Financial statements as of December 31, 2014 and 2013

Transcription

1 (With management report and independent auditors report thereon) (Free translation of the original report in Portuguese containing financial statements prepared in accordance with accounting practices adopted in Brazil, applicable to institutions authorized to operate by Central Bank of Brazil.) KPDS

2 Contents Management report 3 Summary of the Audit Committee s Report 5 Independent auditors report 6 Statements of financial position 8 Statements of income 9 Statements of changes in shareholders equity 10 Statements cash flows - Indirect method 11 Notes to the financial statements 12 2

3 Management report Dear Shareholders, Pursuant to the legal provisions, we submit to your appreciation the financial statements referring to the year and semester ended December 31, The description of the structure related to the management of risk is available on our webpage on the Internet at the website: Credit risk In compliance with Resolution No. 3721, of April 30, 2009 of the National Monetary Council (CMN), Banco de Tokyo-Mitsubishi UFJ Brasil S/A has an installed structure of Credit Risk Management and the Risk Management Department - Credit Risk Control Group is the one responsible for monitoring and control of the credit risk and the adherence to the credit policy. Market risk In accordance with the National Monetary Council Resolution No. 3,464 of June 26, 2007, Banco de Tokyo-Mitsubishi UFJ Brasil S/A had implemented a market risk management structure and defined the Risk Management Department - Market Risk Control Group as the area responsible for identifying, measurement, assessing, monitoring and controlling the market risks assumed by the Bank. Liquidity risk In compliance with the CMN Resolution No of May 24, 2012, Banco de Tokyo-Mitsubishi UFJ Brasil S/A has an installed structure for the Management of Liquidity Risk and its Risk Management Department - Group Market Risk Control is the area responsible for the identification, measurement, assessment, monitoring and control of liquidity risks assumed by the Bank. Operating risk In accordance with the National Monetary Council Resolution No of June 29, 2006, Banco de Tokyo-Mitsubishi UFJ Brasil S/A implemented their Operating Risk Management Structure and adopted as methodology the Basic Index Approach for the calculation of the portion of the Required Notional Equity related to the Operating Risk, which is required by Circular of the Central Bank of Brazil No of March 29, Page 3 of 41

4 Structure of Capital Risk Management In compliance with Articles 10 and 12 of the National Monetary Council Resolution No of June 30, 2011, Banco de Tokyo-Mitsubishi UFJ Brasil S/A created a Risk Management Department - Group Credit Risk Control and appointed, on November 25, 2011, the director responsible for the implementation of the organizational structure to implement the management of capital risk management. At an executive board s meeting held on June 27, 2012, Banco de Tokyo-Mitsubishi UFJ Brasil S/A approved the Bank s Corporate Policy, processes, procedures and systems required for the implementation of the Capital Management Structure. In accordance with Articles 5 and 8 of Resolution No. 3988, the Banco de Tokyo-Mitsubishi UFJ Brasil S/A Capital Plan was approved at an Executive Board s Meeting. Ombudsman s office In accordance with Central Bank of Brazil standards, an Ombudsman s office department was established comprising a Director in charge and an Ombudsman whose purpose is to assure the strict compliance with legal and regulatory standards referring to consumer rights and to operate as a communication channel between the institution and its customers and users of its services and products, as well as to mediate conflicts. February 19, Management Page 4 of 41

5 Summary of the Audit Committee s report Banco de Tokyo-Mitsubishi UFJ Brasil S/A In compliance with its assignments, it is the duty of the Banco de Tokyo-Mitsubishi UFJ Brasil S/A Audit Committee to care for the quality of the financial statements, for compliance with legal and regulatory requirements, for the independence and quality of the independent auditors' work and internal audit work, and for the quality and effectiveness of the internal control and risk management systems. Work meetings held throughout the period were attended by representatives of the Internal Audit, Independent Auditors and other departments, in addition to Audit Committee members. We highlight the following matters as the principal ones: Review of the financial statements for the second semester of 2014; Assessment of the performance and quality of the Independent and Internal Auditors' work; Assessment of compliance with the recommendations made by the Independent and the Internal Auditors; and Monitoring of risk management and compliance matters. The Audit Committee, as a result of the assessments performed, based on information received from the Management and the Internal and Independent Auditors, concluded that the work developed are effective and grants transparency and quality to the financial statements of Banco de Tokyo-Mitsubishi UFJ Brasil S/A. February 19, The Audit Committee Page 5 of 41

6 KPMG Auditores Independentes R. Dr. Renato Paes de Barros, São Paulo, SP - Brasil Caixa Postal São Paulo, SP - Brasil Independent auditors report Central Tel 55 (11) Fax Nacional 55 (11) Internacional 55 (11) Internet To The Shareholders and Management Banco de Tokyo-Mitsubishi UFJ Brasil S/A São Paulo - SP We have examined the financial statements of Banco de Tokyo-Mitsubishi UFJ Brasil S/A (Bank), which comprise the statement of financial position as at December 31, 2014 and the related statements of income, changes in shareholders equity and cash flows for the semester and year then ended, and notes, and a summary of significant accounting policies and other notes to the financial statements. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting practices adopted in Brazil applicable to institutions authorized to operate by the Central Bank of Brazil, and for designing, implementing and maintaining the internal controls relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. Independent auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit, carried out in accordance with Brazilian and International Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of risks of material misstatement in the financial statements, whether caused by fraud or error. In make those risk assessment, the auditor considers the internal controls relevant for the preparation and adequate presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Bank s internal controls. An audit also includes evaluating the appropriateness of the accounting practices used and reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements taken as a whole. We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of Banco de Tokyo-Mitsubishi UFJ Brasil S/A as of December 31, 2014, 6 KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ( KPMG International ), uma entidade suíça. KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity.

