Conference Call about 2009 Earnings Results

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1 Conference Call about 2009 Earnings Results Roberto Egydio Setubal CEO February 10 th,

2 Highlights 1. Earnings: 4 th Q/09: Recurring Net Income of R$ 2,813 million, an increase of 4.7% compared to previous quarter; annualized recurring ROE of 22.6%. 4 th Q/09 : Net Income of R$ 3,213 million; annualized ROE of 25.8%. 2. Extraordinary Items: A positive impact of R$ 399 million net of taxes, mainly explained by the Program for Installment Payment of Federal Taxes (Law 11,941/09). 3. Additional Provision: In 4 th Q/09, additional provision was not constituted nor consumed. The balance of additional provision stood at R$6,104 million at the end of the quarter. 4. NPL ratio over 90 and over 60 days: The NPL ratio over 90 days and the NPL ratio over 60 days reached 5.6% and 6.6%, respectively, at the end of the period, reduction of 30 bps and 40 bps compared to the prior quarter, with a clear improvement tendency. 5. BIS Ratio: The BIS ratio increased 40 bps to 16.7% in the fourth quarter. 2

3 Highlights R$ Million 4 th Q/09 3 rd Q/09 Variation Variation Net Income 3,213 2, % 10,067 10, % Recurring Net Income 2,813 2, % 10,491 10, % Earnings per Share (R$) % % Recurring Earnings per Share (R$) % % Market Capitalization (*) 175, , % 175, , % ROE (Average Equity) Annualized 25.8% 18.9% 690 b.p. 21.4% 23.4% -200 b.p. Recurring ROE (Average Equity) Annualized % % 20 b.p % 24.8% -250 b.p. BIS Ratio 16.7% 16.3% 40 b.p. 16.7% 16.1% 60 b.p. Efficiency Ratio 43.6% 41.1% 250 b.p % % -290 b.p. Risk Adjusted Efficiency Ratio 58.6% 58.2% 40 b.p. 59.4% 59.2% 20 b.p /31/09 9/30/09 12/31/08 12/31/09 x 9/30/09 12/31/09 x 12/31/08 Total Assets 608, , , % -4.7% Retail Loan Portfolio (**) 177, , , % 14.0% Deposits + Debentures + Borrowings and Onlending and Securities (***) 270, , , % -4.1% Stockholders' Equity 50,683 48,862 43, % 16.1% (*) Calculated based on the average quotation of non-voting shares on the last trading day in the period. (**) Includes Credit Card, Personal Loans, Vehicles, Micro, Small and Middle Market, Rural Loans and Mortgage Loans. The total loan portfolio reached R$ 278,382 million in December 31, 2009, an increase of 3.6% from 09/30/09 and 2.4% from 12/31/08. Includes endorsements and sureties. (***) Net of Reserve Requirements. The 2008 data reflect the sum of first nine months separately posted by Itaú and Unibanco and of the 4Q08 consolidated data of Itaú Unibanco. For comparison purposes, we have adjusted the 2008 accounting statements with the full consolidation of Redecard. 3

4 Non Recurring Effects Net of Taxes R$ Million 4 th Q/09 3 rd / Recurring Net Income (A) 2,813 2,687 10,491 10,571 Effects related to Itaú Unibanco merger (merger of shares) ,183 Equalization of accounting criteria (1,414) Provision for Itaú Unibanco integration expenses (888) Additional provision for loan losses (3,089) Effects of the adoption of Law 11, (136) Economic plans provision (26) (56) (191) (174) Disposal of investments Goodwill amortization 117 (363) (753) (223) Program for Installment Payment of Federal Taxes Law 11,941/ Other non-recurring effects (59) Total of Non Recurring Effects (B) 399 (419) (424) (567) Net Income (A + B) 3,213 2,268 10,067 10,004 The 2008 data reflect the sum of first nine months separately posted by Itaú and Unibanco and of the 4Q08 consolidated data of Itaú Unibanco. For comparison purposes, we have adjusted the 2008 accounting statements with the full consolidation of Redecard. 4

