UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 20112012
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
¨SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-15276
ITAÚ UNIBANCO HOLDING S.A. (*)
(Exact name of Registrant as specified in its charter)
(*) Former corporate name Banco Itaú Holding Financeira S.A.
N/A
(Translation of Registrant’s name into English)
Federative Republic of Brazil
(Jurisdiction of incorporation)
Praça Alfredo Egydio de Souza Aranha, 100
04344-902 São Paulo, SP, Brazil
Alfredo Egydio Setubal (Investor Relations Officer)
e-mail:aes-drinvest@itau-unibanco.com.br
Telephone number: +55-11-5019-1549
________________________
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each share: | Name of each exchange on which registered: | |
Preferred Share, without par value | New York Stock Exchange* | |
American Depositary Shares (as evidenced by | ||
American Depositary Receipts), each | ||
representing 1(one) Share of Preferred Stock | New York Stock Exchange |
*Not for trading purposes, but only in connection with the listing of American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None.
_________________________
Securities for which there is a reporting obligation
pursuant to Section 15(d) of the Act:
None.
_________________________
The number of outstanding shares of each class of stock of ITAÚ UNIBANCO HOLDING S.A., as of December 31, 20112012 was:
2,289,284,300 Common Shares, no par value per share
2,224,355,7292,229,095,461 Preferred Shares, no par value per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes x No ¨
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x¨ No ¨x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x Accelerated filer ¨ Non-accelerated filer¨
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ¨ Item 18 x
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
TABLE OF CONTENTS
INTRODUCTION
All references in this annual report to (1) “Itaú Unibanco Holding,” “Itaú Holding,”
As of December 31,
We have prepared our consolidated financial statements included in this annual report under Item 18, in accordance with International Financial Reporting
We use accounting practices adopted in Brazil applicable to the institutions authorized to operate by the Central Bank for our reports to Brazilian shareholders, in filings with the Brazilian Securities Commission(Comissão de Valores Mobiliá
Our fiscal year ends on December 31, and references in this annual report to any specific fiscal year are to the twelve-month period ended December 31 of such year.
Certain industry data presented in this annual report have been derived from the following sources: the Central Bank System (Sistema do Banco
You should assume that the information appearing in this annual report is accurate only as of the date to which it refers or as of the date of this annual report, as the case may be. Our business, financial condition, results of operations and prospects may have changed since that date.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains statements that are or may constitute forward-looking statements, including but not limited to statements in “Item 3D. Risk Factors,” “Item 4B. Business Overview” and “Item 5. Operating and Financial Review and Prospects.” We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business. These forward-looking statements are subject to risks, uncertainties and assumptions including, among other risks:
The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar words are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. We undertake no obligation to update publicly or revise any forward-looking statements because of new information, future events or otherwise. In light of these risks and uncertainties, the forward-looking information, events and circumstances discussed in this annual report might not occur. Our actual results and performance could differ substantially from those anticipated in such forward-looking statements.
ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
Not applicable.
ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3 KEY INFORMATION
3A. Selected Financial Data
You should read the following selected financial data in conjunction with the “Introduction” and “Item 5. Operating and Financial Review and Prospects” included in this annual report. The information below is qualified in its entirety by reference to our consolidated financial statements included in Item 18 in this annual report.
We maintain our books and records inreais,
Notwithstanding the above, we have derived the data we present in the tables below from our audited consolidated financial statements as of and for the years
The consolidated financial statements as of December 31, 2012 and 2011
IFRS Selected Financial Data
This information is qualified in its entirety by reference to the consolidated financial statements included in
(1) Earnings per share have been computed following the “two class method” set forth by IAS 33 Earnings Per Share. See “Item 10B. Memorandum and Articles of Association” for a description of our two classes of stock. See note (2)Under Brazilian Corporate Law, we are allowed to pay interest on stockholders’ equity as an alternative to paying dividends to our shareholders. See "Item 8A. Consolidated Financial Statements and Other Financial Information - Dividend Policy and Dividends" and “Item 10E. Taxation – Interest on Stockholders’ Equity” and note
(1)Under Brazilian Corporate Law, we are allowed to pay interest on stockholders’ equity as an alternative to paying dividends to our stockholders. See "Item 8A. Consolidated Financial Statements and Other Financial Information - Dividend Policy and Dividends" and "Item 10E. Taxation - Brazilian Tax Considerations - Interest on Stockholders Equity" for a description of interest on stockholders’ equity. (2)Translated into US$ fromreais at the selling rate established by the Central Bank at the end of the year in which dividends or interest on stockholders’ equity were paid or declared, as the case may be.
Balance Sheet Data
(*) The average balances are calculated based on a monthly basis. See “Item 4B. Business Overview – Selected Statistical Information – Average Balance Sheet and Interest Rate Data” for more detailed information on our average assets, liabilities and stockholders’ equity for the years ended December 31, 2012, 2011 and 2010.
(*) The average balances are calculated based on a monthly basis. See “Item 4B. Business Overview – Selected Statistical Information – Average Balance Sheet and Interest Rate Data” for more detailed information on our average assets, liabilities and stockholders’ equity for the years ended December 31, 2012, 2011 and 2010.
(1) Net interest income divided by average interest-earning assets. The average balances are calculated based on a monthly basis. See “Item 4B. Business Overview - Selected Statistical Information – Average Balance Sheets and Interest Rate Data” for more detailed information on our average assets, liabilities and stockholders' equity for the years ended December 31, 2012, 2011 and 2010. �� (2)Net income attributable to Information – Average Balance Sheet and Interest Rate Data” for more detailed information on our average assets, liabilities and stockholders' equity for the years ended December 31, 2012, 2011 and 2010. (3) Net income attributable to owners of the parent company divided by average stockholders' equity. The average balances are calculated based on a monthly basis. See “Item 4B. Business Overview - Selected Statistical Information – Average Balance Sheet and Interest Rate Data” for more detailed information on our average assets, liabilities and stockholders' equity for the years ended December 31,
(4)Loans and leases operations as of year-end divided by total deposits as of year-end.
(5) Total stockholders' equity as of year-end divided by total assets as of year-end.
EXCHANGE RATES Currently, the Brazilian foreign exchange system allows the purchase and sale of foreign currency and the performance of international transfers inreais by any individual or legal entity, subject to certain regulatory procedures. The Brazilian government may impose temporary restrictions on the conversion of Brazilian currency into foreign currencies and on the remittance to foreign investors of proceeds from their investments in Brazil. Brazilian law allows the government to impose these restrictions whenever there is a serious imbalance in Brazil’s balance of payments or there are reasons to foresee a serious imbalance. We cannot predict whether the Brazilian government will impose remittance restrictions in the future. Thereal may depreciate or appreciate substantially against the U.S. dollar in the future. See “Item 3D. Risk Factors — Risks Relating to Brazil — Exchange rate instability may have a material adverse effect on the Brazilian economy and our business, financial condition and results of operations.” As of April 19, 2013, the U.S. dollar-real exchange rate (PTAX) was R$2.0089 to U$1.00. Exchange Rates
The following table sets forth information on the selling rate for U.S. dollars as reported by the Central Bank for the periods and dates indicated.
Source: Central Bank (1) Represents the average of the exchange rates on the last day of each month during the relevant period.
Source: Central Bank (1) Represents the average of the closing exchange rates
Not applicable.
Not applicable.
The following section does not describe all the risks of an investment in our preferred shares and ADSs. These are the risks we consider material as of the date of this annual report. There may be additional risks that we currently consider immaterial or of which we are currently unaware, and any of these risks could have similar effects to those set forth below.
Therefore, you should carefully read this annual report in its entirety. You should consider, among other things, the risk factors with respect to Itaú Unibanco Holding, to Brazilian financial institutions and to Brazil not normally associated with investments in securities of United States, European and other similar issuers, including those risk factors set out below. Our business, results of operations, financial condition or prospects could be negatively affected if any of such risks occurs, and as a result, the trading price of our preferred shares and ADSs could decline and you could lose all or part of your investment.
Risks Relating to Brazil
The Brazilian government has exercised, and continues to exercise, influence over the Brazilian economy. This influence, as well as Brazilian political and economic conditions, could have a material adverse effect on our business, financial condition and results of operations and, as a consequence, on the market price of our preferred shares and ADSs.
The Brazilian government from time to time intervenes in the Brazilian economy and makes changes in policies and regulations. The Brazilian government’s actions have involved, in the past, among other measures, changes in interest rates, changes in tax policies, price controls, capital control limits and restrictions on selected imports and, prior to the current floating exchange regime, currency devaluations. Our business, financial condition, and results of operations may be materially and adversely affected by changes in policies or regulations involving or affecting certain factors, such as:
Interest rates; Reserve requirements; Capital requirements; Liquidity of capital, financial and credit markets; General economic growth, inflation and currency fluctuations; Tax and regulatory policies; Restrictions on remittances abroad and other exchange controls; Increases in unemployment rates, decreases in wage and income levels and other factors that influence our customers’ ability to meet their obligations with us; and Other political, diplomatic, social and economic developments within and outside Brazil that affect the country.
As a bank in Brazil, the vast majority of our income, expenses, assets and liabilities are directly tied to interest rates. Therefore, our business, results of operations and financial condition are significantly affected by inflation, interest rate fluctuations and related government monetary policies, all of which may have a material adverse effect on the growth of the Brazilian economy and on us, including our loan portfolio, our cost of funding and our income from credit operations.
In addition, changes in
Inflation and fluctuation in interest rates could have a material adverse effect on our business, financial condition and results of operations.
Inflation and interest rate volatility have in the past caused material adverse effects in the Brazilian economy. While the Brazilian government has been able to keep inflation close to target levels since the introduction of inflation targets in 1999, we cannot assure you that it will continue to be able to do so. Inflation, especially sudden increases in inflation, usually causes the loss of purchasing power. Also prolonged periods of high inflation provoke distortions in the allocation of resources. From
Measures to combat historically high rates of inflation have included tight monetary policies with high interest rates, resulting in restrictions on credit and short-term liquidity. Between
Exchange rate instability may have a material adverse effect on the Brazilian economy and our business, financial condition and results of operations.
The Brazilian currency fluctuates in relation to the U.S. dollar and other foreign currencies. The Brazilian government has in the past implemented various economic plans and utilized a number of exchange rate regimes, including sudden devaluations, periodic mini-devaluations in which the frequency of adjustments has ranged from daily to monthly, floating exchange rate systems, and dual exchange rates coupled with exchange controls. Since 1999, Brazil has adopted a floating exchange rate system with interventions by the Central Bank in buying or selling foreign currency. From time to time, the exchange rate between thereal and the U.S. dollar and other currencies has fluctuated significantly. For example, thereal depreciated 15.7%, 34.3%, 24.2% and
Some of our assets and liabilities are denominated in, or indexed to, foreign currencies, especially the U.S. dollar. As of December 31,
Infrastructure and work force deficiencies in Brazil may impact economic growth and have a material adverse effect on our business. Our performance is dependent on the overall health of the Brazilian economy. While Brazil has experienced economic growth in recent years, the rate of growth has decreased in 2011 and 2012. Continued growth could be limited by inadequate infrastructure, including potential energy shortages and a deficient transportation sector, and a lack of qualified work force, which could contribute to low levels of productivity and efficiency. Depending on intensity and duration, these factors could lead to employment volatility and generally lower income and consumption levels, which could limit our growth, result in increased default rates and ultimately have a material adverse effect on our business.
Developments and the perception of risk of other countries may adversely affect the Brazilian economy and the market price of Brazilian securities.
Economic and market conditions in other countries, including the United States, the European Union and emerging market countries, may affect to varying degrees the market value of securities of Brazilian issuers. Although economic conditions in these countries may differ significantly from economic conditions in Brazil, investors’ reactions to developments in these other countries may have a material adverse effect on the market value of securities of Brazilian issuers, the availability of credit in Brazil and the amount of foreign investment in Brazil. Crises in the European Union, the United States and emerging market countries, particularly Latin American countries, may diminish investor interest in securities of Brazilian issuers, including Itaú Unibanco Holding. This could materially and adversely affect the market price of our securities, and could also make it more difficult for us to access the capital markets and finance our operations in the future on acceptable terms or at all.
Banks located in countries considered to be emerging markets may be particularly susceptible to disruptions and reductions in the availability of credit or increases in financing costs, which could have a material adverse impact on our financial condition. In addition, the availability of credit to entities that operate within emerging markets is significantly influenced by levels of investor confidence in such markets as a whole and any factor that impacts market confidence (for example, a decrease in credit ratings or state or central bank intervention in one market) could materially and adversely affect the price or availability of funding for entities within any of these markets.
Risks Relating to Our Business and the Banking Industry
We are exposed to effects of the disruptions and volatility in the global financial markets and the economies in those countries where we do business, especially Brazil. Beginning in late 2007, major financial institutions, including some of the largest global commercial and investment banks and insurance companies, experienced significant difficulties, especially lack of liquidity and depreciation of financial assets. More recently, fiscal problems in Europe, such as high debt levels, impaired growth and the risk of a sovereign default, particularly in Greece, Spain, Italy, Ireland and Portugal, increased volatility in already relatively fragile global financial markets. At the same time, the United States has been facing fiscal difficulties, which led to the downgrade of the U.S. long-term sovereign credit rating by Standard & Poor’s on August 6, 2011. See “Item 5A. Operating Results — Effects of the Global Financial Markets on our Financial Condition and Results of Operations.” These difficulties constricted the ability of a number of major global financial institutions to engage in further lending activity and caused losses. In addition, downgrades of sovereign credit ratings and defaults by, and doubts about the solvency of, certain financial institutions and the financial services industry generally led to market-wide liquidity problems and could lead to losses or defaults by, and bankruptcies of, other institutions.
We are exposed to the disruptions and volatility in the global financial markets because of their effects on the financial and economic environment in the countries in which we operate, especially Brazil, such as a slowdown in the economy, an increase in the unemployment rate, a decrease in the purchasing power of consumers and the lack of credit availability. We lend primarily to Brazilian borrowers and these effects could materially and adversely affect our customers and increase our non-performing loans and, as a result, increase the risk associated with our lending activity and require us to make corresponding revisions to our risk management and loan loss reserve models. For example, in 2009, we experienced an increase in our non-performing loans past due more than 90 days from
The global financial downturn has had significant consequences for Brazil and the other countries in which we operate, including stock, interest and credit market volatility, a general economic slowdown, and volatile exchange rates that may, directly or indirectly, materially and adversely affect the market price of Brazilian securities and have a material adverse effect on our business, financial condition and results of operations. In addition, institutional failures and disruption of the financial market in Brazil and the other countries in which we operate could restrict our access to the public equity and debt markets.
Continued or worsening disruption or volatility in the global financial markets could lead to further increase in negative effects on the financial and economic environment in Brazil and the other countries in which we operate, which could have a material adverse effect on us.
A failure in, or breach of, our operational or security systems could temporarily interrupt our businesses, increasing our costs and causing losses.
Although we have high profile information security controls, continuing investments in infrastructure, and operations and crisis management in place, our business, financial, accounting, data processing systems or other operating systems and facilities may stop operating properly for a limited period of time or become temporarily disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control, such as: electrical or telecommunications outages; breakdowns, systems failures or other events affecting third parties with which we do business or that facilitate our business activities, including exchanges, clearing houses, financial intermediaries or vendors that provide services; events arising from local or larger-scale political or social matters and cyber attacks.
Temporary interruptions or failures in the physical infrastructure or operating systems that support our businesses and customers,
Changes in applicable law and regulation may have a material adverse effect on our business.
Brazilian banks, including us, are subject to extensive and continuous regulatory review by the Brazilian government, principally by the Central Bank. We have no control over applicable law and government regulations, which govern all aspects of our operations, including regulations that impose:
The regulatory structure governing Brazilian financial institutions, including banks, broker-dealers and leasing companies and Brazilian insurance companies is continuously evolving. Disruptions and volatility in the global financial markets resulting in liquidity problems at major international financial institutions could lead the Brazilian government to change laws and regulations applicable to Brazilian financial institutions based on such international developments. In response to the global financial crisis which began in late 2007, national and intergovernmental regulatory entities, such as the Basel Committee on Banking Supervision, proposed reforms to prevent the recurrence of a similar crisis, including the Basel III Moreover, there are several proposed bills under consideration in the Brazilian congress that, if signed into law as currently drafted, could adversely affect us. For example, a proposed law to benefit insolvent individual borrowers would allow courts to change the terms and conditions of credit agreements in certain situations. In addition, another proposed bill to amend the rules of civil procedures could have the effect of making recovery more difficult and appealing unfavorable judicial decisions in higher courts more burdensome. We also have operations in countries outside of Brazil, including Argentina, Chile, Colombia, Paraguay, Portugal, United Kingdom, Uruguay The amendment of existing laws and regulations or the adoption of new laws and regulations could have a material adverse effect on our business, financial condition and results of operations, including our ability to provide loans, make investments or render certain financial services. See Tax reforms may have a material adverse impact on our results of operations. To maintain its fiscal policies, the Brazilian government regularly enacts reforms to tax and other assessment regimes. These reforms include the enactment of new taxes, changes in the bases of calculation or rates of assessments, including rates applicable solely to the banking industry, and Future changes in tax policy that may affect financial operations include the creation of new taxes. Until 2007, certain financial transactions were subject to the provisional contribution on financial transactions (Contribuição Provisória sobre a Movimentação ou Transmissão de Valores e de Créditos e Direitos de Natureza Financeira or “CPMF”). However, much uncertainty exists as to whether the CPMF, or similar taxes, will be re-introduced in the future. Also, the Brazilian Congress may discuss broad tax reforms in Brazil to improve the efficiency of allocation of economic resources, as proposed by the executive branch of the Brazilian federal government. Increases in reserve and compulsory deposit requirements may have a material adverse effect on our business, financial condition and results of operations. The Central Bank has periodically changed the level of reserves and compulsory deposits that financial institutions in Brazil are required to maintain with the Central Bank. The Central Bank may increase the reserve and compulsory deposits requirements in the future or impose new requirements. Increases in reserve and compulsory deposit requirements reduce our liquidity to make loans and other investments and, as a result, may have a material adverse effect on our business, financial condition and results of The compulsory deposits generally do not yield the same return as other investments and deposits because a portion of compulsory deposits: For more detailed information on compulsory deposits and capital requirements, see “Item 4B. Business Overview — Regulation and As of December 31, The increasingly competitive environment and consolidations in the Brazilian banking industry may have a material adverse effect on us. The markets for financial and banking services in Brazil are highly competitive. We face significant competition from other large Brazilian and international banks, including Brazilian public banks. Competition has increased as a result of recent consolidations among financial institutions in Brazil and as a result of new regulations by CMN that facilitate the customer’s ability to switch business between banks. See Changes in the profile of our business and economic conditions may have a material adverse effect on our loan portfolio. As of December 31, In addition, our strategy includes efforts to significantly expand our loan portfolio as well as increase the number of clients, particularly individuals and small and middle-market companies, that we serve. Certain financial products we offer to individuals and other clients are generally characterized by higher margins, but also higher risks of default. A future increase in our loan portfolio, as well as a shift to higher margins and higher risk products, could result in increased default rates, which could have a material adverse effect on our business, financial condition and results of operations. The value of our securities and derivatives positions are subject to market fluctuations due to changes in Brazilian or international economic conditions and may produce material losses. As of December 31, Exposure to Brazilian federal government debt could have a material adverse effect on us. Like many other Brazilian banks, we invest in debt securities of the Brazilian government. As of December 31, If our pricing expectations are incorrect or our reserves for future policyholder benefits and claims are inadequate, the profitability of our insurance and pension products or our results of operations and financial condition may be materially and adversely affected. Our insurance and pension plan business sets prices and establishes reserves for many of our insurance and pension products based upon actuarial or statistical estimates. The pricing of our insurance and pension products and the insurance and pension plans reserves carried to pay future policyholder benefits and claims are each based on models that include many assumptions and projections which are inherently uncertain and involve the exercise of significant judgment, including as to the levels of and timing of receipt or payment of premiums, contributions, benefits, claims, expenses, interest credits, investment results, interest rates, retirement, mortality, morbidity and persistency. Although we frequently review the pricing of our insurance and pensions products and the adequacy of our insurance and pension plans reserves, we cannot determine with precision the ultimate amounts that we will pay for, or the timing of payment of, actual benefits, claims and expenses or whether the assets supporting our policy liabilities, together with future premiums and contributions will be sufficient for payment of benefits and claims. Significant deviations in actual experience from our pricing assumptions could have a material adverse effect on the profitability of our insurance and pension plans products. In addition, if we conclude that our reserves, together with future premiums, are insufficient to cover future policy benefits and claims, we would be required to increase our reserves and incur income statement charges for the period in which the determination is made, which may have a material adverse effect on our business, financial condition and results of operations. Our market, credit and operational risk management policies, procedures and methods may not be fully effective in mitigating our exposure to unidentified or unanticipated Our market, credit and operational risk management policies, procedures and methods, including our statistical modeling tools, such as value at risk (VaR), stress test and sensitivity analyses, may not be fully effective in mitigating our risk exposure in all economic market environments or against all types of risk, including risks that we fail to identify or anticipate. Some of our qualitative tools and metrics for managing risk are based upon our use of observed historical market behavior. In addition, due to limitations in the availability of information in Brazil, in assessing customers’ creditworthiness we rely largely on the credit information available from our own databases, certain publicly available consumer credit information and other sources. We apply statistical and other tools to these observations to quantify our risk exposures. These qualitative tools and metrics may fail to predict future risk exposures. These risk exposures could, for example, arise from factors we did not anticipate or correctly evaluate in our statistical models. This would limit our ability to manage our risks. Our losses thus could be significantly greater than the historical measures indicate. In addition, our quantified modeling does not take all risks into account. Our more qualitative approach to managing those risks could prove insufficient, exposing us to material unanticipated losses. If existing or potential customers believe our risk management is inadequate, they could take their business elsewhere. This could harm our reputation as well as our revenues and profits. Our results of operations and financial condition depend on our ability to evaluate losses associated with risks we are exposed to and our ability to build these risks into our pricing policies. We estimate our allowance for loan losses according to the principles within IFRS. The calculation also involves significant judgment on the part of our management. Those judgments may prove to be incorrect or change in the future depending on information as it becomes available. This could adversely affect our operating income and, consequently, our financial condition and results of operations. In addition, our businesses depend on the ability to process a large number of transactions securely, efficiently and accurately. Losses can result from inadequate personnel, inadequate or failed internal control processes and systems, information systems failures or breaches or from external events that interrupt normal business operations. We also face the risk that the design of our controls and procedures for mitigating operational risk proves to be inadequate or is circumvented. We may incur losses associated with counterparty exposures. We face the possibility that a counterparty will be unable to honor its contractual obligations. These counterparties may default on their obligations due to bankruptcy, lack of liquidity, operational failure or other reasons. Our controlling shareholder has the ability to direct our business. As of Investors in our securities do not have the same protections as if the majority of the members of our board of directors were independent. As described in “Item 7A. Major Shareholders”, IUPAR is our controlling shareholder and, as a result, has the power to control us, including the power to elect and remove our directors and officers. Our current board of directors is comprised of We are subject to regulation on a consolidated basis and may be subject to liquidation or intervention on a consolidated basis. The Central Bank treats us and our subsidiaries and affiliates as a single financial institution for regulatory purposes. While our consolidated capital base provides financial strength and flexibility to our subsidiaries and affiliates, their activities could indirectly put our capital base at risk. In particular, any investigation of, or intervention by the Central Bank in, the affairs of any of our subsidiaries and affiliates could have a material adverse impact on our other subsidiaries and affiliates and ultimately on us. Integration of acquired or merged businesses involves certain risks that may have a material adverse effect on us. We have engaged in a number of mergers and acquisitions in the past and may make further acquisitions in the future as part of our growth strategy in the Brazilian financial services industry. We believe that these transactions will contribute to our continued growth and competitiveness in the Brazilian banking sector. Any acquisition and merger of institutions and assets and the integration of such institutions and assets involves certain risks including the risk that: If we fail to achieve the business growth opportunities, cost savings and other benefits we anticipate from mergers and acquisition transactions, or incur greater integration costs than we have estimated, our business, financial condition and results of operations Risks Relating to the Preferred Shares and the ADSs The relative volatility and illiquidity of the Brazilian securities markets may substantially limit your ability to sell the preferred shares underlying the ADSs at the price and time you desire. Investing in securities that trade in emerging markets often involves greater risk than investing in securities of issuers in the United States or in other countries, and these investments are generally considered to be more speculative in nature. The Brazilian securities market is substantially smaller, less liquid, more concentrated and can be more volatile than major securities markets in the United States or in other countries. There is also significantly greater concentration in the Brazilian securities market than in major securities markets such as the United States or in other countries. The ten largest companies in terms of market capitalization represented The preferred shares and ADSs generally do not have voting rights. According to our bylaws, Despite there According to the provisions of the deposit agreement, we will provide notice to the depositary bank, which will, in its turn, and to the extent practicable, mail such notice to holders and instructions on how the ADS Holders of ADSs may be unable to exercise preemptive rights with respect to our preferred shares. We may not be able to offer our preferred shares to U.S. holders of ADSs pursuant to preemptive rights granted to holders of our preferred shares in connection with any issuance of our preferred shares unless a registration statement under the Securities Act is effective with respect to the preferred shares and preemptive rights, or an exemption from the registration requirements of the Securities Act is available. However, as we are not obligated to file a registration statement relating to preemptive rights with respect to our preferred shares, we cannot assure you that we will file any such registration statement. If a registration statement is not filed and an exemptionfrom registration does not exist, The Bank of New York Mellon, as depositary, will attempt to sell the preemptive rights, and you will be entitled to receive the proceeds of the sale. However, these preemptive rights will expire if the depositary does not sell them in a timely manner, and U.S. holders of ADSs will not realize any value from the granting of the preemptive rights. For more information on the exercise of your preemptive rights, see “Item 10B. Memorandum and Articles of Association If you surrender your ADSs and withdraw preferred shares, you risk losing the ability to remit foreign currency abroad and certain Braziliantax advantages. As a holder of ADSs, you benefit from the electronic certificate of foreign capital registration obtained by the custodian for our preferred shares underlying the ADSs in Brazil, which permits the Holders of our preferred shares and ADSs may not receive any According to our bylaws, we are obligated to pay our shareholders at least As a holder of ADSs, you have shareholder rights that differ from those of shareholders of companies organized under the laws of the United States or other Our corporate affairs are governed by the Brazilian Corporate Law and our bylaws, which may differ from the legal principles that would apply if we were incorporated in a jurisdiction in the United States or in other jurisdictions outside Brazil. Under Brazilian Corporate Law, ITEM 4 INFORMATION ON THE COMPANY General Our legal and commercial name is Itaú Unibanco Holding S.A. We were incorporated on September 9, Investor information can be found on our website at www.itau-unibanco.com/ir. Information contained on our website is not incorporated by reference in, and shall not be considered a part of, this annual report. Our agent for service of process in the United States is the general manager of our New York branch, which is located at 767 Fifth Avenue, 50th History We trace our origins to 1944, when members of the Egydio de Souza Aranha family founded Banco Federal de Crédito S.A. in São Paulo. Since 1973 we have operated through Banco Itaú S.A., now Itaú Unibanco. Unibanco was founded by the Moreira Salles family in 1924, making it Brazil’s oldest non-state owned bank at the time of the Association. On November 3, 2008, we announced the As Statistical Disclosure by Bank Holding Companies See “Item 4B. Business Overview Divestitures On December Serasa On October 22, 2012, Itaú Unibanco Holding, through BIU Participações S.A., entered into a stock purchase agreement with Experian Brasil Ltda., under which it undertook to sell its equity stake, corresponding to 601,403 common shares, in Serasa S.A., a credit bureau, for approximately R$1,700 million. This transaction closed on November 23, 2012. BPI On April 20, 2012 Itaú Unibanco Holding entered into an agreement Capital Expenditures On January 27, 2012, we announced the construction of a new technology center, representing a total investment of approximately R$800 See “Item 5B. Liquidity and Capital Resources – Capital – Capital Expenditures” for a discussion of our capital expenditures for the last Acquisitions Banco Carrefour On April 14, 2011 Itaú Unibanco entered into a share purchase and sale agreement governing the indirect acquisition by Itaú Unibanco of On Banco BMG shares its distribution channels operated through banking agents (correspondentes bancários) with the JV, which The payroll loans granted to Itaú Unibanco’s clients through Itaú Unibanco’s branches and other exclusive Itaú Unibanco channels remain separate from the Following approval of this transaction by CADE, definitive agreements governing the BMG Association were executed on December 13, 2012, and included an investment agreement governing each party’s rights and obligations under the JV, and an agreement for the provision of funding through assignment of credit rights governing Itaú On Unibanco Participações Societárias On July 29, 2011, we acquired, through a wholly-owned subsidiary, all remaining interests not previously owned in Unibanco Participações Societárias, an indirect investment subsidiary of Itaú Unibanco Holding, for approximately R$1.2 billion in cash. HSBC Portfolio in Chile On October 24, 2011, we completed the acquisition of HSBC’s high net worth portfolio in Chile, which included, among others, 4 branches and the consumer credit and mortgage portfolios, strengthening our position in the Chilean market, with a network of 88 branches in Chile. MCC Securities On August 1, 2011, Itaú Unibanco, through its subsidiaries, entered into certain agreements with Munita, Cruzat & Claro (“MCC”) and acquired 50.0% plus one share issued by MCC Securities Inc. (Cayman Islands), forming a joint venture with MCC targeting Chilean high net worth clients. Itaú Unibanco Holding ranked among the We In addition, we received the following awards and recognition in Our Ownership Structure We are a financial holding company controlled by IUPAR, a holding company jointly controlled by (i) Itaúsa, which is a holding company controlled by members of the Egydio de Souza Aranha The following chart is a simplified overview of the direct and indirect ownership structure of the Itaú Unibanco Group as of (1) Excluding controlling shares. Ownership percentages above refer to the total of direct and indirect ownership. All of the above companies were organized and have their operations in Brazil, except Banco Itaú Argentina S.A. Competitive Strengths We believe the following strengths provide us with significant competitive advantages and distinguish us from our competitors. Premier banking brand in Brazil. Our brands are very strong and very well recognized in Brazil. They represent quality and reliability and, with our large portfolio of products, help us to maintain a low customer turnover rate, especially among customers in the high income segment. Large branch network in geographic areas We have an extensive network with Diverse line of products and services. We are a multi-service bank offering a diverse line of products and services that are designed to address the needs of various types of clients, including corporate clients, small and medium-sized enterprises, retail customers, high-income individuals, private bank clients, non-accountholders and credit card users. We believe that this model creates opportunities to improve our Technology and electronic distribution channels as drivers for sales. Our intensive use of technology and electronic distribution channels, which has contributed significantly to an increase in sales of products and services, is one of our most important competitive advantages. In Risk-based pricing model as a tool to manage risk while exploring opportunities. Our risk-based pricing model is an important competitive advantage as it gives us a more precise dimension of the risk equation versus return in various scenarios. This is an essential tool to explore commercial opportunities and simultaneously manage risks. Depending on the product, each contract is individually priced using risk adjusted return on capital models that give us a better assessment of the Business Strategy Our board of directors is responsible for defining the guidelines of our strategy and that of our subsidiaries. Strategic decisions by our board of directors are supported by the strategy committee of the board, which provides data and information about strategic business issues. See “Item 6C. Board Practices Expand our operations in Brazil and abroad. We intend to expand our operations in Brazil and abroad. In 2012, we carried out a series of transactions aimed at expanding our operations in Brazil. We acquired the remaining shares of Redecard S.A. in a tender offer, resulting in our ownership of 100.0% of Redecard’s capital stock, formed Banco Itaú BMG Consignado S.A., a new financial institution in partnership with Banco BMG S.A. and controlled by us, and acquired shares representing 49.0% of the capital stock of Banco CSF S.A. Also in 2012, we were authorized by the Colombian regulatory authorities to structure our wholesale and investment Continue to improve efficiency. Grow our loan portfolio with the maintenance of asset quality. The growth of our loan portfolio and the maintenance of asset quality are central issues to our strategy. We are constantly seeking to improve our models for risk management and our economic forecasts and scenario modeling. We intend to increase the average volume of Implement an advanced and fully integrated risk management approach should position us for sustainable growth and enhanced profitability. Our main strategic goals in risk management include: (i) the incorporation of best practice recommendations and the implementation of the advanced approaches under Basel II and Basel III, which should enhance profitability from more precise risk-based pricing and risk-adjusted performance measurement frameworks, which are important sources of competitive advantage; and (ii) developing and implementing a fully integrated risk management approach, through the integration of processes and systems to provide a comprehensive picture of risk exposures across risk types and from multiple viewpoints, as well as through the development of stress testing and risk appetite standards. Develop strong relationships with our We will continue to work on our customer segmentation strategy in order to identify our customers’ needs and enhance our relationship with our customer base, as well as to increase market penetration. A customer segment is a distinguishable part of our customer base that is subject to a specific set of needs that we focus on meeting. We believe that our customer segmentation tools and strategy provide us an important competitive advantage developed over the course of more than 25 years. We aim to fulfill Operations The table below presents revenues for our segments for each of the years ended December 31, 2012, 2011 and 2010. As disclosed in note (1) Includes net interest and similar income and expenses, dividend income, net gain (loss) from (2) Activities with the Market and Corporation includes the results related to the trading activities in our proprietary portfolio, trading related to managing currency, interest rate and other market risk factors, asset and liability management and arbitrage opportunities in domestic and foreign markets. It also includes the results associated with financial income from the investment of our excess capital. We mainly carry out our business activities in Brazil. We do not break down our revenues by geographic market within Brazil. Our revenues consisting of interest income, (1)Includes interest and similar income, dividend income, net gain (loss) from The table below presents revenues abroad by operational segment for each of the years ended December 31, (1) Includes Banco Itaú Argentina S.A, Itaú Asset Management S.A., Sociedad Gerente de Fondos Comunes de Inversión, Itrust Servicios Inmobiliarios S.A.C.I (formerly known as Itrust Servicios Financieros S.A) and Itaú Sociedad de Bolsa S.A. (2) Includes Itaú Chile Holdings, Inc., BICSA Holdings LTD., Banco Itaú Chile S.A., Itaú Chile Inversiones, Servicios y Administración S.A., Itaú Chile Corredor de Bolsa Ltda., Itaú Chile Corredora de Seguros Ltda., Itaú Chile Administradora General de Fondos S.A., Itaú Chile Securitizadora S.A., Recuperadora de Créditos Ltda. and Itaú Chile Compañ (3) Includes ACO Ltda., Banco Itaú Uruguay S.A., OCA Casa Financiera S.A., OCA S.A, and Unión Capital AFAP S.A. (4) Itaú Unibanco S.A. - Grand Cayman, New York (5) Activities with the Market and Corporation has no operations outside Brazil. Our Business Overview We provide a broad range of banking services to a diverse customer base of individuals and corporate customers. We provide these services on an integrated basis through the following operational The commercial banking business Itaú BBA is responsible for our corporate and investment banking activities. Itaú BBA’s management model is based on building close relationships with its customers by obtaining an in-depth understanding of their needs and offering them customized solutions. Corporate activities include providing banking services to large corporations and investment banking activities include offering funding resources to the corporate segment, including through fixed and variable income instruments. On February 21, 2013, we announced certain changes to our management, which includes our middle-market banking business becoming part of the Itaú BBA operational segment. The segment information included in “Item 5A. Operating Results” and in our financial statements is based on the organizational structure in place as of December 31, 2012 and, therefore, the previously mentioned change has not been reflected in such information. Through the consumer credit business The activities with the market and corporation segment manages interest income associated with Itaú Unibanco Holding capital surplus, subordinated debt surplus and the net balance of tax credits and debits, as well as net interest income from the trading of financial assets through proprietary positions (desks), management of currency interest rate gaps and other risk factors, arbitrage opportunities in the foreign and domestic markets, and mark-to-market of financial assets. This segment also includes the effect of non-recurring items that are not considered in the managerial statement of income. Itaú Unibanco Holding also has a broad range of overseas operations and has built its international presence based on strategically positioned units in the Americas, Europe and Asia. This creates significant synergies in foreign trade finance, the placement of Eurobonds, offering more sophisticated financial transactions, and private banking operations. These operations are presented in the commercial banking and in the Itaú BBA segments. Commercial Banking Overview of Accountholder Products and Services We have a large and diverse portfolio of products to address our customers’ needs. The main available products to our accountholders are: Retail Banking Our core business is retail banking, which serves individuals with a monthly income below R$10,000. We classify our retail clients in accordance with their income and profile: For the year ended December 31, Our strategy is to offer high quality and differentiated banking products to our retail banking customers. As part of this strategy, Itaú Unibanco now serves two retail segments: (i) Itaú Uniclass serves customers with differentiated needs and who require a more diversified service with separate areas within branches; and (ii) Itaú retail serves all other customers. This diversified relationship concept is interwoven by “Itaú 30 horas,” a convenience service that enables users to carry out banking transactions in ATMs, telephones, mobiles, on the internet and at the branches. Public Sector Our public sector business operates in all areas of the public sector, including the federal, state and municipal governments (in the executive, legislative and judicial branches). As of December 31, Itaú Personnalité Itaú Unibanco began providing customized services to higher-income individuals in 1996 with the creation of Itaú Personnalité. Itaú Personnalité serves individuals who earn more than R$10,000 per month or have investments in excess of R$100,000. Itaú Personnalité’s focus is delivering (i) financial advisory services by its managers, who understand the specific needs of our higher-income customers; (ii) a large portfolio of exclusive products and services (iii) special benefits based on the type and length of relationship with the customer, including discounts on various products and services. Itaú Personnalité services its clients through a dedicated network comprised of Itaú Private Bank Itaú Private Bank is a leading Brazilian bank in the global private banking industry, providing wealth management services to Latin American high net worth individuals. Approximately 600 employees Wealth management services are provided by teams of experienced relationship managers based in Brazil, the United States, On August 21, 2011, Itaú Private Bank International entered into a joint venture with MCC to develop the Chilean private banking market. With over Very Small Business Banking Our very small business banking office managers are trained to offer customized solutions and provide detailed advice on all products and services to very small companies. Our strategy is to capture the market opportunity by meeting the needs of these companies and their owners, particularly with respect to the management of cash flow, credit facilities, investment needs and As of December 31, Loans to very small businesses totaled R$ Small Business Banking We have structured our relationships with small business customers through the use of specialized offices since 2001. As of December 31, All our managers are certified by ANBIMA, and throughout the year they receive training to offer the best solutions for each customer profile. Our customers rely on our ability to provide products, terms and rates customized to their needs. Loans to small businesses totaled R$ Middle-Market Banking As of December 31, We offer a full range of financial products and services to middle-market customers, including deposit accounts, investment options, insurance, private retirement plans and credit products. Credit products include investment capital loans, working capital loans, inventory financing, trade financing, foreign currency services, equipment leasing services, letters of credit and guarantees. We also carry out financial transactions on behalf of middle-market customers, including interbank transactions, open market transactions and futures, swaps, hedging and arbitrage transactions. We also offer our middle-market customers collection services and electronic payment services. We are able to provide these services for virtually any kind of payment, including Internet office banking. We charge collection fees and fees for making payments, such as payroll, on behalf of our customers. Credit Cards and Commercial Agreements We are the leading company in the Brazilian credit card market, based on transaction volume as of December 31, We have developed a strong presence in the consumer finance sector through our strategic alliances and commercial agreements with leading retailers in Brazil. Since 2001, when we established the first In August 2012, we launched a new credit card, Itaucard 2.0, a new product in the Brazilian market with an interest rate structure more similar to international markets, including lower rates which accrue from the date of purchase instead of the invoice due date and with a maximum monthly limit of 5.99%. New customers receive the new card, and existing customers can also receive Itaucard 2.0 with the option of going back to their previous credit card. In addition, monthly credit card interest rates for accountholders and non-accountholders are less than 10.0%. Our main challenges in the credit card business are to continually Real Estate Financing As of December 31, Given our expectation of growth over the next several years in the mortgage market in Brazil, we are investing in the operational platform in order to reduce costs and improve quality for our customers. We are also developing our distribution channels for mortgage loans by focusing on our branch network and developing our relationships with real estate brokers. We have partnerships with two of the largest real estate brokers in Brazil: LPS Brasil Consultoria de Imóveis S.A. According to Brazilian regulations, financial institutions are required to allocate at least Payroll Loans A payroll loan is a credit transaction with fixed installments directly discounted from the customer’s payroll. Through the BMG Association, which was established in July 2012 and which has been operational since December 2012, we aim at achieving a leading position in the offering, distribution and sale of payroll loans in Brazil, in line with our strategy of expanding our activities in businesses with historically lower spreads and losses. The BMG Association was structured as a new business, with Itaú Unibanco holding 70.0% of the capital stock of the BMG Association and Banco BMG holding the remaining 30.0%. Payroll loans granted to Itaú Unibanco’s customers through Itaú Unibanco’s branches and other exclusive Itaú Unibanco channels will remain separate from the operations of the JV. See “Item 4B. — Business Overview — Acquisitions — BMG Association.” Our payroll loan portfolio, including the portfolio acquired from Banco BMG, reached R$12,929 million as of December 31, 2012. Itaú Asset Management According to ANBIMA, as of December 31, As of December 31, In Corporate Social Responsibility The Itaú Social Excellence Fund In addition, every year the fund manager donates As of December 31, Securities Services The local custody and fiduciary services business provide services such as custody, fund accounting, administration, supervision and contracting of service for local investment funds and other funds. As of December 31, Our corporate solutions services consist of acting as transfer agent and shareholder servicer for Brazilian companies issuing equity, debentures and promissory notes. We are currently the registrar agent to 229 companies listed on BM&FBovespa (the Brazilian securities, commodities and futures exchange), which represents 62.9% of the listed companies on that exchange. Moreover, as of December 31, 2012, we were the transfer agent to 307 debentures offerings in the Brazilian market, representing 47.4% of the debentures market in Brazil. We also provide collateral agent services for corporate clients. In 2012, Itau Securities Services received industry awards voted on by customers as the Best Brazilian Custodian for domestic customers (5th consecutive year), international customers (4th consecutive year) and was recognized as Top Rated service provider in the region Americas and Caribbean (2nd consecutive year) according to Global Custodian Magazine. Also in 2012, we were recognized by Global Finance as Best Custodian in Brazil for international customers. The management and business governance model was awarded the Gold Medal by the Management Excellence Institute of São Paulo. Brokerage Itaú Corretora de Valores In Insurance, Private Retirement Insurance As of Our main lines of insurance are (i) life and casualty (excluding VGBL; see “— Private Retirement Plans”) Risks that exceed the retention limit must be ceded to licensed Brazilian reinsurers in accordance with Supplementary Law No. 126, published on January 15, 2007, and the SUSEP regulations, published on December 17, 2007. Our strategy to increase our level of penetration in the Brazilian insurance market varies by market. In the high risk market, we intend to grow our market share through independent local brokers and multinational brokerage firms. For individuals and small and medium company markets, we focus on operations within our banking Porto Seguro Itaú Unibanco Holding and Porto Seguro XL In Private Retirement Plans As of December 31, Capitalization Products Capitalization products are savings account products that generally require a customer to deposit a fixed sum with us to be returned at the end of an agreed upon term, with accrued interest. In return, the customer is automatically entered into periodic drawings for the opportunity to win a significant cash prize. As of December 31, Itaú BBA Itaú BBA is responsible for our corporate and investment banking activities. As of December 31, As of December 31, In investment banking, the fixed income department In addition, Itaú BBA advised During In 2012, Itaú BBA Aiming to We focus on assessment practices and mitigation of environmental Coordinated by Itaú BBA, market in Latin America, where Itaú BBA In Consumer Credit Vehicle Financing As of December 31, The vehicle financing sector in Brazil is dominated by banks and finance companies that are affiliated with vehicle manufacturers. According to ABEL, the Brazilian association of leasing companies, We Due to an increase in our non-performing loan ratio with respect to vehicle loans in 2012, which followed the general trends observed in the Brazilian financial market, we adopted stricter requirements for granting loans, including term reduction and an increased down payment policy, in addition to classifying customers into groups based on their level of The truck financing division Redecard In May 2010, Hipercard, also a subsidiary of Itaú Unibanco, entered into an agreement with Redecard, pursuant to which, beginning in the second quarter of 2010, Redecard started In The following table sets forth the financial volume of transactions in millions of International Operations The following information refers to our main operations in Latin America (Argentina, Chile, Uruguay, Paraguay and Colombia). We are also present in the Mexican credit card market, through Itaucard México, and in Peru, with an Itaú BBA representative office. Banco Itaú Argentina We started our operations in Argentina As of December 31, Banco Itaú Argentina offers products and services in corporate banking, small- and medium-sized enterprises (“SMEs”) and retail banking. Our corporate banking business focuses on large and institutional clients, providing lending, structured finance, investment and cash management services. Our SMEs business provides credit for working capital and investments in production capacity increases. Our retail banking business focuses on middle and upper-income customers and services offerings include current and saving accounts, personal loans and credit cards. Banco Itaú Chile Banco Itaú Chile started its official activities on February 26, 2007, when BAC transferred the operations of BankBoston Chile and BankBoston Uruguay to us. As of December 31, Banco Itaú Chile offers several products such as factoring, leasing, corporate finance, mutual funds, insurance brokerage and trading, which are offered through different entities and different lines of business. The retail segment focuses on the upper-income segment that, as of December 31, Banco Itaú Uruguay Banco Itaú Uruguay The retail banking business is focused on individuals and small business customers, with more than OCA is the main credit card issuer in Uruguay, with a Unión Capital is a pension fund management company which has been operating in Uruguay since 1996, when the current Uruguayan pension system was created. As of December 31, Banco Itaú Paraguay Banco Itaú Paraguay S.A. (“Banco Itaú Paraguay”), formerly known as Interbanco, was set up in Paraguay in 1978 and has become one of the largest banks in the Paraguayan financial market. In 1995, Interbanco was acquired by Unibanco, and the “Itaú” brand has been present in the country since July 12, 2010. Banco Itaú Paraguay’s products and services operate under the following structure: corporate banking (small and medium-sized businesses, agribusiness, large companies, institutional clients) and consumer banking (individuals and payroll customers). Its main sources of income are consumer banking products, primarily credit cards. The retail segment also focuses on the payroll customers. Under corporate banking, Banco Itaú Paraguay has a well-established presence in the agribusiness segment, which has experienced attractive credit performance. Banco Itaú Paraguay has been the most profitable bank in Paraguay for the past Banco Itaú Paraguay is also recognized by launching innovative products and services. It provides its customers several products and services, such as International Debit Card Cirrus Maestro and the Internet Banking Service Interhome Banking and also offers banking customer information through mobile phones with the Click Banking service. Itaú BBA Colombia In Itaú BBA’s target market in Colombia is composed of institutional investors and large Brazilian companies In order to consolidate and expand our operations in Europe, we decided to transfer the central administration and registered offices of Itau BBA International, then Banco Itaú BBA International, Itau BBA International focuses mainly on two lines of business: As of December 31, The private banking business provides financial and asset management services to our Latin American customers, putting at their disposal a diversified and specialized range of investment funds, dealing in and managing securities and other financial instruments, trusts and investment companies on behalf of customers. Assets under management of the private banking business amounted to All of our transactions with Itau BBA International (successor of Banco Itaú BBA Other International Operations Our other international operations have the following objectives: The proprietary portfolios are mainly held by Itaú Bank and Itaú Unibanco Cayman Islands branch. These offices also enhance our ability to manage our international liquidity. Through our international operations, we establish and monitor trade-related lines of credit from foreign banks and maintain correspondent banking relationships with money centers and regional banks throughout the world and oversee our other foreign currency-raising activities. Trade Financing Marketing and Distribution Channels We provide integrated financial services and products to our customers through a variety of marketing and distribution channels. Our distribution network consists principally of branches, ATMs and CSBs, which are banking service centers located on corporate customers’ premises. The following table provides information relating to our branch network, CSBs and ATMs as of December 31, The following table provides information relating to the geographic distribution of our distribution network throughout Brazil as of December 31, Branches As of December 31, Customer Site Branches As of December 31, ATMs As of December 31, Risk Management The credit, market, liquidity, operational and insurance risk control is performed in a centralized manner by an independent risk control unit, in order to ensure that the risks faced by Itaú Unibanco Holding are managed in accordance with our policies and procedures. This independent unit is also responsible for centralizing Itaú Unibanco Holding’s capital management. This centralized control aims to provide our board and the senior management with a global view of Itaú Unibanco Holding’s exposure to risks as well as a prospective view of our capital adequacy, so as to optimize corporate decisions. Our risk management procedures permeate the entire institution, aligned with the guidelines of our board and senior management, which, through Superior Committees described below, determine our overall risk management objectives, expressed as targets and limits for each of our business units. The control units, in turn, support Itaú Unibanco Holding’s management by means of monitoring procedures and risk analysis. The Capital and Risk Management Committee (“CGRC”) advises our board on Itaú Unibanco Holding’s risks and capital management. The CGRC submits reports and recommendations for the analysis of the The Audit Committee is responsible for overseeing the quality and integrity of our internal controls and risk management systems, among other functions. See “Item 6C. Board Practices — Statutory Bodies — Audit Committee.” The Superior Risk Policies Committee (“CSRisc”) is our superior risk and capital management body at the executive level, responsible for (i) establishing guidelines consistent with our risk management policies; (ii) approving management-level risk policies with high impact on capital positions; (iii) defining decision authority levels for the lower level committees; (iv) setting limits combined by type of risk; (v) ensuring consistency of risk and capital management across the Itaú Unibanco Group; (vi) monitoring the process for implementing risk and capital management tools; and (vii) approving risk assessment and capital calculation methodologies. In addition to the Superior Risk Policies Committee (CSRisc), senior management oversight of The Superior Institutional Treasury Committee (CSTI) and the Superior Institutional Treasury and Liquidity Committee (CSTIL) are The Superior Credit Committee (CSC) is responsible for managing large corporate credit risks, including establishing corporate credit policies, coordinating internal rules on credit limits for financing and guarantees and determining the authority levels to approve credit transactions. The Superior Audit and Operational Risk Management Committee (CSAGRO) is responsible for operational risks and The Superior Risk Institutional Policies Committee (CSNIR) is responsible for validating and approving our institutional policies of market, liquidity, credit, operational and insurance risks control and of capital management. In addition to the risk management committees, the Superior Product Committee (CSP) approves products, operations, services and processes in As part of our risk control tools, Itaú Unibanco Holding has processes to calculate the regulatory capital, in accordance with CMN Resolution No. 3,490. The Complementing the risk management process, we have concluded the implementation of the capital management structure, in compliance with CMN Resolution No. 3,988, of June 30, 2011. The capital management process supports Itaú Unibanco Holding by means of an ongoing process involving: Market Risk Management Market risk is Our market risk control Market risk control is managed by a Itaú Unibanco Holding’s market risk The structure of limits and alerts follows our board guidelines. These are approved by the Superior Risk Policies Committee (CSRisc), after endorsement by the Superior Institutional Treasury Committee (CSTI). The limits are reviewed at least annually. Liquidity Risk Management Liquidity risk is defined as the occurrence of imbalances between assets and liabilities, or a mismatch between payments and receipts, that may affect an institution’s payment capabilities, taking into consideration the different currencies and settlement terms of its rights and obligations. Liquidity risk management aims to use best practices so as to avoid cash shortages and difficulties making payments. Liquidity risk management is overseen by We have a structure dedicated to improving monitoring and analysis of liquidity risk by applying statistical models and economic and financial forecasts of the variables that impact cash flows and the level of reserves in local and foreign currency. In addition, we have established guidelines and limits, which compliance is periodically reviewed by technical committees to ensure an additional safety margin with respect to the minimum liquidity requirements based on our models. Our liquidity management policies and related limits are established based on prospective scenarios that are periodically reviewed in light of cash requirements due to atypical market conditions or arising from strategic decisions. Pursuant to the requirements of CMN Resolution No. 2,804, of December 21, 2000 and Central Bank Circular No. 3,393, of July 3, 2008, we deliver our Liquidity Risk Statements (DRL) to the Central Bank monthly and the following items are regularly prepared and submitted to senior management for monitoring and support: Credit Risk Management Credit risk is defined as the possibility of losses associated In line with the In order to calculate credit risk we consider the client’s or counterparty’s probability of default (PD), the estimated value of the exposure at default (EAD) and loss given default (LGD), as well as single-creditor and industry-level credit concentration. The assessment and monitoring of these risk components is a part of our process for granting credit, managing portfolios and defining limits contributing to a diversified borrower distribution. Our credit policy is developed on the basis of internal factors, such as borrower rating criteria, performance and evolution of portfolio, default levels, return rates, and the allocated economic capital, as well as external factors related to the economic environment, interest rates, market default indicators, inflation and changes in consumption levels. The governance of our credit risk management is conducted through executive committees and the Superior Credit Committee (CSC). The executive committees evaluate competitive market conditions, define our credit limits, review control Our credit risk control is carried out by our independent risk control unit, segregated from the business units and the internal audit unit, as required by current regulation. With respect to the credit risk control processes, this independent risk control unit has the following responsibilities, among others: The credit We seek to strictly control our credit exposure to clients and counterparties, taking action to remediate occasional situations in which our actual exposure exceeds the desired one. In these cases, a series of contractual provisions may be enforced, such as the As part of our framework for credit We We also use credit derivatives, such as single name credit default swaps, to mitigate the credit Operational Risk Management Operational risk is defined as the possibility of losses resulting from failure, deficiency or inadequacy of internal processes, people and systems or from external events. It includes legal risk, coupled with inadequacy or deficiency of contracts, as well as the penalties due to non-compliance with laws and punitive damages to third parties arising from the activities undertaken by an institution. The sophistication of the banking businesses and the evolution of technologies have increased the complexity of our risk profiles and affected our operational risk management. As a result, we have established a specific structure for the operational risk distinct from the one traditionally applied to market and credit risks. The CSAGRO oversees operational risk management and establishes guidance for internal auditing. The committee analyses audit reports, establishes operational risk management guidelines and models and monitors internal controls, operational risks and legal compliance. Decisions regarding capital measurement models and risk control policies are made by the CSRisc. In line with the principles established by the CMN, we established an operational risk management policy, which was approved by our audit committee and ratified by the board of directors. The operational risk management policy is applicable to Itaú Unibanco Holding. Since July 1, 2008, the Central Bank has required financial institutions to allocate capital for operational risk, based on Basel II operational risk capital requirements guidelines. Itaú See Insurance Underwriting and Portfolio Risk Management Insurance underwriting and portfolio risk is the risk from an adverse economic scenario that contradicts the assumptions used in our underwriting policy and in estimating its reserves. This risk is managed by the same bodies that oversee operational risk as described above. Management of our insurance operations establishes our underwriting policies relating to retentions, protections, reinsurance programs and pricing, depending on the type of business. This approach is designed to maintain high quality underwriting, pricing discipline and reduce volatility in the results. The actuarial department analyses the adherence of the probability tables used in the pricing models to the experience of our portfolio. In the retail market, the prices of our insurance products are established according to proprietary scoring and rating systems based on data we gathered and analyzed over many years, which underwriters use to assess and evaluate risks prior to quotation. This information provides specialized knowledge relating to industry segments and helps analyze risk based on account characteristics and pricing parameters. In the group life market, the prices of our insurance products are established according to rating systems based on an international actuarial table of mortality and the historical experience of our policies, the age of the group, the industry segments, the percentage of females and males and experience of each group and the financial health of the client. Property insurance underwriting is monitored through risk factors and pricing is based on exposure based on economic segment analysis, activity and level of severity risk, customer and similar companies experiences, financial health and customized management instruments. Our strategy for reinsurance underwriting is to work with a limited number of reinsurers in order to have a high pre-negotiated retention limit, which decreases our risk exposure. In addition, the underwriters analyze all of our accounts on an annual basis to manage risk associated with our insurance portfolio. In addition we apply risk-adjusted return on capital model to the corporate segment to allocate enough capital to ensure business sustainability. The risk adjustment return on capital model allows us to quantify the exposure to risk based on statistical criteria. Funding Main Sources The following tables set forth a breakdown of deposits by maturity, as of December 31, 2012, 2011 and 2010: The following table sets forth the mix of the individual and corporate time deposits divided among our retail, Itaú Personnalité, middle market and corporate markets (each expressed as a percentage of total time deposits) as of December 31, 2012, 2011 and 2010: Other Sources We also act as a financial agent We obtain U.S. dollar-denominated lines of credit from our In addition, we obtain foreign currency funds from the issuance of securities in the international capital markets, either by borrowing privately or by issuing debt securities generally to
We also generate additional funds for our operations through the resale to our customers of securities issued by us and previously held in
Technology
We are committed to offering the most advanced technology for the convenience of our customers. Therefore, we continuously invest in the development and improvement of our systems.
In
We have workplace contingency and disaster recovery processes for our main businesses. The back-up site is located in Campinas, São Paulo. Both our primary and secondary data centers have dedicated uninterruptible power systems
General
The last several years have been characterized by increased competition and consolidation in the financial services industry in Brazil. Retail Banking
As of December 31,
We, together with Banco Bradesco S.A. (“Bradesco”), Banco Santander (Brasil) S.A. (“Banco Santander”) and HSBC Bank Brasil S.A. (“HSBC”), are the leaders in the non-state-owned multiple-services banking sector. As of September 30,
The table below sets forth the total assets of the top 14 banks in Brazil, ranked according to their share of the Brazilian banking sector’s total assets:
(*) Based on banking services, excluding insurance and pension funds.
(**)Includes the consolidation of 50.0% of Banco Votorantim S.A. based on Banco do Brasil ownership of a 50.0% interest in Banco Votorantim S.A..
Source: Central Bank, 50 Largest Banks and the Consolidated Financial System (September
We also have a highly qualified team of employees. We intensified our presence in the Southern Cone (Argentina, Chile, Paraguay and Uruguay) to strengthen our operations in Latin America. Our long-term strategy is to move gradually to a global position, but our strategy gives priority to the consolidation of our presence in the domestic and regional markets.
Credit Cards
The Brazilian credit card market is highly competitive, growing at a compound annual growth rate of over 21.4% over the last three years, as of
Asset Management Competition in Brazil
Insurance
The Brazilian insurance market is highly competitive. Our primary competitors in this sector, excluding health insurance, are related to large commercial banks, such as Bradesco, Banco do Brasil, CEF and Banco
Private Retirement Plans and Capitalization Products
Our primary competitors in private retirement plans and capitalization products are controlled by large commercial banks, such as Bradesco, Banco do Brasil, Banco Santander and CEF, which, like us, take advantage of their branch network to gain access to the retail market.
Corporate and Investment Banking
In the wholesale credit market, Itaú BBA contends for the top spot against Banco do Brasil (including its 50.0% stake in Banco Votorantim) based on aggregate loan volume, where it is currently followed by Bradesco and
Itaú BBA also has a prominent position in the derivatives market, particularly in structured derivatives. In this market, its main competitors are the international banks, namely Banco Citibank,
Itaú BBA also has a leading position in the
In investment banking, Itaú BBA’s main competitors include Banco Santander,
Real Estate Financing The main player in the Brazilian real estate market is CEF, a government owned bank. CEF is focused on real estate financing and, with its aggressive pricing strategy, is the leader in this market. This position is reinforced with the
REGULATION AND SUPERVISION
Principal Regulatory Agencies The CMN
The CMN, the highest authority responsible for monetary and financial policies in Brazil, is responsible for the overall supervision of Brazilian monetary, credit, budgetary, fiscal and public debt policies. The CMN is chaired by the minister of finance and includes the minister of planning budget and management and the president of the Central Bank. The CMN is authorized to regulate the credit operations which Brazilian financial institutions are engaged in, to regulate the Brazilian currency, to supervise Brazil’s reserves of gold and foreign exchange, to determine Brazilian saving and investment policies and to regulate the Brazilian capital markets. In this regard, the CMN also oversees the activities of the Central Bank and the CVM.
The Central Bank
The Central Bank is responsible for implementing the policies established by the CMN, related to monetary policy and exchange control matters, regulating public and private sector Brazilian financial institutions, monitoring and registration of foreign investment in Brazil and overseeing the Brazilian financial markets. The president of the Central Bank is appointed by the president of Brazil subject to ratification by the Brazilian senate, to perform his duties for an indefinite term. Since January 2011, the president of the Central Bank has been Mr.
The CVM
The CVM is the
SUSEP
The
CNSP The National Private Insurance Council
Principal Limitations and Restrictions on Financial Institutions
Under Brazilian banking laws and regulations, financial institutions may not:
Principal Financial Institutions
Public Sector
The federal and state governments of Brazil control several commercial banks and financial institutions devoted to fostering economic development, primarily with respect to the agricultural and industrial sectors. State development banks act as independent regional development agencies in addition to performing commercial banking activities. In the last decade, several public sector multiple-service banks have been privatized and acquired by Brazilian and foreign financial groups. Government-controlled banks include:
Private Sector
The private financial sector includes commercial banks, investment, finance and credit companies, investment banks, multiple-service banks, securities dealers, stock brokerage firms, credit co-operatives, leasing companies, insurance companies and others. In Brazil, the largest participants in the financial markets are financial conglomerates involved in commercial banking, investment banking, financing, leasing, securities dealing, brokerage and insurance. In addition, the private financial sector
Regulation by the Central Bank Overview
The Central Bank implements the currency and credit policies established by the CMN, and controls and supervises all public- and private-sector financial institutions. Any amendment to a financial institution’s bylaws, any increase in its capital or any establishment or transfer of its principal place of business or any branch (whether in Brazil or abroad), any merger, acquisition, corporate reorganization or change of control, and the election of directors, officers or audit committee members of financial institutions must be approved by the Central Bank.
Central Bank approval is necessary to enable a financial institution to merge with, or acquire, another financial institution or See also “— Antitrust
The Central Bank monitors compliance with accounting and statistical requirements. Financial institutions must submit annual and semi-annual audited financial statements, quarterly financial statements, subject to a limited review, as well as monthly unaudited financial statements, prepared in accordance with the Central Bank rules, all of which must be filed with the Central Bank. Publicly held financial institutions must also submit annual and quarterly financial statements to the CVM, which are subject to a limited review. In addition, financial institutions are required to disclose to the Central Bank all credit transactions, foreign exchange transactions, export and import transactions and any other related economic activity. This disclosure is usually made on a daily basis by computer and through periodic reports and statements. A financial institution and the corporate entities or individuals which control such financial institution have a duty to make available for inspection by the Central Bank its corporate records and any other document which the Central Bank may require in order to carry out its activities.
Capital Adequacy and Leverage/Regulatory Capital Requirements Existing Requirements
Since January 1995, Brazilian financial institutions have been required to comply with Basel I on risk-based capital adequacy, modified as described below.
In general, Basel I and Basel II require banks to maintain a ratio of capital to assets and certain off-balance sheet items, determined on a risk-weighted basis, of at least 8.0%. At least half of the required capital must consist of Tier 1 Capital, and the balance must consist of Tier 2 Capital. Tier 1 Capital includes equity capital (i.e., common shares and non-cumulative permanent preferred shares), share premium, retained earnings and certain disclosed reserves less goodwill. Tier 2 Capital, or supplementary capital, includes “hidden” reserves, asset revaluation reserves, general loan loss reserves, subordinated debt and other quasi-equity capital instruments (such as cumulative preferred shares, long-term preferred shares and mandatory convertible debt instruments). There are also limitations on the maximum amount of certain Tier 2 Capital items. To assess the capital adequacy of banks under the risk-based capital adequacy guidelines, a bank’s capital is evaluated on the basis of the aggregate amount of its assets and off-balance sheet exposures, such as financial guarantees, letters of credit and foreign currency and interest rate contracts, which are weighted according to their categories of risk.
Brazilian legislation closely tracks the provisions of Basel II standardized or basic approaches for credit, market and operational risks. Among the key differences between Brazilian legislation and Basel II are:
For limited purposes, the Central Bank establishes the criteria for the determination of regulatory capital for Brazilian financial institutions. In accordance with those criteria established by CMN Resolution No. 3,444, the capital of the banks is divided into Tier 1 Capital and Tier 2 Capital.
Tier 1 Capital is represented by
Tier 2 Capital is represented by revaluation reserves, contingency reserves, special profit reserves related to mandatory dividends not yet distributed, preferred cumulative stock, preferred redeemable stock, subordinated debt and hybrid instruments and non-realized earnings related to available-for-sale securities market value adjustments. As mentioned above, Tier 2 Capital must not exceed Tier 1 Capital. In addition, preferred redeemable stock with original maturity of less than 10 years plus the amount of subordinated debt is limited to 50.0% of the amount of Tier 1 Capital.
Regulatory capital is represented by the sum of Tier 1 Capital and Tier 2 Capital and, together with the deductions described in note
On March 4, 2013, the Central Bank enacted Circular No. 3,648, which establishes the minimum requirements for the use of internal credit risk classification systems in the calculation of the required regulatory capital, as set forth in Resolution No. 3,490. Basel III Framework
On December 16, 2010, the Basel Committee
The Basel III framework will require banks to maintain: (i) a minimum common equity capital ratio of 4.5%
Basel III also introduces a new leverage ratio. A supervisory monitoring period began on January 1, 2011 and a parallel semi-annual testing run period of a minimum Tier 1 Capital leverage ratio of
In addition, Basel III aims to improve risk coverage by reforming the treatment of counterparty credit risk (“CCR”). Going forward, affected banks generally will, among other things, be required to determine their capital requirement for CCR using stressed inputs and be subject to a capital charge for potential mark-to-market losses associated with counterparties’ deteriorating credit-worthiness.
In relation to liquidity, Basel III implements a liquidity coverage ratio (“LCR”) and a net stable funding ratio (“NSFR”). The LCR will require affected banks to maintain sufficient high-quality liquid assets to cover the net cash outflows that could be encountered under a potential liquidity disruption scenario over a thirty-day period. The NFSR establishes a minimum amount of stable sources of funding a bank will be required to maintain based on the liquidity profiles of the bank’s assets, as well as the potential for contingent liquidity needs arising from off-balance sheet commitments over a one-year period. Basel III provides for an observation period which began in
In addition, on January 13, 2011, the Basel Committee expanded on the Basel III capital rules with additional requirements, also referred to generally as the “January 13 Annex”, applicable to non-common Tier 1 Capital or Tier 2 Capital instruments issued by internationally active banks. These requirements are in addition to the criteria detailed in the Basel III capital rules outlined above. To be included in additional Tier 1 Capital or Tier 2 Capital, the January 13 Annex requires an instrument issued by an internationally active bank to have a provision that requires such instruments, at the option of the relevant authority, to either be written off or converted to common equity upon a “trigger
On November 4, 2011, the Basel Committee published the final document addressing the assessment methodology for determining the systemically important financial institutions (“G-SIFIs”) and the amount of additional regulatory capital requirements that G-SIFIs should meet and the arrangements by which such additional requirements will be phased in. The assessment methodology is based on an indicator-based measurement approach. The selected indicators reflect a G-SIFI’s (i) The Issuer has not been classified as a G-SIFI by the Basel Committee.
On October 11, 2012, the Basel Committee issued a framework for dealing with domestic systemically important banks (“D-SIBs”), which entails a set of principles national regulators could adopt when determining the assessment methodology and the higher loss absorbency requirement for D-SIBs. The D-SIB framework supplements the G-SIFI framework by focusing on the impact that the distress or failure of systemically important banks would have on the domestic economy of each country. The Central Bank has not yet issued any proposed regulation or official guidance on the assessment methodology or the higher loss absorbency requirement for D-SIBs in Brazil. No official revision of the phase-in arrangements for the Basel III framework has been made by the Basel Committee (except for the LCR), which phase-in should have begun on January 1, 2013. Implementation of Basel III in Brazil
On February
Pursuant to Provisional Measure No. 608, new rules were also issued to adapt financial bills to the Basel III framework, as well as to provide for the possibility of Central Bank limiting payment of dividends and interest on capital by financial institutions if they disregard the capital requirements defined by the CMN. The
On March 1, 2013, the CMN issued four resolutions (one of which, CMN Resolution No. 4,194, does not apply to our business), which were followed by several circulars enacted by the Central Bank on
According to CMN Resolution No. 4,192 and CMN Resolution No. 4,193, Brazilian banks’ minimum total capital ratio
According to CMN Resolution No. 4,192, in order to qualify as Additional Tier 1 or Tier 2 Capital, an instrument issued by a Brazilian bank must, among other things, have a provision that requires such instrument to be automatically written-off or converted to equity upon a “trigger event.” A “trigger event” is the earlier of: (i) Common Equity Tier 1 Capital being less than 5.125% of risk-weighted assets for Tier 1 instruments and 4.5% for Tier 2 instruments, calculated in accordance with the requirements of CMN Resolution No. 4,193; (ii) the decision, as established in a firm irrevocable written agreement, to make a public sector injection of capital, as determined by applicable legislation; (iii) the Central Bank declares the beginning of a special administration regime (Regime de Administração Especial Temporária or “RAET”) or intervention in the issuing financial institution; or (iv) a decision that a write-off or conversion, without which the bank would become non-viable and in order to mitigate relevant risks to the Brazilian financial system, is necessary, as determined by the Central Bank, in accordance with guidance criteria to be established by the CMN (the “regulatory discretionary trigger event”). The additional requirements apply to all instruments issued after October 1, 2013.
Resolution No. 4,193 also establishes capital conservation and countercyclical buffers for Brazilian financial institutions, determining their minimum percentages and which sanctions and limitations will apply in case of non-compliance with such additional requirements. Such limitations include: (i) partial or full inability to pay executives and members of the board their share of variable compensation; (ii) partial or full inability to distribute dividends and interest on equity to shareholders; and (iii) full inability to repurchase their own shares and effect reductions in their share capital. Under
The following table
Also as part of the implementation of the Basel III framework, on June 30, 2011 the CMN enacted Resolution No. 3,988, which sets forth that Brazilian financial institutions shall implement a structure of capital management
In order to reduce the negative impact of such reductions to Common Equity Tier 1 Capital, Provisional Measure No. 608 allows financial institutions to replace such temporary differences related to allowances for loan and lease losses with a presumed credit, cashable against the national treasury. Temporary differences related to allowances for loan and lease losses are also automatically replaced with a presumed credit when a financial institution undergoes liquidation or bankruptcy. As a result, financial institutions should be able to reduce their tax credits due to temporary differences which depend of future profits for their realization (accounting tax credits) and, consequently, negative impacts on Common Equity Tier 1 Capital. The presumed credit created by Provisional Measure No. 608, on the other hand, does not reduce the regulatory capital as it is not an accounting tax credit that depends on future profits. The use of presumed credits is expected to be further regulated by the Brazilian Revenue Office and the Central Bank
Implementation of Basel III in Brazil — Expected Future Rules A maximum leverage ratio of 3.0% is expected to apply to Brazilian banks beginning January 2018, with certain
The Central Bank and the CMN are also expected to enact regulation in the near future on
Reserve Requirements
The Central Bank currently imposes several reserve requirements on Brazilian financial institutions and such reserve amounts must be deposited with the Central Bank. Reserve requirements are a mechanism to control the liquidity of the Brazilian financial system. These reserve requirements are applied to a wide range of banking activities and transactions, such as demand deposits, savings deposits and time deposits.
Pursuant to Circular 3,632, as a general rule, banks are currently required to deposit 45.0% of the sum of the arithmetic average balance of demand deposits, third-party funds in transit, collection of taxes and similar items, banker’s checks, debt assumption agreements related to transactions carried out in Brazil, obligations for the rendering of services of payment, and proceeds from the realization of guarantees in excess of R$44 million. However, up until the calculation and compliance periods beginning (i) on June 2, 2014 and June 18, 2014, respectively, for institutions classified by the Brazilian Central Bank as Group A institutions for purposes of demand deposits, and (ii) on June 9, 2014 and June 25, 2014, respectively, for institutions classified by the Brazilian Central Bank as Group B institutions for purposes of demand deposits, the applicable rate shall be 44%. The calculation is made over a two-week period, beginning on Monday of the first week and ending on Friday of the following week. At the end of each day, the balance of the bank’s accounts must be equivalent to at least 80.0% of the required deposit for the respective period. The arithmetic average of the balance of such account of the institution during the period of required deposit should correspond to 100% of the required deposit calculated for the respective period.
Reserve requirements and mandatory application of moneys in certain financing transactions applicable to savings deposits are currently regulated by CMN Resolution No. 3,932, of December 16, 2010 and/or Circular No. 3,093, dated March 1, 2002, as amended. Resolution 3,932 establishes the minimum mandatory investment criteria for a percentage of a financial institution’s savings deposit outstanding balance. Circular 3,093 consolidated and redefined savings reserve requirements applicable to commercial banks, multiservice banks with a real estate portfolio, real estate credit companies (sociedades de crédito imobiliário) and savings banks. Key features of Resolution 3,932 and Circular 3,093 include the definition of:
Reserve requirements and deductibility criteria applicable to time deposits are currently regulated by Circular No. 3,569, dated December 22, 2011,
Pursuant to
monetary policy. As of December 31,
Foreign Currency Exposure The total exposure in gold, foreign currency and other assets and liabilities indexed or linked to the foreign exchange rate variation undertaken by financial institutions (including their offshore branches), and their direct and indirect subsidiaries, on a consolidated basis, may not exceed 30.0% of their regulatory capital, in accordance with CMN Resolution No.
Liquidity and Fixed Assets Investment Regime
In accordance with CMN Resolution No. Lending Limits In accordance with the CMN Resolution No. 2,844, of June 29, 2001, a financial institution, on a consolidated basis, may not extend loans or advances, grant guarantees, enter into credit derivative transactions, underwrite or hold in its investment portfolio securities of any customer or group of affiliated customers that, in the aggregate, exceed 25.0% of the financial institution’s regulatory capital.
Treatment of Past Due Debts In accordance with CMN Resolution No 2,682, Brazilian financial institutions are required to classify their credit transactions (including leasing transactions and other transactions characterized as credit advances) at different levels and make provisions according to the level attributed to each such transaction. The classification is based on the financial condition of the customer, the terms and conditions of the transaction and the period of time during which the transaction
Under IFRS, allowance for loan losses is based on our internally developed incurred loss models, which calculate the allowance by multiplying the probability of default by the client or counterparty (PD) by the potential for recovery on defaulted credits (LGD) for each transaction, as described in note 2.4(g) VIII to our consolidated financial statements. The risk levels strong, satisfactory, higher risk, and impairment are determined based on the probability of default, following an internal scaling, as set out in note 36 to our consolidated financial statements.
Provision for Loan Losses for Income Tax Deduction Purposes Brazilian financial institutions are allowed to deduct loan losses as expenses for purposes of determining their taxable income. The period during which these deductions may be made depends on the amounts, maturities and types involved in the transaction, in accordance with article 9 of Law No. 9,430 of December 27, 1996.
Foreign Currency Loans Financial institutions in Brazil are permitted to borrow foreign-currency denominated funds in the international markets (either through direct loans or through the issuance of debt securities) for any purpose including on-lending those funds in Brazil to Brazilian corporations and financial institutions without the prior written consent of the Central Bank, in accordance with CMN Resolution No.
Cross-border loans between individual or legal entities (including banks) resident or domiciled in Brazil and individual or legal entities resident or domiciled abroad are no longer subject to the prior approval of the Central Bank, but are subject to the prior registration with the Central Bank.
Financial institutions may also grant loans in foreign currency, or indexed to the fluctuation of a foreign currency, to their clients’ trade-related activities, such as by granting advances on foreign exchange contracts (Adiantamento sobre Contrato de Câmbio), advances on delivered commercial papers (Adiantamento sobre Cambiais Entregues) or export or import prepayment agreements (Pré-Pagamento de Exportação e Financiamento à Importação), all in accordance with Brazilian regulations on foreign exchange markets and international capital flows. On December 4, 2012, for instance, the Central Bank issued Circular No. 3,617, which amended Brazilian regulations on foreign exchange markets and international capital flows and lessened some previously established limitations imposed on export financings by, among other changes, extending the maximum term for export financings from 360 to 1,800 days.
The Central Bank and the Brazilian government frequently change rules and regulations applicable to foreign currency loans in accordance with the economic scenario and the Brazilian monetary policy. Foreign Currency Position
Transactions involving the sale and purchase of foreign currency in Brazil may only be conducted by institutions authorized to do so by the Central Bank. The Central Bank imposes limits on the foreign exchange sale and purchase positions of institutions authorized to operate in the foreign exchange markets. These limits vary according to the type of financial institution conducting foreign exchange transactions, the foreign exchange sale positions held by those institutions, as well as the
Transactions with Affiliates Under Brazilian Corporate Law, as well as Central Bank and CVM rules, we are required to identify in our financial statements all related party transactions, according to the materiality criteria established by accounting rules. On December 2012, we adopted a Related Party Transactions Policy so as to ensure we are aligned with best practices in corporate governance. See “Item 7B. Related Party Transactions.”
Law No. 7,492,
Brazilian banking laws and regulations also impose prohibitions on the extension of credit or guarantee to any company which holds more than 10.0% of the financial institution’s capital and to any company in which they hold more than 10.0% of the capital. This limitation is also applicable in respect to directors and officers of the financial institution and certain family members of
Establishment of Offices and Investments Abroad For a Brazilian financial institution to establish foreign offices or directly or indirectly maintain equity interests in financial institutions outside Brazil, it must obtain the prior approval of the Central Bank, which will depend on the applicant Brazilian bank being able to meet certain criteria, including:
Within 180 days of Central Bank approval, the Brazilian financial institution must submit a request to open the branch to the competent foreign authorities and begin operations within one
Compensation of Directors and Officers of Financial Institutions
On November 25, 2010, the CMN issued Resolution No. 3,921, which established new rules related to the compensation of directors and officers of financial institutions. The compensation of directors and officers may be fixed or variable. Variable compensation may be based on specific criteria set forth in CMN Resolution No. 3,921 and is required to be compatible with the financial institution’s risk management policies. At least 50.0% of variable compensation must be paid in
On October 22, 2012, our board of directors approved a compensation policy (as amended on February 28, 2013), proposed by the compensation committee for the members of the management of Itaú Unibanco Holding and its controlled companies, in compliance with the guidelines established by CMN Resolution No 3,921 stated above.
Other
On July 28, 2011 the CMN enacted Resolution No. 3,998, supplemented by Central Bank Circular No. 3,553, both effective as of August 22, 2011, which requires that financial institutions in Brazil register assignments of the following types of credit transactions: (i) payroll loans and (ii) vehicle leases. Under Resolution No. 3,998, financial institutions must appoint an officer responsible for registration procedures and specified controls related to these credit transactions and the assignment thereof. The information required to be disclosed upon registration of these credit transactions and their assignment includes: (i)
On June 13, 2012, the Central Bank
Law No. 12,414, dated June 9, 2011, as regulated by Decree No. 7,829, dated October 17, 2012, established rules for the organization and consultation of databases compiling credit history information of individuals and legal entities. On December 20, 2012, the Central Bank enacted Resolution No. 4,172, which regulates the provision of credit history information by financial institutions to such databases and the disclosure of such information, which are subject to the express request or authorization by the client. Financial institutions and other institutions which are subject to the Central Bank’s regulation must carry out the necessary operational adjustments no later than August 1, 2013 to comply with Resolution No. 4,172. Bank Insolvency Insolvency Regime Financial institution insolvency is largely a matter handled by the Central Bank. The Central Bank will commence and oversee all administrative proceedings, whether for, or in avoidance of, liquidation.
Intervention
The Central Bank may intervene in the operations of a bank in the following circumstances:
Beginning with the date it is ordered, by the Central Bank, an intervention suspends claims related to payable obligations of the financial institutions, prevents early termination or maturity of obligations of the financial institution, and freezes pre-existing deposits.
The intervention may cease:
Extrajudicial Liquidation
An extrajudicial liquidation of any financial institution (with the exception of public financial institutions controlled by the Brazilian government) may be carried out by the Central Bank if it can be established that:
Liquidation proceedings may otherwise be requested, on reasonable grounds, by the financial institution’s officers or by the intervener appointed by the Central Bank in the intervention proceeding.
Extrajudicial liquidation (i) suspends actions or foreclosures related to the financial institution, during which time no other action or foreclosure may be
Extrajudicial liquidation proceedings may cease:
Temporary Special Administration Regime
In addition to the aforesaid procedures, the Central Bank may also establish the
The main purpose of the RAET is to assist with the recovery of the financial condition of the institution under special administration. Although the RAET does not affect the day-to-day business operations, liabilities or rights of the financial institution, which continue to operate in its ordinary course, the Central Bank has the authority to order corporate reorganizations of the financial institution and its subsidiaries, including changing the corporate type, merger or other types of business consolidations, spin-off or change of control of the financial institution under such regime.
Deposit Insurance In the event of intervention, extrajudicial liquidation or liquidation of a financial institution in a bankruptcy proceeding, theFundo Garantidor de Crédito(“FGC”), a deposit insurance system, guarantees a maximum amount of R$70,000 of certain deposits and credit instruments held by an individual, a company or another legal entity with a financial institution (or financial institutions of the same financial group). The FGC is funded principally by mandatory contributions from all Brazilian financial institutions that handle customer deposits, currently at 0.0125% of the total amount of outstanding balances of the accounts corresponding to guaranteed obligations per month, and certain special contributions, in accordance with CMN Resolution No. 4,087, as amended. Additionally, deposits and any funds raised outside of Brazil are not guaranteed by the FGC, in accordance with CMN Resolution No. 4,087, of May 24, 2012. In addition, CMN Resolution No. 4,115, of July 26, 2012, authorizes financial institutions to raise funds by means of time deposits guaranteed by the FGC up to a certain amount provided that such deposits (i) have a minimum term of twelve months and a maximum term of thirty-six months; (ii) are not callable before their term; (iii) are backed by a secured interest over assets; and (iv) are limited to an amount assessed considering bank’s Tier 1 reference net worth and bank’s time deposits, whichever is higher, per deposit of the same bank, limited to R$5 billion. Repayment of Creditors in Liquidation
In the event of
Brazilian Payment and Settlement System The rules for the settlement of payments in Brazil are based on the guidelines adopted by the Bank of International Settlements. The Brazilian
Foreign Banks and Foreign Investments Foreign Banks
The establishment in Brazil of new branches by foreign financial institutions (financial institutions which operate and have a head office offshore), as well as the acquisition of equity interests by foreign financial institutions in Brazilian financial institutions, is prohibited, except when duly authorized by the Brazilian government and by the Central Bank, in accordance with international treaties, the policy of reciprocity and the interest of the Brazilian government. Once authorized to operate in Brazil, a foreign financial institution is subject to the same rules, regulations and requirements that are applicable to any other Brazilian financial institution.
Foreign Investments in Brazilian Financial Institutions
Foreign investment in Brazilian financial institutions by individuals or companies is permitted only if specific authorization is granted by the Brazilian government and by the Central Bank, in accordance with international treaties, the policy of reciprocity and the interest of the Brazilian government. Once authorization is granted, Brazilian law sets forth the following rules concerning foreign investment in Brazil and the remittance of capital outside of Brazil:
On December 9, 1996, a presidential decree authorized the acquisition by non-Brazilians of non-voting shares issued by Brazilian financial institutions as well as the offering abroad of depositary receipts representing those shares. Also, On March 15, 2013, a presidential decree authorized an increase in the limit of foreign ownership of Itaú Unibanco Holding´s common shares, from 7.18% to 30%. We do not expect this to affect our corporate and control structures.
Internal Compliance Procedures
All financial institutions must have in place internal policies and procedures to control their activities, their financial, operational and management information systems, and their compliance with all regulations applicable to them.
Audit Committee
For information regarding our audit committee and our audit committee financial experts, see “Item 6C. Board Practices — Statutory Bodies — Audit Committee” and “Item 16D. Exemptions from the Listing Standards for Audit Committees.”
Regulation of Independent Auditors
CMN Resolution No. 3,198, of May 27, 2004, as amended, establishes the rules governing external audit services provided to financial institutions.
In accordance with CMN Resolution No. 3,198, financial statements and financial information of financial institutions must be audited by independent auditors who are (i) registered with the
In order to maintain their banking
At least every five consecutive fiscal years, the responsible partner and the audit team members with management duties must
CMN Resolution No. 3,198 also prohibits the engagement and maintenance of independent auditors by financial institutions in the event that: (i) any of the circumstances of impediment or incompatibility for the provision of audit services provided for in the rules and regulations of the CVM, CFC or IBRACON arise; (ii) any ownership
In connection with the audit work for the financial institution, in addition to the audit report, the independent auditor must prepare the following reports:
These reports, as well as working papers, mail, service agreements and other documents related to the audit work must be made available to the Central Bank for at least five years.
Under Brazilian law, our financial statements must be prepared in accordance with Brazilian GAAP. Financial institutions must have their financial statements audited every six months. Quarterly financial statements filed with the CVM must be reviewed by a financial institution’s independent auditors. CVM Rule No. 381 requires public companies, including financial institutions, to disclose information relating to other services
Regulation of Presentation of Financial Statements
CMN Resolution No. 2,723, of May 31, 2000, as amended, establishes certain rules on consolidation of financial statements by financial institutions. According to this Resolution, financial institutions, except for credit unions, are required to prepare their financial statements on a consolidated basis, including investments in companies in which they hold, directly or indirectly, solely or
Rules Governing the Collection of Bank and Credit Card Fees
The collection of bank fees and commissions is extensively regulated by the CMN and by the Central Bank. CMN Resolution No. 3,919, effective as of March 1, 2011, amended the existing rules seeking standardization of the collection of bank fees and the cost of credit transactions for individuals. According to these rules, bank services to individuals are divided into the following four groups: (i) essential services; (ii) priority services; (iii) special services; and (iv) specific or differentiated services. Banks are not able to collect fees in exchange for supplying essential services to individuals with regard to checking accounts, such as (i) supplying a debit card; (ii) supplying ten checks per month to accountholders who meet the requirements to use checks, as per the applicable rules; (iii) supplying a second debit card (except in cases of loss, theft, damage and other reasons not caused by the bank); (iv) up to four withdrawals per month, which can be made at a branch of the bank, using checks or in ATM terminals; (v) supplying up to two statements describing the transactions during the month, to be obtained through branch counters or ATM terminals; (vi) inquiries over the internet; (vii) up to two transfers of funds between accounts held by the same bank, per month, at a branch counter, through ATM terminals or over the internet; (viii) clearance of checks; and (ix) supplying, by February 28th of each year, a consolidated statement describing, on a month-by-month basis, the fees charged over the preceding year with regard to checking accounts and savings accounts. Certain services rendered to individuals with regard to savings accounts also fall under the category of essential services and, therefore, are exempt from the payment of fees. CMN Resolution No. 3,919 prohibits banks from collecting fees for supplying essential services in connection with deposit and savings accounts where clients agree to access and use their accounts by electronic means only. In the case of these exclusively electronic deposit and savings accounts, banks are only authorized to collect fees for supplying essential services when the client voluntarily elects to obtain personal service at the banks’ branches or client service locations.
Priority services are the ones rendered to individuals with regard to checking accounts, transfers of funds, credit transactions, leasing, standard credit cards and records and are subject to the collection of fees by the financial institutions only if the service and its nomenclature are listed in Appendix I. CMN Resolution No. 3,919 also states that commercial banks must offer to their individual clients a “standardized package” of priority services, whose content is defined by Appendix II to such resolution. Banking clients must have the option to acquire individual services, instead of adhering to the package.
The collection of fees in exchange for the supply of special services (including, among others, services relating to rural credit, currency exchange market and on-lending of funds from the real estate financial system, for example) are still governed by the specific provisions found in the laws and regulations relating to such services.
The regulation authorizes financial institutions to collect fees for the performance of specific or differentiated services, provided that the account holder or user shall be informed of the conditions for use and payment or the fee and charging method are defined in the contract. Some of the specific or differentiated services are (i) approval of signatures; (ii) management of investment funds; (iii) rental of safe deposit boxes; (iv) courier services; (v) custody and brokerage
Other changes included in CMN Resolution No. 3,919 are: (i) prohibition from charging fees for amending adhesion contracts, except in the cases of asset replacement in leasing transactions and early liquidation or amortization, cancelation or
CMN Resolution No. 3,919 also established new rules applicable to credit card, including types of fees that can be charged for services rendered by financial institutions, information to be disclosed in credit card invoices and agreement and creation of two types of credit cards: (i) a basic credit cards with certain basic services, which was classified as a
In addition, CMN regulations establish that all debits related to the collection of fees must be charged to a bank account only if there are sufficient funds to cover such debits in such account thus forbidding overdrafts caused by the collection of banking fees. Furthermore, a minimum of 30 days notice must precede any increase or creation of fees, while fees related to priority services and the “standardized package” can be increased only after 180 days from the date of the last increase (whereas reductions can take place at any time). With respect to credit cards, a minimum of 45 days notice is required for any increase or creation of fees, and such fees can only be increased after 365 days from the date of last increase. The period of 365 days is also applicable to changes in rewards or benefits program rules.
Finally, CMN Resolution
Regulation of Internet and Electronic Commerce
Although Brazil does not have a comprehensive legislation regulating electronic commerce, since 2001 the legal validity of electronic documents in Brazil is ruled by Provisional Measure No. 2,200, which establishes a government controlled digital certification system, aimed at guaranteeing the authenticity, integrity and legal validity of electronic documents and ensuring the security of electronic transactions. However, there are currently several bills relating to internet and electronic commerce regulation in the Brazilian Congress. The proposed legislation, if enacted, will reinforce the legal effect, validity and enforceability of information in the form of electronic messages, allowing parties to enter into an agreement, make an offer and accept one through electronic messages.
Considering the increasing use of electronic channels in the Brazilian banking sector, the CMN enacted Resolution No. 2,817 on February 22, 2001, as amended by CMN Resolution No. 2,953, of April, 25, 2002, allowing Brazilian residents to open deposit bank accounts by electronic means, which includes the internet, ATM machines, telephone and other communication channels. This regulation sets forth specific rules on the opening and use of bank accounts via electronic means, including: (i) requirements contained in CMN Resolution No. 2,025, of November 24, 1993, for verification of the identity of the customer; and (ii) transfers of amounts are allowed only between accounts of the same accountholders or in the event of liquidation of investment products and funds, to an account of the same accountholders of the investment products/funds.
On March 26, 2009, the CMN enacted Resolution No. 3,694 requiring that all financial institutions offering products and services to their clients through electronic means must guarantee security, secrecy and reliability in all electronic transactions and disclose, in clear and precise terms, the risks and responsibilities involving the product or service acquired through such channel.
In addition, the Central Bank also permits, under CMN Resolution No. 3,919, the opening of deposit bank and savings accounts, accessed and used exclusively through electronic means. See “—Rules Governing the Collection of Bank and Credit Card Fees” above.
On November 30, 2012, in order to address cybersecurity crimes, the Brazilian government enacted Law No. 12,737, which added the crime of computer hacking to the Brazilian Penal Code, describing the conduct of invading another person’s computing device, connected or not to a network, in violation of security mechanisms and to obtain, tamper or destroy data or information without express or implied consent of the device’s owner, or install anything to gain an unfair advantage. Anti-Money Laundering Regulations
The Brazilian anti-money laundering law (Law No. 9,613, enacted on March 3, 1998, as
The AML Law also created the Council of Control of Financial Activities (Conselho de Controle de Atividades Financeiras
According to the AML Law and complementary regulations enacted by the Central Bank, including rules applicable to procedures that must be adopted by financial institutions in the prevention and combat of money laundering and terrorism financing, as a response to the recommendations of the Financial Action Task Force (“FATF”), financial institutions must have internal policies and internal controls procedures in order to:
Non-compliance with any of the obligations indicated above subjects the financial institution and its managers to
Politically-Exposed Persons
PEPs are public agents who occupy or have occupied a relevant public function (for example heads of state or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party
Banking Secrecy
Financial institutions must maintain the secrecy of their banking operations and services provided to their customers. The only circumstances in which information about clients, services or operations of Brazilian financial institutions or credit card companies may be disclosed to third parties are the following: (i) the disclosure of information with the express consent of the interested parties; (ii) the exchange of information between financial institutions for record purposes; (iii) the provision to credit reference agencies of information based on data from the records of subscribers of checks drawn on accounts without sufficient funds and defaulting debtors; (iv) the provision by financial institutions and credit card companies to competent authorities of information relating to the occurrence of, or suspicions as to a criminal or other unlawful act; (v) as otherwise expressly allowed by Supplementary Law No. 105, of January 10, 2001; and (vi) the disclosure of information in compliance with a judicial order. Supplementary Law No. 105 also allows the Central Bank or the CVM to exchange information with foreign governmental authorities pursuant to an existing treaty.
Finally, a breach of bank confidentiality may be ordered by judicial authority when necessary to investigate any torts or crimes. With the exception of instances permitted by Supplementary Law No. 105 and other instances permitted by judicial order, a breach of bank confidentiality is a crime punished by one to four years of confinement, and fine.
The Consumer Defense Code and Banking Client Protection Regulation
Besides the banking client protection regulation enforced by CMN and the Central Bank, the basic consumer rights guaranteed by the CDC regarding the relationship between financial institutions and their clients include: (i) the imposition of a reverse burden of proof in court; (ii) financial institutions must ensure that customers are fully aware of all contractual clauses, including responsibilities and penalties applicable to both parties, in order to protect against abusive practices; (iii) financial institutions are prohibited from releasing misleading or abusive publicity or information about their contracts or services; (iv) financial institutions are liable for any damages caused to their customers by misrepresentations in their publicity or information provided; and (v) interest charges in connection with personal credit and consumer directed credit transactions must be proportionally reduced in case of early payment of debts.
With respect to consumer’s rights, Decree No. 6,523, of July 31, 2008, directed the CDC to establish general rules on Customer Service Assistance (Serviço de Atendimento ao Consumidor
Antitrust Regulation
A new Brazilian Antitrust law (Law
Financial conglomerates submit merger and acquisitions transactions in various industries, including the insurance and pension plan industries, to Since 2010, a dispute has been under review in the Federal Supreme Court as to the exclusive authority of the Central Bank to review and approve merger and acquisition transactions involving financial
Asset Management Regulation
Asset management is regulated by the CMN and the CVM. CMN and CVM regulations stipulate that institutions must segregate their asset management activities from their other activities.
Certain investment funds within the asset management industry, such as private equity investment funds are also regulated by ANBIMA, which enacts additional rules and policies, especially with respect to the offering, marketing and advertising of financial products and services.
Investment funds are subject to the regulation and supervision of the CVM and are managed by companies authorized by the CVM to manage investment fund portfolios. Investment funds may invest in instruments available in the financial and capital markets, including fixed income instruments, stocks, debentures and derivative products, provided that, in addition to the denomination of the fund, a reference to the relevant type of fund is included.
According to CVM Instruction No. 409, of August 18, 2004, as amended, investment funds may be classified as (i) short term funds; (ii) referenced funds; (iii) fixed income funds; (iv) stocks funds; (v) exchange funds; (vi) external debt funds; and (vii) multi-market funds.
Investment funds are subject to certain restrictions with respect to the composition of their portfolios and the classification of their investors, including, among other things, restrictions on the types of securities, financial assets and operations, limits per issuer and limits by type of financial assets. Such restrictions are set forth in CVM regulations.
In addition, the CVM regulations establish criteria for the registration and accounting evaluation of titles, securities, financial instruments and
The CVM has also enacted rules to regulate private equity funds, credit rights investment funds, real estate investment funds and other specified investment funds. The rules of CVM Instruction No. 409 are applicable to each and every investment fund registered with the CVM to the extent they are not contrary to
Leasing Regulations
The basic legal framework governing leasing transactions is established by Law No. 6,099, of September 12, 1974, as amended, Ordinance No. 564, of November 3, 1978 of the Ministry of Finance and the regulations issued thereunder by the CMN from time to time, in particular CMN Resolution No. 2,309, of August 28, 1996.
Law No. 6,099, as amended, sets forth the general guidelines for the tax treatment of leasing transactions and provides that all leasing transactions are subject to the control and supervision of the Central Bank according to standards established by the National Monetary Council. CMN Resolution No. 2,309 provides the types of leasing, the legal requirements of a leasing contract and other relevant guidelines applicable to the product. The Ministry of Finance’s Ordinance No. 564 establishes the loss/profit recognition, for purposes of taxation of leasing transactions, and, in particular, establishes that the guaranteed residual amount of a leasing transaction is the value contractually guaranteed by the leaseholder as a minimum that will be received by the lessor after the sale of the leasehold item to a third-party, if the purchase option is not exercised. Furthermore, the laws and regulations applicable to financial institutions, such as those related to reporting requirements, capital adequacy and leverage, assets composition limits and treatment of doubtful loans, are generally also applicable to leasing companies.
Taxation
We describe below the main corporate taxes that may impact financial transactions entered into by companies of the Itaú Unibanco Group, as well as a description of the main taxes on financial transactions. Overview
The table below summarizes the main taxes imposed on our activities.
Corporate Income Tax and Social Contribution on Profits
Currently, Brazilian companies are subject to the corporate income tax
According to the tax regime adopted by each company, the IRPJ and CSLL may be imposed on an adjusted tax basis (taxable income regime), which is subject to adjustments (deductions, additions and exclusions) upon the ascertainment of the tax due at the end of the fiscal year
The IRPJ is imposed at a rate of 15.0% and a surtax of 10.0% is applicable when the total amount of profit exceeds R$20,000 per month or R$240,000 per year (imposing a total rate of 25.0% on the amount of profit exceeding R$20,000 per month).
The CSLL is generally imposed at a rate of 9.0%. Law No. 11,727, of June 23, 2008, established that as of May 1, 2008, the CSLL rate on income of financial, insurance and similar companies increased to 15.0%. The following companies are considered financial, insurance and similar companies for this purpose: private insurance and capitalization companies, banks of any type, securities underwriters, foreign exchange and securities brokerages, credit, financing and investment companies, real estate loan companies, credit card management companies, leasing companies, credit cooperatives and savings and loan associations. The increased CSLL rate is applicable to us and many of our subsidiaries and affiliates. Brazilian financial institutions, including us, are disputing the constitutionality of a higher CSLL tax rate that applies only to financial, insurance and similar companies. The amounts in dispute are accounted for as a tax liability provision in our balance sheet.
Brazilian companies can offset the historical nominal amount of tax losses against results of subsequent years at any time
Companies pay the IRPJ and CSLL taxes based on their worldwide income rather than on income solely from Brazilian operations. Therefore, profits, capital gains and other income obtained abroad by Brazilian entities will be computed in the determination of their net income. In addition, profits, capital gains and other income from foreign branches or income from subsidiaries or foreign corporations controlled by a Brazilian entity will also be computed in the calculation of such entity’s profits, in proportion to its participation in such foreign companies’ capital. The Brazilian company is allowed to deduct income tax paid abroad, up to the amount of Brazilian income taxes imposed on such income. Taxation of Profit Distribution
Dividends paid by a Brazilian company, including stock dividends and other dividends paid to
Law No. 9,249, of December 26, 1995, as amended, allows a Brazilian corporation to make, instead of dividend distributions, distributions that are treated as interest on net equity (juros sobre o capital próprio) and that constitute deductible expenses for purposes of calculating the IRPJ and CSLL. These distributions may be paid in cash. For tax purposes, this interest is limited to the daily average of the
Any payment of interest on net equity is subject to withholding income tax at the rate of 15.0%, or 25.0% in the case of a shareholder who is resident or domiciled in a tax haven jurisdiction (see “Item 10E. Taxation
Taxes on Revenue – Contribution on Social Integration Program and Social Security Financing Contribution
In addition to IRPJ and CSLL, Brazilian companies are subject to the following taxes on revenues: contribution on social integration program (
According to Law
Service Tax The tax on services ( Tax on Financial Transactions
The tax on financial transactions (
The IOF on foreign exchange transactions (“IOF/FX”) tax is imposed on several foreign exchange transactions. Its applicable rates may be increased up to 25.0%. The IOF/FX tax rates imposed on foreign exchange transactions recently have been modified and are currently imposed at a rate of 0.38%, with the following main important exceptions:
Depending upon the type of inflow of foreign funds into Brazil, the IOF/FX may be levied on the outflow and inflow of funds. It may also be levied when the type of investment is changed. In many cases, the outflow and inflow of funds will require simultaneous foreign exchange transactions.
The IOF tax is also imposed on insurance transactions upon the receipt of a premium (“IOF/Insurance”). In insurance transactions, the IOF/Insurance tax will be imposed at a highest rate of 25.0%. Currently, the rates imposed vary from 0.0% to 7.38% according to the type of insurance purchased.
The IOF tax is also imposed on credit transactions, including financing, discounts and factoring (“IOF/Credit”). Currently,
The IOF tax is also imposed on the acquisition, assignment, redemption, renegotiation or payment for settlement of securities, even though these transactions are carried out on stock, commodities and futures exchanges (“IOF/Securities”). The rate of the IOF/Securities with respect to many securities transactions is currently 0.0%, although certain transactions may be subject to specified rates. The President has the legal authority to increase the rate to a maximum of 1.5% of the amount of the taxed transaction per day for the period during which the investor holds the securities, up to the amount equal to the gain on the transaction. Currently, there is a short-term IOF/Securities tax on fixed income and investments in fund quotas with a holding period of less than 30 days. If the investor sells, redeems, assigns, resells or renews fixed income and investments in fund quotas within 30 days of the original investment, IOF/Securities is levied at a rate of 1.0% per day, with certain maximum limits based on a regressive percentage of the total fixed income gain for a security reaching zero and for a maturity equal to or higher than 30 days. Finally, the IOF/Securities tax is levied at a rate of 1.5% on the assignment of shares traded in the Brazilian stock market in order to permit the issuance of depositary receipts to be negotiated overseas.
On July 27, 2011, the Brazilian government enacted Decree No. 7,536, which introduced a tax on securities transactions (“IOF/Securities-Derivatives”) at the rate of
According to Decree No. 7,563, enacted on September 15, 2011, the IOF/Securities-Derivatives taxpayer is the holder of the
On December 8, 2011, Provisional Measure No. 539 was converted into Law No. 12,543, On March 15, 2012, Decree 7,699 reduced to 0.0% IOF/Securities-Derivatives on (i) derivatives transactions for hedging purposes, related to export contracts celebrated by individuals or companies who are resident or domiciled in Brazil; and (ii) all other financial derivatives transaction which do not result in an increase in the net sold exposure of the holder.
The table below summarizes IOF tax, which is imposed on financial transactions (such as foreign exchange, insurance transactions, credit or those transactions related to securities), as explained above. For a more detailed analysis, investors should consult their tax advisers.
Income Taxes Imposed on Financial Investments
Foreign investors that receive payments derived from Brazilian sources, or gains related to Brazilian assets, will be subject to the Brazilian income tax. Under Brazilian law, income tax on capital gains and income from financial transactions carried out in the Brazilian financial and capital market vary depending on the domicile or residence of the investor, the type of registration of the investment held by the investor with the Central Bank and the manner in which the transaction is carried out.
For foreign investors who invested in the Brazilian financial and capital markets, in accordance with CMN Resolution No.
Foreign investors that invested in the Brazilian financial and capital markets, in accordance with CMN Resolution No.
The table below is a summary of the income taxation relating to the foreign investment in the Brazilian financial and capital market located in a non-tax haven jurisdiction and a tax haven jurisdiction. It does not purport to be a complete analysis of all tax considerations relating to investments in Brazil. For a more detail analysis the prospective investors should consult their tax advisers.
Rate for
Finally, Provisional Measure No. 517, of December 31, 2010, converted into Law 12,431, of June 24, 2011, as amended by Law 12,715, of September 17, 2012, provides that income from publicly-traded bonds and securities acquired as of January 1, 2011, of non-resident investors that are not resident or domiciled in tax haven jurisdictions are subject to the withholding income tax at a 0.0% rate. To be eligible for this benefit, the following requirements must be met: (i) the bonds and securities must have been issued by private non-financial entities in accordance with the rules set forth by the CMN; (ii) the bonds must have weighted average maturity greater than four Presumed Credits Ascertained by Financial Institutions On February 28, 2013, the Brazilian government enacted Provisional Measure No. 608, which entitles financial institutions to benefit from a presumed credit (crédito presumido) based on tax credits due to temporary differences on allowance for loan and lease losses which may, in the future, reduce taxation levied on profits. These presumed credits, which are tax credits for accounting purposes, may be used as of January 1, 2014 and are cashable against the national treasury, through reimbursement requests either in cash or Brazilian federal government bonds, after the deduction of any debts the financial institution may have with the national treasury. Each calendar year, presumed credits may be ascertained by financial institutions and certain other institutions duly authorized by the Central Bank which have cumulatively ascertained credits due to temporary differences on allowances for loan and lease losses and accumulated tax losses in the previous tax year, such presumed credits being limited to the lesser of such amounts. As further discussed in “—Regulation by the Central Bank —Capital Adequacy and Leverage/Regulatory Capital Requirements—Further Details on Provisional Measure No. 608´s Effects” above, presumed credits do not reduce Common Equity Tier 1 Capital, as would be the case for accounting tax credits which depend on future profits for their realization. The use of presumed credits is expected to be further regulated by the Brazilian Revenue Office and the Central Bank during 2013.
Insurance Regulation
The Brazilian insurance system is governed by three regulatory agencies: the CNSP, SUSEP and the ANS. With governmental approval, an insurance company may offer all types of insurance with the exception of workers’ compensation insurance, which is provided exclusively by the National Institute of Medical Assistance and Social Welfare (Instituto Nacional
Insurance companies must set aside reserves to be invested in specific types of securities. As a result, insurance companies are among the main investors in the Brazilian financial market and are subject to the rules of the CMN regarding the investment of technical reserves.
Insurance companies are exempt from ordinary bankruptcy procedures and instead are subject to a special procedure administered by SUSEP or by the ANS, the insurance sector There is currently no restriction on foreign investments in insurance
According to Brazilian law, insurance companies must buy reinsurance to the extent their liabilities exceed their technical limits under SUSEP rules. For several years, reinsurance activities in Brazil were carried out on a monopoly basis by the Brazilian Reinsurance Institute (IRB –Brasil Resseguros S.A. or “IRB”). On January 16, 2007, Supplementary Law No. 126 came into force, providing for the opening of the Brazilian reinsurance market to other reinsurance companies. This supplementary law specifically established new policies related to reinsurance, retrocession and its intermediation, coinsurance operations, contracting insurance products abroad and insurance sector foreign currency operations.
The main changes introduced by Supplementary Law No. 126 are summarized below. Three types of reinsurers are established by such law:
An eventual reinsurer cannot be
An admitted or eventual reinsurer must comply with the following requirements:
In addition to the requirements mentioned above, an admitted reinsurer must keep a foreign currency account with SUSEP and periodically submit their financial statements to SUSEP, pursuant to the rules enacted by CNSP.
Entering into reinsurance and retrocession contracts in Brazil or abroad must occur either through direct negotiation between the involved parties or an authorized broker. Foreign reinsurance brokers may be authorized to operate in Brazil, according to the law and additional requirements established by SUSEP and the CNSP.
Reinsurance operations relating to survival life insurance and private pension plans may only be offered by local reinsurers.
With due observance of the rules enacted by the CNSP, insurance companies, when transferring their risks in reinsurance, have to transfer to local reinsurers 40.0% of said risks. In addition, risk assignment between insurers and reinsurers belonging to the same economic group is currently limited to 20.0% of the premiums pertaining to a given insurance coverage.
The technical reserves of local reinsurers and funds deposited in Brazil for purposes of guaranteeing admitted reinsurers’ local activities will be managed according to the rules of the CMN. The IRB continues to be authorized to carry out reinsurance and retrocession activities in Brazil as a local reinsurer.
SELECTED STATISTICAL INFORMATION
The following information is included for analytical purposes and should be read in connection with our IFRS consolidated financial statements in Item 18 as well as with “Item 5. Operating and Financial Review and Prospects.” Information is presented as of and for the years ended December 31, 2012, 2011 and 2010.
The data included in this section are presented in accordance with IFRS, unless otherwise indicated.
Average Balance Sheet and Interest Rate Data
The following table presents the average balances of our interest-earning assets and interest-bearing liabilities, other assets and liabilities accounts, the related interest income and expense amounts and the average real yield/rate for each period. We calculated the average balances using monthly book balances for the years ended December 31, 2012, 2011 and 2010 as we believe such balances are representative of our operations and it would be too costly to produce average balances using daily book balances in IFRS. The majority of our business is composed of retail banking operations, which have grown organically and without significant fluctuations over short periods of time during 2012, 2011 and 2010. Non-accrual loans and leases are disclosed as a non-interest earning asset in the table below.
(*) For the net yield on total average interest-earning assets, see "Net Interest Margin and Spread".
Changes in Interest Income and Expenses – Volume and Rate Analysis
The following table sets forth the allocation of the changes in our interest income and expense in terms of average volume and changes in the average yields/rates for the year ended December 31, 2012 compared to 2011 and December 31, 2011 compared to 2010. Volume balance and rate variations have been calculated based on variations of average balances over the period and changes in average interest yield/rates on interest-earning assets and interest-bearing liabilities from one period to the other. Volume change has been computed as the change in the average interest-earning assets or interest-bearing liabilities from one period to the other multiplied by the average yield/rate in the earlier period. Yield/rate change has been computed as the change in the yield/rate in the period multiplied by the average interest-earning assets or interest-bearing liabilities in the earlier period. We allocated the net change from the combined effects of volume and yield/rate proportionately to volume change and yield/rate change, in absolute terms, without considering positive and negative effects.
Net Interest Margin and Spread
The following table sets forth our average interest-earning assets, total average interest-bearing liabilities, net interest income and the comparative net interest margin and net interest spread for the years ended December 31, 2012, 2011 and 2010.
(1) Is the sum of total interest income (2)Total interest income, dividend income, net gain (loss) from financial assets and liabilities, foreign exchange results and exchange variation on transactions divided by total average interest-earning assets. (3) Total interest expense divided by total average interest-bearing liabilities. (4)Difference between the average yield on interest-earning assets and the average rate on interest-bearing liabilities. (5)
Return on Equity and Assets
The following table sets forth certain data with respect to return on equity and assets for the years ended December 31, 2012, 2011, and 2010:
Securities Portfolio
General
The following table sets forth our portfolio of financial assets held for trading, derivatives, available-for-sale financial assets and held-to-maturity financial assets, as of December 31, 2012, 2011 and 2010. The amounts exclude our investments in securities of unconsolidated companies. For more information on our investments in unconsolidated companies see note
As of December 31, 2012, we held securities issued by the Brazilian federal government classified above as “Brazilian federal government securities” with an aggregate book value and
As of December 31, 2011, we held securities issued by the Brazilian federal government classified above as
The following table sets forth our portfolio of financial assets held for trading, financial assets designated at fair value through profit or loss, derivatives, available-for-sale financial assets and held-to-maturity financial assets at its amortized cost and its fair value as of December 31,
Maturity Distribution The following table sets forth the maturity distribution and average yields as of December 31,
(1) Average yields are not shown for these securities, as such yields are not meaningful because future yields are not quantifiable. These securities have been excluded from the calculation of the total yield.
The following table sets forth our securities and derivative portfolio by currency as of December 31, 2012, 2011 and 2010.
(1)
Central Bank Compulsory Deposits
We are required to either maintain certain deposits with the Central Bank or to purchase and hold federal government securities as compulsory deposits. The following table shows the amounts of these deposits as of December 31, 2012, 2011 and
(1)Mainly related to demand deposits. (2)Mainly related to time and savings deposits.
Loan and Lease Operations
The following table presents our loan and lease portfolio by category of transaction. Substantially all of our loans are to borrowers domiciled in Brazil and are denominated inreais. Additionally, the majority of our loan portfolio is indexed to Brazilian base interest rates or to the U.S. dollar.
(1)We consider all loans and leases more than 60 days overdue as non-accrual loans and we discontinue accruing financial income related to them. The contractual amount of non-accrual loans was R$20,791 million, R$20,439 million and R$14,736 million as of December 31, 2012, 2011 and 2010, respectively. Non-accrual loans are presented in the table above in the appropriate category of loan and lease. The interest income foregone on our non-accrual loans net of allowance for loan losses for 2012, 2011 and 2010 was R$
- The Individuals portfolio consists primarily of vehicle financing to individuals, credit card, personal loans (including mainly consumer finance and overdrafts) and residential mortgage loans. - The Corporate portfolio consists primarily of loans made to large corporate clients. - The Small and Medium Businesses portfolio consists primarily of loans to small and medium-sized companies. - The Foreign Loans Latin America portfolio consists primarily of loans granted by our operations in Argentina, Chile, Paraguay and Uruguay, primarily to individuals.
With respect to loans which are not considered either impaired or
The following table presents our loan and lease portfolio by category of transaction,
(1)The contractual amount of non-accrual loans was R$15,499 million
- The Commercial portfolio consists primarily of short-term loans as well as medium-term loans and financing for large, medium, and small companies. We also act as a financial agent for the Brazilian government through BNDES and its affiliates for the onlending of money to target groups of private sector borrowers. Our trade financing activities focus on export, pre-export and import financing.
- The Real estate portfolio consists primarily of loans for the construction, refurbishment, extension and acquisition of homes. We fund real estate loans primarily from Central Bank mandated portions of our savings account deposits. We extended real estate loans principally to retail bank customers to finance home acquisitions. Maturity is generally limited to 15 years.
- The Lease financing portfolio consists primarily of automobiles leased to individuals and machinery and equipment leased to corporate and middle market borrowers. We are a major participant in the Brazilian leasing market through our subsidiary, Itauleasing.
- The Public sector portfolio consists primarily of loans to federal government, state and municipal entities.
- The Individuals portfolio consists primarily of providing individual customers with three main credit products: overdraft accounts, consumer finance operations and credit card. In addition, we are one of the largest issuers of credit cards in Brazil under the Itaucard brand.
- The Agricultural portfolio consists primarily of obtaning funding for our Agricultural loans from Central Bank mandated portions of our deposit base. We extend agricultural loans principally to agro-industrial borrowers.
Loan Approval Process Our management seeks to optimize the relationship between risk and return of assets, maintaining the quality of credit financial instruments at an acceptable level in the market segments in which we operate. Both our accepted risk levels and return objectives are set for each of our credit areas, and interest rates applicable to each transaction are defined through models of risk-adjusted pricing.
Our credit policies are defined and reviewed considering internal and external factors. Internal factors include the criteria for classification of customers; analysis of portfolio evolution, observed delinquency levels, observed rates of return, portfolio quality and allocation of economic capital. External factors are related to the economic environment in Brazil and abroad, and factors such as market share, interest rates, and indicators of market default, inflation and increase (or decrease) in consumer spending.
Our decision-making process and our process for setting credit policy is structured to ensure alignment of credit approvals with the optimization of business opportunities, and this process is managed by our credit committees. For retail credit transactions, decisions regarding granting and management of credit portfolio are made based on credit score models that are continuously monitored by us. For Corporate credit transactions, our various committees are subordinated to the Superior Credit Committee responsible for managing credit risk and the various authority levels within our risk management structure ensure detailed monitoring of the risk of credit transactions as well as the necessary timing and flexibility in our approval processes. For a discussion of our credit committee structure, see “Item 4B. Business Overview— Credit Risk Management”.
Credit Cards Granting of credit cards is based mainly on each customer’s level of income and score models. Through these models, we define which customers will receive credit offers and the conditions under which they receive offers. We also look to each customer’s monthly income to establish monthly credit limits.
Personal Loans Granting of credit to our account holder customers is based mainly on their level of income (whether self-reported or estimated according to internal methodologies) and our customer internal credit score determined based on statistical models of behavior and credit score. Through these models and the observation of several financial indicators, we define which customers will receive credit offers and in what amount. According to their credit score, we define the maximum number of installments, interest rates (which are fixed) and the maximum percentage of the monthly installment with respect to monthly income. Based on these limits, customers choose the amount and terms that best meet their needs. We do not require collateral from the majority of our customers. We require the following documents during the credit granting process: personal identification, tax identification number, proof of income and proof of residential address.
Vehicles Our vehicle financing applications are originated in multi-brand car dealers or official brand car dealers and subject to “filters” to reject those from customers with serious indications of credit default or indications of fraud. Subsequently, a score is calculated internally for the loan requested, which takes into consideration the internal credit score of the customer and the terms of the proposed transaction. Applications with scores below an established cutoff level are automatically rejected. Applications with high credit scores and for which personal information is validated by our credit bureaus are automatically approved. The process of consulting with credit bureau is similar to the process described under “Real Estate” above. Applications that are not automatically approved also go through individual reviews by our credit approval desk. The maximum maturity is determined based on the age of the vehicle. Our credit policy also defines maximum ratio of lease payments to income and maximum LTV ratio, which may not exceed 100% at the date credit is granted.
Interest rates are generally fixed. Interest rates vary from customer to customer depending on factors such as the department through which the loan is made, maturity and the age of the vehicle acquired and a spread which is defined for each individual contract based on our RAROC (Risk Adjusted Return on Capital) analysis.
Mortgage loans The mortgage application is originated by Internet, telephone, real estate brokers or by our branch network. A client score is calculated internally based on credit score models. Applications with score below an established cutoff level are automatically rejected (such as applications rejected due to serious indications of credit default and/or score may be exceptionally approved by the appropriate credit committee). Applications with high credit scores and for which no significant negative information is provided by credit bureaus are automatically approved. A request of information made to credit bureaus has the purpose of verifying whether the applicant’s history shows anything that we would consider an impediment to grant loans (applicants with assets blocked in court, applicants who provided invalid tax identification number), or that would effectively restrict the granting of a loan (e.g., customers who have entered into debt restructuring or renegotiation or have issued checks with insufficient funds) or other information (e.g., customers under other types of judicial debt restructuring). In Brazil, credit bureaus do not provide score information or general credit history but rather only information with respect to default and other negative events. If, as result of information provided by a credit bureau, we identify an impediment or suspect fraud exists (e.g., cases where the telephone number provided by the applicant matches the number of another existing client in our files or if last name provided by the applicant does not match the last name provided by the credit bureau), the proposals are individually reviewed by one of our credit approval desks. If there is additional relevant positive information (such as acceptable evidence of current funds or income or there is evidence that any negative information obtained results from isolated events), the application may be approved by the one of our credit desks or by our Real Estate Credit Committee, even if the credit score is below the cutoff threshold we have established. The volume and the observed levels of default associated with credit approved in this manner are monitored so we can control the quality of our lending practices. Our credit policy also defines maximum maturity, maximum ratio of mortgage installment to income and maximum loan-to-value (“LTV”) ratio, which may not exceed 85% at the date the loan is granted. Interest rates are established based on the “TR” rate (a Brazilian interest rate that represents the interest rate of saving deposits) plus a fixed spread defined for each individual contract based on our RAROC (Risk Adjusted Return on Capital) analysis.
In the corporate segment, credit committees periodically evaluate customer data, analyzing several material aspects for determining credit ratings and credit limits to be applied to each customer. In addition, all corporate customers shall be subject to KYC (know-your-customer) procedures.
Our various credit committees are subordinated to the Superior Credit Committee responsible for managing credit risk and the various authority levels within our risk management structure ensure detailed monitoring of the risk of credit transactions as well as the necessary timing and flexibility in our approval processes.
Much of the credit for companies requires guarantees. Transactions to finance the production of goods usually require machinery and equipment as collateral. Financing for working capital might be guaranteed by trade receivables, check receivables or credit card receivables or is guaranteed by the company's partners or shareholders and/or by third parties. Investment transactions, on the other hand, typically require insurance or mortgage liens but may also include liens on acceptable investments, fund shares, debt securities and other instruments.
We grant credit to companies on the condition that they open a current account with us, a process which includes review of company documents and implementation of KYC procedures. For each client, we determine a maximum credit amount to be granted. This limit is determined based on our internal customer classification (based on credit score and history) and the level of average monthly earnings of the company. Billing information may be provided by the company or estimated by us based on internal methods. Our internal customer classification determines a maximum level of indebtedness, maximum credit to be granted, interest rates (substantially fixed rates), maximum ratio of the monthly installment to the company’s profits and the amount and type of guarantees required. Similar to the corporate segment, the majority of the portfolio is guaranteed by receivables within the retail sector and by goods in the case of financing.
Granting of credit in our subsidiaries in Latin America follows the same corporate governance and the policies established by Itaú Unibanco Holding. All subsidiaries are subject to a centralized management that monitors the performance of our portfolio, establishes the rules for granting of credit and is responsible for the corporate governance related to granting of credit within Itaú Unibanco Holding.
The Individuals and Corporate units within our Foreign Loans Latin America segment follow similar procedures as the Individuals and Corporate segments discussed above. For the Individuals unit, granting of credit is based on mainly on each customer’s level of income and score models. For the Corporate unit, granting of credit is based on an evaluation of customer data and KYC procedures. Credit analysis is made after analysis of such information and credit limits are approved according to the guidelines established by the risk management structure. Such guidelines depend upon the size and the needs of each of the subsidiaries, but are subordinate to the guidelines established by the credit committees within Itaú Unibanco Holding.
Indexing
Most of our portfolio is denominated inreais. However, a portion of our portfolio is indexed to foreign currencies, primarily the U.S. dollar. The foreign currency portion of our portfolio consists of loans and financing for foreign trade and onlending operations. Our loans indexed to foreign currencies or denominated in U.S. dollars represented 23.9%, 22.1% and 19.7% of our loan portfolio as of December 31, 2012, 2011 and 2010, respectively.
Loans and Leases – Maturity and Interest Rates
The following tables present an analysis of the distribution of our loan and lease portfolio as of December 31,
Non-Overdue
(1)Non-accrual loans of R$
(1) Non-accrual loans of R$ (2) Defined as loans and leases contractually past due as to payment of interest or principal.
(1) Non-accrual loans of R$
(1) Non-accrual loans of R$ (2) Defined as loans and leases contractually past due as to payment of interest or principal.
Cross-Border
Loans outstanding to foreign borrowers exceeded 1% of total assets in the case of foreign borrowers from our subsidiaries and branches in Argentina, Chile, Paraguay, Uruguay and Europe. Total amount outstanding to such borrowers consisting of loans and leases, deposits in banks and securities, as of December 31,
Total cross-border outstanding amounts to countries listed above, as of December 31, 2012, 2011 and 2010 consisted of:
Loans and Leases by Economic Activity
The following table presents the composition of our loan portfolio, including non-accrual loans, by economic activity of the borrower at each of the dates indicated.
As of December 31,
Rating of the Loan and Lease Portfolio
We present below the classification of our loan and lease portfolio based on probability of default. For corporate clients, the classification is based on information such as the economic and financial condition of the client, its ability to generate cash, the economic group to which it belongs, current economic and financial conditions and prospects for the market in which it operates, the collateral offered and the ultimate purpose of the loans granted. For the remaining clients, the classification is based on statistical models of credit and behavior scoring, as required by Basel II. In certain exceptional circumstances, classification may be based on individualized analyses which are submitted to the appropriate credit committees. The ratings are grouped in four categories: strong, satisfactory, higher risk and impairment.
Non-Accrual Loans and Leases
We consider all loans and leases more than 60 days overdue as non-accrual loans and we discontinue accruing financial income related to them the contractual amount of such loans and leases. In
Charge-offs
Loans and leases are charged off against the allowance when the loan is not collected or is considered permanently impaired. We normally charge off loans when they become 360 days past due as to principal or interest payments, except for loans with original maturity in excess of 36 months that we charge off when they are overdue 540 days. However, charge-offs may be recognized earlier than 360 days if we conclude that the loan is not recoverable.
Loans and Leases Quality Information
The table below presents our non-accrual loans together with certain asset quality ratios for the years ended December 31, 2012, 2011 and 2010.
The table below presents, calculated in accordance with U.S. GAAP, our non-accrual loans together with certain asset quality ratio for the years ended December 31, 2009
Loan Loss Experience
The table below sets forth the allowance for loan and lease losses for the years ended December 31, 2012, 2011 and 2010.
The table below sets forth our provision for loan and lease losses, charge-offs and recoveries included in our result of operations for the years ended December 31, 2012, 2011 and 2010.
Itaú Unibanco Holding periodically assesses whether there is any objective evidence that a receivable or group of receivables is impaired. A receivable or group of receivables is impaired and there is a need for recognizing an impairment loss if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows that can be reliably estimated.
The allowance for loan and lease losses is recognized
default in principal or interest payment;
financial difficulties of the debtor and other objective evidence that results in the deterioration of the financial position of the debtor (for example, debt-to-equity ratio, percentage of net sales or other indicators obtained through processes adopted to monitor credit, particularly for retail portfolios);
breach of loan clauses or terms;
entering into bankruptcy; and
loss of competitive position of the debtor.
The estimated period between the loss event and its identification is defined by management for each identified portfolio of similar receivables. The periods adopted by management are of twelve months and considering that the observed period for homogenous receivables portfolios vary, depending upon the specific portfolio, between nine and twelve
Assessment
To determine the amount of the allowance for individually significant receivables with objective evidence of impairment, we use methodologies that consider both the quality of the client and the nature of the transaction, including its collateral, to estimate the cash flows expected from these loans.
If no objective evidence of impairment exists for an individually assessed receivable, whether significant or not, the asset is included in a group of receivables with similar credit risk characteristics and such group is collectively assessed for impairment. Receivables that are individually assessed for impairment and for which an impairment loss is recognized are not included in the collective assessment. The amount of loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate.
For collectively assessed loans, the calculation of the present value of the estimated future cash flows for which there is collateral reflects the historical performance of the foreclosure and recovery of fair value, considering the cash flows that may arise from foreclosure less costs for obtaining and selling that collateral.
For the purpose of a collective evaluation of impairment, receivables are grouped on the basis of similar credit risk characteristics. The characteristics are relevant to the estimation of future cash flows for such receivables by being indicative of the debtors’ ability to pay all amounts due, according to the contractual terms of the receivables being evaluated. Future cash flows in a group of receivables that are collectively evaluated for purposes of identifying the need for recognizing impairment are estimated on the basis of the contractual cash flows of the group of receivables and the historical loss experience for receivables with similar credit risk characteristics. The historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently.
For individually significant receivables with no objective evidence of impairment, Itaú Unibanco Holding classifies these loans
To determine the amount of the allowance for individually non-significant items, loans are segregated into classes considering the underlying risks and characteristics of each group. The allowance for loan and lease losses is determined for each of those classes through a process that considers historical delinquency and loan loss experience over the most recent years.
During the year ended in December 31, 2012, we charged off credits in the total amount of R$22,142 million and as of December 31, 2012 our ratio of allowances for loan and lease losses to total loans and leases was 7.0%. The increase in the volume of loans charged off is a consequence of the increase in delinquencies in 2011 and early 2012, coupled with the increase in the volume of our portfolio of credit card, personal loans and small and medium businesses. As of December 31, 2012, our ratio of allowances for loan and lease losses to total loans and leases was the same as in the previous year.
During the year ended December 31, 2011, we charged off loans and leases in the total amount of R$16,159 million and as of December 31, 2011 our ratio of allowances for loan and lease losses to total loans and leases was 6.9%. Our ratio of allowances for loan and lease losses to total loans and leases increased by 0.1 percentage points compared to the previous year, as we continue to provide for loans and leases in 2011 as a result of increased delinquency in 2009 and 2010, combined with the strong growth of our loan and lease portfolio in 2011.
During the year ended December 31, 2010, we charged off loans and leases in the total amount of R$15,798 million and as of December 31, 2010 our ratio of allowances for loan and lease losses to total loans and leases was 6.8%. The increase in the volume of loans and leases written off in 2010 was a result of increased delinquency in 2009 combined with the strong growth of our loan and lease portfolio.
The table below sets forth allowance for loan and lease losses, calculated in accordance with U.S. GAAP, for the years ended December 31, 2009
The table below sets forth our provision for loan and lease losses, charge-offs and recoveries included in our result of operations, calculated in accordance with U.S. GAAP, for the years ended December 31,
During the year ended December 31, 2009, under U.S. GAAP, we charged off loans and leases in the total amount of R$9,490 million and as of December 31, 2009 our ratio of allowance for loan and lease losses to total loans and leases was 8.1%. The increase in losses reflects the adverse economic environment and occurred in accordance with our forecasted scenario. Recent data indicate that leading indicators for default rates, such as first payment default rates, improved and we believe that this is a result of increased selectivity in our origination, our ongoing development of risk analysis procedures and an overall improvement in macroeconomic conditions in Brazil.
During the year ended December 31, 2008, under U.S. GAAP, we charged off loans and leases in the total amount of R$5,904 million and as of December 31, 2008 our ratio of allowance for loan and lease losses to total loans and leases was 7.2%. The relatively small increase in our charged-off loans and leases in 2008, in an environment where our portfolio has been growing significantly, was due to the improved performance of our portfolio and collection activities during that year, mainly in the first nine months of the year. During the fourth quarter, with the worsening of the global economic crisis, we increased the balance of allowance for loans and lease losses to adapt to the new economic scenario of increased credit risk in our loan and lease portfolio. As a consequence, our ratio of allowance for loan and lease losses to total loans and leases was 7.2% as of December 31, 2008, compared to 6.4% as of December 31, 2007.
Allocation of the Allowance for Loans and Lease Losses
The table below presents a breakdown, by each segment and class, as defined under our portfolio segmentation, of the allowance for loan and lease losses, the allowance as a percentage of total loan and lease losses for the relevant segment or class and the percentage of total loans and leases in each segment and class of total loans and leases as of December 31, 2012, 2011 and 2010.
(1) Excludes non-accrual loans.
The following table sets forth, calculated in accordance with U.S. GAAP, our allocation of the allowance for loan and lease losses by type of loan as of December 31, 2009
(1) Excludes non-accrual
(1) Includes debt consolidation, deferment or any other arrangement that modifies the periods or conditions, of operations originally overdue. We include under renegotiated loans both loans which the original terms of the contractual arrangement have been amended (agreements) and new loan transactions originated to settle contracts or transactions with the same customer (restructured loans), that were originally overdue. Amendments and restructured loans typically reflect changes in contract terms, rates or payment conditions. After the amendment or restructuring, the loan which was previously overdue is no longer considered past due. The fact that a loan or lease transaction has been renegotiated is also considered in determining its specific allowance for loan and lease losses after renegotiation. The past performance and payment history of both the client and the transaction, including the redefault probability of renegotiated transactions, are considered by our risk models to determine the probability of default . This probability of default is always higher than the one attributed to similar transactions that have never been renegotiated. Another factor that is considered in determining the appropriate level of the allowance for loan and lease losses is any additional collateral provided by the debtor. The resulting provision levels are compatible with the risk profile of each transaction. Our renegotiated loan portfolio increased to 3.96% of our total loan portfolio as of December 31, 2012, compared to 3.42% as of December 31, 2011. At the end of 2012, the ratio of the allowance for loan and lease losses to the renegotiated portfolio was 46.6% compared to 45.2% at December 31, 2011. This ratio increased in 2012 mainly because of an increase in the redefaulted renegotiated loans to total renegotiated loans ratio, from 29.8% as of December 31, 2011 compared to 35.4% as of December 31, 2012. During 2012, the Brazilian economy experienced an increase in delinquency levels for individuals, mainly in vehicles and in personal loan portfolios. As one of the largest banks in Brazil, this increase also affected our loan portfolio. In order to increase the recovery of loan operations that are past due, including loans that have been written off as losses, and to reduce losses, we increased our collection and recovery initiatives. We require, however, that at least one installment be paid in order to consider the renegotiation to be valid and treated as a renegotiated agreement.
