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SAFRA GROUP
BRAZIL
Banco Safra S.A.
Banco J. Safra S.A.
Safra Leasing S.A. Arrendamento Mercantil
J. Safra Asset Management Ltda.
J. Safra Corretora de Valores e Câmbio Ltda.
Safra Seguros Gerais S.A.
Safra Vida e Previdência S.A.
JS Administração de Recursos S.A.
Banco Safra (Cayman Islands) Limited
Af-RelatIngles2012Parte01_RelatBco 7/23/13 12:38 PM Page 1
“If you choose to sail upon the seas
of banking, build your bank
as you would your boat,
with the strength to sail safely
through any storm.”
JACOB SAFRA, founder
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Contents
MESSAGE FROM THE CEO
page 4
GLOBAL ECONOMY
page 14
BRAZILIAN ECONOMY
page 34
SAFRA GROUP - BRAZIL
page 48
BANCO SAFRA S.A. & SAFRA CONSOLIDATED –
FINANCIAL STATEMENTS
page 56
BRANCHES IN BRAZIL
page 124
ADMINISTRATION BOARD &
BOARD OF DIRECTORS
page 127
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KEY FINANCIAL INDICATORS
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MESSAGE FROM THE CEO
n 2012 Brazil experienced another year characterized by global turbulence and
low growth of the world economy. In addition to the external problems, domestic
growth was also frustratingly low owing to crop losses, adverse weather and falling
investment in the infrastructure and manufacturing sectors.
I
On the other hand, it should be stressed that Brazil took important steps from
the perspective of a broader time horizon. The government began implementing
a reform agenda that is designed to enhance the competitiveness of the Brazilian
economy and will have a significant impact in the medium to long term.
First of all, a start was made on tax reform in the shape of payroll tax exemption
for several key segments of the industrial and service sectors. Another point that
deserves emphasis was the announcement of an ambitious plan to auction
concessions to private investors in the main infrastructure segments, from ports
and airports to highways and railroads. In the coming years this initiative will
contribute strongly to Brazil’s economic growth, improve the quality of services
provided, and reduce costs for companies and consumers.
In 2012 Brazil was again one of the top five recipients of foreign direct
investment. FDI totaled US$65.3 billion in the year, confirming that Brazil is
one of the most promising countries in the long run. Moreover, despite a fall in
the primary fiscal surplus in proportion to GDP, Brazil’s public-sector net debt
continued to decline while public finance deteriorated in the developed
countries.
In this context of low economic growth, decelerating credit and rising loan
delinquency rates, the results achieved by Banco Safra in 2012 were consistent
with its history and conservative strategy.
Year-end liquidity totaled R$14.8 billion. This was equivalent to twice the
bank’s equity and in line with the high ratio maintained for the past several
years.
Total assets reached R$111.5 billion and stockholders’ equity rose to R$7.2
billion. Net income in the year amounted to R$1.3 billion, for a return on equity
in the range of 20%.
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Another indicator of the bank’s strong
performance was the 36.8% efficiency ratio (the
lower the better), down from 50.0% in the
previous year and above the industry average,
expressing prudent management and the
efficacy of our rigorous internal controls.
The BIS capital adequacy ratio was 14%,
suitably above the 11% minimum set by the
Central Bank of Brazil, with Tier I accounting
for 9.9%. Here it is worth recalling that the
Brazilian financial system begins implementing
Basel III in 2013, and that Safra already
complies comfortably with the capital adequacy
ratios that will be required.
We expect 2013 to be a year of transition to a
new pattern of growth in Brazil, emphasizing
competitiveness and productivity gains via
modernization of the tax system, steady
improvements to the logistical infrastructure,
and growing investment by industry, which will
benefit from historically low real interest rates
and a more competitive exchange rate, factors
corroborated by better prospects for the US and
Chinese economies as well as stabilization of the
European crisis.
To this favorable outlook we must not forget to
add the growing importance of investment
associated with the 2014 FIFA World Cup and
the 2016 Olympics.
Rossano Maranhão
Chief Executive Officer
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THE BRAZIL WE WANT
Antônio Delfim Netto
I
We all hope this will be the year Brazil wants. Perhaps we can
simplify and say we would like to continue to build a social and
economic organization compatible with:
1. Complete freedom of enterprise for citizens to find efficient
ways to fulfill their material needs;
2. Full use of the available production factors and continuous
growth in the productivity of human capital through
education, healthcare and innovation incentives for physical
capital, keeping production and the rate of expansion of
production at the optimal level without inflationary
pressures or balance-of-payments deficits;
3. An increase in equality of opportunity for all citizens,
enabling what is produced to be more equitably distributed.
Today and for the foreseeable future this organization requires a
strong, constitutionally controlled state capable of regulating the
functioning of the markets and producing public goods efficiently;
justice for all; internal and external security; and a currency with
a stable value. In other words, the state is responsible for:
1. Regulating the conditions necessary for the full use of
markets and allowing markets freely to establish the
incentives and relative prices that lead to rising productive
efficiency;
2. Organizing itself to produce public goods efficiently, as
without these the markets cannot function adequately.
II
It is hard to ignore the stagnation of per capita GDP in 2012.
While this performance can easily be transformed into a
“synthesis” of the failures of President Dilma Rousseff’s social
and economic policies, this would evidently be a mistake. The
year was distinguished by efforts to confront old and new
obstacles to growth and by a significant rise in expenditure on
education and healthcare, which is actually investment to
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enhance the future quality of life and the productivity of Brazil’s
workforce. This “activism” has been criticized but is a move in
the right direction. What is missing is a more harmonious
relationship and interface with the private sector.
What to expect from 2013? The year’s promises are not written
in the stars, much less in the models of our doomsayers. It will
be whatever we are wise and capable enough of making it,
government and private enterprise working together within the
limits of their respective competencies as established in the
Constitution. Neither can do it alone.
The job of government is to formulate objectives while resigning
itself to its low capacity to execute physically and accept that its
performance depends on dispensing amicable treatment to
private enterprise, transferring investment in infrastructure to
the private sector via intelligent auctions and controlling it by
means of regulatory agencies that stimulate competition, are
stable, and are shielded against party politics.
The transfer of “natural” monopolies to the private sector is a
highly complex political and technical matter, and it is
contaminated by the fact that if such monopolies are
uncontrolled they are even more cruel in private hands. It must
be acknowledged that when labor unions in these sectors combat
privatization they should not be seen as doing so on technical, let
alone ideological, grounds. In actuality they are defending the
“interests” of those who know they will lose the comfort and
benefits received at the expense of consumers who have no
alternative.
Within the existing institutional context the private sector should
be supported by universal stimulus in the shape of relative prices
constructed in competitive markets. Subsidies should be clearly
earmarked in the budget and reserved for those projects that
unquestionably assure a higher social rate of return than the
market rate, as is certainly the case with some infrastructure
projects. There is no social or economic justification for “picking
winners” and subsidizing them, or for creating gigantic
oligopsonies and private oligopolies to the detriment of
consumers’ interests, much less for strongly protecting industries
that produce basic inputs without taking into account the effects
of such protection on the prices of the goods that use them.
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These concerns appear to underlie the government’s current
policy of activism.
It is an illusion to believe that the markets left to themselves will
self-organize and produce an efficient equilibrium. It is an even
greater illusion to imagine that “economic science” can produce
a universal recipe for obtaining such a balance. When God
organized the world, He was tough on “economists”, ordering
them to study Man, a creature who thinks, resists, imitates,
learns, complains, innovates, transmits his experience – and
ultimately votes!
From moment to moment Man is richer and different, thanks to
the accumulation of information and social immersion, all of
which makes economic policy an increasingly sophisticated
game.
The implications of this fact for economics are fundamental:
There never is equilibrium. The future will never be the same as
the past. Each observation in a time series is not a sample taken
at random from an “urn” containing all its possible states. There
is nothing like the stable observable universe of the physical
world in which for all practical purposes the present reproduces
the past and the past anticipates the future, in what is known as
an “ergodic” process. Because economic agents incorporate
information from the past and are always learning in the present,
the future cannot be a repetition of either. Theirs is a “nonergodic” process.
These pedestrian observations deny all hope that there can be
such a thing as a universal economic theory, independent of
history and geography, that could allow us to put social and
economic policy “on automatic pilot”, such as the famous “three
pillars” to which some of our most notable high priests are
attached with almost religious passion. On the other hand,
voluntarism based on ignoring the huge amount of knowledge
accumulated in the last 250 years, as well as historical
experience, cannot sustain a long successful flight.
TFP depends on the business “environment” (a more equitable
tax burden, stable regulation, encouragement of competition
etc.) and on the government’s visible and clear demonstration of
its desire to maintain an amicable relationship with the private
sector. It is this co-option that kindles investors’ “animal spirits”,
stimulates investment in infrastructure, facilitates credit, and
offers the prospect of long-term growth. Its improvement, even
in the short run, is a significant driver of the growth rate.
The workforce expansion problem is both quantitative (the level
of employment is high) and qualitative (talent is scarce and takes
time to mature). The solution is to stimulate immigration by the
qualified professionals available worldwide, accelerate training
and participation by working-age professionals, continue to
implement ways of relieving the tax burden on wages, and
develop institutions that permit free negotiation within
companies under union supervision and without violating
workers’ constitutional rights.
Full capacity utilization requires the redirecting of demand to
domestically manufactured consumer goods and capital goods,
correcting tax distortions, reducing taxation of exports, and
maintaining a relatively devalued exchange rate without sharp
fluctuations.
In light of the Brazilian economy’s current supply situation,
there are grounds to believe growth of about 3.0% is possible in
2013. What about demand? What are the likely sources of
demand to drive growth? Aggregate demand can be broken
down into four components:
1. Household consumption;
2. Government consumption;
3. Net exports (the difference between exports and imports in
the national accounts);
4. Gross fixed capital formation (investment in capital goods
and infrastructure).
III
Never has a relationship of absolute trust between government
and private enterprise been as necessary as it is now. Growth in
2013 will result from it. If we look at GDP from a supply
perspective, the following depend on it:
1. Total factor productivity (TFP);
2. Expansion of the workforce and improvement in the quality
of the manpower employed;
3. Full utilization of installed production capacity.
We can expect a certain amount of growth in the first
component, even with less expansion in the level of credit,
provided the present fiscal policy with its redistributive effects
remains in place. As for the second, it would be best to expect
only its maintenance or a slight reduction in favor of government
investment. The third (net exports) was strongly negative until
recently and now appears to be moving to a slightly negative
level, perhaps -0.5% of GDP.
This leaves us only with alternative four to increase aggregate
demand in 2013: strong growth in the rate of gross fixed capital
formation by the private sector and government (investment in
plant and infrastructure) in proportion to GDP. This rate slowed
dramatically from 4.7% in 2011 to less than 4.0% in 2012.
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The 2013 growth rate is entirely in the hands of government,
which must recognize that over the past 30 years it has lost the
capacity to plan and execute investment. It is time, therefore, to
accelerate the concession program so as to transfer investment in
infrastructure to the private sector via competent auctions and
leverage the capacity created by the maturing of investment for
the large-scale international events to be hosted by Brazil.
IV
Inflation is a kind of “radiator” that dissipates the heat produced
by friction in the markets. The causes of this friction can be
exemplified non-exhaustively as follows:
1. The inertia naturally caused by the inevitable time taken for
demand to adjust to supply in specific sectors (supply shocks,
changes in habits);
2. Deficient infrastructure;
3. Institutional and political obstacles that delay adjustments to
the supply of basic inputs;
4. Exaggerations committed by the powers that be when they
lose all sense and surrender to voluntarism, ignoring the
physical constraints imposed by the national accounts;
5. The government’s attempts to protect its revenue by pegging
taxes, prices, tariffs or wages automatically to inflation,
thereby creating more inflation;
6. Stimulating credit when there are no more production
factors available in the right proportion and a rising currentaccount deficit does not permit imports of them;
7. Real wage increases surpassing the physical productivity of
labor etc.
Thus the inflation rate is a doubtful indicator of aggregate
demand. It is simultaneously a cause and effect of income
redistribution. Ultimately it is an inverted image of the level of
productivity in the economy, a level which rises in proportion to
the reduction in the very same “friction” that produces inflation.
Reducing Brazilian inflation, which has remained in the range
of about 5.2% per year for eight years and which tends to stick
to the upper limit of the target range, as it does in every country
that practices inflation targeting, is not and cannot be a task of
the Central Bank alone. It is a mission for the entire government,
involving an increase in efficiency grounded in clearly focused
microeconomic reforms that require the support of society.
For example, a well-organized labor market that respects
workers’ constitutional rights, allows free collective bargaining
within each company (not industrywide) under the aegis of a
works committee comprising elected representatives of the
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employees and ignores the legal effects accumulated by
corporatism over the years is a powerful instrument for raising
labor “productivity” and simultaneously reducing the friction
that fuels inflationary pressures.
On the other hand, when there are mismatches between the
needs of the economy and the supply of skilled labor it is
extremely costly to correct for these mismatches by reducing
aggregate demand via monetary policy.
What is needed are structural measures that increase the supply
and quality of labor, especially rapid vocational training and
immigration. Brazil’s inflation problem is partly a result of the
government’s own behavior:
1. The government’s social policy encourages generous
minimum wage hikes that exceed the rise in the average
productivity of labor (because they are based on total GDP
rather than per capita GDP, with a multiplier for past
inflation) and other forms of transfer at the expense of public
investment. This reduces the efficiency of the economy
although at the same time it contributes to social inclusion,
which of course is a welcome and necessary goal.
2. The government’s economic policy tries to combat such
inflationary effects with monetary measures while failing to
tackle structural and institutional problems with rigor.
This is a socially expensive effort that takes a long time to
produce results. It gets more complicated when there is a
generalized belief that economists have a “recipe” for easily
controlling inflation. Suffice it to accept uncritically, as some do,
that economic agents are rational optimizers and extend this
belief to macroeconomic policy, constructing a “model” (an
imaginary world) in which monetary tightening:
1. Makes the inflation rate “converge” to any “target” at the
desired speed;
2. In the longer run makes the economy grow in line with
“potential GDP”;
3. Brings down unemployment to a level compatible with the
inflation target.
Nothing complicated there! Forget about agricultural supply
shocks, tax increases, changes in the global economic situation,
structural imbalances in the labor market, mismatches between
social and economic policy, and so on. Inflation above target?
Just hike interest rates, even if economic growth is weak!
Unfortunately the key findings of a competent paper by three
economists at IPEA, a respected think tank, show a more
complicated picture:
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1. A single result remains robust in the various econometric
experiments performed: Inflation expectations and past
inflation play a relevant part in the dynamics of the inflation
process. The significance of expectations appears to have
increased in the recent past.
2. The short-term impact of unemployment on inflation
depends on the set of representative variables used as
proxies. In most cases it was negative, as expected. The longterm impact is hard to measure but appears to be negligible.
In any event, the real effect of the unemployment rate on
inflation was found to be close to zero in the short and long
run.
3. Brazilian inflation appears to have little to do with a tradeoff
with unemployment and interest rates as claimed by most
“macromodels” for the Brazilian economy.
V
The inflation we are experiencing is grave and has complex
structural causes that must be addressed without destroying the
civilizatory process of building social inclusion, which has
combined expansion of credit with rising real incomes, while
reducing income inequality via clearly targeted public policies.
First of all, this means reducing the velocity of the redistributive
impulse and paying special attention to the organization of the
labor market, especially that part of pay policy directly
controlled by the government.
Secondly, it is necessary to accept that we have suffered a major
supply shock caused by the fall in agricultural production, which
will probably be corrected for by a rise in production in the
2012-13 crop year. Thirdly, export prices will exert less upside
pressure on domestic prices, not only because they appear to
have embarked on a calmer period but because local currency
depreciation will be weaker.
But if today’s consensual diagnosis is that inflation is not caused
by excessive demand (and how could it be with GDP growing
only 2.5%?) but above all by supply “bottlenecks”, it remains to
ask whether a central-bank interest rate of 4%-5% in real terms
stimulates or reduces aggregate supply. As for aggregate
demand, the effect on consumption is minimal because the real
interest rates paid by consumers are very high. The effect on
public spending is to transfer income to “rent seekers” to the
detriment of workers because of the rising cost of the public debt.
It will certainly reduce investment and exert upside pressure on
the exchange rate. Ultimately the effect will probably be slightly
negative, thus failing to sustain even today’s 2.5% growth, with
negligible effects on the inflation rate.
So what about the supply side? Here the effect seems clearer.
Unblocking supply requires:
1. Increasing public investment and accelerating concession
auctions;
2. Stimulating private investment, which requires lower real
interest rates and the prospect of a higher return on capital
via future demand growth. None of this will be achieved by
raising real interest rates. Here too the effect will be
ultimately negative. Maybe, just maybe, there will be some
effect on the inflation “expectations” formulated by the
financial sector.
VI
Current pessimism about economic policy is evidently
exaggerated. This criticism throws overboard all the social
progress Brazil is making in the building of a more educated
middle class that consequently demands higher quality in public
services, and without which it will be impossible to consolidate
democratic institutions that contribute to a gradual increase in
equality of opportunity.
Worse still, it pretends to ignore important advances: approval
of a pensions system for civil servants; successful replacement of
the regime whereby passbook savings were guaranteed 6% real
interest; the effort to reduce the cost of basic inputs (electricity
and ports); the learning curve in holding auctions for concessions
to infrastructure projects designed to attract private investment;
controlling civil service pay rises for three years; the orderly
reduction in real interest rates; payroll tax exemption for
exporters, which in conjunction with relative local currency
depreciation is starting to stimulate the export of manufactured
goods; localized cuts in the tax burden; small enhancements of
the taxation system etc. And last but not least, a slow but steady
improvement in the relationship between the public and private
sectors, which should lead business ultimately to acknowledge
that economic policy is amicable and aims to enhance
competitiveness and productivity.
The claim that the famous three pillars of canonical economic
policy have been abandoned is not correct. From the fiscal
standpoint it is necessary to recognize the pointlessness of
“creative accounting”, a venial sin expiated by severe criticism
from friends and enemies. Here’s the rub: Does 0.9% GDP
growth not justify a countercyclical policy? Do a nominal deficit
corresponding to 2.5% of GDP and a 36% net debt-to-GDP
ratio amount to abandoning fiscal responsibility?
9
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From the monetary standpoint, is 6% inflation driven by an
agricultural supply shock that will probably weaken in under six
months a sign that the Central Bank has abandoned its 4.5%
target? Or that it will tend to lose its “autonomy”? When Central
Bank Governor Alexandre Tombini says he does not feel
comfortable with the behavior of inflation, what does he mean
save that he will do what it takes?
As for the floating exchange rate, the discussion borders on the
ridiculous if you listen to François Hollande, Mario Draghi and
Shinzo Abe. Who still believes in an exchange rate “freely
determined by the interplay of market forces” based on the
“fundamentals”?
VII
To conclude on a note that is more realistic than optimistic, let
me draw your attention to three significant facts:
1. The measure of social welfare proposed by philosophereconomist Amartya Sen, whereby real income growth is
corrected by an indicator of income distribution (1-Gini
coefficient), has steadily improved since 2003, as shown
below:
2. A Datafolha poll of 2,653 people conducted on March
20-21, 2013, suggests a profound cognitive gap between the
beneficiaries of the government’s social inclusion policy and
the investment agents who must produce the growth in
supply required to assure this inclusion. Unless this gap is
closed, our society will be forced to leave behind its current
state of grace and will face increasing difficulties due to the
10
impossibility of violating a physical law: You can distribute
only what has already been produced! Ultimately what has
kept Dilma Roussef’s approval ratings relatively high (65%)
is her ability to meet the demand for goods and services
generated by rising wages and income transfers, but this can
only be done permanently by a positive response from the
7% who rated her administration poor or very poor. In other
words, by the private investors who must increase supply.
The poll discloses other aspects of a similar cognitive gap in
readings of the economic situation. While the reports and
newsletters put out by financial institutions suggest Brazil is
on the verge of stagflation, 76% of Datafolha’s interviewees
in the third week of March said this is a good or excellent
country to live in, 85% expected the economic situation to
improve or remain stable, 77% said the purchasing power of
wages will improve or remain stable, and 64% said
unemployment will fall or remain stable. Where the gap
appears narrower is in Datafolha’s significant finding that
only 49% expected inflation to remain stable or fall.
Here the government undoubtedly faces a complicated
problem, to which many economists believe they have a
simple solution: “Raise the real interest rate and generate
unemployment”. But as the authors of the poll point out:
“The basis for society’s feeling of wellbeing is not confined to
the prospect of social mobility, inclusion in the consumer
market or access to social policies… but extends to the
striking change in the average Brazilian’s sentiment of
employability”. According to the survey 75% of those
interviewed did not fear losing their jobs and 59% did not
believe there was any likelihood they would find themselves
unemployed.
3. One of the most extraordinary indicators of the immense
progress achieved by Brazilian society thanks to the
enhanced and improving focus of the social and economic
policies that have been developed since the days of the
Empire is the consequences of the terrible droughts that
repeatedly descend upon the semi-arid zone of the
Northeast region.
Only those who are familiar with the Brazilian state’s
century-old effort to surmount the effects of these droughts,
who witnessed the phenomenon that gave rise to the failed
attempt to evacuate the semi-arid zone via construction of
the Transamazon Highway in the 1970s, and who saw the
tragedies of the droughts in the 1980s with their inhuman
“work fronts”, invasions of towns and looting of warehouses
by starving mobs in search of food, can appraise the
cumulative effects of the experimental policies that
accelerated and significantly matured from 2003 on. As
recently as 1999, on the brink of the present century, we still
had not found the right mechanisms, as evidenced by the
formation in that year of yet more “work fronts” involving
more than 1 million people.
Af-RelatIngles2012Parte01_RelatBco 7/23/13 12:38 PM Page 11
Well, we are currently seeing a drought with the same
characteristics and severity as in the 1970s and 1980s, and there
are no seismic movements among the low-income population
and small farmers. The hunger that once denied their humanity
no longer exists. Thanks to markets that work well, to the welfare
system introduced in the 1970s and to the improvements made
to the Bolsa Família conditional cash transfer program, even the
most deprived citizens of the semi-arid zone have the
wherewithal to buy food. Moreover, they drink noncontaminated water thanks to a cistern program (over 500,000
have been built since 2003) and army control of supply via water
trucks. Livestock still suffers because silage is technically
rudimentary.
So let us not ignore what has been achieved. Best of all, we must
persuade ourselves that thanks to the progress won so far, its
availability to the population of the area and its continuity
through expanding research and technical assistance our semiarid zone is at last prepared to face future droughts as if they
were a “normal” state of affairs.
The great truth is that by trial and error we have slowly
improved the quality of our institutions and succeeded in paying
more attention to structural difficulties. Our main problem
continues to be coordinating public management, given the loss
of expertise in the past 30 years.
It is self-evident that these three points mean much more
than material progress. They show the unfolding of a
civilizatory process.
ANTÔNIO DELFIM NETTO
Delfim graduated in economics from the School of Economics
& Administration at the University of São Paulo
(FEA/USP), where he has had a long academic career,
having been Full Professor of Brazilian Economy &
Economic Development Theory and subsequently Professor
Emeritus. He is a former São Paulo State Secretary of
Finance (1966-67), Minister of Finance (1967-74),
Ambassador to France (1975-77), Minister of
Agriculture (1979) and Minister of Planning (1979-85).
During his tenure as finance minister, Brazil enjoyed an
“economic miracle” and its economy grew faster than at
any time in its history, averaging 9% per annum. As a
result, Brazil rose from 48th to eighth position among the
world’s economies by size of GDP. The 1973 growth rate
of 14.4% remains the all-time record. He was elected to
Congress in 1986 and re-elected for four more terms, the
last of which began in 2003 and ended in 2007. He is the
author of several books on Brazilian economic issues and
writes weekly columns published by 70 newspapers and
magazines in São Paulo and other states.
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GLO
BAL
ECO
NOMY
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1.1. ECONOMIC ENVIRONMENT IN 2012 AND OUTLOOK FOR 2013
Like previous years, 2012 began with widespread expectations that the global economy would succeed in leaving the financial
crisis behind and grow at a faster pace. Once again, however, it was soon evident that the wounds inflicted by the 2008 crisis were
still far from healing.
The extent to which the 2012 performance of the global economy fell short of initial forecasts can be seen from Table 1 (based on
IMF data).
The European economy’s performance was the most disappointing. While weak growth in continental Europe mainly reflected
doubts about the fiscal health of Italy and Spain, in the United Kingdom aggregate demand slumped in response to the tough
austerity program and drastic budget cuts implemented by the Conservative-Liberal Democrat coalition.
Once again it fell to the world’s central banks to try to stem the economic deterioration. In the eurozone the European Central
Bank (ECB) mitigated systemic risk by pledging to do “whatever it takes” to preserve the integrity of the common currency. In the
UK and US new rounds of asset buying by the Bank of England (BoE) and the Fed helped to shore up expectations. In Japan,
which was still recovering from the earthquake and tsunami, a newly elected government advocated bolder monetary policy
measures to revive the economy.
Meanwhile, inflation in the developed countries, which at times had surpassed 3.0% in 2011, decelerated significantly and ended
2012 below 2.0%. The reversal was largely due to falling oil prices (Figure 1). Slower growth in the largest economies and
dissipation of the uprisings in the Middle East contributed to a reduction in upside pressure on oil prices.
Although no eurozone countries applied for financial aid, as had Greece, Ireland and Portugal in previous years, the region’s
fiscal crisis continued to have negative effects on the economy and to cause concern on global financial markets. The ECB’s
initiative of lending unlimited amounts of liquidity to local banks was immediately met by a positive response and contributed to a
calmer start to the year.
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By mid-2012, however, tension had again built up on the periphery and many analysts saw no alternative for Italy and Spain but
to request a financial rescue package. In the case of Spain the situation was more serious. Some provinces formally applied for aid
to the central government and distressed commercial banks had to be recapitalized. In Greece, parliamentary elections also
resulted in instability in the region.
On the other side of the Atlantic, President Barack Obama’s re-election came as no surprise. Although unemployment remained
at a historically high level, most Americans, especially in the lower income groups, continued to support the policies implemented
during Obama’s first term.
Reinvigorated by the election result, Obama began negotiating with the opposition on a deal to attenuate the effects of wideranging budget cuts set to enter into force in early 2013. After an intense process of talks an agreement was sealed between
representatives of the Senate and House on the last day of 2012. The deal called for a higher income tax rate only for the
wealthiest families, renewal of extended unemployment insurance for another year, and postponement for two months of a
decision on what to do about the automatic budget cuts totaling almost $100 billion (known as the “sequester”).
Global economic growth was extremely weak in 2012 owing to the political and economic uncertainty that afflicted most of the
developed world. As can be seen from Table 2, fourth-quarter GDP growth in the seven most advanced industrial economies (G7)
was one of the lowest in recent history.
The outlook for 2013 is therefore one of low economic growth in the first half and the expectation of an improvement during the
second half. In the eurozone, with the exception of few countries, the process of severely austere fiscal adjustment will continue to
weigh against more vigorous economic dynamism, making the ambition of reducing public debt even more complicated and
difficult to achieve. In the US, the expiration of several fiscal stimulus measures and the reduction in public spending will mean a
slower start to the year in terms of economic growth, followed by a faster second half. In Japan there is considerable expectancy
that the policy changes promised by the new government, especially currency devaluation and fiscal and monetary easing, will
help the economy overcome yet another recession and the deflation that has now lasted many years.
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1.2. USA
In late 2011 the US economy grew more than in any year since the start of the financial crisis. Fourth-quarter GDP growth was
4.1% in annualized terms (Table 3). The economy’s strong performance at the turn of the year led to a sharp rise in market
expectations for growth in 2012, but in the ensuing quarters the pace of growth decelerated again.
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The pattern can be seen even more clearly in the labor market data. As shown by Figure 2, the three-month moving average of net
job creation by the private sector reached a post-crisis high in February 2012, only to decelerate thereafter. The unemployment
rate trended down throughout almost all of 2012, but this was largely to due to discouragement (growing numbers of people who
stopped looking for work).
In response to the US economy’s loss of momentum in the second half, the Fed announced its third asset-buying program (QE3)
in September. Initially its purchases were limited to mortgage-backed securities guaranteed by the government (agency MBS).
The Fed’s aim at that time was to support the housing market, which was then beginning to show signs of a more consistent
recovery. The novelty was the lack of a time limit for the program, as well as its conditionality, in the sense that the Fed
undertook to buy $40 million per month of commercial housing market debt risk until there was a substantial improvement in the
labor market.
At its last meeting of the year, the FOMC decided to extend QE3 to treasuries and raise the amount of open-ended purchases to
$85 billion per month. But the main surprise that came out of the December meeting was the decision to keep the federal funds
rate between zero and 0.25% until certain economic variables improved. The post-meeting statement said this exceptionally low
range for the federal funds rate would be appropriate at least as long as the unemployment rate remained above 6.5% and
inflation 1-2 years ahead was projected to be no more than 2.5%.
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This measure was yet another step toward monetary heterodoxy and demonstrated the FOMC’s strong dissatisfaction with the
persistently slow pace of reduction in the unemployment rate.
The Fed’s purchases of MBS did indeed prove very important as a means of revitalizing the housing market. As evidenced by
Figure 3, housing prices rose significantly during the year, and the inventory of unsold houses also fell sharply. Lower inventory
levels in turn drove a more vigorous resumption of homebuilding.
Investment lost momentum in 2012. Corporate purchases of plant and equipment fell in 3Q12 for the first time since the end of
the recession in 2009. The reluctance to invest was largely a reflection of increasing uncertainty about the fiscal outlook, as well as
the delicate situation faced by Europe at that time.
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Political issues were important throughout the year. The main political event of 2012 was President Barack Obama’s re-election.
He led the polls during the months that preceded the November election and defeated Republican candidate Mitt Romney on the
day. However, while Obama won a new presidential term for the Democrats, the Republic opposition kept its majority in the
House of Representatives, although the Democrats retained control of the Senate.
The gap between the two parties widened during the year, particularly with regard to the best way to address the budget deficit.
The parties agreed that something must be done to reduce the enormous deficit but proved unable to reach a consensus on the
manner and speed of the necessary adjustment.
The situation became even more complicated with the approach of the end of the year when a number of very restrictive fiscal
measures were scheduled to take effect. Spending cuts and tax increases corresponding in aggregate to almost 4% of GDP would
be triggered automatically on January 1 unless a law was passed to avert this “fiscal cliff”.
In the small hours of January 1, 2013, after weeks of intense negotiation involving majority and minority leaders, Congress finally
reached a deal, passing laws that avoided higher taxes for middle-class families, renewing extended unemployment insurance for
another year and postponing for two months a decision on what to do about the budget sequester amounting to almost $100
billion. On the other hand, the deal allowed payroll tax to return to the original rate of 6.2%, from 4.2% previously.