7 and the performance of its operations and cash flows for the semester and year then ended in accordance with accounting practices adopted in Brazil applicable to the institutions authorized to operate by the Central Bank of Brazil. São Paulo, February 19, 2015 KPMG Auditores Independentes CRC 2SP014428/O-6 Original report in Portuguese signed by Rodrigo de Mattos Lia Accountant CRC 1SP252418/O-3 7

8 Banco de Tokyo -Mitsubishi UFJ Brasil S/A Financial Statements as of Banco de Tokyo-Mitsubishi UFJ Brasil S/A Balance sheets as of (restated) (In thousands of Reais) Assets Liabilities Current assets 12,214,599 6,139,783 Current liabilities 10,538,749 5,198,270 Cash and due from banks 430,073 7,789 Deposits 1,460,497 2,039,704 Interbank investments 2,921,456 2,508,589 Demand deposits 143, ,849 Time deposits 1,316,749 1,889,855 Money market 2,863,167 2,390,142 Interbank deposits 37,805 55,469 Money market repurchase commitments 238, ,510 Foreign currency 20,484 62,978 Third party portfolio 238, ,510 Securities and derivative financial instruments 1,788, ,648 Interbank accounts Own portfolio 599, ,754 Collections in transit Pledged as guaranty 1,153, ,217 Derivative financial instruments 35,776 3,677 Interbranch accounts 28,756 55,377 Interbank Relations 75,169 66,880 Third party funds in transit 28,756 55,377 Collections in transit Borrowings 2,545, ,454 Restricted Deposits: Brazilian Central Bank 74,814 66,044 Foreign borrowings 2,545, ,454 Correspondents Local onlendings - government institutions 115,444 31,263 Loans 635, ,721 BNDES ,280 Loans: Finame 94,718 10,040 Private sector 662, ,299 Other government institutions 20,101 5,943 Allowance for loan losses (27,173) (9,578) Foreing onlendings 117, ,309 Other assets 6,360,749 1,779,896 Foreign onlendings 117, ,309 Foreign exchange portfolio 6,326,432 1,751,703 Income receivable 1,122 4,516 Derivative financial instruments 100,285 80,918 Negotiation and intermediation securities 34,798 26,256 Other 1, Derivative financial instruments 100,285 80,918 Allowance for other loan losses (3,521) (2,839) Other liabilities 5,932,199 1,613,191 Other receivables 2,864 1,260 Tax collection 1, Foreign exchange portfolio 5,537,599 1,407,591 Prepaid expenses 2,864 1,260 Social and statutory 975 1,490 Tax and social secutity 194, ,684 Negotiation and intermediation securities 140,933 3,251 Provision for contingent liabilities 28,443 22,100 Other 28,577 17,880 Non-current assets Non-current liabilities 1,348, , , ,894 Borrowings 683, ,576 Interbank investments 2,681 - Foreign borrowings 683, ,576 Interbank deposits 2,681 - Local onlendings - government institutions 97,156 37,729 Securities and derivative financial instruments 327, ,497 BNDES 58,913 27,548 Finame 38,243 10,181 Own portfolio 14,810 - Pledged as guaranty 291, ,215 Foreign onlendings 72,319 82,635 Derivative financial instruments 21,160 9,282 Foreign onlendings 72,319 82,635 Loans 225, ,701 Loans: Derivative financial instruments 495, ,674 Private sector 226, ,948 Allowance for loan losses (755) (2,247) Derivative financial instruments 495, ,674 Other assets 252, ,594 Foreign exchange portfolio - - Debtors for guarantee deposits 187, ,150 Other 65,638 45,444 Other receivables Prepaid expenses Deferred income Permanent assets 58,720 55,159 Shareholders' equity 1,194,603 1,158,421 Investments 1 1 Capital 853, ,071 Other investments Provision for losses (195) (195) Local Capital Stock 4,445 4,445 Foreign Capital Stock 848, ,626 Fixed assets 44,303 45,965 Capital reserves 5,103 5,103 Profit reserves 340, ,277 Property in use 30,362 28,645 Assets valuation adjustments (356) (124) Other fixed assets 34,625 33,616 Treasury shares (4,041) (3,906) Accumulated depreciation (20,684) (16,296) Intangible 14,392 9,130 Intangibles assets 29,167 19,975 Accumulated amortization (14,775) (10,845) Deferred charges Organization and expansion expenditures 5,624 5,703 Accumulated amortization (5,600) (5,640) Total assets 13,082,522 6,782,836 Total liabilities and shareholders' equity 13,082,522 6,782,836 The accompanying notes are in integral part of these financial statements. Page 8 of 37

