Financial statements as of

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1 Banco de Tokyo-Mitsubishi UFJ Brasil S/A (With management report and independent auditors report thereon) (A free translation of the original report in Portuguese containing financial statements prepared in accordance with accounting practices adopted in Brazil, applicable to the Institutions authorized to operate by Central Bank of Brazil.) Page 1 of 37

2 Contents Management report 3 Summary of the Audit Committee s Report 5 Independent auditors report 6 Balance sheets 8 Statements of income 9 Statements of changes in shareholders equity 10 Statements cash flows - Indirect method 11 Notes to the financial statements 12 Page 2 of 37

3 Management report Dear Shareholders, Pursuant to the legal provisions, we submit to your appreciation the financial statements referring to the Semester ended. 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 3,721, 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 the identification, measurement, assessment, monitoring and control of the adherence to the credit policy and the credit risks related to each unit of the Bank. Market risk In accordance with the National Monetary Council Resolution 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, assessing, monitoring and controlling the operating risks assumed by the Bank. Liquidity risk In compliance with the CMN Resolution 4090 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. Page 3 of 37

4 Operating risk In accordance with the National Monetary Council Resolution 3,380 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 3,640 of march 29, Structure of Capital Risk Management In compliance with Articles 10 and 12 of the National Monetary Council Resolution 3,988 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 3,988, 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 Ombudswoman 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. August 14, Management Page 4 of 37

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 1st, semester of 2014; Assessment of the performance and quality of the Independent Auditors' and Internal Audit's work; Assessment of compliance with the recommendations made by the Independent Auditors and by the Internal Auditors; 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 is effective and grants transparency and quality to the financial statements of Banco de Tokyo-Mitsubishi UFJ Brasil S/A. August 14, The Audit Committee Page 5 of 37

6 Independent auditors report 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 June 30, 2014 and the related statements of income, changes in equity and cash flows for the six-month period then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management s responsibility for the Financial Statements The Bank s 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 such internal control as management determines in necessary to enable the preparation of 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, which is conducted in accordance with Brazilian and international standards on auditing. 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 selected for obtaining 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 the performance of this risk assessment, the auditor considers the internal controls which are significant for the preparation and adequate presentation of the bank s financial statements in order to design audit procedures which are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of bank s internal controls. An audit also includes evaluating the adequacy of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the 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. Page 6 of 37

7 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 June 30, 2014, and the performance of its operations and cash flows for the six-month-period 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, August 14, 2014 KPMG Auditores Independentes CRC 2SP014428/O-6 Original report in Portuguese signed by Rodrigo de Mattos Lia Accountant CRC 1SP252418/O-3 Page 7 of 37

8 Banco de Tokyo -Mitsubishi UFJ Brasil S/A Financial Statements of as Balance sheets as of (In thousands of Reais) Assets Liabilities Current assets Current liabilities Cash and cash equivalents Deposits Interbank funds applied Demand deposits Time deposits Money market Interbank deposits Money market repurchase commitments Foreign currency Own portfolio - - Third party portfolio Securities and derivative financial instruments Interbank accounts Own portfolio Collections in transit Subject to guarantees provided Derivative financial instruments Interbranch accounts Interbank Relations Third party funds in transit Collections in transit 2 2 Borrowings Restricted Depósits: Brazilian Central Bank Foreign currency borrowings Correspondents Local repass borrowings - government institutions Loans BNDES Loans: Finame Private sector Other government institutions Allowance for loan losses (12.043) (8.012) Foreing currency repass borrowings Other receivables Foreign currency repass borrowings Foreign exchange portfolio Income receivable Derivative financial instruments Securities clearing accounts Other Derivative financial instruments Allowance for other loan losses (5.794) (970) Other liabilities Other assets Tax collection Other assets Foreign exchange portfolio Prepaid expenses Due to shareholders Taxes payable Securities clearing accounts Provision for contingent liabilities Other Non-current assets Non-current liabilities Borrowings Interbank funds applied Foreign currency borrowings Interbank deposits Local repass borrowings - government institutions Securities and derivative financial instruments BNDES Finame Own portfolio Linked to repurchase commitments - - Subject to guarantees provided Foreign currency repass borrowings Derivative financial instruments Foreign currency repass borrowings Loans Loans: Derivative financial instruments Private sector Allowance for loan losses (500) (946) Derivative financial instruments Other receivables Other liabilities Foreign exchange portfolio Foreign exchange portfolio Debtors for guarantee deposits Other Other Other assets Prepaid expenses Deferred income Permanent assets Shareholders' equity Investments 1 1 Capital Other investments Provision for losses (195) (195) Capital - Domestic Capital - Foreign Fixed assets Capital reserves Profit reserves Property for use Equity valuation adjustments (301) (3.460) Other fixed assets Treasury shares (3.912) (3.906) Accumulated depreciation (18.510) (14.566) Intangible assets Intangibles assets Accumulated amortization (12.739) (8.900) Deferred charges Organization and expansion expenditures Accumulated amortization (5.660) (5.594) Total assets Total liabilities and shareholders' equity See the accompanying notes to the financial statements. Page 8 of 37