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Attention will focus in 2013 on the behavior of the economy in response to the federal government’s fiscal adjustment, which will
be considerably more strenuous than in previous years. If the projections announced by the Congressional Budget Office (CBO)
are correct, this adjustment will be one of the largest seen since world war two, with a negative impact on GDP amounting to
almost 2 pp.
The US is better placed to tackle this situation than the other developed economies, since the Fed’s quantitative easing programs
provide an important counterweight to this severe fiscal adjustment. Even if GDP growth is not particularly robust in 2013, the
US economy will look like an oasis compared with the other G7 economies.
1.3. EUROZONE
In the eurozone, 2012 began with the hope that the steps taken by the ECB at the end of the previous year would avert additional
deterioration in the economy and especially in the banking sector. In December 2011 the ECB announced measures to offer
banks additional liquidity as well as lowering rates by another 25 bps. The former measure entailed an innovation known as
Long-Term Refinancing Operations (LTROs), comprising an unlimited amount of three-year loans to banks at 1% annual
interest. Demand from commercial banks exceeded €1.0 trillion and the list of eligible securities accepted by the ECB as collateral
was significantly expanded.
The ECB’s initiative initially resulted in significantly reduced financial market stress. As can be seen from Figure 5, Spain’s
ten-year sovereign yield fell to 4.8% in 1Q12, from 6.7% at end-2011, while Italy’s fell to 4.8%, from 7.0% in December 2011.
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By the middle of the first half, however, market concern regarding the sustainability of Spain’s public debt had rebounded
strongly and the new Spanish government was obliged to announce additional austerity measures in an attempt to reassure
investors that the sovereign could remain solvent.
In the ensuing months Spain’s five-year credit default swap (CDS), considered a gauge of default risk, rose from 400 bps to over
600 bps (having been about 200 bps in 2010). At this stage of the crisis it was widely expected that Prime Minister Mariano Rajoy
would have to apply formally for a financial rescue package from the European Financial Stability Facility (EFSF), following the
example set in previous years by Greece, Ireland and Portugal. However, despite Spain’s severe difficulties the government did
not request EFSF aid.
The fragile situation in the Spanish banking system led the government to announce a major bank recapitalization program in
June. Initial estimates pointed to a total capital requirement of up to €100 billion but the amount injected by December was
slightly less than €40 billion.
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The decisive turning-point in the crisis that threatened the euro’s existence came in late July when ECB President Mario Draghi
said, “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”
From then on the Spanish CDS and the sovereign borrowing rates of the peripheral eurozone countries fell significantly and
requests for aid became unnecessary (Figure 7).
At the ECB’s September meeting Draghi announced a new program called Outright Monetary Transactions (OMT), designed
to safeguard monetary policy transmission throughout the eurozone and prevent the markets from betting against the common
currency’s survival. In practice the program involved the purchase of sovereign bonds via the EFSF (later renamed ESM)
provided the country concerned agreed to certain conditions, such as spending cuts, tax hikes and structural reforms.
The main political events were the French presidential election and two troubled parliamentary elections in Greece. The French
election was won by Socialist Party candidate François Hollande in two closely contested rounds with Nicolas Sarkozy, the
incumbent who was seeking re-election. President Sarkozy was yet another politician who suffered the consequences of unpopular
economic reforms designed to engineer a profound adjustment of public finance.
In Greece two elections had to be held in rapid succession before a coalition government could be formed. The first, held on
May 6, failed to give any party a clear majority. Attempts to form a coalition government were unsuccessful and ten days later
a new election was called for June.
At the time it was widely believed that the outcome of this second election would be interpreted as a referendum on whether
Greece should remain in the eurozone. The answer would be no if Syriza won, it was thought. However, New Democracy won
by less than 3 pp and days later succeeded in forming a coalition government with two other parties. European leaders lauded this
result, which laid the foundations for a continuation of severe fiscal austerity in Greece.
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Economic contraction was the logical outcome of fiscal policy throughout the region. As shown by Table 4, the eurozone
re-entered recession (defined here as two consecutive quarters of negative growth) in 2Q12. Greece had long faced a very serious
economic crisis, and now Italy, Spain and Portugal were deteriorating again. These countries contracted 2.2%, 1.4% and 3.2%
respectively in 2012. France emerged from recession in 3Q12 but again contracted in 4Q12. Even in Germany, which until
mid-2012 had been relatively immune from this deterioration in the European crisis, economic activity fell more sharply in 4Q12
than at any time since the height of the financial crisis in 2009.
The region’s labor market was also severely affected by fiscal austerity. The unemployment rate reached an all-time high of
11.8% in December 2012 (compared with 10.7% in December 2011). Germany’s unemployment rate fell during the period but
the labor market continued to deteriorate in other countries. Unemployment rose almost 3 pp in Spain and Portugal, and almost
2 pp in Italy (Figure 8).
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In attempt to improve the complicated economic situation, in July the ECB cut its benchmark refinancing rate (refi) by 25 bps to
0.75%, the lowest ever, but did not venture to implement less conventional monetary measures such as those deployed in the US,
UK and Japan, for example. The aim of monetary policy never ceased to be price stability and although the ECB bought
sovereign bonds at certain times it never came close to engaging in massive asset buying in order to reduce long-term yields.
As a result, monetary policy transmission to all eurozone countries alike was patchy at best. As can be seen from Figure 9, while
Germany and France benefited from low interest rates, economic agents in the peripheral countries faced very high rates
relatively speaking. Moreover, a large number of commercial banks in the region continued to deleverage and were reluctant to
lend except to low-risk borrowers. Small and medium enterprises were therefore jeopardized most by uneven transmission of
monetary policy, and SMEs are the largest source of employment in the region.
The economic outlook for the eurozone in 2013 remains unfavorable, although the most troubled economies are expected to
contract less. Most eurozone countries will continue to implement fiscal austerity measures but at a slower pace, given the growing
consensus that fiscal adjustment must be carefully dosed.
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1.4. ASIA
In Asia the contrast between the Japanese economy, which appeared unable to grow or exit deflation, and the region’s robustly
growing emerging-market economies remained unchanged. The geopolitical highlight was a deterioration in Sino-Japanese
relations due to a longstanding territorial dispute over a number of small islands located south of Japan in the East China Sea.
In late 2012 the Japanese government decided to buy the islands for the nation and China protested vociferously. The fall in
Japanese exports to China in the period (Figure 10) may well have been due to the intensification of this dispute.
Alongside appreciation of the yen and strong dependency on imports of energy commodities, the fall in exports to China led to a
record Japanese merchandise trade deficit of US$87.2 billion in 2012 (Figure 11). Imports rose 3.8% in the period while exports
fell 2.8%. Because of this fall, as well as weak domestic demand, industrial production contracted 7.9% year over year in 2012.
All the above developments had a strong impact on Japanese politics. At the end of the year Prime Minister Yoshihiko
Noda resigned in recognition of his loss of support, paving the way for opposition leader Shinzo Abe to win the ensuing election.
Throughout the campaign he pledged to combat recession by deploying fiscal stimulus to drive economic growth, while also
making monetary easing by the Bank of Japan his prime instrument to put an end to the deflation that has afflicted Japan
for many years. The promise of more fiscal and monetary stimulus led the yen to depreciate considerably against the dollar
(Figure 12).
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In China it was established early in 2012 that the government would pursue a more moderate growth target. Instead of 8%
growth, the target adopted for previous years, the objective would now be growth of 7.5%.
According to the government, the priority was to obtain economic growth of better quality. In this direction the authorities
gradually introduced a range of macroprudential measures designed to stem speculation in the real estate market.
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China’s merchandise trade surplus rose 47% year over year to US$231.4 billion in 2012. Exports rose 7.9% and imports 4.4%.
Consumer price inflation decelerated to 2.5%, from 4.1% in the previous year. Investor fears early in the year that China would
not achieve its growth target gave way to relative calm in the second half as rising commodity prices and imports signaled that
demand for raw materials was indeed growing (Figure 13). Despite ups and downs during the year, the Chinese economy grew
7.8% in 2012.
China is expected to grow at the same pace in 2013 as in 2012, despite the government’s decision to enhance the quality of
growth by prioritizing consumption over investment. In Japan attention will focus on evaluating the government’s success in
reactivating the economy on a sustainable basis and driving inflation into positive territory.
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BRA
ZILIAN
ECO
NOMY
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2.1. ECONOMIC GROWTH
GDP growth decelerated to 0.9% in 2012, from 2.7% in the previous year. This fell well short of analysts’ expectations. The
consensus forecast for 2012 growth in January was 3.3%. In response to the deceleration, both monetary policy and fiscal policy
were more expansionary than in 2011.
The Central Bank of Brazil, which had begun lowering the target for its benchmark lending rate (Selic) in August 2011, continued
to do so for much of 2012 in response to the deteriorating global economic outlook. In October the Selic reached 7.25% per
annum, the lowest ever. In the public finance sphere, government expenditure rose while revenue fell owing to tax relief and
slower economic growth.
In addition to monetary and fiscal stimulus, the government introduced a number of initiatives designed to enhance the
competitiveness of the Brazilian economy, especially the manufacturing sector, and promote a resumption of investment. The
exchange rate moved to a more favorable level for exports, with local currency depreciation averaging 17% year over year.
Several sectors were granted payroll tax cuts or exemption, interest rates on loans extended by BNDES, the national development
bank, were lowered, and a significant reduction in electricity prices was announced for 2013.
Another highlight was the announcement of an ambitious program of concessions to private enterprise in various infrastructure
segments, involving airports, ports, railroads and highways. It was also announced that the National Petroleum Agency (ANP)
would resume auctions in 2013, including the presalt layer.
The weak performance of the domestic economy in 2012 mainly reflected the behavior of investment on the demand side and of
industry on the supply side. Among the components of aggregate demand, gross fixed capital formation (GFCF) decelerated most,
falling 4.0% in the year compared with a rise of 4.7% in 2011. Household consumption displayed the lowest growth rate (3.1% in
2012 compared with 4.1% in 2011), in contrast with accelerating government expenditure (up 3.2% in 2012 and 1.9% in 2011).
Net exports (exports less imports) had a neutral impact on GDP, with exports rising 0.5% and imports 0.2%, compared with the
strong negative impact seen in 2011, when imports rose 9.7% whereas exports rose 4.5%.
On the supply side, all sectors of the economy decelerated, led by a fall of 2.3% in agriculture (+3.9% in 2011) and a fall of 0.8%
in industry (+1.6% in 2011). GDP growth was positive thanks to 1.7% growth in the service sector (+2.7% in 2011).
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2.2. INFLATION AND MONETARY POLICY
Inflation measured by the IPCA reached 5.84% in 2012, surpassing the official target (4.5%) but even so improving on this
criterion compared with 2011, when the IPCA reached the upper limit of the target band (6.5%). Despite the improvement in
2012 compared with the previous year, the 12-month inflation rate surprised negatively in the second half, when monthly data
consistently outpaced expectations. The upside dynamics of inflation from July on derived mainly from accelerating prices
of food and services.
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A breakdown of the IPCA by group shows more than 70% of the year’s 5.8% inflation coming from Food (+2.2 percentage
points), Housing (+1.0 pp) and Personal Expenses (+1.0 pp). The IGP-M accelerated in 2012, rising 7.8% in the year compared
with 5.1% in 2011. This reflected accelerating farm prices (+18.8% in 2012 versus +3.1% in 2011), influenced by the rise in
commodity prices in 2012.
During the course of 2012 the Central Bank’s Monetary Policy Committee (Copom) lowered its target for the Selic benchmark
lending rate, following up on the easing cycle begun in August 2011. At its first meeting of the year the Copom cut the Selic by 50
basis points to 10.50% p.a. The pace of easing was stepped up at the March and April meetings with cuts of 75 bps, followed by
three cuts of 50 bps in May, July and August to take the Selic to 7.50% p.a.
Although the 12-month inflation rate accelerated from July onward, as noted above, the Copom took the view that weak global
growth continued to point to a disinflationary bias, justifying the cuts. The easing cycle ended at the October meeting, which cut
the Selic by 25 bps and announced that “keeping monetary conditions stable for a sufficiently extended period is the most suitable
strategy to assure the convergence of inflation to the target, albeit not in a linear manner”. As a result, the Selic ended the year on
7.25% p.a., an all-time low.
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2.3. OUTLOOK
The main concern for 2013 remains the growth trajectory of the Brazilian economy, which lost momentum in 2011-12 despite a
series of economic policy stimulus measures. While a recovery is expected in 2013, with GDP growth accelerating to 2.2%, the
average rate of economic growth in the first three years of the Dilma Rousseff administration is set to be lower than the average
seen in the previous decade.
It is important to stress that low growth has occurred despite ample monetary easing, with the Selic rate falling to an all-time low,
as well as tax breaks for a range of industries. In our view a consistent economic recovery depends on growth in both investment
and industrial production. While the weak performance of GFCF reflects above all a lack of business confidence, the
manufacturing sector is suffering from a loss of competitiveness due to rising costs and strong foreign competition.
Thus a consistent recovery requires more than conventional macroeconomic policy measures. Progress must be made with
structural reform, especially in the areas of taxation and concessions to the private sector in the infrastructure sector. To some
extent this process began in 2012 with payroll tax exemption for selected industries and the announcement of a program of
infrastructure concessions to private enterprise.
The process is set to intensify in 2013. Initiatives such as the reduction of electricity prices, extension of payroll tax exemption to
other industries and new infrastructure concessions will help enhance the competitiveness of the Brazilian economy and promote
sustainable growth in the domestic production of goods and services. The full effect of such initiatives, however, will be felt only in
the medium term, and this explains the modest below-potential growth forecast for 2013.
Inflation will tend to remain under upside pressure due to strongly rising food prices despite the reduction in electricity prices, and
is set to end 2013 in the range of 5.9%.
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2.4. KEY ECONOMIC INDICATORS
2.4.1. ECONOMIC ACTIVITY
Economic activity in 2012 was characterized by a conspicuous gap between commerce and industry, a dynamic seen since 2008
(Figure 17). Industrial production fell in the year, despite low unemployment and robust consumption. At the same time retail
sales continued to grow vigorously thanks to rising incomes and tax cuts extended to segments that depend heavily on credit, such
as motor vehicles and white goods.
Industrial production contracted 2.6% in 2012, performing significantly worse than in 2011, when it had already displayed a very
low growth rate (0.4%). As a result of last year’s performance, the level of industrial production returned to that seen at end-2009.
The capital goods industry contracted particularly sharply, falling 11.8%, while intermediate goods and consumer goods fell 1.6%
and 0.8% respectively.
In contrast, retail sales performed better than in the previous year. The narrow measure, which excludes motor vehicles and
building materials, rose 8.4%, compared with 6.7% in 2011. The broad measure also accelerated, rising 8.0% in 2012, up from
6.6% in 2011.
The labor market remained robust throughout the year, with the average rate of unemployment falling to 5.5%, an all-time low
and below the 2011 average, which was 6.0% (Figure 18). Reflecting the lower supply of available workers compared with
previous years, the total wage bill (understood as the number of people in paid employment times average real earnings) rose
6.3% in real terms in 2012, as a result of 2.2% growth in the workforce and a 4.1% rise in real earnings. Despite the fall in
unemployment, slower GDP growth affected the formal hiring rate.
According to the Labor Ministry’s General Register of Employed & Unemployed Persons (Caged), net formal job creation
reached 868,000 in 2012. This was the smallest annual number since 2003 and much less than in 2011 (1,566,000). Formalization
of the workforce improved only slightly in the year, reaching 66.0% compared with 65.6% in 2011. This rise was far smaller than
in 2010 and 2011, when formalization rose 2.6 pp and 1.8 pp respectively.
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2.4.2. CREDIT
Overall the performance of the credit market in 2012 was characterized by decelerating growth despite the significant
contribution of the state-owned banks, which continued to increase their share of the total stock of credit. This deceleration
reflected both a decrease in the willingness of private-sector banks to extend loans owing to high delinquency rates and a decrease
in demand for loans from consumers owing to the high debt-to-income ratio.
The total stock of credit grew to 53.6% of GDP at end-2012, from 49.1% a year earlier, reaching the highest level of the time
series in proportional terms. As noted above, however, the rate of growth decelerated to 16.4%, the lowest since 2009, when
credit expansion was affected by the global financial crisis.
The stock of unearmarked loans to individuals grew only 10.2% in 2012 (13.2% in 2011), while the stock of unearmarked
corporate loans grew 17.0%, decelerating from 20.1% in 2011. Earmarked loans, in contrast, grew 20.7%, although even so this
was less than in 2011 (22.4%).
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The slower growth of unearmarked loans to individuals reflected the delinquency rate, which rose sharply in 2011 and remained
at a historically high level in 2012, ending the year on 8.0%. In our view this was due to the high debt-to-income ratio, i.e. the
proportion of household income devoted to debt repayment, and not to the labor market, which performed very favorably.
The high delinquency rate had a negative effect on the results of financial institutions, which responded by adopting more
conservative lending policies, so that the volume of new consumer loans flatlined for most of 2012 compared with the previous
year. Given the reluctance of private-sector banks to extend new loans, the share of public-sector banks in the total stock of credit
rose significantly in 2012, reaching 47.6% compared with 43.5% in 2011. While the loan portfolios of private-sector and foreign
banks rose 7.5% in 2012, those of public-sector institutions rose 27.8%, in line with their goal of stimulating the economic
recovery.
In the same direction, in 2Q12 state-owned financial institutions began significantly cutting bank spreads to enable borrowers to
pay lower interest rates. Several private-sector institutions later followed suit, so that market rates fell to an all-time low. In
unearmarked lending operations, the average rate for loans to individuals fell to 33.9% p.a. in December 2102, compared with
39.7% a year earlier, while the rate for corporate loans fell to 17.9%, from 23.3% at end-2011.
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2.4.3. BALANCE OF PAYMENTS
In 2012 the current account of the balance of payments ended the year displaying a deficit of US$54.2 billion, or 2.40% of GDP,
compared with US$52.5 billion, or 2.12% of GDP, in 2011. This increase of 0.3 pp in proportion to GDP was mainly a reflection
of the contraction in GDP in dollar terms, which in turn was due to 17% depreciation of the average exchange rate in 2012.
Despite a smaller merchandise trade surplus in 2012 (US$19.4 billion, compared with US$29.8 billion in 2011), the currentaccount balance did not deteriorate significantly because the outflow of dollars in profit and dividend remittances fell 36.8%,
reflecting local currency depreciation as well as weaker domestic economic activity (factors that reduce corporate earnings in
dollar terms). The deficit in this account totaled US$24.1 billion in 2012, compared with US$38.2 billion in 2011. The deficit in
international travel amounted to US$15.6 billion, for practically no change in the year.
In the capital and financial account, foreign direct investment (FDI) amply surpassed the current-account deficit, totaling US$65.3
billion in the year (US$66.7 billion in 2011). Thus Brazil’s external deficit was mostly financed by long-term capital.
As noted above, the Brazilian Real (BRL) depreciated against the US Dollar (USD) in 2012. The year-end BRL/USD exchange
rate (sell) was 2.04, compared with 1.88 in January 2011. A comparison of the average exchange rates for the two years shows
that the 2012 average (1.95) devalued 17.0% compared with the 2011 average (1.67). In January-February the BRL appreciated
to 1.71 per USD, the lowest exchange rate for the year, depreciating until end-May and thereafter remaining relatively stable in
the range of 2.00.
This depreciation was induced by government rhetoric designed to devalue the currency in order to make Brazilian exports more
competitive, given the weak performance of domestic industry. In addition, the 6% financial transactions tax (IOF) paid by
corporations and banks on foreign borrowings was extended to external loans of up to 60 months, and in February the Central
Bank resumed intervention in the foreign-exchange market by buying spot dollars for the first time since September 2011.
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In May the inflow of foreign funds lost momentum and even turned negative for a few months. The weaker inflow of dollars led
the Finance Ministry to withdraw the tax measures introduced earlier to stem the strong inflow, including a reduction of the
maximum foreign loan maturity on which IOF was levied to 24 months in June and then again to 12 months in December.
When the exchange rate rose to about 2.10 in November in the context of high inflation, the Central Bank again intervened in
the foreign-exchange market, but this time by selling dollars to combat expectations of additional local currency depreciation.
The net inflow of foreign funds amounted to US$16.8 billion in 2012, falling sharply compared with 2011 (US$65.3 billion).
2.4.4. PUBLIC FINANCE
In 2012 the consolidated public-sector primary surplus totaled R$105.0 billion, or 2.4% of GDP, compared with 3.1% of GDP
in 2011. The result was less than the target of R$139 billion set in the 2012 Budget, obliging the government to subtract capital
expenditure for investment in infrastructure under the Growth Acceleration Program (PAC), as permitted by law, in order to
achieve the primary surplus target. The last time a similar situation had occurred was in 2010. The remainder of the target was
made up by redeeming R$12.4 billion (0.3% of GDP) from the Sovereign Wealth Fund (FSB) to bolster federal revenue in the last
month of the year.
Subtraction of PAC capex and the transfer of funds from the FSB illustrate the difficulty faced by the public sector in achieving the
primary surplus target in 2012, a year during which monthly tax collection was consistently disappointing because of weak economic
activity and rising expenditure, although much of the latter had been anticipated (mainly owing to the budgeted hike in the
minimum wage, to which state pensions and other social security benefits are indexed).
The nominal public-sector deficit (primary surplus plus interest expense) totaled R$108.9 billion, or 2.5% of GDP, down 0.14 pp
compared with the previous year. Despite the smaller primary surplus the nominal deficit did not deteriorate, thanks to the fall in
nominal interest rates. The downtrend in rates seen in the course of the year reflected the Central Bank’s policy of monetary easing
and lower inflation than in 2011 measured by the IPCA, to which the federal debt is partly indexed.
45
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Public-sector net debt (PSND) fell 1.3 pp to 35.2% of GDP in 2012. The contribution of the primary surplus to this fall was 2.4
pp of GDP, while the effect of nominal GDP growth contributed 2.1 pp. Other contributions to the fall came from 8.9% local
currency depreciation (1.3 pp of GDP), from parity adjustment to the basket of currencies comprised by net foreign debt (0.1 pp),
and from asset recognition (0.1 pp). On the other hand, nominal interest contributed positively to the PSND/GDP ratio to the
tune of 4.9 pp.
General government gross debt (federal government, INSS, state governments and municipal governments) reached 58.7% of
GDP at end-2012, up from 54.2% a year earlier. This rise mainly reflected a reduction in bank reserves due to the lowering of
reserve requirements and debt issuance to capitalize public-sector banks such as BNDES. The increase in international reserves
during the year also raised the level of gross debt, albeit less so than in previous years.
46
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SAFRA
GROUP
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The situation was unfavorable for
In accordance with its conservative
Total liquidity, considering cash and
financial institutions in Brazil in 2012
accounting policy the bank does not
cash equivalents as well as
owing to decelerating credit, rising
recognize deferred tax assets. The year-
unencumbered government securities
consumer loan delinquencies and high
end balance of these assets, mainly
considered highly liquid and held in the
debt-to-income ratios.
deriving from temporal differences in
bank’s own portfolio, amounted to
loan loss provision, totaled R$1.2 billion.
R$14.8 billion at end-2012. This was
If they had been booked, the BIS capital
equivalent to two times stockholders’
adequacy ratio would have risen to
equity, the same high ratio that has been
15.4%.
maintained since 2008.
its track record. Net income rose 2.1% in
Furthermore, Safra’s efficiency ratio
Assets under management totaled
the year to R$1.3 billion, and
improved in 2012, ending the year
R$94.7 billion at end-2012 (R$106.5
profitability measured by the return on
above the industry average on 36.8%
billion in December 2011).
average equity (ROAE) was once again
(50.0% in 2011). This improvement (the
in the range of 20%.
lower the efficiency ratio, the better)
Despite this combination of factors,
which affected both the supply and
demand for credit, Banco Safra’s
performance in 2012 was consistent with
Safra’s consolidated assets totaled
R$111.5 billion on December 31, 2012,
reflected prudent management and the
efficacy of its rigorous internal controls.
Even though it already has a large
depositor base and a diversified array
of funding instruments, the bank
unremittingly pursues improvements to
for growth of 30.1% compared with the
All other indicators continued to
position at end-2011 (R$85.7 billion).
improve as usual, evidencing the success
the quality of its sources of funding.
of Safra’s traditional conservatism in
During the year it took steps to enhance
credit and provisioning, and in
funding stability, focusing with particular
management of liquidity, which
emphasis on individual investors and
remained at high levels. In light of this
longer maturities by extending the use
The BIS capital adequacy ratio was
performance the top three rating
of bank bonds (letras financeiras), which
14%, comfortably above the 11%
agencies – FitchRatings, Moody’s and
totaled R$11.1 billion at end-2012
minimum set by the Central Bank of
Standard & Poor’s (S&P) – maintained
(R$5.3 billion in December 2011).
Brazil, with Tier I accounting for 9.9%.
their investment grade ratings in 2012.
These measures enhanced the efficiency
Safra was also highly rated by local
of liquidity management and thus
agencies RISKbank and Austin Rating.
assured greater security for clients.
Consolidated stockholders’ equity grew
20.5% year over year, reaching R$7.2
billion at end-2012.
Another highlight is the loyalty of its
50
Af-RelatIngles2012Parte01_RelatBco 7/26/13 4:16 PM Page 51
Another highlight is the loyalty of its customers and clients, about one-third of whom have maintained a relationship with the
bank for more than ten years, and almost 60% for more than five.
The investment funds managed by the group are also significant in size. Excluding the investments in funds of funds booked
under Banco Safra’s consolidated assets, these investment funds totaled R$35.2 billion at end-2012 (R$45.1 billion in
December 2011).
It is also important to note that in 2012 the bank recognized an after-tax profit of R$412 million from the appreciation of
securities classified as available for sale. This profit was booked directly to equity and did not affect net income in the period, in
compliance with the accounting rules for securities available for sale. Interest income before loan loss provision rose 11.7% year
over year to R$3.8 billion. Income from insurance and pensions operations rose 3.8%. Loan loss provision expense less the
cumulative value of loans written off totaled R$972 million in the year. Income from service charges and banking fees totaled
R$731 million.
CREDIT & SERVICES
Safra’s loan portfolio excluding guarantees grew 1.5% to R$48.9 billion in 2012 and accounted for a significant proportion of its
net income in the period. The loan portfolio including guarantees grew only 0.6% to R$57.3 billion, reflecting the Brazilian
economy’s low growth in 2012 and the fall in demand for credit associated with rising delinquency rates.
Loans more than 90 days past due corresponded to only 1.6% of the total portfolio in December 2012. This was one of the lowest
levels of non-performing loans in the industry, clearly evidencing the efficacy of the bank’s credit management practices and
technologies.
In conformity with its conservative credit strategy, Safra Group has a policy of not maintaining exposure to risk in the market, so
that every day Treasury seeks to match terms and rates for assets and liabilities using the various instruments available.
Credit facilities rated AA, A and B, the highest on the risk scale established by the Central Bank, accounted for 92.1% of the
portfolio and the balance of total loan loss provision corresponded to 3.4% of the portfolio at end-2012 (2.7% at end-2011).
The service sector accounted for the largest proportion of the total loan portfolio when broken down by branch of the private
sector, followed by commerce and industry. Credit operations continued to focus on corporate clients in accordance with the
bank’s tradition of supporting the productive sector.
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ASSET MANAGEMENT
HUMAN RESOURCES
CHALLENGES & OPPORTUNITIES
Safra Group is responsible for the
Banco Safra ended 2012 with 5,541
The Brazilian economy is expected to
management, administration and
employees, who among other benefits
grow faster in 2013, thanks largely to
distribution of investment funds,
receive first-class medical and dental
lower real interest rates and a gradual
including the funds administered by
care, school and daycare allowances,
improvement in the nation’s logistics
JS Administração de Recursos S.A.
food baskets, and access to a wide array
infrastructure.
of cultural and social activities organized
Assets under management by Safra Asset
by their association.
Brazilian government’s infrastructure
Management totaled R$35.2 billion at
end-2012, comprising R$23.7 billion in
Payroll expense including taxes,
investment plan with a budget of R$235
financial investment funds, R$8.6 million
charges, contributions and benefits
billion, including roads, railroads, ports,
in other investment funds, and R$2.9
totaled R$1.0 billion in 2012. The social
airports and a bullet train, as well as
billion in pension funds. Including
benefits extended to employees and their
electricity, oil and gas.
R$19.1 billion in funds of funds and
dependants amounted to R$79 million.
R$3.7 billion in consolidated exclusive
The highlight among these was
funds, the total value of all funds
investment in employee training and
amounted to R$58.0 billion.
professional development programs.
Face-to-face and distance courses
In 2012 Banco Safra again ranked
involved 19,000 participations and
among the leading financial institutions
78,000 training hours in 2012.
accredited to act as onlending agents for
BNDES, the national development bank,
The main programs comprised training
with aggregate onlending to the
for sales teams, administrative staff and
productive sector reaching R$8.6 billion
operations support personnel (back
in the year.
office), and preparatory or refresher
courses for mandatory certification
(Anbima CPA 10 and CPA 20),
Anbima’s CGA Fund Manager
Certification Program and the PQO
Operational Qualification Program.
Safra also maintained its emphasis on
support for staff pursuing university
degrees, including MBAs and graduate
qualifications, and for the training and
inclusion of persons with special needs
(PSN) in partnership with the Brazilian
Federation of Banks (Febraban).
54
In this context it is important to note the
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BANCO SAFRA S.A. &
SAFRA CONSOLIDATED
FINANCIAL
STATEMENTS
BALANCE SHEET
PAGE 58
STATEMENT OF INCOME
PAGE 62
STATEMENT OF CHANGES IN EQUITY
PAGE 63
STATEMENT OF VALUE ADDED
PAGE 64
STATEMENT OF CASH FLOWS
PAGE 65
NOTES TO THE FINANCIAL STATEMENTS
PAGE 66
SUMMARY OF AUDIT COMMITTEE’S REPORT
PAGE 120
REPORT OF INDEPENDENT AUDITORS
PAGE 121
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
BALANCE SHEET
AS OF DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
BANCO SAFRA S.A.
