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

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Analysis of the Net Income Itaú Unibanco Holding S.A. Non-interest Expenses without Redecard, Porto Seguro, Migration and New Points of Sale Openings effects Excluding the effect of expenses associated with the migration of Unibanco branches to the Itaú platform, those associated with the opening of new points of sale, as well as expenses related to Redecard and Porto Seguro – consolidated companies whose cost management is not directly under our responsibility – non-interest expenses totaled R$ 20,108 million in the first nine months of 2010, growing by 1.1% from the same period of 2009. R$ million Non-interest Expenses without Redecard, Porto Seguro, New Points of Sale Openings and Branches’ Migration effects. Variation 3 rd Q/10 2 nd Q/10 3 rd Q/09 3 rd Q/10 – Jan-Sep/10 – Jan-Sep/10 Jan-Sep/09 2 nd % Q/10 Jan-Sep/09 % Non-interest Expenses (7,975) (7,570) (6,895) (22,266) (20,586) (405) 5.3% (1,680) 8.2% (+) Redecard Expenses 309 263 243 805 693 46 17.7% 112 16.1% (+) Porto Seguro Expenses 125 117 - 349 - 9 7.3% 349 - Non-interest Expenses without Redecard and Porto Seguro (7,540) (7,190) (6,652) (21,112) (19,893) (350) 4.9% (1,219) 6.1% (+) New Points of Sale Expenses 183 68 - 304 - 115 170.8% 304 - (+) Branches' Migration Expenses 406 235 - 700 - 171 72.9% 700 - Non-interest Expenses without Redecard, Porto Seguro, New Points of Sale Openings and Branches’ Migration effects. (6,951) (6,888) (6,652) (20,108) (19,893) (63) 0.9% (215) 1.1% Two years have not yet elapsed since the merger, and Itaú Unibanco completed on October 24, 2010 the integration of its base of points of service throughout Brazil. In total, 998 branches and 245 client service branches (CSB) of Unibanco were fully redesigned and integrated into Itaú points, thus creating a network of almost five thousand units in the whole country. Performance of Non-Interest Expenses and Ratio of Non-Interest Expenses to Assets (*) 4.9% 4.4% 4.4% 4.6% 4.8% 4.3% (7,446) (6,900) (6,791) (6,895) (7,397) (6,722) 4.7% 4.8% (7,570) (7,975) History of Numbers of Points of Service (**) 35,820 35,949 35,606 35,435 35,589 35,565 35,267 34,991 3,906 3,928 3,939 3,951 3,936 3,933 3,931 3,929 999 989 978 960 948 946 938 942 4th Q/08 1st Q/09 2nd Q/09 3rd Q/09 4th Q/09 1st Q/10 2nd Q/10 3rd Q/10 Non-Interest Expenses (R$ Million) Non-Interest Expenses/Assets (*) (*) Division of Non-Interest Expenses by the arithmetic average of total assets for the two previous quarters (annualized). 30,915 31,032 30,689 30,524 30,705 30,686 30,398 30,120 Dec/08 Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 Jun/10 Sep/10 ATM (***) Client Service Branches (CSB) Branches (**) Includes Banco Itaú Argentina, Banco Itaú BBA and Chile, Uruguay and Paraguay companies’ information. Does not include points of sale and ATMs of Banco 24h. (***) Includes ESBs (electronic service branches) and service points in third-party establishments. 16 Management Discussion & Analysis 3 rd Quarter, 2010
Analysis of the Net Income Itaú Unibanco Holding S.A. Efficiency Ratio and Risk-Adjusted Efficiency Ratio The efficiency ratio and the risk-adjusted efficiency ratio, which includes the risk portions associated with banking operations (results from the provisions for loan and lease losses) and insurance and private pension operations (claims) are presented below. Efficiency Ratio In the third quarter, the efficiency ratio stood at 49.2%, representing a 180 basis points increase from the prior quarter, primarily due to the intensification of the branch migration process concluded in advance in October 2010. Should migration expenses be disregarded, the ratio would have been 46.7%. During the past 12 months, the efficiency ratio was 47.1%, practically stable from period to period. Should migration expenses be disregarded, the ratio during the past 12 months would have been 46.0%. Efficiency Ratio (E.R.) and Risk-Adjusted Efficiency Ratio (R.A.E.R.) 71.7% 73.2% 74.8% 75.6% 74.7% 73.1% 71.9% 71.2% 48.2% 50.6% 48.1% 47.8% 46.8% 46.1% 45.5% 46.0% 47.1% 76.9% 75.5% 75.5% 74.5% 73.4% 46.2% 45.4% 45.0% 47.7% 68.9% 70.8% 71.6% 44.0% 47.3% 49.2% 4th Q/08 1st Q/09 2nd Q/09 3rd Q/09 4th Q/09 1st Q/10 2nd Q/10 3rd Q/10 Quarter E.R. Quarter R.A.E.R. Risk-Adjusted Efficiency Ratio The risk-adjusted efficiency ratio reached 71.6% in the third quarter, or an 80 basis points increase compared to the prior quarter, chiefly as a result of higher expenses, as described above. E.R. Cumulative figure of the last 12 months R.A.E.R. Cumulative figure of the last 12 months In the past 12 months, the risk-adjusted efficiency ratio stood at 71.2%, declining by 440 basis points in comparison with the same period of the previous year, due to the improved quality of the credit portfolio. Risk Adjusted Efficiency = Ratio Non-Interest Expenses (Personnel Expenses + Other Administrative Expenses + Other Operating Expenses + Tax Expenses with Other Taxes) + Result from Loan Losses + Retained Claims (Managerial Financial Margin + Banking Service Fees and Charge Revenues + Operating Result of Insurance, Capitalization and Pension Plans before Retained Claims + Other Operating Income - Tax Expenses for ISS, PIS, Cofins and Other Taxes) Usage of Managerial Financial Margin Plus Banking Service Fees The chart below shows the portions of the Managerial Financial Margin Plus Banking Service Fees that are utilized to cover Non-interest Expenses, Result from Loan Losses and Retained Claims. Managerial Financial