9 Banco de Tokyo -Mitsubishi UFJ Brasil S/A Financial Statements as of Banco de Tokyo-Mitsubishi UFJ Brasil S/A Statements of income Years ended (restated) Semester ended December 31, 2014 (In thousands of Reais except for net income/loss per share) 2nd. Semester Year Revenue from financial intermediation 556, , ,773 Loans 59,361 92,954 96,048 Securities income 209, , ,530 Income from derivative financial instruments 237, ,465 80,448 Income from foreign exchange operations 49,867 21,888 64,747 Expenses from financial intermediation (435,264) (420,631) (321,362) Deposits, money market and interbank funds (91,149) (176,736) (152,087) Borrowings and onlendings (331,003) (227,110) (163,230) Accrual of allowance for loan losses (13,112) (16,785) (6,045) Gross income from financial operations 121, , ,411 Other operating income (expenses) (85,089) (147,842) (102,398) Service fee income 13,804 35,576 29,521 Income from bank charges Personal expenses (54,369) (102,527) (86,120) Other administrative expenses (32,010) (60,287) (49,661) Tax expenses (6,090) (10,531) (8,172) Other operating income 7,818 9,690 35,481 Other operating expenses (14,705) (20,689) (24,211) Operating income 36,143 75,104 88,013 Non-operating income (13) (28) (51) Income before taxation and profit sharing 36,130 75,076 87,962 Income tax and and social contribution (19,114) (36,350) (40,327) Provision for income tax (17,391) (28,310) (18,435) Provision for social contribution (10,498) (17,058) (11,150) Deferred tax assets/liabilities - Taxes and Contributions 8,775 9,018 (10,742) Net income for the semester/ year 17,016 38,726 47,635 Number of outstanding shares (per lot of a thousand shares) 4,331,569 4,331,569 4,332,060 Net income per lot of a thousand shares - R$ The accompanying notes are in integral part of these financial statements. Banco de Tokyo-Mitsubishi UFJ Brasil S/A Page 9 of 37

10 Financial Statements as of Shareholders Equity Years ended (restated) Semester ended December 31, 2014 (Em milhares de Reais) Capital reserves Profit reserves Premium on Other Assets Capital the subscription capital valuation Retained Treasury stock of shares reserves Legal Statutory adjustments earnings shares Total Balances at December 31, previously presented 853,071 4, , , (3,906) 1,097,244 Prior year adjustment , ,532 Balances at December 31, adjusted 853,071 4, , , (3,906) 1,113,776 Assets valuation adjustment (380) - - (380) Reversal of dividends proposed in prior years Net income for the year ,635-47,635 Profit distribution: Legal reserve , (2,259) - - Dividends (2,617) - (2,617) Transfer to statutory reserve Balances at December 31, 2013 Changes in the year ,759 - (42,759) ,071 4, , ,144 (124) - (3,906) 1,158, ,259 42,766 (380) ,645 Balances at December 31, ,071 4, , ,144 (124) - (3,906) 1,158,421 Assets valuation adjustment (232) - - (232) Acquisition of shares issued by the Bank (135) (135) Reversal of dividends proposed in prior years Net income for the semester ,726-38,726 Profit distribution: Legal reserve , (1,936) - - Dividends (2,195) - (2,195) Transfer to statutory reserve Balances at December 31, 2014 Changes in the year ,595 - (34,595) ,071 4, , ,757 (356) - (4,041) 1,194, ,936 34,613 (232) - (135) 36,182 Balances at June 30, ,071 4, , ,556 (301) - (3,912) 1,178,735 Assets valuation adjustment (55) - - (55) Acquisition of shares issued by the Bank (129) (129) Reversal of dividends proposed in prior years Net income for the semester ,016-17,016 Profit distribution: Legal reserve (851) - - Dividends (964) - (964) Transfer to statutory reserve Balances at December 31, 2014 Changes in the semester ,201 - (15,201) ,071 4, , ,757 (356) - (4,041) 1,194, ,201 (55) - (129) 15,868 The accompanying notes are in integral part of these financial statements. Page 10 of 36

11 Banco de Tokyo -Mitsubishi UFJ Brasil S/A Financial Statements as of Banco de Tokyo-Mitsubishi UFJ Brasil S/A Statement of cash flows - Indirect method Years ended (restated) Semester ended December 31, 2014 (In thousands of Reais) 2nd. Semester Year Cash provided by operating activities 1,551, , ,713 Net income for the semester / year 17,016 38,726 47,635 Adjustments to the net income: 32,309 44,928 1,053 Recording of allowance for loans losses 15,385 16,103 4,439 Recording / (Reversal) of provision for other assets (2,273) 682 1,606 Depreciation and amortization 4,720 9,153 7,813 Recording of civil, labor and tax provisions 9,114 13,502 5,420 Recording / (Reversal) of actuarial provision 5,336 5,336 (18,437) Variation in deferred income Adjusted net income 49,325 83,654 48,688 Changes in operating assets (4,468,868) (5,508,057) (467,934) (Increase) / decrease in interbank investments 67,862 19,997 (35,752) (Increase) in securities (331,247) (912,959) (211,375) (Increase) / decrease in interbank and interbranch accounts (32,168) (35,452) 13,256 (Increase) / decrease in loans (216,695) 64,631 (370,893) (Increase) / decrease in other assets and other receivables (3,956,620) (4,644,274) 136,830 Changes in operating liabilities: 5,970,700 6,295,081 1,014,959 Increase /(decrease) in deposits (199,339) (579,207) 683,387 Increase / (decrease) in money market funding 60,531 90,020 (78,508) Increase in borrowings and onlendings 1,761,659 2,133, ,841 Increase in derivative financial instruments (net of assets) 485, , ,349 Increase / (decrease) in other liabilities 3,862,231 4,323,575 (174,110) Cash used in investment activities (6,945) (12,714) (22,669) Disposal of fixed assets 11,033 17,389 11,542 Acquisition of fixed assets (9,517) (20,911) (32,686) Investment in intangible assets (8,461) (9,192) (1,525) Cash used in financing activities (129) (135) - Acquisition of shares issued by the Bank (129) (135) - Net increase in cash and cash equivalents 1,544, , ,044 Statement of changes in cash and cash equivalents Cash and cash equivalents at the beginning of the semester/year 1,774,655 2,460,909 1,887,865 Cash and cash equivalents at the end of the semester/year 3,318,738 3,318,738 2,460,909 Increase in cash and cash equivalents 1,544, , ,044 The accompanying notes are in integral part of these financial statements. Banco de Tokyo-Mitsubishi UFJ Brasil S/A Page 11 of 37

