Quarterly Management Discussion & Analysis (MDA300905.pdf)

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Analysis of the Consolidated Net IncomeNon-Interest ExpensesR$ MillionRemuneration 563 539 24 1,621 1,375 245Charges 184 162 21 509 425 84Social Benefits 146 148 (2) 432 349 83Training 16 18 (2) 41 33 8Employee Resignation and Labor Claims 90 104 (14) 322 219 103Single Bonus 65 - 65 65 8 56Data Processing and Telecommunication 303 282 21 861 795 66Depreciation and Amortization 138 151 (13) 434 413 21Premises 165 154 12 466 398 69Third-Party Services 213 199 14 604 465 139Financial System Service 92 90 2 264 239 25Advertising, Promotions and Publications 107 85 22 253 202 51Transportation 48 46 2 140 136 4Materials 47 32 14 116 105 11Security 34 34 0 101 95 6Legal and Judicial Suit 14 23 (9) 54 43 11Travel Expenses 13 12 1 34 31 3Others 71 72 (1) 198 157 41Provision for contingencies 96 150 (54) 332 448 (116)Tax and Social Securities 16 (6) 22 43 106 (63)Civil Lawsuits 80 130 (50) 263 272 (9)Others - 26 (26) 26 70 (43)Sales - Credit Cards 62 63 (1) 186 141 46Claims 54 49 5 129 62 67Others 8 43 (35) 117 237 (120)CPMF 51 97 (46) 207 113 94Other taxes 28 19 8 65 53 12(-) Itaucred (Vehicle + Credit Cards - Non-Account Holders +Taií)(459) (356) (103) (1,111) (589) (522)(-) Orbitall (129) (159) 30 (434) (179) (255)Non-Interest Expenses, which include PersonnelExpenses, Other Administrative Expenses, OtherOperating Expenses, and Tax Expenses for CPMF andOther Taxes, reached R$ 2,605 million in the third quarterof 2005, increasing by R$ 34 million compared with theR$ 2,572 million of the second quarter. New ventureswere responsible for an increase of R$ 73 million in Non-Interest Expenses, when compared with the previousquarter. If these ventures were not considered, suchexpenses would have decreased by R$ 39 million.Efficiency RatioNon-Interest ExpensesR$ Million1st Q.04 2ndQ.04 3rd Q.04 4th Q.04 1st Q.05 2ndQ.05 3rd Q.051st Q.04 2nd Q.04 3rd Q.04 4th Q.04 1st Q.05 2nd Q.05 3rd Q.05EfficiencyRatio =Non-Interest Expenses (Personnel Expenses + Other Administrative Expenses +Other Operating Expenses + Tax Expenses for CPMF and Others)(Net Interest Income + Banking Service Fees + Partial Result of Insurance, Capitalization and Pension Plans +Other Operating Income - Tax Expenses of PIS/COFINS/ISS)18 Management Discussion and AnalysisBanco Itaú Holding Financeira S.A.