The total amount of each type of renegotiated loan is shown in the tables below as of December 31, 2012 and 2011.
(*) Our redefaulted renegotiated loans are renegotiated operations 60 days or more overdue.
(*) Our redefaulted renegotiated loans are renegotiated operations 60 days or more overdue.
The following tables provide an additional breakdown of renegotiated loans by portfolios of segments and classes, based on type of modification, as of December 31, 2012 and 2011:
(1)Represents loan and lease transactions subject to an amendment of contractual terms relating exclusively to payment due dates. (2) Represents multiple loan and lease transactions which have been restructured, i.e., all such outstanding transactions are terminated and a single new transaction consolidating the terminated loan and lease transactions is entered into. (3)Represents individual loan and lease transactions entered into with a customer that are renegotiated for an amendment of the original contractual terms, which may include amendment of interest rates, discounts of outstanding amounts due and payment extensions.
(1) Represents loan and lease transactions subject to an amendment of contractual terms relating exclusively to payment due dates. (2) Represents multiple loan and lease transactions which have been restructured, i.e., all such outstanding transactions are terminated and a single new transaction consolidating the terminated loan and lease transactions is entered into. (3) Represents individual loan and lease transactions entered into with a customer that are renegotiated for an amendment of the original contractual terms, which may include amendment of interest rates, discounts of outstanding amounts due and payment extensions.
The following tables provide show an additional breakdown of renegotiated loans by portfolios of segments and classes, based on their classification, as of December 31, 2012 and 2011:
The table below additionally presents changes in our impaired loan and lease portfolio, including changes from the renegotiated transactions in our impaired operations, for the years ended December 31, 2012 and 2011:
Average Deposit Balances and Interest Rates
The table below sets forth the average balances of deposits together with the average interest rates
Maturity of Deposits
The following tables set forth a breakdown of deposits by maturity, as of December 31,
The table below sets forth the maturity of outstanding time deposits with balances in excess of US$100,000 (or its equivalent) issued by us as of December 31,
Short-Term Borrowings
Short-term borrowings are included in our balance sheet under the line items "Securities sold under repurchase agreements", "Interbank market debt" and "Institutional market debt". The principal category of our short-term borrowings is securities held under repurchase agreements. The average monthly balance outstanding during 2012, 2011 and 2010 for other categories of short-term borrowings was less than 30% of our stockholders’ equity at the end of each fiscal year.
The table belowpresents a summary of securities sold under repurchase agreements for the periods indicated.
Capital
Specific regulatory capital requirements are discussed in “Item 4B. Business Overview — Regulation and Supervision — Regulatory Capital Requirements.” Additional information on capital requirements is discussed in note
Minimum Capital Requirements
The following table sets forth our capital positions of total risk-weighted assets, as well as our minimum capital requirements under Central Bank rules, in each case as of December 31, 2012, 2011
(1) Based on Central Bank requirements (see note (2) The minimum requirement in Brazil was 11% as of December 31, 2012, 2011
We are a financial holding company controlled by IUPAR, a holding company jointly controlled by Itaúsa and E. Johnston, which is a holding company controlled by the former controlling shareholders of Unibanco, the Moreira Salles family. See “Item 4B. Business Overview – Our Ownership Structure” and “Item 7A. Major Shareholders.” Our list of significant subsidiaries as of December 31,
We own our principal executive offices located in São Paulo, Brazil and a number of other administrative buildings.
We also lease a portion of our administrative offices and the majority of our branches at competitive market prices from third parties and under renewable leases with terms ending from the first
In addition, on January 27, 2012, we announced the construction of a new technology center. See
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion should be read in conjunction with our consolidated financial statements and accompanying notes and other financial information included elsewhere in this annual report, and in conjunction with the information included under “Item 3A. Selected Financial Data” and “Item 4B. Business Overview – Selected Statistical Information”. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from these discussed in forward-looking statements as a result of various factors, including those set in forth in “Cautionary Statement Regarding Forward-Looking Statements” and “Item 3D. Risk Factors”.
Effects of the Global Financial Markets on our Financial Condition and Results of Operations
The global financial markets crisis has significantly affected the world economy since the last quarter of 2008. The crisis led to (i) recessions and increasing unemployment in the world’s leading Global financial markets
Increased financial market risks in the
Although
Our gross exposure as of December 31, 2012 to the sovereign bonds of the GIIPS countries as well as to financial institutions and other corporations and small businesses and individuals domiciled in those countries, is set forth in the table below, in millions ofreais:
The gross exposure presented above as of December 31,
In
Our results of operations since the last quarter of 2008 have been partially negatively affected by the global financial markets crisis. Fiscal problems in advanced economies, sluggishness in the developed world and inflation and other issues in developing economies may have an impact on future growth in Brazil and, therefore, on our results of operations.
Brazilian Economic, Political and Social Conditions
As a Brazilian bank with most of our operations in Brazil, we are significantly affected by economic, political and social conditions in Brazil. In recent years, we have benefited from Brazil’s generally stable economic environment, with average annual gross domestic product
There are still concerns about the acceleration of inflation in Brazil. Consumer price inflation did not reach the Central Bank’s target in
The Brazilian credit market showed moderate growth
The current account deficit
We are also exposed to tax-policy and regulatory changes, which are sometimes adopted on short notice. For
On April 30, 2008, Standard & Poor’s Rating Services upgraded the long-term rating of Brazil’s sovereign foreign currency debt to BBB- from BB+, upgrading Brazil’s rating to investment grade. On November 17, 2011, S&P further upgraded Brazil to BBB. On May 29, 2008, Fitch Ratings followed suit and upgraded Brazil to investment grade, raising its rating to BBB- from BB+, and on April 4, 2011, to BBB. On September 22, 2009, Moody’s Investors Service Inc. “Moody’s”) raised Brazil’s sovereign rating to Baa3 from Ba1, and on June 20, 2011 updated it to Baa2. These upgrades have contributed to further On June 27, 2012, Moody’s concluded their previously announced review for downgrade of Brazilian financial institutions as part of their ongoing global review of banks whose standalone assessments are higher than the rate of the country in which they are domiciled. Itaú Unibanco Holding’s issuer rating was downgraded to Baa1 from A2, which is one notch above the level of the Brazil sovereign debt rating, and carries a positive outlook. The downgrade reflected Moody’s assessment of the correlation between sovereign and financial institution credit risk globally, in On February 28, 2013, Moody’s announced the downgrade of the ratings of subordinated debt issued by certain Brazilian banks, including Itaú Unibanco Holding. This downgrade reflected Moody´s global revision of its approach to “notching” and is in line with the “Moody´s Guidelines for Rating Bank Hybrid Securities and Subordinated Debt”. For Itaú Unibanco Holding, the downgrade did not reflect a credit profile deterioration. There has
The table below shows the real GDP growth, the inflation rate, exchange rate variation and the interest rates in Brazil as of and for the years ended December 31, 2012, 2011, 2010, 2009
(1) Source: Instituto Brasileiro de Geografia e Estatística (“ (2)Source: General Price (3) Source: IPCA, as published by IBGE. (4)Source: Central Bank (5)Source: Central Bank (period end). (6)Source: Bloomberg (period end). Credit default swap (CDS) is a measure of country risk (basis point).
Certain Effects of Foreign Exchange Rates on Our Net Interest
The variation of the real can affect our net interest
Unless otherwise indicated, the discussion in this “Item 5. Operating Results and Financial Review and Prospects” relates to our annual average interest rates and yields. Interest rates cited are measured inreais and include the effect of the variation of thereal against foreign currencies.
Seasonality
Generally our retail banking and our credit card businesses have some seasonality, with increased levels of retail and credit card transactions during the Christmas season and a subsequent decrease of these levels at the beginning of the year. We also have some seasonality in our banking service fees related to collection services at the beginning of the year, which is when taxes and other fiscal contributions are generally paid.
Discussion of Critical Accounting Policies General
The preparation of the consolidated financial statements included in this annual report involves certain assumptions that are derived from historical experience and various other factors that we deem reasonable and relevant. While we review these estimates and assumptions in the ordinary course of business, the portrayal of our financial condition and results of operations often requires our management to make judgments regarding the effects on our financial condition and results of operations on matters that are inherently uncertain. The following discussion describes those areas that require the most judgment or involve a higher degree of complexity in the application of the accounting policies that currently affect our financial condition and results of operations. Actual results may differ from those estimated under different variables, assumptions or conditions.
Use of Estimates and Assumptions
The preparation of
All estimates and assumptions made by management are in accordance with IFRS and represent the current best estimates made in conformity with the applicable rule standards. Estimates and judgments are evaluated on an ongoing basis, considering past experience and other factors.
Allowance for Loan Losses
The allowance for loan losses represents our estimate of the probable losses inherent to our loan and lease portfolio at the end of each reporting period. The methodology for determining the allowance for loan and lease losses is further described in “Item 4B. Business Overview
Fair Value of Financial Instruments
Financial instruments recorded at fair value on our balance sheet include mainly securities classified as trading and available-for-sale, and other trading assets including derivatives. Securities classified as held-to- maturity are recorded at amortized historical cost on our balance sheet, and their corresponding fair values are shown in the notes to our consolidated financial statements. Total financial instruments recorded at fair value
Significant Changes in Accounting Rules
See note 2.2 to our consolidated financial statements for information about significant changes in accounting rules. Results of Operations for Year Ended December 31, 2012 Compared to Year Ended December 31, 2011 Highlights For the year ended December 31, 2012, our net income attributable to owners of the parent company was R$12,634 million and our total stockholders’ equity was R$75,902 million. As of December 31, 2012, total loan operations and lease operations was R$366,984 million, a 6.0% increase compared to December 31, 2011. Our total loan and lease operations grew at a slower pace in 2012 compared to 2011. Loans to individuals increased by 0.7%, while loans to companies increased by 6.6% compared to December 31, 2011. During 2012, we increased the volume of credit card lending, personal loans, mortgage loans and loans to medium companies, with mortgage loans and payroll loans increasing at a higher rate than other segments, but decreased the volume of loans to individuals for vehicles and to small companies. As of December 31, 2012, the loan portfolio of our operations in Latin America increased 41.0% compared to December 31, 2011. This increase reflects the growth of our operations outside Brazil and the depreciation of the real against the currencies of these countries and the U.S. dollar in the year ended December 31, 2012. Loans to individuals totaled R$150,300 million in 2012, an increase of R$1,023 million, or 0.7% compared to 2011. This increase is primarily a result of mortgage loans increasing 34.2%, totaling R$18,047 million in 2012 compared to 2011, as a result of a favorable Brazilian economic environment for that particular line of credit. Personal loans increased 10.1% in 2012, totaling R$40,076 million, primarily due to an increase in the volume of payroll loans of 15.1%, mainly due to payroll loans acquired, as we focused increasingly on less risky portfolios. Credit card increased 4.0%, totaling R$40,531 million in 2012, due to the growing popularity of this product. Vehicle financing decreased 14.6% in 2012 compared to 2011, totaling R$51,646 million, as a result of our stricter requirements for granting loans during this period, which have led to increased down payment requirements and shorter financing terms. Loans to companies totaled R$189,535 million in 2012, an increase of R$11,807 million, or 6.6%, compared to 2011. Loans to small and medium businesses decreased R$464 million, or 0.5% in 2012 compared to 2011, totaling R$85,185 million. Loans to corporate customers increased R$12,271 million, or 13.3%, in 2012 compared to 2011, totaling R$104,350 million, in particular in export/import financing, payroll loans acquired from other financial institutions and working capital facilities. In 2012, we continued to focus our underwriting initiatives on medium and large companies, which typically have lower delinquency rates, and which grew consistent with the banking industry as a whole. In addition, the depreciation of the real against other currencies, especially the U.S. dollar, also contributed to the growth of our medium to large companies portfolio since certain loans to these customers are denominated, or originated in, such currencies.
Losses on loans and claims are the sum of expenses for allowance for loan and lease losses, recovery of loans written off as losses and expenses for claims. In 2012, our losses on loans and claims increased from R$16,072 million in 2011 to R$21,354 in 2012 a R$5,282 million increase, or 32.9%, mainly due to an increase of expenses for allowance for loan and lease losses and in a lesser extent by a decrease in the recovery in loans written off as losses and by an increase of expenses for claims. The increase in expenses for allowance for loan and lease losses is primarily due to an increase in non-performing loans to individuals, especially in vehicle loans and personal loans, which follows the general trends observed in the Brazilian financial market. As of December 31, 2012, the ratio of 90-day non-performing loans as a percentage of our total loan portfolio decreased to 4.8%, compared to 4.9% as of December 31, 2011. This decrease in the non-performing loan ratio, impacted our 90-day coverage ratio, that increased from 142% in 2011 to 146% in 2012. When the non-performing loan ratio decreases, an increase in the coverage ratio is expected. The provisions for allowance for loan and lease losses are reversed only when there is a strong indication of the recovery of overdue loans, increasing the coverage ratio. Impaired loans (see note 36.6 of our consolidated financial statements) increased from R$18,385 million in 2011 to R$19,511 million in 2012, mainly due to growth of impaired personal loans and vehicle loans. Loan operations under renegotiation, including extended, modified and deferred repayments, increased to 5.3%, of our total portfolio as of December 31, 2012, compared to 4.2% as of December 31, 2011, mainly due to the increased amount of renegotiation of collateralized loans (mainly vehicles). See “Item 4B. Business Overview – Selected Statistical Information – Loan and Lease Operations – Renegotiated Loans.” Results of Operations The following table shows the main components of our net income for 2012 and 2011.
Our results of operations for the year ended December 31, 2012, when compared to the year ended December 31, 2011, reflected a significant impact from lower CDI rates and in a lesser extent from exchange rate variations. In 2012, we observed a decrease in the CDI rate to 8.4% from 11.6% which caused impacts on costs and on revenues of many our assets and liabilities. The exchange rate between the U.S. dollar and the real changed significantly. During the year ended December 31, 2012, the real depreciated 8.9% against the U.S. dollar, while in 2011 the real depreciated 12.6% against the U.S. dollar. In order to improve liquidity in the Brazilian market the Central Bank of Brazil decreased the reserve and compulsory deposit requirement in 2012. This decrease was primarily due to a change in criteria for returns on compulsory deposits enacted by Circulars No. 3,569 and 3,576 that allowed part of the funds to be used in vehicle loan operations instead of compulsory deposits. The balance of interest-bearing compulsory deposits from the Central Bank of Brazil decreased 38.0%, from R$92,323 million as of December 31, 2011 to R$57,253 million as of December 31, 2012.
Banking Product Banking product is a subtotal of the following line items: interest and similar income, interest and similar expense, dividend income, net gain (loss) from financial assets and liabilities, foreign exchange results and exchange variation on transactions, banking service fees, income from insurance, private pension and capitalization operations before claim and selling expenses and other income. Interest and similar Income The following table shows the main components of our interest income for 2012 and 2011.
Interest and similar income is a subtotal of the following line items: interest on loan and lease operations, interest on interbank deposits, interest on Central Bank compulsory deposits, interest on securities purchased under agreements to resell, interest on financial assets held for trading, interest on available-for-sale financial assets, interest on held-to-maturity financial assets and interest on other financial assets. The R$988 million, or 1.0%, decrease in interest income in 2012 is primarily due to the decrease in interest on Central Bank compulsory deposits and in interest on financial assets held for trading, partially offset, primarily, by an increase in the income of loan and lease operations and in interest on available-for-sale financial assets. Interest on Loan and Lease Operations The table below shows the volume of loan and lease operations, with loans classified by type of creditor (individuals and companies) and further broken down by type of product for individuals and by size of customer for companies. In addition, the table presents the balance of loan operations from our subsidiaries in Latin America outside of Brazil (Argentina, Chile, Uruguay and Paraguay).
Mortgage loans and rural loans portfolios are presented within loans to individuals, loans to companies or foreign loans Latin Amercia, as appropriate, according to the type of client. As of December 31, 2012, the total mortgage loan portfolio totalled R$31,344 million and the total rural loan portfolio totalled R$6,616 million, compared to R$23,339 million and R$5,939 million, respectively, as of December 31, 2011. Interest on loan and lease operations totaled R$61,139 million in 2012, an increase of R$2,647 million, or 4.5% compared to 2011. This increase was due primarily to an increase in the average volume of loans and lease transactions.
As of December 31, 2012, total loan and lease operations was R$366,984 million, a 6.0% increase compared to December 31, 2011. Loans to individuals increased by 0.7%, while loans to companies increased by 6.6% compared to December 31, 2011. During 2012, we increased the volume of credit card lending, personal loans, mortgage loans and loans to medium companies, with mortgage loans and payroll loans increasing at a higher rate than other segments, but decreased the volume of loans to individuals for vehicles and to small companies. We highlight that mortgage loans and rural loans portfolios are presented within loans to individuals or loans to companies, as appropriate, according to the type of client. Loans to individuals totaled R$150,300 million in 2012, an increase of R$1,023 million, or 0.7% compared to 2011. This increase is primarily a result of mortgage loans increasing 34.2%, totaling R$18,047 million in 2012 compared to 2011, as a result of a favorable Brazilian economic environment for that particular line of credit. Personal loans increased 10.1% in 2012, totaling R$40,076 million, primarily due to an increase in the volume of payroll loans of 15.1%, mainly due to payroll loans acquired, as we focused increasingly on less risky portfolios. Credit card increased 4.0%, totaling R$40,531 million in 2012, due to the growing popularity of this product. Vehicle financing decreased 14.6% in 2012 compared to 2011, totaling R$51,646 million, as a result of our stricter requirements for granting loans during this period, which have led to increased down payment requirements and shorter financing terms. Loans to companies totaled R$189,535 million in 2012, an increase of R$11,807 million, or 6.6%, compared to 2011. Loans to small and medium businesses decreased R$464 million, or 0.5% in 2012 compared to 2011, totaling R$85,185 million. Loans to corporate customers increased R$12,271 million, or 13.3%, in 2012 compared to 2011, totaling R$104,350 million, in particular in export/import financing, payroll loans acquired from other financial institutions and working capital facilities. In 2012, we continued to focus our underwriting initiatives on medium and large companies, which typically have lower delinquency rates, and which grew consistent with the banking industry as a whole. In addition, the depreciation of the real against other currencies, especially the U.S. dollar, also contributed to the growth of our medium to large companies portfolio since certain loans to these customers are denominated, or originated in, such currencies. The balance of our foreign loans from our operations in Latin America outside Brazil (Argentina, Chile, Uruguay and Paraguay) totaled R$27,149 million as of December 31, 2012, an increase of 41.0% compared to December 31, 2011, mostly as a result of the growth of operations in South American countries where we operate, excluding Brazil, and by the depreciation of the real against several foreign currencies, particularly the U.S. dollar. Interest on Interbank Deposits Interest on interbank deposits, totaled R$1,042 million in 2012, an increase of R$152 million, or 17.1%, compared to 2011. This increase was mainly due to the increase on the average balance of these deposits, which are managed by our treasury department, that resulted in an increase in income of R$267 million, partially offset by the decrease in the average yield/rate, mainly due to lower CDI rates, that resulted in a decrease in income of R$115 million. See “Item 4B. Business Overview — Selected Statistical Information — Average Balance Sheet and Interest Rate Data.” Interest on Central Bank Compulsory Deposits Interest on Central Bank compulsory deposits totaled R$5,334 million in 2012, a decrease of R$3,848 million, in 2012 compared to 2011. This decrease was primarily due to a change in criteria for returns on compulsory deposits enacted by Circulars No. 3,569 and 3,576 that allowed part of the funds to be used in vehicle loan operations instead of compulsory deposits. The balance of interest-bearing compulsory deposits from the Central Bank decreased 38.0%, from R$92,323 million as of December 31, 2011 to R$57,253 million as of December 31, 2012. The decrease in the average balance of Central Bank compulsory deposits resulted in a decrease in income of R$1,688 million in 2012 compared to 2011. Furthermore, the decrease of the average SELIC rate from 11.8% during the year ended December 31, 2011 to 8.6% during the year ended December 31, 2012 contributed to this decrease in income from compulsory deposits. This decrease in the average yield/rate of Central Bank compulsory deposits resulted in a decrease in income of R$2,160 million in 2012 compared to 2011. See “Item 4B. Business Overview — Selected Statistical Information — Average Balance Sheet and Interest Rate Data.” Interest on Securities Purchased under Agreements to Resell Interest on securities purchased under agreements to resell totaled R$10,096 million in 2012, an increase of R$135 million, or 1.4% in 2012 compared to 2011. This increase was mainly due to higher average balance of securities purchased under agreements to resell that resulted in an increase in income of R$437 million, partially offset by a lower yield/rate of securities purchased under agreements to resell that resulted in a decrease in income of R$301 million in 2012 compared to 2011. See “Item 4B. Business Overview — Selected Statistical Information — Average Balance Sheet and Interest Rate Data.”
Interest on Financial Assets Held for Trading Interest on financial assets held for trading, which is managed by our treasury department, totaled R$13,324 million in 2012, a decrease of R$1,352 million, or 9.2%, compared to 2011. This decrease was mainly due to a decrease in the average yield/rate of financial assets held for trading that resulted in an increase income of R$1,956 million, partially offset by an increase in the average balance of interest on financial assets held for trading that resulted in a decrease in income of R$604 million in 2012 compared to 2011. See “Item 4B. Business Overview — Selected Statistical Information — Average Balance Sheet and Interest Rate Data.” Interest on Available – for – Sale Financial Assets Interest on available-for-sale financial assets totaled R$3,771 million in 2012, an increase of R$883 million, or 30.6%, compared to 2011. This increase was mainly due to an increase in the average balance of available-for-sale financial assets that resulted in an increase in income of R$1,137 million, partially offset by the decrease in average yield/rate of available-for-sale financial assets that resulted in a decrease in income of R$254 million in 2012 compared to 2011. See “Item 4B. Business Overview — Selected Statistical Information — Average Balance Sheet and Interest Rate Data.” Interest on Held-to-Maturity Financial Assets Interest on held-to-maturity financial assets totaled R$471 million in 2012, an increase of R$111 million, or 30.9%, compared to 2011. This increase was mainly due to an increase in the average yield/rate of held-to-maturity financial assets that resulted in an increase in income of R$112 million, partially offset by a decrease in the average balance of held-to-maturity financial assets that resulted in a decrease in income of R$1 million in 2012 compared to 2011. See “Item 4B. Business Overview — Selected Statistical Information — Average Balance Sheet and Interest Rate Data.” Interest on Other Financial Assets Interest on other financial assets totaled R$1,187 million, an increase of R$284 million, or 31.4%, compared to 2011. This increase was mainly due to an increase in the average yield/rate of financial assets held for trading that resulted in an increase in income of R$433 million, partially offset by a decrease in the average balance of interest on financial assets held for trading that resulted in a decrease in income of R$148 million in 2012 compared to 2011. See “Item 4B. Business Overview — Selected Statistical Information — Average Balance Sheet and Interest Rate Data.” Interest and similar Expense The following table shows the main components of our interest expense in 2012 and 2011.
Total interest expense was R$48,067 million in 2012, a decrease of R$7,532 million, or 13.5%, compared to 2011, mainly due to decreases in interest expense from interest on securities sold under repurchase agreements and from interest on deposits, primarily due to lower CDI in 2012. The depreciation of the real against the dollar also contributed to this decrease. Interest on Deposits Interest on deposits was R$10,544 million in 2012, a decrease of R$1,642 million, or 13.5% in comparison to 2011. The decrease in the average yield/rate resulted in a decrease in expenses of R$2,213 million, partially offset by an increase in the average balance of deposits that resulted in an increase in expenses of R$571 million. See “Item 4B. Business Overview — Selected Statistical Information — Average Balance Sheet and Interest Rate Data."
Interest on Securities Sold Under Repurchase Agreements Interest on securities sold under repurchase agreements was R$17,539 million in 2012 a decrease of R$4,594 million, or 20.8%, compared to 2011. The decrease in the average yield/rate resulted in a decrease in expenses of R$5,727 million, partially offset by an increase in the average balance of securities sold under repurchase agreements that resulted in an increase in expenses of R$1,133 million. See “Item 4B. Business Overview — Selected Statistical Information — Average Balance Sheet and Interest Rate Data." Interbank Market Debt Interest expense on interbank market debt totaled R$5,747 million in 2012, an increase of R$211 million, or 3.8%, compared to 2011. This increase was due to an increase in the average balance of interbank market debt, that resulted in an increase in expenses of R$656 million, partially offset by a decrease on the average yield/rate that decreased expenses by R$445 million. See “Item 4B. Business Overview — Selected Statistical Information — Average Balance Sheet and Interest Rate Data. Institutional Market Debt Interest expense on institutional market debt totaled R$7,724 million in 2012, a decrease of R$2,781 million, or 26.5% compared to 2011. This decrease was primarily due to a decrease in the average yield/rate that resulted in a decrease in expenses of R$7,436 million, partially offset by an increase on the average balance of institutional market debt that increased expenses by R$4,655 million. See “Item 4B. Business Overview — Selected Statistical Information — Average Balance Sheet and Interest Rate Data." Financial Expense from Reserves for Insurance and Private Pension Financial expense from reserves for insurance and private pension plans totaled R$6,513 million in 2012, an increase of R$1,274 million, or 24.3%, compared to 2011. This increase was primarily due to an increase in the average balance of reserves for insurance and private pension and liabilities for capitalization plans of R$1,304 million, partially offset by a decrease of R$30 million due to a decrease of the average yield/rate. See “Item 4B. Business Overview — Selected Statistical Information — Average Balance Sheet and Interest Rate Data." Other interest income and Foreign Exchange Results The following table shows the main components of our other interest income and foreign exchange results in 2012 and 2011.
In 2012, our other interest income and foreign exchange results totaled R$5,541 million, a decrease of R$1,069 million, or 16.2%, in 2012 compared to 2011. This decrease was primarily due to the decrease of R$1,243 million in foreign exchange results and exchange variation on transactions, partially offset by an increase of R$212 million in net gain (loss) from investment securities and derivatives. Dividend Income Dividend income totaled R$323 million in 2012, a decrease of R$38 million compared to 2011, due to lower income from dividends of other companies.
Net gain (loss) from investment securities and derivatives totaled a gain of R$1,463 million in 2012 compared to a gain of R$1,251 million in 2011, mainly to our risk management strategy and administration of gaps, particularly those associated with derivative instruments used to hedge our investments abroad. Foreign Exchange Results and Exchange Variation on Transactions Foreign exchange results and exchange variation on transactions totaled R$3,755 million a decrease of R$1,243 million, or 24.9% compared to 2011, due mainly to the effect from derivative financial instruments used to hedge the impact of exchange rate variation on our investments in subsidiaries abroad. Non-Interest Income The following table shows the main components of our non-interest income in 2012 and 2011.
In 2012, our non-interest income totaled R$27,334 million, an increase of R$1,421 million, or 5.5%, in 2012 compared to 2011. This increase was primarily due an increase of R$1,124 million in other non-interest income, partially offset by a decrease in banking service fees of R$466 million. Banking Service Fees Banking service fees totaled R$18,944 million in 2012, a decrease of R$466 million, or 2.4%, compared to 2011. This decrease was mainly due to certain income from fund management that was no longer included in banking service fees and was instead included in interest and similar income in 2012 and to decreases in the real interest rate principally for checking accounts, in line with pricing changes by our competitors, partially offset by an increase in our volume of transactions with customers. See note 24 to our consolidated financial statements for more details. Income from Insurance, Private Pension and Capitalization Operations Before Claim and Selling Expenses Income from insurance, private pension and capitalization operations before claim and selling expenses totaled R$6,108 million in 2012, an increase of R$763 million, or 14.3%, compared to 2011. This increase was mainly due to an increase in the volume of pension plan, life insurance and extended guarantee insurance products, due in part to a favorable economic environment for pension plan in Brazil. Other Income Other income totaled R$2,282 million in 2012, an increase of R$1,124 million, or 97.0%, compared to 2011. This increase was mainly due to the sale of our 16.14% interest in Serasa S.A. to Experian Brasil Ltda. that generated a gain of R$1,468 million.
Losses on Loans and Claims The following table shows the principal components of our losses on loans and claims for 2012 and 2011.
Losses on loans and claims include expenses for allowance for loan and lease losses, recovery of loans written off as losses, expenses for claims and recovery of claims under reinsurance. In 2012, our losses on loans and claims increased from R$16,072 million in 2011 to R$21,354 in 2012 a R$5,282 million increase, or 32.9%, mainly due to an increase of expenses for allowance for loan and lease losses and to a lesser extent a decrease in the recovery in loans written off as losses and an increase of expenses for claims. Expenses for Allowance for Loan and Lease Losses Expenses for allowance for loan and lease losses totaled R$23,982 million in 2012, an increase of R$3,944 million, or 19.7%, in comparison to 2011, due to a decrease in the asset quality of our vehicle and personal loan portfolios in comparison to the previous year, which resulted in an increase in default levels in our vehicle and personal loan portfolios. Itaú Unibanco Holding uses statistical models to calculate the allowance for loan and lease losses in the homogeneous loan portfolio (reviewed for impairment on a portfolio basis). Itaú Unibanco Holding periodically carries out procedures to improve these estimates by aligning the necessary provisions to the levels of losses observed by the historical behavior (as described in Note 2.4g VIII to our consolidated financial statements). This alignment aims at ensuring that the allowance for loan and lease losses reflects the current economic condition, the composition of the loan portfolios, the quality of guarantees and the profile of our clients. In 2012, as a result of the market trends we observed, mainly in relation to an increase in delinquency rates of personal loans and small and medium companies, we analyzed the assumptions we were using in our statistical models. As a result of this analysis, we implemented improvements in the risk models of Probability Default (PD) and Loss Given Default (LGD) to provision more conservatively. Such improvements included the update of the observed period of historical losses to more recent loan vintages (improving the adherence to the actual loan loss experience) and the inclusion of new variables in the risk models (improving the credit assessment capability). These improvements of model assumptions gave rise to a growth in the level of provisions in the amount of R$1,492 million, mainly in the small and medium companies’ portfolio and in the personal loans portfolio. See notes 2.4g.VIII, 12 b. and 36 to our consolidated financial statements for more details. The observed market trends in delinquency further triggered us to improve our credit granting process. Below we have highlighted some actions taken by us to reduce our credit risk and future loan loss experience.
Recovery of Loans Written off as Losses Recovery of loans written off as losses decreased from R$5,477 million in 2011 to R$4,663 million in 2012, a decrease of R$814 million, or 14.9%, primarily due to discounts granted in the renegotiation of credit that had already been written off as losses no longer being deducted from interest and similar income in 2012, but deducted from income from the recovery of loans written off as losses. In 2011, these discounts amounted to R$609 million. Disregarding this effect, the recovery of loans written off as losses would have decreased by 3.7%, or R$205 million.
Expenses for Claims Expenses for claims increased from R$2,446 million in 2011 to R$3,320 million in 2012, an increase of R$874 million, or 26.3%, mainly due to increases in claims in life insurance and corporate risks insurance portfolios. Recovery of Claims under Reinsurance Recovery of claims under reinsurance increased from R$935 million in 2011 to R$1,285 million in 2012, an increase of R$350 million, or 27.2%, mainly due to an increase in the recovery of claims from corporate insurance risks, that have reinsurance. Operating Margin Operating margin is the sum of banking product and losses on loans and claims. The operating margin increased R$1,614 million, or 2.8%, amounting to R$59,818 million in 2012, due to the 9.3% growth in the banking product, partially offset by the 32.9% increase in losses on loans and claims. Non-Interest Expenses The following table shows the main components of our non-interest expense in 2012 and 2011.
Non-interest expense totaled R$42,402 million in 2012, an increase of R$2,449 million, or 6.1%, compared to 2011. This increase was mainly due to general and administrative expenses, partially offset by the increase in share of profit or (loss) of unconsolidated companies. General and Administrative Expenses General and administrative expenses is composed of salaries and employee benefits, administrative expenses, amortization of intangible assets, insurance selling expenses, depreciation and other non-interest expenses. Salaries and Employee Benefits Salaries and employee benefits totaled R$14,332 million in 2012, an increase of 7.2% compared with 2011. This increase was mainly a result of the increase in expenses related to employee terminations and labor claims in connection with the restructuring process of our consumer credit business unit. This increase was also due to the collective bargaining agreements reached in September 2011, which increased both compensation and benefits by 9.0% for all employees, and in September 2012, which further increased compensation by 7.5% and benefits by 8.5%. The number of employees decreased 7.2% from December 31, 2011 to a total of 96,977 employees as of December 31, 2012, mainly due to restructuring initiatives in our consumer credit business unit which were intended to integrate systems and processes into a single platform in order to capture synergies across our consumer operations and in connection with a strategic review of certain businesses (as part of this review, certain positions within our consumer credit business were transferred to our retail partners) and, to a lesser extent, due to the sale of Orbitall, which reduced the number of our employees by 1,231.
Administrative Expenses Administrative expenses totaled R$12,665 million in 2012, an increase of R$175 million, or 1.4%, compared to 2011. This increase in administrative expenses was mainly due to inflation affecting most contracts and costs such as utilities and to the organic growth of our operations. We also recorded increased expenses related to higher operating activity, especially those related to data processing and communication, services from third-parties, including marketing, advisory and consulting services, and financial system services. Amortization of Intangible Assets Amortization of intangible assets totaled R$844 million in 2012, a decrease of R$139 million, or 14.2%, compared to 2011, primarily, due to lower amortization of acquisition of rights to payroll loans in 2012. See note 16 to our consolidated financial statements. Insurance Selling Expenses Insurance selling expenses totaled R$1,253 million in 2012, a decrease of R$16 million, or 1.2%, compared to 2011, primarily, due to lower expenses for life insurance products. Depreciation Depreciation totaled R$1,346 million in 2012, an increase of R$162 million, or 13.7%, compared to 2011. This increase was primarily due to an increase of 5.0% in the balance of our fixed assets. Other Non-Interest Expense Other non-interest expenses totaled R$7,640 million in 2012, an increase of R$1,265 million, or 19.8%, compared to 2011. This increase was mainly due to an increase in expenses related to credit cards and to a review of civil lawsuits for provisioning that increased provisions for contingencies related to lawsuits primarily in connection with economic plans and other civil lawsuits (see note 32 to our consolidated financial statements). Tax Expenses Tax expenses amounted to R$4,497 million in 2012 an increase of R$330 million, or 7.9%, from R$4,166 million in 2011. This increase in tax expenses was mainly due to increased operational activity. Share of Profit or (Loss) of Unconsolidated Companies Share of profit or (loss) of unconsolidated companies increased from a R$113 million loss in 2011 to a R$175 million gain in 2012. This R$288 million increase, or 254.9%, was mainly due to the impairment to our investment in Banco BPI recognized in 2011 and on April 20, 2012 we sold our investment in Banco BPI to La Caixa Group. Current Income Tax and Social Contribution and Deferred Income Tax and Social Contribution Certain amounts of income and expenses are recognized in our statement of income but do not affect our taxable basis and, conversely certain amounts are taxable income or deductible expenses in determining our taxes on income but do not affect our statement of income. Those items are known as permanent differences. Our total income tax and social contribution includes current income tax and social contribution and deferred income tax and social contribution. The first is the tax expense under the Brazilian tax laws for the period. The second is the tax expense resulting from the permanent differences. Income tax expense and social contribution for the year resulted in a tax expense of R$4,225 million in 2012 compared to R$3,641 million in the prior year, a 16.0% increase. Deferred income tax and social contribution totaled positive R$3,491 million, an increase of R$176 million compared to 2011. Current income tax and social contribution totaled R$7,716 million in 2012, an increase of R$760 million, or 10.9% compared to 2011. The main reason for this increase was the foreign exchange variation as described below, which was partially offset by decreased income from banking activities. For Brazilian tax purposes, exchange rate gains and losses on our investments in subsidiaries abroad are not taxable, if they represent a gain, or are not deductible, if they represent a loss, and they constitute a permanent difference. From an economic perspective we hedge our investments in subsidiaries outside Brazil by using foreign-currency denominated liabilities or derivative instruments. The gains or losses on derivative instruments and the exchange rate gains and losses on foreign-currency denominated liabilities are taxable or deductible for purposes of Brazilian taxes. During the year ended December 31, 2012, depreciation of the real against the foreign currencies in which our subsidiaries operate generated gains that were not recognized for tax purposes. The depreciation of the real generated taxable losses on derivatives instruments used as economic hedges and taxable exchange rate gains on liabilities used as economic hedges.
Results of our Operating Segments The following discussion should be read in conjunction with our consolidated financial statements, especially note 34 regarding segment information included elsewhere in this annual report as well as the information included under “Item 3A. Selected Financial Data” and “Item 4B. Business Overview - Selected Statistical Information”. Overview We provide a wide range of financial products and services to a diverse customer base of individuals and corporate customers. Below we describe our four operational and reporting segments: Commercial Bank, Itaú BBA, Consumer Credit, and Activities with the Market and Corporation: Commercial Bank Our commercial bank segment provides a broad range of banking services to a diversified client base of individuals and companies, among which are the following: retail clients (individuals and very small companies), high net worth clients, private banking clients, and small and medium-sized companies. The products and services provided by our commercial bank segment include insurance, private pension and capitalization plans, credit cards, asset management and loans, among others. The segment is an important source of funding for our operations and provides significant interest and banking services income. Itaú BBA Itaú BBA is the segment responsible for banking operations for large companies and investment banking services. The investment banking activities comprise lending to corporate borrowers through fixed and variable income instruments. In addition, this segment performs activities related to mergers and acquisitions. Consumer Credit Our consumer credit segment is responsible for the development of the strategy of increasing the range of financial products and services beyond the universe of clients who are accountholders. Thus, the consumer credit segment comprises vehicle financing services provided by units other than the branch network, credit cards to clients who are not accountholders, and credit to low income individuals. Activities with the Market and Corporation Our activities with the market and corporation segment manages the interest income associated with our capital surplus, subordinated debt surplus and the net balance of tax credits and debits, as well as the net interest income from the trading of financial assets through proprietary positions (desks), management of currency interest rate gaps, and other risk factors, arbitrage opportunities in the foreign and domestic markets, and mark-to-market of financial assets. In this segment, we also present the effect of non-recurring items that are not considered in the managerial statement of income. Basis of Presentation of Segment Information We prepare segment information based on reports used by senior management to assess the performance of our business and to make decisions regarding the allocation of funds for investment and other purposes. Our senior management uses a variety of information for such purposes, including financial information that is prepared based on accounting practices adopted in Brazil. Our segment information is not prepared in accordance with IFRS. The segment information has been prepared following accounting practices adopted in Brazil modified for the adjustments described below. Financial segment information differs from accounting practices adopted in Brazil because: (i) it includes recognition of the impact related to allocated capital using a proprietary model; and (ii) it presents net interest income using certain management criteria. For more information our segment financial information, see note 34 to our consolidated financial statements.
Capital Allocation to each Segment The book value of each of stockholders' equity and subordinated debt was replaced by funding at estimated market price, and interest income and expense were allocated to the segments, based on Tier I Capital, following a proprietary model, with surplus capital and subordinated debt being allocated to the activities with the market and corporation segment. The tax effects of payments of interest on capital by each segment have been reversed and reallocated to the segments in amounts proportional to the amount of the Tier I Capital. Share of income of unconsolidated companies which is not related to segment and non-controlling interest were allocated to the activities with the market and corporation segment. Net Interest Income We manage the foreign exchange risk of subsidiaries outside Brazil in order to economically hedge against impacts on our results arising from variation in exchange rates. In order to achieve this objective, we use derivative instruments to hedge against foreign currency risk. Hedge accounting is not applied for those derivatives; instead, they are recorded at fair value, with gains and losses included in income. Our hedging strategy considers all tax effects, including those not related to taxes or to the non-deductibility of the exchange variation on the investments abroad as well as gains and losses on derivative financial instruments used. When the parity of the real against foreign currencies is considerable, there is a significant impact on interest income and expense. As a result of the above, we have adopted a managerial statement of income to report segment information. The managerial statement of income is prepared by making reclassifications in the financial statements in accordance with the accounting practices adopted in Brazil. Tax effects of the hedge of these investments abroad, which are presented in tax expenses (PIS and COFINS) and income tax and social contribution expense, have been reclassified for our segment information. Additionally, the managerial interest margin for banking product includes, for each operation, allocation of its opportunity cost. For a better analysis we present below a summary of the results from our operating segments. The adjustments column shows the effects of the differences between the accounting principles followed for the presentation of segment information, which are substantially in line with the accounting practices adopted in Brazil, except as described above, and the policies used in the preparation of these consolidated financial statements according to IFRS.
Results of Operations for Year Ended December 31, 2012 Compared to Year Ended December 31, 2011 The result per segment is disclosed based on managerial criteria. Such information excludes certain results which are considered not related to our core business by our management. We highlight that in note 34 to our consolidated financial statements, we have disclosed the main IFRS adjustments into the business operating segments’ consolidated managerial data to obtain the IFRS consolidated financial statements in more detail. Commercial Bank The main products and services we provide to our accountholders are:
The table below shows our banking product for the commercial bank segment for the years ended December 31, 2012 and 2011:
(1) Includes net interest and similar income and expenses, dividend income, net gain (loss) from investment securities and derivatives and foreign exchange results and exchange variation on transactions. For the year ended December 31, 2012, our banking product for the commercial bank segment increased by 6.9%, from R$48,236 million in the year ended December 31, 2011 to R$51,551 million for the same period in 2012, an increase of R$3,315 million. This increase was mainly due to the 12.6% growth in banking service fees related to the increase in our customer base and to an increase in the volume of services, the 3.8% growth in interest margin, related to the 12.8% growth in the loan portfolio, and to a lesser extent the 15.3% growth in income from insurance, private pension and capitalization operations before claim and selling expenses , partially offset by the decrease of 9.1% in other income. The increase in banking service fees was partially offset by recent reductions in some of our banking service fees, in line with pricing changes by our competitors.
The table below shows an increase of 38.9% in our losses on loans and claims for the commercial bank segment for the year ended December 31, 2012, compared to the same period of 2011, mainly due to the 19.7% increase in expenses for allowance for loan and lease losses.
Our expenses for allowance for loan and lease losses increased by 19.7%, from R$13,845 million in the year ended December 31, 2011 to R$16,577 million in the same period of 2012. The increase of R$2,732 million in expenses for allowance for loan and lease losses was mainly due to the increase in delinquency levels observed in our portfolios of personal loans and to the growth in our loan portfolio. The decrease of R$1,026 million in recovery of loans written-off as losses was mainly due to discounts granted in the renegotiation of credit that had already been written off as losses no longer being deducted from the interest and similar income in 2012, but deducted from the income from the recovery of loan operations written off as losses. The table below shows an increase of 4.6% in our other operating income (expenses) for the commercial bank segment for the year ended December 31, 2012, compared to the same period of 2011, primarily due to the increase of 5.2% in non-interest expenses.
(1) Refers to general and administrative expenses including salaries and employee benefits, depreciation expenses and amortization. Non-interest expenses totaled R$24,539 million in 2012, an increase of R$1,224 million, or 5.2%, compared to 2011.This increase was driven by the higher volume of transactions, as a result of a growth in our banking operations. This increase was also driven by an increase in personnel expenses, which were affected by the increases in compensation and benefits of 9.0% in September, 2011, that affected all of 2012, and of 7.5% (compensation) and 8.5% (benefits) in September, 2012, due to the collective bargaining agreements reached in each year, was partially offset by a reduction in the number of employees in the segment during the year. Finally, this increase was also driven by an increase in provisions due to changes in criteria for the model for provisioning (see note 32 to our consolidated financial statements), as well as increased selling expenses for credit cards due to the growth in customer base and volume of transactions (see note 26 to our consolidated financial statements). Our tax expense for ISS, PIS and COFINS and other taxes increased 4.2% compared to year ended December 31, 2011. This increase reflects the increase in revenues and in our operational activities throughout the year. See “— Net interest income” above. Our share of profit or (loss) of unconsolidated companies, net of commercial bank activities increased by R$151 million for the year ended December 31, 2012 compared to the same period of 2011, mainly due to the impairment to our investment in Banco BPI recognized in 2011 and in April 20, 2012 we sold the Banco BPI to La Caixa Group. The table shows a 22.2% decrease in income tax expense and social contribution for the year ended December 31, 2012. The main reason for this was the decrease in income before income tax and social contribution as explained above.
The table below also shows a decrease of R$1,315 million in our net income for the commercial bank segment for the year ended December 31, 2012, compared to the same period of 2011.
Itaú BBA For our corporate and investment bank segment (Itaú BBA), the banking product for 2012 compared to 2011, is shown in the table below:
(1) Includes net interest and similar income and expenses, dividend income, net gain (loss) from investment securities and derivatives and foreign exchange results and exchange variation on transactions. For the year ended December 31, 2012, our banking product for Itaú BBA increased by 8.6%, from R$6,897 million in the year ended December 31, 2011 to R$7,491 million for the same period in 2012, an increase of R$594 million. This increase was mainly due to an increase in interest margin due to an increase in the large companies’ credit portfolio by 13.8% and an increase in income from dividends. This increase in banking product was also due to an increase in banking service fees due to an increase in revenues from investment banking transactions and fees from credit transactions. The increase in banking product was partially offset by a decrease in other income of R$20 million. The table below shows a significant increase in our losses on loans and claims from Itaú BBA for the year ended December 31, 2012, compared to the same period of 2011, primarily due to an increase in expenses for allowance for loan and lease losses.
We had a loss of R$795 million for loans and claims for the year ended December 31, 2012 compared to a loss of R$134 million for the year ended December 31, 2011. This increase is mainly due to an increase in expenses for allowance for loan and lease losses related to the recognition of provisions for some economic groups as a result of the revision of ratings and the growth in our loan portfolio. However, there was no increase in overdue balances of the corporate portfolio and 92.1% of our corporate portfolio has an “AA”, “A” or “B” rating in accordance with the criteria set forth in CMN Resolution No. 2,682. The table below shows an increase of 13.4% in other operating income (expenses) for the Itaú BBA segment in the year ended December 31, 2012, compared to the same period of 2011, mainly due to a 11.0% increase in non-interest expenses.
(1) Refers to general and administrative expenses including salaries and employee benefits, depreciation expenses and amortization. Non-interest expenses totaled R$2,891 million in 2012, an increase of R$286 million, or 11.0%, compared to 2011. This increase is due mainly to increases in compensation and benefits of 9.0% in September 2011, that affected all of 2012, and of 7.5% (compensation) and 8.5% (benefits) in September 2012, due to the collective bargaining agreements reached in each year, and an increase of 14% in the number of employees. Tax expense for ISS, PIS and COFINS and other taxes resulted in R$410 million in 2012 compared to R$341 million in the prior year, a 20.2% increase, mainly due to a growth in the operating activities. The table shows a 11.9% decrease inincome before tax and social contribution for Itaú BBAfor the period ended December 31, 2012 compared to the same period of 2011from R$3,852 million for 2011 to R$3,395 million for 2012. Income tax and social contribution for the year totaled R$1,066 million in 2012 compared to R$1,287 million in the prior year, a 17.2% decrease, mainly due to the lower income before income tax and social contribution. The table below also shows a decrease of 9.2% in net income for Itaú BBA segment for the year ended December 31, 2012 compared to the same period of 2011.
Consumer Credit We offer credit cards to non-account holders both through direct sales and through our partnerships, in the form of joint ventures and operating agreements with major retailers present in the Brazilian market. We also offer vehicle financing to non-account holders, through partnerships with both new and used car retailers in Brazil. The banking product for the consumer credit operating segment is show in the table below.
(1) Includes net interest and similar income and expenses, dividend income, net gain (loss) from investment securities and derivatives and foreign exchange results and exchange variation on transactions. For the year ended December 31, 2012, our banking product for consumer credit increased 0.8% compared with 2011, from R$14,102 million in the year ended December 31, 2011 to R$14,211 million in the year ended December 31, 2012, an increase of R$109 million. In 2012, the results of the banking product remain in line with 2011, as the increase in interest income and fees from credit cards was offset by a decrease in interest income and fees from our vehicle portfolio.
Our losses on loans and claims for the consumer credit segment increased 21.3% in the year ended December 31, 2012 compared to the same period of 2011, from R$4,270 million in 2011 to R$5,179 million in 2012, primarily due to a 16.0% increase in expenses for allowance for loan and lease losses, as shown in the table below.
Our expenses for allowance for loan and lease losses increased by 16.0%, from R$5,270 million in the year ended December 31, 2011 to R$6,111 million in the same period of 2012. This increase is due to an increase in the delinquency levels of Brazilian consumers and in the vehicle loans portfolio.
(1) Refers to general and administrative expenses including salaries and employee benefits, depreciation expenses and amortization. Non-interest expenses totaled R$6,551 million in 2012, a decrease of R$397 million, or 5.7%, compared to 2011, mainly due the restructuring of the consumer credit business unit, implemented in 2012 in which we revised agreements and partnerships, halting those with underperformance histories, and reduced the number of employees some of which were transferred to our retail partners. Some of the benefits of the unit restructuring was offset by increases in compensation and benefits of 9.0% in September 2011, that affected all of 2012, and of 7.5% (compensation) and 8.5%(benefits) in September 2012, due to the collective bargaining agreements reached in each year. Tax expenses for ISS, PIS and COFINS and other taxes remained in line with 2011. See —Net interest income above. Our income before income tax and social contribution for the consumer credit segment decreased 19.0% in the year ended December 31, 2012 compared to the same period of 2011, from R$1,921 million in 2011 to R$1,556 million in 2012, as shown in the table below. The table below also shows a 34.8% decrease in income tax and social contribution for the year that totaled R$311 million in 2012 compared to R$477 million in the prior year, primarily due to lower income before income tax and social contribution. The table below also shows a 13.8% decrease in net income for the consumer credit segment for the year ended December 31, 2012, compared to the same period of 2011.
Activities with the Market and Corporation The activities with the market and corporation segment presents the result from excess capital, excess subordinated debt and the net balance of tax assets and liabilities. It also shows the financial margin on market transactions, costs of treasury operations, equity in the earnings of companies that are not linked to any segments, as well those adjustments relating to minority shareholdings in subsidiaries and our interest in Porto Seguro. The banking product for the activities with the market and corporation business operational segment shown in the table below increased by 13.7%, from R$5,109 million in the year ended December 31, 2011 to R$5,808 million in the same period in 2012, an increase of R$699 million, mainly due to an increase in the interest margin.
(1) Includes net interest and similar income and expenses, dividend income, net gain (loss) from investment securities and derivatives and foreign exchange results and exchange variation on transactions. The interest margin within this segment primarily consists of revenues by treasury transactions and surplus capital. During the year ended December 31, 2012, the interest margin totaled R$5,555 million and increased by 15.7% compared to the same period of 2011. This increase is primarily due to higher gains from investing capital surplus in 2012 compared to 2011. Gains in treasury transactions in 2012 remained in line with 2011. Banking service fees decreased 19.4% while income from insurance, private pension and capitalization operations before claim and selling expenses increased R$5 million. These changes were due to differences in revenues and expenses allocation to other operating segments in 2012 compared to 2011. Losses on loans and claims decreased from a loss of R$521 million in 2011 to a gain of R$251 million in 2012, as shown in the table below, mainly due to the decrease in expenses for allowance for loan and losses.
The expenses for allowance for loans and lease losses decreased from R$531 million in 2011 to R$85 million in 2012. These changes were due to differences in revenues and expenses allocation to other operating segments in 2012 compared to 2011. Other operating income (expenses) decreased from R$390 million in 2011 to R$281 million in 2012, as shown in the table below, mainly due to the 52.0% decrease in non-interest expenses.
(1) Refers to general and administrative expenses including salaries and employee benefits, depreciation expenses and amortization. Non-interest expenses decreased R$486 million in the year ended December 31, 2012 compared to the year ended December, 31, 2011, mainly due to lower expenses in benefits related to employment in 2012 compared to 2011. Tax expenses for ISS, PIS and COFINS and other increased R$199 million in the year ended December 31, 2012 compared to the year ended December, 31, 2011, mainly due to differences in revenues and expenses allocation to other operating segments in 2012 compared to 2011. Share of profit or (loss) of unconsolidated companies, net decreased R$131 million, from R$447 million in 2011 to R$316 million in 2012, a decrease of 29.3%, due to sale of BPI and of Serasa shares. The table below shows an increase of R$724 million in income tax and social contribution for 2012 from 2011, due to higher income before income tax and social contribution as explained above and a decrease of R$296 million in non-controlling interest in subsidiaries from R$885 million in 2011 to R$589 million in 2012, mainly due to the acquisition of the remaining minority shares of Redecard. Net income for the activities with the market and corporation segment increased from R$3,069 million in 2011 to R$4,221 million in 2012, as shown in the table below.
Results of Operations for Year Ended December 31, 2011 Compared to Year Ended December 31, 2010
Highlights
For the year ended December 31, 2011, our net income attributable to owners of the parent company was R$13,837 million and our total stockholders’ equity was R$73,941 million.
As of December 31, 2011, total loan operations and lease operations was R$346,264 million, a 17.4% increase compared to December 31, 2010. Loans to individuals increased by
Loans to individuals totaled R$148,277 million in 2011, an increase of R$22,760 million, or 18.0%, compared to 2010. This increase is primarily a result of a 44.1% growth in personal loans, totaling R$36,403 million, as a consequence of the increase in credit limits as well as additional product offerings to our customer base. Mortgage loans in 2011 compared to 2010 increased 66.7%, totaling R$13,450 million, as a result of the favorable Brazilian mortgage market, which presented the highest growth in 2011. Vehicle financing increased 0.5% in 2011 compared to 2010, totaling R$60,463 million, due to a) the low overall growth in this market in Brazil, related to the macroprudential measures taken by the government at the end of 2010 (i.e., increase in capital requirements for such transactions, considering the percentage of down-payment and the tenure of the contracts, as established by Circular 3,515/Central Bank of December 3, 2010), b) higher non-performing loan (NPL) levels and c) tightening of our underwriting standards.
Loans to companies totaled R$177,728 million in 2011, an increase of R$22,925 million, or 14.8%, compared to 2010. Loans to small and medium companies increased R$5,699 million, or 7.1% in 2011 compared to 2010, totaling R$85,649 million and loans to corporate customers increased R$17,226 million, or 23.0%, in 2011 compared to 2010, totaling R$92,079 million. In 2011, we focused our underwriting initiatives on medium and large companies, which typically have lower delinquency rates, and grew consistent with the banking industry as a whole. In addition, the depreciation of the real against other currencies, especially the U.S. dollar, also contributed to the growth of our medium to large companies portfolio since certain of our loans are denominated, or originated in, such currencies. Due to the higher non-performing loan (NPL) levels observed in our small businesses portfolio (mainly in the first half of 2011) and in our vehicle financing portfolio (especially in the second half of 2011), we tightened our underwriting standards and required either more collateral or higher down payments, and reduced the maturity of loans within these portfolios. These changes, combined with the slowing growth of the Brazilian market, resulted in a slight reduction of our small companies loan portfolio and in the overall stability in the vehicle financing portfolio. Losses on loans and claims During 2011, delinquency levels increased both in our portfolio and in the Brazilian financial system. This increase led to higher incurred losses, especially in the small companies and vehicle financing portfolios, and to an increase in expenses for allowance for loan and lease losses from 2010 to 2011. For more details on how we calculate allowance for loan losses, see note 36.4 of our consolidated financial statements.
As of December 31, 2011, the ratio of 90-day non-performing loans as a percentage of our total loan portfolio increased to 4.9%, compared to 4.2% as of December 31, Credits under renegotiation, including extended, modified and deferred repayments, increased to 4.2% of our total portfolio, mainly due to the increased amount of renegotiation of collateralized loans (mainly vehicle loans) as of December 31, 2011, compared to 3.1% as of December 31, 2010.
Efficiency Project
During 2011, after the completion of the integration of Itaú and Unibanco branches in 2010, we implemented the “Efficiency Project”, which aims a close budget management and matricial monitoring of costs and revenues, the establishment of targets for each business unit and the promotion of a strong culture of operational efficiency.
During 2010 our main challenge was the completion of the integration of Unibanco branches and CSBs throughout Brazil. With the completion of the integration, we were able to improve our processes and, accordingly, expand the volume of services and increase our customer base, while maintaining service quality. We highlight the improvement of asset quality as the principal change in our financial condition for the year ended December 31, 2010. Our operations were positively affected by a decrease in nonperforming loans, mainly due to an improvement in the quality of our portfolio with individuals and companies, and an improvement in our recovery of loans previously written off as losses. Reduced delinquency levels are associated with the improving Brazilian economy.
Results of Operations
The following table shows the main components of our net income for 2011 and 2010.
Interest and similar Income
The following table shows the main components of our interest income for 2011 and 2010.
Banking Product
Banking product is a subtotal of individual line items, such as interest and similar income, interest and similar expense, dividend income, net gain (loss) from
Interest and Similar Income
The R$19,534 million or 25.1% increase in interest income in 2011 is primarily due to an increase in the balance of loan and lease operations, financial assets held for trading and securities and in a lesser extent to Central Bank compulsory deposits.
Interest and similar income is a subtotal of individual line items, such as interest on loan and lease operations, interest on interbank deposits, interest on Central Bank compulsory deposits, interest on securities purchased under agreements to resell, interest on financial assets held for trading, interest on available-for-sale financial assets, interest on held-to-maturity financial assets and interest on other financial assets.
Interest on Loan and Lease Operations
The table below shows the performance of loan operations and lease operations, with loans classified by type of creditor (individuals and companies) and further broken down by type of product for individuals and by size of customer for companies. In addition, the table presents the balance of credit operations from our subsidiaries in Latin America outside of Brazil (Argentina, Chile, Uruguay and Paraguay).
Our results of operations for the year ended December 31, 2011, when compared to the year ended December 31, 2010, reflected a significant impact from exchange rate variations. The exchange rate between the U.S. dollar and the real changed significantly. During the year ended December 31, 2011, the real depreciated 12.6% against the U.S. dollar, while in 2010 the real appreciated 4.3% against the U.S. dollar.
In 2011, we observed an increase in the CDI rate to 11.6% from 9.8% which caused impacts on costs as revenues of many our assets and liabilities.
Interest on loan and lease operations totaled R$58,492 million in 2011, an increase of R$7,799 million, or 15.4% compared to 2010. This increase was due primarily to an increase in the average volume of loans and lease transactions.
As of December 31, 2011, total loan operations and lease operations was R$346,264 million, a 17.4% increase compared to December 31, 2010. Loans to individuals increased by
Loans to individuals totaled R$
Loans to companies totaled R$
The balance of our foreign loans from our operations in Latin America outside Brazil (Argentina, Chile, Uruguay and Paraguay) totaled R$19,259 million as of December 31, 2011, an increase of 42.5% compared to December 31, 2010, primarily driven by the growth of operations abroad and the fluctuation of the real against several of these currencies.
Interest on Interbank Deposits
Interest on interbank deposits totaled R$890 million in 2011, an increase of R$66 million, or 8.1%, compared to 2010. This increase was due primarily to the increase on the average balance of these deposits, which is managed by our treasury department.
Interest on Central Bank Compulsory Deposits
Interest on Central Bank compulsory deposits totaled R$9,182 million in 2011, an increase of R$5,157 million, in 2011 compared to 2010. This increase was mainly due to increases in the average balance of levels of compulsory deposits required by the Central Bank compared to 2010. In December 2010, the Central Bank increased compulsory deposit requirements in order to restore the levels of compulsory deposits held by the banks before the international financial crisis of 2008, when the Central Bank decreased required amounts of compulsory deposits, and also to help control inflation and credit growth in Brazil.
Interest on Securities Purchased under Agreements to Resell
Interest on securities purchased under agreements to resell totaled R$9,961 million in 2011, an increase of R$21 million, or 0.2% in 2011 compared to 2010. This increase was mainly due to higher yield/rate of interest on securities purchased under agreements to resell in 2011 compared to 2010.
Interest on Financial Assets Held for Trading
Interest on financial assets held for trading totaled R$14,676 million in 2011, an increase of R$6,648 million, or 82.8%, compared to 2010. This increase was mainly due to an increase in the average balance and in the average yield/rate of financial assets held for trading in 2011 compared to 2010, which is managed by our treasury department.
Interest on Available for Sale Financial Assets
Interest on available-for-sale financial assets totaled R$2,888 million in 2011, a decrease of R$109 million, or 3.6%, compared to 2010. This decrease was mainly due to the decrease of average yield/rate of available-for-sale financial assets, partially offset by an increase in the average balance of available-for-sale financial assets in 2011 compared to 2010.
Interest on Held-to-Maturity Financial Assets
Interest on held-to-maturity financial assets totaled R$360 million in 2011, a decrease of R$96 million, or 21.0%, compared to 2010. This decrease was mainly due to a decrease in the average yield/rate of held-to-maturity financial assets, partially offset by an increase in the average balance of held-to-maturity financial assets in 2011 compared to 2010.
Interest on Other Financial Assets
Interest on other financial assets totaled R$903 million, an increase of R$48 million, or 5.7%, compared to 2010. This increase was mainly due to an increase in other operational income.
Interest and similar Expense
The following table shows the main components of our interest expense in 2011 and 2010.
Total interest expense was R$55,599 million in 2011, an increase of R$18,759 million, or 50.9%, compared to 2010, mainly due to increases in interest expense from interest on securities sold under repurchase agreements and from institutional market debt.
Interest on Deposits
Interest on deposits was R$
Interest on Securities Sold Under Repurchase Agreements
Interest on securities sold under repurchase agreements was R$22,133 million in 2011 an increase of R$6,359 million, or 40.3%, compared to 2010. An increase in the average balance resulted in an increase in expenses of R$
Interbank Market Debt
Interest expense on interbank market debt totaled R$5,536 million in 2011, an increase of R$
Institutional Market Debt
Interest expense on institutional market debt totaled R$
Financial Expense from Reserves for Insurance and Private Pension
Financial expense from reserves for insurance and private pension plans totaled R$5,239 million in 2011, an increase of R$1,201 million, or 29.8%, compared to 2010. This increase was primarily due to an increase in the average balance of reserves for insurance and private pension and liabilities for capitalization plans of R$921 million, and by an increase of R$281 million due to an increase on the average yield/rate. See “Item 4B. Business Overview — Selected Statistical Information — Average Balance Sheet and Interest Rate Data."
Other interest income and Foreign Exchange Results
The following table shows the main components of our other interest and foreign exchange results income in 2011 and 2010.
In 2011, our other interest income and foreign exchange results totaled R$6,610 million, an increase of R$1,598 million, or 31.9%, in 2011 compared to 2010. This increase was primarily due to the increase of R$3,174 million in foreign exchange results and exchange variation on transactions, partially offset by a decrease of R$1,611 million in net gain (loss) from
Dividend Income
Dividend income totaled R$361 million on 2011, an increase of R$35 million compared to 2010, due to higher income from dividends of other companies.
Net Gain (Loss) from
Net gain (loss) from
Foreign Exchange Results and Exchange Variation on Transactions
Foreign exchange results and exchange variation on transactions totaled R$4,998 million an increase of R$3,174 million, or 174.0% compared to 2010, due mainly to the effect of the depreciation of the real against the dollar in our investments in subsidiaries abroad.
Non-Interest Income
The following table shows the main components of our non-interest income in 2011 and 2010.
In 2011, our non-interest income totaled R$25,913 million, an increase of R$2,488 million, or 10.6%, in 2011 compared to 2010. This increase was primarily due an increase of R$2,318 million in banking service fees, partially offset by a decrease of R$252 million in other non-interest income.
Banking Service Fees
Banking service fees totaled R$19,410 million in 2011, an increase of R$2,318 million, or 13.6%, compared to 2010. This increase was mainly due to increased revenues from credit card fees, which increased by 16.2% from R$6,408 million in 2010 to R$7,446 million in 2011, primarily due to higher annual fees, and higher interchange revenues arising from the increased volume of transactions due to year-end sales and growth in the number of credit card transactions. See note
Income from Insurance, Private Pension and Capitalization Operations Before Claim and Selling Expenses
Income from insurance, private pension and capitalization operations before claim and selling expenses totaled R$5,345 million in 2011, an increase of R$422 million, or 8.6%, compared to 2010. This increase was mainly due to an increase in insurance and private pension premiums and to a lesser extent to an increase on revenue from capitalization plans, partially offset by an increase in reserves for insurance and private pension.
Other Income
Other income totaled R$1,158 million in 2011, a decrease of R$252 million, or 17.9%, compared to 2010. This decrease was mainly due to a reversal of operational provisions in 2010.
Losses on Loans and Claims
Losses on loans and claims are the sum of expenses for allowance for loan and lease losses, recovery of loans written off as losses and expenses for claims. In 2011, our losses on loans and claims increased from R$12,938 million in 2010 to R$16,072 in 2011 a R$3,134 million increase, or 24.2%, mainly due to an increase of expenses for allowance for loan and lease losses and to a lesser extent to an increase of expenses for claims, partially offset by an increase in the recovery in loans written off as losses.
Expenses for Allowance for Loan and Lease Losses
Expenses for allowance for loan and lease losses totaled R$20,038 million in 2011, an increase of R$4,491 million, or 28.9%, in comparison to 2010. See note
During 2011, the asset quality of our loan portfolio decreased in comparison to the previous year. In 2011, the adverse effects of the international economic and financial crisis spread among industries and resulted in increased risk related to certain credit portfolios. Levels of non-performing loans increased for individuals and companies generally, reflecting these adverse market conditions.
Recovery of Loans Written off as Losses
Recovery of loans written off as losses increased from R$4,195 million in 2010 to R$5,477 million in 2011, an increase of R$1,282 million, or 30.6%, mainly due to an increase in collection efforts.
Expenses for Claims
Expenses for claims decreased from R$1,586 million in 2010 to R$1,511 million in 2011, a reduction of R$75 million, or 4.7%, mainly due to decreases in claims in the life and personal accidents portfolios.
Operating Margin
Operating margin is the sum of banking product and losses on loans and claims. The operating margin increased R$1,727 million, or 3.1%, amounting R$58,204 million in 2011, due to the 7.0% growth in the banking product, partially offset by the 24.2% increase in the losses on loans and claims.
Non-Interest Expenses The following table shows the main components of our non-interest expense in 2011 and 2010.
Non-interest expense totaled R$39,953 million in 2011, an increase of R$1,506 million, or 3.9%, compared to 2010. This increase was mainly due to general and administrative expenses and the increase in share of comprehensive income of unconsolidated companies.
General and Administrative Expenses
General and administrative expenses is composed by salaries and employee benefits, administrative expenses, amortization of intangible assets, insurance selling expenses, depreciation and other non-interest expenses.
Salaries and Employee Benefits
Salaries and employee benefits totaled R$13,373 million in 2011, an increase of 2.8% compared with 2010, partially offset by the 3.2% decrease in number of employees in 2011. This increase was lower than the 9.0% on the labor agreement. See note
Administrative Expenses
Administrative expenses totaled R$12,490 million in 2011, an increase of R$139 million, or 1.1%, compared to 2010. This increase was driven by the higher volume of overall customer transactions, partially offset by a reduction of expenses related to the migration of Unibanco branches and CSBs to the Itaú layout and platform.
Amortization of Intangible Assets
Amortization of intangible assets totaled R$984 million in 2011, an increase of R$6 million, or 0.6%, compared to 2010, due to amortization of intangible assets in line with 2010. See note
Insurance Selling Expenses
Insurance selling expenses totaled R$1,268 million in 2011, a decrease of R$61 million, or 4.6%, compared to 2010. This decrease was mainly due to improvements in our insurance selling process.
Depreciation
Depreciation totaled R$
Other Non-Interest Expense
Other non-interest expenses totaled R$
Tax Expenses
Tax expenses amounted to R$4,166 million in 2011 an increase of R$ 2 million, or 0.1%, from R$4,164 million in 2010, remaining practically stable. PIS, COFINS expenses increased in 2011, but were offset by the decrease in ISS and other tax expenses.
Share of
Share of
Current Income Tax and Social Contribution and Deferred Income Tax and Social Contribution
Certain amounts of income and expenses are recognized in our statement of income but do not affect our taxable basis and, conversely certain amounts are taxable income or deductible expenses in determining our taxes on income but do not affect our statement of income. Those items are known as permanent differences, which it segregates our total income tax and social contribution in two different lines: current income tax and social contribution and deferred income tax and social contribution. The first is the tax expense demanded by the Brazilian tax laws in the period. The second is a result from the permanent differences.
Income tax expense and social contribution for the year resulted in a tax expense of R$3,641 million in 2011 compared to R$5,536 million in the prior year, a 34.2% decrease. Deferred income tax and social contribution totaled positive R$3,315 million, a decrease of R$4,809 million compared to 2010. Current income tax and social contribution totaled R$6,956 million in 2011, an increase of R$2,914 million, or 72.1% compared to 2010. The main reason for this decrease was the effect of, decreased exchange rate losses on our investments in subsidiaries abroad and related increased gains on the derivative instruments used to hedge our investments in subsidiaries abroad as described below, which was partially offset by increased income in the banking activities.
For Brazilian tax purposes, exchange rate gains and losses on our investments in subsidiaries abroad are not taxable, if they represent a gain, or are not deductible, if they represent a loss, they constitute a permanent difference. From an economic perspective we hedge our investments in subsidiaries outside Brazil by using foreign-currency denominated liabilities or derivative instruments. The gains or losses on derivative instruments and the exchange rate gains and losses on foreign-currency denominated liabilities are taxable or deductible for purposes of Brazilian taxes.
Results of our
The following discussion should be read in conjunction with our consolidated financial statements, especially note
For a better analysis we present below a summary of the results from our operating segments.
Results of Operations for Year Ended December 31, 2011 Compared to Year Ended December 31, 2010
The result per segment is disclosed based on managerial criteria. Such information excludes certain results which are considered not related to our core business by our management. We highlight that in note
Commercial Bank
We have a large and diverse portfolio of products to address our customers’ needs. The main products and services we provide to our accountholders are:
The table below shows our banking product in the commercial bank segment for 2011 and 2010:
(1) Includes net interest and similar income and expenses, dividend income, net gain (loss) from
For the year ended December 31, 2011, our consolidated banking product from the commercial bank segment increased by 17.0%, from R$41,238 million in the year ended December 31, 2010 to R$48,236 million for the same period in 2011, an increase of R$6,998 million. This increase was mainly due to the 16.7% growth in interest margin, related to a 20.4% growth in the loan portfolio as well as a 18.1% growth in banking service fees related to the increase in our customer base and to an increase in the volume of services, and to a lesser extent to income from insurance, private pension and capitalization operations before claim and selling expenses that increased by 17.0% and to other income that increased by 11.6%.
The table below shows an increase of 15.6% on our losses on loans and claims in the commercial bank segment for the year ended December 31, 2011, compared to the same period of 2010.
Our expenses for allowance for loan and lease losses increased by 28.1%, from R$10,808 million in the year ended December 31, 2010 to R$13,845 million in the same period of 2011. We highlight the increase in the delinquency levels and reduction in the asset quality as the principal change in our commercial bank segment for the year ended December 31, 2011. This increase was partially offset by the increase in the recovery of loans written-off as losses due to a higher effort in collection services and lower expenses for claims.
The table below shows an increase of 12.7% on our other operating income (expenses) from the commercial bank segment for the year ended December 31, 2011, compared to the same period of 2010.
(1) Refers to general and administrative expenses including salaries and employee benefits, depreciation expenses and amortization.
Upon the completion of the integration of Unibanco's branches and other customer sites throughout Brazil in the end of 2010. During 2011 we were able to improve our processes and expand accordingly the volume of services and increase our customer base, while maintaining service quality. Non-interest expenses totaled R$23,315 million in 2011, an increase of R$2,488 million, or 11.9%, compared to 2010.This increase was driven by the higher volume of overall customer transactions, an increase in provisions for civil lawsuits (see note
Our tax expense for ISS, PIS and COFINS and other taxes increased 21.4% compared to year ended December 31, 2010. This increase reflects the increase in revenues and in our operational activities throughout the year. See “—Net interest income above”.
Our share of
The net income from commercial bank activities totaled R$7,563 million in 2011, an increase of R$1,282 million compared to 2010.
Income tax expense and social contribution for the year resulted in a tax expense of R$3,833 million in 2011 compared to R$2,509 million in the prior year, a 52.8% increase. The main reasons for this was the increase in income before income tax and social contribution and the adjustment in tax rate as explained above.
Itaú BBA
For our corporate and investment bank activities (Itaú BBA), the banking product for 2011 compared to 2010, is shown in the table below:
(1) Includes net interest and similar income and expenses, dividend income, net gain (loss) from
For the year ended December 31, 2011, our consolidated banking product from Itaú BBA increased by 7.8%, from R$6,400 million in the year ended December 31, 2010 to R$6,897 million for the same period in 2011, an increase of R$497 million. This increase was mainly due to an increase in interest margin and in banking service fees due to an increase in the large companies’ segment credit portfolio by 21.7%, and an increase in revenues from investment bank transactions and credit fees and by an increase in other income of R$11 million.
Our losses on loans and claims from Itaú BBA are shown in the table below:
We had a loss of R$134 million on loans and claims for the year ended December 31, 2011 compared to a gain on losses on loans and claims of R$186 million for the year ended December 31, 2010. In both 2011 and 2010 we reversed provisions for allowance for loans losses, with significantly increased reversals in 2010. The strong quality level of the credit portfolio is to be highlighted, with 95,3% of the credits as described as “AA”, “A” an “B” risk ratings, in accordance with criteria set forth in the Brazilian Monetary Council Resolution 2,682.
Our other operating income (expenses) in the Itaú BBA segment in the table below shows an increase of 7.0% for the year ended December 31, 2011, compared to the same period of 2010.
(1) Refers to general and administrative expenses including salaries and employee benefits, depreciation expenses and amortization.
Non-interest expenses totaled R$2,605 million in 2011, an increase of R$226 million, or 9.5%, compared to 2010. The rise in non-interest expense is primarily attributable to the 9.0% salaries increase on the labor agreement.
Tax expense for ISS, PIS and COFINS and other taxes resulted in R$341 million in 2011 compared to R$387 million in the prior year, an 11.9% decrease.
Net income from Itaú BBA activities decreased by 9.7% for the year ended December 31, 2011 compared to the same period of 2010, as showed in the table below.
Income before tax and social contribution from Itaú BBA decreased 0.3% for the period ended December 31, 2011 compared to the same period of 2010, from R$3,865 million in 2010 to R$3,852 million in 2011. Income before tax and social contribution for the year totaled R$1,287 million in 2011 compared to R$1,023 million in the prior year, a 25.8% increase due to the adjustment in tax rate as explained above.
Consumer
We offer credit cards to non-account holders both through direct sales and through our partnerships, in the form of joint ventures and operating agreements with major retailers present in the Brazilian market. We also offer vehicle financing to non-account holders, through a wide chain of partnerships with both new and used car retailers in Brazil.
The banking product from consumer credit business operating segment is show in the table below.
(1) Includes net interest and similar income and expenses, dividend income, net gain (loss) from
For the year ended December 31, 2011, our interest margin from consumer credit decreased by 7.6%, from R$9,044 million in the year ended December 31, 2010 to R$8,356 million for the same period in 2011, a decrease of R$ 688 million. Banking service fees remained in line with 2010. The income from insurance, private pension and capitalization operations before claim and selling expenses decreased R$ 267 million in the year ended December 31, 2011 compared to the year ended December, 31, 2010. This decrease is due to the small growth in the vehicles loan portfolio during 2011, as a result of an increase in the capital requirements established by Central Bank for this market.
Our losses on loans and claims from consumer credit segment increased 13.7% in the year ended December 31, 2011 compared to the same period of 2010, from R$3,754 million in 2010 to R$4,270 million in 2011, as shown in the table below.
Our expenses for allowance for loan and lease losses increased by 12.1%, from R$4,702 million in the year ended December 31, 2010 to R$5,270 million in the same period of 2011. This increase is due to an increase in the delinquency levels of Brazilian consumers generally and the growth in the credit portfolio in 2011.
(1) Refers to general and administrative expenses including salaries and employee benefits, depreciation expenses and amortization.
Non-interest expenses totaled R$6,948 million in 2011, an increase of R$91 million, or 1.3%, compared to 2010, remaining in line with 2010, mainly due to the 9.0% salaries increase on the labor agreement, offset by the restructuring of the consumer credit area.
Tax expenses for ISS, PIS and COFINS and other taxes remained in line with 2010. See “—Net interest
Our income before tax and social contribution on net income in the consumer credit segment decreased 46.2% in the year ended December 31, 2011 compared to the same period of 2010, from R$3,568 million in 2010 to R$1,921 million in 2011, as shown in the table below.
Income tax and social contribution for the year totaled R$477 million in 2011 compared to R$1,054 million in the prior year, a 54.7% decrease, primarily due to lower income before income tax and social contribution, partially offset by the adjustment in tax rate as explained above.
Activities with the Market and Corporation
The activities with the market and corporation segment presents the result from excess capital, excess subordinated debt and the net balance of tax assets and liabilities. It also shows the financial margin on market transactions, costs of treasury operations, equity in the earnings of companies that are not linked to any segments, as well those adjustments relating to minority shareholdings in subsidiaries and our interest in Porto Seguro.
The banking product from activities with the market and corporation business operational segment is shown in the table below and increased by 39.7%, from R$3,657 million in the year ended December 31, 2010 to R$5,109 million in the same period in 2011, an increase of R$1,452 million, mainly due to an increase in the interest margin.
(1) Includes net interest and similar income and expenses, dividend income, net gain (loss) from
The interest margin within this segment primarily consists of revenues by treasury transactions and excess capital. During the year ended December 31, 2011, the interest margin totaled R$4,801 million and increased by 43.1% compared to the same period of 2010. This increase is primarily due to higher investing capital excess gains in 2011 compared to 2010, partially offset by lower gains in treasury operations.
Banking service fees increased 69.8% while income from insurance, private pension and capitalization operations before claim and selling expenses decreased 91.7% and other income in 2011 decreased 100%. These changes were due to differences in revenues and expenses allocation to other operating segments in 2011 compared to 2010.
Losses on loans and claims increased from R$2 million in 2010 to R$521 million in 2011, as shown in the table below.
The expenses for allowance for loans losses increased from R$2 million in 2010 to R$531 million in 2011, due to an increase in provisions we made in 2011 in connection with our activities with the market and corporation segment in excess of Central Bank requirements as a result of our model for allowance for loan losses which includes the expected loss.
Other operating income (expenses) decreased from R$860 million in 2010 to R$390 million in 2011, as shown in the table below:
(1) Refers to general and administrative expenses including salaries and employee benefits, depreciation expenses and amortization.
The Tax expenses for ISS, PIS and COFINS and other decreased R$ 325 million in the year ended December 31, 2011 compared to the year ended December, 31, 2010, mainly due to the increase in the PIS and COFINS taxable base with respect to the payment of interest on own capital between the different group companies.
Non-interest expenses decreased R$70 million in the year ended December 31, 2011 compared to the year ended December, 31, 2010.
Share of
Net income in the activities with the market and corporation segment increased from R$1,386 million in 2010 to R$3,069 million in 2011, as shown in the table below.
Income tax and social contribution decreased R$251 million in 2011 from 2010, due to the adjustment in tax rate as explained above.
Non-controlling interest in subsidiaries in 2011 stood in line with 2010.
5B. Liquidity and Capital Resources
Our Superior Institutional Treasury and Liquidity Committee
We have invested in improving our liquidity risk We maintain separate liquidity pools at our Brazilian operations and at each of our subsidiaries in Latin America and Europe. Our Brazilian operations include the financial institutions in Brazil (the most important ones in terms of size being Itaú Unibanco Holding, Itaú Unibanco and Itaú BBA) and the entities used by the Brazilian operations for funding and serving their clients abroad (the most important ones in terms of size being Itaú Unibanco Holding S.A., Cayman Branch, Itaú Unibanco S.A., Cayman Branch, Itaú BBA S.A., Nassau Branch and Itaú Bank, a
Each subsidiary in Latin America (e.g., in Chile, Argentina, Uruguay and Paraguay) and in Europe has its own treasury function with significant autonomy to manage liquidity according to local needs and regulations, while remaining in compliance with the liquidity limits established by Itaú Unibanco Holding senior management. In general there are no liquidity transfers between subsidiaries or between the head office and a subsidiary, except under very specific circumstances, like targeted capital increases. There are no liquidity pool minima established by Brazilian regulators, nor by regulators in the countries where the above mentioned foreign entities operate. The following table presents our operational reserve as of December 31, 2012 and 2011, as well as the yearly average.
Management controls our liquidity reserves by projecting the resources that will be available for investment by our treasury department. The technique we employ involves the statistical projection of scenarios for our assets and liabilities, considering the liquidity profiles of our counterparties.
Short-term minimum liquidity limits are defined according to guidelines set by the Superior Institutional Treasury and Liquidity Committee
Management of liquidity makes it possible for us to simultaneously meet our operating requirements, protect our capital and
Due to our stable sources of funding, which include a large deposit base, the large number of correspondent banks with which we have long-standing relationships
Under Brazilian law, cash dividends may only be paid if the subsidiary paying such dividends has reported a profit in its financial statements. In addition, subsidiaries that are financial institutions are prohibited from making loans to Itaú Unibanco Holding but are allowed to make deposits in Itaú Unibanco Holding, which are represented by CDIs —certificados de depósitos
The following table sets forth our average liabilities for 2012, 2011 and 2010.
Our principal sources of funding are interest-bearing deposits,
Our current funding strategy is to continue to use all our funding sources in accordance with their cost and availability and our general asset and liability management strategy. We consider our current level of liquidity to be adequate. The international financial turmoil magnified the importance of issues associated with funding and the liquidity of financial institutions around the world. In order to finance our operations, we intensified the use of liquidity provided by savings and
Our ability to obtain funding depends on numerous factors, including our credit ratings, general economic conditions, investors’ perception of emerging markets in general and of Brazil (in particular, prevailing economic and political conditions in Brazil and government regulations in relation to foreign exchange funding).
Some of our long-term debt provides for acceleration of the outstanding principal balance upon the occurrence of specified events, which are events ordinarily found in long-term financing agreements. As of December 31,
On June 27, 2012, Moody’s announced the downgrade of Brazilian financial institutions as part of their ongoing global review of banks whose standalone assessments are higher than the rate of the country in which they are domiciled. Itaú Unibanco Holding’s issuer rating was downgraded to Baa1 with positive outlook from A2. This change did not reflect a credit profile deterioration and there was no liquidity impact as a result of this downgrade.
Share Repurchases On October 31, 2011, our board of directors renewed the annual authorization for open market purchases at market prices of up to 9,000,000 of our common shares and 56,700,000 of our preferred shares. These purchases were authorized to be carried out from November 4, 2011 to November 5, 2012. From January to October 2012, we acquired 4,300,000 of our preferred shares at an average price of R$28.45 per share. On October 22, 2012, our board of directors again renewed the authorization for open market purchases at market prices, increasing the amounts to up to 13,700,000 common shares and 86,300,000 preferred shares, for the period from November 5, 2012 to November 4, 2013. Changes in Cash Flows The following table sets forth the main variations in our cash flows during the years ended December 31, 2012, 2011 and 2010.
Operating Activities
Our cash flows from operating activities resulted in cash inflows of R$48,635 million in 2012, cash outflows of
Investing Activities
Our cash flows from investing activities generated cash outflows of R$37,583 million in 2012, cash outflows of R$1,311 million in 2011 and cash outflows of R$2,117 million in 2010. In 2012, 2011 and 2010,
Financing Activities Our cash flows from financing activities generated cash outflows of R$4,913 million in 2012, cash outflows of R$921 million in 2011 and cash inflows of
We paid dividends and interest on capital in the amount of
Capital
We are required to comply with Brazilian capital adequacy regulations under Central Bank rules, which require banks to have total capital equal to or greater than 11.0% of risk-weighted assets, in lieu of the
As required by Central Bank rules, we currently measure our capital compliance according to two different methods: (i) by consolidating only our financial
The following table sets forth our capital positions of total risk-weighted assets, as well as our minimum capital requirements under Central Bank rules, in each case as of December 31, 2012, 2011 and 2010, in each case on a fully consolidated basis, including our financial and non-financial subsidiaries.
CMN Resolution No. 3,490, of August 29, 2007, which sets out the criteria currently applicable to our computation of our minimum regulatory capital required, has been in effect since July 1, 2008. For calculation of our risk portions, we follow the procedures of the following Central Bank circulars and circular letters:
Circular No. 3,568, of December 21, 2011, amends the provisions of Circulars No 3,361, of September 12, 2007, No. 3,388, of June 4, 2008, No. 3,389, of June 25, 2008, No. 3,478 of December 24, 2009 and No. 3,498, of June 28, 2010, which set forth the procedures for calculation of the portion of regulatory capital related to market risk. The new calculation method will be adopted gradually from January 1, 2012, and will be fully effective on December 31,
(1) Subordinated CDBs in the principal amount of $2,415.4 million have matured as of March 28, 2013. (2) Subordinated CDBs may be redeemed on any date from November 2011 until maturity.
Interest Rate Sensitivity
Management of interest rate sensitivity is a key component of our asset and liability policy. Interest rate sensitivity is the relationship between market interest rates and net interest income resulting from the maturity or re-pricing characteristics of interest-earning assets and interest-bearing liabilities. The pricing structure is matched when an equal amount of these assets or liabilities matures or re-prices. Any mismatch of interest-earning assets and interest-bearing liabilities is known as a gap position. A negative gap denotes liability sensitivity and normally means that a decline in interest rates would have a positive effect on net interest income, while a positive gap denotes asset sensitivity and normally means that an increase in interest rates would have a positive effect on net interest income. These relationships are as of one particular date only, and significant swings can occur daily as a result of both market forces and management decisions. Our interest rate sensitivity strategy takes into account rates of return, the underlying degree of risk, and liquidity requirements, including minimum regulatory cash reserves, mandatory liquidity ratios, withdrawal and maturity of deposits, capital costs and additional demand for funds.
Our Superior Institutional Treasury and Liquidity Committee
The following table sets forth our interest-earning assets and interest-bearing liabilities based on our contractual cash flows as of December 31,
Exchange Rate Sensitivity
The greater part of our operations is denominated in, or indexed to,reais. We also have assets and liabilities denominated in foreign currency, mainly in U.S. dollars, as well as assets and liabilities, which, although denominated inreais, are dollar-indexed and therefore expose us to exchange rate risks. The Central Bank regulates our maximum open, short and long foreign currency positions. As of December 31,
Our foreign currency position is composed on the liability side of the issuance of securities in the international capital markets, credit from foreign banks to finance trade operations and dollar-linked onlending from government financial institutions. The proceeds of these operations are mainly applied to dollar-linked lending operations and securities purchases.
The following table sets forth assets and liabilities classified by currency including those denominated in Brazilianreais and those denominated in or indexed to foreign currencies as of December 31,
For purposes of analysing our exposure to changes in foreign currency, the table below present the composition of the notional amount of our derivative instruments as of December 31,
Capital Expenditures
In
In September 2012, we announced the investment of R$10,413 million in technology, innovation and services to be made in the period from 2012 to 2015, of which:
In accordance with our practice during recent years, our capital expenditures in 2012
The table below sets forth our capital expenditures for the years ended December 31, 2012, 2011 and 2010.
5C. Research and Development, Patents and Licenses, Etc.
Not applicable.
5D. Trend Information
As
5E. Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, other than the guarantees we granted that are described in note
The table below summarizes the maturity profile of our consolidated long-term debt, operating leases and other contractual commitments as of December 31, 2012:
(1) Includes total estimated interest payments (including for derivatives). These estimated interest payments were calculated substantially based on the interbank forward rates at the specific periods.
ITEM 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6A. DIRECTORS AND SENIOR MANAGEMENT
We are managed by ourConselho de Administração, or board of directors, and ourDiretoria, or board of officers.
Pursuant to our bylaws, our board of directors must be composed of a minimum of
Our board of officers must be composed of a minimum of
All of our directors and officers are elected for a term of one year and can be
Pursuant to Brazilian law, the election of each member of our board of directors and our board of officers must be approved by the Central Bank.
As determined pursuant to our corporate governance policy, we have
The business address for correspondence with each of our directors and officers is Praça Alfredo Egydio de Souza Aranha, 100, 04344-902, São Paulo, SP, Brazil.
Directors:
Officers:
Set forth below are the summary biographical descriptions of our directors and officers. As described, some of the members of our board of directors and board of officers also perform senior management functions at our subsidiaries and at Itaúsa and its subsidiaries.
Mr.Pedro Moreira Salles has been chairman of our board of directors since February 2009 (with investiture,
Mr.Alfredo Egydio Arruda Villela Filho has been
Mr.Roberto Egydio Setubal has been
Mr.Alfredo Egydio Setubal has been a member of our board of directors since April 2007 (with investiture on June 29, 2007) and has served as executive vice president since April 29, 1996 (with investiture on July 3, 1996). He has served as our investor relations officer since 1995. He is currently responsible for our wealth management and capital markets services divisions, with primary responsibility for communications with capital markets, for increasing the transparency of financial and strategic information through improvements in the quality, relevance, timeliness, reliability and comparability of information and for managing relations with the CVM, the Central Bank and other official capital markets authorities. He served as our executive officer between 1993 and 1996 and managing officer between 1988 and 1993. He has been a member of the board of directors of Itaúsa since September 2008. He was a member of ANBIMA from 1994 to August 2003 and its president from August 2003 to August 2008. He has been a member of the board of directors of the Securities Dealers’ Association
Mr.Candido Botelho Bracher has been a member of our board of directors since November 2008 (with investiture on February 19, 2009) and the executive vice president of our board of officers since May 2, 2005 (with investiture on August 1, 2005). He is currently responsible for our corporate treasury division. He has been a member of the board of directors of Itaú BBA since February 2003, CEO since April 2005, and is responsible for the commercial, capital markets and human resources divisions and was vice president of the board of officers from February 2003 to April 2005. He served as an officer at Banco BBA Creditanstalt S.A. from 1988 to 2003. He
Mr.
Mr. Henri Penchashas been a member of our board of directors since November 2002 (with investiture on March 10, 2003) and served as senior vice president from April 1997 to April 2008, executive vice president from 1993 to 1997 and executive officer from 1988 to 1993. He was an executive officer of Itaúsa from December 1984 to April 2008, has been its investor relations officer since 1995 and its executive vice president since April 2009. He has also been the chief executive officer of Duratex S.A. since April 2009. Mr. Penchas was the vice president of the board of directors of Itaú BBA from February 2003 to April 2008. Mr. Penchas has a bachelor’s degree in Mechanical Engineering from the Universidade Mackenzie Mr. Israel Vainboimhas been a member of our board of directors since November 2008 (with investiture on February 19, 2009). He was elected to the board of directors of Unibanco in 1988 and to the board of directors of Unibanco Holdings in 1994. He was chairman of Unibanco from 1988 to 1992. He has served as executive chairman of Unibanco Holdings since 1992. He joined Unibanco in 1969. He has served on the board of directors of Souza Cruz S.A., Iochpe Maxion S.A.,E-Bit Tecnologia em Marketing S.A., Vinhedo Investimentos Ltda., Casa da Cultura de Israel, Museu de Arte Moderna de São Paulo — MAM and Hospital Israelita Albert Einstein. Mr. Vainboim has a bachelor’s degree in Mechanical Engineering from the Universidade Federal do Rio de Janeiro (UFRJ), and a master’s degree in Business Administration, or MBA, from Stanford University.
Mr. Nildemar Seccheshas been a member of our board of directors since April 2012 (with investiture on May 31, 2012). Mr. Secches has been chairman of the board of directors of BRF-Brasil Foods since April, 2007. He has also been a member of the board of directors of Weg S.A. since 2004, Ultrapar Participações S.A. since 2002 and Iochpe-Maxion since 2004. He was a director of BNDES from 1987 to 1990, corporate director general for the Iochpe-Maxion Group from 1990 to 1994 and President of the Brazilian Association of Chicken Exporters (Associacāo Brasileira dos Exportadores de Frango — ABEF) from 2001 to 2003. He graduated with a degree in Mechanical Engineering from the Universidade de São Paulo (USP), earned a post-graduate degree in Finance from the Pontifícia Universidade Católica do Rio de Janeiro (PUC-RJ) and completed a Ph.D. in Economics at the Universidade Estadual de Campinas (Unicamp). Mr. Pedro Luiz Bodin de Moraes has been a member of our board of directors since November 2008 (with investiture on February 19, 2009). He was a partner in Itaú Holding and a member of the board of directors of Unibanco, from April 2003 to November 2008. He was an officer and partner at Banco Icatu S.A. from 1993 to 2002. He served as deputy governor for monetary policy at the Central Bank from 1991 to 1992 and officer of BNDES from 1990 to 1991. Mr. Bodin de Moraes has a bachelor’s and master’s degree in economics from the Pontifícia Universidade Católica do Rio de Janeiro (PUC-RJ) and a Ph.D. in economics from Massachusetts Institute of Technology (MIT). Mr. Ricardo Villela Marino has been a member of our board of directors since April 2008 (with investiture on June 2, 2008) and has served as executive vice president of Itaú Unibanco since September 2009 (with investiture on February 2, 2010). He is currently responsible for our human resources and international division. He served as our senior managing officer from May 2005 to August 2006, managing officer from April 2004 to April 2005, head of the derivatives dealing desk (heading the team responsible for the structuring and sale of derivative products to middle market companies, institutional investors and private individuals) from 2003 to 2004 and head of business intelligence (responsible for the implementation of new technologies and methodologies which have helped us become a leader in the credit card industry in Brazil) from 2002 to 2003. He has served as chairman of Federación Latino Americana de Bancos Mr. Caio Ibrahim David has been a member of our board of officers since May 2010 (with investiture on December 3, 2010). He joined the group in 1987 as a trainee, with expertise as a controller and in risk management. He
Ms. Claudia Politanskihas been a member of our board of officers since November 2008 (with investiture on November 27, 2008) and is currently responsible for our legal division and serves as general legal counsel. She joined Unibanco in 1991 and was elected executive officer of Unibanco in 2007. Ms. Politanski has a law degree from the Universidade de São Paulo (USP). She also holds a master’s degree in law, or
Mr.
Mr.Ricardo Baldinhas been a member of our board of officers since April 2009 (with investiture on September 1, 2009) and is currently responsible for our internal audit division. In 1977 he joined PricewaterhouseCoopers as a trainee and was a partner there for
Mr. Alexsandro Broedel Lopes has been a member of our board of officers since May 2012 (with investiture on August 1, 2012). He is an Accounting and Finance Professor at Universidade de São Paulo (USP) and has been a Professor and Researcher at the London School of Economics, Manchester Business School, Arizona State University and Fundação Getúlio Vargas. He was a commissioner at the CVM from 2010 to 2011. Mr. Lopes is a member of the audit committee of BM&FBovespa and a member of the Advisory Council and Education Advisory Group of IFRS Foundation. He is also the author of various books and articles regarding finance, tax and accounting. Mr. Lopes graduated with a degree and doctorate in accounting from Universidade de São Paulo and holds a PhD in accounting sciences from Manchester Business School.
Mr.Eduardo Hiroyuki Miyaki has been a member of our board of officers since April 2011 (with investiture on August 1, 2011). He has been an officer of Itaú Unibanco since June 2010. He was the manager and compliance officer of the Money Laundering Prevention program of the Itaú Unibanco Group from 1996 to 2003 and, from 2003 until 2004, he was the manager responsible for its internal audit department for our treasury and asset management units. Mr. Miyaki was also the manager of our internal audit of treasury, capital markets, insurance and securities units from 2005 to 2010, when he became a managing director of Itaú Unibanco. He holds a degree in Civil Engineering from the Universidade de São Paulo (USP), a postgraduate degree in sanitation from Federal University of Gunma Province in Japan and
Mr.Emerson Macedo Bortoloto has been a member of our board of officers since September 2011 (with investiture on November 1, 2011). He joined us in July 2003, holding positions in the Internal Audit group. Since November 2008, he has been responsible for the evaluation of processes related to Market, Credit and Operational Risks in addition to Auditing Projects and Continuous Auditing. Previously, Mr. Bortoloto held positions in the Itaú Unibanco group in Coordination and Management, where he was responsible for auditing the processes of Information Technology and Analysis and Concession of Retail Credit. He also worked at Ernst & Young Auditores Independentes from May 2001 to June 2003, as well as at Banco Bandeirantes S.A. between 1992 and 2001, where he was responsible for conducting IT and operational processes audits. He holds a degree in Data Processing Technology from the Faculdades Integradas
Mr.
Mr.Rogério Paulo Calderón Peres
Mr.Rodrigo Luis Rosa Couto has been a member of our board of officers since December 2011 (with investiture on January 10, 2012). He joined us in 2008, holding a position in the corporate risk management sector. Previously, Mr. Couto worked at McKinsey & Company as an Associate from September 2005 to February 2008, as well as at the Central Bank from 1998 to 2003. He holds a degree in Business from Universidade Federal do Rio Grande do Sul (UFRGS) and an MBA in Finance from the Wharton School, University of Pennsylvania.
There are no pending legal proceedings in which any of our directors, nominees for director, or officers is a party adverse to us. We have no knowledge of any arrangement or understanding with major shareholders, customers, suppliers or any other person pursuant to which any person was selected as a director or executive officer, except the shareholders’ agreement between Itaúsa and E. Johnston to govern their relationship regarding IUPAR, Itaú Unibanco Holding and its subsidiaries. See On March 15, 2013, Marcos de Barros Lisboa, our executive officer responsible for operational risk and efficiency divisions, resigned. On April 19, 2013, our shareholders approved an increase to the mandatory retirement age for the position of Chief Executive Officer of Itaú Unibanco Holding from 60 to 62 years old. This increase is subject to Central Bank approval. Roberto Egydio Setubal is expected to remain as Chief Executive Officer of Itaú Unibanco Holding and Itaú Unibanco until he reaches the age of 60, after which he is expected to hold only the position of Chief Executive Officer of Itaú Unibanco Holding for the following two years.
For the year ended on December 31,
On April
Our officers and members of our board of directors receive additional benefits generally provided to our employees, such as medical and dental assistance, which benefits
For fiscal year 2013, our shareholders approved, on April 19, 2013, (i) compensation for members of our board of directors in an annual aggregate amount of R$15.5 million, (ii) compensation for members of our board of officers in an annual aggregate amount of R$125 million, and (iii) monthly individual compensation of R$15,000 and R$6,000 for members and alternate members of our fiscal council, respectively.
Regarding the disclosure of the highest and lowest compensation received by
We have established a profit sharing plan for our management
On October 22, 2012, our board of directors approved a compensation policy (amended on February 28, 2013) proposed by the compensation committee for the members of the management of Itaú Unibanco Holding and its controlled companies, in compliance with the guidelines established by CMN Resolution No 3,921. This measure established new rules related to compensation of management of financial institutions, establishing that variable compensation should be consistent with the institution’s risk management policies, of which at least 50.0% of the compensation must be paid in shares or share-based instruments and at least 40.0% must be deferred as payment for at least three years, and that the deferred payment is subject to clawbacks, based on the results of the institution or the business unit during the period of deferral. These new rules have been in force since January 1, 2012 and are applicable to compensation of directors and officers based on the services rendered during 2012. In
Our directors have not entered into any service contract with us or any of our subsidiaries providing for benefits upon termination of employment.
For information concerning the election of our directors and officers and their respective term of office see “Item 6A. Directors and Senior Management.”
For information concerning the
Statutory Bodies
Fiscal Council
According to Brazilian Corporate Law, the adoption of a fiscal council is
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(1) | Members appointed by the controlling block of shareholders. |
(2) | Members appointed by the holders of preferred shares. |
The reelection of the members of our fiscal council is pending approval by the controlling block of shareholders.
(**) Members appointed by the holders of preferred shares.
Central Bank.
Audit Committee
In accordance with CMN regulations, all financial institutions that (i) have regulatory capital equal to or in excess of R$1 billion; (ii) manage third-party funds of at least R$1 billion; or (iii) hold deposits and manage third-party funds in an aggregate amount of at least R$5 billion, are required to have an in-house audit committee. Audit committees are required to be created under an express provision in the bylaws of the respective financial institution and are required to be composed of at least three members, one of which must be a financial expert, who should rotate every five years. The members of the audit committee will only be allowed to be part of the committee again after three years following the maximum five-year office term.
Audit committee members of publicly held financial institutions may not (i) be or have been in the previous twelve months: (a) an officer of the institution or its affiliates,affiliates; (b) an employee of the institution or its affiliates,affiliates; (c) an officer, manager, supervisor, technician, or any other member of the team involved in auditing activities at the institution,institution; or (d) a member of the institution’s fiscal council or that of its affiliates; and (ii) be a spouse or relative (first or second-degree relative) of the persons described in items (i)(a) or (i)(c).
Audit committee members of publicly held financial institutions are also prohibited from receiving any compensation from the institution or its affiliates other than as a member of the audit committee. In the event an audit committee member of the institution is also a member of the board of directors of the institution or its affiliates, such member must opt for compensation related to only one of the positions.
Our audit committee reports to the board of directors and its principal functions are to oversee:
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According to Central Bank regulations, the audit committee is required to be a statutory body, created by a shareholders’ resolution, which is separate from the board of directors. Notwithstanding the requirement of separate corporate bodies, the members of the audit committee may be members of the board of directors, provided that they meet certain independence requirements. In addition, under Brazilian law, the hiring of the independent auditor is a function reserved exclusively for the board of directors of a company. However, Brazilian regulation permits the creation of a single committee for an entire group of companies.
Independent auditors and the audit committee must immediately notify the Central Bank of the existence or evidence of error or fraud within a maximum period of three business days from the respective identification of the same, including:
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Our audit committee is comprised of the following individuals, each of whom serves for a one year term and was electedreelected by our board of directors.directors on April 25, 2013. The reelection of the members of our audit committee is pending approval by the Central Bank.
Name | Position | |
Gustavo Jorge Laboissiere Loyola | President | |
Alkimar Ribeiro Moura | Member | |
Eduardo Augusto de Almeida Guimarães | Member |
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Guy Almeida Andrade | Member and Financial Expert | |
Luiz Alberto Fiore | Member | |
Geraldo Travaglia Filho | Member |
Our board of directors has determined that one of the members of our audit committee, Mr. Guy Almeida Andrade, is an audit committee financial expert and meets the requirements set forth by the SEC and the NYSE. Our audit committee financial expert, along with the other members of our audit committee, who are financially literate, are independent pursuant to CMN Resolution No. 3,198, of May 27, 2004, which requires that such members not be, or have been in the last year, an officer or employee of the company or its affiliates or an employee with managerial responsibilities in the internal audit division of the company. WeOther members of our audit committee are experts in accounting practices adopted in Brazil and we believe the skills, experience and education of our audit committee members qualify them to carry out all of their duties as members of the audit committee, including overseeing the preparation of our IFRS financial statements. In addition, our audit committee has the ability to retain independent auditors, financial advisers or other consultants, advisers and experts whenever it deems appropriate.
See above for the biography of Gustavo Jorge Laboissiere Loyola. Set forth below are brief biographical descriptions of Messrs.AlkimarMessrs. Alkimar Ribeiro Moura, Eduardo Augusto de Almeida Guimarães, Guy Almeida Andrade and Luiz Alberto Fiore.
Mr. Alkimar Ribeiro Moura has been a member of our audit committee since May 2010. He was an independent member on the Supervisory Board of BM&FBOVESPA&FBovespa Supervisão de Mercados (BSM) from October 2007 to September 2010. Previously, he was a member of the board of Banco Nossa Caixa S.A. from May 2006 to February 2007 and of Cia. Brasil de Seguros from May 2001 to February 2003. He was a member of the board of Banco Bandeirantes S.A. from May 1999 to December 2000, and chief executive officer of the Banco do Brasil Banco de Investimentos (BBBI), and executive vice-president for Finance and Capital Markets of the Banco do Brasil S.A., from April 2001 to January 2003. In the Central Bank, he was deputy governor for Financial System Regulationsfinancial system regulations and Organization,organization, from February 1996 to September 1997, deputy governor for monetary policy from March 1994 to February 1996, and deputy governor for public debt and open market operations from January 1987 to January 1988. Mr. Moura has a degree in economics from the Universidade Federal de Minas Gerais, a master’s degree from University of California, Berkeley, USA in 1966, and a Ph.D. in economics from Stanford University.
Mr. Eduardo Augusto de Almeida Guimarães has been a member of our audit committee since December 2008. He was a member of the audit committee of Unibanco from April 2004 to December 2008. He previously held the positions of president of the IBGE from 1990 to 1992, National Treasury Secretary at the Ministry of Finance from 1996 to 1999, CEO of the Banco do Estado de Sāo Paulo — BANESPA from 1999 to 2000, and CEO of Banco do Brasil from 2001 to 2003. He has been a member of the boards of directors of various companies such as Banco do Brasil, CEF, BNDES Participações S.A. and Banco Nossa Caixa S.A. He has also undertaken various academic functions, such as professor and dean of the Economics Institute of the Universidade Federal of Rio de Janeiro, lecturer in the Economics Departments of both the Pontifícia Universidade Católica of Rio de Janeiro (PUC)(PUC-RJ), and the Universidade Federal Fluminense. Mr. Guimarães has a degree in civil engineering, a degree in economics, a master’s degree in production engineering from the Universidade Federal do Rio de Janeiro, and a Ph.D. in economics from the University of London.
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Mr. Guy Almeida Andradehas been a member of our audit committee since December 2008. He was a member of the audit committee of Unibanco from April 2004 to December 2008. He began his career in 1974 at Magalhães Andrade S/S Auditores Independentes, where he became a partner in 1982, a position he currently holds. In 1984, he joined an intern program at Dunwoody & Co., Toronto, Canada. In 1983 he was admitted to the Chamber of Independent Auditors of IBRACON. Currently, Mr. Andrade is member of board of directors of IBRACON. From 2002 to 2004, he was president of the National Executive Board of IBRACON and, currently, Mr. Andrade is Chairman of the board of directors of IBRACON. In 2000, he was elected as a member of the board of directors of the International Federation of Accountants — IFAC, headquartered in New York, a position he held until November 2006. Mr. Andrade was the chairman of IFAC’s audit committee, from 2003 to 2006. He was also a member of IFAC’s nominating committee, from 2007 to 2010. Mr. Guy Almeida Andrade has a bachelor’s degree in accounting from the Universidade de São Paulo, (USP), and a bachelor’s degree in business administration from Universidade Mackenzie.
Mr. Luiz Alberto Fiore was elected ashas been a member of our audit committee insince February 2012 (with election approved by the Central Bank and pending investiture).2012. He began his career in 1971 at PriceWaterhouseCoopers.PricewaterhouseCoopers. In 1973, he joined Deloitte Touche Tohmatsu, where he became a partner in the External Audit and Corporate Finance areas in 1985 and member of the Executive Committee and of the board of directors of Deloitte do Brasil in 1987. In 1998, he became a representative for Latin America of the International Board of Deloitte Corporate Finance, continuing at Deloitte until 2010. Mr. Luiz Alberto Fiore has a bachelor’s degree in Business Management from Universidade Católica (ESAN-PUC) and a bachelor’s degree in Accounting Sciences from Universidade Mackenzie.
Mr. Geraldo Travaglia Filho has been a member of our audit committee since January 2013. He served as executive officer of Itaú Unibanco Holding from November 2008 to April 2009 and as secretary to the board of directors from December 2010 to August 2011. He also served as executive officer of Redecard from May 2009 to April 2010, of Itaú BBA from November 2008 to January 2010 and of Itaú Unibanco from November 2008 to April 2009. Mr. Travaglia Filho has a bachelor’s degree in Business Management from Universidade de São Paulo (USP) and a specialization in Bank Management from Wharton School, University of Pennsylvania.
Committees of the Board of Directors
The information provided below relates to the members of the strategy, risks and capital management, appointment and corporate governance, personnel and compensation committees electedreelected on April 28, 2011.25, 2013.
The board of directors generally appoints members to each committee from the members of our board of directors, however, key employees of Itaú Unibanco Holding and specialists in each specific committee area may be invited to be members of a committee. Members are appointed on an annual basis.
Strategy Committee
Our strategy committee is responsible for corporate strategy, investments and budget.
With respect to corporate strategy, the committee: (i) supports the board of directors in its discussions with the board of officers regarding the strategic guidelines with respect to business matters; (ii) issues opinions and recommendations on the strategic guidelines and provides input for the board of directors’ discussions and decisions; and (iii) takes the initiative in the discussion of key matters and those of a high impact nature.
Regarding investments, the committee: (i) reviews investment opportunities presented by the board of officers which have a relevant impact on the business; and (ii) issues opinions and recommendations on investment opportunities presented, providing input and support to the discussions and decisions of the board of directors.
As to the budget, the committee: (i) proposes budgetary guidelines; (ii) conducts a thorough discussion with the board of officers in order to establish budgetary guidelines; (iii) conducts discussions with the board of officers and makes a recommendation on the budget for the current year to the board of directors; and (iv) advises and supports the CEO in monitoring corporate strategy in relation to the budget.
Further, the strategy committee also establishes an economic scenarios sub-committee, made up of key employees of Itaú Unibanco Holding and its controlled companies that have recognisedrecognized expertise in macroeconomy.macro economy. Such sub-committee supplies macroeconomic input to the strategy committee to provide support for its considerations in defining strategy, investments and budgets.
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The following members of our board of directors were appointed to our strategy committee: Pedro Moreira Salles (president), Roberto Egydio Setubal, Ricardo Villela Marino, Henri Penchas, Israel Vainboim and Israel Vainboim.Nildemar Secches.
Capital and Risk Management Committee
Our capital and risk management committee is responsible for supporting the board of directors in the performance of its functions related to Itaú Unibanco’s risk and capital management, submitting reports and recommendations for the analysis of the board of directors with respect to: (i) supervision of Itaú Unibanco’s risk management and control activities, for the purpose of ensuring their adequacy to the risk levels assumed and to the complexity of operations, as well as complying with regulatory requirements; (ii) review and approve capital management policies and strategies that establish mechanisms and procedures aimed at maintaining capital compatible with the risks incurred by the institution; (iii) determination of the minimum return expected on the capital of Itaú Unibanco as a whole and of its business lines, as well as performance monitoring; (iv) supervision of incentive structures, including compensation, aimed at ensuring their alignment with risk control and value creation objectives; and (v) promotion of the improvement of Itaú Unibanco’s risk culture.
The following members of our board of directors were appointed to our capital and risk management committee: Pedro Luiz Bodin de Moraes (president), Roberto Egydio Setubal, Gustavo Jorge Laboissière Loyola, Pedro Luiz BodinDemosthenes Madureira de Moraes, Francisco Eduardo de Almeida PintoPinho Neto and Candido Botelho Bracher.
Appointment and Corporate Governance Committee
Our appointment and corporate governance committee is responsible for certain corporate governance matters, such as the selection, appointment and assessment of members of our board of directors and CEO.
In connection with corporate governance matters, the Committee:committee: (i) analyses and opines on potential situations of conflicts of interest between the directors and companies that are part of the Itaú Unibanco Group based on criteria established by the board of directors, in particular (a) situations arising from external activities undertaken by members of the board of directors or the board of Officers in the statutory bodies of other companies which are not part of the Itaú Unibanco Holding, and (b) transactions between directors and companies which are part of the Itaú Unibanco Holding; (ii) proposes the division among the directors of the fixed aggregate compensation established by the annual shareholders meeting; (iii)(ii) recommends changes in the composition of the board of directors and its committees; and (iv)(iii) recommends changes to the structure of committees, including the creation and dissolution of committees. Certain functions that used to be responsibility of the appointment and corporate governance committee were transferred to the related parties committee. See “— Related Parties Committee.”
In connection with selection and appointment of members of the board of directors and the CEO, the committee: (i) identifies, analyses and proposes candidates for the board of directors to be presented at the annual shareholders meeting, and determines, if elected, whether the candidate will be deemed an internal (also an officer of the company), external (not an officer of the company) or independent (not elected by the controlling shareholder, among other independence requirements) director; (ii) periodically reviews criteria for defining independent, external and internal directors pursuant to best practice governance principles and applicable regulations, recommends to the board of directors any modifications that may be necessary and re-evaluates the standing of each director in the light of any new independence criteria that may be established; (iii) assesses the functioning of the board of directors; (iv) discusses and makes recommendations on the succession of the chairman of the board of directors; (v) discusses and makes recommendations on the succession of the CEO; and (vi) assists in the identification of directors qualified to fill vacancies on the board committees, including the appointment and corporate governance committee, and is specifically required to provide an opinion with respect to the independence and financial specialisationspecialization of members of the audit committee.
With respect to the assessment of members of the board of directors and the CEO, the committee: (i) recommends processes for evaluating the board of directors, individual directors, the chairman of the board, the committees and the CEO; and (ii) provides support with respect to evaluation methodology and to the board of directors, individual directors, chairman of the board, committees and CEO.
The following members of theour board of directors were appointed to theour appointment and corporate governance committee: Pedro Moreira Salles (president), Alfredo Egydio Arruda Villela Filho, Alfredo Egydio Setubal, Henri Penchas, Israel Vainboim and Fernando Roberto Moreira Salles.Demosthenes Madureira de Pinho Neto.
Personnel Committee
Since 2009, the personnel committee has been in charge of establishing compensation principles and practices, as well as stock options and overseeing recruiting, training and retaining talented employees. In view of the creation of the compensation committee by our board of directors at a meeting held on February 17, 2011, in response to CMN Resolution No. 3,921, some of the responsibilities of the personnel committee regarding the establishment of the main compensation policies and principles of the Itaú Unibanco Group were transferred to the compensation committee.
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Our personnel committee is responsible for establishingthe principal guidelines with respect to the policies relating to personnel, being responsible for the following functions:
With respect to guidelines for employee recruiting and retention: (i) discuss strategies for domestic and international recruiting and mobility of executives; (ii) discuss, monitor and advise the board of officers with respect to the career of the key employees in the Itaú Unibanco Group; (iii) monitor the performance of the key executives of the Itaú Unibanco Group and the results of the trainees program; (iv) monitor the employee appraisal system; (v) provide support in the establishment of executive monitoring and mentoring guidelines; (vi) suggest employee compensation policies to the compensation policy of the Company’s directors and officers and staff, defining stock options, attracting, recruiting, training and retaining talented employees.
Regarding compensation and stock options, the personnel committee, among other functions: (i) establishes and revises the policy for compensation of the Company’s directors and officers and staff; (ii) proposesincluding various forms of fixed and variable compensation in addition to benefitscompensation; (vii) advise on the necessary skills and special programsprofile for recruiting and severance; and (iii) approves the granting of stock options of Itaú Unibanco Holding, asGroup to reach its medium and long-term goals; and (viii) monitor the committee responsible fortendencies in employee hiring among companies in the institutional decisions within the scope of the stock option plans sponsored by Itaú Unibanco Holding.same sector.
With respect to recruitment and training issues, the committee: (i) proposes guidelines for recruitment, evaluation and career development policies of the companies which are part of Itaú Unibanco Holding, ensuring the preparation of successors for all key positions; (ii) discusses, monitors and advises the board of officers on the career of key personnel within Itaú Unibanco Holding (varying from 100 to 150 persons) identified not necessarily according to hierarchical function; (iii) monitors the performance of key employees of Itaú Unibanco Holding, evaluating their results in comparison with established targets; (iv) monitors the results of the trainee program, including recruitment during the year, development of the trainees from previous years and an overall analysis of the program; (v) tracks the evaluation system used by the board of officers to evaluate Itaú Unibanco Holding’s employees and analyses compliance with the established guidelines; (vi) assists in the establishment of mentoring guidelines; (vii) advises on skills necessary for Itaú Unibanco Holding to achieve its medium term goals while complying with ethical and moral principles; (viii) reviews the profiles of the principal employees to be hired, recommending their engagement to the CEO and, if hiring an officer, to the board of directors; (ix) recommends general recruitment policies; (x) tracks what companies in the same sector are seeking in regard to their key employees; (xi) advises on the engagement of consultants and specialists for assisting in the hiring process; (xii) monitors the number of employees per business unit compared with established targets; (xiii) discussestraining: (i) discuss the culture, suitability of profile and training needs; (xiv) tracks policies with respect tothe needs for training; (ii) monitor the policy for courses and training programsprocesses for training personnel;improving skills; and (xv) assists in(iii) provide support for the definition of continuingdecision-making regarding continued education programs.
Finally, with respect to the stock options plan: (i) oversee our stock options plan and (ii) approve option grants under our stock option plan.
The following members of our board of directors were appointed to our personnel committee: Pedro Moreira Salles (president), Roberto Egydio Setubal, Ricardo Villela Marino Francisco Eduardo de Almeida Pinto and Candido Botelho Bracher.
Compensation Committee
On February 17, 2011, our board of directors created the compensation committee. We are required under Resolution No. 3,921, to establish a compensation committee under the requirements set out in Resolution No. 3,921. Our compensation committee is responsible for all matters regarding compensation of the members of the management and employees of Itaú Unibanco Group as described below.
The main functionsCommittee is responsible for the following functions: (i) propose to the board of directors the compensation committee currently include: (i) discussionpolicy for Itaú Unibanco Holding’s management, including the various forms of fixed and analysisvariable compensation in addition to special benefits and policies for recruitment and termination; (ii) discuss, examine and supervise the implementation and operation of the existing compensation models offor Itaú Unibanco Holding, Itaú Unibanco and for Itaú BBA (including the treasury operations); (ii) proposalunit), and discuss general principles of acompensation policy for their employees and recommend any adjustments and improvements to the board of directors; (iii) supervise the implementation and operation of the compensation policy for Itaú Unibanco Holding’s management; (iv) review the compensation policy for Itaú Unibanco Holding’s management on an annual basis, recommending any adjustments or improvements to the board of directors; (v) propose to the board of directors the aggregate compensation for management to be submitted at the annual shareholders meeting; (vi) evaluate and approve the compensation package for the CEO, as well as approve the individual amount of Itaú Unibanco Holding for approval by the board of directors;his compensation, including fixed and (iii) evaluationvariable salaries and approval of thebenefits; (vii) evaluate and approve compensation packages proposed by the CEO for the executive vice-presidentsvice presidents of Itaú Unibanco and Itaú BBAfor the CEO and for their respective CEOs,the executive vice presidents of Itaú BBA, including fixed and variable compensation components, benefits and long-term incentive compensation. The impactcompensation, and evaluate the compensation packages of the remaining members of management of the Itaú Unibanco Group; (vii) evaluate future internal and external scenarios and their possible impacts on the compensation policy; (viii) compare the compensation policy of similar companies in order to identify significant discrepancies and propose any necessary adjustments; (ix) ensure that the compensation policy is compatible with the risk management policy, targets and the current and expected financial situation of the Itaú Unibanco Holding and with CMN Resolution No. 3,921, as well as other legislation relating to existing compensation practices in countries in which our subsidiaries operate, is being reviewed byNo 3,921; and (x) prepare the compensation committee. “Compensation Committee Report” on an annual basis.
See “Item 4B. Business Overview –— Regulation by the Central Bank –and Supervision — Compensation of Directors and Officers of Financial Institutions”.Institutions.”
The following members of our board of directors were appointed to our compensation committee: Pedro Moreira Salles (president), Alfredo Egydio Arruda VilelaVillela Filho, Henri Penchas, Israel Vainboim, and Pedro Luiz Bodin de Moraes.Moraes and José Castro Araújo Rudge.
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Related Parties Committee
We created a related parties committee, entirely composed of independent members, to analyze the transactions between related parties in certain circumstances and in accordance with our related party transactions policy (“Related Party Transactions Policy”), to ensure their treatment at arm’s length and transparency and our alignment with best practices in corporate governance.
The following members were elected to our related parties committee: Pedro Luiz Bodin de Moraes, Nildemar Secches and Gustavo Jorge Laboissiere Loyola.
Committees of the Board of Officers
Disclosure and Trading Committee
Our disclosure and trading committee’s main responsibility is to manage our trading and disclosure policies. It covers a range of internal actions in order to improve the flow of information and oversee the ethical conduct of the management and employees in order to: (i) ensure the transparency, quality, equality and accuracy of the information rendered to shareholders, investors, press, government authorities and other capital market entities; (ii) address and implement the criteria established by us so that Itaú Unibanco Holding’s management, shareholders, controllers and employees, as well as third parties that have a relationship with us, may comply with ethical and legal standards in the trading of our securities; (iii) evaluate the guidelines and procedures under our trading policy and guidelines for disclosure of an act or material fact and for maintaining confidentiality of certain information established by our disclosure policy, as well as the prior analysis of the content of announcements to the press; (iv) monitor and regulate compliance by management and other employees of Itaú Unibanco Holding to our policies; and (v) investigate cases of breach of our policies, notifying any infractions to the board of directors.
Our disclosure and trading committee is comprised of our principal investor relations officer and from two to ten persons elected annually among the members of theour board of directors, board of officers or controlled companies and specialists in capital markets.
6D. Employees
General
The following table sets forth the number of our employees as of December 31, 2012, 2011 2010 and 2009:2010:
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2011 | 2010 | 2009 | 2012 | 2011 | 2010 | |||||||||||||||||||
Employees (on a consolidated basis) | 104,542 | 108,040 | 101,640 | 96,977 | 104,542 | 108,040 | ||||||||||||||||||
Brazil | 98.258 | 102,316 | 96,240 | 90,323 | 98,258 | 102,316 | ||||||||||||||||||
Abroad | 6.284 | 5,724 | 5,400 | 6,654 | 6,284 | 5,724 | ||||||||||||||||||
Argentina | 1.566 | 1,514 | 1,376 | 1,651 | 1,566 | 1,514 | ||||||||||||||||||
Chile | 2.334 | 2,043 | 2,012 | 2,451 | 2,334 | 2,043 | ||||||||||||||||||
Uruguay | 1.099 | 1,071 | 983 | 1,162 | 1,099 | 1,071 | ||||||||||||||||||
Paraguay | 650 | 517 | 461 | 701 | 650 | 517 | ||||||||||||||||||
Europe | 213 | 212 | 345 | 261 | 213 | 212 | ||||||||||||||||||
Others | 422 | 367 | 223 | 428 | 422 | 367 |
Employees from each of our operations segments as of December 31, 2012, 2011 2010 and 20092010 are presented in the following table:
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2011 | 2010 | 2009 | 2012 | 2011 | 2010 | |||||||||||||||||||
Commercial Banking | 95,534 | 93,430 | 89,360 | 91,304 | 95,534 | 93,430 | ||||||||||||||||||
Itaú BBA | 3,024 | 2,387 | 2,310 | 2,848 | 3,024 | 2,387 | ||||||||||||||||||
Consumer Credit | 5,941 | 12,133 | 9,888 | 2,781 | 5,941 | 12,133 | ||||||||||||||||||
Corporate and Treasury | 43 | 90 | 82 | 44 | 43 | 90 | ||||||||||||||||||
Total | 104,542 | 108,040 | 101,640 | 96,977 | 104,542 | 108,040 |
The number of our employees decreasedhad reduction by 3.2%7.2% from December 31, 20102011 to December 31, 2011.2012.
Our employees are represented by one of the 203 labour unions in Brazil, which consist of banking labour unions in various localities in which we operate.
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Since 1986, the banking industrysector in Brazil has been the target of strikes organized by labor unions, usually during wage negotiations in the third quarter of each year. During a strike, part of the normal activities of our branches suffers from temporary disruptions. During the wage negotiations of 2012, our branches suffered a 9-day strike which resulted in an average closure of 30.0% of our branches during the strike. Despite the disruptions to our operations in retail banking operations and, to a lesser extent, our corporate banking operations, we have not historically suffered significant losses due to strikes.
The FENABAN represents banking institutions as employers and negotiates with the two entitiesorganizations representing the employees,workers, the National Federation of Financial Industry Workers (Confederação Nacional dos Trabalhadores do Ramo Financeiro— CONTRAF) or “CONTRAF”), and the National Federation of Credit Industry Workers (Confederação Nacional dos Trabalhadores nas Empresas de Crédito— CONTEC) or “CONTEC”). They carry outconduct annual wage negotiations to update salaries, banks’ overtime pay levels of banks and other benefits. The negotiation takes place in September of each year. We traditionally set the salary structure of our employees above these levels.
We seekstrive to maintain good relationships with our employees and with the labor unions whichthat represent them.
Itaú Unibanco Holding, through sponsored enterprises, offers its employees 19nineteen pension plans that are administered by ninesix entities, described below, eighteighteen of which are closed pensionspension funds and one of which is an open pension fund. The plans’ main objectivepurpose of the plans is to provide a supplement to the Brazilian federal social securitypension benefits. Twelve of the plans are defined benefit plans, underin which the calculation of the retirement benefit amount on retirement is determined by a set formula. Three are defined contribution plans, underin which contribution amounts are fixed and the value of the benefit amount is proportional to the return on investment returns over time and four are variable contribution plans underin which the contribution amounts vary by participant and the amount of the benefit amount also depends on investment returns over time. New employees can participate in a defined contribution plan managed by Itaú Vida e Previdência S.A. Life and Pensions.
The plans are administered by the following entities (closed pension funds):
Our pension plans are managed in accordance with our corporate governance principles which aimdesigned to ensure that participants receive superior retirement benefits through plan management.the management plan. As required by Brazilian regulatory agencies, actuarial valuations are made by the actuary responsible for each plan eachevery year. During 20112012, we made contributions to the pension plans at the levels required by actuarial standards. We made contributions to our pension plans of approximately R$4242.3 million in 2011.2012.
Training and Development
Personnel development is one of our maincore values, and we make an effort to train high performance teams engaged and motivated by sustainable development. The Itaú Unibanco Business School, provides continuing education in three areas: business management (knowledge management of different business areas), leadership (knowledge management for the development of leaders) and corporatebusiness skills (knowledge(general knowledge management of general applicationapplications and certification preparation programs)programs for certification). The continuing education of our teams and leaders promotes a high level of discussion on themes such as ethics, sustainability, meritocracy and efficiency.
6E. | Share Ownership |
Except for the stock indirectly owned by our controlling shareholders (owned through their participation in IUPAR and Itaúsa), the members of our board of directors and our board of officers, on an individual basis and as a group, beneficially own less than 1.0% of the shares of our common stock and less than 1.0% of the shares of our preferred stock.
Stock Option Plan
Stock Based Compensation Plans
We have been issuing stock options as compensationa long-term incentive since 1995. Accordingly, part of our management’s variable compensation is in the form of stock options,1995, which we believe reinforces theirthe commitment to our performance. Our stock option plan has been instituted withof the purposemembers of integrating officers into our mediumthe management (including directors and long-term development. Our shareholders, at the general extraordinary meetings, held on April 24, 2009officers) and April 26, 2010, included the board of directors, senior employees of Itaú Unibanco Holding and senior employees and management members of its controlled companies as beneficiaries of the plan.to our medium and long-term development. We believe that this will allow them to benefit from additional value that their work created for Itaú Unibanco Holding. OurGroup and our stock option plan is designed to attract and retain the services of directors and officers and to obtain highly qualified management and employees.
Our stock option plan is governed by the personnel committee, whose members are appointed by our board of directors. The personnel committee periodically designates members of our managementthe beneficiaries to whom stock options are granted in the quantities specified. Stock options may also be granted to the members of management of controlled companies or to senior employees of Itaú Unibanco Holding or such controlled companies.under our stock option plan. Our board of directors mayhas the power to modify the decisions oftaken by the personnel committee in their first meeting after the date the options are granted. If not modified, the options granted by the personnel committeeoption grants are confirmed. The personnel committee may only grant options if our profits are sufficient to permit the distribution of the mandatory dividend in accordance with Brazilian Corporate Law. TheLaw and the amount of options granted in any given year may not exceed 0.5% of our total shares at the end of the relevant fiscal year. If in a specific fiscal year, the amount of stock options granted during such year is below the 0.5% maximum limit of the total number of shares, the difference may be added to options granted in any one of seven subsequent fiscal years.
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The options have an exercise period of between five and ten years from the date of their issuance and they may only be exercised after a vesting period determined by the personnel committee, and outside blackout periods. The vesting periodthat varies at the personnel committee’s discretion, from one to seven years from the date of issuance of the options. Blackout periods are time periods during which the CVM forbids management from trading shares of the company with person with which they are affiliated and therefore no options may be exercised.
The exercise price of an option is determined by the personnel committee atwhen the time of the grantoption is granted and can be restated up to the month prior to the exercise of the option. In determiningTo determine the exercise price, the personnel committee considers the average prices of our preferred shares ofat BM&FBOVESPA&FBovespa during the last three months prior to the issuance of the option. Anoption and an adjustment of up to 20.0% more or less than the average price is permitted.
At the general extraordinary meeting held on April 24, 2009, our shareholders also approved the assumption by Itaú Unibanco Holding of all the rights and obligations that Unibanco and Unibanco Holdings had under their respective stock option plans. After this assumption, the options held by the respective beneficiaries to acquire shares issued by Unibanco and Unibanco Holdings were exchanged for options to acquire shares of Itaú Unibanco Holding at the same exchange ratio used for the Association.
The general extraordinary meeting held on April 24, 2009 also createdIn addition, we have a new mechanism for the granting of options to beneficiaries who are considered to have had outstanding performance and have potential, according to the criteria established by the personnel committee andmeasured through the use of performance and leadership evaluation tools.tools, which we refer to as partner options. The personnel committee may grant options for which the strike price is paid through the obligation of the beneficiary to invest up to 20.0% of the portion of his or herthe person’s bonus that is tied to profits and results in shares of Itaú Unibanco Holding. The beneficiaries to whom these options are granted must keep ownership of the shares unaltered and with no encumbrances of any nature from the date the option is granted until the exercise of the option. This mechanism was expanded at the general extraordinary meeting held on April 26, 2010 in order to (i) permit a portion or the full net amount of the bonus to be invested in sharesshares; and (ii) allow the personnel committee to impose additional conditions on the exercise of the shares.options.
In addition, theThe general extraordinary meeting of shareholders held on April 26, 2010, established that the shares which the beneficiaries receive through the exercise of options may be subject to additional restrictions in accordance with resolutions adopted by the personnel committee such as minimum holding periods.
On April 25, 2011, our shareholders approved modifications to the Stock Option Planour stock option plan in order to (i) adjust the rule for termination of the beneficiary holding options; (ii) adjust the term for defining the price of simple options; and (iii) expressly provide that the beneficiaries, upon investing their bonuses in the stock option program and thereby receiving bonus options, may acquire stock directly from our treasury.
On April 19, 2013, our shareholders approved modifications to our stock option plan in order to (i) improve clarity and objectivity; (ii) establish new mechanisms for granting options to the beneficiaries who reside outside of Brazil; (iii) consolidate rules governing termination of options in the event of an option-holder’s death; and (iv) amend the rule on a holder’s right to retain options in the event of retirement.
Finally, our shareholders approved the assumption, by the Company, of the rights and obligations set forth in currently effective agreements entered into with beneficiaries of Redecard S.A.���s stock option plan, including responsibilities for the granting of options under such plan.
See note 2122 of our consolidated financial statements, as of and for the year ended December 31, 2011, for additional information on our stock option plan and the issuance of options.
