Brazilian Credit Card Market and Bradesco Cartões

Brazilian Credit
Card Market and
Bradesco Cartões
April 2016
1
Agenda
I.
Brazilian Credit Card Market
II. Bradesco Cartões
2
Cards billings growth (Credit + Debit)
Cards market has grown on average 20% annually over the past 10 years
Cards Billings: Credit + Debit
Temporary growth
deceleration
(R$ billion)
YoY1515-16E: 5.5% / 7.5%
Expansion was only possible because of:
High investment in infrastructure
Competitive business model
Banking and financial inclusion
Diversified products
1,080
1,150
993
853
725
614
498
336
174
2005
Source: ABECS
213
2006
401
266
2007
2008
2009
2010
2011
3
2012
2013
2014
2015
2016E
Importance of Credit Cards in Brazil
Compared to other countries, Brazil still has a lot of room for growth
Credit cards importance on Brazilian household consumption
(%)
2009
2010
Source: Brazil, ABECS and IBGE. Other countries: BIS
2013
2014
2015
2016
2017
2018
4
2019
2020
2021
2022
2023
2024
2025
51%
Canadá
2012
39%
49%
Coréia do Sul
2011
EUA
24%
França
23%
28%
Brasil
21%
28%
Brasil
19%
26%
37%
Reino Unido
33%
30%
35%
43%
46%
42%
45%
48%
2026
2027
Bradesco Cartões
• Universal bank
• Serve all client segments
• Fortress distribution channels
Strong
brand
awareness
• Fortress balance sheet
Distribution channels
Indivuduals
Legal
entities
Private Bank
Corporate
Prime
Empresas
Product mix
Distribution channels
Product mix
Value chain
Value chain
More than 20
partnerships:
FPS
Retail
Retail SME
4,507 Branches
3,511 Service Points (PAs)
Source: Internal data
5
Bradesco Cartões | High value-added solutions
Bradesco Cartões and the payments value chain
LARGEST PREPAID COMPANY
OF AMERICA!
AFFILIATION, CAPTURE,
PROCESSING AND SETTLEMENT!
Leader in the Brazilian acquiring
1o
1o
Leader in the prepaid benefit cards
OUR NATIONAL BRAND
3o
With Elo all the royalties currently
industry with a market value of R$ 65
market with the most
exported to other countries and the
billion approximately
comprehensive acceptance network
operation know-how remains in
of Brazil!
Brazil!
DIGITAL WALLET
PRACTICAL AND SAFE
LOYALTY AND SATISFACTION
AMONG TOP 10 BRAZIL ECOMMERCE
Livelo represents a strength
Partnership with top national market
solution that contributes to the
combination to enable actions
retail
advance of the market.
and offers that generate greater
Bradesco innovates and search for
1o
value for our customers and
partners!
Source: Internal data
6
Bradesco Cartões | Shareholder structure
30.1%
28.7%
50.1%
33.3%
66.7%
49.9%
100%
100%
Source: Internal data
70%
7
30%
Bradesco Cartões’ subsidiaries | Corporate Governance
Best corporate governance practice within Bradesco Cartões
Main committees
Listed company
Board of Directors
Personnel Committee
Audit Committee
Corporate Governance
Fiscal Council
Sustainability Committee
Board Support Committee
Source: Internal data
8
Bradesco Cartões | Cielo
Return to shareholders
The interests of its directors are in the best interests of its
shareholders, especially minority shareholders
Corporate Governance
Commitment to transparency
Practices that exceed the
292.6
requirements of BM&FBovespa
Ethical and sustainable behavior
100
94.2
Bradesco’s share in Cielo:
30.1%
Source: Internal data
9
Ibovespa
Mar-16
Jun-15
Sep-15
Dec-15
Sep-14
Dec-14
Mar-15
Jun-14
Dec-13
Mar-14
Jun-13
Sep-13
Dec-12
Mar-13
Jun-12
Cielo
Sep-12
Mar-12
Sep-11
Dec-11
Jun-11
Dec-10
Mar-11
Jun-10
Sep-10
Sep-09
Dec-09
Mar-10
Create value on long term
Jun-09
Efficiency and high quality of results
The leader in benefit cards in Brazil
Portfolio of simple and complete solutions,
ranging from benefit cards to prepaid cards
Benefit/voucher cards
Food
Cultural options
Pre-paid cards
Workers' Food Program (PAT)
Market share in 2014
Others,
16.1%
Alelo,
30.9%
Player 3,
23.7%
Prepax
Player 2,
29.3%
Meals
Fluel
Moneycard
FLEX CAR
Christmas
meals
Source: Internal data
~ R$500 million of net
income in 2015
Transport
voucher
10
Elo is already the 3rd largest brand in Brazil
Issued Cards
Active merchants
(# millions)
(# thousands)
thousands)
CAGR 1212-15: 99%
CAGR 1212-15: 38%
87
64
37
1,160
780
2,050
1,450
11
2012
2013
2014
2015
2012
2013
Purchase transactions
Transactions volume
(# millions)
(R$ million)
CAGR 1212-15: 221%
CAGR 1212-15: 236%
1,397
1,050
87.4
33.2
42
Source: Internal data
2015
68.2
510
2012
2014
2.3
2013
2014
2012
2015
11
2013
2014
2015
New credit cards | Upper scale segment
DIFFERENTIADED REWARDS AND
ENCHANCED POINTS ACCUMULATION
MEET THE NEEDS OF
THE MOST SOPHISTICATED SEGMENTS
ELO acceptance network will expand to 185 countries
Will be able to purchase in over
35 million merchants
Source: Internal data
12
And make withdraws in a network
of 1.7 million ATMs
Bradesco Cartões | Livelo
One of the largest (worldwide) independent and open loyalty program by coalition
Diverse group of relevant and strategic partners (generation and rescue of benefits)
Joint venture of Bradesco and Banco do Brasil
Customer experience
User-friendly
Efficiency
Main rescue partners
cost per point
(US$/points)
Value to customers
Shareholders
New channels
Quickly and efficiently
Strong fundamentals
Management team
Convenience and security
Customization
Upside
Scarcity value
+ Customer intelligence
+ Economies of scale
13
Potential for IPO
Increase importance of cards in Bradesco’s income
Cards fee and commission income / Bradesco fee and commission income
Cards fee and commission income / Card billings
%
% in 2015
Total cards’ commission
6.9%
29.5%
31.4%
33.5% 34.4%
36.2% 36.8%
38.7%
9,612
27.1%
Excluding acquiring income
5,096
2,449
Source: Internal data
Competitor B
6,024
4,202
2005
Competitor A
7,165
18.5% 17.7% 19.8%
2004
4.3%
8,129
22.7%
1,076 1,301
4.8%
3,035
4.4%
3,423
2.5%
2.4%
Competitor A
Competitor B
1,758
2006
2007
2008
2009
2010
2011
2012
2013
2014
14
2015
Bradesco Cartões | Value creation
Corporate Governance
Consistency
Strategy
&
Management
Long term value creation
Profitability & return
Sustainable growth
15
Thank you!
16