9 Banco de Tokyo -Mitsubishi UFJ Brasil S/A Financial Statements of as Statements of income Semesters ended (In thousands of Reais except for net income/loss per share) 1 st Semester Financial operations income Loans Securities income Income from derivative financial instruments (88.399) Income from foreign exchange operations Financial operations expenses (13.344) ( ) Funds obtained in the open market (85.587) (62.308) Borrowings and repass borrowings (96.861) Income from foreign exchange operations (27.978) - Recording of allowance for loan losses (3.673) (1.309) Gross profit from financial operations Other operating income (expenses) (62.754) (64.348) Service fee income Income from bank charges Personnel expenses (48.158) (40.182) Other administrative expenses (28.277) (22.500) Tax expenses (4.441) (3.699) Other operating income Other operating expenses (5.984) (5.130) Operating result Non-operating result (15) 1 Income before taxes Income and social contribution taxes (17.236) (12.504) Provision for income tax (10.920) - Provision for social contribution (6.559) - Deferred tax assets/liabilities - Taxes and Contributions 243 (12.504) Net income for the semester Number of outstanding shares (per lot of a thousand shares) Net income per lot of a thousand shares - R$ 5,01 4,45 See the accompanying notes to the financial statements. Banco de Tokyo-Mitsubishi UFJ Brasil S/A Page 9 of 37

10 Banco de Tokyo -Mitsubishi UFJ Brasil S/A Financial Statements of as Banco de Tokyo-Mitsubishi UFJ Brasil S/A Statements of changes in shareholders' equity Semesters ended (In thousands of Reais) Capital reserves Profit reserves Premium on Other Equity the subscription capital valuation Retained Treasury Capital of shares reserves Legal Statutory adjustments earnings shares Total Balances at December 31, (3.906) Equity valuation adjustment (3.716) - - (3.716) Reversal of dividends proposed in prior years Net income for the semester Profit distribution: Legal reserve (965) - - Dividends (1.151) - (1.151) Transfer to statutory reserve Balances at June 30, 2013 Changes in the semester (17.178) (3.460) - (3.906) (3.716) Balances at December 31, (124) - (3.906) Equity valuation adjustment (177) - - (177) Acquisition of shares issued by the Bank (6) (6) Reversal of dividends proposed in prior years Net income for the semester Profit distribution: Legal reserve (1.085) - - Dividends (1.231) - (1.231) Transfer to statutory reserve Balances at June 30, 2014 Changes in the semester (19.394) (301) - (3.912) (177) - (6) See the accompanying notes to the financial statements. Banco de Tokyo-Mitsubishi UFJ Brasil S/A Page 10 of 37

