Competitive Advantages and Strategy

Competitive Advantages

Paraná Banco’s competitive strengths include:

Presence in markets with growth potencial.

The Company is well positioned in three niche markets in Brazil with large growth potential: (i) Paycheck deductible loans, where Paraná Banco has enormous growth potential to be exploited within its current base of employers; (iii) loans to the middle market segment, through specialized teams. Among other strategies to raise this portfolio is the synergy between the Bank and the Insurance Company´s clients and (ii) Surety Bonds, where the JMalucelli Seguradora is absolute leader in the surety bond market in Brazil with 28.3% market share in December 2012, according to SUSEP. The Insurance Company’s operating efficiency and profitability indicators are among the best in the market, being measured by return on equity, retention index and claims rate index; (iv) Consumer Finance Partnership in wich Paraná Banco provides funding for the issuance of credit cards in the states of Paraná, Santa Catarina, and Rio Grande do Sul.

Segmentation and products.

Additionally to the paycheck deductible loans, Paraná Banco also operates on the loan to middle market segment, Consumer Finance Partnership and reisunrance, aiming the diversification of products offered and expanding its actuation to new markets.

Reinsurance market.

Focused on the guarantee of reinsurance premiums generated by JMalucelli Seguradora, the JMalucelli Reinsurance Company was created to catch the opportunities arising from the opening of the Reinsurance market in Brazil. As a local reinsurer, JMalucelli Re and the others reinsurance companies in this category granted the right to receive 40% of reinsured premiums pursuant to SUSEP´s Dispatch 225.

Strong loan origination capacity.

The competitive advantages of Paraná Banco is also a result of its well-structured sales channel and diversified nationwide distribution network. Besides the traditional channel of banking agents, the Company has implemented an alternative sales channel, the franchise correspondent, which gives the Company competitive advantages by being innovative, low cost and unique in the Brazilian market.The Company also opened its own stores that work as regional offices and coordinate brokers and franchisees correspondents in their regions.

Broad and diversified base of employers.

Paraná Banco’s strategy has always been to diversify and expand its base of employers at a national level. The Company is able to operate small, medium-sized and large public entities at the municipal, state and federal levels, including the INSS, the armed forces, the judiciary, the federal administration, the Brazilian Company for Airport Infrastructure (Infra-estrutura Aeroportuária), or Infraero, the Post Office (Correios) and the federal, state and municipal legislative branches. Paraná Banco’s business model minimizes its exposure to the risk of default per employer by dispersing it across various regions of Brazil and in several spheres of the public administration. Besides it, because Paraná Banco is focused on payroll lending, its loan portfolio is known as of good quality, in terms of delinquency ratio.

Institutional support from the JMalucelli Group.

The reputation and success story of the JMalucelli Group, which is one of the main economic groups in the state of Paraná, contribute to the credibility of the Company’s products and services.


Paraná Banco seeks to implement the following strategies:

Priority of profitability.

While in the beginning of 2008 the competitive advantage in the payroll loans market was the volume of operations, in the end of 2008 it became the ability to operate agreements in a better profitability terms. In June 2008, Paraná Banco anticipated this trend and restructured its portfolio giving more priority to operate more profitable agreements. The strategy now on is to keep the profitability of its credit portfolio combined with an organic growth of payroll loans portfolio and loans to middle market.

Increase the Middle Market share on total portfolio by intensifying the sinergies with JMalucelli's Group and JMalucellis Seguradora.

The strategy is to increase the middle market portion of the consolidated portfolio by focusing on companies in Paraná, where the JMalucelli Group thrives, and in São Paulo through synergies with JMalucelli Seguradora’s clients.

In Intensify the participation of new products.

Paraná Banco concerns about the diversification of its portfolio of products. For this reason, at the end of 2007, Paraná Banco started to operate on the loan to medium-sized companies segment. The middle market portfolio might increase its participation on the total Paraná Banco´s loan portfolio. In line with this strategy of diversification, in 2012, Paraná Banco was authorized to offer BNDES credit facilities.

Take advantage of the opportunities of infrastructure investiments and operate in the Property & Casualty market.

There are high expectations of growth for investments in infrastructure and therefore for the surety bond market. JMalcelli Seguradora´s experience and procedures in the issuing of surety bond policies, combined with JMalucelli Resseguradora supportive premium retention, enable Paraná Banco to take advantage of this opportunity.

Together with Travelers Companies Inc , Parana Banco intend to operate in the Property & Casualty market and intensify the participation of JMalucelli Resseguradora in the reinsurance market in Latin America.

Improve credit analysis process.

With its experience and procedures in the concession of surety bond policies, Paraná Banco has led the market since 1997 through JMalucelli Seguradora. Due to the implementation of a credit analysis system by points, a great amount of policies proposals are automatically analyzed and monitored. A classification in 12 risks levels also determines periodicity of new analysis, and division by sectors, regions and sizes. Today, our average time for analysis, which was previously 1 week is performed now in only one day, consequently, our strategy is keep investing in credit analysis to speed up this process.

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