5 Itaú Unibanco - Results R$ Million 4 th Q/09 3 rd Q/09 Variation Variation Managerial Financial Margin Plus Banking Service Fees 16,587 16, % 64,297 58, % Financial Margin with Customers 9,324 9, % 37,158 34, % Financial Margin with Market 1,488 1, % 5,621 2, % Banking Service Fees and Income from Banking Charges 4,231 3, % 15,227 15, % Result from Op. of Insurance, Pension Plans and Capitalization before Retained Claims 1,467 1, % 5,637 5, % Other Operating Income % 654 1, % Loan Losses and Retained Claims (3,980) (4,518) -11.9% (17,371) (12,831) 35.4% Provision for Loan and Lease Losses (4,016) (4,669) % (18,086) (11,286) 60.3% Reversal / (Increase) of Additional Provision for Loan Losses , Recovery of Credits Written Off as Losses % 2,234 1, % Retained Claims (757) (791) -4.3% (3,205) (3,111) 3.0% Other Operating Income/(Expenses) (9,794) (8,931) 9.7% (36,436) (34,800) 4.7% Non-interest Expenses (6,751) (6,306) 5 7.1% (25,806) (24,789) 4.1% Tax Expenses for ISS, PIS and Cofins (1,089) (787) 38.3% (3,467) (3,501) -1.0% Other Results (*) (1,954) (1,838) 6.3% (7,163) (6,511) 10.0% Recurring Net Income 2,813 2, % 10,491 10, % Non-recurring Events 399 (419) % (424) (567) -25.2% Net Income 3,213 2, % 10,067 10, % (*) Other results is composed by Non Operating Income, Equity in the Earnings of Associated Companies, Income Tax and Social Contribution, Profit Sharing and Minority Interest in subsidiaries. The 2008 data reflect the sum of first nine months separately posted by Itaú and Unibanco and of the 4Q08 consolidated data of Itaú Unibanco. For comparison purposes, we have adjusted the 2008 accounting statements with the full consolidation of Redecard

6 Loans by Type of Customer (*) 12/31/09 9/30/09 12/31/08 12/31/09 x 9/30/09 Variation R$ Million 12/31/09 x 12/31/08 Individuals 102,845 98,383 93, % 10.4% Credit Card 29,096 25,215 23, % % Personal Loans 21,545 22,498 21, % -0.6% Vehicles 52,204 50,670 47, % 6 9.1% Businesses 149, , , % -2.3% Corporate 88,880 90, , % % Micro, Small and Middle Market 60,992 56,709 50, % 20.4% Directed Loans 13,654 12,761 11, % 14.8% Rural Loans 5,143 4,929 5, % -9.0% Mortgage Loans 8,510 7,832 6, % % Argentina/Chile/Uruguay/Paraguay 11,708 10,541 13, % -12.6% Porto Seguro's Portfolio Total 278, , , % 2.4% Total Retail (**) 177, , , % % (*) Includes endorsements and sureties. (**) Includes Credit Card, Personal Loans, Vehicles, Micro, Small and Middle Market, Rural Loans and Mortgage Loans. 6

7 Non-Performing Loans and Coverage Ratios 6.6% 6.5% 6.4% NPL Ratio (90 days) 3.9% 4.0% 3.8% 3.9% 1.3% 1.3% 1.2% 1.3% 7.9% 8.1% 6.9% 5.4% 4.4% 3.1% 1.9% 8.1% 7.6% 5.9% 5.6% 4.1% 4.0% NPL Ratio (61-90 days) 2.0% 2.0% 1.7% 1.6% 1.7% 1.5% 1.5% 1.2% 1.2% 1.3% 1.0% 1.0% 1.1% 1.0% 0.8% 0.9% 0.6% 0.8% 0.7% 0.5% 0.3% 0.3% 0.3% 0.2% Mar/08 Jun/08 Sep/08 Dec/08 Mar/09 Jun/09 Sep/09 Dec/09 Mar/08 Jun/08 Sep/08 Dec/08 Mar/09 Jun/09 Sep/09 Dec/09 Individuals Total Companies Additional Balance of Allowance for Loan Losses (R$ Million) 7,791 7,252 6,477 6,104 6,104 Coverage ratio (*) 90 days 231% 204% 175% 182% 169% 172% 174% 161% 3,118 3,135 3,220 Mar/08 Jun/08 Sep/08 Dec/08 Mar/09 Jun/09 Sep/09 Dec/09 Mar/08 Jun/08 Sep/08 Dec/08 Mar/09 Jun/09 Sep/09 Dec/09 (*) Allowance por Loan Losses / Credits overdue more than 90 days. Data until September 2008 reflect the sum of results and balances separately posted by Itaú and Unibanco. 7