11 Banco de Tokyo -Mitsubishi UFJ Brasil S/A Financial Statements of as Banco de Tokyo-Mitsubishi UFJ Brasil S/A Statement of cash flows - Indirect method Semesters ended (In thousands of Reais) 1 st Semester Cash provided by (used in) operating activities ( ) Net income for the semester Net income adjustments: Recording of allowance for doubtful loans Recording / (Reversal) of provision for other receivable (263) Depreciation and amortization Recording of civil, labor and tax provisions Variation in deferred income 126 (17) Adjusted net income Changes in operating assets ( ) ( ) (Increase) / decrease in interbank funds applied (47.864) (15.428) (Increase) in securities ( ) ( ) (Increase) / decrease in interbank and interbranch accounts (3.284) (Increase) in loans ( ) (Increase) in other assets and other receivables ( ) ( ) Changes in operating liabilities: Increase in deposits ( ) Increase in money market repurchase commitments (Decrease) / increase in borrowings and repass borrowings Increase in derivative financial instruments (net of assets) ( ) Increase in other liabilities Cash used in investment activities (5.769) (10.205) Disposal of fixed assets Acquisition of fixed assets (11.394) (18.590) Investment in intangible assets (731) (735) Cash used in financing activities (5) - Acquisition of shares issued by the Bank (5) - Net increase (decrease) in cash and cash equivalents ( ) Statement of changes in cash and cash equivalents Cash and cash equivalents at the beginning of the semester Cash and cash equivalents at the end of the semester Increase/(decrease) in cash and cash equivalents ( ) See the accompanying notes to the 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 guidelines issued by the Brazilian Corporate Law, 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 07/18/2014 and approved for disclosure on 08/14/ Description of significant accounting practices Summary of significant accounting practices a. Statement of income Income and expenses are recorded on an accrual basis. 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 Page 12 of 37

13 following classification and accounting measurement criteria: Securities Banco de Tokyo-Mitsubishi UFJ Brasil S/A Trading securities, Securities available for sale and Securities held to maturity. Classified in the category trading securities, are securities acquired for the purpose of being actively and frequently traded; in the category securities available for sale, those that do not classify in the other categories described above; 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 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 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 Page 13 of 37

14 risk assessment policy of Management, regarding the parameters established by the National Monetary Council Resolution 2,682/99, 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. As renegotiation 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, in accordance with the CMN Resolution 2,682/99. 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 11,638 eliminated the account of Deferred Assets. The National Monetary Council authorized 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. Page 14 of 37

15 4 Cash and cash equivalents composition Cash and cash equivalents presented on the statements of cash flows are composed as follows: At the beginning of the semester 2,460,909 1,903,736 Cash 7,789 5,262 Interbank deposits (*) 2,453,120 1,898,474 At the end of the semester 1,774,656 2,359,890 Cash 8,527 36,399 Interbank deposits (*) 1,766,129 2,323,491 Increase/(Decrease) of cash and cash equivalents (686,253) 456,154 (*)Operations whose maturity at the time of acquisition was up to 90 days. 5 Interbank funds applied a. Money market From 91 to 365 days Over 365 days (*) Total Total Own portfolio LTN 50,000 42,001 92, ,585 NTN-B - 1,399,999 1,399,999 1,455,287 50,000 1,442,000 1,492,000 2,002,872 Financed portfolio LTN - 177, , , , , ,575 Total 50,000 1,619,999 1,669,999 2,255,447 (*)They are classified in Current Assets in the Balance Sheet, as it refers to maturity of the operation and not to the maturity of the underlying collateral, less than 2 days. Page 15 of 37

16 b. Interbank deposits Due up to 30 days 16,320 13,123 From 31 to 180 days 68,712 22,848 From 181 to 365 days 9,648 2,842 Over 365 days 8, Total 103,334 39,462 c. Foreign currency Due up to 30 days (*) 96,130 47,856 Total 96,130 47,856 (*) They refer to high-liquidity investments. 6 Securities Up to 3 months From 3 to 12 months Over 12 months Total Total 0BCategories Trading securities 199,918 47,369 5, ,816 63,250 Securities available for sale 550, , ,593 1,425,077 1,175,649 Total 750, , ,122 1,677,893 1,238,899 1BCategories Curve value Market value Adjustmet Market value Trading securities 252, ,816 (48) 63,250 Securities available for sale 1,424,426 1,425, ,175,649 Total 1,677,290 1,677, ,238,899 Page 16 of 37

