Income from Financial Intermediation

Loans and Financing Operations. Income from credit transactions refers to interest on loans and financings related to working capital deals through loan agreements, discount of receivables, overdraft accounts, BNDES onlending and import financing.

Income from Securities consists mainly of the result from the local and foreign financial investments, fixed income investments chiefly in government bonds, and also in Agricultural Notes (CPRs); and variable income instruments (stock and investment fund quotas).

Income from Derivative Instruments is composed primarily by hedge operations through interest rates, currencies, indexes and cash flow swaps, options, futures and term deals to cover exposures from assets and liabilities related to the credit portfolio and funding.

Income from Foreign Exchange Transactions relates to interest income and FX fluctuations on Export Financing, mainly ACC/ACE transactions and income on spot FX derived from Import and Export deals.

Expenses from Financial Intermediation

Money Market Funding expenses are chiefly related to local currency funding through Time Deposits (CDs and DPGEs), Interbank Deposits, Repurchase transactions (Repos), Agro Letters of Credit (LCAs - Letras de Crédito ao Agronegócio) and Bank Notes (LFs – Letras Financeiras).

Loans, Assignments and Onlending.

These expenses are represented mainly by interest and monetary update on local and foreign borrowings and onlending resources, such as those obtained with BNDES.

Allowance for Loan Losses

Expenses reflect the variation on the balance of those accounts within a defined period calculated under the terms of Resolution 2682 from the Monetary Council dated Dec. 21, 1999 and according to the risk rating of the loans granted by the Bank. The Bank’s management may decide on the constitution of provisions additional to those required by Resolution 2682, whenever it deems necessary to provide additional protection in view of a higher default probability.

Operating Income and Expenses

Operating income (expenses) generally consist of personnel expenses, financial system fees and tariffs, administrative costs, infrastructure services in support of the Bank activities and costs from outsourced services.

Income from Services aremainly geared by fees from guarantees issued; stock, futures & mercantile exchange brokerage transactions and other financial and administrative services, including collection fees.

Personnel Expenses are basically composed by salaries, benefits and other personnel related expenses provisioned and paid to the Bank’s employees.

Other Administrative expenses are related to the maintenance of the operating infra-structure such as rental expenses, utilities, publishing, data processing, as well as financial services fees, technical support, consulting and other services expenses.

Tax expenses vary according to the evolution of income and expenses and the deductions in calculating the Social Contribution (PIS & COFINS) and Service Rendering (ISS) charges.

Other Operating Income is primarily related to positive FX effects on cash and capital abroad, charges and expenses recoveries, income on the financed sale of non-operating assets and, after the acquisition of Serglobal Cereais in March 2011, also  the income on sale and positive price fluctuation of the commodities operated by this subsidiary.

Other Operating Expenses are derived from negative FX effects on cash and capital carried out abroad, provisions for contingencies, goodwill amortization and cost of goods and services related to the activities of Serglobal, from April 2011.

Non Operating Income (Expenses)

Banco Indusval non-operating income (expenses) is mostly a result of the sale of property and rights not directly derived from the Bank’s core activity.

Income tax and Social Contribution

Income tax and social contribution expenses are recorded on the basis of the rates charged on taxable income and the establishment or reversal of tax credits.

Profit Sharing

The paid and provisioned amounts under the Profit Sharing Program of Banco Indusval established in agreement with the Bank Employees Labor Union composed such expenses.

For further details on the accounting parameters utilized by Banco Indusval & Partners, the reading of the Explanatory Notes that are integral part of the Financial Statements of the Company is recommended. The Financial Statements are available for reading and download in through the item Financial Information in the Main Menu of this website.