CONSOLIDATED ECONOMIC AND FINANCIAL PERFORMANCE
Mercantil do Brasil is positioned as a traditional medium size retail bank, aligned as a corporation and in pace with the current domestic expansionist economic cycle, having branches and outposts providing services to individuals and corporate customers strategically located in the leading financial centers of the country and featuring services to Individual, Corporate and Large Scale Company customers.
Based on this corporate profile, the bank has proven its expertise and has benefited from business opportunities; the Institution has also achieved exemplary performance in terms of prospection, credit extension and deposits raising diversity in the first half of 2008, reflected in its assets and liabilities structure.
Assets and Borrowings
Total Mercantil do Brasil consolidates assets grew to R$ 8.2 billion, with roughly 82.1% earmarked for lending operations and liquidity applications, reflecting a 26.3% increase in the last 12 months and 12.8% in the first half of 2008. Current assets in June 2008 totaled R$ 5.6 billion, 35.2% higher than short term liabilities.
Interbank investments and securities investments totaled R$ 2.5 billion depicting 10.8% growth in the last 12 months and 5.6% in the first half of 2008, equal to 30.7% of total assets as on June 30, 2008.
The bonds classified in the category held to maturity securities, which totaled R$ 1.4 million in 30 June 2008, for which, in accordance with Bacen Circular No. 3.068/01, the Bank has intention and financial capacity to maintain through maturity.
The lending operations in turn recorded a volume of R$ 4.3 billion, reflecting a significant increase of 42.5% over the last 12 months and 15.3% in the first half of 2008.
The lending operations rated as lower risk, from "AA" to "C", showed an improvement in the quality of these assets from June 2008 in 94.2% of total lending operations compared to 92.0% in December 2007, and 90.4%, in June of the previous year. There was also a 55.6% reduction in lending operations recorded under the highest risk level “H” this half.
The 3.1% percentage risk provision for lending operations is an indication of the prospecting efforts and implementation of improved operations as in June 2008, lower than the Brazilian Financial System average. The lending operations risk provision in prior periods at Mercantil do Brasil was 5.3% in December 2007 and 6.2% in June last year.
Funding
The main funding raised by the Mercantil do Brasil totaled R$ 6.0 billion in June 2008, 26.4% higher than that recorded in June 2007 and 10.7% higher when compared to December last year and comprise funds raised on the domestic and foreign markets.
Looking at the breakdown of these funds as in June 2008, it should be noted that R$ 3,051.7 million were term deposits, R$ 1,310.1 million of money-market funding and R$ 387.3 million were cash deposits. Long term funds available to the Bank are reflected by adding to these funds R$ 758.9 million in foreign securities liabilities, of which R$ 206.6 million refer to subordinate debt.
Another important highlight is that performance in the retail segment led to most of the increase in funding in the form of time deposits, thus contributing to lower costs and diversifying third-party funding.
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