Dear investors, clients, employees and analysts,
Today, we are a different bank, entirely professional and increasingly digital. Through this annual report, we want to show our stakeholders our quarterly figures as well as our transformation and development story and the evolution of the strategy we implemented, in addition to the important advances we had in our business model over the period.
The year of 2017 was marked as a period of important achievements and changes at the Bank. We implemented a series of new products and services throughout the year, aimed at bringing new clients to our client base. Thus, in addition to offering traditional structured products, we began to offer standardized products that meet our clients’ immediate cash requirements. This initiative will enable us to serve both new and old clients more completely, in addition to further reducing average ticket volumes and transaction terms. To support this strategy, we substantially expanded our origination team with the hiring of new officers who are dedicated to serving companies with annual revenues below R$ 500 million and we also expanded our product portfolio via the internet banking channel.
In addition to new products and services, our portfolio diversification strategy has proven to be very effective. Throughout the year, we increased the number of transactions with average tickets of under R$ 10 million, grew our client base with the entrance of new clients and priced new transactions more adequately. We understand that once this strategy has been fully implemented and reflected in our credit portfolio, it will bring greater resilience to our business model in the future.
One of the great highlights of 2017 was the beginning of the digitalization process of our businesses and this was reflected by the launching of our Pine Online investment platform. We created an internal Digital Channels division, which is exclusively dedicated towards exploring growth opportunities for products and services offered via the digital platform. Additionally, we also made important advances in our internal operational processes with the implementation of systems and technology that allowed the Bank to greater scale, security and agility.
We will continue to advance in our digitization process, always seeking partnership opportunities and developing more intelligent and cost-effective ways to serve our clients.
Finally, we executed changes to our management team, not only at the Executive Board but also at the Board of Directors and Audit Committee, with the objective of further corroborating to the Bank’s commitment with best Corporate Governance practices and higher levels of business management efficiency.
In terms of results, the Brazilian economy presented a recovery in 2017, recording a 1% growth after two years of a deep recession in the country (-3.8% in 2015 and -3.6% in 2016), which together resulted in GDP levels similar to the levels recorded in the first half of 2011, that is, the recession negatively impacted growth for six years.
We split the Bank’s management approach between corporate portfolio and monitored portfolio to better understand the evolution dynamics of indicators such as profitability and portfolio quality. The corporate portfolio includes credits in normal conditions and largely reflects new originations, while the monitored portfolio includes the revalued portfolio in the period, with clients classified within the E-H rating ranges.
The results of this revaluation, added to the provisions made during 2017, had a negative balance sheet impact of approximately R$ 450 million, of which R$ 375 million alone was due to allowances for doubtful accounts. As a result, Pine has increased its levels of credit portfolio coverage, both as a result of the revaluation carried out and the improved performance of the portfolio produced by the new management model.
In terms of expenses, in September 2017 we contracted Falconi Consulting’s Zero-Base Budget (OBZ) project with the objective of improving efficiency indicators and optimizing operational processes during the same period in which the Bank, and the banking industry, undergoes a technological transformation. We understand that this project will bring positive results throughout 2018.
We are certain that all these initiatives adopted during the year will give us competitive advantages to capture the improvement in the corporate segment and will create the conditions for us to safely increase the resilience of our business model in addition to efficiently regain theBank’s monetization.
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We are a wholesale bank specialized in providing credit and financial services to the corporate market. Our strategy is to establish long-term relationships and to thoroughly understand each client, its business and potential in order to build and offer tailored solutions and alternatives that generate value and meet their specific needs.
We believe our trademarks include the agility in analyzing and approving proposals, along with the creativity and proximity in which we serve our clients. Such abilities are attainable because of our management model, which is characterized by a lean internal structure, with few hierarchical levels, and a culture that is based on meritocracy and privileges the outstanding performances of our employees’ talents, which combined has marked our growth pace since the beginning of our operations, back in 1997.