12 Notes to the financial statements (In thousands of Reais, except when otherwise indicated) 1 Operations The Bank develops all types of authorized bank activities and operates as a commercial bank, including the following operations: Trade, Investment, Credit, Financing and Investment and Foreign Exchange Portfolios. 2 Presentation of the financial statements The financial statements were prepared based on the accounting practices issued by the Brazilian Corporate Law, considering changes by Law No and Law 11,941, and the rules and instructions of the National Monetary Council (CMN), Central Bank of Brazil and Committee for Accounting Pronouncements (CPC), when applicable. The presentation of these financial statements is in conformity with the Chart of Accounts for Institutions of the National Financial System (COSIF), concluded on 01/20/2015 and approved for disclosure on 02/19/2015. Restatement of corresponding amounts Corresponding amounts related to balance sheet as of December 31, 2013 and statements of income, changes in shareholders equity and cash flows, for the year ended December 31, 2013, originally presented in the financial statements for that year, are restated herein in compliance with CPC 23 - Accounting Policies, Change in Estimates (CMN Resolution 4007/11) and Error Rectification, and CPC 26(R1) - Presentation of Financial statements, to reflect the recognition of monetary correction on deposits in court and contingent liabilities and certain adjustments to the statements of cash flows, as shown below: Page 12 of 41

13 Balance sheets Published balance Adjustment Restatement Assets 6,705,972 76,864 6,782,836 Current assets 6,139,783-6,139,783 Non-current assets 511,030 76, ,894 Other assets 140,730 76, ,594 Debtors for guarantee deposits 108,200 63, ,150 Other - deferred income taxes 32,530 12,914 45,444 Other 370, ,300 Fixed assets 55,159-55,159 Liabilities and Shareholders' equity 6,705,972 76,864 6,782,836 Current liabilities 5,140,404 57,866 5,198,270 Other liabilities 1,555,325 57,866 1,613,191 Other 1,452,507-1,452,507 Tax and social security 102,818 57, ,684 Other 32,622-32,622 Provision for deferred income taxes 15,554 25,580 41,134 Provision for tax risks 54,642 32,286 86,928 Other current liabilities 3,585,079-3,585,079 Deferred income Non-current liabilities 425, ,614 Shareholders' equity 1,139,423 18,998 1,158,421 Profit reserves 285,279 18, ,277 Other 854, ,144 Statements of income Published balance Adjustment Restated Revenue from financial intermediation 511, ,773 Expense from financial intermediation (321,362) - (321,362) Gross income from financial operations 190, ,411 Other operating income (expenses) (106,508) 4,110 (102,398) Other (113,668) - (113,668) Other operating income 28,720 6,761 35,481 Other operating expenses (21,560) (2,651) (24,211) Operating income 83,903 4,110 88,013 Non-operating income (51) - (51) Income before taxition and profit sharing 83,852 4,110 87,962 Page 13 of 41

14 Income tax and social contribution (38,683) (1,644) (40,327) Provision for income and social contribution taxes (29,585) - (29,585) Deferred tax assets/liabilities - Taxes and Contributions contribuições (9,098) (1,644) (10,742) Net income for the year 45,169 2,466 47,635 Statement of cash flows - Indirect method Published balance Ajuste Restated Cash provided by operating activities 598,599 (2,886) 595,713 Net income for the year 45,169 2,466 47,635 Adjustments to the net income (1,598) 2,651 1,053 Other (4,367) - (4,367) Recording of civil, labor and tax provisions 2,769 2,651 5,420 Adjusted net income 43,571 5,117 48,688 Changes in operating assets (462,817) (5,117) (467,934) Other (604,764) - (604,764) (Increase) in other assets and other receivables 141,947 (5,117) 136,830 Changes in operating liabilities 1,017,845 (2,886) 1,014,959 Other 1,189,069-1,189,069 Decrease in other liabilities (171,224) (2,886) (174,110) Cash used in investment activities (22,669) - (22,669) Cash used in financing activities (2,886) 2,886 - Dividends proposed (2,893) 2,893 - Reversal of dividends proposed 7 (7) - Net increase in cash and cash equivalents 573, ,044 Increase in cash and cash equivalents 573, ,044 Page 14 of 41