Notes
SAFRA CONSOLIDATED
12.31.2012
12.31.2011
12.31.2012
12.31.2011
63,365,077
55,577,174
72,153,036
61,862,223
301,797
246,604
411,090
380,224
3(c) e 4 e 5
20,290,174
18,804,366
699,371
786,437
20,279,323
18,111,372
1,441,219
726,732
20,627,745
18,805,831
972,129
849,785
20,291,328
18,111,372
1,441,219
738,737
3(d) e 6
10,165,209
3,195,725
6,421,235
434,586
22
113,641
3,342,051
2,498,438
–
80,873
188,582
574,158
13,398,440
6,321,916
6,421,235
302,425
22
127,169
4,163,828
3,117,946
–
42,997
188,582
606,765
225,673
207,538
ASSETS
CURRENT ASSETS
Cash
Interbank investments
Money market investments
Interbank deposits
Foreign currency investments
Securities and derivative financial
instruments
Own portfolio
Subject to repurchase agreements
Derivative financial instruments
Restricted deposits – Brazilian Central Bank
Linked to guarantees
Securities pledged in guarantee of
technical reserves
Interbank and interdepartmental accounts
Deposits – Brazilian Central Bank
Internal transfers of funds and other
Credit operations
Credit operations
(Allowance for loan losses)
Other receivables
Foreign exchange portfolio
Negotiation and intermediation of securities
Sundry
Other assets – prepaid expenses
(continued)
58
3(b) e 4
3(e) e 7
11(b)
–
–
13(a)
794,136
722,985
71,151
4,508,665
4,449,927
58,738
1,249,455
1,178,292
71,163
5,452,851
5,394,015
58,836
26,153,035
26,467,289
(314,254)
26,282,451
26,693,438
(410,987)
30,290,853
30,671,926
(381,073)
30,101,345
30,662,771
(561,426)
5,632,524
5,211,354
73,172
347,998
912,830
504,567
514
407,749
6,081,780
5,211,354
333,703
536,723
1,372,317
504,567
56,419
811,331
28,202
5,250
93,673
100,330
3(g) e 8
9
13(b)
13(c)
3(i)
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:45 AM Page 59
BANCO SAFRA S.A.
Notes
SAFRA CONSOLIDATED
12.31.2012
12.31.2011
12.31.2012
12.31.2011
NON-CURRENT ASSETS
46,888,742
37,136,747
39,299,279
23,794,403
LONG-TERM RECEIVABLES
43,380,570
33,708,907
38,966,627
23,234,520
3(c) e 4 e 5
1,290,850
1,290,850
1,243,441
1,243,441
1,290,850
1,290,850
1,243,441
1,243,441
3(d) e 6
29,301,561
4,022,741
23,620,832
438,669
278,817
940,502
19,348,724
2,132,921
16,634,394
480,961
–
100,448
20,089,498
4,450,159
11,380,445
193,815
278,817
961,622
4,739,301
1,982,731
–
357,068
–
100,448
11(b)
–
–
2,824,640
2,299,054
Credit operations
Credit operations
(Allowance for loan losses)
3(g) e 8
12,235,729
13,162,158
(926,429)
12,708,503
13,156,365
(447,862)
16,877,710
18,179,389
(1,301,679)
16,722,331
17,478,988
(756,657)
Other sundry receivables
13(c)
530,800
399,701
686,720
520,689
3(i)
21,630
8,538
21,849
8,758
3,403,891
3,213,686
190,205
3,341,988
3,020,889
321,099
192,649
–
192,649
323,515
–
323,515
Interbank investments
Interbank deposits
Securities and derivative financial
instruments
Own portfolio
Subject to repurchase agreements
Derivative financial instruments
Restricted deposits – Brazilian Central Bank
Linked to guarantees
Securities pledged in guarantee of technical
reserves
Other assets
3(e) e 7
Investments
3(j) e 15(a) (b)
Equity in the results of associates and subsidiaries:
Other investments
Property and equipment in use
Property
Other property and equipment assets in use
(Accumulated depreciation)
3(k) e 16
63,440
–
152,050
(88,610)
61,043
–
140,772
(79,729)
94,898
–
280,645
(185,747)
207,381
231,158
262,433
(286,210)
Intangible assets
Intangible assets
(Accumulated amortization)
3(l) e 16
40.841
74,746
(33,905)
24.809
47,527
(22,718)
45.105
80,067
(34,962)
28.987
52,492
(23,505)
110,253,819
92,713,921
111,452,315
TOTAL ASSETS
85,656,626
The accompanying notes are an integral part of these financial statements.
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
BALANCE SHEET
AS OF DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
BANCO SAFRA S.A.
Notes
SAFRA CONSOLIDATED
12.31.2012
12.31.2011
12.31.2012
12.31.2011
81,877,354
64,837,776
77,843,168
54,478,444
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Deposits
Demand deposits
Savings deposits
Interbank deposits
Time deposits
3(n) e 10(a)
16,087,466
955,669
1,346,916
8,627,105
5,157,776
26,285,368
811,639
1,207,831
14,249,354
10,016,544
10,867,459
936,365
1,346,916
3,898,125
4,686,053
15,240,480
809,667
1,207,831
3,344,638
9,878,344
Money market funding
Own portfolio
Third party portfolio
Unrestricted portfolio
3(n) e 10(b)
42,555,184
27,865,743
12,441,023
2,248,418
23,458,839
12,754,047
10,704,792
–
42,191,095
27,865,743
12,076,934
2,248,418
23,366,830
12,754,047
10,612,783
–
3(n) e 10(c)
7,872,754
2,667,480
7,429,980
2,667,479
6,979,150
893,604
2,533,964
133,516
6,979,150
450,830
2,533,964
133,515
217,774
210,399
7,375
251,673
248,925
2,748
213,548
210,399
3,149
250,529
248,925
1,604
3(n) e 10(d)
6,229,113
3,572,246
919
2,517,470
138,478
7,781,227
4,653,908
17,252
3,110,067
–
7,146,996
3,572,246
919
3,435,353
138,478
8,036,913
4,634,639
17,252
3,385,022
–
3(e) e 7
2,933,142
3,109,242
3,039,629
2,831,845
9
17(b)
14(c)
3(o) e 11(c)
13(b)
13(d)
5,981,921
9,914
5,162,728
10,463
380,190
–
11,620
407,006
1,283,947
16,740
373,449
9,708
448,114
–
20,688
415,248
6,954,461
12,015
5,162,728
10,463
696,456
234,047
272,910
565,842
2,084,368
20,263
373,449
9,712
722,611
215,280
75,512
667,541
Funds from acceptance and issuance
of securities
Funds from financial bills, bills of credit
and similar notes
Securities issued abroad
Interbank and interdepartmental accounts
Third-party funds in transit
Internal transfers of funds
Borrowings and onlendings
Foreign borrowings
Transfer of financial assets
Domestic onlendings
Lending of shares
Derivative financial instruments
Other obligations
Collected taxes and other
Foreign exchange portfolio
Social and statutory
Taxes and social security contributions
Technical reserves – insurance and pension plan
Negotiation and intermediation of securities
Sundry
(continued)
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BANCO SAFRA S.A.
Notes
SAFRA CONSOLIDATED
12.31.2012
12.31.2011
12.31.2012
12.31.2011
NON-CURRENT LIABILITIES
21,129,705
21,860,486
26,362,387
25,162,523
LONG-TERM LIABILITIES
21,103,237
21,822,117
26,335,919
25,124,154
Deposits
Interbank deposits
Time deposits
3(n) e 10(a)
770,300
195,899
574,401
1,260,220
127,340
1,132,880
1,091,317
195,899
895,418
1,260,220
127,340
1,132,880
Money market funding – Own portfolio
3(n) e 10(b)
2,037,302
3,937,560
2,037,302
3,937,560
3(n) e 10(c)
9,306,036
7,863,820
9,377,145
7,511,019
6,933,579
2,372,457
4,540,969
3,322,851
7,004,688
2,372,457
4,643,295
2,867,724
3(n) e 10(d)
3,119,571
37,119
–
3,082,452
4,643,692
107,376
1,232
4,535,084
5,198,858
37,119
–
5,161,739
5,018,110
126,645
1,232
4,890,233
3(e) e 7
1,375,234
272,262
885,216
439,547
14(c)
3(o) e 11(c)
3(n) e 10(e)
13(d)
4,494,794
1,470,345
–
2,657,265
367,184
3,844,563
1,389,220
–
2,120,428
334,915
7,746,081
1,845,149
2,824,640
2,657,265
419,027
6,957,698
2,156,996
2,299,054
2,120,428
381,220
Funds from acceptance and issuance
of securities
Funds from financial bills, bills of credit
and similar notes
Securities issued abroad
Borrowings and onlendings
Foreign borrowings
Transfer of financial assets
Domestic onlendings
Derivative financial instruments
Other obligations
Taxes and social security contributions
Technical reserves – insurance and pension plan
Subordinated debt
Sundry
DEFERRED INCOME
3(r)
26,468
38,369
26,468
38,369
EQUITY
Capital
Revenue reserves
Carrying value adjustments
17
7,246,760
4,219,440
2,604,150
423,170
6,015,659
3,980,315
2,024,647
10,697
7,246,760
4,219,440
2,604,150
423,170
6,015,659
3,980,315
2,024,647
10,697
110,253,819
92,713,921
111,452,315
85,656,626
TOTAL LIABILITIES AND EQUITY
The accompanying notes are an integral part of these financial statements.
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
STATEMENT OF INCOME
FOR THE PERIODS ENDED DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
BANCO SAFRA S.A.
Notes
2nd six-month
period of 2012
2012
2011
9,014,087
4,877,968
3,882,819
10,414,598
4,798,505
5,296,167
9,629,288 10,207,841
6,238,641 5,997,098
2,859,208 3,650,952
–
–
9,239
60,849
42,037
189,287
1,483
3,164
(2,627,088) (5,974,496)
(149,182)
(186,829)
(2,239,301) (5,261,024)
(207,769)
(455,354)
–
–
(387)
(1,570)
(30,449)
(69,719)
–
55,683
264,243
–
(7,757,169)
(77,908)
(7,215,746)
(454,755)
–
(8,760)
–
236,031
189,387
60,849
55,683
229,956
314,721
4,603
–
(5,826,433) (6,795,560)
(395,454) (205,052)
(4,537,284) (5,922,872)
(580,353) (484,473)
(222,693) (174,403)
(1,570)
(8,760)
(89,079)
–
1,581,296
3,039,591
2,657,429
3,802,855 3,412,281
(490,039)
(539,750)
49,711
(761,977)
(850,335)
88,358
544,426
(511,203)
1,055,629
(971,985) 150,603
(1,093,397) (919,047)
121,412 1,069,650
1,091,257
(184,813)
160,329
73,426
(509,627)
(273,074)
(104,595)
2,277,614
(642,805)
322,247
158,806
(968,224)
(539,598)
(206,763)
3,201,855
(1,421,801)
439,019
118,782
(1,007,782)
(527,294)
(219,439)
2,830,870 3,562,884
(911,560) (1,517,379)
523,309
506,376
207,863
214,049
(1,143,545) (1,188,850)
(585,737) (571,874)
(269,298) (281,633)
455,570
–
14,360
(1,202)
906,444
31
906,475
499,817
–
132,108
(41,198)
1,634,809
57
1,634,866
56,563
–
46,291
(327,941)
1,780,054
3,242
1,783,296
–
(283)
102,152
98,413
310,814
60,923
(57,118) (354,500)
1,919,310 2,045,505
251
3,190
1,919,561 2,048,695
(222,252)
(353,889)
684,223 1,280,977
0.45
0.85
(528,851)
1,254,445
0.81
(638,584) (794,250)
1,280,977 1,254,445
0.85
0.81
STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIODS ENDED DECEMBER 31
PROFIT FOR THE PERIOD
684,223
1,280,977 1,254,445
Carrying value adjustments
644,105
721,563
17,726
Taxes
(274,437)
(309,090)
(6,784)
COMPREHENSIVE INCOME
1,053,891
1,693,450 1,265,387
1,280,977 1,254,445
721,563
17,726
(309,090)
(6,784)
1,693,450 1,265,387
INCOME FROM FINANCIAL INTERMEDIATION
Credit operations
Result from transactions with marketable securities
Receitas financeiras das operações com
Financial income from insurance and pension
plan operations
11(d)
Foreign exchange transactions
9
Compulsory investments
13(a)
Other financial income
EXPENSES ON FINANCIAL INTERMEDIATION
Result from derivative financial instruments
Funds obtained in the market
Borrowings and onlendings
Financial expenses with pension plan funds
11(d)
Financial assets sale or transfer operations
Other finance costs
12(c-I e II)
GROSS PROFIT ON FINANCIAL
INTERMEDIATION BEFORE THE
ALLOWANCE FOR LOAN LOSSES
RESULT FROM ALLOWANCE
FOR LOAN LOSSES
Allowance for loan losses
3(g) e 8(b)
Recovery of credits written off
3(g) e 8(c)
GROSS PROFIT ON FINANCIAL
INTERMEDIATION
OTHER OPERATING INCOME (EXPENSES)
Income from services rendered
13(e)
Income from bank fees
13(f)
Personnel expenses
13(g)
Administrative expenses
13(h)
Tax expenses
14(a-II)
Equity in the earnings of subsidiary
and associated companies
15(a)
Result from insurance and pension plan
3(o) e 11(d)
Other operating income
13(i)
Other operating expenses
13(j)
OPERATING PROFIT
NON-OPERATING PROFIT
PROFIT BEFORE TAXATION
INCOME TAX AND SOCIAL
CONTRIBUTION ON NET INCOME
3(q) e 14(a-I)
PROFIT FOR THE PERIOD
Earnings per shares in R$ (Note 3(a))
4,208,384
2,301,717
1,853,908
The accompanying notes are an integral part of these financial statements.
62
SAFRA CONSOLIDATED
Years
2012
2011
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODS ENDED DECEMBER 31, 2012 AND 2011 (NOTE 17)
(ALL AMOUNTS IN THOUSANDS OF REAIS)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
Paid-up
capital
AT JANUARY 1, 2011
Capital
reserves
Revenue
reserves
Retained
Carrying
earnings
value
(accumulated
adjustments
deficit)
2,245,458
72,723
3,295,806
Capital increase – merger of reserves
1,825,510
Merger of reserves
1,257,195
Interest on capital and kind
568,315
Capital decrease – disposal of investment
(90,653)
Reverse share split
–
Carrying value adjustments – available-for-sale securities
–
Interest on capital
–
Profit for the period
–
Allocation:
Legal reserve
–
Special reserve
–
Interest on capital
–
Dividends
–
(72,723)
(72,723)
–
–
–
–
–
–
(1,184,472)
(1,184,472)
–
–
(7,528)
–
(340,065)
–
–
–
–
–
62,723
863,183
–
(665,000)
–
–
–
–
AT DECEMBER 31, 2011
3,980,315
Capital increase – merger of reserves
350,000
Capital decrease – disposal of investment
(110,875)
Carrying value adjustments – available-for-sale securities
–
Profit for the period
–
Appropriation:
Legal reserve
–
Special reserve
–
Interest on capital
–
Dividends
–
–
–
–
–
–
2,024,647
(350,000)
–
–
–
10,697
–
–
412,473
–
–
–
–
–
64,049
865,454
–
–
AT DECEMBER 31, 2012
4,219,440
–
AT JULY 1, 2012
4,219,440
Carrying value adjustments – available-for-sale securities
–
Profit for the period
–
Allocation:
Legal reserve
–
Special reserve
–
Interest on capital
–
Dividends
–
AT DECEMBER 31, 2012
4,219,440
(245)
–
–
–
–
–
10,942
–
–
–
Total
5,613,742
–
–
–
–
–
–
–
1,254,445
568,315
–
568,315
(90,653)
(7,528)
10,942
(340,065)
1,254,445
(62,723)
(863,183)
(328,539)
–
–
–
(328,539)
(665,000)
–
–
–
–
1,280,977
6,015,659
–
(110,875)
412,473
1,280,977
–
–
–
–
(64,049)
(865,454)
(346,756)
(4,718)
–
–
(346,756)
(4,718)
2,604,150
423,170
–
7,246,760
–
–
–
2,094,958
–
–
53,502
369,668
–
–
–
684,223
6,367,900
369,668
684,223
–
–
–
–
34,211
474,981
–
–
–
–
–
–
(34,211)
(474,981)
(170,313)
(4,718)
–
–
(170,313)
(4,718)
–
2,604,150
423,170
–
7,246,760
The accompanying notes are an integral part of these financial statements.
63
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
STATEMENT OF VALUE ADDED
FOR THE PERIODS ENDED DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
BANCO SAFRA S.A.
2012
SAFRA CONSOLIDATED
2012
2011
Income
Financial operations
Banking services and income from bank fees
Result from allowance for loan losses
Result from insurance and pension plan
Other operating income and non-operating income
8,865,328
9,014,087
481,053
(761,977)
–
132,165
11,566,358
10,414,598
557,801
544,426
–
49,533
9,801,692
9,629,288
731,172
(971,985)
102,152
311,065
11,241,395
10,207,841
720,425
150,603
98,413
64,113
Expenses
Financial operations
Other operating expenses
(6,015,694)
(5,974,496)
(41,198)
(8,085,110)
(7,757,169)
(327,941)
(5,883,551)
(5,826,433)
(57,118)
(7,150,060)
(6,795,560)
(354,500)
Expenses from acquired inputs
Facilities
Data processing and telecommunications
Third party services
Financial system services
Surveillance services, security and transport
Legal and notary fees
Other
(416,987)
(29,930)
(36,793)
(64,868)
(37,996)
(13,657)
(72,076)
(161,667)
(411,051)
(25,837)
(43,691)
(70,032)
(35,207)
(33,258)
(82,921)
(120,105)
(461,226)
(31,659)
(40,021)
(77,037)
(40,658)
(14,137)
(96,582)
(161,132)
(488,160)
(27,513)
(52,539)
(88,911)
(37,500)
(34,205)
(113,042)
(134,450)
Gross value added
Retentions – depreciation and amortization
2,432,647
(25,505)
3,070,197
(18,599)
3,456,915
(34,527)
3,603,175
(38,030)
Net value added generated by the Company
Value added received through transfer – Equity in the
earnings of subsidiary and associated companies
2,407,142
3,051,598
3,422,388
3,565,145
499,817
56,563
Total value added to distribute
2,906,959
3,108,161
3,422,388
3,564,862
Distribution of value added
Personnel
Remuneration and profit sharing
Benefits
Government Severance Indemnity Fund for Employees (FGTS)
Labor contingencies
Other
2,906,959
968,223
746,932
72,837
34,467
88,883
25,104
3,108,161
885,056
623,054
76,782
41,069
131,188
12,963
3,422,388
1,143,544
899,391
78,750
39,312
97,950
28,141
3,564,862
1,042,676
762,610
77,819
46,454
141,236
14,557
560,653
523,168
373
37,112
871,016
845,049
432
25,535
907,883
860,363
423
47,097
1,222,057
1,186,390
455
35,212
97,106
97,644
89,984
45,684
1,280,977
351,474
929,503
1,254,445
714,281
540,164
1,280,977
351,474
929,503
1,254,445
714,281
540,164
Taxes and contributions
Federal
State
Municipal
Remuneration on third parties' capital – rentals
Remuneration on own capital
Interest on capital
Profit reinvested in the period
The accompanying notes are an integral part of these financial statements.
64
2011
–
(283)
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED DECEMBER 31, 2012 AND 2011 (NOTES 3 (B) AND 4)
(ALL AMOUNTS IN THOUSANDS OF REAIS)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
BANCO SAFRA S.A.
2012
CASH FLOWS FROM OPERATING ACTIVITIES
ADJUSTED PROFIT
1,970,894
Profit for the period
1,280,977
Adjustments to profit:
Depreciation and amortization
25,505
Allowance for loan losses
850,335
Equity in the earnings of subsidiary and associated companies
(499,817)
Adjustment to market value of trading securities, derivative
financial instruments and hedge
(72,426)
Provisions for civil, labor and other contingencies
54,027
Provisions for legal, tax and social security obligations
(67,217)
Interest on subordinated debt
45,621
Provision for current and deferred income taxes
353,889
CHANGES IN ASSETS AND LIABILITIES
2,660,659
(Increase) in interbank investments
(3,399,850)
(Increase) decrease in securities – for trading
(8,108,729)
(Increase) decrease in derivative financial instruments (assets/liabilities)
679,698
(Increase) decrease in interbank and interdepartmental
accounts (assets/liabilities)
3,680,630
(Increase) in credit operations
(248,145)
(Increase) decrease in other receivables
(71,348)
(Increase) decrease in other assets
(22,952)
Increase (decrease) in deposits
(10,687,822)
Increase (decrease) in open market funding
17,196,087
Increase (decrease) in entity's own securities
(4,388,785)
Increase (decrease) in government securities
21,584,872
Increase (decrease) in borrowings and onlendings
(3,076,235)
Increase in funds from acceptance and issuance of securities
6,913,751
Increase (decrease) in foreign exchange portfolio (assets/liabilities)
82,492
Increase (decrease) in negotiation and intermediation of amounts
(assets/liabilities)
(81,726)
Increase (decrease) in collected taxes and other
(6,826)
Increase (decrease) in technical reserves – insurance and pension plan operations
–
Increase in other payables
311,925
Taxes paid
(500,291)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 4,631,553
CASH FLOWS FROM INVESTING ACTIVITIES
Dividends received
207,467
Available-for-sale securities
(7,569,760)
Acquisitions
(17,922,416)
Sales
10,352,656
Securities held to maturity
(303,257)
Acquisitions
(303,257)
Redemptions
–
Purchase of property and equipment in use
(16,997)
Sale of property and equipment in use
1,619
Acquisition of assets not for use
(13,092)
Acquisition of investments
(10,466)
Sale of investments
131,302
Increase in intangible assets
(28,556)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (7,601,740)
CASH FLOWS FROM FINANCING ACTIVITIES
Capital reduction
–
Securities issued abroad
(329,701)
Subordinated debt
364,965
Interest on capital and dividends paid
(351,474)
NET CASH PROVIDED BY FINANCING ACTIVITIES
(316,210)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(3,286,397)
Cash and cash equivalents at the beginning of the period
8,670,664
Cash and cash equivalents at the end of the period
5,384,267
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(3,286,397)
SAFRA CONSOLIDATED
2011
2012
2011
2,310,411
1,254,445
2,953,803
1,280,977
3,436,129
1,254,445
18,599
511,203
(56,563)
34,527
1,093,397
–
38,030
919,047
283
(407,695)
111,611
307,260
42,700
528,851
129,264
(1,107,436)
1,016,390
(938,696)
26,277
59,297
(224,877)
45,621
638,584
6,266,491
(3,375,518)
(12,099,585)
553,502
(135,418)
133,521
389,271
42,700
794,250
(5,805,859)
(1,399,426)
2,360,927
(1,079,808)
(3,010,968)
(9,280,280)
299,119
7,693
5,346,738
(525,605)
545,736
(1,071,341)
2,800,554
5,917,210
(241,844)
4,166,415
(1,438,284)
108,577
6,657
(4,541,924)
16,924,007
(4,388,785)
21,312,792
(709,169)
6,892,898
82,492
(3,963,469)
(11,181,349)
(304,565)
(71,159)
1,933,472
(599,807)
545,736
(1,145,543)
2,739,934
5,747,672
(241,844)
22,136
3,146
–
70,327
(249,220)
2,439,675
(79,886)
(8,248)
544,353
(259,505)
(500,291)
9,220,294
20,479
3,898
557,901
301,795
(630,510)
(2,369,730)
456,432
(1,327,375)
(3,142,736)
1,815,361
(64,682)
(74,376)
9,694
(19,216)
–
(5,965)
(600,000)
131,304
(17,192)
–
(12,804,933)
(18,569,459)
5,764,526
275,992
(438,257)
714,249
(21,314)
1,808
(13,092)
(436)
131,302
(29,531)
–
62,340
(42,990)
105,330
(278,275)
(324,813)
46,538
(13,805)
–
(5,965)
(1,925)
134,407
(18,739)
(1,446,694)
(12,460,204)
(121,962)
(5,024)
1,298,889
821,272
(765,289)
1,349,848
2,342,829
6,327,835
8,670,664
2,342,829
–
(329,701)
364,965
(351,474)
(316,210)
(3,556,120)
9,411,583
5,855,463
(3,556,120)
(5,024)
1,298,889
821,272
(765,289)
1,349,848
(1,141,844)
10,553,427
9,411,583
(1,141,844)
The accompanying notes are an integral part of these financial statements.
65
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
1. OPERATIONS
Banco Safra S.A. and its subsidiaries are engaged in asset,
liability and accessory operations inherent in the related
authorized lines of business (commercial, including foreign
exchange, housing loans, credit, financing and investment,
and commercial leasing), and complementary activities among
which are insurance operations, pension fund, brokerage
and distribution of securities, management of credit cards
and investment funds, and managed portfolios, in accordance
with current legislation and regulations.
2. PRESENTATION OF THE FINANCIAL
STATEMENTS
a) Presentation of the Financial Statements
The financial statements of Banco Safra S.A. and its
subsidiaries ("Consolidated") have been prepared and are
presented in conformity with accounting practices adopted
in Brazil, applicable to institutions authorized to operate
by the Brazilian Central Bank (BACEN), and in compliance
with Brazilian Corporate Law, and reflect the changes
introduced by Laws 11,638/2007 and 11,941/2009, and the
standards and instructions of the National Monetary Council
(CMN), the Brazilian Securities Commission (CVM), and the
Superintendence of Private Insurances (SUSEP), as applicable.
The financial statements have been prepared considering
leasing operations under the financial method. Thus, the
financial result of these transactions is presented together with
the credit operations in the Statement of income.
The advances on foreign exchange contracts are presented
in conjunction with the foreign exchange portfolio for credit
operations. The presentation of foreign exchange gains and
losses is adjusted so that income and expenses represent only
the changes and differences in exchange rates applied to the
foreign currency amounts.
The consolidated financial statements for Banco Safra S.A.
were approved by the Board of Directors on 1/31/2013.
b) Consolidation
The Balance sheet accounts and the income and expenses
between the parent and subsidiary companies, as well as the
unrealized profits between the consolidated companies, were
eliminated on consolidation. The Exclusive investment funds
of consolidated companies are consolidated. The securities
and investments included in the portfolios of these funds
are classified by transactions and were distributed into types
of Notes, in the same categories on which they were
originally allocated.
The figures of the Cayman Islands agent consolidated in the
financial statements of the Bank and its balances, excluding
the amounts of transactions with the parent company,
converted at the exchange rate prevailing on December 31 are:
Assets R$ 7,509,664 (R$ $7,051.645 on 31.12.2011), Liabilities
R$ 7,200,635 (R$ 7,193,260 on 31.12.2011) and equity
of R$ 1,624,645 (R$ 934,771 on 31.12.2011). Net income
for the six months ended December 31 was R$ 94,644
(R$ 87,049 in 2011).
The consolidated financial statements include Banco Safra and
its subsidiaries shown below, including the exclusive investment
funds consolidated on a proportional basis, highlighting:
PARTICIPATION (%)
12.31.2012
12.31.2011
Banco Safra (Cayman Islands) Limited (1)
J. Safra Corretora de Valores e Câmbio Ltda.
Safra Asset Management Ltda. (2)
Safra Leasing S.A. – Arrendamento Mercantil
Banco J. Safra S.A.
J. Safra Participações Ltda. (3)
Sercom Comércio e Serviços Ltda.
Safra Vida e Previdência S.A.
Safra Seguros Gerais S.A.
100.00
100.00
100.00
100.00
100.00
–
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
90.98
100.00
99.98
100.00
(1) Entities based abroad. (2) Formerly Safra Distribuidora de Títulos e Valores Mobiliários Ltda. (3)Formerly Safra Cia. Securitizadora de Créditos
Imobiliários. This investment, consolidated on a proportional basis at 12.31.2011, was transferred to the controlling stockholder on 4.11.2012, due
to the capital decrease of Banco Safra (Note 17(a)).
66
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:46 AM Page 67
c) Reclassifications for comparative purposes
In the balance sheet, advance payments on foreign exchange
These being:
• Operating activities are the main income generating
contracts in leasing operations, previously classified as
activities of the entity that are neither investing nor
Obligations for purchase of foreign currency (liabilities),
financing activities. Included in this section are the
started to be reclassified as foreign currency exchange
funding activities that are carried out for the purposes
purchases pending settlement (assets). The amount involved
of financial intermediation and other operational activities
was R$ 1,210,396. We highlight that the above reclassifications
that are typical of a financial institution;
did not give rise to alteration in profit, equity position, or the
earnings per share.
• Investing activities are those related to the buying and
selling of long-term assets and other investments not
included as cash equivalents, such as available-for-sale
3. SIGNIFICANT ACCOUNTING PRACTICES
a) Determination of results
and held-to-maturity investments; and
• Financing activities are those that result in changes
Profit is determined on the accrual basis of accounting, which
to the size and composition of the entity's and third
establishes that it should be included in the results of operations
parties' capital. Included in this section are structured
for the period in which they occur, simultaneously when they
funding activities aimed at raising resources to finance
are correlated, regardless of receipt or payment.
the Entity itself.
The earnings per share for the period ended 12.31.2012 were
Cash flows from operating activities are presented using
calculated based on the number of shares issued at the base
the indirect method. Cash flows from investing and financing
date (1,513,299,608). For comparability purposes, the earnings
activities are presented based on gross payments and receivables.
per share for 12.31.2011 (1,539,217,345) were calculated based
on the equivalent amount of shares, taking into consideration
c) Interbank investments
the adjustment related to the change in shares during the
These are stated at cost plus, when applicable, accrued income
period, which did not change the equity amount.
and monetary and foreign exchange rate variations up to the
b) Cash flow
I - Cash and cash equivalents: represented by cash and
Balance sheet date, on a pro rata basis.
d) Securities
deposits held at call with financial institutions, recorded in
In accordance with Brazilian Central Bank (BACEN) Circular
line item 'Cash', interbank deposits, units in investment
3,068/2001, securities are classified according to management's
funds, and fixed interest investments retrievable within 90
intention into three specific categories:
days, with an immaterial risk of market value variation.
'Cash equivalents' are amounts held for the purpose of
settling short term cash obligations and not for investment
or other purposes.
II - Cash flow statement: prepared in line with the criteria set
out in Accounting Standard CPC 03 – Cash flow
statements, approved by CMN Resolution 3,604/2008.
This standard foresees the cash flow statements being
made up of amounts used for operating, investing, and
financing purposes.
• Trading securities: securities acquired to be actively and
frequently traded. The securities are stated in current
assets, regardless of their maturities and adjusted to market
against income for the period;
• Available-for-sale: securities that can be traded but are not
acquired to be actively and frequently traded or held to
maturity. The income earned is recognized in the
Statement of income, and unrealized gains and losses
arising from market value fluctuations are recognized in a
specific account in equity, net of taxes;
67
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:46 AM Page 68
BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
• Held-to-maturity: securities which the Bank has the
models developed by management and include gathering of
intention and financial capacity to hold in portfolio up
average prices practiced in the market, applicable at the
to their maturity. These securities are stated at cost, plus
Balance sheet date. Accordingly, when these items are
income accrued.
financially settled, actual results may differ from estimates.
