Executive Summary. Banco Itaú S.A. Highlights. * JCP ( Interests on Capital) * * Efficiency Ratio was calculated using the recurring net income.

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1 Highlights * JCP ( Interests on Capital) * * Efficiency Ratio was calculated using the recurring net income.

2 Consolidated Balance Sheet 95,580 82,887 78,113 2,791 2,046 1,797 10,861 13,471 7,181 23,227 19,818 21, (1,519) 11,508 7,138 8,828 28,950 25,579 24,475 1,075 1,233 1,352 (3,262) (2,911) (2,372) 20,428 16,514 16,615 7,730 4,722 5,611 12,698 11,792 11,004 3,434 3,497 3, ,289 2,288 2, ,014 86,385 81,384 86,150 74,250 70,298 32,498 28,754 27,121 7,662 6,356 6,094 17,433 16,019 15, ,796 5,730 5,099 11,985 12,750 10,019 4,287 3,852 4,272 4,369 3,112 3,359 7,346 6,109 6,691 3,473 3,182 3,412 2, ,929 15,837 15,425 6,206 3,370 4,116 2,148 1, ,574 10,580 10,374 3,261 2,951 2, , ,560 8,288 7,747 99,014 86,385 81,384 32,498 28,754 27,121 87,391 84,997 80,599 Banco Itaú Management Discussion and Analysis

3 Consolidated Statement of Income

4 Third Quarter of 2002 Net Income Recurring Return on Equity ( %) 4 th Q st Q rd Q th Q.00 Recurring 1 st Q.01 3 rd Q.01 Net Income per Thousand Shares (R$) 4 th Q.00 1 st Q.01 3 rd Q.01 Recurring - A volatile business environment marked the third quarter of The Brazilian real fell 36.9% in relation to the U.S. dollar and the base interest rate (Selic) decreased in July, from 18.5% to 18.0% p.a., and remained unchanged up to the end of the quarter. - Banco Itaú achieved consolidated net income of R$ 639 million in the third quarter of 2002, representing a growth of 17.5% in relation to the prior quarter. Net income per thousand shares reached R$ 5.75 in the quarter. - Stockholders equity of the parent company totaled R$ 8,560 million, an increase of 3.3% in relation to the balance at June 30, The annualized return on stockholders equity (ROE) reached 33.4% in the quarter, developing positively in relation to the 29.0% reported in the prior period. Total assets amounted to R$ 99,014 million at the end of September 2002, growing 14.6% in relation to the balance at June 30. Once again, growth in this balance is basically due to the effect of the exchange fluctuations on assets indexed in U.S. dollar. The annualized return on total assets (ROA) reached 2.6%. - The BIS ratio of Banco Itaú reached 16.9% in the third quarter of 2002, an increase of 1.6 basis points in relation to the prior period. If we consider the adjustment set forth in Circular 3,156, dated October 11, 2002, on the equity position at September 30, this ratio had a reduction of 1.0 basis points. - The balance of credit operations, including guarantees, totaled R$ 39,687 million, an increase of 13.9% in relation to the second quarter. The increase in the portfolio is basically associated with the portion of loans indexed in U.S. dollars, which represented 31.5% of the total risk, growing 29% in the period. Banco Itaú maintained the restrictive credit policies adopted in the second quarter of The efficiency ratio shifted from 55.3% to 49.6%, as a result of the significant contribution of the financial margin, which in turn was affected by the exchange variation in the period. - In September 2002, the balance of resources managed in Funds and Portfolios totaled R$ 54,893 million. In August, Itaú participated actively in an auction fostered by Brazilian Central Bank to swap Financial Treasury Bills (LFT), falling due from 2004 to 2006, for financial instruments falling due in The decrease in the duration of Interbank Deposit (DI) and Active Fixed Income Funds reduced the volatility of the quotas, which the market had undergone since the introduction of the mark-to-market methodology to determine the value of the quotas. On the other hand, the total balance of deposits grew 13% in the quarter. As a consequence, the sum of the balance of investment funds with the balance of deposits reached R$ 87,391 million at the end of September, an increase of 2.8% in relation to the prior quarter. - The uncertainties generated by the process of political transition in Brazil contributed significantly to the devaluation of the real in relation to the U.S. dollar. Accordingly, the rates may flow back, when the objectives proposed by the new economic policymakers become clearer to the economic agents. In view of this scenario, Itaú set up a provision on exchange position, taking into consideration that the real may appreciate against the U.S. dollar and reach R$ Credit Operations (1) Mar00 Sep00 Mar01 Sep01 Mar02 Sep02 (1) Endorsements and Sureties included The effects of exchange variation on foreign investments are distributed in the Statement of Income according to the nature of the corresponding accounts. The tables of this report have the numbers expressed in millions. However, the variations and totals were calculated based on numbers expressed in whole units. Future expectations resulting from this analysis should take into consideration the risks and uncertainties surrounding any activity and which are beyond the control of the companies in the group (political and economic changes, volatility of interest and exchange rates, technological change, infl ation, fi nancial desintermediation, competitive pressures on products and prices, and changes in tax legislation). Banco Itaú Management Discussion and Analysis

5 Non Accrual Loans Ratio (2) - Individuals x Businesses (%) Non Accrual Loans Ratio- Individuals Non Accrual Loans Ratio- Businesses Non Accrual Loans Ratio (2) Non accrual: Loans Overdue for more than 60 days. The consolidated net income of Banco Itaú totaled R$ 639 million in the third quarter of 2002, compared to R$ 544 million in the prior period.the main items of the change that occurred between the quarters involved the following: a) The increase in Financial Margin R$ 743 million b) The increase in Provision for Loan Losses c) The increase in Administrative Expenses R$ (123) million d) The increase in Tax Expenses R$ (45) million e) Other Operating Income (Expenses) f) Income Tax and Social Contribution R$ (146) million g) Other R$ 4 million TOTAL R$ 95 million A) Financial Margin The main effects that occurred in the financial margin in the third quarter were: Efficiency Ratio (%) - Exchange fluctuations on permanent investments overseas allocated to the financial margin / Effect of exchange fluctuations on operations in Brazil and overseas, net of provisions. R$ 632 million R$ 111 million R$ 743 million 1 st Q./01 2 nd Q./01 3 rd Q./01 4 th Q./01 1 st Q./02 2 nd Q./02 3 rd Q./02 B) Provision for Loan Losses - The increase in provision for loan losses is basically due to two factors: set up of a specific full allowance on the balances of Itaucorp customer and stricter criteria to classify corporate customers. C) Administrative Expenses Among the various factors that affect administrative expenses, we highlight the following: - Salary increase and collective bargaining agreement. R$ (91) million R$ (32) million R$ (123) million Total Assets D) Tax Expenses The tax expenses of the third quarter of 2002 arise basically from the following factors: - PIS/COFINS expenses arising from greater financial intermediation activity. R$ (16) million taxes R$ (29) million R$ (45) million Mar00 Sep00 Mar01 Sep01 Mar02 Sep02 Assets Under Management E) Other Operating Income (Expenses) - These expenses relate to mark-to-market adjustments of fiscal incentive options. F) Income Tax and Social Contribution G) Other R$ (179) million R$ 10 million R$ (146) million R$ 4 million Dec00 Mar01 Jun01 Sep01 Dec01 Mar02 Jun02 Sep02 TOTAL R$ 95 million Mutual Funds + Portfolio Under Management Deposits