8 Provision for Loan Losses 8.3% 9.0% 9.8% 7.0% 10.2% 7.6% 9.8% 7.3% 5.8% 5.7% 5.5% 4.2% 4.2% 4.0% 2,460 2,674 2, % 1.4% 1.3% 5.1% 3, % 6.0% 4, , % 5, , % 4, , % 4, % 1stQ/08 2ndQ/08 3rdQ/08 4thQ/08 1stQ/09 2ndQ/09 3rdQ/09 4thQ/09 Recurring Expenses for Provisions for Loan Losses (R$ million) Use of additional provision (R$ million) Recurring Expenses for Provisions for Loan Losses / Credit Portfolio (1) Provisions for Loan Losses (Specific + Generic) / Credit Portfolio (end of period balance) Provisions for Loan Losses (Specific + Generic + Additional) / Credit Portfolio (end of period balance) (1) Average balance of the two previous quarters. Data until 3Q08 reflect the sum of results and balances separately posted by Itaú and Unibanco. 8

9 Funding and Assets Under Management R$ Million 0 Variation 12/31/09 9/30/09 12/31/08 12/31/09 x 9/30/09 12/31/09 x 12/31/08 Demand Deposits 25,240 23,306 28, % -10.1% Savings Deposits 48,207 44,132 39, % % Time Deposits 102, , , % -13.8% Debentures (Committed operations) / Mortgage - Backed Notes 69,642 65,497 55, % % Subtotal 1 Funding from Account Holders Customers 245, , , % 1.6% Institutional Customers 20,217 20,007 30, % -33.6% Onlending 22,356 20,661 18, % 21.1% Subtotal 2 Funding from Institutional & Account Holders Customers 288, , , % -0.9% Assets under Management 333, , , % % Technical Provisions of Insurance, Pension Plans and Capitalization 52,404 49,978 43, % 21.4% Subtotal 3 Customers 674, , , % 13.9% Deposits from Banks 2,046 2,232 2, % -29.9% Funds from Acceptance and Issuance of Securities 5,703 6,474 6, % % Total Funding 682, , , % 13.3% 9

10 Ratio between Loan Portfolio and Funding 0 R$ Million Variation 12/31/09 9/30/09 12/31/08 12/31/09 x 9/30/09 12/31/09 x 12/31/08 Funding from Institutional & Account Holders Customers 288, , , % -0.9% (-) Compulsory Deposits (24,662) (22,854) (23,358) 7.9% 5.6% (-) Available Funds (10,594) (10,325) (15,853) 2.6% -33.2% Funds from Acceptance and Issuance of Securities Abroad 5,703 6,474 6, % -18.4% Borrowings 12,336 12,147 24, % -49.0% Total (A) 270, , , % -4.1% Loan Portfolio (B) (*) 245, , , % 2.0% B/A 90.8% 89.5% 85.3% 130 b.p. 550 b.p. (*) Does not include sureties and endorsements. 85.3% 85.6% 87.4% 89.5% 90.8% R$ Billion /31/08 03/31/09 06/30/09 09/30/09 12/31/09 Funding Loan Portfolio Loans / Funding 10