Our model of compensation of directors and officers described above is expected to change in view of the requirements of Resolution No 3,921, issued on November 25, 2010 by the CMN. Resolution No 3,921 establishes new rules related to the compensation of directors and officers of financial institutions. The compensation may be fixed or variable. Variable compensation may be based on specific criteria set forth in Resolution No. 3,921 and is required to be compatible with the financial institution’s risk management policies. At least 50.0% of the variable compensation must be paid in stock or stock-based instruments and at least 40.0% of the variable compensation must be deferred for future payment by at least three years and is subject to claw-backs, based on the result of the institution and business unit during the period of deferral. These rules took effect on January 1, 2012 and are applicable to compensation based on the services rendered during the year of 2012. In addition, financial institutions that are publicly-held companies or required by the Central Bank to establish an audit committee must also establish a compensation committee prior to the first shareholders’ meeting of 2012. Such committee must follow the requirements set forth in Resolution No. 3,921.
As of December 31, 2011,2012, we had 69,845,11373,514,461 options to be exercised by our directors, officers and employees, comprising 443633 beneficiaries of simple options (including Itaú Unibanco Holding and the original Unibanco and Unibanco Holdings stock option plans) and 216220 beneficiaries of partner options (including Itaú Unibanco Itaú BBAHolding and Unibanco’sUnibanco and Unibanco Holdings original stock option plans).
In 2011, 14,447,9002012, 13,745,475 options were granted under the Stock Option Plan.our stock option plan. The granting dates were January 13, February 28,24, April 19, August 1927 and November 4, 2011.June 14, 2012.
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ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7A. Major Shareholders
In accordance with our bylaws, our capital stock is divided into two classes of shares: common shares (aç(ações ordinárias)rias) and preferred shares (aç(ações preferenciais)preferenciais). Each common share entitles its holder to one vote at meetings of our shareholders, and there are no differences in the voting rights conferred by each of our common shares. TheOur preferred shares are non-voting.
The following table sets forth certain information as of February 29, 2012,March 31, 2013, with respect to (i) any person known to us to be the beneficial owner of more than 5.0% of our outstanding common shares; and (ii) any person known to us to be the beneficial owner of more than 5.0% of our outstandingor preferred shares.shares:
Common shares | Preferred shares | Total | ||||||||||||||||||||||
% | % | % | ||||||||||||||||||||||
Iupar - Itaú Unibanco Participações S.A. | 1,167,536,100 | 51.00 | 0 | 0.00 | 1,167,536,100 | 25.54 | ||||||||||||||||||
Itaúsa - Investimentos Itaú S.A. | 885,142,900 | 38.66 | 77,100 | 0.00 | 885,220,000 | 19.37 | ||||||||||||||||||
BlackRock | 0 | 0.00 | 159,335,737 | 6.98 | 159,335,737 | 3.48 | ||||||||||||||||||
Others | 236,605,300 | 10.34 | 2,068,410,813 | 90.65 | 2,305,016,113 | 50.43 | ||||||||||||||||||
Subtotal | 2,289,284,300 | 100.00 | 2,227,823,650 | 97.64 | 4,517,107,950 | 98.82 | ||||||||||||||||||
Treasury stock (*) | 2,100 | 0.00 | 53,826,050 | 2.36 | 53,828,150 | 1.18 | ||||||||||||||||||
TOTAL | 2,289,286,400 | 100.00 | 2,281,649,700 | 100.00 | 4,570,936,100 | 100.00 |
Common Shares | Preferred Shares | Total | ||||||||||||||||||||||
Total Number of Shares | % of Total | Total Number of Shares | % of Total | Total Number of Shares | % of Total | |||||||||||||||||||
IUPAR – Itaú Unibanco Participacões S.A. | 1,167,536,100 | 51.00 | % | – | 0.00 | % | 1,167,536,100 | 25.54 | % | |||||||||||||||
Itaúsa – Investimentos Itaú S.A. | 885,142,900 | 38.66 | % | 77,100 | 0.00 | % | 885,220,000 | 19.37 | % | |||||||||||||||
Blackrock(1) | 0 | 0.00 | % | 159,335,737 | 6.98 | % | 159,335,737 | 3.49 | % | |||||||||||||||
Others | 236,605,300 | 10.34 | % | 2,069,903,034 | 90.73 | % | 2,306,508,334 | 50.46 | % | |||||||||||||||
Subtotal | 2,289,284,300 | 100.00 | % | 2,229,315,871 | 97.71 | % | 4,518,600,171 | 98.86 | % | |||||||||||||||
Treasury stock(2) | 2,100 | 0.00 | % | 47,818,173 | 2.10 | % | 47,820,273 | 1.05 | % | |||||||||||||||
Total | 2,289,286,400 | 100.00 | % | 2,281,649,700 | 100.00 | % | 4,570,936,100 | 100.00 | % |
(*) Does not include Itaú Unibanco stock
(1) | Share ownership information provided by shareholder. |
(2) | Does not include Itaú Unibanco shares held by Itaubanco defined contribution plan in excess of the individual accounts of participants in the amount of 1,500,000 common shares. |
On April 19, 2013, our shareholders approved an increase in our capital stock of R$15.0 billion, from R$45.0 billion to R$60.0 billion, through the capitalization of certain statutory revenue reserves, subject to approval by the Central Bank. This capital increase will be effected by the issuance of 457,093,610 new book entry shares with no par value, 228,928,640 of which will be common shares and 228,164,970 of which will be preferred shares. Such shares will be granted to shareholders in the form of bonus shares, free of charge, in the proportion of one new share for every ten shares of the same class held. Shares held as treasury stock will be entitled to receive bonus shares in the same proportion. There has been no change to our dividend policy as a consequence of this capital increase.
Itaú Unibanco Holding is a financial holding company controlled by IUPAR, a holding company jointly controlled by (i) Itaúsa, which is a holding company controlled by members of the Egydio de Souza Aranha family, holds 50.0% of the common stockfamily; and 100.0% of the preferred stock of IUPAR and also directly holds 38.66% of our common stock, and(ii) E. Johnston, a holding company controlled by the former controlling shareholders of Unibanco, the Moreira Salles family, which holds 50.0%family. Itaúsa also directly owned 38.7% of the shares of our common stock as of IUPAR. ThreeMarch 31, 2013. Four of our directors, Alfredo Egydio Arruda Villela Filho, RobertoAlfredo Egydio Setubal, Ricardo Villela Marino and AlfredoRoberto Egydio Setubal, are members of the Egydio de Souza Aranha family and twoone of our directors, Pedro Moreira Salles, and Fernando Roberto Moreira Salles, are membersis a member of the Moreira Salles family.
On March 30, 2011, BlackRock, Inc. informed us, according toIn accordance with Article 12 of CVM Rule No. 358No.358, BlackRock, Inc. informed us on March 30, 2011 that it owned preferred shares representing approximately 7% of the issued preferred shares of Itaú Unibanco Holding. In addition, BlackRock, Inc. informed us that it holds our sharesHolding for investment purposes only.
On April 25, 2011, our shareholders approved a reverse split of our common and preferred shares in the proportion of 100 shares to one share of the same type in order to adjust our shareholder base to reduce administrative costs and improve the efficiency of our book-entry system. Our shareholders also approved a simultaneous stock split of one share to 100 shares, which will maintain the market price of our shares at an appropriate level to ensure liquidity. The transaction, which was ratified by the Central Bank, was completed on November 21, 2011.
The table below contains information regarding our shares and American Depository Shares (“ADS”) according to our internal share record as of February 29, 2012:March 31, 2013:
Number | ||||
of Shares | ||||
Common | 2,289,286,400 | |||
Preferred | 2,281,649,700 | |||
Preferred | ||||
Total |
Shareholders’ Agreement
Itaúsa and E. Johnston
Itaúsa, a holding company controlled by the Egydio de Souza Aranha family, and E. Johnston, a holding company controlled by the Moreira Salles family, have a shareholders’ agreement that governs their relationship regarding IUPAR, Itaú Unibanco Holding and its subsidiaries. Its main provisions are described below.
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Corporate Governance
The board of directors of IUPAR is composed of four members: two appointed by Itaúsa and two by E. Johnston, and its board of officers is composed of four officers: two appointed by Itaúsa and two by E. Johnston. The board of directors of Itaú Unibanco Holding is composed of up to fourteen members, out of which six are jointly appointed by Itaúsa and E. Johnston.
Lock-up Period, Right of First Refusal and Tag-Along Rights
The shares issued by IUPAR may not be transferred by its shareholders to third parties until November 3, 2018. After this period, in case one of the parties decides to transfer shares of IUPAR, the other party may choose to (i) exercise its right of first refusal to acquire the shares,shares; (ii) exercise its tag-along right, in the exact same terms and conditionsconditions; or (iii) waive both its rights of first refusal and tag-along. Itaúsa may freely transfer the shares issued by Itaú Unibanco Holding that are directly owned by it. In case the parties decide to jointly transfer the totality of their shares issued by IUPAR, Itaúsa may exercise its tag-along right in order to include all or part of the shares issued by Itaú Unibanco Holding that are directly owned by Itaúsa.
Term
The shareholders’ agreement is in effect for a period of twenty years from January 27, 2009, and may be automatically renewed for successive periods of ten years, unless otherwise terminated upon one year’s prior written notice by any of the shareholders.
Bank of America
On June 1, 2010, Bank of America Corporation or “BAC”, a shareholder of Itaú Unibanco Holding, offered, in the form of ADS (each ADS representing one preferred share issued by Itaú Unibanco Holding), all 188,424,758 preferred shares issued by Itaú Unibanco Holding and owned by BAC, corresponding to approximately 8.4% of the outstanding preferred shares issued by Itaú Unibanco Holding and 4.16% of its outstanding total capital stock. In addition, on June 11, 2010, Itaúsa purchased all 56,476,299 common shares issued by Itaú Unibanco Holding and owned by BAC, corresponding to approximately 2.5% of the outstanding common shares issued by Itaú Unibanco Holding and 1.2% of its outstanding total capital stock. As a result of such transactions, the previously existing shareholder agreement among Itaú Unibanco Holding, Itaúsa and BAC is no longer in effect and BAC no longer has the right to appoint one member of the board of directors of Itaú Unibanco Holding or, as a consequence, sell its Itaú Unibanco Holding shares in the event of a transfer of control (tag along).
7B. | Related Party Transactions |
Transactions between related parties are carried out at amounts, terms and average rates in accordance with normal market practices during the period, as well as under reciprocal conditions. See “note 34 – Related Parties” ofnote 35 to our consolidated financial statements.
The granting of credit to our officers, directors or affiliates is subject to restrictions under Brazilian law. Under Brazilian law, financial institutions may not grant loans, advances or guarantees to:
· | any individual, or the immediate family members of such individual, or entity that controls the financial institution or any entity under common control with the financial institution; |
· | any officer, director or member of the fiscal council of the financial institution, or the immediate family members of such individual, or entity in which such individual directly or indirectly holds more than 10.0% of the capital stock; |
· | any entity controlled by the financial institution; or |
· | any entity in which the financial institution directly or indirectly holds more than 10.0% of the capital stock or which directly or indirectly holds more than 10.0% of the financial institution’s capital stock. |
As of the date hereof, we believe that we are in compliance with the restrictions under Brazilian law. Brazilian law does not limit our ability to enter into transactions in the interbank market with our affiliates that are financial institutions. See “Item 4B. Business Overview – Regulation and Supervision.”
On October 22, 2012, our board of directors approved a Related Party Transactions Policy. The definition of related party is provided in our Related Party Transactions Policy, and includes controlling shareholders of, and entities controlled by or under common control with, Itaú Unibanco Holding, as well as directors and officers of these entities, certain family members of such individuals and any entities controlled directly or indirectly by them. Our Related Party Transactions Policy provides that any transaction involving related parties must be carried out at arm’s length, comply with all practices put in place by Itaú Unibanco Holdings’ management (such as the guidelines provided in our Code of Ethics), be executed in writing, and be clearly disclosed in Itaú Unibanco Holding’s financial statements according to the materiality criteria provided by accounting standards.
Any related party transaction or series of transactions within a one-year period that exceeds R$1 million, defined as a “Significant Amount” (except those exclusively involving entities wholly owned, directly or indirectly, by Itaú Unibanco Holding), is analyzed by our ethics and ombudsman department and submitted to our board of directors on a quarterly basis. Any related party transaction or series of transactions within a one-year period that exceeds 0.1% of our total assets and liabilities, defined as a “Relevant Amount” (except those exclusively involving entities wholly owned, directly or indirectly, by Itaú Unibanco Holding), must be approved in advance by an ad hoc committee formed by two independent members of our board of directors and one member of our audit committee, and subsequently submitted to approval by our board of directors.
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Transactions between companies included in the consolidation were eliminated in the consolidated financial statements and take into consideration the absence of risk. See “notenote 2.4a – Summary of Main Accounting Practices – Consolidation and Proportionate Consolidation” ofto our consolidated financial statements.
Unconsolidated related parties are the following:
· | IUPAR and Itaúsa, parent companies of Itaú Unibanco Holding. |
· | Non-financial subsidiaries of Itaúsa, especially: Itautec S.A., Duratex S.A., Elekeiroz S.A. and Itaúsa Empreendimentos S.A.. |
· | Fundação Itaubanco, FUNBEP – Fundo de Pensão Multipatrocinado, Caixa de Previdência dos Funcionários do BEG (PREBEG), Fundação Bemgeprev, Itaubank Sociedade de Previdência Privada, UBB – Prev Previdência Complementar, and Fundação Banorte Manuel Baptista da Silva de Seguridade Social, closed-end private pension entities, that administer supplementary retirement plans sponsored by Itaú Unibanco Holding and/or our subsidiaries. |
· | Fundação Itaú Social, Instituto Itaú Cultural, Instituto Unibanco, Instituto Assistencial Pedro Di Perna, Instituto Unibanco de Cinema, and Associação Clube “A”, entities sponsored by Itaú Unibanco Holding and subsidiaries to act in their respective areas of interest. |
· | Investments in unconsolidated companies – Porto Seguro Itaú Unibanco Participações S.A., |
Additionally, there are transactions with entities under joint control, particularly Banco Investcred Unibanco S.A., Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento, Luizacred S.A. Soc. Créd. Financiamento Investimento, FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento, FIC Promotora de Vendas Ltda. and Ponto Frio Leasing S.A. Arrendamento Mercantil. See note 3(b) to our consolidated financial statements.
The transactions with these related parties are mainly as follows:
· | interbank deposits, which are investments in other financial institutions; |
· | deposits, which are funds received as deposits from other entities; |
· | securities sold under repurchase agreements, which are funds received from security repurchase agreements for financial treasury bills, national treasury bills, national treasury notes, government securities abroad, Eurobonds, bank deposit certificates, debentures, swaps forwards, options and future contracts; |
· | amounts receivable from (payable to) related parties, which arise from custody fees and risk management fees; |
· | banking service fees (expenses), which arise from affiliate portfolio management fees, custody fees, risk management fees and social security and investment management fees; |
· | rental revenues (expenses), which consist of rent for space used by not-for profit entities sponsored by us; |
· | donation expenses, which consist of donations for investment in projects of not-for profit entities sponsored by us; and |
· | data processing expenses, which consist of expenses for processing services, including expert technical assistance and maintenance of equipment, provided by Itautec. |
For more details on transactions with related parties see “note 34 – Related Parties” ofnote 35 to our consolidated financial statements.
The granting of credit to our officers, directors or affiliates is subject to restrictions under Brazilian law. Under Brazilian law, financial institutions may not grant loans, advances or guarantees to:
In addition, Itaú Unibanco Holding has made regular donations to Fundação Itaú Social, a charitable foundation whose objectives are:
· | to create the “Programa Itaú Social,” aimed at coordinating activities of interest to the community, supporting and developing social, scientific and cultural projects, mainly in the areas of education and health; |
· | to support ongoing projects or initiatives, sustained or sponsored by entities qualified under the “Programa Itaú Social,” and |
· | to act as a supplier of ancillary services to companies of the group. |
Itaú Unibanco Holding is the founding partner and sponsor of the Instituto Itaú Cultural – IIC, an entity whose purpose is the promotion and preservation of the Brazilian cultural heritage.
The donations to Instituto Itaú Cultural and services rendered by other entities such as:
· | Fundação Itaubanco, Funbep — Fundo de Pensão Multipatrocinado, Fundação Bemgeprev, UBB PREV — Previdência Complementar, and Fundação Manoel Baptista da Silva de Seguridade Social, closed-end private pension entities, that administer supplementary retirement plans sponsored by Itaú Unibanco Holding and its subsidiaries; and |
· | Instituto Itaú Cultural, Instituto Unibanco de Cinema and Associação Clube “A,” not-for-profit entities sponsored by Itaú Unibanco Holding and its subsidiaries. |
In addition to the aforementioned transactions, Itaú Unibanco and non-consolidated entities are parties to an agreement for apportionment of common costs, pursuant to which such subsidiaries pay Itaú Unibanco for certain shared structures provided by Itaú Unibanco. In connection with such agreement, the non-consolidated entities paid Itaú Unibanco R$8.0 million, R$8.0 million and R$16.6 million in 2012, 2011 and 2010, respectively.
7C. | Interests of Experts and Counsel |
Not applicable.
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ITEM 8 FINANCIAL INFORMATION
ITEM 8 | FINANCIAL INFORMATION |
8A. | Consolidated Financial Statements and Other Financial Information |
The information included in “Item 18. Financial Statements” of this annual report is referred to and incorporated by reference into this Item 8A.
Litigation
Overview
We are party to numerous lawsuits and administrative proceedings that arise during the normal course of our business. We are routinely involved in consumer complaints filed with SUSEP and the Central Bank, which do not constitute administrative proceedings. We are not defendants in any material administrative proceeding with the CVM, SUSEP, the Central Bank or any municipalities.
Our financial statements only include reserves for probable losses that can be reasonably estimated and expenses that we may incur in connection with pending litigation or administrative proceedings, or as otherwise required by Brazilian law. As of December 31, 2011,2012, our provisions for such contingencies were R$15,99019,209 million, of which R$ 8,64510,433 million are related to tax contingencies, R$4,014million4,852 million are related to labor contingencies, R$3,1663,732 million are related to civil contingencies and R$165192 million to other contingencies. See note 3132 to our consolidated financial statements as of and for the year ended December 31, 2011.statements. Our management believes that our provisions, including interest, for legal proceedings in which we are defendants are sufficient to cover probable losses that can be reasonably estimated in the event of unfavorable court decisions. It is currently not possible to estimate the amount of all potential costs that we may incur or penalties that may be imposed on us other than those amounts for which we have reserves. We believe that any potential liabilities related to these lawsuits and administrative proceedings will not have a material adverse effect on our financial condition or results. There are no material proceedings in which any of our directors, any member of our senior management or any of our affiliates is either a party adverse to us or to our subsidiaries or has a material interest adverse to us or our subsidiaries.
Civil Litigation
Litigation Arising from Government Monetary Stabilization Plans
From 1986 to 1994, the Brazilian federal government implemented several consecutive monetary stabilization plans to combat hyper-inflation. In order to implement these plans, the Brazilian federal government enacted several laws based on its power to regulate the monetary and financial systems as granted by the Brazilian federal constitution.
Holders of savings accounts during the periods when the monetary stabilization plans were implemented have challenged the constitutionality of the laws that implemented those plans, claiming from the banks where they held their savings accounts additional amounts of interest based on the inflation rates applied to savings accounts under the monetary stabilization plans.
We are defendants in numerous standardized lawsuits filed by individuals in respect of the monetary stabilization plans. We record provisions for such claims upon receipt of summons to present a defense based on statistical criteria. Each provision may be adjusted based on the balance in the savings account statements of each plaintiff during the relevant periods.defense.
In addition, we are defendants in class actions, similar to the lawsuits by individuals, filed by either (i) consumer protection associations or (ii) public attorneys’ office (Ministé(Ministério Público)blico) on behalf of holders of savings accounts. Holders of savings accounts may collect any amount due based on such a decision. We record provisions when individual plaintiffs apply to enforce such decisions, using the same criteria used to determine provisions for individual lawsuits.
The Federal Supreme Court (Supremo(Supremo Tribunal Federal)Federal) has issued some decisions in favor of the holders of savings accounts, but has not issued a final ruling with respect to the constitutionality of the monetary stabilization plans as applicable to savings accounts. In relation to a similar dispute with respect to the constitutionality of monetary stabilization plans as applicable to time deposits and other private agreements the Federal Supreme Court has decided that the laws were in accordance with the federal constitution. Due to this contradiction, theConfederação Nacional do Sistema Financeiro – Consif (“Consif”), an association of Brazilian financial institutions, filed a special proceeding with the Federal Supreme Court (Arguiç(Arguição de Descumprimento de Preceito Fundamental nº 165, or ADPF, 165), in which the Central Bank has filed an amicus brief, arguing that holders of savings accounts did not incur actual damages and that the monetary stabilization plans as applicable to savings accounts were in accordance with the federal constitution.
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Other Civil Litigation
In addition to litigation arising from government monetary stabilization plans, we are defendants in numerous civil lawsuits arising from the normal course of our business. We are not able to currently predict the total amounts involved in these claims, due to the nature of the matters disputed. However, we believe that any potential liabilities related to these lawsuits will not have a material adverse effect on our financial condition or results.
As of December 31, 2011,2012, our total amount of provisions related to civil litigation, including the monetary stabilization plans, was R$3,1663,732 million.
Tax Litigation
We have certain tax disputes that arise from our ordinary business activities, mainly relating to the constitutionality or legality of certain taxes imposed on us. For our accounting policy regarding contingentContingent liabilities arising from tax liabilities,disputes are computed according to the principal amount of taxes in dispute, subject to tax assessment notices, plus interest and, if applicable, penalties and other administrative charges.
A provision for such liabilities, see note 2.4 t to tour consolidated financial statements.contingent liability is established if it involves a legal tax obligation, regardless of the probability of winning or losing the dispute. A legal tax obligation exists if the gain or loss of the related litigation depends directly on the determination that a currently enforceable law is or not unconstitutional. In any other situation, a provision is recognized if a loss is probable (prevailing in the litigation is less likely than a loss).
As of December, 31, 2011,2012, our total amount of provisions related to taxes was R$ 8,64510,433 million. See note 3132 to our consolidated financial statements, as of and for the year ended December 31, 2011, for details regarding the changes in the provisions and respective escrow deposits for tax and social security lawsuits.
The main types of tax disputes for which we have recognized provisions are as follows:follows (the terms “PIS”, “COFINS”, “CSLL”, “IRPJ” and “ISS” are described in “Item 4B. Business Overview — Regulation and Supervision — Taxation”):
· | PIS and COFINS: we claim those taxes should be levied on the revenue arising from sales of goods and services, instead of the total gross revenue. |
· | CSLL: we claim that this tax should be levied at the regular rate of 9.0%, instead of the increased CSLL rate for financial and insurance companies of 15.0%, which we believe unconstitutional. |
· | IRPJ and CSLL: we claim that |
· | PIS: we claim that the effectiveness of Constitutional Amendments No. 10 and 17 should not apply retroactively to tax periods prior to its effectiveness, during which the tax provisions of preceding Supplementary Law No. 07 should apply. |
No provision is recognized in relation to tax litigation where the likelihood of prevailing is more likely than losing. The total actual estimated risk in such litigation is R$ 5,9308,395 million, which reflects the amount under dispute where a loss is possible. The main types of such tax disputes are detailed below:
· | INSS: we defend and claim that non-wage benefits, such as profit sharing, transportation voucher and one-time bonuses, are not subject to social security taxes. |
· | IRPJ, CSLL, PIS and COFINS: we claim certain tax credits that we have offset against other tax liabilities, which have not been recognized by tax authorities. |
· |
· | IRPJ, CSLL: we defend that losses and discounts on receipt of credits are necessary operating expenses and therefore losses are deductible from loan operations and discounts are deductible upon their renegotiation and recovery. |
· | ISS: we defend that certain banking transactions do not generate service fees or income, but rather only interest and commissions, and that certain revenues are not listed under the law and are therefore not subject to the ISS tax. |
· | IRPJ, CSLL: we defend the deductibility of |
· | IRPJ, CSLL: we defend the application of the standard Brazilian tax (taxable income) and the unavailability of profits with the mere transfer of capital |
In addition, we participated in the Program for Cash or Installment Payment of Federal Taxes established by Law No. 11,941, ofenacted on May 27, 2009, which allowed litigating taxpayers who agreed to discontinue the litigation to pay only the principal amount under dispute without penalties and interest applicable to such amounts. Under this program, we paid part of the disputed amounts in our litigation regarding PIS and COFINS based on total gross revenue as set forth by paragraph 1 of Article 3 of Law No. 9,718, ofenacted on November 27, 1998, and recognized them under Legal Tax Liability.
A portion of the payments will be paid in installments and are pending the consolidation of related debt by the tax authorities. They are no longer considered to be a provision for a contingency and, therefore, such amounts have been transferred to tax and social securities contributions liability.
Labor Litigation
Labor unions and former employees file lawsuits against us seeking compensation for alleged violations of their labor contract or related statutory rights. As of December 31, 2011,2012, there were approximately 44,60050,500 labor claims filed against us. Individual labor lawsuits against us are primarily related to overtime pay and salary parity. Collective labor lawsuits against us are primarily related to maintenance of healthcare plans, security rules, strikes and salary differences resulting from monetary stabilization plans implemented by the Brazilian federal government. We are also defendants in labor lawsuits filed by the Brazilian Public Labor Prosecutor Office related to union classification, outsourcing, occupational disease, health and safety, determination of working days, and compliance with minimum share of disabled personnel. For the fiscal year ended December 31, 2011,2012, we paid approximately R$683916 million in settlements with former employees and judgments imposed by the labor courts.
Dividend Policy and Dividends
General
Brazilian Corporate Law generally requires that the bylaws of each Brazilian corporation specify a minimum percentage of the distributable profit of the corporation (adjusted net profit, as defined in Article 202 of Brazilian Corporate Law), comprising normal dividends and interest on stockholders’ equity, that must be distributed to the shareholders as described below. Under our bylaws, we are required to distribute to our shareholders each fiscal year an amount equal to not less than 25.0% of our adjusted net profit. This is referred to as the mandatory dividend. Under Brazilian Corporate Law, the mandatory dividend may be paid in the form of normal dividends or in the form of interest on stockholders’ equity. Our board of directors may also declare the payment of interim dividends from retained earnings and profit reserves. Any payment of interim dividends or payment of interest on stockholders’ equity will be netted against the amount of the mandatory dividend for that fiscal year. In addition, under our bylaws, each preferred share is entitled to a priority minimum annual dividend of R$0.022, which amount is reduced from the mandatory dividend payable.
The principal difference between dividends and interest on stockholders’ equity is their tax treatment. For tax purposes, interest on stockholders’ equity is limited to the daily average of the Brazilian long-term interest rate (Taxa de Juros de Longo Prazo or “TJLP”)TJLP as determined by the Central Bank, over the taxable year, and cannot exceed the greater of (i) 50.0% of adjusted net profit for the period in respect of which the payment is made (after the deduction of CSL,CSLL, but before taking into account the amount of such interest on stockholders’ equity and the provision for IRPJ, as described in “Taxation”“Item 4B. Business Overview — Regulation and Supervision — Taxation”),; and (ii) 50.0% of the sum of retained earnings and profit reserves. Any payment of interest on stockholders’ equity to holders of preferred shares, whether Brazilian residents or not, including holders of ADSs, is subject to Brazilian withholding tax at the rate of 15%15.0%, or 25%25.0% if the shareholder is a resident or domiciled in a tax haven jurisdiction or a privileged tax regime, pursuant to Normative Ruling No. 1,037 of June 4, 2010, as amended. The amount paid to shareholders as interest on stockholders’ equity, net of any withholding tax, may be included as part of the mandatory dividend. In such cases, we are required to distribute to shareholders an amount sufficient to ensure that the net amount received by shareholders, after the payment by us of applicable withholding taxes in respect of the distribution of interest on stockholders’ equity, is at least equal to the mandatory dividend. See “The Brazilian Financial System“Item 4B. Business Overview — Regulation and Banking Regulation -Supervision — Taxation on Financial Transactions – Corporate—Corporate Income Tax and Social Contribution on Profits”.
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Under Brazilian Corporate Law, a company is allowed to suspend payment of the mandatory dividend in respect of common shares and preferred shares if management reports to shareholders at a meeting that the distribution would be incompatible with the financial circumstances of the company and the shareholders ratify this decision at a meeting. In this case, the fiscal council must prepare and issue an opinion about the report of management and management must provide an explanation to the CVM within five days of the shareholders’ meeting, justifying the decision. The distributable amount that was not distributed will be recorded as a special reserve and, if not absorbed by losses in subsequent fiscal years, should be paid as dividends as soon as the company’s financial situation permits.
On February 28, 2013, the Brazilian government enacted Provisional Measure No. 608, which establishes that the payment of dividends and interest on stockholders’ equity by financial institutions to their shareholders is subject to the compliance with regulation issued by the CMN. The measure is part of recent developments to implement Basel III liquidity requirements. On March 1, 2013, CMN issued Resolution No 4,193, which provides that non-payment of dividends may occur if financial institutions fail to comply with the additional capital requirements, which will be required beginning on January 1, 2016 and gradually increased until 2019. For more information, see “Item 4B. Business Overview — Regulation and Supervision — Capital Adequacy and Leverage/Regulatory Capital Requirements — Implementation of Basel III in Brazil”.
Such restriction on the payment of dividends will apply progressively, according to the extent of the non-compliance with additional capital requirements. In case the additional capital provided by a financial institution is less than 25.0% of that established by the CMN for that year, no dividends or interest on stockholders’ equity may be distributed. If the additional capital is greater than 25.0% and less than 50.0% of that required, 80.0% of the intended dividends and interest on stockholders’ equity may not be distributed. If the additional capital is greater than 50.0% and less than 75.0% of that required, 60.0% of the intended dividends and interest on stockholders’ equity may not be distributed. If the additional capital is greater than 75.0% and less than 100.0% of that required, 40.0% of the intended dividends and interest on stockholders’ equity may not be distributed.
Payment of Dividends
We are required to hold an annual shareholders’ meeting by no later than April 30 of each year at which the annual dividend may be declared or ratified. Additionally, interim dividends may be declared by our board of directors. According to Brazilian Corporate Law, the payment of dividends must occur prior to the end of the fiscal year in which the dividend was declared. A shareholder has a three-year period from the dividend payment date to claim dividends in respect of its shares, after which we have no liability for that payment. Shareholders who do not reside in Brazil must generally register with the Central Bank to have dividends and interest on stockholders’ equity, sales proceeds or other amounts with respect to their shares eligible to be remitted in foreign currency outside of Brazil.
The preferred shares underlying the ADSs are held in Brazil by the custodian (as agent for the depositary), which is the registered owner on the records of the registrar of our preferred shares. The registrar is The Bank of New York Mellon. Payments of cash dividends and cash distributions, if any, on preferred shares underlying the ADSs will be made in Brazilian currency to the custodian or to the depositary, which will then convert or cause to be converted as promptly as practicable those proceeds into U.S. dollars. The custodian or the depositary will deliver the converted proceeds to the holders of our ADSs, in proportion to the number of ADSs representing the preferred shares held by holders; provided, however, that in the event that we, the custodian or the depositary are required to withhold from cash dividend or other cash distribution an amount of taxes or other governmental charges, the amount distributed to the holder of the ADSs shall be reduced accordingly.
Dividend Policy
We currently pay dividends and interest on stockholders’ equity equal to the mandatory dividend, subject to any determination by our board of directors that such distribution would be inadvisable in view of our financial condition and provided that our board of directors determines to pay solely the minimum, non-cumulative preferred dividend in respect of the preferred shares. We currently intend to pay a fixed amount of dividends monthly, which is equal to R$0.015 per share. At the end of a fiscal year, we intend to pay any difference between this monthly dividend and our minimum annual dividend of R$0.022 per share.
The record date in Brazil for the monthly payment is the last business day of the preceding month and in the United States the record date is three business days after the Brazilian record date. The payment of the dividend is the first business day of the following month.
On February 9, 2011, our Disclosuredisclosure and Trading Committeetrading committee approved a formal policy regarding dividends and interest on stockholders’ equity, as described above.
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History of Dividend Payments
The following table sets forth the dividends and interest on stockholders’ equity paid to or declared for holders of our common shares and preferred shares since 2009.2010.
Dividend | ||||||||||
Year | Amount (In millions of R$) | Per Share (R$) | ||||||||
2011 | 5,054 | 1.12 | ||||||||
2010 | 4,482 | 0.99 | ||||||||
2009 | 3,977 | 0.92 |
We also paid our shareholders a dividend of R$0.012 per share, net of taxes in Brazil, on February 1, 2012.
Dividend | ||||||||
Amount | Per Share | |||||||
Year | (In millions of R$) | (R$) | ||||||
2012 | 5,177 | 1.145 | ||||||
2011 | 5,054 | 1.12 | ||||||
2010 | 4,484 | 0.99 |
On February 6, 2012,4, 2013, our board of directors declared interest on equity in the amount of R$0.416400.3824 per share (or R$0.353940.3250 per share, net of taxes) and authorized payment of interest on equity declared on December 16, 2011November 29, 2012 in the amount of R$0.28800.3120 per share (or R$0.2448,0.2652, net of taxes). All such amounts are expected bewere paid on March 13,14, 2013. The ex-dividend date is March 14, 2013 and December 21, 2012, and total R$0.59874 per share, net of taxes. In addition, on February 6, 2012, our board of directors approved a 25% increase (i.e., from R$0.12 to R$0.15 per share) in the monthly dividend included in the calculation of our mandatory dividend under Brazilian corporate law, beginning with the payment to be made on April 2, 2012 and calculated based on our final shareholder base as of February 29, 2012.respectively.
8B. | Significant Changes |
We are not aware of any significant changes bearing on the financial condition since the date of the consolidated financial statements included in this annual report.
ITEM 9 THE OFFER AND LISTING
ITEM 9 | THE OFFER AND LISTING |
9A. | Offer and Listing Details |
Our preferred shares trade on the NYSE, under the symbol “ITUB” in the form of ADSs. We listed our ADSs on the NYSE and became a U.S. registered company on February 21, 2002 and have since that time complied with NYSE requirements, as well as andwith those of the SEC, which include disclosure of financial statements in U.S. GAAP until 2010, in IFRS since 2011, and compliance with U.S. legislative requirements, including the 2002 Sarbanes-Oxley Act. Each ADS represents one preferred share. The ADSs are evidenced by of American Depository Receipts or ADRs,(“ADRs”), issued by The Bank of New York Mellon, as depositary, under a Deposit Agreement, dated as of May 31, 2001, as amended and restated as of February 20, 2002 and as of March 30, 2009, effective as of April 3, 2009, among us, the depositary and the owners and beneficial owners of ADSs from time to time.
We are a publicly held company with shares traded on the market since our founding in 1943. In 1944 we registered with the BM&FBOVESPA, which is the principal trading market for our preferred shares and common shares. Our shares trade on the BM&FBOVESPA under the symbol “ITUB4” for the preferred shares without par value and “ITUB3” for the common shares without par value.
As of December 31, 2011,2012, there were an aggregate of 2,281,649,700 preferred shares issued, including 57,293,97152,554,239 held as treasury shares, and 2,289,286,400 common shares issued, including 2,100 held as treasury shares. As of December 31, 2011, 5,330,9712012, 8,886,344 common shares and 1,361,850,3011,397,000,259 preferred shares were held by non-Brazilian investors (calculated based on the investors’ addresses indicated in our records related to the shares that are in our custody), representing 0.23%0.39% and 59.7%61.2%, respectively, of the total of each class outstanding.
We have registered one class of ADSs under a registration statement on Form F-6 pursuant to the Securities Act. As a result of a stock split effected on October 3, 2005, one ADS came to represent one preferred share without par value. As of December 31, 2011,2012, there were approximately884.6 856.5 million ADSs outstanding, representing approximately 38.8%37.5% of the preferred shares. All of the ADSs were registered in the name of The Depository Trust Company and The Bank of New York Mellon. As of December 31, 2011,2012, there were 82 registered holders of ADSs.
We also trade our preferred shares in the form of Argentine Certificates of Deposits (Certificados(Certificados de Depósitos Argentinos or “CEDEARs”), or CEDEARs, on the Argentine Stock Exchange (Bolsa(Bolsa de Comércio de Buenos Aires), or BCBA.“BCBA”). Currently, one CEDEAR represents one preferred share without par value. As of December 31, 2010,2012, there were approximately 5,141,300 CEDEARs outstanding.
On April 19, 2013, our shareholders approved an increase in our capital stock of R$15.0 billion, from R$45.0 billion to R$60.0 billion, through the capitalization of certain statutory revenue reserves, subject to approval by the Central Bank. This capital increase would be effected by the issuance of 457,093,610 new book entry shares with no par value, 228,928,640 of which will be common shares and 228,164,970 of which will be preferred shares, granted to shareholders in the form of bonus shares, free of charge, in the proportion of one new share for every ten shares of the same class held. Shares held as treasury stock will be entitled to receive bonus shares in the same proportion. Determination of the record date for shareholders entitled to receive bonus shares will be made following approval of the issuance by the Central Bank.
The following table setstables set forth, for the periods indicated, the reported high and low sales prices for our preferred shares on the BM&FBOVESPA, inreais and U.S. dollars at the selling rate for the sale of U.S. dollars at the last day of each respective period. See “Item 3A. Selected Financial Data -— Exchange Rates” for information with respect to exchange rates applicable during the periods set forth below. All information takes into account retroactively the effect of certain bonus shares and stock split.shares. See “Item 3A. Selected Financial Data -— IFRS Selected Financial Data”.
Data.”
R$ per | US$ per | |||||||||||||||
Preferred Share | Preferred Share | |||||||||||||||
Calendar Period | High | Low | High | Low | ||||||||||||
2007 | 37.45 | 24.55 | 21.22 | 11.48 | ||||||||||||
2008 | 38.09 | 15.37 | 23.07 | 6.65 | ||||||||||||
2009 | 40.63 | 18.47 | 23.44 | 7.63 | ||||||||||||
2010 | 43.72 | 31.03 | 25.90 | 16.50 | ||||||||||||
2011 | 40.65 | 25.15 | 24.45 | 14.36 | ||||||||||||
2010 | ||||||||||||||||
1st quarter | 40.49 | 33.81 | 23.49 | 18.03 | ||||||||||||
2nd quarter | 40.27 | 31.03 | 22.91 | 16.50 | ||||||||||||
3rd quarter | 40.47 | 32.51 | 23.89 | 18.06 | ||||||||||||
4th quarter | 43.72 | 37.66 | 25.90 | 22.05 | ||||||||||||
2011 | ||||||||||||||||
1st quarter | 40.65 | 34.17 | 24.32 | 20.37 | ||||||||||||
2nd quarter | 39.47 | 34.00 | 24.45 | 20.81 | ||||||||||||
3rd quarter | 36.89 | 25.15 | 23.68 | 14.36 | ||||||||||||
4th quarter | 34.97 | 27.51 | 19.92 | 14.59 | ||||||||||||
Share prices for the most recent six months are as follows: | ||||||||||||||||
September 2011 | 31.13 | 27.11 | 19.41 | 14.36 | ||||||||||||
October 2011 | 34.22 | 27.51 | 19.92 | 14.59 | ||||||||||||
November 2011 | 33.16 | 29.05 | 19.07 | 15.40 | ||||||||||||
December 2011 | 34.97 | 32.25 | 19.19 | 17.73 | ||||||||||||
January 2012 | 37.41 | 33.50 | 21.18 | 17.93 | ||||||||||||
February 2012 | 37.56 | 34.67 | 21.88 | 19.95 | ||||||||||||
March 2012(1) | 38.94 | 35.77 | 22.02 | 20.35 |
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R$ per | US$ per | |||||||||||||||
Preferred Share | Preferred Share | |||||||||||||||
Calendar Period | High | Low | High | Low | ||||||||||||
2008 | 38.09 | 15.37 | 23.07 | 6.65 | ||||||||||||
2009 | 40.63 | 18.47 | 23.44 | 7.63 | ||||||||||||
2010 | 43.72 | 31.03 | 25.90 | 16.50 | ||||||||||||
2011 | 40.65 | 25.15 | 24.45 | 14.36 | ||||||||||||
2012 | 38.94 | 26.73 | 22.02 | 12.88 | ||||||||||||
2011 | ||||||||||||||||
1st quarter | 40.65 | 34.17 | 24.32 | 20.37 | ||||||||||||
2nd quarter | 39.47 | 34.00 | 24.45 | 20.81 | ||||||||||||
3rd quarter | 36.89 | 25.15 | 23.68 | 14.36 | ||||||||||||
4th quarter | 34.97 | 27.51 | 19.92 | 14.59 | ||||||||||||
2012 | ||||||||||||||||
1st quarter | 38.94 | 33.50 | 22.02 | 17.93 | ||||||||||||
2nd quarter | 35.58 | 26.73 | 19.47 | 12.88 | ||||||||||||
3rd quarter | 35.60 | 27.55 | 17.68 | 13.46 | ||||||||||||
4th quarter | 34.47 | 28.19 | 16.64 | 13.90 | ||||||||||||
Share prices for the most recent six months are as follows: | ||||||||||||||||
September 2012 | 35.60 | 30.41 | 17.68 | 14.98 | ||||||||||||
October 2012 | 31.45 | 28.19 | 15.52 | 13.90 | ||||||||||||
November 2012 | 32.54 | 29.47 | 15.47 | 14.34 | ||||||||||||
December 2012 | 34.47 | 32.20 | 16.64 | 15.30 | ||||||||||||
January 2013 | 36.28 | 33.80 | 17.74 | 16.61 | ||||||||||||
February 2013 | 35.73 | 32.91 | 18.16 | 16.63 | ||||||||||||
March 2013 | 37.03 | 34.57 | 18.94 | 17.17 | ||||||||||||
April 2013(1) | 36.08 | 32.30 | 17.96 | 16.08 |
Source: Economática System
(1) Until March 20, 2012.April 19, 2013.
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The following table sets forth, for the periodsperiod indicated, the high and low sales prices in U.S. dollars for the ADSsADS in the over-the-counterover the counter market and NYSE during the period indicated.
US$ per ADS | US$ per ADS | |||||||||||||||
Calendar Period | High | Low | High | Low | ||||||||||||
2007 | 21.37 | 11.47 | ||||||||||||||
2008 | 23.53 | 6.09 | 23.53 | 6.09 | ||||||||||||
2009 | 23.95 | 7.55 | 23.95 | 7.55 | ||||||||||||
2010 | 26.30 | 16.33 | 26.30 | 16.33 | ||||||||||||
2011 | 24.77 | 14.47 | 24.77 | 14.47 | ||||||||||||
2010 | ||||||||||||||||
1st quarter | 23.79 | 17.86 | ||||||||||||||
2nd quarter | 22.97 | 16.33 | ||||||||||||||
3rd quarter | 24.18 | 17.93 | ||||||||||||||
4th quarter | 26.30 | 22.47 | ||||||||||||||
2012 | 22.00 | 12.84 | ||||||||||||||
2011 | ||||||||||||||||
1st quarter | 24.77 | 20.61 | 24.77 | 20.61 | ||||||||||||
2nd quarter | 24.72 | 20.93 | 24.72 | 20.93 | ||||||||||||
3rd quarter | 23.85 | 14.47 | 23.85 | 14.47 | ||||||||||||
4th quarter | 20.09 | 14.52 | 20.09 | 14.52 | ||||||||||||
2012 | ||||||||||||||||
1st quarter | 22.00 | 18.51 | ||||||||||||||
2nd quarter | 19.50 | 12.84 | ||||||||||||||
3rd quarter | 17.83 | 13.44 | ||||||||||||||
4th quarter | 16.57 | 13.93 | ||||||||||||||
Share prices for the most recent six months are as follows: | ||||||||||||||||
September 2011 | 19.55 | 14.47 | ||||||||||||||
October 2011 | 20.09 | 14.52 | ||||||||||||||
November 2011 | 19.18 | 15.60 | ||||||||||||||
December 2011 | 19.20 | 17.53 | ||||||||||||||
January 2012 | 21.11 | 18.51 | ||||||||||||||
February 2012 | 21.85 | 20.02 | ||||||||||||||
March 2012(1) | 22.00 | 20.22 | ||||||||||||||
September 2012 | 17.83 | 15.04 | ||||||||||||||
October 2012 | 15.58 | 13.93 | ||||||||||||||
November 2012 | 16.25 | 14.20 | ||||||||||||||
December 2012 | 16.57 | 15.21 | ||||||||||||||
January 2013 | 17.80 | 16.71 | ||||||||||||||
February 2013 | 18.11 | 16.63 | ||||||||||||||
March 2013 | 19.07 | 17.13 | ||||||||||||||
April 2013(1) | 17.99 | 16.09 |
Source:Souce: Economática System
(1) Until March 20, 2012.April 19, 2013.
9B. | Plan of Distribution |
Not applicable.
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9C. Markets
Trading on the Brazilian Stock Exchanges
In 2000, the Brazilian stock exchanges executed a memorandum of understanding, and from that date on all securities became to be traded only on the Bolsa de Mercadorias e Futuros, or BM&F and the São Paulo Stock Exchange, or BOVESPA,The main market in which have merged and now operate as BM&FBOVESPA, as described below, with the exception of electronically traded public debt securities and privatization auctions, which continued to be traded on the Rio de Janeiro Stock Exchange.
The principal trading market for our preferred shares and common shares are traded is the Bovespa Segment of BM&FBOVESPA, which isthe Brazilian Securities, Commodities and Futures Exchange, the second largest exchange by market capitalization in the Americas and the largest stock trading centerexchange by market capitalization in Latin America. Settlement
Currently, BM&FBOVESPA is the only Brazilian exchange operator and manager of organized securities and derivatives markets (the Bovespa Segment and BM&F Segment, respectively) and provides registration, clearing and settlement services for transactions is effected threecarried out on its trading platforms, acting as central counterparty to ensure multilateral clearing and settlement. BM&FBOVESPA adopts an integrated business days aftermodel, encompassing the trade date. Deliveryentire chain of trading, clearing and payment for shares are madesettlement, risk management, central counterparty, central securities depository and custody services, through the facilities of separateintegrated, fully-electronic systems. Furthermore, BM&FBOVESPA operates four clearing houses for each exchange,(equities, derivatives, bonds and foreign exchange), a securities lending facility, safeguard mechanisms and, through BM&FBovespa Market Surveillance (BM&FBovespa Supervisão de Mercados, or “BSM”), a mutual entity and self-regulatory organization in which maintain accounts for member brokerage firms. The sellerit holds a material membership interest, is ordinarily required to deliver the shares to the clearing house on the second business day following the trade date.
Throughout its history, the BM&FBOVESPA has undergone changes in order to streamline its structure. On August 28, 2007, a corporate restructuring process resulted in the mergercharge of BM&Foverseeing activities by market participants and BOVESPA. The group underwent another restructuring process in November 28, 2008, as a result of which the holding company of the group, BOVESPA incorporated the wholly-owned subsidiaries, the Bovespa – Bolsa de Valores de São Paulo (“BVSP”), which was responsible for the operations of the stock exchange and the organized over-the-counter markets and the Brazilian Clearing and Depository Corporation (Companhia Brasileira de Liquidação e Custódia), which provided settlement,all trading, clearing and depository services.
These corporate restructurings have consolidatedsettlement transactions performed within the demutualization process, thereby causing the access to trading and other services rendered by the stock exchange to be unpegged from the stock ownership. In the former operating format of the BM&FBOVESPA, only the brokers that were members of the stock exchange were allowed to trade.
The BM&FBOVESPA has four daily open outcry trading sessions in Electronic Trading System: Pre-Opening Fixing, to input orders for the calculation of the theoretical opening price; Continuous Trading Session, for all securities traded on all markets; Closing Call, for all the stocks traded on the cash market comprising the portfolio of the BOVESPA Index and options series with higher liquidity.; and After Market Trading Session for cancellation of bids and asks registered during the regular trading session.markets it manages.
In order to better control volatility of the Bovespa Index (IBOVESPA), BM&FBOVESPA has adopted a “circuit breaker” system pursuant to which the trading sessions may be suspended for a period of time if IBOVESPA falls below a predetermined limit (such limit is determined according to the historic volatility of the index). The circuit breaker is activated based on IBOVESPA’s value on the previous day and the trading sessions may be suspended (i) for thirty minutes, in case IBOVESPA drops 10%, (ii) for one additional hour, if IBOVESPA drops another 5% after reopening (15% total drop), or one hour whenever(iii) for a period of time to be determined by BM&FBOVESPA, if IBOVESPA drops another 5% after the indices of the BOVESPA fall below the limits of 10% or 15%, respectively, as compared to the index registered in the previous trading session.second reopening (20% total drop).
TradingWe also issued CEDEARs, which represent shares of non-Argentine companies that are traded in Argentina. Our CEDEARs represent preferred shares on the BM&FBOVESPA by a holder not deemed to be domiciled in Brazil for Brazilian taxone-for-one basis and regulatory purposes, or a non-Brazilian holder,are traded on BCBA, which is subject to certain limitations under Brazilian foreign investment legislation. With limited exceptions, non-Brazilian holders may only trade on Brazilian stock exchanges in accordance with the requirements of CMN Resolution No. 2,689. CMN. Resolution No. 2,689 requires that securities held by non-Brazilian holders be maintained in the custody of, or in deposit accounts with, financial institutions and be registered with a clearing house. Such financial institutions and clearing houses must be duly authorized to act as such by the Central Bank and the CVM. In addition, CMN Resolution No. 2,689 requires non-Brazilian holders to restrict their securities trading to transactions on Brazilian stock exchanges or qualified over-the-counter markets. With limited exceptions, non-Brazilian holders may not transfer the ownership of investments made under CMN Resolution No. 2,689 to other non-Brazilian holders through a private transaction. See “Item 10E. Taxation - Brazilian Tax Considerations”non-profit and self-regulated association. BCBA is responsible for a descriptionthe registration of certain tax benefits extendedtrades and publication of prices and volume of transactions. Its supervisory powers allows, among other measures, stop trading when it deems necessary, in order to non-Brazilian holders who qualify under CMN Resolution No. 2,689.control or prevent abnormal changes in prices.
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Regulation of Brazilian Securities Markets
The Brazilian securities markets are regulated by the CVM, which has authority over stock exchanges and the securities markets generally, the CMN, and the Central Bank. The Central Bank, among other powers, has licensing authority over brokerage firms and regulatory authority over foreign investment and foreign exchange transactions.
Under Brazilian Corporate Law, a company is either public, acompanhia aberta, such as we are, or private, acompanhia fechada. All public companies are registered with the CVM and are subject to reporting requirements. A company registered with the CVM may have its securities traded either on the BM&FBOVESPA or in the Brazilian over-the-counter market. The shares of a public company may also be traded privately, subject to certain limitations. To be listed on the BM&FBOVESPA, a company must apply for registration with the CVM and the BM&FBOVESPA.
Trading in securities on the BM&FBOVESPA may be suspended at the request of a company in anticipation of a material announcement. Trading may also be suspended on the initiative of the BM&FBOVESPA or the CVM, based on or due to, among other reasons, a belief that a company has provided inadequate information regarding a material event or has provided inadequate responses to inquiries by the CVM or the BM&FBOVESPA.
Brazilian securities laws, the Brazilian Corporate Law and the laws and regulations issued by the CVM, the CMN and the Central Bank provide for, among other things, disclosure requirements applicable to issuers of traded securities, restrictions on insider trading and price manipulation, as well as protection of minority shareholders. On January 3, 2002, the CVM issued Rule No. 358 which amended the rules applicable to the disclosure of material facts, which became effective on April 18, 2002. In accordance with this regulation, we established internal policies applicable to the disclosure of relevant facts and the confidentiality of non-public information. See ““—Corporate Governance Practices” below. The CVM has also issued several rules regarding disclosure requirements, namely, Rule No. 358 for the regulation of disclosure of material facts, Rules No. 361 and No. 400 for the regulation of public offerings, Rule No. 380 for the regulation of Internet offerings, Rule No. 381 for the regulation of independent auditors.,auditors, Rule No. 480 for the regulation of registry of security issuers admitted to negotiation in regulated markets in Brazil, and Rule No. 481 for the regulation of information and public request of proxy for shareholders meeting. Rule No. 480 also requires that publicly traded companies file a reference form (Formulário de Referência) which is a regularly updated report containing certain information about the issuer as required by the form, to which supplementary information regarding notes or securities being offered are added at the time of each new public offering.
Corporate Governance Practices
In 2000, the BM&FBOVESPA introduced three special listing segments, known as Levels 1 and 2 of Differentiated Corporate Governance Practices and Novo Mercado aimed at fostering a secondary market for securities issued by Brazilian companies listed on the BM&FBOVESPA by prompting such companies to follow good corporate governance practices. The listing segments were designed for the trading of shares issued by companies voluntarily undertaking to abide by corporate governance practices and disclosure requirements in addition to those already imposed by Brazilian law. These listing segments increase shareholders’ rights and enhance the quality of information provided to shareholders.
To become a Level 1 (Nível 1) company, in addition to the obligations imposed by current Brazilian law, an issuer must, among other things, (i) ensure that shares of the issuer representing 25%25.0% of its total capital are effectively available for trading (free-float); (ii) adopt offering procedures that favor widespread ownership of shares when making a public offering; (iii) comply with minimum quarterly disclosure standards; (iv) follow stricter disclosure policies with respect to transactions by controlling shareholders, directors and officers involving securities issued by the issuer; (v) disclose the terms of agreements entered into with related parties; and (vi) make a schedule of corporate events available to shareholders.
To become a Level 2 (Nível 2) company, in addition to the obligations imposed by current Brazilian law, an issuer must, among other things, (i) comply with all of the listing requirements for Level 1 companies; (ii) grant tag-along rights for all shareholders in connection with a transfer of control of the company, offering the same conditions and price paid per share for the controlling block of common shares and 80% of the price paid per share of the controlling block of preferred shares; (iii) grant voting rights to holders of preferred shares in connection with certain corporate restructurings and related party transactions, such as (a) any conversion of the company into another corporate form, (b) merger, consolidation or spin-off of the company, (c) approval of transactions between the company and its controlling shareholder, including parties related to the controlling shareholder, (d) approval of any valuation of assets to be delivered to the company in payment for shares issued in a capital increase, (e) appointment of an expert firm to ascertain the fair value of the company in connection with any deregistration and delisting tender offer, and (f) changes to the aforementioned voting rights; (iv) have a board of directors comprised of at least five members at least 20% of whom are independent members as determined by the rules of Level 2, with a maximum two year term; (v) prepare annual financial statements in English, including cash flow statements, in accordance with international accounting standards, such as U.S. GAAP or IFRS; (vi) hold a tender offer by the company’s controlling shareholder if it elects to delist from the Level 2 segment (the minimum price of the shares to be offered will be determined by an appraisal process); and (vii) adhere exclusively to the rules of the BM&FBOVESPA Arbitration Chamber for resolution of disputes between the company and its investors.
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To be listed in the Novo Mercado, an issuer must meet all of the requirements described above, in addition to (i) issuing only voting shares and; (ii) granting tag-along rights for all shareholders in connection with a transfer of control of the company, offering the same price paid per share for the controlling block of common shares.
Our goal is to create value for our shareholders. We believe that one of the ways of reaching this goal is to maintain good corporate governance practices, as a long-term continuous process, designed to ensure sustained growth of the company. For many years we have been following principles relating to disclosure, minority shareholders’ rights and transparency as part of our corporate governance initiatives. For example, we have been registered as a public company with the BM&FBOVESPA and have had our shares traded on the market since our founding in 1944. We voluntarily adhered to BM&FBOVESPA’s Level 1 of Corporate Governance in June, 2001. In February 2002, we listed our Level 2 ADRs on the NYSE and have therefore complied with NYSE requirements, as well as those of the SEC, which include disclosure of financial statements in U.S. GAAP and fulfilling U.S. legislative requirements, including the 2002 Sarbanes-Oxley Act.
Public meetings are one of the most important channels of communication and are highly appreciated by investors, analysts and shareholders. The opportunity to interact with members of our senior management and discuss strategies and profitability can be a decisive factor when making an investment decision. The BM&FBOVESPA requires companies listed on the Levels 1 and 2 of Differentiated Corporate Governance Practices to hold at least one meeting with investors every year. We have been holding public meetings at the regional offices of the Association of Capital Market Investment Analysts and Professionals (APIMEC) and making several presentations in the United States and Europe since 1996. When making these presentations, we have the opportunity to provide the financial community with details regarding our performance, strategies for adding value and perspectives for the future as well as other relevant issues. As a commitment to further strengthen our position in the Brazilian capital market, we have also made presentations at APIMEC’s regional offices in different cities covered by APIMEC since 2002. In 2011, we made various presentations at APIMEC, roadshows in the United States, Europe and Asia, teleconferences in Portuguese and teleconferences in English on quarterly reports and relevant facts among other presentations that were made in Brazil at seminars, conferences and congresses on a wide range of subjects related to our performance and the capital markets.
In November 2004, we became the first Brazilian company to voluntarily adopt treasury operational rules based on our review of best practices in the international markets and CVM Rule No. 10. Our senior management believes these rules provide a number of benefits such as decrease in operational, financial and strategic risk, reduced risk of market concentration or improper price formation, reinforcement of the strategy of repurchasing securities aimed at preserving liquidity and value for shareholders and corporate governance best practices, improving transparency for transactions.
On June 8, 2006, we became the first non-U.S. bank listed on the NYSE to comply with all of the requirements set forth in Section 404 of the Sarbanes-Oxley Act, regarding internal controls over financial reporting, one year before the deadline established by the SEC.
We were the first company in Brazil to adopt Brazilian Association of Listed Companies (Associação Brasileira das Companhias Abertas)Abertas— ABRASCA), or ABRASCA’s, Control and Disclosure of Relevant Information Guide in 2007.
In May 5, 2008, our board of directors accepted the proposal of our disclosure and trading committee to establish a Corporate Governance Policy,corporate governance policy, consolidating our corporate governance principles and practices. Our corporate governance policy is included as Exhibit 11.2 to this Annual Report. The key principle upon which our policy rests is excellence in corporate governance with a view of strengthening and creating the best conditions for the development of our company and subsidiaries. Since then, our Corporate Governance Policy has been amended to include the committees of the board of directors and their respective rules.
In line with best disclosure practices and international trends, we make available our financial statements prepared in accordance with IFRS and Brazilian GAAP.
For more information about the members of our board of directors, stock options plan, fiscal council, audit committee, and other committees of the board of directors and the board of officers, see “Item 6C. Board Practices.”Practices”.
For more information on our corporate governance practices, including tag-along rights and our Code of Ethics, see “Item 10B. Memorandum and Articles of Association” and “Item 16B. Code of Ethics”.
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Disclosure Requirements
Pursuant to the CVM Rule No. 358 of January 3, 2002, the CVM revised and consolidated the requirements regarding the disclosure and use of information related to material facts and acts of publicly held companies, including the disclosure of information in connection with trading and acquisition of securities issued by publicly held companies.
Such requirements include provisions that:
· | establish the concept of a material fact that gives rise to reporting requirements. Material facts include decisions made by controlling shareholders, resolutions of the general meeting of shareholders and of management of the company, or any other facts related to the company’s business (whether occurring within the company or otherwise related thereto) that may influence the price of its publicly traded securities, or the decision of investors to trade such securities or to exercise any of such securities’ underlying rights; |
· | specify examples of facts that are considered to be material, which include, among others, the execution of shareholders’ agreements providing for the transfer of control, the entry or withdrawal of shareholders that have any managing, financial, technological or administrative functions within or to the company, and any corporate restructuring undertaken among related companies; |
· | oblige the investor relations officer, controlling shareholders, other officers, directors, members of the fiscal committee and other advisory boards to disclose material facts; |
· | require simultaneous disclosure of material facts to all markets in which the corporation’s securities are admitted for trading; |
· | require the acquirer of a controlling stake in a corporation to publish material facts, including its intentions as to whether or not to de-list the corporation’s shares, within one year; |
· | establish disclosure requirements in the acquisition and disposal of a material shareholding stake; and |
· | forbid the use of insider information. |
Pursuant to the CVM Rule No. 480 of December 7, 2009, the CVM expanded the quantity and improved the quality of information reported by issuers. This Rule represents a significant step forward in providing the market with greater transparency with respect to issuers. For that purpose, the Annual Information Report (IAN) was replaced by a reference form (Formulário de Referência), which comprised the information required by IAN and additional information required under CVM Rule 400 that was previously only subject to disclosure upon a public offering. Such reference form (Formulário de Referência) is in line with the Shelf Registration System recommended by the International Organization Securities Commission (IOSCO) and adopted in other countries (England and the United States, among others), by means of which the information regarding a specific issuer is consolidated into one document and is subject to periodic updates. This mechanism offers the investor the ability to analyze one single document for relevant information about the issuer.
CVM Rule No. 480 also created two groups of issuers by type of securities traded. Group A issuers are authorized to trade in any securities, whereas Group B issuers cannot trade in stocks, depositary receipts (BDRs, Units) and securities convertible or exchangeable into stocks or depositary receipts. The greater extent of Group A authorization is followed by more stringent disclosure and reporting requirements. As an issuer of stock, we are part of Group A.
CVM has also enacted Rule No. 481 of December 17, 2009 to regulate two key issues involving general meetings of shareholders in publicly held companies: (i) the extent of information and documents to be provided in support of call notices (subject to prior disclosure to shareholders); and (ii) proxy solicitation for exercise of voting rights. CVM Rule No. 481 is intended to (i) improve the quality of information disclosure by publicly held companies to shareholders and to the market in general, favoring the use of Internet as a disclosure mechanism; (ii) make the exercise of voting rights less costly and foster the participation of shareholders in general meetings, specially for companies with widely dispersed capital; and, consequently (iii) facilitate the oversight of corporate businesses.
Changes in the Brazilian Corporate Law
On October 31, 2001, Law No. 10,303, amended the Brazilian Corporate Law. The main goal of Law No. 10,303 was to broaden the rights of minority shareholders. In this sense, Law No. 10,303:
On July 13, 2007, the CVM issued Rule No. 457 (as amended by Rule No. 485, issued on September 1, 2010) to require listed companies to publish their consolidated financial statements according to IFRS and according to standards issued by CPC and approved by CVM, starting with the year ending December 31, 2010. We have published such financial statements prior to such date.
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On December 28, 2007, Law No. 11,638 amended numerous provisions of the Brazilian Corporate Law relating to accounting principles and authority to issue accounting standards. Law No. 11,638 sought to enable greater convergence between Brazilian GAAP and IFRS. To promote convergence, Law No. 11,638 modified certain accounting principles established in the Brazilian Corporate Law and required the CVM to issue accounting rules conforming such principles to the accounting standards adopted in international markets. Additionally, the statute acknowledged a role in the setting of accounting standards for the CPC, which is a committee of officials from the BM&FBOVESPA, industry representatives and academic bodies that has issued accounting guidance and pursued the improvement of accounting standards in Brazil. Law No. 11,638 allows the CVM and the Central Bank to rely on the accounting standards issued by the CPC in establishing accounting principles for regulated entities.
As a result of the issuance of Law No. 11,638, in a parallel process, CPC has issued approximately 40 standards with the objective of making Brazilian GAAP similar to IFRS as described above. In the case of Itaú Unibanco Holding, effectiveness of such standards issued by CPC depends on approval of the standards by the Central Bank. Standards issued by the CPC but not approved by the Central Bank are not required to be applied by Itaú Unibanco Holding.
Additionally, on May 27, 2009, Law No. 11,941 was enacted and, among other things, amended numerous provisions of the Brazilian Corporate Law and tax regulation, to further enable greater convergence between Brazilian GAAP and IFRS. The Law is currently subject to several accounting complementary regulations that affect, among others, the accounting of goodwill, deferred expenses, stocks, provisions, real state investments. Amendments provided additional criteria that financial statements are required to follow. The financial statements of Brazilian publicly held companies as of and for the yearyears ended December 31, 2010, 2011 and December 31, 20112012 were published according to these new regulations.
Finally, on June 24, 2011, Law No. 12,431 amended the Brazilian Corporate Law, among other laws. Many of the changes in the Brazilian Corporate Law prescribed by, Law No.12,431, such as the possibility for shareholders of public companies to vote without being present at meetings and for physical shareholder registries to be replaced by electronic registries in public companies, still require further regulation by the CVM. Among other changes, the amended Brazilian Corporate Law no longer requires members of the board of directors to be shareholders of the company.
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9D. | Selling Shareholders |
Not applicable.
9E. | Dilution |
Not applicable.
9F. | Expenses of the Issue |
Not applicable.
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ITEM 10 ADDITIONAL INFORMATION
10A. | Share Capital |
Not applicable.
10B. | Memorandum and Articles of Association |
Set forth below is certain information concerning our capital stock and a brief summary of certain significant provisions of our bylaws and Brazilian Corporate Law. This description does not purport to be complete and is qualified by reference to our bylaws (an English translation of which has beenis being filed with the SEC)SEC as part of this annual report) and to the Brazilian Corporate Law.
Registration and Purpose
We are organized as a publicly held corporation for an unlimited period of time under the laws of Brazil. Our head offices are located in the city of São Paulo, Brazil. We are governed mainly by the Brazilian Corporate Law and our bylaws. Our Tax Payer´sPayer’s Registry (CNPJ) is 60.872.504/0001-23 and we are registered with the São Paulo Commercial Registry (Junta Comercial do Estado de São Paulo) under NIRE. 35300010230.
Our corporate purpose, as set forth in Article 2 of our bylaws, is to perform banking activity in all its authorized forms, including foreign exchange transactions.
Shareholders’ Meetings
Under Brazilian Corporate Law, shareholders at a general meeting of shareholders may decide all matters relating to the business objectives andof the company, as well as pass resolutions deemed necessary for the protection of ourtheir interests. Shareholders voting at a general meeting have the exclusive power, among others, to:
·amend the bylaws;
·appoint, elect and dismiss members of our board of directors at any time;
·appoint members of the fiscal council;
·receive the yearly accounts prepared by management and accept or reject management’s financial statements, including the appropriation of net income and the distributable amount for payment of the mandatory dividend and allocation to the various reserve accounts;
·accept or reject the valuation of assets contributed by a shareholder in consideration for the issuance of capital stock;
·pass resolutions to reorganize our legal form, merge, consolidate or split, dissolve and liquidate, appoint and dismiss our liquidators and examine our accounts;
·decide with respect to the financial statements and the distribution and allocation of profits;
·decide with respect to the management report and the board of executive officers’ accounts;
·establish the aggregate and annual compensation of the members of the board of directors and the board of officers, specifying the amount applicable to each one of these bodies;
· approve alterations of the capital stock, without prejudice to our board of director’s authority to approve capital increases within authorized capital limits approved at a shareholders’’ meeting;
· decide on retained profits or the constitution of reserves; and
·decide on plans for stock option grants of shares issued by the company or by its controlled companies.
· | decide on plans for stock option grants of shares issued by the company or by its controlled companies. |
It is the responsibility of our board of directors to call a shareholders’ meeting. The first notice of the shareholders’ meeting must be published no later than 15fifteen days before the date of the meeting on the first call. Brazilian Corporate Law establishes that under specified circumstances, the meeting may also be convened by the fiscal council or any shareholder.
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The notice of a shareholders’ meeting must be published three times, on different dates, in official newspapers widely circulated in São Paulo, Brazil,our principal place of business, setting forth the place, date and time of the meeting, the day’s agenda and, in the event of an amendment to our bylaws, a description of the proposed change. In addition to the requirements of Brazilian Corporate Law, we also publish notices in three different languages (Portuguese, English and Spanish) on our website and email our subscribed investors and shareholders, as well as through CVM, BM&FBOVESPA, the SEC, the NYSE and the BCBA (Bolsa de Comercio de Buenos Aires).
As a general rule, Brazilian Corporate Law provides that a quorum for a shareholders’ meeting consists of shareholders representing at least 25% of a company’s issued and outstanding voting capital stock, on the first date the meeting is called for, and, if a quorum is not reached, any percentage of the company’s voting capital stock on a second date the meeting is called for.
Generally, our meetings are held with a quorum representing two thirds of our voting capital. In order to attend a shareholders’ meeting, a shareholder must present a document evidencing his identity and proof of deposit issued by the financial institution responsible for the bookkeeping of our stock.
A shareholder may be represented at a shareholders’ meeting by a proxy appointed less than a year before the meeting, which proxy must be oura shareholder, anyan officer of our officers,the company, a lawyer or a financial institution. An investment fund must be represented by its investment fund officer.
Board of Directors and Board of Officers -– Powers
Pursuant to the Brazilian Corporate Law and our bylaws, our board of directors has powers to, among other things:
·establish ourthe general business policies;guidelines of the company;
·elect and remove from office the members of our board ofcompany's officers and establish their functions;
·appoint officers to comprise the boards of officers of certainthe controlled companies as specified;
·supervise the managementadministration of our boardthe officers of officers,the company, examine at any time company accounts and documents, request information on contracts already signedexecuted or to be signednearing the point of execution and any other acts;
·convene call shareholders’ meetings;meetings to be held no earlier than fifteen days from the date the notice is given;
·approve give its opinion on the annualmanagement report, the board of officers' accounts and management’sthe financial statements to be submittedfor each fiscal year and submit such documents to the shareholders´ meetings;shareholders for approval;
·decide on budgets for results and investments and respective action plans;
·appoint and remove from office the independent auditors;
·appoint and remove the members of our audit committee and approving the operational rules that the audit committee may establish for its own functioning;
·decide on the distribution of interim dividends, andincluding distribution to profits or existing revenue accounts contained in the most recent annual or semi-annual balance sheet;
· make decisions on payment of interest on stockholders’ equity;
·decide on buy-back transactionsoperations on a non-permanent basis;
·decide on the purchase and writing of put and call options supported by the shares issued by the company for the purposes of cancellation, holding as treasury stock or sale, with due observance of the limits set forth the applicable regulations;
·decide on the institution of committees to handle specific issues within the scope of the board of directors;
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·elect and remove the members of ourthe audit committee and the compensation committee;
·approve the operational rules that ourthe audit committee and the compensation committee may establish for its own functioning and be aware of the committee’s activities through its reports;
·approve investments and divestments direct or indirect in corporate stakes for amounts higher than 15% of the book value of the company as registered in the last audited balance sheet; and
·decide on the increase of capital within the limits of our authorized capital.
On April 19, 2013, our shareholders approved, subject to approval by the Central Bank, an amendment to our bylaws in order to include, among the board powers, the power to authorize issuances of debt securities and other instruments convertible into shares, within the limit of our authorized capital.
Our board of directors may be composed of a minimum of ten and a maximum of fourteen directors, elected by our shareholders at the annual shareholders’ meeting. The directors elect one chairman and one to three vice-chairmen from among their peers. The annual shareholders’ meeting held on April 25, 2011 reelected the thirteen members of our current board of directors for a term of one year, whose term ends upon the election of the directors at the annual shareholders’ meeting to be held in2012. Pursuant to our bylaws, the age limit for holding a position on our board of directors is 70seventy years old. For more information regarding the composition of our board of directors, see “6A. Directors, Senior Management and Employees – Directors and Senior Management”.
Our board of officers is responsible for our day-to-day management and representation of the company with respect toItaú Unibanco Holding before third parties. It may be composed of a minimum of five and a maximum of twenty members. Our board of directorsPursuant to our bylaws, the age limit for holding a position on April 28, 2011 reelected twelve members of our current board of officers, which as of the date hereof consists of the president, two executive vice presidents, five executive officers and five officers, who collectively comprise our board of officers allis 60 years old. On April 19, 2013, our shareholders approved an increase to the mandatory retirement age for a termthe position of one year, whose term ends at the board meeting following the 2012 annual shareholders’ meeting. Additionally, Mr. Eduardo Hiroyuk Miyaki and Mr. Rogério Paulo Calderón Peres were elected as officers for a term of one year.Also, on September 21, 2011, Mr. Emerson Macedo Bortoloto was elected as officer for a term ending at the board meeting following the 2012 general shareholders’ meeting and took office on November 1, 2011. Mr. Bortoloto replaced Wagner Roberto Pugliese, who served as an officerChief Executive Officer of Itaú Unibanco Holding until June 3, 2011. In addition, on December 16, 2011, Mr. Rodrigo Luís Rosa Couto was elected as officer for a term ending at the investiture of the membersfrom 60 to be elected on the board meeting following the 2012 general shareholders’ meeting. His election was approved62 years old, subject to approval by the Central BankBank. For more information regarding the composition of our board of officers, see “Item 6A. Directors, Senior Management and he was invested in his position on January 10, 2012. Finally, Mr. Carlos Eduardo de Souza LaraEmployees – Directors and Mr. Jackson Ricardo Gomes stepped down from their positions as officers of Itaú Unibanco Holding on February 29, 2012 and March 6, 2012, respectively.Senior Management”.
Certain Provisions of Brazilian Law
Under Brazilian law,Corporate Law, as well as Central Bank and CVM rules, we are required to identify in our financial institutions may not grant loans, advancesstatements all related party transactions, according to the materiality criteria established by accounting rules. On December 2012, we adopted a Related Party Transactions Policy so as to ensure we are aligned with best practices in corporate governance. For further details, see “Item 7B. Related Party Transactions”.
Law No. 7,492, enacted on June 16, 1986, which sets forth crimes against the Brazilian financial system, defines as a criminal offense the extension of credit by a financial institution to any of its controlling shareholders, directors or guarantees to (i) any individual, or the immediateofficers and certain family members of such individual,individuals and any entity controlled directly or entity that controls theindirectly by such financial institution or any entitywhich is under common control with such financial institution. Violations of Law No. 7,492 are punishable by two to six years of imprisonment and a fine. On June 30, 1993, the financial institution; (ii)CMN issued Resolution No. 1,996, which requires any officer, directorsuch transaction to be reported to the prosecutor’s office.
Brazilian banking laws and regulations also impose prohibitions on the extension of credit or member of the fiscal council of the financial institution, or the immediate family members of such individual, or entity inguarantee to any company which such individual directly or indirectly holds more than 10.0% of the capital stock; (iii) any entity controlled by the financial institution; (iv) any entity in which the financial institution directly or indirectly holds more than 10.0% of the capital stock or which directly or indirectly holds more than 10.0% of the financial institution’s capital stock; or (v)and to any company in which they hold more than 10% of the capital. This limitation is also applicable in respect to directors, officers and members of the fiscal council of the financial institution and certain family members of these individuals, as well to those companies in which our officerssuch persons hold a management position.more than 10.0% of the capital.
In addition, directors and officers may not take part in any corporate transaction or deliberate with respect to any corporate transaction in which they have a conflict of interest with the company of which they are a director or officer. Any director or officer who believes he may have a conflict must inform the company’s other officers and/or directors, as the case may be, of the nature and extent of his interest in the transaction.
Directors and Officers Compensation
On November 25, 2010, the CMN issued Resolution No. 3,921, which established new rules related to the compensation of directors and officers of financial institutions. The compensation of directors and officers may be fixed or variable. Variable compensation may be based on specific criteria set forth in Resolution No. 3,921 and is required to be compatible with the financial institution’s risk management policies. At least 50.0% of variable compensation must be paid in stockshares or stock-basedshare-based instruments and at least 40.0% of variable compensation must be deferred for futureas payment byfor at least 3three years and is subject to claw-backs, based on the result of the institution and business unit during the period of deferral. These new rules took effect on January 1, 2012 and are applicable to compensation of directors and officers based on the services rendered during the year of 2012. In addition, financial institutions that are publicly-held companies or that are required by the Central Bank to establish an audit committee must also establish a compensation committee prior to the first shareholders’ meeting of 2012. Such committee must follow the requirements set out in Resolution No. 3,921.
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On October 22, 2012, our board of directors approved a compensation policy (as amended on February 28, 2013) proposed by the compensation committee for the members of the management of Itaú Unibanco Holding and its controlled companies, in compliance with the guidelines established by CMN Resolution No 3,921.
Audit Committee
See “Item 6C. Board Practices – Statutory Bodies – Audit Committee” for information regarding our Audit Committee.
Fiscal Council
See “Item 6C. Board Practices – Statutory Bodies – Fiscal Council” for information regarding our Fiscal Council.
Preferred Shares and Common Shares
General
Each common share entitles its holder to one vote at our shareholders meetings. Holders of common stock are not entitled to any preference relating to our dividends or other distributions or any preference upon our liquidation.
Each preferred share is non-voting except under limited circumstances and entitles its holder to (i) priority in the receipt of a non-cumulative dividend of not less than the dividend entitled to each common share; (ii) priority in the receipt of a minimum annual dividend of R$0.022 per share; and (iii) in the event of a sale of the company’s controlling stake, the right to be included in the public offering of shares, thus assuring such shares the right to a price equal to 80% (eighty percent) of the value paid per voting share to the controlling stockholders; and (iii) guarantee of a dividend at least equal to that of the common shares.shareholders.
There are no redemption provisions associated with our common or preferred shares.shares, except as discussed below.
Preemptive Rights, Capital Increases and Payment for Subscribed Stock Shares
Each shareholder has a general preemptive right to subscribe for shares in any capital increase, in proportion to its equity interest, except in the event of the grant and exercise of any option to acquire shares of our capital. Our bylaws authorize our board of directors to increase our capital stock up to a limit of six billion shares, of which three billion must consist of common shares and three billion of preferred shares, without amending our bylaws. Up to the limit of our authorized capital, the issuance of our shares may be made without considering our shareholders preemptive rights if (i) made for the sale on a stock exchange; (ii) by a public subscriptionsubscription; and (iii) exchange for our stock; or (iii)stock in a public offering for the acquisition of our control. Regardless of this provision, all other increases in our capital stock must be ratified by our shareholders and the Central Bank.
Once a capital increase is duly approved, the shareholder must pay the amount corresponding to the subscribed shares in accordance with the terms of the subscription bulletin. If the shareholder fails to make such payment, the shareholder will be considered to be in default under the terms of the law.
In the event of a capital increase which would maintain or increase the proportion of our capital represented by preferred shares, holders of ADSs, except as described above, would have preemptive rights to subscribe only to newly issued preferred shares. In the event of a capital increase which would reduce the proportion of our capital represented by preferred shares, holders of ADSs, except as described above, would have preemptive rights to subscribe for preferred shares, in proportion to their shareholdings and for common shares only to the extent necessary to prevent dilution of their interest in us.
On April 19, 2013, our shareholders approved an increase in our authorized capital from 6.0 billion to 6.6 billion shares, of which 3.3 billion must consist of common shares and 3.3 billion of preferred shares. This increase is subject to Central Bank approval.
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Liquidation
Pursuant to Brazilian Corporate Law, when a company’s bylaws do not have a provision concerning liquidation, its shareholders at an annual shareholder’s meeting shall determine the manner in which liquidation shall be conducted. Shareholders shall also appoint a liquidator and the fiscal council, which shall be installed during the period of liquidation, when liquidation occursdissolution may occur under the following circumstances: (i) due to the expiration of the company’s length of life; (ii) in cases set forth by the company’s bylaws; (iii) by resolution of the annual shareholders’ meeting; (iv) when a company’s stock is held by a single shareholder, except when the single shareholder is a Brazilian corporation, and a minimum of two shareholders is not reinstated by the following year; orannual shareholders’ meeting; (v) when a company’s authorization to operate is legally extinguished.
Before the completionextinguished; (vi) by judicial decision; or (vii) by decision of the competent administrative authority. A dissolved company retains its legal personality through extinction, in order to conduct liquidation. When a company’s bylaws do not have a provision concerning liquidation, process and after all creditors have been paid, ourits shareholders at a shareholders’shareholder’s meeting may resolve to makeshall determine the manner in which liquidation shall be conducted. Shareholders shall also appoint a pro-rata distribution among them, as corporate assets are being calculated. liquidator and the fiscal council, which shall be installed during the period of liquidation.
The liquidator is responsible for, among other things, the winding up of the company’s businesses, sale of its assets, payment of liabilities and distribution of the remaining assets among shareholders.
Before the completion of the liquidation process and after all creditors have been paid, shareholders, at a shareholders’ meeting, may resolve to make a pro-rata distribution among them, as corporate assets are being calculated.
Liability of Our Shareholders for Further Capital Calls
Brazilian Corporate Law does not provide liability for capital calls. If there is an increase in our capital, the ownership interest of our shareholders could be reduced if they elect not to exercise their preemptive rights to subscribe for shares in the capital stock increase.
Calculation of Net Profit
At each annual shareholders’ meeting, our board of directors is required to recommend how our earnings for the preceding fiscal year are to be allocated. For purposes of the Brazilian Corporate Law, a company’s net income after income taxes and social contribution taxes for that fiscal year, net of any accumulated losses from prior fiscal years and amounts allocated to employees’ and management’s participation in earnings, represents its “net income” for that fiscal year derived from financial statements prepared in accordance with Brazilian GAAP. In accordance with Brazilian Corporate Law, an amount equal to our net income as further (i) reduced by amounts allocated to the legal reserve, as explained below; (ii) reduced by amounts allocated to other reserves established by us in compliance with applicable law and (iii) increased by reversions of reserves constituted in prior years, will be available for distribution to shareholders (the “adjusted net income,”income” herein referred to as the “Net Profit”) in any particular year.
Under Brazilian Corporate Law, we are required to maintain a legal reserve to which we must allocate 5%5.0% of our net income for each fiscal year until the amount of the reserve equals 20%20.0% of our paid-in capital.capital stock. Net losses, if any, may be charged against the legal reserve, after the deduction of the accrued earnings and profit reserves.
Pursuant to our bylaws, we are required to distribute to our shareholders in respect to each fiscal year an amount equal to not less than 25.0%25% Net Profit, or the mandatory dividend. See “ItemItem 8A. Consolidated Financial Statements and Other Financial Information –— Dividend Policy and Dividends.”Dividends”.
According to Brazilian Corporate Law, the payment of dividends must occur prior to the end of the fiscal year in which the dividend was declared. A shareholder has a three-year period from the dividend payment date to claim dividends in respect of its shares, after which we have no liability for that payment and the dividends will revert to our profit reserve. Shareholders who do not reside in Brazil must generally register with the Central Bank to have dividends and interest on stockholders’ equity, sales proceeds or other amounts with respect to their shares eligible to be remitted in foreign currency outside of Brazil.
Under Brazilian Corporate Law, we may establish other reserves as long as we specify their purpose, the criteria for determining the annual portion of the net income to be allocated to these reserves and their maximum limit.limit may not exceed our capital stock.
Based on that, we have established in our bylaws that, in accordance with a proposal by our board of directors, our shareholders may decide on the creation of the following reserves:
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·dividend equalization reserve (which has been created by shareholders), limited to 40%40.0% of the value of our capital stock, for the purpose of paying dividends, including interest on stockholders equity, with the objective of maintaining a payment flow to shareholders. This reserve will be allocated: (i) up to 50%50.0% of the fiscal year’s net income; (ii) up to 100%100.0% of the realized portion of reserves arising from revaluation of assets, recorded as retained earnings; (ii) up to 100%100.0% of the amount of the adjustments from previous fiscal years, recorded as retained earnings; and (iv) credits corresponding to the anticipation of dividends;
·reinforcement for working capital stock reserve (which has been created by shareholders), limited to 30%30.0% of the value of our capital, for the purpose of guaranteeing resources for our operations, to be allocated up to 20%20.0% of the fiscal year’s net income;
·reserve for capital increase in companies held by Itaú Unibanco Holding (which has been created by shareholders), limited to 30%30.0% of the value of our capital, for the purpose of guaranteeing the right of first refusal in capital increases of participating companies, and to be allocated up to 50%50.0% of the fiscal year’s net earnings.
Upon the proposal of our board of directors, amounts will be regularly capitalized from these reserves so that its aggregate balance never exceeds the limit of 95%95.0% of our capital stock. The balance of these reserves together with the legal reserve may not exceed the value of our capital stock; andstock.
·Additionally, under Brazilian Corporate Law, we may establish a contingency reserve which isas a portion of our net income, which may also be allocated to a contingency reserve for an anticipated loss that our shareholders deem probable in future years. Any amount so allocated in a prior year must be either (i) reversed in the fiscal year in which the loss was anticipated if such loss does not in fact occur; or (ii) charged off in the event that the anticipated loss occurs.
We determine our calculation of net income and allocations to reserves for any fiscal year on the basis of financial statements prepared in accordance with Brazilian GAAP. On the other hand, our consolidated financial statements included in this annual report have been prepared in accordance with IFRS and, although our allocations to reserves and dividends will be reflected in these consolidated financial statements, you will be unable to calculate those allocations or required dividend amounts from our consolidated financial statements. Our consolidated statement of changes in stockholders’ equity presents the amount of dividends and interest on stockholders’ equity distributed in each of the years ended December 31, 20112012 and 2010.2011.
Brazilian Corporate Law provides that all discretionary allocations of net income are subject to approval by our shareholders at the annual meeting.
Interest on Stockholders’ Equity
We are allowed to pay interest on stockholders’ equity as an alternative form of payment to shareholders. For tax purposes, interest on stockholders’ equity is limited to the daily average of the Brazilian long-term interest rate, or TJLP, as determined by the Central Bank, over the taxable year, and cannot exceed the greater of (i) 50.0%50% of adjusted net income for the period in respect of which the payment is made; and (ii) 50.0%50% of the sum of retained earnings and profit reserves. Any payment of interest on stockholders’ equity to holders of preferred shares, whether Brazilian residents or not, including holders of ADSs, is subject to Brazilian withholding tax at the rate of 15%, or 25% if the shareholder is a resident or domiciled in a tax haven jurisdiction. The amount paid to shareholders as interest on stockholders’ equity, net of any withholding tax, may be included as part of the mandatory distribution. In such case, we are required to distribute to shareholders an amount sufficient to ensure that the net amount received by shareholders, after the payment by us of applicable withholding taxes in respect of the dividend of interest on stockholders’ equity, is at least equal to the mandatory dividend. See “Item 4B. Business Overview –— Regulation and Supervision –— Taxation –— Corporate Income Tax and Social Contribution on Profits –— Taxation of Profit Distribution.”Distribution”.
Voting Rights
Each common share entitles the holder thereof to one vote at our shareholders meetings. Holders of preferred shares are not entitled to vote at our shareholders’ meetings, except under certain limited circumstances.
Brazilian Corporate Law provides that non-voting preferred shares acquire voting rights when a company has failed for the term provided for in its bylaws (but no longer than a period of three consecutive fiscal years) to pay any fixed or minimum dividend to which such shares are entitled and continuing until payment thereof is made if those dividends are not cumulative or until those cumulative dividends are paid. Our bylaws establish a term of three fiscal years.
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Any change in the preferences or rights of our preferred shares, or the creation of a class of shares having priority over the preferred shares, would require the approval of at least 50% of the voting shareholders with prior or future ratification of a majority of the preferred shares, voting as a class at a special meeting. This meeting, according to the Brazilian Corporate Law, would be called by publication of a notice three times, on different dates, in an official gazette and a newspaper of wide circulation in São Paulo, our principal place of business, with the first notice published at least 15fifteen days prior to the meeting, but would not generally require any other form of notice. In addition to the requirements of Brazilian Corporate Law , we also publish notices in three different languages (Portuguese, English and Spanish) on our website and email our subscribed investors and shareholders, as well as thought CVM, BM&FBOVESPA, the SEC, the NYSE and the BCBA (Bolsa de Comercio de BuenosAires).
Brazilian Corporate Law provides for multiple voting rights. Despite our bylaws being silent on the matter, a shareholder representing at least one tenth of our voting capital may request multiple voting rights. Once multiple voting rights have been duly requested within forty eight hours prior to the annual shareholders’ meeting, each share will be attributed as many votes as the number of directors and the shareholders right to accumulate votes for a single candidate or distribute them among various candidates will be recognized. Whenever the election of our board of directors is conducted through a multiple voting process and the holders of common or preferred stock elect a director, the shareholder or group of shareholders bound by a voting agreement holding more than 50% of our voting rights will be entitled to elect directors in a number equal to the number of directors elected by the other shareholders plus one, regardless of the number of directors that, pursuant to our bylaws, comprise the board. It is the responsibility of the presiding officials at a shareholders’ meeting to inform our shareholders in advance about the number of votes necessary for the election of each member of our board of directors.
As our bylaws do not provide for staggered intervals, our directors may be reelected consecutively without interruption. Whenever the election has been conducted through a multiple voting process, the removal from office of any of our directors by our shareholders, at an annual shareholders’ meeting will result in the removal from office of all of the remaining directors and a new election shall be arranged. In order not to affect the management of the company as a result of the removal of directors, Brazilian Corporate Law provides that despite the removal, the same directors may continue to exercise their functions until the newly elected board members take office.
Transfer of Control
Our bylaws do not contain any provision that would have the effect of delaying, deferring or preventing a change in our control or that would operate only with respect to a merger, acquisition or corporate restructuring involving us or any of our subsidiaries. However, Brazilian banking regulations require that any transfer of control of a financial institution follow certain specific procedures of, and be previously approved by, the Central Bank.
Additionally, Brazilian Corporate Law provides that acquisition of control of a publicly held company is contingent on tender offers for all outstanding common shares at a price equivalent to at least 80% of the price per share paid for the controlling block. Our bylaws provide that in the event of a change in our control, the acquirer will be required to pay the holders of our preferred shares 80% of the price per share paid to our controlling shareholders.
Brazilian Corporate Law also obliges our controlling shareholder to make a tender offer for all of our shares if it increases its interest in our capital stock to a level that materially and negatively affects the liquidity of our shares.
Withdrawal Rights
Neither our common shares nor our preferred shares are redeemable except upon delisting, as described below. A dissenting shareholder under the Brazilian Corporate Law may, however, seek to withdraw, subject to certain conditions, following a decision made at a shareholders’ meeting by shareholders representing at least 50% of the voting shares:
·to create preferred shares or increase disproportionately an existing class of preferred shares relative to the other types or classes of shares, unless this action is provided for or authorized by the bylaws;
·to modify a preference, privilege or condition of redemption or amortization conferred on one or more classes of preferred shares, or create a new class with greater privileges than the existing classes of preferred shares;
·to reduce the mandatory dividend;
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·to change our corporate purposes;
·to transfer all of our stock to another company in order to make us a wholly -ownedwholly-owned subsidiary of that company or vice versa (incorporação de ações);
·to acquire another company, the price of which exceeds certain limits set forth in Brazilian Corporate Law;
·to merge into another company, including if we are merged into one of our controlling companies, or to consolidate with another company;
·to participate in a group of companies as defined under Brazilian Corporate Law; or
·in the event that the entity resulting from (i) a transfer of all our stock to another company in order to make us a wholly owned subsidiary of that company or vice versa, as discussed in the fifth bullet point above, (ii) a spin-off, (iii) a merger or (iv) a consolidation of a Brazilian publicly held company, fails to become a Brazilian publicly held company within one hundred and twenty days of the annual shareholders’ meeting in which such decision was taken.
The right to withdraw in the circumstances discussed in the first and second bullet points above only applies to the holders of the affected shares.
In accordance with the Brazilian Corporate Law, the right to withdraw expires thirty days after publication of the minutes of the relevant shareholders’ meeting unless, in the first two bullet points above, the resolution is subject to confirmation by the preferred shareholders (which must be made at a special meeting to be held within one year), in which case the thirty -daythirty-day term is counted from the date the minutes of the special meeting are published. We are entitled to reconsider any action giving rise to a stock redemption within ten days following the expiration of the thirty -daythirty-day term mentioned above if such redemption would jeopardize our financial stability. In addition, the rights to withdrawal in the seventh and eighth bullet points above may only be exercised by holders of shares if those shares are not part of the BM&FBOVESPA Index and if less than 50% of our shares is outstanding.
Brazilian Corporate Law provides that common and preferred shares are redeemable under delisting of shares at a fair price determined upon the criteria provided thereof. If the shareholders’shareholders��� meeting giving rise to withdrawal rights occurs more than sixty days after the date of the last approved balance sheet, a shareholder may demand that its shares be redeemed at a value on the basis of a new balance sheet that is dated within sixty days of that shareholders’ meeting. In such case, we will pay 80% of the value calculated according to the last approved balance sheet and, after the preparation of the new balance sheet, we will pay the balance within one hundred and twenty days from the date of the relevant shareholders’ meeting.
Other Aspects of Brazilian Corporate Law
The following are also significant aspects of Brazilian Corporate Law:
·preferred shares representing 10% of the outstanding shares not held by the controlling shareholders are entitled to appoint a representative to our board of directors;
·disputes among our shareholders as well as among our shareholders and us can be subject to arbitration, as provided for in the shareholders’ agreement with Itaúsa and E. Johnston (though not provided for in our bylaws);
·a tender offer at a purchase price equal to the fair value of all outstanding stock is required upon a delisting or a substantial reduction in liquidity of our stock as a result of purchases by controlling shareholders;
·a sale of control requires that shareholders tender for the minority shareholders’ common shares and, as provided for in our bylaws, for the minority shareholders’ preferred shares, at a purchase price equal to 80% of the price per share paid to the controlling shareholder;
· minority shareholders’ shares may be redeemed if, after a tender offer, controlling shareholders increase their participation in the company’s total share capital to more than 95%;
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·shareholders are entitled to withdraw upon a spin-off only if it entails a change in the corporate purpose, a reduction in mandatory dividends or participation of the company in a “group of companies” (grupo de sociedades);
·the controlling shareholders, the shareholders that appoint members to our board of directors and fiscal council, the members of our board of directors and fiscal council and our executive officers are required to disclose any purchase or sale of our stock to the CVM and the BM&FBOVESPA;
·we are permitted to satisfy our information disclosure requirements through the Internet; and
·direct or indirect controlling shareholders and shareholders that appoint members to our board of directors or fiscal council, as well as any natural person or corporate entity, or group of persons, acting jointly or representing the same interests, that reach a participation, directly or indirectly, corresponding to 5% or more of type or class of stock representative of the capital of a listed company, must notify the company and, as well as when such participation increases by 5% for the type or class of shares representative of the company’s capital stock. In cases when an acquisition results in or was effected for the purpose of altering the control or the management structure of the corporation, as well as in cases in which the acquisition creates an obligation to conduct a public offering, the acquirer must further publish a notice in the press containing the required legal information about the transaction. The investor relations officer is responsible for informing the CVM, and as the case may be, the BM&FBOVESPA or organized over-the-counter markets.
Form and Transfer
According to the Brazilian Corporate Law, all shares issued by Brazilian companies must be nominative and either registered within the companies’ registry books (Registro de Ações Nominativas) or placed under the custody of a financial institution specifically designated to perform custodial services by each company. The transfer of shares is effected by either an entry made by us in our books by debiting the share account of the transferor and crediting the share account of the transferee or by a book entry by the custodian in case the board of directors authorizes the maintenance of our shares under the custody of a financial institution specifically designated by the shareholders to perform book-entry services.
Under our bylaws, our shares are in the form of book-entry shares and the transfer of those shares is effected through an order to the financial institution that controls the registration of those shares, Itaú Corretora.
Transfers of preferred shares by a foreign investor are made in the same way and executed by that investor’s local agent on the investor’s behalf except that, if the original investment was registered with the Central Bank pursuant to the Annex IV Regulations, the foreign investor also should seek amendment, if necessary, through its local agent, of the certificate of registration to reflect the new ownership.
The BM&FBOVESPA operates a central clearing system. A holder of our shares may choose, at its discretion, to participate in this system and all shares elected to be put into the system will be deposited in custody with the stock exchange (through a Brazilian institution that is duly authorized to operate by the Central Bank or by the CVM, as the case may be, having a clearing account with the stock exchange). The fact that these shares are subject to custody with the stock exchange will be reflected in our registry of shareholders.
Each participating shareholder will, in turn, be registered in our register of beneficial shareholders maintained by the stock exchange and will be treated in the same way as registered shareholders.
Limitations on Rights to Own Securities
Except as described above, there are no limitations under Brazilian law on the rights of non-residents or foreign shareholders to own non-voting preferred shares of Brazilian financial institutions, including the rights of such non-resident or foreign shareholders to hold or exercise voting rights due to future circumstances that may grant voting rights to such shareholders. Our bylaws reflect the nonexistence of such limitations in connection with our preferred shares.
Registered Capital
The amount of an investment in preferred shares held by a non-Brazilian holder who qualifies under the CMN Resolution No. 2,689 and obtains registration with the CVM or by the depositary representing that holder, is eligible for registration with the Central Bank. In addition to the repatriation of the principal amount invested, such registration (the amount so registered is referred to as registered capital) allows the remittance outside Brazil of foreign currency, converted at the commercial market rate, equivalent to the amount so distributed inreais in favor of those preferred shares. The registered capital for each preferred share purchased in Brazil, and deposited with the depositary, will be equal to its purchase price (in U.S. dollars). The registered capital for a preferred share that is withdrawn upon surrender of an ADS will be the U.S. dollar equivalent of (i) the average price of a preferred share on the Brazilian stock exchange on which the greatest number of such shares was sold on the day of withdrawal, or (ii) if no preferred shares were sold on that day, the average price on the Brazilian stock exchange on which the greatest number of preferred shares were sold in the fifteen trading sessions immediately preceding that withdrawal. The U.S. dollar value of the preferred shares is determined on the basis of the average commercial market rates quoted by the Central Bank on such date (or if the average price of preferred shares is determined under clause (ii) of the preceding sentence, the average of such quoted rates on the same fifteen dates used to determine the average price of the preferred shares).
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A non-Brazilian holder of preferred shares may experience delays in effecting such registration, which may delay remittances abroad. Such a delay may adversely affect the amount, in U.S. dollars, received by the non-Brazilian holder. See “Item 3.D Risk Factors –— Risks Relating to the Preferred Shares and the ADSs”.
American Depositary Receipts – ADR
The Bank of New York, as depositary, has executed and delivered the ADRs representing our preferred shares. Each ADR is a certificate evidencing a specific number of ADSs. Each ADS represents one preferred share (or a right to receive one preferred share) deposited with the principal São Paulo office of Itaú Unibanco, as custodian for the depositary in Brazil. Each ADS also represents any other securities, cash or other property which may be held by the depositary.
You may hold ADSs either directly (by having an ADR registered in your name) or indirectly through your broker or other financial institution. If you hold ADSs directly, you are an ADR holder. We do not treat ADR holders as our shareholders and ADR holders have no shareholder rights. The depositary is the holder of the preferred shares underlying the ADSs. Holders of ADRs have ADR holder rights. Brazilian law governs shareholder rights. A deposit agreement among us, the depositary and you, as an ADR holder, and the beneficial owners of ADRs sets out ADR holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADRs.
10C. | Material Contracts |
10C. Material Contracts
None.
10.D | Exchange Controls |
There are no restrictionsAs described in item “10B. Memorandum and Articles of Association — Limitations on ownership of our stock by individualRights to Own Securities”, individuals or legal entities domiciled outside Brazil.Brazil may own our stock. However, the right to convert dividend payments and proceeds from the sale of our shares into foreign currency and to remit such amounts abroad is subject to restrictions under foreign investment legislation which generally requires, among other things, that the relevant investment be registered with the Central Bank and the CVM. Foreign investors may register their direct investment in our shares under Law No. 4,131, dated September 3, 1962, or CMN Resolution No 2,689, dated January 26, 2000.
Law 4,131 is the main legislation concerning foreign capital and direct equity investments in Brazilian companies and applies to any capital that enters the country in the form of foreign currency, goods and services. Except for registration of the capital inflow/outflow with the Central Bank, non-resident investors directly investing in equity of Brazilian companies do not need any specific authorization to make such investments.
Registration under Resolution No. 2,689 affords favorable tax treatment to non-resident investors who are not residents or domiciled in tax haven jurisdictions, (i.e., countries that do not impose income tax or where the maximum income tax rate is lower than 20%), as defined by Brazilian tax laws. See “Item 10E. Taxation –— Brazilian Tax Considerations” for more information.
Under Resolution No. 2,689, non-resident investors may invest in almost all financial assets and engage in almost all transactions available in the Brazilian financial and capital markets, provided that certain requirements are fulfilled. In accordance with Resolution No. 2,689, the definition of non-resident investor includes individuals, legal entities, mutual funds and other collective investment entities, domiciled or headquartered outside Brazil. Under Resolution No. 2,689, a non-resident investor must:
· | appoint at least one representative in Brazil with powers to perform actions relating to its investment; |
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· | appoint an authorized custodian in Brazil for its investment; |
· | register as a non-Brazilian investor with the CVM; and |
· | register its foreign investment with the Central Bank. |
Additionally, the investor operating under the provisions of Resolution No. 2,689 must be registered with the Brazilian internal revenue service (Receita Federal) pursuant to the latter’s Regulatory Instructions No. 748,1,183, dated June 28, 2007August 19, 2011 and 1,042, dated June 10, 2010. This registration process is undertaken by the investor’s legal representative in Brazil.
Pursuant to Resolution No. 2,689, securities and other financial assets held by foreign investors must be registered, safe kept or maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank or the CVM.
The trading of securities under the regime of Resolution No. 2,689 is restricted to transactions carried out in the stock exchanges or through organized over-the-counter markets licensed by the CVM, except for transactions resulting from subscriptions, stock dividends, conversion of debt securities into shares, securities-referenced indexes, purchase and sale of shares of opened-end investment funds in securities and, when previously authorized by the CVM, cases resulting from going private transactions, cancellation or suspension of trading, judicial settlements and trading of shares covered by shareholder agreements.
In addition, any transfer or ownership assignment of investments in securities or other financial instruments held by non-resident investors not foreseen by Resolution No. 2,689 is prohibited, except for transfers resulting from mergers, spin-off, and other corporate reorganizations carried out abroad, as well as the cases of hereditary succession.
10E. | Taxation |
This summary contains a description of the main Brazilian and U.S. federal income tax considerations of the acquisition, ownership and disposition of our preferred shares or ADSs, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to these matters. This summary is based upon tax laws of Brazil and the United States in effect as of the date hereof, which laws are subject to change and to differing interpretations (possibly with retroactive effect). Although there is at present no income tax treaty between Brazil and the United States, the tax authorities of the two countries have had discussions that may result in such a treaty. No assurance can be given, however, as to whether or when a treaty will enter into force or how it will affect a U.S. Holder (as defined below) of our preferred shares or ADSs.
Prospective purchasers of our preferred shares or ADSs should consult their own tax advisors as to the tax consequences of the acquisition, ownership and disposition of our preferred shares and ADSs, including, in particular, the effect of any non-U.S., non-resident, state or local tax laws.
Brazilian Tax Considerations
The following discussion summarizes the main Brazilian tax consequences related to the acquisition, ownership and disposition by holders of our preferred shares (who are registered with the Central Bank as U.S. dollar investors) or of ADSs, both not domiciled in Brazil for purposes of Brazilian taxation or (“Non-Resident Holders.Holders”).
Non-Resident Holders Resident or Domiciled in Tax Havens
In accordance with Brazilian law, as regulated by Article 1 of Normative Instruction No. 1,037 of June 4, 2010, as amended, a “tax haven” is defined as a country or location (a) that does not impose any income tax or where the maximum income tax rate is 20% or below or (b) where the local legislation imposes restrictions on disclosure regarding shareholder composition or investment ownership. A list of current tax havens has been published per such Normative Instruction. Non-Resident Holders resident or domiciled in tax havens may be subject to tax in Brazil at higher rates than Non-Resident Holders not resident or domiciled in tax havens, as described below.
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Registration of Our Preferred Shares
Our preferred shares may be registered with the Brazilian Central Bank pursuant to CMN Resolution No. 2,689/00. CMN Resolution No. 2,689/00 allows foreign investors to invest in almost all financial assets and to enter into almost all transactions available in the Brazilian financial and capital markets, provided that certain requirements are fulfilled, such as appointing a representative in Brazil and registering with the Securities and Exchange Commission - CVM. The amount eligible for registration with respect to our preferred shares purchased in Brazil and deposited with the depositary shall be equal to the purchase price of such preferred shares (in U.S. Dollars). According to CMN Resolution No. 2,689/00, foreign investors include individuals, companies, mutual funds and other collective investment entities domiciled or headquartered outside Brazil. See “Item 10D. Exchange Controls” for more information.
A Non-Resident Holder of our preferred shares may encounter delays in registration, which may delay any remittances abroad. Such delays may also adversely affect the amount of U.S. Dollars received by such Non-Resident Holder.
Taxation of Dividends
Payment of dividends derived from profits generated after January 1, 1996, including dividends paid in kind, are not subject to withholding income tax in Brazil. Payment of dividends derived from profits generated before January 1, 1996 may be subject to Brazilian withholding income tax at varying rates, according to the year when the profits were generated.
Taxation of Interest on Net Equity
Law No. 9,249, dated December 26, 1995, as amended, allows a Brazilian corporation, such as ourselves, to make payments of interest on net equity instead of dividend distributions (see “Item 4B. Business Overview — Regulation and Supervision — Taxation” and “Item 10B. Memorandum and Articles of Association — Interest on Net Equity”). Payment of interest on net equity is generally subject to withholding income tax at the rate of 15%, or 25% in the case of a Non-Resident Holder that is resident or domiciled in a tax haven.
Taxation of Gains
(a) Sales or other dispositionsOther Dispositions of ADSs
Gains realized outside Brazil by a Non-Resident Holder from the sale or other disposition of ADSs to another Non-Resident Holder are not subject to Brazilian taxation. However, according to Law No. 10,833/03, the disposition of assets located in Brazil by a Non-Resident Holder may be subject to Brazilian withholding income tax at a general rate of 15% (a 25% rate may apply if the foreign beneficiary is resident or domiciled in a jurisdiction deemed to be a tax haven for Brazilian tax purposes). Although Law No. 10,833/03 is not completely clear with respect to what is considered to be an asset located in Brazil, ADSs generally should not be considered to be assets located in Brazil for purposes of such Law because they represent securities issued and negotiated in an offshore exchange market. It is important to note, however, that even if ADSs were considered to be assets located in Brazil, Non-Resident Holders not resident or domiciled in tax havens may still apply for exemption from capital gains tax according to Article 81 of Law No. 8,981/95.
(b) Conversion of our preferred sharesOur Preferred Shares into ADSs
The deposit by a Non-Resident Holder of our preferred shares with the depositary for conversion into ADSs may be subject to Brazilian capital gains tax, if such Non-Resident Holder is resident or domiciled in a tax haven or if such preferred shares were not registered with the Brazilian Central Bank according to CMN Resolution No. 2,689/00. In those cases, the difference between the acquisition cost of such preferred shares or the amount otherwise previously registered with the Brazilian Central Bank and the average price of such preferred shares, according to CMN Resolution 1.927/93, may be considered taxable capital gain, and may be subject to income tax at a general rate of 15%.
Non-Resident Holders that are resident or domiciled in tax havens may be subject to 25% capital gain tax on the sale or transfer of shares out of the financial markets upon such a conversion.
On the other hand, when Non-Resident Holders that are not resident or domiciled in tax havens deposit preferred shares registered according to CMN Resolution No. 2,689/00 in exchange for ADSs, such deposit should not be subject to capital gain tax.
(c) Sale or other dispositionOther Disposition of our preferred sharesOur Preferred Shares
Non-Resident Holders not resident or domiciled in tax havens that register their portfolio according to CMN Resolution No. 2,689/00 benefit from a special tax treatment according to which any capital gain arising from the sale of securities within Brazilian stock exchanges is exempt from income tax. On the other hand, sale of shares not registered according to CMN Resolution No. 2,689/00 or made out of Brazilian stock exchanges is generally subject to 15% capital gain tax.
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Such special treatment is not applicable to Non-Resident Holders resident or domiciled in tax havens, who are subject to general taxation rules applicable to Brazilian residents on the sale of their investments in financial markets, including stock exchanges and over-the-counter markets. The taxation rate is then generally 15%. If such Non-Resident Holders sell shares out of the financial markets, the income taxation rate shall raise to 25%. Any exercise of preemptive rights related to our preferred shares (and in connection with the ADS program) will not be subject to Brazilian taxation. The gains from the sale or assignment of preemptive rights will be subject to income tax according to rates that vary depending on the location of the Non-Resident Holder and the market in which such rights are sold. If the Non-Resident Holder is not resident or domiciled in a tax haven, the sale of preemptive rights is exempt from tax if made within the Brazilian stock exchange markets or is subject to 15% income tax if made beyond stock exchange market. If the Non-Resident Holder is resident or domiciled in a tax haven, the sale of preemptive rights is generally subject to 15% income tax if made within Brazilian financial markets or 25% tax if the rights are sold beyond such markets.
Tax on Foreign Exchange on Financial Transactions
Pursuant to Decree No. 6,306/07, and further amendments, tax on foreign transactions, or IOF/FX may be levied on foreign exchange transactions, affecting either or both the inflow or outflow of investments. The IOF/FX rates are set by the Brazilian executive branch, and the highest applicable rate is 25.0% (See “Item 4B. Business Overview — Regulation and Supervision — Taxation”).
The rate of IOF/FX imposed on foreign exchange transactions carried out by a Non-Resident Holder for the purpose of investing in the financial and capital markets may vary from time to time as defined by the Brazilian government and the rates may be different based on the type of investment. The inflow of proceeds into Brazil for the acquisition of shares under CMN Resolution No. 2,689/00 is subject to 0.0% IOF/FX tax. IOF/FX rate is also zero in the outflow of foreign investment and on the payment of interest on net equity and dividends.
The acquisition of ADSs is not subject to IOF tax. The IOF/Securities tax is levied at a rate of 1.5% on the assignment of shares traded in the Brazilian stock exchange market in order to permit the issuance of depositary receipts to be negotiated overseas.
Other Brazilian Taxes
There are no Brazilian inheritance, gift or succession taxes applicable to the transfer of ownership or title (ownership without beneficial interest) of our preferred shares or ADSs or the vesting of free beneficial interest of such shares or ADSs outside Brazil by a Non-Resident Holder, except for gift, inheritance and legacy taxes that are levied by some states of Brazil if bestowed in such states of Brazil or abroad when the receiver is resident or domiciled in these states of Brazil. There is no Brazilian stamp, issue, registration, or similar taxes or duties payable by Non-Resident Holders of our preferred shares or ADSs.
U.S. Federal Income Tax Considerations
The following is a general discussion of certain U.S. federal income tax considerations relating to the purchase, ownership and disposition of our preferred shares or ADSs by U.S. Holders (as defined below) who hold such preferred shares or ADSs as capital assets within the meaning of section 1221 of the Internal Revenue Code of 1986, as amended or the Code.(the “Code”). This discussion does not address all of the tax considerations that may be relevant to U.S. Holders in light of their particular circumstances or to U.S. Holders subject to special rules under U.S. federal income tax laws, such as banks, insurance companies, retirement plans, regulated investment companies, real estate investment trusts, dealers in securities, brokers, tax-exempt entities, certain former citizens or residents of the United States, U.S. Holders who hold our preferred shares or ADSs as part of a “straddle,” “hedging,” “conversion” or other integrated transaction, U.S. Holders who mark their securities to market for U.S. federal income tax purposes, U.S. Holders whose functional currency is not the U.S. dollar, U.S. Holders that own (or are deemed to own) 10% or more (by voting power) of our stock or U.S. Holders that receive our preferred shares or ADSs as compensation. In addition, this discussion does not address the effect of any state, local or non-U.S. tax laws or any U.S. federal estate, gift or alternative minimum tax considerations.
This discussion is based on the Code, the Treasury Regulations promulgated thereunder and administrative and judicial pronouncements, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect. This discussion also assumes that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.
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For purposes of this discussion, the term “U.S. Holder” means a beneficial owner of our preferred shares or ADSs that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation created or organisedorganized in or under the laws of the United States or of any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or certain electing trusts that were in existence on August 19, 1996 and were treated as domestic trusts on that date.
If an entity treated as a partnership for U.S. federal income tax purposes invests in our preferred shares or ADSs, the U.S. federal income tax considerations relating to such investment generally will depend in part upon the status and activities of such entity and its partners. Such an entity should consult its own tax advisor regarding the U.S. federal income tax considerations applicable to it and its partners of the purchase, ownership and disposition of such preferred shares or ADSs.
INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE U.S. FEDERAL INCOME AND OTHER TAX CONSIDERATIONS RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR PREFERRED SHARES OR ADSS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR NON-U.S. TAX LAWS.
Except where specifically described below, this discussion assumes that we are not a passive foreign investment company or a PFIC,(a “PFIC”), for U.S. federal income tax purposes. Please see the discussion under “Passive Foreign Investment Company Considerations” below.
Treatment of ADSs
A U.S. Holder of ADSs generally will be treated for U.S. federal income tax purposes as the owner of such U.S. Holder’s proportionate interest in our preferred shares held by the depositary that are represented and evidenced by such ADSs. Accordingly, any deposit or withdrawal of our preferred shares in exchange for ADSs generally will not result in the realisationrealization of gain or loss to such U.S. Holder for U.S. federal income tax purposes.
Distributions
A U.S. Holder that receives a distribution with respect to our preferred shares (whether held through ADSs or directly), including distributions of interest on stockholders’ equity as described above under “—Brazilian Tax Considerations —– Taxation of Interest on Net Equity,” generally will be required to include the amount of such distribution (without reduction for any Brazilian withholding tax with respect thereto) in gross income as a dividend to the extent of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) on the date such U.S. Holder (or the depositary, in the case of ADSs) actually or constructively receives such distribution, and will not be eligible for the dividends received deduction allowed to corporations. A distribution on our preferred shares (whether held through ADSs or directly) in excess of current and accumulated earnings and profits will be treated as a non-taxable return of capital to the extent of the U.S. Holder’s basis in such preferred shares or ADSs, as the case may be, and thereafter as gain from the sale or exchange of such preferred shares or ADSs. We have not maintained and do not plan to maintain calculations of earnings and profits for U.S. federal income tax purposes. As a result, a U.S. Holder may need to include the entire amount of any such distribution in income as a dividend.
The U.S. dollar value of any distribution on our preferred shares made in Brazilianreais generally should be calculated by reference to the exchange rate between the U.S. dollar and the Brazilian real in effect on the date of receipt of such distribution by the U.S. Holder (or the depositary, in the case of ADSs), regardless of whether thereaisso received are in fact converted into U.S. dollars. If thereais so received are converted into U.S. dollars on the date of receipt, the U.S. Holder of the relevant preferred shares or ADSs generally should not recogniserecognize foreign currency gain or loss on such conversion. If thereais so received are not converted into U.S. dollars on the date of receipt, such U.S. Holder generally will have a basis in suchreais equal to the U.S. dollar value of such reais on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of suchreais by such U.S. Holder generally will be treated as ordinary income or loss and generally will be income or loss from sources within the United States.
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Distributions treated as dividends that are received by certain non-corporate U.S. persons (including individuals) through taxable years beginning on or before December 31, 2012 in respect of stock of a non-U.S. corporation (other than a corporation that is, in the taxable year during which the distributions are made or the preceding taxable year, a PFIC) that is readily tradable on an established securities market in the United States generally qualify for a 15%20% reduced maximum tax rate (and potentially additional tax discussed below under “Medicare Tax”) so long as certain holding period and other requirements are met. Since the ADSs will be listed on the NYSE, unless we are treated as a PFIC with respect to a U.S. Holder, dividends received by such a U.S. Holder in respect of the ADSs should qualify for the reduced rate. Based on existing guidance, it is not entirely clear whether dividends received by such a U.S. Holder of our preferred shares in respect of such shares will qualify for the reduced rate, because our preferred shares are not themselves listed on a United States exchange. Special rules apply for purposes of determining the recipient’s investment income (which may limit deductions for investment interest) and foreign income (which may affect the amount of U.S. foreign tax credit) and to certain extraordinary dividends. Each U.S. Holder that is a non-corporate taxpayer should consult its own tax advisor regarding the possible applicability of the reduced tax rate and the related restrictions and special rules.
Sale, Exchange or Other Disposition of Preferred Shares or ADSs
Upon a sale, exchange or other disposition of our preferred shares or ADSs, a U.S. Holder generally will recogniserecognize gain or loss equal to the difference between the amount realisedrealized on such sale, exchange or other disposition and such U.S. Holder’s tax basis in such preferred shares or ADSs. Such gain or loss generally will be long-term capital gain or loss if such U.S. Holder held such preferred shares or ADSs for more than one year at the time of disposition. Certain non-corporate U.S. Holders are entitled to preferential treatment for net long-term capital gains. The ability of a U.S. Holder to offset capital losses against ordinary income is limited.
A U.S. Holder that receives Brazilianreais from the sale, exchange or other disposition of our preferred shares generally will realiserealize an amount equal to the U.S. dollar value of suchreaison the settlement date of such sale, exchange or other disposition if (i) such U.S. Holder is a cash basis or electing accrual basis taxpayer and our preferred shares are treated as being “traded on an established securities market” or (ii) such settlement date is also the date of such sale, exchange or other disposition. If thereais so received are converted into U.S. dollars on the settlement date, such U.S. Holder generally should not recogniserecognize foreign currency gain or loss on such conversion. If thereais so received are not converted into U.S. dollars on the settlement date, such U.S. Holder generally will have a basis in suchreais equal to the U.S. dollar value of suchreais on the settlement date. Any gain or loss on a subsequent conversion or other disposition of such reais by such U.S. Holder generally will be treated as ordinary income or loss and generally will be income or loss from sources within the United States. Each U.S. Holder should consult its own tax advisor regarding the U.S. federal income tax consequences of receivingreais from the sale, exchange or other disposition of our preferred shares in cases not described in the first sentence of this paragraph.
Foreign Tax Credit Considerations
Distributions on our preferred shares (whether held through ADSs or directly), including distributions of interest on stockholders’ equity as described above under “—Brazilian Tax Considerations — Taxation of Interest on Net Equity,” that are treated as dividends, before reduction for any Brazilian withholding taxes with respect thereto, will generally be included in the gross income of a U.S. Holder. Thus, such U.S. Holder may be required to report income for such purposes in an amount greater than the actual amount such U.S. Holder receives in cash. Distributions treated as dividends generally will constitute income from sources outside the United States and generally will be categorisedcategorized for U.S. foreign tax credit purposes as “passive category income” or, in the case of some U.S. Holders, as “general category income.” Subject to applicable limitations and holding period requirements, a U.S. Holder may be eligible to elect to claim a U.S. foreign tax credit against its U.S. federal income tax liability for any such Brazilian withholding taxes. Under current law, gain resulting from a sale or other disposal of our preferred shares or ADSs may be subject to Brazilian income or withholding taxes. A U.S. Holder’s use of a foreign tax credit with respect to any such Brazilian income or withholding taxes could be limited, as such gain generally will constitute income from sources within the United States. Certain proposed Treasury regulations, if adopted in their current form, could affect the ability of U.S. Holders of ADSs to credit non-U.S. tax withheld on dividends against their U.S. federal income tax liability. A U.S. Holder that does not claim a U.S. foreign tax credit generally may instead claim a deduction for any such Brazilian taxes, but only for a taxable year in which such U.S. Holder elects to do so with respect to all non-U.S. income taxes. Foreign currency exchange gain or loss generally will constitute income from sources within the United States. The rules relating to foreign tax credits are very complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.
Passive Foreign Investment Company Considerations
Special U.S. federal income tax rules apply to U.S. persons owning shares of a PFIC. A non-U.S. corporation generally will be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which, after applying relevant look-through rules with respect to the income and assets of certain subsidiaries, either: at least 75% of its gross income is “passive income”, or on average at least 50% of the gross value of its assets is attributable to assets that produce passive income or are held for the production of passive income.
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For this purpose, passive income generally includes, among other things, dividends, interest, rents, royalties, gains from the disposition of passive assets and gains from commodities transactions.
The application of the PFIC rules to banks is unclear under present U.S. federal income tax law. Banks generally derive a substantial part of their income from assets that are interest bearing or that otherwise could be considered passive under the PFIC rules. The United States Internal Revenue Service (or “IRS”), has issued a notice, and has proposed regulations, that exclude from passive income any income derived in the active conduct of a banking business by a qualifying foreign bank, also known as the Active Bank Exception. The IRS notice and proposed regulations have different requirements for qualifying as a foreign bank, and for determining the banking income that may be excluded from passive income under the Active Bank Exception. Moreover, the proposed regulations have been outstanding since 1994 and will not be effective unless finalised.finalized.
Based on estimates of our current and projected gross income and gross assets, we do not believe that we will be classified as a PFIC for our current or future taxable years. The determination of whether we are a PFIC, however, is made annually and is based upon the composition of our income and assets (including income and assets of entities in which we hold at least a 25% interest), and the nature of our activities (including our ability to qualify for the Active Bank Exception).
Because final regulations have not been issued and because the notice and the proposed regulations are inconsistent, our status under the PFIC rules is subject to considerable uncertainty. While we conduct, and intend to continue to conduct, a significant banking business, there can be no assurance that we will satisfy the specific requirements for the Active Bank Exception under either the IRS notice or the proposed regulations. Accordingly, U.S. Holders could be subject to U.S. federal income tax under the rules described below.
If we are treated as a PFIC for any taxable year during which a U.S. Holder owns our preferred shares or ADSs, any gain realisedrealized on a sale or other taxable disposition of such preferred shares or ADSs and certain “excess distributions” (generally distributions in excess of 125% of the average distribution over the prior three-year period, or if shorter, the holding period for such preferred shares or ADSs) will be treated as ordinary income and will be subject to tax as if (i) the excess distribution or gain had been realisedrealized ratably over the U.S. Holder’s holding period for such preferred shares or ADSs, (ii) the amount deemed realisedrealized in each year had been subject to tax in each such year at the highest marginal rate for such year (other than income allocated to the current period or any taxable period before we became a PFIC, which would be subject to tax at such U.S. Holder’s regular ordinary income rate for the current year and would not be subject to the interest charge discussed below), and (iii) the interest charge generally applicable to underpayments of tax had been imposed on the taxes deemed to have been payable in those years.
We do not expect to provide information that would allow U.S. Holders to avoid the foregoing consequences by making a “qualified electing fund” election.
If we are treated as a PFIC and, at any time, we invest in non-U.S. corporations that are classified as PFICs or (“Subsidiary PFICs,PFICs”), U.S. Holders generally will be deemed to own, and also would be subject to the PFIC rules with respect to, their indirect ownership interest in any such Subsidiary PFIC. If we are treated as a PFIC, a U.S. Holder could incur liability for the deferred tax and interest charge described above if either (i) we receive a distribution from, or dispose of all or part of our interest in, any such Subsidiary PFIC or (ii) such U.S. Holder disposes of all or part of our preferred shares or ADSs.
A U.S. holder of stock in a PFIC (but possibly not a Subsidiary PFIC, as discussed below) may make a “mark-to-market” election, provided the PFIC stock is “marketable stock” as defined under applicable Treasury regulations (i.e., “regularly traded” on a “qualified exchange or other market”). Under applicable Treasury regulations, a “qualified exchange or other market” includes (i) a national securities exchange that is registered with the U.S. Securities and Exchange Commission or the national market system established under the Securities Exchange Act of 1934, as amended or the Exchange Act,(the “Exchange Act”), or (ii) a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located and meets certain trading, listing, financial disclosure and other requirements set forth in applicable Treasury regulations. The NYSE constitutes a qualified exchange or other market. Although the IRS has not addressed whether the BM&FBOVESPA meets the requirements to be treated as a qualified exchange or other market, we believe that the BM&FBOVESPA should be so treated. PFIC stock traded on a qualified exchange or other market is regularly traded on such exchange or other market for any calendar year during which such stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. We cannot assure U.S. Holders that our preferred shares or ADSs will be treated as “marketable stock” for any taxable year.
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The tax consequences that would apply if we were a PFIC would be different from those described above if a U.S. Holder validly makes a mark-to-market election as of the beginning of such U.S. Holder’s holding period. If such an election were made, such U.S. Holder generally would (i) include in gross income, entirely as ordinary income, an amount equal to the excess, if any, of the fair market value of our preferred shares or ADSs as of the close of each taxable year and such U.S. Holder’s adjusted tax basis in such preferred shares or ADSs, and (ii) deduct as an ordinary loss the excess, if any, of such U.S. Holder’s adjusted tax basis in such preferred shares or ADSs over the fair market value of such preferred shares or ADSs at the end of the taxable year, but only to the extent of the net amount previously included in gross income as a result of the mark-to-market election. Any gain from a sale, exchange or other disposition of our preferred shares or ADSs in a taxable year in which we were a PFIC would be treated as ordinary income, and any loss from such sale, exchange or other disposition would be treated first as ordinary loss (to the extent of any net mark-to-market gains previously included in income) and thereafter as capital loss. A U.S. Holder’s adjusted tax basis in such preferred shares or ADSs would increase or decrease by the amount of the gain or loss taken into account under the mark-to-market regime. Even if a U.S. Holder is eligible to make a mark-to-market election with respect to our preferred shares or ADSs, however, it is not clear whether or how such election would apply with respect to the stock of any Subsidiary PFIC that such U.S. Holder is treated as owning, because such Subsidiary PFIC stock might not be marketable stock. The mark-to-market election is made with respect to marketable stock in a PFIC on a stockholder-by-stockholder basis and, once made, can only be revoked with the consent of the IRS. Special rules would apply if the mark-to-market election is not made for the first taxable year in which a U.S. Holder owns any equity interest in us while we are a PFIC.
A U.S. Holder who owns our preferred shares or ADSs during any taxable year that we are treated as a PFIC generally would be required to file an information return with respect to us and any Subsidiary PFIC in which the U.S. Holder holds a direct or indirect interest. U.S. Holders should consult their own tax advisors regarding the application of the PFIC rules to our preferred shares or ADSs and the availability and advisability of making a mark-to-market election should we be considered a PFIC for any taxable year.
Medicare Tax
Beginning in 2013, in addition to regular U.S. federal income tax, certain U.S. Holders that are individuals, estates or trusts are subject to a 3.8% tax on all or a portion of their “net investment income,” which may include all or a portion of distributions with respect to and net gain from the disposition of a preferred share or ADS.
Backup Withholding and Information Reporting
Backup withholding and information reporting requirements generally apply to certain U.S. Holders with respect to payments made on or proceeds from the sale, exchange or other disposition of our preferred shares or ADSs. A U.S. Holder not otherwise exempt from backup withholding generally can avoid backup withholding by providing a properly executed IRS Form W-9. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
Disclosure Requirements for Specified Foreign Financial Assets
Individual U.S. Holders (and certain U.S. entities specified in IRSU.S. Treasury Department guidance) who, during any taxable year, hold any interest in any “specified foreign financial asset” generally will be required to file with their U.S. federal income tax returns a statement setting forth certain information on IRS Form 8938 if the aggregate value of all such assets exceeds U.S.$50,000.certain specified amounts. “Specified foreign financial asset” generally includes any financial account maintained with a non-U.S. financial institution and may also include our preferred shares or ADSs if they are not held in an account maintained with a U.S. financial institution. Substantial penalties may be imposed, and the period of limitations on assessment and collection of U.S. federal income taxes may be extended, in the event of a failure to comply. U.S. Holders should consult their own tax advisors as to the possible application to them of this filing requirement.
Disclosure Requirements for Certain U.S. Holders RecognisingRecognizing Significant Losses
A U.S. Holder that claims significant losses in respect of our preferred shares or ADSs for U.S. federal income tax purposes (generally (i) U.S.$10 million or more in a taxable year or U.S.$20 million or more in any combination of taxable years for corporations or partnerships all of whose partners are corporations, (ii) U.S.$2 million or more in a taxable year or U.S.$4 million or more in any combination of taxable years for all other taxpayers, or (iii) U.S.$50,000 or more in a taxable year for individuals or trusts with respect to a foreign currency transaction) may be subject to certain disclosure requirements for “reportable transactions.” U.S. Holders should consult their own tax advisors concerning any possible disclosure obligation with respect to our preferred shares or ADSs.
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10F. | Dividends and Paying Agents |
Not applicable.
10G. | Statement by Experts |
Not applicable.
10H. | Documents on Display |
We are subject to the informational requirements for foreign private issuers of the Exchange Act. Accordingly, we are required to file reports and other information with the SEC, including annual reports on Form 20-F and reports on Form 6-K. You may inspect and copy reports and other information filed with the SEC at the public reference facilities maintained by the SEC at 100 F Street, N.W., Washington D.C. 20549 and at the SEC’s regional offices at 500 West Madison Street, Suite 1400, Chicago Illinois 60661, and 233 Broadway, New York, New York 10279. Copies of the materials may be obtained by mail from the Public Reference Room of the SEC at 100 F Street, N.W., Washington, D.C. 20549 at prescribed rates. The public may obtain information on the operation of the SEC’s Public Reference Room by calling the SEC in the United States at 1-800-SEC-0330. In addition, the SEC maintains an Internet website at http://www.sec.gov, from which you can electronically access those materials, including this annual report and the accompanying exhibits. We also file financial statements and other periodic reports with the CVM located at Rua Sete de Setembro, 111, Rio de Janeiro, Rio de Janeiro 20050-901, Brazil. The CVM maintains an Internet website athttp://www.cvm.gov.br.
Copies of our annual report on Form 20-F will be available for inspection upon request at our offices at Praça Alfredo Egydio de Souza Aranha 100 - São Paulo - SP - 04344-902 – Brazil.
10I. | Subsidiary Information |
Not required.
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ITEM 11. Quantitative and Qualitative Disclosures about Market Risk
Derivative Instruments Qualifying for Hedge Accounting
Below we present an overview of the hedge strategies that are categorized as cash flow hedges and hedges of net investments under IFRS. For the accounting policy regarding these hedges we refer to note 2.4 g III of our consolidated financial statements.
Starting fromwith 2008, we implemented our cash flow hedge strategy,strategies to hedge the variability of future cash flows of interest payments Itaú Unibanco Holding designedand utilize DI Futures contracts exchange-traded at-traded on BM&FBovespa with respect to certain real-denominated variable-interest liabilities and interest rate swaps with respect to US dollar-denominated redeemable preferred shares issued by one of our subsidiaries.
Our cash flow hedge strategies consist of the hedge ofhedging the exposure to the variability inof cash flows onof interest payments that are attributable to changes in interest rates with respect to recognized liabilities.
Itaú Unibanco Holding has applied cash flow hedge strategies as follows:
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· |
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The carrying amounts as of December 31, 20112012 of time deposits and repurchase agreements, redeemable preferred shares and subordinated certificates of deposit (or hedged objects) was R$ 19,93850,193 million and the notional amount of the related Derivatives (or hedging instruments)derivatives was R$ 19,93750,057 million. These cash flow hedge strategies will mature between 20122013 and 2017. For the specific maturities of the instruments we refer to note 8 of the financial statements included in Item 18.
DuringIn addition, in 2011 we implemented a hedging strategy for our net investments with a different functional currency. In connection with our hedge strategy for net investments in foreign operations we designed DDI Futures contracts traded at BM&FBovespa, and Forward contracts or NDF contracts entered into by our subsidiaries abroad.
Our strategies of net investments in foreign operations consistconsisting of a hedge of the exposure in foreign currency arising from the functional currency of the foreign operation, upon translation to the functional currency of the head office. In connection with our hedging strategy for net investments in foreign operations, we designed DI Futures contracts traded on BM&FBovespa, and forward contracts or non-deliverable forward contracts entered into by our subsidiaries abroad.
The carrying amount as of December 31, 20112012 of Hedge of investmentinvestments in foreign operations was R$ 4,1315,156 million and the notional amount of the related Derivativesderivatives was R$ 6,8868,593 million. The notional amount of the derivatives includes the overhedge rate of 40% regarding taxes. This hedgehedging strategy has no stated maturity unless on theexcept at time of sale of the investments abroad.