15 3 Description of significant accounting practices Summary of significant accounting practices a. Statement of income Income and expenses are recorded on an accrual basis. Banco de Tokyo-Mitsubishi UFJ Brasil S/A b. Accounting estimates The preparation of the financial statements in accordance with accounting practices adopted in Brazil applicable to institutions authorized to operate by the Central Bank of Brazil requires that Management uses its judgment in determining and recording accounting estimates. Significant assets and liabilities subject to these estimates and assumptions include the residual value of fixed assets, the allowance for doubtful loans, the provision for deferred income tax assets, the provision for contingencies, the provision for actuarial obligation and the valuation of derivative financial instruments. The actual amounts required to settle these transactions may be different from the amounts estimated due to the lack of precision inherent in the estimation process. These estimates are reviewed at least once a year, seeking to establish values which more precisely reflect future settlement values of the assets and liabilities considered. c. Current and noncurrent assets and liabilities These assets and liabilities are recognized at realizable and/or payable amounts, including accrued and/or incurred income, charges, monetary and exchange variations earned and/or incurred up to the balance sheet date, calculated on a daily pro rata basis, and, when applicable, the effect of the adjustments to reduce the cost of assets to market and/or realizable values. Realizable and payable balances falling due within 12 months are classified in current assets and liabilities, respectively. All other assets and liabilities are considered as noncurrent. d. Securities and derivative financial instruments The securities portfolios and derivative financial instruments are recognized in accordance with the following classification and accounting measurement criteria: Securities Trading securities, Securities available for sale and Securities held to maturity. Trading securities are securities acquired for the purpose of being actively and frequently traded; in the category and in the category securities held to maturity, the securities acquired and held with the intention and financial ability to be held by the Bank as part of its portfolio until their maturity date. Securities available for sale, those that do not classify in the other categories described above. Securities classified in the categories trading securities and securities available for sale above are recognized at their purchase price plus accrued earnings up to the balance sheet date, which are calculated on a daily pro rata basis, and adjusted to their market value, with the corresponding entry for the valuation adjustment being reflected in: (1) the appropriate income or expense account in the statements of income, when relating to the securities classified as trading securities ; and (2) a specific account in shareholders equity, when relating to securities classified as securities available for sale. The securities classified as held to maturity are recognized at their purchase price plus accrued earnings up to the balance sheet date, calculated on a daily pro rata basis, which are recorded in the Page 15 of 41

16 statements of income, and an allowance for losses is recorded whenever there is a permanent loss in the realizable value of these securities. Derivative financial instruments Derivative financial instruments are recorded at market value, with the increase or decrease arising from the adjustment to market value being recorded in a separate income or expense account, except for the derivative instruments designated as part of a hedge structure, which can be classified as follows: I. Market risk hedge II. Cash flow hedge The derivative financial instruments destined for hedge purposes and the respective hedge objects are measured at market value, observing the following: For those classified in Category I, the increase or decrease in market value is recorded with a corresponding entry in the appropriate income or expense account, in the statements of income; and For those classified in Category II, the increase or decrease in market value is recorded with a corresponding entry in a shareholders equity account. e. Loans and allowance for loan losses Loans are classified according to the Management s judgment, based on analyses of the outstanding loan transactions (overdue and falling due), past experience, future expectations, specific portfolio risks and the risk assessment policy of Management, regarding the parameters established by the National Monetary Council Resolution No. 2682/99, which requires the periodic analysis of the portfolio and its classification in nine levels, which of AA represents minimum risk and H represents loss. Revenues from loans overdue up to 60 days, irrespective of its risk level, will only be recognized as income when effectively received. The allowance for loan losses, considered sufficient by the Management, meets the minimum requisite established by the aforementioned Resolution, as per Note 7c. The bank considers debt composition, extension, renovation, new operation for partial or full settlement of the previous operation or any other type of agreement involving the change in maturity or payment terms as originally agreed as renegotiations, in accordance with the CMN Resolution No. 2682/99. f. Permanent assets They are recognized at the acquisition cost in combination with the following aspects: Depreciation of property for use is computed using the straight-line method at the following annual rates: properties for use - buildings - 4%; machinery and equipment, security and communication systems - 10%; and data processing systems and transport - 20%. Amortization of deferred assets is calculated using the straight-line method, up to ten years, or based on contractual terms in the case of leased asset improvements. Law No eliminated the account of Deferred Assets. The National Monetary Council authorized Page 16 of 41

17 Financial Institutions to maintain the balance as of December 31, 2008 up to its complete amortization to write-off, Financial Institutions shall register in Deferred Asset, only preoperational expenses and restructuring costs which will, effectively, increase the results of more than one subsequent semester and do not represent only reduction of costs or increase in operational efficiency. Linking expenses and expenditure recorded in Deferred Assets with the increase of income of more than one fiscal year was based on a technical study, consistent with the information used in other operational reports. Intangible assets - they correspond to the vested rights in intangible assets for the maintenance of the entity or exercised for this purpose. The intangible assets with defined useful lives are usually amortized on a straight-line basis over their estimated useful economic lives. g. Reduction in the recoverable value of non-financial assets ( Impairment ) A loss due to impairment is recognized if the carrying amount of an asset, or of its cash generating unit, exceeds its recoverable value. A cash generating unit is the smallest identifiable group of assets that substantially generates cash flows independently of other assets and groups. Losses due to impairment are recognized in the income statement. The values of non-financial assets are reviewed once a year at least in order to determine whether there is any indication of loss due to impairment. h. Provision for income and social contribution taxes The provision for income tax is recorded at the rate of 15% of taxable income, plus an additional 10% on annual taxable income exceeding R$240 (six-month-period - R$120), and the provision for social contribution on net income is recorded at the rate of 15% on adjusted income before income tax. The accounting policy for recording income and social contribution tax credits on temporary difference are described in Note 20. Deferred tax liabilities are recognized for all taxable temporary differences. i. Securities clearing accounts Securities clearing accounts are stated using the balances of operations carried out on Bolsa de Valores, Mercadorias e Futuros - BM&FBOVESPA pending settlement within regulatory terms or contract terms. j. Provisions for contingencies Provisions for legal actions are recognized when the Bank has a present or not-formalized obligation (constructive obligation) as a result of past events; and the outflow of funds to settle the obligation is likely and the amount may be accurately estimated. When there is a group of similar obligations, the chances of settling them are determined by the Bank, taking into account the obligations as a whole. A provision is recognized even when the chances of settlement related to any individual item included in the same group of obligations are small. Provisions are measured at the present value of expenditures which should be required to settle an obligation which reflects the current market assessments of time value of money (TVM) and specific risks of the obligation. The increase in the obligation due to the elapsing of time is recognized as Interest expenses and the like. Page 17 of 41