Our business platforms are geographically distributed in the country’s key economic centers through 7 branches located in: Campinas, Curitiba, Porto Alegre, Ribeirão Preto, Rio de Janeiro, São José do Rio Preto and São Paulo (headquarters).
Our business model has three main action fronts:
offers traditional credit products to the corporate segment.
offers companies hedge products with the objective of protecting and managing their balance sheet market risks, as well as specialized sales of complementary products, such as investments, insurance, means of payments partnerships, simple and linked billing.
a unit of Pine Investment Bank, offering customized solutions in the Capital Markets, Financial Advisory and Project & Structured Finance areas
We offer a complete range of financial products and services, both in the domestic and international markets, through standard and tailored solutions. We seek the best alternatives to support each client's sustainable growth plan.
Standby Letter of Credit
Spot Foreign Exchange
Credit with receivable guarantees
Mergers & Acquisitions
Pine Online, our digital investment platform, offers fixed income products such as Agribusiness Credit Letters (LCA), Real Estate Credit Letter (LCI) and Bank Deposit Certificate (CDB) for individuals, with a minimum investment starting from R$ 1,000.00.
The platform can be accessed through the website www.pineonline.com.br and has detailed procedures necessary to open a totally digital and simplified account, free of cost, in addition to having a profitability simulation calculator for the products available.
Throughout our 20-year history, we faced cycles that served as guidelines for our business. Our first cycle was the foundation of the Bank by Mr. Noberto Pinheiro, a member of the prominent and traditional Pinheiro family, present in the financial markets since the 1930's. Our second cycle was our growth path, which mainly occurred after the IPO in 2007 and finally, our current cycle consists in the governance and strategic turnaround changes that has allowed the Bank to become more professional and efficient.
Banco Central do Nordeste was founded by the Pinheiro family
Norberto Pinheiro becomes one of the controlling shareholders of Banco BMC
Norberto Pinheiro sales his stake and founds Pine
According to the Brazilian Corporations Law and the Company’s Bylaws, the Board of Directors is the highest body within the corporate hierarchy and is responsible for determining the general guidelines and policies for the business. The Executive Board executes the daily administration and the implementation of the general guidelines and policies established by the Board of Directors.
Board of Directors
According to the Company’s Bylaws, the Board of Directors is composed of at least five, and at most eleven, members, all of whom are elected by the General Shareholders’ Meeting, with a unified mandate of two years and are entitled for a possible re-election.
On January 1, 2012, an Extraordinary General Meeting was held in which two new independent members were elected to the Board of Director, being them Fábio Dutra, an executive with vast experience in important financial institutions in the areas of products, innovation, commercial and market development and with a technological knowledge that adds value to the Bank’s digital transformation process and Sérgio Machado Zica de Castro, an executive with vast experience in leadership positions within the financial markets who has also been a member of the Pine Audit Committee since 2013.
As a result, Banco Pine's Board of Directors is now composed by 50% of independent members, above the regulatory minimum requirement of 20%, which guarantees higher professionalism and independence for the Company’s decision-making process.
The current composition of our Board of Directors is as follows:
|Noberto Nogueira Pinheiro||Chairman|
|Rodrigo Esteves Pinheiro||Vice-President|
|Igor Esteves Pinheiro||Member|
|Norberto Zaiet Junior||Member|
|Maílson Ferreira da Nóbrega||Independent Member|
|Gustavo Diniz Junqueira||Independent Member|
|Fábio Mendes Dutra||Independent Member|
|Sergio Machado Zica de Castro||Independent Member|
In view of the objective to ensure the strategic management and orientation of specific and relevant aspects of the business, the Board of Directors has the support of three formal committees which assist in identifying relevant issues and report directly to the Board of Directors.
According to the Bank's Bylaws and in addition to the duties provided for in laws and regulations, the Audit Committee is responsible for: (i) the quality and integrity of the financial statements; (ii) compliance with legal and regulatory requirements; (iii) the performance, independence and quality of work done by independent auditors; (iv) the performance, independence and quality of work done by the internal audit; and (v) the quality and effectiveness of internal control and risk management systems.