11 Banking Fees Revenues and Income from Banking Charges R$ Million 4 th Q/09 3 rd Q/09 Variation Variation Asset Management % 2,249 2, % Current Account Services % 2,147 2, % Loan Operations and Guarantees Provided % 2,414 2, % Collection Services % 1,205 1, % Credit Cards 1,583 1, % 5,817 5, % Other % 1,395 1, % Total 4,231 3, % 15,227 15, % Historical Data of Banking Fees Revenues and Income from Banking Charges 9.8% 3,708 3,846 3,825 4,063 3,526 3,617 3,853 4, stQ/08 2ndQ/08 3rdQ/08 4thQ/08 1stQ/09 2ndQ/09 3rdQ/09 4thQ/09 Participation over managerial Financial Margin plus Banking Service Fees (in %) The 2008 data reflect the sum of first nine months separately posted by Itaú and Unibanco. For comparison purposes, we have adjusted the 2008 accounting statements with the full consolidation of Redecard. 11

12 Non Interest Expenses R$ Million 4 th Q/09 3 rd Q/09 Variation Variation Personnel Expenses (2,598) (2,374) 1 9.4% (9,832) (9,399) 4 4.6% Other Administrative Expenses (3,162) (2,774) % (11,593) (11,017) 5 5.2% Other Operating Expenses (907) (1,051) % (4,036) (4,057) -0.5% Tax Expenses (*) (85) (106) -19.6% (345) (316) 9.0% Total (6,751) (6,306) 7.1% (25,806) (24,789) 6 4.1% (*) PIS, Cofins and ISS not included. Historical Data of Non Interest Expenses Baseline % 7.1% ,015 6,357 6,392 5,506 5,805 6,462 6,306 6,751 1stQ/08 2ndQ/08 3rdQ/08 4thQ/08 1stQ/09 2ndQ/09 3rdQ/09 4thQ/09 1stQ/09 x 1stQ/08 2ndQ/09 x 2ndQ/08 3rdQ/09 x 3rdQ/08 4thQ/09 x 4thQ/08 The 2008 data reflect the sum of first nine months separately posted by Itaú and Unibanco. For comparison purposes, we have adjusted the 2008 accounting statements with the full consolidation of Redecard. 12

13 Efficiency Ratio and Risk-Adjusted Efficiency Ratio (*) Efficiency Ratio (ER) Risk-Adjusted Efficiency Ratio (RAER) 45.4% 45.3% 45.0% 44.7% 43.4% 42.4% 60.1% 59.2% 60.0% 61.2% 60.9% 59.4% 46.3% 47.7% 42.3% 42.7% 41.1% 43.6% 59.4% 64.7% 59.6% 61.2% 58.2% 58.6% 3rdQ/08 4thQ/08 1stQ/09 2ndQ/09 3rdQ/09 4thQ/09 3rdQ/08 4thQ/08 1stQ/09 2ndQ/09 3rdQ/09 4thQ/09 Quarter figure Cumulative figure of the last 12 months Quarter figure Cumulative figure of the last 12 months (*) For this quarter, an additional methodology was employed to monitor our efficiency, by considering the impacts of the risk associated with banking transactions (result of the provision for doubtful loans) and insurance and pension plan transactions (claims) as a share of the ratio components. Risk Adjusted Efficiency Ratio = Non-Interest Expenses (Personnel Expenses + Other Administrative Expenses + Other Operating Expenses + Tax Expenses with Other Taxes) (Managerial Financial Margin + Banking Service Fees and Charge Revenues + Operating Result of Insuance, Capitalization and Pension Plans before Retained Claims + Other Operating Income + Tax Expenses for PIS/COFINS/ISS) Result from Loan Losses Retained Claims The 2008 data reflect the sum of first nine months separately posted by Itaú and Unibanco. For comparison purposes, we have adjusted the 2008 accounting statements with the full consolidation of Redecard. 13

14 BIS Ratio 16.3% 13.1% 10.8% 16.7% 13.7% 11.2% (*) 15.5% 09/30/09 12/31/09 BIS Tier I (Core Capital) Tangible Equity 12/31/09 The Tangible Common Equity (TCE ) is internationally defined as Stockholders Equity less intangible assets, goodwill and preferred shares. In the case of Brazil, non-voting shares have primarily a capital function and, for this reason, have not been excluded from Tangible Equity. (*) This would be Itaú Unibanco s BIS Ratio if Res. 3,825 of CMN, published at the end of 2009, was applicable immediately. The resolution determined that from April 1 st, 2010, the total amount for addicional allowance for loans and lease losses shall not be added to the Tier I Capital. 14