In 2012 we implemented a hedging strategy against market risk consisting of hedging the exposure to variation in market risk related to receipt of interest, resulting from changes in interest rates related to recognized assets. We hedged mortgage notes portfolios in Chile in the amount of R$470 million, which gave rise to an adjustment to market value of R$(4) million which represents the effective hedge portion recognized in income.
The notional amount as of December 31, 2012 of the interest rate swap contracts used to hedge strategy against market risk was R$470 million, which gave rise to an adjustment to market value of R$4 million. The interest rate swaps have maturities between 2020 and 2027.
The fair value of the derivatives used for our hedging strategies our included in note 8 of our consolidated financial statements included in itemItem 18.
Market Risk
Market risk is the possibility of losses resulting from fluctuations in the market values of positions held by a financial institution, including risks of transactions subject tomost typically caused by variations in foreign exchange rates, interest rates, equitiesprice indexes, equity and commodities prices.commodity prices, along with various indexes on these risk factors.
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Market risk management is the process by which an institution plans,our management monitors and controls risksrisk of variations in the value of financial instruments, market values,while aiming optimisation ofto optimize the risk-return ratio through an adequate limits structure, effective risk management models and related management tools.
Itaú Unibanco uses proprietary systems to measure its consolidated market risk. The processing of these systems occurs mainly in São Paulo in a controlled access location with high availability, storage and data recovery, which has the infrastructure to ensure business continuity in case of a contingency (disaster recovery). We are currently assessing potential changes to our risk technology infrastructure to ensure continuing compliance with regulatory requirements and management guidelines.
TheOur market risk control carried out by Itaú Unibancoframework covers all financial instruments contained in all portfolios of the companies controlled by Itaú Unibanco.under our control. In this respect, Itaú Unibanco’sUnibanco Holding’s policies and general market risk management policy is in lineframework are consistent with the principles of CMN Resolution No. 3,464, of June 26, 2007, constituting a set ofand subsequent amendments. These principles that guide the institution’s strategy ofour approach to market risk control and management inacross all conglomerate business units and legal entities of the Itaú Unibanco Holding group.
Itaú Unibanco’s strategy is based on a comprehensive and complementary use of methodologies as well as quantitative tools to estimate, monitor and manage risks, in line with bestUnibanco Holding’s market practices.
In this context, Itaú Unibanco’s risk management strategy is aimed at balancing corporate business goals, taking into account:account, among other things:
· | Political, economic and market conditions; |
· |
· | Expertise within the group to |
Itaú Unibanco Holding’s market risk management framework is subject to the governance and hierarchy of committees, with specific limits and established authorities. These range from aggregated risk indicators at the portfolio level, to more granular limits at the individual desk level. They help ensure the effectiveness and coverage of control. Limits are calibrated based on projections of future balance sheet data, stockholders’ equity available to support trading activities, and the risk profile of each organizational entity (defined in terms of risk measurement as used within the risk management process). Limits are monitored on a daily basis, with compliance reported to and discussed at the relevant board and management committees.
The structure of limits and alerts follows the guidelines of our board of directors. These are approved by the Superior Risk Policies Committee (CSRisc), after endorsement by the Superior Institutional Treasury Committee (CSTI). This structure is reviewed at least annually.
Key principles underlying market risk control are as follows:
· | All market risk taken should be in line with Itaú Unibanco Holding’s risk-return objectives; |
· | Through disciplined dialogue, senior management is to be kept informed of the overall market risk profile and its evolution through time; |
· | There should be transparency as to how the business works to optimize its results; |
· | The market risk control structure should provide early warning mechanisms to facilitate effective risk management, without obstructing the business objectives, and |
· | Concentration risks should be avoided. |
Itaú Unibanco Holding uses proprietary systems to measure consolidated market risk. These systems have controlled access, high availability, large data storage capacity, capability for data recovery, and the infrastructure to ensure business continuity in case of contingency (disaster recovery). We monitor market developments and emerging regulatory requirements on an ongoing basis, to ensure Itaú Unibanco remains current.
Market risk control is conductedmanaged by a group that is independent from the front office“risk origination” business units, and that is responsible for performing the daily activities of risk measurement, evaluation, analysis and reporting by means of its controlto responsible individuals and units, according to established within the legal entities of the Itaú Unibanco group. Moreover, this independent group carries out the consolidated monitoring, evaluation and reporting of market risk information, including any extrapolations of risk limits, reporting of events to the responsible business unitgovernance requirements, and monitoring the necessary actions to readjust athe position and/or level of risk. For this purpose, we havethere is a structured process of communication and information in order to provideflow, which provides information to senior management committeesthe Superior Committees and to ensureensures compliance with the requirements of Brazilian and relevant foreign regulatory agencies.
TheItaú Unibanco Holding hedges transactions with clients and proprietary positions, including its foreign investments, in order to mitigate risk arising from fluctuations in market risk managementfactors (e.g., prices) and control processto prevent positions from breaching relevant limits. Derivatives are commonly used for these hedging activities. When these transactions are classified as hedges for accounting purposes, specific supporting documentation is subject to periodic reviews, to ensure that it is aligned with best market practicesprovided, including ongoing follow-up of hedge effectiveness (retrospective and that it reflects continuous improvement processes implemented throughoutprospective) and other changes in the accounting process. The accounting and managerial hedging procedures are governed by the institutional polices of Itaú Unibanco.Unibanco Holding.
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According to transaction classification
Our market risk framework categorizes transactions as part of either the banking portfolio or the trading portfolio, in accordance with criteria defined in CMN Resolution No. 3,464, of June 26, 2007,established by Basel II and in Central Bankby Circular No. 3,354, of June 27, 2007 and the New Capital Accord – Basel II, Itaú Unibanco’s financial instruments, including all transactions with derivatives, are segregated in trading and banking portfolios. Market risk assessment is performed using this same portfolio segregation.CMN Resolution No. 3,464.
The trading portfolio consists of all transactions including derivatives,(including derivatives) held with intent to trade in the short term, to benefit from arbitrage opportunities, or to hedge other financial instruments ofrisk within this portfolio, and that have no restriction on their trading. TheyProfits are intended for obtaining profit from thebased on changes in actual or expected prices in the short term or arbitrage execution.term.
The banking portfolio is composed of transactions that are not classified in the trading portfolio. TheTreasury transactions in the banking portfolio consistsare executed in conjunction with active management of transactionsfinancial risks inherent in our overall balance sheet, and are held without intent to trade in the short term and their respective hedges, as well as transactions executed for the active management of financial risks, which transactionsterm. The banking portfolio may be executed with or withoutinclude derivatives.
Itaú Unibanco hedges transactions with clients and proprietary positions, including its foreign investments, aiming to mitigate risks derived from price fluctuations of the relevant market risk factors to keep such transactions within the exposure limits in effect. Derivatives are the instruments commonly used for these hedging activities. When these transactions are classified as hedge accounting, specific supporting documentation is provided, including the continuous follow-up of the hedge effectiveness (retrospective and prospective) and other changes in the accounting process, as defined by the internal policies of Itaú Unibanco.
The marketMarket risk exposures that underlieinherent in various financial instruments, including derivatives, are decomposed incomposed of various risk factors. A risk factor refers to a market parameter whose variation impacts an institution’s results.a position’s valuation. The main risk factors measured by Itaú Unibanco Holding are as follows:
· | Interest rates: the risk of losses from transactions subject to interest rates variations, including: |
o | Fixed income interest rates denominated in reais; and |
o |
· | Foreign |
· | Foreign exchange rates: the risk of losses from positions |
· |
· | Equities: the risk of losses from transactions subject to equity price |
The Itaú Unibanco market risk management process is subject to the governance and hierarchy of committees and limits are specifically approved for risk management support, from aggregated risk indicators to granulated limits, aimed at effectiveness and coverage of control. These limits are calibrated based on evaluations of projected results on future balance sheets, amount of shareholder’s equity and risk profile of each legal entity, and are defined in terms of risk measurement and used on the risk management process. These limits are monitored on a daily basis and results in excess of such limits are reported and discussed at the competent committees.
The limits structure is established and approved by the Superior Risk Policies Committee (“CSRisc”), after discussions and deliberations by the Superior Institutional Treasury Committee (“CSTI”) regarding metrics and market risk limits.
In the last quarter of 2011, Itaú Unibanco improved its market risk limits control structure by making it more granular and aligned its business structure, breaking metrics into groups of risk factors, according to business units. This new control structure is intended to:
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In this control structure, limits are more granular than in the past, are monitored and trigger alerts starting discussions about the positions in question.
Market risk is analysedanalyzed based on the following metrics:
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· | Losses in Stress Scenarios (Stress |
· | Stop Loss |
· |
In addition to the risk metrics described above, sensitivity and loss control measures are also analysed.analyzed. They include:
· | Gap |
· | Sensitivity |
217 |
· | Sensitivities to Various Risk Factors (Greek): partial derivatives of a portfolio of options on the |
· | Stop |
VaR – Consolidated Itaú Unibanco Holding S.A.
The internal VaR model used by Itaú Unibanco Holding considers a one-day holding period and a 99%99.0% confidence level. Volatilities and correlations are estimated based on a “volatility weighting” methodology that confers higher weight to the most recent information.
The table below shows the Consolidated Global VaR, comprising the portfolios of Itaú Unibanco BancoHolding, and its subsidiaries abroad (Banco Itaú BBA International S.A. (“Banco Itaú BBA International”), Banco Itaú Argentina S.A. (“Banco Itaú Argentina”), Banco Itaú Chile S.A. (“Banco Itaú Chile”), Banco Itaú UruguaiUruguay S.A. (“, Banco Itaú Uruguai”)Paraguay S.A. and Banco Itaú ParaguaiBBA Colombia S.A. (“Banco Itaú Paraguai”);- Corporación Financiera), showing where there are higher concentrations of market risk.
The consolidated Itaú Unibanco Holding S.A., maintainingon a consolidated basis, maintained its conservative management and portfolio diversification keptin keeping its policy of operating within lower limits in relation to its capital.
In 2011,order to improve the quality of quantitative market risk information, beginning in June 2012, Itaú Unibanco Holding changed the composition of the risk factors presented in the followingVaR tables, reclassifying and combining certain risks between risk factors. Itaú Unibanco Holding’s total market risk exposure, expressed by total Global VaR, was not impacted by these reclassifications. Prior year figures have been restated, so the figures presented for both current and previous years reflect the revised risk factors, facilitating comparison.
In 2012, our average global VaR was R$142.0289.7 million or 0.20%0.38% of our consolidated stockholders’ equity, as of December 31, 2011,2012, compared to R$109.4142.0 million in 2010,2011, or 0.18%0.19% of our consolidated stockholders’ equity, as of December 31, 2010.2011. The higher average global VaR in 2012 was primarily the result of the volatility of financial markets related to the changes to the SELIC interest rate and interest on savings accounts, as well as related fluctuations in interest rate structure in the futures market, most of which occurred in the second and fourth quarters of 2012.
Global VaR2011
2012
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Group of Risk Factor | ||||||||||||||||
Interest rate(*) | 114.8 | 105.3 | 27.0 | 229.2 | ||||||||||||
Foreign exchange linked | 23.6 | 29.5 | 12.6 | 59.0 | ||||||||||||
Foreign exchange rates | 29.0 | 38.1 | 14.2 | 69.2 | ||||||||||||
Price index linked | 21.1 | 17.7 | 2.5 | 41.6 | ||||||||||||
Equities | 4.4 | 13.4 | 3.7 | 26.1 | ||||||||||||
Banco Itaú BBA International | 1.5 | 2.9 | 0.4 | 6.5 | ||||||||||||
Banco Itaú Argentina | 3.7 | 4.0 | 1.6 | 9.4 | ||||||||||||
Banco Itaú Chile | 5.3 | 5.3 | 1.9 | 10.3 | ||||||||||||
Banco Itaú Uruguai | 0.7 | 0.5 | 0.2 | 1.1 | ||||||||||||
Banco Itaú Paraguai | 0.2 | 0.6 | 0.2 | 1.7 | ||||||||||||
Diversification effect(**) | (53.4 | ) | ||||||||||||||
Global Risk | 150.9 | 142.0 | 74.0 | 278.5 |
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor Group | ||||||||||||||||
Brazilian interest rate(1) | 348.7 | 191.2 | 71.8 | 427.6 | ||||||||||||
Other Interest rate | 11.4 | 20.4 | 7.3 | 49.6 | ||||||||||||
FX rate | 8.8 | 25.7 | 4.6 | 53.9 | ||||||||||||
Brazilian inflation indexes | 51.2 | 110.3 | 14.8 | 325.0 | ||||||||||||
Equities and commodities | 16.8 | 24.2 | 13.6 | 43.5 | ||||||||||||
Banco Itaú BBA International | 1.1 | 1.7 | 0.7 | 5.1 | ||||||||||||
Banco Itaú Argentina | 5.5 | 3.0 | 1.7 | 5.6 | ||||||||||||
Banco Itaú Chile | 4.4 | 5.5 | 3.2 | 9.6 | ||||||||||||
Banco Itaú Uruguay | 2.0 | 1.7 | 0.3 | 3.4 | ||||||||||||
Banco Itaú Paraguay | 1.0 | 0.4 | 0.2 | 1.4 | ||||||||||||
Itaú BBA Colombia | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||
Diversification effect(2) | (77.1 | ) | ||||||||||||||
Total | 373.7 | 289.7 | 118.0 | 601.4 |
Adjusted to reflect the difference in Brazilian tax treatment of investments abroad and investments in Brazil. |
Reduction of risk due to the combination of all risk factors. |
218 |
Global VaR
20102011
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Group of Risk Factor | ||||||||||||||||
Interest rate(*) | 123.7 | 109.6 | 70.6 | 137.2 | ||||||||||||
Foreign exchange linked | 17.3 | 18.4 | 6.0 | 41.6 | ||||||||||||
Foreign exchange rates | 34.0 | 31.8 | 9.1 | 56.9 | ||||||||||||
Price index linked | 18.6 | 17.1 | 6.4 | 30.0 | ||||||||||||
Equities | 14.4 | 15.1 | 5.1 | 27.7 | ||||||||||||
Banco Itaú BBA International | 0.6 | 1.3 | 0.5 | 3.4 | ||||||||||||
Banco Itaú Argentina | 1.6 | 1.0 | 0.4 | 2.3 | ||||||||||||
Banco Itaú Chile | 3.3 | 5.1 | 2.6 | 9.4 | ||||||||||||
Banco Itaú Uruguai | 0.2 | 0.4 | 0.2 | 0.8 | ||||||||||||
Banco Itaú Paraguai | 0.9 | 0.6 | 0.2 | 1.6 | ||||||||||||
Diversification effect(**) | (82.8 | ) | ||||||||||||||
Global Risk | 131.9 | 109.4 | 61.6 | 181.8 |
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor Group | ||||||||||||||||
Brazilian Interest rate(1) | 104.8 | 100.9 | 24.6 | 222.6 | ||||||||||||
Other Interest rate | 23.6 | 29.5 | 12.6 | 59.0 | ||||||||||||
FX rate | 18.0 | 19.1 | 5.2 | 38.8 | ||||||||||||
Brazilian Inflation Indexes | 21.1 | 17.7 | 2.5 | 41.6 | ||||||||||||
Equities and Commodities | 25.2 | 36.9 | 17.4 | 57.1 | ||||||||||||
Banco Itaú BBA International | 1.5 | 2.9 | 0.4 | 6.5 | ||||||||||||
Banco Itaú Argentina | 3.7 | 4.0 | 1.6 | 9.4 | ||||||||||||
Banco Itaú Chile | 5.3 | 5.3 | 1.9 | 10.3 | ||||||||||||
Banco Itaú Uruguay | 0.7 | 0.5 | 0.2 | 1.1 | ||||||||||||
Banco Itaú Paraguay | 0.2 | 0.6 | 0.2 | 1.7 | ||||||||||||
Itaú BBA Colombia | ||||||||||||||||
Diversification effect(2) | (53.4 | ) | ||||||||||||||
Total | 150.9 | 142.0 | 74.0 | 278.5 |
Adjusted to reflect the difference in Brazilian tax treatment of investments abroad and investments in Brazil. |
Reduction of risk due to the combination of all risk factors. |
VaR – Institutional Treasury
The Institutional Treasury maintains its risk management segregated in the Banking and Trading Desks.
Banking Desk
The Banking Desk, which has a portfolio composed of commercial transactions and related financial instruments, increased the GlobalTotal VaR of its portfolio in 2012, as compared to 2011. Conservative management of the portfolio composition enabled the average Global VaR to remain at lower levels in comparison to the bank’s equity.
The average VaR of the Banking Desk portfolio was R$83.4242.5 million as of December 31, 2011,in 2012, compared to R$80.383.4 million asin 2011. The increase in the average VaR of December 31, 2010.the Banking Desk in 2012 was due to an increase in volatility and in our positions in the Brazilian interest rate risk factor group.
VaR of Banking Desk Portfolio
20112012
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Group of Risk Factor | ||||||||||||||||
Interest rate(*) | 95.2 | 88.1 | 22.7 | 193.0 | ||||||||||||
Foreign exchange linked | 23.6 | 24.9 | 8.6 | 46.3 | ||||||||||||
Foreign exchange rates | 4.9 | 2.8 | 0.0 | 15.3 | ||||||||||||
Price index linked | 17.9 | 11.7 | 2.4 | 33.8 | ||||||||||||
Equities | 5.0 | 4.8 | 2.7 | 7.9 | ||||||||||||
Diversification effect(**) | (49.2 | ) | ||||||||||||||
Global Risk | 97.5 | 83.4 | 31.1 | 171.5 |
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor Group | ||||||||||||||||
Brazilian interest rate(1) | 342.6 | 173.1 | 54.9 | 391.0 | ||||||||||||
Other interest rate | 11.4 | 17.1 | 6.3 | 42.3 | ||||||||||||
FX rate | 2.0 | 3.1 | 0.0 | 17.4 | ||||||||||||
Brazilian inflation indexes | 44.5 | 102.2 | 15.4 | 308.4 | ||||||||||||
Equities and commodities | 3.6 | 3.9 | 2.5 | 6.7 | ||||||||||||
Diversification effect(2) | (59.5 | ) | ||||||||||||||
Total | 344.6 | 242.5 | 62.4 | 508.5 |
Adjusted to reflect the difference in Brazilian tax treatment of investments abroad and investments in Brazil. |
Reduction of risk due to the combination of all risk factors. |
VaR of Banking Desk Portfolio
20102011
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Group of Risk Factor | ||||||||||||||||
Interest rate(*) | 85.5 | 92.6 | 70.0 | 110.5 | ||||||||||||
Foreign exchange linked | 11.4 | 6.2 | 2.7 | 11.4 | ||||||||||||
Foreign exchange rates | 0.3 | 3.0 | 0.0 | 23.2 | ||||||||||||
Price index linked | 9.0 | 10.4 | 3.8 | 22.1 | ||||||||||||
Equities | 4.2 | 4.7 | 2.9 | 12.5 | ||||||||||||
Diversification effect(**) | (33.7 | ) | ||||||||||||||
Global Risk | 76.6 | 80.3 | 54.5 | 108.0 |
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor Group | ||||||||||||||||
Brazilian interest rate(1) | 95.2 | 88.2 | 22.7 | 193.0 | ||||||||||||
Other interest rate | 23.6 | 24.9 | 8.6 | 46.3 | ||||||||||||
FX rate | 4.7 | 2.1 | 0.0 | 14.9 | ||||||||||||
Brazilian inflation indexes | 17.9 | 11.7 | 2.4 | 33.8 | ||||||||||||
Equities and commodities | 5.2 | 5.5 | 2.7 | 10.6 | ||||||||||||
Diversification effect(2) | (49.2 | ) | ||||||||||||||
Total | 97.5 | 83.4 | 31.1 | 171.5 |
Adjusted to reflect the difference in Brazilian tax treatment of investments abroad and investments in Brazil. |
Reduction of risk due to the combination of all risk factors. |
Since May 1, 2011, the VaR risk factors of the Overseas portfolio (i.e., transactions not booked in Brazil) are managed together with the Banking Desk portfolio. In 2010, the average Global VaR of Overseas portfolio was R$7.9 million.
219 |
Trading Desk
The Institutional Treasury Trading Desk takes positions aiming to optimiseoptimize risk-weighted results.
Effective market risk control enabled Itaú Unibanco Holding to manage efficiently market changes, as well as maintain the continuousongoing improvement of diversification and sophistication of its transactions.
The Trading Desk seeks the best domestic and foreign market opportunities, within the pre-established limits, and is intendedstrives to create a well-diversified risk exposure.
In this context, the risk assumed by the Institutional Treasury did not change significantly, strengthening Itaú Unibanco’s tendency to incur only limited market risk exposures in relation to its capital.
To improve the management of their assets, the Flow Book Desk and Proprietary Trading Desk were unified, under the name Trading Desk, beginning June 1, 2011. In 2011, theThe average VaR of the Trading Desk portfolio was R$54.3 million in 2012, compared to R$69.1 million compared to an average VaR of the Flow Book Desk and Proprietary Trading Desk of R$9.5 million and R$46.3 million, respectively, in 2010.2011.
VaR of Trading Desk Portfolio(**)
20112012
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Group of Risk Factor | ||||||||||||||||
Interest rate(*) | 28.3 | 35.8 | 12.4 | 88.1 | ||||||||||||
Foreign exchange linked | 7.5 | 11.5 | 5.5 | 27.1 | ||||||||||||
Foreign exchange rates | 32.7 | 40.0 | 21.4 | 68.9 | ||||||||||||
Price index linked | 4.7 | 6.9 | 0.9 | 24.5 | ||||||||||||
Equities | 3.3 | 7.5 | 1.5 | 15.1 | ||||||||||||
Diversification effect(***) | (22.6 | ) | ||||||||||||||
Global Risk | 53.9 | 69.1 | 38.4 | 125.0 |
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor Group | ||||||||||||||||
Brazilian interest rate(1) | 25.2 | 38.3 | 12.8 | 95.4 | ||||||||||||
Other interest rate | 6.4 | 10.7 | 4.2 | 27.2 | ||||||||||||
FX rate | 9.9 | 25.1 | 4.9 | 55.6 | ||||||||||||
Brazilian inflation indexes | 7.1 | 9.4 | 1.8 | 22.2 | ||||||||||||
Equities and commodities | 14.8 | 23.3 | 13.8 | 41.5 | ||||||||||||
Diversification effect(2) | (38.6 | ) | ||||||||||||||
Total | 24.7 | 54.3 | 21.3 | 112.3 |
Adjusted to reflect the difference in Brazilian tax treatment of investments abroad and investments in Brazil. |
Reduction of risk due to the combination of all risk factors. |
VaR of Trading Portfolio
2011
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor Group | ||||||||||||||||
Brazilian interest rate(1) | 18.4 | 31.2 | 9.5 | 79.0 | ||||||||||||
Other interest rate | 7.5 | 11.5 | 5.5 | 27.1 | ||||||||||||
FX rate | 22.0 | 20.9 | 7.7 | 37.8 | ||||||||||||
Brazilian inflation indexes | 4.7 | 6.9 | 0.9 | 24.5 | ||||||||||||
Equities and commodities | 24.0 | 7.5 | 1.5 | 15.1 | ||||||||||||
Diversification effect(2) | (22.6 | ) | ||||||||||||||
Total | 53.9 | 69.1 | 38.4 | 125.0 |
(1) | Adjusted to reflect the difference in Brazilian tax treatment of investments abroad and investments in Brazil. |
(2) | Reduction of risk due to the combination of all risk factors. |
220 |
VaR – Foreign Units
Itaú Unibanco’sUnibanco Holding’s foreign units are financial institutions based in different countries that operate with local treasuries, whosewith market risk exposures are monitored by local risk control groups. Thesegroups.These treasury and risk control groups report to equivalent structures of Itaú Unibanco Holding. These foreign units are “BancoBanco Itaú BBA International”, “BancoInternational, Banco Itaú Argentina”, “BancoArgentina, Banco Itaú Chile”, “BancoChile, Banco Itaú Uruguai”Uruguay, Banco Itaú Paraguay and “Banco Itaú Paraguai”.BBA Colombia. Our Colombian operations were recently authorized by local authorities and are expected to gradually grow throughout 2013.
In 2011,2012, the average VaR of Banco Itaú BBA International was R$2.91.7 million, or 0.19% of Banco Itaú BBA International’s stockholders’ equity as of December 31, 2011 compared to R$1.32.9 million in 2010, or 0.09% of Banco Itaú BBA International’s stockholders’ equity as of December 31, 2010.2011.
VaR of Banco Itaú BBA International
20112012
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
EURIBOR | 0.4 | 0.4 | 0.1 | 2.6 | ||||||||||||
LIBOR | 0.4 | 0.6 | 0.3 | 1.1 | ||||||||||||
FX rate | 0.2 | 0.7 | 0.1 | 4.5 | ||||||||||||
Equities | 0.1 | 0.1 | 0.0 | 0.3 | ||||||||||||
Other | 0.5 | 0.2 | 0.0 | 0.6 | ||||||||||||
Diversification effect(1) | (0.4 | ) | ||||||||||||||
Total | 1.1 | 1.7 | 0.7 | 5.1 |
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Risk Factor | �� | |||||||||||||||
EURIBOR | 0.1 | 0.6 | 0.1 | 2.6 | ||||||||||||
LIBOR | 0.7 | 0.7 | 0.3 | 1.5 | ||||||||||||
Foreign exchange rates | 0.6 | 1.7 | 0.2 | 5.6 | ||||||||||||
Other | 0.3 | 0.1 | 0.0 | 0.5 | ||||||||||||
Diversification effect(*) | (0.2 | ) | ||||||||||||||
Global Risk | 1.5 | 2.9 | 0.4 | 6.5 |
VaR of Banco Itaú BBA International
2010
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
EURIBOR | 0.3 | 0.5 | 0.0 | 1.2 | ||||||||||||
LIBOR | 0.4 | 0.7 | 0.2 | 1.9 | ||||||||||||
Foreign exchange rates | 0.2 | 0.3 | 0.1 | 1.3 | ||||||||||||
Other | 0.2 | 0.3 | 0.0 | 0.7 | ||||||||||||
Diversification effect(*) | (0.5 | ) | ||||||||||||||
Global Risk | 0.6 | 1.3 | 0.5 | 3.4 |
In 2011, the average VaR of Banco Itaú Argentina was R$4.0 million, or 1.33% of Banco Itaú Argentina’s stockholders’ equity, as of December 31, 2011, compared to R$1.0 million in 2010, or 0.67% of Banco Itaú Argentina’s stockholders’ equity, as of December 31, 2010.
VaR of Banco Itaú Argentina
2011
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (Argentine peso) | 2.9 | 4.2 | 1.8 | 10.0 | ||||||||||||
Badlar(*) | 2.0 | 0.7 | 0.1 | 2.1 | ||||||||||||
Inflation index linked interest rate | 0.0 | 0.0 | 0.0 | 0.2 | ||||||||||||
LIBOR | 3.8 | 1.8 | 0.3 | 7.3 | ||||||||||||
Foreign exchange rates – Euros | 0.2 | 0.2 | 0.0 | 1.1 | ||||||||||||
Diversification effect(**) | (5.2 | ) | ||||||||||||||
Global Risk | 3.7 | 4.0 | 1.6 | 9.4 |
Reduction of risk due to the combination of all risk factors. |
VaR of Banco Itaú ArgentinaBBA International
20102011
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
EURIBOR | 0.1 | 0.6 | 0.1 | 2.6 | ||||||||||||
LIBOR | 0.7 | 0.7 | 0.3 | 1.5 | ||||||||||||
FX rate | 0.6 | 1.7 | 0.2 | 5.6 | ||||||||||||
Equities | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||
Other | 0.3 | 0.1 | 0.0 | 0.5 | ||||||||||||
Diversification effect(1) | (0.2 | ) | ||||||||||||||
Total | 1.5 | 2.9 | 0.4 | 6.5 |
(1) | Reduction of risk due to the combination of all risk factors. |
In 2012, the average VaR of Banco Itaú Argentina was R$3.0 million, compared to R$4.0 million in 2011.
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (Argentine peso) | 1.8 | 1.1 | 0.3 | 2.5 | ||||||||||||
Badlar(*) | 0.1 | 0.2 | 0.1 | 0.3 | ||||||||||||
Inflation index linked interest rate | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||
LIBOR | 0.5 | 0.4 | 0.1 | 0.8 | ||||||||||||
Foreign exchange rates – Euros | 0.3 | 0.1 | 0.0 | 0.6 | ||||||||||||
Diversification effect(**) | (1.2 | ) | ||||||||||||||
Global Risk | 1.6 | 1.0 | 0.4 | 2.3 |
VaR of Banco Itaú Argentina
2012
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (Argentine peso) | 3.8 | 2.6 | 1.3 | 4.8 | ||||||||||||
Badlar(1) | 0.1 | 0.5 | 0.1 | 1.9 | ||||||||||||
Inflation index linked interest rate | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||
FX + interest rate – Dollar | 4.2 | 2.7 | 1.1 | 5.5 | ||||||||||||
FX + interest rate – Euro | 0.4 | 0.1 | 0.0 | 1.0 | ||||||||||||
Diversification effect(2) | (2.9 | ) | ||||||||||||||
Total | 5.5 | 3.0 | 1.7 | 5.6 |
(*)
(1) Badlar is the average rate offered by commercial banks based on a survey by the Central Bank of Argentina for time deposits over 1 million pesos with a maturity of 30 to 35 days.
(2) Reduction of risk due to the combination of all risk factors.
VaR of Banco Itaú Argentina
2011
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (Argentine peso) | 2.9 | 4.2 | 1.8 | 10.0 | ||||||||||||
Badlar(1) | 2.0 | 0.7 | 0.1 | 2.1 | ||||||||||||
Inflation index linked interest rate | 0.0 | 0.0 | 0.0 | 0.2 | ||||||||||||
FX + interest rate – Dollar | 3.8 | 1.8 | 0.3 | 7.3 | ||||||||||||
FX + interest rate – Euro | 0.2 | 0.2 | 0.0 | 1.1 | ||||||||||||
Diversification effect(2) | (5.2 | ) | ||||||||||||||
Total | 3.7 | 4.0 | 1.6 | 9.4 |
(1) Badlar is the average rate offered by commercial banks based on a survey by Central Bank of Argentina for time deposits over 1 million pesos with a maturity of 30 to 35 days.
(2) Reduction of risk due to the combination of all risk factors.
In 2011,2012, the average VaR of Banco Itaú Chile was R$5.35.5 million, or 0.27% of Banco Itaú Chile’s stockholders’ equity, as of December 31, 2011, compared to R$5.15.3 million in 2010, or 0.36% of Banco Itaú Chile’s stockholders’ equity, as of December 31, 2010.
2011.
VaR of Banco Itaú Chile
20112012
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (Chilean peso) | 1.4 | 0.9 | 0.3 | 2.0 | ||||||||||||
Inflation index linked interest rate | 4.1 | 5.2 | 3.1 | 8.5 | ||||||||||||
FX + interest rate – Dollar | 0.7 | 0.8 | 0.1 | 2.1 | ||||||||||||
FX rate - Other currencies | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||
Diversification effect(1) | (1.8 | ) | ||||||||||||||
Total | 4.4 | 5.5 | 3.2 | 9.6 |
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (Chilean peso) | 0.8 | 1.5 | 0.5 | 2.8 | ||||||||||||
Inflation index linked interest rate | 4.3 | 4.4 | 1.6 | 8.5 | ||||||||||||
Dollar linked interest rate | 1.9 | 0.9 | 0.3 | 2.1 | ||||||||||||
Diversification effect(*) | (1.8 | ) | ||||||||||||||
Global Risk | 5.3 | 5.3 | 1.9 | 10.3 |
Reduction of risk due to the combination of all risk factors. |
VaR of Banco Itaú Chile
20102011
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (Chilean peso) | 0.8 | 1.5 | 0.5 | 2.8 | ||||||||||||
Inflation index linked interest rate | 4.3 | 4.4 | 1.6 | 8.5 | ||||||||||||
FX + interest rate – Dollar | 1.9 | 0.9 | 0.3 | 2.1 | ||||||||||||
FX rate - Other currencies | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||
Diversification effect(1) | (1.8 | ) | ||||||||||||||
Total | 5.3 | 5.3 | 1.9 | 10.3 |
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (Chilean peso) | 1.1 | 1.5 | 0.6 | 4.7 | ||||||||||||
Inflation index linked interest rate | 3.5 | 4.9 | 2.1 | 8.1 | ||||||||||||
Dollar linked interest rate | 0.3 | 0.7 | 0.3 | 1.6 | ||||||||||||
Diversification effect(*) | (1.5 | ) | ||||||||||||||
Global Risk | 3.3 | 5.1 | 2.6 | 9.4 |
Reduction of risk due to the combination of all risk factors. |
In 2011,2012, the average VaR of Banco Itaú UruguaiUruguay was R$1.7 million, compared to R$0.5 million or 0.13% of Banco Itaú Uruguai’s stockholders’ equity, as of December 31, 2011, compared to R$0.4 million in 2010, or 0.13% of Banco Itaú Uruguai’s stockholders’ equity, as of December 31, 2010.2011.
222 |
VaR of Banco Itaú UruguaiUruguay
20112012
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (Uruguayan peso) | 0.7 | 0.5 | 0.0 | 1.4 | ||||||||||||
Inflation index linked interest rate | 0.4 | 0.8 | 0.4 | 2.2 | ||||||||||||
Dollar linked interest rate | 1.8 | 1.4 | 0.1 | 3.6 | ||||||||||||
FX rate | 0.1 | 0.1 | 0.0 | 0.4 | ||||||||||||
Diversification effect(1) | (1.0 | ) | ||||||||||||||
Total | 2.0 | 1.7 | 0.3 | 3.4 |
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (Uruguayan peso) | 0.1 | 0.0 | 0.0 | 0.1 | ||||||||||||
Inflation index linked interest rate | 0.7 | 0.4 | 0.1 | 1.0 | ||||||||||||
Dollar linked interest rate | 0.1 | 0.3 | 0.1 | 0.7 | ||||||||||||
Foreign exchange rate | 0.0 | 0.2 | 0.0 | 0.6 | ||||||||||||
Diversification effect(*) | (0.2 | ) | ||||||||||||||
Global Risk | 0.7 | 0.5 | 0.2 | 1.1 |
VaR of Banco Itaú Uruguai2010
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (Uruguayan peso) | 0.0 | 0.1 | 0.0 | 0.2 | ||||||||||||
Inflation index linked interest rate | 0.2 | 0.2 | 0.1 | 0.3 | ||||||||||||
Dollar linked interest rate | 0.1 | 0.3 | 0.0 | 0.6 | ||||||||||||
Foreign exchange rate | 0.2 | 0.2 | 0.0 | 0.4 | ||||||||||||
Diversification effect(*) | (0.2 | ) | ||||||||||||||
Global Risk | 0.2 | 0.4 | 0.2 | 0.8 |
In 2011, the average VaR of Banco Itaú Paraguai was R$0.6 million, or 0.14% of Banco Itaú Paraguai’s stockholders’ equity, as of December 31, 2011, compared to R$0.6 million in 2010, or 0.17% of Banco Itaú Paraguai’s stockholders’ equity, as of December 31, 2010.
VaR of Banco Itaú Paraguai2011
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (guarani) | 0.0 | 0.5 | 0.0 | 1.7 | ||||||||||||
Dollar linked interest rate | 0.2 | 0.2 | 0.1 | 0.5 | ||||||||||||
Foreign exchange rate | 0.0 | 0.0 | 0.0 | 0.3 | ||||||||||||
Diversification effect(*) | (0.1 | ) | ||||||||||||||
Global Risk | 0.2 | 0.6 | 0.2 | 1.7 |
Reduction of risk due to the combination of all risk factors. |
VaR of Banco Itaú ParaguaiUruguay
20102011
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (Uruguayan peso) | 0.1 | 0.0 | 0.0 | 0.1 | ||||||||||||
Inflation index linked interest rate | 0.7 | 0.4 | 0.1 | 1.0 | ||||||||||||
Dollar linked interest rate | 0.1 | 0.3 | 0.1 | 0.7 | ||||||||||||
FX rate | 0.0 | 0.2 | 0.0 | 0.6 | ||||||||||||
Diversification effect(1) | (0.2 | ) | ||||||||||||||
Total | 0.7 | 0.5 | 0.2 | 1.1 |
December 31 | Average | Minimum | Maximum | |||||||||||||
(in millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (guarani) | 0.7 | 0.5 | 0.1 | 1.6 | ||||||||||||
Dollar linked interest rate | 0.2 | 0.2 | 0.1 | 0.2 | ||||||||||||
Foreign exchange rate | 0.2 | 0.2 | 0.1 | 0.3 | ||||||||||||
Diversification effect(*) | (0.3 | ) | ||||||||||||||
Global Risk | 0.9 | 0.6 | 0.2 | 1.6 |
Reduction of risk due to the combination of all risk factors. |
In 2012, the average VaR of Banco Itaú Paraguay was R$0.4 million, compared to R$0.6 million in 2011.
VaR of Banco Itaú Paraguay
2012
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (guarani) | 1.0 | 0.3 | 0.0 | 1.3 | ||||||||||||
Dollar linked interest rate | 0.1 | 0.2 | 0.1 | 0.3 | ||||||||||||
FX rate | 0.0 | 0.1 | 0.0 | 0.3 | ||||||||||||
Diversification effect(1) | (0.1 | ) | ||||||||||||||
Total | 1.0 | 0.4 | 0.2 | 1.4 |
(1) | Reduction of risk due to the combination of all risk factors. |
VaR of Banco Itaú Paraguay
2011
December 31 | Average | Minimum | Maximum | |||||||||||||
(In millions of R$) | ||||||||||||||||
Risk Factor | ||||||||||||||||
Fixed income interest rate (guarani) | 0.0 | 0.5 | 0.0 | 1.7 | ||||||||||||
Dollar linked interest rate | 0.2 | 0.2 | 0.1 | 0.5 | ||||||||||||
FX rate | 0.0 | 0.0 | 0.0 | 0.3 | ||||||||||||
Diversification effect(1) | (0.1 | ) | ||||||||||||||
Total | 0.2 | 0.6 | 0.2 | 1.7 |
(1) | Reduction of risk due to the combination of all risk factors. |
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Backtesting
The effectiveness of the Value at Risk model is validated on a daily basis by the use of backtesting techniques that compare actual daily results with the percentage of cases where the results exceed pre-established limits of maximum potential loss.VaR. The number of violations with respect to the pre-established VaR pre-established limits should be consistent, within an acceptable margin, with the hypothesis of 99%99.0% confidence intervals (i.e., there is a 1%1.0% probability that financial losses could be greater than the losses estimated by the model), considering a range of 250 business days (ending on December 31, 2012). ForStarting in 2012, the backtesting analysis presented below takes into consideration the numberranges suggested by the Basel document “Supervisory Framework for the use of violations should be not higher than 7.backtesting in conjunction with the internal models approach to market risk capital requirements.” The ranges are divided into:
· | GREEN (0 to 4 violations): corresponds to backtesting results that do not suggest any problems with the quality or accuracy of the models adopted; |
· | YELLOW (5 to 9 violations): refers to an intermediate range group, which indicates the need to pay attention and/or monitoring; and |
· | RED (10 or more violations): demonstrate the need for improvement action. |
In order to illustrate the reliability of risk measures generated from the models used by Itaú Unibanco Holding, we present below the backtesting graphs of (i) the global exposure of the Banking Desk portfolio andportfolio; (ii) the fixed income interest rate risk factor of the Banking Desk portfolio (the most significant risk factor for the Banking Desk), as well as the backtesting graph ofDesk portfolio); and (iii) the total Trading Desk portfolio, in each caseportfolio. These analyses are performed for the periodlast 250 business days (ending on December 31, 2012) and consist of a comprehensive analysis and review of positions of both portfolios.
International units are excluded from the last 12 months. Duebacktesting results presented below, due to the limited importancemateriality of thetheir VaR amounts of the international operations, the following backtesting analyses refer only to the portfolio related to domestic operations.amounts.
The graphs show the adequacy level of the market risk models used by Itaú Unibanco Holding, presenting the risk (absolute value) x return pairs for the period considered.
Since the diagonal line represents the threshold where risk equals results, all the dots below this line indicate violations to the estimated risk.
For the global VaRexposure of the Banking Desk portfolio, financial losses exceeded the VaR estimated by the model on 2two days in the period, aplacing the tested portfolio result which is withinin the adopted confidence interval.
range GREEN.
Backtest – Global VaR Banking Desk Portfolio
For the fixed income interest rate risk factor of the Banking Desk portfolio, financial losses exceeded the VaR estimated by the model on 3two days in the period, a result which is withinplacing the adopted confidence interval.tested portfolio in the range GREEN.
Backtest – Fixed Income Interest Rate Banking Desk Portfolio
224 |
For the global VaRexposure of the Trading Desk portfolio, actual financial losses never exceeded the VaR estimated by the model, on no daysplacing the tested portfolio in the period, a result which is within the adopted confidence interval.
range GREEN.
Backtest – Global VaR Trading Desk Portfolio
225 |
ITEM 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
12A. Debt Securities
Not applicable.
12B. Warrants and Rights
Not applicable.
12C. Other Securities
Not applicable.
12D. American Depositary Shares
In the United States, our preferred shares trade in the form of ADSs. Since 2005 each ADS represents one preferred share, issued by The Bank of New York Mellon, as depositary, under a Deposit Agreement, dated as of May 31, 2001, as amended and restated as of February 20, 2002 and as of March 30, 2009, effective as of April 3, 2009, among us, the depositary and the owners and beneficial owners of ADSs from time to time.1 The depositary’s principal executive office is located at One Wall Street, New York, New York 10286.
We do not treat ADR holders as our shareholders and ADS holders have no shareholder rights. Brazilian Corporate Law governs shareholder rights. The depositary is the holder of the preferred shares underlying the ADSs. Holders of ADSs have ADS holder rights.
Fees and Expenses
The following table summarizes the fees and expenses payable by holders of ADSs:
Persons depositing preferred shares or ADR holders must pay: | For: | |
US$5.00 (or less) per 100 ADSs (or portion thereof) plus any additional fees charged by any governmental authorities or other institutions for the execution and delivery or surrender of ADRs. | Issuance of ADSs, including issuances resulting from a distribution of preferred shares or rights or other property. | |
Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates. | ||
US$0.02 (or less) per ADS (or portion thereof). | Any cash distribution to you. | |
A fee equivalent to the fee that would be payable if securities distributed to you had been preferred shares and the shares had been deposited for issuance of ADSs. | Distribution of securities by the depositary to ADS holders. | |
US$0.02 (or less) per ADS (or portion thereof) per calendar year (in addition to cash distribution fee of US$0.02 per ADS during the year). | Depositary services. | |
Registration fees. | Registration of transfers of preferred shares on our preferred share register to or from the name of the depositary or its agent when you deposit or withdraw preferred shares. | |
Foreign currency conversion expenses. | Expenses of the depositary in converting foreign currency to U.S. dollars. | |
Expenses of the depositary. | Cable, telex and facsimile transmissions (when expressly provided in the Deposit Agreement). | |
Taxes and other governmental charges the depositary or the custodian have to pay on any ADR or preferred share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes. | As necessary. | |
Any other charges incurred by the depositary or its agents for servicing the deposited securities. | No charges of this type are currently made in the Brazilian market. |
Payment of Taxes
The depositary may deduct the amount of any taxes owed from any payments to you. It may also sell deposited securities, by public or private sale, to pay any taxes owed. You will remain liable if the proceeds of the sale are not sufficient to pay the taxes. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to you any proceeds, or send to you any property, remaining after it has paid the taxes.
Reimbursement of Fees
The Bank of New York Mellon, as depositary, has agreed to reimburse us for expenses we incur that are related to establishment and maintenance of the ADS program. The depositary has agreed to reimburse us for our continuing annual stock exchange listing fees. The depositary has also agreed to pay the standard out-of-pocket maintenance costs for the ADSs, which consist of the expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of United States federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls. It has also agreed to reimburse us annually for certain investor relationship programs or special investor relations promotional activities. In certain instances, the depositary has agreed to provide additional payments to us based on any applicable performance indicators relating to the ADS facility. There are limits on the amount of expenses for which the depositary will reimburse us, but the amount of reimbursement available to the Company is not necessarily tied to the amount of fees the depositary collects from investors.
The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deducting from cash distributions by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services have been paid.
Reimbursement of Fees Incurred in 20112012
In 2011,2012, the Company received from the depositary US$12.0 million for promoting and encouraging the ADR program in the market, out-of-pocket maintenance costs for the ADSs (consisting of the expenses of postage costs and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. Federal tax information, mailing required tax forms, stationery, postage, facsimile, telephone calls and international and national meetings with investment analysts and investors), any applicable performance indicators relating to the ADS facility, underwriting fees and legal fees.
PART II
ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
No matters to report.
ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
No matters to report.
227 |
ITEM 15 CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer or CEO,(“CEO”), and our chief financial officer or CFO,(“CFO”), of the effectiveness of our “disclosure controls and procedures” (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) as required by paragraph (b) of the Exchange Act Rules 13a-15 or 15d-15, as of December 31, 2011.2012. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Therefore, our management does not expect that the controls will prevent all errors and all fraud.
Based upon the evaluation performed, our CEO and CFO have concluded that as of December 31, 2011,2012, Itaú Unibanco Holding’s disclosure controls and procedures were effective to provide reasonable assurance that material information relating to Itaú Unibanco Holding and its consolidated subsidiaries is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
(b) Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withInternational Financial Reporting Standards (“IFRSs”)IFRS as issued by the International Accounting Standards Board (“IASB”).IASB.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may decline.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2011.2012. In making this assessment, it used the criteria established by the Internal Control – Integrated Framework of the Committee of Sponsoring Organizations - COSO. Based on its evaluation and those criteria, our management has concluded that our internal control over financial reporting was effective as of December 31, 2011.2012.
The effectiveness of internal control over financial reporting as of December 31, 2011,2012, was audited by PricewaterhouseCoopers Auditores Independentes, an independent registered public accounting firm, as stated in their report appearing on page F-2 of this Form 20-F.
(c) Attestation Report of the Independent Registered Public Accounting Firm
For the report of PricewaterhouseCoopers Auditores Independentes, our independent registered public accounting firm, dated March 30, 2012,April 26, 2013, on the effectiveness of our internal control over financial reporting as of December 31, 2011,2012, see “Item 18. Financial Statements.”
(d) Changes in Internal Control over Financial Reporting
In connection with the evaluation required by the Exchange Act Rule 13a-15(d), our management, including our CEO and CFO, concluded that the changes that occurred during the year ended December 31, 20112012 have not materially affected, or are not reasonably likely to materially affect, our internal controls over financial reporting.
228 |
ITEM 16 [RESERVED]
16A. Audit Committee Financial Expert
Our board of directors has determined that one member of our audit committee, Mr. Guy Almeida Andrade, is our audit committee financial expert and meets the requirements set forth by the SEC and the NYSE. Our audit committee financial expert, along with the other members of our audit committee, are independent pursuant to CMN Resolution No. 3,198, which requires that the members not be, or have been in the last year, an officer or employee of the company or its affiliates or an employee with managerial responsibilities in the internal audit division of the financial institution. Other members of our audit committee are financially literate and we believe the skills, experience and education of our audit committee members qualify them to carry out all of their duties as members of the audit committee, including overseeing the preparation of our IFRS financial statements. In addition, our audit committee has the ability to retain independent accountants, financial advisors or other consultants, advisors and experts whenever it deems appropriate.
16B. Code of Ethics
We have adopted a Code of Ethics that applies to all of our employees, including directors, principal executive officers, principal financial officers, principal controllers, other officers and certain third parties, such as suppliers, who have relationship with us. Our board of directors approved our current code of ethics which has been effective since February 2010.on March 28, 2013. The full text of our Code of Ethics is published on our website, at the following address: http://ww13.itau.com.br/Portalri/HTML/ing/download/Codigo_Etica_2010.pdfCodigo_Etica_2013.pdf.
16C. Principal Accountant Fees and Services
PricewaterhouseCoopers Auditores Independentes acted as our independent registered public accounting firm for the fiscal years ended December 31, 2012, 2011 2010 and 2009.2010. The chart below sets forth the total amount billed to us by PricewaterhouseCoopers Auditores Independentes for services performed in the years 2012, 2011 2010 and 2009,2010, and breaks down these amounts by category of service in thousands ofreais:
reais:
Total Fees | Total Fees | |||||||||||||||||||||||
(in thousands of R$) | (in thousands of R$) | |||||||||||||||||||||||
2011 | 2010 | 2009 | 2012 | 2011 | 2010 | |||||||||||||||||||
Audit Fees | 37,834 | 41,614 | 33,200 | 37,191 | 37,834 | 41,614 | ||||||||||||||||||
Audit-Related Fees | 2,489 | 2,366 | 4,973 | 3,330 | 2,583 | 2,448 | ||||||||||||||||||
Tax Fees | 181 | 74 | 135 | 64 | 181 | 74 | ||||||||||||||||||
All Other Fees | 1,030 | 448 | 13 | 1,491 | 936 | 367 | ||||||||||||||||||
Total | 41,534 | 44,503 | 38,320 | 42,075 | 41,534 | 44,503 |
(1) For years ended December 31, 2011 and 2010, R$ 94 thousands and R$ 81 thousands, respectively, related to assurance services on the Greenhouse Gas Emissions controls and policies were reclassified from All Other Fees to Audit-Related Fees.
Audit Fees
Audit fees in 2012, 2011 2010 and 20092010 substantially refer to the audit of our annual consolidated financial statements, for the review of our quarterly financial statements, as well as the audit and review of financial statements of our subsidiaries, services relating to issuance of comfort letters in securities offerings and audit of internal controls in connection with the Sarbanes-Oxley Act.
Audit-Related Fees
Audit-related fees in 2012, 2011, 2010, and 20092010 refer to services provided in connection with the preparation of accounting appraisal reports, assistance related to the preparation of documents to be sent to local and foreign regulatory bodies, including documents regarding compliance with legislation and regulations, and audit of specific financial statements, for management purposes,compliance with Greenhouse Gas Emissions controls and policies, due diligence activities and issuanceassurance of special purpose reports.
Tax Fees
Tax fees in 2012, 2011 2010 and 20092010 were related to tax compliance, tax consulting and other consulting services.
All Other Fees
Other fees paid in 2012, 2011 and 2010 and 2009 included compliance with Greenhouse Gas Emissions controls and policies, internet safety testing, evaluation of business continuity management, and consultancy for new projects, as well as use of electronic databases, technical materials, training, assistance in operations analysis and the compliance project Global Investment Performance Standards - GIPS Project.– GIPS.
Pre-Approval Policies and Procedures
Among the audit committee’s responsibilities is the approval, on an annual basis, of policies and procedures regarding non-audit services that (i) can be provided by our external auditors, as well as the list of those services which are pre-approved, (ii) can notcannot be provided by our external auditors, due to the fact that such services could affect the independence of the external auditors, and (iii) need to be previously approved by the audit committee. We enhanced our corporate governance ensuring its alignment with the Sarbanes-Oxley Act requirements.
16D. Exemptions from the Listing Standards for Audit Committees
Under the listed company audit committee rules of the NYSE and the SEC, we must comply with Rule 10A-3 of the Exchange Act (Listing Standards Relating to Audit Committees). Rule 10A-3 requires that we either establish an audit committee composed of members of the board of directors that meets specified requirements, or designate and empower a board of auditors or similar body to perform the role of the audit committee in reliance on the general exemption for audit committees of foreign private issuers set forth in Rule 10A-3(c)(3) of the Exchange Act.
In accordance with Central Bank regulations, we have established a body similar to the audit committee of the board of directors of a U.S. company, which we are required to call an “audit committee.” For more information, see “Item 6C. Board Practices — Statutory Bodies — Audit Committee.”Committee”.
Our audit committee, to the extent permitted under Brazilian law, performs all the functions required of an audit committee under Rule 10A-3. As required by Brazilian law, our board of directors and audit committee are separate corporate bodies. Only one of the fivesix members of our audit committee is also member of our board of directors. In addition, under Brazilian law, the function of hiring independent auditors is a power reserved exclusively for a company’s board of directors. Therefore, our board of directors acts as our audit committee, as permitted under Rule 10A-3(c)(3)(v) of the Exchange Act for the purpose of the appointment of our independent auditors.
Except in these respects, our audit committee is comparable to, and performs the functions of, an audit committee of the board of directors of a U.S. company. We believe that our audit committee is able to act independently in performing the responsibilities of an audit committee under Sarbanes-Oxley, satisfies the other requirements of the exemption of Rule 10A-3(c)(3) and therefore is in compliance with Rule 10A-3 of the Exchange Act.
230 |
16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Period (1) | (a) Total number of preferred shares purchased | (b) Average price paid per preferred share (2) | (c) Total number of preferred shares purchased as part of publicly announced plans or programs | (d) Maximum number of preferred shares that may yet be purchased under the plans or programs | ||||||||||||
01/03 to 01/31/2011 | - | 56,700,000 | ||||||||||||||
02/01 to 02/28/2011 | - | 56,700,000 | ||||||||||||||
03/01 to 03/31/2011 | - | 56,700,000 | ||||||||||||||
04/01 to 04/29/2011 | 4,000,000 | 37.16 | 4,000,000 | 52,700,000 | ||||||||||||
05/02 to 05/31/2011 | 6,500,000 | 35.72 | 10,500,000 | 46,200,000 | ||||||||||||
06/01 to 06/30/2011 | 5,000,000 | 35.43 | 15,500,000 | 41,200,000 | ||||||||||||
07/01 to 07/29/2011 | 7,000,000 | 32.98 | 22,500,000 | 34,200,000 | ||||||||||||
08/01 to 08/31/2011 | 18,470,900 | 27.82 | 40,970,900 | 15,729,100 | ||||||||||||
09/01 to 09/30/2011 | 40,970,900 | 15,729,100 | ||||||||||||||
10/03 to 10/31/2011 | 40,970,900 | 15,729,100 | ||||||||||||||
11/01 to 11/30/2011 | 40,970,900 | 56,700,000 | ||||||||||||||
12/01 to 12/30/2011 | 40,970,900 | 56,700,000 |
Period(1) | (a) Total number of preferred shares purchased | (b) Average price paid per preferred share (2) | (c) Total number of preferred shares purchased as part of publicly announced plans or programs | (d) Maximum number of preferred shares that may yet be purchased under the plans or programs | ||||||||||||
01/02 to 01/31/2012 | - | - | - | 56,700,000 | ||||||||||||
02/01 to 02/29/2012 | - | - | - | 56,700,000 | ||||||||||||
03/01 to 03/30/2012 | - | - | - | 56,700,000 | ||||||||||||
04/02 to 04/30/2012 | - | - | - | 56,700,000 | ||||||||||||
05/02 to 05/31/2012 | 3,500,000 | 28.30 | 3,500,000 | 53,200,000 | ||||||||||||
01/06 to 29/06/2012 | - | - | 3,500,000 | 53,200,000 | ||||||||||||
07/02 to 07/31/2012 | - | - | 3,500,000 | 53,200,000 | ||||||||||||
08/01 to 08/31/2012 | - | - | 3,500,000 | 53,200,000 | ||||||||||||
09/03 to 09/29/2012 | - | - | 3,500,000 | 53,200,000 | ||||||||||||
10/01 to 10/31/2012 | 800,000 | 29.11 | 4,300,000 | 52,400,000 | ||||||||||||
11/01 to 11/30/2012 | - | - | 4,300,000 | 86,300,000 | ||||||||||||
12/03 to 12/31/2012 | - | - | 4,300,000 | 86,300,000 |
(1) OurOn October 31, 2011 our board of directors approved on November 01, 2010 the purchase of up to 56,700,000 of our book-entry preferred shares, maturingending on November 4, 2011.5, 2012.
OurOn October 22, 2012 our board of directors approved onOctober 31, 2011 the purchase of up to 56,700,00086,300,000 of our book-entry preferred shares, maturingending on November 5, 2012.4, 2013.
(2) Includes brokerage costscosts.
16F. Change in Registrant’s Certifying Accountant
Not applicable.
16G. Corporate Governance
Principal Differences Between Brazilian and U.S. Corporate Governance Practices
We are subject to the NYSE corporate governance listing standards. As a foreign private issuer, the standards applicable to us are considerably different than those applied to U.S. listed companies. Under the NYSE rules, we are only required to: (i) have an audit committee or audit board that meets certain requirements, as discussed below,below; (ii) provide certification by our chief executive officer to the NYSE each year that he is not aware of any violation by the company of NYSE corporate governance listing standards,standards; (iii) submit an executed written affirmation annually to the NYSE and submit an interim written affirmation each time a change occurs to the board or any of itsour committees subject to Section 303A of the NYSE rules,rules; and (iv) provide a brief description of the significant differences between our corporate governance practices and the NYSE corporate governance practice required to be followed by U.S. listed companies. The discussion of the significant differences between our corporate governance practices and those required of U.S. listed companies follows below.
Majority of Independent Directors
The NYSE rules require that a majority of the board must consist of independent directors. Independence is defined by various criteria, including the absence of a material relationship between the director and the listed company.
Brazilian law does not have a similar requirement. Under Brazilian law, neither our board of directors nor our management is required to test the independence of directors before their election to the board. However, Brazilian Corporate Law, the Central Bank and the CVM have established rules that require directors to meet certain qualification requirements relating to professional qualifications and that address the compensation and duties and responsibilities of, as well as the restrictions applicable to, a company’s officers and directors and our directors meet the qualification requirements of Brazilian Corporate Law, the Central Bank and the CVM. Our corporate governance policy discloses the criteria used by our board of directors to determine if a director is independent. According to those criteria, threefour of our directors are considered independent.independent: Nildemar Secches, Israel Vainboim, Gustavo Jorge Laboissiere Loyola and Pedro Luiz Bodin de Moraes. Brazilian Corporate Law requires that our directors be elected by our shareholders at an annual shareholders’ meeting. ThreeFour of our directors, Alfredo Egydio Arruda Villela Filho, Roberto Egydio Setubal, and Alfredo Egydio Setubal and Ricardo Villela Marino, are members of the Egydio de Souza Aranha family and twoone of our directors, Pedro Moreira Salles, and Fernando Roberto Moreira Salles, are membersis a member of the Moreira Salles family. The families are owners of IUPAR, the controlling shareholder for Itaú Unibanco Holding. Currently we have three independent directors: Alcides Lopes Tápias, Gustavo Jorge Laboissiere Loyola and Pedro Luiz Bodin de Moraes.
231 |
Executive Sessions
NYSE rules require that non-management directors meet at regularly scheduled executive sessions without the presence of management. Brazilian Corporate Law does not have a similar provision. According to Brazilian Corporate Law, up to one-third of the members of the board of directors can be elected from management. Our president Roberto Setubal, our executive vice presidents Alfredo Egydio Setubal and Candido Botelho Bracher and the executive officer of Itaú Unibanco, Ricardo Villela Marino, are members of our board of directors. There is no requirement that non-management directors meet regularly without management. As a result, the non-management directors do not typically meet in executive sessions. Our board of directors consists of nineeight non-management directors.
Committees
NYSE rules require that listed companies have a nominating and corporate governance committee and a compensation committee composed entirely of independent directors and governed by written charters addressing the committees’ required purposes and detailing their required responsibilities. The responsibilities of the nominating and corporate governance committee include, among other things, identifying and selecting qualified board member nominees and developing a set of corporate governance principles applicable to the company. The responsibilities of the compensation committee, in turn, include, among other things, reviewing and approving corporate goals and objectives relevant to the chief executive officer’s compensation, evaluating the chief executive officer’s performance, approving the chief executive officer’s compensation levels and recommending non-chief executive officer compensation, incentive-compensation and equity-based plans to the board.
We are not required under applicable Brazilian Corporate Law to have a nominating committee or a corporate governance committee and compensation committee. However, we have an appointment and corporate governance committee a personnel committeeresponsible for matters relating to our governance, including corporate governance guidelines, guidelines for selection and appointment of members of the board of directors and guidelines for evaluation of the board of directors.
We are required under Resolution No. 3,921 to establish a compensation committee. Pursuantcommittee pursuant to certain requirements. Our compensation committee is responsible for all matters regarding compensation of the members of the management and employees of the Itaú Unibanco Group. Under Brazilian law our bylaws, our directors are elected by our shareholders at an annual shareholders’ meeting. Aggregate compensation for our directors and officerscommittee is established by our shareholders.not required to be comprised solely of independent directors.
Audit Committee and Audit Committee Additional Requirements
NYSE rules require that listed companies have an audit committee that (i) is composed of a minimum of three independent directors who are all financially literate; (ii) meets the SEC rules regarding audit committees for listed companies; (iii) has at least one member who has accounting or financial management expertise; and (iv) is governed by a written charter addressing the committee’s required purpose and annual performance evaluation of the audit committee and detailing its required responsibilities.
Brazilian banking law (Central Bank(CMN Resolution No. 3,198) requires us to have an audit committee of at least three members, and Brazilian Corporate Law requires us to have a fiscal council, which is composed of three to five members. Pursuant to Brazilian Corporate Law and Central BankCMN Resolution No. 3,198, the fiscal council members are elected at the annual shareholders’ meeting and the audit committee is elected by the board of directors among its members and independent members, one of which must be a financial expert, provided that, according to our bylaws, its chairman must be also a member of our board of directors.
The fiscal council operates independently from our management and from our external auditors. Its main function is to examine the financial statements for each fiscal year and provide a formal report to our shareholders. We have a fiscal council that consistsis currently composed of three members and three alternates and which meets once a month.
alternates.
According to the SEC, foreign private issuers are exempt from the audit committee requirements if the issuer meets certain requirements. We believe that our audit committeeAudit Committee is able to act independently in performing the responsibilities of an audit committee under Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), satisfies the other requirements of the exemption of Rule 10A-3(c)(3) and therefore is in compliance with Rule 10A-3 of the Exchange Act. Our audit committee, to the extent permitted under Brazilian law, performs all the functions required of an audit committee under Rule 10A-3. As required by Brazilian law, our board of directors and audit committee are separate corporate bodies. In addition, under Brazilian law, the authority to hire independent auditors is reserved exclusively for a company’s board of directors. Therefore, our board of directors acts as our audit committee, as permitted under Rule 10A-3(c)(3)(v) of the Exchange Act, for the purpose of the appointment of our independent auditors. Our audit committee is currently composed of five members, one of whom is also member of our board of directors.
232 |
Shareholder Approval of Equity Compensation Plans
NYSE rules require that stockholdersshareholders be given the opportunity to vote on all equity compensation plans and material revisions thereto, including material increases in the number of shares available under the plans, with limited exceptions. Under Brazilian Corporate Law, shareholders must approve all stock option plans. In addition, any issuance of new shares that exceeds our authorized share capital is subject to shareholder approval.
Corporate Governance Guidelines
NYSE rules require that listed companies adopt and disclose corporate governance guidelines. We comply with the corporate governance guidelines imposed by applicable Brazilian law. We believe the corporate governance guidelines applicable to us under Brazilian law are consistent with the guidelines established by the NYSE. We have adopted standards beyond what is required by applicable Brazilian law: we voluntarily adhere to BM&FBOVESPA’s&FBovespa’s Level 1 of Corporate Governance and have tag-along rights for all shareholders, regardless of their voting rights.
In addition, we have adopted (i) the Policy of Material Information Disclosure, which deals with the public disclosure of all relevant information as per CVM Rule No. 358, of January 3, 2002, as amended, guidelines; and (ii) the Policy on Trading of Securities, which restricts the trading in securities during certain periods and requires management to publicly announce all transactions relating to our securities, and which was an optional device included in the CVM Rule No. 358. Going beyond the requirements of applicable Brazilian law, in July 2002 we created the disclosure and trading committees, which were unified in the disclosure and trading committee in April 2006.
Code of Business Conduct and Ethics
NYSE rules require that listed companies adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. Applicable Brazilian law does not have a similar requirement. However, we adopted a code of ethics in 2000 which regulatesregulated the conduct of our managers in connection with the registration and control of financial and accounting information and their access to privileged and non-public information. In 2004, we included a supplement to our code of ethics in order to comply with the requirements of Sarbanes-Oxley and the NYSE rules. In October 2005, we announced our newly and updated code of ethics, and this code was reviewed in February 2010 in connection with the Association. In February 2013, we adopted a revised code of ethics in order to update and consolidate our guiding principles. The new document is available at http://ww13.itau.com.br/Portalri/HTML/ing/download/Codigo_Etica_2013.pdf.
Internal Audit
NYSE rules require that listed companies maintain an internal audit function to provide management and the audit committee with ongoing assessments of the company’s risk management processes and system of internal control.
Our internal auditing directorate has the independence from management to conduct methodologically structured examinations, analyses, surveys and fact-finding to evaluate the integrity, adequacy, effectiveness and efficiency of the information systems processes and internal controls related to our risk management. The directorate reports directlyis subordinated to the presidency of our board of directors and interacts withits activities are supervised by the audit committee and, incommittee. In carrying out its duties, the internal auditing directorate has access to all documents, records, systems, locations and people involved with the activities under review.
Sarbanes-Oxley Act of 2002
We maintain controls and procedures designed to ensure that we are able to collect the information we are required to disclose in the reports we file with the SEC, and to process, summarize and disclose this information within the time periods specified in the rules of the SEC.
Although the maintenance of such controls and procedures is required by the Sarbanes-Oxley Act, financial information prepared in accordance with Brazilian GAAP is not subject to such Act.
233 |
16H. Mine Safety Disclosure
Not applicable.
234 |
PART III
ITEM 17 FINANCIAL STATEMENTS
We have responded to Item 18 in lieu of responding to this item.
ITEM 18 FINANCIAL STATEMENTS
The following financial statements, together with the report of the independent registered public accounting firm, are filed as part of this annual report:
Consolidated Financial Statements
Management’s Report on Internal Control Over Financial Reporting. | F-1 |
Report of Independent Registered Public Accounting Firm. | F-2 |
Consolidated Balance Sheet as of December 31, 2012, 2011 and | F-3 |
Consolidated Statement of Income for the years ended December 31, 2012, 2011 and 2010. | F-5 |
Consolidated Statement of Comprehensive Income for the years ended December 31, 2012, 2011 and 2010. | F-6 |
Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, 2012, 2011 and 2010. | F-7 |
Consolidated Statement of Cash Flows for the years ended December 31, | F-8 |
Notes to the Consolidated Financial Statements. | F-9 |
Management´s Report on Internal Control over Financial Reporting
The management of Itaú Unibanco Holding S.A is responsible for establishing and maintaining adequate internal control over financial reporting for the company.
The company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB). The company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposals of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to allow for the preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2011,2012, based on the criteria set forth by the COSO – Committee of Sponsoring Organization of the Treadway Commission in Internal Control – Integrated Framework.
Management's assessment included documenting, evaluating and testing of the design and operating effectiveness of its internal control over financial reporting. Based on that assessment, management has concluded that as of December 31, 20112012 the company’s internal control over financial reporting is effective.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2011,2012, has been audited by PricewaterhouseCoopers Auditores Independentes, an independent registered public accounting firm, as stated in their report which appears herein.
/s/Roberto Egydio Setubal | /s/ | |||
Roberto Egydio Setubal | Caio Ibrahim David | |||
Chief Executive | Chief Financial Officer |
A signed original copy of this report has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.
Date: March 30, 2012April 29, 2013
F.1 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
Itaú Unibanco Holding S.A.
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of comprehensive income, of cash flows and of changes in stockholdersstockholders’ equity present fairly, in all material respects, the financial position of Itaú Unibanco Holding S.A. and its subsidiaries at December 31, 2011,2012 and December 31, 2010 and January 1, 20102011 and the results of their operations and their cash flows for each of the twothree years in the period ended December 31, 2011,2012, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011,2012, based on criteria established inInternal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management's Report on Internal Control over Financial Reporting”. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our audits (which was anwere integrated auditaudits in 2012 and 2011).We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and International Standards on Auditing. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/
PricewaterhouseCoopers
Auditores Independentes
São Paulo, Brazil
March 30, 2012April 26, 2013
ASSETS | NOTE | 12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||||
Cash and deposits on demand | 3 | 10,668 | 10,172 | 10,671 | ||||||||||||
Central Bank compulsory deposits | 4 | 98,053 | 85,776 | 13,869 | ||||||||||||
Interbank deposits | 5 | 27,821 | 14,835 | 17,799 | ||||||||||||
Securities purchased under agreements to resell | 5 | 92,248 | 88,682 | 135,820 | ||||||||||||
Financial assets held for trading | 6 | 121,889 | 115,497 | 55,552 | ||||||||||||
Pledged as collateral | 12,142 | 54,400 | 6,336 | |||||||||||||
Other | 109,747 | 61,097 | 49,216 | |||||||||||||
Financial assets designated at fair value through profit or loss | 6b | 186 | 306 | 373 | ||||||||||||
Derivatives | 7 and 8 | 8,754 | 7,777 | 5,589 | ||||||||||||
Available-for-sale financial assets | 9 | 47,510 | 44,539 | 41,302 | ||||||||||||
Pledged as collateral | 8,455 | 8,825 | 3,019 | |||||||||||||
Other | 39,055 | 35,714 | 38,283 | |||||||||||||
Held-to-maturity financial assets | 10 | 3,105 | 3,170 | 2,429 | ||||||||||||
Pledged as collateral | 230 | 268 | 124 | |||||||||||||
Other | 2,875 | 2,902 | 2,305 | |||||||||||||
Loan operations and lease operations, net | 11 | 322,391 | 274,843 | 224,168 | ||||||||||||
Loan operations and lease operations | 346,264 | 294,837 | 244,413 | |||||||||||||
(-) Allowance for loan losses | (23,873 | ) | (19,994 | ) | (20,245 | ) | ||||||||||
Other financial assets | 19a | 40,254 | 40,945 | 26,931 | ||||||||||||
Investments in unconsolidated companies | 12 | 2,544 | 2,948 | 3,180 | ||||||||||||
Fixed assets, net | 14 | 5,358 | 4,801 | 4,178 | ||||||||||||
Intangible assets, net | 15 | 3,825 | 2,934 | 3,409 | ||||||||||||
Tax assets | 26,088 | 24,142 | 26,937 | |||||||||||||
Income tax and social contribution - current | 2,857 | 3,534 | 4,769 | |||||||||||||
Income tax and social contribution - deferred | 26b | 22,745 | 20,169 | 21,771 | ||||||||||||
Other | 486 | 439 | 397 | |||||||||||||
Assets held for sale | 35 | 85 | 78 | 238 | ||||||||||||
Other assets | 19a | 7,357 | 5,637 | 5,762 | ||||||||||||
TOTAL ASSETS | 818,136 | 727,082 | 578,207 |
ITAÚ UNIBANCO HOLDING S.A.
Consolidated Balance Sheet
(In millions of Reais)
LIABILITIES AND STOCKHOLDERS' EQUITY | NOTE | 12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||||
Deposits | 16 | 242,636 | 202,688 | 190,716 | ||||||||||||
Securities sold under repurchase agreements | 18a | 185,413 | 199,657 | 131,945 | ||||||||||||
Financial liabilities held for trading | 17 | 2,815 | 1,335 | 663 | ||||||||||||
Derivatives | 7 and 8 | 6,747 | 5,671 | 5,332 | ||||||||||||
Interbank market debt | 18a | 90,498 | 62,599 | 44,675 | ||||||||||||
Institutional market debt | 18b | 54,807 | 44,513 | 30,530 | ||||||||||||
Other financial liabilities | 19b | 44,119 | 41,012 | 26,825 | ||||||||||||
Reserves for insurance and private pension | 29c lll | 70,904 | 56,864 | 47,946 | ||||||||||||
Liabilities for capitalization plans | 2,838 | 2,603 | 2,261 | |||||||||||||
Provisions | 31 | 15,990 | 14,457 | 13,628 | ||||||||||||
Tax liabilities | 7,408 | 12,110 | 9,669 | |||||||||||||
Income tax and social contribution - current | 1,872 | 1,282 | 1,265 | |||||||||||||
Income tax and social contribution - deferred | 26b II | 4,319 | 5,365 | 4,954 | ||||||||||||
Other | 1,217 | 5,463 | 3,450 | |||||||||||||
Other liabilities | 19b | 18,625 | 16,021 | 15,327 | ||||||||||||
Total liabilities | 742,800 | 659,530 | 519,517 | |||||||||||||
Capital | 20a | 45,000 | 45,000 | 45,000 | ||||||||||||
Treasury shares | 20a | (1,663 | ) | (628 | ) | (1,031 | ) | |||||||||
Additional paid-in capital | 738 | 490 | 356 | |||||||||||||
Appropriated reserves | 20d | 24,279 | 16,904 | 6,801 | ||||||||||||
Unappropriated reserves | 5,561 | 3,615 | 5,219 | |||||||||||||
Cumulative comprehensive income | 26 | 494 | 781 | |||||||||||||
Total stockholders’ equity attributed to the owners of the parent company | 73,941 | 65,875 | 57,126 | |||||||||||||
Non-controlling interests | 1,395 | 1,677 | 1,564 | |||||||||||||
Total stockholders’ equity | 75,336 | 67,552 | 58,690 | |||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 818,136 | 727,082 | 578,207 |
ASSETS | NOTE | 12/31/2012 | 12/31/2011 | |||||||
Cash and deposits on demand | 4 | 13,967 | 10,668 | |||||||
Central Bank compulsory deposits | 5 | 63,701 | 98,053 | |||||||
Interbank deposits | 6 | 23,826 | 27,821 | |||||||
Securities purchased under agreements to resell | 6 | 162,737 | 92,248 | |||||||
Financial assets held for trading | 7a | 145,516 | 121,889 | |||||||
Pledged as collateral | 2,348 | 12,142 | ||||||||
Other | 143,168 | 109,747 | ||||||||
Financial assets designated at fair value through profit or loss | 7b | 220 | 186 | |||||||
Derivatives | 8 and 9 | 11,597 | 8,754 | |||||||
Available-for-sale financial assets | 10 | 90,869 | 47,510 | |||||||
Pledged as collateral | 25,929 | 8,455 | ||||||||
Other | 64,940 | 39,055 | ||||||||
Held-to-maturity financial assets | 11 | 3,202 | 3,105 | |||||||
Pledged as collateral | 120 | 230 | ||||||||
Other | 3,082 | 2,875 | ||||||||
Loan operations and lease operations portfolio, net | 12 | 341,271 | 322,391 | |||||||
Loan operations and lease operations portfolio | 366,984 | 346,264 | ||||||||
(-) Allowance for loan and lease losses | (25,713 | ) | (23,873 | ) | ||||||
Other financial assets | 20a | 44,492 | 40,254 | |||||||
Investments in unconsolidated companies | 13 | 3,005 | 2,544 | |||||||
Fixed assets, net | 15 | 5,628 | 5,358 | |||||||
Intangible assets, net | 16 | 4,671 | 3,825 | |||||||
Tax assets | 32,412 | 26,088 | ||||||||
Income tax and social contribution - current | 3,198 | 2,857 | ||||||||
Income tax and social contribution - deferred | 27b | 28,381 | 22,745 | |||||||
Other | 833 | 486 | ||||||||
Assets held for sale | 36 | 117 | 85 | |||||||
Other assets | 20a | 9,923 | 7,357 | |||||||
TOTAL ASSETS | 957,154 | 818,136 |
The accompanying notes are an integral part of these consolidated financial statements.
F.3 |
ITAÚ UNIBANCO HOLDING S.A.
Consolidated Balance Sheet
(In millions of Reais)
LIABILITIES AND STOCKHOLDERS' EQUITY | NOTE | 12/31/2012 | 12/31/2011 | |||||||
Deposits | 17 | 243,200 | 242,636 | |||||||
Securities sold under repurchase agreements | 19a | 267,405 | 185,413 | |||||||
Financial liabilities held for trading | 18 | 642 | 2,815 | |||||||
Derivatives | 8 and 9 | 11,069 | 6,747 | |||||||
Interbank market debt | 19a | 97,073 | 90,498 | |||||||
Institutional market debt | 19b | 72,028 | 54,807 | |||||||
Other financial liabilities | 20b | 50,255 | 44,119 | |||||||
Reserves for insurance and private pension | 30c lll | 90,318 | 70,904 | |||||||
Liabilities for capitalization plans | 2,892 | 2,838 | ||||||||
Provisions | 32 | 19,209 | 15,990 | |||||||
Tax liabilities | 7,109 | 7,408 | ||||||||
Income tax and social contribution - current | 2,560 | 1,872 | ||||||||
Income tax and social contribution - deferred | 27b II | 3,038 | 4,319 | |||||||
Other | 1,511 | 1,217 | ||||||||
Other liabilities | 20b | 19,956 | 18,625 | |||||||
Total liabilities | 881,156 | 742,800 | ||||||||
Capital | 21a | 45,000 | 45,000 | |||||||
Treasury shares | 21a | (1,523 | ) | (1,663 | ) | |||||
Additional paid-in capital | 888 | 738 | ||||||||
Appropriated reserves | 21d | 22,423 | 24,279 | |||||||
Unappropriated reserves | 7,379 | 5,561 | ||||||||
Cumulative other comprehensive income | 1,735 | 26 | ||||||||
Total stockholders’ equity attributed to the owners of the parent company | 75,902 | 73,941 | ||||||||
Non-controlling interests | 96 | 1,395 | ||||||||
Total stockholders’ equity | 75,998 | 75,336 | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 957,154 | 818,136 |
The accompanying notes are an integral part of these consolidated financial statements.
F.4 |
ITAÚ UNIBANCO HOLDING S.A.
Consolidated Statement of Income
YearsPeriods ended December 31, 2011 and 2010
(In millions of Reais, except for earnings per share information)
NOTE | 2011 | 2010 | NOTE | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||||||
Banking product | 74,276 | 69,415 | 81,172 | 74,276 | 69,415 | |||||||||||||||||||||
Interest and similar income | 22a | 97,352 | 77,818 | 23a | 96,364 | 97,352 | 77,818 | |||||||||||||||||||
Interest and similar expense | 22b | (55,599 | ) | (36,840 | ) | 23b | (48,067 | ) | (55,599 | ) | (36,840 | ) | ||||||||||||||
Dividend income | 361 | 326 | 323 | 361 | 326 | |||||||||||||||||||||
Net gain (loss) from financial assets and liabilities | 22c | 1,251 | 2,862 | |||||||||||||||||||||||
Net gain (loss) from investment securities and derivatives | 23c | 1,463 | 1,251 | 2,862 | ||||||||||||||||||||||
Foreign exchange results and exchange variation on transactions | 4,998 | 1,824 | 3,755 | 4,998 | 1,824 | |||||||||||||||||||||
Banking service fees | 23 | 19,410 | 17,092 | 24 | 18,944 | 19,410 | 17,092 | |||||||||||||||||||
Income from insurance, private pension and capitalization operations before claim and selling expenses | 5,345 | 4,923 | 6,108 | 5,345 | 4,923 | |||||||||||||||||||||
Income from insurance and private pension | 29b III | 17,169 | 13,637 | 30b III | 24,748 | 18,179 | 14,239 | |||||||||||||||||||
Premium reinsurance | 30b III | (1,166 | ) | (1,010 | ) | (602 | ) | |||||||||||||||||||
Change in reserves for insurance and private pension | (12,311 | ) | (9,143 | ) | (17,970 | ) | (12,311 | ) | (9,143 | ) | ||||||||||||||||
Revenue from capitalization plans | 487 | 429 | 496 | 487 | 429 | |||||||||||||||||||||
Other income | 24 | 1,158 | 1,410 | 25 | 2,282 | 1,158 | 1,410 | |||||||||||||||||||
Losses on loans and claims | (16,072 | ) | (12,938 | ) | (21,354 | ) | (16,072 | ) | (12,938 | ) | ||||||||||||||||
Expenses for allowance for loan losses | 11b | (20,038 | ) | (15,547 | ) | |||||||||||||||||||||
Recovery of loans written off as loss | 5,477 | 4,195 | ||||||||||||||||||||||||
Expenses for allowance for loan and lease losses | 12b | (23,982 | ) | (20,038 | ) | (15,547 | ) | |||||||||||||||||||
Recovery of loans written-off as loss | 4,663 | 5,477 | 4,195 | |||||||||||||||||||||||
Expenses for claims | (1,511 | ) | (1,586 | ) | (3,320 | ) | (2,446 | ) | (2,301 | ) | ||||||||||||||||
Recovery of claims under reinsurance | 1,285 | 935 | 715 | |||||||||||||||||||||||
Operating margin | 58,204 | 56,477 | 59,818 | 58,204 | 56,477 | |||||||||||||||||||||
Other operating income (expenses) | (39,953 | ) | (38,447 | ) | (42,402 | ) | (39,953 | ) | (38,447 | ) | ||||||||||||||||
General and administrative expenses | 25 | (35,674 | ) | (34,632 | ) | 26 | (38,080 | ) | (35,674 | ) | (34,632 | ) | ||||||||||||||
Tax expenses | (4,166 | ) | (4,164 | ) | (4,497 | ) | (4,166 | ) | (4,164 | ) | ||||||||||||||||
Share of comprehensive income of unconsolidated companies | 12 | (113 | ) | 349 | ||||||||||||||||||||||
Share of profit or (loss) of unconsolidated companies | 13 | 175 | (113 | ) | 349 | |||||||||||||||||||||
Income before income tax and social contribution | 26 | 18,251 | 18,030 | 27 | 17,416 | 18,251 | 18,030 | |||||||||||||||||||
Current income tax and social contribution | (6,956 | ) | (4,042 | ) | (7,716 | ) | (6,956 | ) | (4,042 | ) | ||||||||||||||||
Deferred income tax and social contribution | 3,315 | (1,494 | ) | 3,491 | 3,315 | (1,494 | ) | |||||||||||||||||||
NET INCOME | 14,610 | 12,494 | 13,191 | 14,610 | 12,494 | |||||||||||||||||||||
Net income attributable to owners of the parent company | 27 | 13,837 | 11,708 | 28 | 12,634 | 13,837 | 11,708 | |||||||||||||||||||
Net income attributable to non-controlling interests | 773 | 786 | 557 | 773 | 786 | |||||||||||||||||||||
EARNINGS PER SHARE - BASIC (in R$) | ||||||||||||||||||||||||||
EARNINGS PER SHARE - BASIC | ||||||||||||||||||||||||||
Common | 3.06 | 2.58 | 2.80 | 3.06 | 2.58 | |||||||||||||||||||||
Preferred | 3.06 | 2.58 | 2.80 | 3.06 | 2.58 | |||||||||||||||||||||
EARNINGS PER SHARE - DILUTED (in R$) | 27 | |||||||||||||||||||||||||
EARNINGS PER SHARE - DILUTED | 28 | |||||||||||||||||||||||||
Common | 3.05 | 2.57 | 2.79 | 3.05 | 2.57 | |||||||||||||||||||||
Preferred | 3.05 | 2.57 | 2.79 | 3.05 | 2.57 | |||||||||||||||||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC | 27 | 28 | ||||||||||||||||||||||||
Common | 2,289,284,275 | 2,289,284,273 | 2,289,284,300 | 2,289,284,275 | 2,289,284,273 | |||||||||||||||||||||
Preferred | 2,240,026,557 | 2,246,784,818 | 2,228,675,507 | 2,240,026,557 | 2,246,784,818 | |||||||||||||||||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED | 27 | 28 | - | |||||||||||||||||||||||
Common | 2,289,284,275 | 2,289,284,273 | 2,289,284,300 | 2,289,284,275 | 2,289,284,273 | |||||||||||||||||||||
Preferred | 2,251,061,836 | 2,260,240,831 | 2,239,708,939 | 2,251,061,836 | 2,260,240,831 |
The accompanying notes are an integral part of these consolidated financial statements.
F.5 |
ITAÚ UNIBANCO HOLDING S.A.
Consolidated Statement of Comprehensive Income
YearsPeriods ended December 31, 2011 and 2010
(In millions of Reais)
NOTE | 2011 | 2010 | NOTE | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||||||
Net income | 14,610 | 12,494 | 13,191 | 14,610 | 12,494 | |||||||||||||||||||||
Available-for-sale financial assets | (226 | ) | 170 | 1,231 | (226 | ) | 170 | |||||||||||||||||||
Change in fair value | 39 | 434 | 2,760 | 39 | 434 | |||||||||||||||||||||
(Gains)/losses transferred to income on disposal | 9 | (444 | ) | (151 | ) | 10 | (705 | ) | (444 | ) | (151 | ) | ||||||||||||||
Income tax effect | 17 | 179 | (113 | ) | 18 | (824 | ) | 179 | (113 | ) | ||||||||||||||||
Cash flow hedge and hedge of net investment in foreign operation | 8 | (445 | ) | (17 | ) | 9 | (465 | ) | (445 | ) | (17 | ) | ||||||||||||||
Change in fair value | (735 | ) | (28 | ) | (778 | ) | (735 | ) | (28 | ) | ||||||||||||||||
Income tax effect | 290 | 11 | 313 | 290 | 11 | |||||||||||||||||||||
Foreign exchange differences on foreign investments | 392 | (274 | ) | 530 | 392 | (274 | ) | |||||||||||||||||||
Share of other comprehensive income of unconsolidated companies - Available-for-sale financial assets | (189 | ) | (166 | ) | ||||||||||||||||||||||
Share of other comprehensive income of unconsolidated companies – Available-for-sale financial assets - (Disposal of the Banco BPI S.A.) | 26 | 413 | (189 | ) | (166 | ) | ||||||||||||||||||||
Change in fair value | - | - | (286 | ) | (251 | ) | ||||||||||||||||||||
(Gains)/losses transferred to income on disposal | 626 | - | - | |||||||||||||||||||||||
Income tax effect | (213 | ) | 97 | 85 | ||||||||||||||||||||||
Total comprehensive income | 14,142 | 12,207 | 14,900 | 14,142 | 12,207 | |||||||||||||||||||||
Comprehensive income attributable to non-controlling interests | 773 | 786 | 557 | 773 | 786 | |||||||||||||||||||||
Comprehensive income attributable to controlling interests | 13,369 | 11,421 | ||||||||||||||||||||||||
Comprehensive income attributable to the owners of the parent company | 14,343 | 13,369 | 11,421 |
The accompanying notes are an integral part of these consolidated financial statements.
F.6 |
ITAÚ UNIBANCO HOLDING S.A.
Consolidated Statement of Changes in Stockholders’ Equity (Notes 2021 and 21)22)
YearsPeriods ended December 31, 20112012 and 20102011
(In millions of Reais)
Attributed to owners of the parent company | Attributed to owners of the parent company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | Other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital | Treasury shares | Additional paid- in capital | Appropriated reserves | Unappropriated reserves | Retained earnings | Available for sale | Cumulative translation adjustments | Gains and losses – Cash flow hedge | Total stockholders’ equity – owners of the parent company | Total stockholders’ equity – non- controlling interests | Total | Capital | Treasury shares | Additional paid-in capital | Appropriated reserves | Unappropriated reserves | Retained earnings | Available for sale (1) | Cumulative translation adjustments abroad | Gains and losses – hedge (2) | Total stockholders’ equity – owners of the parent company | Total stockholders’ equity – non- controlling interests | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at 01/01/2010 | 45,000 | (1,031 | ) | 356 | 6,801 | 5,219 | - | 771 | - | 10 | 57,126 | 1,564 | 58,690 | 45,000 | (1,031 | ) | 356 | 6,801 | 5,219 | - | 771 | - | 10 | 57,126 | 1,564 | 58,690 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions with owners | - | 403 | 134 | 1,304 | (29 | ) | (4,484 | ) | - | - | - | (2,672 | ) | (673 | ) | (3,345 | ) | - | 403 | 134 | 1,304 | (29 | ) | (4,484 | ) | - | - | - | (2,672 | ) | (673 | ) | (3,345 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury shares - Granting of stock options – exercised options | - | 403 | 3 | - | - | - | - | - | - | 406 | - | 406 | - | 403 | 3 | - | - | - | - | - | - | 406 | - | 406 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option plan – expenses recognized for the year | - | - | 131 | - | - | - | - | - | - | 131 | - | 131 | - | - | 131 | - | - | - | - | - | - | 131 | - | 131 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition/Increase of interest of controlling stockholders | - | - | - | - | - | - | - | - | - | - | (206 | ) | (206 | ) | - | - | - | - | - | - | - | - | - | - | (206 | ) | (206 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends and interest on capital (Note 20b) | - | - | - | 1,308 | - | (4,484 | ) | - | - | - | (3,176 | ) | (714 | ) | (3,890 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends and interest on capital (Note 21b) | - | - | - | 1,308 | - | (4,484 | ) | - | - | - | (3,176 | ) | (714 | ) | (3,890 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Decrease of interest of controlling stockholders | - | - | - | - | - | - | - | - | - | - | 247 | 247 | - | - | - | - | - | - | - | - | - | - | 247 | 247 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | - | - | - | (4 | ) | (29 | ) | - | - | - | - | (33 | ) | - | (33 | ) | - | - | - | (4 | ) | (29 | ) | - | - | - | - | (33 | ) | - | (33 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | - | - | - | - | - | 11,708 | 4 | (274 | ) | (17 | ) | 11,421 | 786 | 12,207 | - | - | - | - | - | 11,708 | 4 | (274 | ) | (17 | ) | 11,421 | 786 | 12,207 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 11,708 | - | - | - | 11,708 | 786 | 12,494 | - | - | - | - | - | 11,708 | - | - | - | 11,708 | 786 | 12,494 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income for the year | - | - | - | - | - | - | 4 | (274 | ) | (17 | ) | (287 | ) | - | (287 | ) | - | - | - | - | - | - | 4 | (274 | ) | (17 | ) | (287 | ) | - | (287 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Appropriations: | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legal reserve | - | - | - | 514 | - | (514 | ) | - | - | - | - | - | - | - | - | - | 514 | - | (514 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized revenue reserve | - | - | - | (358 | ) | - | 358 | - | - | - | - | - | - | - | - | - | (358 | ) | - | 358 | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statutory reserve | - | - | - | 8,643 | (1,575 | ) | (7,068 | ) | - | - | - | - | - | - | - | - | - | 8,643 | (1,575 | ) | (7,068 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at 12/31/2010 | 45,000 | (628 | ) | 490 | 16,904 | 3,615 | - | 775 | (274 | ) | (7 | ) | 65,875 | 1,677 | 67,552 | 45,000 | (628 | ) | 490 | 16,904 | 3,615 | - | 775 | (274 | ) | (7 | ) | 65,875 | 1,677 | 67,552 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in the year | - | 403 | 134 | 10,103 | (1,604 | ) | - | 4 | (274 | ) | (17 | ) | 8,749 | 113 | 8,862 | - | 403 | 134 | 10,103 | (1,604 | ) | - | 4 | (274 | ) | (17 | ) | 8,749 | 113 | 8,862 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at 01/01/2011 | 45,000 | (628 | ) | 490 | 16,904 | 3,615 | - | 775 | (274 | ) | (7 | ) | 65,875 | 1,677 | 67,552 | 45,000 | (628 | ) | 490 | 16,904 | 3,615 | - | 775 | (274 | ) | (7 | ) | 65,875 | 1,677 | 67,552 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions with owners | - | (1,035 | ) | 248 | 539 | (1 | ) | (5,054 | ) | - | - | - | (5,303 | ) | (1,055 | ) | (6,358 | ) | - | (1,035 | ) | 248 | 1,847 | - | (5,054 | ) | - | - | - | (3,994 | ) | (1,055 | ) | (5,049 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury shares - Granting of stock options – exercised options | - | (1,035 | ) | 248 | - | - | - | - | - | - | (787 | ) | - | (787 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Granting of stock options – exercised options | - | 268 | 85 | - | - | - | - | - | - | 353 | - | 353 | - | 268 | 85 | - | - | - | - | - | - | 353 | - | 353 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of treasury shares | - | (1,303 | ) | - | - | - | - | - | - | - | (1,303 | ) | - | (1,303 | ) | - | (1,303 | ) | - | - | - | - | - | - | - | (1,303 | ) | - | (1,303 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Granting of options recognized | - | - | 163 | - | - | - | - | - | - | 163 | - | 163 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Granted options recognized | - | - | 163 | - | - | - | - | - | - | 163 | - | 163 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition/Increase of interest of controlling stockholders | - | - | - | - | - | - | - | - | - | - | (391 | ) | (391 | ) | - | - | - | - | - | - | - | - | - | - | (391 | ) | (391 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends and interest on capital (Note 20b) | - | - | - | 1,847 | - | (5,054 | ) | - | - | - | (3,207 | ) | (664 | ) | (3,871 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends/Interest on capital paid in 2011 - Year 2010 (Note 2.5b Vlll) | - | - | - | (1,308 | ) | - | - | - | - | - | (1,308 | ) | - | (1,308 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends and interest on capital (Note 21b) | - | - | - | 1,847 | - | (5,054 | ) | - | - | - | (3,207 | ) | (664 | ) | (3,871 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends/Interest on capital paid in 2011 - Year 2010 - Statutory Reserve | - | - | - | (1,308 | ) | - | - | - | - | - | (1,308 | ) | - | (1,308 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | - | - | - | - | (1 | ) | - | - | - | - | (1 | ) | - | (1 | ) | - | - | - | - | (1 | ) | - | - | - | - | (1 | ) | - | (1 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | - | - | - | - | - | 13,837 | (415 | ) | 392 | (445 | ) | 13,369 | 773 | 14,142 | - | - | - | - | - | 13,837 | (415 | ) | 392 | (445 | ) | 13,369 | 773 | 14,142 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 13,837 | - | - | - | 13,837 | 773 | 14,610 | - | - | - | - | - | 13,837 | - | - | - | 13,837 | 773 | 14,610 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income for the year | - | - | - | - | - | - | (415 | ) | 392 | (445 | ) | (468 | ) | - | (468 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income for the period | - | - | - | - | - | - | (415 | ) | 392 | (445 | ) | (468 | ) | - | (468 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Appropriations: | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legal reserve | - | - | - | 594 | - | (594 | ) | - | - | - | - | - | - | - | - | - | 594 | - | (594 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statutory reserve | - | - | - | 6,242 | 1,947 | (8,189 | ) | - | - | - | - | - | - | - | - | - | 6,242 | 1,947 | (8,189 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at 12/31/2011 | 45,000 | (1,663 | ) | 738 | 24,279 | 5,561 | - | 360 | 118 | (452 | ) | 73,941 | 1,395 | 75,336 | 45,000 | (1,663 | ) | 738 | 24,279 | 5,561 | - | 360 | 118 | (452 | ) | 73,941 | 1,395 | 75,336 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in the year | - | (1,035 | ) | 248 | 7,375 | 1,946 | - | (415 | ) | 392 | (445 | ) | 8,066 | (282 | ) | 7,784 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in the period | - | (1,035 | ) | 248 | 7,375 | 1,946 | - | (415 | ) | 392 | (445 | ) | 8,066 | (282 | ) | 7,784 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at 01/01/2012 | 45,000 | (1,663 | ) | 738 | 24,279 | 5,561 | - | 360 | 118 | (452 | ) | 73,941 | 1,395 | 75,336 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions with owners | - | 140 | 150 | (7,479 | ) | - | (5,177 | ) | - | - | - | (12,366 | ) | (1,458 | ) | (13,824 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury shares - Granting of stock options | - | 140 | 150 | - | - | - | - | - | - | 290 | - | 290 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Granting of stock options – exercised options | - | 262 | (53 | ) | - | - | - | - | - | - | 209 | - | 209 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of treasury shares | - | (122 | ) | - | - | - | - | - | - | - | (122 | ) | - | (122 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Granted options recognized | - | - | 203 | - | - | - | - | - | - | 203 | - | 203 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition/Increase of interest of controlling stockholders | - | - | - | - | - | - | - | - | - | - | (141 | ) | (141 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends / Interest on capital (Note 21b) | - | - | - | (119 | ) | - | (5,177 | ) | - | - | - | (5,296 | ) | (378 | ) | (5,674 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of additional interest from non-controlling stockholders – Redecard (Note 3c) | - | - | - | (7,360 | ) | - | - | - | - | - | (7,360 | ) | (939 | ) | (8,299 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | - | - | - | - | (16 | ) | - | - | - | - | (16 | ) | (398 | ) | (414 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | - | - | - | - | - | 12,634 | 1,644 | 530 | (465 | ) | 14,343 | 557 | 14,900 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 12,634 | - | - | - | 12,634 | 557 | 13,191 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income for the period | - | - | - | - | - | - | 1,644 | 530 | (465 | ) | 1,709 | - | 1,709 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Appropriations: | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legal reserve | - | - | - | 540 | - | (540 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statutory reserve | - | - | - | 5,083 | 1,834 | (6,917 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at 12/31/2012 | 45,000 | (1,523 | ) | 888 | 22,423 | 7,379 | - | 2,004 | 648 | (917 | ) | 75,902 | 96 | 75,998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in the period | - | 140 | 150 | (1,856 | ) | 1,818 | - | 1,644 | 530 | (465 | ) | 1,961 | (1,299 | ) | 662 |
(1) Includes Share of other comprehensive income of unconsolidated companies – Available-for-sale financial assets
(2) Includes Cash flow hedge and hedge of net investment in foreign operation
The accompanying notes are an integral part of these consolidated financial statements.
F.7 |
ITAÚ UNIBANCO HOLDING S.A.
Consolidated Statement of Cash Flows
Years ended December 31, 2011 and 2010
(In millions of Reais)
NOTE | 2011 | 2010 | NOTE | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||||||
ADJUSTED NET INCOME | 49,136 | 43,182 | 40,100 | |||||||||||||||||||||||
Net income | 14,610 | 12,494 | 13,191 | 14,610 | 12,494 | |||||||||||||||||||||
Adjustments to net income: | 28,572 | 27,606 | 35,945 | 28,572 | 27,606 | |||||||||||||||||||||
Granted options recognized | 21d | 163 | 131 | 22d | 203 | 163 | 131 | |||||||||||||||||||
Effects of changes in exchange rates on cash and cash equivalents | (2,168 | ) | 629 | (1,546 | ) | (2,168 | ) | 629 | ||||||||||||||||||
Expenses for allowance for loan losses | 11b | 20,038 | 15,547 | |||||||||||||||||||||||
Expenses for allowance for loan and lease losses | 12b | 23,982 | 20,038 | 15,547 | ||||||||||||||||||||||
Interest and foreign exchange expense from operations with subordinated debt | 4,441 | 2,602 | 4,374 | 4,441 | 2,602 | |||||||||||||||||||||
Interest expense from operations with debentures | 165 | 224 | 138 | 165 | 224 | |||||||||||||||||||||
Change in reserves for insurance and private pension | 12,311 | 9,143 | 17,970 | 12,311 | 9,143 | |||||||||||||||||||||
Revenue from capitalization plans | (487 | ) | (429 | ) | (496 | ) | (487 | ) | (429 | ) | ||||||||||||||||
Depreciation and amortization | 14 and 15 | 2,168 | 2,143 | 15 and 16 | 2,190 | 2,168 | 2,143 | |||||||||||||||||||
Deferred taxes | (3,315 | ) | 1,494 | (3,491 | ) | (3,315 | ) | 1,494 | ||||||||||||||||||
Share of comprehensive income of unconsolidated companies | 113 | (349 | ) | |||||||||||||||||||||||
Share of profit or (loss) of unconsolidated companies | (175 | ) | 113 | (349 | ) | |||||||||||||||||||||
(Gain) loss from available-for-sale securities | 9 | (444 | ) | (151 | ) | 10 | (705 | ) | (444 | ) | (151 | ) | ||||||||||||||
Interest and foreign exchange income from available-for-sale securities | (3,744 | ) | (2,895 | ) | ||||||||||||||||||||||
Interest and foreign exchange income from held-to-maturity securities | (408 | ) | (445 | ) | ||||||||||||||||||||||
Interest and foreign exchange income from available-for-sale financial assets | (4,725 | ) | (3,744 | ) | (2,895 | ) | ||||||||||||||||||||
Interest and foreign exchange income from held-to-maturity financial assets | (495 | ) | (408 | ) | (445 | ) | ||||||||||||||||||||
(Gain) loss from sale of assets held for sale | 24 and 25 | (36 | ) | (33 | ) | 25 and 26 | (52 | ) | (36 | ) | (33 | ) | ||||||||||||||
(Gain) loss from sale of investments | 24 and 25 | (53 | ) | (28 | ) | 25 and 26 | (1,194 | ) | (53 | ) | (28 | ) | ||||||||||||||
(Gain) loss from sale of fixed assets | 24 and 25 | (43 | ) | 7 | 25 and 26 | 20 | (43 | ) | 7 | |||||||||||||||||
(Gain) loss from termination of operations of intangible assets | (44 | ) | (56 | ) | 3 | (44 | ) | (56 | ) | |||||||||||||||||
Loss on impairment of fixed and intangible assets | 14 and 15 | 45 | 20 | |||||||||||||||||||||||
Impairment losses of fixed assets and intangible assets | 15 and 16 | 7 | 45 | 20 | ||||||||||||||||||||||
Other | (130 | ) | 52 | (63 | ) | (130 | ) | 52 | ||||||||||||||||||
CHANGE IN ASSETS AND LIABILITIES (*) | (50,622 | ) | (70,972 | ) | (501 | ) | (50,622 | ) | (70,972 | ) | ||||||||||||||||
(Increase) decrease in interbank deposits | (1,354 | ) | 3,195 | |||||||||||||||||||||||
(Increase) decrease in securities purchased under agreements to resell | (23,218 | ) | 20,504 | |||||||||||||||||||||||
(Increase) decrease in compulsory deposits with the Central Bank of Brazil | (12,187 | ) | (71,945 | ) | ||||||||||||||||||||||
(Increase) decrease in financial assets held for trading | (6,378 | ) | (60,023 | ) | ||||||||||||||||||||||
(Increase) decrease in derivatives (assets/liabilities) | 98 | (1,849 | ) | |||||||||||||||||||||||
(Increase) decrease in financial assets designated at fair value | 120 | 67 | ||||||||||||||||||||||||
(Increase) decrease in loan operations | (66,850 | ) | (66,254 | ) | ||||||||||||||||||||||
(Increase) decrease in other financial assets | 751 | (14,015 | ) | |||||||||||||||||||||||
(Increase) decrease in other tax assets | 1,377 | 1,302 | ||||||||||||||||||||||||
(Increase) decrease in other assets | (268 | ) | 1,080 | |||||||||||||||||||||||
(Decrease) increase in deposits | 38,607 | 12,165 | ||||||||||||||||||||||||
(Decrease) increase in deposits received under securities repurchase agreements | (14,252 | ) | 67,661 | |||||||||||||||||||||||
(Decrease) increase in financial liabilities held for trading | 1,480 | 672 | ||||||||||||||||||||||||
(Decrease) increase in funds from interbank markets | 27,853 | 17,891 | ||||||||||||||||||||||||
(Decrease) increase in other financial liabilities | 3,024 | 14,200 | ||||||||||||||||||||||||
(Decrease) increase in technical reserve for insurance and private pension | 1,729 | (202 | ) | |||||||||||||||||||||||
(Decrease) increase in liabilities for capitalization plans | 722 | 771 | ||||||||||||||||||||||||
(Decrease) increase in provisions | 593 | (466 | ) | |||||||||||||||||||||||
(Decrease) increase in tax liabilities | (645 | ) | 5,530 | |||||||||||||||||||||||
(Decrease) increase in other liabilities | 2,185 | 1,852 | ||||||||||||||||||||||||
(Increase) decrease in Assets | (93,875 | ) | (107,909 | ) | (187,938 | ) | ||||||||||||||||||||
Interbank deposits | 323 | (1,354 | ) | 3,195 | ||||||||||||||||||||||
Securities purchased under agreements to resell | (61,519 | ) | (23,218 | ) | 20,504 | |||||||||||||||||||||
Compulsory deposits with the Central Bank of Brazil | 34,525 | (12,187 | ) | (71,945 | ) | |||||||||||||||||||||
Financial assets held for trading | (23,627 | ) | (6,378 | ) | (60,023 | ) | ||||||||||||||||||||
Derivatives (assets/liabilities) | 1,565 | 98 | (1,849 | ) | ||||||||||||||||||||||
Financial assets designated at fair value | (34 | ) | 120 | 67 | ||||||||||||||||||||||
Loan operations | (39,837 | ) | (66,850 | ) | (66,254 | ) | ||||||||||||||||||||
Financial assets | (4,003 | ) | 751 | (14,015 | ) | |||||||||||||||||||||
Other tax assets | 994 | 1,377 | 1,302 | |||||||||||||||||||||||
Other assets | (2,262 | ) | (268 | ) | 1,080 | |||||||||||||||||||||
(Decrease) increase in Liabilities | 93,374 | 57,287 | 116,966 | |||||||||||||||||||||||
Deposits | (3,056 | ) | 38,607 | 12,165 | ||||||||||||||||||||||
Deposits received under securities repurchase agreements | 81,953 | (14,252 | ) | 67,661 | ||||||||||||||||||||||
Financial liabilities held for trading | (2,173 | ) | 1,480 | 672 | ||||||||||||||||||||||
Funds from interbank markets | 6,256 | 27,853 | 17,891 | |||||||||||||||||||||||
Other financial liabilities | 5,886 | 3,024 | 14,200 | |||||||||||||||||||||||
Technical reserve for insurance and private pension | 1,444 | 1,729 | (202 | ) | ||||||||||||||||||||||
Liabilities for capitalization plans | 550 | 722 | 771 | |||||||||||||||||||||||
Provisions | 2,771 | 593 | (466 | ) | ||||||||||||||||||||||
Tax liabilities | 6,157 | (645 | ) | 5,530 | ||||||||||||||||||||||
Other liabilities | 229 | 2,185 | 1,852 | |||||||||||||||||||||||
Payment of income tax and social contribution | (4,009 | ) | (3,108 | ) | (6,643 | ) | (4,009 | ) | (3,108 | ) | ||||||||||||||||
NET CASH FROM (USED IN) OPERATING ACTIVITIES | (7,440 | ) | (30,872 | ) | 48,635 | (7,440 | ) | (30,872 | ) | |||||||||||||||||
Interest on capital/dividends received from investments in unconsolidated companies | 70 | 104 | 204 | 70 | 104 | |||||||||||||||||||||
Cash received from sale of available-for-sale securities | 35,107 | 17,517 | ||||||||||||||||||||||||
Cash received from redemption of held-to-maturity securities | 533 | 286 | ||||||||||||||||||||||||
Cash received from sale of available-for-sale financial assets | 15,905 | 35,107 | 17,517 | |||||||||||||||||||||||
Cash received from redemption of held-to-maturity financial assets | 397 | 533 | 286 | |||||||||||||||||||||||
Cash upon sale of assets held for sale | 140 | 368 | 131 | 140 | 368 | |||||||||||||||||||||
Cash upon sale of investments in unconsolidated companies | 1,796 | - | - | |||||||||||||||||||||||
Disposal of investment in Unibanco Saúde Seguradora S.A. | - | 55 | - | - | 55 | |||||||||||||||||||||
Disposal of investment in Unibanco Rodobens Adm. de Consórcios S.A. | - | 41 | ||||||||||||||||||||||||
Disposal of investments in Cia. Hipotecária Unibanco Rodobens | - | 12 | ||||||||||||||||||||||||
Alienação do Investimento no Unibanco Rodobens Adm. De Consórcios S.A. | - | - | 41 | |||||||||||||||||||||||
Alienação do Investimento na Cia. Hipotecária Unibanco Rodobens | - | - | 12 | |||||||||||||||||||||||
Cash upon sale of fixed assets | 14 | 190 | 71 | 15 | 226 | 190 | 71 | |||||||||||||||||||
Cash received from termination of contracts of intangible assets | 15 | 184 | 146 | 16 | 22 | 184 | 146 | |||||||||||||||||||
Purchase of available-for-sale securities | (33,600 | ) | (17,629 | ) | ||||||||||||||||||||||
Purchase of held-to-maturity securities | (60 | ) | (582 | ) | ||||||||||||||||||||||
Purchase of available-for-sale financial assets | (51,796 | ) | (33,600 | ) | (17,629 | ) | ||||||||||||||||||||
Purchase of held-to-maturity financial assets | - | (60 | ) | (582 | ) | |||||||||||||||||||||
Purchase of investments in unconsolidated companies | 13 | (816 | ) | - | - | |||||||||||||||||||||
Purchase of fixed assets | 14 | (1,903 | ) | (1,924 | ) | 15 | (1,914 | ) | (1,903 | ) | (1,924 | ) | ||||||||||||||
Purchase of intangible assets | 15 | (1,972 | ) | (582 | ) | 16 | (1,738 | ) | (1,972 | ) | (582 | ) | ||||||||||||||
NET CASH FROM (USED IN) INVESTING ACTIVITIES | (1,311 | ) | (2,117 | ) | (37,583 | ) | (1,311 | ) | (2,117 | ) | ||||||||||||||||
Funding from institutional markets | 14,246 | 12,953 | 26,494 | 14,246 | 12,953 | |||||||||||||||||||||
Redemptions in institutional markets | (8,574 | ) | (1,796 | ) | (14,017 | ) | (8,574 | ) | (1,796 | ) | ||||||||||||||||
Acquisition/Increase of interest of controlling stockholders | (391 | ) | (206 | ) | ||||||||||||||||||||||
Decrease of interest of controlling stockholders | - | 247 | ||||||||||||||||||||||||
Granting of stock options - exercised options | 353 | 406 | ||||||||||||||||||||||||
Acquisition/Increase of interest of non-controlling stockholders | (141 | ) | (391 | ) | 41 | |||||||||||||||||||||
Purchase of additional interest from non-controlling stockholders – Redecard S.A. | 3c | (11,752 | ) | - | - | |||||||||||||||||||||
Granting of stock options – exercised options | 209 | 353 | 406 | |||||||||||||||||||||||
Purchase of treasury shares | (1,303 | ) | - | (122 | ) | (1,303 | ) | - | ||||||||||||||||||
Dividends and interest on capital paid to non-controlling interests | (664 | ) | (714 | ) | (378 | ) | (664 | ) | (714 | ) | ||||||||||||||||
Dividends and interest on capital paid | (4,588 | ) | (4,315 | ) | (5,206 | ) | (4,588 | ) | (4,315 | ) | ||||||||||||||||
NET CASH FROM (USED IN) FINANCING ACTIVITIES | (921 | ) | 6,575 | (4,913 | ) | (921 | ) | 6,575 | ||||||||||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 2.4c and 3 | (9,672 | ) | (26,414 | ) | 2.4c and 4 | 6,139 | (9,672 | ) | (26,414 | ) | |||||||||||||||
Cash and cash equivalents at the beginning of the year | 3 | 45,609 | 72,652 | |||||||||||||||||||||||
Cash and cash equivalents at the beginning of the period | 4 | 38,105 | 45,609 | 72,652 | ||||||||||||||||||||||
Effects of changes in exchange rates on cash and cash equivalents | 2,168 | (629 | ) | 1,546 | 2,168 | (629 | ) | |||||||||||||||||||
Cash and cash equivalents at the end of the year | 3 | 38,105 | 45,609 | |||||||||||||||||||||||
Cash and cash equivalents at the end of the period | 4 | 45,790 | 38,105 | 45,609 | ||||||||||||||||||||||
Additional information on cash flow | ||||||||||||||||||||||||||
Interest received | 94,911 | 79,799 | 89,533 | 94,911 | 79,799 | |||||||||||||||||||||
Interest paid | 36,159 | 40,484 | 39,304 | 36,159 | 40,484 | |||||||||||||||||||||
Non-cash transactions | ||||||||||||||||||||||||||
Loans transferred to assets held for sale | 4 | 68 | - | 4 | 68 | |||||||||||||||||||||
Dividends and interest on capital declared and not yet paid | 1,309 | 1,447 | 1,358 | 1,309 | 1,447 |
(*) Includes the amounts of interest received and paid as shown above.
The accompanying notes are an integral part of these consolidadedconsolidated financial statements.
F.8 |
ITAÚ UNIBANCO HOLDING S.A.
Notes to the Consolidated Financial Statements
At December 31, 2012, 2011 and 2010 and January 1, 2010
(In millions of Reais, except information per share information)share)
NOTE 01 – OVERVIEW
ITAÚ UNIBANCO HOLDING S.A. (ITAÚ UNIBANCO HOLDING) and its subsidiaries and affiliates) is a publicly-held company, organized and existing under the Laws of Brazil. The head office of ITAÚ UNIBANCO HOLDING is located at Praça Alfredo Egydio de Souza Aranha, n° 100, in the city of São Paulo, Brazil.
ITAÚ UNIBANCO HOLDING provides a wide range of creditfinancial products and other financial services to a diverse customer base of individualsindividual and companiescorporate clients in Brazil and outside Brazil,abroad, whether these clients are Brazilian-related andor non-related customers throughthroughout its international branches, subsidiaries and associates. Such services are offered inaffiliates. In Brazil towe serve retail customersclients through the branch network of Itaú Unibanco S. A.S.A. (“Itaú Unibanco”) and to wholesale customersclients through Banco Itaú BBA S.A. (“Itaú BBA”), and overseas through branches in New York, Grand Cayman, Tokyo, and Nassau, and through subsidiaries mainly in Argentina, Chile, Uruguay, Paraguay,the US (New York and Miami), and Europe (Lisbon, London, Luxembourg and Switzerland), Cayman Islands, Paraguay and Europe (Portugal and Luxembourg).Uruguay. In 2012, we started operations in Colombia, which will gradually strengthen over 2013.
ITAÚ UNIBANCO HOLDING is a holding company controlled by Itaú Unibanco Participações S.A. (“IUPAR”), a holding company which owns 51% of our common shares, and which is jointly controlled by (i) Itaúsa Investimentos Itaú S.A., (“Itaúsa”), a holding company controlled by members of the Egydio de Souza Aranha family;family, and (ii) Companhia E. Johnston de Participações (“E. Johnston”), a holding company controlled by the Moreira Salles family. Itaúsa also directly holds 38.7% of ITAÚ UNIBANCO HOLDING common shares.
As described in Note 33,34, the operations of ITAÚ UNIBANCO HOLDING are divided into four operating and reportable segments: (1) Commercial Bank, which offers a wide range of banking services for retail individuals (retail banking, under several areas specialized in distribution and under several brands, such as Itaú, Uniclass, and Personnalité, or Privatehigh net worth clients (Private Bank) and for companies (very small, small and medium-sized companies), including services such as asset management, investor services, insurance, private pension plans, capitalization plans, and credit cards issued to account holders; (2) Itaú BBA, which offers wholesale products and services to large companies, as well as investment bank activities; (3) Consumer Credit, which offers financial products and services to non-accountan universe beyond account holders, such as vehicle financing, credit card transactions and consumer financing;financing, and (4) Corporate and Treasury,Activities with the Market + Corporation, which generatesmanages interest income associated with capital surplus, subordinated debt surplus, and the results of certain treasury activities, carries forwardcarry forwards of the net balance of deferred tax assets and liabilities, the net interest income from the negotiation of financial assets, from the management of currency and interest rate gaps, fair value adjustments and other risks, from arbitrage opportunities in the foreign and domestic markets, and from the effect of marking-to-market of financial assets and liabilities.liabilities (held for trading, financial assets designated at fair value and available for sale financial assets).
These consolidated financial statements were approved by the board of directorsExecutive Board on March 29, 2012.4th, 2013.
F.9 |
NOTE 02 – SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the preparation of these consolidated financial statements are set out below.
2.1 BASIS OF PREPARATION
These consolidated financial statements of ITAÚ UNIBANCO HOLDING were prepared taking into consideration that the National Monetary Council (CMN) Resolution No. 3,786 established that starting December 31, 2010, annual consolidated financial statements shall be prepared in accordance with the International Financial Reporting Standards (IFRS), as issued by the International Accounting StandardsStandard Board (IASB).
For the purposes of the accompanying financial statements, ITAÚ UNIBANCO HOLDING elected January 1, 2010 as the date of transition from the accounting practices adopted in Brazil (“BRGAAP”) to IFRS. BRGAAP has been defined as the previous accounting practice (“Prior GAAP”), for purposes of IFRS 1 – “First-time Adoption of International Financial Reporting Standards”.
These consolidated financial statements arehave been presented following the accounting practices described in this note.
In the preparation of these consolidated financial statements, ITAÚ UNIBANCO HOLDING adopted the criteria for recognition, measurement, and disclosure established in the IFRS pronouncements issued by the IASB, and the interpretations of the International Financial Reporting InterpretationsInterpretation Committee (IFRIC) described in this note. For this reason, these consolidated financial statementsConsolidated Financial Statements are in full conformity with the pronouncements issued by the IASB and the interpretations issued by the IFRIC, and represent the first complete financial statements prepared in accordance with IFRS.IFRIC.
The reconciliation between stockholders’ equity under BRGAAP, defined as the “Prior GAAP”, and IFRS at the transition date is presented in Note 2.5 (B) together with a descriptionConsolidated Statement of the applicable exemptions and the mandatory exceptions, as defined by IFRS 1.
IFRS 1 is applied when an entity adopts the IFRS in the preparation of its annual financial statements for the first time, with an explicit and unreserved statement of compliance with IFRS. In general, IFRS 1 requires the entity to comply with each IFRS accounting standard effective at the date of preparation of its first IFRS consolidated financial statements.
IFRS 1 grants exemptions that provide limited relief from requirements in specific areas in which the cost of producing information could exceed the benefits to users of financial statements. In addition, IFRS 1 also prohibits the retrospective application of certain standards or criteria to some areas, particularly those in which the retrospective application could require Management to exercise judgment over conditions that did not exist at the time of the transactions.
The summary of the IFRS1 applicable exemptions and of the exceptions adopted by Management in the preparation of these consolidated financial statements is presented in Note 2.5 (A).
We also present in Note 2.5 (B) the reconciliation between stockholders’ equity and net income under BRGAAP and IFRS, on the base date December 31, 2010.
In accordance with Securities and Exchange Commission’s (SEC) requirements for the first-time filing of financial statements under IFRS of a foreign “private issuer”, we present in Note 2.5 (C) the reconciliation of the stockholders’ equity under USGAAP and IFRS on the transition date and stockholders’ equity and net income under USGAAP and IFRS at December 31, 2010. Also in Note 2.5 (C), we present the reconciliation of the balance sheet under USGAAP and IFRS at December 31, 2010, the adjustments made affecting the same lines on the balance sheet on the transition date.
The consolidated statement of cash flowsCash Flows shows the changes in cash and cash equivalents during the period from operating, investing, and financing activities. Cash and cash equivalents include highly-liquid financial investments.investments (Note 2.4c).
Cash flows from operating activities are presented under the indirect method. Consolidated net income is adjusted for non-monetary items, such as measurement gains and losses, changes in provisions and in receivables and liabilities balances. All income and expense arising from non-monetary transactions, attributable to investing and financing activities, are eliminated. Interest received or paid is classified as operating cash flows.
2.2
In order to improve the presentation and classification of insurance operations in the Consolidated Statement of Income, in accordance with IFRS 4, reclassifications adjustments were made in relation to insurance operations. Previously, income from insurance activities was presented in the Consolidated Statement of Income net of reinsurance held under the line item Income from Insurance and Private Pension and gross figures were presented in Note (30b III). In these financial statements this information will be presented by their gross amounts on separate line items in the Consolidated Statement of Income under the line items Income from insurance and private pension and Reinsurance premiums. Expenses for claims which previously were presented net under the line item Expenses for claims will also be presented gross of the recovery values of claims with reinsurance held under the line items Expenses for claims and Recovery with Reinsurance Claims.
2.2. NEW PRONOUNCEMENTS,PRONOUNCEMENTS; CHANGES TO AND INTERPRETATIONS OF EXISTING PRONOUNCEMENTS
a) | Accounting pronouncements applicable as of January 01, 2012 |
· | Changes to |
· |
b) | Accounting pronouncements recently issued and applicable in future periods |
The following pronouncements will become applicable for periods after the date of these consolidated financial statements and were not early adopted:
· | IAS 32 – “Financial Instruments: Presentation” – this change was issued to clarify the offsetting requirements for financial instruments in the balance sheet. The change is |
· | IFRS 7 – “Financial Instruments: Disclosures” |
· | IFRS 9 – “Financial Instruments” – the pronouncement is the first step in the process of replacing IAS 39 - “Financial Instruments: Recognition and Measurement”. IFRS 9 introduces new requirements for classifying and measuring financial assets, and it is expected to |
· | IAS 19 – “Employee Benefits” – |
· | IFRS 10 – “Consolidated Financial Statements” – the pronouncement changes the current principle, identifying the concept of control as a determining |
· | IFRS 11 – “Joint Arrangements” – the pronouncement provides a different approach for analyses of “Joint Arrangements” focused on the rights and obligations of the arrangements rather than on the legal form. IFRS 11 divides the “Joint Arrangements” into two types: “Joint Operations” and “Joint Ventures”, in accordance with the rights and obligations of the parties. For investments in |
· | IFRS 12 – “Disclosures of Interests in Other Entities” – the pronouncement includes new requirements for disclosure of all types of investments in other entities, such as |
· | IFRS 13 – “Fair Value Measurement” – the purpose of this pronouncement is a better alignment between IFRS and USGAAP, increasing consistency and reducing the complexity of the disclosures by using consistent definitions of fair value. It is not effective until January 1, 2013. |
· | Annual improvements cycle (2009-2011) – IASB makes, on an annual basis, minor changes within a number of pronouncements with the purpose of clarifying current rules and avoiding dual meaning. In this |
· | Investment Entities -Amendments to IFRS 10 – “Consolidated Financial Statements”, IFRS 12 – “Disclosure of Interests in Other Entities” and IAS 27 – “Separate Financial Statements” – Applicable to investment entities, which invest in funds exclusively for obtaining return on capital valuation, investment income or both. It is not effective until January 1, 2014. Any possible impacts of these amendments are being assessed. |
2.3 ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of consolidated financial statements in accordance with IFRS requires Management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenue, expenses, gains, and losses over the reporting and subsequent periods, because actual results may differ from those determined in accordance with such estimates and assumptions.
All estimates and assumptions made by Management are in accordance with IFRS and represent the current best estimates made in conformity with the applicable rule standards. Estimates and judgments are evaluated on an ongoing basis, considering past experience and other factors.
The consolidated financial statementsConsolidated Financial Statements reflect a variety of estimates and assumptions. The critical accounting estimates and assumptions that have the most significant impact on the carrying amounts of assets and liabilities are described below:
a) | Allowance for |
ITAÚ UNIBANCO HOLDING periodically reviews its portfolio of loans and receivables to evaluate the existence of impairment.
In order to determine the amount of the allowance for loan and lease losses in the Consolidated StatementStatements of Income with respect to certain receivables or a group of receivables, ITAÚ UNIBANCO HOLDING exercises its judgment to determine whether objective evidence indicates that an event of loss has occurred. These evidencesThis evidence may include observable data that indicates that an adverse change has occurred in relation to the expected cash inflows from the counterparty or the existence of a change in local or international economic conditions that correlates with impairment. Management uses estimates based on the history of loss experience in loan operations with similar characteristics and with similar objective evidence of impairment. The methodology and assumptions used for estimating future cash flows are regularly reviewed by Management, considering the adequacy of models and sufficiency of provision volumes in view of the experience of incurred loss.
At December 31, 2011,ITAÚ UNIBANCO HOLDING uses statistical models to calculate the Allowance for Loan and Lease Losses in the homogeneous loan portfolio. ITAÚ UNIBANCO HOLDING periodically carries out procedures to improve these estimates by aligning the required provisions to the levels of losses observed by the historical behavior (as described in Note 2.4g VIII). This alignment aims at ensuring that the volume of allowances reflects the current economic conditions, the composition of the loan portfolios, the quality of guarantees obtained and the profile of our clients. In 2012, the improvement of model assumptions gave rise to a growth in the level of provisions in the amount of R$ 1,492.
The allowance amounted to R$ 23,87325,713 (R$ 19,99423,873 at December 31, 2010 and R$ 20,245 at January 1, 2010).2011.)
If the present value of the estimated cash flows were to have a positive or negative variation of 1%, the allowanceAllowance for loan lossesLoan and Lease Losses would be increased or decreased by approximately R$ 3,413 (R$ 3,224 at December 31, 2011 and R$ 2,748 December 31, 2010.2011).
The details on the methodology and assumptions used by the Management are disclosed in Note 2.4 (g) (VIII).note 2.4g VIII.
b) | Deferred |
As explained in Note 2.4 (n),item 2.4n, deferred tax assets are recognized only in relation to temporary differences and loss carryforwards to the extent that it is probable that ITAÚ UNIBANCO HOLDING will generate future taxable profit for their utilization. The expected realization of ITAÚ UNIBANCO HOLDING’sHOLDING´s deferred tax asset is based on the projection of future income and other technical studies, as disclosed in Note 26.27. The carrying amount of deferred tax assets atwas R$ 35,003 (R$ 28,810 as of December 31, 2011 is R$ 28,810 (R$ 25,920 at December 31, 2010 and R$ 26,794 at January 1, 2010)2011).
F.12 |
c) | Fair |
Financial instruments recorded at fair value at December 31, 2011 are assets amounting to R$ 178,339248,202 (R$ 168,119178,339 at December 31, 2010 and R$ 102,816 at January 1, 2010),2011) of which R$ 8,75411,597 are derivatives (R$ 7,7778,754 at December 31, 2010 and R$ 5,589 at January 1, 2010)2011) and liabilities in the amount of R$ 9,56211,711 (R$ 7,0069,562 at December 31, 2010 and R$ 5,995 at January 1, 2010),2011) of which R$ 6,74711,069 are derivatives (R$ 5,6716,747 at December 31, 2010 and R$ 5,332 at January 1, 2010)2011). The fair value of financial instruments, including derivatives that are not traded in active markets, is calculated by using valuation techniques. This calculation is based on assumptions that take into consideration Management’sITAÚ UNIBANCO HOLDING Management´s judgment about market information and conditions existing at the balance sheet date.
ITAÚ UNIBANCO HOLDING ranks the fair value measurements using a fair value hierarchy that reflects the significance and observability of inputs adopted in the measurement process. There are three broad levels related to the fair value hierarchy, detailed in Note 30.31.
ITAÚ UNIBANCO HOLDING believes that all methodologies adopted are appropriate and consistent with market participants. Regardless of this fact, the adoption of other methodologies or use of different assumptions to estimate fair values may result in different fair value estimates.
The methodologies used to estimate the fair value of certain financial instruments are described in Note 30.31.
d) | Defined |
At December 31, 2011,2012, an amount of R$ 9729 (R$ 24497 at December 31, 2010 and R$ 1,372 at January 1, 2010)2011) was recognized as an asset related to pension plans. The current amount of the pension plan obligations is obtained from actuarial calculations that use a variety of assumptions. Among the assumptions used for estimating the net cost (income) of these plans is the discount rate. Any changes in these assumptions will affect the carrying amount of pension plan assets orand liabilities.
ITAÚ UNIBANCO HOLDING determines the appropriate discount rate at the end of each year, which is used for determining the present value of estimated future cash outflows necessary for settling the pension plan liabilities. In order to determine the appropriate discount rate, ITAÚ UNIBANCO HOLDING considers the interest rates of the Brazilian federal government bonds that are denominated in Brazilian reais, the currency in which the benefits will be paid, and that have maturity terms approximating the terms of the related liabilities.
Should the discount rate currently used be lower by 0.5% than Management’s estimates, the actuarial amount of the pension plan obligations would be increased by approximately R$ 578.868.
Other important assumptions for pension plan obligations are in part based on current market conditions. Additional information is disclosed in Note 28.29.
e) | Contingent |
ITAÚ UNIBANCO HOLDING periodically reviews its contingencies. These contingencies are evaluated based on Management’sManagement´s best estimates, taking into account the opinion of legal counsel, when there is a likelihood that financial resources will be required to settle the obligations and the amounts may be reasonably estimated.
Contingencies classified as probable losses are recognized in the balance sheetBalance Sheet under “Provisions”.Provisions.
Contingent amounts are measured using appropriate models and criteria, despite the uncertainty surrounding the ultimate timing and amounts, as detailed in Note 31.32.
The carrying amount of these contingencies was R$ 19,209 (R$ 15,990 at December 31, 2011 is R$ 15,990 (R$ 14,457 at December 31, 2010 and R$ 13,628 at January 1, 2010)2011).
F.13 |
f) | Technical |
Technical provisions are liabilities arising from obligations of ITAÚ UNIBANCO HOLDING to its policyholders and participants. These obligations may be short-term liabilities (property and casualty insurance) or medium and long-term liabilities (life insurance and pension plans).
The determination of the actuarial liability is subject to several uncertainties inherent in the coverage of insurance and pension contracts, such as the assumptions of persistence, mortality, disability, life expectancy, morbidity, expenses, frequency and severity of claims, conversion of benefits into annuities, redemptions and return on assets.
The estimates for these assumptions are based on the historical experience of ITAÚ UNIBANCO HOLDING, benchmarks and experience of the actuary, in order to comply with best market practices and the continuous review of the actuarial liability. The adjustments resulting from these continuous improvements, when necessary, are recognized in the statement of income for the corresponding period.
Additional information is described in Note 30.
2.4 SUMMARY OF MAIN ACCOUNTING PRACTICES
a) | CONSOLIDATION AND PROPORTIONATE CONSOLIDATION |
I- | Subsidiaries |
In accordance with IAS 27 – “Consolidated and Separate Financial Statements”, subsidiaries are entities in which ITAÚ UNIBANCO HOLDING has the power to govern the financial and operating policies so as to obtain benefits from its activities, and normally correspondingcorrespond to ownership of more than 50% of the voting capital.
II- | Special Purpose Entities (SPEs) |
In accordance with SIC 12 – “Consolidation – Special Purpose Entities”, we consolidateITAÚ UNIBANCO HOLDING consolidates special purpose entities (SPEs), when the substance of the relationship between ITAÚ UNIBANCO HOLDING and the SPEs indicates that the SPEs are controlled by ITAÚ UNIBANCO HOLDING. The following circumstances may show evidence of control, in substance:control:
· | In substance, the activities of the SPEs are being conducted on behalf of ITAÚ UNIBANCO HOLDING, according to its specific business needs so that ITAÚ UNIBANCO HOLDING obtains benefits from their |
· | In substance, ITAÚ UNIBANCO HOLDING has the decision-making powers to obtain the majority of the benefits of the activities of SPEs or ITAÚ UNIBANCO HOLDING has the ability to delegate such |
· | In substance, ITAÚ UNIBANCO HOLDING has the right to obtain the majority of the benefits of the SPEs and therefore may be exposed to risks incident to their |
· | In substance, ITAÚ UNIBANCO HOLDING retains the majority of the residual risks related to the SPEs or their assets in order to obtain benefits from their activities. |
III- | Joint Ventures |
IAS 31 – “Interests in Joint Ventures”, defines joint ventures as entities jointly controlled by two or more unrelated entities (venturers). Joint ventures include contractual agreements in which two or more entities have joint-control over entities or over operations or over assets, so that the strategic financial and operating decisions that affect them require the unanimous decision of the venturers.
F.14 |
Also in accordance with IAS 31, the accounting treatment for investments in joint ventures can be either proportionate consolidation or the equity method. ITAÚ UNIBANCO HOLDING has elected to use proportionate consolidation.