The reconsideration of how securities are categorized occurs
at the point of preparation of the half-year statements, taking
into consideration their intended use and financial capacity,
in accordance with procedures established by BACEN Circular
3,068/2001.
e) Derivative financial instruments
Derivative financial instruments used to hedge exposures to
g) Credit operations and allowance for loan losses
These are recorded at present value based on the index and
contractual interest rate, on a pro rata basis, calculated up to
the Balance sheet date. The revenues related to transactions
that are delayed for 60 days or more are recognized in the
statement of income only when received, regardless of their risk
level classification.
risks through the change of certain characteristics of the
The Bank records monthly allowances for loan losses in
financial assets and liabilities hedged that are considered highly
conformity with the minimum provisioning levels established
effective and follow all the requirements of designation and
by CMN Resolution 2,682/1999, which requires the
documentation under BACEN Circular 3,082/2002 are
classification of transactions in nine risk levels, from "AA"
classified as accounting hedges according to their nature:
(minimum risk) to "H" (maximum risk), and also based on an
• Market risk hedge – hedged financial assets or liabilities
and the related derivative financial instruments are
recorded at market value, with the related gains or losses
recognized in the Statement of income; and
• Cash flow hedge – hedged financial assets or financial
liabilities and the related derivative financial instruments
are recorded at market value, with the related gains
or losses, net of taxes, recognized in a specific account
of equity entitled "Carrying value adjustments". The noneffective hedge portion is recognized directly in the
Statement of income.
analysis of the risks involved in the realization of the
receivables, periodically performed and reviewed by
management, which considers, among others, the historical
experience with borrowers, the economic scenario and global
and specific portfolio risks.
For the purposes of presentation in the notes, lending operations
and their respective allowances are classified in two groups:
i) Normal course and general allowance for loan losses – transactions
without delay and/or with installments overdue up to 14 days,
and ii) Normal course and specific allowance for loan losses –
transactions with installments overdue for more than 14 days.
The transactions classified in level "H" are written off against
Derivative financial instruments contracted at the request of
assets after six months from their classification in this level, and
third parties or on own behalf that fail to meet the accounting
then are controlled in a memorandum account for at least five
hedge criteria established by the Brazilian Central Bank,
years and while all collection procedures are not exhausted.
especially derivative financial instruments used to manage
overall risk exposure, are recorded at market value, with gains
and losses recognized directly in income.
Renegotiated transactions remain at least at the same risk level
in which they were classified. Renegotiated transactions that
had already been written off are rated in risk level H, and any
68
f) Market value measurement
income from the renegotiation is only recognized when actually
The market value measurement methodology (probable
received. When a significant amount is paid or new material
realizable value) of securities and derivative financial
events justify changing a transaction's risk level, the transaction
instruments is based on the economic scenario and pricing
may be reclassified to a lower risk rating.
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:46 AM Page 69
h) Derecognition of financial instruments
In accordance with CMN Resolution 3,533/2008, financial
assets are derecognized when the contractual rights to the cash
flows from these assets expire, or when substantially all the risks
and rewards of ownership of the instrument are transferred.
When substantially all the risks and rewards are not transferred
nor retained, Safra assesses the instrument control in order to
determine its maintenance or not in assets.
on the economic useful lives of assets, as follows: properties
in use – 4%; communication and security systems, facilities,
aircraft, and furniture and fixtures – 10%; and vehicles and
data processing equipment – 20%. They are adjusted by a
provision for impairment losses.
l) Intangible assets
Correspond to rights in intangible assets that are maintained
or used in the Bank and its subsidiaries' activities. Intangible
Securities linked to repurchase and assignment of credit
assets with finite useful lives are amortized on the straight-line
with co-obligation are not derecognized because Safra retains
method over the estimated period in which they will generate
substantially all the risks and rewards to the extent there is,
economic benefits. They are adjusted by a provision for
respectively, a commitment to repurchase them at a
impairment losses.
predetermined amount or to make payments in the event
of default of the original debtor of the credit operations.
m) Impairment of non-financial assets
Financial liabilities are derecognized if the obligation
CMN Resolution 3,566/2008 provides the procedures
is contractually extinguished or settled.
applicable to the recognition, measurement and disclosure
of impairment and requires compliance with CPC Technical
i) Other assets
Pronouncement 1 – Impairment of assets.
These correspond basically to assets not held for sale, especially
Impairment of non-financial assets is recorded as a loss when
those received as payment, and prepaid expenses, whose
the book value of an asset or a cash generating unit is higher
benefits or services are expected in the future.
than its recoverable or realizable value. A cash-generating unit
j) Investments
is the smallest identifiable group of assets which generates
substantial cash flows irrespective of other assets and groups
Investments in subsidiary and associated companies in which
the Bank has significant influence or its interest is 20% or more
of assets. When applicable, impairment losses are recorded in
income for the period in which they were identified.
of the voting capital are recorded by the equity method
of accounting. Other investments refer basically to shares of
companies in which the Bank, directly or indirectly, does not
have significant influence or does not hold more than 20%
of the voting capital and are, therefore, stated at cost, adjusted
Non-financial assets are periodically reviewed for impairment,
at least on an annual basis, to determine if there are any
indications that the assets' recoverable or realizable value is
impaired.
by a provision for impairment. Dividends received from these
Accordingly, in conformity with the above standards, Safra
investments are recognized within the result.
Group's management is not aware of any material adjustments
k) Property and equipment in use
Correspond to rights in tangible assets that are maintained or
that might affect the ability to recover the amounts recorded in
property and equipment and intangible assets at 12.31.2012
and 2011.
used in the Bank and its subsidiaries' activities, including those
rights received as a result of transactions that transfer the risks,
n) Open market funding and borrowings and onlendings
rewards, and control of such assets to the Bank. They are
The stated amounts include income, monetary adjustments
stated at cost, net of accumulated depreciation. Depreciation
(on a pro rata basis) and exchange variations, as applicable,
is calculated on the straight-line method at annual rates based
incurred through the Balance sheet date.
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
Incurred transaction costs, basically relating to amounts paid to
a. Insurance:
third parties for intermediation, placement and distribution
• Provision for unearned premiums (PPNG): corresponds
services for entity securities are accounted for against the
to the portion of insurance premiums retained
securities and are recognized on a monthly basis to the
corresponding to the non-elapsed risk period of the
appropriate expense account i.e. "pro rata temporis", except
insurance contracts, on a pro rata basis. That reserve
when the instruments are measured at fair value through the
related to retrocession transactions is recognized based
profit or loss.
on information received from IRB Brasil Resseguros S.A.
o) Insurance, reinsurance and supplementary pension plan operations
I - Receivables from insurance and reinsurance operations
• Premiums receivable – refer to financial resources
(RVNE) is recognized to cover risks that were not issued
on the date of calculation;
• Provision for unsettled claims (PSL): based on estimates
flowing to the Bank as receipt of premiums related to
of indemnities relating to claims received until the end
insurance, recorded on the date of issuance of the
of the period, and monetarily restated according to
policies. An allowance for loan losses is recorded for
SUSEP regulations;
these amounts and, in case of non-payment, they are
written off through the unilateral cancellation of the
insurance coverage;
• Reinsurance technical provisions – comprise technical
provisions referring to reinsurance operations;
Reinsurance operations are carried out in the normal
course of activities in order to limit its potential losses.
The liabilities related to reinsurance operations are
presented gross of their respective recoveries, since the
existence of a contract does not exempt the Company
from its obligations to the policyholders.
• Deferred acquisition costs – include direct and indirect
costs related to the origination of insurances. These costs,
except for the commissions paid to the brokers and
others, are recorded directly in the statement of income,
when incurred. The commissions are deferred and are
recognized in the statement of income in proportion to
the recognition of the revenues with premiums, that is,
for the term corresponding to the insurance contract.
II - Technical reserves of insurance and supplementary
pension plan
Insurance and supplementary pension plan reserves are
• Reserve for incurred but not reported losses (IBNR):
calculated based on actuarial studies and recorded to
cover claims that have occurred but not notified by the
insured party;
• Premium deficiency reserve (PIP): consists of a
prospective actuarial calculation, recognized in the event
of insufficiency of the unearned premium reserve
(PPNG); and
• Supplementary premium reserve (PCP): recognized on a
monthly basis to supplement the PPNG, and its amount
is equal to the difference, if positive, between the average
of the sum of amounts calculated daily during the
recognition month and the PPNG recorded, considering
risks in force, whether written or not.
b. Supplementary pension plan:
• Reserves for unvested and vested benefits: represent the
amount of the obligations assumed with the participants
of the defined contribution plans PGBL and VGBL and
are recognized according to the methodology established
in a technical actuarial note approved by SUSEP;
• Contribution deficiency reserve (PIC): recorded annually
recorded based on technical actuarial notes, in accordance
based on an actuarial valuation to cover occasional
with criteria established by SUSEP and National Council
insufficiency of mathematical reserves for unvested and
of Private Insurances (CNSP) Resolutions 162/2006, and
vested benefits; and
subsequent modifications:
70
In addition, the Reserve for current risks not issued
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:46 AM Page 71
• Administrative expenses reserve (PDA): recognized to
cover the administrative expenses of the VGBL and
PGBL pension plans and individual life insurance,
calculated based on approved methodology in the
technical actuarial note.
If the result is positive, this amount is recognized in PIP,
PIC or any other allowances that may replace them.
p) Provisions, contingent assets and liabilities, and legal, tax
and social security obligations
The recognition, measurement and disclosure of contingent
III - Calculation of insurance, reinsurance and supplementary
pension plan earnings
assets and liabilities and legal obligations are made in
conformity with the criteria set forth in the CPC Technical
Insurance premiums, net of co-insurance premiums, as well
Pronouncement 25 – Provisions, Contingent Liabilities and
as acquisition costs are recognized at the point of issue of
Contingent Assets, approved by CMN Resolution 3,823/2009
the policy contract or invoice. Insurance premium income
and BACEN Circular 3,429/2010, as described below:
is recognized into the Statement of income over the course
of the policy risk period. This is achieved by establishing an
unearned premium reserve, and deferred acquisition costs.
Pension plan contributions are recognized as received.
Reinsurance premiums are deferred and recognized over
the course of the cover period.
(i) Contingent assets – possible assets that have come
about as a result of a past event but whose existence will
only be confirmed by the occurrence or not of one or more
uncertain future events that are not fully under the control
of the entity. The contingent asset is not recognized in the
accounts, but is disclosed in the Notes when it is probable
that the asset will be recognized. By extension, when
Income and expenses arising from insurance operations
with Compulsory Automobile Insurance for Personal
Damages (DPVAT) are recognized based on the
evidence arises that makes the asset a practical certainty, the
asset is no longer contingent and is recognized in the
accounts.
information received from Seguradora Líder dos
Consórcios do Seguro DPVAT S.A.
(ii) Contingent liabilities – a present (legal or constructive)
obligation as a result of past events, in which it is probable
IV - Liability adequacy test
that an outflow of resources will be required to settle the
In compliance with SUSEP Circular Letter 457/2012,
obligation and the amount can be reliably measured, should
Safra prepares a Liability Adequacy Test (LAT) every six
be recognized by the entity as a provision. If the outflow
months. The purpose of this test is to assess the liabilities
of resources to settle the obligation is not probable or cannot
arising from the contracts of the certificates of insurance
be reliably measured, then a contingent liability is created
plans (except for DPVAT, DPEM and Housing Insurance
instead of a provision. The contingent liability is not
of the National Housing System (SFH)) and of open-end
registered in the accounts but is disclosed in the Notes,
supplementary pension plan, considering the minimum
unless the likelihood of having to settle the obligation is
assumptions determined by SUSEP and by Safra's own
remote.
internal actuaries.
Contingent liabilities also come about as a result of possible
The LAT result will be the difference between:
obligations arising from past events and whose existence
i) the amount of the current estimates of cash flows; and
ii) the sum of the accounting balance of the technical
provisions on the base-date (except for PIP and PIC),
deducted from the deferred acquisition costs and intangible
will be confirmed only by the occurrence of one or more
uncertain future events that are not fully under the control
of the entity. These possible obligations should also be
disclosed.
assets directly related to the technical allowances.
71
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
Obligations are evaluated by Management, based on the
calculation continue to be subject to PIS and COFINS rates of 1.65% and
best estimates and taking into consideration the opinion
7.6%, respectively.
of legal advisors, who create a provision when the
likelihood of a loss is considered probable; when the
r) Deferred income
likelihood is considered possible, then this is disclosed.
Refers to income received before fulfillment of the obligation
Obligations for which there is a remote chance of loss are
that gave origin to it. The recognition, as effective income, will
neither provided for or disclosed.
be recorded over the term of the transaction.
(iii) Legal (tax and social security obligations) – refer to lawsuits
challenging the legality or constitutionality of certain taxes.
s) Use of accounting estimates
The amount under litigation is quantified, accrued and
The preparation of financial statements requires management
adjusted on a monthly basis.
to make estimates and assumptions that, in its best judgment,
affect the amounts of certain financial and non-financial assets
The judicial deposits not linked to provisions for
and liabilities, income and expenses and other transactions,
contingencies and legal obligations are updated on a
such as: (i) the market value of certain financial assets and
monthly basis.
financial liabilities and derivative financial instruments;
(ii) depreciation rates of property and equipment items;
q) Taxes
Calculated at the rates below, considering the effective relevant
(iii) amortization of intangible assets; (iv) provisions required to
cover risks of contingent liabilities; (v) tax credits; (vi)
legislation for each tax rate.
impairment of trade receivables, and (vii) insurance and
Income tax
15.00%
pension plan technical reserves. The amounts of the possible
Income tax surcharge
10.00%
liquidation of these assets and liabilities, financial or otherwise,
Social contribution (1)
15.00%
may differ from those estimates.
Social Integration Program (PIS)
(2)
Social Contribution on Revenues (COFINS)
Service tax (ISS)
0.65%
(2)
4.00%
Up to 5.00%
(1) Non-financial institution subsidiaries continue to be subject to a rate
of 9% for this contribution;
(2) Non-financial institution subsidiaries that perform a non-cumulative
72
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:46 AM Page 73
4. CASH AND CASH EQUIVALENTS
BANK
CONSOLIDATED
12.31.2012
12.31.2011
12.31.2012
12.31.2011
301,797
4,014,889
281,144
786,437
5,384,267
246,604
7,405,924
291,404
726,732
8,670,664
411,090
4,313,444
281,144
849,785
5,855,463
380,224
8,001,218
291,404
738,737
9,411,583
Cash
Open market investments – own portfolio (1)
Interbank deposits
Foreign currency investments
Total
(1) At 12.31.2011 included in Consolidated R$ 595,294 referring to repurchase agreements carried out through an exclusive investment fund (Note 6 (b)).
The models of management of the liquidity of the bank take into consideration the high liquidity of the free public treasury, with
the overall liquidity of Consolidated, represented as follows:
CONSOLIDATED
Cash and cash equivalents
Own portfolio – free government securities – Note 6 (b)
Free resources
12.31.2012
12.31.2011
5,855,463
8,925,615
14,781,078
9,411,583
1,980,869
11,392,452
5. INTERBANK INVESTMENTS
BANK
12.31.2012
Amounts by maturity
Open market investments
Own portfolio – National Treasury
Securities under resell agreement –
Third-party portfolio – National Treasury
Short position – National Treasury
Interbank deposits (1)
Foreign currency investments (Note 19)
Total at 12.31.2012
Total at 12.31.2011
12.31.2011
Up to
90 days
From 91 to
365 days
Over
365 days
Total
Total
3,784,697
100,978
15,019,669
3,913,911
–
–
18,804,366
4,014,889
18,111,372
7,405,924
3,683,719
–
588,432
786,437
5,159,566
19,411,573
8,860,328
2,245,430
110,939
–
15,130,608
867,750
–
–
1,290,850
–
1,290,850
1,243,441
12,544,047
2,245,430
1,990,221
786,437
21,581,024
21,522,764
10,705,448
–
2,684,660
726,732
–
21,522,764
CONSOLIDATED
12.31.2012
Amounts by maturity
Open market investments
Own portfolio – National Treasury
Securities under resell agreement –
Third-party portfolio – National Treasury
Short position – National Treasury
Interbank deposits (1)
Foreign currency investments (Note 19)
Total at 12.31.2012
Total at 12.31.2011
12.31.2011
Up to
90 days
From 91 to
365 days
Over
365 days
Total
Total
3,786,162
399,533
15,019,669
3,913,911
–
–
18,805,831
4,313,444
18,111,372
7,405,924
3,386,629
–
631,732
849,785
5,267,679
19,423,578
8,860,328
2,245,430
340,397
–
15,360,066
867,750
–
–
1,290,850
–
1,290,850
1,243,441
12,246,957
2,245,430
2,262,979
849,785
21,918,595
21,534,769
10,705,448
–
2,684,660
738,737
–
21,534,769
(1) R$ 261,000 (R$ 570,000 at 12.31.2011) of this amount in Bank and R$ 401,000 in Consolidated relates to operations between non-related financial
institutions, which are held as guarantees against certain compulsory payments-on-account.
73
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
6. SECURITIES
a) Breakdown by maturity by class
BANK
12.31.2012
Mark-tomarket
adjustment
Cost
No stated
maturity
Up to From 91 to
Over
90 days 365 days 365 days
Market
value
–
–
–
–
–
–
–
–
–
–
2,651,250
2,281,431
407,862
1,849,524
24,045
–
369,819
66,122
–
303,697
28,780,215
15,428,246
7,668,043
7,760,203
13,286,087
13,155,492
19,388,067
562,185
–
562,185
18,354,135
18,119,303
Trading securities
National Treasury
National Treasury Notes
National Treasury Bills
Financial Treasury Bills
Private entities – Shares
Securities issued abroad
Shares
Bank deposit certificate – Note 19
Eurobonds
9,336,283
8,870,540
6,630,931
2,216,852
22,757
19,176
446,568
145,638
300,910
19
78,124
50,666
5,618
45,052
(4)
(354)
27,812
–
27,812
–
9,414,407
8,921,206
6,636,549
2,261,904
22,753
18,822
474,380
145,638
328,722
19
164,460
–
–
–
–
18,822
145,638
145,638
–
–
119,986
119,967
119,967
–
–
–
19
–
–
19
Securities available for sale
National Treasury
National Treasury Notes
National Treasury Bills
Private securities
Debentures (1)
Certificates of real estate
receivables (CRI)
Shares
Financial bills
Securities issued abroad
Eurobonds
Bank deposit certificate – Note 19
28,358,592
14,954,862
7,506,169
7,448,693
13,338,337
13,155,492
737,840
737,070
161,874
575,196
281
–
29,096,432
15,691,932
7,668,043
8,023,889
13,338,618
13,155,492
52,531
–
–
–
52,531
–
–
–
–
–
–
–
8,400
52,250
122,195
65,393
65,393
–
–
281
–
489
489
–
8,400
52,531
122,195
65,882
65,882
–
–
52,531
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,400
–
122,195
65,882
65,882
–
160,057
74,775
–
471,747
35,889
435,858
82,676
–
82,676
–
–
–
82,676
89,624
82,676
–
–
–
82,676
–
–
–
–
–
–
–
82,676
–
–
15,248
–
–
–
–
–
–
–
216,991
140,897
66,122
74,775
–
251,783
371,769
509,864
43,041
436,193
–
–
30,630
Securities held to maturity
Government securities – National
Treasury Bills
Private securities – Promissory Notes
Foreign securities – Bank Deposit
Certificates
Derivative financial instruments –
Assets (Note 7)
647,766 225,489
Total at 12.31.2012
38,425,317 1,041,453
Total at 12.31.2011
22,518,294 172,481
Trading securities
2,644,745
6,505
Securities available for sale (1)
19,371,522
16,545
Securities held to maturity (4)
89,624
–
Derivative financial instruments –
Assets (Note 7)
412,403 149,431
74
Market
value
12.31.2011
873,255
39,466,770
22,690,775
2,651,250
19,388,067
89,624
561,834
9,129,961
8,801,239
6,516,582
2,261,904
22,753
–
328,722
–
328,722
–
263,686
263,686
–
263,686
–
–
–
182,803
438,669
9,576,449 29,301,561
2,691,290 19,348,724
2,542,087
–
9,336 18,867,763
89,624
–
50,243
480,961
74,376
561,834
–
22,690,775
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:46 AM Page 75
CONSOLIDATED
12.31.2012
12.31.2011
Cost
Mark-tomarket
adjustment
Market
value
15,363,220
12,240,487
10,000,878
2,216,852
22,757
50,312
50,666
5,618
45,052
(4)
15,413,532
12,291,153
10,006,496
2,261,904
22,753
390,230
–
–
–
–
2,957,803
97
19,176
145,657
145,638
19
–
–
(354)
–
–
–
2,957,803
97
18,822
145,657
145,638
19
225,673
97
18,822
145,638
145,638
–
Securities available for sale
16,720,229 739,655
National Treasury
14,983,590 737,506
National Treasury Notes
7,534,897 162,310
National Treasury Bills
7,448,693 575,196
Linked to Technical Reserve –
National Treasury Bills – Note 11(b)
91,131
1,379
Private securities
1,580,115
281
Debentures
817,229
–
Certificates of real estate
receivables (CRI)
8,400
–
Shares
52,329
281
Bank Deposit Certificates
579,962
–
Financial bills
122,195
–
Securities issued abroad
65,393
489
Eurobonds
65,393
489
Bank deposit certificate – Note 19
–
–
17,459,884
15,721,096
7,697,207
8,023,889
52,610
–
–
–
28,924
–
–
–
92,510
1,580,396
817,229
–
52,610
–
–
28,924
24,403
–
33,788
13,523
92,510
1,465,074
779,303
80,384
1,627,921
1,027,564
–
–
4,521
–
–
–
–
–
–
20,265
–
–
–
–
8,400
–
555,176
122,195
65,882
65,882
–
160,957
74,775
364,625
–
473,624
35,889
437,735
15,179
–
15,179
–
15,179
82,676
82,676
–
–
–
356,848
–
282,471
16,787
265,684
Trading securities
National Treasury
National Treasury Notes
National Treasury Bills
Financial Treasury Bills
Linked to Technical Reserve –
Note 11(b)
Investment fund quotas
Private entities – Shares
Securities issued abroad
Shares
Eurobonds
Securities held to maturity
National Treasury
Private securities
Debentures
Promissory Notes
Foreign securities – Bank Deposit
Certificates
118,282
82,676
35,606
–
35,606
–
–
–
–
–
–
–
Derivative financial instruments –
Assets (Note 7)
475,490 20,751
Total at 12.31.2012
32,677,220 810,718
Total at 12.31.2011
8,857,345 45,784
Trading securities
5,442,056
7,383
Securities available for sale
2,679,862 16,915
Securities held to maturity
356,848
–
Derivative financial instruments –
Assets (Note 7)
378,579
21,486
No stated
maturity
Up to From 91 to
Over
90 days 365 days 365 days
1,927,764 10,363,408
1,927,745 10,363,408
1,927,745 8,078,751
–
2,261,904
–
22,753
–
–
–
19
–
19
8,400
52,610
579,962
122,195
65,882
65,882
–
–
52,610
–
–
–
–
–
118,282
82,676
35,606
–
35,606
–
–
–
–
–
20,427
–
20,427
–
20,427
–
–
–
496,240
33,487,938
8,903,129
5,449,439
2,696,777
356,848
–
442,840
863,345
788,570
74,775
–
400,065
–
2,732,130
–
–
–
–
5,369,055
2,281,431
407,862
1,849,524
24,045
2,732,130
–
–
–
–
–
2,426,208
595,294
–
66,122
66,122
–
297,474 17,080,876
263,686 15,457,410
–
7,697,207
263,686 7,760,203
2,777,161
595,232
33,047
562,185
–
–
–
–
–
–
–
–
224,196
78,229
193,815
2,201,311 10,754,290 20,089,497
573,954 2,726,529 4,739,301
43,041
2,318,774 2,299,054
489,182
49,641 2,083,179
16,787
340,061
–
24,944
Market
value
18,053
74,377
400,065
–
8,903,129
357,068
75
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:46 AM Page 76
BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
b) By type
BANK
Own portfolio
National Treasury
National Treasury Notes
Financial Treasury Bills
National Treasury Bills
Private securities
Debentures (1)
Shares
Promissory Notes
Financial bills
Quotas of investment funds (2)
Bank Deposit Certificates
Certificates of real estate receivables (CRI)
Securities issued abroad
Eurobonds
Shares
Bank Deposit Certificates
Subject to repurchase agreements
National Treasury
National Treasury Notes
National Treasury Bills
Private securities – Debentures (1)
Restricted deposits – National Treasury
National Treasury Notes
National Treasury Bills
Linked to guarantees – National Treasury (3)
National Treasury Notes
Financial Treasury Bills
National Treasury Bills
Insurance and supplementary pension plan guarantee
reserves – (Note 11(b))
Government securities – National Treasury Bills
Quotas of investment funds – DPVAT
Quotas of investment funds – PGBL and VGBL
Derivative financial instruments – Assets (Note 7)
Total
CONSOLIDATED
12.31.2012
12.31.2011
12.31.2012
12.31.2011
7,218,466
5,561,152
1,643,220
22,306
3,895,626
1,117,053
915,105
71,353
–
122,195
–
–
8,400
540,261
65,901
145,638
328,722
4,631,359
1,980,428
294,618
19,266
1,666,544
1,734,989
1,484,909
74,775
15,248
–
–
–
160,057
915,942
35,889
66,122
813,931
10,772,075
8,925,615
5,007,683
22,306
3,895,626
1,634,921
817,229
71,432
35,606
122,195
97
579,962
8,400
211,539
65,901
145,638
–
5,100,678
1,980,869
295,059
19,266
1,666,544
2,505,686
1,044,351
74,775
265,684
–
595,294
364,625
160,957
614,123
35,889
66,122
512,112
30,042,067
17,801,680
12,497,731
5,303,949
12,240,387
16,634,394
–
–
–
16,634,394
17,801,680
17,801,680
12,497,731
5,303,949
–
–
–
–
–
–
278,839
69,873
208,966
188,582
2
188,580
278,839
69,873
208,966
188,582
2
188,580
1,054,143
176,444
447
877,252
674,606
113,242
4,779
556,585
1,088,791
211,092
447
877,252
707,212
145,849
4,778
556,585
–
–
–
–
–
–
–
–
3,050,313
92,510
63,715
2,894,088
2,506,592
80,384
58,938
2,367,270
873,255
39,466,770
561,834
22,690,775
496,240
33,487,938
400,065
8,903,129
(1) It includes debentures issued by Safra Leasing S.A. – Arrendamento Mercantil (subsidiary) amounting to R$ 13,039,596 (R$ 17,969,675 at 12.31.2011) – Note 19.
(2) At 12.31.2011, Safra Group's exclusive funds were mainly represented by R$ 564,713 of securities under agreement to resell (guaranteed by
Government Bonds) with Banco Safra S.A.
(3) Relates to derivative guarantees worth R$ 927,936 (R$ 533,365 at 12.31.2011) in Bank and R$ 962,584 (R$ 565,786 at 12.31.2011) in Consolidated,
held in custody worth R$ 87,904 (R$ 92,299 at 12.31.2011) in Bank and Consolidated, and amounts for civil and labor suits (Note 12(c-I)) worth R$
38,303 (R$ 48,942 at 12.31.2011) in Bank and R$ 38,303 (R$ 49,127 at 12.31.2011) in Consolidated.
(4) Securities classified as held to maturity, are valued at market value, would present a positive adjustment on 12.31.2012 in the amount of R$ 3,379.
76
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:46 AM Page 77
c) Changes of financial assets
CONSOLIDATED
Available-for-Sale
Securities Held-to-Maturity
01.01 to 12.31.2012
01.01 to 12.31.2011
01.01 to 12.31.2012
At the beginning of the period
01.01 to 12.31.2011
2,777,161
2,347,565
356,848
40,495
Acquisition in the period
18,569,459
42,990
438,257
324,813
Sales in the period
(2,513,013)
(45,918)
–
–
Interest income and redemptions
(3,251,513)
(59,412)
(714,249)
(46,538)
Interest income and result on realization
1,156,227
474,210
37,426
38,078
721,563
17,726
17,459,884
2,777,161
Adjustments in changes in fair value (1)
Balance at the end of the period
–
–
118,282
356,848
(1) Recorded in Equity.
In 2012, there were no reclassifications in securities.
d) Developments and market value adjustment
BANK
CONSOLIDATED
01.01 to 12.31.2012
01.01 to 12.31.2011
01.01 to 12.31.2012
01.01 to 12.31.2011
126,868
(297,803)
23,021
(130,123)
6,505
(600)
7,383
(2,105)
16,545
(431)
18,092
366
(assets and liabilities)
126,538
(279,827)
(10,212)
(136,519)
Fair value hedge
(22,720)
(16,945)
7,758
8,135
Activity affecting:
793,721
424,671
695,286
153,144
72,426
407,695
(26,277)
135,418
71,619
7,105
42,929
9,488
(assets and liabilities)
64,247
406,365
(3,776)
126,307
Fair value hedge
(63,440)
(5,775)
(65,430)
(377)
721,295
16,976
721,563
17,726
920,589
126,868
718,307
23,021
78,124
6,505
50,312
7,383
737,840
16,545
739,655
18,092
(assets and liabilities)
190,785
126,538
(13,988)
(10,212)
Fair value hedge
(86,160)
(22,720)
(57,672)
7,758
Opening balance – Mark-to-market
adjustment
Trading securities
Securities available for sale
Derivative financial instruments
Statement of income
Trading securities
Derivative financial instruments
Equity – Available for sale
Closing balance – Mark-to-market
adjustment
Trading securities
Securities available for sale
Derivative financial instruments
77
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:46 AM Page 78
BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
7. DERIVATIVE FINANCIAL INSTRUMENTS
The main purpose of the use of derivative financial instruments
by Banco Safra and its subsidiaries is to provide to their
customers products that hedge these customers' assets against
risks from currency and interest rate fluctuations. Furthermore,
these instruments are used by the Bank in the daily
negotiable assets and payable liabilities in transactions with
derivative financial instruments that might affect the
payment ability of the entity, taking into consideration the
currencies and settlement terms of their assets and
liabilities.
management of the risks assumed in its operations, including
Banco Safra and its subsidiaries' positions are monitored by an
the hedging of the portfolio of fixed interest securities and
independent control function, which uses a specific system to
operations defined by management.
manage risk, including calculating the Value at Risk (VaR)
The main risks related to the derivative financial instruments
with a confidence interval of 99 percent, stress tests, back
are: credit risk, market risk, and liquidity risk, as defined below:
testing, and other technical resources. The Group has a Market
• Credit risk is the exposure to losses in the event of default
by counterparties or by debtors of contracted amounts.
• Market risk is the exposure to fluctuations in interest rates,
Risk Committee, consisting of high-ranked executives, which
meets on a weekly basis to analyze the market conditions and a
Treasury and Risk Committee, including members of the
Executive Committee, which meets on a monthly basis to
foreign exchange rates, commodity prices, stock market
discuss detailed aspects of Market Risk management, as well as
prices, and other values, and due to the type of product,
reviewing risk limits, stress scenarios, strategies and outcomes.
volume of operations, terms and conditions of the
agreement and underlying volatility.