Margin Plus Banking Service Fees (*) (-) Efficiency Ratio (-) Loan Losses and Retained Claims/ Managerial Financial Margin Plus Banking Service Fees (*) = Income before Tax and Profit Sharing (**) / Managerial Financial Margin Plus Banking Service Fees (*) (+) Risk Adjusted Efficiency Ratio Managerial Financial Margin Plus Banking Service Fees (*) 46.2% 45.4% 45.0% 47.7% 44.0% 50.6% 47.3% 49.2% 25.0% 29.2% 30.1% 29.5% 25.7% 23.4% 22.4% 26.3% E.R. R.A.E.R. 24.5% 25.5% 26.6% 31.1% 23.1% 24.5% 29.2% 28.4% 4th Q/08 1st Q/09 2nd Q/09 3rd Q/09 4th Q/09 1st Q/10 2nd Q/10 3rd Q/10 (*) Net of Tax Expenses for ISS, PIS and Cofins and Others. (**) Does not include Equity in Earnings of Affiliates and Other Investments and Non-operating Income. Income before Tax and Profit Sharing (**) 17 Management Discussion & Analysis 3 rd Quarter, 2010
Page 1 and 2: 3 rd Quarter 2010 Management Discus
Page 3 and 4: ITAÚ UNIBANCO HOLDING S.A. RESULTS
Page 5 and 6: 3 rd quarter, 2010 Management Discu
Page 7 and 8: Executive Summary Third Quarter of
Page 11 and 12: Executive Summary NPL Ratio over 90
Page 15 and 16: Analysis of the Net Income Manageri
Page 17 and 18: Analysis of the Net Income Results
Page 19: Analysis of the Net Income Non-inte
Page 23 and 24: Balance Sheet Balance Sheet by Curr
Page 25 and 26: Balance Sheet Credit Portfolio by P
Page 27 and 28: Balance Sheet Itaú Unibanco Holdin
Page 29 and 30: Value at Risk (VaR) The table below
Page 31 and 32: Performance in the Stock Market 3 r
Page 33 and 34: Pro Forma Financial Statements by S
Page 41 and 42: Insurance, Pension Plans and Capita
Page 43 and 44: Insurance, Pension Plans and Capita
Page 45 and 46: Activities Abroad
Page 47 and 48: Activities Abroad Europe Banking ac
Page 49 and 50: Activities Abroad Below we present
Page 51: PricewaterhouseCoopers Av. Francisc
Page 55 and 56: MANAGEMENT REPORT - January to Sept
Page 57 and 58: BUSINESS PERFORMANCE We present bel
Page 59 and 60: • The team of analysts of Itaú C
Page 61 and 62: ITAÚ UNIBANCO HOLDING S.A. BOARD O
Page 63 and 64: BANCO ITAÚ BBA S.A. BOARD OF DIREC
Page 65 and 66: ITAÚ UNIBANCO HOLDING S.A. Consoli
Page 67 and 68: ITAÚ UNIBANCO HOLDING S.A. Consoli
Page 69 and 70: ITAÚ UNIBANCO HOLDING S.A. Balance
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Itaú Unibanco S.A. - - September0
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ITAÚ UNIBANCO HOLDING S.A. Stateme
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NOTE 2 - PRESENTATION OF THE FINANC
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The consolidated financial statemen
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The Referential Equity used for cal
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) Capital for Insurance Activity SU
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• Cash Flow Hedge - the effective
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• Mathematical provisions for ben
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NOTE 5 - CASH AND CASH EQUIVALENTS
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I - Derivatives by index Memorandum
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V - Accounting hedge a) The purpose
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i) Changes in adjustment to market
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III - By business sector 09/30/2010
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d) Recovery and renegotiation of cr
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NOTE 9 - FOREIGN EXCHANGE PORTFOLIO
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NOTE 12 - CONTINGENT ASSETS AND LIA
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- Contingencies classified as possi
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c) Legal Liabilities - Tax and Soci
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The main natures of processes are d
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) Prepaid expenses Commissions 09/3
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d) Banking service fees 01/01 to 09
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f) Personnel expenses Compensation
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NOTE 14 - TAXES a) Composition of e
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III- The estimate of realization an
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d) Taxes paid or provided for and w
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II - Composition of investments 09/
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NOTE 16 - STOCKHOLDERS’ EQUITY a)
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c) Capital and revenue reserves 09/
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f) Stock Option Plan I - Purpose an
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III - Fair Value and Economic Assum
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NOTE 17 - RELATED PARTIES a) Transa
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NOTE 19 - BENEFITS TO EMPLOYEES Und
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In accordance with the operations c
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Analogous to Basel II, the Internat
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e) Fundação Itaú Social - ITAÚ
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Report of Independent Auditors To t
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MD&A and Financial Statements (PDF) - Banco Itaú

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