The following table shows the main consolidated subsidiaries and proportionally consolidated joint ventures, as well as the interests of ITAÚ UNIBANCO HOLDING in their voting capital at December 31, 2011,2012, and December 31, 2010 and January 1, 2010:2011:
Subsidiaries | Incorporation country | Activity | Interest in voting capital at 12/31/2011 | Interest in voting capital at 12/31/2010 | Interest in voting capital at 01/01/2010 | |||||||||||
Banco Dibens S.A. | Brazil | Bank | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Banco Fiat S.A. | Brazil | Bank | 100.00 | % | 100.00 | % | 99.99 | % | ||||||||
Banco Itaú Argentina S.A. | Argentina | Bank | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Banco Itaú BBA S.A. | Brazil | Bank | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||
Banco Itaú Chile | Chile | Bank | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||
Banco Itaú Europa Luxembourg S.A. | Luxembourg | Bank | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||
Banco Itaú BBA International, S.A. | Portugal | Bank | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||
Banco Itaú Paraguay S.A. | Paraguay | Bank | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||
Banco Itaú Uruguay S.A. | Uruguay | Bank | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Banco Itaucard S.A. | Brazil | Bank | 100.00 | % | 100.00 | % | 99.99 | % | ||||||||
Banco Itaucred Financiamentos S.A. | Brazil | Bank | 100.00 | % | 100.00 | % | 99.99 | % | ||||||||
Banco Itauleasing S.A. | Brazil | Bank | 100.00 | % | 100.00 | % | 99.99 | % | ||||||||
BIU Participações S.A. | Brazil | Holding Company of non-financial institutions | 66.15 | % | 66.15 | % | 66.15 | % | ||||||||
Cia. Itaú de Capitalização | Brazil | Capitalization | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||
Dibens Leasing S.A. - Arrendamento Mercantil | Brazil | Leasing | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Fiat Administradora de Consórcios Ltda | Brazil | Consortia administrator | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||
Hipercard Banco Múltiplo S.A. | Brazil | Bank | 100.00 | % | 100.00 | % | 99.99 | % | ||||||||
Itaú Administradora de Consórcios Ltda. | Brazil | Consortia administrator | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||
Itaú Ásia Securities Ltd | Hong Kong | Broker | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Itau Bank, Ltd. | Cayman Islands | Bank | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Itaú Companhia Securitizadora de Créditos Financeiros | Brazil | Securitization company | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||
Itaú Corretora de Valores S.A. | Brazil | Broker | 100.00 | % | 100.00 | % | 99.99 | % | ||||||||
Itaú Distribuidora de Títulos e Valores Mobiliários Ltda | Brazil | Dealer | 100.00 | % | 100.00 | % | 99.99 | % | ||||||||
Itaú Japan Asset Management Limited | Japan | Asset management | 100.00 | % | 100.00 | % | - | |||||||||
Itaú Middle East Securities Limited | Arab Emirates | Broker | 100.00 | % | 100.00 | % | 99.99 | % | ||||||||
Itaú Seguros S.A. | Brazil | Insurance | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Itaú Unibanco S.A. | Brazil | Bank | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Itaú USA Securities, INC. | United States | Broker | 100.00 | % | 100.00 | % | 99.99 | % | ||||||||
Itaú Vida e Previdência S.A. | Brazil | Pension plan | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Orbitall Serviços e Processamento de Informações Comerciais S.A | Brazil | Technology services | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||
Redecard S.A. | Brazil | Card administrator | 50.01 | % | 50.01 | % | 50.01 | % | ||||||||
Unibanco Cayman Bank Ltd. | Cayman Islands | Bank | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Unibanco Participações Societárias S.A. | Brazil | Company | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Joint ventures | ||||||||||||||||
Banco Investcred Unibanco S.A. | Brazil | Bank | 50.00 | % | 50.00 | % | 49.99 | % | ||||||||
FAI - Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento | Brazil | Consumer finance company | 50.00 | % | 50.00 | % | 49.99 | % | ||||||||
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento | Brazil | Consumer finance company | 50.00 | % | 50.00 | % | 50.00 | % | ||||||||
Luizacred S.A. Soc. Cred. Financiamento Investimento | Brazil | Consumer finance company | 50.00 | % | 50.00 | % | 49.99 | % |
Interest in voting capital at | Interest in total capital at | |||||||||||||||||||||
Incorporation Country | Activity | 12/31/2012 | 12/31/2011 | 12/31/2012 | 12/31/2011 | |||||||||||||||||
Banco Dibens S.A. | Brazil | Financial institution | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
Banco Fiat S.A. | Brazil | Financial institution | 100.00 | % | 100.00 | % | 99.99 | % | 99.99 | % | ||||||||||||
Banco Itaú Argentina S.A. | Argentina | Financial institution | 100.00 | % | 100.00 | % | 99.99 | % | 99.99 | % | ||||||||||||
Banco Itaú BBA S.A. | Brazil | Financial institution | 99.99 | % | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||||||
Banco Itaú Consignado S.A. | (1) Note 3d | Brazil | Financial institution | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | |||||||||||
Banco Itaú Chile | Chile | Financial institution | 99.99 | % | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||||||
Banco Itaú Europa Luxembourg S.A. | Luxembourg | Financial institution | 99.99 | % | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||||||
Banco Itaú BBA International, S.A. | (2) | Portugal | Financial institution | 99.99 | % | 99.99 | % | 99.99 | % | 99.99 | % | |||||||||||
Banco Itaú Paraguay S.A. | Paraguay | Financial institution | 99.99 | % | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||||||
Banco Itaú Uruguay S.A. | Uruguay | Financial institution | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
Banco Itaucard S.A. | Brazil | Financial institution | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
Banco Itaucred Financiamentos S.A. | Brazil | Financial institution | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
Banco Itauleasing S.A. | Brazil | Financial institution | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
BIU Participações S.A. | Note 13a | Brazil | Holding company | - | 66.15 | % | - | 66.15 | % | |||||||||||||
Cia. Itaú de Capitalização | Brazil | Capitalization | 99.99 | % | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||||||
Dibens Leasing S.A. - Arrendamento Mercantil | Brazil | Leasing | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
FAI - Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento | Note 3b | Brazil | Consumer finance credit | 100.00 | % | - | 100.00 | % | - | |||||||||||||
Fiat Administradora de Consórcios Ltda. | Brazil | Consortia administrator | 99.99 | % | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||||||
Hipercard Banco Múltiplo S.A. | Brazil | Financial institution | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
Itaú Administradora de Consórcios Ltda. | Brazil | Consortia administrator | 99.99 | % | 99.99 | % | 99.99 | % | 99.99 | % | ||||||||||||
Itaú Ásia Securities Ltd | Hong Kong | Broker | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
Itau Bank, Ltd. | (3) | Cayman Islands | Financial institution | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | |||||||||||
Itaú Companhia Securitizadora de Créditos Financeiros | Brazil | Securitization | 99.99 | % | 99.99 | % | 99.98 | % | 99.99 | % | ||||||||||||
Itaú Corretora de Valores S.A. | Brazil | Broker | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
Itaú Distribuidora de Títulos e Valores Mobiliários Ltda. | Brazil | Dealer | 100.00 | % | 100.00 | % | 99.99 | % | 99.99 | % | ||||||||||||
Itaú Japan Asset Management Limited | Japan | Asset management | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
Itaú Middle East Limited | Arab Emirates | Broker | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
Itaú Seguros S.A. | Brazil | Insurance | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
Itaú Unibanco S.A. | Brazil | Financial institution | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
Itaú USA, INC. | United States | Broker | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
Itaú Vida e Previdência S.A. | Brazil | Pension plan | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
Itaú Unibanco Serviços e Processamento de Informações Comerciais S.A. | (4) | Brazil | Technology services | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | |||||||||||
Redecard S.A. | Note 3c | Brazil | Acquirer | 100.00 | % | 50.01 | % | 100.00 | % | 50.01 | % | |||||||||||
Unibanco Participações Societárias S.A. | (5) | Brazil | Holding company | - | 99.99 | % | - | 99.99 | % | |||||||||||||
Joint Ventures | ||||||||||||||||||||||
Banco Investcred Unibanco S.A. | Brazil | Financial institution | 50.00 | % | 50.00 | % | 50.00 | % | 50.00 | % | ||||||||||||
FAI - Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento | Note 3b | Brazil | Consumer finance credit | - | 50.00 | % | - | 50.00 | % | |||||||||||||
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento | Brazil | Consumer finance credit | 50.00 | % | 50.00 | % | 50.00 | % | 50.00 | % | ||||||||||||
Luizacred S.A. Soc. Cred. Financiamento Investimento | Brazil | Consumer finance credit | 50.00 | % | 50.00 | % | 50.00 | % | 50.00 | % |
(1) New company name of Banco Banerj S.A.;
(2) New company name of Banco Itaú Europa, S.A.;
(3) Does not include Redeemable Preferred Shares;
(4) New company name of Orbitall Serviços e Processamento de Informações Comerciais S.A.;
(5) Merged in 10/31/2012 into Unibanco Negócios Imobiliários Ltda controlled by Dibens Leasing S.A. - Arrendamento Mercantil.
Other information
The table below shows the amounts included in the consolidated balance sheets and statements of income forof the jointly-controlled entities (Joint Ventures), proportionally consolidated by ITAÚ UNIBANCO HOLDING:
12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2012 | 12/31/2011 | 12/31/2010 | |||||||||||||||||||
Current assets | 3,869 | 4,303 | 3,474 | 3,336 | 3,869 | 4,303 | ||||||||||||||||||
Non-current assets | 393 | 323 | 65 | 230 | 393 | 323 | ||||||||||||||||||
Total assets | 4,262 | 4,626 | 3,539 | 3,566 | 4,262 | 4,626 | ||||||||||||||||||
Current liabilities | 3,537 | 3,743 | 2,909 | 3,034 | 3,537 | 3,743 | ||||||||||||||||||
Non-current liabilities | 31 | 46 | 92 | 17 | 31 | 46 | ||||||||||||||||||
Total liabilities | 3,568 | 3,789 | 3,001 | 3,051 | 3,568 | 3,789 | ||||||||||||||||||
Total income | 1,647 | 1,605 | 1,391 | 1,683 | 1,647 | 1,605 | ||||||||||||||||||
Total expenses | (1,600 | ) | (1,494 | ) | (1,353 | ) | ||||||||||||||||||
Total expense | (1,603 | ) | (1,600 | ) | (1,494 | ) |
ITAÚ UNIBANCO HOLDING is committed to maintaining the minimum capital required by jointly-controlled entities. For the companiesall those jointly controlled entities, for all entities FIC - Financeira Itaú CBD S.A Crédito, Financiamento e Investimento, and FAI - Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento (just in 12/31/2012 - Note 3c), the minimum capital percentage is 25% higher than that required by the Central Bank of Brazil (Note 32)33).
F.15 |
Business combinations |
Accounting for business combinations under IFRS 3 (R) is only applicable when a business is acquired. Under IFRS 3 (R), a business is defined as an integrated set of activities and assets that is conducted and managed for the purpose of providing a return to investors, or cost reduction or other economic benefits. In general, a business consists of inputs, and processes applied to those inputs and outputs that are, or will be, used to generate income. If there is goodwill in a set of activities or transferred assets, this is presumed to be a business. For acquisitions that meet the definition of business, combination, accounting under the purchase method is required.
The acquisition cost is measured asat the fair value of the assets delivered,transferred, equity instruments issued and liabilities incurred or assumed at the exchange date, plus costs directly attributable to the acquisition. Acquired assets and assumed liabilities and contingent liabilities identifiable in a business combination are initially measured at their fair value at the date of acquisition, date, regardless of the existence of non-controlling interests. The excess of the acquisition cost, plus non-controlling interest,interests, if any, over the fair value of identifiable net assets acquired, is accounted for as goodwill.
The treatment of goodwill is described in Note 2(k).2.4k. If the cost of acquisition, cost, plus non-controlling interest,interests, if any, is lower than the fair value of identifiable net assets acquired, the difference is directly recognized directly in income.
For each business combination, the purchaser should measure any non-controlling interest in the acquired company at the fair value or amount proportional to its interest in net assets of the acquired company.
F.16 |
b) | FOREIGN CURRENCY TRANSLATION |
Functional and presentation currency |
The consolidated financial statements of ITAÚ UNIBANCO HOLDING are presented in Brazilian reais, which is its functional currency and the presentation currency of these consolidated financial statements. For each subsidiary, joint venture and investment in an unconsolidated company, ITAÚ UNIBANCO HOLDING has defined the functional currency.
IAS 21 – “The Effectseffects of Changeschanges in Foreign Exchange Rates”foreign exchange rates” defines the functional currency as the currency of the primary economic environment in which the entity operates. If the indicators are mixed and the functional currency is not obvious, Management has to use its judgment to determine the functional currency that most faithfully represents the economic effects of the entity’s operations, focusing on the currency that mainly influences the pricing of transactions. Additional indicators are the currency in which financing is made or in which funds from operating activities are generated or received, as well as the nature of activities and the extent of transactions between the foreign subsidiaries and the other entities of the consolidated group.
The assets and liabilities of subsidiaries with a functional currency other than the Brazilian real are translated as follows:
· | assets and liabilities are translated at the closing rate at the balance sheet |
· | income and expenses are translated at monthly average exchange |
· | exchange differences arising from currency translation are recorded in other comprehensive income. |
II- | Foreign currency transactions |
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated statement of income as an integral part of “Foreignforeign exchange resultsoperations and foreign exchange variation on transactions”gains/losses and amount to R$ 1,109 for the period for the period January 1, to December 31, 2012 (R$ 2,186 for the year endedperiod January 1 to December 31, 2011 (R$and R$ (814) for to the year endedperiod January 1 to December 31, 2010).
In the case of changes in the fair value of monetary assets denominated in foreign currency classified as available for sale,available-for-sale, the exchange differences resulting from a change in the amortized cost of the instrument are separated from all other changes in the carrying amount of the instrument. The exchange differences resulting from a change in the amortized cost of the instrument are recognized in the income statement, while those resulting from other changes in the carrying amount, except impairment losses, are recognized in other comprehensive income until derecognition or impairment.
c) | CASH AND CASH EQUIVALENTS |
ITAÚ UNIBANCO HOLDING defines cash and cash equivalents as cash and current accounts in banks (included in the heading “Cashcash and deposits on demand” indemand on the consolidated balance sheet), interbank deposits and securities purchased under agreements to resell that have original maturities of up to 90 days or less, as shown in Note 3.4.
d) | CENTRAL BANK COMPULSORY DEPOSITS |
The Central Banks of the countries in which ITAÚ UNIBANCO HOLDING operates currently impose a number of compulsory deposit requirements on financial institutions. Such requirements are applied to a wide range of banking activities and operations, such as demand, savings, and time deposits. In the case of Brazil, the acquisition and deposit of Brazilian federal government securities is also required.
Compulsory deposits are initially recognized at fair value and subsequently at amortized cost, using the effective interest rate method as detailed in Note 2.4 (g) (VI).2.4g VI.
F.17 |
e) | INTERBANK DEPOSITS |
ITAÚ UNIBANCO HOLDING recognizes its interbank deposits in the balance sheet initially at fair value and subsequently at the amortized cost using the effective interest method as detailed in Note 2.4 (g) (VI).2.4g VI.
f) | SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND SOLD UNDER REPURCHASE AGREEMENTS |
ITAÚ UNIBANCO HOLDING has purchased transactionssecurities with resale agreements (“resale agreements”)agreement (resale agreements), and sold transactionssecurities with repurchase agreements ("repurchase agreements")agreement (repurchase agreement) of financial assets. Resale and repurchase agreements are accounted for under “SecuritiesSecurities purchased under agreements to resell”resell and “SecuritiesSecurities sold under repurchase agreements”,agreements, respectively.
The amounts invested in resale agreement transactions and borrowed in repurchase agreement transactions are initially recognized initially in the balance sheet at the amount advanced or raised, and subsequently measured at amortized cost. The difference between the sale and repurchase prices is treated as interest and recognized over the life of the agreements using the effective interest rate method. Interest earned onin resale agreement transactions and incurred in repurchase agreement transactions is recognized in “InterestInterest and similar income”income and “InterestInterest and similar expense”,expense, respectively.
The financial assets accepted as collateral in our resale agreements can be used by us, if provided for in the agreements, as collateral for our repurchase agreements or can be sold.
In Brazil, control over custody of financial assets is centralized and the ownership of investments under resale and repurchase agreements is temporarily transferred to the buyer. WeITAÚ UNIBANCO HOLDING strictly monitormonitors the fair value of financial assets received as collateral under our resale agreements and adjustadjusts the collateral amount when appropriate.
Financial assets pledged as collateral to counterparties are also recognized in the consolidated financial statements. When the counterparty has the right to sell or repledgere-pledge such instruments, they are presented in the balance sheet under the appropriate class of financial assets as “Pledged as collateral”.assets.
g) | FINANCIAL ASSETS AND LIABILITIES |
In accordance with IAS 39, all financial assets and liabilities, including derivative financial instruments, shall be recognized in the balance sheet and measured based on the category in which the instrument is classified.
Financial assets and liabilities can be classified into the following categories:
· | Financial assets and liabilities at fair value through profit or loss – held for trading. |
· | Financial assets and liabilities at fair value through profit or loss – designated at fair value. |
· | Available-for-sale financial assets. |
· | Held-to-maturity |
· | Loans and receivables. |
· | Financial liabilities at amortized cost. |
The classification depends on the purpose for which financial assets were acquired or financial liabilities were assumed. Management determines the classification of financial instruments at initial recognition.
ITAÚ UNIBANCO HOLDING classifiedclassifies financial instruments into classes that reflect the nature and characteristics of these financial instruments.
ITAÚ UNIBANCO HOLDING classifies as loanloans and receivables the following classes of balance sheet headings: Cash and deposits on demand, Central Bank compulsory deposits, Interbank deposits (Note 2.4 (e))2.4e), Securities purchased under agreement to resell (Note 2.4 (f))2.4f), Loan operations (Note 2.4 (g) (VI))2.4g VI) and Other financial assets (Note 2.4 (g) (IX))2.4g IX).
Regular purchases and sales of financial assets are recognized and derecognized, respectively, on the trade date.
F.18 |
Financial assets are derecognized when the rights to receive cash flows from the assetassets have expired or when ITAÚ UNIBANCO HOLDING has substantially transferred substantially all risks and rewards of ownership, and such transfer qualifies for derecognition, according to the requirements of IAS 39. Therefore, if the risks and rewards were not substantially transferred, ITAÚ UNIBANCO HOLDING evaluates the extent of control in order to determine whether the continuous involvement related to any retained control does not prevent derecognition. Financial liabilities are derecognized when discharged or extinguished.
Financial assets and liabilities are offset against each other and the net amount is reported in the balance sheet solely when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle them on a net basis, or simultaneously realize the asset and settle the liability.
I- | Financial assets and liabilities at fair value through profit or loss - held for trading |
These are financial assets and liabilities acquired or incurred principally for the purpose of selling them in the short term or when they are part of a portfolio of financial instruments that are managed together and for which there is evidence of a recent history of short-term profit taking. Derivatives are also classified as held for trading except for those designated and effective as hedging instruments. ITAÚ UNIBANCO HOLDING discloses derivatives in a separate line in the consolidated balance sheet (see item III below).
The financial assets and liabilities included in this category are initially and subsequently recognized at fair value. Transaction costs are directly recognized in the consolidated statement of income. Gains and losses arising from changes in fair value are directly included in the consolidated statement of income under “NetNet gain (loss) from financial assetsinvestment securities and liabilities”.derivatives. Interest income and expenses are recognized in “InterestInterest and similar income”income and “InterestInterest and similar expense”,expense, respectively.
II- | Financial assets and liabilities at fair value through profit or loss – designated at fair value |
These are assets and liabilities designated at fair value through profit or loss upon initial recognition (fair value option). This designation cannot be subsequently changed. In accordance with IAS 39, the fair value option can only be applied if it reduces or eliminates an accounting mismatch when the financial instruments are part of a portfolio for which risk is managed and reported to Management based on its fair value or when these instruments consist of hosts and embedded derivatives that shall otherwise be separated.
The financial assets and liabilities included in this category are initially and subsequently recognized at fair value. Transaction costs are directly recognized in the consolidated statement of income. Gains and losses arising from changes in fair value are directly included in the consolidated statement of income under “NetNet gain (loss) from financialinvestment securities and derivatives - Financial assets and liabilities”.designated at fair value through profit or loss. Interest income and expenses are recognized in “IncomeIncome and similar income”income and “InterestInterest and similar expense”,expense, respectively.
ITAÚ UNIBANCO HOLDING designated certain assets at fair value through profit or loss upon their initial recognition, because they are reported to Management and their performance is daily evaluated daily based on their fair value.
III- | Derivatives |
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. All derivatives are recognized as assets when the fair value is positive, and as liabilities when negative.
Certain derivatives embedded in other financial instruments are treated as separate derivatives, when their economic characteristics and risks are not closely related to those of the host contract and the host contract is not recognized at fair value through profit or loss. These embedded derivatives are accounted for separately at fair value, with changes in fair value recognized in the consolidated statement of income in “NetNet gain (loss) from financial assetsinvestment securities and liabilitiesderivatives – Financial assets and liabilities held for trading and derivatives”derivatives - except when ITAÚ UNIBANCO HOLDING designates these hybrid contracts as a whole as fair value through profit or loss.
F.19 |
Derivatives can be designated and qualify as hedging instruments under hedge accounting and in the event they qualify, depending upon the nature of the hedged item, the method for recognizing gains or losses from changes in fair value will be different. These derivatives, which are used to hedge exposures to risk or modify the characteristics of financial assets and liabilities, and that meet IAS 39 criteria, are recognized as hedge accounting.
In accordance with IAS 39, to qualify for hedge accounting, all of the following conditions should beare met:
· | at the inception of the hedge there is formal designation and documentation of the hedging relationship and the entity’s risk management objective and strategy for undertaking the hedge. |
· | the hedge is expected to be highly effective in offsetting changes in fair value or cash flows attributable to the hedged risk, consistent with the originally documented risk management strategy for that particular hedging relationship. |
· | for a cash flow hedge, a forecast transaction that is the subject of the hedge must be highly probable and must present an exposure to variations in cash flows that could ultimately affect profit or loss. |
· | the effectiveness of the hedge can be reliably measured, i.e. the fair value or cash flows of the hedged item that are attributable to the hedged risk and the fair value of the hedging instrument can be reliably measured. |
· | the hedge is assessed on an ongoing basis and it is determined that the hedge has in fact been highly effective throughout the periods for which the hedge was designated. |
IAS 39 definespresents three hedge accounting categories: fair value hedge, cash flow hedge, and hedge of net investmentinvestments in a foreign operations.operation.
ITAÚ UNIBANCO HOLDING uses derivatives as hedging instruments under cash flow hedge strategies, fair value hedge and hedge of net investments, as detailed in Note 8.09.
Fair value hedge
For derivatives that are designated and qualify as fair value hedges, the following practices are adopted:
a) | The gain or loss arising from the new measurement of the hedge instrument at fair value should be recognized in income; and |
b) | The gain or loss arising from the hedged item, attributable to the effective portion of the hedged risk, should adjust the book value of the hedged item and also be recognized in income. |
When the derivative expires or is sold or the hedge no longer meets the accounting hedge criteria or the entity revokes the designation, the entity should prospectively discontinue the accounting hedge. In addition, any adjustment in the book value of the hedged item should be amortized in income.
Cash flow hedge
For derivatives that are designated and qualify as a cash flow hedges,hedge, the effective portion of derivative gains or losses are recognized in “Other Comprehensive IncomeOther comprehensive income – Gains and Losseslosses – Cash Flow Hedge”,flow hedge, and reclassified to incomeIncome in the same period or periods in which the hedged transaction affects income. The portion of gain or loss on derivatives that represents the ineffective portion or the hedge components excluded from the assessment of effectiveness is recognized immediately in income. Amounts originally recorded in otherOther comprehensive income and subsequently reclassified to incomeIncome are recorded in the corresponding income or expense lines in which the related hedged item is reported.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting and also when ITAÚITAU UNIBANCO HOLDING dedesignatesredesignates a hedge, any cumulative gain or loss existing in otherOther comprehensive income at the time remains in other comprehensive incomeis frozen and is recognized in income when the hedgehedged item is ultimately reconizedrecognized in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss recognisedrecognized in otherOther comprehensive income is immediately transferred to the income statement.
statement of income.
Hedge of net investments in foreign operations
A hedge of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment, is accounted for in a manner similar to a cash flow hedge:
a) the portion of gain or loss on the hedge instrument determined as effective is recognized in other comprehensive income.
b) the ineffective portion is recognized in the statement of income.
a) | the portion of gain or loss on the hedge instrument determined as effective is recognized in other comprehensive income. |
b) | the ineffective portion is recognized in income. |
Gains or losses on the hedging instrument related to the effective portion of the hedge which is recognized in other comprehensive income isare reclassified to the income statement upon the disposal of the investment in the foreign operation.
Available-for-sale financial assets |
In accordance with IAS 39, financial assets are classified as available for saleavailable-for-sale when in the Management’s judgment they can be sold in response to or in anticipation of changes in market conditions, and that were not classified into the categories of financial assets at fair value through profit or loss, loans and receivables or held to maturity.
Available-for-sale financial assets are initially and subsequently recognized in the consolidated balance sheet at fair value, plus transaction costs. Unrealized gains and losses (except losses for impairment, foreign exchange differences, dividends and interest income) are recognized, net of applicable taxes, in otherOther comprehensive income. Interest, including the amortization of premiums and discounts, areis recognized in the consolidated statement of income under “InterestInterest and similar income”.income. The average cost is used to determine the realized gainsGains and losses on disposalDisposal of available-for-sale financial assets, which are recorded in the consolidated statement of income under “NetNet gain (loss) from financial assets and liabilities".liabilities – Available-for-sale financial assets. Dividends on available-for-sale assets are recognized in the consolidated statement of income as “Dividend Income”Dividend income when ITAÚ UNIBANCO HOLDING is entitled to receive such dividends, and inflowsinflow of economic benefits.benefits is probable.
ITAÚ UNIBANCO HOLDING assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale,available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is evidence of an impairment, resulting in the recognition of an impairment loss. If any impairment evidence exists for available-for-sale financial assets, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in income, is recognized in the consolidated statement of income as a reclassification adjustment from otherOther comprehensive income.
Impairment losses recognized in the consolidated statement of income on equity instruments are not reversed through the statement of income. However, if in a subsequent period the fair value of a debt instrument classified as an available-for-sale financial asset increases and such increase can be objectively related to an event that occurred after the loss recognition, such loss is reversed through the statement of income.
F.21 |
V- | Held-to-maturity financial assets |
In accordance with IAS 39, the financial assets classified into the held-to-maturity category are non-derivative financial assets that ManagementITAÚ UNIBANCO HOLDING has the positive intention and ability to hold to maturity.
These assets are initially recognized at fair value, plus transaction costs, and subsequently measured at amortized cost, using the effective interest rate method (as detailed in item VI below). Interest income, including the amortization of premiums and discounts, is recognized in the consolidated statement of income under “InterestInterest and similar income”.income.
When there is impairment of held-to-maturity financial assets, the loss is recorded as a reduction in the carrying amount through the use of an allowance account and recognized in the consolidated statement of income. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the loss was recognized, the previously recognized loss is reversed. The reversal amount is also recognized in the consolidated statement of income.
VI- | Loan operations |
Loan operations are initially recognized at fair value, plus transaction costs and are subsequently measured at amortized cost using the effective interest rate method.
The effective interest rate approach is a method of calculating the amortized cost of a financial asset or liability and of allocating the interest income or expense over the relevant period. The effective interest rate is the discount rate that is applied to future payments or receipts through the expected life of the financial instrument that results in an amount equal to the net carrying amount of the financial asset or liability. When calculating the effective interest rate, ITAÚ UNIBANCO HOLDING estimates cash flows considering all contractual terms of the financial instrument, but does not consider future credit losses. The calculation includes all commissions paid or received between parties to the contract, transaction costs, and all other premiums or discounts.
AITAÚ UNIBANCO HOLDING classifies a loan operation is classified as on nonaccrualnon-accrual status if the payment of the principal or interest has been in default for 60 days or more. When a loan is placed on nonaccrualnon-accrual status, the accrual of interest of the loan is discontinued.
When a financial asset or group of similar financial assets is impaired and its carrying amount is reduced through an allowance for loan losses, the subsequent interest income is recognized on the reduced carrying amount using the interest rate used to discount the future cash flows for purposes of measuring the allowance for loan losses.
TheOur Individuals portfolio consists primarily of vehicle financing to individuals, credit card, personal loans (including mainly consumer finance and overdrafts) and residential mortgage loans. The Corporate portfolio includes loans made to large corporate clients. TheOur Small/Medium BusinessesBusiness Portfolio corresponds to loans to a variety of customers from small to medium-sized companies. The Foreign Loans Latin America is substantially comprised of loans granted to individuals in Argentina, Chile, Paraguay, and Uruguay.
At a corporate level, ITAÚ UNIBANCO HOLDING hasthere are two groups (independent from the business areas): the credit risk group and the finance group, which are responsible for defining the methodologies used to measure the allowance for loan losses and for performing the corresponding calculations on a recurring basis.
The credit risk group and the finance group, at the corporate level, monitor the trends observed in the allowance for loan losses at the portfolio segment level, in addition to establishing an initial understanding of the variables that may trigger changes in the allowance for loan losses, the probability of default or the loss given default.
F.22 |
Once the trends have been identified and an initial assessment of the variables has been made at the corporate level, the business areas are responsible for further analyzing these observed trends at a detailed level and for each portfolio, byfor understanding the underlying reasons for the trends observed and for deciding whether changes are required in our credit policies.
Lease operations (as lessor) |
When assets are subject to a finance lease, the present value of lease payments is recognized as a receivable in the consolidated balance sheet under “Loan Operations”.Loan operations and Lease Operations.
Initial direct costs when incurred by ITAÚ UNIBANCO HOLDING are included in the initial measurement of the lease receivable, reducing the amount of income to be recognized over the lease period. Such initial costs usually include commissions and legal fees.
The recognition of interest income reflects a constant return rate on the net investment of ITAÚ UNIBANCO HOLDING and is recognized in the consolidated statement of income under “InterestInterest and similar income”.income.
VIII- Allowance for loan and lease losses
General
ITAÚ UNIBANCO HOLDING periodically assesses whether there is any objective evidence that a receivable or group of receivables is impaired. A receivable or group of receivables is impaired and there is a need for recognizing an impairment loss if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’)loss event) and that loss event (or events) has an impact on the estimated future cash flows that can be reliably estimated.
The allowance for loan and lease losses is recognized foras probable losses inherent in the portfolio at the balance sheet date. The determination of the level of the allowance rests upon various judgments and assumptions, including current economic conditions, loan portfolio composition, prior loan and lease loss experience and evaluation of credit risk related to individual loans. Our process for determining the allowance for loan and lease losses includes Management's judgment and the use of estimates. The adequacy of the allowance is regularly analyzed by Management.
The criteria adopted by ITAÚ UNIBANCO HOLDING for determining whether there is objective evidence of impairment include the following:
· | default in principal or interest payment; |
· | financial difficulties of the debtor and other objective evidence that results in the deterioration of the financial position of the debtor (for example, debt-to-equity ratio, percentage of net sales or other indicators obtained through processes adopted to monitor credit, particularly for retail portfolios); |
· | breach of loan clauses or terms; |
· | entering into bankruptcy; |
· | loss of competitive position of the debtor. |
The estimated period between the loss event and its identification is defined by Management for each identified portfolio of similar receivables. The periods adopted by Management are of twelve months, considering that the observed period for homogenous receivables portfolios vary, depending upon the specific portfolio, between nine and twelve months.months Management determinedchose to use twelve months period as being the period between the loss events and their identificationmost representative, with those observed for receivablesportfolios of loans individually testedevaluated for impairment is also twelve months.are at most 12 months, considering the review cycle for each credit.
F.23 |
Assessment
ITAÚ UNIBANCO HOLDING first assesses whether objective evidence of impairment exists for receivables that are individually significant, and individually or collectively for receivables that are not individually significant.
To determine the amount of the allowance for individually significant receivables with objective evidence of impairment, it ismethodologies are used methodologies that consider both the quality of the client and the nature of the transaction, including its collateral, to estimate the cash flows expected from these loans.
If no objective evidence of impairment exists for an individually assessed receivable, whether significant or not, the asset is included in a group of receivables with similar credit risk characteristics and such group is collectively assessed for impairment. Receivables that are individually assessed for impairment and for which an impairment loss is recognized are not included in the collective assessment. The amount of loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate.
For collectively assessed loans, the calculation of the present value of the estimated future cash flows for which there is a collateral reflects the historical performance of the foreclosure and recovery of fair value, considering the cash flows that may arise from foreclosure less costs for obtaining and selling that collateral.
For the purpose of a collective evaluation of impairment, receivables are grouped on the basis of similar credit risk characteristics. The characteristics are relevant to the estimation of future cash flows for such receivables by being indicative of the debtors’ ability to pay all amounts due, according to the contractual terms of the receivables being evaluated. Future cash flows in a group of receivables that are collectively evaluated for purposes of identifying the need for recognizing impairment are estimated on the basis of the contractual cash flows of the group of receivables and the historical loss experience for receivables with similar credit risk characteristics. The historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently.
For individually significant receivables with no objective evidence of impairment, ITAÚ UNIBANCO HOLDING classifies these loans are classified into certain rating categories based on several qualitative and quantitative factors applied through internally developed models. Considering the size and the different risk characteristics of each contract, the rating category determined according to internal models maycan be reviewed and modified by our Corporate Credit Committee, the members of which are executives and expertsofficers in corporate credit risk. We estimateITAÚ UNIBANCO HOLDING estimates inherent losses for each rating category considering an internally developed approach for low-default portfolios, that uses our historical experience for building internal models, that are used both to estimate the PD (probability of default) and to estimate the LGD (Loss(loss given default).default.)
To determine the amount of the allowance for individually non-significant items loans are segregated into classes considering the underlying risks and characteristics of each group. The allowance for loan and lease losses is determined for each of those classes through a process that considers historical delinquency and loan loss experience over the most recent years.
Measurement
The methodology used to measure the allowance for loan and lease losses was developed internally by the credit risk and finance areas at the corporate level. Inlevel.In those areas and considering the different characteristics of the portfolios, different areas are responsible for defining the methodology to measure the allowance for each of the portfolio segments: each:Corporate (including loan operations with objective evidence of impairment and individually significant loan operations but with no objective evidence of impairment), Individuals, Small and Medium Businesses, and Foreign Units Latin America. EachAmerica.Each of the four portfolio segmentsareas responsible for defining the methodology to measure the allowance for loan and lease losses is further divided into groups, including groups that develop the methodology and groups that validate the methodology. Amethodology.A centralized group in the credit risk area is responsible for measuring the allowance on a recurring basis following the methodologies developed and approved for each of the four segments.areas.
This
F.24 |
The methodology is based on two components to determine the amount of the allowance: theThe probability of default by the client or counterparty (PD), and the potential and expected timing for recovery on defaulted creditseconomic loss that may occur in the event of default, being the debt that cannot be recovered (LGD) which are applied to the outstanding balance of the loan. Measurement and assessment of these risk components areis part of the process for granting credit and for managing the portfolio. The estimated amounts of PD and LGD are measured based on statistical models that consider a significant number of variables which are different for each class and include, among others, income, equity, past loan experiences, level of indebtedness, economic sectors that affect collectability and other attributes of each counterparty and of the economic environment. These models are regularly updated regularly for changes in economic and business conditions.
A model updating process is started when the modeling area identifies that it is not capturing significant effects of the changes inof economic conditions, in the performance of the portfolio or when a change is made toin the methodology for calculating the allowance for loan and lease losses. When a change in the model is made, the model is validated through back-testing and statisticsstatistical methods are used to measure its performance through detailed analysis of its documentation, by describing step-by-step how the process is carried out. The models are validated by an area independent from the one developing it, by issuing a technical report on the assumptions used (integrity, consistency, and replicability of the bases) and on the mathematical methodology used. The technical report is subsequently submitted to CTAM (Model assessment technical committee), which is the highest level forof approval of model reviews.
Considering the different characteristics of the loans inat each of the four portfolio segmentsareas (Corporate (with no objective evidence of impairment), Individuals, Small and Medium Businesses, and Foreign Units Latin America), different areas within the corporate credit risk area are responsible for developing and approving the methodologies for loans in each of those four portfolio segments.areas. Management believes that the fact that different areas focus on each of the four portfolio segmentsportfolios results in increased knowledge, specialization and awareness of the teams as to the factors that are more relevant for each portfolio segmentarea in measuring the loan losses. Also considering such different characteristics and other factors, different inputs and information are used to estimate the PD and LGD as further detailed below:
· | Corporate (with no evidence of impairment) -factors considered and inputs used are mainly the history of the customer relationship with us, the results of analysis of the customer’s accounting statements and the information obtained through frequent contacts with its officers, aiming at understanding the strategy and the quality of its management. Additionally, industry and macroeconomic factors are also included in the analysis. All those factors (which are |
· | Individuals – factors considered and inputs used are mainly the history of the customer relationship with us, and information available through credit bureaus (negative information). |
· | Small/Medium Businesses – factors considered and inputs used include, in addition to the history of the customer relationship and credit bureau information about the customer’s revenues, industry expertise, and information about its shareholders and officers, among others. |
· | Foreign Units – Latin America - considering the relative smaller size of this portfolio and its more recent nature, the models are simpler and use the past due status and an internal rating of the customer as main factors. |
F.25 |
Reversal, write-off, and inputs used are mainly the history of the customer relationship with us and information available through credit bureaus (negative information).
Reversal, Write-off and Renegotiationrenegotiation
If, in a subsequent period, the amount of the impairment loss decreases and the decrease is objectively related to an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit rating), the previously recognized impairment is reversed. The amount of reversal is recognized in the consolidated statement of incomeIncome under “ExpenseExpense for allowance for loan losses”.and lease losses.
When a loan is uncollectible, it is written offwritten-off in the balance sheet under Allowanceallowance for loan and lease losses. Loans are written offWrite-off as losses occur after 360 days of credits have matured or after such loans being past due or 540 days of being past due in the case offor loans with original maturities over 36 months.
RenegotiatedIn almost all cases for loan products, renegotiated loans are not consideredrequire at least one payment to be in default. In subsequent periods, the asset is considered and disclosed as a non-performing loan, whenmade under the renegotiated terms are not met.in order for it to be removed from nonperforming and nonaccrual status. Renegotiated loans return to nonperforming and nonaccrual status when they reach 60 days past due under the renegotiated terms, which typically corresponds to the borrower missing two or more payments.
IX- | Other financial assets |
ITAÚ UNIBANCO HOLDING presents these assets, which composition is detailed in Note 19 (a),20a, in the consolidated balance sheet initially at fair value and subsequently at amortized cost using the effective interest method.
Interest income is recognized in the consolidated statement of income under “InterestInterest and similar income”.income.
X- | Financial liabilities at amortized cost |
The financial liabilities that are not classified as at fair value through profit or loss are classified into this category and initially recognized at fair value and subsequently measured at amortized cost using the effective interest rate method. Interest expense isexpenses are presented in the consolidated statement of income under “InterestInterest and similar expense”.expense.
The following financial liabilities are presented in the Consolidatedconsolidated balance sheet and recognized at amortized cost:
· | Deposits. (See Note |
· | Securities sold under repurchase agreements |
· | Funds from interbank markets. |
· | Funds from institutional markets. |
· | Liabilities for capitalization plans. |
· | Other financial |
h) | INVESTMENTS IN UNCONSOLIDATED COMPANIES |
Unconsolidated companies (the term we useITAÚ UNIBANCO HOLDING uses for associates under IAS 38)28) are those companies in which the investor has significant influence, but does not have control. Significant influence is usually presumed to exist when an interest in voting capital from 20% to 50% is held. Investments in these companies are initially recognized at cost of acquisition and subsequently accounted for on the equity method. Investments in unconsolidated companies include the goodwill identified upon acquisition, net of any cumulative impairment loss.
ITAÚ UNIBANCO HOLDINGHOLDING’s share in profits or losses of its unconsolidated companies after acquisition is recognized in the consolidated statement of income. Its share of the changes in the reserves of corresponding stockholders’ equity of its unconsolidated companies is recognized in its own reserves inof stockholders’ equity. The cumulative changes after acquisition are adjusted against the carrying amount of the investment. When the ITAÚ UNIBANCO HOLDING share of losses of an unconsolidated company is equal or above its interest in the unconsolidated company, including any other receivables, ITAÚ UNIBANCO HOLDING does not recognize additional losses, unless it has incurred any obligations or made payments on behalf of the unconsolidated company.
F.26 |
Unrealized profits on transactions between ITAÚ UNIBANCO HOLDING and its unconsolidated companies are eliminated to the extent of the interest of ITAÚ UNIBANCO HOLDING. Unrealized losses are also eliminated, unless the transaction provides evidence of impairment of the transferred asset. The accounting policies ofon unconsolidated companies are consistent with the policies adopted by ITAÚ UNIBANCO HOLDING.
If the interest in the unconsolidated company decreases, but ITAÚ UNIBANCO HOLDING retains significant influence, only the proportional amount of the previously recognized amounts in otherOther comprehensive income is reclassified to income,in Income, when appropriate.
Gains and losses from dilution arising from investments in unconsolidated companies are recognized in the consolidated statement of income.
LEASE COMMITMENTS (as lessee) |
As a lessee, ITAÚ UNIBANCO HOLDING has finance and operating lease agreements.
ITAÚ UNIBANCO HOLDING leases certain fixed assets. Leases of fixed assets, in which ITAÚ UNIBANCO HOLDING substantially holds all risks and rewards incidental to the ownership are classified as finance leases. They are capitalized on the commencement date of the leases at the lower of the fair value of the asset and the present value of the lease future minimum payments.
Each lease installment is allocated part to the liability and part to financial charges, so that a constant rate is obtained for the outstanding debt balance. The corresponding obligations, net of future financial charges, are included in “OtherOther financial liabilities”.liabilities. The interest expense is recognized in the consolidated statement of income over the lease term, to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Fixed assets acquired through finance lease are depreciated over their useful lives.
Expenses of operating leases are recognized in the consolidated statement of income, on a straight-line basis, over the period of the lease.
When an operating lease is terminated before the end of the lease term, any payment to be made to the lessor as a penalty is recognized as an expense in the period the termination occurs.
j) | FIXED ASSETS |
In accordance with IAS 16 – “Property, PlantProperty, plant and Equipment”,equipment, fixed assets are recognized at the cost of acquisition less accumulated depreciation, calculated using the straight-line method and rates based on the estimated useful lives of these assets. Such rates are presented in Note 14.15.
The residual values and useful lives of assets are reviewed and adjusted, if appropriate, at the end of each year.
ITAÚ UNIBANCO HOLDING reviews its assets in order to identify whether any indications of impairment exist. If such indications are identified, fixed assets are tested for impairment. In accordance with IAS 36 – “ImpairmentImpairment of assets”,assets, impairment losses are recognized for the difference between the carrying and recoverable amount of an asset (or group of assets), in the consolidated statement of income. The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and its value in use. For purposes of assessing impairment, assets are grouped at the lowest level for which independent cash flows can be identified (cash-generating units). The assessment may be made at an individual asset level when the fair value less the cost to sell may be determined reliably. Inreliably determined.
ITAÚ UNIBANCO HOLDING in the period ended December 31, 2011,2012, did not recognize any impairment losses related to fixed assets wereassets. (At December 31, 2011, we recognized due to the results achieved being lower than the expected economic benefits by R$ 15. No impairment losses on fixed assets were recognized atof R$ 15 and in the period ended December 31, 2010, or January 1, 2010.did not recognize any impairment losses).
Gains and losses on disposals of fixed assets are recognized in the consolidated statement of income under “Other income”Other income or “GeneralGeneral and administrative expenses”.expenses.
F.27 |
k) | GOODWILL |
In accordance with IFRS 3 (R) - "Business Combinations"– “Business Combinations”, goodwill may arise on an acquisition and represents the excess of the consideration transferred plus non-controlling interest over the net fair value of the net identifiable assets liabilities and contingent liabilities of the acquiree. Goodwill is not amortized, but its recoverable amount is tested for impairment annually or when there is any indication of impairment, using an approach that involves the identification of cash-generating units and estimates of fair value less cost to sell and/or value in use.
As defined in IAS 36, a cash-generating unit is the lowest identifiable group of assets that generates cash inflows that are independent of the cash inflows from other assets or groups of assets. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units that are expected to benefit from the business combination.
IAS 36 determines that an impairment loss shall be recognized for a cash-generating unit if the recoverable amount of the cash-generating unit is less than its carrying amount. The loss shall be allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit, and then to the other assets of the unit on a pro rata basis applied to the carrying amount of each asset. The loss cannot reduce the carrying amount of an asset below the higher of its fair value less costs to sell and its value in use. The impairment loss of goodwill cannot be reversed. At December 31, 2012 and December 31, 2011, and 2010 and January 1, 2010, weITAÚ UNIBANCO HOLDING did not have any goodwill balance in our consolidated financial statements.
Goodwill of unconsolidated companies is reported as part of the investmentsinvestment in the consolidated balance sheet under “InvestmentsInvestments in unconsolidated companies, and the impairment test is carried out in relation to the total balance of the investments (including goodwill).
l) | INTANGIBLE ASSETS |
Intangible assets are non-physical assets, including software and other assets, and are initially recognized at cost. Intangible assets are recognized when they arise from legal or contractual rights, their costs can be reliably measured, and in the case of intangible assets not arising from separate acquisitions or business combinations, it is probable that future economic benefits may arise from their use. The balance of intangible assets refers to acquired assets or those internally generated.
Intangible assets may have finite or indefinite useful lives. Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives. Intangible assets with indefinite useful lives are not amortized, but areperiodically tested periodically in order to identify any impairment.
ITAÚ UNIBANCO HOLDING semiannuallysemi-annually assesses its intangible assets in order to identify whether any indications of impairment exist, as well as any possible reversal of previous impairment losses. If such indications are found, intangible assets are tested for impairment. In accordance with IAS 36, impairment losses are recognized as the difference between the carrying and the recoverable amount of an asset (or group of assets), and recognized in the consolidated statement of income. The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and its value in use. For purposes of assessing an impairment, assets are grouped into the minimum level for which cash flows can be identified. The assessment can be made at an individual asset level when the fair value less its cost to sell can be determined reliably.
In the yearperiod ended December 31, 2011,2012, ITAÚ UNIBANCO HOLDING recognized impairment losses in the amount of R$ 7 (R$ 30 (R$at December 31, 2011 and R$ 20 at December 31, 2010), related to acquisition of rights to credit payroll and rightsthe association for the promotion and offer of financial products and services, caused by rescissions of agreements and results below those projected. expectations.
As provided forset forth in IAS 38, ITAÚ UNIBANCO HOLDING choseelected the costcosting model to measure its intangible assets after its initial recognition.
F.28 |
m) | ASSETS HELD FOR SALE |
Assets held for sale are recognized in the consolidated balance sheet when they are actually repossessed or there is an intention to sell. These assets are initially recorded at their fair value.
Subsequent reductions in the carrying value of the asset are recorded as a loss due to decreases in fair value less costs to sell, in the consolidated statement of income under General and administrative expenses. In the case of recovery of the fair value less cost to sell, the recognized losses can be reversed.
n) | INCOME TAX AND SOCIAL CONTRIBUTION |
There are two components of the provision for income tax and social contribution: current and deferred.
Current income tax expense approximates taxes to be paid or recovered for the applicable period. Current assets and liabilities are recorded in the balance sheet under Tax assets – Incomeincome tax and socialSocial contribution credits and Tax liabilities – current, respectively.
Deferred income tax and social contribution represented by deferred tax assets and liabilities are calculatedobtained based on the differences between the tax bases of assets and liabilities and the amounts reported in the financial statements at each year end. The tax benefit of tax loss carryforwards is recognized as an asset. Deferred tax assets are only recognized when it is probable that future taxable income will be available for offset. Deferred tax assets and liabilities are recognized in the balance sheet under Tax assets – incomeIncome tax and social contribution – deferredDeferred and Tax liabilities – incomeIncome tax and social contribution - deferred,Deferred, respectively.
Income tax and social contribution expense is recognized in the consolidated statement of income under Income tax and social contribution, except when it refers to items directly recognized in otherOther comprehensive income, such as: deferred tax on fair value measurement of available-for-sale financial assets, and tax on cash flow hedges. Deferred taxes of such items are initially recognized in other comprehensive income and subsequently recognized in Income together with the recognition of the gain/loss originally deferred.
Changes in tax legislation and rates are recognized in the consolidated statement of income under Income tax and social contribution in the period in which they are enacted. Interest and fines are recognized in the consolidated statement of income under General and administrative expenses. Income tax and social contribution are calculated at the rates shown below, considering the respective taxable bases, based on the current legislation related to each tax, which in the case of the operations in Brazil are for all the reporting periods as follows:
12/31/ | ||||
Income tax | 15 | % | ||
Additional income tax | 10 | % | ||
Social contribution (*) | 15 | % |
(*) For non-financial operations consolidated in the financial statements the social contribution rate regards 9%.
To determine the proper level of provisions for taxes to be maintained for uncertain tax positions, a two-phased approach was applied, according to which a tax benefit is recognized if it is more probable than not that a position can be sustained. The benefit amount is then measured to be the highest tax benefit which probability of realization is over 50%. Interest and fines on income tax and social contribution are treated as General and administrative expenses.
F.29 |
o) | INSURANCE CONTRACTS AND PRIVATE PENSION |
IFRS 4 – “Insurance contracts” defines insurance contracts as contracts under which the issuer accepts a significant insurance risk fromof the counterparty, by agreeing to compensate it if a specified uncertain future event adversely affects it.
ITAÚ UNIBANCO HOLDING, through its subsidiaries, issues contracts to clients that have insurance risks, financial risks or a combination of both. A contract under which ITAÚ UNIBANCO HOLDING accepts significant insurance risks from its clients and agrees to compensate them upon the occurrence of a specified uncertain future event is classified as an insurance contract. The insurance contract may also transfer a financial risk, but is accounted for as an insurance contract, should the insurance risk be significant.
As permitted by IFRS 1, upon adoption of IFRS for the first time, ITAÚ UNIBANCO HOLDING elected not to change its accounting policies for insurance contracts, which follow accounting practices adopted in Brazil (“BRGAAP”).
Investment contracts are those that transfer a significant financial risk. Financial risk is the risk of a future change in one or more variables, such as interest rate, price of financial assets, price of commodities, foreign exchange rate, index of prices or rates, credit risk rating, credit index or other variable.
Investment contracts may be reclassified as insurance contracts after their initial classification, should the insurance risk become significant.
Investment contracts with discretionary participation features are financial instruments, but they are treated as insurance contracts, as established by IFRS 4.
Once the contract is classified as an insurance contract, it remains as such until the end of its life, even if the insurance risk is significantly reduced during such period, unless all rights and obligations are extinguished or expire.expired.
Note 2930 presents a detailed description of all products classified as insurance contracts.
Private pension plans
In accordance with IFRS 4, an insurance contract is one that exposes its issuer to a significant insurance risk. An insurance risk is significant only if the insuredinsurance event could cause an issuer to pay significant additional benefits in any scenario, except for those that do not have commercial substance. Additional benefits refer to amounts that exceed those that would be payable if no insured event occurred.
Contracts that contemplate retirement benefits after an accumulation period (known as PGBL, VGBL and FGB) assure, at the commencement date of the contract, the basis for calculating the retirement benefit (mortality table and minimum interest). The contracts specify the annuity fees and, therefore, the contract transfers the insurance risk to the issuer at the commencement date, and they are classified as insurance contracts.
The payment of additional benefits is considered significant in all scenarios with commercial substance, since survival of the beneficiary may exceed the survival estimates in the actuarial table used to define the benefit agreed in the contract. The option of conversion into a fixed amount to be paid for the life of the beneficiary is not available and allavailable. All contracts give the right to the counterparty to choose a life annuity benefit.
Insurance premiums
Insurance premiums are recognized over the period of the contracts in proportion to the amount of the insurance coverage. Insurance premiums are recognized as income in the consolidated statement of income.
If there is evidence of impairment losses with respect to receivables for insurance premiums, ITAÚ UNIBANCO HOLDING recognizes a provision, sufficient to cover this loss, based on the risk analysis of realization of insurance premiums receivable with installments overdue for over 60 days.
F.30 |
Reinsurance
Reinsurance premiums are recognized in income over the same period in which the related insurance premiums are recognized in the consolidated statement of income.
In the ordinary course of business, ITAÚ UNIBANCO HOLDING reinsures a portion of the risks underwritten, particularly property and casualty risks that exceed the maximum limits of responsibility that we determine to be appropriate for each segment and product (after a study which considers size, experience, specificities, and the necessary capital to support these limits). These reinsurance agreements allow the recovery of a portion of the losses from the reinsurer, although they do not release the insurer from the main obligation as direct insurer of the risks contemplated in the reinsurance.
Reinsurance assets are valued according to consistent basis of risk assignment contracts, and in the event of losses effectively paid these are revalued after 365 days elapse in relation to the possibility of non-recovery of such losses. In the event of doubt, these assets are reduced based on the provision recognized for credit risk associated to reinsurance.
Acquisition costsCosts
Acquisition costs include direct and indirect costs related to the origination of insurance. These costs, except for the commissions paid to brokers and others, are expensed directly in income as incurred. Commissions, on the other hand, are deferred and expensed in proportion to the recognition of the premium revenue, i.e. over the period of the corresponding insurance contract.
Liabilities
Reserves for claims are established based on historical experience, claims in process of payment, estimated amounts of claims incurred but not yet reported, and other factors relevant to the required reserve levels. A liability for premium deficiencies is recognized if the estimated amount of premium deficiencies exceeds deferred acquisition costs. Expenses related to recognition of liabilities for insurance contracts are recognized in the consolidated statement of income under “ChangeChange in reserves for insurance and private pension”.pension.
Embedded derivatives
ITAÚ UNIBANCO HOLDING analyzes all contracts in order to check for any embedded derivatives.derivates. In the cases where these derivatives meet the definition of insurance contracts on their own, we do not separate them. We have not identified any embedded derivatives in our insurance contracts, which may be separated or measured at fair value in accordance with IFRS 4 requirements.
Liability adequacy test
IFRS 4 requires that the insurance companies analyze the adequacy of their insurance liabilities in each reporting period through a minimum adequacy test. The liability adequacy test for IFRS iswas conducted by adopting the current actuarial assumptions for future cash flows of all insurance contracts in force on the balance sheet date.
As a result of this test, if the assessment shows that the carrying amount of the insurance liabilities (less related deferred acquisition costs of contracts and related intangible assets) is lower than the value of the estimated future cash flows, any identified deficiency (after recording the deferred acquisition costs and intangible assets related to deficit portfolios, in compliance with the accounting policy) will have to be recognized in income for the period. In order to perform the adequacy test, insurance contracts are grouped in portfolios that are broadly subject to similar risks and for which risks are jointly managed as a single portfolio.
The assumptions used to conduct the liability adequacy test are detailed in Note 29.30.
F.31 |
p) | CAPITALIZATION PLANS |
ITAÚ UNIBANCO HOLDING sells capitalization certificates, in which clients deposit specific amounts, depending on the plan, which are redeemable at the original amount plus interest. Clients enter, during the term of the plan, into raffles of cash prizes.
While for regulatory purposes in Brazil they are regulated by the insurance regulator, these plans do not meet the definition of an insurance contract under IFRS 4, and therefore they are classified as a financial liability at amortized cost under IAS 39.
Revenue from capitalization plans is recognized during the period of the contract and measured as the difference between the amount deposited by the client and the amount that ITAÚ UNIBANCO HOLDING has to reimburse.
q) | EMPLOYEE BENEFITS |
ITAÚ UNIBANCO HOLDING is required to make contributions to government social security and labor indemnity plans, in Brazil and in other countries where it operates, which are expensed in the consolidated statement of income as an integral part of “Generalgeneral and administrative expenses”,expenses, when incurred. TheseThose contributions totaled R$ 1,488 from January 1 to December 31, 2012 (R$ 1,429 for the year endedfrom January 1 to December 31, 2011 (R$ 1,415 for the year endedand R$ 1.415 from January 1 to December 31, 2010).
Additionally, ITAÚ UNIBANCO HOLDING also sponsors defined benefit plans and defined contribution plans, accounted for pursuant to IAS 19 – “Employee benefits”.
Pension plans - definedDefined benefit plans
The liability (or asset, as the case may be) recognized in the consolidated balance sheet with respect to the defined benefit plansplan corresponds to the present value of the defined benefit obligations on the balance sheet date less the fair value of the plan assets. The defined benefit obligation is annually calculated annually by an independent actuarial company using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated amount of future cash flows of benefit payments based on the Brazilian government securities denominated in reais and with maturity periods similar to the term of the pension plan liabilities.
Actuarial gains and losses are fully recognized in income in the period in which they arise under “GeneralGeneral and administrative expenses – Retirementretirement plans and post-employment benefits”.benefits.
The following amounts are recognized in the consolidated statementincome of income:statement:
· |
· |
· |
· |
· |
In accordance with IAS 19, a curtailment is an event that significantly decreases the years of future service by current employees or that eliminates or reduces, for a significant number of employees, the qualification for benefits for all or part of future services. Settlement is a transaction in which an irrevocable action relieves the employer (or plan) of the primary responsibility for a pension or post-retirement benefit and therefore eliminates significant risks related to the obligation and to the related assets.
F.32 |
A gain or loss fromin the curtailment of athe plan is the sum of two elements: (a) theThe recognition in income of deferred past service cost associated with the years of service that no longer will have to be provided;provided, and (b) the change in the definedprojected benefit obligation. If the curtailment causes the reduction of the defined benefit obligation, the result will be a curtailment gain. If the curtailment causes the increase of the defined benefit obligation, the result will be a curtailment loss.
Upon a settlement, a gain or loss will be recognized.
Pension plans - definedDefined contribution
For defined contribution plans, contributions to plans made by ITAÚ UNIBANCO HOLDING are recognized as an expense when due.
Other post-employment benefit obligationsPost-Employment Benefit Obligations
Certain companies that merged into ITAÚ UNIBANCO HOLDING over the past few years were sponsors of post-employment healthcare benefit plans and ITAÚ UNIBANCO HOLDING is committed as per the acquisition contracts to maintain such benefits forover specific periods. Such benefits are also accounted for in accordance with IAS 19, in a manner similar to defined benefit plans.
r) | STOCK-BASED COMPENSATION |
Stock basedStock-based compensation is accounted for in accordance with IFRS 2 - “Share-based payment” which requires the entity to measure the value of equity instruments granted, based on their fair value at the option grant date. This cost is recognized during the vesting period of the right to exercise the instruments.
The total amount to be expensed is determined by reference to the fair value of the options granted excluding the impact of any service and non-market performance vesting conditions (notably remaining an employee of the entity over a specified time period).period.) The fulfillment of non-marketon-market vesting conditions is included in the assumptions about the number of options that are expected to be exercised. At the end of each period, ITAÚ UNIBANCO HOLDING revises its estimates forof the number of options that are expected to be exercised based on non-market vesting conditions. It recognizes the impact of the revision of the original estimates, if any, in the consolidated statement of income, with a corresponding adjustment to stockholders’ equity.
When the options are exercised, the ITAÚ UNIBANCO HOLDING treasury shares are generally delivered to the beneficiaries.
The fair value of stock options is estimated by using option pricing models that take into account the exercise price of the option, the current stock price, the risk-free interest rate, the expected volatility of the stock price and the life of the option.
All stock-basedstock based compensation plans established by ITAÚ UNIBANCO HOLDING correspond to plans that can be settled exclusively through the delivery of shares.
s) | FINANCIAL GUARANTEES |
In accordance with IAS 39, the issuer of a financial guarantee contract has an obligation and should recognize it initially at its fair value. Subsequently, this obligation should be measured at: (i) the amount initially recognized less accumulated amortization and;and (ii) the amount determined pursuant to IAS 37 – “Provisions, contingent liabilitiesProvisions, Contingent Liabilities and contingent assets”,Contingent Assets, whichever is higher.
ITAÚ UNIBANCO HOLDING recognizes the fair value of the guarantees issued in the consolidated balance sheet under “Other liabilities”.Other liabilities. Fair value is generally represented by the fee charged to the client for issuing the guarantee. This amount at the issuance date is amortized over the life of the guarantee issued and recognized in the consolidated statement of income under “Banking service fees”.Banking Service Fees.
After issuance, if based on the best estimate we concludeITAÚ UNIBANCO HOLDING concludes that the occurrence of a loss regarding a guarantee issued is probable, and if the loss amount is higher than the initial fair value less cumulative amortization of the guarantee, a provision is recognized for such amount.
F.33 |
t) | PROVISIONS, |
These are assessed, recognized and disclosed in accordance with IAS 37. Contingent assets and contingent liabilities are rights and obligations arising from past events for which materialization depends on future events.
Contingent assets are not recognized in the consolidated financial statements, except when the Management of ITAÚ UNIBANCO HOLDING understands that realization is virtually certain which, generally corresponds to lawsuits with favorable rulings, in final and unappealable judgments, withdrawal from lawsuits as a result of a payment in settlement or as a result of an agreement to offsettoffset against an existing liability.
Contingent liabilities mainly arise from administrative proceedings and lawsuits, inherent in the ordinary course of business, filed by third parties, former employees and governmental bodies, in connection with civil, labor, and tax and social security claims.
These contingencies are evaluated based on the Management’s best estimates, taking into account the opinion of legal counsel when there is a likelihood that financial resources are required to settle the obligations and the amounts can be estimated with reasonable certainty.
Contingent losses are classified as:
· |
· |
· |
Contingent liabilities recorded under “Provisions”Provisions and those disclosed as possible are measured using best estimates through the use of models and criteria which allow their appropriate measurement even if there is uncertainty as to their ultimate timing and amount, and the criteria are detailed in Note 31.32.
The amount of court escrow deposits is updatedadjusted in accordance with current legislation.
Contingent liabilities guaranteed by indemnity clauses provided by third parties, such as in business combinations carried out before the transition date to IFRS, are recognized when a claim is asserted, and a receivable is recognized simultaneously subject to its collectability. For business combinations carried out after the transition date, indemnification assets are recognized at the same time and measured on the same basis as the indemnified item, subject to collectability or contractual limitations on the indemnified amount.
u) | CAPITAL |
Common and preferred shares, which are substantiallyequivalent to common shares but without voting rights are classified in stockholders’Stockholders’ equity. The additional costs directly attributable to the issue of new shares are included in Stockholders’ Equityequity as a deduction from the proceeds, net of taxes.
v) | TREASURY SHARES |
Common and preferred shares repurchased are recorded in stockholders’Stockholders’ equity under “Treasury shares”Treasury shares at their average purchase price.
Shares that are subsequently sold, such as those sold to grantees under our stock option plans,plan, are recorded as a reduction in treasury shares, measured at the average price of treasury stock held at such date.
The difference between the sale price and the average price of the treasury shares is recorded as a reduction or increase in “AdditionalAdditional paid-in capital”.capital. The cancellation of treasury shares is recorded as a reduction in treasuryTreasury shares against “Appropriated reserves”,Appropriated reserves, at the average price of treasury shares at the cancellation date.
F.34 |
DIVIDENDS AND INTEREST ON CAPITAL |
Pursuant to the Company's bylaws, stockholders are entitled to a mandatory minimum dividend of 25% of net income for the year, as determined in accordance with the corporate law. Minimum dividend amounts established in the bylaws are recorded as liabilities at the end of each year. Any other amount above the mandatory minimum dividend is accounted for as a liabilityliabilities, when approved by the stockholders at a Stockholder’sStockholder´s Meeting. Since January 1, 1996, Brazilian companies have been permitted to attribute a tax-deductible nominal interest rate charge on net equity (called interest on capital).capital.)
Interest on capital is treated for accounting purposes as a dividend, and it is presented as a reduction of stockholders' equity in the consolidated financial statements. The related tax benefit is recorded in the consolidated statement of income.
Dividends have been and continue to be calculated and paid based on the financial statements prepared under BRGAAP and not based on these IFRSconsolidated financial statements. statements prepared under IFRS.
EARNINGS PER SHARE |
Earnings per share are computed by dividing net income attributable to the owners of ITAÚ UNIBANCO HOLDING by the weighted average number of common and preferred shares outstanding for each reporting year. Weighted average shares are computed based on the periods for which the shares were outstanding.
Earnings per share are presented based on the two types of shares issued by ITAÚ UNIBANCO HOLDING. Both types, common and preferred, participate in dividends on substantially the same basis, except that preferred shares are entitled to a priority non-cumulative minimum annual dividend of R$ 0.022 per share. Earnings per share are computed based on the distributed earnings (dividends and interest on capital) and undistributed earnings of ITAÚ UNIBANCO HOLDING after giving effect to the preference indicated above, without regard to whether the earnings will ultimately be fully distributed. Earnings per share amounts have been determined as if all earnings were distributed and computed following the requirements of IAS 33 – “EarningsEarnings per share”.share.
ITAÚ UNIBANCO HOLDING grants stock-based compensation whose dilutive effect is reflected in diluted earnings per share, with the application of the treasury“treasury stock method.method“. Under the treasury stock method, earnings per share are calculated as if shares under stock-based compensation plans had been issued and as if the assumed proceeds (funds to be received upon exercise of the stock options and the amount of compensation cost attributed to future services and not yet recognized) were used to purchase shares of ITAÚ UNIBANCO HOLDING.
REVENUE FROM SERVICES |
ITAÚ UNIBANCO HOLDING provides a number of services to its clients, such as investment management, credit card, services, investment banking services and certain commercial bankbanking services.
Services related to current accounts are offered to clients either in the format of packages or individually. These revenues are recognized when such services are provided.
Revenue from certain services such as fees from funds management, performance, collection for retail clients, custody, and those related to credit cards is recognized over the life of the related contracts on a straight-line basis.
The breakdown of the banking service fees is detailed in Note 23.24.
F.35 |
SEGMENT INFORMATION |
IFRS 8 – “Operating Segments” requires that operating segments are disclosed consistently with information provided to the chief operating decision maker, who is the person or group of persons that allocates resources to the segments and assesses their performance. ITAÚ UNIBANCO HOLDING considers that its Executive Board of Directors is the chief operating decision maker.
ITAÚ UNIBANCO HOLDING has four reportable segments: (i) Commercial Bank;Bank, (ii) Itaú BBA;BBA, (iii) Consumer Credit;Credit, and (iv) Corporate and Treasury.Activities with the Market + Corporation.
Segment information is presented in Note 33.
As mentioned in Note 2.1, the transition to IFRS was made in accordance with IFRS 1 and the transition date chosen was January 1, 2010. As a result, the accounting policies of ITAÚ UNIBANCO HOLDING for these consolidated financial statements were changed on January 1, 2010, for the purpose of complying with IFRS, from the accounting policies applied for BRGAAP purposes.
Changes in accounting policies arising from the transition to IFRS and the reconciliation of the effects of this transition are presented below. ITAÚ UNIBANCO HOLDING prepared its opening balance sheet on January 1, 2010 applying the accounting policies, standards and measurement bases described in Note 2.4, and applied the following exemptions and used all mandatory exceptions set forth in IFRS 1.34.
IFRS 1 permitsIAS 27 – “Consolidated and Separate Financial Statements” establishes that business combinations and acquisition of investmentschanges in associates that were recognized before the transition date or an earlier date are not restated, retrospectively, by applying IFRS 3 (R). This exemption permits companies that are first-time adopters to maintain the accounting treatment adoptedownership interest in the prior accounting practices, BRGAAP in this case. ITAÚ UNIBANCO HOLDING applied this exemption up to August 1, 2009, and, accordingly, it applied IFRS 3 (R) or IAS 28, as appropriate, to account for business combinations or the acquisition of investments in associates after such date.
In accordance with the exemption allowed by IFRS 1, the accounting policies used for initial recognition and subsequent measurement of goodwill and intangible assets generated by the acquisitions prior to August 1, 2009 under BRGAAP were maintained. Under BRGAAP, goodwill was fully amortized at the time such acquisitions took place. Intangible assets arising from acquisitions prior to the transition date were not recognized under BRGAAP.
IFRS 1 also requires that if ITAÚ UNIBANCO HOLDING had not consolidated a subsidiary, acquired under BRGAAP,which do not result in loss of control, are accounted for as capital transactions and any difference between the amount paid and the carrying amount of assets and liabilities of this acquired subsidiary would have to be adjustednon-controlling stockholders is recognized directly in accordance with IFRS. However, in the case of ITAÚ UNIBANCO HOLDING, there were no significant subsidiaries that had not been consolidated in BRGAAP before the transition to IFRS.stockholders' equity.
F.36 |
NOTE 3 - BUSINESS DEVELOPMENT
In accordance with IFRS 1, an entity may, on the transition date to IFRS, measureOn April 14, 2011, Itaú Unibanco Holding S.A. entered into a fixed asset at its fair valuesale and this amount will be considered the deemed cost of this asset, from such date. ITAÚ UNIBANCO HOLDING did not apply this exemption of IFRS 1. The cost of fixed assets was determined based on the historical cost under BRGAAP and adjusted for inflationpurchase agreement for the years whenpurchase and sale of shares with Carrefour Comércio e Indústria Ltda. (“Carrefour”) to acquire 49% of BSF Holding S.A. (“Banco Carrefour”), the entity responsible for the offer and distribution, on an exclusive basis, of financial, insurance and private pension products and services in the distribution channels of Carrefour Brazil operated under the “Carrefour” brand in Brazil. The completion of the operation was considered hyperinflationarysubject to the approval of the Central Bank of Brazil, which was obtained on April 23, 2012 and to the transfer of shares of BSF to Itaú Unibanco Holding S.A., which was carried out on May 31, 2012.
Since May 31, 2012 we have accounted for this interest in accordanceBSF under the equity method (Note 13) and as transactions with IAS 29.related parties (Note 35).
In the first half of 2013, we will complete the final allocation of the difference between the amount paid for BSF and the interest in its net assets at fair value.
On August 9, 2012, ITAÚ UNIBANCO HOLDING applied this IFRS 1 exemption, under which all actuarial gainsS.A. informed that conclusion its partnership with LOJAS AMERICANAS S.A. (“LASA”), entered into in 2005, for the offering, distribution and losses accrued to the transition date, related to defined benefit plans sponsoredsale, on an exclusive basis by FAI (entity jointly controlled by ITAÚ UNIBANCO HOLDING S.A. and LASA), of financial, insurance and pension plan products and services to customers of LASA and its subsidiaries, were recognized in retained earnings at the transition date.affiliated companies.
ITAÚ UNIBANCO HOLDING applied this exemption by which all gains and losses from translation of subsidiaries and investments in unconsolidated companies on the transition date were set to zero. The effects of application of IAS 21 to the translation of these subsidiaries and investments in unconsolidated companies with a functional currency other than Brazilian real will be applied prospectively. These effects are recorded in other comprehensive income and accumulate in a separate reserve in equity only from the transition date.
IAS 32 – “Financial Instruments: Presentation” requires that the components of compound financial instruments, as defined by IAS 32, be separated and classified as debt instruments and equity instruments. This classification is made based on circumstances, economic substance and specific terms of these instruments on the date they are issued. IFRS 1 allows a company to not bifurcate these two components, if the debt component is no longer outstanding on the transition date. This exemption did not have any impact on ITAÚ UNIBANCO HOLDING.
IFRS 1 recognizes that there may be situations in which the controlling entity of a group and its subsidiaries adopt IFRS on different dates. The IFRS 1 exemption permitted us to use the financial statements of the subsidiaries that made the transition to IFRS before January 1, 2010. On consolidation, the amounts in the IFRS financial statements of subsidiaries and unconsolidated companies of ITAÚ UNIBANCO HOLDING that had already applied IFRS before January 1, 2010, were used.
IAS 39 permits an entity to designate financial instruments as financial assets or liabilities at fair value through profit or loss, or available-for-sale financial assets, on the date of acquisition or issue of the financial instrument. In accordance with this IFRS 1 exemption, the designation may be made on the transition date, even if the instrument has originally been designated in another category. ITAÚ UNIBANCO HOLDING did not apply this exemption permitted by IFRS 1 and it did not change the designation of financial assets existing on the transition date, keeping the designation existing under BRGAAP on January 1, 2010.
IFRS 1 encourages, but does not require, that an entity applies IFRS 2 for employee benefits in the form of share-based payment that were granted before November 7, 2002 and also for benefits that were granted after November 7, 2002, but for which vesting conditions had been met before January 1, 2010. On the other hand, if Management decides to apply IFRS 2 retrospectively, it can only do so if the entity has already disclosed the fair value of the relevant share-based instruments, determined on the measurement dates. ITAÚ UNIBANCO HOLDING applied IFRS 2 for all share-based payments, since it has already disclosed the fair value of these instruments.
a.IX) Insurance contracts
IFRS 1 permits companies that issue insurance contracts to change certain insurance accounting policies on the transition date to IFRS, provided that some minimum procedures are followed. ITAÚ UNIBANCO HOLDING decided not to change its accounting policies for insurance contracts; however, it has applied the minimum requirements of IFRS 4, including the classification of contracts as insurance contracts or investment contracts (as defined by IAS 39 and IFRS 4) and the minimum liability adequacy tests for insurance contracts, as defined by IFRS 4, and further detailed in Note 2.4.(o).
IFRIC 1 - “Changes in Existing Decommissioning, Restoration and Similar Liabilities” requires specific changes in these liabilities. An entity that applies IFRS for the first time does not need to meet these requirements for changes that occurred before the transition date to IFRS. This exemption did not have any impact on ITAÚ UNIBANCO HOLDING.
a.XI) Leases
An entity that applies IFRS for the first time may opt to apply the specific transition rules of IFRIC 4 - “Determining Whether an Arrangement Contains a Lease”, and it may determine if there is a lease agreement on the transition date to IFRS based on the facts and circumstances existing on the transition date. The application of IFRIC 4 did not have any impact on ITAÚ UNIBANCO HOLDING on the transition date to IFRS since no contracts that should be accounted for as lease agreements, pursuant to IFRIC 4, have been identified.
a.XII) Fair value measurement of financial assets and liabilities on the transition date
IFRS 1 determines that an entity should apply the specific requirements of IAS 39 for fair value measurement of financial assets and liabilities on the transition date to IFRS. IAS 39 requires that valuation techniques of financial assets and liabilities at fair value incorporate all factors that a market participant would consider in setting a price when using consistent and accepted economic methodologies for pricing such financial instruments. Additionally, IAS 39 establishes rules for situations in which an entity may recognize an initial gain or loss when purchasing a financial asset or liability ("day one profit or loss"). As a consequence of this requirement, IAS 39 requires that a gain or loss generated in the initial purchase or subsequent changes in the fair value of a financial instrument be recognized immediately only if the fair value calculation methodology included only data and quotations directly observable in the market on the fair value assessment date.
IFRS 1 requires that these criteria be applied on a mandatory and prospective basis to transactions with asset or liability financial instruments entered into after October 25, 2002 or prospectively for transactions entered into after January 1, 2004.
a.XIII) Borrowing costs
IFRS 1 permits an entity to apply IAS 23 for borrowing costs related to the qualifying assets for which the capitalization initial date is the same or subsequent to the transition (January 1, 2010), or designate a date prior to the transition date and apply IAS 23 to the borrowing costs related to qualifying assets for which the capitalization initial date is the same or subsequent to that date. ITAÚ UNIBANCO HOLDING did not apply this exemption.
a.XIV) Derecognition of financial assets and financial liabilities
IFRS 1 requires that an entity that applies IFRS for the first time applies the derecognition standards (asset derecognition, as defined by IAS 39) of financial assets and liabilities prospectively for transactions after January 1, 2004. Accordingly, should ITAÚ UNIBANCO HOLDING have derecognized, pursuant to BRGAAP, a non-derivative financial asset or liability resulting from a transaction before January 1, 2004, it shall not recognize this asset or liability on the transition to IFRS. Additionally, IFRS 1 permits the application of standards of derecognition of financial assets and liabilities retrospectively, from a date elected by the entity, provided that the information needed to apply such standards had already been obtained at the time of the transaction that gave rise to the derecognition. This exemption did not have any impact on ITAÚ UNIBANCO HOLDING as no significant financial asset or liability was derecognized under BRGAAP.
a.XV) Hedge accounting
IAS 39 requires the valuation of all derivative financial instruments at fair value, as well as the elimination of deferred gains or losses, recognized as assets or liabilities under BRGAAP prior to IFRS. Additionally, an entity should not apply hedge accounting (as defined by IAS 39) in its consolidated balance sheet at the transition date if the instrument did not qualify as a hedge in accordance with IAS 39. As a result of this requirement, hedge accounting was not applied for IFRS purposes on the transition date to certain hedge relationships that meet the criteria for hedge accounting in BRGAAP, but that do not meet all requirements of IAS 39 as of such date.
a.XVI) Estimates
IFRS 1 requires that the estimates used by management for IFRS purposes at the transition date to IFRSs are consistent with estimates made as of the same date under BRGAAP, unless there is evidence of errors in the preparation of the estimates in BRGAAP as compared to IFRS. ITAÚ UNIBANCO HOLDING considered that the estimates used for BRGAAP, except for the differences in the methodology for the calculation of the allowance for loan losses, as described in Note 2.3(a), are consistent with those used on the transition date to IFRS. No information regarding the estimates made in accordance with BRGAAP was obtained on a date subsequent to the transition date that should be accounted for under IAS 10.
a.XVII) Non-controlling interests
IFRS 1 requires that the entity that adopts IFRS for the first time applies certain requirements of IAS 27 prospectively from the transition date. However, these requirements did not have an impact on ITAÚ UNIBANCO HOLDING.
12/31/2010 | 01/01/2010 | 01/01 to 12/31/2010 | ||||||||||||
Reference | Stockholders’ equity | Income | ||||||||||||
In accordance with BRGAAP (stockholders’ equity attributed to the owners of the parent company, excluding non-controlling interest) | 60,879 | 50,683 | 13,323 | |||||||||||
Adjustments that affect stockholders’ equity between BR GAAP and IFRS | 4,996 | 6,443 | (1,615 | ) | ||||||||||
Allowance for loan losses | b.I | 2,025 | 3,458 | (1,434 | ) | |||||||||
Recognition of total deferred tax assets | b.II | 1,631 | 2,367 | (660 | ) | |||||||||
Pension and health care plans | b.III | - | 1,410 | - | ||||||||||
Adjustment to market value of shares | b.IV | 1,162 | 970 | 14 | ||||||||||
Acquisition of interest in Porto Seguro Itaú Unibanco Participações S.A. | b.V | 896 | 936 | (40 | ) | |||||||||
Provision for Itaú Unibanco merger expenses | b.VI | - | 844 | (844 | ) | |||||||||
Translation of foreign subsidiaries and unconsolidated companies abroad | b.VII | - | - | 275 | ||||||||||
Provision for dividends payable not yet declared | b.VIII | 1,308 | - | - | ||||||||||
Effective interest rate | b.IX | (819 | ) | (841 | ) | 22 | ||||||||
Other adjustments | b.X | 70 | (95 | ) | 236 | |||||||||
Income tax and social contribution on all IFRS adjustments | b.XI | (1,277 | ) | (2,606 | ) | 816 | ||||||||
In accordance with IFRS – attributable to controlling stockholders | 65,875 | 57,126 | 11,708 | |||||||||||
In accordance with IFRS – attributable to non-controlling interest | 1,677 | 1,564 | 786 | |||||||||||
In accordance with IFRS – attributable to controlling stockholders and non-controlling interest | 67,552 | 58,690 | 12,494 | |||||||||||
Adjustments that affect comprehensive income | ||||||||||||||
Available-for-sale financial assets | 170 | |||||||||||||
Cash flow hedge | (17 | ) | ||||||||||||
Foreign exchange variation on investments abroad | (274 | ) | ||||||||||||
Share of other comprehensive income of investments in unconsolidated companies | (166 | ) | ||||||||||||
Total | 12,207 |
Adoption of IFRS has not changed ITAÚ UNIBANCO HOLDING’s actual cash flows since under BRGAAP we were already required to apply the Brazilian equivalent of IAS 7, and there are no significant differences in the statement of cash flows prepared under BRGAAP and that presented in these financial statements.
Summary of the main differences between BRGAAP and IFRS
Below is presented a description of the main accounting practices applicable to ITAÚ UNIBANCO HOLDING, which differ significantly between BRGAAP and IFRS and are presented in the reconciliations above:
In BRGAAP, the allowance for loan losses is measured considering an analysis of the risk of non-realization of receivables, at an amount considered sufficient to cover expected losses, following the rules established by BACEN. Pursuant to these rules, the allowance is created from the date loans are granted, based on the client’s risk rating and on a periodic quality evaluation of clients and industries, and not only when default actually occurs. Under BRGAAP, the allowance cannot be less than the minimum required by the regulatory authorities, but an additional allowance can be recorded when the minimum allowance is not considered sufficient. At December 31, 2008, considering the economic scenario and the related uncertainties, the criteria for recognition of an allowance for loan losses additional to the required regulatory minimum allowance were revised, including an allowance for risks associated with a more pessimistic scenario. During 2009, there was an improvement in the economic situation, causing a reduction in the ratio of the allowance for loan losses to the loan portfolio. In 2010, a change in the criteria under BRGAAP was adopted which resulted in a reduction in the allowance for loan losses. The criteria were adopted considering new Basel III guidelines (not yet applicable), which require counter-cyclical effects should be considered.
IAS 39 determines that the entity should assess, on each reporting date, whether there is objective evidence that the loan operation or group of loan operations is impaired. A loan or group of loans is impaired if there is objective evidence of impairment as a consequence of one or more events that occurred after the initial recognition of the loan (loss event), this event or events impact the future cash flow and it can be reliably estimated.
The amount of the loss is measured as the difference between the carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the original effective interest rate of the loan.
Initially, it is necessary to assess, on an individual basis, if there is objective evidence of impairment for exposures that are individually significant, or individually and collectively significant for exposures that are not individually significant. If there is no objective evidence for an exposures individually assessed, be it significant or not, it should be included in a group of exposures with similar characteristics and assessed collectively. The exposures that are individually assessed and for which a loss has been recorded should not be included in the collective assessment.
The differences between BRGAAP and IFRS resulted in differing amounts of the allowance for loan losses and, accordingly, an adjustment has been recognized.
Under Law No. 11,727/2008, the social contribution (CSLL) rate for private insurance, capitalization companies and financial institutions, was increased from 9% to 15%, for taxable events that occurred after May 1, 2008. As a result of a lawsuit claiming unconstitutionality of the increase of the CSLL rate that was filed on June 26, 2008, by the National Confederation of the Financial System (CONSIF), deferred tax assets were recorded under BRGAAP only up to the amount of the increase in tax liabilities and did not considering the increased rate of 15%.
IAS 12 prescribes that deferred tax assets should be measured using substantively enacted tax rates. IAS 12 also prescribes that deferred tax assets should be recognized when the generation of future taxable income is probable, allowing the realization of the assets.
ITAÚ UNIBANCO HOLDING recognized, in these consolidated financial statements, deferred tax assets using the substantively enacted tax rate of 15% for CSLL.
Up to December 31, 2009, under BRGAAP, ITAÚ UNIBANCO HOLDING did not recognize assets resulting from the difference between the fair value of plan assets and their actuarial liabilities. The measurement basis of plan obligations and plan assets was similar to IFRS. However, differences existed in the criteria for recognizing the funded status when it resulted in a net asset.
Actuarial calculations for certain plans of ITAÚ UNIBANCO HOLDING resulted in net assets, for which an asset is recognized in accordance with IAS 19. As ITAÚ UNIBANCO HOLDING has an economic benefit available through reductions in future contributions, the asset was recognized as of December 31, 2009, measured taking into consideration the asset ceiling, prescribed by IAS 19 and IFRIC 14.
As from December 31, 2010, ITAÚ UNIBANCO HOLDING, pursuant to CVM Resolution No. 600/09, recognizes as assets the difference, when positive, between the fair value of plan assets and actuarial liabilities. CVM Resolution No. 600/09 is equivalent to IAS 19, and, accordingly, this adjustment is no longer necessary as from such date.
For purposes of BRGAAP, shares classified as permanent investments are recognized at historical cost and adjusted only for provision for permanent impairment. Increases in value over acquisition cost are not recognized.
Under IFRS, ITAÚ UNIBANCO HOLDING classified these shares as available-for-sale financial assets, in accordance with IAS 39, and recorded them at fair value, with gains and losses recognized in other comprehensive income.
Under BRGAAP, there are no specific rules for the recognition of transactions where a subsidiary is exchanged for an unconsolidated company (associate); this kind of transaction is generally recognized at the carrying amount of the subsidiary transferred.
Under IFRS, consideration received (an interest in PSIUPAR acquired on November 30, 2009) in connection with the loss of control of a subsidiary is accounted for at fair value.
This difference in the basis of our investment in PSIUPAR is adjusted in the reconciliation.
As a consequence of the acquisition of Unibanco, a provision to cover expenses related to communication to clients, changes in systems and personnel was recognized under BRGAAP, as the amount of the provision could be reasonably estimated.
Under IFRS, this provision did not meet at the transition date the requirements of IAS 19 and IAS 37, which are more restrictive than the requirements under BRGAAP and, accordingly, the provision was reversed at the transition date in these consolidated financial statements. During the year ended December 31, 2010, the provision recorded under BRGAAP was fully utilized.
The process adopted bysaid termination, ITAÚ UNIBANCO HOLDING S.A. and LASA entered into, on that date, a purchase agreement and other covenants under BRGAAP for the translation of foreign subsidiaries and unconsolidated companies is similarwhich LASA has agreed (i) to the requirements of IAS 21, except that the differences arising from the translation process are recorded in the statement of income. Accordingly, under BRGAAP, there is no specific reserve in stockholders’ equity where cumulative gains or losses arising from the translation of foreign subsidiaries and unconsolidated companies are recognized.
Under IFRS, the differences on translation of foreign subsidiaries and unconsolidated companies are reported in other comprehensive income.
Until 2010, in accordance with BRGAAP, the year-end financial statements should recognize a provision for dividends proposed by Management but not yet approved by the stockholders even if proposed dividends exceed the mandatory minimum dividend established in the bylaws.
In accordance with IAS 10 -“Events After The Balance Sheet Date”, if an entity declares dividends after the balance sheet date, it cannot recognize the amount of these dividends as a liability in the year-end financial statements.
From May 2011,sell to ITAÚ UNIBANCO HOLDING S.A. the total interest it holds in conformitythe capital of FAI for the approximate amount of R$ 83 million; and (ii) to acquire the operating right held by FAI with Resolution No. 3,973/11,respect to the offering, distribution and sale, on an exclusive basis, of financial products and services through the distribution channels of LASA and/or its affiliates, at the approximate amount of R$ 112 million.The completion of the transaction was subject to approval of the Central Bank of Brazil, no longer recognizeswhich was obtained on December 27, 2012.
As a provision (in liabilities) that exceeds the mandatory minimum dividends. The Resolution No. 3,973/11 is equivalent to IAS 10 and, therefore, fromresult of this date on, this adjustmenttransaction, FAI is no longer necessary.an entity controlled jointly by ITAÚ UNIBANCO HOLDING S.A. and LASA, becoming a whole-owned subsidiary of ITAÚ UNIBANCO HOLDING S.A.. At December 31, 2012 the balance of FAI’s balance sheet accounts were fully consolidated; the net income for 2012, however, was partially consolidated.
In 2013 we will complete the final appropriation of the difference between the amount paid by FAI and the interest in its net assets at fair value.
F.37 |
c) | Redecard |
On September 24, 2012, ITAÚ UNIBANCO HOLDING S.A. completed the auction of the Tender Public Offer (OPA) to cancel Redecard’s listed company register, pursuant to the OPA call notice published on August 23, 2012.
As a result of the auction, ITAÚ UNIBANCO HOLDING S.A. purchased, through its non-financial subsidiary Banestado Participações, Administração e Serviços Ltda., 298,989,237 common shares issued by Redecard, representing 44.4% of its capital, and now it holds 635,474,593 common shares, representing 94.4% of its capital.The shares were purchased for the unit price of R$ 35.00, totaling R$ 10,469.
With the purpose of completing the purchase of the remaining minority interest, ITAÚ UNIBANCO HOLDING acquired, by way of its subsidiary Banestado Participações, Administração e Serviços Ltda., 36,423,856 common shares (24,207,582 shares in October 2012; 9,893,659 shares in November 2012; and 2,322,615 shares in December 2012) for the amount, offered at the OPA of September 24, 2012, of R$ 35.00, plus SELIC variation for the period, redeemed 999,884 common shares and canceled 72,372 treasury shares, thus increasing its interest in the capital, from 94.4% to 100.0%, totaling the amount of R$ 1,283 (including fees and brokerage).
On October 18, 2012, the Brazilian Securities and Exchange Commission (CVM) cancelled Redecard’s registration as a publicly-held company.
Changes in stockholders’ equity of ITAÚ UNIBANCO HOLDING S.A., due to the purchase of shares from non-controlling stockholders of Redecard, are shown below:
2012 | ||||
Effect of change in interest | (11,151 | ) | ||
Recognition of deferred income tax on temporary difference (*) | 3,791 | |||
Decrease in stockholders’ equity due to the purchase of Redecard’s shares | (7,360 | ) |
(*) For non-financial subsidiaries, tax rate of Income Tax and Social Contribution is 34%.
Under IAS 39, financial assets and liabilities measured at amortized cost should be recognized using the effective interest method, which consists of recognizing revenues and costs directly attributable to its acquisition, issue or disposal for the term of the operation.
Other differences between IFRS and BRGAAP have been recorded, which are not material either individually or in the aggregate.
IAS 12 requires the recognition of deferred income tax and social contribution for all taxable or deductible temporary differences, except for deferred taxes arising from the initial recognition of goodwill, the initial recognition of an asset or liability in a transaction which is not a business combination, and that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). The adjustments of deferred income tax and social contribution were calculated on IFRS adjustments, when applicable.
12/31/2010 | 1/1/2010 | 01/01 to 12/31/2010 | Class in IFRS | ||||||||||||||
Reference | Stockholders' Equity | Income | statement of Income | ||||||||||||||
In accordance with USGAAP (stockholders' equity attributed to the owners of the parent company, excluding non-controlling interest) | 76,625 | 69,277 | 11,067 | ||||||||||||||
Adjustments that affect stockholders' equity between USGAAP and IFRS | (10,750 | ) | (12,151 | ) | 642 | ||||||||||||
Pension and healthcare plans | c.I | (1,634 | ) | (1,049 | ) | (1,567 | ) | General and administrative expenses | |||||||||
Stock-based compensation | c.II | 491 | 584 | 66 | General and administrative expenses | ||||||||||||
Related to business combinations | c.III | (10,579 | ) | (12,728 | ) | 2,150 | |||||||||||
Full amortization of goodwill recognized under BRGAAP | c.III i | (15,607 | ) | (15,607 | ) | - | |||||||||||
Reversal of adjustment at fair value recognized under USGAAP for the price paid | c.III ii | 4,576 | 4,576 | - | |||||||||||||
Reversal of amortization of intangible assets recognized under USGAAP | c.III iii | 5,066 | 1,476 | 3,590 | General and administrative expenses | ||||||||||||
Reversal of adjustment at fair value recognized under USGAAP of Unibanco's net assets | c.III iv | (1,138 | ) | (89 | ) | (1,050 | ) | Interest and similar income, General and administrative expenses | |||||||||
Negative goodwill in the acquisition of Unibanco recognized under USGAAP | c.III v | (830 | ) | (830 | ) | - | |||||||||||
Difference in the investment base in Redecard as a result of remeasurement under USGAAP upon gaining control | c. III vi | (4,530 | ) | (4,530 | ) | - | |||||||||||
Recognition of total deferred tax assets on goodwill | c. III vii | 1,250 | 1,574 | (323 | ) | Deferred income tax and social contribution | |||||||||||
Other | c.IV | 634 | 702 | (67 | ) | Interest and similar income, General and administrative expenses | |||||||||||
Other adjustments | c.IV | (269 | ) | (868 | ) | 378 | General and administrative expenses | ||||||||||
Income tax and social contribution over all IFRS adjustments | c.V | 1,241 | 1,910 | (385 | ) | Deferred income tax and social contribution | |||||||||||
In accordance with IFRS - attributable to controlling stockholders | 65,875 | 57,126 | 11,708 | ||||||||||||||
In accordance with USGAAP- attributable to non-controlling interest | 13,076 | 12,757 | 824 | ||||||||||||||
Redecard | c.III vi | (10,915 | ) | (10,840 | ) | 75 | Net income attributable to non-controlling interests | ||||||||||
Deconsolidation of Joint Ventures | c.VI | (366 | ) | (268 | ) | (98 | ) | ||||||||||
Other | c.IV/cIII iv | (118 | ) | (85 | ) | (16 | ) | ||||||||||
In accordance with IFRS - attributable to non-controlling interest | 1,677 | 1,564 | 785 | ||||||||||||||
In accordance with IFRS - attributable to controlling and non-controlling interest | 67,552 | 58,690 | 12,493 |
The adoption of IFRS has changed the statement of cash flows of ITAÚ UNIBANDO HOLDING, arising from the recognition of the effects shown in the table above, as well as from the differences in classification of Central Bank Compulsory Deposits, Securities Purchased under Agreements to Resell and Loan Operations, considered as investiment activities under USGAAP, while under IFRS, the same items are classified as operating activities and also from the differences in classification of Deposits, Securities sold under Repurchase Agreements, Interbank Market Debt and Reserves for Insurance and Private Pension, considered as financing activities under USGAAP, while under IFRS, the same items are classified as operating activities.
We are not presenting the Cumulative Comprehensive Income in the reconciliation above because there is no difference between USGAAP and IFRS.
Balance Sheet on December 31, 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ASSETS | USGAAP | c.IX | c.I | c.II | c.i | c.III ii / c.III iii | c.III iv | c.III v | c.III vi | c.IV / c.III vii | c.V | c.VI | c.VII | c.VIII | c.IV | IFRS | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash and deposits on demand | 5,568 | 4,585 | - | - | - | - | - | - | - | - | - | (5 | ) | - | - | 24 | 10,172 | |||||||||||||||||||||||||||||||||||||||||||||||
Central Bank Compulsory Deposits | 85,790 | - | - | - | - | - | - | - | - | - | - | - | - | - | (14 | ) | 85,776 | |||||||||||||||||||||||||||||||||||||||||||||||
Interbank deposits | 57,566 | (44,297 | ) | - | - | - | - | - | - | - | - | - | 1,565 | - | - | 1 | 14,835 | |||||||||||||||||||||||||||||||||||||||||||||||
Securities purchased under agreements to resell | 34,734 | 36,790 | - | - | - | - | - | - | - | - | - | (10 | ) | 17,158 | - | 10 | 88,682 | |||||||||||||||||||||||||||||||||||||||||||||||
Financial assets held for trading | 140,003 | (5,646 | ) | (1,340 | ) | - | - | - | (2 | ) | - | - | - | - | (21 | ) | (17,219 | ) | - | (278 | ) | 115,497 | ||||||||||||||||||||||||||||||||||||||||||
Financial assets designated at fair value through profit or loss | - | 306 | - | - | - | - | - | - | - | - | - | - | - | - | - | 306 | ||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | - | 7,789 | (48 | ) | - | - | - | - | - | - | - | - | - | 37 | - | (1 | ) | 7,777 | ||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale financial assets | 44,636 | 473 | (184 | ) | - | - | - | 32 | - | - | - | - | - | - | - | (418 | ) | 44,539 | ||||||||||||||||||||||||||||||||||||||||||||||
Held-to-maturity financial assets | 2,506 | 845 | - | - | - | - | (131 | ) | - | - | - | - | - | - | - | (50 | ) | 3,170 | ||||||||||||||||||||||||||||||||||||||||||||||
Loan operations and lease operations, net | 278,031 | - | - | - | - | - | 390 | - | - | - | - | (2,894 | ) | - | - | (684 | ) | 274,843 | ||||||||||||||||||||||||||||||||||||||||||||||
Loan operations and lease operations | 298,169 | 1,240 | - | - | - | - | (514 | ) | - | - | - | - | (3,411 | ) | - | - | (647 | ) | 294,837 | |||||||||||||||||||||||||||||||||||||||||||||
(-) Allowance for loan losses | (20,138 | ) | (1,240 | ) | - | - | - | - | 904 | - | - | - | - | 517 | - | - | (37 | ) | (19,994 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Other financial assets | - | 40,517 | - | - | - | - | - | - | - | - | - | 973 | 24 | - | (569 | ) | 40,945 | |||||||||||||||||||||||||||||||||||||||||||||||
Investments in unconsolidated companies | 3,597 | (538 | ) | - | - | - | - | - | - | - | - | - | (18 | ) | - | - | (94 | ) | 2,947 | |||||||||||||||||||||||||||||||||||||||||||||
Fixed assets, net | 5,151 | (638 | ) | - | - | - | - | 181 | - | - | - | - | (11 | ) | - | - | 119 | 4,802 | ||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets, net | 18,148 | (20,064 | ) | - | - | - | 5,066 | (61 | ) | - | - | - | - | (114 | ) | - | - | (41 | ) | 2,934 | ||||||||||||||||||||||||||||||||||||||||||||
Goodwill, net | 14,664 | 19,857 | - | - | (22,762 | ) | 4,576 | (2,835 | ) | (830 | ) | (14,206 | ) | 634 | - | - | - | - | 902 | - | ||||||||||||||||||||||||||||||||||||||||||||
Tax assets | - | 10,585 | - | - | 7,155 | - | - | - | - | 1,250 | 1,241 | (300 | ) | - | 5,080 | (869 | ) | 24,142 | ||||||||||||||||||||||||||||||||||||||||||||||
Assets held for sale | - | 69 | - | - | - | - | - | - | - | - | - | (1 | ) | - | - | 10 | 78 | |||||||||||||||||||||||||||||||||||||||||||||||
Other assets | 56,186 | (50,633 | ) | (62 | ) | - | - | - | 77 | - | - | - | - | (75 | ) | - | - | 144 | 5,637 | |||||||||||||||||||||||||||||||||||||||||||||
TOTAL ASSETS | 746,580 | - | (1,634 | ) | - | (15,607 | ) | 9,642 | (2,349 | ) | (830 | ) | (14,206 | ) | 1,884 | 1,241 | (911 | ) | - | 5,080 | (1,808 | ) | 727,082 | |||||||||||||||||||||||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | USGAAP | c.IX | c.I | c.II | c.i | c.III ii / c.III iii | c.III iv | c.III v | c.III vi | c.IV / c.III vii | c.V | c.VI | c.VII | c.VIII | c.IV | IFRS | ||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | 202,660 | - | - | - | - | - | - | - | - | - | - | (1 | ) | - | - | 29 | 202,688 | |||||||||||||||||||||||||||||||||||||||||||||||
Securities sold under repurchase agreements | 97,972 | 101,598 | - | - | - | - | - | - | - | - | - | - | - | - | 87 | 199,657 | ||||||||||||||||||||||||||||||||||||||||||||||||
Financial liabilities held for trading | - | 1,335 | - | - | - | - | - | - | - | - | - | - | - | - | - | 1,335 | ||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | - | 6,674 | - | - | - | - | (694 | ) | - | - | - | - | - | - | - | (309 | ) | 5,671 | ||||||||||||||||||||||||||||||||||||||||||||||
Interbank market debt | - | 62,988 | - | - | - | - | - | - | - | - | - | - | - | - | (389 | ) | 62,599 | |||||||||||||||||||||||||||||||||||||||||||||||
Institutional market debt | - | 43,098 | - | - | - | - | (7 | ) | - | 1,239 | - | - | - | - | - | 183 | 44,513 | |||||||||||||||||||||||||||||||||||||||||||||||
Short-term borrowings | 123,041 | (123,041 | ) | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt | 84,768 | (84,768 | ) | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
Other financial liabilities | - | 41,902 | - | - | - | - | - | - | - | - | - | (346 | ) | - | - | (544 | ) | 41,012 | ||||||||||||||||||||||||||||||||||||||||||||||
Reserves for insurance and private pension | 60,463 | (3,634 | ) | - | - | - | - | (74 | ) | - | - | - | - | - | - | - | 109 | 56,864 | ||||||||||||||||||||||||||||||||||||||||||||||
Liabilities for capitalization plans | - | 2,603 | - | - | - | - | - | - | - | - | - | - | - | - | - | 2,603 | ||||||||||||||||||||||||||||||||||||||||||||||||
Provisions | - | 14,736 | - | - | - | - | - | - | - | - | - | (33 | ) | - | - | (247 | ) | 14,456 | ||||||||||||||||||||||||||||||||||||||||||||||
Tax liabilities | - | 7,078 | - | - | - | - | - | - | - | - | - | (83 | ) | - | 5,080 | 35 | 12,110 | |||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | 87,975 | (70,569 | ) | - | (491 | ) | - | - | (228 | ) | - | - | - | - | (82 | ) | - | - | (583 | ) | 16,022 | |||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 656,879 | - | - | (491 | ) | - | - | (1,003 | ) | - | 1,239 | - | - | (545 | ) | - | 5,080 | (1,629 | ) | 659,530 | ||||||||||||||||||||||||||||||||||||||||||||
Total stockholders’ equity attributed to the owners of the parent company | 76,625 | - | (1,634 | ) | 491 | (15,607 | ) | 9,642 | (1,138 | ) | (830 | ) | (4,530 | ) | 1,884 | 1,241 | - | - | - | (269 | ) | 65,875 | ||||||||||||||||||||||||||||||||||||||||||
Non-controlling interests | 13,076 | - | - | - | - | - | (208 | ) | - | (10,915 | ) | - | - | (366 | ) | - | - | 90 | 1,677 | |||||||||||||||||||||||||||||||||||||||||||||
Total stockholders’ equity | 89,701 | - | (1,634 | ) | 491 | (15,607 | ) | 9,642 | (1,346 | ) | (830 | ) | (15,445 | ) | 1,884 | 1,241 | (366 | ) | - | - | (179 | ) | 67,552 | |||||||||||||||||||||||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 746,580 | - | (1,634 | ) | - | (15,607 | ) | 9,642 | (2,349 | ) | (830 | ) | (14,206 | ) | 1,884 | 1,241 | (911 | ) | - | 5,080 | (1,808 | ) | 727,082 |
Summary of the main differences between USGAAP and IFRS
Below is a description of the main accounting practices applicable toOn July 9, 2012 ITAÚ UNIBANCO HOLDING which differ significantly between USGAAPentered into an Association Agreement with Banco BMG S.A. ("BMG"), aiming at the offering, distribution and IFRScommercialization of payroll debit loans through the incorporation of a financial institution, the Banco Itaú BMG Consignado S.A. (“Itaú BMG Consignado”). After obtaining the previous approval required for starting operations, issued by the Administrative Council for Economic Defense (CADE) on October 17, 2012, the final documents were signed on December 13, 2012 and are presented inBanco BMG has been a stockholder of Itaú BMG Consignado since January 7, 2013. The association is subject to the reconciliations above:approval of the Central Bank of Brazil.
Under IFRS and USGAAP, the sponsor of pension and healthcare plans should recognize both the deficit and surplus of a defined benefit plan as a liability or an asset in its balance sheet. In accordance with IFRS, whenever an entity has a surplus in a defined benefit plan, it should measure the asset by using the lower between: (a) the plan surplus; or (b) the asset ceiling defined as the present value of decreases in the employer’s future contributions.
The difference between USGAAP and IFRS is derived from the impact of this limitation in the recognition of the asset described above.
Another difference refers to the recognition of actuarial gains and losses, which are directly recorded in stockholders’ equity under USGAAP and in net income for the period under IFRS.
Under USGAAP, the cost of stock-based compensation plans considered liability awards is recognized as an expense, with a corresponding entry to liabilities. Certain options granted are considered liability awards under USGAAP and measured at each reporting date, since the exercise price is indexed to inflation rates.
Under IFRS, stock-based compensation is recognized at the fair value of options on the grant date, and they are not remeasured, since they are all classified as “equity awards”.
Both for USGAAP and IFRS, the cost of stock-based compensation plans is recognized over the vesting period.
Under USGAAP, business combinations are accounted in a manner similar to the requirements of IFRS 3 (R), i.e., they are recognized under the purchase method.
IFRS 1 permits that business combinations and past acquisitions of investments in associates that occurred before the transition date are not reassessed on a retrospective basis, through the application of IFRS 3 (R) (Detailed on Note 2.5 (a)). This exemption allows first-time adopters of IFRS to basically maintain the accounting treatment adopted under the previous accounting practice, in this case previous GAAP. ITAÚ UNIBANCO HOLDING adopted this exemption up to August 1, 2009 and then adopted IFRS 3 (R) or IAS 28, as the case may be, to recognize only the business combinations and past acquisitions of investments in associates after that date (there were no business combinations after that date).
Pursuant to the exemption permitted by IFRS 1, the accounting policies adopted for initial recognition and subsequent measurement of goodwill generated in acquisitions before August 1, 2009 under previous GAAP were maintained.
On the transition date, the accounting treatment of these business combinations under IFRS is the same as the accounting treatment under previous GAAP. Accordingly, the following differences between USGAAP and previous GAAP (IFRS, at the transition date) are presented below:
Includes differences between USGAAP and IFRS previously recorded, related to business combination, non-controlling shareholders and others, which are not material either individually or in the aggregate.
The USGAAP and IFRS requires the recognition of deferred income tax and social contribution for all taxable or deductible temporary differences, except for deferred taxes arising from the initial recognition of goodwill, the initial recognition of an asset or liability in a transaction which is not a business combination, and that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). The difference between USGAAP and IFRS refers to calculation of deferred income tax and social contribution levied on the differences of adjustments between both GAAPs.
c.VI) Difference in consolidation between Variable Interest Entities (VIEs) (USGAAP) and Joint Ventures (IFRS)
In accordance with USGAAP requirements, we record certain interests as VIEs, and we conclude that we are their primary beneficiary mainly because we are exposed to most of their risks and benefits. As the primary beneficiary of these entities, we should fully consolidate them in our financial statements.
Under IFRS, the interests held by an entity may not be defined as VIEs. We analyze these interests in accordance with IAS 31 requirements and conclude that these entities fall into the category of Joint Ventures (Note 2.4 (a)), because the main operating and financial decisions in these entities are made jointly with other stockholders. IAS 31 allows for Joint Ventures to be either proportionally consolidated or recorded under the equity method. We have opted for the proportional consolidation.
Therefore, the difference is due to the fact that these entities are fully consolidated under USGAAP and proportionally consolidated under IFRS.
c.VII) Consolidation of pension funds
Certain investment funds, exclusive for investment of funds arising from private pension products offered by ITAÚ UNIBANCO HOLDING to its clients, comply with consolidation requirements under IFRS. These funds are not consolidated, but rather treated as financial instruments in the financial statements under USGAAP.
c.VIII) Difference in the recognition of taxes
Under USGAAP, deferred tax assets and liabilities should be offset whenever they are attributable to the same tax authority, and not mandatorily by taxable entity.
Under IFRS, an entity should offset deferred tax assets and liabilities if and only if it is legally entitled to settle current tax assets and liabilities, and these deferred taxes are related to taxes on income required by the same tax authority, levied on the same taxable entity.
c.IX) Changes/ reclassifications in the balance sheet accounts
The presentation model for the balance sheet under IFRS adopted by ITAÚ UNIBANCO HOLDING is different from that under USGAAP. The main changes/ reclassifications are due to the different presentation of the following lines: Interbank Deposits (under USGAAP in Securities purchased under agreements to resell), Derivatives – Assets and Liabilities (under USGAAP in Assets Held for Trading and Other Liabilities), Liabilities for capitalization plans (considered under USGAAP in the Reserve for insurance, pension plan and capitalization line), Other Financial Assets and Liabilities (under USGAAP in Other Assets and Liabilities), Goodwill (considered under USGAAP in the Intangible Assets line arising from the allocation of fair value of assets and liabilities resulting from business combination), Tax Assets and Liabilities (under USGAAP in Other Assets and Liabilities), Interbank Markets and Institutional Markets (under USGAAP in Short-Term and Long-Term Borrowings) and Provisions (under USGAAP in Other Liabilities).
NOTE 0304 - CASH AND CASH EQUIVALENTS
For purposes of consolidated statements of cash flows, cashCash and cash equivalentsCash Equivalents in this note comprises the following items (amounts with original maturity terms equal to or less than 90 days):items:
12/31/2011 | 12/31/2010 | 1/1/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||
Cash and deposits on demand | 10,668 | 10,172 | 10,671 | 13,967 | 10,668 | |||||||||||||||
Interbank deposits | 18,921 | 7,639 | 7,304 | 14,347 | 18,921 | |||||||||||||||
Securities purchased under agreements to resell | 8,516 | 27,798 | 54,677 | 17,476 | 8,516 | |||||||||||||||
TOTAL | 38,105 | 45,609 | 72,652 | |||||||||||||||||
Total | 45,790 | 38,105 |
Amounts related to interbank deposits and securities purchased under agreements to resell over 90 daysnot included in cash equivalent are R$ 8,9009,479 (R$ 7,1968,900 at December 31, 20102011) and R$ 10,495 at January 1, 2010) and R$145,261 (R$ 83,732 (R$ 60,884 at December 31, 2010 and R$ 81,143 at January 1, 2010)2011), respectively.
NOTE 0405 - CENTRAL BANK COMPULSORY DEPOSITS
12/31/2011 | 12/31/2010 | 1/1/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||
Non-interest bearing deposits | 5,730 | 4,742 | 4,042 | 6,448 | 5,730 | |||||||||||||||
Interest-bearing deposits | 92,323 | 81,034 | 9,827 | 57,253 | 92,323 | |||||||||||||||
TOTAL | 98,053 | 85,776 | 13,869 | |||||||||||||||||
Total | 63,701 | 98,053 |
NOTE 05 –06 - INTERBANK DEPOSITS AND SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL
12/31/2011 | 12/31/2012 | 12/31/2011 | ||||||||||||||||||||||||||||||||||
CURRENT | NON-CURRENT | TOTAL | Current | Non- current | Total | Current | Non- current | Total | ||||||||||||||||||||||||||||
Interbank deposits | 25,384 | 2,437 | 27,821 | 23,430 | 396 | 23,826 | 25,384 | 2,437 | 27,821 | |||||||||||||||||||||||||||
Securities purchased under agreements to resell (*) | 92,248 | - | 92,248 | 162,558 | 179 | 162,737 | 92,248 | - | 92,248 | |||||||||||||||||||||||||||
TOTAL | 117,632 | 2,437 | 120,069 | |||||||||||||||||||||||||||||||||
Total | 185,988 | 575 | 186,563 | 117,632 | 2,437 | 120,069 |
(*) Of these securitiesThe amounts of R$ 7.0469,106 (R$ 7,046 at December 31, 2011) are pledged in guarantee of operations on BM&F Bovespa S.A. - Bolsa de Valores, Mercadorias e Futuros the amounts of R$ 116,922 (R$ 49,701 at December 31, 2011) are pledged in guarantee of repurchase agreement transactions, in conformity with the policies described in note 2.4fNote 2.4f.
12/31/2010 | ||||||||||||
CURRENT | NON-CURRENT | TOTAL | ||||||||||
Interbank deposits | 14,315 | 520 | 14,835 | |||||||||
Securities purchased under agreements to resell (*) | 82,094 | 6,588 | 88,682 | |||||||||
TOTAL | 96,409 | 7,108 | 103,517 |
(*) Of these securities R$ 8.670 are pledged in guarantee in conformity with the policies described in note 2.4f
F.39 |
1/1/2010 | ||||||||||||
CURRENT | NON-CURRENT | TOTAL | ||||||||||
Interbank deposits | 17,262 | 537 | 17,799 | |||||||||
Securities purchased under agreements to resell (*) | 124,227 | 11,593 | 135,820 | |||||||||
TOTAL | 141,489 | 12,130 | 153,619 |
(*) Of these securities R$ 9.288 are pledged in guarantee in conformity with the policies described in note 2.4f
NOTE 0607 – FINANCIAL ASSETS HELD FOR TRADING AND DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
a)Financial assets held for trading recognized at their fair value are presented in the following table:
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||||
Cost/ Amortized | Unrealized results | Cost/ Amortized | Unrealized results | |||||||||||||||||||||||||||||
cost | Gain | Loss | Fair value | cost | Gain | Loss | Fair value | |||||||||||||||||||||||||
Investment funds | 1,422 | 47 | (1 | ) | 1,468 | 1,326 | 35 | (22 | ) | 1,339 | ||||||||||||||||||||||
Brazilian government securities (1a) | 110,999 | 212 | (5 | ) | 111,206 | 93,914 | 184 | (184 | ) | 93,914 | ||||||||||||||||||||||
Brazilian external debt bonds | 1,250 | 39 | (3 | ) | 1,286 | 868 | 42 | - | 910 | |||||||||||||||||||||||
Government securities – abroad (1b) | 860 | 16 | (4 | ) | 872 | 787 | 28 | (13 | ) | 802 | ||||||||||||||||||||||
Argentina | 105 | 5 | (4 | ) | 106 | 226 | 12 | (13 | ) | 225 | ||||||||||||||||||||||
United States | 335 | 10 | - | 345 | 280 | 12 | - | 292 | ||||||||||||||||||||||||
Mexico | 224 | 1 | - | 225 | 201 | 4 | - | 205 | ||||||||||||||||||||||||
Chile | 108 | - | - | 108 | 50 | - | - | 50 | ||||||||||||||||||||||||
Uruguai | 33 | - | - | 33 | 27 | - | - | 27 | ||||||||||||||||||||||||
Colombia | 34 | - | - | 34 | 3 | - | - | 3 | ||||||||||||||||||||||||
Other | 21 | - | - | 21 | - | - | - | - | ||||||||||||||||||||||||
Corporate securities (1c) | 30,613 | 185 | (114 | ) | 30,684 | 24,965 | 84 | (125 | ) | 24,924 | ||||||||||||||||||||||
Shares | 2,777 | 137 | (99 | ) | 2,815 | 2,325 | 69 | (97 | ) | 2,297 | ||||||||||||||||||||||
Securitized real estate loans | 21 | - | - | 21 | 23 | 1 | - | 24 | ||||||||||||||||||||||||
Bank deposit certificates | 2,933 | - | - | 2,933 | 7,820 | - | - | 7,820 | ||||||||||||||||||||||||
Debentures | 4,629 | 8 | (1 | ) | 4,636 | 3,525 | 2 | (1 | ) | 3,526 | ||||||||||||||||||||||
Eurobonds and other | 1,587 | 39 | (14 | ) | 1,612 | 1,446 | 12 | (27 | ) | 1,431 | ||||||||||||||||||||||
Financial credit bills | 18,440 | 1 | - | 18,441 | 8,973 | - | - | 8,973 | ||||||||||||||||||||||||
Promissory notes | 20 | - | - | 20 | 290 | - | - | 290 | ||||||||||||||||||||||||
Other | 206 | - | - | 206 | 563 | - | - | 563 | ||||||||||||||||||||||||
TOTAL | 145,144 | 499 | (127 | ) | 145,516 | 121,860 | 373 | (344 | ) | 121,889 |
12/31/2011 | 12/31/2010 | 1/1/2010 | ||||||||||||||||||||||||||||||||||||||||||||||
Cost/ amortized | Unrealized results | Fair | Cost/ amortized | Unrealized results | Fair | Cost/ amortized | Unrealized results | Fair | ||||||||||||||||||||||||||||||||||||||||
cost | Gain | Loss | value | cost | Gain | Loss | value | cost | Gain | Loss | value | |||||||||||||||||||||||||||||||||||||
Investment funds | 1,326 | 35 | (22 | ) | 1,339 | 1,701 | 49 | (2 | ) | 1,748 | 1,589 | 32 | (2 | ) | 1,619 | |||||||||||||||||||||||||||||||||
Brazilian government securities (1a) | 93,914 | 184 | (184 | ) | 93,914 | 86,636 | 77 | (14 | ) | 86,699 | 36,099 | 48 | (12 | ) | 36,135 | |||||||||||||||||||||||||||||||||
Brazilian external debt bonds (1b) | 868 | 42 | - | 910 | 653 | 17 | (4 | ) | 666 | 222 | - | - | 222 | |||||||||||||||||||||||||||||||||||
Government securities – abroad (1c) | 787 | 28 | (13 | ) | 802 | 9,323 | 38 | (8 | ) | 9,353 | 1,045 | 25 | (13 | ) | 1,057 | |||||||||||||||||||||||||||||||||
Argentina | 226 | 12 | (13 | ) | 225 | 295 | 6 | (8 | ) | 293 | 179 | 3 | (3 | ) | 179 | |||||||||||||||||||||||||||||||||
United States | 280 | 12 | - | 292 | 8,682 | 32 | - | 8,714 | 735 | 22 | (10 | ) | 747 | |||||||||||||||||||||||||||||||||||
Mexico | 201 | 4 | - | 205 | 29 | - | - | 29 | 10 | - | - | 10 | ||||||||||||||||||||||||||||||||||||
Russia | - | - | - | - | 45 | - | - | 45 | 77 | - | - | 77 | ||||||||||||||||||||||||||||||||||||
Chile | 50 | - | - | 50 | 248 | - | - | 248 | 30 | - | - | 30 | ||||||||||||||||||||||||||||||||||||
Uruguay | 27 | - | - | 27 | 24 | - | - | 24 | 14 | - | - | 14 | ||||||||||||||||||||||||||||||||||||
Other | 3 | - | - | 3 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Corporate securities (1d) | 24,965 | 84 | (125 | ) | 24,924 | 16,941 | 152 | (62 | ) | 17,031 | 16,279 | 248 | (8 | ) | 16,519 | |||||||||||||||||||||||||||||||||
Shares | 2,325 | 69 | (97 | ) | 2,297 | 3,161 | 134 | (47 | ) | 3,248 | 2,476 | 240 | (6 | ) | 2,710 | |||||||||||||||||||||||||||||||||
Securitized real estate loans | 23 | 1 | - | 24 | 587 | 9 | - | 596 | 33 | 2 | - | 35 | ||||||||||||||||||||||||||||||||||||
Bank deposit certificates | 7,820 | - | - | 7,820 | 8,932 | - | - | 8,932 | 9,490 | - | - | 9,490 | ||||||||||||||||||||||||||||||||||||
Debentures | 3,525 | 2 | (1 | ) | 3,526 | 2,799 | 1 | - | 2,800 | 3,095 | 2 | (1 | ) | 3,096 | ||||||||||||||||||||||||||||||||||
Eurobonds and other | 1,446 | 12 | (27 | ) | 1,431 | 1,459 | 8 | (15 | ) | 1,452 | 624 | 4 | (1 | ) | 627 | |||||||||||||||||||||||||||||||||
Financial credit bills | 8,973 | - | - | 8,973 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Other | 853 | - | - | 853 | 3 | - | - | 3 | 561 | - | - | 561 | ||||||||||||||||||||||||||||||||||||
TOTAL | 121,860 | 373 | (344 | ) | 121,889 | 115,254 | 333 | (90 | ) | 115,497 | 55,234 | 353 | (35 | ) | 55,552 |
(1) Assets held for trading pledged as collateral of funding transactions of financial institutions and clients were: a) R$ 1,881 (R$ 12,010 at December 31, 2011 were: a) R$ 12,010 (R$ 45,672 at 12/31/2010 and R$ 5,870 at 01/01/2010)2011), b) R$ 0 (R$ 12584 at 12/31/2010December 31, 2011) and R$ 77 at 01/01/2010), c) R$ 84467 (R$ 8,59248 at 12/31/2010 and R$ 288 at 01/01/2010) and d) R$ 48 (R$ 11 at 12/31/2010 and R$ 101 at 01/01/2010)December 31, 2011), totaling R$ 2,348 (R$ 12,142 (R$ 54,400 at 12/31/2010 and R$ 6,336 at 01/01/2010)December 31, 2011).
F.40 |
Realized and unrealized gains and losses
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2011 | ||||||||||||||||
Financial assets held for trading | ||||||||||||||||||||
Gains | 2,995 | 1,668 | 4,808 | 2,995 | 1,668 | |||||||||||||||
Losses | (2,559 | ) | (1,266 | ) | (1,609 | ) | (2,559 | ) | (1,266 | ) | ||||||||||
TOTAL | 436 | 402 | ||||||||||||||||||
Total | 3,199 | 436 | 402 |
The cost/amortized cost and fair value of financial assets held for trading by maturity are as follows:
12/31/2011 | 12/31/2010 | 1/1/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||||||||||||||||||||||
Cost/ amortized cost | Fair value | Cost/ amortized cost | Fair value | Cost/ amortized cost | Fair value | Cost/ Amortized cost | Fair value | Cost/ Amortized cost | Fair value | |||||||||||||||||||||||||||||||
CURRENT | 37,701 | 37,706 | 58,534 | 58,705 | 26,039 | 26,323 | ||||||||||||||||||||||||||||||||||
Current | 32,225 | 32,334 | 37,701 | 37,706 | ||||||||||||||||||||||||||||||||||||
Non-stated maturity | 3,650 | 3,635 | 4,862 | 4,996 | 4,070 | 4,334 | 4,199 | 4,284 | 3,650 | 3,635 | ||||||||||||||||||||||||||||||
Up to one year | 34,051 | 34,071 | 53,672 | 53,709 | 21,969 | 21,989 | 28,026 | 28,050 | 34,051 | 34,071 | ||||||||||||||||||||||||||||||
NON-CURRENT | 84,159 | 84,183 | 56,720 | 56,792 | 29,195 | 29,229 | ||||||||||||||||||||||||||||||||||
Non-current | 112,919 | 113,182 | 84,159 | 84,183 | ||||||||||||||||||||||||||||||||||||
From one to five years | 72,064 | 72,088 | 49,392 | 49,403 | 26,131 | 26,138 | 85,418 | 85,581 | 72,064 | 72,088 | ||||||||||||||||||||||||||||||
From five to ten years | 8,570 | 8,550 | 5,134 | 5,177 | 2,313 | 2,332 | 17,878 | 17,934 | 8,570 | 8,550 | ||||||||||||||||||||||||||||||
After ten years | 3,525 | 3,545 | 2,194 | 2,212 | 751 | 759 | 9,623 | 9,667 | 3,525 | 3,545 | ||||||||||||||||||||||||||||||
TOTAL | 121,860 | 121,889 | 115,254 | 115,497 | 55,234 | 55,552 | 145,144 | 145,516 | 121,860 | 121,889 |
Financial assets held for trading include assets with a fair value of R$ 75,146 (R$ 57,734 (R$ 46,051 at 12/31/2010 and R$ 38,626 at 01/01/2010)December 31, 2011) that belong to investment funds wholly owned by Itaú Vida e Previdência S.A..S.A. The return onof those assets (positive or negative) is fully transferred to customers of our PGBL and VGBL private pension plans whose premiums (less fees charged by us) are used by our subsidiary to purchase quotas of those investment funds.
F.41 |
b) Financial assets designated at fair value through profit or loss are presented in the following table:
12/31/2011 | ||||||||||||||||
Cost/ amortized | Unrealized results | Fair | ||||||||||||||
cost | Gain | Loss | value | |||||||||||||
Brazilian external debt bonds | 182 | 4 | - | 186 |
12/31/2012 | ||||||||||||||||
Cost/ | ||||||||||||||||
Amortized | Unrealized results | |||||||||||||||
cost | Gain | Loss | Fair value | |||||||||||||
Brazilian external debt bonds | 217 | 3 | - | 220 |
12/31/2010 | ||||||||||||||||
Cost/ amortized | Unrealized results | Fair | ||||||||||||||
cost | Gain | Loss | value | |||||||||||||
Brazilian external debt bonds | 297 | 9 | - | 306 |
1/1/2010 | ||||||||||||||||
Cost/ amortized | Unrealized results | Fair | ||||||||||||||
cost | Gain | Loss | value | |||||||||||||
Brazilian external debt bonds | 368 | 5 | - | 373 |
12/31/2011 | ||||||||||||||||
Cost/ | ||||||||||||||||
amortized | Unrealized results | |||||||||||||||
cost | Gain | Loss | Fair value | |||||||||||||
Brazilian external debt bonds | 182 | 4 | - | 186 |
Realized gain and lossunrealized gains and losses
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | |||||||
Designated at fair value through profit or loss | ||||||||
Gain | 20 | - | ||||||
Loss | - | (1 | ) | |||||
Total | 20 | (1 | ) |
01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||
Designated at fair value through profit or loss | ||||||||||||
Gain | 17 | 20 | - | |||||||||
Losses | - | - | (1 | ) | ||||||||
Total | 17 | 20 | (1 | ) |
The cost or amortized cost and fair value by maturity of financial assets designated as fair value through profit or loss were as follows:
12/31/2011 | 12/31/2010 | 1/1/2010 | ||||||||||||||||||||||
Cost/ amortized cost | Fair value | Cost/ amortized cost | Fair value | Cost/ amortized cost | Fair value | |||||||||||||||||||
NON-CURRENT | 182 | 186 | 297 | 306 | 368 | 373 | ||||||||||||||||||
After ten years | 182 | 186 | 297 | 306 | 368 | 373 |
12/31/2012 | 12/31/2011 | |||||||||||||||
Cost/ Amortized cost | Fair value | Cost/ Amortized cost | Fair value | |||||||||||||
Non-current | 217 | 220 | 182 | 186 | ||||||||||||
After ten years | 217 | 220 | 182 | 186 |
F.42 |
NOTE 0708 – DERIVATIVES
ITAÚ UNIBANCO HOLDING enters into derivative financial derivative instruments with various counterparties to manage its overall exposures and to assist its customers in managing their own exposures.
Futures - Interest rate and foreign currency futures contracts are commitments to buy or sell a financial instrument at a future date, at a contracted price or yield and may be settled in cash or through delivery. The notional amount represents the face value of the underlying instrument. Commodity futures contracts or financial instruments are commitments to buy or sell commodities (mainly gold, coffee and orange juice), at a future date, at a contracted price, which are settled in cash. The notional amount represents the quantity of such commodities multiplied by the future price at the contract date. Daily cash settlements of price movements are made for all instruments.
ForwardForwards - Interest forward contracts are agreements to exchange payments on a specified future date, based on a market change in interest rates from trade date to contract settlement date. Foreign exchange forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed price, at an agreed settlement date. Financial instrument forward contracts are commitments to buy or sell a financial instrument on a future date at a contracted price and are settled in cash.
Swaps - Interest rate and foreign exchange swap contracts are commitments to settle in cash at a future date or dates, based on differentials between specified financial indices (either two different interest rates in a single currency or two different rates each in a different currency), as applied to a notional principal amount. Swap contracts presented in Other in the table below correspond substantially to inflation rate swap contracts.
Options - Option contracts give the purchaser, for a fee, the right, but not the obligation, to buy or sell within a limited time a financial instrument including a flow of interests,interest, foreign currencies, commodities, or financial instruments at a contracted price that may also be settled in cash, based on differentials between specific indices.
Credit Derivatives – Credit derivatives are financial instruments with value relating to the credit risk associated to the debt issued by a third party (the reference entity), which permits that one party (the purchaser of the hedge) transfers the risk to the counterparty (the seller of the hedge). The seller of the hedge should make payments as set forth in the contract when the reference entity undergoes a credit event, such as bankruptcy, default or debt restructuring. The seller of the hedge receives a premium for the hedge, but, on the other hand, assumes the risk that the underlying asset referenced in the contract undergoingundergoes a credit event, and the seller would have to make the payment to the purchaser of the hedge, which could be the notional amount of the credit derivative.
The total value of margins pledged in guarantee forby ITAÚ UNIBANCO HOLDING amounted towas R$ 7,7934,895 (R$ 8,0618,225 at 12/31/2010 and R$ 12,252 at 01/01/2010)2011) and was basically comprised of government securities.