78
• Liquidity risk is the risk arising from mismatches between
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:46 AM Page 79
a) Asset and liability accounts
BANK
12.31.2012
12.31.2011
Mark-to-
Non Deliverable Forward – NDF
Option premiums
Cost
market
adjustment
71,834
–
Market
value
Up to
90 days
From 91 to
365 days
71,834
25,186
46,648
1,358
155
1,513
1,372
7
2,506
35
2,541
2,541
Over
365 days
Market
value
61,788
–
134
4,766
Forward – Purchase
receivables – Shares
Swap – Amounts receivable
–
–
1,292
549,189
225,299
774,488
208,646
127,307
438,535
477,908
Interest rate – Note 19
192,531
207,693
400,224
29,210
107,177
263,837
181,070
Foreign currency
336,871
29,912
366,783
176,893
18,274
171,616
283,204
11,943
(6,021)
5,922
2,474
1,470
1,978
10,577
7,844
(6,285)
1,559
69
386
1,104
3,057
Commodities
Shares
Credit default swaps (CDS)
261
–
261
261
22,618
–
22,618
13,777
8,841
Total assets at 12.31.2012
647,766
225,489
873,255
251,783
182,803
438,669
–
Total assets at 12.31.2011
412,403
149,431
561,834
30,630
50,243
480,961
561,834
Futures
Non Deliverable Forward (NDF)
Option premiums (1)
Bovespa Index
Foreign currency – Note 19
Shares
Swap – amounts payable (1)
(4,523)
(3,495,504)
–
46,177
–
(4,523)
(1,813)
(2,710)
(3,449,327)
(729,026)
(1,577,583)
(137)
(20)
(157)
(143)
(14)
(3,494,687)
46,197
(3,448,490)
(728,203)
(1,577,569)
(680)
(740,514)
–
(80,881)
(680)
(680)
(821,395)
(201,463)
–
(392,793)
–
16,080
–
–
–
(1,065)
(1,142,718) (2,747,269)
–
144
(1,142,718) (2,747,413)
–
(227,139)
–
(623,312)
Interest rate
(206,877)
(67,504)
(274,381)
(68,884)
(129,737)
(75,760)
(77,677)
Foreign currency – Note 19
(274,409)
(23,053)
(297,462)
(18,179)
(183,232)
(96,051)
(163,099)
Bovespa Index
Commodities
(8,788)
(16)
(8,804)
(8,654)
(150)
(148,130)
1,313
(146,817)
(95,575)
(49,329)
(30,345)
Shares
(82,909)
3,928
(78,981)
(10,171)
Other
(19,401)
4,451
(14,950)
–
Credit default swaps (CDS)
Futures
(11,711)
(21,420)
–
(11,711)
(6,334)
(40,252)
(308,430)
(38,465)
(33,854)
–
(14,950)
–
–
(5,377)
(7,618)
–
(2,240)
(21,420)
(3,612)
(17,808)
Total liabilities at 12.31.2012
(4,273,672)
(34,704)
(4,308,376)
(942,248)
(1,990,894)
Total liabilities at 12.31.2011
(3,358,611)
(22,893)
(3,381,504) (1,134,422)
(1,974,820)
–
–
(1,913)
(1,375,234)
–
(272,262) (3,381,504)
79
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:46 AM Page 80
BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
CONSOLIDATED
12.31.2012
Mark-to-
Non Deliverable Forward – NDF
Option premiums
Cost
market
adjustment
71,834
–
Market
value
12.31.2011
Up to
90 days
From 91 to
365 days
Over
365 days
Market
value
71,834
25,186
46,648
1,358
155
1,513
1,372
7
2,506
35
2,541
2,541
376,912
20,561
397,473
181,059
22,733
193,681
317,022
20,255
2,955
23,210
1,624
2,603
18,983
20,184
336,870
29,912
366,782
176,892
18,274
171,616
283,204
11,943
(6021)
5,922
2,474
1,470
1,978
10,577
7,844
(6,285)
1,559
69
386
1,104
3,057
–
134
61,788
3,883
Forward – Purchase
receivables – Shares
Swap – Amounts receivable
Interest rate
Foreign currency
Commodities
Shares
Credit default swaps (CDS)
–
–
261
–
261
261
–
–
22,618
–
22,618
13,777
8,841
–
Total assets at 12.31.2012
475,489
20,751
496,240
224,196
78,229
193,815
Total assets at 12.31.2011
378,579
21,486
400,065
24,944
18,053
357,068
Futures
Non Deliverable Forward (NDF)
Option premiums (1)
Bovespa Index
Foreign currency
Shares
Swap – amounts payable (1)
(4,523)
(3,005,487)
–
46,142
(4,523)
(1,813)
(2,710)
(2,959,345)
(729,064)
(1,577,583)
(137)
(20)
(157)
(143)
(14)
(3,004,670)
46,162
(2,958,508)
(728,239)
(1,577,569)
(680)
–
(680)
(680)
(846,965)
(80,881)
(927,846)
(201,462)
–
1,292
16,080
–
–
400,065
(1,065)
(652,697) (2,493,167)
–
144
(652,700) (2,493,311)
–
–
(499,245)
(227,139)
–
(767,302)
Interest rate
(206,877)
(67,504)
(274,381)
(68,884)
(129,737)
(75,760)
(77,256)
Foreign currency
(380,860)
(23,053)
(403,913)
(18,178)
(289,684)
(96,051)
(307,510)
Bovespa Index
Commodities
(8,788)
(16)
(8,804)
(8,654)
(150)
(148,130)
1,313
(146,817)
(95,575)
(49,329)
(30,345)
Shares
(82,909)
3,928
(78,981)
(10,171)
Other
(19,401)
4,451
(14,950)
–
(11,711)
–
(11,711)
Credit default swaps (CDS)
Futures
(21,420)
(6,334)
–
(40,252)
(1,913)
(308,430)
(38,465)
(33,854)
–
(14,950)
–
(5,377)
–
(7,618)
(21,420)
(3,612)
(17,808)
Total liabilities at 12.31.2012
(3,890,106)
(34,739)
(3,924,845)
(942,283)
(2,097,346)
(885,216)
Total liabilities at 12.31.2011
(3,239,694)
(31,698)
(3,271,392)
(880,142)
(1,951,703)
(439,547) (3,271,392)
–
–
(2,240)
–
(1) Includes premiums of structured fixed income transactions in the amount of R$ 3,979,296 (R$ 3,156,897 at 12.31.2011) in Bank and R$ 3,489,278
(R$ 2,901,330 at 12.31.2011) in Consolidated – Note 10.
80
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 81
b) Composition by notional value
I - By type of operation
BANK
12.31.2012
Locations
Non Deliverable Forward – NDF
12.31.2011
CONSOLIDATED
12.31.2012 12.31.2011
Notional
amount
Notional
amount
Notional
amount
Notional
amount
1,784,424
1,026,236
1,784,424
1,026,236
Bought
CETIP
1,230,093
1,017,845
1,230,093
1,017,845
Sold
CETIP
554,331
8,391
554,331
8,391
37,314,587
26,136,289
30,369,127
23,731,793
107,907
386,487
107,907
386,487
Option premiums
Bought
Interbank deposit – DI
BM&FBOVESPA
19,401
–
19,401
Foreign currency
BM&FBOVESPA
2,089
375,160
2,089
Others
BM&FBOVESPA
Sold
Foreign currency
Other
CETIP
BM&FBOVESPA
Forward
Sale receivables – Shares
BM&FBOVESPA
Liability for shares to deliver
BM&FBOVESPA
Swaps
86,417
11,327
86,417
11,327
37,206,680
25,749,802
30,261,220
23,345,306
37,112,401
25,737,974
30,166,941
23,333,478
94,279
11,828
94,279
11,828
2,547
446,425
2,547
446,425
2,547
1,413
2,547
1,413
–
16,816,542
Interest rate
BM&FBOVESPA
Interest rate
CETIP
–
375,160
445,012
16,280,637
–
11,635,312
445,012
9,044,558
527,013
478,500
527,013
478,500
9,134,964
11,668,909
3,652,241
4,156,079
Foreign currency
CETIP
5,463,537
1,929,314
5,765,030
2,206,065
Commodities
CETIP
1,035,802
1,763,148
1,035,802
1,763,148
Shares
CETIP
528,842
241,065
528,842
241,065
Other
126,384
199,701
126,384
199,701
Future
32,460,805
25,431,288
32,460,805
25,431,288
7,569,876
2,766,698
7,569,876
2,766,698
Long positions
Interest rate
BM&FBOVESPA
4,803,937
2,693,684
4,803,937
2,693,684
Currency coupon
BM&FBOVESPA
1,995,939
–
1,995,939
–
Shares
BM&FBOVESPA
266,327
Foreign currency
BM&FBOVESPA
434,400
Other
BM&FBOVESPA
Short positions
69,273
–
73,014
–
266,327
–
434,400
73,014
69,273
–
24,890,929
22,664,590
24,890,929
22,664,590
Interest rate
BM&FBOVESPA
21,080,988
22,547,582
21,080,988
22,547,582
Foreign currency
BM&FBOVESPA
321,509
66,736
321,509
66,736
Currency coupon
BM&FBOVESPA
3,425,613
Other
BM&FBOVESPA
62,819
Credit default swaps (CDS)
Total
Over-the-counter
–
50,272
3,425,613
62,819
–
50,272
423,587
232,205
423,587
232,205
88,801,183
69,553,080
76,674,492
59,912,505
81
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 82
BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
II - Locations
BANK
12.31.2012
From 91 to
365 days
Over
365 days
Notional
amount
Notional
amount
12,599,741
23,263,686
19,341,019
55,204,446
16,851,528
4,512,099
8,967,325
19,693,726
33,173,150
52,469,239
Locations
CETIP
BM&FBOVESPA
Over-the-counter
423,587
Total
12.31.2011
Up to
90 days
17,535,427
–
–
32,231,011
39,034,745
423,587
232,313
88,801,183
69,553,080
CONSOLIDATED
12.31.2012
From 91 to
365 days
Over
365 days
Notional
amount
11,593,016
21,621,961
9,864,867
43,079,844
9,615,449
4,510,010
8,967,325
19,693,726
33,171,061
50,064,743
–
–
423,587
232,313
30,589,286
29,558,593
76,674,492
59,912,505
Locations
CETIP
BM&FBOVESPA
Over-the-counter
423,587
Total
12.31.2011
Up to
90 days
16,526,613
Notional
amount
c) Credit derivatives
Banco Safra makes use of derivative financial instruments of credit in order to offer their customers, through issuance of securities,
opportunities to diversify their investment portfolios.
Banco Safra held the following positions in credit derivatives, shown at their notional value:
BANK AND CONSOLIDATED
12.31.2012
12.31.2011
Risks transferred
Credit swap whose underlying assets are: Securities
(423,587)
(423,587)
(232,205)
(232,205)
Risks received (1)
Credit swap whose underlying assets are: Securities
423,587
423,587
232,205
232,205
–
–
–
–
(1)
Net transferred exposure total
Net received exposure total
(1) The transferred and received risks refer to the same issuers.
82
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 83
During the period there was no occurrence of a credit event
related to the facts set forth in the agreements.
d) Hedging of financial assets and financial liabilities
The aim of the designated hedge accounting applied by Safra
There was no significant effect on the calculation of Required
is to protect against the effects of market interest rates (CDI or
Regulatory Capital (PRE) at 12.31.2012, in accordance with
Libor) or exchange variations to assets and liabilities fair value
CMN Resolution 3,490/2007. The credit risk exposures
(depending on their nature).
of Banco Safra are mitigated, as provided in BACEN
Circular 3,360/2007, by guarantee instruments contracted
with customers.
CONSOLIDATED
MTM object to
hedge (R$) (2)
Market value (R$)
12.31.2011
Hedge
derivative
instrument
Strategy – Market Risk Hedge
12.31.2012
12.31.2011
12.31.2012
Fixed portfolio (1)
14,502,147
16,157,030
235,668
158,475 DI futures
(923,871)
(863,379)
(90,426)
(35,562) DI futures
(1,207,189)
(1,075,220)
(158,907)
(627,507)
(559,838)
(15,856)
(332,729)
(307,399)
(28,151)
(2,821) DI futures
(57,672)
7,758
Notional value (R$)
12.31.2012 12.31.2011
(12,472,870) (13,233,596)
Fixed funding, 8.8.2011 –
R$ 800,000 (3)
934,715
895,049
(113,283) Fixed swap x Libor1,207,189
1,075,220
Fixed funding, 1.27.2011 –
US$ 500,000 (4)
Fixed funding, 5.16.2011 –
US$ 300,000 (3)
Fixed funding – R$ 300,000
Total
(3)
949 DDI futures
631,365
573,948
335,356
306,348
(1) Financial assets and liabilities with fixed rates, mainly credit operations and funding – Note 13 (c).
(2) Fully recorded in profit (loss).
(3) Note 10(c) – Funds from acceptance and issuance of securities.
(4) Note 10(e) – Subordinated debt.
The effectiveness of hedges designated by Safra for accounting purposes is in accordance with the parameters set out in BACEN
Circular 3,082/2002.
83
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 84
BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
8. CREDIT PORTFOLIO
a) Credit operations and the related allowance per risk level
BANK
12.31.2012
Risk levels
AA
A
B
C
acquired
15,505,071
4,168,604
933,799
632,603
Financing
7,192,473
174,707
45,122
3,144
D
12.31.2011
E
F
G
H
Total
Total
Borrowings, discounted
receivables and portfolios
376,719 147,332
782
55
194,114
11
71,633
631,128 22,661,003 20,472,624
–
397
7,416,691
7,348,184
338
212
285
754,885
773,864
–
507
788
729,838
596,412
Rural and agro-industrial
financing
692,831
37,912
18,577
3,684
587
459
Housing loans
556,925
73,788
49,365
37,217
11,171
77
Advances on foreign exchange
contracts
1,378,548
31,899
32,137
2,801
1,230
–
1,686
–
874
1,449,175
1,231,581
Onlendings BNDES/FINAME 3,787,407
1,058,655
245,732
158,504
120,974
40,372
13,579
20,884
81,617
5,527,724
7,543,558
Direct consumer credit and leases 815,971
Direct consumer credit
Leasing operations
Other receivables
106,452
10,696
5,858
4,808
2,135
1,703
1,041
6,802
955,466
1,212,843
814,045
1,229
4,572
277
1,645
305
98
31
365
822,567
726,432
1,926
105,223
6,124
5,581
3,163
1,830
1,605
1,010
6,437
132,899
486,411
502
134,665
670,737
133,720
–
–
–
443
–
–
–
Total transactions with
credit characteristics
Past due
Normal course
Guarantees and sureties
30,062,946 5,652,017 1,335,428
843,811
516,714 190,430
211,431
94,277
209
76,770
113,602
122,458
84,456
77,367
46,474
495,149
5,651,808
1,258,658
730,209
394,256 105,974
134,064
47,803
227,244 38,612,962 39,023,668
–
–
–
30,062,946
–
–
–
–
–
–
722,393 39,629,447 39,849,803
–
1,016,485
8,410,541
826,135
8,767,100
Total with guarantees
and sureties
Minimum allowance required
Specific
General
30,062,946 5,652,017 1,335,428
843,811
516,714 190,430
211,431
94,277
722,393 48,039,988 48,616,903
–
(28,260)
(13,355)
(25,314)
(51,641)
(57,128) (105,717)
(65,997)
(722,393) (1,069,805)
(585,309)
–
(1)
(768)
(3,408)
(12,246)
(25,337)
(32,532)
(495,149)
(373,873)
–
(28,259)
(12,587)
(21,906)
(39,395)
(31,791)
(67,034)
(33,465)
(227,244)
(461,681)
(211,436)
–
–
(62,283)
(38,056)
(42,264)
(28,275)
–
(170,878)
(273,540)
(25,314) (113,924) (95,184) (147,981)
(94,272) (722,393) (1,240,683)
(858,849)
Additional allowance
–
Total allowance
–
–
(28,260)
(13,355)
(38,683)
(608,124)
Total transactions with
credit credit characteristics
at 12.31.2011
Past due at 12.31.2011
Normal course at 12.31.2011
Guarantees and sureties
30,464,013 6,020,038 1,501,509
–
30,464,013
–
799,189
407,193 198,205
50,120
61,861
347,675 39,849,803
1,799
159,218
102,566
103,935 103,646
33,563
34,939
286,469
6,018,239
1,342,291
696,623
303,258
94,559
16,557
26,922
–
–
–
–
–
–
–
826,135
61,206 39,023,668
–
8,767,100
Total with guarantees
and sureties at 12.31.2012
799,189
407,193 198,205
50,120
61,861
347,675 48,616,903
–
(30,100)
(15,015)
(23,976)
(40,717)
(59,462)
(25,060)
(43,304)
(347,675)
Specific
–
(9)
(1,592)
(3,077)
(10,394)
(31,094)
(16,781)
(24,457)
(286,469)
(373,873)
General
–
(30,091)
(13,423)
(20,899)
(30,323)
(28,368)
(8,279)
(18,847)
(61,206)
(211,436)
(80,795)
–
Minimum allowance required
84
30,464,013 6,020,038 1,501,509
Additional allowance
(9,471)
(29,498)
(29,719)
(55,864)
(39,621)
(10,019)
(18,553)
Total at 12.31.2011
(9,471)
(59,598)
(44,734)
(79,840) (121,512) (99,083)
(35,079)
(61,857) (347,675)
(585,309)
(273,540)
(858,849)
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 85
CONSOLIDATED
12.31.2012
Risk levels
AA
A
B
C
acquired
15,505,071
4,170,468
933,799
632,603
Financing
7,192,473
174,707
45,122
3,144
D
12.31.2011
E
F
G
H
Total
Total
Borrowings, discounted
receivables and portfolios
376,719 147,332
782
55
194,114
11
71,633
631,128 22,662,867 20,474,402
–
397
7,416,691
7,348,184
338
212
285
754,885
773,864
–
507
788
729,838
596,412
Rural and agro-industrial
financing
692,831
37,912
18,577
3,684
587
459
Housing loans
556,925
73,788
49,365
37,217
11,171
77
Advances on foreign exchange
contracts
1,378,548
31,899
32,137
2,801
1,230
Onlendings BNDES/FINAME 5,909,014
1,610,190
416,788
235,343
169,187
Direct consumer credit and leases1,626,640
Direct consumer credit
Leasing operations
Other receivables
–
1,686
–
52,869
16,692
23,272
874
1,449,175
1,231,581
98,355
8,531,710
8,172,584
4,009,374
374,977
646,939
180,801
69,425
43,052
36,533
183,743
7,171,484
8,873,995
1,475,499
3,884,229
364,366
615,103
159,482
65,407
39,240
33,845
153,856
6,791,027
7,639,236
151,141
125,145
10,611
31,836
21,319
4,018
3,812
2,688
29,887
380,457
1,234,759
133,720
–
–
–
502
134,665
670,737
443
–
–
–
Total transactions with
credit characteristics
Past due
Normal course
Guarantees and sureties
32,995,222 10,108,338 1,870,765 1,561,731
–
777
32,995,222 10,107,561
–
–
740,920 270,217
255,893
132,157
265,704
245,801 143,679
115,740
80,298
666,565
1,698,484 1,296,027
495,119 126,538
140,153
51,859
249,507 47,160,470 46,731,208
–
–
172,281
–
–
–
–
916,072 48,851,315 48,141,759
–
1,690,845
8,410,541
1,410,551
8,767,100
Total with guarantees
and sureties
Minimum allowance required
Specific
General
32,995,222 10,108,338 1,870,765 1,561,731
255,893
132,157
916,072 57,261,856 56,908,859
–
(50,535)
(18,708)
(46,852)
(74,058)
(81,065) (127,948)
(92,514)
(916,072) (1,407,752)
(875,483)
–
(4)
(1,723)
(7,971)
(24,580)
(43,104)
(56,209)
(666,565)
(575,913)
(38,881)
(49,478)
(37,961)
(70,078)
(36,305)
(249,507)
(549,726)
(299,570)
(22,860) (107,102)
(54,006)
(51,151)
(39,636)
–
(275,000)
(442,600)
–
(50,531)
(16,985)
Additional allowance
–
(131)
(114)
Total allowance
–
(50,666)
(18,822)
740,920 270,217
(57,870)
(858,026)
(69,712) (181,160) (135,071) (179,099) (132,150) (916,072) (1,682,752) (1,318,083)
Total transactions with
credit credit characteristics
at 12.31.2011
Past due at 12.31.2011
Normal course at 12.31.2011
Guarantees and sureties
32,175,980 10,534,536 2,091,594 1,798,451
–
2,003
32,175,980 10,532,533
–
–
602,738 263,534
81,711
84,848
508,367 48,141,759
243,248
196,196 155,433
63,400
56,252
428,626
1,826,201 1,555,203
406,542 108,101
18,311
28,596
–
–
265,393
–
–
–
–
1,410,551
79,741 46,731,208
–
8,767,100
Total with guarantees
and sureties at 12.31.2012
602,738 263,534
81,711
84,848
508,367 56,908,859
–
(52,665)
(20,916)
(53,953)
(60,270)
(79,060)
(40,856)
(59,396)
(508,367)
(875,483)
Specific
–
(10)
(2,654)
(7,297)
(19,620)
(46,630)
(31,700)
(39,376)
(428,626)
(575,913)
General
–
(52,655)
(18,262)
(46,656)
(40,650)
(32,430)
(9,156)
(20,020)
(79,741)
(299,570)
(41,461) (125,713) (119,884)
(52,680)
(16,334)
(25,447)
–
(442,600)
(62,377) (179,666) (180,154) (131,740)
(57,190)
(84,843) (508,367) (1,318,083)
Minimum allowance required
32,175,980 10,534,536 2,091,594 1,798,451
Additional allowance
(9,471)
(51,610)
Total at 12.31.2011
(9,471)
(104,275)
85
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 86
BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
b) Allowance for loan losses
I - Composition of portfolio and allowance for loan losses
BANK
Credit Portfolio
12.31.2012
Minimum Allowance Required
Past Due
Normal
Total
Specific
General
Total
780,901
21,880,102
22,661,003
(494,420)
(414,909)
(909,329)
5,843
7,410,848
7,416,691
(529)
(1,388)
(1,917)
877
754,008
754,885
(436)
(849)
(1,285)
Borrowings, discounted receivables
and portfolios acquired
Financing
Rural and agro-industrial financing
Housing loans
5,554
724,284
729,838
(1,098)
(3,165)
(4,263)
Advances on foreign exchange contracts
6,340
1,442,835
1,449,175
(1,670)
(735)
(2,405)
190,439
5,337,285
5,527,724
(99,961)
(39,779)
(139,740)
25,585
929,881
955,466
(9,463)
(856)
(10,319)
Onlendings BNDES/FINAME
Direct consumer credit and leases
Direct consumer credit
Leasing operations
Other receivables
Total
Total at 12.31.2011
2,644
819,923
822,567
(659)
(93)
(752)
22,941
109,958
132,899
(8,804)
(763)
(9,567)
946
133,719
134,665
(547)
1,016,485
38,612,962
39,629,447
(608,124)
(461,681)
(1,069,805)
826,135
39,023,668
39,849,803
(373,873)
(211,436)
(585,309)
–
(547)
CONSOLIDATED
Credit Portfolio
12.31.2012
Minimum Allowance Required
Past Due
Normal
Total
Specific
General
Total
781,468
21,881,399
22,662,867
(494,423)
(414,907)
(909,330)
5,843
7,410,848
7,416,691
(529)
(1,388)
(1,917)
877
754,008
754,885
(436)
(849)
(1,285)
Borrowings, discounted receivables
and portfolios acquired
Financing
Rural and agro-industrial financing
Housing loans
5,554
724,284
729,838
(1,098)
(3,165)
(4,263)
Advances on foreign exchange contracts
6,340
1,442,835
1,449,175
(1,670)
(735)
(2,405)
Onlendings BNDES/FINAME
239,978
8,291,732
8,531,710
(120,335)
(54,715)
(175,050)
Direct consumer credit and leases
649,839
6,521,645
7,171,484
(238,988)
(73,967)
(312,955)
589,191
6,201,836
6,791,027
(209,115)
(65,141)
(274,256)
60,648
319,809
380,457
(29,873)
(8,826)
(38,699)
946
133,719
134,665
(547)
Total
1,690,845
47,160,470
48,851,315
(858,026)
(549,726)
(1,407,752)
Total at 12.31.2011
1,410,551
46,731,208
48,141,759
(575,913)
(299,570)
(875,483)
Direct consumer credit
Leasing operations
Other receivables
86
–
(547)
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 87
II - Changes in the provision for credit operations
BANK
01.01 to 12.31.2012
Total
Constitution/ White-
CONSOLIDATED
01.01 to 12.31.2012
Total
Total
Constitution/
allowance allowance (reversal)
White-
Total
offs
allowance
allowance
(reversal)
offs
483,498
825,903
(400,069)
909,329
483,499
825,902
(400,068)
909,330
6,211
(394)
(3,901)
1,917
6,211
(394)
(3,901)
1,917
753
1,076
(545)
1,285
753
1,076
(545)
1,285
(785)
4,263
5,595
(548)
–
2,405
622
1,783
Borrowings, discounted receivables
and portfolios acquired
Financing
Rural and agro-industrial financing
Housing loans
5,595
(548)
622
1,783
Onlendings BNDES/FINAME
56,534
114,996
(31,790)
139,740
68,483
147,051
(40,484)
175,050
Direct consumer credit and leases
30,262
9,634
(29,577)
10,319
308,486
285,580
(281,111)
312,955
Advances on foreign exchange contracts
Direct consumer credit
(785)
4,263
–
2,405
4,151
4,245
(7,644)
752
221,405
268,221
(215,370)
274,256
26,111
5,389
(21,933)
9,567
87,081
17,359
(65,741)
38,699
1,834
547
(1,834)
547
1,834
547
(1,834)
547
585,309
952,997
(468,501) 1,069,805
875,483
1,260,997
Additional allowance
273,540
(102,662)
442,600
(167,600)
Total allowance
858,849
850,335
Leasing operations
Other receivables
Total minimum allowance required
–
170,878
(468,501) 1,240,683 1,318,083 1,093,397
01.01 to 12.31.2012
Total
Constitution/ White-
allowance
(reversal)
offs
364,128
523,363
(302,182)
(728,728) 1,407,752
–
275,000
(728,728) 1,682,752
01.01 to 12.31.2012
Total
Total
Constitution/
allowance allowance (reversal)
White-
Total
offs
allowance
(403,014)
875,483
–
442,600
Total minimum allowance required
at 12.31.2011
585,309
516,350
762,147
Additional allowance at 12.31.2011
285,700
(12,160)
–
273,540
285,700
156,900
Total allowance at 12.31.2011
649,828
511,203
(302,182)
858,849
802,050
919,047
(403,014) 1,318,083
In recognizing the provision above, Banco Safra's Management
(R$ 290,371 at 12.31.2011) in Consolidated, of which the
does not consider only the minimum provisioning levels
provision amounted to R$ 365,313 (R$ 162,737 at 12.31.2011)
defined by CMN Resolution 2,682/1999. In addition to the
in Bank and R$ 372,439 (R$ 172,770 at 12.31.2011) in
minimum provisioning levels, Banco Safra also thoroughly
Consolidated.
analyzes the risk of loan losses supported by an internal credit
rating methodology widely tested and periodically re-evaluated
and approved by management.
c) Renegotiated loans and recovery of receivables
The recovery of receivables amounted to R$ 88,358 in the
period (R$ 1,055,629 in 2011) in Bank and R$ 121,412
(R$ 1,069,650 in 2011) in Consolidated. The balance for the
period of 2011 includes the amount of R$ 958,534 referring
to the judicial approval with an agreement signed between
The balance of renegotiated loans amounted to R$ 505,050
(R$ 279,105 at 12.31.2011) in Bank and R$ 513,933
Banco Safra S.A. and Whirlpool S.A. at 7.8.2011 to close the
ordinary collection lawsuit filed by Banco Safra since 2001.
87
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 88
BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
d) Breakdown of the portfolios and provision by maturity
BANK
12.31.2012
12.31.2011
Past due
CONSOLIDATED
12.31.2012
12.31.2011
1,016,485
826,135
1,690,845
1,410,551
15 to 30
160,171
280,831
300,645
432,657
31 to 60
223,502
155,407
401,460
302,859
61 to 90
127,924
105,441
221,854
174,460
91 to 180
237,979
154,057
367,054
254,063
181 to 365
266,909
130,399
399,832
246,512
Over 365
160,171
280,831
300,645
432,657
38,612,962
39,023,668
47,160,470
46,731,208
132,871
114,178
156,103
129,306
1 to 30
6,391,594
6,908,247
6,753,733
7,263,620
31 to 60
4,591,459
4,882,526
4,972,796
5,234,226
61 to 90
3,176,097
3,281,356
3,511,115
3,623,711
91 to 180
6,591,510
5,648,353
7,595,331
6,586,069
181 to 365
5,200,085
5,422,540
6,980,743
7,090,323
Over 365
12,529,346
12,766,468
17,190,649
16,803,953
Total
39,629,447
39,849,803
48,851,315
48,141,759
Past due operations:
Normal course
Installments overdue in days:
Overdue up to 14
Outstanding installments in days:
Nonaccrual amounts receivable greater than 60 days past due are R$ 632,812 (R$ 389,897 at 12.31.2011) in Bank and
R$ 988,740 (R$ 675,035 at 12.31.2011) in Consolidated and over 90 days R$ 504,888 (R$ 284,456 at 12.31.2011) in Bank and
R$ 766,886 (R$ 500,575 at 12.31.2011), in Consolidated.
e) Breakdown of the portfolios by activity
BANK
12.31.2012
12.31.2011
CONSOLIDATED
12.31.2012
12.31.2011
Private Sector:
Rural
762,598
784,034
787,289
789,086
Industry
11,682,648
12,579,457
12,558,799
13,063,215
Commerce
12,408,291
11,546,973
13,028,102
11,999,890
1,111,381
777,584
1,112,568
781,050
11,919,866
12,426,684
15,377,570
14,801,899
1,340,308
1,442,340
5,582,632
6,413,888
Financial institutions
Other services
Individuals
Housing
Total
88
404,355
292,731
404,355
292,731
39,629,447
39,849,803
48,851,315
48,141,759
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 89
f) Concentration of credit
CONSOLIDATED
12.31.2012
12.31.2011
10 major customers
4,599,212
4,752,187
40 major customers
6,225,456
5,771,226
50 major customers
Subtotal 100 major customers
3,574,037
3,458,297
14,398,705
13,981,710
Other customers
34,452,610
34,160,049
Total
48,851,315
48,141,759
12.31.2012
12.31.2011
8,410,541
5,327,261
13,737,802
8,767,100
5,259,254
14,026,354
5,816,984
1,511,101
6,409,717
6,096,861
2,543,445
5,386,048
g) Credit commitments (off-balance)
The off-balance amounts referring to financial guarantee contracts are as follows:
CONSOLIDATED
Guarantees, sureties and other guarantees provided
Credit limits committed (2)
Total
Contractual term:
Falling due in up to 90 days
Falling due from 91 to 365 days
Falling due after 365 days
(1)
(1) Refer to liabilities for guarantees. Sureties and other guarantees provided.