18 4 Cash and cash equivalents Cash and cash equivalents presented on the statements of cash flows are composed as follows: At the beginning of the year 2,460,909 1,887,865 Cash 7,789 5,262 Interbank deposits (*) 2,453,120 1,882,603 At the end of the year 3,318,738 2,460,909 Cash 430,073 7,789 Interbank deposits (*) 2,888,665 2,453,120 Increase of cash and cash equivalents 857, ,044 (*)Operations whose maturity at the time of acquisition was up to 90 days. 5 Interbank Investments a. Money market Over 365 days (*) Total Total Own portfolio LFT LTN - 2,264,028-2,264, ,639 1,885,998 NTN-B 399, ,999-2,624,027 2,624,027 2,241,637 Financed position LFT LTN - 239, , , , , ,505 Total 2,863,167 2,863,167 2,390,142 (*)They are classified in Current Assets in the Balance Sheet, due to maturity of the operation with is less than 2 days and not to the maturity of the underlying collateral. b. Interbank deposits Due up to 30 days 3,752 - From 31 to 180 days 16,511 54,791 From 181 to 365 days 17, Over 365 days 2,681 - Total 40,486 55,469 Page 18 of 41

19 c. Foreign currency Due up to 30 days (*) 20,484 62,978 Total 20,484 62,978 (*) They refer to high-liquidity investments. 6 Securities Up to 3 months From 3 to 12 months Over 12 months Total Total Categories Trading securities - - 2,570 2,570 50,352 Securities available for sale 499,781 1,250, ,749 2,057,366 1,140,834 Total 499,781 1,250, ,319 2,059,936 1,191,186 Categories Curve value Market value Adjustmet Market value Trading securities 2,601 2,570 (31) 50,352 Securities available for sale 2,062,578 2,057,366 (5,212) 1,140,834 Total 2,065,179 2,059,936 (5,243) 1,191,186 Types of Securities Curve value Market value Adjustment Market value Letras do Tesouro Nacional 2,052,488 2,047,355 (5,133) 1,054,489 Notas do Tesouro Nacional 12,691 12,581 (110) - Letras Financeiras do Tesouro ,697 Total 2,065,179 2,059,936 5,243 1,191,186 For securities classified as "held for trading" and "available for sale", the measurement at market value is performed by discounting the future flow at present value using the interest rate curves built by an independent area independent which follows its own methodology, and leading practices of the market, in accordance with the specific characteristics of each security, based primarily on data published by the Stock Exchange, Commodities and Futures Exchange - BM&F BOVESPA and the National Association of Investment Banks and Security Dealers - ANBIMA. The mark-to-market adjustments of securities classified as available for sale are recognized in a special account in the shareholders equity, net of tax Page 19 of 41

20 effects. Securities classified as "held for trading" are measured at fair value with a corresponding entry in income and are presented in the balance sheet as current assets, irrespective of their maturity. Government bonds are kept in custody with the Special System for Settlement and Custody - SELIC. As per Note 3d, the Bank recorded mark-to-market adjustments of securities for the year ended December 31, 2014, loss of which deriving from this assessment totaled R$356 ( R$124 loss), net of tax effects. The amount of R$(656) ( R$4,011) was recorded in the equity account deriving from the use of Hedge Accounting of securities classified as available for sale securities. 7 Loans a. Analysis of the total loan portfolio by activity sector Loans: Rural 22,091 12,203 Industry 473, ,926 Commerce 213, ,463 Services 179, ,743 Individuals , ,247 Other receivables - Foreign exchange portfolio: Advances on exchange contracts and income receivable: Industry 586, ,254 Commerce 97,217 18,184 Services 108, , ,438 Total 1,681,307 1,301,685 b. Composition of the loan portfolio by maturity range Falling due: From 1 to 180 days 869, ,590 From 181 to 365 days 585, ,146 Over 365 days 226, ,948 Total 1,681,307 1,301,684 Past due (installments) Up to 90 days - 1 Total 1,681,307 1,301,685 Page 20 of 41

21 c. Composition of provision by risk levels In accordance with the CMN Resolution No. 2682/99, presented below is the analysis of the loan portfolio and other credits (foreign exchange portfolio - advances on exchange contracts) and the related risk levels: Risk level % Minimum required provision Normal course loan Total loans Minimum required provision Total provision Effective % of provision AA - 1,239,215-1, A B ,089 3,811 9, C , D ,656 2,766 3, G ,091 15,464 15, ,681,307 22,378 31,449 Risk level % Minimum required provision Normal course loan Loans in arrears Total loans Total loans Minimum required provision Total provision Effective % of provision AA - 865, ,432-1, A ,898-4, B , ,405 3,764 7, C ,156-41,156 1,235 3, D , ,794 1,379 2, ,301, ,301,685 6,402 14,664 2nd. semester 2014 Year Loans renegotiated during the period 74, , ,260 Renegotiated loans are basically composed of working capital renewals. During the Years ended, there were no write-offs to loss or loan recoveries prior written off as loss. The provision recorded by the Bank is higher than the minimum provision required by BACEN as the Bank adopts the provision criterion established by the Headquarter (The Bank of Tokyo-Mitsubishi UFJ, Ltd,), which reflects the loss forecast of Management. Page 21 of 41