F.43 |
The following table shows the composition of derivatives by index:
Off-Balance Sheet Notional amount | Amortized cost | Gains / Losses | Fair value | |||||||||||||
12/31/2011 | 12/31/2011 | 12/31/2011 | 12/31/2011 | |||||||||||||
Futures contracts | 268,806 | 75 | (49 | ) | 26 | |||||||||||
Purchase commitments | 251,094 | 75 | 19 | 94 | ||||||||||||
Foreign currency | 59,087 | (1 | ) | 12 | 11 | |||||||||||
Interbank market | 144,154 | 1 | - | 1 | ||||||||||||
Indices | 41,365 | 75 | 7 | 82 | ||||||||||||
Securities | 6,338 | - | - | - | ||||||||||||
Commodities | 122 | - | - | - | ||||||||||||
Other | 28 | - | - | - | ||||||||||||
Commitments to sell | 17,712 | - | (68 | ) | (68 | ) | ||||||||||
Foreign currency | 15,796 | - | (63 | ) | (63 | ) | ||||||||||
Interbank market | 52 | - | - | - | ||||||||||||
Indices | 1,106 | - | - | - | ||||||||||||
Securities | 230 | - | (3 | ) | (3 | ) | ||||||||||
Commodities | 513 | - | (2 | ) | (2 | ) | ||||||||||
Other | 15 | - | - | - | ||||||||||||
Swap contracts | 72 | (120 | ) | (48 | ) | |||||||||||
Asset position | 94,806 | 2,155 | 595 | 2,750 | ||||||||||||
Foreign currency | 9,883 | 605 | 7 | 612 | ||||||||||||
Interbank market | 39,936 | 545 | 50 | 595 | ||||||||||||
Fixed rate | 16,808 | 227 | 241 | 468 | ||||||||||||
Floating rate | 3,809 | 3 | - | 3 | ||||||||||||
Indices | 23,995 | 739 | 312 | 1,051 | ||||||||||||
Securities | 28 | 23 | (26 | ) | (3 | ) | ||||||||||
Commodities | 3 | - | - | - | ||||||||||||
Other | 344 | 13 | 11 | 24 | ||||||||||||
Liability position | 94,734 | (2,083 | ) | (715 | ) | (2,798 | ) | |||||||||
Foreign currency | 11,171 | (608 | ) | 22 | (586 | ) | ||||||||||
Interbank market | 24,958 | (100 | ) | 10 | (90 | ) | ||||||||||
Fixed rate | 21,733 | (325 | ) | (301 | ) | (626 | ) | |||||||||
Floating rate | 6,144 | (133 | ) | 2 | (131 | ) | ||||||||||
Indices | 29,225 | (816 | ) | (477 | ) | (1,293 | ) | |||||||||
Securities | 112 | (85 | ) | 34 | (51 | ) | ||||||||||
Commodities | 108 | (1 | ) | (4 | ) | (5 | ) | |||||||||
Other | 1,283 | (15 | ) | (1 | ) | (16 | ) | |||||||||
Option contracts | 1,108,517 | 576 | (739 | ) | (163 | ) | ||||||||||
Purchase commitments – long position | 237,863 | 1,122 | (373 | ) | 749 | |||||||||||
Foreign currency | 17,481 | 887 | (289 | ) | 598 | |||||||||||
Interbank market | 36,911 | 65 | (36 | ) | 29 | |||||||||||
Floating rate | 278 | 1 | (1 | ) | - | |||||||||||
Indices | 181,517 | 124 | (58 | ) | 66 | |||||||||||
Securities | 1,162 | 31 | 11 | 42 | ||||||||||||
Commodities | 501 | 14 | - | 14 | ||||||||||||
Other | 13 | - | - | - | ||||||||||||
Commitments to sell – long position | 354,697 | 1,457 | 237 | 1,694 | ||||||||||||
Foreign currency | 7,635 | 149 | (41 | ) | 108 | |||||||||||
Interbank market | 27,212 | 293 | (49 | ) | 244 | |||||||||||
Fixed rate | 2 | - | 1 | 1 | ||||||||||||
Floating rate | 218 | 1 | - | 1 | ||||||||||||
Indices | 315,903 | 915 | (2 | ) | 913 | |||||||||||
Securities | 2,821 | 82 | 317 | 399 | ||||||||||||
Commodities | 768 | 14 | - | 14 | ||||||||||||
Other | 138 | 3 | 11 | 14 | ||||||||||||
Purchase commitments – short position | 174,398 | (778 | ) | 47 | (731 | ) | ||||||||||
Foreign currency | 10,325 | (454 | ) | (97 | ) | (551 | ) | |||||||||
Interbank market | 23,954 | (47 | ) | 11 | (36 | ) | ||||||||||
Indices | 139,248 | (258 | ) | 144 | (114 | ) | ||||||||||
Securities | 795 | (15 | ) | (13 | ) | (28 | ) | |||||||||
Commodities | 65 | (4 | ) | 2 | (2 | ) | ||||||||||
Other | 11 | - | - | - | ||||||||||||
Commitments to sell – short position | 341,559 | (1,225 | ) | (650 | ) | (1,875 | ) | |||||||||
Foreign currency | 10,757 | (309 | ) | 113 | (196 | ) | ||||||||||
Interbank market | 35,433 | (178 | ) | (239 | ) | (417 | ) | |||||||||
Fixed rate | 2 | - | (1 | ) | (1 | ) | ||||||||||
Indices | 293,394 | (647 | ) | (197 | ) | (844 | ) | |||||||||
Securities | 1,636 | (79 | ) | (316 | ) | (395 | ) | |||||||||
Commodities | 197 | (9 | ) | 1 | (8 | ) | ||||||||||
Other | 140 | (3 | ) | (11 | ) | (14 | ) |
Off-Balance Sheet Notional amount | Amortized cost | Gains / Losses | Fair Value | |||||||||||||
12/31/2011 | 12/31/2011 | 12/31/2011 | 12/31/2011 | |||||||||||||
Forwards operations (onshore) | 17,248 | 1,092 | (31 | ) | 1,061 | |||||||||||
Purchases receivable | 8,702 | 921 | (62 | ) | 859 | |||||||||||
Foreign currency | 7,883 | 623 | (62 | ) | 561 | |||||||||||
Interbank market | 520 | - | - | - | ||||||||||||
Fixed rate | - | 35 | - | 35 | ||||||||||||
Floating rate | 262 | 262 | - | 262 | ||||||||||||
Commodities | 37 | 1 | - | 1 | ||||||||||||
Purchases payable | 1,351 | (324 | ) | (9 | ) | (333 | ) | |||||||||
Foreign currency | 1,218 | (43 | ) | (8 | ) | (51 | ) | |||||||||
Floating rate | - | (262 | ) | - | (262 | ) | ||||||||||
Commodities | 131 | (19 | ) | (1 | ) | (20 | ) | |||||||||
Other | 2 | - | - | - | ||||||||||||
Sales receivable | 2,230 | 1,013 | 7 | 1,020 | ||||||||||||
Foreign currency | 1,181 | 24 | 9 | 33 | ||||||||||||
Interbank market | 48 | 1 | - | 1 | ||||||||||||
Fixed rate | 148 | 148 | (1 | ) | 147 | |||||||||||
Floating rate | 110 | 110 | - | 110 | ||||||||||||
Securities | 731 | 726 | (1 | ) | 725 | |||||||||||
Commodities | 12 | 4 | - | 4 | ||||||||||||
Sales deliverable | 4,965 | (518 | ) | 33 | (485 | ) | ||||||||||
Foreign currency | 4,905 | (342 | ) | 32 | (310 | ) | ||||||||||
Fixed rate | - | (54 | ) | - | (54 | ) | ||||||||||
Floating rate | - | (110 | ) | - | (110 | ) | ||||||||||
Commodities | 60 | (12 | ) | 1 | (11 | ) | ||||||||||
Credit derivatives | 7,194 | 153 | 136 | 289 | ||||||||||||
Asset position | 3,659 | 242 | 157 | 399 | ||||||||||||
Foreign currency | 117 | - | 1 | 1 | ||||||||||||
Fixed rate | 1,820 | 226 | 134 | 360 | ||||||||||||
Floating rate | - | 5 | 11 | 16 | ||||||||||||
Indices | - | 11 | (1 | ) | 10 | |||||||||||
Securities | 1,721 | - | 12 | 12 | ||||||||||||
Other | 1 | - | - | - | ||||||||||||
Liability position | 3,535 | (89 | ) | (21 | ) | (110 | ) | |||||||||
Foreign currency | 117 | - | (1 | ) | (1 | ) | ||||||||||
Fixed rate | 2,900 | (89 | ) | (8 | ) | (97 | ) | |||||||||
Securities | 517 | - | (12 | ) | (12 | ) | ||||||||||
Other | 1 | - | - | - | ||||||||||||
Forwards operations (offshore) | 31,285 | 69 | 56 | 125 | ||||||||||||
Asset position | 16,257 | 421 | 30 | 451 | ||||||||||||
Foreign currency | 15,862 | 415 | 30 | 445 | ||||||||||||
Interbank market | 19 | - | - | - | ||||||||||||
Floating rate | 376 | 6 | - | 6 | ||||||||||||
Liability position | 15,028 | (352 | ) | 26 | (326 | ) | ||||||||||
Foreign currency | 14,946 | (348 | ) | 26 | (322 | ) | ||||||||||
Interbank market | 13 | - | - | - | ||||||||||||
Floating rate | 69 | (1 | ) | - | (1 | ) | ||||||||||
Indices | - | (1 | ) | - | (1 | ) | ||||||||||
Securities | - | (2 | ) | - | (2 | ) | ||||||||||
Swap with target flow | 102 | - | (2 | ) | (2 | ) | ||||||||||
Asset position - Interbank market | 51 | - | - | - | ||||||||||||
Liability position - Interbank market | 51 | - | (2 | ) | (2 | ) | ||||||||||
Target flow of swap - Asset position - Foreign currency | 53 | - | 4 | 4 | ||||||||||||
Other derivative financial instruments | 4,894 | 695 | 20 | 715 | ||||||||||||
Asset position | 4,640 | 769 | 33 | 802 | ||||||||||||
Foreign currency | 608 | 55 | 31 | 86 | ||||||||||||
Fixed rate | 973 | 521 | - | 521 | ||||||||||||
Securities | 3,054 | 193 | 2 | 195 | ||||||||||||
Other | 5 | - | - | - | ||||||||||||
Liability position | 254 | (74 | ) | (13 | ) | (87 | ) | |||||||||
Foreign currency | 118 | (74 | ) | (11 | ) | (85 | ) | |||||||||
Securities | 75 | - | - | - | ||||||||||||
Other | 61 | - | (2 | ) | (2 | ) | ||||||||||
ASSETS | 8,175 | 579 | 8,754 | |||||||||||||
LIABILITIES | (5,443 | ) | (1,304 | ) | (6,747 | ) | ||||||||||
TOTAL | 2,732 | (725 | ) | 2,007 |
Off-Balance Sheet Notional amount | Amortized cost | Gains /(Losses) | Fair value | |||||||||||||
12/31/2012 | 12/31/2012 | 12/31/2012 | 12/31/2012 | |||||||||||||
Futures contracts | 537,449 | 46 | (69 | ) | (23 | ) | ||||||||||
Purchase commitments | 349,872 | 47 | - | 47 | ||||||||||||
Foreign currency | 15,013 | 29 | - | 29 | ||||||||||||
Interbank market | 289,816 | 11 | - | 11 | ||||||||||||
Indices | 38,012 | 6 | - | 6 | ||||||||||||
Securities | 6,731 | - | - | - | ||||||||||||
Commodities | 294 | 1 | - | 1 | ||||||||||||
Other | 6 | - | - | - | ||||||||||||
Commitments to sell | 187,577 | (1 | ) | (69 | ) | (70 | ) | |||||||||
Foreign currency | 58,848 | 2 | (68 | ) | (66 | ) | ||||||||||
Interbank market | 107,854 | (5 | ) | - | (5 | ) | ||||||||||
Indices | 13,429 | 2 | (1 | ) | 1 | |||||||||||
Securities | 7,196 | - | - | - | ||||||||||||
Commodities | 250 | - | - | - | ||||||||||||
Swap contracts | (906 | ) | (476 | ) | (1,382 | ) | ||||||||||
Asset position | 130,949 | 2,131 | 1,555 | 3,686 | ||||||||||||
Foreign currency | 12,851 | 518 | 140 | 658 | ||||||||||||
Interbank market | 44,778 | 366 | (7 | ) | 359 | |||||||||||
Fixed rate | 35,527 | 444 | 379 | 823 | ||||||||||||
Floating rate | 4,742 | 13 | 4 | 17 | ||||||||||||
Indices | 32,492 | 741 | 1,011 | 1,752 | ||||||||||||
Securities | 559 | 49 | 25 | 74 | ||||||||||||
Other | - | - | 3 | 3 | ||||||||||||
Liability position | 131,855 | (3,037 | ) | (2,031 | ) | (5,068 | ) | |||||||||
Foreign currency | 14,899 | (860 | ) | (227 | ) | (1,087 | ) | |||||||||
Interbank market | 28,081 | (89 | ) | 24 | (65 | ) | ||||||||||
Fixed rate | 45,070 | (735 | ) | (444 | ) | (1,179 | ) | |||||||||
Floating rate | 6,652 | (54 | ) | (4 | ) | (58 | ) | |||||||||
Indices | 36,526 | (1,184 | ) | (1,410 | ) | (2,594 | ) | |||||||||
Securities | 569 | (115 | ) | 30 | (85 | ) | ||||||||||
Commodities | 28 | - | - | - | ||||||||||||
Other | 30 | - | - | - | ||||||||||||
Option contracts | 2,027,095 | (168 | ) | (207 | ) | (375 | ) | |||||||||
Purchase commitments – long position | 525,476 | 428 | (202 | ) | 226 | |||||||||||
Foreign currency | 15,634 | 227 | (109 | ) | 118 | |||||||||||
Interbank market | 80,332 | 57 | (55 | ) | 2 | |||||||||||
Floating rate | 174 | 1 | (1 | ) | - | |||||||||||
Indices | 428,463 | 125 | (46 | ) | 79 | |||||||||||
Securities | 632 | 7 | 13 | 20 | ||||||||||||
Commodities | 200 | 11 | (4 | ) | 7 | |||||||||||
Other | 41 | - | - | - | ||||||||||||
Commitments to sell – long position | 578,535 | 1,058 | 622 | 1,680 | ||||||||||||
Foreign currency | 12,098 | 130 | (16 | ) | 114 | |||||||||||
Interbank market | 20,343 | 125 | 100 | 225 | ||||||||||||
Floating rate | 923 | 1 | - | 1 | ||||||||||||
Indices | 541,676 | 614 | 478 | 1,092 | ||||||||||||
Securities | 3,054 | 165 | 37 | 202 | ||||||||||||
Commodities | 109 | 11 | (3 | ) | 8 | |||||||||||
Other | 332 | 12 | 26 | 38 | ||||||||||||
Purchase commitments – short position | 296,683 | (473 | ) | 263 | (210 | ) | ||||||||||
Foreign currency | 11,990 | (212 | ) | 91 | (121 | ) | ||||||||||
Interbank market | 45,296 | (47 | ) | 46 | (1 | ) | ||||||||||
Indices | 238,695 | (195 | ) | 139 | (56 | ) | ||||||||||
Securities | 592 | (7 | ) | (17 | ) | (24 | ) | |||||||||
Commodities | 84 | (12 | ) | 5 | (7 | ) | ||||||||||
Other | 26 | - | (1 | ) | (1 | ) | ||||||||||
Commitments to sell – short position | 626,401 | (1,181 | ) | (890 | ) | (2,071 | ) | |||||||||
Foreign currency | 9,379 | (178 | ) | 6 | (172 | ) | ||||||||||
Interbank market | 117,429 | (143 | ) | (322 | ) | (465 | ) | |||||||||
Indices | 497,633 | (668 | ) | (513 | ) | (1,181 | ) | |||||||||
Securities | 1,455 | (168 | ) | (38 | ) | (206 | ) | |||||||||
Commodities | 173 | (12 | ) | 3 | (9 | ) | ||||||||||
Other | 332 | (12 | ) | (26 | ) | (38 | ) |
Derivative contracts mature as follows (in days): | ||||||||||||||||||||
Off-Balance Sheet - Notional amount | 0 - 30 | 31 - 180 | 181 - 365 | Over 365 | 12/31/2011 | |||||||||||||||
Futures | 75,850 | 67,789 | 36,072 | 89,095 | 268,806 | |||||||||||||||
Swaps | 9,939 | 16,691 | 19,679 | 46,342 | 92,651 | |||||||||||||||
Options | 846,277 | 58,377 | 176,965 | 26,898 | 1,108,517 | |||||||||||||||
Forwards (onshore) | 3,393 | 7,970 | 3,626 | 2,259 | 17,248 | |||||||||||||||
Credit derivatives | 88 | 1,902 | 1,025 | 4,179 | 7,194 | |||||||||||||||
Forwards (offshore) | 6,636 | 14,066 | 6,899 | 3,684 | 31,285 | |||||||||||||||
Swaps with target flow | - | - | - | 51 | 51 | |||||||||||||||
Target flow of swap | - | - | - | 53 | 53 | |||||||||||||||
Other | 112 | 1,372 | 760 | 2,650 | 4,894 |
Off-Balance Sheet Notional amount | Amortized cost | Gains / Losses | Fair value | |||||||||||||
12/31/2010 | 12/31/2010 | 12/31/2010 | 12/31/2010 | |||||||||||||
Futures contracts | 292,049 | 5 | (60 | ) | (55 | ) | ||||||||||
Purchase commitments | 127,499 | (1 | ) | 174 | 173 | |||||||||||
Foreign currency | 8,128 | (1 | ) | 1 | - | |||||||||||
Interbank market | 98,353 | - | 45 | 45 | ||||||||||||
Indices | 19,288 | - | 95 | 95 | ||||||||||||
Securities | 1,645 | - | - | - | ||||||||||||
Commodities | 84 | - | 33 | 33 | ||||||||||||
Other | 1 | - | - | - | ||||||||||||
Commitments to sell | 164,550 | 6 | (234 | ) | (228 | ) | ||||||||||
Foreign currency | 13,057 | 6 | (20 | ) | (14 | ) | ||||||||||
Interbank market | 113,173 | - | (45 | ) | (45 | ) | ||||||||||
Indices | 32,033 | - | (127 | ) | (127 | ) | ||||||||||
Securities | 4,230 | - | - | - | ||||||||||||
Commodities | 2,048 | - | (42 | ) | (42 | ) | ||||||||||
Other | 9 | - | - | - | ||||||||||||
Swap contracts | 344 | 580 | 924 | |||||||||||||
Asset position | 68,839 | 2,160 | 777 | 2,937 | ||||||||||||
Foreign currency | 7,330 | (292 | ) | 238 | (54 | ) | ||||||||||
Interbank market | 34,370 | 1,299 | 161 | 1,460 | ||||||||||||
Fixed rate | 9,277 | 326 | 140 | 466 | ||||||||||||
Floating rate | 865 | 2 | 18 | 20 | ||||||||||||
Indices | 16,745 | 819 | 218 | 1,037 | ||||||||||||
Securities | 32 | 3 | - | 3 | ||||||||||||
Commodities | 219 | 3 | 2 | 5 | ||||||||||||
Other | 1 | - | - | - | ||||||||||||
Liability position | 68,495 | (1,816 | ) | (197 | ) | (2,013 | ) | |||||||||
Foreign currency | 14,609 | (310 | ) | (17 | ) | (327 | ) | |||||||||
Interbank market | 19,443 | (358 | ) | 138 | (220 | ) | ||||||||||
Fixed rate | 7,835 | (256 | ) | (133 | ) | (389 | ) | |||||||||
Floating rate | 3,272 | (2 | ) | (1 | ) | (3 | ) | |||||||||
Indices | 23,122 | (865 | ) | (181 | ) | (1,046 | ) | |||||||||
Securities | 29 | (1 | ) | - | (1 | ) | ||||||||||
Commodities | 178 | (24 | ) | (3 | ) | (27 | ) | |||||||||
Other | 7 | - | - | - | ||||||||||||
Option contracts | 2,330,950 | (570 | ) | 235 | (335 | ) | ||||||||||
Purchase commitments – long position | 695,908 | 1,182 | (108 | ) | 1,074 | |||||||||||
Foreign currency | 24,905 | 414 | (104 | ) | 310 | |||||||||||
Interbank market | 530,428 | 468 | 2 | 470 | ||||||||||||
Floating rate | 314 | 2 | - | 2 | ||||||||||||
Indices | 138,085 | 182 | (53 | ) | 129 | |||||||||||
Securities | 1,534 | 86 | 27 | 113 | ||||||||||||
Commodities | 642 | 30 | 20 | 50 | ||||||||||||
Commitments to sell – long position | 526,323 | 625 | 53 | 678 | ||||||||||||
Foreign currency | 12,295 | 339 | 142 | 481 | ||||||||||||
Interbank market | 404,532 | 128 | (28 | ) | 100 | |||||||||||
Floating rate | 282 | - | - | - | ||||||||||||
Indices | 107,034 | 109 | (48 | ) | 61 | |||||||||||
Securities | 1,625 | 40 | (6 | ) | 34 | |||||||||||
Commodities | 555 | 9 | (7 | ) | 2 | |||||||||||
Purchase commitments – short position | 527,731 | (1,587 | ) | 342 | (1,245 | ) | ||||||||||
Foreign currency | 26,547 | (802 | ) | 341 | (461 | ) | ||||||||||
Interbank market | 376,482 | (256 | ) | (7 | ) | (263 | ) | |||||||||
Indices | 123,221 | (449 | ) | 50 | (399 | ) | ||||||||||
Securities | 864 | (49 | ) | (27 | ) | (76 | ) | |||||||||
Commodities | 617 | (31 | ) | (15 | ) | (46 | ) | |||||||||
Commitments to sell – short position | 580,988 | (790 | ) | (52 | ) | (842 | ) | |||||||||
Foreign currency | 16,715 | (451 | ) | (95 | ) | (546 | ) | |||||||||
Interbank market | 444,963 | (196 | ) | 3 | (193 | ) | ||||||||||
Indices | 118,333 | (71 | ) | 22 | (49 | ) | ||||||||||
Securities | 825 | (58 | ) | 7 | (51 | ) | ||||||||||
Commodities | 152 | (14 | ) | 11 | (3 | ) |
Off-Balance Sheet Notional amount | Amortized cost | Gains / Losses | Fair value | |||||||||||||
12/31/2010 | 12/31/2010 | 12/31/2010 | 12/31/2010 | |||||||||||||
Forwards operations (onshore) | 1,445 | 1,432 | (27 | ) | 1,405 | |||||||||||
Purchases receivable | 21 | 57 | 29 | 86 | ||||||||||||
Interbank market | - | 36 | - | 36 | ||||||||||||
Floating rate | 21 | 21 | 29 | 50 | ||||||||||||
Purchases payable - Floating rate | - | (21 | ) | (29 | ) | (50 | ) | |||||||||
Sales receivable | 1,424 | 1,397 | 1 | 1,398 | ||||||||||||
Foreign currency | 4 | 4 | - | 4 | ||||||||||||
Securities | 1,419 | 1,392 | 1 | 1,393 | ||||||||||||
Commodities | 1 | 1 | - | 1 | ||||||||||||
Sales deliverable - Floating rate | - | (1 | ) | (28 | ) | (29 | ) | |||||||||
Credit derivatives | 6,701 | 125 | 7 | 132 | ||||||||||||
Asset position | 2,902 | 258 | 3 | 261 | ||||||||||||
Foreign currency | 53 | - | 1 | 1 | ||||||||||||
Fixed rate | 2,622 | 258 | (2 | ) | 256 | |||||||||||
Securities | 227 | - | 4 | 4 | ||||||||||||
Liability position | 3,799 | (133 | ) | 4 | (129 | ) | ||||||||||
Foreign currency | 22 | - | (1 | ) | (1 | ) | ||||||||||
Fixed rate | 3,126 | (133 | ) | 10 | (123 | ) | ||||||||||
Securities | 651 | - | (5 | ) | (5 | ) | ||||||||||
Forwards operations (offshore) | 36,958 | (522 | ) | 22 | (500 | ) | ||||||||||
Asset position | 13,832 | 597 | 15 | 612 | ||||||||||||
Foreign currency | 13,121 | 548 | 8 | 556 | ||||||||||||
Fixed rate | 3 | 1 | - | 1 | ||||||||||||
Floating rate | 509 | 8 | - | 8 | ||||||||||||
Commodities | 199 | 40 | 7 | 47 | ||||||||||||
Liability position | 23,126 | (1,119 | ) | 7 | (1,112 | ) | ||||||||||
Foreign currency | 22,759 | (1,098 | ) | 9 | (1,089 | ) | ||||||||||
Interbank market | 27 | - | (1 | ) | (1 | ) | ||||||||||
Floating rate | 273 | (3 | ) | - | (3 | ) | ||||||||||
Commodities | 67 | (18 | ) | (1 | ) | (19 | ) | |||||||||
Swap with USD check | ||||||||||||||||
Asset position – Interbank market | 6 | - | - | - | ||||||||||||
Liability position – Interbank market | 6 | - | - | - | ||||||||||||
Check of swap – Liability position – Foreign currency | 25 | - | - | - | ||||||||||||
Other derivative financial instruments | 3,755 | 626 | (91 | ) | 535 | |||||||||||
Asset position | 3,395 | 785 | (54 | ) | 731 | |||||||||||
Foreign currency | 259 | 189 | 5 | 194 | ||||||||||||
Fixed rate | 698 | 375 | 2 | 377 | ||||||||||||
Floating rate | - | - | (3 | ) | (3 | ) | ||||||||||
Securities | 2,438 | 221 | (58 | ) | 163 | |||||||||||
Liability position | 360 | (159 | ) | (37 | ) | (196 | ) | |||||||||
ASSETS | 7,061 | 716 | 7,777 | |||||||||||||
LIABILITIES | (5,621 | ) | (50 | ) | (5,671 | ) | ||||||||||
TOTAL | 1,440 | 666 | 2,106 |
F.44 |
Derivative contracts mature as follows (in days): | ||||||||||||||||||||
Off-Balance Sheet - Notional Amount | 0 - 30 | 31 - 180 | 181 - 365 | Over 365 | 12/31/2010 | |||||||||||||||
Futures | 108,359 | 64,874 | 49,747 | 69,069 | 292,049 | |||||||||||||||
Swaps | 5,318 | 16,169 | 8,225 | 36,967 | 66,679 | |||||||||||||||
Options | 1,292,156 | 439,940 | 506,039 | 92,815 | 2,330,950 | |||||||||||||||
Forwards (onshore) | 274 | 1,143 | 28 | - | 1,445 | |||||||||||||||
Credit derivatives | - | 1,011 | 592 | 5,098 | 6,701 | |||||||||||||||
Forwards (offshore) | 13,658 | 13,233 | 6,051 | 4,016 | 36,958 | |||||||||||||||
Swap with USD check | - | - | 6 | - | 6 | |||||||||||||||
Check of swap | 6 | 16 | 3 | - | 25 | |||||||||||||||
Other | 105 | 927 | 405 | 2,318 | 3,755 |
Off-Balance Sheet Notional amount | Amortized cost | Gains / Losses | Fair value | |||||||||||||
1/1/2010 | 1/1/2010 | 1/1/2010 | 1/1/2010 | |||||||||||||
Futures contracts | 216,786 | (2 | ) | (24 | ) | (26 | ) | |||||||||
Purchase commitments | 94,210 | (1 | ) | 30 | 29 | |||||||||||
Foreign currency | 3,160 | - | 22 | 22 | ||||||||||||
Interbank market | 78,537 | 1 | 18 | 19 | ||||||||||||
Indices | 10,314 | (2 | ) | 2 | - | |||||||||||
Securities | 2,132 | - | - | - | ||||||||||||
Commodities | 64 | - | (12 | ) | (12 | ) | ||||||||||
Other | 3 | - | - | - | ||||||||||||
Commitments to sell | 122,576 | (1 | ) | (54 | ) | (55 | ) | |||||||||
Foreign currency | 18,939 | (1 | ) | (25 | ) | (26 | ) | |||||||||
Interbank market | 82,302 | 4 | (21 | ) | (17 | ) | ||||||||||
Indices | 11,843 | (3 | ) | (4 | ) | (7 | ) | |||||||||
Securities | 3,144 | - | - | - | ||||||||||||
Commodities | 6,339 | (1 | ) | (4 | ) | (5 | ) | |||||||||
Other | 9 | - | - | - | ||||||||||||
Swap contracts | 401 | 64 | 465 | |||||||||||||
Asset position | 69,018 | 2,128 | 451 | 2,579 | ||||||||||||
Foreign currency | 7,098 | 46 | 56 | 102 | ||||||||||||
Interbank market | 31,371 | 1,398 | 20 | 1,418 | ||||||||||||
Fixed rate | 10,946 | 261 | 106 | 367 | ||||||||||||
Floating rate | 6,538 | (2 | ) | 6 | 4 | |||||||||||
Indices | 12,964 | 416 | 264 | 680 | ||||||||||||
Securities | 11 | 5 | (1 | ) | 4 | |||||||||||
Commodities | 89 | 4 | - | 4 | ||||||||||||
Other | 1 | - | - | - | ||||||||||||
Liability position | 68,617 | (1,727 | ) | (387 | ) | (2,114 | ) | |||||||||
Foreign currency | 11,560 | (285 | ) | (9 | ) | (294 | ) | |||||||||
Interbank market | 19,601 | (795 | ) | 73 | (722 | ) | ||||||||||
Fixed rate | 15,387 | (211 | ) | (183 | ) | (394 | ) | |||||||||
Floating rate | 6,473 | (9 | ) | - | (9 | ) | ||||||||||
Indices | 15,433 | (414 | ) | (267 | ) | (681 | ) | |||||||||
Commodities | 106 | (13 | ) | (1 | ) | (14 | ) | |||||||||
Other | 57 | - | - | - | ||||||||||||
Option contracts | 1,728,321 | (83 | ) | 61 | (22 | ) | ||||||||||
Purchase commitments – long position | 489,888 | 1,421 | (462 | ) | 959 | |||||||||||
Foreign currency | 67,850 | 596 | (418 | ) | 178 | |||||||||||
Interbank market | 330,854 | 491 | (94 | ) | 397 | |||||||||||
Floating rate | 33 | - | - | - | ||||||||||||
Indices | 90,111 | 264 | 50 | 314 | ||||||||||||
Securities | 801 | 53 | (6 | ) | 47 | |||||||||||
Commodities | 239 | 17 | 6 | 23 | ||||||||||||
Commitments to sell – long position | 442,926 | 617 | 250 | 867 | ||||||||||||
Foreign currency | 12,721 | 319 | 30 | 349 | ||||||||||||
Interbank market | 388,004 | 185 | (11 | ) | 174 | |||||||||||
Indices | 41,059 | 98 | 229 | 327 | ||||||||||||
Securities | 1,010 | 3 | (1 | ) | 2 | |||||||||||
Commodities | 132 | 12 | 3 | 15 | ||||||||||||
Purchase commitments – short position | 379,223 | (1,433 | ) | 415 | (1,018 | ) | ||||||||||
Foreign currency | 48,514 | (619 | ) | 414 | (205 | ) | ||||||||||
Interbank market | 246,600 | (452 | ) | 71 | (381 | ) | ||||||||||
Indices | 83,355 | (332 | ) | (80 | ) | (412 | ) | |||||||||
Securities | 616 | (17 | ) | 4 | (13 | ) | ||||||||||
Commodities | 138 | (13 | ) | 6 | (7 | ) | ||||||||||
Commitments to sell – short position | 416,284 | (688 | ) | (142 | ) | (830 | ) | |||||||||
Foreign currency | 16,264 | (316 | ) | (144 | ) | (460 | ) | |||||||||
Interbank market | 317,681 | (182 | ) | 16 | (166 | ) | ||||||||||
Fixed rate | - | (21 | ) | 10 | (11 | ) | ||||||||||
Indices | 82,089 | (159 | ) | (175 | ) | (334 | ) | |||||||||
Securities | 147 | 5 | 140 | 145 | ||||||||||||
Commodities | 103 | (15 | ) | 11 | (4 | ) |
Off-Balance Sheet Notional amount | Amortized cost | Gains / Losses | Fair value | |||||||||||||
1/1/2010 | 1/1/2010 | 1/1/2010 | 1/1/2010 | |||||||||||||
Forwards operations (onshore) | 68 | 32 | - | 32 | ||||||||||||
Purchases receivable | 49 | 49 | - | 49 | ||||||||||||
Foreign currency | - | 1 | - | 1 | ||||||||||||
Floating rate | 48 | 48 | - | 48 | ||||||||||||
Commodities | 1 | - | - | - | ||||||||||||
Purchases payable - Floating rate | - | (48 | ) | - | (48 | ) | ||||||||||
Sales receivable | 19 | 50 | - | 50 | ||||||||||||
Interbank market | - | 31 | - | 31 | ||||||||||||
Floating rate | 19 | 19 | - | 19 | ||||||||||||
Sales deliverable - Floating rate | - | (19 | ) | - | (19 | ) | ||||||||||
Credit derivatives | 4,532 | (78 | ) | (13 | ) | (91 | ) | |||||||||
Asset position | 1,786 | 19 | (4 | ) | 15 | |||||||||||
Foreign currency | 137 | 1 | - | 1 | ||||||||||||
Fixed rate | 1,615 | 18 | (6 | ) | 12 | |||||||||||
Indices | 2 | - | - | - | ||||||||||||
Securities | 10 | - | 1 | 1 | ||||||||||||
Other | 22 | - | 1 | 1 | ||||||||||||
Liability position | 2,746 | (97 | ) | (9 | ) | (106 | ) | |||||||||
Foreign currency | - | (1 | ) | - | (1 | ) | ||||||||||
Interbank market | 50 | - | - | - | ||||||||||||
Fixed rate | 2,696 | (96 | ) | (7 | ) | (103 | ) | |||||||||
Securities | - | - | (1 | ) | (1 | ) | ||||||||||
Other | - | - | (1 | ) | (1 | ) | ||||||||||
Forwards operations (offshore) | 13,723 | (94 | ) | - | (94 | ) | ||||||||||
Asset position | 6,609 | 313 | - | 313 | ||||||||||||
Foreign currency | 5,584 | 279 | - | 279 | ||||||||||||
Interbank market | 213 | 20 | - | 20 | ||||||||||||
Fixed rate | 532 | 4 | - | 4 | ||||||||||||
Securities | 27 | - | - | - | ||||||||||||
Other | 253 | 10 | - | 10 | ||||||||||||
Liability position | 7,114 | (407 | ) | - | (407 | ) | ||||||||||
Foreign currency | 6,659 | (393 | ) | - | (393 | ) | ||||||||||
Interbank market | 2 | - | - | - | ||||||||||||
Fixed rate | 94 | (10 | ) | - | (10 | ) | ||||||||||
Floating rate | 348 | (3 | ) | - | (3 | ) | ||||||||||
Indices | 11 | (1 | ) | - | (1 | ) | ||||||||||
Swap with USD check | 1,935 | 17 | (58 | ) | (41 | ) | ||||||||||
Asset position | 976 | 80 | (31 | ) | 49 | |||||||||||
Foreign currency | 505 | 31 | (30 | ) | 1 | |||||||||||
Interbank market | 399 | 49 | (1 | ) | 48 | |||||||||||
Fixed rate | 72 | - | - | - | ||||||||||||
Liability position | 959 | (63 | ) | (27 | ) | (90 | ) | |||||||||
Foreign currency | 641 | (41 | ) | (17 | ) | (58 | ) | |||||||||
Interbank market | 292 | (21 | ) | (10 | ) | (31 | ) | |||||||||
Fixed rate | 26 | (1 | ) | - | (1 | ) | ||||||||||
Check of swap | 3,160 | (102 | ) | 148 | 46 | |||||||||||
Asset position | 2,451 | 122 | 64 | 186 | ||||||||||||
Foreign currency | 2,447 | 122 | 64 | 186 | ||||||||||||
Indices | 4 | - | - | - | ||||||||||||
Liability position - Floating rate | 709 | (224 | ) | 84 | (140 | ) | ||||||||||
Other derivative financial instruments | 11,936 | 14 | (26 | ) | (12 | ) | ||||||||||
Asset position | 7,548 | 557 | (35 | ) | 522 | |||||||||||
Foreign currency | 3,234 | 425 | - | 425 | ||||||||||||
Interbank market | 2,270 | - | - | - | ||||||||||||
Securities | 1,890 | 114 | (36 | ) | 78 | |||||||||||
Commodities | 154 | 18 | 1 | 19 | ||||||||||||
Liability position | 4,388 | (543 | ) | 9 | (534 | ) | ||||||||||
Foreign currency | 4,287 | (506 | ) | 9 | (497 | ) | ||||||||||
Fixed rate | 30 | (29 | ) | - | (29 | ) | ||||||||||
Commodities | 71 | (8 | ) | - | (8 | ) | ||||||||||
ASSETS | 5,356 | 233 | 5,589 | |||||||||||||
LIABILITIES | (5,251 | ) | (81 | ) | (5,332 | ) | ||||||||||
TOTAL | 105 | 152 | 257 |
Off-Balance Sheet Notional amount | Amortized cost | Gains / (Losses) | Fair Value | |||||||||||||
12/31/2012 | 12/31/2012 | 12/31/2012 | 12/31/2012 | |||||||||||||
Forward operations (onshore) | 23,641 | 1,227 | 10 | 1,237 | ||||||||||||
Purchases receivable | 4,103 | 1,170 | (3 | ) | 1,167 | |||||||||||
Foreign currency | 3,116 | 185 | (3 | ) | 182 | |||||||||||
Fixed rate | 727 | 727 | - | 727 | ||||||||||||
Floating rate | 258 | 258 | - | 258 | ||||||||||||
Commodities | 2 | - | - | - | ||||||||||||
Purchases payable | 5,894 | (1,077 | ) | 13 | (1,064 | ) | ||||||||||
Foreign currency | 5,759 | (82 | ) | 13 | (69 | ) | ||||||||||
Fixed rate | - | (727 | ) | - | (727 | ) | ||||||||||
Floating rate | - | (258 | ) | - | (258 | ) | ||||||||||
Commodities | 135 | (10 | ) | - | (10 | ) | ||||||||||
Sales receivable | 12,054 | 2,368 | (5 | ) | 2,363 | |||||||||||
Foreign currency | 6,788 | 107 | (3 | ) | 104 | |||||||||||
Interbank market | 2,908 | 7 | - | 7 | ||||||||||||
Fixed rate | 868 | 891 | (1 | ) | 890 | |||||||||||
Floating rate | 395 | 396 | (1 | ) | 395 | |||||||||||
Indices | 5 | 5 | - | 5 | ||||||||||||
Securities | 961 | 951 | (2 | ) | 949 | |||||||||||
Commodities | 129 | 11 | 2 | 13 | ||||||||||||
Sales deliverable | 1,590 | (1,234 | ) | 5 | (1,229 | ) | ||||||||||
Foreign currency | 1,558 | (58 | ) | 4 | (54 | ) | ||||||||||
Fixed rate | - | (779 | ) | - | (779 | ) | ||||||||||
Floating rate | - | (396 | ) | 1 | (395 | ) | ||||||||||
Commodities | 32 | (1 | ) | - | (1 | ) | ||||||||||
Credit derivatives | 6,198 | 630 | 8 | 638 | ||||||||||||
Asset position | 3,150 | 734 | (6 | ) | 728 | |||||||||||
Fixed rate | 2,307 | 734 | (12 | ) | 722 | |||||||||||
Securities | 650 | - | 5 | 5 | ||||||||||||
Other | 193 | - | 1 | 1 | ||||||||||||
Liability position | 3,048 | (104 | ) | 14 | (90 | ) | ||||||||||
Fixed rate | 2,810 | (104 | ) | 20 | (84 | ) | ||||||||||
Securities | 232 | - | (6 | ) | (6 | ) | ||||||||||
Other | 6 | - | - | - | ||||||||||||
Forwards operations (offshore) | 39,875 | (47 | ) | 80 | 33 | |||||||||||
Asset position | 18,969 | 315 | 64 | 379 | ||||||||||||
Foreign currency | 18,522 | 305 | 64 | 369 | ||||||||||||
Floating rate | 410 | 8 | - | 8 | ||||||||||||
Indices | 25 | 2 | - | 2 | ||||||||||||
Securities | 12 | - | - | - | ||||||||||||
Liability position | 20,906 | (362 | ) | 16 | (346 | ) | ||||||||||
Foreign currency | 20,890 | (362 | ) | 16 | (346 | ) | ||||||||||
Interbank market | 14 | - | - | - | ||||||||||||
Indices | 2 | - | - | - | ||||||||||||
Swap with USD check | 1,087 | (1 | ) | (41 | ) | (42 | ) | |||||||||
Asset position – Interbank market | 543 | - | - | - | ||||||||||||
Liability position - Interbank market | 544 | (1 | ) | (41 | ) | (42 | ) | |||||||||
Foreign currency | 479 | (1 | ) | (40 | ) | (41 | ) | |||||||||
Interbank market | 65 | - | (1 | ) | (1 | ) | ||||||||||
Check of swap – Asset position - Foreign currency | 547 | - | 35 | 35 | ||||||||||||
Other derivative financial instruments | 6,677 | 276 | 131 | 407 | ||||||||||||
Asset position | 5,493 | 1,291 | 42 | 1,333 | ||||||||||||
Foreign currency | 485 | 104 | 5 | 109 | ||||||||||||
Fixed rate | 1,633 | 776 | 40 | 816 | ||||||||||||
Floating rate | 285 | 262 | - | 262 | ||||||||||||
Securities | 2,994 | 149 | (4 | ) | 145 | |||||||||||
Other | 96 | - | 1 | 1 | ||||||||||||
Liability position | 1,184 | (1,015 | ) | 89 | (926 | ) | ||||||||||
Foreign currency | 179 | (92 | ) | 94 | 2 | |||||||||||
Fixed rate | - | (637 | ) | 2 | (635 | ) | ||||||||||
Floating rate | - | (286 | ) | (1 | ) | (287 | ) | |||||||||
Securities | 819 | - | (5 | ) | (5 | ) | ||||||||||
Other | 186 | - | (1 | ) | (1 | ) | ||||||||||
ASSETS | 9,495 | 2,102 | 11,597 | |||||||||||||
LIABILITIES | (8,438 | ) | (2,631 | ) | (11,069 | ) | ||||||||||
TOTAL | 1,057 | (529 | ) | 528 |
Derivative contracts mature as follows (in days): | Derivative contracts mature as follows (in days): | Derivative contracts mature as follows (in days): | ||||||||||||||||||||||||||||||||||||||
Off-Balance Sheet - Notional Amount | 0 - 30 | 31 - 180 | 181 - 365 | Over 365 | 1/1/2010 | |||||||||||||||||||||||||||||||||||
Off-Balance Sheet – Notional amount | 0 - 30 | 31 - 180 | 181 - 365 | Over 365 | 12/31/2012 | |||||||||||||||||||||||||||||||||||
Futures | 62,714 | 52,906 | 30,269 | 70,897 | 216,786 | 107,856 | 116,709 | 147,543 | 165,341 | 537,449 | ||||||||||||||||||||||||||||||
Swaps | 19,085 | 14,918 | 11,131 | 21,756 | 66,890 | 14,159 | 29,218 | 21,019 | 64,422 | 128,818 | ||||||||||||||||||||||||||||||
Options | 539,139 | 266,126 | 573,715 | 349,341 | 1,728,321 | 1,000,052 | 97,773 | 420,582 | 508,688 | 2,027,095 | ||||||||||||||||||||||||||||||
Forwards (onshore) | 67 | 1 | - | - | 68 | 7,057 | 9,140 | 3,512 | 3,932 | 23,641 | ||||||||||||||||||||||||||||||
Credit derivatives | 469 | 1,259 | 663 | 2,141 | 4,532 | 224 | 1,806 | 154 | 4,014 | 6,198 | ||||||||||||||||||||||||||||||
Forwards (offshore) | 5,336 | 5,631 | 1,654 | 1,102 | 13,723 | 11,037 | 22,537 | 4,186 | 2,115 | 39,875 | ||||||||||||||||||||||||||||||
Swaps with USD Check | 446 | 19 | - | 431 | 896 | |||||||||||||||||||||||||||||||||||
Swaps with USD check | - | - | - | 543 | 543 | |||||||||||||||||||||||||||||||||||
Check of swap | 369 | 151 | 68 | 2,572 | 3,160 | - | - | - | 547 | 547 | ||||||||||||||||||||||||||||||
Other | 3,791 | 4,067 | 1,689 | 2,389 | 11,936 | 132 | 1,498 | 710 | 4,337 | 6,677 |
F.45 |
The following table shows the composition of derivatives by index:
Off-Balance Sheet Notional amount | Amortized cost | Gains / (Losses) | Fair value | |||||||||||||
12/31/2011 | 12/31/2011 | 12/31/2011 | 12/31/2011 | |||||||||||||
Futures contracts | 268,806 | 75 | (49 | ) | 26 | |||||||||||
Purchase commitments | 251,094 | 75 | 19 | 94 | ||||||||||||
Foreign currency | 59,087 | (1 | ) | 12 | 11 | |||||||||||
Interbank market | 144,154 | 1 | - | 1 | ||||||||||||
Indices | 41,365 | 75 | 7 | 82 | ||||||||||||
Securities | 6,338 | - | - | - | ||||||||||||
Commodities | 122 | - | - | - | ||||||||||||
Other | 28 | - | - | - | ||||||||||||
Commitments to sell | 17,712 | - | (68 | ) | (68 | ) | ||||||||||
Foreign currency | 15,796 | - | (63 | ) | (63 | ) | ||||||||||
Interbank market | 52 | - | - | - | ||||||||||||
Indices | 1,106 | - | - | - | ||||||||||||
Securities | 230 | - | �� | (3 | ) | (3 | ) | |||||||||
Commodities | 513 | - | (2 | ) | (2 | ) | ||||||||||
Other | 15 | - | - | - | ||||||||||||
Swap contracts | 72 | (120 | ) | (48 | ) | |||||||||||
Asset position | 94,806 | 2,155 | 595 | 2,750 | ||||||||||||
Foreign currency | 9,883 | 605 | 7 | 612 | ||||||||||||
Interbank market | 39,936 | 545 | 50 | 595 | ||||||||||||
Fixed rate | 16,808 | 227 | 241 | 468 | ||||||||||||
Floating rate | 3,809 | 3 | - | 3 | ||||||||||||
Indices | 23,995 | 739 | 312 | 1,051 | ||||||||||||
Securities | 28 | 23 | (26 | ) | (3 | ) | ||||||||||
Commodities | 3 | - | - | - | ||||||||||||
Other | 344 | 13 | 11 | 24 | ||||||||||||
Liability position | 94,734 | (2,083 | ) | (715 | ) | (2,798 | ) | |||||||||
Foreign currency | 11,171 | (608 | ) | 22 | (586 | ) | ||||||||||
Interbank market | 24,958 | (100 | ) | 10 | (90 | ) | ||||||||||
Fixed rate | 21,733 | (325 | ) | (301 | ) | (626 | ) | |||||||||
Floating rate | 6,144 | (133 | ) | 2 | (131 | ) | ||||||||||
Indices | 29,225 | (816 | ) | (477 | ) | (1,293 | ) | |||||||||
Securities | 112 | (85 | ) | 34 | (51 | ) | ||||||||||
Commodities | 108 | (1 | ) | (4 | ) | (5 | ) | |||||||||
Other | 1,283 | (15 | ) | (1 | ) | (16 | ) | |||||||||
Option contracts | 1,108,517 | 576 | (739 | ) | (163 | ) | ||||||||||
Purchase commitments – long position | 237,863 | 1,122 | (373 | ) | 749 | |||||||||||
Foreign currency | 17,481 | 887 | (289 | ) | 598 | |||||||||||
Interbank market | 36,911 | 65 | (36 | ) | 29 | |||||||||||
Floating rate | 278 | 1 | (1 | ) | - | |||||||||||
Indices | 181,517 | 124 | (58 | ) | 66 | |||||||||||
Securities | 1,162 | 31 | 11 | 42 | ||||||||||||
Commodities | 501 | 14 | - | 14 | ||||||||||||
Other | 13 | - | - | - | ||||||||||||
Commitments to sell – long position | 354,697 | 1,457 | 237 | 1,694 | ||||||||||||
Foreign currency | 7,635 | 149 | (41 | ) | 108 | |||||||||||
Interbank market | 27,212 | 293 | (49 | ) | 244 | |||||||||||
Fixed rate | 2 | - | 1 | 1 | ||||||||||||
Floating rate | 218 | 1 | - | 1 | ||||||||||||
Indices | 315,903 | 915 | (2 | ) | 913 | |||||||||||
Securities | 2,821 | 82 | 317 | 399 | ||||||||||||
Commodities | 768 | 14 | - | 14 | ||||||||||||
Other | 138 | 3 | 11 | 14 | ||||||||||||
Purchase commitments – short position | 174,398 | (778 | ) | 47 | (731 | ) | ||||||||||
Foreign currency | 10,325 | (454 | ) | (97 | ) | (551 | ) | |||||||||
Interbank market | 23,954 | (47 | ) | 11 | (36 | ) | ||||||||||
Indices | 139,248 | (258 | ) | 144 | (114 | ) | ||||||||||
Securities | 795 | (15 | ) | (13 | ) | (28 | ) | |||||||||
Commodities | 65 | (4 | ) | 2 | (2 | ) | ||||||||||
Other | 11 | - | - | - | ||||||||||||
Commitments to sell – short position | 341,559 | (1,225 | ) | (650 | ) | (1,875 | ) | |||||||||
Foreign currency | 10,757 | (309 | ) | 113 | (196 | ) | ||||||||||
Interbank market | 35,433 | (178 | ) | (239 | ) | (417 | ) | |||||||||
Fixed rate | 2 | - | (1 | ) | (1 | ) | ||||||||||
Indices | 293,394 | (647 | ) | (197 | ) | (844 | ) | |||||||||
Securities | 1,636 | (79 | ) | (316 | ) | (395 | ) | |||||||||
Commodities | 197 | (9 | ) | 1 | (8 | ) | ||||||||||
Other | 140 | (3 | ) | (11 | ) | (14 | ) |
F.46 |
Off-Balance Sheet Notional amount | Amortized cost | Gains / (Losses) | Fair Value | |||||||||||||
12/31/2011 | 12/31/2011 | 12/31/2011 | 12/31/2011 | |||||||||||||
Forwards operations (onshore) | 17,248 | 1,092 | (31 | ) | 1,061 | |||||||||||
Purchases receivable | 8,702 | 921 | (62 | ) | 859 | |||||||||||
Foreign currency | 7,883 | 623 | (62 | ) | 561 | |||||||||||
Interbank market | 520 | - | - | - | ||||||||||||
Fixed rate | - | 35 | - | 35 | ||||||||||||
Floating rate | 262 | 262 | - | 262 | ||||||||||||
Commodities | 37 | 1 | - | 1 | ||||||||||||
Purchases payable | 1,351 | (324 | ) | (9 | ) | (333 | ) | |||||||||
Foreign currency | 1,218 | (43 | ) | (8 | ) | (51 | ) | |||||||||
Floating rate | - | (262 | ) | - | (262 | ) | ||||||||||
Commodities | 131 | (19 | ) | (1 | ) | (20 | ) | |||||||||
Other | 2 | - | - | - | ||||||||||||
Sales receivable | 2,230 | 1,013 | 7 | 1,020 | ||||||||||||
Foreign currency | 1,181 | 24 | 9 | 33 | ||||||||||||
Interbank market | 48 | 1 | - | 1 | ||||||||||||
Fixed rate | 148 | 148 | (1 | ) | 147 | |||||||||||
Floating rate | 110 | 110 | - | 110 | ||||||||||||
Securities | 731 | 726 | (1 | ) | 725 | |||||||||||
Commodities | 12 | 4 | - | 4 | ||||||||||||
Sales deliverable | 4,965 | (518 | ) | 33 | (485 | ) | ||||||||||
Foreign currency | 4,905 | (342 | ) | 32 | (310 | ) | ||||||||||
Fixed rate | - | (54 | ) | - | (54 | ) | ||||||||||
Floating rate | - | (110 | ) | - | (110 | ) | ||||||||||
Commodities | 60 | (12 | ) | 1 | (11 | ) | ||||||||||
Credit derivatives | 6,598 | 153 | 351 | 504 | ||||||||||||
Asset position | 3,406 | 242 | 368 | 610 | ||||||||||||
Foreign currency | 117 | - | 1 | 1 | ||||||||||||
Fixed rate | 1,858 | 226 | 354 | 580 | ||||||||||||
Floating rate | - | 5 | 11 | 16 | ||||||||||||
Indices | - | 11 | (1 | ) | 10 | |||||||||||
Securities | 1,430 | - | 3 | 3 | ||||||||||||
Other | 1 | - | - | - | ||||||||||||
Liability position | 3,192 | (89 | ) | (17 | ) | (106 | ) | |||||||||
Fixed rate | 2,900 | (89 | ) | (8 | ) | (97 | ) | |||||||||
Securities | 292 | - | (9 | ) | (9 | ) | ||||||||||
Forwards operations (offshore) | 31,285 | 69 | 56 | 125 | ||||||||||||
Asset position | 16,257 | 421 | 30 | 451 | ||||||||||||
Foreign currency | 15,862 | 415 | 30 | 445 | ||||||||||||
Interbank market | 19 | - | - | - | ||||||||||||
Floating rate | 376 | 6 | - | 6 | ||||||||||||
Liability position | 15,028 | (352 | ) | 26 | (326 | ) | ||||||||||
Foreign currency | 14,946 | (348 | ) | 26 | (322 | ) | ||||||||||
Interbank market | 13 | - | - | - | ||||||||||||
Floating rate | 69 | (1 | ) | - | (1 | ) | ||||||||||
Indices | - | (1 | ) | - | (1 | ) | ||||||||||
Securities | - | (2 | ) | - | (2 | ) | ||||||||||
Swap with USD check | 102 | - | (2 | ) | (2 | ) | ||||||||||
Asset position – Interbank market | 51 | - | - | - | ||||||||||||
Liability position - Interbank market | 51 | - | (2 | ) | (2 | ) | ||||||||||
Check of swap – Asset position - Foreign currency | 53 | - | 4 | 4 | ||||||||||||
Other derivative financial instruments | 5,490 | 695 | (195 | ) | 500 | |||||||||||
Asset position | 4,893 | 769 | (178 | ) | 591 | |||||||||||
Foreign currency | 608 | 55 | 31 | 86 | ||||||||||||
Fixed rate | 935 | 521 | (220 | ) | 301 | |||||||||||
Securities | 3,345 | 193 | 11 | 204 | ||||||||||||
Other | 5 | - | - | - | ||||||||||||
Liability position | 597 | (74 | ) | (17 | ) | (91 | ) | |||||||||
Foreign currency | 235 | (74 | ) | (12 | ) | (86 | ) | |||||||||
Securities | 300 | - | (3 | ) | (3 | ) | ||||||||||
Other | 62 | - | (2 | ) | (2 | ) | ||||||||||
ASSETS | 8,175 | 579 | 8,754 | |||||||||||||
LIABILITIES | (5,443 | ) | (1,304 | ) | (6,747 | ) | ||||||||||
TOTAL | 2,732 | (725 | ) | 2,007 |
Derivative contracts mature as follows (in days): | ||||||||||||||||||||
Off-Balance Sheet - Notional amount | 0 - 30 | 31 - 180 | 181 - 365 | Over 365 | 12/31/2011 | |||||||||||||||
Futures | 75,850 | 67,789 | 36,072 | 89,095 | 268,806 | |||||||||||||||
Swaps | 9,939 | 16,691 | 19,679 | 46,342 | 92,651 | |||||||||||||||
Options | 846,277 | 58,377 | 176,965 | 26,898 | 1,108,517 | |||||||||||||||
Forwards (onshore) | 3,393 | 7,970 | 3,626 | 2,259 | 17,248 | |||||||||||||||
Credit derivatives | 190 | 2,774 | 589 | 3,045 | 6,598 | |||||||||||||||
Forwards (offshore) | 6,636 | 14,066 | 6,899 | 3,684 | 31,285 | |||||||||||||||
Swaps with USD check | - | - | - | 51 | 51 | |||||||||||||||
Check of swap | - | - | - | 53 | 53 | |||||||||||||||
Other | 10 | 500 | 1,196 | 3,784 | 5,490 |
F.47 |
Derivative financial instruments
TheSee below the composition of the Derivative Financial Instruments portfolio (assets and liabilities) by type of instrument, stated fair value, and by maturity.
12/31/2011 | 12/31/2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | % | 0-30 days | 31-90 days | 91-180 days | 181-365 days | 366-720 days | Over 720 days | Fair value | % | 0-30 days | 31-90 days | 91-180 days | 181-365 days | 366-720 days | Over 720 days | |||||||||||||||||||||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Futures | 26 | 0.4 | 1 | 51 | 5 | (1 | ) | (3 | ) | (27 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Swaps – Difference receivable | 3,686 | 31.7 | 275 | 215 | 171 | 519 | 568 | 1,938 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BM&F Bovespa | 31 | 0.4 | 1 | 57 | 5 | (1 | ) | (4 | ) | (27 | ) | 471 | 4.1 | 5 | 10 | 13 | 17 | 145 | 281 | |||||||||||||||||||||||||||||||||||||||||||||
Financial institutions | (4 | ) | 0.0 | - | (2 | ) | - | (2 | ) | - | - | 420 | 3.6 | 86 | 137 | 19 | 27 | 32 | 119 | |||||||||||||||||||||||||||||||||||||||||||||
Companies | (1 | ) | 0.0 | - | (4 | ) | - | 2 | 1 | - | 2,746 | 23.6 | 180 | 68 | 136 | 463 | 389 | 1,510 | ||||||||||||||||||||||||||||||||||||||||||||||
Individuals | 49 | 0.4 | 4 | - | 3 | 12 | 2 | 28 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Option premiums | 2,443 | 27.9 | 1,252 | 182 | 223 | 660 | 113 | 13 | 1,906 | 16.4 | 936 | 176 | 83 | 295 | 358 | 58 | ||||||||||||||||||||||||||||||||||||||||||||||||
BM&F Bovespa | 1,689 | 19.3 | 1,162 | 11 | 35 | 471 | 10 | - | 1,396 | 12.0 | 853 | 31 | 14 | 220 | 278 | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Financial institutions | 286 | 3.3 | 45 | 67 | 59 | 87 | 27 | 1 | 118 | 1.0 | 26 | 32 | 20 | 17 | 16 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||
Companies | 468 | 5.3 | 45 | 104 | 129 | 102 | 76 | 12 | 392 | 3.4 | 57 | 113 | 49 | 58 | 64 | 51 | ||||||||||||||||||||||||||||||||||||||||||||||||
Forwards (onshore) | 1,879 | 21.3 | 644 | 384 | 156 | 209 | 146 | 340 | 3,530 | 30.5 | 547 | 652 | 677 | 427 | 718 | 509 | ||||||||||||||||||||||||||||||||||||||||||||||||
BM&F Bovespa | 727 | 8.3 | 461 | 219 | 47 | - | - | - | 961 | 8.3 | 285 | 502 | 149 | 25 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Financial institutions | 80 | 0.9 | 74 | - | 1 | 2 | 3 | - | 172 | 1.5 | 171 | 1 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Companies | 1,072 | 12.1 | 109 | 165 | 108 | 207 | 143 | 340 | 2,396 | 20.7 | 91 | 149 | 528 | 402 | 718 | 508 | ||||||||||||||||||||||||||||||||||||||||||||||||
Swaps – Difference receivable | 2,750 | 31.4 | 230 | 351 | 168 | 502 | 534 | 965 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BM&F Bovespa | 332 | 3.8 | 13 | 25 | 31 | 61 | 22 | 180 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial institutions | 259 | 3.0 | 29 | 63 | 13 | 28 | 49 | 77 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Companies | 2,155 | 24.6 | 187 | 262 | 122 | 413 | 463 | 708 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individuals | 4 | 0.0 | 1 | 1 | 2 | - | - | - | 1 | - | - | - | - | - | - | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Credit derivatives | 399 | 4.6 | - | 15 | 17 | 6 | 52 | 309 | 728 | 6.3 | 119 | 564 | 1 | 1 | 2 | 41 | ||||||||||||||||||||||||||||||||||||||||||||||||
Financial institutions | 95 | 1.1 | - | 15 | 17 | 2 | 2 | 59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Companies | 304 | 3.5 | - | - | - | 4 | 50 | 250 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forwards (offshore) | 451 | 5.2 | 96 | 101 | 73 | 67 | 44 | 70 | 379 | 3.3 | 66 | 86 | 56 | 58 | 49 | 64 | ||||||||||||||||||||||||||||||||||||||||||||||||
Financial institutions | 279 | 3.2 | 83 | 73 | 45 | 31 | 8 | 39 | 126 | 1.1 | 38 | 45 | 26 | 14 | 2 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Companies | 172 | 2.0 | 13 | 28 | 28 | 36 | 36 | 31 | 253 | 2.2 | 28 | 41 | 30 | 44 | 47 | 63 | ||||||||||||||||||||||||||||||||||||||||||||||||
Swaps with target flow - Companies | 4 | 0.0 | - | - | - | - | - | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Check of swap – Companies | 35 | 0.3 | - | - | - | - | 1 | 34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | 802 | 9.2 | 54 | 470 | 3 | 30 | 74 | 171 | 1,333 | 11.5 | - | 900 | - | 90 | 60 | 283 | ||||||||||||||||||||||||||||||||||||||||||||||||
Financial institutions | 778 | 8.9 | 54 | 467 | 1 | 11 | 74 | 171 | 786 | 6.8 | - | 576 | - | 71 | 6 | 133 | ||||||||||||||||||||||||||||||||||||||||||||||||
Companies | 24 | 0.3 | - | 3 | 2 | 19 | - | - | 547 | 4.7 | - | 324 | - | 19 | 54 | 150 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total (*) | 8,754 | 100.0 | 2,277 | 1,554 | 645 | 1,473 | 960 | 1,845 | 11,597 | 100.0 | 1,943 | 2,593 | 988 | 1,390 | 1,756 | 2,927 | ||||||||||||||||||||||||||||||||||||||||||||||||
% per maturity term | 26.0 | % | 17.8 | % | 7.4 | % | 16.8 | % | 11.0 | % | 21.1 | % | 16.8 | 22.4 | 8.5 | 12.0 | 15.1 | 25.2 |
(*) Of the total asset portfolio of Derivative Financial Instruments, R$ 5,9496,914 refers to current and R$ 2,8054,683 to non-current.
12/31/2010 | ||||||||||||||||||||||||||||||||
Fair value | % | 0-30 days | 31-90 days | 91-180 days | 181-365 days | 366-720 days | Over 720 days | |||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
Option premiums | 1,752 | 22.5 | 213 | 230 | 222 | 405 | 106 | 576 | ||||||||||||||||||||||||
BM&F Bovespa | 1,305 | 16.7 | 746 | 72 | 123 | 287 | 77 | - | ||||||||||||||||||||||||
Financial institutions | 364 | 4.7 | 24 | 116 | 90 | 106 | 22 | 6 | ||||||||||||||||||||||||
Companies | 83 | 1.1 | (557 | ) | 42 | 9 | 12 | 7 | 570 | |||||||||||||||||||||||
Forwards (onshore) | 1,484 | 19.1 | 323 | 1,071 | 64 | 26 | - | - | ||||||||||||||||||||||||
BM&F Bovespa | 1,398 | 18.0 | 251 | 1,059 | 62 | 26 | - | - | ||||||||||||||||||||||||
Financial institutions | 86 | 1.1 | 72 | 12 | 2 | - | - | - | ||||||||||||||||||||||||
Swaps - Difference receivable | 2,937 | 37.8 | 286 | 249 | 191 | 655 | 621 | 935 | ||||||||||||||||||||||||
BM&F Bovespa | 271 | 3.5 | 5 | 8 | 14 | 55 | 63 | 126 | ||||||||||||||||||||||||
Financial institutions | 441 | 5.7 | 167 | 44 | 3 | 73 | 21 | 133 | ||||||||||||||||||||||||
Companies | 2,203 | 28.3 | 112 | 193 | 163 | 524 | 536 | 675 | ||||||||||||||||||||||||
Individuals | 22 | 0.3 | 2 | 4 | 11 | 3 | 1 | 1 | ||||||||||||||||||||||||
Credit derivatives | 261 | 3.4 | - | 22 | 1 | 2 | 1 | 235 | ||||||||||||||||||||||||
Financial institutions | 77 | 1.0 | - | 22 | 1 | 1 | 1 | 52 | ||||||||||||||||||||||||
Companies | 184 | 2.4 | - | - | - | 1 | - | 183 | ||||||||||||||||||||||||
Forwards (offshore) | 612 | 7.8 | 273 | 128 | 96 | 96 | 13 | 6 | ||||||||||||||||||||||||
Financial institutions | 151 | 1.9 | 64 | 39 | 21 | 19 | 4 | 4 | ||||||||||||||||||||||||
Companies | 460 | 5.9 | 209 | 88 | 75 | 77 | 9 | 2 | ||||||||||||||||||||||||
Individuals | 1 | 0.0 | - | 1 | - | - | - | - | ||||||||||||||||||||||||
Other | 731 | 9.4 | 50 | 326 | - | 130 | 12 | 213 | ||||||||||||||||||||||||
Financial institutions | 724 | 9.3 | 50 | 326 | - | 130 | 5 | 213 | ||||||||||||||||||||||||
Companies | 7 | 0.1 | - | - | - | - | 7 | - | ||||||||||||||||||||||||
Total (*) | 7,777 | 100.0 | 1,145 | 2,026 | 574 | 1,314 | 753 | 1,965 | ||||||||||||||||||||||||
% per maturity term | 14.7 | % | 26.1 | % | 7.4 | % | 16.9 | % | 9.7 | % | 25.3 | % |
F.48 |
Derivative financial instruments
See below the composition of the Derivative Financial Instruments portfolio (assets and liabilities) by type of instrument, stated fair value and by maturity.
12/31/2011 | ||||||||||||||||||||||||||||||||
Fair value | % | 0-30 days | 31-90 days | 91-180 days | 181-365 days | 366-720 days | Over 720 days | |||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
Futures | 26 | 0.4 | 1 | 51 | 5 | (1 | ) | (3 | ) | (27 | ) | |||||||||||||||||||||
BM&F Bovespa | 31 | 0.4 | 1 | 57 | 5 | (1 | ) | (4 | ) | (27 | ) | |||||||||||||||||||||
Financial institutions | (4 | ) | - | - | (2 | ) | - | (2 | ) | - | - | |||||||||||||||||||||
Companies | (1 | ) | - | - | (4 | ) | - | 2 | 1 | - | ||||||||||||||||||||||
Swaps – Difference receivable | 2,750 | 31.4 | 230 | 351 | 168 | 502 | 534 | 965 | ||||||||||||||||||||||||
BM&F Bovespa | 332 | 3.8 | 13 | 25 | 31 | 61 | 22 | 180 | ||||||||||||||||||||||||
Financial institutions | 259 | 3.0 | 29 | 63 | 13 | 28 | 49 | 77 | ||||||||||||||||||||||||
Companies | 2,155 | 24.6 | 187 | 262 | 122 | 413 | 463 | 708 | ||||||||||||||||||||||||
Individuals | 4 | - | 1 | 1 | 2 | - | - | - | ||||||||||||||||||||||||
Option premiums | 2,443 | 27.9 | 1,252 | 182 | 223 | 660 | 113 | 13 | ||||||||||||||||||||||||
BM&F Bovespa | 1,689 | 19.3 | 1,162 | 11 | 35 | 471 | 10 | - | ||||||||||||||||||||||||
Financial institutions | 286 | 3.3 | 45 | 67 | 59 | 87 | 27 | 1 | ||||||||||||||||||||||||
Companies | 468 | 5.3 | 45 | 104 | 129 | 102 | 76 | 12 | ||||||||||||||||||||||||
Forwards (onshore) | 1,879 | 21.3 | 644 | 384 | 156 | 209 | 146 | 340 | ||||||||||||||||||||||||
BM&F Bovespa | 727 | 8.3 | 461 | 219 | 47 | - | - | - | ||||||||||||||||||||||||
Financial institutions | 80 | 0.9 | 74 | - | 1 | 2 | 3 | - | ||||||||||||||||||||||||
Companies | 1,072 | 12.1 | 109 | 165 | 108 | 207 | 143 | 340 | ||||||||||||||||||||||||
Credit derivatives - Financial institutions | 610 | 7.0 | 50 | 465 | 12 | 2 | 22 | 59 | ||||||||||||||||||||||||
Financial institutions | 610 | 7.0 | 50 | 465 | 12 | 2 | 22 | 59 | ||||||||||||||||||||||||
Forwards (offshore) | 451 | 5.2 | 96 | 101 | 73 | 67 | 44 | 70 | ||||||||||||||||||||||||
Financial institutions | 279 | 3.2 | 83 | 73 | 45 | 31 | 8 | 39 | ||||||||||||||||||||||||
Companies | 172 | 2.0 | 13 | 28 | 28 | 36 | 36 | 31 | ||||||||||||||||||||||||
Check of Swap – Companies | 4 | - | - | - | - | - | - | 4 | ||||||||||||||||||||||||
Other | 591 | 6.8 | 4 | 20 | 8 | 34 | 104 | 421 | ||||||||||||||||||||||||
Financial institutions | 263 | 3.1 | 4 | 17 | 6 | 11 | 54 | 171 | ||||||||||||||||||||||||
Companies | 328 | 3.7 | - | 3 | 2 | 23 | 50 | 250 | ||||||||||||||||||||||||
Total (*) | 8,754 | 100 | 2,277 | 1,554 | 645 | 1,473 | 960 | 1,845 | ||||||||||||||||||||||||
% per maturity term | 26.0 | 17.8 | 7.4 | 16.8 | 11.0 | 21.1 |
(*) Of the total asset portfolio of Derivative Financial Instruments, R$ 5,0595.949 refers to current and R$ 2,7182,805 to non-current.
1/1/2010 | ||||||||||||||||||||||||||||||||
Fair value | % | 0-30 days | 31-90 days | 91-180 days | 181-365 days | 366-720 days | Over 720 days | |||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
Option premiums | 1,826 | 32.7 | 750 | 201 | 156 | 331 | 385 | 3 | ||||||||||||||||||||||||
BM&F Bovespa | 1,573 | 28.1 | 723 | 101 | 93 | 281 | 374 | 1 | ||||||||||||||||||||||||
Financial institutions | 216 | 3.9 | 7 | 93 | 60 | 47 | 7 | 2 | ||||||||||||||||||||||||
Companies | 37 | 0.7 | 20 | 7 | 3 | 3 | 4 | - | ||||||||||||||||||||||||
Forwards (onshore) | 99 | 1.8 | 67 | - | 32 | - | - | - | ||||||||||||||||||||||||
Financial institutions | 70 | 1.3 | 38 | - | 32 | - | - | - | ||||||||||||||||||||||||
Companies | 29 | 0.5 | 29 | - | - | - | - | - | ||||||||||||||||||||||||
Swaps - Difference receivable | 2,579 | 46.2 | 407 | 206 | 274 | 455 | 469 | 768 | ||||||||||||||||||||||||
BM&F Bovespa | 256 | 4.6 | 3 | 8 | 37 | 100 | 31 | 77 | ||||||||||||||||||||||||
Financial institutions | 741 | 13.3 | 223 | 34 | 114 | 154 | 68 | 148 | ||||||||||||||||||||||||
Companies | 1,552 | 27.8 | 177 | 158 | 111 | 198 | 368 | 540 | ||||||||||||||||||||||||
Individuals | 30 | 0.5 | 4 | 6 | 12 | 3 | 2 | 3 | ||||||||||||||||||||||||
Credit derivatives | 15 | 0.3 | 1 | 6 | 2 | 1 | 1 | 4 | ||||||||||||||||||||||||
Financial institutions | 15 | 0.3 | 1 | 6 | 2 | 1 | 1 | 4 | ||||||||||||||||||||||||
Forwards (offshore) | 313 | 5.6 | 88 | 81 | 105 | 27 | 7 | 5 | ||||||||||||||||||||||||
Financial institutions | 227 | 4.1 | 61 | 55 | 87 | 17 | 2 | 5 | ||||||||||||||||||||||||
Companies | 86 | 1.5 | 27 | 26 | 18 | 10 | 5 | - | ||||||||||||||||||||||||
Swaps with USD Check | 49 | 0.9 | 45 | 1 | 1 | 1 | 1 | - | ||||||||||||||||||||||||
Check of swap – Financial institutions | 186 | 3.3 | - | - | - | 2 | 135 | 49 | ||||||||||||||||||||||||
Other | 522 | 9.2 | 25 | 103 | 102 | 25 | 126 | 141 | ||||||||||||||||||||||||
Financial institutions | 316 | 5.6 | 1 | - | 52 | 1 | 122 | 140 | ||||||||||||||||||||||||
Companies | 206 | 3.6 | 24 | 103 | 50 | 24 | 4 | 1 | ||||||||||||||||||||||||
Total (*) | 5,589 | 100.0 | 1,383 | 598 | 672 | 842 | 1,124 | 970 | ||||||||||||||||||||||||
% per maturity term | 24.7 | % | 10.7 | % | 12.0 | % | 15.1 | % | 20.1 | % | 17.4 | % |
F.49 |
12/31/2012 | ||||||||||||||||||||||||||||||||
Fair value | % | 0 - 30 days | 31 - 90 days | 91 - 180 days | 181 - 365 days | 366 - 720 days | Over 720 days | |||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||
Futures - BM&F Bovespa | (23 | ) | 0.2 | - | - | - | (8 | ) | (6 | ) | (9 | ) | ||||||||||||||||||||
Swaps – Difference payable | (5,068 | ) | 45.8 | (351 | ) | (186 | ) | (536 | ) | (404 | ) | (902 | ) | (2,689 | ) | |||||||||||||||||
BM&F Bovespa | (819 | ) | 7.4 | (3 | ) | (10 | ) | (169 | ) | (13 | ) | (170 | ) | (454 | ) | |||||||||||||||||
Financial institutions | (1,111 | ) | 10.0 | (238 | ) | (78 | ) | (66 | ) | (184 | ) | (100 | ) | (445 | ) | |||||||||||||||||
Companies | (2,882 | ) | 26.1 | (102 | ) | (87 | ) | (294 | ) | (195 | ) | (623 | ) | (1,581 | ) | |||||||||||||||||
Individuals | (256 | ) | 2.3 | (8 | ) | (11 | ) | (7 | ) | (12 | ) | (9 | ) | (209 | ) | |||||||||||||||||
Option premiums | (2,281 | ) | 20.5 | (1,145 | ) | (152 | ) | (145 | ) | (275 | ) | (508 | ) | (56 | ) | |||||||||||||||||
BM&F Bovespa | (1,720 | ) | 15.5 | (1,104 | ) | (34 | ) | (31 | ) | (131 | ) | (420 | ) | - | ||||||||||||||||||
Financial institutions | (335 | ) | 3.0 | (24 | ) | (91 | ) | (54 | ) | (52 | ) | (64 | ) | (50 | ) | |||||||||||||||||
Companies | (226 | ) | 2.0 | (17 | ) | (27 | ) | (60 | ) | (92 | ) | (24 | ) | (6 | ) | |||||||||||||||||
Forwards (onshore) | (2,293 | ) | 20.7 | (152 | ) | (50 | ) | (492 | ) | (381 | ) | (710 | ) | (508 | ) | |||||||||||||||||
Financial institutions | (138 | ) | 1.2 | (131 | ) | - | (1 | ) | (1 | ) | (5 | ) | - | |||||||||||||||||||
Companies | (2,155 | ) | 19.5 | (21 | ) | (50 | ) | (491 | ) | (380 | ) | (705 | ) | (508 | ) | |||||||||||||||||
Credit derivatives | (90 | ) | 0.8 | (4 | ) | (1 | ) | - | - | (7 | ) | (78 | ) | |||||||||||||||||||
Forwards (offshore) | (346 | ) | 3.2 | (72 | ) | (153 | ) | (40 | ) | (58 | ) | (18 | ) | (5 | ) | |||||||||||||||||
Financial institutions | (185 | ) | 1.7 | (48 | ) | (77 | ) | (26 | ) | (33 | ) | (1 | ) | - | ||||||||||||||||||
Companies | (161 | ) | 1.5 | (24 | ) | (76 | ) | (14 | ) | (25 | ) | (17 | ) | (5 | ) | |||||||||||||||||
Swaps with USD check - Companies | (42 | ) | 0.4 | - | - | - | - | (1 | ) | (41 | ) | |||||||||||||||||||||
Other | (926 | ) | 8.4 | - | (826 | ) | (1 | ) | (85 | ) | (2 | ) | (12 | ) | ||||||||||||||||||
Financial institutions | (606 | ) | 5.5 | - | (512 | ) | - | (84 | ) | - | (10 | ) | ||||||||||||||||||||
Companies | (320 | ) | 2.9 | - | (314 | ) | (1 | ) | (1 | ) | (2 | ) | (2 | ) | ||||||||||||||||||
Total (*) | (11,069 | ) | 100.0 | (1,724 | ) | (1,368 | ) | (1,214 | ) | (1,211 | ) | (2,154 | ) | (3,398 | ) | |||||||||||||||||
% per maturity term | 15.6 | 12.4 | 11.0 | 10.9 | 19.5 | 30.6 |
(*) Of the total assetliability portfolio of Derivative Financial Instruments, R$ 3,495(5,517) refers to current and R$ 2,094(5,552) to non-current.
12/31/2011 | ||||||||||||||||||||||||||||||||
Fair value | % | 0-30 days | 31-90 days | 91-180 days | 181-365 days | 366-720 days | Over 720 days | |||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||
Option premiums | (2,606 | ) | 38.6 | (1,205 | ) | (289 | ) | (235 | ) | (712 | ) | (153 | ) | (12 | ) | |||||||||||||||||
BM&F Bovespa | (1,768 | ) | 26.2 | (1,114 | ) | (87 | ) | (20 | ) | (484 | ) | (63 | ) | - | ||||||||||||||||||
Financial institutions | (687 | ) | 10.2 | (86 | ) | (185 | ) | (180 | ) | (162 | ) | (63 | ) | (11 | ) | |||||||||||||||||
Companies | (151 | ) | 2.2 | (5 | ) | (17 | ) | (35 | ) | (66 | ) | (27 | ) | (1 | ) | |||||||||||||||||
Forwards (onshore) | (818 | ) | 12.1 | (42 | ) | (92 | ) | (194 | ) | (56 | ) | (99 | ) | (335 | ) | |||||||||||||||||
Financial institutions | (67 | ) | 1.0 | (6 | ) | (31 | ) | (30 | ) | - | - | - | ||||||||||||||||||||
Companies | (751 | ) | 11.1 | (36 | ) | (61 | ) | (164 | ) | (56 | ) | (99 | ) | (335 | ) | |||||||||||||||||
Swaps - Difference payable | (2,798 | ) | 41.5 | (211 | ) | (177 | ) | (116 | ) | (534 | ) | (497 | ) | (1,263 | ) | |||||||||||||||||
BM&F Bovespa | (518 | ) | 7.7 | (6 | ) | (11 | ) | (24 | ) | (131 | ) | (102 | ) | (244 | ) | |||||||||||||||||
Financial institutions | (682 | ) | 10.1 | (134 | ) | (75 | ) | (13 | ) | (41 | ) | (110 | ) | (309 | ) | |||||||||||||||||
Companies | (1,557 | ) | 23.1 | (70 | ) | (89 | ) | (73 | ) | (342 | ) | (274 | ) | (709 | ) | |||||||||||||||||
Individuals | (41 | ) | 0.6 | (1 | ) | (2 | ) | (6 | ) | (20 | ) | (11 | ) | (1 | ) | |||||||||||||||||
Credit derivatives | (110 | ) | 1.7 | - | (5 | ) | (9 | ) | (7 | ) | (8 | ) | (81 | ) | ||||||||||||||||||
Financial institutions | (106 | ) | 1.6 | - | (5 | ) | (9 | ) | (5 | ) | (7 | ) | (80 | ) | ||||||||||||||||||
Companies | (4 | ) | 0.1 | - | - | - | (2 | ) | (1 | ) | (1 | ) | ||||||||||||||||||||
Forwards (offshore) | (326 | ) | 4.8 | (68 | ) | (67 | ) | (61 | ) | (49 | ) | (47 | ) | (34 | ) | |||||||||||||||||
Financial institutions | (246 | ) | 3.6 | (55 | ) | (51 | ) | (40 | ) | (33 | ) | (38 | ) | (29 | ) | |||||||||||||||||
Companies | (80 | ) | 1.2 | (13 | ) | (16 | ) | (21 | ) | (16 | ) | (9 | ) | (5 | ) | |||||||||||||||||
Swaps with target flow - Companies | (2 | ) | 0.0 | - | - | - | - | - | (2 | ) | ||||||||||||||||||||||
Other | (87 | ) | 1.3 | - | - | - | (6 | ) | (81 | ) | - | |||||||||||||||||||||
Financial institutions | (80 | ) | 1.2 | - | - | - | - | (80 | ) | - | ||||||||||||||||||||||
Companies | (7 | ) | 0.1 | - | - | - | (6 | ) | (1 | ) | - | |||||||||||||||||||||
Total (*) | (6,747 | ) | 100.0 | (1,526 | ) | (630 | ) | (615 | ) | (1,364 | ) | (885 | ) | (1,727 | ) | |||||||||||||||||
% per maturity term | 22.6 | % | 9.3 | % | 9.1 | % | 20.2 | % | 13.1 | % | 25.6 | % |
F.50 |
12/31/2011 | ||||||||||||||||||||||||||||||||
Fair value | % | 0 - 30 days | 31 - 90 days | 91 - 180 days | 181 - 365 days | 366 - 720 days | Over 720 days | |||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||
Swaps – Difference payable | (2,798 | ) | 41.5 | (211 | ) | (177 | ) | (116 | ) | (534 | ) | (497 | ) | (1,263 | ) | |||||||||||||||||
BM&F Bovespa | (518 | ) | 7.7 | (6 | ) | (11 | ) | (24 | ) | (131 | ) | (102 | ) | (244 | ) | |||||||||||||||||
Financial institutions | (682 | ) | 10.1 | (134 | ) | (75 | ) | (13 | ) | (41 | ) | (110 | ) | (309 | ) | |||||||||||||||||
Companies | (1,557 | ) | 23.1 | (70 | ) | (89 | ) | (73 | ) | (342 | ) | (274 | ) | (709 | ) | |||||||||||||||||
Individuals | (41 | ) | 0.6 | (1 | ) | (2 | ) | (6 | ) | (20 | ) | (11 | ) | (1 | ) | |||||||||||||||||
Option premiums | (2,606 | ) | 38.6 | (1,205 | ) | (289 | ) | (235 | ) | (712 | ) | (153 | ) | (12 | ) | |||||||||||||||||
BM&F Bovespa | (1,768 | ) | 26.2 | (1,114 | ) | (87 | ) | (20 | ) | (484 | ) | (63 | ) | - | ||||||||||||||||||
Financial institutions | (687 | ) | 10.2 | (86 | ) | (185 | ) | (180 | ) | (162 | ) | (63 | ) | (11 | ) | |||||||||||||||||
Companies | (151 | ) | 2.2 | (5 | ) | (17 | ) | (35 | ) | (66 | ) | (27 | ) | (1 | ) | |||||||||||||||||
Forwards (onshore) | (818 | ) | 12.1 | (42 | ) | (92 | ) | (194 | ) | (56 | ) | (99 | ) | (335 | ) | |||||||||||||||||
Financial institutions | (67 | ) | 1.0 | (6 | ) | (31 | ) | (30 | ) | - | - | - | ||||||||||||||||||||
Companies | (751 | ) | 11.1 | (36 | ) | (61 | ) | (164 | ) | (56 | ) | (99 | ) | (335 | ) | |||||||||||||||||
Credit derivatives - Financial institutions | (106 | ) | 1.6 | - | (5 | ) | (9 | ) | (5 | ) | (7 | ) | (80 | ) | ||||||||||||||||||
Forwards (offshore) | (326 | ) | �� | 4.8 | (68 | ) | (67 | ) | (61 | ) | (49 | ) | (47 | ) | (34 | ) | ||||||||||||||||
Financial institutions | (246 | ) | 3.6 | (55 | ) | (51 | ) | (40 | ) | (33 | ) | (38 | ) | (29 | ) | |||||||||||||||||
Companies | (80 | ) | 1.2 | (13 | ) | (16 | ) | (21 | ) | (16 | ) | (9 | ) | (5 | ) | |||||||||||||||||
Swaps with USD check – Companies | (2 | ) | - | - | - | - | - | - | (2 | ) | ||||||||||||||||||||||
Other | (91 | ) | 1.4 | - | - | - | (8 | ) | (82 | ) | (1 | ) | ||||||||||||||||||||
Financial institutions | (80 | ) | 1.2 | - | - | - | - | (80 | ) | - | ||||||||||||||||||||||
Companies | (11 | ) | 0.2 | - | - | - | (8 | ) | (2 | ) | (1 | ) | ||||||||||||||||||||
Total (*) | (6,747 | ) | 100.0 | (1,526 | ) | (630 | ) | (615 | ) | (1,364 | ) | (885 | ) | (1,727 | ) | |||||||||||||||||
% per maturity term | 22.6 | 9.3 | 9.1 | 20.2 | 13.1 | 25.6 |
(*) Of the total liability portfolio of Derivative Financial Instruments, R$ (4,135) refers to current and R$ (2,612) to non-current.
12/31/2010 | ||||||||||||||||||||||||||||||||
Fair Value | % | 0-30 days | 31-90 days | 91-180 days | 181-365 days | 366-720 days | Over 720 days | |||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||
Futures | (55 | ) | 0.9 | (22 | ) | (52 | ) | (12 | ) | 12 | 16 | 3 | ||||||||||||||||||||
BM&F Bovespa | (59 | ) | 0.9 | (25 | ) | (50 | ) | (14 | ) | 11 | 16 | 3 | ||||||||||||||||||||
Companies | 4 | 0.0 | 3 | (2 | ) | 2 | 1 | - | - | |||||||||||||||||||||||
Option premiums | (2,087 | ) | 36.8 | (812 | ) | (414 | ) | (231 | ) | (413 | ) | (207 | ) | (10 | ) | |||||||||||||||||
BM&F Bovespa | (1,677 | ) | 29.6 | (756 | ) | (298 | ) | (108 | ) | (349 | ) | (163 | ) | (3 | ) | |||||||||||||||||
Financial institutions | (299 | ) | 5.3 | (17 | ) | (93 | ) | (114 | ) | (45 | ) | (27 | ) | (3 | ) | |||||||||||||||||
Companies | (110 | ) | 1.9 | (39 | ) | (23 | ) | (8 | ) | (19 | ) | (17 | ) | (4 | ) | |||||||||||||||||
Individuals | (1 | ) | 0.0 | - | - | (1 | ) | - | - | - | ||||||||||||||||||||||
Forwards (onshore) | (79 | ) | 1.4 | (50 | ) | - | - | - | - | (29 | ) | |||||||||||||||||||||
Financial institutions | (50 | ) | 0.9 | (50 | ) | - | - | - | - | - | ||||||||||||||||||||||
Companies | (29 | ) | 0.5 | - | - | - | - | - | (29 | ) | ||||||||||||||||||||||
Swaps - Difference payable | (2,013 | ) | 35.4 | (92 | ) | (96 | ) | (139 | ) | (598 | ) | (442 | ) | (646 | ) | |||||||||||||||||
BM&F Bovespa | (388 | ) | 6.8 | (6 | ) | (9 | ) | (40 | ) | (60 | ) | (112 | ) | (161 | ) | |||||||||||||||||
Financial institutions | (396 | ) | 7.0 | (14 | ) | (29 | ) | (3 | ) | (149 | ) | (26 | ) | (175 | ) | |||||||||||||||||
Companies | (1,170 | ) | 20.6 | (70 | ) | (50 | ) | (73 | ) | (364 | ) | (303 | ) | (310 | ) | |||||||||||||||||
Individuals | (59 | ) | 1.0 | (2 | ) | (8 | ) | (23 | ) | (25 | ) | (1 | ) | - | ||||||||||||||||||
Credit derivatives | (129 | ) | 2.3 | (7 | ) | (6 | ) | (2 | ) | (3 | ) | (8 | ) | (103 | ) | |||||||||||||||||
Financial institutions | (126 | ) | 2.2 | (7 | ) | (6 | ) | (2 | ) | (2 | ) | (8 | ) | (101 | ) | |||||||||||||||||
Companies | (3 | ) | 0.1 | - | - | - | (1 | ) | - | (2 | ) | |||||||||||||||||||||
Forwards (offshore) | (1,112 | ) | 19.6 | (176 | ) | (267 | ) | (205 | ) | (317 | ) | (87 | ) | (60 | ) | |||||||||||||||||
Financial institutions | (629 | ) | 11.1 | (88 | ) | (201 | ) | (106 | ) | (138 | ) | (46 | ) | (50 | ) | |||||||||||||||||
Companies | (482 | ) | 8.5 | (88 | ) | (66 | ) | (99 | ) | (179 | ) | (41 | ) | (9 | ) | |||||||||||||||||
Individuals | (1 | ) | 0.0 | - | - | - | - | - | (1 | ) | ||||||||||||||||||||||
Other | (196 | ) | 3.6 | 46 | (2 | ) | 3 | (89 | ) | (15 | ) | (139 | ) | |||||||||||||||||||
Financial institutions | (173 | ) | 3.1 | - | - | - | (87 | ) | - | (86 | ) | |||||||||||||||||||||
Companies | (23 | ) | 0.5 | 46 | (2 | ) | 3 | (2 | ) | (15 | ) | (53 | ) | |||||||||||||||||||
Total (*) | (5,671 | ) | 100.0 | (1,113 | ) | (837 | ) | (586 | ) | (1,408 | ) | (743 | ) | (984 | ) | |||||||||||||||||
% per maturity term | 19.6 | % | 14.8 | % | 10.3 | % | 24.8 | % | 13.1 | % | 17.4 | % |
(*) Of the total liability portfolio of Derivative Financial Instruments, R$ (3,944) refers to current and R$ (1,727) to non-current.
1/1/2010 | ||||||||||||||||||||||||||||||||
Fair value | % | 0-30 days | 31-90 days | 91-180 days | 181-365 days | 366-720 days | Over 720 days | |||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||
Futures | (26 | ) | 0.5 | 7 | 8 | (9 | ) | (2 | ) | 1 | (31 | ) | ||||||||||||||||||||
BM&F Bovespa | (31 | ) | 0.5 | 5 | 5 | (9 | ) | (2 | ) | 1 | (31 | ) | ||||||||||||||||||||
Companies | 5 | 0.0 | 2 | 3 | - | - | - | - | ||||||||||||||||||||||||
Option premiums | (1,848 | ) | 34.7 | (628 | ) | (200 | ) | (152 | ) | (385 | ) | (480 | ) | (3 | ) | |||||||||||||||||
BM&F Bovespa | (1,630 | ) | 30.6 | (586 | ) | (107 | ) | (124 | ) | (342 | ) | (470 | ) | (1 | ) | |||||||||||||||||
Financial institutions | (337 | ) | 6.3 | (35 | ) | (86 | ) | (25 | ) | (41 | ) | (148 | ) | (2 | ) | |||||||||||||||||
Companies | 119 | (2.2 | ) | (7 | ) | (7 | ) | (3 | ) | (2 | ) | 138 | - | |||||||||||||||||||
Forwards (onshore) | (67 | ) | 1.2 | (67 | ) | - | - | - | - | - | ||||||||||||||||||||||
Financial institutions | (38 | ) | 0.7 | (38 | ) | - | - | - | - | - | ||||||||||||||||||||||
Companies | (29 | ) | 0.5 | (29 | ) | - | - | - | - | - | ||||||||||||||||||||||
Swaps - Difference payable | (2,114 | ) | 39.6 | (241 | ) | (71 | ) | (578 | ) | (286 | ) | (382 | ) | (556 | ) | |||||||||||||||||
BM&F Bovespa | (308 | ) | 5.8 | (10 | ) | (5 | ) | (9 | ) | (73 | ) | (52 | ) | (159 | ) | |||||||||||||||||
Financial institutions | (769 | ) | 14.4 | (152 | ) | (13 | ) | (67 | ) | (137 | ) | (93 | ) | (307 | ) | |||||||||||||||||
Companies | (1,009 | ) | 18.9 | (71 | ) | (49 | ) | (498 | ) | (73 | ) | (229 | ) | (89 | ) | |||||||||||||||||
Individuals | (28 | ) | 0.5 | (8 | ) | (4 | ) | (4 | ) | (3 | ) | (8 | ) | (1 | ) | |||||||||||||||||
Credit derivatives | (106 | ) | 2.0 | (9 | ) | (6 | ) | (5 | ) | (5 | ) | (3 | ) | (78 | ) | |||||||||||||||||
Financial institutions | (106 | ) | 2.0 | (9 | ) | (6 | ) | (5 | ) | (5 | ) | (3 | ) | (78 | ) | |||||||||||||||||
Forwards (offshore) | (407 | ) | 7.7 | (90 | ) | (118 | ) | (91 | ) | (95 | ) | (9 | ) | (4 | ) | |||||||||||||||||
Financial institutions | (175 | ) | 3.3 | (37 | ) | (56 | ) | (43 | ) | (37 | ) | (1 | ) | (1 | ) | |||||||||||||||||
Companies | (232 | ) | 4.4 | (53 | ) | (62 | ) | (48 | ) | (58 | ) | (8 | ) | (3 | ) | |||||||||||||||||
Swaps with USD check | (90 | ) | 1.7 | (1 | ) | - | - | - | (14 | ) | (75 | ) | ||||||||||||||||||||
Check of swap | (140 | ) | 2.6 | (2 | ) | (5 | ) | (9 | ) | (2 | ) | (50 | ) | (72 | ) | |||||||||||||||||
Financial institutions | (18 | ) | 0.3 | (2 | ) | (5 | ) | (9 | ) | (2 | ) | - | - | |||||||||||||||||||
Companies | (122 | ) | 2.3 | - | - | - | - | (50 | ) | (72 | ) | |||||||||||||||||||||
Other | (534 | ) | 10.0 | (46 | ) | (57 | ) | (116 | ) | (75 | ) | (159 | ) | (81 | ) | |||||||||||||||||
Financial institutions | (239 | ) | 4.5 | (1 | ) | (1 | ) | (45 | ) | (15 | ) | (97 | ) | (80 | ) | |||||||||||||||||
Companies | (273 | ) | 5.2 | (35 | ) | (49 | ) | (67 | ) | (59 | ) | (62 | ) | (1 | ) | |||||||||||||||||
Individuals | (22 | ) | 0.3 | (10 | ) | (7 | ) | (4 | ) | (1 | ) | - | - | |||||||||||||||||||
Total (*) | (5,332 | ) | 100.0 | (1,077 | ) | (449 | ) | (960 | ) | (850 | ) | (1,096 | ) | (900 | ) | |||||||||||||||||
% per maturity term | 20.2 | % | 8.4 | % | 18.0 | % | 15.9 | % | 20.6 | % | 16.9 | % |
F.51 |
(*) Of the total liability portfolio of Derivative Financial Instruments, R$ (3,336) refers to current and R$ (1,996) to non-current.
Realized and unrealized gains and losses(losses) in the portfolio of derivatives
01/01 to | 01/01 to 12/31/2010 | |||||||||||||||||||
01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||||
Swap | (476 | ) | 169 | (911 | ) | (476 | ) | 169 | ||||||||||||
Forwards | (139 | ) | 29 | 71 | (139 | ) | 29 | |||||||||||||
Futures | 91 | 1,370 | (2,148 | ) | 91 | 1,370 | ||||||||||||||
Options | 323 | 924 | 322 | 323 | 924 | |||||||||||||||
Credit derivatives | 185 | 87 | 191 | 185 | 87 | |||||||||||||||
Other | 367 | (269 | ) | 17 | 367 | (269 | ) | |||||||||||||
Total | 351 | 2,310 | (2,458 | ) | 351 | 2,310 |
a) Information on credit derivatives
ITAÚ UNIBANCO HOLDING buys and sells credit protection mainly related to securities of the Brazilian government and securities of Brazilian listed companies in order to meet the needs of its customers. When ITAÚ UNIBANCO HOLDING sells contracts for credit protection, the exposure for a given reference entity may be partially or totally offset by a credit protection purchase contract of another counterparty for the same reference entity or similar entity. The credit derivatives for which ITAÚ UNIBANCO HOLDING is protection sellersseller are credit default swaps, total return swaps and credit-linked notes. At December 31, 2011, December 31, 2010 and January 1, 2010, ITAÚ UNIBANCO HOLDING did not have open contracts for credit protection in the form of credit-linked notes.
Credit Default Swaps – CDS
CDS are credit derivatives in which, upon a credit event related to the reference entity pursuant to the terms of the contract, the protection buyer is entitled to receive, from the protection seller, the amount equivalent to the difference between the face value of the CDS contract and the fair value of the liability on the date the contract was settled, also known as the recovered amount. The protection buyer does not need to hold the debt instrument of the reference entity for it to receive the amounts due pursuant to the CDS contract terms when a credit event occurs.
Total Return Swap – TRS
TRS is a transaction in which a party swaps the total return of a reference entity or of a basket of assets for regular cash flows, usually interest and a guarantee against capital loss. In a TRS contract, the parties do not transfer the ownership of the assets.
The table below presents the portfolio of credit derivatives in which ITAÚ UNIBANCO HOLDING sells protection to third parties, by maturity, and the maximum potential of future payments, gross of any guarantees, as well as its classification by instrument, risk and reference entity.
12/31/2011 | ||||||||||||||||||||||||
Maximum potential | From 1 | From 3 | ||||||||||||||||||||||
of future payments, | Before 1 | to 3 | to 5 | After 5 | ||||||||||||||||||||
gross | year | years | years | years | Fair value | |||||||||||||||||||
By instrument | ||||||||||||||||||||||||
CDS | 3,526 | 1,290 | 1,106 | 990 | 140 | (101 | ) | |||||||||||||||||
TRS | 9 | - | - | 9 | - | (9 | ) | |||||||||||||||||
Total by instrument | 3,535 | 1,290 | 1,106 | 999 | 140 | (110 | ) | |||||||||||||||||
By risk rating | ||||||||||||||||||||||||
Investment grade | 3,535 | 1,290 | 1,106 | 999 | 140 | (110 | ) | |||||||||||||||||
Total by risk | 3,535 | 1,290 | 1,106 | 999 | 140 | (110 | ) | |||||||||||||||||
By reference entity | ||||||||||||||||||||||||
Private entities | 3,535 | 1,290 | 1,106 | 999 | 140 | (110 | ) | |||||||||||||||||
Total by entity | 3,535 | 1,290 | 1,106 | 999 | 140 | (110 | ) |
12/31/2010 | ||||||||||||||||||||||||||||||||||||||||||||||||
Maximum potential | From 1 | From 3 | ||||||||||||||||||||||||||||||||||||||||||||||
of future payments, | Before 1 | to 3 | to 5 | After 5 | Fair | 12/31/2012 | ||||||||||||||||||||||||||||||||||||||||||
gross | year | years | years | years | value | Maximum potential of future payments, gross | Before 1 year | From 1 to 3 years | From 3 to 5 years | Over 5 years | Fair value | |||||||||||||||||||||||||||||||||||||
By instrument | ||||||||||||||||||||||||||||||||||||||||||||||||
CDS | 3,375 | 541 | 1,234 | 1,184 | 416 | (121 | ) | 3,847 | 858 | 1,983 | 1,006 | - | (72 | ) | ||||||||||||||||||||||||||||||||||
TRS | 424 | 416 | - | 8 | - | (8 | ) | 1,285 | 1,275 | 10 | - | - | 672 | |||||||||||||||||||||||||||||||||||
Total by instrument | 3,799 | 957 | 1,234 | 1,192 | 416 | (129 | ) | 5,132 | 2,133 | 1,993 | 1,006 | - | 600 | |||||||||||||||||||||||||||||||||||
By risk rating | ||||||||||||||||||||||||||||||||||||||||||||||||
Investment grade | 3,799 | 957 | 1,234 | 1,192 | 416 | (129 | ) | 5,132 | 2,133 | 1,993 | 1,006 | - | 600 | |||||||||||||||||||||||||||||||||||
Total by risk | 3,799 | 957 | 1,234 | 1,192 | 416 | (129 | ) | 5,132 | 2,133 | 1,993 | 1,006 | - | 600 | |||||||||||||||||||||||||||||||||||
By reference entity | ||||||||||||||||||||||||||||||||||||||||||||||||
Private entities | 3,799 | 957 | 1,234 | 1,192 | 416 | (129 | ) | 5,132 | 2,133 | 1,993 | 1,006 | - | 600 | |||||||||||||||||||||||||||||||||||
Total by entity | 3,799 | 957 | 1,234 | 1,192 | 416 | (129 | ) | 5,132 | 2,133 | 1,993 | 1,006 | - | 600 |
01/01/2010 | ||||||||||||||||||||||||||||||||||||||||||||||||
Maximum potential | From 1 | From 3 | ||||||||||||||||||||||||||||||||||||||||||||||
of future payments, | Before 1 | to 3 | to 5 | Over 5 | Fair | 12/31/2011 | ||||||||||||||||||||||||||||||||||||||||||
gross | year | years | years | years | value | Maximum potential of future payments, gross | Before 1 year | From 1 to 3 years | From 3 to 5 years | Over 5 years | Fair value | |||||||||||||||||||||||||||||||||||||
By instrument | ||||||||||||||||||||||||||||||||||||||||||||||||
CDS | 2,746 | 844 | 712 | 685 | 505 | (106 | ) | 3,427 | 1,302 | 1,106 | 925 | 94 | (92 | ) | ||||||||||||||||||||||||||||||||||
Total by instrument | 2,746 | 844 | 712 | 685 | 505 | (106 | ) | |||||||||||||||||||||||||||||||||||||||||
TRS | 982 | 973 | - | 9 | - | 511 | ||||||||||||||||||||||||||||||||||||||||||
Total by instrument (*) | 4,409 | 2,275 | 1,106 | 934 | 94 | 419 | ||||||||||||||||||||||||||||||||||||||||||
By risk rating | ||||||||||||||||||||||||||||||||||||||||||||||||
Investment grade | 2,746 | 844 | 712 | 685 | 505 | (106 | ) | 4,409 | 2,275 | 1,106 | 934 | 94 | 419 | |||||||||||||||||||||||||||||||||||
Total by risk | 2,746 | 844 | 712 | 685 | 505 | (106 | ) | |||||||||||||||||||||||||||||||||||||||||
Total by risk (*) | 4,409 | 2,275 | 1,106 | 934 | 94 | 419 | ||||||||||||||||||||||||||||||||||||||||||
By reference entity | ||||||||||||||||||||||||||||||||||||||||||||||||
Private entities | 2,746 | 844 | 712 | 685 | 505 | (106 | ) | 4,409 | 2,275 | 1,106 | 934 | 94 | 419 | |||||||||||||||||||||||||||||||||||
Total by entity | 2,746 | 844 | 712 | 685 | 505 | (106 | ) | |||||||||||||||||||||||||||||||||||||||||
Total by entity (*) | 4,409 | 2,275 | 1,106 | 934 | 94 | 419 |
(*) In the period we aligned the procedures for disclosing credit derivative information in order to state the position in the same disclosure standard as that of the Risk Management (www.itau-unibanco.com.br/ri, under section Corporate Governance/Risk Management – Circular 3,477).
F.52 |
ITAÚ UNIBANCO HOLDING assesses the risk of a credit derivative based on the credit ratings attributed to the reference entity by independent credit rating agencies. Investment grade are those entities for which credit risk is rated as Baa3 or higher, as rated by Moody's, and BBB- or higher, according to the ratings of Standard & Poor’s and Fitch Ratings. The maximum potential loss that may be incurred with the credit derivative is based on the notional amount of the derivative. ITAÚ UNIBANCO HOLDING believes, based on its historical experience, that the amount of the maximum potential loss does not represent the actual level of loss. This is so because, should there be an event of loss, the amount of maximum potential loss should be reduced from the notional amount by the recoverable amount.
The credit derivatives sold are not covered by guarantees, and during this period, ITAÚ UNIBANCO HOLDING has not incurred in any loss related to credit derivative contracts.
The following table presents the notional amount of purchased credit derivatives whose the underlying amounts are identical to those for which ITAÚ UNIBANCO HOLDING operates as seller of the credit protection:protection.
12/31/2011 | ||||||||||||
Notional amount of credit | ||||||||||||
Notional amount of | protection purchased with | |||||||||||
credit protection sold | identical underlying amount | Net position | ||||||||||
CDS | (3,526 | ) | 2,471 | (1,055 | ) | |||||||
TRS | (9 | ) | 1,188 | 1,179 | ||||||||
Total | (3,535 | ) | 3,659 | 124 |
12/31/2010 | ||||||||||||||||||||||||
Notional amount of credit | ||||||||||||||||||||||||
Notional amount of | protection purchased with | 12/31/2012 | ||||||||||||||||||||||
credit protection sold | identical underlying amount | Net position | Notional amount of credit protection sold | Notional amount of credit protection purchased with identical underlying amount | Net position | |||||||||||||||||||
CDS | (3,375 | ) | 2,902 | (473 | ) | (3,847 | ) | 1,066 | (2,781 | ) | ||||||||||||||
TRS | (424 | ) | - | (424 | ) | (1,285 | ) | - | (1,285 | ) | ||||||||||||||
Total | (3,799 | ) | 2,902 | (897 | ) | (5,132 | ) | 1,066 | (4,066 | ) |
1/1/2010 | ||||||||||||||||||||||||
Notional amount of credit | ||||||||||||||||||||||||
Notional amount of | protection purchased with | 12/31/2011 | ||||||||||||||||||||||
credit protection sold | identical underlying amount | Net position | Notional amount of credit protection sold | Notional amount of credit protection purchased with identical underlying amount | Net position | |||||||||||||||||||
CDS | (2,746 | ) | 1,785 | (961 | ) | (3,427 | ) | 1,001 | (2,426 | ) | ||||||||||||||
TRS | - | 1 | 1 | (982 | ) | 1,188 | 206 | |||||||||||||||||
Total | (2,746 | ) | 1,786 | (960 | ) | |||||||||||||||||||
Total (*) | (4,409 | ) | 2,189 | (2,220 | ) |
(*) In the period we aligned the procedures for disclosing credit derivative information in order to state the position in the same disclosure standard as that of the Risk Management (www.itau-unibanco.com.br/ri, under section Corporate Governance/Risk Management – Circular 3,477).
F.53 |
NOTE 0809 – HEDGE ACCOUNTING
Hedge accounting varies depending on the nature of the hedged item and of the transaction. Derivatives may qualify asfor hedging instrument for accounting purposes if they are designated as hedging instruments under fair value hedges, cash flow hedgeshedge or hedgeshedge of net investment in foreign operations.
Cash flow hedge
To hedge the variability of future cash flows of interest payments, ITAÚ UNIBANCO HOLDING uses DI Futures contracts exchange-traded at BM&FBovespa&FBOVESPA with respect to certain real-denominated variable-interest liabilities and interest rate swaps with respect to US dollar-denominated redeemable preferred shares issued by one of our subsidiaries.
Under a DI Futures contract, a net payment (receipt) is made for the difference between a normal amount multiplied by the CDI rate and an amount computed and multiplied by a fixed rate. Under interest rate swap, a net payment (receipt) is made for the difference between an amount computed and multiplied by LIBOR and a notional amount computed and multiplied by a fixed rate.
OurITAÚ UNIBANCO HOLDING cash flow hedge strategies consist of the hedge of the exposure to the variability in cash flows on interest payments that are attributable to changes in interest rates with respect to recognized liabilities.
ITAÚ UNIBANCO HOLDING has applied cash flow hedge strategies as follows:
· | Hedge of time deposits and repurchase agreements: hedge of the variability in cash flows of interest payments resulting from changes in the CDI interest |
· | Hedge of redeemable preferred shares: hedge of the variability in cash flows of interest payments resulting from changes in the LIBOR interest |
· | Hedge of subordinated certificates of deposit (CDB): hedge of the variability in the cash |
To evaluate the effectiveness and to measure the ineffectiveness of such strategies, ITAÚ UNIBANCO HOLDING uses the hypothetical derivative method. The hypothetical derivative method is based on a comparison of the change in the fair value of a hypothetical derivative with terms identical to the critical terms of the variable-rate liability, and this change in the fair value of a hypothetical derivative is considered a proxy of the present value of the cumulative change in the future cash flow expected for the hedged liability.
Hedge relationshipsThe accounting hedge strategies were designatedoriginally established in 2008 (subordinated CDB hedge), 2009 (hedge of redeemable preferred shares) and 2010 (hedge of deposits denominated in Brazilian reais and agreements to resell), and related derivatives will mature between 20122013 and 2017. Periods in which expected cash flows should be paid and affect the income statement of income are as follows:
· | Hedge of time deposits and agreements to resell: interest paid/received |
· | Hedge of |
· | Subordinated CDB |
ITAÚ UNIBANCO HOLDING strategies of net investments in foreign operations consist of a hedge of the exposure in foreign currency arising from the functional currency of the foreign operation, with respect to the functional currency of the head office.
To hedge the changes of future cash flows of exchange variation of net investments in foreign operations, ITAÚ UNIBANCO HOLDING uses DDI Futures contracts traded at BM&FBovespa,&FBOVESPA, Financial Assets and Forward contracts or NDF contracts entered into by our subsidiaries abroad.
In DDI FuturesFuture contracts, the gain (loss) from exchange variation is computed as the difference between two periods of market quotation between the US dollar and Real. In the Forward or NDF contracts and Financial Assets, the gain (loss) from exchange variation is computed as the difference between two periods of market quotation between the functional currency and the US dollar.
F.54 |
Hedge of net investment in foreign operations
ITAÚ UNIBANCO HOLDING applies the hedge of net investment in foreign operations as follows:
· | To hedge the risk of variation in the investment amount, when measured in Brazilian |
To evaluate the effectiveness and to measure the ineffectiveness of such strategies, ITAÚ UNIBANCO HOLDING uses the Dollar Offset Method. The Dollar Offset Method is based on a comparison of the change in fair value (cash flow) of the hedge instrument, attributable to changes in exchange rate and gain (loss) arising from the variation in exchange rates, on the amount of investment abroad designated as a hedged item.
Hedge relationships were designated in 2011 and the derivativeshedge instruments will mature on the sale of investmentinvestments abroad, which will be in the period when the cash flows of exchange variation are expected to occur and affect the statement of income.
Fair value hedge
The fair value hedge strategy of ITAÚ UNIBANCO HOLDING consists of hedging the exposure to variation of the fair value, of interest receipts, which is attributable to changes in interest rates related to recognized assets.
To hedge the variation in market risk in the receipt of interest, ITAÚ UNIBANCO HOLDING uses interest rate swap contracts to hedge assets that are prefixed items, expressed in UF (Chilean Unit of Account - CLF), issued in Chile, with maturities between 2020 and 2027.
Under an interest rate swap contract, net receipt (payment) is made for the difference between the amount computed and multiplied by ICPR (Índice de Camera Promédio Real) and an amount computed and multiplied by a fixed rate.
ITAÚ UNIBANCO HOLDING has applied fair value hedge as follows:
· | To protect the risk of variation in the fair value of receipt of interest resulting from variations in the fair value of the ICPR rate. |
To evaluate the effectiveness and to measure the ineffectiveness of such strategy, ITAÚ UNIBANCO HOLDING uses the percentage approach method. The percentage approach is based on the calculation of change in the fair value of the reviewed estimate for the hedged position (hedge item) attributable to the protected risk versus the change in the fair value of the hedged derivative instrument.
Hedge relationships were designated in 2012 and the respective swaps will mature between 2020 and 2027. Receipts (payments) of interest flows are expected to occur on a monthly basis, and they will affect the statement of income.
F.55 |
The amounts in the following tables are presented in millions of Brazilian reais:
12/31/2011 | 12/31/2010 | 12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||||||||||
Gain or (loss) accumulated | Gain or (loss) | Gain or (loss) accumulated | Gain or (loss) | |||||||||||||||||||||||||||||||||||||
recognized in other | recognized in | recognized in other | recognized in | |||||||||||||||||||||||||||||||||||||
comprehensive Income and | Line Item where the ineffective | derivatives | comprehensive Income and | Line Item where the ineffective | derivatives | |||||||||||||||||||||||||||||||||||
Derivatives used in | cash flow hedge (effective | portion is recognized in the | (ineffective portion) | cash flow hedge (effective | portion is recognized in the | (ineffective portion) | ||||||||||||||||||||||||||||||||||
cash flow hedge | portion) | statement of income | (*) | portion) | statement of income | (*) | ||||||||||||||||||||||||||||||||||
Hedge instruments used in cash flow hedge | Accumulated Gain or (Loss) recognized in Other Comprehensive Income and Cash Flow Hedge (effective portion) | Line item where the ineffective portion is recognized in the statement of income | Gain or (Loss) recognized in derivatives (ineffective portion) (*) | Accumulated Gain or (Loss) recognized in Other Comprehensive Income and Cash Flow Hedge (effective portion) | Line item where the ineffective portion is recognized in the statement of income | Gain or (Loss) recognized in derivatives (ineffective portion) (*) | ||||||||||||||||||||||||||||||||||
Interest rate futures | (282 | ) | Net gain (loss) from financial assets and liabilities | 1 | 8 | Net gain (loss) from financial assets and liabilities | 1 | (316 | ) | Net Gain (Loss) from investment securities and derivatives | - | (282 | ) | Net Gain (Loss) from investment securities and derivatives | 1 | |||||||||||||||||||||||||
Interest rate swap | (30 | ) | Net gain (loss) from financial assets and liabilities | - | (20 | ) | Net gain (loss) from financial assets and liabilities | - | (10 | ) | Net Gain (Loss) from investment securities and derivatives | - | (30 | ) | Net Gain (Loss) from investment securities and derivatives | - | ||||||||||||||||||||||||
Total | (312 | ) | 1 | (12 | ) | 1 | (326 | ) | - | (312 | ) | 1 |
(*) At December 31, 2011,2012, the gain (loss) related to the cash flow hedge expected to be reclassified from Comprehensive Income to Income in the following 12 months is R$ 167(376) (R$ 1(167) at December 31, 2010)2011).
12/31/2011 | ||||||||||
Gain or (loss) accumulated | ||||||||||
recognized in other | Other gain or (loss) | |||||||||
Derivatives used in hedge of | comprehensive Income and | Line item where the ineffective | recognized in | |||||||
net investment in foreign | cash flow hedge (effective | portion is recognized in the | derivatives | |||||||
operations | portion) | statement of income | (ineffective portion) | |||||||
DDI Futures (1) | (890 | ) | Net gain (loss) from financial assets and liabilities | 42 | ||||||
Forwards | 120 | Net gain (loss) from financial assets and liabilities | 19 | |||||||
NDF (2) | 335 | Net gain (loss) from financial assets and liabilities | 2 | |||||||
Total | (435 | ) | 63 |
12/31/2010 | ||||||||||
Hedge instruments used in cash flow hedge | Accumulated Gain or (Loss) recognized in Other Comprehensive Income and Cash Flow Hedge (effective portion) | Line item where the ineffective portion is recognized in the statement of income | Gain or (Loss) recognized in derivatives (ineffective portion) (*) | |||||||
Interest rate futures | 8 | Net Gain (Loss) from investment securities and derivatives | 1 | |||||||
Interest rate swap | (20 | ) | Net Gain (Loss) from investment securities and derivatives | - | ||||||
Total | (12 | ) | 1 |
(*) At December 31, 2010, the gain (loss) related to the cash flow hedge expected to be reclassified from Comprehensive Income to Income in the following 12 months is R$ 1.
12/31/2012 | 12/31/2011 | |||||||||||||||||||
Hedge instrument used in Hedge of Net Investment in Foreign Operations | Accumulated Gain or (Loss) recognized in Other Comprehensive Income and Cash Flow Hedge (effective portion) | Line item where the ineffective portion is recognized in the statement of income | Other Gain or (Loss) recognized in derivatives | Accumulated Gain or (Loss) recognized in Other Comprehensive Income and Cash Flow Hedge (effective portion) | Line item where the ineffective portion is recognized in the statement of income | Other Gain or (Loss) recognized in derivatives (ineffective portion) | ||||||||||||||
DDI Futures (1) | (1,473 | ) | Net Gain (Loss) from investment securities and derivatives | 66 | (890 | ) | Net Gain (Loss) from investment securities and derivatives | 42 | ||||||||||||
Forward | 67 | Net Gain (Loss) from investment securities and derivatives | (6 | ) | 130 | Net Gain (Loss) from investment securities and derivatives | 19 | |||||||||||||
NDF (2) | 207 | Net Gain (Loss) from investment securities and derivatives | 4 | 335 | Net Gain (Loss) from investment securities and derivatives | 2 | ||||||||||||||
Financial Assets | - | Net Gain (Loss) from investment securities and derivatives | - | (10 | ) | Net Gain (Loss) from investment securities and derivatives | - | |||||||||||||
Total | (1,199 | ) | 64 | (435 | ) | 63 |
(1) DDI Futures is a Futures contract in which participants may trade a clean coupon for any period between the first maturity of the futures contract of foreign currency coupon (DDI) and a later maturity;maturity.
(2) NDF (Non Deliverable Forward), or Forward Contract of Currency without Physical Delivery is a derivative traded on over-the-counter market, which has the foreign exchange rate of a given currency as its subject.
12/31/2012 | ||||||||||||||
Hedge instrument used in Hedge of Fair Value | Cumulative gain (loss) recognized in result hedge instrument | Cumulative gain (loss) recognized in result hedge item (effective portion) | Gain or (loss) recognized in result (ineffective portion) | Line item in which the ineffective portion is recognized in the statement of income | ||||||||||
Interest rate swap | 4 | (4 | ) | - | Net Gain (Loss) from investment securities and derivatives | |||||||||
Total | 4 | (4 | ) | - |
F.56 |
The tabletables below presents,present, for each strategy, the notional amount and the fair value of derivativeshedge instruments and the carrying amount of the hedged item and beginning of maturities of the derivatives at:item:
12/31/2011 | 12/31/2010 | 1/1/2010 | ||||||||||||||||||||||||||||||||||
Derivatives | Hedged item | Derivatives | Hedged item | Derivatives | Hedged item | |||||||||||||||||||||||||||||||
Notional | Notional | Notional | ||||||||||||||||||||||||||||||||||
Strategies | amount | Fair value | Carrying value | amount | Fair value | Carrying value | amount | Fair value | Carrying value | |||||||||||||||||||||||||||
Hedge of deposits and repurchase agreements | 19,113 | (4 | ) | 19,083 | 9,092 | (10 | ) | 9,117 | - | - | - | |||||||||||||||||||||||||
Hedge of redeemable preferred shares | 737 | (37 | ) | 737 | 655 | (27 | ) | 655 | 684 | (2 | ) | 684 | ||||||||||||||||||||||||
Hedge of subordinated CDB | 87 | - | 118 | 350 | - | 419 | 350 | - | 382 | |||||||||||||||||||||||||||
Hedge of net investment in foreign operations (*) | 6,886 | 31 | 4,131 | - | - | - | - | - | - |
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||
Strategies | Hedge instruments | Hedged item | Hedge instruments | Hedged item | ||||||||||||||||||||
Notional amount | Fair value | Carrying value | Notional amount | Fair value | Carrying value | |||||||||||||||||||
Hedge of deposits and repurchase agreements | 50,057 | 1 | 50,193 | 19,113 | (4 | ) | 19,083 | |||||||||||||||||
Hedge of redeemable preferred shares | 803 | (20 | ) | 803 | 737 | (37 | ) | 737 | ||||||||||||||||
Hedge of subordinated CDB | 87 | - | 129 | 87 | - | 118 | ||||||||||||||||||
Hedge of net investment in foreign operations (*) | 8,593 | 30 | 5,156 | 6,886 | 31 | 4,131 | ||||||||||||||||||
Hedge of fair value of interest receipts | 470 | 4 | 470 | - | - | - | ||||||||||||||||||
Total | 60,010 | 15 | 56,751 | 26,823 | (10 | ) | 24,069 |
(*) Hedge instruments include the overhedge rate of 40% regarding taxes.
With the purpose of extending the maturities of subordinated CDBs, ITAÚ UNIBANCO HOLDING partially discontinued the hedge operations of Subordinated CDBs by carrying out a debt roll-over (settlement of prior operation and issue of a new operation), which resulted in an effect of R$ 3 in income statement during 2011.
Strategies | ||||||||||||||||||||||||
Maturity | Hedge of deposits and repurchase agreements | Hedge of redeemable preferred shares | Hedge of subordinated CDB | Hedge of net investment in foreign operations | Hedge of fair value | Total | ||||||||||||||||||
2013 | 41,170 | - | - | 8,593 | - | 49,763 | ||||||||||||||||||
2014 | 7,559 | - | 87 | - | - | 7,646 | ||||||||||||||||||
2015 | 515 | 803 | - | - | - | 1,318 | ||||||||||||||||||
2017 | 813 | - | - | - | - | 813 | ||||||||||||||||||
2020 | - | - | - | - | 46 | 46 | ||||||||||||||||||
2022 | - | - | - | - | 210 | 210 | ||||||||||||||||||
2025 | - | - | - | - | 47 | 47 | ||||||||||||||||||
2027 | - | - | - | - | 167 | 167 | ||||||||||||||||||
Total | 50,057 | 803 | 87 | 8,593 | 470 | 60,010 |
Strategies | ||||||||||||||||||||
Hedge of deposits and | Hedge of redeemable | Hedge of net investment | ||||||||||||||||||
Maturity | repurchase agreements | preferred shares | Hedge of subordinated CDB | in foreign operations | Total | |||||||||||||||
2012 | 4,448 | - | - | 6,886 | 11,334 | |||||||||||||||
2013 | 8,652 | - | - | - | 8,652 | |||||||||||||||
2014 | 5,263 | - | 87 | - | 5,350 | |||||||||||||||
2015 | - | 737 | - | - | 737 | |||||||||||||||
2016 | - | - | - | - | - | |||||||||||||||
2017 | 750 | - | - | - | 750 | |||||||||||||||
Total | 19,113 | 737 | 87 | 6,886 | 26,823 |
F.57 |
NOTE 0910 – AVAILABLE-FOR-SALE FINANCIAL ASSETS
The fair value and corresponding cost or amortized cost of available-for-sale financial assets are as follows:
12/31/2011 | 12/31/2010 | 1/1/2010 | ||||||||||||||||||||||||||||||||||||||||||||||
Cost/ amortized | Unrealized results | Fair | Cost/ amortized | Unrealized results | Fair | Cost/ amortized | Unrealized results | Fair | ||||||||||||||||||||||||||||||||||||||||
cost | Gain | Loss | value | cost | Gain | Loss | value | cost | Gain | Loss | value | |||||||||||||||||||||||||||||||||||||
Investment funds | 802 | 4 | - | 806 | 756 | 14 | - | 770 | 1,260 | 13 | - | 1,273 | ||||||||||||||||||||||||||||||||||||
Brazilian government securities (1a) | 12,296 | 183 | (55 | ) | 12,424 | 9,949 | 130 | - | 10,079 | 13,631 | 87 | - | 13,718 | |||||||||||||||||||||||||||||||||||
Brazilian external debt bonds (1b) | 5,667 | 240 | (1 | ) | 5,906 | 4,584 | 181 | (45 | ) | 4,720 | 1,783 | 197 | - | 1,980 | ||||||||||||||||||||||||||||||||||
Government securities – abroad (1c) | 4,327 | 5 | (15 | ) | 4,317 | 4,736 | 4 | (181 | ) | 4,559 | 7,259 | 25 | (43 | ) | 7,241 | |||||||||||||||||||||||||||||||||
Portugal | - | - | - | - | - | - | - | - | 26 | - | - | 26 | ||||||||||||||||||||||||||||||||||||
United States | - | - | - | - | 679 | - | - | 679 | 17 | - | - | 17 | ||||||||||||||||||||||||||||||||||||
Austria | - | - | - | - | - | - | - | - | 212 | 1 | - | 213 | ||||||||||||||||||||||||||||||||||||
Mexico | 10 | 1 | - | 11 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Denmark | 1,949 | - | - | 1,949 | 2,108 | - | (92 | ) | 2,016 | 1,995 | 6 | (30 | ) | 1,971 | ||||||||||||||||||||||||||||||||||
Spain | 418 | - | - | 418 | 777 | - | (43 | ) | 734 | 1,090 | 3 | - | 1,093 | |||||||||||||||||||||||||||||||||||
Korea | 295 | - | - | 295 | 262 | - | (26 | ) | 236 | 1,748 | 12 | (5 | ) | 1,755 | ||||||||||||||||||||||||||||||||||
Chile | 992 | 4 | (1 | ) | 995 | 454 | 1 | (2 | ) | 453 | 1,278 | 3 | (7 | ) | 1,274 | |||||||||||||||||||||||||||||||||
Paraguay | 358 | - | (14 | ) | 344 | 272 | 2 | (18 | ) | 256 | 417 | - | - | 417 | ||||||||||||||||||||||||||||||||||
Uruguay | 268 | - | - | 268 | 184 | 1 | - | 185 | 476 | - | (1 | ) | 475 | |||||||||||||||||||||||||||||||||||
Other | 37 | - | - | 37 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Corporate securities (1d) | 23,174 | 1,699 | (816 | ) | 24,057 | 22,865 | 1,734 | (188 | ) | 24,411 | 16,006 | 1,217 | (133 | ) | 17,090 | |||||||||||||||||||||||||||||||||
Shares | 3,458 | 698 | (178 | ) | 3,978 | 3,889 | 1,395 | (160 | ) | 5,124 | 3,700 | 1,024 | (30 | ) | 4,694 | |||||||||||||||||||||||||||||||||
Securitized real estate loans | 7,806 | 707 | (499 | ) | 8,014 | 6,799 | 190 | (14 | ) | 6,975 | 4,275 | 107 | (88 | ) | 4,294 | |||||||||||||||||||||||||||||||||
Bank deposit certificates | 274 | - | - | 274 | 559 | - | - | 559 | 99 | - | - | 99 | ||||||||||||||||||||||||||||||||||||
Debentures | 7,165 | 139 | (68 | ) | 7,236 | 6,597 | 40 | (3 | ) | 6,634 | 4,522 | 25 | (13 | ) | 4,534 | |||||||||||||||||||||||||||||||||
Eurobonds and others | 3,554 | 152 | (68 | ) | 3,638 | 3,745 | 109 | (11 | ) | 3,843 | 1,765 | 61 | (2 | ) | 1,824 | |||||||||||||||||||||||||||||||||
Promissory notes | 646 | - | - | 646 | 1,265 | - | - | 1,265 | 1,626 | - | - | 1,626 | ||||||||||||||||||||||||||||||||||||
Other | 271 | 3 | (3 | ) | 271 | 11 | - | - | 11 | 19 | - | - | 19 | |||||||||||||||||||||||||||||||||||
TOTAL | 46,266 | 2,131 | (887 | ) | 47,510 | 42,890 | 2,063 | (414 | ) | 44,539 | 39,939 | 1,539 | (176 | ) | 41,302 |
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||||
Cost/ Amortized | Unrealized results | Cost/ Amortized | Unrealized results | |||||||||||||||||||||||||||||
cost | Gain | Loss | Fair value | cost | Gain | Loss | Fair value | |||||||||||||||||||||||||
Investment funds | 250 | 5 | - | 255 | 802 | 4 | - | 806 | ||||||||||||||||||||||||
Brazilian government securities (1a) | 24,706 | 847 | (91 | ) | 25,462 | 12,296 | 183 | (55 | ) | 12,424 | ||||||||||||||||||||||
Brazilian external debt bonds (1b) | 17,217 | 868 | (20 | ) | 18,065 | 5,667 | 240 | (1 | ) | 5,906 | ||||||||||||||||||||||
Government securities – abroad (1c) | 7,174 | 6 | (43 | ) | 7,137 | 4,327 | 5 | (15 | ) | 4,317 | ||||||||||||||||||||||
United States | 375 | - | - | 375 | - | - | - | - | ||||||||||||||||||||||||
Mexico | - | - | - | - | 10 | 1 | - | 11 | ||||||||||||||||||||||||
Denmark | 2,554 | - | - | 2,554 | 1,949 | - | - | 1,949 | ||||||||||||||||||||||||
Spain | - | - | - | - | 418 | - | - | 418 | ||||||||||||||||||||||||
Korea | 1,662 | - | - | 1,662 | 295 | - | - | 295 | ||||||||||||||||||||||||
Chile | 1,538 | 2 | (6 | ) | 1,534 | 992 | 4 | (1 | ) | 995 | ||||||||||||||||||||||
Paraguay | 528 | - | (37 | ) | 491 | 358 | - | (14 | ) | 344 | ||||||||||||||||||||||
Uruguay | 292 | 2 | - | 294 | 268 | - | - | 268 | ||||||||||||||||||||||||
Belgium | 70 | 1 | - | 71 | - | - | - | - | ||||||||||||||||||||||||
France | 56 | 1 | - | 57 | 37 | - | - | 37 | ||||||||||||||||||||||||
United Kingdon | 83 | - | - | 83 | - | - | - | - | ||||||||||||||||||||||||
Other | 16 | - | - | 16 | - | - | - | - | ||||||||||||||||||||||||
Corporate securities (1d) | 38,228 | 1,862 | (140 | ) | 39,950 | 23,174 | 1,699 | (816 | ) | 24,057 | ||||||||||||||||||||||
Shares | 3,350 | 553 | (91 | ) | 3,812 | 3,458 | 698 | (178 | ) | 3,978 | ||||||||||||||||||||||
Securitized real estate loans | 7,916 | 681 | (29 | ) | 8,568 | 7,806 | 707 | (499 | ) | 8,014 | ||||||||||||||||||||||
Bank deposit certificates | 391 | - | - | 391 | 274 | - | - | 274 | ||||||||||||||||||||||||
Debentures | 13,656 | 316 | (8 | ) | 13,964 | 7,165 | 139 | (68 | ) | 7,236 | ||||||||||||||||||||||
Eurobonds and others | 5,311 | 297 | (12 | ) | 5,596 | 3,554 | 152 | (68 | ) | 3,638 | ||||||||||||||||||||||
Promissory notes | 777 | - | - | 777 | 646 | - | - | 646 | ||||||||||||||||||||||||
Rural Product Note | 770 | 8 | - | 778 | 108 | - | - | 108 | ||||||||||||||||||||||||
Financial bills | 5,720 | - | - | 5,720 | - | - | - | - | ||||||||||||||||||||||||
Other | 337 | 7 | - | 344 | 163 | 3 | (3 | ) | 163 | |||||||||||||||||||||||
TOTAL | 87,575 | 3,588 | (294 | ) | 90,869 | 46,266 | 2,131 | (887 | ) | 47,510 |
(1) Available-for-sale assets pledged as collateral of funding of financial institutions and clientsClients were: a) R$ 9,969 (R$ 2,208 at December 31, 2011 were: a)2011), b) R$ 2,20811,646 (R$ 3,3963,880 at December 31, 2010 and2011), c) R$ 2,594 at January 1, 2010), b) R$ 3,880450 (R$ 3,26712 at December 31, 2010), c)2011) and d) R$ 123,864 (R$ 132,355 at December 31, 2010 and2011), totaling R$ 42 at January 1, 2010) and d) R$ 2,35525,929 (R$ 2,1498,455 at December 31, 2010 and R$ 383 at January 1, 2010), totaling R$ 8,455 (R$ 8,825 at 12/31/2010 and R$ 3,019 at 01/01/2010)2011).
Realized gains and losses
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||
Available-for-sale financial assets | ||||||||||||||||||||
Gain | 597 | 230 | 970 | 597 | 230 | |||||||||||||||
Loss | (153 | ) | (79 | ) | (265 | ) | (153 | ) | (79 | ) | ||||||||||
TOTAL | 444 | 151 | ||||||||||||||||||
Total | 705 | 444 | 151 |
The cost or amortized cost and fair value of available-for-sale financial assets by maturity are as follows:
12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||||||||||||||||||||||
Cost/ | Cost/ | Cost/ | Cost/ Amortized cost | Fair value | Cost/ Amortized cost | Fair value | ||||||||||||||||||||||||||||||||||
amortized | amortized | amortized | ||||||||||||||||||||||||||||||||||||||
cost | Fair value | cost | Fair value | cost | Fair value | |||||||||||||||||||||||||||||||||||
CURRENT | 13,239 | 13,904 | 18,424 | 19,566 | 19,982 | 21,012 | ||||||||||||||||||||||||||||||||||
Current | 25,963 | 26,515 | 13,239 | 13,904 | ||||||||||||||||||||||||||||||||||||
Non-stated maturity | 4,257 | 4,779 | 4,645 | 5,894 | 4,955 | 5,962 | 3,595 | 4,060 | 4,257 | 4,779 | ||||||||||||||||||||||||||||||
Up to one year | 8,982 | 9,125 | 13,779 | 13,672 | 15,027 | 15,050 | 22,368 | 22,455 | 8,982 | 9,125 | ||||||||||||||||||||||||||||||
NON-CURRENT | 33,027 | 33,606 | 24,466 | 24,973 | 19,957 | 20,290 | ||||||||||||||||||||||||||||||||||
Non-current | 61,612 | 64,354 | 33,027 | 33,606 | ||||||||||||||||||||||||||||||||||||
From one to five years | 16,875 | 17,042 | 12,060 | 12,228 | 13,560 | 13,737 | 28,914 | 29,470 | 16,875 | 17,042 | ||||||||||||||||||||||||||||||
From five to ten years | 9,792 | 9,655 | 7,281 | 7,400 | 2,637 | 2,689 | 19,924 | 20,480 | 9,792 | 9,655 | ||||||||||||||||||||||||||||||
After ten years | 6,360 | 6,909 | 5,125 | 5,345 | 3,760 | 3,864 | 12,774 | 14,404 | 6,360 | 6,909 | ||||||||||||||||||||||||||||||
TOTAL | 46,266 | 47,510 | 42,890 | 44,539 | 39,939 | 41,302 | ||||||||||||||||||||||||||||||||||
Total | 87,575 | 90,869 | 46,266 | 47,510 |
During the yearperiods ended December 31, 2012, 2011 December 31, 2010 and January 1, 2010, ITAÚ UNIBANCO HOLDING has not recognized any impairment losses on available-for-sale financial assets.