17 2BTypes of Securities Curve value Market value Adjustment Market value National Treasury Bill 1,586,143 1,586, ,042,834 Financial Treasury Bill 91,147 91,146 (1) 196,065 Total 1,677,290 1,677, ,238,899 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 area independent of the business area 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 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 semester ended June 30, 2014, loss of which deriving from this assessment totaled R$301 ( R$3,460 loss), net of tax effects. The amount of R$5,115 (2013 R$5,466) 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 15,768 9,775 Industry 289, ,570 Commerce 196,420 33,748 Services 169, ,558 Financial Intermediation - 178,321 Individuals , ,017 Page 17 of 37

18 Other receivables - Foreign exchange portfolio: Advances on exchange contracts and income receivable: Industry 337, ,165 Commerce 172,880 14,769 Services 67, , ,934 Total 1,250, ,951 b. Composition of the loan portfolio by range of maturity of transactions Falling due: From 1 to 180 days 856, ,937 From 181 to 365 days 339, ,961 Over 365 days 54, ,053 Total 1,250, ,951 c. Composition of the provision per risk levels In accordance with the CMN Resolution 2,682/99, 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 provision required Normal course loan Total loans 2014 Total loans Minimum provision required Total provision Effective % of provision AA - 791, ,778-1, A B , ,142 4,071 9, C ,803 13, , D ,530 37,530 3,753 5, ,250,255 1,250,255 8,238 18,337 Page 18 of 37

19 Risk level % Minimum provision required Normal course loan Total loans 2013 Total loans Minimum provision required Total provision Effective % of provision AA - 560, , A , ,368 1,162 1, B , ,437 1,564 4, C ,362 27, , D ,975 9, , , ,951 4,545 9,928 1st Semester Loans renegotiated for the period 275, ,026 Renegotiated loans are basically composed of working capital renewals. During the Semesters ended, there were no write-offs to loss or loan recoveries prior written off as loss. The provision recorded by the Bank is bigger than the minimum provision required by BACEN, This is so because the Bank adopts the provision criterion established by the Headquarter (The Bank of Tokyo- Mitsubishi UFJ, Ltd,), which reflects the loss forecast of Management. d. Concentration of the largest debtors Balance Portfolio % Provisions Balance Portfolio % Provisions Largest Client 132, , , Following Largest clients 569, , , ,249 Other clients 548, , , ,465 1,250, , , ,928 Page 19 of 37

20 e. Changes in provision Changes in provision for allowance for doubtful loans were the following during the semester: 1st Semester Opening balance 14,664 8,619 Provision recognition 7,893 5,032 Provision reversal (4,220) (3,723) Closing balance 18,337 9,928 % of provision on the loans portfolio Other receivables - Other Advances and prepayment of salaries 1,292 1,112 Tax credits from temporary differences (Note 20) - 1,628 Tax credits from temporary differences (Note 20) 12,531 13,357 Tax credits from MTM securities available for sale 200 2,307 Taxes to offset 18,477 12,629 Sundry debtors Domestic 31 1,785 Payments reimbursable Other 8 4 Total 32,575 32,916 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 28,457 25,613 10,800 8,384 17,657 17,229 Facilities, Machinery and equipment in use 10 7,324 6,432 1,585 1,306 5,739 5,126 Data processing system 20 10,092 6,716 4,170 3,580 5,922 3,136 Transport system 20 1,075 1, Security system 10 3,282 1, ,732 1,452 Communication system 10 1,299 1, Fixed asset in progress (*) - 14,050 6, ,050 6,647 Total 66,995 50,979 18,510 14,566 48,485 36,413 (*)Refers to expenditures for expansion projects. Page 20 of 37

21 b. Intangible assets Amortization rate Cost Accumulated amortization Net Value p.a. (%) Expenditures on software acquisitions and development 20(*) 20,706 19,185 12,739 8,900 7,967 10,285 Total 20,706 19,185 12,739 8,900 7,967 10,285 (*)Development of new systems. c. Deferred assets Amortization rate Cost Accumulated amortization Net Value p.a. (%) Expenditures on software acquisitions and development 20 4,667 4,667 4,667 4, Branches and facilities improvements 20 1,036 1, Total 5,703 5,703 5,660 5, Page 21 of 37

