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Annual Report 2014

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GRI G4-1

The international scenario remained complicated in 2014, with different dynamics among the major economies. Signs of growth in the USA were in stark contrast to the difficulties facing several European countries that experienced a combination of low economic dynamism and deflation risk. In Asia, the slowdown in the Chinese economy, albeit a smooth landing, is challenging the policies of easing, while adversely affecting the prices of the major commodities.

Even amidst the complexities of the international scenario, the Brazilian economy returned to modest growth in the second half of 2014, thanks to the favorable conditions of the labor market, where jobs continued to be created, the formalization process continued and salaries rose in real terms. The credit markets grew at a rate compatible with economic activity on the back of a sound financial system. Prior to the realignment of relative prices arising from the larger currency depreciation and the adjustments to government-controlled prices, the Central Bank had already resumed the cycle of increases in the benchmark interest rate.

Amidst this scenario, Banco do Brasil (BB) achieved consistent results. Our adjusted net income was R$11.3 billion, representing a Return on Shareholder’ Equity (ROE) of 15.1% per annum. The Bank maintained the payout of 40%, allocating R$4,525 million to shareholder remuneration for the year. We retained our leading position in assets among the financial institutions of Latin America, with a balance of R$1.4 trillion, of which R$760.9 billion refer to the Loan Portfolio – Broad Concept.

We consolidated our position as leaders in lending within the Brazilian Banking Industry (SFN), with a 21.0% market share, while keeping delinquency ratios under control and below the average of the SFN. Worthy of note is our role as the major partner of Brazilian agribusiness, where we achieved a 63.5% share of the National Rural Lending System (SNCR). In the asset management, we continued to lead the market with a 21.7% share, which makes BB DTVM Brazil’s largest asset manager.

During 2014 we also proceeded with the biannual update of our Sustainability Plan – BB Agenda 21. Through a series of meetings with representatives of our stakeholders and between the Bank’s employees and officers, we updated our challenges and defined the actions for period from 2015 to 2017. This process is also presented in this Annual Report, in addition to accountability for the initiatives in which we engaged in 2014 and the actions envisaged for the years ahead. Bringing sustainability management more in line with reporting, in this publication we focus on the challenges considered to be priorities.

Internally we undertook an extensive process of reviewing our essence and our corporate strategy, presented in the chapter on Strategy of this report. With the involvement of different departments we reflected on our Mission, Vision and Values, positioning BB as a market bank with public spirit. This guiding principle reflects our vocation and evidences our daily, transversal challenge of reconciling public and private interests that produce sustainable results for the shareholders and benefits for all stakeholders with whom we relate.

Among the prospects for 2015, we foresee a scenario that will continue to challenge us, and we estimate that our main indicators will be in line with the results achieved in 2014. The year 2015 has begun with a slow recovery in Brazilian industry, but the challenge of holding inflation at appropriate levels, as well as the political and economic turbulence the country is currently experiencing, may affect economic activity and, consequently, our business. That is why we will continue to focus on operating efficiency and high levels of governance, as well as on ethics and strict management of security and risks to ensure the consistency and soundness that have made Banco do Brasil a respected and solid institution in the market.

The Bank’s corporate strategy for the 2015-2019 period reemphasizes our commitment to the development of Brazil and the sectors of the economy essential for this growth. We will further deepen our alignment with public policies and our support for agribusiness, infrastructure, micro and small businesses and trade finance. In our constant search for operating efficiency and return on equity, we are striving to enhance our customers’ satisfaction, investing in our human capital and engaging in sustainable relationships with all our stakeholders.

Evidencing the soundness and transparency of our management, we received several awards during the year. The Bank retained its listing, for the third consecutive year, on the Dow Jones Sustainability Index (DJSI) of the New York Stock Exchange, and for the tenth consecutive year, on the Corporate Sustainability Index (ISE) of the BM&FBOVESPA. We also reiterated our wholehearted commitment to the 10 principles of the UN Global Compact through a series of initiatives and by participating among the 30 companies comprising the Brazilian Committee of the UN Global Compact.

We wish to thank our more than 111,000 employees for their dedication and effort, without which it would not have been possible to achieve these results. We are also proud of the trust placed in us by our customers and investors, as well as the partnerships with our suppliers. Certain that these joint efforts will lead us to sustainable results, we will continue to pursue our path of growth, balancing our role in delivering competitive results, with our vocation for the development of Brazil.

CEO of Banco do Brasil
Chairman of the Board of Directors