NOTE 1011 - HELD-TO-MATURITY FINANCIAL ASSETS
The amortized cost of held-to-maturity financial assets is as follows:
12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||
Amortized cost | Amortized cost | Amortized cost | Amortized cost | Amortized cost | ||||||||||||||||
Brazilian government securities | 2,812 | 2,764 | 1,942 | 3,013 | 2,812 | |||||||||||||||
Brazilian external debt bonds (1a) | 196 | 226 | 238 | 118 | 196 | |||||||||||||||
Government securities – abroad | - | 16 | 17 | 20 | - | |||||||||||||||
Corporate securities (1b) | 97 | 164 | 232 | 51 | 97 | |||||||||||||||
Debentures | 30 | 30 | 45 | - | 30 | |||||||||||||||
Eurobonds and others | 65 | 130 | 182 | 51 | 65 | |||||||||||||||
Securitized real estate loans | 2 | 4 | 5 | - | 2 | |||||||||||||||
Total | 3,105 | 3,170 | 2,429 | 3,202 | 3,105 |
(1) Held-to-maturity financial assets pledged as collateral of funding transactions of financial institutions and clients were: a) R$ 76 (R$ 189 at December 31, 2011 were: a) R$ 1892011) and b) R$ 44 (R$ 41 (R$ 268 at 12/31/2010 and R$ 124 at 01/01/2010)December 31, 2011), totaling R$ 120 (R$ 230 (R$ 268 at 12/31/2010 and R$ 124 at 01/01/2010)December 31, 2011).
The resultinterest income from held-to-maturity financial assets by maturity was R$ 471 (R$ 360 (R$from 01/01 to 12/31/2011 e R$ 456 from 01/01 to 12/31/2010).
The fair value of held-to-maturity financial assets is disclosed in Note 30.31.
F.59 |
The amortized cost of held-to-maturity financial assetsHeld-to-Maturity Financial Assets by maturity is as follows:
12/31/2011 | 12/31/2010 | 1/1/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||
Amortized cost | Amortized cost | Amortized cost | Amortized cost | Amortized cost | ||||||||||||||||
CURRENT | 120 | 284 | 41 | |||||||||||||||||
Current | 188 | 120 | ||||||||||||||||||
Up to one year | 120 | 284 | 41 | 188 | 120 | |||||||||||||||
NON-CURRENT | 2,985 | 2,886 | 2,388 | |||||||||||||||||
Non-current | 3,014 | 2,985 | ||||||||||||||||||
From one to five years | 242 | 344 | 616 | 147 | 242 | |||||||||||||||
From five to ten years | 1,077 | 77 | 79 | 1,087 | 1,077 | |||||||||||||||
After ten years | 1,666 | 2,465 | 1,693 | 1,780 | 1,666 | |||||||||||||||
Total | 3,105 | 3,170 | 2,429 | 3,202 | 3,105 |
During the yearsperiods ended December 31, 2012, 2011 December 31,and 2010, and January 1, 2010, there were noITAÚ UNIBANCO HOLDING has not recognized any impairment losses recognized with respect toon held-to-maturity financial assets.
F.60 |
NOTE 1112 - LOAN OPERATIONS AND LEASE OPERATIONS PORTFOLIO
a) Composition of loan operations and lease operations
Below is the composition of the carrying amoutnamount of loan operations and lease operations by type, sector of debtor, maturity and concentration:
Loan operations and lease operations, by type | 12/31/2011 | 12/31/2010 | 01/01/2010 | |||||||||||||||||
Loan operations and lease operations by type | 12/31/2012 | 12/31/2011 | ||||||||||||||||||
Individuals | 148,127 | 124,787 | 107,032 | 150,879 | 149,277 | |||||||||||||||
Credit card | 38,961 | 33,041 | 27,748 | 40,531 | 38,961 | |||||||||||||||
Personal loan | 35,253 | 23,528 | 21,187 | 40,655 | 36,403 | |||||||||||||||
Vehicles | 60,463 | 60,151 | 52,849 | 51,646 | 60,463 | |||||||||||||||
Mortgage loans | 13,450 | 8,067 | 5,248 | 18,047 | 13,450 | |||||||||||||||
Corporate | 93,229 | 76,583 | 50,428 | 103,771 | 92,079 | |||||||||||||||
Small and medium businesses | 85,649 | 79,950 | 75,924 | 85,185 | 85,649 | |||||||||||||||
Foreign loans and Latin America | 19,259 | 13,517 | 11,029 | |||||||||||||||||
Foreign loans - Latin America | 27,149 | 19,259 | ||||||||||||||||||
Total loan operations and lease operations | 346,264 | 294,837 | 244,413 | 366,984 | 346,264 | |||||||||||||||
Allowance for loan and lease losses | (25,713 | ) | (23,873 | ) | ||||||||||||||||
Allowance for loan losses | (23,873 | ) | (19,994 | ) | (20,245 | ) | ||||||||||||||
Total loan operations and lease operations, net of allowance for loan losses | 322,391 | 274,843 | 224,168 | |||||||||||||||||
Total loan operations and lease operations, net of allowance for loan and lease losses | 341,271 | 322,391 |
By sector of debtor | 12/31/2011 | 12/31/2010 | 01/01/2010 | |||||||||
Public sector | 1,990 | 1,138 | 1,620 | |||||||||
Industry and commerce | 99,859 | 84,997 | 67,902 | |||||||||
Services | 70,642 | 60,295 | 48,657 | |||||||||
Primary sector | 16,109 | 13,933 | 13,299 | |||||||||
Other sectors | 1,497 | 2,185 | 1,278 | |||||||||
Individuals | 156,167 | 132,289 | 111,657 | |||||||||
Total loan operations and lease operations | 346,264 | 294,837 | 244,413 |
By maturity | 12/31/2012 | 12/31/2011 | ||||||
Overdue as from 1 day | 13,234 | 14,879 | ||||||
Falling due up to 3 months | 101,273 | 95,449 | ||||||
Falling due more than 3 months but less than 1 year | 94,350 | 85,438 | ||||||
Falling due after 1 year | 158,127 | 150,498 | ||||||
Total loan operations and lease operations | 366,984 | 346,264 |
By maturity | 12/31/2011 | 12/31/2010 | 01/01/2010 | |||||||||
Overdue as from 1 day | 14,879 | 12,229 | 12,910 | |||||||||
Falling due up to 3 months | 95,449 | 82,609 | 74,467 | |||||||||
Falling due more than 3 months but less than 1 year | 85,438 | 77,354 | 65,667 | |||||||||
Falling due after 1 year | 150,498 | 122,645 | 91,369 | |||||||||
Total loan operations and lease operations | 346,264 | 294,837 | 244,413 |
By concentration | 12/31/2012 | 12/31/2011 | ||||||
Largest debtor | 4,186 | 2,331 | ||||||
10 largest debtors | 18,429 | 13,613 | ||||||
20 largest debtors | 26,751 | 21,603 | ||||||
50 largest debtors | 41,798 | 35,504 | ||||||
100 largest debtors | 57,034 | 48,280 |
By concentration | 12/31/2011 | 12/31/2010 | 01/01/2010 | |||||||||
Largest debtor | 2,331 | 1,620 | 2,161 | |||||||||
10 largest debtors | 13,613 | 11,313 | 10,521 | |||||||||
20 largest debtors | 21,603 | 18,313 | 16,520 | |||||||||
50 largest debtors | 35,504 | 31,831 | 28,126 | |||||||||
100 largest debtors | 48,280 | 42,949 | 38,445 |
The breakdown of the Loan and Lease Operations Portfolio by debtor’s industry is evidenced in Note 36 item 5.1. Maximum exposure of Financial Assets segregated by business sector.
The accretion of the net present value onof impaired loan operations and lease operations and the respective allowance for loan and lease losses are not presented using their gross amounts in the statement of income but on a net basis within interest and similar income. If they were presented at gross amounts, there would be an increase of R$ 1,914 million1,852 and R$ 1,548 million1,914 in interest and similar income inas of December 31, 2012 and 2011, and 2010, respectively, with the same impact on the allowance for loan and lease losses expensesexpenses.
F.61 |
b) | Allowance for loan and lease losses |
The changes in the allowance for loan and lease losses are shown in the table below:
Net increase/ | ||||||||||||||||||||||||||||||||
Opening | Write-offs | (reversal) | Closing | |||||||||||||||||||||||||||||
balance | 01/01 to | 01/01 to | balance | |||||||||||||||||||||||||||||
Composition of the carrying amount by class of assets | 12/31/2010 | 12/31/2011 | 12/31/2011 | 12/31/2011 | Opening balance 12/31/2011 | Write-offs 01/01 to 12/31/2012 | Net increase / (Reversal) 01/01 to 12/31/2012 | Closing balance 12/31/2012 | ||||||||||||||||||||||||
Individuals | 10,619 | (8,631 | ) | 11,641 | 13,629 | 13,679 | (13,199 | ) | 14,361 | 14,841 | ||||||||||||||||||||||
Credit card | 3,306 | (3,558 | ) | 4,077 | 3,825 | 3,825 | (5,335 | ) | 4,373 | 2,863 | ||||||||||||||||||||||
Personal loans | 3,492 | (2,959 | ) | 4,810 | 5,343 | 5,393 | (5,134 | ) | 7,446 | 7,705 | ||||||||||||||||||||||
Vehicles | 3,709 | (2,041 | ) | 2,747 | 4,415 | 4,415 | (2,696 | ) | 2,508 | 4,227 | ||||||||||||||||||||||
Mortgage loans | 112 | (73 | ) | 7 | 46 | 46 | (34 | ) | 34 | 46 | ||||||||||||||||||||||
Corporate | 1,071 | (294 | ) | (19 | ) | 758 | 708 | (314 | ) | 971 | 1,365 | |||||||||||||||||||||
Small and medium businesses | 8,041 | (7,001 | ) | 8,157 | 9,197 | 9,197 | (8,407 | ) | 8,301 | 9,091 | ||||||||||||||||||||||
Foreign loans and Latin America | 263 | (233 | ) | 259 | 289 | |||||||||||||||||||||||||||
Foreign loans - Latin America | 289 | (222 | ) | 349 | 416 | |||||||||||||||||||||||||||
Total | 19,994 | (16,159 | ) | 20,038 | 23,873 | 23,873 | (22,142 | ) | 23,982 | 25,713 |
Net increase/ | ||||||||||||||||||||||||||||||||
Opening | Write-offs | (reversal) | Closing | |||||||||||||||||||||||||||||
balance | 01/01 to | 01/01 to | balance | |||||||||||||||||||||||||||||
Composition of the carrying amount by class of assets | 01/01/2010 | 12/31/2010 | 12/31/2010 | 12/31/2010 | Opening balance 12/31/2010 | Write-offs 01/01 to 12/31/2011 | Net increase / (Reversal) 01/01 to 12/31/2011 | Closing balance 12/31/2011 | ||||||||||||||||||||||||
Individuals | 12,969 | (9,091 | ) | 6,741 | 10,619 | 10,717 | (8,631 | ) | 11,593 | 13,679 | ||||||||||||||||||||||
Credit card | 4,173 | (2,731 | ) | 1,864 | 3,306 | 3,306 | (3,558 | ) | 4,077 | 3,825 | ||||||||||||||||||||||
Personal loans | 4,491 | (3,908 | ) | 2,909 | 3,492 | 3,590 | (2,959 | ) | 4,762 | 5,393 | ||||||||||||||||||||||
Vehicles | 4,022 | (2,377 | ) | 2,064 | 3,709 | 3,709 | (2,041 | ) | 2,747 | 4,415 | ||||||||||||||||||||||
Mortgage loans | 283 | (75 | ) | (96 | ) | 112 | 112 | (73 | ) | 7 | 46 | |||||||||||||||||||||
Corporate | 1,244 | (466 | ) | 293 | 1,071 | 973 | (294 | ) | 29 | 708 | ||||||||||||||||||||||
Small and medium businesses | 5,646 | (5,793 | ) | 8,188 | 8,041 | 8,041 | (7,001 | ) | 8,157 | 9,197 | ||||||||||||||||||||||
Foreign loans and Latin America | 386 | (448 | ) | 325 | 263 | |||||||||||||||||||||||||||
Foreign loans - Latin America | 263 | (233 | ) | 259 | 289 | |||||||||||||||||||||||||||
Total | 20,245 | (15,798 | ) | 15,547 | 19,994 | 19,994 | (16,159 | ) | 20,038 | 23,873 |
Composition of the carrying amount by class of assets | Opening balance 01/01/2010 | Write-offs 01/01 to 12/31/2010 | Net increase / (Reversal) 01/01 to 12/31/2010 | Closing balance 12/31/2010 | ||||||||||||
Individuals | 12,969 | (9,091 | ) | 6,839 | 10,717 | |||||||||||
Credit card | 4,173 | (2,731 | ) | 1,864 | 3,306 | |||||||||||
Personal loans | 4,491 | (3,908 | ) | 3,007 | 3,590 | |||||||||||
Vehicles | 4,022 | (2,377 | ) | 2,064 | 3,709 | |||||||||||
Mortgage loans | 283 | (75 | ) | (96 | ) | 112 | ||||||||||
Corporate | 1,244 | (466 | ) | 195 | 973 | |||||||||||
Small and medium businesses | 5,646 | (5,793 | ) | 8,188 | 8,041 | |||||||||||
Foreign loans - Latin America | 386 | (448 | ) | 325 | 263 | |||||||||||
Total | 20,245 | (15,798 | ) | 15,547 | 19,994 |
The composition of the allowance for loan and lease losses by customers sector is shown in the following table:
12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||
Public sector | 1 | 16 | 57 | 2 | 1 | |||||||||||||||
Industry and commerce | 6,266 | 5,658 | 4,258 | 6,443 | 6,266 | |||||||||||||||
Services | 3,476 | 3,020 | 2,185 | 3,742 | 3,476 | |||||||||||||||
Primary sector | 273 | 318 | 529 | |||||||||||||||||
Natural resources | 411 | 273 | ||||||||||||||||||
Other sectors | 32 | 123 | 64 | 16 | 32 | |||||||||||||||
Individuals | 13,825 | 10,859 | 13,152 | 15,099 | 13,825 | |||||||||||||||
Total | 23,873 | 19,994 | 20,245 | 25,713 | 23,873 |
ITAÚ UNIBANCO HOLDING assesses the objective evidence of impairment for loan operations and lease operations on an individual basis for financial assets that are individually significant and, in the aggregate, for financial assets that are not individually significant. (Note 2.4.g.VIII).2.4g VIII)
F.62 |
The composition of the allowance for loan and lease losses by type of assessment offor objective evidence of impairment is shown in the following table:
12/31/2011 | ||||||||||||||||||||||||
Impaired | Not Impaired | Total | ||||||||||||||||||||||
Loan | Allowance | Loan | Allowance | Loan | Allowance | |||||||||||||||||||
I – Individually evaluated | ||||||||||||||||||||||||
Corporate (*) | 1,033 | 430 | 92,196 | 328 | 93,229 | 758 | ||||||||||||||||||
II - Collectivelly evaluated | ||||||||||||||||||||||||
Individuals | 10,986 | 6,738 | 137,141 | 6,891 | 148,127 | 13,629 | ||||||||||||||||||
Credit card | 3,083 | 1,918 | 35,878 | 1,907 | 38,961 | 3,825 | ||||||||||||||||||
Personal loans | 3,455 | 2,087 | 31,798 | 3,256 | 35,253 | 5,343 | ||||||||||||||||||
Vehicles | 4,329 | 2,707 | 56,134 | 1,708 | 60,463 | 4,415 | ||||||||||||||||||
Mortgage loans | 119 | 26 | 13,331 | 20 | 13,450 | 46 | ||||||||||||||||||
Small and medium businesses | 6,770 | 4,808 | 78,879 | 4,389 | 85,649 | 9,197 | ||||||||||||||||||
Foreign loans and Latin America | 63 | 36 | 19,196 | 253 | 19,259 | 289 | ||||||||||||||||||
Total | 18,852 | 12,012 | 327,412 | 11,861 | 346,264 | 23,873 |
12/31/2010 | ||||||||||||||||||||||||
Impaired | Not impaired | Total | ||||||||||||||||||||||
Loan | Allowance | Loan | Allowance | Loan | Allowance | |||||||||||||||||||
I – Individually evaluated | ||||||||||||||||||||||||
Corporate (*) | 884 | 394 | 75,699 | 677 | 76,583 | 1,071 | ||||||||||||||||||
II – Collectively evaluated | ||||||||||||||||||||||||
Individuals | 8,086 | 4,839 | 116,701 | 5,780 | 124,787 | 10,619 | ||||||||||||||||||
Credit card | 2,411 | 1,458 | 30,630 | 1,848 | 33,041 | 3,306 | ||||||||||||||||||
Personal loans | 2,195 | 1,380 | 21,333 | 2,112 | 23,528 | 3,492 | ||||||||||||||||||
Vehicles | 3,315 | 1,938 | 56,836 | 1,771 | 60,151 | 3,709 | ||||||||||||||||||
Mortgage loans | 165 | 63 | 7,902 | 49 | 8,067 | 112 | ||||||||||||||||||
Small and medium businesses | 4,856 | 3,412 | 75,094 | 4,629 | 79,950 | 8,041 | ||||||||||||||||||
Foreign loans and Latin America | 52 | 35 | 13,465 | 228 | 13,517 | 263 | ||||||||||||||||||
Total | 13,878 | 8,680 | 280,959 | 11,314 | 294,837 | 19,994 |
01/01/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impaired | Not impaired | Total | Impaired | Not Impaired | Total | Impaired | Not Impaired | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan | Allowance | Loan | Allowance | Loan | Allowance | Loan | Allowance | Loan | Allowance | Loan | Allowance | Loan | Allowance | Loan | Allowance | Loan | Allowance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
I – Individually evaluated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
I – Individually | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
evaluated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate (*) | 631 | 172 | 49,797 | 1,072 | 50,428 | 1,244 | 1,467 | 845 | 102,304 | 520 | 103,771 | 1,365 | 1,012 | 429 | 91,067 | 279 | 92,079 | 708 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
II – Collectively evaluated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
II- Collectively | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
evaluated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individuals | 8,527 | 6,873 | 98,505 | 6,096 | 107,032 | 12,969 | 11,593 | 7,530 | 139,286 | 7,311 | 150,879 | 14,841 | 10,589 | 6,617 | 138,688 | 7,062 | 149,277 | 13,679 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit card | 2,446 | 2,350 | 25,302 | 1,823 | 27,748 | 4,173 | 2,296 | 1,463 | 38,235 | 1,400 | 40,531 | 2,863 | 3,083 | 1,919 | 35,878 | 1,906 | 38,961 | 3,825 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Personal loans | 2,686 | 2,173 | 18,501 | 2,318 | 21,187 | 4,491 | 4,862 | 3,397 | 35,793 | 4,308 | 40,655 | 7,705 | 3,380 | 2,042 | 33,023 | 3,351 | 36,403 | 5,393 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vehicles | 3,206 | 2,273 | 49,643 | 1,749 | 52,849 | 4,022 | 4,250 | 2,647 | 47,396 | 1,580 | 51,646 | 4,227 | 4,016 | 2,630 | 56,447 | 1,785 | 60,463 | 4,415 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage loans | 189 | 77 | 5,059 | 206 | 5,248 | 283 | 185 | 23 | 17,862 | 23 | 18,047 | 46 | 110 | 26 | 13,340 | 20 | 13,450 | 46 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Small and medium businesses | 4,796 | 3,410 | 71,128 | 2,236 | 75,924 | 5,646 | 6,335 | 4,886 | 78,850 | 4,205 | 85,185 | 9,091 | 6,721 | 4,785 | 78,928 | 4,412 | 85,649 | 9,197 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign loans and Latin America | 73 | 3 | 10,956 | 383 | 11,029 | 386 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign loans - Latin America | 116 | 68 | 27,033 | 348 | 27,149 | 416 | 63 | 36 | 19,196 | 253 | 19,259 | 289 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 14,027 | 10,458 | 230,386 | 9,787 | 244,413 | 20,245 | 19,511 | 13,329 | 347,473 | 12,384 | 366,984 | 25,713 | 18,385 | 11,867 | 327,879 | 12,006 | 346,264 | 23,873 |
(*) As detailed in Note 2.4.g.VIII, corporate loans are first evaluated on an individual basis. In the event there is no objective indication of impairment, these are subsequently evaluated on an aggregate basis in accordance with the characteristics of the operation. As a result, an allowance for loan and lease losses for corporate loans is recognized, both in the individual and the aggregate evaluation.
F.63 |
c) | Present value of lease operations |
Below is the analysis of the present value of minimum future payments receivable from finance leases by maturity basically composed of individual operations - vehicles:
12/31/2012 | ||||||||||||||||||||||||
12/31/2011 | Minimum future | Future financial | Present | |||||||||||||||||||||
Minimum future payments | Future financial income | Present value | payments | income | value | |||||||||||||||||||
Current | 15,244 | (1,172 | ) | 14,072 | 10,811 | (1,168 | ) | 9,643 | ||||||||||||||||
Up to 1 year | 15,244 | (1,172 | ) | 14,072 | 10,811 | (1,168 | ) | 9,643 | ||||||||||||||||
Non-current | 18,133 | (5,361 | ) | 12,772 | 10,158 | (2,751 | ) | 7,407 | ||||||||||||||||
From 1 to 5 years | 17,901 | (5,310 | ) | 12,591 | 9,938 | (2,704 | ) | 7,234 | ||||||||||||||||
Over 5 years | 232 | (51 | ) | 181 | 220 | (47 | ) | 173 | ||||||||||||||||
Total | 33,377 | (6,533 | ) | 26,844 | 20,969 | (3,919 | ) | 17,050 |
12/31/2010 | ||||||||||||
Minimum future payments | Future financial income | Present value | ||||||||||
Current | 19,462 | (2,047 | ) | 17,415 | ||||||||
Up to 1 year | 19,462 | (2,047 | ) | 17,415 | ||||||||
Non-current | 29,611 | (8,879 | ) | 20,732 | ||||||||
From 1 to 5 years | 28,793 | (8,693 | ) | 20,100 | ||||||||
Over 5 years | 818 | (186 | ) | 632 | ||||||||
Total | 49,073 | (10,926 | ) | 38,147 |
12/31/2011 | ||||||||||||||||||||||||
1/1/2010 | Minimum future | Future financial | Present | |||||||||||||||||||||
Minimum future payments | Future financial income | Present value | payments | income | value | |||||||||||||||||||
Current | 25,155 | (3,056 | ) | 22,099 | 15,244 | (1,172 | ) | 14,072 | ||||||||||||||||
Up to 1 year | 25,155 | (3,056 | ) | 22,099 | 15,244 | (1,172 | ) | 14,072 | ||||||||||||||||
Non-current | 38,549 | (12,531 | ) | 26,018 | 18,133 | (5,361 | ) | 12,772 | ||||||||||||||||
From 1 to 5 years | 37,302 | (12,404 | ) | 24,898 | 17,901 | (5,310 | ) | 12,591 | ||||||||||||||||
Over 5 years | 1,247 | (127 | ) | 1,120 | 232 | (51 | ) | 181 | ||||||||||||||||
Total | 63,704 | (15,587 | ) | 48,117 | 33,377 | (6,533 | ) | 26,844 |
The allowance for loan losesand lease losses related to the lease portfolio amounts to: R$ 1,513 (R$ 2,020 (at 12/31/at December 31, 2011), R$ 2,752 (at 12/31/2010).
d) | Sale or Transfer of Financial Assets |
ITAÚ UNIBANCO HOLDING carried out operations for the sale or transfer of financial assets in which there was the retention of credit risks of financial assets transferred, through joint obligation clauses or the acquisition of subordinated quotas of credit right funds. Therefore, such operations remained recorded as loan operations and R$ 3,010 (at 01/01/2010).are represented by the following information at December 31, 2012:
12/31/2012 | ||||||||||||||||
Assets | Liabilities (*) | |||||||||||||||
Nature of operation | Book value | Fair value | Book value | Fair value | ||||||||||||
Individuals – mortgage loan | 394 | 434 | 394 | 400 |
(*) Under Interbank Market Debt
F.64 |
NOTE 12 –13 - INVESTMENTS IN UNCONSOLIDATED COMPANIES
a) Composition |
Interest % at 12/31/2011 | 12/31/2011 | 12/31/2010 | 01/01/2010 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | Voting | Stockholders’ equity | Net income | Investment | Share of comprehensive income | Market value | Stockholders’ equity | Net income | Investment | Share of comprehensive income | Market value | Stockholders’ equity | Investment | Market value | ||||||||||||||||||||||||||||||||||||||||||||||
Porto Seguro Itaú Unibanco Participações S.A. (a) | 42.93 | 42.93 | 2,681 | 415 | 2,014 | 144 | 2,094 | 2,494 | 466 | 1,968 | 161 | 2,782 | 2,212 | 1,886 | 1,941 | |||||||||||||||||||||||||||||||||||||||||||||
Banco BPI S.A. (b) (c) | 19.01 | 19.01 | 1,151 | (1,880 | ) | 219 | (343 | ) | 219 | 3,589 | 442 | 682 | 75 | 524 | 4,803 | 914 | 903 | |||||||||||||||||||||||||||||||||||||||||||
Serasa S.A. (d) | 16.14 | 16.14 | 1,119 | 310 | 273 | 102 | - | 1,052 | 301 | 256 | 80 | - | 1,007 | 250 | - | |||||||||||||||||||||||||||||||||||||||||||||
Outros (e) | - | - | - | - | 38 | (16 | ) | - | - | - | 42 | 33 | - | - | 130 | - | ||||||||||||||||||||||||||||||||||||||||||||
Total | - | - | - | - | 2,544 | (113 | ) | - | - | - | 2,948 | 349 | - | - | 3,180 | - |
Interest % at at 12/31/2012 | 12/31/2012 | 12/31/2011 | 12/31/2010 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total | Voting | Stockholders’ equity | Net income | Investment | Equity in earnings | Market value | Stockholders’ equity | Investment | Market value | Net income | Equity in earnings | Equity in earnings | ||||||||||||||||||||||||||||||||||||||||
Porto Seguro Itaú Unibanco Participações S.A. (a) (b) | 42.93 | 42.93 | 2,898 | 436 | 2,076 | 157 | 2,309 | 2,681 | 2,014 | 2,094 | 415 | 144 | 161 | |||||||||||||||||||||||||||||||||||||||
BSF Holding S.A. (c) | 49.00 | 49.00 | 607 | 131 | 880 | 64 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Banco BPI S.A. (d) | - | - | - | - | - | (102 | ) | - | 1,151 | 219 | 219 | (1,880 | ) | (343 | ) | 75 | ||||||||||||||||||||||||||||||||||||
Serasa S.A. (e) | - | - | - | - | - | 70 | - | 1,119 | 273 | 1,161 | 310 | 102 | 80 | |||||||||||||||||||||||||||||||||||||||
Other (f) | - | - | - | - | 49 | (14 | ) | - | - | 38 | - | - | (16 | ) | 33 | |||||||||||||||||||||||||||||||||||||
Total | - | - | - | - | 3,005 | 175 | - | - | 2,544 | - | - | (113 | ) | 349 |
(a) For purpose of recording the participation in earnings, at 12/31/2012 the position at 11/30/2012 was used, in accordance with IAS 27;
(b) For purposes of market value, the quoted share price of Porto Seguro S.A. was taken into account. The investment included the amounts of R$ 832 at 12/31/2012 and R$ 862 at December 31, 12/31/2011 R$ 897 at December 31, 2010 and R$ 936 at January 1, 2010 that correspond to the difference between the interest in the net assets at fair value of Porto Seguro Itaú Unibanco Participações S.A. and the investment cost.
(b) At 12/31/2011, impairment of R$ 277 was recognized in relation to that investment.book value;
(c) Investment recorded under the equity method dueIn May 2012 Itaú Unibanco S.A. acquired 137,004,000 common shares of BSF Holding S.A. (parent company of Banco Carrefour) per R$ 816 which corresponds to significant influence exerted by management members on the conduction49% of business.interest in its capital. The investment amount includes R$ 583 at 12/31/2012, which correspond to goodwill.
(d) Investments disposed of in 04/20/2012;
(e) Indirect interestinvestment of ITAÚ UNIBANCO HOLDING as a result of its 66% interest in subsidiary company BIU Participações S.A. which holds 24% of Serasa S.A.’s voting capital. Investments disposed of in 11/23/2012 (Note 25);
(e)(f) At 12/31/2011,2012, includes interest in total capital and voting capital of the following companies: Compañia Uruguaya de Medios de Procesamiento S.A. (26.88%(30.06% total and voting capital);, Latosol Empreendimentos e Participação Ltda (32.11% total and voting capital); Redebanc SRL (20.00% total and voting capital) and Tecnologia Bancária S.A. (24.81% total capital and voting capital).
At December 31, 2012, ITAÚ UNIBANCO HOLDING received/recognized for dividends and interest on capital of the unconsolidated companies, being the main Porto Seguro Itaú Unibanco Participações S.A. in the amount of R$ 161 (R$ 148 at December 31, 2011).
b) Other information
The table below shows the summary of the proportional interest onin the aggregate financial information of the investees under the equity method of accounting.
12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||
Total assets (*) | 107,783 | 107,250 | 120,798 | |||||||||
Total liabilities (*) | 102,831 | 100,114 | 112,783 | |||||||||
Total income (*) | 8,739 | 8,275 | - | |||||||||
Total expense (*) | (9,894 | ) | (7,066 | ) | - |
12/31/2012 | 12/31/2011 | 12/31/2010 | ||||||||||
Total assets (*) | 3,505 | 107,783 | 107,250 | |||||||||
Total liabilities (*) | - | 102,831 | 100,114 | |||||||||
Total income | 567 | 8,739 | 8,275 | |||||||||
Total expenses | - | (9,894 | ) | (7,066 | ) |
(*) Basically represented by Banco BPI S.A., in the amount of R$ 103,696 at 12/31/2011 (R$ 103,472 at December 31, 2010 and R$ 117,362 at January 01, 12/31/2010) related to assets, of R$ 102,544 at 12/31/2011 (R$ 99,883 at December 31, 2010 and R$ 112,566 at January 01, 12/31/2010) related to liabilities, of R$ 7,081 at 12/31/2011 (R$ 6,428 at December 31, 12/31/2010) related to income and of R$ 8,961 at 12/31/2011 (R$ 5,986 at December 31, 12/31/2010) related to expenses. This investiment was disposed on 04/20/2012.
The investees do not have contingent liabilities to which ITAÚ UNIBANCO HOLDING is significantly exposed.
NOTE 1314 – LEASE COMMITMENTS AS LESSEE
a) | Finance lease |
ITAÚ UNIBANCO HOLDING is the lessee in finance lease contracts of data processing equipment, with the option of purchase or extension, without contingent rental payments or imposed restrictions. The net carrying amount of these assets is R$ 339248 (R$ 210339 at 12/31/2010 and R$ 109 at 01/01/2010)2011).
The table below shows the total future minimum payments:
12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||
Current | 220 | 129 | 63 | 174 | 220 | |||||||||||||||
Up to 1 year | 220 | 129 | 63 | 174 | 220 | |||||||||||||||
Non-Current | 120 | 83 | 46 | 74 | 120 | |||||||||||||||
From 1 to 5 years | 120 | 83 | 46 | 74 | 120 | |||||||||||||||
Total future minimum payments | 340 | 212 | 109 | 248 | 340 | |||||||||||||||
Future interest | 1 | 2 | - | |||||||||||||||||
(-) Future interest | - | 1 | ||||||||||||||||||
Present value | 339 | 210 | 109 | 248 | 339 |
b) | Operating leases |
ITAÚ UNIBANCO HOLDING leases many properties, for use in its operations, under standard real estate leases that normally can be cancelled at its option and include renewal options and price escalationescalations clauses. No lease agreement imposes any restriction on our ability to pay dividends, engage in debt or equity financing transactions, or enter into further lease agreements, and there areis no contingent payments related to the agreements.
Minimum payments forof services provided by third parties and rents underaccording to operating and capital lease agreements with non-cancelable initial and remaining lease terms of more than one year wereare as follows:
12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||
Current | 882 | 823 | - | 948 | 882 | |||||||||||||||
Up to 1 year | 882 | 823 | - | 948 | 882 | |||||||||||||||
Non-current | 3,131 | 3,311 | 3,392 | 3,412 | 3,131 | |||||||||||||||
From 1 to 5 years | 2,537 | 2,571 | 2,646 | 2,910 | 2,537 | |||||||||||||||
Over 5 years | 595 | 740 | 746 | 502 | 595 | |||||||||||||||
Total future minimum payments | 4,013 | 4,134 | 3,392 | 4,360 | 4,013 |
F.66 |
NOTE 1415 – FIXED ASSETS
Annual | CHANGES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
depreciation | Balance at | Depreciation | Exchange | Balance at | Annual | CHANGES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FIXED ASSETS (1) | rates | 01/01/2011 | Acquisitions | expense | Impairment | Disposals | variation | Other | 12/31/2011 | depreciation rates | Balance at 12/31/2011 | Acquisitions | Depreciation expense | Impairment | Disposals | Exchange variation | Other | Balance at 12/31/2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
REAL ESTATE IN USE (2) | 1,844 | 248 | (96 | ) | - | (60 | ) | (11 | ) | 16 | 1,941 | 1,941 | 278 | (78 | ) | - | (182 | ) | 4 | (69 | ) | 1,894 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Land | 1,045 | 167 | - | - | (20 | ) | 2 | (10 | ) | 1,184 | 1,184 | 53 | - | - | (173 | ) | 2 | (37 | ) | 1,029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Buildings | 799 | 81 | (96 | ) | - | (40 | ) | (13 | ) | 26 | 757 | 757 | 225 | (78 | ) | - | (9 | ) | 2 | (32 | ) | 865 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cost | 2,321 | 81 | - | - | (67 | ) | (11 | ) | 16 | 2,340 | 2,340 | 225 | - | - | (15 | ) | 4 | (82 | ) | 2,472 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated depreciation | 4 | (1,522 | ) | - | (96 | ) | - | 27 | (2 | ) | 10 | (1,583 | ) | 4 | (1,583 | ) | - | (78 | ) | - | 6 | (2 | ) | 50 | (1,607 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
OTHER FIXED ASSETS | 2,957 | 1,655 | (1,088 | ) | (15 | ) | (87 | ) | 17 | (22 | ) | 3,417 | 3,417 | 1,636 | (1,268 | ) | - | (64 | ) | 22 | (9 | ) | 3,734 | |||||||||||||||||||||||||||||||||||||||||||||||||
Improvements | 626 | 229 | (242 | ) | - | (4 | ) | (5 | ) | 34 | 638 | 638 | 226 | (263 | ) | - | - | 13 | 26 | 640 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost | 1,116 | 229 | - | - | (131 | ) | (1 | ) | 32 | 1,245 | 1,245 | 226 | - | - | (251 | ) | 10 | 23 | 1,253 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated depreciation | 10 | (490 | ) | - | (242 | ) | - | 127 | (4 | ) | 2 | (607 | ) | 10 | (607 | ) | - | (263 | ) | - | 251 | 3 | 3 | (613 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Installations | 267 | 179 | (53 | ) | - | (1 | ) | 8 | (10 | ) | 390 | 390 | 202 | (68 | ) | - | - | 10 | (20 | ) | 514 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cost | 770 | 179 | - | - | (18 | ) | 5 | 1 | 937 | 937 | 202 | - | - | (10 | ) | 6 | (263 | ) | 872 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated depreciation | 10 to 20 | (503 | ) | - | (53 | ) | - | 17 | 3 | (11 | ) | (547 | ) | 10 to 20 | (547 | ) | - | (68 | ) | - | 10 | 4 | 243 | (358 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Furniture and equipment | 433 | 220 | (63 | ) | (15 | ) | (21 | ) | (19 | ) | (47 | ) | 488 | 488 | 139 | (77 | ) | - | (23 | ) | (11 | ) | (11 | ) | 505 | |||||||||||||||||||||||||||||||||||||||||||||||
Cost | 863 | 220 | - | (15 | ) | (165 | ) | (13 | ) | (42 | ) | 848 | 848 | 139 | - | - | (38 | ) | (14 | ) | (13 | ) | 922 | |||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated depreciation | 10 to 20 | (430 | ) | - | (63 | ) | - | 144 | (6 | ) | (5 | ) | (360 | ) | 10 to 20 | (360 | ) | - | (77 | ) | - | 15 | 3 | 2 | (417 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
EDP systems (3) | 1,404 | 942 | (677 | ) | - | (56 | ) | 28 | 3 | 1,644 | 1,644 | 1,008 | (801 | ) | - | (38 | ) | 11 | (8 | ) | 1,816 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cost | 4,746 | 942 | - | - | (671 | ) | 39 | (68 | ) | 4,988 | 4,988 | 1,008 | - | - | (504 | ) | 2 | (14 | ) | 5,480 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated depreciation | 20 to 50 | (3,342 | ) | - | (677 | ) | - | 615 | (11 | ) | 71 | (3,344 | ) | 20 to 50 | (3,344 | ) | - | (801 | ) | - | 466 | 9 | 6 | (3,664 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Other (communication, security and transportation) | 227 | 85 | (53 | ) | - | (5 | ) | 5 | (2 | ) | 257 | 257 | 61 | (59 | ) | - | (3 | ) | (1 | ) | 4 | 259 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cost | 529 | 85 | - | - | (66 | ) | 3 | (3 | ) | 548 | 548 | 61 | - | - | (7 | ) | - | 4 | 606 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated depreciation | 10 to 20 | (302 | ) | - | (53 | ) | - | 61 | 2 | 1 | (291 | ) | 10 to 20 | (291 | ) | - | (59 | ) | - | 4 | (1 | ) | - | (347 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
TOTAL FIXED ASSETS | 4,801 | 1,903 | (1,184 | ) | (15 | ) | (147 | ) | 6 | (6 | ) | 5,358 | 5,358 | 1,914 | (1,346 | ) | - | (246 | ) | 26 | (78 | ) | 5,628 | |||||||||||||||||||||||||||||||||||||||||||||||||
Cost | 11,390 | 1,903 | - | (15 | ) | (1,138 | ) | 24 | (74 | ) | 12,090 | 12,090 | 1,914 | - | - | (998 | ) | 10 | (382 | ) | 12,634 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated depreciation | (6,589 | ) | - | (1,184 | ) | - | 991 | (18 | ) | 68 | (6,732 | ) | (6,732 | ) | - | (1,346 | ) | - | 752 | 16 | 304 | (7,006 | ) |
(1) There are no contractual commitments for the purchase of new fixed assets;
(2) Includes the amount of R$ 2 related to attached real estate; fixed assets under construction in the amount of R$ 349, consisting of R$ 235 in real estate in use, R$ 65 in improvements, and R$ 49 in equipment;
(3) Includes lease contracts, mainly related to data processing equipment, which are accounted for as lease operations. The asset and the liability are recognized in the Financial Statements.
F.67 |
Annual | CHANGES | |||||||||||||||||||||||||||||||||||
FIXED ASSETS (1) | depreciation rates | Balance at 12/31/2010 | Acquisitions | Depreciation expense | Impairment | Disposals | Exchange variation | Other | Balance at 12/31/2011 | |||||||||||||||||||||||||||
REAL ESTATE IN USE (2) | 1,844 | 248 | (96 | ) | - | (60 | ) | (11 | ) | 16 | 1,941 | |||||||||||||||||||||||||
Land | 1,045 | 167 | - | - | (20 | ) | 2 | (10 | ) | 1,184 | ||||||||||||||||||||||||||
Buildings | 799 | 81 | (96 | ) | - | (40 | ) | (13 | ) | 26 | 757 | |||||||||||||||||||||||||
Cost | 2,321 | 81 | - | - | (67 | ) | (11 | ) | 16 | 2,340 | ||||||||||||||||||||||||||
Accumulated depreciation | 4 | (1,522 | ) | - | (96 | ) | - | 27 | (2 | ) | 10 | (1,583 | ) | |||||||||||||||||||||||
OTHER FIXED ASSETS | 2,957 | 1,655 | (1,088 | ) | (15 | ) | (87 | ) | 17 | (22 | ) | 3,417 | ||||||||||||||||||||||||
Improvements | 626 | 229 | (242 | ) | - | (4 | ) | (5 | ) | 34 | 638 | |||||||||||||||||||||||||
Cost | 1,116 | 229 | - | - | (131 | ) | (1 | ) | 32 | 1,245 | ||||||||||||||||||||||||||
Accumulated depreciation | 10 | (490 | ) | - | (242 | ) | - | 127 | (4 | ) | 2 | (607 | ) | |||||||||||||||||||||||
Installations | 267 | 179 | (53 | ) | - | (1 | ) | 8 | (10 | ) | 390 | |||||||||||||||||||||||||
Cost | 770 | 179 | - | - | (18 | ) | 5 | 1 | 937 | |||||||||||||||||||||||||||
Accumulated depreciation | 10 a 20 | (503 | ) | - | (53 | ) | - | 17 | 3 | (11 | ) | (547 | ) | |||||||||||||||||||||||
Furniture and equipment | 433 | 220 | (63 | ) | (15 | ) | (21 | ) | (19 | ) | (47 | ) | 488 | |||||||||||||||||||||||
Cost | 863 | 220 | - | (15 | ) | (165 | ) | (13 | ) | (42 | ) | 848 | ||||||||||||||||||||||||
Accumulated depreciation | 10 a 20 | (430 | ) | - | (63 | ) | - | 144 | (6 | ) | (5 | ) | (360 | ) | ||||||||||||||||||||||
EDP Systems (3) | 1,404 | 942 | (677 | ) | - | (56 | ) | 28 | 3 | 1,644 | ||||||||||||||||||||||||||
Cost | 4,746 | 942 | - | - | (671 | ) | 39 | (68 | ) | 4,988 | ||||||||||||||||||||||||||
Accumulated depreciation | 20 a 50 | (3,342 | ) | - | (677 | ) | - | 615 | (11 | ) | 71 | (3,344 | ) | |||||||||||||||||||||||
Other (communication, security and transportation) | 227 | 85 | (53 | ) | - | (5 | ) | 5 | (2 | ) | 257 | |||||||||||||||||||||||||
Cost | 529 | 85 | - | - | (66 | ) | 3 | (3 | ) | 548 | ||||||||||||||||||||||||||
Accumulated depreciation | 10 a 20 | (302 | ) | - | (53 | ) | - | 61 | 2 | 1 | (291 | ) | ||||||||||||||||||||||||
TOTAL FIXED ASSETS | 4,801 | 1,903 | (1,184 | ) | (15 | ) | (147 | ) | 6 | (6 | ) | 5,358 | ||||||||||||||||||||||||
Cost | 11,390 | 1,903 | - | (15 | ) | (1,138 | ) | 24 | (74 | ) | 12,090 | |||||||||||||||||||||||||
Accumulated depreciation | (6,589 | ) | - | (1,184 | ) | - | 991 | (18 | ) | 68 | (6,732 | ) |
(1) Includes a contractual commitment for the purchase of fixed assets in the amount of R$ 166;166.
(2) Includes the amount of R$ 2 related to attached real estate; fixed assets under construction in the amount of R$ 131, consisting of R$ 56 in real estate in use;use, R$ 51 in improvements, and R$ 24 in equipment;equipment.
(3) Includes lease contracts, mainly related to data processing equipment, which are accounted for as finance lease operations. The asset and the liability are recognized in the Financial Statements.
F.68 |
Annual | CHANGES | |||||||||||||||||||||||||||||||||||
depreciation | Balance at | Depreciation | Exchange | Balance at | ||||||||||||||||||||||||||||||||
FIXED ASSETS (1) | rates (%) | 01/01/2010 | Acquisitions | expense | Impairment | Disposals | variation | Other | 12/31/2010 | |||||||||||||||||||||||||||
REAL ESTATE IN USE (2) | 1,754 | 208 | (102 | ) | - | (9 | ) | 8 | (15 | ) | 1,844 | |||||||||||||||||||||||||
Land | 959 | 90 | - | - | (3 | ) | - | (1 | ) | 1,045 | ||||||||||||||||||||||||||
Buildings | 795 | 118 | (102 | ) | - | (6 | ) | 8 | (14 | ) | 799 | |||||||||||||||||||||||||
Cost | 2,218 | 118 | - | - | (8 | ) | (3 | ) | (4 | ) | 2,321 | |||||||||||||||||||||||||
Accumulated depreciation | 4 | (1,423 | ) | - | (102 | ) | - | 2 | 11 | (10 | ) | (1,522 | ) | |||||||||||||||||||||||
OTHER FIXED ASSETS | 2,424 | 1,716 | (1,064 | ) | - | (69 | ) | (25 | ) | (25 | ) | 2,957 | ||||||||||||||||||||||||
Improvements | 592 | 225 | (208 | ) | - | (3 | ) | 11 | 9 | 626 | ||||||||||||||||||||||||||
Cost | 1,084 | 225 | - | - | (161 | ) | 8 | (40 | ) | 1,116 | ||||||||||||||||||||||||||
Accumulated depreciation | 10 | (492 | ) | - | (208 | ) | - | 158 | 3 | 49 | (490 | ) | ||||||||||||||||||||||||
Installations | 296 | 145 | (191 | ) | - | - | 5 | 12 | 267 | |||||||||||||||||||||||||||
Cost | 606 | 145 | - | - | (146 | ) | 4 | 161 | 770 | |||||||||||||||||||||||||||
Accumulated depreciation | 10 to 20 | (310 | ) | - | (191 | ) | - | 146 | 1 | (149 | ) | (503 | ) | |||||||||||||||||||||||
Furniture and equipment | 383 | 275 | (49 | ) | - | (3 | ) | (30 | ) | (143 | ) | 433 | ||||||||||||||||||||||||
Cost | 763 | 275 | - | - | (9 | ) | (31 | ) | (135 | ) | 863 | |||||||||||||||||||||||||
Accumulated depreciation | 10 to 20 | (380 | ) | - | (49 | ) | - | 6 | 1 | (8 | ) | (430 | ) | |||||||||||||||||||||||
EDP systems (3) | 951 | 954 | (570 | ) | - | (60 | ) | 22 | 107 | 1,404 | ||||||||||||||||||||||||||
Cost | 4,015 | 954 | - | - | (414 | ) | 11 | 180 | 4,746 | |||||||||||||||||||||||||||
Accumulated depreciation | 20 to 50 | (3,064 | ) | - | (570 | ) | - | 354 | 11 | (73 | ) | (3,342 | ) | |||||||||||||||||||||||
Other (communication, security and transportation) | 202 | 117 | (46 | ) | - | (3 | ) | (33 | ) | (10 | ) | 227 | ||||||||||||||||||||||||
Cost | 509 | 117 | - | - | (12 | ) | (55 | ) | (30 | ) | 529 | |||||||||||||||||||||||||
Accumulated depreciation | 10 to 20 | (307 | ) | - | (46 | ) | - | 9 | 22 | 20 | (302 | ) | ||||||||||||||||||||||||
TOTAL FIXED ASSETS | 4,178 | 1,924 | (1,166 | ) | - | (78 | ) | (17 | ) | (40 | ) | 4,801 | ||||||||||||||||||||||||
Cost | 10,154 | 1,924 | - | - | (753 | ) | (66 | ) | 131 | 11,390 | ||||||||||||||||||||||||||
Accumulated depreciation | (5,976 | ) | - | (1,166 | ) | - | 675 | 49 | (171 | ) | (6,589 | ) |
Annual | CHANGES | |||||||||||||||||||||||||||||||||||
FIXED ASSETS (1) | depreciation rates (%) | Balance at 01/01/2010 | Acquisitions | Depreciation expense | Impairment | Disposals | Exchange variation | Other | Balance at 12/31/2010 | |||||||||||||||||||||||||||
REAL ESTATE IN USE (2) | 1,754 | 208 | (102 | ) | - | (9 | ) | 8 | (15 | ) | 1,844 | |||||||||||||||||||||||||
Land | 959 | 90 | - | - | (3 | ) | - | (1 | ) | 1,045 | ||||||||||||||||||||||||||
Buildings | 795 | 118 | (102 | ) | - | (6 | ) | 8 | (14 | ) | 799 | |||||||||||||||||||||||||
Cost | 2,218 | 118 | - | - | (8 | ) | (3 | ) | (4 | ) | 2,321 | |||||||||||||||||||||||||
Accumulated depreciation | 4 | (1,423 | ) | - | (102 | ) | - | 2 | 11 | (10 | ) | (1,522 | ) | |||||||||||||||||||||||
OTHER FIXED ASSETS | 2,424 | 1,716 | (1,064 | ) | - | (69 | ) | (25 | ) | (25 | ) | 2,957 | ||||||||||||||||||||||||
Improvements | 592 | 225 | (208 | ) | - | (3 | ) | 11 | 9 | 626 | ||||||||||||||||||||||||||
Cost | 1,084 | 225 | - | - | (161 | ) | 8 | (40 | ) | 1,116 | ||||||||||||||||||||||||||
Accumulated depreciation | 10 | (492 | ) | - | (208 | ) | - | 158 | 3 | 49 | (490 | ) | ||||||||||||||||||||||||
Installations | 296 | 145 | (191 | ) | - | - | 5 | 12 | 267 | |||||||||||||||||||||||||||
Cost | 606 | 145 | - | - | (146 | ) | 4 | 161 | 770 | |||||||||||||||||||||||||||
Accumulated depreciation | 10 to 20 | (310 | ) | - | (191 | ) | - | 146 | 1 | (149 | ) | (503 | ) | |||||||||||||||||||||||
Furniture and equipment | 383 | 275 | (49 | ) | - | (3 | ) | (30 | ) | (143 | ) | 433 | ||||||||||||||||||||||||
Cost | 763 | 275 | - | - | (9 | ) | (31 | ) | (135 | ) | 863 | |||||||||||||||||||||||||
Accumulated depreciation | 10 to 20 | (380 | ) | - | (49 | ) | - | 6 | 1 | (8 | ) | (430 | ) | |||||||||||||||||||||||
EDP systems (3) | 951 | 954 | (570 | ) | - | (60 | ) | 22 | 107 | 1,404 | ||||||||||||||||||||||||||
Cost | 4,015 | 954 | - | - | (414 | ) | 11 | 180 | 4,746 | |||||||||||||||||||||||||||
Accumulated depreciation | 20 to 50 | (3,064 | ) | - | (570 | ) | - | 354 | 11 | (73 | ) | (3,342 | ) | |||||||||||||||||||||||
Other (communication, security and transportation) | 202 | 117 | (46 | ) | - | (3 | ) | (33 | ) | (10 | ) | 227 | ||||||||||||||||||||||||
Cost | 509 | 117 | - | - | (12 | ) | (55 | ) | (30 | ) | 529 | |||||||||||||||||||||||||
Accumulated depreciation | 10 to 20 | (307 | ) | - | (46 | ) | - | 9 | 22 | 20 | (302 | ) | ||||||||||||||||||||||||
TOTAL FIXED ASSETS | 4,178 | 1,924 | (1,166 | ) | - | (78 | ) | (17 | ) | (40 | ) | 4,801 | ||||||||||||||||||||||||
Cost | 10,154 | 1,924 | - | - | (753 | ) | (66 | ) | 131 | 11,390 | ||||||||||||||||||||||||||
Accumulated depreciation | (5,976 | ) | - | (1,166 | ) | - | 675 | 49 | (171 | ) | (6,589 | ) |
(1) There are no contractual commitments for the purchase of new fixed assets.
(2) Includes the amount of R$ 2 related to attached real estate; fixed assets under construction in the amount of R$ 166, consisting of R$ 27 in real estate in use; R$ 113 in improvements, and R$ 26 in equipment;
(3) Includes lease contracts, mainly related to data processing equipment, which are accounted for as finance lease operations. The asset and the liability are recognized in the Financial Statements.
F.69 |
NOTE 1516 – INTANGIBLE ASSETS
CHANGES | ||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS (1) | Amortization period (2) | Balance at 12/31/2011 | Acquisitions | Amortization expense | Impairment (3) | Terminated agreements/ Write off | Exchange variation | Other | Balance at 12/31/2012 | |||||||||||||||||||||||||||
ACQUISITION OF RIGHTS TO CREDIT PAYROLL | 751 | 320 | (369 | ) | (3 | ) | (1 | ) | - | - | 698 | |||||||||||||||||||||||||
Cost | 1,648 | 320 | - | (3 | ) | (500 | ) | - | 14 | 1,479 | ||||||||||||||||||||||||||
Accumulated amortization | Up to 9 | (897 | ) | - | (369 | ) | - | 499 | - | (14 | ) | (781 | ) | |||||||||||||||||||||||
OTHER INTANGIBLE ASSETS | 3,074 | 1,418 | (475 | ) | (4 | ) | (24 | ) | 26 | (42 | ) | 3,973 | ||||||||||||||||||||||||
Association for the promotion and offer of financial products and services | 1,289 | 12 | (135 | ) | (4 | ) | (24 | ) | 6 | 8 | 1,152 | |||||||||||||||||||||||||
Cost | 1,400 | 12 | - | (4 | ) | (95 | ) | 7 | 10 | 1,330 | ||||||||||||||||||||||||||
Accumulated amortization | Up to 5 | (111 | ) | - | (135 | ) | - | 71 | (1 | ) | (2 | ) | (178 | ) | ||||||||||||||||||||||
Acquisition/Development of software | 1,338 | 1,295 | (269 | ) | - | - | 9 | 24 | 2,397 | |||||||||||||||||||||||||||
Cost | 2,133 | 1,295 | - | - | - | 8 | (147 | ) | 3,289 | |||||||||||||||||||||||||||
Accumulated amortization | 20 | (795 | ) | - | (269 | ) | - | - | 1 | 171 | (892 | ) | ||||||||||||||||||||||||
Other intangible assets | 447 | 111 | (71 | ) | - | - | 11 | (74 | ) | 424 | ||||||||||||||||||||||||||
Cost | 621 | 111 | - | - | (1 | ) | 23 | (66 | ) | 688 | ||||||||||||||||||||||||||
Accumulated amortization | 10 to 20 | (174 | ) | - | (71 | ) | - | 1 | (12 | ) | (8 | ) | (264 | ) | ||||||||||||||||||||||
TOTAL INTANGIBLE ASSETS | 3,825 | 1,738 | (844 | ) | (7 | ) | (25 | ) | 26 | (42 | ) | 4,671 | ||||||||||||||||||||||||
Cost | 5,802 | 1,738 | - | (7 | ) | (596 | ) | 38 | (189 | ) | 6,786 | |||||||||||||||||||||||||
Accumulated amortization | (1,977 | ) | - | (844 | ) | - | 571 | (12 | ) | 147 | (2,115 | ) |
(1) There are no contractual commitments for the purchase of new intangible assets.
CHANGES | ||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS (1) | Amortization period (2) | Balance at 01/01/2011 | Acquisitions | Amortization expense | Impairment (3) | Terminated agreements/ Write off | Exchange variation | Other | Balance at 12/31/2011 | |||||||||||||||||||||||||
ACQUISITION OF RIGHTS TO CREDIT PAYROLL | 1,130 | 366 | (603 | ) | (24 | ) | (112 | ) | - | (6 | ) | 751 | ||||||||||||||||||||||
Cost | 2,415 | 366 | - | (24 | ) | (1,097 | ) | - | (12 | ) | 1,648 | |||||||||||||||||||||||
Accumulated amortization | Up to 9 | (1,285 | ) | - | (603 | ) | - | 985 | - | 6 | (897 | ) | ||||||||||||||||||||||
OTHER INTANGIBLE ASSETS | 1,804 | 1,606 | (381 | ) | (6 | ) | (28 | ) | 28 | 51 | 3,074 | |||||||||||||||||||||||
Association for the promotion and offer of financial products and services | 1,115 | 318 | (114 | ) | (6 | ) | (28 | ) | 1 | 3 | 1,289 | |||||||||||||||||||||||
Cost | 1,171 | 318 | - | (6 | ) | (94 | ) | 1 | 10 | 1,400 | ||||||||||||||||||||||||
Accumulated amortization | Up to 5 | (56 | ) | - | (114 | ) | - | 66 | - | (7 | ) | (111 | ) | |||||||||||||||||||||
Expenditures on acquisition/ developement of software | 532 | 981 | (208 | ) | - | - | 10 | 23 | 1,338 | |||||||||||||||||||||||||
Cost | 1,327 | 981 | - | - | (116 | ) | 16 | (75 | ) | 2,133 | ||||||||||||||||||||||||
Accumulated amortization | 20 | (795 | ) | - | (208 | ) | - | 116 | (6 | ) | 98 | (795 | ) | |||||||||||||||||||||
Other intangible assets | 157 | 307 | (59 | ) | - | - | 17 | 25 | 447 | |||||||||||||||||||||||||
Cost | 271 | 307 | - | - | (7 | ) | 25 | 25 | 621 | |||||||||||||||||||||||||
Accumulated amortization | 10 to 20 | (114 | ) | - | (59 | ) | - | 7 | (8 | ) | - | (174 | ) | |||||||||||||||||||||
TOTAL INTANGIBLE ASSETS | 2,934 | 1,972 | (984 | ) | (30 | ) | (140 | ) | 28 | 45 | 3,825 | |||||||||||||||||||||||
Cost | 5,184 | 1,972 | - | (30 | ) | (1,314 | ) | 42 | (52 | ) | 5,802 | |||||||||||||||||||||||
Accumulated amortization | (2,250 | ) | - | (984 | ) | - | 1,174 | (14 | ) | 97 | (1,977 | ) |
(2) All intangible assets have a defined useful life.
(3) Note 2.4l.
F.70 |
CHANGES | ||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS (1) | Amortization period (2) | Balance at 12/31/2010 | Acquisitions | Amortization expense | Impairment (3) | Terminated agreements/ Write off | Exchange variation | Other | Balance at 12/31/2011 | |||||||||||||||||||||||||||
ACQUISITION OF RIGHTS TO CREDIT PAYROLL | 1,130 | 366 | (603 | ) | (24 | ) | (112 | ) | - | (6 | ) | 751 | ||||||||||||||||||||||||
Cost | 2,415 | 366 | - | (24 | ) | (1,097 | ) | - | (12 | ) | 1,648 | |||||||||||||||||||||||||
Accumulated amortization | Up to 9 | (1,285 | ) | - | (603 | ) | - | 985 | - | 6 | (897 | ) | ||||||||||||||||||||||||
OTHER INTANGIBLE ASSETS | 1,804 | 1,606 | (381 | ) | (6 | ) | (28 | ) | 28 | 51 | 3,074 | |||||||||||||||||||||||||
Association for the promotion and offering of financial products and services | 1,115 | 318 | (114 | ) | (6 | ) | (28 | ) | 1 | 3 | 1,289 | |||||||||||||||||||||||||
Cost | 1,171 | 318 | - | (6 | ) | (94 | ) | 1 | 10 | 1,400 | ||||||||||||||||||||||||||
Accumulated amortization | Up to 5 | (56 | ) | - | (114 | ) | - | 66 | - | (7 | ) | (111 | ) | |||||||||||||||||||||||
Acquisition/Development of software | 532 | 981 | (208 | ) | - | - | 10 | 23 | 1,338 | |||||||||||||||||||||||||||
Cost | 1,327 | 981 | - | - | (116 | ) | 16 | (75 | ) | 2,133 | ||||||||||||||||||||||||||
Accumulated amortization | 20 | (795 | ) | - | (208 | ) | - | 116 | (6 | ) | 98 | (795 | ) | |||||||||||||||||||||||
Other intangible assets | 157 | 307 | (59 | ) | - | - | 17 | 25 | 447 | |||||||||||||||||||||||||||
Cost | 271 | 307 | - | - | (7 | ) | 25 | 25 | 621 | |||||||||||||||||||||||||||
Accumulated amortization | 10 to 20 | (114 | ) | - | (59 | ) | - | 7 | (8 | ) | - | (174 | ) | |||||||||||||||||||||||
TOTAL INTANGIBLE ASSETS | 2,934 | 1,972 | (984 | ) | (30 | ) | (140 | ) | 28 | 45 | 3,825 | |||||||||||||||||||||||||
Cost | 5,184 | 1,972 | - | (30 | ) | (1,314 | ) | 42 | (52 | ) | 5,802 | |||||||||||||||||||||||||
Accumulated amortization | (2,250 | ) | - | (984 | ) | - | 1,174 | (14 | ) | 97 | (1,977 | ) |
(1) There are no contractual commitments for the purchase of new intangible assets.
(2) All intangible assets have a defined useful life.
(3) Note 2.4l.
F.71 |
CHANGES | ||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS (1) | Amortization period (2) | Balance at 01/01/2010 | Acquisitions | Amortization expense | Impairment (3) | Terminated agreements/ Write off | Exchange variation | Other | Balance at 12/31/2010 | |||||||||||||||||||||||||||
ACQUISITION OF RIGHTS TO CREDIT PAYROLL | 1,684 | 182 | (649 | ) | (17 | ) | (70 | ) | - | - | 1,130 | |||||||||||||||||||||||||
Cost | 2,598 | 182 | - | (17 | ) | (348 | ) | - | - | 2,415 | ||||||||||||||||||||||||||
Accumulated amortization | Up to 9 | (914 | ) | - | (649 | ) | - | 278 | - | - | (1,285 | ) | ||||||||||||||||||||||||
OTHER INTANGIBLE ASSETS | 1,725 | 400 | (328 | ) | (3 | ) | (20 | ) | (10 | ) | 40 | 1,804 | ||||||||||||||||||||||||
Association for the promotion and offer of financial products and services | 1,076 | 195 | (133 | ) | (3 | ) | (20 | ) | - | - | 1,115 | |||||||||||||||||||||||||
Cost | 1,091 | 195 | - | (3 | ) | (112 | ) | - | - | 1,171 | ||||||||||||||||||||||||||
Accumulated amortization | Up to 5 | (15 | ) | - | (133 | ) | - | 92 | - | - | (56 | ) | ||||||||||||||||||||||||
Expenditures on acquisition/ developement of software | 457 | 205 | (165 | ) | - | - | (8 | ) | 43 | 532 | ||||||||||||||||||||||||||
Cost | 1,173 | 205 | - | - | (158 | ) | (18 | ) | 125 | 1,327 | ||||||||||||||||||||||||||
Accumulated amortization | 20 | (716 | ) | - | (165 | ) | - | 158 | 10 | (82 | ) | (795 | ) | |||||||||||||||||||||||
Other Intangible Assets | 192 | - | (30 | ) | - | - | (2 | ) | (3 | ) | 157 | |||||||||||||||||||||||||
Cost | 256 | - | - | - | - | 17 | (2 | ) | 271 | |||||||||||||||||||||||||||
Accumulated amortization | 10 to 20 | (64 | ) | - | (30 | ) | - | - | (19 | ) | (1 | ) | (114 | ) | ||||||||||||||||||||||
TOTAL INTANGIBLE ASSETS | 3,409 | 582 | (977 | ) | (20 | ) | (90 | ) | (10 | ) | 40 | 2,934 | ||||||||||||||||||||||||
Cost | 5,118 | 582 | - | (20 | ) | (618 | ) | (1 | ) | 123 | 5,184 | |||||||||||||||||||||||||
Accumulated amortization | (1,709 | ) | - | (977 | ) | - | 528 | (9 | ) | (83 | ) | (2,250 | ) |
(1) There are no contractual commitments for the purchase of new intangible assets;
(2) All intangible assets have a defined useful life.
(3) Note 2.4.l.
CHANGES | ||||||||||||||||||||||||||||||||||||
Terminated | ||||||||||||||||||||||||||||||||||||
Amortization | Balance at | Amortization | agreements/ | Exchange | Balance at | |||||||||||||||||||||||||||||||
INTANGIBLE ASSETS (1) | period (2) | 01/01/2010 | Acquisitions | expense | Impairment (3) | Write off | variation | Other | 12/31/2010 | |||||||||||||||||||||||||||
ACQUISITION OF RIGHTS TO CREDIT PAYROLL | 1,684 | 182 | (649 | ) | (17 | ) | (70 | ) | - | - | 1,130 | |||||||||||||||||||||||||
Cost | 2,598 | 182 | - | (17 | ) | (348 | ) | - | - | 2,415 | ||||||||||||||||||||||||||
Accumulated amortization | Up to 9 | (914 | ) | - | (649 | ) | - | 278 | - | - | (1,285 | ) | ||||||||||||||||||||||||
OTHER INTANGIBLE ASSETS | 1,725 | 400 | (328 | ) | (3 | ) | (20 | ) | (10 | ) | 40 | 1,804 | ||||||||||||||||||||||||
Association for the promotion and offer of financial products and services | 1,076 | 195 | (133 | ) | (3 | ) | (20 | ) | - | - | 1,115 | |||||||||||||||||||||||||
Cost | 1,091 | 195 | - | (3 | ) | (112 | ) | - | - | 1,171 | ||||||||||||||||||||||||||
Accumulated amortization | Up to 5 | (15 | ) | - | (133 | ) | - | 92 | - | - | (56 | ) | ||||||||||||||||||||||||
Expenditures on acquisition/ developement of software | 457 | 205 | (165 | ) | - | - | (8 | ) | 43 | 532 | ||||||||||||||||||||||||||
Cost | 1,173 | 205 | - | - | (158 | ) | (18 | ) | 125 | 1,327 | ||||||||||||||||||||||||||
Accumulated amortization | 20 | (716 | ) | - | (165 | ) | - | 158 | 10 | (82 | ) | (795 | ) | |||||||||||||||||||||||
Other Intangible Assets | 192 | - | (30 | ) | - | - | (2 | ) | (3 | ) | 157 | |||||||||||||||||||||||||
Cost | 256 | - | - | - | - | 17 | (2 | ) | 271 | |||||||||||||||||||||||||||
Accumulated amortization | 10 to 20 | (64 | ) | - | (30 | ) | - | - | (19 | ) | (1 | ) | (114 | ) | ||||||||||||||||||||||
TOTAL INTANGIBLE ASSETS | 3,409 | 582 | (977 | ) | (20 | ) | (90 | ) | (10 | ) | 40 | 2,934 | ||||||||||||||||||||||||
Cost | 5,118 | 582 | - | (20 | ) | (618 | ) | (1 | ) | 123 | 5,184 | |||||||||||||||||||||||||
Accumulated amortization | (1,709 | ) | - | (977 | ) | - | 528 | (9 | ) | (83 | ) | (2,250 | ) |
(1) There are no contractual commitments for the purchase of new intangible assets;
(2) All intangible assets have a defined useful life.
(3) Note 2.4.l.
F.72 |
NOTE 16 –17 - DEPOSITS
The table below shows the breakdown of deposits:
12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||||||||||||||||||||||||||
CURRENT | NON- CURRENT | TOTAL | CURRENT | NON- CURRENT | TOTAL | CURRENT | NON- CURRENT | TOTAL | ||||||||||||||||||||||||||||
Interest-bearing deposits | 130,523 | 83,181 | 213,704 | 114,017 | 63,134 | 177,151 | 97,006 | 68,829 | 165,835 | |||||||||||||||||||||||||||
Time deposits | 61,560 | 82,909 | 144,469 | 53,522 | 62,894 | 116,416 | 45,944 | 68,680 | 114,624 | |||||||||||||||||||||||||||
Interbank deposits | 1,793 | 272 | 2,065 | 1,689 | 240 | 1,929 | 1,843 | 149 | 1,992 | |||||||||||||||||||||||||||
Investment deposits | - | - | - | 906 | - | 906 | 997 | - | 997 | |||||||||||||||||||||||||||
Savings deposits | 67,170 | - | 67,170 | 57,900 | - | 57,900 | 48,222 | - | 48,222 | |||||||||||||||||||||||||||
Non-interest bearing deposits | 28,932 | - | 28,932 | 25,537 | - | 25,537 | 24,881 | - | 24,881 | |||||||||||||||||||||||||||
Demand deposits | 28,932 | - | 28,932 | 25,349 | - | 25,349 | 24,664 | - | 24,664 | |||||||||||||||||||||||||||
Other deposits | - | - | - | 188 | - | 188 | 217 | - | 217 | |||||||||||||||||||||||||||
Total | 159,455 | 83,181 | 242,636 | 139,554 | 63,134 | 202,688 | 121,887 | 68,829 | 190,716 |
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||
Current | Non-current | Total | Current | Non-current | Total | |||||||||||||||||||
Interest-bearing deposits | 140,742 | 67,542 | 208,284 | 130,523 | 83,181 | 213,704 | ||||||||||||||||||
Time deposits | 49,897 | 67,335 | 117,232 | 61,560 | 82,909 | 144,469 | ||||||||||||||||||
Interbank deposits | 7,394 | 207 | 7,601 | 1,793 | 272 | 2,065 | ||||||||||||||||||
Savings deposits | 83,451 | - | 83,451 | 67,170 | - | 67,170 | ||||||||||||||||||
Non-interest bearing deposits | 34,916 | - | 34,916 | 28,932 | - | 28,932 | ||||||||||||||||||
Demand deposits | 34,916 | - | 34,916 | 28,932 | - | 28,932 | ||||||||||||||||||
Total | 175,658 | 67,542 | 243,200 | 159,455 | 83,181 | 242,636 |
NOTE 17 -18 – FINANCIAL LIABILITIES HELD FOR TRADING
Financial liabilities held for trading are presented in the following table:
12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||
Finacial liabilities held for trading | ||||||||||||||||||||
Financial liabilities held for trading | ||||||||||||||||||||
Structured notes | 2,815 | 1,335 | 663 | 642 | 2,815 | |||||||||||||||
Total | 2,815 | 1,335 | 663 | 642 | 2,815 |
The change in fair value ofresult from financial liabilities held for trading was R$ 1,480(2) (R$ 672 at December 31, 49 from 01/01 to 12/31/2011 and R$ (26) from 01/01 to 12/31/2010).
The effect of the changes in credit risk of these instruments is not significant for years ended at December 31, 201112/31/2012 and 2010.12/31/2011.
The balance is comprisedcomposed of short position in shares in the amount of R$ 1,666298 (R$ 9281,666 at 12/31/2010)2011) and debt securities in the amount of R$ 1,149344 (R$ 4071,149 at 12/31/2010)2011). For shares, in view of the characteristics of the instrument, there is no definite value to be paid at the maturity date. For debt securities, the amount to be paid at maturity comprises several exchange rates and indices, and there is no contractual amount for settlement.
The fair value of Financialfinancial liabilities held for trading by maturity is as follows:
12/31/2012 | 12/31/2011 | |||||||
Fair value | Fair value | |||||||
Current | 79 | 1,803 | ||||||
Up to one year | 79 | 1,803 | ||||||
Non-current | 563 | 1,012 | ||||||
From one to five years | 522 | 909 | ||||||
From five to ten years | 36 | 89 | ||||||
After ten years | 5 | 14 | ||||||
Total | 642 | 2,815 |
12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||
CURRENT | 1,803 | 658 | 231 | |||||||||
Up to one year | 1,803 | 658 | 231 | |||||||||
NON-CURRENT | 1,012 | 677 | 432 | |||||||||
From one to five years | 909 | 632 | 395 | |||||||||
From five to ten years | 89 | 32 | 37 | |||||||||
After ten years | 14 | 13 | - | |||||||||
TOTAL | 2,815 | 1,335 | 663 |
F.73 |
NOTE 18 -19 – SECURITIES SOLD UNDER REPURCHASE AGREEMENTS AND INTERBANK AND INSTITUTIONAL MARKET DEBTS
a) | Securities sold under repurchase agreements and |
The table below shows the breakdown of funds:
12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CURRENT | NON- CURRENT | TOTAL | CURRENT | NON- CURRENT | TOTAL | CURRENT | NON- CURRENT | TOTAL | Current | Non- current | Total | Current | Non- current | Total | ||||||||||||||||||||||||||||||||||||||||||||||
Securities sold under repurchase agreements | 78,408 | 107,005 | 185,413 | 122,445 | 77,212 | 199,657 | 88,420 | 43,525 | 131,945 | 157,120 | 110,285 | 267,405 | 78,408 | 107,005 | 185,413 | |||||||||||||||||||||||||||||||||||||||||||||
Transactions backed by own financial assets | 57,080 | 110,285 | 167,365 | 43,145 | 92,576 | 135,721 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions backed by third-party financial assets | 100,040 | - | 100,040 | 35,263 | 14,429 | 49,692 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interbank market debt | 47,265 | 43,233 | 90,498 | 32,551 | 30,048 | 62,599 | 22,641 | 22,034 | 44,675 | 53,542 | 43,531 | 97,073 | 47,265 | 43,233 | 90,498 | |||||||||||||||||||||||||||||||||||||||||||||
Mortgage notes | 37 | 207 | 244 | 48 | 254 | 302 | 144 | 368 | 512 | 44 | 183 | 227 | 37 | 207 | 244 | |||||||||||||||||||||||||||||||||||||||||||||
Real estate credit bills | 14,470 | 1,281 | 15,751 | 8,259 | 477 | 8,736 | 5,711 | 158 | 5,869 | 12,432 | 864 | 13,296 | 14,470 | 1,281 | 15,751 | |||||||||||||||||||||||||||||||||||||||||||||
Agribusiness credit bills | 1,422 | 1,862 | 3,284 | 2,660 | 114 | 2,774 | 2,383 | 61 | 2,444 | 2,735 | 2,586 | 5,321 | 1,422 | 1,862 | 3,284 | |||||||||||||||||||||||||||||||||||||||||||||
Financial credit bills | 2,544 | 11,764 | 14,308 | - | 2,466 | 2,466 | - | - | - | 7,593 | 11,102 | 18,695 | 2,544 | 11,764 | 14,308 | |||||||||||||||||||||||||||||||||||||||||||||
Import and export financing | 17,755 | 3,697 | 21,452 | 11,815 | 3,640 | 15,455 | 8,434 | 3,794 | 12,228 | 18,878 | 4,175 | 23,053 | 17,755 | 3,697 | 21,452 | |||||||||||||||||||||||||||||||||||||||||||||
Onlending - domestic | 11,037 | 24,422 | 35,459 | 9,769 | 21,920 | 31,689 | 5,969 | 16,387 | 22,356 | |||||||||||||||||||||||||||||||||||||||||||||||||||
On-lending - domestic | 11,860 | 24,188 | 36,048 | 11,037 | 24,422 | 35,459 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | - | - | - | - | 1,177 | 1,177 | - | 1,266 | 1,266 | - | 433 | 433 | - | - | - |
Funding for import and export financing represents credit facilities available for financing of imports and exports of Brazilian companies, in general denominated in foreign currency. The interest rate for each one of the operations (p.a.) is presented in the table below:
Brazil | Foreign | |||||
Securities sold under repurchase agreements | ||||||
Mortgage notes | - | |||||
Real estate credit bills | 82% to 100% of CDI | - | ||||
Financial credit bills | IGPM to | - | ||||
Agribusiness credit bills | - | |||||
Import and export financing | ||||||
- |
In “Securities sold under repurchase agreements”, are presentedwe present the liabilities in transactions in which ITAÚ UNIBANCO HOLDING sells to customers in exchange for cash debt securities issued by its consolidated subsidiaries previously held in treasury, and where it undertakes to repurchase them at any time after the sale up to a repurchase deadline, at which time they must be repurchased by ITAÚ UNIBANCO HOLDING. The repurchase price is computed as the price paid on the sale date plus interest at rates ranging from 50%40% CDI and 16.68%to 13.23%. The deadline for repurchase expires in January 2027.
b) | Institutional market debt |
The table below presents the breakdown of funds obtained in Institutional markets:
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||
Current | Non- current | Total | Current | Non- current | Total | |||||||||||||||||||
Subordinated debt (*) | 3,382 | 51,797 | 55,179 | 10,719 | 28,996 | 39,715 | ||||||||||||||||||
Debentures | 1,569 | - | 1,569 | 1,039 | - | 1,039 | ||||||||||||||||||
Foreign borrowings through securities | 7,119 | 8,161 | 15,280 | 8,143 | 5,910 | 14,053 | ||||||||||||||||||
Total | 12,070 | 59,958 | 72,028 | 19,901 | 34,906 | 54,807 |
12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||||||||||||||||||||||||||
CURRENT | NON- CURRENT | TOTAL | CURRENT | NON- CURRENT | TOTAL | CURRENT | NON- CURRENT | TOTAL | ||||||||||||||||||||||||||||
Subordinated debt | 10,719 | 28,996 | 39,715 | 979 | 33,508 | 34,487 | 42 | 22,684 | 22,726 | |||||||||||||||||||||||||||
Debentures | 1,039 | - | 1,039 | 293 | 1,091 | 1,384 | 237 | 2,527 | 2,764 | |||||||||||||||||||||||||||
Foreign borrowings through securities | 8,143 | 5,910 | 14,053 | 2,659 | 5,983 | 8,642 | 1,716 | 3,324 | 5,040 | |||||||||||||||||||||||||||
Total | 19,901 | 34,906 | 54,807 | 3,931 | 40,582 | 44,513 | 1,995 | 28,535 | 30,530 |
(*) At December 31, 2012, the amount of R$ 51,134 (R$ 38,257 at 12/31/2011) is included in the Reference Equity, under the proportion defined by CMN Resolution No. 3,444, of February 28, 2007, as amended by CMN Resolution No. 3,532, of January 31, 2008.
The interest rate for each one of the operations (p.a.) is presented in the table below:below.
Brazil | Foreign | |||||
Subordinated debt | 7.8% | 3.04% to | ||||
Debentures | 104.7% of CDI | - | ||||
Foreign borrowings through securities | 1.40% to | 0.24% to 16.43% |
F.74 |
NOTE 1920 - OTHER ASSETS AND LIABILITIES
a) | Other assets |
12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||||||||||||||||||||||||||
CURRENT | NON- CURRENT | TOTAL | CURRENT | NON- CURRENT | TOTAL | CURRENT | NON- CURRENT | TOTAL | ||||||||||||||||||||||||||||
Financial (1) | 28,952 | 11,302 | 40,254 | 30,720 | 10,225 | 40,945 | 17,160 | 9,771 | 26,931 | |||||||||||||||||||||||||||
Receivables from credit card issuers | 18,317 | - | 18,317 | 18,061 | - | 18,061 | 9,520 | - | 9,520 | |||||||||||||||||||||||||||
Insurance and reinsurance operations | 3,590 | - | 3,590 | 3,093 | - | 3,093 | 2,638 | - | 2,638 | |||||||||||||||||||||||||||
Deposits in guarantee for contingent liabilities (Note 31) | 2,211 | 10,632 | 12,843 | 2,397 | 9,508 | 11,905 | 1,444 | 9,153 | 10,597 | |||||||||||||||||||||||||||
Deposits in guarantee for foreign borrowing programs | 601 | - | 601 | 1,876 | - | 1,876 | 411 | - | 411 | |||||||||||||||||||||||||||
Negotiation and intermediation of securities | 1,734 | - | 1,734 | 3,290 | - | 3,290 | 1,059 | - | 1,059 | |||||||||||||||||||||||||||
Receivables from reimbursement of contingent liabilities (Note 31c) | 626 | - | 626 | 763 | 140 | 903 | 805 | 78 | 883 | |||||||||||||||||||||||||||
Receivables from services provided | 1,260 | - | 1,260 | 1,140 | - | 1,140 | 943 | - | 943 | |||||||||||||||||||||||||||
Amounts receivable from FCVS – Salary Variations Compensation Fund (2) | - | 670 | 670 | - | 577 | 577 | 11 | 522 | 533 | |||||||||||||||||||||||||||
Foreign exchange portfolio | 268 | - | 268 | - | - | - | - | - | - | |||||||||||||||||||||||||||
Operations without credit granting characteristics | 345 | - | 345 | 100 | - | 100 | 329 | 18 | 347 | |||||||||||||||||||||||||||
Non-financial | 5,872 | 1,485 | 7,357 | 4,653 | 984 | 5,637 | 4,221 | 1,541 | 5,762 | |||||||||||||||||||||||||||
Prepaid expenses | 2,335 | 1,485 | 3,820 | 1,340 | 984 | 2,324 | 1,125 | 1,541 | 2,666 | |||||||||||||||||||||||||||
Retirement plan assets (Notes 28b and c) | 1,785 | - | 1,785 | 1,536 | - | 1,536 | 1,534 | - | 1,534 | |||||||||||||||||||||||||||
Sundry-domestic | 897 | - | 897 | 1,087 | - | 1,087 | 581 | - | 581 | |||||||||||||||||||||||||||
Sundry-foreign | 113 | - | 113 | 88 | - | 88 | 187 | - | 187 | |||||||||||||||||||||||||||
Other | 742 | - | 742 | 602 | - | 602 | 794 | - | 794 |
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||
Current | Non- current | Total | Current | Non- current | Total | |||||||||||||||||||
Financial (1) | 31,293 | 13,199 | 44,492 | 28,521 | 11,733 | 40,254 | ||||||||||||||||||
Receivables from credit card issuers | 20,429 | - | 20,429 | 18,317 | - | 18,317 | ||||||||||||||||||
Insurance and reinsurance operations | 4,407 | - | 4,407 | 3,590 | - | 3,590 | ||||||||||||||||||
Deposits in guarantee for contingent liabilities (Note 32) | 1,270 | 11,846 | 13,116 | 2,211 | 10,632 | 12,843 | ||||||||||||||||||
Deposits in guarantee for foreign borrowing program | 758 | - | 758 | 601 | - | 601 | ||||||||||||||||||
Negotiation and intermediation of securities | 2,532 | 110 | 2,642 | 1,734 | - | 1,734 | ||||||||||||||||||
Receivables from reimbursement of contingent liabilities (Note 32c) | 237 | 553 | 790 | 195 | 431 | 626 | ||||||||||||||||||
Receivables from services provided | 1,372 | - | 1,372 | 1,260 | - | 1,260 | ||||||||||||||||||
Amounts receivable from FCVS – Salary Variations Compensation Fund (2) | - | 690 | 690 | - | 670 | 670 | ||||||||||||||||||
Foreign exchange portfolio | - | - | - | 268 | - | 268 | ||||||||||||||||||
Operations without credit granting characteristics | 288 | - | 288 | 345 | - | 345 | ||||||||||||||||||
Non-financial | 8,284 | 1,639 | 9,923 | 5,872 | 1,485 | 7,357 | ||||||||||||||||||
Prepaid expenses | 2,561 | 1,615 | 4,176 | 2,335 | 1,485 | 3,820 | ||||||||||||||||||
Retirement plan assets (Notes 29b and c) | 2,815 | - | 2,815 | 1,785 | - | 1,785 | ||||||||||||||||||
Sundry domestic | 1,392 | - | 1,392 | 897 | - | 897 | ||||||||||||||||||
Sundry foreign | 326 | 24 | 350 | 113 | - | 113 | ||||||||||||||||||
Other | 1,190 | - | 1,190 | 742 | - | 742 |
(1) In this period, thereThere were no impairment losses for other financial assets.assets in these periods.
(2) The Salary VariationsVariation Compensation Fund – FCVS was established through Resolution No. 25, of June 16, 1967, of the Board of the former BNH (National Housing Bank), and its purpose is to settle balances remaining after the end of real estate financing contracted up to March 1990, relating to agreements financed under the SFH (National Housing System), and provided that they are covered by FCVS.
b) | Other liabilities |
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||
Current | Non- current | Total | Current | Non- current | Total | |||||||||||||||||||
Financial | 50,033 | 222 | 50,255 | 43,999 | 120 | 44,119 | ||||||||||||||||||
Credit card operations | 45,125 | - | 45,125 | 41,195 | - | 41,195 | ||||||||||||||||||
Foreign exchange portfolio | 144 | - | 144 | - | - | - | ||||||||||||||||||
Negotiation and intermediation of securities | 4,105 | 148 | 4,253 | 2,504 | - | 2,504 | ||||||||||||||||||
Finance leases (Note 14a) | 174 | 74 | 248 | 219 | 120 | 339 | ||||||||||||||||||
Funds from consortia participants | 86 | - | 86 | 81 | - | 81 | ||||||||||||||||||
Other | 399 | - | 399 | - | - | - | ||||||||||||||||||
Non-financial | 19,539 | 417 | 19,956 | 17,939 | 686 | 18,625 | ||||||||||||||||||
Collection and payment of taxes and contributions | 399 | - | 399 | 868 | - | 868 | ||||||||||||||||||
Sundry creditors - domestic | 1,648 | - | 1,648 | 1,228 | - | 1,228 | ||||||||||||||||||
Funds for clients in transit | 7,207 | - | 7,207 | 6,092 | - | 6,092 | ||||||||||||||||||
Provision for sundry payments | 2,011 | 273 | 2,284 | 1,574 | 570 | 2,144 | ||||||||||||||||||
Social and statutory | 3,004 | 55 | 3,059 | 2,891 | 85 | 2,976 | ||||||||||||||||||
Related to insurance operations | 922 | - | 922 | 914 | - | 914 | ||||||||||||||||||
Liabilities for official agreements and rendering of payment services | 370 | - | 370 | 1,507 | - | 1,507 | ||||||||||||||||||
Provision for retirement plan benefits (Note 29b and d) | 569 | 37 | 606 | 343 | 31 | 374 | ||||||||||||||||||
Personnel provision | 1,163 | 52 | 1,215 | 1,113 | - | 1,113 | ||||||||||||||||||
Provision for health insurance | 635 | - | 635 | 623 | - | 623 | ||||||||||||||||||
Deferred income | 1,110 | - | 1,110 | 570 | - | 570 | ||||||||||||||||||
Other | 501 | - | 501 | 216 | - | 216 |
12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||||||||||||||||||||||||||
CURRENT | NON- CURRENT | TOTAL | CURRENT | NON- CURRENT | TOTAL | CURRENT | NON- CURRENT | TOTAL | ||||||||||||||||||||||||||||
Financial | 43,999 | 120 | 44,119 | 40,881 | 131 | 41,012 | 26,764 | 60 | 26,825 | |||||||||||||||||||||||||||
Credit card operations | 41,195 | - | 41,195 | 37,282 | 23 | 37,305 | 25,337 | - | 25,337 | |||||||||||||||||||||||||||
Foreign exchange portfolio | - | - | - | 320 | - | 320 | 154 | - | 154 | |||||||||||||||||||||||||||
Negotiation and intermediation of securities | 2,504 | - | 2,504 | 3,099 | - | 3,099 | 1,135 | - | 1,135 | |||||||||||||||||||||||||||
Finance leases (Note 13a) | 219 | 120 | 339 | 128 | 82 | 210 | 82 | 27 | 109 | |||||||||||||||||||||||||||
Funds from consortia participants | 81 | - | 81 | 52 | 26 | 78 | 56 | 33 | 90 | |||||||||||||||||||||||||||
Non-financial | 17,939 | 686 | 18,625 | 15,771 | 250 | 16,021 | 14,987 | 340 | 15,327 | |||||||||||||||||||||||||||
Collection and payment of taxes and contributions | 868 | - | 868 | 694 | - | 694 | 468 | - | 468 | |||||||||||||||||||||||||||
Sundry creditors - domestic | 1,228 | - | 1,228 | 848 | - | 848 | 814 | - | 814 | |||||||||||||||||||||||||||
Funds for clients in transit | 6,092 | - | 6,092 | 5,126 | - | 5,126 | 3,805 | - | 3,805 | |||||||||||||||||||||||||||
Provision for sundry payments | 1,574 | 570 | 2,144 | 2,080 | 226 | 2,306 | 2,006 | 273 | 2,279 | |||||||||||||||||||||||||||
Social and statutory | 2,891 | 85 | 2,976 | 3,132 | 24 | 3,156 | 4,229 | - | 4,229 | |||||||||||||||||||||||||||
Related to insurance operations | 914 | - | 914 | 753 | - | 753 | 1,029 | - | 1,029 | |||||||||||||||||||||||||||
Liabilities for official agreements and rendering of payment services | 1,507 | - | 1,507 | 735 | - | 735 | 415 | - | 415 | |||||||||||||||||||||||||||
Provision for retirement plan benefits (Notes 28b and d) | 343 | 31 | 374 | 228 | - | 228 | 169 | 67 | 236 | |||||||||||||||||||||||||||
Personnel provision | 1,113 | - | 1,113 | 1,040 | - | 1,040 | 892 | - | 892 | |||||||||||||||||||||||||||
Provision for health insurance | 623 | - | 623 | 606 | - | 606 | 596 | - | 596 | |||||||||||||||||||||||||||
Deferred income | 570 | - | 570 | 311 | - | 311 | 284 | - | 284 | |||||||||||||||||||||||||||
Other | 216 | - | 216 | 218 | - | 218 | 280 | - | 280 |
F.75 |
NOTE 2021 – STOCKHOLDERS’ EQUITY
a) Capital |
At the Extraordinary Stockholders’ Meeting held on April 25, 2011 and as ratified by the Brazilian Central Bank on August 22, 2011, the stockholders approved a 100 to 1 reverse stock split and simultaneously a 1 to 100 stock split. This required cancellation of 75 common shares and 44 preferred shares, all of which are book entry shares of ITAÚ UNIBANCO HOLDING and existing in treasury, with no capital reduction.
Capital comprises 4,570,936,100 book-entry shares with no par value, of which 2,289,286,400 are common shares and 2,281,649,700 are preferred shares without voting rights; preferred shares have tag-along rights, in the event of a possible change in control, at a price equal to 80% of the amount per share paid for the controlling common shares. Capital stock amounts to R$ 45,000 (R$ 45,000 at December 31, 2010)2011), of which R$ 31,55231,159 (R$ 31,54731,552 at December 31, 2010)2011) refers to stockholders resident in Brazil and R$ 13,44813,841 (R$ 13,45313,448 at December 31, 2010)2011) refers to stockholders resident abroad.
The table below shows the breakdown of and change in shares of paid-in capital and the reconciliation of balances at the beginning and end of the year:period:
12/31/2011 | ||||||||||||||
NUMBER | ||||||||||||||
Common | Preferred | Total | Amount | |||||||||||
Residents in Brazil at 12/31/2010 | 2,286,135,621 | 918,287,035 | 3,204,422,656 | |||||||||||
Residents abroad at 12/31/2010 | 3,150,854 | 1,363,362,709 | 1,366,513,563 | |||||||||||
Shares of capital stock at 12/31/2010 | 2,289,286,475 | 2,281,649,744 | 4,570,936,219 | |||||||||||
Cancellation of shares – ESM of 04/25/2011 – Approved on 08/22/2011 | (75) | (44 | ) | (119 | ) | |||||||||
Shares of capital stock at 12/31/2011 | 2,289,286,400 | 2,281,649,700 | 4,570,936,100 | |||||||||||
Residents in Brazil at 12/31/2011 | 2,283,888,835 | 921,023,218 | 3,204,912,053 | |||||||||||
Residents abroad at 12/31/2011 | 5,397,565 | 1,360,626,482 | 1,366,024,047 | |||||||||||
Treasury shares at 12/31/2010 (*) | 2,202 | 26,566,015 | 26,568,217 | (628 | ) | |||||||||
Purchase of shares | - | 40,970,900 | 40,970,900 | (1,303 | ) | |||||||||
Exercised options - Granting of stock options – Simple and Partner options | - | (5,977,962 | ) | (5,977,962 | ) | 117 | ||||||||
Disposals – stock option plan | (27) | (4,264,938 | ) | (4,264,965 | ) | 151 | ||||||||
(-) Cancellation of shares – ESM of 04/25/2011 | (75) | (44 | ) | (119 | ) | - | ||||||||
Treasury shares at 12/31/2011 (*) | 2,100 | 57,293,971 | 57,296,071 | (1,663 | ) | |||||||||
Shares outstanding at 12/31/2011 | 2,289,284,300 | 2,224,355,729 | 4,513,640,029 | |||||||||||
Shares outstanding at 12/31/2010 | 2,289,284,273 | 2,255,083,729 | 4,544,368,002 |
12/31/2012 | ||||||||||||||||
NUMBER | ||||||||||||||||
Common | Preferred | Total | Amount | |||||||||||||
Residents in Brazil at 12/31/2011 | 2,283,888,835 | 921,023,218 | 3,204,912,053 | |||||||||||||
Residents abroad at 12/31/2011 | 5,397,565 | 1,360,626,482 | 1,366,024,047 | |||||||||||||
Shares of capital stock at 12/31/2011 | 2,289,286,400 | 2,281,649,700 | 4,570,936,100 | |||||||||||||
Shares of capital stock at 12/31/2012 | 2,289,286,400 | 2,281,649,700 | 4,570,936,100 | |||||||||||||
Residents in Brazil at 12/31/2012 | 2,280,400,056 | 884,649,441 | 3,165,049,497 | |||||||||||||
Residents abroad at 12/31/2012 | 8,886,344 | 1,397,000,259 | 1,405,886,603 | |||||||||||||
Treasury shares at 12/31/2011 (*) | 2,100 | 57,293,971 | 57,296,071 | (1,663 | ) | |||||||||||
Purchase of shares | - | 4,300,000 | 4,300,000 | (122 | ) | |||||||||||
Exercised options – Granting of stock options | - | (5,783,920 | ) | (5,783,920 | ) | 126 | ||||||||||
Disposals – Stock option plan | - | (3,255,812 | ) | (3,255,812 | ) | 136 | ||||||||||
Treasury shares at 12/31/2012 (*) | 2,100 | 52,554,239 | 52,556,339 | (1,523 | ) | |||||||||||
Shares outstanding at 12/31/2012 | 2,289,284,300 | 2,229,095,461 | 4,518,379,761 | |||||||||||||
Shares outstanding at 12/31/2011 | 2,289,284,300 | 2,224,355,729 | 4,513,640,029 |
12/31/2011 | ||||||||||||||||
NUMBER | ||||||||||||||||
Common | Preferred | Total | Amount | |||||||||||||
Residents in Brazil at 12/31/2010 | 2,286,135,621 | 918,287,035 | 3,204,422,656 | |||||||||||||
Residents abroad at 12/31/2010 | 3,150,854 | 1,363,362,709 | 1,366,513,563 | |||||||||||||
Shares of capital stock at 12/31/2010 | 2,289,286,475 | 2,281,649,744 | 4,570,936,219 | |||||||||||||
Cancellation of shares - ESM of 04/25/2011 – Approved on 08/22/2011 | (75 | ) | (44 | ) | (119 | ) | ||||||||||
Shares of capital stock at 12/31/2011 | 2,289,286,400 | 2,281,649,700 | 4,570,936,100 | |||||||||||||
Residents in Brazil at 12/31/2011 | 2,283,888,835 | 921,023,218 | 3,204,912,053 | |||||||||||||
Residents abroad at 12/31/2011 | 5,397,565 | 1,360,626,482 | 1,366,024,047 | |||||||||||||
Treasury shares at December 31, 2010 (*) | 2,202 | 26,566,015 | 26,568,217 | (628 | ) | |||||||||||
Purchase of shares | - | 40,970,900 | 40,970,900 | (1,303 | ) | |||||||||||
Exercised options - Granting of stock options – Simple and Partners’ options | - | (5,977,962 | ) | (5,977,962 | ) | 117 | ||||||||||
Disposals – Stock option plan | (27 | ) | (4,264,938 | ) | (4,264,965 | ) | 151 | |||||||||
Cancellation of Shares – ESM of 04/25/2011 | (75 | ) | (44 | ) | (119 | ) | - | |||||||||
Treasury shares at 12/31/2011 (*) | 2,100 | 57,293,971 | 57,296,071 | (1,663 | ) | |||||||||||
Shares outstanding at 12/31/2011 | 2,289,284,300 | 2,224,355,729 | 4,513,640,029 | |||||||||||||
Shares outstanding at 12/31/2010 | 2,289,284,273 | 2,255,083,729 | 4,544,368,002 |
12/31/2010 | ||||||||||||
Number | ||||||||||||
Common | Preferred | Total | Amount | |||||||||
Residents in Brazil at 01/01/2010 | 2,286,135,621 | 918,287,035 | 3,204,422,656 | |||||||||
Residents abroad at 01/01/2010 | 3,150,854 | 1,363,362,709 | 1,366,513,563 | |||||||||
Shares of capital stock at 01/01/2010 | 2,289,286,475 | 2,281,649,744 | 4,570,936,219 | |||||||||
Treasury shares at 01/01/2010 (*) | 2,202 | 43,588,307 | 43,590,509 | (1,031 | ) | |||||||
Exercised options - Granting of stock options – Simple and Partner options | - | (13,379,117 | ) | (13,379,117 | ) | 317 | ||||||
Disposals – stock option plan | - | (3,643,175 | ) | (3,643,175 | ) | 86 | ||||||
Treasury shares at 12/31/2010 (*) | 2,202 | 26,566,015 | 26,568,217 | (628 | ) | |||||||
Shares outstanding at 12/31/2010 | 2,289,284,273 | 2,255,083,729 | 4,544,368,002 | |||||||||
Shares outstanding at 01/01/2010 | 2,289,284,273 | 2,238,061,437 | 4,527,345,710 |
(*) Own shares, purchased based on authorization of the Board of Directors, to be held in Treasury for subsequent cancellation orof replacement in the market.
F.76 |
We detail below the costs of shares purchased in the period, as well as the average cost of treasury shares and their market price (in Brazilian reais per share):
01/01 to 12/31/2011 | 01/01 to 12/31/2012 | |||||||||||||||
Cost/market value | Common | Preferred | ||||||||||||||
Cost/Market value | Common | Preferred | ||||||||||||||
Minimum | - | 26.20 | - | 27.25 | ||||||||||||
Weighted average | - | 31.79 | - | 28.45 | ||||||||||||
Maximum | - | 37.40 | - | 28.98 | ||||||||||||
Treasury shares | ||||||||||||||||
Average cost | 9.65 | 29.03 | 9.65 | 28.99 | ||||||||||||
Market value at 12/31/2011 | 27.01 | 33.99 | ||||||||||||||
Market value at 12/31/2012 | 31.18 | 33.39 |
01/01 to 12/31/2010 | 01/01 to 12/31/2011 | |||||||||||||||
Cost/market value | Common | Preferred | ||||||||||||||
Cost/Market value | Common | Preferred | ||||||||||||||
Minimum | - | 26.20 | ||||||||||||||
Weighted average | - | 31.79 | ||||||||||||||
Maximum | - | 37.40 | ||||||||||||||
Treasury shares | ||||||||||||||||
Average cost | 9.65 | 23.66 | 9.65 | 29.03 | ||||||||||||
Market value at 12/31/2010 | 31.00 | 39.79 | ||||||||||||||
Market value at 12/31/2011 | 27.01 | 33.99 |
F.77 |
b) | Dividends |
Stockholders are entitled to an annual mandatory minimum dividend of not less than 25% of adjusted profit, pursuant to the provisions of the Brazilian Corporate Law. Both common and preferred shares participate equally, after common shares have received dividends equal to the annual minimum priority dividend of R$ 0.022 per share to be paid onto preferred shares.
The calculation of the monthly advance of the mandatory minimum dividend is based on the share position on the last day of the prior month, with payment being made on the first business day of the subsequent month, in the amount of R$ 0.012 per share. The amountshare, and beginning with the payment of April 2012, it will be increased by 25%, to R$ 0.015 per share, was determined according to a resolution adopted at the A/ESMBoard of Directors’ meeting held on April 24,2009.February 6, 2012.
At March 13, 2012, interest on capital was paid in the amount of R$ 1,847 – R$ 0.4092 per share, which at December 31, 2011 was recorded in stockholders Equity in the Special Revenue Reserve (Appropriated Reserves).
On August 15, 2012, Interest on Capital was paid in the amount of R$ 1,253 – R$ 0.2774 per share related to the 1st half of 2012.
Additionally, interest on capital was declared after December 31, 2011,2012, segregated into stockholders' equity in special revenue reserves in the amount of R$ 1,728 - R$ 0.3824 per share, which, net of withholding income tax, totals R$ 1,468 (R$ 1,847 -– R$ 0.4092 per share, which, net of withholding income tax, totals R$ 1,570 (R$ 1,308 - R$ 0.2879 per share, which, net of withholding income tax, totals R$ 1,112 to December 31,2010)in 12/31/2011).
Payments/Provision for interest on capital and dividends
12/31/2011 | ||||||||||||
Gross | WTF | Net | ||||||||||
Paid / Prepaid | 1,820 | (183 | ) | 1,637 | ||||||||
Dividends - 11 monthly installments of R$ 0.012 per share paid from February to December 2011 | 598 | - | 598 | |||||||||
Interest on capital - R$ 0.2706 per share, paid on August 22, 2011 | 1,222 | (183 | ) | 1,039 | ||||||||
Declared before December 31, 2011 (Recorded in Other Liabilities) | 1,387 | (200 | ) | 1,187 | ||||||||
Dividends - 1 monthly installment of R$ 0.012 per share, paid on January 2, 2012 | 54 | - | 54 | |||||||||
Interest on capital - R$ 0.2880 per share, credited on December 29, 2011 to be paid by April 30, 2012 | 1,300 | (195 | ) | 1,105 | ||||||||
Interest on capital - R$ 0.0072 per share to be paid by April 30, 2012 | 33 | (5 | ) | 28 | ||||||||
Declared after December 31, 2011 (Recorded in Revenue Reserve - Unrealized profits) | 1,847 | (277 | ) | 1,570 | ||||||||
Interest on capital - R$ 0.4092 per share to be paid by April 30, 2012 | 1,847 | (277 | ) | 1,570 | ||||||||
Total from 01/01 to 12/31/2011 - R$ 0.9727 net per share | 5,054 | (660 | ) | 4,394 |
12/31/2012 | ||||||||||||
Gross | WHT | Net | ||||||||||
Paid / Prepaid | 1,971 | (188 | ) | 1,783 | ||||||||
Dividends - 2 monthly installments of R$ 0.012 per share paid from February to March 2012 | 108 | - | 108 | |||||||||
Dividends - 9 monthly installments of R$ 0.015 per share paid from April to December 2012 | 610 | - | 610 | |||||||||
Interest on capital - R$ 0.2774 per share paid on August 15, 2012 | 1,253 | (188 | ) | 1,065 | ||||||||
Declared until 12/31/2012 (Recorded in Other liabilities) | 1,478 | (212 | ) | 1,267 | ||||||||
Dividends - 1 monthly installment of R$ 0.015 per share paid on January 2, 2013 | 68 | - | 68 | |||||||||
Interest on capital - R$ 0.3120 per share, credited in 12/28/2012 and to be paid until 04/30/2013 | 1,410 | (212 | ) | 1,199 | ||||||||
Declared after December 31, 2012(Recorded in Revenue Reserves - Unrealized Profits Reserve) | 1,728 | (259 | ) | 1,468 | ||||||||
Interest on capital - R$ 0.3824 per share to be paid until 04/30/2013 | 1,728 | (259 | ) | 1,468 | ||||||||
Total from 01/01 to 12/31/2012 - R$ 1.0000 net per share | 5,177 | (658 | ) | 4,518 |
Payments/Provision for interest on capital and dividends
12/31/2011 | ||||||||||||
Gross | WHT | Net | ||||||||||
Paid / Prepaid | 1,820 | (183 | ) | 1,637 | ||||||||
Dividends - 11 monthly installments of R$ 0.012 per share paid from February to December 2011 | 598 | - | 598 | |||||||||
Interest on capital - R$ 0.2706 per share paid on August 22, 2011 | 1,222 | (183 | ) | 1,039 | ||||||||
Declared until 12/31/2011 (Recorded in Other liabilities) | 1,387 | (200 | ) | 1,187 | ||||||||
Dividends - 1 monthly installment of R$ 0.012 per share paid on January 2, 2012 | 54 | - | 54 | |||||||||
Interest on capital - R$ 0.2880 per share, credited in 12/29/2012 and paid between 01/01/2012 and 04/30/2012 | 1,300 | (195 | ) | 1,105 | ||||||||
Interest on capital - R$ 0.0072 per share and paid between 01/01/2012 and 04/30/2012 | 33 | (5 | ) | 28 | ||||||||
Declared after December 31, 2012 (Recorded in Revenue Reserves - Unrealized Profits Reserve) | 1,847 | (277 | ) | 1,570 | ||||||||
Interest on capital - R$ 0.4092 per share and paid between 01/01/2012 and 04/30/2012 | 1,847 | (277 | ) | 1,570 | ||||||||
Total from 01/01 to 12/31/2011 - R$ 0.9727 net per share | 5,054 | (660 | ) | 4,394 |
Payments/Provision of interest on capital and dividends
12/31/2010 | 12/31/2010 | |||||||||||||||||||||||
Gross | WTF | Net | Gross | WTF | Net | |||||||||||||||||||
Paid / Prepaid | 1,716 | (168 | ) | 1,548 | 1,716 | (168 | ) | 1,548 | ||||||||||||||||
Dividends - 11 monthly installments of R$ 0.012 per share paid from February to December 2010 | 598 | - | 598 | 598 | - | 598 | ||||||||||||||||||
Interest on capital - R$ 0.2465 per share, paid on 08/20/2010 | 1,118 | (168 | ) | 950 | 1,118 | (168 | ) | 950 | ||||||||||||||||
Declared until December 31, 2010 (Recorded in Other Liabilities) | 1,460 | (210 | ) | 1,250 | 1,460 | (210 | ) | 1,250 | ||||||||||||||||
Dividends - 1 monthly installment of R$ 0.012 per share, paid on 01/02/2011 | 55 | - | 55 | 55 | - | 55 | ||||||||||||||||||
Interest on capital - R$ 0.2150 per share, credited at 12/30/2010 to be paid up to 04/30/2011 | 977 | (147 | ) | 830 | ||||||||||||||||||||
Interest on capital - R$ 0.0943 per share to be paid up to 04/30/2011 | 428 | (63 | ) | 365 | ||||||||||||||||||||
Interest on capital - R$ 0.2150 per share, credited at 12/30/2010 and paid between 01/01/2011 and 04/30/2011 | 977 | (147 | ) | 830 | ||||||||||||||||||||
Interest on capital - R$ 0.0943 per share paid between 01/01/2011 and 04/30/2011 | 428 | (63 | ) | 365 | ||||||||||||||||||||
Declared after December 31, 2010 (Recorded in Revenue Reserve) | 1,308 | (196 | ) | 1,112 | 1,308 | (196 | ) | 1,112 | ||||||||||||||||
Interest on capital - R$ 0.2879 per share to be paid by April 30, 2011 | 1,308 | (196 | ) | 1,112 | ||||||||||||||||||||
Interest on capital - R$ 0.2879 per share paid between 01/01/2011 and 04/30/2011 | 1,308 | (196 | ) | 1,112 | ||||||||||||||||||||
Total from 01/01 to 12/31/2010 - R$ 0.8605 net per share | 4,484 | (574 | ) | 3,910 | 4,484 | (574 | ) | 3,910 |
F.78 |
c) | Additional paid-in capital |
Additional paid-in capital corresponds to: (i) the difference between the proceeds from the sale of treasury shares and the average cost of such shares, and (ii) the compensation expenses recognized in accordance with the stock option plan.
d) | Appropriated reserves |
12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||
CAPITAL RESERVES (1) | 285 | 285 | 285 | |||||||||
Premium on subscription of shares | 284 | 284 | 284 | |||||||||
Reserves from tax incentives and restatement of equity securities and other | ||||||||||||
1 | 1 | 1 | ||||||||||
REVENUE RESERVES | 23,994 | 16,619 | 6,516 | |||||||||
Legal (2) | 3,848 | 3,254 | 2,740 | |||||||||
Statutory | 18,299 | 13,365 | 3,418 | |||||||||
Dividends equalization (3) | 3,751 | 3,403 | 1,062 | |||||||||
Working capital increase (4) | 5,257 | 3,963 | 1,414 | |||||||||
Increase in capital of investees(5) | 9,291 | 5,999 | 942 | |||||||||
Unrealized profits (6) | 1,847 | - | - | |||||||||
Unrealized income (7) | - | - | 358 | |||||||||
Total reserves at parent company | 24,279 | 16,904 | 6,801 |
12/31/2012 | 12/31/2011 | 12/31/2010 | ||||||||||
CAPITAL RESERVES (1) | 285 | 285 | 285 | |||||||||
Premium on subscription of shares | 284 | 284 | 284 | |||||||||
Reserves from tax incentives and restatement of equity securities and other | 1 | 1 | 1 | |||||||||
REVENUE RESERVES | 22,138 | 23,994 | 16,619 | |||||||||
Legal (2) | 4,388 | 3,848 | 3,254 | |||||||||
Statutory | 23,382 | 18,299 | 13,365 | |||||||||
Dividends equalization (3) | 6,291 | 3,751 | 3,403 | |||||||||
Working capital increase (4) | 6,274 | 5,257 | 3,963 | |||||||||
Increase in capital of investees (5) | 10,817 | 9,291 | 5,999 | |||||||||
Purchase of additional interest from non-controlling stockholders – Redecard (Note 3 c) | (7,360 | ) | - | - | ||||||||
Unrealized profits (6) | 1,728 | 1,847 | - | |||||||||
Total reserves at parent company | 22,423 | 24,279 | 16,904 |
(1) | Refers to amounts received by Itaú Unibanco Holding that were not included in the statement of income, since they do not refer to compensation for the provision of goods or services. |
(2) | Legal |
(3) | Reserve for |
(4) | Reserve for |
(5) | Reserve for |
(6) | Refers to |
e) | Unappropriated reserves |
Refers to the balance of profit remaining after the distribution of dividends and interest on capital and appropriations to statutory reserves in the statutory accounts of ITAÚ UNIBANCO HOLDING.
F.79 |
NOTE 2122 – STOCK OPTION PLAN
a) Purpose and Guidelines of the Plan
The GroupITAÚ UNIBANCO HOLDING has a stock option plan for its executives. This program aims at involving the members of management in the medium and long-term corporate development process, by granting simple stock options or bonuspartner options, that are personal and cannot be pledged or transferred, entitling the holder to subscribe one authorized capital share or, at the discretion of the management, one treasury share which has been acquired for the purpose of reselling.
Such options may only be granted in years in which there are sufficient profits to enable the distribution of mandatory dividends to stockholders and at a quantity that does not exceed the limit of 0.5% of the total shares held by the stockholders at the base date of the year-end balance sheet. ITAÚ UNIBANCO HOLDING’s Personnel Committee is responsible for defining the quantity, the beneficiaries, the type of option, the life of the option under each series, which may vary between a minimum of 5 years and a maximum of 10 years, and the vesting and lookuplockup periods for exercising the options. The executive officers and membermembers of the Board of Directors of ITAÚ UNIBANCO HOLDING and of its subsidiaries, as well as employees may participate in this program, based on assessment of potential and performance.
ITAÚ UNIBANCO HOLDING settles the benefits under this plan solely by delivering its own shares, which are held in treasury until the effective exercise of the options by the beneficiaries.
b) Characteristics of the Programs
I – Simple Options
Prior Programsprograms
Before the merger, both Itaú and Unibanco each had Stock Option Plans (Prior Programs). The eligible beneficiaries of the program were granted simple options, depending upon the individual performance. The exercise price is calculated based on the average prices of preferred shares at the BM&FBOVESPA trading sessions over the period of at least one and at the most three months prior to the option issue date; the price is subject to a positive or negative adjustment of up to 20%, and restated until the last business day of the month prior to the option exercise date based either on the IGP-M or IPCA,IPCA; in its absence, based on the index determined by the Committee. Options are no longer granted under this model.
Post-merger Programprogram
The eligible beneficiaries of the program are granted simple options, depending upon the individual employee performance. The exercise price is calculated based on the average prices of preferred shares at the BM&FBOVESPA in the last three months of the year prior to the gratinggranting date or alternatively subject to the positive or negative adjustments of up to 20% in the period of at least one.period. The exercise price is adjusted based on the IGPM or, in its absence, based on the index determined by the committee.
The vesting period is from one (1) to seven (7) years, ascounted from the issue date.
II – Partner options Plan
Executives selected to participate in the program may invest a percentage of their bonus to acquire shares or they have the right to receive shares (“Share-Based Instrument”). Title to the shares acquired, as well as the share-based instruments, should be held by the executives for a period from three to five years and they are subject to market fluctuation. At the times they acquire own shares and/or share-based instruments, partner options are granted in accordance with the classification of executives. Vesting periods of partner options or share-based instruments are from 1one to 7seven years. Share-based instruments and partner options are converted into shares of ITAÚ UNIBANCO HOLDING in the ratio of one preferred share for each instrument after the respective vesting period, with no payment of exercise price in cash.
F.80 |
The acquisition price of own shares and Share-Based Instruments is established every six months and is equivalent to the average preferred share quotation at the BM&FBOVESPA trading sessions in the 30 days prior to the determination of said price.
Title to the shares received after the vesting period of the Partner Options should be held, without any liens or encumbrances, for periods from five to eight years, as from the acquisition date of the shares.
The weighted average of the fair value of share-based instruments on the grant date was estimated for shares purchased in the fiscal year ended December 31, 2011 –2012 - R$ 37.0036.00 per share (R$ 39.9037.00 per share at December 31, 2010)2011).
The fair value of Share-Based InstrumentInstruments is the market price at the grant date for the preferred shares of ITAÚ UNIBANCO HOLDING, less the cash price paid by the beneficiaries. The amount received for the purchase of Share-Based Instruments was R$ 50 at December 31, 2012 (R$ 48 in 2011 (R$ 62 in 2010)at December 31, 2011).
F.81 |
Summary of changes in the plan
Restated | Exercised options | Number of shares | Exercised options | Number of shares | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Granting | Granting | Vesting period | Exercise | exercise | Exercise price | Market value | Prior balance | Forfeited (*) / | To be exercised | Granting | Vesting | Exercise | Restated exercise | Weighted average | Weighted average | Prior balance | Forfeited (*) / | To be exercised | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
No. | Date | until | deadline | price (R$1) | weighted average | weighted average | 12/31/2010 | Granted | Exercised | Cancelled | at 12/31/2011 | Date | period until | deadline | price (R$1) | exercise price | market value | 12/31/2011 | Granted | Exercised | Canceled | at 12/31/2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Simple Options | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10th | 02/16/2004 | 12/31/2008 | 12/31/2011 | 13.46 | 13.23 | 35.17 | 712,942 | - | 712,942 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
27th | 02/01/2005 | 05/05/2009 | 01/31/2011 | 16.52 | 16.42 | 39.50 | 12,650 | - | 12,650 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Simple options | Simple options | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11th | 02/21/2005 | 12/31/2009 | 12/31/2012 | 18.94 | 18.39 | 34.88 | 2,877,600 | - | 1,912,825 | 27,500 | 937,275 | 2/21/2005 | 12/31/2009 | 12/31/2012 | 20.27 | 19.79 | 33.68 | 937,275 | - | (937,275 | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
11th | 08/01/2005 | 12/31/2009 | 12/31/2012 | 18.94 | 18.39 | 34.88 | 27,500 | - | 27,500 | - | - | 8/6/2007 | 12/31/2009 | 12/31/2012 | 20.27 | 19.79 | 33.68 | 11,357 | - | (11,357 | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
11th | 08/06/2007 | 12/31/2009 | 12/31/2012 | 18.94 | - | - | 11,357 | - | - | - | 11,357 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
27th | 02/01/2005 | 02/01/2010 | 01/31/2011 | 16.52 | 16.42 | 39.50 | 16,389 | - | 16,389 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
34th | 03/21/2007 | 03/21/2010 | 03/20/2011 | 35.34 | - | - | 75,901 | - | - | 75,901 | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
35th | 03/22/2007 | 03/22/2010 | 03/21/2011 | 35.31 | - | - | 29,518 | - | - | 29,518 | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
30th | 07/04/2006 | 07/04/2010 | 07/03/2011 | 28.49 | 28.45 | 36.48 | 52,710 | - | 52,710 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
29th | 09/19/2005 | 09/19/2010 | 09/18/2011 | 21.77 | 21.30 | 38.45 | 12,650 | - | 12,650 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12th | 02/21/2006 | 12/31/2010 | 12/31/2013 | 28.18 | 27.30 | 36.42 | 8,025,250 | - | 1,110,385 | 60,500 | 6,854,365 | 2/21/2006 | 12/31/2010 | 12/31/2013 | 30.15 | 28.25 | 37.00 | 6,854,365 | - | (1,946,485 | ) | - | 4,907,880 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
12th | 08/06/2007 | 12/31/2010 | 12/31/2013 | 28.18 | - | - | 15,867 | - | - | - | 15,867 | 8/6/2007 | 12/31/2010 | 12/31/2013 | 30.15 | - | - | 15,867 | - | - | - | 15,867 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
16th | 08/10/2009 | 12/31/2010 | 12/31/2014 | 32.05 | - | - | 874,167 | - | - | - | 874,167 | 8/10/2009 | 12/31/2010 | 12/31/2014 | 34.28 | - | - | 874,167 | - | - | - | 874,167 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
34th | 03/21/2007 | 03/21/2011 | 03/20/2012 | 36.85 | - | - | 75,901 | - | - | - | 75,901 | 3/21/2007 | 3/21/2011 | 3/20/2012 | 37.27 | - | - | 75,901 | - | - | (75,901 | ) | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
35th | 03/22/2007 | 03/22/2011 | 03/21/2012 | 36.80 | - | - | 29,518 | - | - | - | 29,518 | 3/22/2007 | 3/22/2011 | 3/21/2012 | 38.95 | - | - | 29,518 | - | - | (29,518 | ) | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
36th | 05/14/2008 | 05/14/2011 | 05/13/2012 | 45.79 | - | - | 25,301 | - | - | - | 25,301 | 5/14/2008 | 5/14/2011 | 5/13/2012 | 46.72 | - | - | 25,301 | - | - | (25,301 | ) | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
30th | 07/04/2006 | 07/04/2011 | 07/03/2012 | 29.21 | - | - | 52,707 | - | - | - | 52,707 | 7/4/2006 | 7/4/2011 | 7/3/2012 | 29.90 | - | - | 52,707 | - | - | (52,707 | ) | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
33rd | 08/30/2006 | 08/30/2011 | 08/29/2012 | 32.34 | - | - | 21,083 | - | - | - | 21,083 | 8/30/2006 | 8/30/2011 | 8/29/2012 | 33.36 | 32.70 | 38.42 | 21,083 | - | (21,083 | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
13th | 02/14/2007 | 12/31/2011 | 12/31/2014 | 35.89 | 34.82 | 36.93 | 8,546,975 | - | 507,375 | 306,625 | 7,732,975 | 2/14/2007 | 12/31/2011 | 12/31/2014 | 38.39 | 35.91 | 38.32 | 7,732,975 | - | (344,650 | ) | (1,145,825 | ) | 6,242,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
13th | 08/06/2007 | 12/31/2011 | 12/31/2014 | 35.89 | - | - | 30,649 | - | - | - | 30,649 | 8/6/2007 | 12/31/2011 | 12/31/2014 | 38.39 | - | - | 30,649 | - | - | - | 30,649 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
13th | 10/28/2009 | 12/31/2011 | 12/31/2014 | 35.89 | - | - | 45,954 | - | - | - | 45,954 | 10/28/2009 | 12/31/2011 | 12/31/2014 | 38.39 | - | - | 45,954 | - | - | - | 45,954 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total options to be exercised | 21.84 | 35.62 | 21,572,589 | - | 4,365,426 | 500,044 | 16,707,119 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
34th | 03/21/2007 | 03/21/2012 | 03/20/2013 | 36.85 | - | - | 75,901 | - | - | - | 75,901 | 3/21/2007 | 3/21/2012 | 3/20/2013 | 39.00 | - | - | 75,901 | - | - | - | 75,901 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
35th | 03/22/2007 | 03/22/2012 | 03/21/2013 | 36.80 | - | - | 29,514 | - | - | - | 29,514 | 3/22/2007 | 3/22/2012 | 3/21/2013 | 38.95 | - | - | 29,514 | - | - | - | 29,514 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
36th | 05/14/2008 | 05/14/2012 | 05/13/2013 | 45.79 | - | - | 25,300 | - | - | - | 25,300 | 5/14/2008 | 5/14/2012 | 5/13/2013 | 48.46 | - | - | 25,300 | - | - | - | 25,300 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
17th | 09/23/2009 | 09/23/2012 | 12/31/2014 | 37.02 | - | - | 29,551 | - | - | - | 29,551 | 9/23/2009 | 9/23/2012 | 12/31/2014 | 39.61 | - | - | 29,551 | - | - | - | 29,551 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
14th | 02/11/2008 | 12/31/2012 | 12/31/2015 | 41.37 | - | - | 10,846,487 | - | - | 1,580,421 | 9,266,066 | 2/11/2008 | 12/31/2012 | 12/31/2015 | 44.27 | - | - | 9,266,066 | - | - | (2,097,144 | ) | 7,168,922 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
14th | 05/05/2008 | 12/31/2012 | 12/31/2015 | 41.37 | - | - | 20,625 | - | - | - | 20,625 | 5/5/2008 | 12/31/2012 | 12/31/2015 | 44.27 | - | - | 20,625 | - | - | - | 20,625 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
14th | 10/28/2009 | 12/31/2012 | 12/31/2015 | 41.37 | - | - | 45,954 | - | - | - | 45,954 | 10/28/2009 | 12/31/2012 | 12/31/2015 | 44.27 | - | - | 45,954 | - | - | - | 45,954 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total options to be exercised | Total options to be exercised | 26.63 | 36.18 | 26,200,030 | - | (3,260,850 | ) | (3,426,396 | ) | 19,512,784 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
36th | 05/14/2008 | 05/14/2013 | 05/13/2014 | 45.79 | - | - | 25,300 | - | - | - | 25,300 | 5/14/2008 | 5/14/2013 | 5/13/2014 | 48.46 | - | - | 25,300 | - | - | - | 25,300 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
15th | 03/03/2009 | 12/31/2013 | 12/31/2016 | 27.06 | 26.97 | 33.88 | 15,067,330 | - | 804,770 | 147,620 | 14,114,940 | 3/3/2009 | 12/31/2013 | 12/31/2016 | 28.95 | 27.12 | 35.16 | 14,114,940 | - | (1,452,840 | ) | (21,340 | ) | 12,640,760 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
15th | 10/28/2009 | 12/31/2013 | 12/31/2016 | 27.06 | - | - | 45,954 | - | - | - | 45,954 | 10/28/2009 | 12/31/2013 | 12/31/2016 | 28.95 | - | - | 45,954 | - | - | - | 45,954 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
18th | 04/17/2010 | 12/31/2014 | 12/31/2017 | 43.95 | - | - | 6,126,609 | - | - | 74,386 | 6,052,223 | 4/17/2010 | 12/31/2014 | 12/31/2017 | 47.02 | - | - | 6,052,223 | - | - | (119,229 | ) | 5,932,994 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
18th | 05/11/2010 | 12/31/2014 | 12/31/2017 | 43.95 | - | - | 1,206,340 | - | - | 42,421 | 1,163,919 | 5/11/2010 | 12/31/2014 | 12/31/2017 | 47.02 | - | - | 1,163,919 | - | - | (49,928 | ) | 1,113,991 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
37th | 04/19/2011 | 12/31/2015 | 12/31/2018 | 42.93 | - | - | - | 9,863,110 | - | 93,678 | 9,769,432 | 4/19/2011 | 12/31/2015 | 12/31/2018 | 45.93 | - | - | 9,769,432 | - | - | (167,211 | ) | 9,602,221 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
37th | 1/13/2012 | 12/31/2015 | 12/31/2018 | 45.93 | - | - | - | 15,383 | - | - | 15,383 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
38th | 1/13/2012 | 12/31/2016 | 12/31/2019 | 34.35 | - | - | - | 15,097 | - | - | 15,097 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
38th | 4/27/2012 | 12/31/2016 | 12/31/2019 | 34.35 | - | - | - | 10,373,657 | - | (40,264 | ) | 10,333,393 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total options outstanding | Total options outstanding | 26.97 | 33.88 | 33,544,865 | 9,863,110 | 804,770 | 1,938,526 | 40,664,679 | Total options outstanding | 27.12 | 35.16 | 31,171,768 | 10,404,137 | (1,452,840 | ) | (397,972 | ) | 39,725,093 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total simple options | Total simple options | 22.64 | 35.35 | 55,117,454 | 9,863,110 | 5,170,196 | 2,438,570 | 57,371,798 | Total simple options | 26.78 | 35.87 | 57,371,798 | 10,404,137 | (4,713,690 | ) | (3,824,368 | ) | 59,237,877 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Partner options | Partner options | Partner options | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4th | 03/03/2008 | 03/03/2011 | - | - | - | 37.22 | 416,487 | - | 376,581 | - | 39,906 | 3/3/2008 | 3/3/2011 | - | - | - | - | 39,906 | - | - | (39,906 | ) | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
5th | 09/03/2008 | 09/03/2011 | - | - | - | 28.83 | 490,624 | - | 431,185 | 12,729 | 46,710 | 9/3/2008 | 9/3/2011 | - | - | - | - | 46,710 | - | - | (46,710 | ) | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total options to be exercised | - | 37.22 | 907,111 | - | 807,766 | 12,729 | 86,616 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6th | 03/06/2009 | 03/06/2012 | - | - | - | - | 740,362 | - | - | 21,339 | 719,023 | 3/6/2009 | 3/6/2012 | - | - | - | 35.90 | 719,023 | - | (681,490 | ) | (37,533 | ) | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||
7th | 06/19/2009 | 03/06/2012 | - | - | - | - | 79,446 | - | - | - | 79,446 | 6/19/2009 | 3/6/2012 | - | - | - | 35.90 | 79,446 | - | (79,446 | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
1st | 09/03/2007 | 09/03/2012 | - | - | - | - | 329,181 | - | - | 19,673 | 309,508 | 9/3/2007 | 9/3/2012 | - | - | - | 32.05 | 309,508 | - | (309,294 | ) | (214 | ) | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||
3rd | 02/29/2008 | 09/03/2012 | - | - | - | - | 33,474 | - | - | - | 33,474 | 2/29/2008 | 9/3/2012 | - | - | - | - | 33,474 | - | - | - | 33,474 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total options to be exercised | Total options to be exercised | - | - | 34.79 | 1,228,067 | - | (1,070,230 | ) | (124,363 | ) | 33,474 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4th | 03/03/2008 | 03/03/2013 | - | - | - | - | 415,930 | - | - | 27,498 | 388,432 | 3/3/2008 | 3/3/2013 | - | - | - | - | 388,432 | - | - | (15,488 | ) | 372,944 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
8th | 08/17/2010 | 08/16/2013 | - | - | - | - | 376,916 | - | - | 37,284 | 339,632 | 8/17/2010 | 8/16/2013 | - | - | - | - | 339,632 | - | - | (11,120 | ) | 328,512 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
9th | 08/30/2010 | 08/16/2013 | - | - | - | - | 359,991 | - | - | 30,280 | 329,711 | 8/30/2010 | 8/16/2013 | - | - | - | - | 329,711 | - | - | (7,750 | ) | 321,961 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
11th | 09/30/2010 | 08/16/2013 | - | - | - | - | 17,717 | - | - | - | 17,717 | 9/30/2010 | 8/16/2013 | - | - | - | - | 17,717 | - | - | - | 17,717 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
5th | 09/03/2008 | 09/03/2013 | - | - | - | - | 490,126 | - | - | 40,684 | 449,442 | 9/3/2008 | 9/3/2013 | - | - | - | - | 449,442 | - | - | (26,875 | ) | 422,567 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
10th | 09/30/2010 | 09/29/2013 | - | - | - | - | 1,940,987 | - | - | 78,578 | 1,862,409 | 9/30/2010 | 9/29/2013 | - | - | - | - | 1,862,409 | - | - | (48,015 | ) | 1,814,394 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
17th | 6/14/2012 | 2/27/2014 | - | - | - | - | - | 7,791 | - | - | 7,791 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12th | 02/28/2011 | 02/28/2014 | - | - | - | - | - | 1,585,541 | - | 26,957 | 1,558,584 | 2/28/2011 | 2/28/2014 | - | - | - | - | 1,558,584 | - | - | (28,176 | ) | 1,530,408 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
6th | 03/06/2009 | 03/06/2014 | - | - | - | - | 739,608 | - | - | 35,004 | 704,604 | 3/6/2009 | 3/6/2014 | - | - | - | - | 704,604 | - | - | (45,197 | ) | 659,407 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
7th | 06/19/2009 | 03/06/2014 | - | - | - | - | 79,445 | - | - | - | 79,445 | 6/19/2009 | 3/6/2014 | - | - | - | - | 79,445 | - | - | - | 79,445 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
14th | 04/11/2011 | 08/18/2014 | - | 509 | - | - | 509 | 11/4/2011 | 8/18/2014 | - | - | - | - | 509 | - | - | - | 509 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
17th | 6/14/2012 | 8/18/2014 | - | - | - | - | - | 2,527 | - | - | 2,527 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
13th | 08/19/2011 | 08/19/2014 | - | - | - | - | 706,397 | - | - | 706,397 | 8/19/2011 | 8/19/2014 | - | - | - | - | 706,397 | - | - | (19,628 | ) | 686,769 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
17th | 6/14/2012 | 2/23/2015 | - | - | - | - | - | 8,187 | - | - | 8,187 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
15th | 2/24/2012 | 2/24/2015 | - | - | - | - | - | 1,583,044 | - | (10,952 | ) | 1,572,092 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16th | 2/24/2012 | 2/24/2015 | - | - | - | - | - | 69,156 | - | - | 69,156 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8th | 08/17/2010 | 08/16/2015 | - | - | - | - | 376,876 | - | - | 37,953 | 338,923 | 8/17/2010 | 8/16/2015 | - | - | - | - | 338,923 | - | - | (11,508 | ) | 327,415 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
9th | 08/30/2010 | 08/16/2015 | - | - | - | - | 359,962 | - | - | 30,810 | 329,152 | 8/30/2010 | 8/16/2015 | - | - | - | - | 329,152 | - | - | (7,928 | ) | 321,224 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
11th | 09/30/2010 | 08/16/2015 | - | - | - | - | 17,712 | - | - | - | 17,712 | 9/30/2010 | 8/16/2015 | - | - | - | - | 17,712 | - | - | - | 17,712 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
10th | 09/30/2010 | 09/29/2015 | - | - | - | - | 1,940,951 | - | - | 82,433 | 1,858,518 | 9/30/2010 | 9/29/2015 | - | - | - | - | 1,858,518 | - | - | (50,048 | ) | 1,808,470 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
17th | 6/14/2012 | 2/27/2016 | - | - | - | - | - | 7,790 | - | - | 7,790 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12th | 02/28/2011 | 02/28/2016 | - | - | - | - | - | 1,585,497 | - | 28,282 | 1,557,215 | 2/28/2011 | 2/28/2016 | - | - | - | - | 1,557,215 | - | - | (29,532 | ) | 1,527,683 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
14th | 11/4/2011 | 8/18/2016 | - | - | - | - | 508 | - | - | - | 508 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
17th | 6/14/2012 | 8/18/2016 | - | - | - | - | - | 2,527 | - | - | 2,527 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
13th | 08/19/2011 | 08/19/2016 | - | - | - | - | 706,338 | - | - | 706,338 | 8/19/2011 | 8/19/2016 | - | - | - | - | 706,338 | - | - | (20,011 | ) | 686,327 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
14th | 04/11/2011 | 08/18/2016 | - | - | - | - | 508 | - | - | 508 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
17th | 6/14/2012 | 2/23/2017 | - | - | - | - | - | 8,186 | - | - | 8,186 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
15th | 2/24/2012 | 2/24/2017 | - | - | - | - | - | 1,582,979 | - | (11,248 | ) | 1,571,731 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16th | 2/24/2012 | 2/24/2017 | - | - | - | - | - | 69,151 | - | - | 69,151 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total options outstanding | Total options outstanding | - | - | 8,298,684 | 4,584,790 | - | 496,775 | 12,386,699 | Total options outstanding | - | - | 11,245,248 | 3,341,338 | - | (343,476 | ) | 14,243,110 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total partner options | Total partner options | - | 37.22 | 9,205,795 | 4,584,790 | 807,766 | 509,504 | 12,473,315 | Total partner options | - | 34.79 | 12,473,315 | 3,341,338 | (1,070,230 | ) | (467,839 | ) | 14,276,584 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TOTAL SIMPLE/PARTNER OPTIONS | TOTAL SIMPLE/PARTNER OPTIONS | 22.84 | 32.92 | 64,323,249 | 14,447,900 | 5,977,962 | 2,948,074 | 69,845,113 | TOTAL SIMPLE/PARTNER OPTIONS | 26.78 | 35.67 | 69,845,113 | 13,745,475 | (5,783,920 | ) | (4,292,207 | ) | 73,514,461 |
(*) Refers to non-exercise due to the beneficiary’s option.