(2) Refer to credit limits granted and not used, characterized by the cancellation option by Safra, with the average term of 90 days.
9. FOREIGN EXCHANGE PORTFOLIO
Assets
Exchange purchases pending settlement (M.E.)
and Obligations for exchange purchase (M.N)
Foreign exchange variation
Interbank for timely settlement
Other
Receivables for exchange sales (M.N) and Exchange sales
pending settlement (M.E.)
Foreign exchange variation
Interbank for future settlement
Interbank for timely settlement
(–) Advances received
Other
Total
Foreign exchange transactions
BANK AND CONSOLIDATED
12.31.2012
12.31.2011
Liabilities
Assets
Liabilities
2,102,209
65,010
1,992,373
44,826
2,018,596
–
1,992,373
26,223
271,031
140,206
4,515
126,310
131,168
–
4,515
126,653
3,109,145
–
1,121,758
1,982,095
(30,320)
35,612
5,211,354
60.849
3,144,132
5.043
1,121,758
1,982,095
–
35,236
5,162,728
–
233,536
–
187,839
9,754
(8,382)
44,325
504,567
55.683
242,281
219
187,839
9,754
–
44,469
373,449
–
89
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 90
BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
10. OPEN MARKET FUNDING, BORROWINGS AND ONLENDINGS, AND MANAGED FUNDS
At December 31, funds raised comprised the following:
CONSOLIDATED
12.31.2012
(1)
Deposits (a)
Short
Long
Term
Term
6,969,334
895,418
Open market funding – own securities (b) 10,265,520
BANK
12.31.2012 12.31.2011
12.31.2011
Total
Short
Long
Term
Term
7,864,752 11,895,842
Total
1,132,880 13,028,722
Total
Total
8,034,762 13,168,894
2,037,302 12,302,822 12,754,047
3,937,560 16,691,607 12,302,822 16,691,607
7,004,688 13,983,838
2,533,964
4,643,295
2,763,175
138,155
Funds from financial bills, bills of
credit, and similar notes(c)
Structured fixed income transactions
6,979,150
(2)
Deposits from customers
Interbank deposits (a)
2,706,473
Open market funding (b)
Marketable debt securities abroad (c)
Subordinated debt (e)
Market Resources
Borrowings and onlendings (d)
Total funds raised
31,925,575
450,830
–
36,274,530
6,948,378
195,899
–
4,094,024
3,344,638
31,925,575 10,612,783
2,372,457
2,823,287
2,657,265
2,657,265
133,515
–
2,901,330
3,979,296 3,156,897
9,851,890 39,798,918 38,229,609 40,092,331
127,340
–
3,471,978
8,823,004 14,376,694
10,612,783 32,289,664 10,704,792
2,867,724
3,001,239
3,266,061 3,456,367
2,120,428
2,120,428
2,657,265 2,120,428
5,225,621 41,500,151 14,090,936
5,115,492 19,206,428 47,035,994 30,658,281
5,397,476 12,345,854
5,018,110 13,055,023
8,036,913
9,348,684 12,424,919
70,143,385 21,343,310 91,486,695 52,074,877 19,985,492 72,060,369 94,614,287 83,175,531
Managed funds (f)
–
–
35,177,656
–
–
45,085,690
–
–
Total funds under management
–
–
126,664,351
–
–
117,146,059
–
–
(1) Does not include Interbak deposits.
(2) Funds recorded in derivative financial instruments (Note 7(a)).
(3) Does not include own securities.
90
3,489,278
26,920,477 10,720,213 37,640,690 29,947,028
3,898,125
(3)
782,805
7,177,259 13,912,729 7,074,933
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 91
a) Deposits
BANK
12.31.2012
Demand deposits
Savings deposits
Interbank deposits
Time deposits
Total at 12.31.2012
Total at 12.31.2011
12.31.2011
No maturity
date
Up to
90 days
From 91 to
365 days
Over
365 days
Total
Total
955,669
1,346,916
–
–
2,302,585
2,019,470
–
–
1,503,862
1,974,862
3,478,724
12,921,841
–
–
7,123,243
3,182,914
10,306,157
11,344,057
–
–
195,899
574,401
770,300
1,260,220
955,669
1,346,916
8,823,004
5,732,177
16,857,766
27,545,588
811,639
1,207,831
14,376,694
11,149,424
–
27,545,588
CONSOLIDATED
12.31.2012
Demand deposits
Savings deposits
Interbank deposits
Time deposits
Total at 12.31.2012
Total at 12.31.2011
12.31.2011
No maturity
date
Up to
90 days
From 91 to
365 days
Over
365 days
Total
Total
936,365
1,346,916
–
–
2,283,281
2,017,498
–
–
1,399,555
1,824,156
3,223,711
4,114,491
–
–
2,498,570
2,861,897
5,360,467
9,108,491
–
–
195,899
895,418
1,091,317
1,260,220
936,365
1,346,916
4,094,024
5,581,471
11,958,776
16,500,700
809,667
1,207,831
3,471,978
11,011,224
–
16,500,700
b) Open market funding
BANK
12.31.2012
Own portfolio
National Treasury
Own securities
Third-party portfolio – National Treasury
Unrestricted portfolio – National Treasury
Total at 12.31.2012
Total at 12.31.2011
12.31.2011
Up to
90 days
From 91 to
365 days
Over
365 days
Total
Total
17,600,223
3,848,855
12,441,023
–
33,890,101
14,024,258
–
6,416,665
–
2,248,418
8,665,083
9,434,581
–
2,037,302
–
–
2,037,302
3,937,560
17,600,223
12,302,822
12,441,023
2,248,418
44,592,486
27,396,399
–
16,691,607
10,704,792
–
–
27,396,399
CONSOLIDATED
12.31.2012
Own portfolio
National Treasury
Own securities
Third-party portfolio – National Treasury
Unrestricted portfolio – National Treasury
Total at 12.31.2012
Total at 12.31.2011
12.31.2011
Up to
90 days
From 91 to
365 days
Over
365 days
Total
Total
17,600,223
3,848,855
12,076,934
–
33,526,012
13,932,249
–
6,416,665
–
2,248,418
8,665,083
9,434,581
–
2,037,302
–
–
2,037,302
3,937,560
17,600,223
12,302,822
12,076,934
2,248,418
44,228,397
27,304,390
–
16,691,607
10,612,783
–
–
27,304,390
91
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 92
BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
c) Funds from acceptance and issuance of securities
BANK
12.31.2012
12.31.2011
Up to
90 days
From 91 to
365 days
Over
365 days
Total
Total
2,875,872
4,103,278
6,933,579
13,912,729
7,074,933
Financial bills
1,733,845
2,494,666
6,822,949
11,051,460
5,300,453
Agribusiness credit Notes
1,013,360
1,145,701
66,660
2,225,721
1,564,558
Mortgage bills
64,678
68,714
797
134,189
168,571
House Loan Bills
63,989
394,197
43,173
501,359
41,351
38,590
855,014
2,372,457
3,266,061
3,456,367
38,646
–
885,225
923,871
863,379
Funds from financial bills, bills of credit and similar notes
Securities issued abroad
Medium Term Note (Reais) – Hedge – Nota 7 (d)
Medium term notes (U.S. dollar) – Hedge – Note 7 (d)
–
3,141
624,366
627,507
559,838
Medium term notes (fixed) – Hedge – Note 7 (d)
–
–
332,729
332,729
307,399
Medium term Notes (Yen) – Note 19 (c)
–
443,178
–
443,178
455,452
Medium Term Note (Other)
–
409,941
533,605
943,546
1,273,247
(56)
(1,246)
(3,468)
(4,770)
(2,948)
Total at 12.31.2012
2,914,462
4,958,292
9,306,036
17,178,790
–
Total at 12.31.2011
604,939
2,062,541
7,863,820
10,531,300
10,531,300
Incurred transaction costs – Note 3 (n)
CONSOLIDATED
12.31.2012
Up to
90 days
Funds from financial bills, bills of credit and similar notes
12.31.2011
Over
365 days
Total
Total
2,875,872
4,103,278
7,004,688
13,983,838
7,177,259
Financial bills
1,733,845
2,494,666
6,822,949
11,051,460
5,300,453
Agribusiness credit Notes
1,013,360
1,145,701
66,660
2,225,721
1,564,558
Mortgage bills
64,678
68,714
797
134,189
168,571
House Loan Bills
63,989
394,197
43,173
501,359
41,351
–
71,109
71,109
102,326
2,372,457
2,823,287
3,001,239
Debentures
Securities issued abroad
Medium Term Note (Reais) – Hedge – Nota 7 (d)
–
38,590
412,240
38,646
–
885,225
923,871
863,379
Medium term notes (U,S, dollar) – Hedge – Note 7 (d)
–
3,141
624,366
627,507
559,838
Medium term notes (fixed) – Hedge – Note 7 (d)
–
–
332,729
332,729
307,399
Medium Term Note (Other)
–
410,345
533,605
943,950
1,273,571
(1,246)
(3,468)
(4,770)
(2,948)
Incurred transaction costs – Note 3 (n)
92
From 91 to
365 days
(56)
Total at 12.31.2012
2,914,462
4,515,518
9,377,145
16,807,125
–
Total at 12.31.2011
604,939
2,062,540
7,511,019
10,178,498
10,178,498
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 93
d) Borrowings and onlendings
BANK
12.31.2012
Foreign borrowings
(1)
Transfer of financial assets
12.31.2011
Up to
90 days
From 91 to
365 days
Over
365 days
1,871,301
1,700,944
37,120
529
390
Total
Total
3,609,365
4,761,284
18,484
–
919
Lending of shares
138,478
–
–
138,478
Domestic onlendings
799,659
1,717,811
3,082,452
5,599,922
7,645,151
National Treasury
9,511
32,599
56,145
98,255
124,435
–
BNDES
94,429
201,396
361,667
657,492
1,350,755
FINAME
695,719
1,483,816
2,664,640
4,844,175
6,169,961
Total at 12.31.2012
2,809,967
3,419,145
3,119,572
9,348,684
–
Total at 12.31.2011
2,944,064
4,837,163
4,643,692
12,424,919
12,424,919
CONSOLIDATED
12.31.2012
Foreign borrowings (1)
Transfer of financial assets
Lending of shares
12.31.2011
Up to
90 days
From 91 to
365 days
Over
365 days
1,871,301
1,700,944
37,120
529
390
138,478
Total
Total
3,609,365
4,761,284
–
919
18,484
–
–
138,478
–
Domestic onlendings
1,056,440
2,378,913
5,161,739
8,597,092
8,275,255
National Treasury
9,511
32,599
56,145
98,255
124,435
BNDES
137,398
320,188
762,347
1,219,933
1,373,372
FINAME
909,531
2,026,126
4,343,247
7,278,904
6,777,448
Total at 12.31.2012
3,066,748
4,080,247
5,198,859
12,345,854
–
Total at 12.31.2011
3,023,192
5,013,721
5,018,110
13,055,023
13,055,023
(1) Linhas de crédito destinadas para financiamentos de importações e exportações.
93
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 94
BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
e) Subordinated debt
I - Analysis of balance
BANK AND CONSOLIDATED
Issue
Maturity
12.31.2012
12.31.2011
Index
2006
2016
698,767
699,279
106% of CDI
2010
2016
751,309
345,929
144,576
2010
(1)
128,015
IPCA + interest of 7.19% to 7.7%
2010
(2)
2016
203,736
206,241
114% of CDI
2020
13,244
11,673
IPCA + 7.27%
2012
2019
195,579
–
IPCA + interest 4.99% to 6.28%
2012
Bank Deposit
Certificates (CDB) (1) (3)
Financial bills (LF)
2019
128,173
–
114% CDI
(4)
2019
51,699
–
114% CDI
2012 (5)
2022
8,098
–
IPCA + interest 3.89% to 10.92%
(5)
2022
3,618
–
113% CDI
Medium term Notes –
2012 (5)
2022
2,586
–
IPCA + interest 4.41% to 10.92%
Hedge – Note 7 (d)
2011 (1)
2021
1,207,189
1,075,220
2,657,265
2,120,428
2012
2012
Total
US$ + 6.75%
(1) Operations with half yearly interest payments.
(2) Operations with interest to be paid upon the settling of the contract.
(3) Of the amount issued, R$ 1,429 (R$ 1,430 at 12.31.2011) is in the portfolio.
(4) Operations approved by Bacen on 10.18.2012, established by Letter 09062/2012-BCB/DEORFCOFI1.
(5) It is in process of approval with BACEN.
II - Transactions
BANK AND CONSOLIDATED
01.01 to 12.31.2012
At the beginning of the period
2,120,428
1,027,905
91,084
129,452
Funding
364,965
821,272
Interest paid
(147,133)
(137,333)
Exchange variation abroad
Appropriation to income
Interest
Variation in mark-to-market adjustment (hedge)
Balance at the end of the period
94
01.01 to 12.31.2011
227,921
279,132
192,754
180,033
35,167
99,099
2,657,265
2,120,428
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 95
f) Managed funds
The Safra Group is responsible for the management, administration and distribution of shares of investment funds, including
funds managed by a company JS Administração de Recursos S.A. (related party), as follows:
12.31.2012
12.31.2011
23,721,372
36,822,896
8,566,196
5,895,524
2,890,088
2,367,270
35,177,656
45,085,690
Funds in quotas
19,103,437
16,790,952
Exclusive funds
3,669,672
595,294
57,950,765
62,471,936
Financial investment funds
Other financial investment funds
Pension funds
Total funds under management
Total shareholders' funds
(1)
(1)
(1) Includes financial investments in Banco Safra S.A. of R$ 4,090,314 (R$ 4,937,359 at 12.31.2011), basically represented by resale agreements backed by
government bonds.
Income from fund management, administration and share distribution fees, recorded in 'Income from services rendered', totals
R$ 47,003 (R$ 107,466 in 2011) in Bank and R$ 212,436 (R$ 201,809 in 2011) in Consolidated (Note 13(e)). When included revenue
from related party the amount is R$ 409,260 (R$ 393,729 in 2011) – Note 19.
11. INSURANCE, REINSURANCE AND SUPPLEMENTARY PENSION PLAN OPERATIONS
a) Receivables from insurance and reinsurance operations
CONSOLIDATED
12.31.2012
12.31.2011
Premiums receivable
27,683
18,415
Reinsurance technical allowances
17,501
18,124
Deferred acquisition costs
15,017
13,737
3,649
4,847
63,850
55,123
Other insurance operating receivables
Total – Note 13 (c)
95
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:47 AM Page 96
BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
b) Securities pledge in guarantee of technical reserves
CONSOLIDATED
12.31.2012
12.31.2011
3,050,313
2,894,088
–
824,953
376,044
304,586
57,970
79,845
6,508
2,061,986
157,617
1,083,536
820,833
7,149
156,225
92,510
63,715
17,501
3,067,814
2,506,592
2,367,270
33,364
812,764
424,927
176,313
104,658
92,003
14,863
1,502,831
–
852,193
650,638
18,311
139,322
80,384
58,938
18,124
2,524,716
Securities and derivative financial instruments
Quotas of investment funds – PGBL/VGBL
Subject to repurchase agreement – Debentures/NTN-B
Private securities
Bank Deposit Certificates (CDB)(1)
Financial bills
Debentures
Shares
Promissory notes
National Treasury
National Treasury Notes
Financial Treasury Bills
National Treasury Bills
Other
Other securities
Government securities – National Treasury Bills
Quotas of investment funds – DPVAT agreement
Receivables from reinsurance operations
Total
(1) Includes R$ 27,737 (R$ 100,103 at 12.31.2011) in subordinated CDB operations.
c) Technical reserves
I - Analysis
CONSOLIDATED
Insurance
Pension Plan
12.31.2012
12.31.2011
12.31.2012
12.31.2011
Reserve for unvested and vested benefits
Provision for unearned premiums
Provision for unsettled claims
DPVAT agreement
Incurred but not reported losses (IBNR)
Premium and contributions insufficiency –
benefits to be granted
Contribution deficiency reserve –
benefits to be granted
Liability Adequacy Test (LAT)
Supplementary premium reserve
Administrative expenses
Other
Total
96
–
62,003
19,559
63,757
1,791
–
51,188
17,312
58,983
2,275
–
–
–
–
656
–
–
147,766
–
–
736
–
–
130,494
Total
12.31.2012
12.31.2011
2,893,777
–
–
–
–
2,367,208
–
–
–
–
2,893,777
62,003
19,559
63,757
1,791
2,367,208
51,188
17,312
58,983
2,275
16,422
15,866
16,422
15,866
13,631
2,791
–
608
114
2,910,921
15,866
–
–
751
15
2,383,840
13,631
2,791
656
608
114
3,058,687
15,866
–
736
751
15
2,514,334
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:49 AM Page 97
II - Changes in the mathematical provision for supplementary pension plans
CONSOLIDATED
01.01 to 12.31.2012
01.01 to 12.31.2011
2,367,208
475,884
97,726
(269,540)
(194)
222,693
2,893,777
1,823,389
400,551
257,711
(288,660)
(186)
174,403
2,367,208
Opening balance
Contributions
Net transfers accepted
Redemptions
Benefits paid
Financial restatement
Closing balance
d) Result from insurance and supplementary pension plan
CONSOLIDATED
Income from financial intermediation
Financial income from insurance and supplementary pension plan operations
Financial expenses from insurance and supplementary pension plan operations
Results from insurance, reinsurance and supplementary pension plan operations
Premium income
Changes in technical reserves
Changes in technical reserves
Changes in allowances for Liability Adequacy Test (LAT)
Claims expenses
Selling expenses
Other income and expenses (1)
Income from rendering of services with pension funds management – Note 13(e)
Total
31.12.2012
31.12.2011
13,338
236,031
(222,693)
102,152
151,926
(13,495)
(10,704)
(2,791)
(1,328)
(37,582)
2,631
25,325
140,815
14,984
189,387
(174,403)
98,413
130,009
(13,087)
(13,087)
–
(2,395)
(21,142)
5,028
21,526
134,923
(1) Includes the net result of the DPVAT agreement.
e) Liability adequacy test
The calculation of the Liability Adequacy Test (LAT) carried
out at 12.31.2012 resulted in the establishment of an additional
allowance of R$ 2,791.
proceeding, which claimed the recovery of the amounts from
undue payments arising from CPMF on fundraising transactions
and investment of Company's funds – in the period from 2002
to 2007. The income for offset was recorded in December 2011
and is disclosed in the Statement of income as a reduction factor
12. CONTINGENT ASSETS AND LIABILITIES
AND LEGAL OBLIGATIONS – TAX AND SOCIAL
of expenses for tax and pension plan contingencies (Note 13 (j)).
b) Provisions and contingent liabilities
SECURITY
Contingent liabilities are as follows:
a) Contingent assets
Safra Leasing S.A. Arrendamento Mercantil requested to the
I - Civil lawsuits
Federal Revenue Secretariat (SRF) the authorization of tax
Civil lawsuits are represented basically by indemnity claims for
credits of R$ 84,218, originated with the decision of the legal
property and/or moral damages due to direct consumer credit
97
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
operations, collections and loans, protests of notes, inclusion
causes and usual, or as special, when there is a special
of customer data in the credit reporting agencies and
characteristic in the lawsuit received, arising from the
understated inflation adjustments to saving accounts in
significance of the amount involved, or from matter with
connection with economic plans.
corporate importance or different from ordinary lawsuits.
These lawsuits are evaluated when a court notification is
The allowance recorded for mass lawsuits received is calculated
received, and are classified as mass, when related to similar
on a monthly basis at the average historical cost of payments of
causes with insignificant amount, or as special, when there is a
lawsuits terminated in the last 12 months. This average cost is
special characteristic in the lawsuit received, arising from the
restated quarterly and multiplied by the amount of outstanding
significance of the amount involved, or from matter with
lawsuits in the portfolio on the last business day of the month.
corporate importance or different from ordinary lawsuits.
The special lawsuits are evaluated individually concerning the
The allowance recorded for mass lawsuits received is calculated
likelihood of loss, and are periodically reviewed and quantified
on a monthly basis at the average historical cost of payments
based on the judicial stage, on the proof presented and on the
of lawsuits terminated in the last 12 months, also considering
jurisprudence in accordance with the evaluation of
the average of the fees paid in the same period. This average
management and internal lawyers. The provision is recorded at
cost is restated quarterly and multiplied by the amount
the full amount for proceedings classified as a probable loss.
of outstanding lawsuits in the portfolio on the last business day
of the month.
The special lawsuits are evaluated individually concerning the
At 12.31.2012 and 2011, there are no unrecognized contingent
liabilities referring to the amounts involved in the lawsuits
whose loss is classified as possible.
likelihood of loss, and are periodically reviewed and quantified
based on the judicial stage, on the proof presented and on the
III - Other risks
jurisprudence in accordance with the evaluation of
Specific contingencies quantified and provided for per
management and internal lawyers. The provision is recorded
individual evaluation, basically represented by Salary
at the full amount for proceedings classified as a probable loss.
Variations Compensation Fund (FCVS) provisions.
Unrecognized contingent liabilities amount to R$ 232,784,
IV - Tax and social security lawsuits
referring to the amounts involved in the lawsuits whose loss
is classified as possible.
Mainly represented by administrative proceedings and lawsuits
related to municipal and federal taxes.
II - Labor lawsuits
Lawsuits filed to claim alleged labor rights derived from the
labor legislation specifically relating to financial institutions,
especially overtime.
These labor lawsuits are evaluated when a court notification is
received, and are classified as mass, when related to similar
98
These are individually quantified when the notification of the
proceedings is received, based on the amounts assessed and are
accrued monthly. The provision is recorded at the full amount
for proceedings classified as a probable loss.
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:49 AM Page 99
c) The provisions recorded and the related changes for the periods are as follows
I - Civil, labor and other
BANK
01.01 to 12.31.2012
Labor
Other
Civil
Opening balance
Monetary adjustment/Charges (2)
Changes in the period reflected in income (3)
Amount recorded
Reversal
Payments
Closing balance 12.31.2012 (1)
Closing balance 12.31.2011 (1)
Guarantee deposits (4)
Guarantee securities (5)
Total amounts guaranteed at 12.31.2012
Guarantee deposits(4)
Guarantee securities(5)
Total amounts guaranteed at 12.31.2011
184,357
12,754
2,242
11,442
(9,200)
(18,859)
180,494
184,357
22,508
1,251
23,759
24,696
2,197
26,893
157,705
–
88,883
95,903
(7,020)
(55,476)
191,112
157,705
47,901
37,053
84,953
31,464
46,745
78,209
15,779
776
23,707
23,707
–
–
40,262
–
–
–
–
–
–
–
Total
357,841
13,530
114,832
131,052
(16,220)
(74,335)
411,868
342,062
70,409
38,303
108,712
56,160
48,942
105,102
01.01 to
12.31.2011
Total
246,230
–
211,053
227,554
(16,501)
(99,442)
357,841
CONSOLIDATED
Civil
Opening balance
Monetary adjustment/Charges(2)
Changes in the period reflected in income (3)
Amount recorded
Reversal
Payments
Closing balance 12.31.2012 (1)
Closing balance 12.31.2011 (1)
Guarantee deposits(4)
Guarantee securities(5)
Total amounts guaranteed at 12.31.2012
Guarantee deposits(4)
Guarantee securities(5)
Total amounts guaranteed at 12.31.2011
222,786
15,377
3,828
15,054
(11,226)
(22,583)
219,408
222,786
29,665
1,251
30,915
32,207
2,382
34,589
01.01 to 12.31.2012
Labor
Other
165,749
–
97,950
105,511
(7,560)
(59,759)
203,941
165,749
50,020
37,053
87,072
32,263
46,745
79,008
15,779
776
23,707
23,707
–
–
40,262
–
–
–
–
–
–
–
Total
404,314
16,153
125,485
144,272
(18,786)
(82,342)
463,611
388,535
79,685
38,303
117,988
64,470
49,127
113,597
01.01 to
12.31.2011
Total
270,793
–
240,427
258,043
(17,616)
(106,906)
404,314
(1) Note 13 (d)
(2) Recorded in other finance costs.
(3) Notes 13 (j) – Civil and other contingencies 13 (g) – Labor contingencies
(4) Note 13 (c)
(5) Note 6 (b)
99
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
II - Tax and Social Security Contingencies and Legal Obligations
BANK
01.01 to 12.31.2012
Tax and social
Security
Legal
Contingencies
Obligations
Opening balance
Monetary adjustment/Charges(2)
Changes in the period reflected in income
(3)
Amount recorded
(4)
Reversal
01.01 to
12.31.2011
Total (1)
Total
340,039
585,502
925,541
615,683
11,454
38,620
50,074
52,956
(117,654)
363
(117,291)
301,921
31,959
363
32,322
302,637
(149,613)
–
(149,613)
–
–
–
Payments
Other changes
1,046
–
1,046
Closing balance at 12.31.2012
234,885
624,485
859,370
Closing balance at 12.31.2011
340,039
585,502
925,541
Guarantee deposits at 12.31.2012 (5)
46,779
10,244
57,023
Guarantee deposits at 12.31.2011 (5)
25,523
10,244
35,767
(716)
(47,617)
2,598
–
925,541
CONSOLIDADO
01.01 to 12.31.2012
Tax and social
Security
Legal
Contingencies
Obligations
Opening balance
Monetary adjustment/Charges(2)
Changes in the period reflected in income
Amount recorded
(3)
Payments
Other changes
Total (1)
Total
586,760
642,282
1,229,042
838,628
24,213
42,298
66,511
70,246
(291,751)
363
(291,388)
372,063
94,311
Reversal(4)
01.01 to
12.31.2011
94,674
372,779
(386,062)
–
(386,062)
(716)
–
–
(53,038)
–
2,259
2,259
363
–
1,143
Closing balance at 12.31.2012
321,481
684,943
1,006,424
–
Closing balance at 12.31.2011
586,760
642,282
1,229,042
1,229,042
Guarantee deposits at 12.31.2012 (5)
59,498
17,360
76,858
(5)
32,858
10,244
43,102
Guarantee deposits at 12.31.2011
(1) Note 14(c)
(2) Recorded in other finance costs at 12.31.2012 and disclosed in Note 13(j) at 12.31.2011.
(3) Tax and social security contingencies – Note 13(j); Legal obligations recognized within tax expenses.
(4) Mainly comprising: (i) R$ 126,251, consisting of the reversal of the contingency for fines and charges related to the suit challenging the calculation base
used to determine the social integration program contribution (PIS) and social contribution on revenues (COFINS), on June 30, 2012, since the
classification of the likelihood of loss was change to remote subsequent to the decision handed down by the Regional Federal Court on July 27, 2012; and
(ii) R$ 260,670, consisting of the reversal of the ISS contingency related to Leasing operations, on 12.31.2012, the classification of which was changed
following the judgment of the matter by the Superior Court of Justice (STJ)
(5) Note 13(c).
100
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:49 AM Page 101
III - The main lawsuits involving tax and social security
R$ 669,463 (R$ 627,462 at 12.31.2011) in Consolidated,
contingencies are as follows
concerning the calculation and payment of taxes on income,
Tax and social security contingencies:
considered as sales and services revenue. Fully collateralized
by bank guarantees.
• Provisional Contribution on Financial Movements (CPMF) –
Cash Management: tax assessment related to the product
13. OTHER ACCOUNTS
Cash Management, because the tax authorities claimed that
there was settlement/payment of receivables, at the risk and
a) Central Bank Deposits
expense of third parties, without the related credit in the
At 12.31.2012, Central Bank deposits of R$ 722,985 (R$
beneficiary's account, and also, pursuant to Article 5, I, of
4,449,927 at 12.31.2011) in Bank and R$ 1,178,292 (R$
Law 9,311/1996, attributing the liability for payment of this
5,394,015 at 12.31.2011) in Consolidated were substantially
tax to the Bank and Consolidated, an amount of R$ 100,166
made up of compulsory collections. The gain arising from
(R$ 96,050 at 12.31.2011).
compulsory collections subject to remuneration was R$ 189,287
(R$ 264,243 in 2011) in Bank and R$ 229,956 (R$ 314,721 in
Legal obligations:
2011) in Consolidated, and has been disclosed in the Statement
• Calculation basis of PIS and COFINS, amounting to
of income as compulsory investments.
R$ 609,003 (R$ 570,682 at 12.31.2011) in Bank and
b) Negotiation and intermediation of securities
BANK
12.31.2012
12.31.2011
ASSETS
Debtors pending settlement
73,172
(1)
1,124
(1)
–
56,419
77,090
34,600
184,565
21,304
51,424
31
51,424
32
Financial assets and commodities pending settlement
20,624
483
20,624
483
LIABILITIES AND EQUITY
11,620
20,688
272,910
75,512
1,242
1
129,010
26,169
Creditors pending settlement
(1)
Settlement and clearinghouse
(1)
Financial assets and commodities pending settlement
Other
–
–
333,703
Stock exchanges – margin deposits
Settlement and clearinghouse
–
514
CONSOLIDATED
12.31.2012
12.31.2011
–
117,621
23,534
9,679
20,000
25,496
24,979
699
687
783
830
(1) Refers basically to transactions on stock exchanges recorded by J. Safra Corretora de Valores e Câmbio Ltda.