22 10 Related party transactions 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 7,710 (8,677) 36,164 2,517 The Bank of Tokyo-Mitsubishi UFJ, Ltd - London 1,592-2,084 - The Bank of Tokyo-Mitsubishi UFJ, Ltd - Tokyo 5,949-34,080 - The Bank of Tokyo-Mitsubishi UFJ, Ltd - Hong Kong The Bank of Tokyo-Mitsubishi UFJ, Ltd - Mexico Exchange variation - (8,677) - 2,517 Interbank funds applied in foreign currencies 96,130 (2,827) 47,856 10,066 The Bank of Tokyo-Mitsubishi UFJ, Ltd - New York 96,130 (2,827) 47,856 10,066 - Interest Exchange variation - (2,843) - 9,292 Demand deposits (34,322) - (33,240) - The Bank of Tokyo-Mitsubishi UFJ, Ltd - Tokyo (34,322) - (33,240) - Borrowings and repass borrowings (1,716,886) 101,948 (1,182,189) (149,567) The Bank of Tokyo-Mitsubishi UFJ, Ltd - New York (1,716,886) 101,948 (1,182,189) (149,567) - Interest - (1,486) - (114,334) - Exchange variation - 103,434 - (35,233) Swaps 1,563 (7,546) 8,534 (10,039) The Bank of Tokyo-Mitsubishi UFJ, Ltd - New York 1,563 (7,546) 8,534 (10,039) - Derivatives income - 6, Derivatives expenses - (14,468) - (10,039) Other obligations - Services * - 14,182 - (1,321) The Bank of Tokyo-Mitsubishi UFJ, Ltd - New York - 13,652 - (1,321) The Bank of Tokyo-Mitsubishi UFJ, Ltd Leasing and Finance The Bank of Tokyo-Mitsubishi UFJ, Ltd Tokyo - (55) - - The Bank of Tokyo-Mitsubishi UFJ, Ltd London * Receivables and Payments. a. Remuneration of the Management s key personnel The maximum remuneration for the Executive Board which was established at an ordinary General Shareholders Meeting held at April 28, 2014 determined the maximum of R$14,052 to be distributed for directors. Page 22 of 37

23 1st Semester Fixed remuneration 2,281 1,880 Variable remuneration 1,383 1,510 Total 3,664 3,390 The variable remuneration payment to the Management is in compliance with the National Monetary Council (CMN) Resolution 3,921, of 11/25/2010, and is deferred over the minimum period of three months, 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. 11 Deposits 2014 Due up From From 1 to From 3 to Without to 3 3 to 12 maturity months months 3 years 5 years Total Demand deposits 131, ,957 Time deposits (*) - 195,385 1,041, ,245 3,481 1,527,878 Total 131, ,385 1,041, ,245 3,481 1,659,835 Page 23 of 37

24 2013 Without maturity Due up to 3 months From 3 to 12 months From 1to 3 months From 3 to 5 years Total Demand deposits 216, ,743 Time deposits (*) - 99, ,590 1,101,825 46,189 1,716,753 Total 216,743 99, ,590 1,101,825 46,189 1,933,496 (*) In the balance sheets classified as current liabilities due to their liquidity characteristics. 12 Borrowings and repass borrowings Borrowings and repass borrowings 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 February 2015, in the amount of R$1,642,183 ( R$835,532) and for external funding in accordance with Resolution 3,844 with maturities up to June 2018 in the amount of R$ 142,962 ( R$346,657) and are corrected using the foreign exchange rate variation plus spread, and domestic repass borrowings due up to July 2020 in the amount of R$84,847 ( R$58,082). 13 Foreign exchange portfolio a. Other receivables - Assets Description Forward foreign currency purchased 1,464,511 1,686,318 Rights on sales of foreign exchange 977,542 1,410,681 Credit balance of advances received (8,591) (17,397) Income receivable from advances granted 2,349 2,196 Total 2,435,811 3,081,798 b. Other obligations - Liabilities Description Forward foreign currency sold 967,501 1,439,924 Foreign exchange acquisition 1,497,317 1,642,441 Balance from advances on export contracts (576,063) (224,738) Unearned income from advances granted 77 - Total 1,888,832 2,857,627 Page 24 of 37

