MD&A and Financial Statements (PDF) - Banco Itaú

Analysis of the Net Income
Results from Loan and Lease Losses
8.3%
5.1%
3,430
9.0%
6.0%
4,373
539
3,834
9.8%
7.0%
10.2%
7.6%
5,027
4,669
775 373
4,252 4,296
1.5% 1.6% 1.8% 1.8%
9.8%
7.3%
4,016 3,866 4,019 4,069
1.7%
9.2%
6.8%
8.7%
8.3%
6.4% 6.2%
1.6% 1.6% 1.5%
231%
204%
182%
Itaú Unibanco Holding S.A.
R$ million
Expenses for Provision for Loan Losses and Recovery of Credits Written off as Losses
Variation
3 rd Q/10 2 nd Q/10 Jan-Sep/10 Jan-Sep/09 3 rd Q/10 –
Jan-Sep/10 –
%
2 nd Q/10
Jan-Sep/09
%
Provision for Loan and Lease Losses (4,069) (4,019) (11,954) (12,383) (49) 1.2% 428 -3.5%
Income from Recovery of Credits Written Off as Losses 1,134 967 2,946 1,440 167 17.3% 1,506 104.6%
Result from Loan Losses (2,935) (3,053) (9,008) (10,942) 118 -3.9% 1,934 -17.7%
Nonperforming Ratios
R$ million
The result from loan losses reached R$ 2,935 million in the
third quarter of 2010, improving by R$ 118 million in
comparison with the second quarter, due to a R$ 167
million growth in income from the recovery of credits
previously written off as losses. Expenses for the provision
for loan and lease losses added up to R$ 4,069 million, a
1.2% increase from the prior quarter. Such increase is mainly
attributable to the R$ 15,536 million growth in the credit
portfolio balance, not including endorsements and sureties.
The improvement trend observed in our loan and financing
portfolio performance indicators since the third quarter of
2009 continued in the present quarter. Our non-performing
loan ratio (credit transactions more than 90 days overdue)
reached 4.3%, a 130 basis points improvement from
December 2009. This ratio for credit transactions with both
individuals and companies showed a positive variance of 40
and 30 basis points, respectively, quarter-on-quarter. The
reduced delinquency levels are directly associated with the
improvement of the Brazilian economic cycle, as well as the
more conservative credit policies adopted since the end of
2008.
The balance of the additional provision for loan and lease
losses remained unaltered at R$ 6,104 million.
Provision for Loan Losses and Credit Portfolio
Sep 30, 10 Jun 30, 10 Sep 30, 09
Nonperforming Loans over 60 days (a) 14,231 14,778 16,639
Nonperforming Loans over 90 days (b) 11,902 12,224 14,018
Credit Portfolio (c) 279,035 263,498 237,099
NPL Ratio [(a)/(c)] x 100 over 60 5.1% 5.6% 7.0%
NPL Ratio [(b)/(c)] x 100 over 90 4.3% 4.6% 5.9%
(a) Loans overdue for more than 60 days and that do not accrue revenues.
(b) Loans overdue for more than 90 days.
(c) Endorsements and sureties not included.
NPL Ratio – 90 days (%)
7.9%
8.1% 8.1%
6.9%
5.4%
5.9%
3.9%
4.4%
3.1%
4.1%
1.3%
1.9%
7.6%
5.6%
4.0%
Dec/08 Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 Jun/10 Sep/10
Individuals Total Companies
Coverage Ratio – 90 days
The 90-day coverage ratio increased from 187% in June
2010 to 196% in September 2010, mainly driven by the
2.6% reduction in the nonperforming loans over 90 days
portfolio, while the balance of provisions for loan and lease
losses grew by 1.7%.
172% 174%
6.8%
4.9%
3.3%
188%
6.4%
187%
6.0%
4.6%
4.3%
3.2% 2.9%
196%
4th Q/08 1st Q/09 2nd Q/09 3rd Q/09 4th Q/09 1st Q/10 2nd Q/10 3rd Q/10
Result from Loan Losses
2,971
Reversal of additional provision for loan losses (R$ million)
Expenses for Provisions for Loan Losses (R$ million).
Expenses for Provisions for Loan Losses/Credit Portfolio (1).
Provisions for Loan Losses Specific + Generic/Credit Portfolio
Provisions for loan Losses Specific + Generic + Additional/Credit Portfolio
3,976
539
3,437
4,553
4,100
775
373
3,778 3,727
1.3% 1.4% 1.6% 1.6%
3,223 3,021 3,053 2,935
1.3%
1.2% 1.2% 1.1%
4th Q/08 1st Q/09 2nd Q/09 3rd Q/09 4th Q/09 1st Q/10 2nd Q/10 3rd Q/10
Reversal of additional provision for loan losses (R$ million)
Result from Loan Losses (R$ million)
Result from Loan and Lease Losses/Loan Portfolio (1)
(1) Average balance of the two previous quarters.
Dec/08 Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 Jun/10 Sep/10
Coverage ratio is derived from the division of the provisions for loans and lease losses
balance by the balance of operations more than 90 days overdue.
Overdue Loans
During the quarter, the portfolio declined by 4.4% from
the prior quarter. Also, the difference between the balance
of provisions for loan and lease losses versus the overdue
loans portfolio increased by R$ 1,390 million when
compared to the previous quarter.
R$ million
Sep 30, 10 Jun 30, 10 Sep 30, 09
Overdue Loans 21,870 22,876 24,297
Balance of Provision for Loan and Lease Losses (23,284) (22,900) (24,068)
Difference 1,414 24 (228)
Overdue loans are credit operations having at least one installment more than 15 days
overdue, irrespective of collateral provided.
13
Management Discussion & Analysis 3 rd Quarter, 2010