101
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
c) Other receivables
BANK
12.31.2012
12.31.2011
Deferred tax assets – Note 14 (b-I)
Debtors for deposits in guarantee of contingencies
Tax and social security contingencies and legal obligations (1)
Civil, labor – Note 12 (c-I)
Taxes and contributions to be offset
Active operations to be processed
Assignment of loans receivable
Equalization rate for credit operations
Receivables from insurance and reinsurance operations – Note 11 (a)
Hedge market adjustment – Note 7 (d)
Other
Total
178,624
180,887
110,478
70,409
32,001
19,074
741
189,316
–
235,668
42,487
878,798
155,287
218,872
162,712
56,160
26,727
95,092
10,242
78,865
–
158,475
63,890
807,450
CONSOLIDATED
12.31.2012
12.31.2011
265,556
211,176
131,491
79,685
66,399
108,008
741
189,316
63,850
235,668
82,729
1,223,443
261,871
234,517
170,047
64,470
161,190
320,413
10,242
78,865
55,123
158,475
51,324
1,332,020
(1) Payments linked to tax and social security contingencies and legal obligations are disclosed in Note 12 (c-II).
d) Other payables
BANK
12.31.2012
12.31.2011
Provision for contingent liabilities – civil, labor and other –
Note 12 (c-I)
Provision for payments to be made
Foreign creditor amounts
Credit card administration obligations
Passive operations to be processed
Roll over of amounts to release
Other
Total
411,868
171,872
52,735
84,466
23,275
357
29,617
774,190
357,841
92,672
98,687
100,186
12,696
67,788
20,293
750,163
CONSOLIDATED
12.31.2012
12.31.2011
463,611
210,278
52,735
84,466
29,134
85,835
58,810
984,869
404,314
100,489
98,700
100,186
15,678
269,535
59,859
1,048,761
e) Income from services rendered
BANK
12.31.2012
12.31.2011
Custody and investment management fee (Note 10(f))
Broker fees
Collections
Guarantees provided
Credit card operations
Exchange services
Other
Total
102
47,003
–
69,742
142,164
39,079
19,189
5,070
322,247
107,466
–
67,765
190,702
53,529
13,317
6,240
439,019
CONSOLIDATED
12.31.2012
12.31.2011
212,436
19,326
69,742
142,234
41,741
19,192
18,638
523,309
201,809
18,416
67,765
135,342
55,813
13,317
13,914
506,376
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:49 AM Page 103
f) Income from bank fees
BANK
Credit operations
Charges on DOC/TED transfers
Packages of services and registrations
Other current account services
Total
2012
2011
72,181
13,465
10,464
62,696
158,806
52,676
14,185
11,934
39,987
118,782
CONSOLIDATED
2012
2011
72,960
13,465
58,742
62,696
207,863
53,161
14,185
106,716
39,987
214,049
g) Personnel expenses
BANK
Remuneration and profit sharing
Benefits
Payroll taxes
Sub-total
Labor contingencies – Note 12 (c-I)
Dismissal of employees
Sub-total
Total
2012
2011
618,746
72,837
162,653
854,236
88,883
25,105
113,988
968,224
623,054
76,782
166,032
865,868
131,188
10,726
141,914
1,007,782
CONSOLIDATED
2012
2011
748,835
78,750
189,868
1,017,453
97,950
28,142
126,092
1,143,545
762,610
77,819
195,057
1,035,486
141,236
12,128
153,364
1,188,850
h) Administrative expenses
Facilities
Rent – Notes 19(c) and 17(a)
Publicity and advertising
Data processing and telecommunications
Third party services
Travel
Financial system services
Security and surveillance services
Transport
Protection of information
Depreciation and amortization
Legal and notary fees
Other
Total
BANK
2012
29,230
97,106
12,354
36,793
64,868
32,413
37,996
13,657
19,726
73,811
25,505
72,076
23,363
539,598
2011
25,837
97,644
9,225
43,691
70,032
15,977
35,207
11,522
21,736
68,971
18,599
82,921
25,932
527,294
CONSOLIDATED
2012
2011
31,659
27,513
89,984
45,684
14,648
11,224
40,021
52,539
77,037
88,911
34,641
17,839
40,658
37,500
14,137
11,939
20,239
22,266
75,564
81,809
34,527
38,030
96,582
113,042
16,040
23,578
585,737
571,874
103
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
i) Other operating income
BANK
2011
CONSOLIDATED
2012
2011
30.509
3.432
–
12.350
46.291
291.751
3.977
2.640
12.446
310.814
2012
2011
CONSOLIDATED
2012
2011
25.949
79.865
27.535
99.191
–
15.249
41.198
228.192
19.884
327.941
–
29.583
57.118
217.287
38.022
354.500
2012
Reversal of tax and social security contingencies and adjustment
of taxes to be offset and judicial deposits – Note 12 (c-II)
Recovery of charges and expenses
Rental income
Other
Total
117.654
3.294
–
11.160
132.108
33.003
3.432
11.074
13.414
60.923
j) Other operating expenses
BANK
Debtors for deposits in guarantee of civil and other contingencies –
Note 12(c-I)
Tax and social security contingencies – provisions and adjustment –
Note 12 (c-II)
Other
Total
14. TAXES
a) Analysis of expenses for income tax and social contribution
I - Reconciliation of income tax and social contribution charges
BANK
12.31.2012
12.31.2011
Profit before taxation
Charges (income tax and social contribution) at standard
rates – Note 3(o)
Permanent (additions) deductions
Equity in the results of domestic subsidiary and associated
companies
104
CONSOLIDATED
12.31.2012
12.31.2011
1.634.866
1.783.296
1.919.561
2.048.695
(653,946)
(713,318)
(767,824)
(819,478)
199,927
11,678
–
(114)
Exchange gain (loss) on investments abroad
Interest on capital credited individually
Dividends and interest on foreign debt bonds
Non-deductible expenses, net of non-taxable income
Deferred tax assets not recognized in the period/recognized
in previous periods
74,459
138,703
13,182
14,285
59,155
267,436
24,490
11,586
77,231
138,703
13,860
28,563
62,465
267,436
24,860
23,977
(140,499)
(189,878)
(129,117)
(353,396)
Income tax and social contribution for the period
(353,889)
(528,851)
(638,584)
(794,250)
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:49 AM Page 105
II - Tax expenses
BANK
12.31.2012
12.31.2011
CONSOLIDATED
12.31.2012
12.31.2011
PIS/COFINS
Service tax (ISS)
Municipal real estate tax (IPTU)
Tax on financial transactions (IOF)
Other
155,079
30,018
4,712
8,308
8,646
185,422
20,600
4,088
8,235
1,094
207,415
38,027
4,768
8,471
10,617
234,673
29,539
4,665
8,598
4,158
Total
206,763
219,439
269,298
281,633
b) Deferred taxes
I - Origin of income tax and social contribution
BANK
At
12.31.2011
Provision for contingencies
Civil
Labor
Other
Other
Total deferred tax assets on temporary differences –
Note 13(c)
Amount
Record
Amount
Realized
At
12.31.2012
133,966
73,743
60,223
–
21,321
58,186
9,695
39,451
9,040
13,357
(36,238)
(11,240)
(24,998)
–
(11,968)
155,914
72,198
74,676
9,040
22,710
155,287
71,543
(48,206)
178,624
Amount
Record
Amount
Realized
At
12.31.2012
64.689
12.185
43.464
9.040
48
22.480
87.217
10.587
97.804
(40.458)
(13.540)
(26.918)
–
(164)
(15.834)
(56.456)
(37.663)
(94.119)
176.460
87.710
79.710
9.040
48
30.312
206.820
58.736
265.556
CONSOLIDATED
At
12.31.2011
Provision for contingencies
Civil
Labor
Other
Adjustment to market value of trading securities
Other
Total deferred tax assets on temporary differences
Income tax and social contribution losses
Total deferred tax assets – Note 13 (c)
152.229
89.065
63.164
–
164
23.666
176.059
85.812
261.871
(1) Expensed to carrying value adjustments in equity.
II - Deferred tax liabilities
Excess depreciation
Adjustment to market value of derivative financial instruments
Adjustment to market value of available-for-sale securities (1)
Monetary adjustment of judicial deposits
Total – Note 14 (c)
12.31.2012
BANK
12.31.2011
185,942
103,212
315,709
7,974
612,837
374,168
74,278
6,618
8,615
463,679
CONSOLIDATED
12.31.2012
12.31.2011
513,881
15,604
316,485
8,460
854,430
893,019
19,388
6,766
8,781
927,954
(1) Expensed to carrying value adjustments in equity.
105
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
III - Expected realization of deferred tax assets on temporary differences, income tax and social contribution losses and deferred
taxes on excess depreciation.
BANK
Tax Credits
on Temporary
Differences
Period
2013
2014
2015
2016
2017
2018 to 2024
Total
Present Value (*)
Period
2013
2014
2015
2016
2017
2018 to 2024
Total
Present Value (*)
Provision for
Deferred Taxes
and Contributions
Net
Deferred
Taxes
(202,508)
(206,505)
(57,187)
(32,500)
(31,682)
(82,455)
(612,837)
(545,155)
(154,901)
(169,931)
(25,133)
(740)
(1,053)
(82,455)
(434,213)
(385,800)
47,607
36,574
32,054
31,760
30,629
–
178,624
159,155
CONSOLIDATED
Deferred Tax Assets
Income Tax
and Social
Temporary
Contribution
Differences
Losses
Total
53,393
42,313
37,793
37,405
35,916
–
206,820
184,317
25,428
31,754
1,554
–
–
–
58,736
55,051
Provision for
Deferred
Taxes and
Contributions
78,821
74,067
39,347
37,405
35,916
–
265,556
239,368
(447,974)
(165,742)
(87,389)
(38,814)
(31,854)
(82,657)
(854,430)
(775,597)
Net Deferred
Taxes
(369,153)
(91,675)
(48,042)
(1,409)
4,062
(82,657)
(588,874)
(536,229)
(*) For adjustment to present value, the CDI projected interest rate for future periods was used, net of tax effects.
At 12.31.2012, unrecognized deferred tax amounts on temporary differences amounted to R$ 881,364 (R$ 698,962
at 12.31.2011) in Bank and R$ 1,188,181 (R$ 979,450 at 12.31.2011) in Consolidated.
c) The tax and social security obligations are shown below
BANK
12.31.2012
12.31.2011
Income tax and social contribution payable
Taxes and contributions payable
Provision for deferred taxes and contributions – Note 14 (b-II)
Tax and social security contingencies and legal obligations – Note 12 (c-II)
Total
106
317,760
60,568
612,837
859,370
1,850,535
287,857
160,257
463,679
925,541
1,837,334
CONSOLIDATED
12.31.2012
12.31.2011
607,554
73,837
853,789
1,006,424
2,541,604
530,406
192,205
927,954
1,229,042
2,879,607
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:49 AM Page 107
15. INVESTMENTS
a) Investments – Equity in the earnings of subsidiary and associated companies
12.31.2012
Lucro Líquido
Patrimônio
(Prejuízo)
Líquido
Exercício
Part,
%
Domestic:
Safra Leasing S.A.
744,049
Safra CVC Ltda.
126,114
Safra Asset Management Ltda. (1) 210,031
Banco J. Safra S.A.
271,621
Sercom Comércio e Serviços Ltda. 1,237,351
Elong Adm. Rep. Ltda.
158,557
Safra Vida e Previdência S.A.
137,588
Safra Seguros Gerais S.A.
69,060
–
J. Safra Participações Ltda. (2)
Other
–
12.31.2011
Valor
Contábil do
Investimento
Resultado de
Equivalência
Exercício
Valor
Resultado de
Contábil do Equivalência
Investimento
Exercício
2,954,371
499,535
2,783,114
29,194
283,003
6,977
12,308
35,012
83,704
9,548
54,080
10,965
–
–
100
100
100
100
100
100
100
100
–
–
744,049
126,114
210,031
271,621
1,237,351
158,557
137,588
69,060
–
–
283,003
6,977
12,308
35,012
83,704
9,548
54,080
10,965
3,938
–
599,052
119,176
197,723
236,609
1,252,725
149,009
143,221
58,002
27,597
–
141,986
4,928
7,278
(293,503)
83,564
11,985
62,452
7,481
3,525
(502)
282
100
259,315
282
237,775
27,369
3,213,686
499,817
3,020,889
56,563
Foreign:
Banco Safra
(Cayman Islands) Limited.
259,315
Total at 12.31.2012
Total at 12.31.2011
(1) Formerly Safra Distribuidora de Títulos e Valores Mobiliários Ltda.
(2) Formerly Safra Cia. Securitizadora de Créditos Imobiliários. This investment was transferred to the controlling stockholder on 4.11.2012, due to the
capital decrease of Banco Safra (Note 17(a)).
b) Other investments
At 12.31.2012, other investments are mainly represented by shares and quotas of unrelated parties, stated at cost, in the amount
of R$ 185,372 (R$ 316,675 at 12.31.2011) in the Bank and R$ 185,433 (R$ 316,678 at 12.31.2011) in the Consolidated.
107
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
16. PROPERTY AND EQUIPMENT IN USE AND INTANGIBLE ASSETS
a) Analysis
BANK
12.31.2012
Cost
Permanent assets
Facilities, furniture and
equipment in use
IT and data processing
equipment
Construction in progress
Transportation system
Other
Intangible assets – Software
12.31.2011
Accumulated
Property
Accumulated
Property
Depreciation/
and Equip-
Depreciation/
and Equip-
Amortization
ment, net
Amortization
ment, net
152,050
(88,610)
63,440
140,772
Cost
(79,729)
61,043
49,138
(23,938)
25,200
46,433
(22,508)
23,925
74,857
11,187
12,097
4,771
74,746
(56,590)
–
(5,998)
(2,084)
(33,905)
18,267
11,187
6,099
2,687
40,841
71,212
7,646
10,710
4,771
47,527
(49,433)
–
(5,511)
(2,277)
(22,718)
21,779
7,646
5,199
2,494
24,809
CONSOLIDATED
12.31.2012
Property
Accumulated
Property
Depreciation/
and Equip-
Depreciation/
and Equip-
Amortization
ment, net
Amortization
ment, net
280,645
–
–
(185,747)
–
–
94,898
–
–
493,591
220,677
12,481
(286,210)
(111,341)
(10,130)
207,381
109,336
2,351
66,896
(37,540)
29,356
66,156
(34,341)
31,815
76,995
11,254
120,044
5,456
80,067
(57,810)
–
(87,812)
(2,585)
(34,962)
19,185
11,254
32,232
2,871
45,105
72,978
7,646
110,201
3,452
52,492
(52,540)
–
(75,533)
(2,325)
(23,505)
20,438
7,646
34,668
1,127
28,987
Cost
Permanent assets
Properties for use
Rental properties – Note 17(a)
Facilities, furniture and
equipment in use
IT and data processing
equipment
Construction in progress
Transportation system
Other
Intangible assets – Software
12.31.2011
Accumulated
Cost
b) Changes in property and equipment and intangible assets
BANK
Property and Equipment
2012
2011
Opening Balance
Acquisitions
Disposals
Exchange variation and transfers
Depreciation/amortization expenses
Closing Balance
108
61,043
17,993
(1,619)
(996)
(12,981)
63,440
51,986
22,263
(1,898)
–
(11,308)
61,043
Intangible Assets
2012
2011
24,809
28,129
(165)
592
(12,524)
40,841
14,908
17,323
(131)
–
(7,291)
24,809
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:49 AM Page 109
CONSOLIDATED
Property and Equipment
2012
2011
Opening Balance
Acquisitions
Capital decrease – Note 17(a)
Disposals
Exchange variation and transfers
Depreciation/amortization expenses
Closing Balance
17. EQUITY
a) Shares
207,381
18,407
(109,277)
(1,808)
1,309
(21,114)
94,898
Intangible Assets
2012
2011
263,358
26,543
–
(18,320)
(33,737)
(30,463)
207,381
28,987
29,104
(32)
(192)
651
(13,413)
45,105
17,815
18,870
–
(131)
–
(7,567)
28,987
approved by transferring the investment in J. Safra
Participações Ltda. with a value of R$ 110,875, to the
controlling stockholder by way of the extinction of 25,917,737
The capital of Banco Safra S.A. is represented by 757,637,598
common shares (730,695,526 at 12.31.2011) and 755,662,010
(728,790,192 at 12.31.2011) preferred shares of stockholders
domiciled in Brazil, with no par value, totaling 1,513,299,608
shares. This process was approved by the BACEN on
6.21.2012. This transactions resulted in a reduction of
R$ 109,277 in investment and net permanent assets in the
Consolidated balance sheet.
(1,459,485,718 at 12.31.2011).
Changes in capital were as follows:
At the Extraordinary General Stockholders Meeting held on
4.11.2012, a capital reduction of Banco Safra S.A. was
Common
At 12.31.2011
Capital decrease – AGE 4.11.2012
Capital increase – AGE 6.15.2012 (1)
At 12.31.2012
730,695,526
(12,975,786)
39,917,858
757,637,598
Number of shares
Preferred
Total
728,790,192
(12,941,951)
39,813,769
755,662,010
1,459,485,718
(25,917,737)
79,731,627
1,513,299,608
Total
Capital
3,980,315
(110,875)
350,000
4,219,440
(1) With Revenue reserves and approved by Central Bank of Brazil at 7.23.2012.
b) Dividends
At the Extraordinary General Meeting held on 12.28.2012,
The stockholders have a right to a minimum dividend
the stockholders approved and paid the dividend of R$ 4,718,
equivalent to 1% of the capital corresponding to common and
referring to the profit for 2012.
preferred shares, respectively.
In line item "Social and Statutory" is included the amount
At the Extraordinary General Meeting held on 12.21.2012,
of R$ 10,463 (R$ 9,708 at 12.31.2011) in the Bank and
the stockholders approved interest on capital on 12.28.2012
R$ 10,463 (R$ 9,712 at 12.31.2011) in the Consolidated,
totaling R$ 346,756, which, net of income tax represents
which relates to dividends and interest on own capital payable
R$ 294,743. The amount of R$ 5,608 was calculated based
from previous periods.
on the TJLP variation of 2008 and R$ 341,148 calculated
based on the TJLP variation of 2012.
109
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
financial agents), debentures, financial investments, derivatives
c) Revenue reserves
Revenue reserves
Legal
Special (1)
12.31.2012
12.31.2011
and other securities. There is also the credit risk in connection
2,604,150
168,647
2,435,503
2,024,647
104,599
1,920,048
with financial agreements not recorded in the Balance sheet,
(1) Reserve consists aiming to promote the formation of resources for
future development of these resources to capital, payment of interim
dividends, maintaining operating margin compatible with the development
such as loan commitments or pledging of collaterals, sureties
and guarantees.
The Credit Risk Management Committee concentrates the
Credit Risk governance to ensure a total vision across the
entire credit life cycle. In order to ensure the necessary
of the company's and / or expansion of their activities.
independence of the risk function, this committee comprises
d) Changes in the carrying value adjustment of the financial
executive officers and superintendents responsible for
assets available for sale
Corporate Risk Management, Credit Analysis, Policies,
At the beginning of the period
Adjustments in changes in fair value
Securities available for sale
Deferred taxes
Balance at the end of the period
01.01 to
12.31.2012
01.01 to
12.31.2011
10,697
412,473
721,563
(309,090)
423,170
(245)
10,943
17,726
(6,783)
10,697
(1) Note 6 (a).
Modeling and Portfolio Management, Monitoring, Collection
and Validation. Depending on the nature of the issue, the
Committee may refer it to the Board of Directors.
b) Market risk
Market risk is the possibility of losses arising from fluctuations
in market prices in the positions held.
Banco Safra tracks its total exposure to market risks, measured
18. RISK MANAGEMENT
Banco Safra has a set of rules and procedures to ensure
compliance with legal provisions, regulatory standards, best
market practices, and its internal policies. Banco Safra
concentrates its operating, liquidity and market risk
by the daily Value at Risk (VaR) at a 99% confidence level,
adopting as a policy a maximum expected loss of less than 3%
of its regulatory capital. To be able to comply with this
regulation, the Bank sets targets for Treasury that are
compatible with this risk exposure.
management frameworks on the Corporate Risk Board and
Banco Safra's market risk assessments also include the use of
its credit risk management framework on the Credit Analysis
stress metrics, contemplating crises in historical periods and
Department, thus establishing the basis for compliance with
prospective stressed economic scenarios, in addition to the
the prevailing regulations.
effects of stress among risk factor families. Additionally, stop
loss limits are established.
a) Credit risk
new products or financial instruments that may introduce new
arises when a counterparty causes a financial loss by failing to
risk factors for Treasury management. As it is responsible for
meet a contractual obligation. Significant changes in the
economy or in the financial health of a specific segment of
industry that represent a concentration in the portfolio held by
Banco Safra can result in losses that differ from those provided
mark-to-market pricing processes and result and risk
calculation, the approval of the Market Risk area is required
before new products are implemented.
for in the Balance sheet date. Therefore, Banco Safra carefully
The policies that govern market risk management – Market
controls the exposure to credit risk.
Risk Policy and Market Risk Limits Policy – are disclosed to
Exposures to this type of risk mainly arise from direct loan
operations, indirect loan operations (with the intermediation of
110
The Market Risk area actively participates in the approval of
Banco Safra is exposed to credit risk, which is the risk that
Treasury, control and support areas (liquidity and market risk
managers, internal audit, internal controls and compliance,
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:49 AM Page 111
liquidity and market risk validation and information
Capital adequacy and the use of regulatory capital are
technology) through the corporate intranet, in addition
monitored by Banco Safra, through techniques based on
to the disclosure of the Market Risk management framework to
guidelines established by the Basel Committee, as implemented
the public.
by the Brazilian Central Bank (BACEN), for oversight
purposes. The required information is submitted to the
c) Liquidity risk
Liquidity risk consists of the possibility that the Bank may not
have sufficient financial resources to honor its commitments as
appropriate body on a monthly basis.
The bank authority requires that each bank or group of bank
institutions maintains a minimum regulatory capital ratio of 11%.
a result of mismatches between payments and receipts,
considering the different currencies and settlement terms of
rights and obligations.
To manage liquidity risk, there are committees for the
Banco Safra's regulatory capital is divided into two tiers (Note 20):
Tier I capital – share capital, retained earnings and reserves for
the recognition of retained earnings.
management of assets and liabilities, convened every month,
Tier II capital – qualified subordinated debt and unearned
with the objective of defining the liquidity strategies to be
income arising from the measurement at fair value of shares
followed in a two-year horizon. Cash is monitored on a daily
available for sale.
basis and reported to the responsible managers and officers.
Risk-weighted assets are measured through a hierarchy of five
Banco Safra submits to the Brazilian Central Bank the liquidity
risk weights determined according to the nature of each asset
risk reports determined by CMN Resolution 2,804/2000, with
and its corresponding liability – in addition to reflecting
specifications established by BACEN Circular 3,393/2008.
estimated market, liquidity and credit risks and other associated
These reports are prepared based on management information
risks – considering all possible guarantees. A similar treatment
of the Investment Risk area to comply with the prevailing
is adopted for the exposure that is not accounted for, with
regulations.
some adjustments being made to reflect the more contingent
The Investment Risk area uses statistics and projections on the
behavior of payments and receipts to assess impacts on cash
nature of potential losses.
e) Operating risk
over time in a series of scenarios: planning or normality, run
off, stress and hard stress and there is also the possibility of
using an arbitrary scenario. The results from the application of
these scenarios are discussed at the meetings of the Committee
of Assets and Liabilities.
Operating risk is the possibility of incurring losses from failure,
deficiency or inadequate internal procedures, personnel and
systems, or external events.
Operating risk also includes the legal risk associated with the
inappropriateness or deficiency in agreements entered into by
d) Capital management
Banco Safra and its subsidiaries, as well as sanctions arising
Banco Safra's capital risk management objectives encompass a
from non-compliance with legal provisions and damages to
concept wider than "equity" and include the following aspects:
third parties arising from the activities performed by Banco
- Comply with the requirements established by the regulatory
bodies of the bank markets where it operates;
- Safeguard its operating capacity so that it continues providing
return to stockholders and benefits to other stakeholders; and
- Maintain a solid capital base to support the development of
Safra and its subsidiaries. The legal risk is assessed on a
continuous basis by Banco Safra´s legal areas and specific
Committees with that scope.
This definition excludes the risk of reputation or image as well
as other risks, such as strategic or business risks.
its business.
111
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
The Operating Risk Area is an independent control unit,
resale, obtainment of the price movement benefits, effective,
segregated from the internal audit. The Operating Risk Area is
expected or as the result of arbitrage. This portfolio has rigid
responsible for meeting the requirements arising from BACEN
limits defined by the risk controllers and are monitored on a
Resolution 3,380/2006 on the need for identification,
daily basis.
evaluation, monitoring, control and mitigation of operating
risk, as well as for the preparation and maintenance of the
Operating Risk Policy. It is also responsible for Internal
Control and Compliance activities.
The Banking portfolio covers all operations that do not fall into
the Trading portfolio, and are typically, structural operations
for the institutions business lines and the respective hedges that
may or may not be made through the use of derivatives. As a
f) Sensitivity analysis (Trading and Banking portfolios)
result, the derivatives in this portfolio are not used for
speculative purposes.
In accordance with the classification criteria for operations
foreseen within CMN Resolution 3,464/2007 and BACEN
Circular 3,354/2007 and the New Capital Agreement of
BASEL II, financial instruments are divided into Trading
portfolio (Trading) and Structural portfolio (Banking).
The sensitivity analysis below is a simulation and does take into
consideration Management's ability to react were such
circumstances to occur, which would certainly mitigate the
losses that would be incurred. In addition to this, the impacts
presented below do not represent accounting losses as the
The Trading portfolio consists of all operations, including
methodology used is not based on Safra's accounting practices.
derivatives, held for the purposes of trading or for hedging of
other instruments used for this strategy. They are held for
TRADING PORTFOLIO
Risk Factors
Shares
Commodities
Coupon and currencies
Fixed income
Options
112
Risk of Variation in
Share price variation
Operations subject to price variation
Foreign currency coupon rate and exchange
rate variation
Variation in interest rates denominated in Real
Foreign currency coupon rate and exchange
rate variation
Total without correlation
Total with correlation
1
12,31,2012
Scenarios
2
3
(745)
(71)
(18,623)
(1,784)
(37,245)
(3,569)
(3,178)
(7,457)
(100,272)
(866,294)
(198,673)
(1,673,956)
(46)
(11,497)
(7,905)
(1,147)
(988,120)
(856,662)
(2,295)
(1,915,738)
(1,656,565)
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:50 AM Page 113
TRADING AND BANKING PORTFOLIO
Risk Factors
Shares
Commodities
Coupon and currencies
Fixed income
Options
Risk of Variation in
Share price variation
Operations subject to price variation
Foreign currency coupon rate and exchange
rate variation
Variation in interest rates denominated in Real
Foreign currency coupon rate and exchange
rate variation
Total without correlation
Total with correlation
1
12.31.2012
Scenarios
2
3
(745)
(71)
(18,623)
(1,784)
(37,245)
(3,569)
(2,998)
(138)
(86,621)
(18,386)
(172,145)
(35,382)
(46)
(3,998)
(1,037)
(1,147)
(126,561)
(29,167)
(2,295)
(250,636)
(58,043)
The sensitivity analysis was carried out using the following
or liabilities in active markets (Level 1), the data that are
scenarios:
directly or indirectly observable as assets or similar liabilities
• Scenario 1: Application of movements of one basis point
in the interest rates, and 1% in price variations based on
market information (BM&FBovespa, Anbima etc.).
Example: the Real/Dollar rate used was R$ 2.0643 and
the 1 year pre-fixed rate was 7.15% per year.
• Scenario 2: Application of a movement of 25% in the
respective curves or prices, based on the market.
Example: the Real/Dollar rate used was R$ 2.5549 and
the 1 year pre-fixed rate was 8.92% per year.
(level 2), identical assets or liabilities in illiquid markets and
unobservable market data that reflect the very premises
of the Safra when pricing an asset or liability (Level 3).
This maximizes the use of observable inputs and minimizes
the use of unobservable inputs to determine fair value.
To arrive at an estimate of fair value of a financial instrument
measured based on unobservable market, Safra first determines
the appropriate model to be adopted and the lack of
monitoring of significant data, evaluates all data based on
relevant experience in lead data evaluation, including but not
• Scenario 3: Application of a movement of 50% in the
respective curves or prices, based on the market.
Example: the Real/Dollar rate used was R$ 3.0659 and
the 1 year pre-fixed rate was 10.71% per year.
g) Fair value of financial assets and liabilities
limited to, yield curves, interest rates, volatilities, prices on
equity or debt, exchange rates and credit curves. Also, with
respect to products that are not exchange traded, the decision
of Safra should be considered to assess the appropriate level
of valuation adjustments to reflect counterparty credit quality,
the actual amount of credit, liquidity constraints and
I - Methodology of calculating market value
parameters unobservable when relevant. Although it is believed
The fair value of financial instruments are determined based
that the valuation methods are appropriate and consistent
on the price that would be received to sell an asset or paid to
with those prevailing in the market, the use of different
transfer a liability in a transaction conducted between
methodologies or assumptions to determine the fair value
independent participants at the measurement date, without
of certain financial instruments could result in a different
favoritism. There are different levels of data that must be used
estimate of fair value at the reporting date and / or settlement.
to measure the fair value of financial instruments: the
observable data that reflect quoted prices for identical assets
113
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
II - Rating level of financial assets and liabilities at fair value
CONSOLIDATED
Level 1
Trading securities
14,655,414
National Treasury
12,291,153
Private securities
Securities issued abroad
Linked to Technical Reserve – Note 11 (b)
National Treasury
Private securities
Securities available for sale
National Treasury
Subject to Technical Reserve – National
Private securities
Securities issued abroad
Derivative financial instruments – Assets
758,118
–
18,822
Total
15,413,532
12,291,153
97
18,919
145,638
19
145,657
2,199,801
758,002
2,957,803
2,061,986
2,061,986
137,815
758,002
895,817
16,630,914
828,970
17,459,884
15,721,096
92,510
817,308
–
25,159
–
15,721,096
–
92,510
763,088
1,580,396
65,882
65,882
471,081
496,240
Non Deliverable Forward (NDF)
–
71,834
71,834
Option premiums
–
1,513
1,513
Term
2,541
Swaps – amounts receivable
–
Credit default swaps – CDS
Futures
Derivative financial instruments – Liabilities
–
2,541
397,473
–
261
22,618
–
(21,420)
397,473
261
22,618
(3,903,425)
(3,924,845)
Non Deliverable Forward (NDF)
–
(4,523)
(4,523)
Option premiums
–
(2,959,345)
(2,959,345)
Swaps – amounts payable
–
(927,846)
(927,846)
–
(11,711)
Credit default swaps – CDS
Futures
Strategy – Fair value hedge – Note 7(d)
Fixed portfolio
(21,420)
–
(11,711)
(21,420)
–
11,410,851
11,410,851
–
14,502,147
14,502,147
Fixed rate funding, 08.08.2011 – R$ 800,000
–
(923,871)
(923,871)
Fixed funding, 01.27.2011 – US$ 500,000
–
(1,207,189)
(1,207,189)
Fixed funding, 05.16.2011 – US$ 300,000
–
(627,507)
(627,507)
Fixed funding – R$ 300,000
–
(332,729)
(332,729)
(1) At 12.31.2012 and 2011 there were no transactions classified in Level 3.
114
12.31.2012 (1)
Level 2
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:50 AM Page 115
h) Exchange rate exposure
maximum Director's and Board members remuneration was
The value of exposures to gold, foreign currency and assets and
liabilities subject to exchange differences, including derivatives
financial instruments and permanent foreign investments, as
Net national exposure
Bought
Sold
Net foreign exposure
Bought
Sold
Total net exposure
72,549
10,779,653
(10,707,104)
(277,771)
8,752,935
(9,030,706)
(205,222)
management came to R$ 73,911 (R$ 40,236 in 2011) in
Banco Safra S.A. and R$ 73,911 (R$ 72,688 in 2011)
in Consolidated.
presented to the legal authorities, are:
CONSOLIDATED
12.31.2012
established at R$ 136,000. Remuneration received by
The Group does not possess any long-term benefits, contract
12.31.2011
(87,680)
8,004,834
(8,092,514)
(105,438)
7,733,473
(7,838,911)
(193,118)
The risk management structures in relation to market, credit
and operating risk are on the Banco Safra website
(www.safra.com.br). The risk management report will be
available at this address within the time period established by
BACEN Circular 3,477/2009.
termination benefits, or share-based payment arrangements for
any key management personnel.
b) Ownership interest:
Integral interest from Joseph Yacoub Safra.
c) Related-party transactions
Transactions between related parties are disclosed in
accordance with CMN Resolution 3,750/2009. These are
arms length transactions, in the sense that their value, period of
execution, and rates involved are the market average at the
time of the transaction.