In a further step towards the improving our governance practices, on January 08, 2018, we held a Board of Directors Meeting in which two new members were elected to the Audit Committee: Lavínia Junqueira, a professional with over 20 years of experience in financial institutions and in auditing, in addition to being recognized by the market for her solid knowledge in regulatory, tax and legal issues, and Carlos Elder Aquino, an executive with over 20 years of experience in leadership positions in financial institutions and auditing, as well as extensive knowledge in structuring and also participated in audit committees, boards of directors and fiscal councils.
At the same Board meeting, William Pereira Pinto, a member of the Audit Committee since 2012, was appointed as Chairman of the Committee.
|William Pereira Pinto||Chairman|
|Carlos Elder Maciel de Aquino||Member|
|Lavínia Moraes de Almeida Nogueira Junqueira||Member|
The attributions of the Compensation Committee include: (i) ensure compliance with the Institutional Compensation Policy (benefits, fixed compensation, short and long term variable compensation); (ii) propose the total management compensation to be submitted to the general shareholders’ meeting; (iii) ensure that the compensation policy is competitive with market practices and at the same time compatible with the risk management policy; (iv) periodically report information on management practices and compensation structures that may be requested by regulatory bodies.
|Norberto Zaiet Junior||Member|
|Ivan Marc Farber||Member|
Capital Risk Management Committee
The purpose of the Capital Risk Management Committee is to support the Board of Directors in carrying out its responsibilities related to the Company’s risk and capital management in all its dimensions, from integrated risk and capital management structures to the definition of the adequate capital risk appetite for the exercise of its activities, seeking to be fully aligned with the business strategy and the Institution’s perpetuity of the Institution.
|Norberto Zaiet Junior||Chairman|
|Rodrigo Esteves Pinheiro||Member|
|João Vicente Peregrino de Brito||Member|
|Jefferson Dias Micelli||Member|
|José Aparecido da Silva||Member|
|Raquel Andrade Varela||Member|
|Jose do Socorro Assis||Member|
The internal committees are created to monitor and discuss relevant issues of the Bank’s areas. We currently have eleven committees, as illustrated below:
Assets and Liabilities
Compliance and PLD
Portfolio & Credit Risk
Our Executive Board is responsible for the daily administration and implementation of policies and guidelines defined by the Board of Directors. We currently have nine experienced executive directors who responsible for administrating the business and specific activities.
|Norberto Zaiet Junior||CEO|
|João Vicente Peregrino de Brito||Vice President of Financial, Credit and Risk|
|Mauro Sanchez||Vice President of Corporate and Investment Banking|
|Jefferson Dias Micelli||Legal, Compliance, PLD and SI Director|
|Raquel Varela Bastos||IR Officer and Controller|
|Sergio Luis Patricio||Client Desk Director|
|Eduardo Fonseca||Corporate and Investment Banking Director|
|Eugenio Fabbri||Technology Director|
|José Aparecido||Accounting and Tax Director|
At the end of 2017, we carried out a block trade where approximately 3.8 million preferred shares issued by Pine were sold, surpassing the minimum lot by more than 45%. This transaction allowed us to reframe our free float to the minimum mandatory level of 25%, as required by the Level 2 regulation issued by B3.
Accordingly, our shareholding structure is distributed as follows:
Base: March 31, 2018
We believe that our professionals are our greatest asset and thus we seek to invest in the development of our human capital through training, performance evaluations and feedbacks to ensure their alignment with the bank's performance strategy. In 2017, we consolidated some of our products and reviewed internal tools to meet the current management and development needs of the Bank’s employees.
Employees by Type of Employment Contract (*)
|Female Headcount||Male Headcount|
|Full-time (Fixed, CLT)||89||181|
(*) exclude board members
Employees by Position
Employees by Age Group
|Under 30 years old||42||65|
|Between 30 and 50 years old||53||119|
|Above 50 years old||7||22|
Employees by Educational Background
|Undergraduate (in course)||20||6.5%||27||8.8%||15.3%|
|Total de profissionais||102||33.1%||206||66.9%||100%|
100% of Pine’s employees are part of collective bargaining agreements
Position and Salary Structures
Our position and salary structures are strategically standardized and was created to encourage all our professionals. Positions at the Bank are divided into three levels: operational, tactical and strategic with different salary levels within each level.