Analysis of the Consolidated Net IncomePersonnel ExpensesPersonnel Expenses totaled R$ 1,062 million, increasingby R$ 91 million on the prior quarter. This increase wasmainly due to the single payment of a R$ 1,700.00 bonusper employee, as well as to the 6.0% salary increaseunder the collective labor agreement effectiveSeptember 2005. The agreement gave rise to additionalexpenses of R$ 93 million in the quarter.Such increase was partly offset by the expenses forEmployee Resignations and Labor Claims, whichdecreased by R$ 14 million in the quarter.At the end of September 2005, Itaú had 49,546employees, compared to 46,881 at the end of June. Theincrease is attributable to the continuing growth of Taií.Number of Employees (*) (**) (***)Sep/03 Dec/03 Mar/04 Jun/04 Sep/04 Dec/04 Mar/05 Jun/05 Sep/05FIT: Personnal Loan Stores OperationFIC: Itaú CDB Financial Company(*) Includes Orbitall and Intercap bank’s sales promotion company since Dec/04.(**) Includes FIC which is 100% consolidated, despite the fact that Itaú’s share in it is 50%.(***) Credicard Banco, where Itaú’s share is 50% , is not included. In Sep.05 this company had 453employees.Other Administrative ExpensesOther Administrative Expenses totaled R$ 1,245 millionin the third quarter of 2005, increasing by R$ 66 millionwhen compared to the R$ 1,179 million of the previousquarter.New ventures, including the spin-off of CredicardBanco, currently under way, were largely responsiblefor the increase, in particular expenses for DataProcessing and Telecommunications, Third-PartyServices and Materials.Marketing Expenses grew by R$ 22 million, impactedby the institutional campaign “Itaú 60 Years”, heavilypromoted in the quarter.Volume of Self-Service TransactionsOther Operating ExpensesIn the third quarter of 2005, Other Operating Expensesamounted to R$ 220 million, a significant R$ 85 milliondecline compared to the previous quarter. Provisions forContingencies decreased by R$ 54 million in the quarter,as a result of actions taken in the second quarter of 2005,which increased these expenses in that period, primarilythe adjustment in provisions linked to the minimum wage,which increased by 15% in May.Tax Expenses for CPMF and Other TaxesTax Expenses for CPMF and Other Taxes totaled R$ 79million in the third quarter of 2005, a significant decreasecompared to the R$ 117 million in the previous quarter.The decline is due to the corporate reorganization thattook place in the second quarter, which resulted in CPMFexpenses of approximately R$ 50 million.(Quantity in million)1st Q./02 224 27 69 33 10 13 59 3 19 4572nd Q/02 225 46 70 38 10 11 71 3 20 4943rd Q./02 243 48 72 31 10 9 84 3 23 5244th Q./02 254 71 73 33 10 6 92 2 27 5691st Q./03 260 67 75 37 10 5 95 2 26 5762nd Q/03 248 117 76 36 10 4 99 2 28 6213rd Q./03 254 151 75 36 11 3 111 2 30 6754th Q./03 271 251 76 36 10 1 121 2 36 8051st Q./04 263 237 77 33 9 0 127 2 34 7832nd Q/04 258 139 78 32 8 0 130 2 37 6863rd Q./04 272 152 81 32 9 0 130 2 40 7194th Q./04 280 163 85 32 9 - 137 2 47 7541st Q./05 277 156 88 30 9 - 149 2 45 7562nd Q./05 272 158 92 29 9 - 157 2 46 7653rd Q./05 274 167 96 29 9 - 168 2 51 795(*) Transaction through warning screen on ATM.19 Management Discussion and AnalysisBanco Itaú Holding Financeira S.A.
Page 5: Executive SummaryConsolidated State
Page 10 and 11: Executive Summary - Third Quarter o
Page 12 and 13: Analysis of the Consolidated Net In
Page 16 and 17: Analysis of the Consolidated Perfor
Page 22 and 23: 22 Management Discussion and Analys
Page 24 and 25: Pro Forma Financial Statements by S
Page 26 and 27: Pro Forma Financial Statements by S
Page 28 and 29: Itaubanco - Branch BankingThe state
Page 30 and 31: Insurance, Pension Plan and Capital
Page 32 and 33: Insurance, Pension Plan and Capital
Page 34 and 35: Investment Funds and Managed Portfo
Page 36 and 37: ItaucredThe following tables are ba
Page 38 and 39: ItaucredVehiclesThe Vehicle segment
Page 40 and 41: Risk ManagementMarket RiskBanco Ita
Page 42 and 43: Risk ManagementCredit RiskCredit Op
Page 44 and 45: Analysis of the Consolidated Balanc
Page 46 and 47: Activities AbroadTrade Lines Raisin
Page 48 and 49: Ownership StructureOwnership Struct
Page 50: PricewaterhouseCoopersAv. Francisco

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