Transactions between consolidated companies were eliminated
for the purposes of the consolidated financial statements and
continue to be considered void of risk.
19. RELATED-PARTY TRANSACTIONS
a) Management remuneration
At the Remuneration Committee Meeting held in 3.15.2012
and subsequent General Meetings of Stockholders, the
115
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
BANK
Assets / (Liabilities)
Cash
Banco Safra Luxemburgo
Safra National Bank of New York
Open market fundraising – Banco J. Safra S.A.
Aplicações em moedas estrangeiras
Banco Safra Luxemburgo
Safra National Bank of New York
Securities and derivative financial instruments
Debêntures – Safra Leasing S.A. –
Arrendamento Mercantil
Banco Safra (Cayman Islands) Limited,
Accounts receivable/(payable)
Demand deposits
Interbank deposits
Banco J. Safra S.A.
Safra Leasing S.A. – Arrendamento Mercantil
Banco Safra Luxemburgo
Safra National Bank of New York
Other companies
Open market funding – Banco J. Safra S.A.
Securities issued abroad
Banco Safra Luxemburgo
Banco Safra (Cayman Islands) Limited.
Interbank and interdepartmental
transactions – Banco J. Safra S.A.
Derivative financial instruments –
Assets/(Liabilities)
Banco J. Safra S.A.
Sercom Comércio e Serviços Ltda. (1)
Sudafin Repres. e Participações Ltda. (1)
Other companies
Negotiation and intermediation of securities
Brokerage expenses
Rental expenses
J. Safra Participações Ltda.
Kiama S.A.
Other companies
(1) Refer to structured fixed income transactions.
116
Income / (Expenses)
12.31.2012
12.31.2011
35,559
28,356
7,203
84,869
64,264
20,605
–
772,443
547,658
224,785
–
709,049
–
709,049
2,100
2,125
368
1,757
–
931
–
931
13,368,318
18,706,443
1,406,410
1,981,460
Subsidiary 13,039,596
Subsidiary
328,722
17,969,675
736,768
1,340,841
65,569
1,904,871
76,589
Related Party
Related Party
Subsidiary
Related Party
Related Party
Subsidiary
Subsidiary
Related Party
Related Party
(178)
22,563
(19,300)
(1,973)
(6,096,650) (11,625,211)
(4,000,207) (1,537,188)
(700,406) (9,171,851)
(446,919)
(176,582)
(416,914)
(371,306)
(532,204)
(368,284)
Related Party
Subsidiary
(67,000)
(507,505)
(64,327)
(443,178)
(92,009)
(514,530)
(59,078)
(455,452)
Subsidiary
(4,230)
(1,144)
Subsidiary
Subsidiary
Subsidiary
(113,003)
365,388
(436,259)
(53,759)
11,627
(1,277)
–
–
–
Subsidiary
(2)
Related Party
2012
2011
34
34
–
20
20
–
–
–
–
–
(665,110) (1,356,787)
(140,755) (242,352)
(488,551) (1,068,599)
(13,808)
(6,192)
(8,127)
(1,896)
(13,869)
(37,748)
(7,880)
(15,826)
(5,433)
(10,393)
(12,712)
(22,002)
(4,497)
(17,505)
–
–
(97,374)
145,843
(255,259)
–
12,042
266,928
258,597
(25,946)
(759)
35,036
137,169
128,780
(7,110)
–
15,499
(9)
–
(238)
(24,670)
(11,133)
(13,537)
–
–
(420)
(61,641)
(48,843)
(9,407)
(3,391)
–
–
–
–
–
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:50 AM Page 117
CONSOLIDATED
Assets / (Liabilities)
Income / (Expenses)
12.31.2012
12.31.2011
Cash
Banco Safra Luxemburgo
Safra National Bank of New York
43,994
35,164
8,830
94,085
72,396
21,689
–
Foreign currency investments
Banco Safra Luxemburgo
Safra National Bank of New York
835,792
547,658
288,134
721,055
–
721,055
2,178
368
1,810
985
–
985
Marketable securities and derivative financial instruments –
Banco Safra Luxemburgo
Demand deposits
Interbank deposits
Banco Safra Luxemburgo
Safra National Bank of New York
Other companies
–
(5,174)
(1,216,949)
(446,919)
(416,914)
(353,116)
437,735
(452)
(582,572)
(176,582)
(371,306)
(34,684)
–
–
(29,299)
(13,808)
(8,127)
(7,364)
1,339
–
(8,207)
(6,192)
(1,896)
(119)
Securities issued abroad – Banco Safra Luxemburgo
Funds from acceptance and issue of securities – Debentures
Emerald Gestão de Investimentos Ltda
Fundação Filantrópica Vick e Joseph Safra
Escola Beit Yaacov
Irati Imóveis e Representações Ltda
Other companies
(64,327)
(71,109)
(9,744)
–
(41,446)
(2,461)
(17,458)
(59,078)
(102,327)
–
(62,719)
–
(10,896)
(28,712)
5,433
(7,309)
(638)
(3,936)
(731)
(359)
(1,644)
4,497
(8,431)
–
(4,338)
–
(336)
(3,757)
(1,423)
(8)
–
–
–
–
–
30,380
–
(33,977)
(53,316)
(22,703)
(16,993)
(13,620)
32,147
–
(24,582)
(3,391)
–
–
(3,391)
–
–
Derivative financial instruments – Assets/(Liabilities) –
Banco Safra Luxemburgo
Negotiation and intermediation of securities
Insurance commissions – Canárias Corretora de Seguros S.A.
Rental expenses
J. Safra Participações Ltda. (2)
Exton Participações Ltda.
Other companies
Funds managed – Note 10 (f)
Financial investments
Revenue from management fees and fund management –
JS Asset Management S.A.
–
(37)
–
–
–
–
–
(4,090,314)
–
(4,937,359)
–
2012
2011
45
45
196,824
31
31
–
191,920
(2) In March 2012, this company held subsidiary interest in Consolidated, as from April 2012 it was classified as related party – Note 2 (b).
117
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
NOTES TO THE FINANCIAL STATEMENTS
AT DECEMBER 31, 2012 AND 2011
(ALL AMOUNTS IN THOUSANDS OF REAIS UNLESS OTHERWISE STATED)
(A FREE TRANSLATION OF THE ORIGINAL IN PORTUGUESE)
20. OPERATIONAL LIMITS
The institutions authorized to operate by the Brazilian Central Bank (BACEN) are required to maintain a regulatory capital
above the minimum of 11% of the required regulatory capital, in accordance with their operational risks. Regulatory Capital (PR)
is as follows:
CONSOLIDATED FINANCIAL
12.31.2012
12.31.2011
Regulatory Capital (PR)
Tier I
Equity
Intangible assets excluded from tier I
Carrying value adjustment excluded from tier I
Tier II
Subordinated debt
Carrying value adjustments
Required Regulatory Capital (PRE)
CONSOLIDATED
12.31.2012
12.31.2011
9,628,920
8,043,906
9,628,920
8,043,906
6,823,590
5,979,632
6,823,590
5,979,632
7,246,760
6,015,659
7,246,760
6,015,659
–
(25,330)
–
(25,330)
(423,170)
(10,697)
(423,170)
(10,697)
2,805,330
2,064,274
2,805,330
2,064,274
2,382,160
2,053,577
2,382,160
2,053,577
423,170
10,697
423,170
10,697
7,750,419
6,835,390
7,583,667
6,690,143
6,882,790
6,551,790
6,695,660
6,391,684
Credit risk – Exposures weighted by risk
factors (PEPR)
PCAM – Exchange variation exposure
167,744
167,744
–
Market risk
404,439
101,826
404,439
101,826
311,979
81,322
311,979
81,322
21,996
14,918
21,996
14,918
Trading portfolio interest rate exposure (PJUR)
Fixed rate denominated in Real (PJUR1)
Foreign currency coupon (PJUR2)
–
257,317
48,552
257,317
48,552
Price index coupon (PJUR3)
32,666
17,852
32,666
17,852
Operations subject to commodity price variation (PCOM)
10,745
1,367
10,745
1,367
Operations subject to stock price variation (PACS)
81,715
19,137
81,715
19,137
295,446
181,774
315,824
196,633
13.7
12.9
14.0
13.2
Operating risk (POPR)
Basel Index [PR*100/(PRE/0.11)]
Amount of PR calculated for covering the interest rate
risk of operations not classified in the trading
portfolio (RBAN)
Capital margin (PR-PRE-RBAN)
118
345,899
24,771
345,899
24,771
1,532,602
1,183,745
1,699,354
1,328,992
Af-RelatIngles2012Parte02_Layout 1 7/23/13 10:50 AM Page 119
21. OTHER INFORMATION
a) Insurance policy
b) Audit committee
The Audit Committee is made up of five members nominated
by the Board. Four of these are directors of the Bank, with the
Despite Banco Safra and its subsidiaries having a reduced risk
from the non-concentration of assets in one place, the Bank
nonetheless has the policy of insuring these assets to a level
necessary to cover any eventual claims.
other being independent. The Committee's aim is to monitor
and accompany: the effectiveness of internal controls, the
quality and integrity of the financial statements, and the work
of the internal and independent auditors.
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
SUMMARY OF AUDIT COMMITTEE’S REPORT
The Audit Committee of Safra Financial Group was created by statutory provision in accordance with National Monetary
Council (CMN) Resolution 3918 of May 27, 2004.
Safra Financial Group has a single Audit Committee, which is part of the structure of Banco Safra S.A., the Group’s lead
institution.
The Audit Committee has five members appointed by the Board of Directors, four of whom are directors of the company, and
one of whom is independent. A full-time secretary coordinates the committee’s activities.
The Audit Committee operates in accordance with its bylaws and an annual work plan.
In 2012 the committee’s main evaluation and supervision activities, which were conducted in the second half of the year, covered
the following items:
a) Planning and performance of independent and internal audits;
b) Solutions to recommendations and orders received from regulatory bodies;
c) Structure and functioning of Group companies’ internal controls;
d) Integrity and quality of the financial statements and the respective reports;
e) Confirmation of aspects relating to the independence and lack of restrictions on the actions of independent and internal
auditors;
f) Appraisal of compliance by the management of Safra Financial Group with the recommendations of independent and internal
auditors;
g) Integrity and quality of the financial statements in accordance with the applicable laws and regulatory standards;
h) Activities of the Ombudsman;
i) Activities to prevent money laundering and combat terrorism financing.
In addition to the above, the committee accompanied the activities of a team of inspectors from the Central Bank of Brazil and
oversaw the solutions adopted to implement their requests and recommendations.
In light of the work carried out, the Audit Committee recommends that the Board of Directors approve the consolidated financial
statements dated February 6, 2013, referring to the year ended December 31, 2012.
São Paulo, february 6, 2013
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
REPORT OF INDEPENDENT AUDITORS
To the Management and Shareholders of
Banco Safra S.A.
São Paulo – SP
We have audited the individual balance sheets of Banco Safra S.A. ( “Bank”), which comprise the balance sheet drawn up as at
December 31, 2012, the related statements of income and comprehensive income for the year and six months then ended, and
the statement of cash flow for the year ended December 31, 2012, and the consolidated financial statements of Banco Safra S.A.
and its subsidiaries and affiliates (“Consolidated”), comprising the balance sheet drawn up as at December 31, 2012, and the
related consolidated statements of income, comprehensive income and changes in equity for the year and six months then ended
and the consolidated statement of cash flow for the year ended December 31, 2012, as well as the summary of significant
accounting practices and other explanatory notes.
Management’s Responsibility for Financial Statements
Management of Bank is responsible for the preparation and fair presentation of the financial statements in accordance with the
financial reporting standards adopted in Brazil as they apply to the financial institutions authorized to operate by the Central
Bank of Brazil, and for the internal controls deemed necessary to assure the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
Independent Auditors’ Responsibility
Our responsibility is to express an opinion on the financial statements based on our audit, conducted in accordance with Brazilian
and international auditing standards. These standards require that we comply with ethical principles and plan and perform the
audit to obtain reasonable assurance that the financial statements are free from material misstatement.
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BANCO SAFRA S.A. AND BANCO SAFRA S.A. AND SUBSIDIARIES (”SAFRA CONSOLIDATED”)
REPORT OF INDEPENDENT AUDITORS
An audit involves performing selected procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including assessment of the risks of material misstatement
in the financial statements, whether due to fraud or error.
In making such risk assessments, the auditor considers the internal controls relevant to the preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the institution’s internal controls.
An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present accurately and fairly, in all material respects, the financial and equity positions of
Banco Safra S.A. and of Banco Safra S.A. and its subsidiaries and affiliates as at December 31, 2012, the results of its operations
for the year and six months ended on that date and its cash flow for the year then ended, as well as the consolidated results of its
operations and its cash flow for the year ended December 31, 2012, in accordance with the generally accepted accounting
practices adopted in Brazil as they apply to the financial institutions authorized to operate by the Central Bank of Brazil.
122
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Other Matters
Value Added Statements
We have also examined the individual and consolidated value added statements (VAS) for the year ended December 31, 2012,
drawn up by management and presented voluntarily. These statements were submitted to the same audit procedures as described
above and in our opinion are adequately presented in all material respects with regard to the financial statements considered in
aggregate.
São Paulo, february 6, 2013
PRICEWATERHOUSECOOPERS
Luiz Antonio Fossa
Auditores Independentes
Accountant
CRC nº. 2SP000160/O-5
CRC nº. 1SP196161/O-8
123
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º
BANCO SAFRA S.A.
HEADQUARTERS
Av. Paulista, 2100
Tel.: (11) 3175.7575
Cep: 01310-930
SÃO PAULO (SP)
Guarulhos International
Airport of São Paulo
1º floor - Wing B
Tel.: (11) 2413.8100
Fax: (11) 2413.8107
Cep: 07141-970
Alphaville - Barueri
Al. Rio Negro, 1084 - lj. 2
Tel.: (11) 4166.6500
Fax: (11) 4166.6544
Cep: 06454-000
Angélica
Rua Maranhão, 527
Tel.: (11) 3829.2200
Fax: (11) 3829.2202
Cep: 01240-001
Aricanduva
Av. Aricanduva, 5555 - lj. 128
Tel.: (11) 2723.7400
Fax: (11) 2723.7402
Cep: 03527-000
Barão
Rua Barão de Itapetininga, 215
Tel.: (11) 3124.7400
Fax: (11) 3124.7402
Cep: 01042-001
Berrini
Av. Eng. Luís Carlos Berrini, 1062
Tel.: (11) 5503.2200
Fax: (11) 5503.2202
Cep: 04571-000
Boa Vista
Rua Boa Vista, 87
Tel.: (11) 3293.4100
Fax: (11) 3293.4102
Cep: 01014-001
Bom Retiro
Rua da Graça, 109
Tel.: (11) 3353.3399
Fax: (11) 3353.3362
Cep: 01125-001
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LOCATIONS AROUND BRAZIL
Dom José Gaspar
Av. São Luiz, 84
Tel.: (11) 3124.7300
Fax: (11) 3124.7302
Cep: 01046-010
Paraíso
Praça Oswaldo Cruz, 74
Tel.: (11) 3265.2200
Fax: (11) 3265.2202
Cep: 04004-070
Nova Campinas
Av. José de Souza Campos, 900
Tel.: (19) 3794.8500
Fax: (19) 3794.8510
Cep: 13092-123
Einstein
Av. Albert Einstein, 665
Tel.: (11) 3745.2200
Fax: (11) 3745.2202
Cep: 05652-000
Paulista/Augusta/Haddock
Lobo/ Luiz Coelho
Av. Paulista, 2100
Tel.: (11) 3175.7205
Fax: (11) 3175.7923
Cep: 01310-930
Guarulhos
Rua Felício Marcondes, 365
Tel.: (11) 2472.4100
Fax: (11) 2472.4102
Cep: 07010-030
Faria Lima
Av. Brig. Faria Lima, 1581
Tel.: (11) 3035.2200
Fax: (11) 3035.2202
Cep: 01451-001
Gabriel Monteiro
Av. Brig. Faria Lima, 1581 - sobreloja
Tel.: (11) 3035.2213
Fax: (11) 3035.2202
Cep: 01451-001
Graça
Rua da Graça, 206
Tel.: (11) 2177.5560
Fax: (11) 2177.5581
Cep: 01125-000
Higienópolis
Av. Angélica, 1263
Tel.: (11) 3821.2200
Fax: (11) 3821.2202
Cep: 01227-100
Ipiranga
Rua Silva Bueno, 1100
Tel.: (11) 2066.7100
Fax: (11) 2066.7102
Cep: 04208-000
Itaim
Rua Joaquim Floriano, 737
Tel.: (11) 3074.1600
Fax: (11) 3074.1602
Cep: 04534-012
Lapa
Rua Roma, 695
Tel.: (11) 3677.2200
Fax: (11) 3677.2202
Cep: 05050-090
Santana
Rua Voluntários da Pátria, 1409
Tel.: (11) 2224.7300
Fax: (11) 2224.7302
Cep: 02011-100
Santo Amaro
Av. Santo Amaro, 7123
Tel.: (11) 5525.2200
Fax: (11) 5525.2202
Cep: 04701-200
Sírio Libanês
Rua Barata Ribeiro, 360 - loja
Tel.: (11) 3122.6700
Fax: (11) 3122.6717
Cep: 01308-000
Sumaré
Av. Sumaré, 1106
Tel.: (11) 3868.6400
Fax: (11) 3868.6499
Cep: 05016-110
Tatuapé
Rua Cantagalo, 76
Tel.: (11) 2095.6150
Fax: (11) 2095.6162
Cep: 03323-010
Trianon
Av. Paulista, 1063
Tel.: (11) 3178.2200
Fax: (11) 3178.2204
Cep: 01311-200
Vila Maria
Av. Guilherme Cotching, 955
Tel.: (11) 2633.1111
Fax: (11) 2633.1140
Cep: 02113-013
Brás
Rua Mendes Júnior, 605
Tel.: (11) 2799.9988
Fax: (11) 2799.9982
Cep: 03013-011
Moema
Av. Min. Gabriel Resende
Passos, 500
Tel.: (11) 5053.2255
Fax: (11) 5053.2252
Cep: 05421-022
Campo Belo
Av. Vereador José Diniz, 3707
Tel.: (11) 5090.3100
Fax: (11) 5090.3131
Cep: 04603-004
Mooca
Av. Paes de Barros, 242
Tel.: (11) 2797.6699
Fax: (11) 2797.6672
Cep: 03114-000
Bauru
Rua Rio Branco - Quadra 24-65
Tel.: (14) 3104.4000
Fax: (14) 3104.4002
Cep: 17016-190
Central XV
Rua XV de Novembro, 212
Tel.: (11) 3293.7100
Fax: (11) 3293.7101
Cep: 01013-000
Morumbi
Av. Morumbi, 8384
Tel.: (11) 5097.2200
Fax: (11) 5097.2202
Cep: 04703-004
Cidade Jardim
Av. Brig. Faria Lima, 2668
Tel.: (11) 3039.2200
Fax: (11) 3039.2202
Cep: 01452-002
Pacaembu
Praça Charles Miller, 8
Tel.: (11) 2886.5509
Fax: (11) 2886.5519
Cep: 01234-010
Campinas
Cambuí
Rua Olavo Bilac, 101
Tel.: (19) 3753.8500
Fax: (19) 3753.8502
Cep: 13024-110
Vila Olímpia - JK
Av. Juscelino Kubitscheck, 1327
Tel.: (11) 3217.2512
Fax: (11) 3217.2502
Cep: 04543-011
Campinas
Rua Dr. Costa Aguiar, 700
Tel.: (19) 3733.8500
Fax: (19) 3733.8502
Cep: 13010-061
Jundiaí
Rua Rangel Pestana, 305
Tel.: (11) 4583.4399
Fax: (11) 4583.4384
Cep: 13201-000
Mogi das Cruzes
Av. Voluntário Fernando Pinheiro
Franco, 249 - loja
Condomínio Edifício Diomar
de Mello Freire
Tel.: (11) 4736.9100
Fax: (11) 4736.9120
Cep: 08710-500
Osasco
Rua Antônio Agu, 1015
Tel.: (11) 3652.2200
Fax: (11) 3652.2202
Cep: 06013-000
Piracicaba
Praça José Bonifácio, 783
Tel.: (19) 3437.8500
Fax: (19) 3437.8502
Cep: 13400-340
Ribeirão Preto
Alto da Boa Vista
Rua Inácio Luiz Pinto, 82
Tel.: (16) 3913.9560
Fax: (16) 3913.9571
Cep: 14025-680
Corporate Ribeirão
Av. Presidente Vargas, 2164
Tel.: (16) 2111.5555
Fax: (16) 2111.5585
Cep: 14025-700
Ribeirão Preto
Rua Duque de Caxias, 521
Tel.: (16) 3977.4900
Fax: (16) 3977.4913
Cep: 14015-020
Santo André
Rua Senador Flaquer, 304
Tel.: (11) 4433.3300
Fax: (11) 4433.3302
Cep: 09010-160
Santos
Rua São Francisco, 165
Tel.: (13) 3226.2200
Fax: (13) 3226.2203
Cep: 11013-201
São Bernardo do Campo
Rua Mal. Deodoro, 490
Tel.: (11) 4122.6200
Fax: (11) 4122.6202
Cep: 09710-000
São Caetano do Sul
Rua Manoel Coelho, 560
Tel.: (11) 4223.7300
Fax: (11) 4223.7302
Cep: 09510-101
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São José do Rio Preto
Rua Bernardino de Campos, 3390
Tel.: (17) 3214.6200
Fax: (17) 3214.6244
Cep: 15015-300
MANAUS (AM)
Rua José Paranaguá, 186
Tel.: (92) 2121.9110
Fax: (92) 2121.9130
Cep: 69005-130
Moinhos de Vento
Rua Mariante, 86 - lj. 3 a 5
Tel.: (51) 2139.6260
Fax: (51) 2139.6290
Cep: 90430-180
São José dos Campos
Av. 9 de Julho, 95 - lj. 2 a 4
Tel.: (12) 3924.4400
Fax: (12) 3924.4402
Cep: 12243-000
MINAS GERAIS (MG)
Belo Horizonte
Av. João Pinheiro, 215
Tel.: (31) 2122.7900
Fax: (31) 2122.7949
Cep: 30130-180
Porto Alegre
Rua dos Andradas, 1035
Tel.: (51) 2131.3722
Fax: (51) 2131.3741
Cep: 90020-007
Sorocaba
Rua São Bento, 141
Tel.: (15) 3331.8500
Fax: (15) 3331.8502
Cep: 18010-030
BELÉM (PA)
Av. Nazaré, 811
Tel.: (91) 4005.4917
Fax: (91) 4005.4916
Cep: 66035-170
Savassi
Av. do Contorno, 6082 - Funcionários
Tel.: (31) 2127.6200
Fax: (31) 2127.6209
Cep: 30110-110
Juiz de Fora
Rua Halfeld, 603 - 3º andar
Tel.: (32) 3313.3100
Fax: (32) 3313.3103
Cep 36010-002
Caxias do Sul
Rua Júlio de Castilhos, 1500
Tel.: (54) 2101.7500
Fax: (54) 2101.7522
Cep: 95010-000
Novo Hamburgo
Rua Júlio de Castilhos, 400
Tel.: (51) 2123.9900
Fax: (51) 2123.9909
Cep: 93510-130
BRASÍLIA (DF)
SCS - Qd. 6 - Bl. A - lj. 76
Ed. Sofia
Tel.: (61) 2102.4400
Fax: (61) 2102.4444
Cep: 70300-968
Uberlândia
Av. Afonso Pena, 778
Tel.: (34) 2101.1300
Fax: (34) 2101.1312
Cep: 38400-130
RECIFE (PE)
Boa Viagem
Av. Conselheiro Aguiar, 3190
Tel.: (81) 2129.7800
Fax: (81) 2129.7818
Cep: 51020-021
CAMPO GRANDE (MS)
Rua Mal. Rondon, 1740
Tel.: (67) 2106.6800
Fax: (67) 2106.6822
Cep: 79002-200
NATAL (RN)
Av. Prudente de Morais, 2936
Tel.: (84) 4005.3700
Fax.: (84) 4005.3711
Cep: 59020-510
Recife
Av. Dantas Barreto, 514
Tel.: (81) 2122.1250
Fax: (81) 2122.1277
Cep: 50010-360
CUIABÁ (MT)
Av. Hist. Rubens de Mendonça, 1757
Tel.: (65) 2121.7400
Fax: (65) 2121.7403
Cep: 78050-000
PARANÁ (PR)
Curitiba
Batel
Al. Dr. Carlos de Carvalho, 555 - 23º
Tel.: (41) 2102.5555
Fax: (41) 2102.5540
Cep: 80430-180
RIO DE JANEIRO (RJ)
Barra da Tijuca
Av. das Américas, 500
Tel.: (21) 2122.8111
Fax: (21) 2122.8132
Cep: 22640-100
FORTALEZA (CE)
Aldeota
Av. Santos Dumont, 2750
Tel.: (85) 4006.5900
Fax: (85) 4006.5914
Cep: 60150-161
Fortaleza
Rua Barão do Rio Branco, 1411
Tel.: (85) 4006.6200
Fax: (85) 4006.6244
Cep: 60025-061
Curitiba
Rua Marechal Deodoro, 240
Tel.: (41) 2106.1420
Fax: (41) 2106.1439
Cep: 80010-010
Portão
Rua Carlos Dietzsh, 120
Tel.: (41) 2106.5000
Fax: (41) 2106.5002
Cep: 80330-000
GOIÂNIA (GO)
Centro-Oeste
Av. República do Líbano, 2030 - sl. A
Tel.: (62) 4005.4220
Fax: (62) 4005.4246
Cep: 74115-030
Cascavel
Rua Barão do Cerro Azul, 1266
Tel.: (45) 2101.5200
Fax: (45) 2101.5210
Cep: 85801-080
Goiânia
Av. República do Líbano, 2030
Tel.: (62) 4005.4244
Fax: (62) 4005.4229
Cep: 74115-030
Londrina
Av. Higienópolis, 270
Tel.: (43) 2101.9440
Fax: (43) 2101.9484
Cep: 86020-040
Nova Suíça
Av. T63, 1509
Quadra 585 - Lote 01
Tel.: (62) 3237.9800
Fax: (62) 3237.9802
Cep: 74280-235
Maringá
Rua Santos Dumont, 2699
Tel.: (44) 2101.4700
Fax: (44) 2101.4710
Cep: 87013-050
MACEIÓ (AL)
Rua do Sol, 154
Tel.: (82) 2121.5200
Fax: (82) 2121.5244
Cep: 57020-070
RIO GRANDE DO SUL (RS)
Porto Alegre
Corporate Porto Alegre
Rua Mariante, 11
Tel.: (51) 4009.5554
Fax: (51) 4009.5567
Cep: 90430-181
Private Leblon
Rua Dias Ferreira, 190 - sala 702
Tel.: (21) 3797.4300
Cep: 22431-050
Rio Branco
Av. Rio Branco, 80
Tel.: (21) 2122.3400
Fax: (21) 2122.3432
Cep: 20040-070
SALVADOR (BA)
Iguatemi
Av. Tancredo Neves, 148
Shopping Center Iguatemi Bahia
Tel.: (71) 2106.8320
Fax: (71) 2106.8328
Cep: 41828-900
Salvador
Av. Estados Unidos, 14
Tel.: (71) 2106.4500
Fax: (71) 2106.4527
Cep: 40010-020
SANTA CATARINA (SC)
Blumenau
Rua 7 de Setembro, 673
Tel.: (47) 2123.6600
Fax: (47) 2123.6640
Cep: 89010-201
Chapecó
Av. Getúlio Dorneles Vargas, 927
Tel.: (49) 3661.1100
Fax: (49) 3661.1102
Cep: 89802-002
Criciúma
Rua Saldanha da Gama, 3954
Tel.: (48) 2101.3200
Fax: (48) 2101.3203
Cep: 88802-470
Bonsucesso
Rua Cardoso de Morais, 247
Tel.: (21) 2131.2300
Fax: (21) 2131.2332
Cep: 21032-000
Florianópolis
Rua Arcipreste Paiva, 187
Tel.: (48) 2107.3535
Fax: (48) 2107.3536
Cep: 88010-530
Candelária
Praça Pio X, 17
Tel.: (21) 2199.2818
Fax: (21) 2199.2927
Cep: 20040-020
Joinville
Rua do Príncipe, 158
Tel.: (47) 2101.7600
Fax: (47) 2101.7634
Cep: 89201-000
Castelo
Av. Erasmo Braga, 277
Tel.: (21) 2122.5010
Fax: (21) 2122.5031
Cep: 20020-000
SÃO LUIZ (MA)
Av. Cel. Colares Moreira, 07 - lj. 01
Tel.: (98) 2109.9620
Fax: (98) 2109.9630
Cep: 65075-440
Copacabana
Av. Atlântica, 1782 - lj. A e B
Tel.: (21) 2545.1920
Fax: (21) 2545.1903
Cep: 22021-001
VITÓRIA (ES)
Av. Nossa Senhora dos
Navegantes, 451
Tel.: (27) 2121.1777
Fax: (27) 2121.1788
Cep: 29050-335
Ipanema
Rua Visconde de Pirajá, 240
Tel.: (21) 2141.2100
Fax: (21) 2141.2132
Cep: 22410-000
BRANCHES OUTSIDE
BRAZIL
Niterói
Av. Ernani do Amaral Peixoto, 479
Tel.: (21) 2199.5600
Fax: (21) 2199.5632
Cep: 24020-072
Cayman Islands
P.O. Box 1034 KY1-1102,
Harbour Place, 4th Floor,
103 South Church Street,
Grand Cayman, Cayman Islands
Luxembourg
10-12, Boulevard F.-D. Roosevelt,
L-2450, Luxembourg
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BANCO SAFRA S.A.
Administration Board
Carlos Alberto Vieira
president
Rossano Maranhão Pinto
Alberto Joseph Safra
David Joseph Safra
João Inácio Puga
Silvio Aparecido de Carvalho
Board of Directors
Rossano Maranhão Pinto
chief executive officer
Agostinho Stefanelli Filho
Alberto Corsetti
Eduardo Pinto de Oliveira
Eduardo Sosa Filho
Hélio Albert Sarfaty
Hiromiti Mizusaki
João Eduardo de Assis Pacheco Dacache
Luiz Carlos Zambaldi
Márcio Appel
Murilo Robotton Filho
Paulo Sérgio Cavalheiro
Sérgio Luiz Ambrosi
Sidney da Silva Mano
Silvio Aparecido de Carvalho
Walton Magalhães de Campos Filho
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To obtain copies of this Banco Safra Annual Report, please write to:
Superintendência de Comunicação do Grupo Safra – Avenida Paulista, 2100 – 8º andar – São Paulo – SP – Brasil – CEP 01310-930
Design: Bloch Graulich Whelan Inc./New York