22 d. Concentration by largest debtors Balance Portfolio % Provisions Balance Portfolio % Provisions Largest Client 231, , Following Largest clients 745, , , ,458 Other clients 703, , , ,923 1,681, ,449 1,301, ,664 e. Changes in provision Changes in provision for allowance for doubtful loans were the following during the year: 2nd Semester Year Opening balance 18,337 14,664 8,619 Provision recognition 21,635 29,528 12,304 Provision reversal (8,523) (12,743) (6,259) Closing balance 31,449 31,449 14,664 % of provision on the loans portfolio Other assets- Other Advances and prepayment of salaries Tax credits from temporary differences (Note 20) 39,645 26,447 Tax credits from MTM securities available for sale Taxes to offset 27,490 18,915 Sundry debtors - Domestic Payments reimbursable Other 2 9 Total 67,556 45,704 Page 22 of 41

23 9 Permanent assets a. Property and equipment in use Depreciation rate Cost Accumulated depreciation Net value p.a. (%) Land - 1,416 1, ,416 1,416 Buildings 4 28,945 27,229 12,082 9,545 16,863 17,684 Facilities, Machinery and equipment in use 10 7,364 6,941 1,922 1,344 5,442 5,597 Data processing system 20 12,034 6,694 4,435 3,817 7,599 2,877 Transport system 20 1,075 1, Security system 10 3,282 2, ,571 2,532 Communication system 10 1,239 1, Fixed assets in progress (*) - 9,632 14, ,632 14,672 Total 64,987 62,261 20,684 16,296 44,303 45,965 (*)Refers to expenditures for expansion projects. b. Intangible assets Amortization rate Cost Accumulated amortization Net Value p.a. (%) Expenditures on software acquisitions and development 20(*) 29,167 19,975 14,775 10,845 14,392 9,130 Total 29,167 19,975 14,775 10,845 14,392 9,130 (*)Development of new systems. c. Deferred assets Amortization rate Cost Accumulated amortization Net Value p.a. (%) Expenditures on software acquisitions and development 20 4,589 4,667 4,589 4, Branches and facilities improvements 20 1,035 1,036 1, Total 5,624 5,703 5,600 5, Page 23 of 41

24 10 Transactions with related parties According to the Bank, related parties are defined as the Headquarters and branches, parent companies and shareholders, companies related to them, the Bank s Management and other Management key staff and their relatives Assets Revenues Assets Revenues (liabilities) (expenses) (liabilities) (expenses) Cash in foreign currency 428,720 (43,560) 7,421 (9,441) The Bank of Tokyo-Mitsubishi UFJ, Ltd - New York The Bank of Tokyo-Mitsubishi UFJ, Ltd - London 7,828-2,263 - The Bank of Tokyo-Mitsubishi UFJ, Ltd - Tokyo 420,642-4,862 - The Bank of Tokyo-Mitsubishi UFJ, Ltd - Hong Kong The Bank of Tokyo-Mitsubishi UFJ, Ltd - Mexico Interest , Exchange variation - (43,560) - (15,922) Interbank investments in foreign currencies 20,484 2,704 62,978 9,082 The Bank of Tokyo-Mitsubishi UFJ, Ltd - New York 20,484 2,704 62,978 9,082 - Interest Exchange variation - 2,678-9,053 Demand deposits (3,692) - (4,190) - The Bank of Tokyo-Mitsubishi UFJ, Ltd - Tokyo (3,692) - (4,190) - Borrowings and onlendings (3,419,051) (233,177) (1,428,974) (159,997) The Bank of Tokyo-Mitsubishi UFJ, Ltd - New York (3,419,051) (233,177) (1,428,974) (159,997) - Interest - (146) - (96,731) - Exchange variation - (233,031) - (63,266) Swaps 4,185 (9,544) 5,370 (4,166) The Bank of Tokyo-Mitsubishi UFJ, Ltd - New York 4,185 (9,544) 5,370 (4,166) - Derivatives income - 15, Derivatives expenses - (25,017) - (4,166) Other liabilities - Services * (5,168) 19,926 3,810 13,375 The Bank of Tokyo-Mitsubishi UFJ, Ltd - New York (5,168) 19,380 3,810 12,555 The Bank of Tokyo-Mitsubishi UFJ, Ltd - Leasing and Finance ,381 The Bank of Tokyo-Mitsubishi UFJ, Ltd - Tokyo - (55) - (51) The Bank of Tokyo-Mitsubishi UFJ, Ltd - London (510) * Receivables and Payments. Page 24 of 41

25 a. Remuneration of key management The Executive Board maximum remuneration to be distributed to the director which was established at an ordinary General Shareholders Meeting held at April 28, 2014, is R$14,052. 2nd Year Semester Fixed remuneration 2,868 5,150 4,265 Variable remuneration 1,532 2,914 2,783 Total 4,400 8,064 7,048 The variable remuneration payment to the Management is in compliance with the National Monetary Council (CMN) Resolution No. 3921, of 11/25/2010, and is deferred over the minimum period of three years, and established as a result of the Management risks and activity. The number of shares held by the Executive Board is 10,618 shares, which account for % of the total number of shares. The Bank neither has post-employment benefits nor long-term benefits due to employment termination agreements for the Management s key personnel. b. Other information The Bank, in accordance with the legislation in force, cannot grant loans or advances: Neither to executive officers, nor to their respective spouses and relatives up to the 2 nd, degree; Individuals or legal entities that hold an equity interest higher than 10% of the Bank s capital; Legal entities, capital of which the Bank, or any of the executive officers or managers of the institution itself, as well as their spouses and respective relatives up to the 2 nd, degree, hold equity interest higher than 10%; and The Bank s majority shareholder. Accordingly, neither loans nor advances are performed by the Bank to any of the entities and people listed above. Note: The Bank does not have Administrative, Tax or Advisory boards and similar ones. Page 25 of 41