Having meritocracy as one of our main relationship pillars with our professionals, we believe that we must offer full employee support for them to evolve at the Bank and, on the other hand, we expect employees to engage in our corporate culture parameters and demonstrate consistent performance to be recognized by the Institution.
The performance evaluation process is the main mechanism that guides our professionals and provides them with more transparency and equal actions for meritocratic recognition.
Having professionals with profiles that adhere with our corporate culture is one of the main objectives of the Human Resources area. To do so, the Bank's entire Attraction & Selection process is conducted internally by a team with head hunting expertise.
In order to strengthen our employer brand in the market and attract potential candidates, we launched the Bank’s Careers Page in 2017, a space in which we share information on our history, structure and values. Through this channel we also communicate our internal job opportunities to the market.
Through proactive interviews and market mappings, we gain agility and assertiveness in talent Attraction & Selection process by assessing, in addition to the required know-how and skills for the open positions, alignment with our corporate culture.
In 2017, we hired 114 employees with an average time of 38 days to fill the open job positions. We use online tools, social networks and indications by our professionals with our executive networking as main talent attraction channel.
In addition, we created an exclusive space in our corporate intranet to disclose internal job opportunities, seeking to fill our vacancies with professionals already at the Bank and interested in taking on new challenges in other areas. In 2017, 24 internal employee changes were carried out by our Internal Recruitment Program, hiring of trainees and switches of employees among areas.
Youth Talent Program
The Young Talent Program aims to develop professionals who are beginning their careers by providing them with experiences in their daily work environment, enhancing their skills and engaging them in the Bank's values and corporate culture. The three main actions are:
Trainee Program – over a 15-month period, a group of high-potential professionals have the opportunity to develop technical and behavioral skills through training, job rotation, mentoring and career guidance, focusing on the Bank's Business areas, such as Corporate Banking, Investment Banking and Client Desk.
Internship Program – Pine's internship program is ongoing, which meaning the process is open year-round with several job positions available in different areas. In addition to daily on-the-job learning experiences, interns participate in specific technical and behavior training (in person and distance learning) during the 24-month internship period. At the end of the internship and according to the intern’s performance evaluation, they can apply to open job positions.
Additionally, different approach actions are carried out throughout the year with renowned educational institutions in the country, aiming at attracting young talents who are interested in working in the financial market.
We have a simple and structured process to identify and managing the Bank's talents with the objective of getting to know their career expectations and motivations, aiming at implementing eventual development and retention actions, priorities in internal job opportunities, new challenges and management positions. Throughout 2017, a follow-up process with these professionals was carried out, in addition to the identification of new professional talents.
We believe that each professional is responsible for their own development and thus our Corporate University has as its main objective to provide support towards the technical and behavior development of our employees by offering the necessary conditions to ensure that the learning process is ongoing and diversified, by means of tools that are appropriate for our culture and that create value to the business and individuals.
A total of 66 training actions were carried out, totaling more than 1.000 hours dedicated to the learning process of professionals, both in person and through distance learning modules. This total amount represents approximately 4 hours of training per professional. We invested approximately R$ 145,000 for the qualification of our professionals.
Work Environment Survey
With the intention of understanding the demands of the Bank’s internal audience and implementing a structured process of internal environment and engagement, we carried out a new climate survey in 2017.
The results were presented to the Executive Committee, which defined action plans to be implemented throughout the institution.
Our compensation policy was elaborated according to four pillars: Culture, Business Objectives, Market Practices and Risk Management.
The compensation of our professionals is defined through the analysis of factors such as the complexity of the functions, individual performance evaluations and the compatibility with salaries offered in the market.
In addition to the fixed compensation, all our professionals are eligible to receive profit sharing according to the criteria defined by a collective bargaining agreement, as well as the Bank’s own profit-sharing program.