25 14 Taxes payable Description Provision for income and social contribution taxes 17,743 - Taxes and contributions on third party services Taxes and contributions on payroll 1,983 5,394 Other taxes payable Provision for deferred income tax (Note 20) 14,309 20,413 Provision for tax risks (Note 15) 59,219 49,155 Total 94,413 75, 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 Provision for contingent liabilities (iii) Description Opening balance Additions to the provision Used/ Reversal Closing balance Deposits in court (iv) Civil provision 11, , Labor provision 7, ,285 5, Other liabilities (v) 3,638 2,601 1,890 4,349-22,100 3,041 3,175 21,966 1,663 Page 25 of 37

26 Provision for tax risks Federal 54,117 4,577-58,694 91,347 Income and social contribution taxes (i) 18, ,520 51,805 Cofins (ii) 35,426 4,577-40,003 38,905 Other taxes Municipal ,775 Total 54,642 4,577-59, ,122 Overall total 76,742 7,618 3,175 81, , Provision for contingent liabilities (iii) Description Opening balance Additions to the provision Used/ Reversal Closing Balance Deposits in court (iv) Civil provision 6, , Labor provision 4, ,260 2, Other liabilities (v) 3,425 1,329 1,666 3,088-14,026 2,347 3,926 12,447 1,125 Provision for tax risks Federal 46,734 3,455 1,362 48,827 82,565 IR /CSLL (i) 19, ,350 18,465 51,844 Cofins (ii) 27,329 2, ,123 30,123 Other taxes Municipal taxes ,775 Total 47,062 3,455 1,362 49, ,340 Total Geral 61,088 5,802 5,288 61, ,465 (i) It refers, mainly, to the legal obligation with respect to the litigation related to the payment of IRPJ e CSLL, which derive from the unearned discount from loans under settlement from prior years. The Bank adhered to the program established by Law 11,941/09 (the REFIS Program) and withdrew from the litigation. However, no final and unappeasable decision has yet been reached for this litigation. (ii) 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. Page 26 of 37

27 (iii) (iv) (v) 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 2,682/99. 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$14,607 ( R$ 43,750), 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 11,180 25,680 Other domestic creditors 1, Total 12,930 26, Shareholders equity Capital comprises 4,356,234,893 common nominative shares, with no par value, of which 14,120,090 are held by shareholders domiciled in Brazil, 24,194,146 are held in treasury and 4,317,920,657 are held by shareholders domiciled abroad. The Bank s by-laws establish the payment of a minimum dividend of 6% of net income, For this semester the amount of R$ 1,231 ( R$1,151) was set aside. The capital reserves are composed of premium reserve due to subscription of shares and premium reserve in the disposal of treasury shares. The legal reserve is recorded as established in the Corporate Law, and may be used for offsetting losses or for capital increase. The statutory reserve corresponds to the transfer of funds accounted for in the retained earnings account, for the recording of Working Capital and Maintenance of the Operating Margin as established in the bylaws. 18 Derivative financial instruments The Bank s policy is to mitigate the market risks arising from operations through the use of derivative financial instruments. Market risk management is performed by an independent area, which uses practices that include the measurement and monitoring of the use of limits predefined by internal committees, for the value at risk in portfolios, for sensitivities of interest rate fluctuations, for exchange exposure, and for liquidity gaps, among other practices that permit the monitoring of the risks of fluctuation in asset prices, Page 27 of 37

28 interest rates and other factors that may affect the positions of the portfolios in the various markets where the Institution operates. The derivative financial instruments used for hedge purposes always have a credit risk equal to or lower than that of the financial instrument covered. The market value of swaps is determined considering the estimated cash flow of each transaction, discounted to present value based on applicable interest rate curves, which are considered as representative of the market conditions at the balance sheet closing date. Forward operations are recorded at the final value of the contract less the difference between this value and the cash price of the asset or right, and the income and expenses due to the elapsing of the terms of the contracts are recognized, up to the balance sheet date. Futures operations - daily adjustments are recorded in asset and liability accounts and allocated daily as income and expenses. The main interest rate curves are extracted from futures and swaps traded on the Futures and Commodities Exchange (BM&F BOVESPA). As of June 30, derivative financial instruments were represented as follows: Due up to 90 days From 91 to 365 days 2014 Over 365 days Total Futures Notional value 1,401,805 2,863,837 3,403,192 7,668,834 Long position 518,598 1,558,649 3,010,481 5,087,728 Foreign exchange coupon 64,137 1,432,015 2,868,717 4,364,869 Foreign currency 454, ,461 Interest rate - 126, , ,398 Short position 883,207 1,305, ,711 2,581,106 Foreign exchange coupon 207, ,050 29, ,449 Foreign currency 57, ,052 Interest rate 618,324 1,125, ,143 2,106,606 Notional value MTM value (a) Accrual value (b) Appreciation / (depreciation) (a)-(b) Swap - Total net 4,384,008 (17,312) (3,209) (14,103) CDI X BBA Libor 756,464 (8,117) (16,649) 8,532 CDI X US$ 1,926,769 (11,758) 13,685 (25,443) LIBOR X PRE 1,629,692 1,563 (1,191) 2,754 PRÉ X CDI 37, PRÉ X US$ 33, (99) Page 28 of 37