26 11 Deposits 2014 Without maturity Due up to 3 months From 3 to 12 months From 1to 3 months From 3 to 5 years Total Demand deposits 143, ,748 Time deposits (*) - 278, , ,629 13,576 1,316,749 Total 143, , , ,629 13,576 1,460, Without maturity Due up to 3 months From 3 to 12 months From 1to 3 months From 3 to 5 years Total Demand deposits 149, ,849 Time deposits (*) - 622, , ,232 43,694 1,889,855 Total 149, , , ,232 43,694 2,039,704 (*) In the Balance Sheets deposits are classified as current liabilities due to their liquidity characteristics. 12 Borrowings and onlendings Borrowings and onlendings refer to funds obtained in foreign currency from the Bank of Tokyo- Mitsubishi UFJ, Ltd. for the financing of foreign trade operations with maturity up to December 2015, in the amount of R$1,383,202 ( R$337,825) and for external funding in accordance with Resolution 3,844 with maturities up to June 2018 in the amount of R$2,035,849 ( R$1,091,149) and are adjusted using the foreign exchange rate variation plus spread, and domestic onlendings due up to July 2020 in the amount of R$212,600 ( R$68,992). Page 26 of 41

27 13 Foreign exchange portfolio a. Other assets Description Forward foreign currency purchased 3,663,697 1,034,472 Rights on sales of foreign exchange 2,681, ,160 Credit balance of advances received (20,908) (12,672) Income receivable from advances granted 2,295 1,743 Total 6,326,432 1,751,703 b. Other liabilities Description Forward foreign currency sold 2,751, ,739 Foreign exchange acquisition 3,576,391 1,016,546 Balance from advances on export contracts (790,428) (346,694) Unearned income from advances granted 32 - Total 5,537,599 1,407, Taxes payable Description Provision for income and social contribution taxes 45,632 29,113 Taxes and contributions on third party services Taxes and contributions on payroll 3,151 2,671 Other taxes payable 1, Provision for deferred income tax (Note 20) 45,313 41,134 Provision for tax risks (Note 15) 98,698 86,928 Total 194, , Assets and liabilities related to civil, labor and tax contingencies The provisions for contingent and tax liabilities are recognized in the financial statements as Other liabilities - Tax and social security when, based on the opinion of legal counsel, an unfavorable outcome for a judicial or administrative proceeding is regarded as probable, generating the probable disbursement of funds to settle the obligations, and when the amounts involved may be estimated with a reasonable level of certainty, regardless of whether judicial deposits are required or not. Legal obligations arise from lawsuits related to tax obligations, whose legality or constitutionality is being challenged, and which, regardless of the evaluation of the likelihood of a favorable outcome, have their amounts fully recognized in the financial statements. The deposits in court are recorded in the account Other receivable - Debtors for Guarantee Deposits. Page 27 of 41

28 2014 Provision for contingent liabilities (iii) Description Opening balance Additions to the provision Utilization/ Reversal Closing balance Deposits in court (iv) Civil provision 11,374 1, ,249 1,056 Labor provision 7, ,250 5,307 1,026 Other liabilities (v) 3,638 9,188 2,939 9,887-22,100 11,535 5,192 28,443 2,082 Provision for tax risks Federal 86,143 11,737-97, ,347 Income and social contribution taxes (i) 37,199 1,776-38, ,928 Cofins (ii) 48,527 9,944-58,471 56,263 Other taxes ,156 Municipal ,898 86,928 Total 11,770-98, ,245 Overall total 109,028 23,305 5, , , Provision for contingent liabilities (iii) Description Opening balance Additions to the provision Utilization/ Reversal Closing Balance Deposits in court (iv) Civil provision Labor provision Other liabilities (v) 6,396 4,978-11,374 1,000 4,205 5,521 2,638 7, ,425 3,233 3,020 3,638-14,026 13,732 5,658 22,100 1,684 Page 28 of 41

29 Provision for tax risks Federal 76,141 13,509 3,507 86, ,832 IR /CSLL (i) 36,305 2,244 1,350 37,199 95,894 Cofins (ii) 39,363 11,082 1,918 48,527 47,762 Other taxes ,176 Municipal taxes ,634 Total 76,696 13,887 3,655 86, ,466 Geral Total 90,722 27,619 9, , ,150 (i) (ii) (iii) (iv) (v) It refers, mainly, to the legal obligation with respect to the litigation related to the payment of IRPJ and CSLL, which derive from the unearned discount from loans under settlement from prior years. The Bank adhered to the program established by Law No /09 (the REFIS Program) and withdrew from the litigation. However, no final and unappeasable decision has yet been reached for this litigation. It refers to the legal obligation related to the Tax for Social Security Financing (COFINS), on which the Bank litigates Law 9,718/98. According to the legal advisors opinion the chances of loss for this proceeding are possible. The provision for contingent liabilities is recorded as Other liabilities - Other. The balance of deposits in court includes the deposits for risks whose chances of loss were assessed as possible or remote. Refers to the allowance for losses on guarantees and sureties based on criteria similar to the CMN Resolution No. 2682/99. Please refer to Note 23. There are proceedings of civil, labor and tax nature whose risk is evaluated by the legal advisors as being possible, in the amount of R$14,733 ( R$14,423), for which no provision was recorded due to the fact that the accounting practices adopted in Brazil do not require its recognition. 16 Other liabilities - Other Description Provision for payments due - personal expense Provision for payments due - other administrative expense Provision for payments due - other payments 19,446 6, , Other domestic creditors 1, Total 28,577 17,880 Page 29 of 41