The employee variable compensation is calculated using the following criteria: individual performance evaluation, performance committees, performance curve and individual amounts objectively calculated through mathematical formulas.
The overall amounts of the profit-sharing program are calculated by using specific formulas which are determined according to each business division and also considers predefined percentages of the total results of each area and the institution as a whole.
Quality of Life and Benefits
We constantly seek initiatives that offer our professionals more quality of life, satisfaction and well-being at work. In 2017, we maintained the following actions:
Quality of Life: In 2017, the quality of life campaign was held in October and offered massages, nutritionist appointments, discussions on health issues, partnerships offering exclusive discounts and free gifts.
We have an integrated risk management framework through institutional policies for credit, market, liquidity, operational and capital management risks approved by senior management. Policies and controls were established in accordance with current regulations, with an integrated risk control model that guides decisions through periodic decision-making committees in order to ensure adequate capital management and risk assessments.
Integrated Risk Management Structure:
Credit risk is defined as the possibility of losses arising from the lack of compliance with payment obligations by the borrowers of diverse lines of credit.
The purpose of the credit risk management is to support credit management in the decision-making process, defining strategies and policies, establishing operational limits, mechanisms of risk mitigation and procedures designed to maintain exposure to credit risk in accordance with the appropriate risk appetite considered by the Bank's management.
Socio-environmental risk is defined as the possibility of losses due to social and environmental damages. The socio-environmental risk management observes the applicable environmental legislation, as well as evaluates and monitors the socio-environmental aspects with which the client is involved in order to subsidize the decision to provide credit when it is possible to previously identify the purpose for the use of resources.
Operational risk management is fundamental at Pine, due to the increased sophistication of products, services and technologies, regulatory changes and increased complexity of banking activities. The identification and monitoring of operational risks are vital for the prevention of losses, long-term business sustainability, assisting in the stability of profits, the preservation of organizational values and reputation.
Market risk is defined as the possibility of losses arising from changes in the market value of the positions held by the financial institution, including the risks of exchange variation, interest rates, stock prices and commodities.
Market risk management is responsible for monitoring indicators and simulating scenarios to assess the risks of exchange rate variations, benchmark rates and asset prices, controlling the risk levels and keeping them in line with the risk appetite defined by senior management.
Liquidity risk is defined as the possibility that the institution will not be able to efficiently honor its expected and unexpected current and future liabilities, including those arising from collateralization, without affecting daily operations or incurring significant losses, and the possibility that the Bank will not to be able to negotiate a position at market prices due to a position’s large volume in relation to the normal transaction volume. or market discontinuity.
Liquidity risk management is responsible for monitoring indicators and forecasting scenarios to assess the risks of mismatched flows, controlling risk levels and keeping them in line with the risk appetite defined by senior management.
We have a special role in the economy since we provide credit to various sectors and, therefore, we have a responsibility to act in an ethical and transparent way with our society. We face social and environmental issues in our business, considering the needs of our clients, employees, society and regulators.
For this, we have a Social-Environmental Responsibility Policy ("PRSA") that establishes the principles and guidelines for the social and environmental actions of our business. Thus, our social-environmental management system aims to mitigate the risk we assume when financing activities that may not comply with our policies or that represent elevated risk levels. Upon granting credit, we analyze the potential client to verify the possibility of engagement and level of socio-environmental risk it represents.
Pine - Investor Relations
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Banco PINE S.A.
Edifício Eldorado Business Tower
Av. Nações Unidas, 8.501, 30º andar
Postal Code: 05425-070
São Paulo - SP - Brasil
Phone number: 55 (11) 3372-5343
E-mail adress: email@example.com
Pine contacts for further information on sustainability and this report:
Eduardo Magalhães Fonseca - CFO
Caio Schmidt Duarte Vaz - IR Manager
Andressa Nunes - IR Analyst
Tel.: 55 (11) 3372-5409
E-mail adress: firstname.lastname@example.org
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