15 Segmentation Itaú Unibanco Commercial Bank Itaú BBA Consumer Credit Corporation + Treasury Note: The consumer-credit s chart reflects mainly the operations performed in channels dedicated to non-account holders. 15

16 Segmentation Highlights Pro Forma R$ Million Commercial Bank Itaú BBA Consumer Credit Corporation + Treasury Itaú Unibanco (*) 4 th Quarter 2009 Recurring Net Income 1, ,813 Allocated Tier I Capital 13,234 12,509 7,128 17,813 50,683 RAROC in the quarter (% p.y.) 38.3% 17.9% 32.4% 8.0% 22.6% Efficiency Ratio (ER) 51.1% 28.4% 42.5% 11.9% 43.6% Total Assets 424, ,086 74,538 56, , Recurring Net Income 4,383 1,712 2,204 2,190 10,491 Allocated Tier I Capital 13,234 12,509 7,128 17,813 50,683 RAROC annualized (% p.y.) 29.3% 16.1% 30.1% 15.8% 22.3% Efficiency Ratio (ER) 47.1% 28.6% 41.5% 20.5% 42.4% Total Assets 424, ,086 74,538 56, ,273 (*) Do not reflect the sum of the parts because certain intercompany transactions were eliminated only at the Consolidated level. Note: As from 4Q09, it includes 30% stake of Porto Seguro at Corporation + Treasury. 16

17 Association with Porto Seguro Income Statement - 4 th Quater 2009 Result of Automobile and Residential Insurances (from Itaú Unibanco) R$ Million 30% of Porto Seguro results FINANCIAL MARGIN PROVISION FOR LOAN LOSSES RESULT FROM FINANCIAL OPERATIONS OTHER OPERATING INCOME (EXPENSES) (7.7) Banking Fees and Charge Revenues Result from operations of insurance, pension plan and capitalization Personnel expenses and Other administrative expenses (43.9) (99.7) Tax expenses (16.3) (22.5) Other operating income (expenses) 0.0 (1.2) OPERATING INCOME INCOME BEFORE TAX AND PROFIT SHARING INCOME TAX AND SOCIAL CONTRIBUTION PROFIT SHARING NET INCOME (+) GOODWILL CONSOLIDATED NET INCOME (21.3) (4.4) (2.0) (10.2) (36.8) 39.9 (2.0) Note: It does not consider the commission received on sales of products of Porto Seguro on Itaú Unibanco s branch network of approximately R$ 5 million per quarter. 17

18 Guidance for Individuals Credit growth: 15% to 19% (19% to 23% (1) (2) ) 2. Companies Credit growth: 15% to 19% (24% to 28% (1) ) 2.1. SMEs Credit growth: 19% to 23% (26% to 30% (1) ) 3. NPL decrease from current levels: -50 bps to -100 bps 4. Banking Services Fees growth: 10% to 15% 5. Non-Interest Expenses excluding Redecard and Porto Seguro: 3% to 5% growth 5.1. Non-Interest Expenses excluding expansion costs (new points of sales), Redecard and Porto Seguro: 0% to 3% growth (1) Non-overdue operations and operations overdue up to 60 days, ie, loans that generate revenues on the accrual basis. Does not include sureties and endorsements. (2) Does not include acquired payroll credit portfolios. 18

19 Conference Call about 2009 Earnings Results Roberto Egydio Setubal CEO February 10 th,

about 3 rd Q/09 Earnings Results

Conference Call about 3 rd Q/09 Earnings Results Alfredo Egydio Setubal Investor Relations Officer November 4 th, 2009 1 Highlights 1. Earnings: 3 rd Q/09: Recurring Net Income of R$2,687 million, an increase