29 Notional value MTM value (a) Accrual value (b) Appreciation / (depreciation) (a)-(b) NDF - Total net 559,224 15,117 19,545 (4,428) Long position 53,141 (2,286) (2,766) 480 Dollar 50,877 (2,108) (2,551) 443 Swiss Franc 2,264 (178) (215) 37 Short position 506,083 17,403 22,311 (4,908) Dollar 371,374 9,541 12,925 (3,384) Euro 56,683 1,785 2,461 (676) Yen 78,026 6,077 6,925 (848) Due up to 90 days 2013 From 91 to Over 365 days 365 days Total Futures Notional value 1,535, ,981 3,190,960 5,240,486 Long position 657, ,456 2,374,039 3,223,014 Foreign exchange coupon 1, ,883 2,290,870 2,480,860 Foreign currency 656,412 1, ,561 Interest rate - 1,424 83,169 84,593 Short position 878, , ,921 2,017,472 Foreign exchange coupon 154,837 7,759 38, ,809 Foreign currency 441, ,061 Interest rate 282, , ,708 1,375,602 Notional value MTM value (a) Accrual value (b) Appreciation / (depreciation) (a)-(b) Swap - Total net 3,032,971 (139,232) (134,933) (4,299) CDI X US$ 1,010,019 (124,883) (106,117) (18,766) CDI X BBA-Libor 493,894 (21,653) (28,064) 6,411 LIBOR X PRÉ 1,503,036 8, ,157 PRÉ X CDI 13,305 (63) 36 (99) PRÉ X US$ 12,717 (1,167) (1,165) (2) Page 29 of 37

30 Notional value MTM value (a) Accrual value (b) Appreciation / (depreciation) (a)-(b) NDF - Total net 289,501 (11,336) (6,503) (4,833) Long position 29,561 2,983 2, Dollar 29,561 2,983 2, Short position 259,940 (14,319) (8,530) (5,789) Dollar 224,694 (11,833) (6,572) (5,261) Euro 33,504 (2,420) (1,914) (506) Yen 1,742 (66) (44) (22) Value and type of margins provided as guarantees The table below summarizes the amounts deposited at BM&FBOVESPA which are provided as guarantees for the operations with derivative financial instruments as of June 30, 2014: Assets provided as guarantee - BM&FBOVESPA Type of security Quantity Value Financial Treasury Bills (LFTs) 14,723 91, ,564 National Treasury Bills (LTNs) 859, , ,291 Total 874, , , Hedge The Bank adopts the policy of hedging in accordance with its risk management policies. These hedge operations are carried out in compliance with the Bacen Circular 3,082 of 01/30/2002, which requires the periodic assessment of the hedge effectiveness, and the mark-to-market record of both derivative financial instrument and the hedged item, considering that it refers to a market risk hedge operation. The Bank takes out swap and futures contracts used as hedge instruments as fair value hedge strategy. Hedged items consist of securities initially designated as available for sale, and foreign currency borrowings. Hedging strategies aim at protecting the Bank against (i) foreign exchange variation risk and interest rate variation risk for principal and interest payments, for funding contracted abroad and indexed by the US currency and (ii) interest rate variation risk due to the acquisition of federal bonds at pre-fixed interest rates. Page 30 of 37