F.82 |
Summary of changes in the plan
Exercised options | Number of shares | |||||||||||||||||||||||||||||||||||||||
Granting | Vesting | Exercise | Restated exercise | Weighted average | Weighted average | Prior balance | Forfeited(*) / | To be exercised | ||||||||||||||||||||||||||||||||
No. | Date | period until | deadline | price (R$1) | exercise price | market value | 12/31/2010 | Granted | Exercised | Canceled | at 12/31/2011 | |||||||||||||||||||||||||||||
Simple options | ||||||||||||||||||||||||||||||||||||||||
10th | 2/16/2004 | 12/31/2008 | 12/31/2011 | 13.46 | 13.23 | 35.17 | 712,942 | - | 712,942 | - | - | |||||||||||||||||||||||||||||
27th | 2/1/2005 | 5/5/2009 | 1/31/2011 | 16.52 | 16.42 | 39.50 | 12,650 | - | 12,650 | - | - | |||||||||||||||||||||||||||||
11th | 2/21/2005 | 12/31/2009 | 12/31/2012 | 18.94 | 18.39 | 34.88 | 2,877,600 | - | 1,912,825 | 27,500 | 937,275 | |||||||||||||||||||||||||||||
11th | 8/1/2005 | 12/31/2009 | 12/31/2012 | 18.94 | 18.39 | 34.88 | 27,500 | - | 27,500 | - | - | |||||||||||||||||||||||||||||
11th | 8/6/2007 | 12/31/2009 | 12/31/2012 | 18.94 | - | - | 11,357 | - | - | - | 11,357 | |||||||||||||||||||||||||||||
27th | 2/1/2005 | 2/1/2010 | 1/31/2011 | 16.52 | 16.42 | 39.50 | 16,389 | - | 16,389 | - | - | |||||||||||||||||||||||||||||
34th | 3/21/2007 | 3/21/2010 | 3/20/2011 | 35.34 | - | - | 75,901 | - | - | 75,901 | - | |||||||||||||||||||||||||||||
35th | 3/22/2007 | 3/22/2010 | 3/21/2011 | 35.31 | - | - | 29,518 | - | - | 29,518 | - | |||||||||||||||||||||||||||||
30th | 7/4/2006 | 7/4/2010 | 7/3/2011 | 28.49 | 28.45 | 36.48 | 52,710 | - | 52,710 | - | - | |||||||||||||||||||||||||||||
29th | 9/19/2005 | 9/19/2010 | 9/18/2011 | 21.77 | 21.30 | 38.45 | 12,650 | - | 12,650 | - | - | |||||||||||||||||||||||||||||
12th | 2/21/2006 | 12/31/2010 | 12/31/2013 | 28.18 | 27.30 | 36.42 | 8,025,250 | - | 1,110,385 | 60,500 | 6,854,365 | |||||||||||||||||||||||||||||
12th | 8/6/2007 | 12/31/2010 | 12/31/2013 | 28.18 | - | - | 15,867 | - | - | - | 15,867 | |||||||||||||||||||||||||||||
16th | 8/10/2009 | 12/31/2010 | 12/31/2014 | 32.05 | - | - | 874,167 | - | - | - | 874,167 | |||||||||||||||||||||||||||||
34th | 3/21/2007 | 3/21/2011 | 3/20/2012 | 36.85 | - | - | 75,901 | - | - | - | 75,901 | |||||||||||||||||||||||||||||
35th | 3/22/2007 | 3/22/2011 | 3/21/2012 | 36.80 | - | - | 29,518 | - | - | - | 29,518 | |||||||||||||||||||||||||||||
36th | 5/14/2008 | 5/14/2011 | 5/13/2012 | 45.79 | - | - | 25,301 | - | - | - | 25,301 | |||||||||||||||||||||||||||||
30th | 7/4/2006 | 7/4/2011 | 7/3/2012 | 29.21 | - | - | 52,707 | - | - | - | 52,707 | |||||||||||||||||||||||||||||
33rd | 8/30/2006 | 8/30/2011 | 8/29/2012 | 32.34 | - | - | 21,083 | - | - | - | 21,083 | |||||||||||||||||||||||||||||
13th | 2/14/2007 | 12/31/2011 | 12/31/2014 | 35.89 | 34.82 | 36.93 | 8,546,975 | - | 507,375 | 306,625 | 7,732,975 | |||||||||||||||||||||||||||||
13th | 8/6/2007 | 12/31/2011 | 12/31/2014 | 35.89 | - | - | 30,649 | - | - | - | 30,649 | |||||||||||||||||||||||||||||
13th | 10/28/2009 | 12/31/2011 | 12/31/2014 | 35.89 | - | - | 45,954 | - | - | - | 45,954 | |||||||||||||||||||||||||||||
Total options to be exercised | 21.84 | 35.62 | 21,572,589 | - | 4,365,426 | 500,044 | 16,707,119 | |||||||||||||||||||||||||||||||||
34th | 3/21/2007 | 3/21/2012 | 3/20/2013 | 36.85 | - | - | 75,901 | - | - | - | 75,901 | |||||||||||||||||||||||||||||
35th | 3/22/2007 | 3/22/2012 | 3/21/2013 | 36.80 | - | - | 29,514 | - | - | - | 29,514 | |||||||||||||||||||||||||||||
36th | 5/14/2008 | 5/14/2012 | 5/13/2013 | 45.79 | - | - | 25,300 | - | - | - | 25,300 | |||||||||||||||||||||||||||||
17th | 9/23/2009 | 9/23/2012 | 12/31/2014 | 37.02 | - | - | 29,551 | - | - | - | 29,551 | |||||||||||||||||||||||||||||
14th | 2/11/2008 | 12/31/2012 | 12/31/2015 | 41.37 | - | - | 10,846,487 | - | - | 1,580,421 | 9,266,066 | |||||||||||||||||||||||||||||
14th | 5/5/2008 | 12/31/2012 | 12/31/2015 | 41.37 | - | - | 20,625 | - | - | - | 20,625 | |||||||||||||||||||||||||||||
14th | 10/28/2009 | 12/31/2012 | 12/31/2015 | 41.37 | - | - | 45,954 | - | - | - | 45,954 | |||||||||||||||||||||||||||||
36th | 5/14/2008 | 5/14/2013 | 5/13/2014 | 45.79 | - | - | 25,300 | - | - | - | 25,300 | |||||||||||||||||||||||||||||
15th | 3/3/2009 | 12/31/2013 | 12/31/2016 | 27.06 | 26.97 | 33.88 | 15,067,330 | - | 804,770 | 147,620 | 14,114,940 | |||||||||||||||||||||||||||||
15th | 10/28/2009 | 12/31/2013 | 12/31/2016 | 27.06 | - | - | 45,954 | - | - | - | 45,954 | |||||||||||||||||||||||||||||
18th | 4/17/2010 | 12/31/2014 | 12/31/2017 | 43.95 | - | - | 6,126,609 | - | - | 74,386 | 6,052,223 | |||||||||||||||||||||||||||||
18th | 5/11/2010 | 12/31/2014 | 12/31/2017 | 43.95 | - | - | 1,206,340 | - | - | 42,421 | 1,163,919 | |||||||||||||||||||||||||||||
37th | 4/19/2011 | 12/31/2015 | 12/31/2018 | 42.93 | - | - | - | 9,863,110 | - | 93,678 | 9,769,432 | |||||||||||||||||||||||||||||
Total options outstanding | 26.97 | 33.88 | 33,544,865 | 9,863,110 | 804,770 | 1,938,526 | 40,664,679 | |||||||||||||||||||||||||||||||||
Total simple options | 22.64 | 35.35 | 55,117,454 | 9,863,110 | 5,170,196 | 2,438,570 | 57,371,798 | |||||||||||||||||||||||||||||||||
Partner options | ||||||||||||||||||||||||||||||||||||||||
4th | 3/3/2008 | 3/3/2011 | - | - | - | 37.22 | 416,487 | - | 376,581 | - | 39,906 | |||||||||||||||||||||||||||||
5th | 9/3/2008 | 9/3/2011 | - | - | - | 28.83 | 490,624 | - | 431,185 | 12,729 | 46,710 | |||||||||||||||||||||||||||||
Total options to be exercised | - | - | 37.22 | 907,111 | - | 807,766 | 12,729 | 86,616 | ||||||||||||||||||||||||||||||||
6th | 3/6/2009 | 3/6/2012 | - | - | - | - | 740,362 | - | - | 21,339 | 719,023 | |||||||||||||||||||||||||||||
7th | 6/19/2009 | 3/6/2012 | - | - | - | - | 79,446 | - | - | - | 79,446 | |||||||||||||||||||||||||||||
1st | 9/3/2007 | 9/3/2012 | - | - | - | - | 329,181 | - | - | 19,673 | 309,508 | |||||||||||||||||||||||||||||
3rd | 2/29/2008 | 9/3/2012 | - | - | - | - | 33,474 | - | - | - | 33,474 | |||||||||||||||||||||||||||||
4th | 3/3/2008 | 3/3/2013 | - | - | - | - | 415,930 | - | - | 27,498 | 388,432 | |||||||||||||||||||||||||||||
8th | 8/17/2010 | 8/16/2013 | - | - | - | - | 376,916 | - | - | 37,284 | 339,632 | |||||||||||||||||||||||||||||
9th | 8/30/2010 | 8/16/2013 | - | - | - | - | 359,991 | - | - | 30,280 | 329,711 | |||||||||||||||||||||||||||||
11th | 9/30/2010 | 8/16/2013 | - | - | - | - | 17,717 | - | - | - | 17,717 | |||||||||||||||||||||||||||||
5th | 9/3/2008 | 9/3/2013 | - | - | - | - | 490,126 | - | - | 40,684 | 449,442 | |||||||||||||||||||||||||||||
10th | 9/30/2010 | 9/29/2013 | - | - | - | - | 1,940,987 | - | - | 78,578 | 1,862,409 | |||||||||||||||||||||||||||||
12th | 2/28/2011 | 2/28/2014 | - | - | - | - | - | 1,585,541 | - | 26,957 | 1,558,584 | |||||||||||||||||||||||||||||
6th | 3/6/2009 | 3/6/2014 | - | - | - | - | 739,608 | - | - | 35,004 | 704,604 | |||||||||||||||||||||||||||||
7th | 6/19/2009 | 3/6/2014 | - | - | - | - | 79,445 | - | - | - | 79,445 | |||||||||||||||||||||||||||||
14th | 11/4/2011 | 8/18/2014 | - | - | - | - | 509 | - | - | 509 | ||||||||||||||||||||||||||||||
13th | 8/19/2011 | 8/19/2014 | - | - | - | - | - | 706,397 | - | - | 706,397 | |||||||||||||||||||||||||||||
8th | 8/17/2010 | 8/16/2015 | - | - | - | - | 376,876 | - | - | 37,953 | 338,923 | |||||||||||||||||||||||||||||
9th | 8/30/2010 | 8/16/2015 | - | - | - | - | 359,962 | - | - | 30,810 | 329,152 | |||||||||||||||||||||||||||||
11th | 9/30/2010 | 8/16/2015 | - | - | - | - | 17,712 | - | - | - | 17,712 | |||||||||||||||||||||||||||||
10th | 9/30/2010 | 9/29/2015 | - | - | - | - | 1,940,951 | - | - | 82,433 | 1,858,518 | |||||||||||||||||||||||||||||
12th | 2/28/2011 | 2/28/2016 | - | - | - | - | - | 1,585,497 | - | 28,282 | 1,557,215 | |||||||||||||||||||||||||||||
13th | 8/19/2011 | 8/19/2016 | - | - | - | - | - | 706,338 | - | - | 706,338 | |||||||||||||||||||||||||||||
14th | 11/4/2011 | 8/18/2016 | - | - | - | - | - | 508 | - | - | 508 | |||||||||||||||||||||||||||||
Total options outstanding | - | - | 8,298,684 | 4,584,790 | - | 496,775 | 12,386,699 | |||||||||||||||||||||||||||||||||
Total partner options | - | 37.22 | 9,205,795 | 4,584,790 | 807,766 | 509,504 | 12,473,315 | |||||||||||||||||||||||||||||||||
TOTAL SIMPLE/PARTNER OPTIONS | - | 22.84 | 32.92 | 64,323,249 | 14,447,900 | 5,977,962 | 2,948,074 | 69,845,113 |
Restated | Exercised options | Number of shares | |||||||||||||||||||||
Granting | Vesting period | Exercise | exercise | Exercise price | Market value | Prior balance | Forfeited / | To be exercised | |||||||||||||||
No. | Date | until | deadline | price (R$1) | weighted average | weighted average | 01/01/2010 | Granted | Exercised | Cancelled | at 12/31/2010 | ||||||||||||
Simple Options | |||||||||||||||||||||||
9th | 03/10/2003 | 12/31/2007 | 12/31/2010 | - | 7.85 | 38.55 | 570,500 | - | 570,500 | - | - | ||||||||||||
9th | 05/02/2005 | 12/31/2007 | 12/31/2010 | - | 7.85 | 38.55 | 6,187 | - | 6,187 | - | - | ||||||||||||
16th | 09/02/2003 | 09/02/2008 | 02/25/2010 | - | 7.77 | 36.03 | 38,263 | - | 38,263 | - | - | ||||||||||||
10th | 02/16/2004 | 12/31/2008 | 12/31/2011 | 12.70 | 12.15 | 39.34 | 1,886,792 | - | 1,173,850 | - | 712,942 | ||||||||||||
24th | 07/19/2004 | 01/13/2009 | 05/05/2010 | - | 12.58 | 39.59 | 29,516 | - | 29,516 | - | - | ||||||||||||
25th | 08/04/2004 | 01/13/2009 | 05/05/2010 | - | 6.76 | 39.65 | 329,506 | - | 329,506 | - | - | ||||||||||||
27th | 02/01/2005 | 02/01/2009 | 05/05/2010 | - | 15.76 | 36.97 | 206,342 | - | 206,342 | - | - | ||||||||||||
27th | 02/01/2005 | 05/05/2009 | 01/31/2011 | 16.38 | - | - | 12,650 | - | - | - | 12,650 | ||||||||||||
30th | 07/04/2006 | 07/04/2009 | 07/03/2010 | - | 26.73 | 32.50 | 52,710 | - | 52,710 | - | - | ||||||||||||
33re | 08/30/2006 | 08/30/2009 | 08/29/2010 | - | 29.62 | 38.45 | 21,084 | - | 21,084 | - | - | ||||||||||||
29th | 09/19/2005 | 09/19/2009 | 09/18/2010 | - | 20.14 | 38.33 | 12,650 | - | 12,650 | - | - | ||||||||||||
11th | 02/21/2005 | 12/31/2009 | 12/31/2012 | 17.88 | 16.69 | 39.49 | 7,082,200 | - | 4,204,600 | - | 2,877,600 | ||||||||||||
11th | 08/01/2005 | 12/31/2009 | 12/31/2012 | 17.88 | - | - | 27,500 | - | - | - | 27,500 | ||||||||||||
11th | 08/06/2007 | 12/31/2009 | 12/31/2012 | 17.88 | - | - | 11,357 | - | - | - | 11,357 | ||||||||||||
27th | 02/01/2005 | 02/01/2010 | 01/31/2011 | 16.38 | 15.76 | 36.97 | 1,068,901 | - | 999,802 | 52,710 | 16,389 | ||||||||||||
34th | 03/21/2007 | 03/21/2010 | 03/20/2011 | 34.60 | - | - | 75,901 | - | - | - | 75,901 | ||||||||||||
35th | 03/22/2007 | 03/22/2010 | 03/21/2011 | 34.56 | - | - | 29,518 | - | - | - | 29,518 | ||||||||||||
30th | 07/04/2006 | 07/04/2010 | 07/03/2011 | 27.42 | - | - | 52,710 | - | - | - | 52,710 | ||||||||||||
33 rd | 08/30/2006 | 08/30/2010 | 08/29/2011 | - | 29.62 | 38.45 | 21,084 | - | 21,084 | - | - | ||||||||||||
29th | 09/19/2005 | 09/19/2010 | 09/18/2011 | 20.78 | 20.14 | 38.33 | 25,300 | - | 12,650 | - | 12,650 | ||||||||||||
12th | 02/21/2006 | 12/31/2010 | 12/31/2013 | 26.60 | 25.68 | 39.83 | 9,579,384 | - | 1,554,134 | - | 8,025,250 | ||||||||||||
12th | 08/06/2007 | 12/31/2010 | 12/31/2013 | 26.60 | - | - | 15,867 | - | - | - | 15,867 | ||||||||||||
16th | 08/10/2009 | 12/31/2010 | 12/31/2014 | 30.25 | - | - | 874,167 | - | - | - | 874,167 | ||||||||||||
Total options to be exercised | 16.67 | 39.08 | 22,030,089 | - | 9,232,878 | 52,710 | 12,744,501 | ||||||||||||||||
34th | 03/21/2007 | 03/21/2011 | 03/20/2012 | 34.60 | - | - | 75,901 | - | - | - | 75,901 | ||||||||||||
35th | 03/22/2007 | 03/22/2011 | 03/21/2012 | 34.56 | - | - | 29,518 | - | - | - | 29,518 | ||||||||||||
36th | 05/14/2008 | 05/14/2011 | 05/13/2012 | 42.99 | - | - | 25,301 | - | - | - | 25,301 | ||||||||||||
30th | 07/04/2006 | 07/04/2011 | 07/03/2012 | 27.42 | - | - | 52,707 | - | - | - | 52,707 | ||||||||||||
33 rd | 08/30/2006 | 08/30/2011 | 08/29/2012 | 30.37 | - | - | 21,083 | - | - | - | 21,083 | ||||||||||||
13th | 02/14/2007 | 12/31/2011 | 12/31/2014 | 33.87 | 31.99 | 38.98 | 10,220,925 | - | 1,660,200 | 13,750 | 8,546,975 | ||||||||||||
13th | 08/06/2007 | 12/31/2011 | 12/31/2014 | 33.87 | - | - | 30,649 | - | - | - | 30,649 | ||||||||||||
13th | 10/28/2009 | 12/31/2011 | 12/31/2014 | 33.87 | - | - | 45,954 | - | - | - | 45,954 | ||||||||||||
34th | 03/21/2007 | 03/21/2012 | 03/20/2013 | 34.60 | - | - | 75,901 | - | - | - | 75,901 | ||||||||||||
35th | 03/22/2007 | 03/22/2012 | 03/21/2013 | 34.56 | - | - | 29,514 | - | - | - | 29,514 | ||||||||||||
36th | 05/14/2008 | 05/14/2012 | 05/13/2013 | 42.99 | - | - | 25,300 | - | - | - | 25,300 | ||||||||||||
17th | 09/23/2009 | 09/23/2012 | 12/31/2014 | 34.94 | - | - | 29,551 | - | - | - | 29,551 | ||||||||||||
14th | 02/11/2008 | 12/31/2012 | 12/31/2015 | 39.05 | 38.12 | 41.31 | 11,485,485 | - | 612,599 | 26,399 | 10,846,487 | ||||||||||||
14th | 05/05/2008 | 12/31/2012 | 12/31/2015 | 39.05 | - | - | 20,625 | - | - | - | 20,625 | ||||||||||||
14th | 10/28/2009 | 12/31/2012 | 12/31/2015 | 39.05 | - | - | 45,954 | - | - | - | 45,954 | ||||||||||||
36th | 05/14/2008 | 05/14/2013 | 05/13/2014 | 42.99 | - | - | 25,300 | - | - | - | 25,300 | ||||||||||||
15th | 03/03/2009 | 12/31/2013 | 12/31/2016 | 25.54 | 24.80 | 40.27 | 16,829,780 | - | 1,533,100 | 229,350 | 15,067,330 | ||||||||||||
15th | 10/28/2009 | 12/31/2013 | 12/31/2016 | 25.54 | - | - | 45,954 | - | - | - | 45,954 | ||||||||||||
18th | 04/17/2010 | 12/31/2014 | 12/31/2017 | 41.48 | - | - | - | 6,258,877 | - | 132,268 | 6,126,609 | ||||||||||||
18th | 05/11/2010 | 12/31/2014 | 12/31/2017 | 41.48 | - | - | - | 1,290,289 | - | 83,949 | 1,206,340 | ||||||||||||
Total options in the vesting period | 30.08 | 39.87 | 39,115,402 | 7,549,166 | 3,805,899 | 485,716 | 42,372,953 | ||||||||||||||||
Total simple options | 61,145,491 | 7,549,166 | 13,038,777 | 538,426 | 55,117,454 | ||||||||||||||||||
Weighted Average Price – Simple Options | 20.59 | 39.31 | 25.46 | 41.48 | 31.92 | 31.38 | |||||||||||||||||
Bonus options | |||||||||||||||||||||||
1st | 09/03/2007 | 09/03/2010 | - | - | - | 37.85 | 342,502 | - | 340,340 | 2,162 | - | ||||||||||||
3rd | 02/29/2008 | 09/03/2010 | - | - | - | - | 33,474 | - | - | 33,474 | - | ||||||||||||
Total options to be exercised | 37.85 | 375,976 | - | 340,340 | 35,636 | - | |||||||||||||||||
4th | 03/03/2008 | 03/03/2011 | - | - | - | - | 423,212 | - | - | 6,725 | 416,487 | ||||||||||||
5th | 09/03/2008 | 09/03/2011 | - | - | - | - | 502,189 | - | - | 11,565 | 490,624 | ||||||||||||
6th | 03/06/2009 | 03/06/2012 | - | - | - | - | 769,830 | - | - | 29,468 | 740,362 | ||||||||||||
7th | 06/19/2009 | 03/06/2012 | - | - | - | - | 79,446 | - | - | - | 79,446 | ||||||||||||
1st | 09/03/2007 | 09/03/2012 | - | - | - | - | 342,479 | - | - | 13,298 | 329,181 | ||||||||||||
3rd | 02/29/2008 | 09/03/2012 | - | - | - | - | 33,474 | - | - | - | 33,474 | ||||||||||||
4th | 03/03/2008 | 03/03/2013 | - | - | - | - | 423,190 | - | - | 7,260 | 415,930 | ||||||||||||
8th | 08/17/2010 | 08/16/2013 | - | - | - | - | - | 384,961 | - | 8,045 | 376,916 | ||||||||||||
9th | 08/30/2010 | 08/16/2013 | - | - | - | - | - | 359,991 | - | - | 359,991 | ||||||||||||
11th | 09/30/2010 | 08/16/2013 | - | - | - | - | - | 17,717 | - | - | 17,717 | ||||||||||||
5th | 09/03/2008 | 09/03/2013 | - | - | - | - | 502,164 | - | - | 12,038 | 490,126 | ||||||||||||
10th | 09/30/2010 | 09/29/2013 | - | - | - | - | - | 1,940,987 | - | - | 1,940,987 | ||||||||||||
6th | 03/06/2009 | 03/06/2014 | - | - | - | - | 769,807 | - | - | 30,199 | 739,608 | ||||||||||||
7th | 06/19/2009 | 03/06/2014 | - | - | - | - | 79,445 | - | - | - | 79,445 | ||||||||||||
8th | 08/17/2010 | 08/16/2015 | - | - | - | - | - | 384,920 | - | 8,044 | 376,876 | ||||||||||||
9th | 08/30/2010 | 08/16/2015 | - | - | - | - | - | 359,962 | - | - | 359,962 | ||||||||||||
11th | 09/30/2010 | 08/16/2015 | - | - | - | - | - | 17,712 | - | - | 17,712 | ||||||||||||
10th | 09/30/2010 | 09/29/2015 | - | - | - | - | - | 1,940,951 | - | - | 1,940,951 | ||||||||||||
Total options outstanding | - | - | 3,925,236 | 5,407,201 | - | 126,642 | 9,205,795 | ||||||||||||||||
Total bonus options | - | 37.85 | 4,301,212 | 5,407,201 | 340,340 | 162,278 | 9,205,795 | ||||||||||||||||
TOTAL SIMPLE/BONUS OPTIONS | 20.59 | 39.28 | 65,446,703 | 12,956,367 | 13,379,117 | 700,704 | 64,323,249 |
(*) Refers to non-exercise due to the beneficiary’s option.
F.83 |
Summary of Changes in Share-Based Instruments (SBI)
Number | Vesting period | Prior balance 12/31/2011 | New SBI's | Converted into shares | Canceled | Balance at 12/31/2012 | ||||||||||||||||||
1st | 8/17/2010 | 8/16/2012 | 110,588 | - | (109,069 | ) | (1,519 | ) | - | |||||||||||||||
1st | 8/17/2010 | 8/16/2013 | 110,577 | - | - | (3,206 | ) | 107,371 | ||||||||||||||||
1st | 8/30/2010 | 8/16/2012 | 10,216 | - | (10,216 | ) | - | - | ||||||||||||||||
1st | 8/30/2010 | 8/16/2013 | 10,212 | - | - | - | 10,212 | |||||||||||||||||
1st | 9/30/2010 | 8/16/2012 | 3,971 | - | (3,971 | ) | - | - | ||||||||||||||||
1st | 9/30/2010 | 8/16/2013 | 3,970 | - | - | - | 3,970 | |||||||||||||||||
2nd | 9/30/2010 | 9/29/2012 | 424,163 | - | (412,329 | ) | (11,834 | ) | 0 | |||||||||||||||
2nd | 9/30/2010 | 9/29/2013 | 424,154 | - | - | (11,834 | ) | 412,320 | ||||||||||||||||
3rd | 2/28/2011 | 2/27/2011 | 444,040 | - | (444,040 | ) | - | - | ||||||||||||||||
3rd | 2/28/2011 | 2/27/2012 | 444,030 | - | - | (8,679 | ) | 435,351 | ||||||||||||||||
3rd | 2/28/2011 | 2/27/2013 | 444,020 | - | - | (8,678 | ) | 435,342 | ||||||||||||||||
4th | 2/24/2012 | 2/24/2013 | - | 468,852 | - | (4,671 | ) | 464,181 | ||||||||||||||||
4th | 2/24/2012 | 2/24/2014 | - | 468,836 | - | (4,671 | ) | 464,165 | ||||||||||||||||
4th | 2/24/2012 | 2/24/2015 | - | 468,821 | - | (4,671 | ) | 464,150 | ||||||||||||||||
Total | 2,429,941 | 1,406,509 | (979,625 | ) | (59,763 | ) | 2,797,062 |
Number | Vesting period | Prior balance 12/31/2010 | New SBI’s | Converted into shares | Cancelled | Balance at 12/31/2011 | |||||||||||||
1st | 08/17/2010 | 08/16/2011 | 114,980 | - | 110,598 | 4,382 | - | ||||||||||||
1st | 08/17/2010 | 08/16/2012 | 114,969 | - | - | 4,381 | 110,588 | ||||||||||||
1st | 08/17/2010 | 08/16/2013 | 114,958 | - | - | 4,381 | 110,577 | ||||||||||||
1st | 08/30/2010 | 08/16/2011 | 10,221 | - | 10,221 | - | - | ||||||||||||
1st | 08/30/2010 | 08/16/2012 | 10,216 | - | - | - | 10,216 | ||||||||||||
1st | 08/30/2010 | 08/16/2013 | 10,212 | - | - | - | 10,212 | ||||||||||||
1st | 09/30/2010 | 08/16/2011 | 3,972 | - | 3,972 | - | - | ||||||||||||
1st | 09/30/2010 | 08/16/2012 | 3,971 | - | - | - | 3,971 | ||||||||||||
1st | 09/30/2010 | 08/16/2013 | 3,970 | - | - | - | 3,970 | ||||||||||||
2nd | 09/30/2010 | 09/29/2011 | 424,172 | - | 424,172 | - | - | ||||||||||||
2nd | 09/30/2010 | 09/29/2012 | 424,163 | - | - | - | 424,163 | ||||||||||||
2nd | 09/30/2010 | 09/29/2013 | 424,154 | - | - | - | 424,154 | ||||||||||||
3rd | 02/28/2011 | 02/27/2011 | - | 444,040 | - | - | 444,040 | ||||||||||||
3rd | 02/28/2011 | 02/27/2012 | - | 444,030 | - | - | 444,030 | ||||||||||||
3rd | 02/28/2011 | 02/27/2013 | - | 444,020 | - | - | 444,020 | ||||||||||||
Total | 1,659,958 | 1,332,090 | 548,963 | 13,144 | 2,429,941 |
Number | Vesting period | Prior balance 12/31/2010 | New SBI's | Converted into shares | Canceled | Balance at 12/31/2011 | ||||||||||||||||||
1st | 8/17/2010 | 8/16/2011 | 114,980 | - | (110,598 | ) | (4,382 | ) | - | |||||||||||||||
1st | 8/17/2010 | 8/16/2012 | 114,969 | - | - | (4,381 | ) | 110,588 | ||||||||||||||||
1st | 8/17/2010 | 8/16/2013 | 114,958 | - | - | (4,381 | ) | 110,577 | ||||||||||||||||
1st | 8/30/2010 | 8/16/2011 | 10,221 | - | (10,221 | ) | - | - | ||||||||||||||||
1st | 8/30/2010 | 8/16/2012 | 10,216 | - | - | - | 10,216 | |||||||||||||||||
1st | 8/30/2010 | 8/16/2013 | 10,212 | - | - | - | 10,212 | |||||||||||||||||
1st | 9/30/2010 | 8/16/2011 | 3,972 | - | (3,972 | ) | - | - | ||||||||||||||||
1st | 9/30/2010 | 8/16/2012 | 3,971 | - | - | - | 3,971 | |||||||||||||||||
1st | 9/30/2010 | 8/16/2013 | 3,970 | - | - | - | 3,970 | |||||||||||||||||
2nd | 9/30/2010 | 9/29/2011 | 424,172 | - | (424,172 | ) | - | - | ||||||||||||||||
2nd | 9/30/2010 | 9/29/2012 | 424,163 | - | - | - | 424,163 | |||||||||||||||||
2nd | 9/30/2010 | 9/29/2013 | 424,154 | - | - | - | 424,154 | |||||||||||||||||
3rd | 2/28/2011 | 2/27/2011 | - | 444,040 | - | - | 444,040 | |||||||||||||||||
3rd | 2/28/2011 | 2/27/2012 | - | 444,030 | - | - | 444,030 | |||||||||||||||||
3rd | 2/28/2011 | 2/27/2013 | - | 444,020 | - | - | 444,020 | |||||||||||||||||
Total | 1,659,958 | 1,332,090 | (548,963 | ) | (13,144 | ) | 2,429,941 |
Number | Vesting period | New SBI’s | Converted into shares | Cancelled | Balance at 12/31/2010 | ||||||||||||||
1st | 08/17/2010 | 08/16/2011 | 123,231 | - | 8,251 | 114,980 | |||||||||||||
1st | 08/17/2010 | 08/16/2012 | 123,220 | - | 8,251 | 114,969 | |||||||||||||
1st | 08/17/2010 | 08/16/2013 | 123,209 | - | 8,251 | 114,958 | |||||||||||||
1st | 08/30/2010 | 08/16/2011 | 10,221 | - | - | 10,221 | |||||||||||||
1st | 08/30/2010 | 08/16/2012 | 10,216 | - | - | 10,216 | |||||||||||||
1st | 08/30/2010 | 08/16/2013 | 10,212 | - | - | 10,212 | |||||||||||||
1st | 09/30/2010 | 08/16/2011 | 3,972 | - | - | 3,972 | |||||||||||||
1st | 09/30/2010 | 08/16/2012 | 3,971 | - | - | 3,971 | |||||||||||||
1st | 09/30/2010 | 08/16/2013 | 3,970 | - | - | 3,970 | |||||||||||||
2nd | 09/30/2010 | 09/29/2011 | 424,172 | - | - | 424,172 | |||||||||||||
2nd | 09/30/2010 | 09/29/2012 | 424,163 | - | - | 424,163 | |||||||||||||
2nd | 09/30/2010 | 09/29/2013 | 424,154 | - | - | 424,154 | |||||||||||||
Total | 1,684,711 | - | 24,753 | 1,659,958 |
F.84 |
c) | Fair value and economic assumptions for cost recognition |
ITAÚ UNIBANCO HOLDING recognizes, at the grant date, the fair value of options through the Binomial method for simple options and the Black & Scholes method for bonus options. Economic assumptions used are as follows:
ITAÚ UNIBANCO HOLDING recognizes, at the grant date, the fair value of options through the Binomial method for simple options and the Black & Scholes method for partner options. Economic assumptions used are as follows: |
Exercise price: for the option exercise price, the exercise price previously agreed-upon at the time the option was issued is adopted, adjusted by the IGP-M variation.
Exercise price: for the option exercise price, the exercise price previously agreed-upon at the time the option was issued Is adopted, adjusted by the IGP-M variation. |
Price of the underlying asset: the share price of ITAÚ UNIBANCO HOLDING (ITUB4) used for calculation is the closing price at BM&FBOVESPA on the calculation base date.
Price of the underlying asset: the share price of ITAÚ UNIBANCO HOLDING (ITUB4) used for calculation is the closing price at BM&FBOVESPA on the calculation base date. |
Expected dividends the average annual return rate for the last three years, of the dividends, plus interest on capital of the ITUB4 share.
Expected dividends: is the average annual return rate for the last three years, of the dividends, plus interest on capital of the ITUB4 share. |
Risk-free interest rate: the risk-free rate uses is the IGP-M coupon rate at the expiration date of the option plan.
Risk-free interest rate: the risk-free rate used is the IGP-M coupon rate at the expiration date of the option plan. |
Expected volatility: calculated based on the standard deviation from the history of the last 84 monthly returns of closing prices of the ITUB4 share, released by BM&FBOVESPA, adjusted by the IGP-M variation.
Expected volatility: calculated based on the standard deviation from the history of the last 84 monthly returns of closing prices of the ITUB4 share, released by BM&FBOVESPA, adjusted by the IGP-M variation. |
Granting | Vesting | Exercise | Price of the underlying | Expected | Risk-free | Expected | ||||||||||||||||||||||
No. | Date | period | period until | asset | Fair value | dividends | interest rate | volatility | ||||||||||||||||||||
Simple options | ||||||||||||||||||||||||||||
37th | 1/13/2012 | 12/31/2015 | 12/31/2018 | 35.50 | 8.85 | 2.97 | % | 5.25 | % | 30.32 | % | |||||||||||||||||
38th | 1/13/2012 | 12/31/2016 | 12/31/2019 | 35.50 | 12.45 | 2.97 | % | 5.25 | % | 30.32 | % | |||||||||||||||||
38th | 4/27/2012 | 12/31/2016 | 12/31/2019 | 29.70 | 7.82 | 3.02 | % | 3.91 | % | 29.93 | % | |||||||||||||||||
Partner options (*) | ||||||||||||||||||||||||||||
15th | 2/24/2012 | 2/24/2015 | - | 36.00 | 32.94 | 2.97 | % | - | - | |||||||||||||||||||
15th | 2/24/2012 | 2/24/2017 | - | 36.00 | 31.04 | 2.97 | % | - | - | |||||||||||||||||||
16th | 2/24/2012 | 2/24/2015 | - | 36.00 | 32.94 | 2.97 | % | - | - | |||||||||||||||||||
16th | 2/24/2012 | 2/24/2017 | - | 36.00 | 31.04 | 2.97 | % | - | - | |||||||||||||||||||
17th | 6/14/2012 | 8/18/2014 | - | 29.57 | 27.69 | 3.02 | % | - | - | |||||||||||||||||||
17th | 6/14/2012 | 2/27/2014 | - | 29.57 | 28.08 | 3.02 | % | - | - | |||||||||||||||||||
17th | 6/14/2012 | 2/23/2015 | - | 29.57 | 27.26 | 3.02 | % | - | - | |||||||||||||||||||
17th | 6/14/2012 | 8/18/2016 | - | 29.57 | 26.06 | 3.02 | % | - | - | |||||||||||||||||||
17th | 6/14/2012 | 2/27/2016 | - | 29.57 | 26.44 | 3.02 | % | - | - | |||||||||||||||||||
17th | 6/14/2012 | 2/23/2017 | - | 29.57 | 25.65 | 3.02 | % | - | - |
Granting | Vesting | Exercise | Price of the underlying | Expected | Risk-free | Expected | ||||||||||||||||||||
No. | Date | period | period until | asset | Fair value | dividends | interest rate | volatility | ||||||||||||||||||
Simple Options | ||||||||||||||||||||||||||
37th | 04/19/2011 | 12/31/2015 | 12/31/2018 | 37.26 | 11.02 | 2.97 | % | 5.80 | % | 30.53 | % | |||||||||||||||
Bonus Options (*) | ||||||||||||||||||||||||||
12th | 02/28/2011 | 02/28/2014 | - | 37.00 | 33.85 | 2.97 | % | - | - | |||||||||||||||||
12th | 02/28/2011 | 02/28/2016 | - | 37.00 | 31.83 | 2.97 | % | - | - | |||||||||||||||||
13th | 8/19/2011 | 8/19/2014 | - | 26.65 | 24.39 | 2.97 | % | - | - | |||||||||||||||||
13th | 8/19/2011 | 8/19/2016 | - | 26.65 | 22.98 | 2.97 | % | - | - | |||||||||||||||||
14th | 04/11/2011 | 8/18/2014 | - | 32.62 | 30.04 | 2.97 | % | - | - | |||||||||||||||||
14th | 04/11/2011 | 8/18/2016 | - | 32.62 | 28.30 | 2.97 | % | - | - |
(*) The fair value of bonuspartner options is measured based on the fair value of ITAÚ UNIBANCO HOLDING share at the granting date.
d) | Accounting effects arising from options |
The exercise of stock options, pursuant to the plan’s regulation, resulted in the sale of preferred shares held in treasury. The accounting entries related to the plan are recorded during the vesting period, at the portion of the fair value of options granted with effect on income, and during the exercise of options, at the amount received from the option exercise price, reflected in stockholders’ equity.
The exercise of stock options, pursuant to the plan’s regulation, resulted in the sale of preferred shares held in treasury. The accounting entries related to the plan are recorded during the vesting period, at the portion of the fair value of options granted with effect on income, and during the exercise of options, at the amount received from the option exercise price, reflected in stockholders’ equity. |
The effect on income was R$ 163 (R$ 131 for the year end December 31, 2010), with a correspondence to "Additional Paid-in Capital – Granted Options Recognized".
The effect of Income for the period from January 1 to December 31, 2012 was R$ (177) (R$ (163) from January 1 to December 31, 2011 and R$ (131) from January 1 to December 31, 2010), with a corresponding amount to Additional Paid-in Capital – Granted Options Recognized. |
In the stockholders’ equity, the effect was as follows:
In the stockholders’ equity, the effect was as follows: |
12/31/2011 | 12/31/2010 | 12/31/2012 | 12/31/2011 | 12/31/2010 | ||||||||||||||||
Amount received for the sale of shares – exercised options | 353 | 406 | 209 | 353 | 406 | |||||||||||||||
(-) Cost of treasury shares sold | (268 | ) | (403 | ) | (262 | ) | (268 | ) | (403 | ) | ||||||||||
Effect of sale (*) | 85 | 3 | (53 | ) | 85 | 3 |
(*) Recorded in "Additional Paid-in Capital".Additional paid-in capital.
F.85 |
NOTE 2223 - INTEREST AND SIMILAR INCOME AND EXPENSE AND NET GAIN (LOSS) FROM FINANCIAL ASSETSINVESTIMENT SECURITIES AND LIABILITIESDERIVATIVES
a) | Interest and similar income |
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||
Central Bank compulsory deposits | 9,182 | 4,025 | 5,334 | 9,182 | 4,025 | |||||||||||||||
Interbank deposits | 890 | 824 | 1,042 | 890 | 824 | |||||||||||||||
Securities purchased under agreements to resell | 9,961 | 9,940 | 10,096 | 9,961 | 9,940 | |||||||||||||||
Financial assets held for trading | 14,676 | 8,028 | 13,324 | 14,676 | 8,028 | |||||||||||||||
Available-for-sale financial assets | 2,888 | 2,997 | 3,771 | 2,888 | 2,997 | |||||||||||||||
Held-to-maturity financial assets | 360 | 456 | 471 | 360 | 456 | |||||||||||||||
Loan and lease operations | 58,492 | 50,693 | 61,139 | 58,492 | 50,693 | |||||||||||||||
Other financial assets | 903 | 855 | 1,187 | 903 | 855 | |||||||||||||||
Total | 97,352 | 77,818 | 96,364 | 97,352 | 77,818 |
b) | Interest and similar expense |
��
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||
Deposits | (10,544 | ) | (12,186 | ) | (10,591 | ) | ||||||||||||||
Securities sold under repurchase agreements | (22,133 | ) | (15,774 | ) | (17,539 | ) | (22,133 | ) | (15,774 | ) | ||||||||||
Deposits | (14,757 | ) | (12,245 | ) | ||||||||||||||||
Financial expense from reserves for insurance and private pension | (5,239 | ) | (4,038 | ) | ||||||||||||||||
Interbank market debt | (5,536 | ) | (2,100 | ) | (5,747 | ) | (5,536 | ) | (2,100 | ) | ||||||||||
Institutional market debt | (7,934 | ) | (2,683 | ) | (7,693 | ) | (10,505 | ) | (4,337 | ) | ||||||||||
Financial expense from technical reserves for insurance and private pension plans | (6,513 | ) | (5,239 | ) | (4,038 | ) | ||||||||||||||
Other | (31 | ) | - | - | ||||||||||||||||
Total | (55,599 | ) | (36,840 | ) | 48,067 | ) | (55,599 | ) | (36,840 | ) |
c) | Net gain (loss) from |
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||
Financial assets and liabilities held for trading, including the innefective portion of hedge accounting related derivatives | 787 | 2,712 | ||||||||||||||||||
Financial assets held for trading and Derivatives, including the ineffective portion of hedge accounting related derivatives | 741 | 787 | 2,712 | |||||||||||||||||
Financial assets designated at fair value through profit or loss | 20 | (1 | ) | 17 | 20 | (1 | ) | |||||||||||||
Available-for-sale financial assets | 444 | 151 | 705 | 444 | 151 | |||||||||||||||
Total | 1,251 | 2,862 | 1,463 | 1,251 | 2,862 |
NOTE 2324 - BANKING SERVICE FEES
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||
Current account services | 5,445 | 4,275 | 5,272 | 5,445 | 4,275 | |||||||||||||||
Asset management fees | 2,745 | 2,570 | 2,159 | 2,745 | 2,570 | |||||||||||||||
Collection commissions | 1,047 | 1,076 | 1,176 | 1,047 | 1,076 | |||||||||||||||
Fees from credit card services | 7,446 | 6,408 | 7,888 | 7,446 | 6,408 | |||||||||||||||
Fees for guarantees issued and credit lines | 1,393 | 1,422 | 1,135 | 1,393 | 1,422 | |||||||||||||||
Brokerage commission | 361 | 471 | 243 | 361 | 471 | |||||||||||||||
Other | 973 | 870 | 1,071 | 973 | 870 | |||||||||||||||
Total | 19,410 | 17,092 | 18,944 | 19,410 | 17,092 |
F.86 |
NOTE 2425 - OTHER INCOME
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||
Gains on sale of assets held for sale, fixed assets and investments in unconsolidated companies | 271 | 280 | ||||||||||||||||||
Gains on sale of assets held for sale, fixed assets and investments in unconsolidated companies (*) | 1,684 | 271 | 280 | |||||||||||||||||
Recovery of expenses | 184 | 214 | 121 | 184 | 214 | |||||||||||||||
Reversal of provisions | 366 | 338 | 234 | 366 | 338 | |||||||||||||||
Other | 337 | 578 | 243 | 337 | 578 | |||||||||||||||
Total | 1,158 | 1,410 | 2,282 | 1,158 | 1,410 |
(*) Basically composed of the result of the full disposal of investment in Serasa S.A. in the amount of R$ 1,542.
NOTE 25 –26 - GENERAL AND ADMINISTRATIVE EXPENSES
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||
Personnel expenses | (13,373 | ) | (13,006 | ) | (14,332 | ) | (13,373 | ) | (13,006 | ) | ||||||||||
Compensation | (5,910 | ) | (5,585 | ) | (5,961 | ) | (5,910 | ) | (5,585 | ) | ||||||||||
Charges | (2,036 | ) | (1,978 | ) | (2,109 | ) | (2,036 | ) | (1,978 | ) | ||||||||||
Welfare benefits | (1,479 | ) | (1,442 | ) | (1,845 | ) | (1,479 | ) | (1,442 | ) | ||||||||||
Retirement plans and post-employment benefits (Note 28) | 82 | (129 | ) | |||||||||||||||||
Retirement plans and post-employment benefits (Note 29) | 760 | 82 | (129 | ) | ||||||||||||||||
Defined benefit | (192 | ) | (1,170 | ) | (125 | ) | (192 | ) | (1,170 | ) | ||||||||||
Defined contribution | 274 | 1,041 | 885 | 274 | 1,041 | |||||||||||||||
Stock option plan | (163 | ) | (131 | ) | ||||||||||||||||
Stock option plan (Note 21d) | (177 | ) | (163 | ) | (131 | ) | ||||||||||||||
Training | (259 | ) | (233 | ) | (242 | ) | (259 | ) | (233 | ) | ||||||||||
Employee profit sharing | (2,316 | ) | (2,285 | ) | (2,560 | ) | (2,316 | ) | (2,285 | ) | ||||||||||
Dismissals | (398 | ) | (343 | ) | (462 | ) | (398 | ) | (343 | ) | ||||||||||
Provision for labor claims (Note 31) | (894 | ) | (880 | ) | ||||||||||||||||
Provision for labor claims (Note 32) | (1,736 | ) | (894 | ) | (880 | ) | ||||||||||||||
Administrative expenses | (12,490 | ) | (12,351 | ) | (12,665 | ) | (12,490 | ) | (12,351 | ) | ||||||||||
Data processing and telecommunications | (3,450 | ) | (3,271 | ) | (3,523 | ) | (3,450 | ) | (3,271 | ) | ||||||||||
Third-party services | (3,014 | ) | (2,734 | ) | (3,255 | ) | (3,014 | ) | (2,734 | ) | ||||||||||
Installations | (1,135 | ) | (1,281 | ) | (962 | ) | (1,135 | ) | (1,281 | ) | ||||||||||
Advertising, promotions and publications | (981 | ) | (1,235 | ) | (942 | ) | (981 | ) | (1,235 | ) | ||||||||||
Rent | (916 | ) | (861 | ) | (974 | ) | (916 | ) | (861 | ) | ||||||||||
Transportation | (583 | ) | (596 | ) | (500 | ) | (583 | ) | (596 | ) | ||||||||||
Materials | (460 | ) | (456 | ) | (386 | ) | (460 | ) | (456 | ) | ||||||||||
Financial services | (438 | ) | (443 | ) | (512 | ) | (438 | ) | (443 | ) | ||||||||||
Security | (482 | ) | (451 | ) | (511 | ) | (482 | ) | (451 | ) | ||||||||||
Utilities | (295 | ) | (283 | ) | (290 | ) | (295 | ) | (283 | ) | ||||||||||
Travel | (189 | ) | (168 | ) | (188 | ) | (189 | ) | (168 | ) | ||||||||||
Other | (547 | ) | (572 | ) | (622 | ) | (547 | ) | (572 | ) | ||||||||||
Depreciation | (1,184 | ) | (1,166 | ) | (1,346 | ) | (1,184 | ) | (1,166 | ) | ||||||||||
Amortization | (984 | ) | (977 | ) | (844 | ) | (984 | ) | (977 | ) | ||||||||||
Insurance acquisition expenses | (1,268 | ) | (1,330 | ) | (1,253 | ) | (1,268 | ) | (1,330 | ) | ||||||||||
Other expenses | (6,375 | ) | (5,802 | ) | (7,640 | ) | (6,375 | ) | (5,802 | ) | ||||||||||
Expenses related to credit cards | (1,796 | ) | (1,697 | ) | (2,108 | ) | (1,796 | ) | (1,697 | ) | ||||||||||
Reimbursement related to acquisitions | (148 | ) | (116 | ) | (51 | ) | (148 | ) | (116 | ) | ||||||||||
Losses with third party frauds | (753 | ) | (558 | ) | ||||||||||||||||
Loss on Sale of Assets Held for Sale, fixed assets and investments in unconsolidated companies | (139 | ) | (226 | ) | ||||||||||||||||
Provision for civil lawsuits (Note 31) | (1,616 | ) | (1,327 | ) | ||||||||||||||||
Losses with third-party frauds | (734 | ) | (753 | ) | (558 | ) | ||||||||||||||
Loss on sale of assets held for sale, fixed assets and investments in unconsolidated companies (*) | (458 | ) | (139 | ) | (226 | ) | ||||||||||||||
Provision for civil lawsuits (Note 32) | (2,329 | ) | (1,616 | ) | (1,327 | ) | ||||||||||||||
Provision for tax and social security lawsuits | (1,038 | ) | (1,170 | ) | (1,004 | ) | (1,038 | ) | (1,170 | ) | ||||||||||
Refund of interbank costs | (195 | ) | (186 | ) | (215 | ) | (195 | ) | (186 | ) | ||||||||||
Impairment (Notes 14 and 15) | (45 | ) | (20 | ) | ||||||||||||||||
Impairment (Notes 15 and 16) | (7 | ) | (45 | ) | (20 | ) | ||||||||||||||
Other | (645 | ) | (502 | ) | (734 | ) | (645 | ) | (502 | ) | ||||||||||
Total | (35,674 | ) | (34,632 | ) | (38,080 | ) | (35,674 | ) | (34,632 | ) |
(*) Basically composed of the result of the full disposal of investment in Banco BPI S.A. in the amount of R$ (302).
F.87 |
NOTE 2627 - INCOME TAX AND SOCIAL CONTRIBUTION
ITAÚ UNIBANCO HOLDING and each of its subsidiaries file separate, for each fiscal year, corporate income tax returns for each fiscal year. Income tax in Brazil comprises federal income tax and social contribution on net income, which is a federal tax on income additional to federal income tax.income.
a) | Composition of income tax and social contribution |
The amounts recorded as income taxI - Demonstration of Income Tax and social contribution expense in the consolidated financial statements are reconciled to the statutory rates, as follows:Social Contribution expense:
Current income tax and social contribution | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||
Income before income tax and social contribution | 18,251 | 18,030 | ||||||
Charges (income tax and social contribution) at the rates in effect (Note 2.4n) | (7,300 | ) | (7,212 | ) | ||||
Increase/decrease to income tax and social contribution charges arising from: | 3,659 | 1,676 | ||||||
Share of comprehensive income of unconsolidated companies, net | 45 | 113 | ||||||
Foreign exchange variation on assets and liabilities abroad | 916 | (255 | ) | |||||
Interest on capital | 1,662 | 1,496 | ||||||
Dividends, interest on external debt bonds and tax incentives | 269 | 289 | ||||||
Other (*) | 767 | 33 | ||||||
Total income tax and social contribution | (3,641 | ) | (5,536 | ) |
(*) Includes the Program for Cash Settlement or Installment Payment of Federal Taxes – Law No. 11,941/09.
01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||
Income before income tax and social contribution | 17,416 | 18,251 | 18,030 | |||||||||
Charges (income tax and social contribution) at the rates in effect (Note 2.4 n) | (6,966 | ) | (7,300 | ) | (7,212 | ) | ||||||
Increase/decrease to income tax and social contribution charges arising from: | ||||||||||||
Share of profit or (loss) of unconsolidated companies, net | 68 | 45 | 113 | |||||||||
Foreign exchange variation on assets and liabilities abroad | 447 | 916 | (255 | ) | ||||||||
Interest on capital | 1,789 | 1,662 | 1,496 | |||||||||
Dividends, interest on external debt bonds and tax incentives | 188 | 269 | 289 | |||||||||
Other | 249 | 767 | 33 | |||||||||
Total income tax and social contribution | (4,225 | ) | (3,641 | ) | (5,536 | ) |
b) | Deferred taxes |
I - The deferred tax asset balance and respective changes are as follows:
Realization / | ||||||||||||||||||||||||||||||||
12/31/2010 | Reversal | Increase | 12/31/2011 | 12/31/2011 | Realization / Reversal | Increase | 12/31/2012 | |||||||||||||||||||||||||
Reflected in income | 25,788 | (10,948 | ) | 13,626 | 28,466 | 28,466 | (11,438 | ) | 14,032 | 31,060 | ||||||||||||||||||||||
Related to income tax and social contribution loss carryforwards | 2,998 | (1,330 | ) | 2,520 | 4,188 | |||||||||||||||||||||||||||
Allowance for loan losses | 10,423 | (4,318 | ) | 6,784 | 12,889 | |||||||||||||||||||||||||||
Related to income tax and social contribution tax carryforwards | 4,188 | (1,480 | ) | 1,247 | 3,955 | |||||||||||||||||||||||||||
Allowance for loan and lease losses | 12,889 | (4,837 | ) | 8,223 | 16,275 | |||||||||||||||||||||||||||
Adjustment to market value of derivative financial instruments | 22 | (39 | ) | 319 | 302 | 302 | (302 | ) | 229 | 229 | ||||||||||||||||||||||
Goodwill on purchase of investments | 5,905 | (2,896 | ) | 1,252 | 4,261 | 4,261 | (1,923 | ) | 423 | 2,761 | ||||||||||||||||||||||
Legal liabilities – tax and social security | 1,313 | (39 | ) | 143 | 1,417 | 1,417 | (4 | ) | 232 | 1,645 | ||||||||||||||||||||||
Provision for contingent liabilities | 2,418 | (1,024 | ) | 1,372 | 2,766 | 2,766 | (1,585 | ) | 2,306 | 3,487 | ||||||||||||||||||||||
Civil lawsuits | 1,038 | (349 | ) | 496 | 1,185 | 1,185 | (633 | ) | 870 | 1,422 | ||||||||||||||||||||||
Labor claims: | 884 | (608 | ) | 708 | 984 | |||||||||||||||||||||||||||
Tax and social security contributions | 462 | (53 | ) | 168 | 577 | |||||||||||||||||||||||||||
Labor claims | 984 | (844 | ) | 1,084 | 1,224 | |||||||||||||||||||||||||||
Tax and social security | 577 | (107 | ) | 352 | 822 | |||||||||||||||||||||||||||
Other | 34 | (14 | ) | - | 20 | 20 | (1 | ) | - | 19 | ||||||||||||||||||||||
Adjustments of operations carried out in futures settlement market | 47 | (45 | ) | 9 | 11 | 11 | (4 | ) | 1 | 8 | ||||||||||||||||||||||
Provision related to health insurance operations | 242 | - | 7 | 249 | 249 | - | 5 | 254 | ||||||||||||||||||||||||
Other | 2,420 | (1,257 | ) | 1,220 | 2,383 | 2,383 | (1,303 | ) | 1,366 | 2,446 | ||||||||||||||||||||||
Reflected in other comprehensive income | 132 | (66 | ) | 278 | 344 | |||||||||||||||||||||||||||
Reflected in stockholders’ equity | 344 | (192 | ) | 3,791 | 3,943 | |||||||||||||||||||||||||||
Purchase of additional interest from non-controlling stockholders – Redecard (Note 3 c) | - | - | 3,791 | 3,791 | ||||||||||||||||||||||||||||
Adjustment to market value of available-for-sale securities | 344 | (192 | ) | - | 152 | |||||||||||||||||||||||||||
Total (*) | 25,920 | (11,014 | ) | 13,904 | 28,810 | 28,810 | (11,630 | ) | 17,823 | 35,003 |
(*) Deferred income tax and social contribution assets and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 28,381 (R$ 22,745 at December 31, 2011) and R$ 4,319.3,038 ( R$ 4,319 at December 31, 2011).
Realization / | ||||||||||||||||||||||||||||||||
01/01/2010 | Reversal | Increase | 12/31/2010 | 12/31/2010 | Realization / Reversal | Increase | 12/31/2011 | |||||||||||||||||||||||||
Reflected in income | 26,711 | (9,330 | ) | 8,407 | 25,788 | 25,788 | (10,948 | ) | 13,626 | 28,466 | ||||||||||||||||||||||
Related to income tax and social contribution loss carryforwards | 3,204 | (418 | ) | 212 | 2,998 | |||||||||||||||||||||||||||
Allowance for loan losses | 9,264 | (4,132 | ) | 5,291 | 10,423 | |||||||||||||||||||||||||||
Related to income tax and social contribution tax carryforwards | 2,998 | (1,330 | ) | 2,520 | 4,188 | |||||||||||||||||||||||||||
Allowance for loan and lease losses | 10,423 | (4,318 | ) | 6,784 | 12,889 | |||||||||||||||||||||||||||
Adjustment to market value of derivative financial instruments | 208 | (217 | ) | 31 | 22 | 22 | (39 | ) | 319 | 302 | ||||||||||||||||||||||
Goodwill on purchase of investments | 7,704 | (1,870 | ) | 71 | 5,905 | 5,905 | (2,896 | ) | 1,252 | 4,261 | ||||||||||||||||||||||
Legal liabilities – tax and social security | 1,868 | (632 | ) | 77 | 1,313 | 1,313 | (39 | ) | 143 | 1,417 | ||||||||||||||||||||||
Provision for contingent liabilities | 2,321 | (958 | ) | 1,055 | 2,418 | 2,418 | (1,024 | ) | 1,372 | 2,766 | ||||||||||||||||||||||
Civil lawsuits | 897 | (639 | ) | 780 | 1,038 | 1,038 | (349 | ) | 496 | 1,185 | ||||||||||||||||||||||
Labor claims: | 843 | (119 | ) | 160 | 884 | |||||||||||||||||||||||||||
Tax and social security contributions | 477 | (130 | ) | 115 | 462 | |||||||||||||||||||||||||||
Labor claims | 884 | (608 | ) | 708 | 984 | |||||||||||||||||||||||||||
Tax and social security | 462 | (53 | ) | 168 | 577 | |||||||||||||||||||||||||||
Other | 104 | (70 | ) | - | 34 | 34 | (14 | ) | - | 20 | ||||||||||||||||||||||
Adjustments of operations carried out in futures settlement market | 12 | - | 35 | 47 | 47 | (45 | ) | 9 | 11 | |||||||||||||||||||||||
Provision related to health insurance operations | 238 | - | 4 | 242 | 242 | - | 7 | 249 | ||||||||||||||||||||||||
Other | 1,892 | (1,103 | ) | 1,631 | 2,420 | 2,420 | (1,257 | ) | 1,220 | 2,383 | ||||||||||||||||||||||
Reflected in other comprehensive income | 83 | (46 | ) | 95 | 132 | |||||||||||||||||||||||||||
Reflected in stockholders’ equity - Adjustment to market value of available-for-sale securities | 132 | (66 | ) | 278 | 344 | |||||||||||||||||||||||||||
Total (*) | 26,794 | (9,376 | ) | 8,502 | 25,920 | 25,920 | (11,014 | ) | 13,904 | 28,810 |
(*) Deferred income tax and social contribution assets and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 20,16922,745 and R$ 5,365.4,319 .
F.88 |
II - Provision for deferred tax liability balance and respective changes are shown as follows:
II- | The provision for deferred tax liability balance and respective changes are as follows: |
Realization / | ||||||||||||||||||||||||||||||||
12/31/2010 | Reversal | Increase | 12/31/2011 | 12/31/2011 | Realization/ reversal | Increase | 12/31/2012 | |||||||||||||||||||||||||
Reflected in income | 10,395 | (2,919 | ) | 2,409 | 9,885 | 9,885 | (3,385 | ) | 1,872 | 8,372 | ||||||||||||||||||||||
Depreciation in excess – finance lease | 8,295 | (2,365 | ) | 1,630 | 7,560 | 7,560 | (2,785 | ) | 678 | 5,452 | ||||||||||||||||||||||
Taxation of results abroad – capital gains | 34 | - | 44 | 78 | 78 | - | 89 | 167 | ||||||||||||||||||||||||
Adjustments of operations carried out in futures settlement market | 43 | (3 | ) | 43 | 83 | 83 | (2 | ) | 35 | 117 | ||||||||||||||||||||||
Adjustment to market value of securities and derivative financial instruments | 264 | (264 | ) | 175 | 175 | |||||||||||||||||||||||||||
Adjustments to market value of securities and derivative financial instruments | 175 | (175 | ) | 234 | 234 | |||||||||||||||||||||||||||
Restatement of escrow deposits and contingent liabilities | 701 | (157 | ) | 262 | 806 | 806 | (225 | ) | 330 | 911 | ||||||||||||||||||||||
Pension plans | 543 | - | 51 | 594 | 594 | - | 321 | 915 | ||||||||||||||||||||||||
Other | 515 | (130 | ) | 204 | 589 | 589 | (199 | ) | 185 | 575 | ||||||||||||||||||||||
Reflected in other comprehensive income | 721 | (474 | ) | 252 | 499 | |||||||||||||||||||||||||||
Reflected in stockholders’ equity accounts – adjustment to market value of available-for-sale securities | 499 | - | 789 | 1,288 | ||||||||||||||||||||||||||||
Total (*) | 11,116 | (3,393 | ) | 2,661 | 10,384 | 10,384 | (3,385 | ) | 2,660 | 9,660 |
(*) Deferred income tax and social contribution assetsasset and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 28,381 (R$ 22,745 at 12/31/2011) and R$ 3,038 (R$ 4,319 at 12/31/2011).
12/31/2010 | Realization/ reversal | Increase | 12/31/2011 | |||||||||||||
Reflected in income | 10,395 | (2,919 | ) | 2,409 | 9,885 | |||||||||||
Depreciation in excess – finance lease | 8,295 | (2,365 | ) | 1,630 | 7,560 | |||||||||||
Taxation of results abroad – capital gains | 34 | - | 44 | 78 | ||||||||||||
Adjustments of operations carried out in futures settlement market | 43 | (3 | ) | 43 | 83 | |||||||||||
Adjustments to market value of securities and derivative financial instruments | 264 | (264 | ) | 175 | 175 | |||||||||||
Restatement of escrow deposits and contingent liabilities | 701 | (157 | ) | 262 | 806 | |||||||||||
Pension plans | 543 | - | 51 | 594 | ||||||||||||
Other | 515 | (130 | ) | 204 | 589 | |||||||||||
Reflected in stockholders’ equity accounts – adjustment to market value of available-for-sale securities | 721 | (474 | ) | 252 | 499 | |||||||||||
Total (*) | 11,116 | (3,393 | ) | 2,661 | 10,384 |
(*) Deferred income tax and social contribution asset and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 22,745 and R$ 4,319.
Realization / | ||||||||||||||||
01/01/2010 | Reversal | Increase | 12/31/2010 | |||||||||||||
Reflected in income | 9,458 | (2,437 | ) | 3,374 | 10,395 | |||||||||||
Depreciation in excess – finance lease | 7,568 | (2,075 | ) | 2,802 | 8,295 | |||||||||||
Taxation of results abroad – capital gains | 27 | - | 7 | 34 | ||||||||||||
Adjustments of operations carried out in futures settlement market | 36 | (7 | ) | 14 | 43 | |||||||||||
Adjustment to market value of securities and derivative financial instruments | 131 | (131 | ) | 264 | 264 | |||||||||||
Restatement of escrow deposits and contingent liabilities | 585 | (109 | ) | 225 | 701 | |||||||||||
Pension plans | 564 | (21 | ) | - | 543 | |||||||||||
Other | 547 | (94 | ) | 62 | 515 | |||||||||||
Reflected in other comprehensive income | 519 | (9 | ) | 211 | 721 | |||||||||||
Total (*) | 9,977 | (2,446 | ) | 3,585 | 11,116 |
(*) Deferred income tax and social contribution assets and liabilities are recorded in the balance sheet offset by taxable entity and total R$ 20,169 and R$ 5,365 at December 31, 2010.
III - | The |
Deferred tax assets | Deferred tax assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax loss/social | Temporary differences | % | Tax loss/social contribution loss carryforwards | % | Total | % | Deferred tax liabilities | % | Net deferred taxes | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Temporary | contribution on loss | Deferred tax | Net deferred | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
differences | carryforwards | Total | liabilities | taxes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2012 | 8,567 | 1,058 | 9,625 | (2,695 | ) | 6,930 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 5,235 | 1,230 | 6,465 | (2,927 | ) | 3,538 | 11,203 | 36 | % | 572 | 14 | % | 11,775 | 34 | % | (2,302 | ) | 24 | % | 9,473 | 37 | % | ||||||||||||||||||||||||||||||||||||||
2014 | 3,418 | 1,136 | 4,554 | (2,083 | ) | 2,471 | 3,663 | 12 | % | 571 | 14 | % | 4,234 | 12 | % | (1,615 | ) | 17 | % | 2,619 | 10 | % | ||||||||||||||||||||||||||||||||||||||
2015 | 2,478 | 698 | 3,176 | (978 | ) | 2,198 | 5,357 | 17 | % | 405 | 10 | % | 5,762 | 16 | % | (2,052 | ) | 21 | % | 3,710 | 15 | % | ||||||||||||||||||||||||||||||||||||||
2016 | 1,738 | 46 | 1,784 | (614 | ) | 1,170 | 2,420 | 8 | % | 1,164 | 29 | % | 3,584 | 10 | % | (1,002 | ) | 10 | % | 2,582 | 10 | % | ||||||||||||||||||||||||||||||||||||||
after 2016 | 3,186 | 20 | 3,206 | (1,087 | ) | 2,119 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 1,424 | 5 | % | 1,141 | 29 | % | 2,565 | 7 | % | (631 | ) | 7 | % | 1,934 | 8 | % | ||||||||||||||||||||||||||||||||||||||||||||
After 2017 | 6,981 | 22 | % | 102 | 4 | % | 7,083 | 21 | % | (2,058 | ) | 21 | % | 5,025 | 20 | % | ||||||||||||||||||||||||||||||||||||||||||||
Total | 24,622 | 4,188 | 28,810 | (10,384 | ) | 18,426 | 31,048 | 100 | % | 3,955 | 100 | % | 35,003 | 100 | % | (9,660 | ) | 100 | % | 25,343 | 100 | % | ||||||||||||||||||||||||||||||||||||||
Present value (*) | 21,523 | 3,764 | 25,287 | (9,127 | ) | 16,160 | 27,151 | 3,514 | 30,665 | (8,480 | ) | 22,185 |
(*) The average funding rate, net of tax effects, was used to determine the present value.
The projections of future taxable income include estimates related to macroeconomic variables, exchange rates, interest rates, volume of financial operations and services fees and others which can vary in relation to actual data and amounts.
Net income in the financial statements is not directly related to taxable income, due to differences between accounting criteria and tax legislation, besides corporate aspects. Accordingly, it is recommended that the trend of the realization of deferred tax assets arising from temporary differences, and tax loss carryforwards should not be not used as an indication of future net income.
There are no deferred tax assets and liabilities which have not been recognized.
F.89 |
NOTE 2728 – EARNINGS PER SHARE
Basic and diluted earnings per share were computed as shown in the table below for the periods indicated. Basic earnings per share are computed by dividing the net income attributable to the stockholdersstockholder of ITAÚ UNIBANCO HOLDING by the average number of shares for the period, and by excluding the number of shares purchased and held as treasury shares.shares by the company. Diluted earnings per share are computed inon a similar way, but with the adjustment made in the denominator when assuming the conversion of all shares that may dilute earnings.be diluted.
Net income attributable to owners of the parent company – Basic earnings per share | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | |||||||||||||||
Net income | 13,837 | 11,708 | 12,634 | 13,837 | 11,708 | |||||||||||||||
Minimum non-cumulative dividend on preferred shares in accordance with our bylaws | (49 | ) | (49 | ) | (49 | ) | (49 | ) | (49 | ) | ||||||||||
Subtotal | 13,788 | 11,659 | 12,585 | 13,788 | 11,659 | |||||||||||||||
Retained earnings to be distributed to common equity owners in an amount per share equal to the minimum dividend payable to preferred equity owners | (50 | ) | (50 | ) | (50 | ) | (50 | ) | (50 | ) | ||||||||||
Subtotal | 13,738 | 11,609 | 12,535 | 13,738 | 11,609 | |||||||||||||||
Retained earnings to be distributed to common and preferred equity owners on a pro-rata basis | ||||||||||||||||||||
To common equity owners | 6,944 | 5,859 | 6,352 | 6,944 | 5,859 | |||||||||||||||
To preferred equity owners | 6,794 | 5,750 | 6,183 | 6,794 | 5,750 | |||||||||||||||
Total net income available to common equity owners | 6,994 | 5,909 | 6,402 | 6,994 | 5,909 | |||||||||||||||
Total net income available to preferred equity owners | 6,843 | 5,799 | 6,232 | 6,843 | 5,799 | |||||||||||||||
Weighted average number of shares outstanding | ||||||||||||||||||||
Common shares | 2,289,284,275 | 2,289,284,273 | 2,289,284,300 | 2,289,284,275 | 2,289,284,273 | |||||||||||||||
Preferred shares | 2,240,026,557 | 2,246,784,818 | 2,228,675,507 | 2,240,026,557 | 2,246,784,818 | |||||||||||||||
Earnings per share - Basic – R$ | ||||||||||||||||||||
Common shares | 3.06 | 2.58 | 2.80 | 3.06 | 2.58 | |||||||||||||||
Preferred shares | 3.06 | 2.58 | 2.80 | 3.06 | 2.58 |
Net income attributable to owners of the parent company – Diluted earnings per share | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | |||||||||||||||
Total net income available to preferred equity owners | 6,843 | 5,799 | 6,232 | 6,843 | 5,799 | |||||||||||||||
Dividend on preferred shares after dilution effects | 17 | 17 | 15 | 17 | 17 | |||||||||||||||
Net income available to preferred equity owners considering preferred shares after the dilution effect | 6,860 | 5,816 | 6,247 | 6,860 | 5,816 | |||||||||||||||
Total net income available to common equity owners | 6,994 | 5,909 | ||||||||||||||||||
Total net income available to ordinary equity owners | 6,402 | 6,994 | 5,909 | |||||||||||||||||
Dividend on preferred shares after dilution effects | (17 | ) | (17 | ) | (15 | ) | (17 | ) | (17 | ) | ||||||||||
Net income available to common equity owners considering preferred shares after the dilution effect | 6,977 | 5,892 | ||||||||||||||||||
Net income available to ordinary equity owners considering preferred shares after the dilution effect | 6,387 | 6,977 | 5,892 | |||||||||||||||||
- | ||||||||||||||||||||
Adjusted weighted average number of shares | ||||||||||||||||||||
Adjusted weighted average of shares | ||||||||||||||||||||
Common shares | 2,289,284,275 | 2,289,284,273 | 2,289,284,300 | 2,289,284,275 | 2,289,284,273 | |||||||||||||||
Preferred shares | 2,251,061,836 | 2,260,240,831 | 2,239,708,939 | 2,251,061,836 | 2,260,240,831 | |||||||||||||||
Preferred shares | 2,240,026,557 | 2,246,784,818 | 2,228,675,507 | 2,240,026,557 | 2,246,784,818 | |||||||||||||||
Incremental shares from stock options granted under our Stock Option Plan | 11,035,279 | 13,456,013 | 11,033,432 | 11,035,279 | 13,456,013 | |||||||||||||||
- | ||||||||||||||||||||
Earnings per share - Diluted – R$ | ||||||||||||||||||||
Common shares | 3.05 | 2.57 | 2.79 | 3.05 | 2.57 | |||||||||||||||
Preferred shares | 3.05 | 2.57 | 2.79 | 3.05 | 2.57 |
Potential anti-dilution effects of shares under our stock option plan, which were excluded from the calculation of diluted earnings per share, totaled 16,575,701 preferred shares at 12/31/2012, 11,846,655 preferred shares at December 31, 12/31/2011 and 3,549,386 preferred shares at December 31, 12/31/2010.
F.90 |
NOTE 28 –EMPLOYEE29 – EMPLOYEE BENEFITS
As prescribed in IAS 19, we present the policies of ITAÚ UNIBANCO HOLDING and its subsidiaries regarding employee benefits, as well as the accounting procedures adopted:
ITAÚ UNIBANCO HOLDING and some of its subsidiaries sponsor defined benefit plans, including variable contribution plans, the basic purpose of which is to provide benefits that, in general, represent a life annuity benefit, and may be converted into survivorship annuities, according to the plan's regulation. Theyregulation.They also sponsor defined contribution plans, the benefit of which is calculated based on the accumulated balance of individual accounts at the eligibility date, according to the plan’s regulation, onewhich does not require an actuarial calculation.
Employees hired up to July 31, 2002, by Itaú, and up to February 27, 2009, by Unibanco, are beneficiaries of the above-mentioned plans. Asplans.As regards the new employees hired after these dates, they have the option to voluntarily participate in a defined contribution plan (PGBL), managed by Itaú Vida e Previdência S.A.
a) | Description of the plans |
The plans’ assets are invested in separate funds, with the exclusive purpose of providing benefits to eligible employees, and they are maintained independently from ITAÚ UNIBANCO HOLDING.These funds are maintained by closed-end private pension entities with independent legal structures, as detailed below:
F.91 |
Entity | ||
Fundação Itaubanco - Previdência Complementar | Supplementary retirement plan – PAC (1) | |
Franprev benefit plan - PBF (1) | ||
002 benefit plan - PB002 (1) | ||
Itaulam basic plan - PBI (1) | ||
Itaulam Supplementary Plan - PSI (2) | ||
Itaubanco | ||
Itaubank Retirement Plan (3) | ||
Itaú Defined Benefit Plan (1) | ||
Itaú Defined Contribution Plan (2) | ||
Unibanco Pension Plan (3) | ||
Fundação Bemgeprev | Supplementary Retirement Plan – Flexible Premium Annuity (ACMV) (1) | |
Funbep Fundo de Pensão Multipatrocinado | Funbep I Benefit Plan (1) | |
Funbep II Benefit Plan (2) | ||
Caixa de Previdência dos Funcionários do Banco Beg - Prebeg | Prebeg Benefit Plan (1) | |
Múltipla - Multiempresas de Previdência Complementar | Redecard Basic Retirement Plan (1) | |
Redecard Supplementary Retirement Plan (2)
| ||
(4) | ||
UBB-PREV - Previdência Complementar | ||
(5) | ||
Banorte Fundação Manoel Baptista da Silva de Seguridade Social | Benefit Plan II (1) |
(1) Defined benefit plan.plan;
(2) Variable contribution plan.plan;
(3) Defined contribution plan.plan;
(4) The Itaubanco Defined Contribution Plan was set up as a result of the partial spin-off of the Supplementary retirement plan - PAC, and has been offered to former participants of the latter, which are not receiving supplementary retirement benefits from PAC. The participants who have not joined the Itaubanco Defined Contribution Plan, as well as those contributing to the PAC, will remain in this latter, without any continuity, and will have their vested rights guaranteed. As set forth in the Itaubanco Defined Contribution Plan regulation, the migration period ended on May 8, 2010.
5) Redecard Pension Plan was changed in January 2011 from Defined Benefit - BD to Defined Contribution - CD, with adhesion of 95% of employees. This plan enables the employee to contribute monthly with a defined percentage to be deducted from the monthly compensation and, additionally, the company contributes with 100% of the option chosen by the employees, limited to 9% of their income.
(5) Plan arising from the process of merging the IJMS Plan by the Basic Plan, both managed by UBB Prev, approved by the Superintendency of Supplementary Social Security(PREVIC) on December 28, 2012.
F.92 |
b) | Defined benefit plans |
I - | Main assumptions used in actuarial valuation of |
12/31/ | 12/31/ | 2011 | |||||||
Discount rate (1) | 8.16% a.a. | 9.72% | a.a. | ||||||
Expected return rate on assets (1) | 8.16% a.a. | 11.32% | a.a. | ||||||
Mortality table | AT-2000 | AT-2000 | |||||||
Turnover | Exp.Itaú 2008/2010 | ||||||||
Future salary growth | 7.12% | 7.12% | a.a. | ||||||
Growth of the pension fund and social security benefits | 4.00% | 4.00% | a.a. | ||||||
Inflation | 4.00% | 4.00% | a.a. | ||||||
Actuarial method | Projected Unit Credit | Projected Unit Credit |
(1) The Discount Rate and Expected Return Rate on Assets assumptions were changed in order to be consistent with the economic scenario observed at the balance sheet date.
(2) The mortality tables adopted correspond to those disclosed by SOA – Society of Actuaries, the North-American Entityentity which corresponds to IBA – Brazilian Institute of Actuarial Science, which reflects a 10% increase in the probabilities of survival as compared to the respective basic tables.
The life expectancy in years by the AT-2000 mortality table for participants of 55 years of age is 27 and 31 years for men and women, respectively.
(2)(3) The turnover assumption is based on the effective experience of active participants linked to ITAÚ UNIBANCO HOLDING, resulting in the average of 2.4 % p.a. based on the 2008/2010 experience.
(3)(4) Using the Projected Unit Credit method, the mathematical reserve is calculated as the current projected benefit amount multiplied by the ratio between the length of service at the assessment date and the length of service that will be reached at the date when the benefit is granted. The cost is determined taking into account the current projected benefit amount distributed over the years that each participant is employed.
II – | Management of defined benefit plan assets |
The management of the funds of the closed-end private pension entities seeks to achieve the long-term balance between pension assets and liabilities by exceeding the actuarial goals.
As regards the assets guaranteeing mathematical reserves, management should ensure the payment capacity of benefits in the long-term by avoiding the risk of mismatching assets and liabilities in each pension plan.
F.93 |
The allocation of plan assets and the allocation target by type of asset are as follows:
At | % Allocation | At | % Allocation | |||||||||||||||||||||||||||||||||||||||||||||
Types | 12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2011 | 12/31/2010 | 01/01/2010 | 2012 Target | 12/31/2012 | 12/31/2011 | 12/31/2012 | 12/31/2011 | 2013 Target | ||||||||||||||||||||||||||||||||||||
Fixed income securities | 10,341 | 9,818 | 12,909 | 87.85 | % | 87.43 | % | 87.12 | % | 53% to 100% | 13,736 | 10,341 | 91.14 | % | 87.85 | % | 53% to 100% | |||||||||||||||||||||||||||||||
Variable income securities | 1,051 | 1,005 | 1,533 | 8.93 | % | 8.95 | % | 10.35 | % | 0% to 25% | 763 | 1,051 | 5.06 | % | 8.93 | % | 0% to 20% | |||||||||||||||||||||||||||||||
Structured investments | 14 | 11 | 13 | 0.11 | % | 0.10 | % | 0.09 | % | 0% to 10% | 16 | 14 | 0.11 | % | 0.11 | % | 0% to 10% | |||||||||||||||||||||||||||||||
Foreign investments | - | 4 | 4 | 0.00 | % | 0.04 | % | 0.03 | % | 0% to 3% | ||||||||||||||||||||||||||||||||||||||
Foreign Investments | - | - | 0.00 | % | 0.00 | % | 0% to 5% | |||||||||||||||||||||||||||||||||||||||||
Real estate | 344 | 368 | 335 | 2.92 | % | 3.28 | % | 2.25 | % | 0% to 6% | 532 | 344 | 3.53 | % | 2.92 | % | 0% to 7% | |||||||||||||||||||||||||||||||
Loans to participants | 23 | 23 | 23 | 0.19 | % | 0.20 | % | 0.16 | % | 0% to 5% | 25 | 23 | 0.17 | % | 0.19 | % | 0% to 5% | |||||||||||||||||||||||||||||||
Total | 11,773 | 11,229 | 14,817 | 100.00 | % | 100.00 | % | 100.00 | % | 15,072 | 11,773 | 100.00 | % | 100.00 | % |
The defined benefit plan assets include shares of ITAÚ UNIBANCO HOLDING, its main parent company (ITAÚSA) and of subsidiaries of the latter, with a fair value of R$ 589 (R$ 531 (R$ 542 at December 31, 2010 and R$ 1,077 at January 1, 2010)12/31/2011), and real estate rented to Group companies, with a fair value of R$ 498 (R$ 298 (R$ 309 at December 31, 2010 and R$ 301 at January 1, 2010)12/31/2011).
The expected income from portfolios of benefit plan assets is based on projections of returns for each of the asset types detailed above. For the fixed-income segment, the interest rates adopted were taken from long-term securities included in the portfolios, and the interest-ratesinterest rates practiced in the market at the balance sheet date. For the variable-income segment, the 12-month expected returns of the market for this segment were adopted. For the real estate segment, the cash inflows of expected rental payments for the following 12 months were adopted. For all segments, the basis adopted was the portfolio positions at the balance sheet date.
III- | Net amount recognized in the balance sheet |
We present below the calculation of the net amount recognized in the balance sheet:
12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||
1 - Net assets of the plans | 11,773 | 11,229 | 14,817 | |||||||||
2 - Actuarial liabilities | (10,413 | ) | (9,871 | ) | (11,233 | ) | ||||||
3- Surplus (1-2) | 1,360 | 1,358 | 3,584 | |||||||||
4- Asset ceiling (*) | (1,263 | ) | (1,114 | ) | (2,212 | ) | ||||||
5 - Net amount recognized in the balance sheet (3-4) | 97 | 244 | 1,372 | |||||||||
Amount recognized in assets (Note 19a) | 342 | 367 | 1,508 | |||||||||
Amount recognized in liabilities | (245 | ) | (123 | ) | (136 | ) |
12/31/2012 | 12/31/2011 | |||||||
1 - Net assets of the plans | 15,072 | 11,773 | ||||||
2- Actuarial liabilities | (12,906 | ) | (10,413 | ) | ||||
3- Surplus (1-2) | 2,166 | 1,360 | ||||||
4- Asset ceiling (*) | (2,137 | ) | (1,263 | ) | ||||
5- Net amount recognized in the balance sheet | 29 | 97 | ||||||
Amount recognized in assets (Note 20a) | 487 | 342 | ||||||
Amount recognized in liabilities (Note 20b) | (458 | ) | (245 | ) |
(*) Corresponds to the excess of present value of the available economic benefit, in conformity with itemparagraph 58 of IAS 19.
F.94 |
In conformity with the exemption prescribed
IV - Change in IFRS 1, gainsplan net assets, defined benefit obligations, and losses accumulated through January 1, 2010 were recognized in retained earnings, net of tax effects, and taking into account the adjustments in subsidiaries. The actuarial gains and losses for the year were recognized in income under “General and administrative expenses”.surplus
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||
Plan net assets | Defined benefit obligation | Surplus | Plan net assets | Defined benefit obligation | Surplus | |||||||||||||||||||
Present value – beginning of the period | 11,773 | (10,413 | ) | 1,360 | 11,229 | (9,871 | ) | 1,358 | ||||||||||||||||
Inclusion of Itaú Defined Contribution Plan | - | - | - | 12 | (13 | ) | (1 | ) | ||||||||||||||||
Effects of the partial spin-off of Redecard (1) | - | - | - | (44 | ) | 42 | (2 | ) | ||||||||||||||||
Expected return on assets (2) | 1,303 | - | 1,303 | 1,342 | - | 1,342 | ||||||||||||||||||
Cost of current service | - | (85 | ) | (85 | ) | - | (91 | ) | (91 | ) | ||||||||||||||
Interest cost | - | (985 | ) | (985 | ) | - | (930 | ) | (930 | ) | ||||||||||||||
Benefits paid | (671 | ) | 671 | - | (601 | ) | 601 | - | ||||||||||||||||
Contributions of sponsors | 57 | - | 57 | 42 | - | 42 | ||||||||||||||||||
Contributions of participants | 15 | - | 15 | 9 | - | 9 | ||||||||||||||||||
Actuarial gain/(loss) (2) (3) (4) | 2,595 | (2,094 | ) | 501 | (216 | ) | (151 | ) | (367 | ) | ||||||||||||||
Present value - end of the period | 15,072 | (12,906 | ) | 2,166 | 11,773 | (10,413 | ) | 1,360 |
12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||||||||||||||||||||||||||
Plan assets | Defined benefit obligation | Surplus | Plan assets | Defined benefit obligation | Surplus | Plan assets | Defined benefit obligation | Surplus | ||||||||||||||||||||||||||||
Present value – beginning of the year | 11,229 | (9,871 | ) | 1,358 | 14,817 | (11,233 | ) | 3,584 | 12,493 | (11,264 | ) | 1,229 | ||||||||||||||||||||||||
Effects of the partial spin-off of PAC (1) | - | - | - | (5,147 | ) | 2,710 | (2,437 | ) | - | 880 | 880 | |||||||||||||||||||||||||
Inclusion of Redecard Plan | - | - | - | - | - | - | 60 | (53 | ) | 7 | ||||||||||||||||||||||||||
Inclusion of Itaú Defined Benefit Plan | - | - | - | - | - | - | 131 | (123 | ) | 8 | ||||||||||||||||||||||||||
Inclusion of Itaú Defined Contribution Plan | 12 | (13 | ) | (1 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||
Effects of the partial spin-off of Redercard (2) | (44 | ) | 42 | (2 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||
Expected return on assets (4) | 1,342 | - | 1,342 | 1,342 | - | 1,342 | 1,539 | - | 1,539 | |||||||||||||||||||||||||||
Cost of current service | - | (91 | ) | (91 | ) | - | (87 | ) | (87 | ) | - | (237 | ) | (237 | ) | |||||||||||||||||||||
Interest cost | - | (930 | ) | (930 | ) | - | (943 | ) | (943 | ) | - | (1,140 | ) | (1,140 | ) | |||||||||||||||||||||
Benefits paid | (601 | ) | 601 | - | (568 | ) | 568 | - | (541 | ) | 541 | - | ||||||||||||||||||||||||
Contributions of sponsors | 42 | - | 42 | 42 | - | 42 | 34 | - | 34 | |||||||||||||||||||||||||||
Contributions of participants | 9 | - | 9 | 40 | - | 40 | 34 | - | 34 | |||||||||||||||||||||||||||
Actuarial gain/(loss) (3) (4) | (216 | ) | (151 | ) | (367 | ) | 703 | (886 | ) | (183 | ) | 1,067 | 162 | 1,229 | ||||||||||||||||||||||
End of the year | 11,773 | (10,413 | ) | 1,360 | 11,229 | (9,871 | ) | 1,358 | 14,817 | (11,234 | ) | 3,583 |
(1) Corresponds to the effect of the partial spin-off of the PAC and creation of the Plano Itaubanco CD, which migration process resulted in the curtailment and partial settlement of PAC obligations. The curtailment which implied a reduction in obligations and thus in actuarial liabilities, made on December 31, 2009, is already adjusted in the opening balance (January 1, 2010). At March 31, 2010, the PAC participants who opted for the voluntary migration to the Plano Itaubanco CD had all of their obligations settled by PAC through the initial contribution of the assets previously held by PAC to individual accounts corresponding to the Plano Itaubanco CD. PAC is no longer responsible for any retirement benefit at the PAC level related to these participants. After the partial settlement of PAC, assets were transferred from PAC to Plano Itaubanco CD.
(2) During the fiscal year 2011, a process forof migration of participants from Redecard Retirement Plan, structured as a defined benefit plan, to the Redecard Pension Plan, which is structured as a defined contribution plan, was carried out. For those participants who migrated to the Redecard Pension Plan, the accumulation of future benefit is now performed as a defined contribution, and therefore there is no replacement for the same type of benefit.
(3)(2) Gains (losses) recorded in plan assets correspond to the income earned above/below the expected return rate of assets.
(3) At December 31, 2012 losses in Actuarial Liabilities basically correspond to the effects arising from the change in the Interest Rate assumption (from 9.72% to 8.16%).
(4) The actual return on assets wasamounted to R$ 3,898 (R$ 1,126 (R$ 2,045 at December 31, 2010 and R$ 2,606 at January 1, 2010)12/31/2011).
The history of actuarial gains and losses is as follows:
12/31/2011 | 12/31/2010 | 12/31/2009 | 12/31/2008 | 12/31/2007 | 12/31/2012 | 12/31/2011 | 12/31/2010 | 12/31/2009 | 12/31/2008 | |||||||||||||||||||||||||||||||
Plan net assets | 11,773 | 11,229 | 14,817 | 12,493 | 12,583 | 15,072 | 11,773 | 11,229 | 14,817 | 12,493 | ||||||||||||||||||||||||||||||
Defined benefit obligation | (10,413 | ) | (9,871 | ) | (11,234 | ) | (11,264 | ) | (9,441 | ) | (12,906 | ) | (10,413 | ) | (9,871 | ) | (11,234 | ) | (11,264 | ) | ||||||||||||||||||||
Surplus | 1,360 | 1,358 | 3,583 | 1,229 | 3,142 | 2,166 | 1,360 | 1,358 | 3,583 | 1,229 | ||||||||||||||||||||||||||||||
Experience adjustments in plan net assets | (216 | ) | 703 | 1,067 | (979 | ) | 1,060 | 2,595 | (216 | ) | 703 | 1,067 | (979 | ) | ||||||||||||||||||||||||||
Experience adjustments in defined benefit obligation | (151 | ) | (886 | ) | 162 | (823 | ) | (186 | ) | (2,094 | ) | (151 | ) | (886 | ) | 162 | (823 | ) |
The amounts for 2007 tothe years 2008 through 2009, calculated based on the Brazilian standards equivalent to IAS 19, are presented only for change effects, considering that in conformity with the exemption set forth in IFRS 1, assets, liabilities, and gains and losses were recognized at 01/01/2010.
F.95 |
V- | Total revenue (expenses) recognized in income for the |
Total expenses recognized for defined benefit plans include the following components:
12/31/2011 | 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||
Cost of current service | (91 | ) | (87 | ) | (85 | ) | (91 | ) | (87 | ) | ||||||||||
Interest cost | (930 | ) | (943 | ) | (985 | ) | (930 | ) | (943 | ) | ||||||||||
Expected return on the plan assets | 1,342 | 1,342 | ||||||||||||||||||
Expected return on the plan net assets | 1,303 | 1,342 | 1,342 | |||||||||||||||||
Effects of the partial spin-off of PAC | - | (2,437 | ) | - | - | (2,437 | ) | |||||||||||||
Effects of the partial spin-off of Redecard | (1 | ) | - | - | (1 | ) | - | |||||||||||||
Effect on asset ceiling | (154 | ) | 1,098 | |||||||||||||||||
Gain/(loss) for the year | (367 | ) | (183 | ) | ||||||||||||||||
Effects on asset ceiling | (874 | ) | (154 | ) | 1,098 | |||||||||||||||
Gain/(loss) for the period | 501 | (367 | ) | (183 | ) | |||||||||||||||
Contributions of participants | 9 | 40 | 15 | 9 | 40 | |||||||||||||||
Total revenue (expenses) recognized in income for the year | (192 | ) | (1,170 | ) | ||||||||||||||||
Total revenue (expenses) recognized in income for the period | (125 | ) | (192 | ) | (1,170 | ) |
During the year,period, the contributions made totaled R$ 4257 (R$ 42 from 01/01 to 12/31/2010)2011). The contribution rate increases based on the beneficiary’s salary.
In 2012,2013, contribution to the defined benefit retirement plans sponsored by ITAÚ UNIBANCO HOLDING is expected to amount to R$ 39.35.
The estimate for payment of benefits for the next 10 years is as follows:
Payment estimate | ||||||||
2012 | 646 | |||||||
Period | Payment estimate | |||||||
2013 | 673 | 708 | ||||||
2014 | 697 | 741 | ||||||
2015 | 721 | 762 | ||||||
2016 | 746 | 784 | ||||||
2017 to 2021 | 4,119 | |||||||
2017 | 806 | |||||||
2018 to 2022 | 4,399 |
c) | Defined contribution plans |
The defined contribution plans have assets relating to sponsors’ contributions not yet included in the participant’s account balance due to loss of eligibility to a plan benefit, as well as by resources from the migration from the defined benefit plans. The fund will be used for future contributions to the individual participants' accounts, according to the rules of the respective benefit plan regulation.
The amount recognized in assets is R$ 2,328 (R$ 1,443 ( R$ 1,169 atfrom 01/01 to 12/31/2010)2011) (Note 19a)20a).
Total revenue recognized for defined contribution plans includes the following components:
12/31/2011 | 12/31/2010 | |||||||
Effect of the partial spin-off of PAC | - | 1,477 | ||||||
Contribution | (144 | ) | (111 | ) | ||||
Actuarial gain/(loss) | 150 | 256 | ||||||
Effect on asset ceiling | 268 | (581 | ) | |||||
Total revenue recognized in income for the year | 274 | 1,041 |
01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||
Effects of the partial spin-off of PAC | - | - | 1,477 | |||||||||
Contribution | (146 | ) | (144 | ) | (111 | ) | ||||||
Gain/(Loss) in Plan Assets | 1,035 | 150 | 256 | |||||||||
Effects on asset ceiling | (4 | ) | 268 | (581 | ) | |||||||
Total revenue recognized in income for the period | 885 | 274 | 1,041 |
F.96 |
In conformity with the exemption prescribed in IFRS 1, gains and losses accumulated through January 1, 2010 were recognized in retained earnings, net of tax effects, and taking into account the adjustments in subsidiaries. The actuarial gains and losses for the period were recognized in income “General and administrative expenses”.
| During the period, the contributions to the defined contribution plans, including PGBL, totaled R$ 196 (R$ 193 at 12/31/2011), of which R$ 146 (R$ 144 at 12/31/2011) were pension funds. |
d) | Other post-employment benefits |
ITAÚ UNIBANCO HOLDING and its subsidiaries do not offer other post-employment benefits, except in those cases arising from obligations under the acquisition agreements signed by ITAÚ UNIBANCO HOLDING, in accordance with the terms and conditions established, in which health plans are totally or partially sponsored for former workers and beneficiaries.
ITAÚ UNIBANCO HOLDING and its subsidiaries do not offer other post-employment benefits, except in those cases arising from obligations under acquisition agreements signed by ITAÚ UNIBANCO HOLDING, in accordance with the terms and conditions established, in which health plans are totally or partially sponsored for former workers and beneficiaries. |
I- | Changes |
Based on the report prepared by an independent actuary, the changes in obligations for these other projected benefits and the amounts recognized in the balance sheet, under liabilities, of ITAÚ UNIBANCO HOLDING are as follows:
Based on the report prepared by an independent actuary, the changes in obligations for these other projected benefits and the amounts recognized in the balance sheet, under liabilities, of ITAÚ UNIBANCO HOLDING are as follows: |
12/31/2011 | 12/31/2010 | |||||||
At the beginning of the year | (105 | ) | (100 | ) | ||||
Interest cost | (10 | ) | (10 | ) | ||||
Benefits paid | 6 | 5 | ||||||
Actuarial (loss) | (11 | ) | - | |||||
At the end of the year | (120 | ) | (105 | ) |
In conformity with the exemption prescribed in IFRS 1, gains and losses accumulated through January 1, 2010 were recognized in retained earnings, net of tax effects, and taking into account the adjustments in subsidiaries. The actuarial gains and losses for the period were recognized in income as “General and administrative expenses”.
12/31/2012 | 12/31/2011 | 12/31/2010 | ||||||||||
At the beginning of the period | (120 | ) | (105 | ) | (100 | ) | ||||||
Interest cost | (11 | ) | (10 | ) | (10 | ) | ||||||
Benefits paid | 6 | 6 | 5 | |||||||||
Actuarial loss | (23 | ) | (11 | ) | - | |||||||
At the end of the period (Note 20b) | (148 | ) | (120 | ) | (105 | ) |
The estimate for payment of benefits for the next 10 years is as follows:
Period | Payment estimate | Payment estimate | ||||||
2012 | 6 | |||||||
2013 | 7 | 6 | ||||||
2014 | 7 | 7 | ||||||
2015 | 8 | 7 | ||||||
2016 | 8 | 8 | ||||||
2017 to 2021 | 50 | |||||||
2017 | 8 | |||||||
2018 a 2022 | 52 |
II- | Assumptions and sensitivity at 1% |
For calculation of projected benefit obligations in addition to the assumptions for the defined benefit plans (Note 28b I), an 8.16% p.a. increase in medical costs is assumed.
For calculation of projected benefits obligations in addition to the assumptions used for the defined benefit plans (Note 29b I), an 8.16% p.a. increase in medical costs assumption is assumed. |
Assumptions about medical care cost trends have a significant impact on the amounts recognized in income. A change of one percentage point in the medical care cost rates would have the following effects:
Assumptions about medical care cost trends have a significant impact on the amounts recognized in income. A change of one percentage point in the medical care cost rates would have the following effects: |
1.0% increase | 1.0% decrease | 1.0% increase | 1.0% decrease | |||||||||||||
Effects on service cost and interest cost | 2 | (1 | ) | 2 | (2 | ) | ||||||||||
Effects on present value of obligation | 17 | (14 | ) | 26 | (21 | ) |
F.97 |
NOTE 2930 – INSURANCE CONTRACTS
a) | Insurance contracts |
ITAÚ UNIBANCO HOLDING, through its subsidiaries, offers to the market insuranceInsurance and private pension. Products are offered through insurance brokers (third parties operating in the market and its own brokers), Itaú Unibanco branches and electronic channels, according to their characteristics and regulatory requirements.
In all segments, a new product is created when new demands and opportunities arise in the market or from a specific negotiation.
The products developed are submitted to a committee, coordinated and controlled by the Governance of Products, in which all flows comprising the operational, commercial, legal, accounting, financial, internal control and technology aspects are analyzed, discussed and approved by the various areas involved.
The governance process of product evaluation is regulated by the Corporate Policy on Product and Operations Evaluation, and requires the integration of activities between product and evaluation areas, forming an organized group of activities that aims to add value to customers and to promote competitive differentials.
Internal rules provide for and support product evaluation and approval flows, attribution of responsibilities, provisions for carrying out processes, and also maximum and minimum balance limits, contribution, minimum premium and other, which aim at preserving the consistency of the process and product results.
There are also policies on underwriting risks in each segment, such as technical actuarial limits per insurance line and coverage, which are controlled systemically or operationally.
This product creation process involves the following steps:
· | Development of the product by managers in order to meet a market demand. |
· | Submission of the detailed product characteristics to Governance. |
· | Parameterization of new products in IT systems with the concomitant evaluation of the need for developing new |
· | Launch of the product after authorization from the Product Governance Committee. |
For private pension products, registration with the Brazilian Securities and Exchange Commission (CVM) and approval of actuarial technical notes and rules from SUSEP for sales is also required. It is also possible to custom minimum amounts, fund management and entry fees, actuarial table and interest upon negotiation with evaluation of an internal pricing model agreed in a specific contract.
There are policies on minimum appropriate balances and minimum contributions to each negotiation. Risk benefits, considered ancillary coverage, follow their own and specific conditions, such as coverage limits, target audience and proof of good health, among others, according to each agreement. In addition, increased risks may excess ofexceed the loss coverage through reinsurance.
Each product has rules according to the channel and segment to which it will be sold. Pricing policies are determined according to internal models, in compliance with the corporate standard pricing model developed by the Risk and Financial Controls Area, in the context of the Governance of product evaluation.
The cost management of insurance and private pension products includes the groups of administrative, operating and selling expenses, where administrative expenses based on the recognition by cost centers, are allocated to products and sales channels according to the definition of the respective activities, following the corporate managerial model of the ITAÚ UNIBANCO HOLDING. Operating and selling expenses are based on the line for product identification and policy segmentation in order to define the sales channel.
F.98 |
b) | Main |
I- | Insurance |
ITAÚ UNIBANCO HOLDING, through its insurance companies, supplies the market with insurance products with the purpose of assuming risks and restoring the economic balance of the assets of the policyholder if damaged.
In this segment, clients are mainly divided into the Individual (Retail, UniClass, Personnalité and Private) and Corporate (Companies, Corporate and Condominium) markets.
The contract entered into between the parties aims at protectingguaranteeing the client’sprotection of the client's assets. Upon payment of a premium, the policyholder is protected through previously agreedpreviously-agreed replacement or indemnification clauses for damages. ITAÚ UNIBANCO HOLDING insurance companies then recognize technical reserves administered by themselves, through specialized areas within the conglomerate, with the objective of indemnifying the policyholder’spolicyholder's loss in the event of claims forof insured risks.
The insurance risks sold by insurance companies of ITAÚ UNIBANCO HOLDING are divided into property and casualty, and life insurance.
· | Property and casualty insurance: covers losses, damages or liabilities for assets or persons, excluding from this classification life insurance lines. |
· | Life insurance: |
Loss ratio | Sales ratio | |||||||||||||||||||||||||||||||
Loss ratio | Sales ratio | % | % | |||||||||||||||||||||||||||||
Main insurance lines | % | % | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | ||||||||||||||||||||||||||
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | |||||||||||||||||||||||||||||
Mandatory insurance for personal injury caused by motor vehicles (DPVAT) | 86.4 | 87.0 | 1.5 | 1.4 | 87.7 | 86.4 | 1.5 | 1.5 | ||||||||||||||||||||||||
Commercial multiple peril | 43.7 | 43.6 | 15.7 | 17.7 | ||||||||||||||||||||||||||||
Group life | 39.0 | 41.5 | 11.5 | 12.8 | 44.6 | 39.0 | 10.8 | 11.5 | ||||||||||||||||||||||||
Individual accident | 29.0 | 28.8 | 12.3 | 17.6 | ||||||||||||||||||||||||||||
General liability | 33.9 | 42.7 | 9.2 | 13.3 | ||||||||||||||||||||||||||||
Credit life | 21.8 | 25.8 | 25.2 | 29.4 | 21.4 | 21.8 | 23.1 | 25.2 | ||||||||||||||||||||||||
Extended guarantee - assets | 19.5 | 21.1 | 65.4 | 68.5 | ||||||||||||||||||||||||||||
Extended warranty - assets | 17.9 | 19.5 | 65.1 | 65.4 | ||||||||||||||||||||||||||||
Specified and all risks | 85.6 | 71.0 | 4.5 | 6.0 | ||||||||||||||||||||||||||||
Group accident insurance | 6.3 | 7.8 | 45.3 | 43.9 | 7.9 | 6.3 | 37.8 | 45.3 | ||||||||||||||||||||||||
Petroleum risks | 6.2 | 3.2 | 3.2 | 1.8 | ||||||||||||||||||||||||||||
Multiple risks | 5.3 | 16.2 | 59.4 | 50.0 |
II- | Private pension |
Developed as a solution to ensure the maintenance of the quality of life of participants, as a supplement to the government pension,plans, through long-term investments, private pension products are divided into three major groups:
· | PGBL |
· | VGBL |
· | FGB |
III – Income from insurance and private pension
The revenue from the main insurance and private pension products is as follows:
Premiums and contributions direct issue | Reinsurance | Retained premiums and contributions | Premiums and contributions direct issued | Reinsurance | Retained premiums and contributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||||||||||||||||||||||||||||||||
VGBL | 10,010 | 7,036 | - | - | 10,010 | 7,036 | 15,890 | 10,010 | 7,036 | - | - | - | 15,890 | 10,010 | 7,036 | |||||||||||||||||||||||||||||||||||||||||||||
PGBL | 1,424 | 1,247 | (1 | ) | - | 1,423 | 1,247 | 1,554 | 1,424 | 1,247 | - | (1 | ) | - | 1,554 | 1,423 | 1,247 | |||||||||||||||||||||||||||||||||||||||||||
Warranty extension - assets | 1,365 | 1,158 | - | - | 1,365 | 1,158 | 1,368 | 1,365 | 1,158 | - | - | - | 1,368 | 1,365 | 1,158 | |||||||||||||||||||||||||||||||||||||||||||||
Group life | 1,165 | 1,150 | (24 | ) | (17 | ) | 1,141 | 1,133 | 1,299 | 1,165 | 1,150 | (41 | ) | (24 | ) | (17 | ) | 1,258 | 1,141 | 1,133 | ||||||||||||||||||||||||||||||||||||||||
Group accident insurance | 661 | 625 | (1 | ) | - | 660 | 625 | 642 | 661 | 625 | - | (1 | ) | - | 642 | 660 | 625 | |||||||||||||||||||||||||||||||||||||||||||
Specified and operational risk | 480 | 360 | (384 | ) | (209 | ) | 96 | 151 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Mandatory insurance for personal injury caused by motor vehicles (DPVAT) | 404 | 308 | 284 | - | - | - | 404 | 308 | 284 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Credit life | 461 | 424 | - | (1 | ) | 461 | 423 | 460 | 461 | 424 | (2 | ) | - | (1 | ) | 458 | 461 | 423 | ||||||||||||||||||||||||||||||||||||||||||
Traditional | 369 | 391 | - | - | 369 | 391 | 278 | 369 | 391 | - | - | - | 278 | 369 | 391 | |||||||||||||||||||||||||||||||||||||||||||||
DPVAT | 308 | 284 | - | - | 308 | 284 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Multiple risks | 221 | 207 | 238 | (54 | ) | (36 | ) | (34 | ) | 167 | 171 | 204 | ||||||||||||||||||||||||||||||||||||||||||||||||
Commercial multiple peril | 204 | 176 | 84 | (49 | ) | (38 | ) | - | 155 | 138 | 84 | |||||||||||||||||||||||||||||||||||||||||||||||||
Serious or terminal diseases | 130 | 111 | - | - | - | - | 130 | 111 | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
Specified and all risks | 479 | 480 | 360 | (361 | ) | (384 | ) | (209 | ) | 118 | 96 | 151 | ||||||||||||||||||||||||||||||||||||||||||||||||
Individual accident | 104 | 108 | 117 | (2 | ) | - | - | 102 | 108 | 117 | ||||||||||||||||||||||||||||||||||||||||||||||||||
General liability | 125 | 80 | 87 | (57 | ) | (27 | ) | (38 | ) | 68 | 53 | 49 | ||||||||||||||||||||||||||||||||||||||||||||||||
Petroleum risks | 257 | 61 | (220 | ) | (43 | ) | 37 | 18 | 282 | 257 | 61 | (237 | ) | (220 | ) | (43 | ) | 45 | 37 | 18 | ||||||||||||||||||||||||||||||||||||||||
Multiple risks | 207 | 238 | (36 | ) | (34 | ) | 171 | 204 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
General civil liability | 80 | 87 | (27 | ) | (38 | ) | 53 | 49 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineering | 72 | 88 | (64 | ) | (74 | ) | 8 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Aeronautical | 49 | 56 | (49 | ) | (47 | ) | - | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Individual life | 18 | 20 | 22 | - | - | - | 18 | 20 | 22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Engineering risks | 104 | 72 | 88 | (88 | ) | (64 | ) | (74 | ) | 16 | 8 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other lines | 1,271 | 1,034 | (204 | ) | (139 | ) | 1,067 | 895 | 1,186 | 905 | 867 | (275 | ) | (215 | ) | (186 | ) | 911 | 690 | 681 | ||||||||||||||||||||||||||||||||||||||||
18,179 | 14,239 | (1,010 | ) | (602 | ) | 17,169 | 13,637 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 24,748 | 18,179 | 14,239 | (1,166 | ) | (1,010 | ) | (602 | ) | 23,582 | 17,169 | 13,637 |
c) | Technical reserves for insurance and private pension |
Technical reserves for insurance and private pension are recognized according to the criteria established by the National Council of Private Insurance (CNSP) Resolution No. 162 of December 26, 2006 and subsequent amendments.
I - Insurance:
· | Reserve for unearned premiums– |
· | Reserve for premium deficiency– |
· | Reserve for unsettled claims |
· | Reserve for claims incurred but not reported |
· | Other provisions– |
F.100 |
II – Private pension:
The mathematical reserves represent amounts of obligations assumed as insurance for living benefits, retirement plans, disability, pension and annuity and are calculated according to the method of accounting provided for in the contract.
· | Mathematical reserves for benefits to be granted and benefits granted – |
· | Provision for insufficient contribution – |
· | Reserve for unexpired risks – |
· | Reserve for claims incurred but not reported |
· | Reserve for financial surplus – |
· | Other reserves – |
III - Change in reserves for insurance and private pension
The details about the changes in balances of reserves for insurance and private pension operations are as follows:
12/31/2011 | 12/31/2010 | |||||||||||||||||||||||||||||||
Property, individuals and life insurance | Private pension | Life with Survivor benefits | Total | Property, individuals and life insurance | Private pension | Life with Survivor benefits | Total | |||||||||||||||||||||||||
Opening balance | 5,527 | 18,296 | 33,041 | 56,864 | 4,758 | 16,053 | 27,135 | 47,946 | ||||||||||||||||||||||||
(+) Additions arising from premiums/contribution | 16,681 | 1,706 | 9,936 | 28,323 | 11,861 | 1,621 | 6,975 | 20,457 | ||||||||||||||||||||||||
(-) Deferral of risk | (15,694 | ) | - | - | (15,694 | ) | (11,709 | ) | - | - | (11,709 | ) | ||||||||||||||||||||
(-) Payment of claims/benefits | (1,508 | ) | (103 | ) | (6 | ) | (1,617 | ) | (1,556 | ) | (118 | ) | (53 | ) | (1,727 | ) | ||||||||||||||||
(+) Reported claims | 2,020 | - | - | 2,020 | 2,029 | - | - | 2,029 | ||||||||||||||||||||||||
(-) Redemptions | (152 | ) | (917 | ) | (3,745 | ) | (4,814 | ) | - | (907 | ) | (3,240 | ) | (4,147 | ) | |||||||||||||||||
(+/-) Net portability | (115 | ) | 152 | (14 | ) | 23 | - | 139 | (180 | ) | (41 | ) | ||||||||||||||||||||
(+) Adjustment of reserves and financial surplus | 1 | 1,658 | 3,362 | 5,021 | - | 1,512 | 2,352 | 3,864 | ||||||||||||||||||||||||
(+/-) Other (recognition/reversal) | 849 | 101 | (172 | ) | 778 | 144 | (4 | ) | 52 | 192 | ||||||||||||||||||||||
Reserves for insurance and private pension | 7,609 | 20,893 | 42,402 | 70,904 | 5,527 | 18,296 | 33,041 | 56,864 |
INSURANCE | PRIVATE PENSION | TOTAL | ||||||||||||||||||||||||||||||||||
12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||||||||||||||||||||
Mathematical reserve for benefits to be granted and benefits granted | 17 | 30 | 33 | 61,953 | 50,070 | 42,106 | 61,970 | 50,100 | 42,139 | |||||||||||||||||||||||||||
Unearned premiums | 3,026 | 1,354 | 1,224 | - | - | - | 3,026 | 1,354 | 1,224 | |||||||||||||||||||||||||||
Unsettled claims (*) | 2,297 | 2,163 | 1,810 | - | - | - | 2,297 | 2,163 | 1,810 | |||||||||||||||||||||||||||
IBNR (*) | 712 | 587 | 568 | 10 | 9 | 13 | 722 | 596 | 581 | |||||||||||||||||||||||||||
Premium deficiency | 313 | 273 | 245 | - | - | 103 | 313 | 273 | 348 | |||||||||||||||||||||||||||
Insufficient contribution | - | - | - | 692 | 602 | 390 | 692 | 602 | 390 | |||||||||||||||||||||||||||
Financial surplus | 2 | 2 | 2 | 475 | 458 | 452 | 477 | 460 | 454 | |||||||||||||||||||||||||||
Other (Note 29c i) | 1,242 | 1,118 | 876 | 165 | 198 | 124 | 1,407 | 1,316 | 1,000 | |||||||||||||||||||||||||||
TOTAL | 7,609 | 5,527 | 4,758 | 63,295 | 51,337 | 43,188 | 70,904 | 56,864 | 47,946 |
F.101 |
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||||
Property, individuals and life insurance | Private pension | Life with survivor benefits | Total | Property, individuals and life insurance | Private pension | Life with survivor benefits | Total | |||||||||||||||||||||||||
Opening balance | 7,609 | 20,893 | 42,402 | 70,904 | 5,527 | 18,296 | 33,041 | 56,864 | ||||||||||||||||||||||||
(+) Additions arising from premiums/contribution | 6,940 | 1,893 | 15,710 | 24,543 | 6,775 | 1,706 | 9,936 | 18,417 | ||||||||||||||||||||||||
(-) Deferral of risk | (6,576 | ) | - | - | (6,576 | ) | (5,788 | ) | - | - | (5,788 | ) | ||||||||||||||||||||
(-) Payment of claims/benefits | (2,126 | ) | (92 | ) | (6 | ) | (2,224 | ) | (1,508 | ) | (103 | ) | (6 | ) | (1,617 | ) | ||||||||||||||||
(+) Reported claims | 3,073 | - | - | 3,073 | 2,020 | - | - | 2,020 | ||||||||||||||||||||||||
(-) Redemptions | (4 | ) | (985 | ) | (5,213 | ) | (6,202 | ) | (152 | ) | (917 | ) | (3,745 | ) | (4,814 | ) | ||||||||||||||||
(+/-) Net portability | - | 161 | 57 | 218 | (115 | ) | 152 | (14 | ) | 23 | ||||||||||||||||||||||
(+) Adjustment of reserves and financial surplus | 3 | 1,891 | 4,440 | 6,334 | 1 | 1,658 | 3,362 | 5,021 | ||||||||||||||||||||||||
(+/-) Other (recognition/reversal) | 201 | (32 | ) | 79 | 248 | 849 | 101 | (172 | ) | 778 | ||||||||||||||||||||||
Reserves for insurance and private pension | 9,120 | 23,729 | 57,469 | 90,318 | 7,609 | 20,893 | 42,402 | 70,904 |
INSURANCE | PRIVATE PENSION | TOTAL | ||||||||||||||||||||||
12/31/2012 | 12/31/2011 | 12/31/2012 | 12/31/2011 | 12/31/2012 | 12/31/2011 | |||||||||||||||||||
Mathematical reserve for benefits to be granted and benefits granted | 19 | 17 | 79,733 | 61,953 | 79,752 | 61,970 | ||||||||||||||||||
Unearned premiums | 3,371 | 3,026 | - | - | 3,371 | 3,026 | ||||||||||||||||||
Unsettled claims (*) | 3,222 | 2,297 | - | - | 3,222 | 2,297 | ||||||||||||||||||
IBNR (*) | 821 | 712 | 12 | 10 | 833 | 722 | ||||||||||||||||||
Premium deficiency | 336 | 313 | - | - | 336 | 313 | ||||||||||||||||||
Insufficient contribution | - | - | 750 | 692 | 750 | 692 | ||||||||||||||||||
Financial surplus | 1 | 2 | 514 | 475 | 515 | 477 | ||||||||||||||||||
Other (Note 30c I) | 1,350 | 1,242 | 189 | 165 | 1,539 | 1,407 | ||||||||||||||||||
Total | 9,120 | 7,609 | 81,198 | 63,295 | 90,318 | 70,904 |
(*) The provision for unsettled claims and IBRN areIBNR is detailed in Note 29e.30e.
F.102 |
d) | Deferred |
Deferred acquisition costs of insurance are direct and indirect costs incurred to sell, underwrite and originate a new insurance contract.
Direct costs are basically commissions paid for brokerage services, agency and prospecting efforts and are deferred for amortization in proportion to the recognition of revenue from earned premiums, that is, over the coverage period, for the term of effectiveness of contracts, according to the calculation rules in force.
Balances are recorded under gross reinsurance assets and changes are shown in the table below:
Balance at 01/01/2012 | 2,064 | |||
Increase | 207 | |||
Amortization | (40 | ) | ||
Balance at 12/31/2012 | 2,231 | |||
Balance to be amortized in up to 12 months | 1,412 | |||
Balance to be amortized after 12 months | 819 | |||
Balance at 01/01/2011 | 1,649 | |||
Increase | 583 | |||
Amortization | (168 | ) | ||
Balance at 12/31/2011 | 2,064 | |||
Balance to be amortized in up to 12 months | 1,495 | |||
Balance to be amortized after 12 months | 569 | |||
The amounts of deferred selling expenses from reinsurance are stated in Note 29l.30I.
F.103 |
e) | Table of loss development |
Changes in the amount of obligations of the ITAÚ UNIBANCO HOLDING may occur at the end of each annual reporting period. The table below shows the development by the claims incurred method.method. The first part of the table below shows how the final loss estimate changes through time.Thetime. The second part of the table reconciles the amounts pending payment and the liability disclosed in the balance sheet.sheet at December 31, 2012.
The reserve for unsettled claims is comprised as follows, at December 31, 2011:
I –Gross of reinsurance2012:
I – Gross of reinsurance | ||||
Reserve for unsettled claims and | ||||
Liability claims presented in the development table | ||||
DPVAT operations | ||||
Retrocession and other estimates | ||||
Total |
(*) The total reserveprovision refers to provision for unsettled claims and provision for claims incurred but not reported (IBNR), stated in Note 29cnote 30c III.
Date | 12/31/2005 | 12/31/2006 | 12/31/2007 | 12/31/2008 | 12/31/2009 | 12/31/2010 | 12/31/2011 | TOTAL | ||||||||||||||||||||||||||||||||||||||||||||||||
At the end of reporting year | 1,030 | 1,906 | 2,137 | 1,768 | 1,530 | 1,890 | 1,771 | |||||||||||||||||||||||||||||||||||||||||||||||||
Occurrence date | 12/31/2008 | 12/31/2009 | 12/31/2010 | 12/31/2011 | 12/31/2012 | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
At the end of reporting period | 1,766 | 1,444 | 1,882 | 1,534 | 2,353 | |||||||||||||||||||||||||||||||||||||||||||||||||||
After 1 year | 1,030 | 1,963 | 2,140 | 1,787 | 1,590 | 2,031 | - | 1,757 | 1,452 | 2,069 | 1,711 | |||||||||||||||||||||||||||||||||||||||||||||
After 2 years | 1,037 | 2,036 | 2,206 | 1,778 | 1,606 | - | - | 1,763 | 1,452 | 2,065 | ||||||||||||||||||||||||||||||||||||||||||||||
After 3 years | 1,046 | 2,059 | 2,212 | 1,739 | - | - | - | 1,730 | 1,463 | |||||||||||||||||||||||||||||||||||||||||||||||
After 4 years | 1,056 | 2,052 | 2,201 | - | - | - | - | 1,806 | ||||||||||||||||||||||||||||||||||||||||||||||||
After 5 years | 1,056 | 2,036 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
After 6 years | 1,052 | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
Current estimate | 1,052 | 2,036 | 2,201 | 1,739 | 1,606 | 2,031 | 1,771 | 12,436 | 1,806 | 1,463 | 2,065 | 1,711 | 2,353 | 9,398 | ||||||||||||||||||||||||||||||||||||||||||
Accumulated payments through base date | 1,006 | 1,964 | 2,078 | 1,584 | 1,319 | 1,404 | 852 | 10,207 | 1,638 | 1,359 | 1,824 | 1,368 | 1,144 | 7,333 | ||||||||||||||||||||||||||||||||||||||||||
Liabilities recognized in the balance sheet | 46 | 72 | 123 | 155 | 287 | 627 | 919 | 2,229 | 168 | 104 | 241 | 343 | 1,209 | 2,065 | ||||||||||||||||||||||||||||||||||||||||||
Liabilities in relation to years prior to 2005 | 345 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities in relation to years prior to 2008 | 461 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities included in balance sheet | 2,574 | 2,526 |
II-II - Net of reinsurance
Reserve for unsettled claims and for claims incurred but not reported | ||||
Liability claims presented in the development table | ||||
DPVAT operations | ||||
Reinsurance, retrocession and other estimates | ||||
Total |
(*) The total reserveprovision refers to provision for unsettled claims and provision for claims incurred but not reported (IBNR), stated in Note 29cnote 30c III.
Date | 12/31/2005 | 12/31/2006 | 12/31/2007 | 12/31/2008 | 12/31/2009 | 12/31/2010 | 12/31/2011 | TOTAL | ||||||||||||||||||||||||||||||||||||||||||||||||
At the end of reporting year | 808 | 865 | 1,027 | 1,157 | 1,197 | 1,269 | 1,311 | |||||||||||||||||||||||||||||||||||||||||||||||||
Occurrence date | 12/31/2008 | 12/31/2009 | 12/31/2010 | 12/31/2011 | 12/31/2012 | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
At the end of reporting period | 1,144 | 1,151 | 1,184 | 1,177 | 1,387 | |||||||||||||||||||||||||||||||||||||||||||||||||||
After 1 year | 808 | 899 | 1,044 | 1,164 | 1,188 | 1,180 | - | 1,134 | 1,155 | 1,159 | 1,231 | |||||||||||||||||||||||||||||||||||||||||||||
After 2 years | 813 | 921 | 1,063 | 1,161 | 1,190 | - | - | 1,146 | 1,157 | 1,184 | ||||||||||||||||||||||||||||||||||||||||||||||
After 3 years | 820 | 929 | 1,071 | 1,157 | - | - | - | 1,143 | 1,160 | |||||||||||||||||||||||||||||||||||||||||||||||
After 4 years | 829 | 928 | 1,076 | - | - | - | - | 1,150 | ||||||||||||||||||||||||||||||||||||||||||||||||
After 5 years | 827 | 932 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
After 6 years | 834 | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
Current estimate | 834 | 932 | 1,076 | 1,157 | 1,190 | 1,180 | 1,311 | 7,680 | 1,150 | 1,160 | 1,184 | 1,231 | 1,387 | 6,112 | ||||||||||||||||||||||||||||||||||||||||||
Accumulated payments through base date | 796 | 879 | 1,002 | 1,062 | 1,084 | 1,029 | 743 | 6,595 | 1,101 | 1,116 | 1,130 | 1,138 | 1,038 | 5,523 | ||||||||||||||||||||||||||||||||||||||||||
Liabilities recognized in the balance sheet | 38 | 53 | 74 | 95 | 106 | 151 | 568 | 1,085 | 49 | 44 | 54 | 93 | 349 | 589 | ||||||||||||||||||||||||||||||||||||||||||
Liabilities in relation to years prior to 2005 | 160 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities in relation to years prior to 2008 | 167 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities included in balance sheet | 1,245 | 756 |
Variations observed in the estimates of losses occurred in 2010 result mainly from atypical events, with gross amounts frequently higher than the average previously observed. However, as the percentages for reinsurance are high, the net analysis is not affected by this factor. In addition, in view of the high volatility inherent in the analysis of reinsurance gross data, particularly in all risks operations, the analysis of amounts net of reinsurance is recommended.
F.104 |
f) | Liability adequacy test |
As established in IFRS 4 – “Insurance Contracts”, an insurance company must carry out the Liability Adequacy Test, comparing the amount recognized for its technical reserves with the current estimate of projected cash flow. The estimate should consider all cash flows related to the business, which is the minimum requirement for carrying out the adequacy test.
The Liability Adequacy Test did not show any deficiency in this period.
The assumptions used in the test were as follows:
a) | The risk grouping criteria are |
b) | The relevant structure of risk-free interest rate was obtained from the curve of securities deemed to be credit risk free, available in the Brazilian financial market and determined pursuant to an internal |
c) | The methodology for testing all products is based on the projection of cash flows. Specifically for insurance products, cash flows were projected using the method known as chain-ladder triangle of quarterly frequency. |
d) | Cancellations, partial redemptions, future contributions, conversions into annuity income and administrative expenses are periodically reviewed pursuant to the best practices and analysis of the experience in the subsidiaries. Accordingly, they represent the current best estimates for projections. |
e) | Mortality: biometric tables broken down by gender, adjusted according to life expectancy development (improvement). |
The liability adequacy test did not show insufficiency in anyg) Insurance risk – effect of presented year-ends.changes on actuarial assumptions
Property insurance is a short-lived insurance, and the main actuarial assumptions involved in the management and pricing of the associated risks are claims frequency and severity. Volatility above the expected number of claims and amount of claim indemnities may result in unexpected losses.
Life insurance and pension plans are, in general, short-medium or long-lived products and the main risks involved in the business may be classified as biometric risk, financial risk and behavioral risk.
Biometric risk relates to: i) more than expected increase in life expectancies for products with survivorship coverage (mostly pension plans); ii) more than expected decrease in mortality rates for products with survivorship coverage (mostly life insurance.)insurance).
Products offering financial guarantee predetermined under contract involve financial risk inherent toin the underwriting risk, with such risk being considered insurance risk.
Behavioral risk relates to a more than expected increase in the rates of conversion into annuity income, resulting in increased payments of retirement benefits.
The estimated actuarial assumptions are based on the historical evaluation of ITAÚ UNIBANCO HOLDING market benchmarks and the experience of the actuaries.
F.105 |
Sensitivity analysesanalysis were carried out with the amounts of current estimates based on the variations of the main actuarial assumptions. The results of LAT (liability adequacy test) sensitivity analysis were as follows:
12/31/2012 | 12/31/2011 | ||||||||
Impact on the result of LAT | |||||||||
Impact on the result of LAT | |||||||||
Sensitivity analysis | Gross of reinsurance | Net of reinsurance | Gross of reinsurance | Net of reinsurance | |||||
5% increase in mortality rates | Without insufficiency | Without insufficiency | Without insufficiency | Without insufficiency | |||||
5% decrease in mortality rates | Without insufficiency | Without insufficiency | Without insufficiency | Without insufficiency | |||||
Without insufficiency | Without insufficiency | Without insufficiency | Without insufficiency | ||||||
Without insufficiency | Without insufficiency | Without insufficiency | Without insufficiency | ||||||
5% increase in conversion in income rates | Without insufficiency | Without insufficiency | Without insufficiency | Without insufficiency | |||||
5% decrease in conversion in income rates | Without insufficiency | Without insufficiency | Without insufficiency | Without insufficiency | |||||
5% increase in claims | Without insufficiency | Without insufficiency | Without insufficiency | Without insufficiency | |||||
5% decrease in claims | Without insufficiency | Without insufficiency | Without insufficiency | Without insufficiency |
h) Risks of insurance and private pension
ITAÚ UNIBANCO HOLDING has specific committees to define the management of funds from the technical reserves for insurance and private pension, issue guidelines for managing these funds with the objective of achieving long-term return, and developdefine evaluation models, risk limits and strategies on allocation of funds to defined financial assets. Such committees are comprised not only of executives and those directly responsible for the business management process, but also offor an equal number of professionals that head up or coordinate the commercial and financial areas.
Large risks products are distributed by brokers. In the case of the extended warranty product, this is marketed by the retail company that sells the product to the consumer. The DPVAT production results from the participation that the insurance companies of ITAÚ UNIBANCO HOLDING have in the Leading Insurance Company of the DPVAT consortium.
F.106 |
There is no product concentration in relation to insurance premiums, reducing the concentration risk of products and distribution channels. For large risks products, the strategy of lower retention is adopted, in accordance with certain lines shown below:
12/31/2011 | 12/31/2010 | |||||||||||||||||||||||||||||||||||||||||||||||
Insurance premiums | Retained premium | Retention (%) | Insurance premiums | Retained premium | Retention (%) | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | |||||||||||||||||||||||||||||||||||||||||
Insurance premiums | Retained premium | Retention (%) | Insurance premiums | Retained premium | Retention (%) | |||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND CASUALTY | ||||||||||||||||||||||||||||||||||||||||||||||||
Extended warranty | 1,365 | 1,365 | 100.0 | 1,158 | 1,158 | 100.0 | 1,368 | 1,368 | 100.0 | 1,365 | 1,365 | 100.0 | ||||||||||||||||||||||||||||||||||||
Credit life | 461 | 461 | 100.0 | 424 | 423 | 99.8 | 460 | 458 | 99.6 | 461 | 461 | 100.0 | ||||||||||||||||||||||||||||||||||||
Mandatory personal injury caused by motor vehicle (DPVAT) | 308 | 308 | 100.0 | 284 | 284 | 100.0 | 404 | 404 | 100.0 | 308 | 308 | 100.0 | ||||||||||||||||||||||||||||||||||||
Multiple risks | 207 | 171 | 82.6 | 238 | 204 | 85.7 | ||||||||||||||||||||||||||||||||||||||||||
INDIVIDUALS | ||||||||||||||||||||||||||||||||||||||||||||||||
Group life | 1,165 | 1,141 | 97.9 | 1,150 | 1,141 | 99.2 | 1,299 | 1,258 | 96.8 | 1,165 | 1,141 | 97.9 | ||||||||||||||||||||||||||||||||||||
Group accident insurance | 661 | 660 | 99.8 | 625 | 625 | 100.0 | 642 | 642 | 100.0 | 661 | 660 | 99.8 | ||||||||||||||||||||||||||||||||||||
Individual accident | 109 | 108 | 99.1 | 118 | 117 | 99.2 | 104 | 102 | 98.1 | 109 | 108 | 99.1 | ||||||||||||||||||||||||||||||||||||
Individual life | 20 | 19 | 95.0 | 23 | 22 | 95.7 | 18 | 18 | 100.0 | 20 | 19 | 95.0 | ||||||||||||||||||||||||||||||||||||
LARGE RISKS | ||||||||||||||||||||||||||||||||||||||||||||||||
Specified and operational risks | 480 | 96 | 20.0 | 360 | 151 | 41.9 | 479 | 118 | 24.6 | 480 | 96 | 20.0 | ||||||||||||||||||||||||||||||||||||
Petroleum risks | 257 | 37 | 14.4 | 61 | 18 | 29.5 | 282 | 45 | 16.0 | 257 | 37 | 14.4 | ||||||||||||||||||||||||||||||||||||
Engeneering | 72 | 8 | 11.1 | 88 | 14 | 15.9 | ||||||||||||||||||||||||||||||||||||||||||
Aeronautical | 49 | - | - | 56 | 9 | 16.1 | ||||||||||||||||||||||||||||||||||||||||||
Engineering | 104 | 16 | 15.4 | 72 | 8 | 11.1 |
F.107 |
i) | Underwriting risk management structure |
· | Centralized control over underwriting risk |
The risk control of risk the insurance company is centralized by the independent executive area responsible for risk control, while the management of risk is the responsibility of the business units exposed to underwriting risk and the risk management area of ITAÚ UNIBANCO HOLDING insurance subsidiaries.
· | Decentralized management of underwriting risk |
The underwriting risk management is the responsibility of the business area coordinated by the risk management area of ITAÚ UNIBANCO HOLDING insurance subsidiaries with the participation of the institutional actuarial area and product units and managers. These units, in their daily operations, accept risks based on the profitability of their businesses.
j) | Duties and responsibilities |
I- | Independent executive area responsible for risk control |
This area has the following attributes:
· | Validation and control of underwriting risk models. |
· | Control and evaluation of changes in the policies of insurance and private pension. |
· | Monitoring the performance of the insurance and private pension portfolios. |
· | Construction of underwriting risk models. |
· | Risk assessment of insurance and private pension products when created and on an ongoing basis. |
Establishment and publication of the underwriting risk management structure. |
· | Adoption of remuneration policies that discourage |
II- | Executive area responsible for operational and efficiency risk |
· | Devise methods for identifying, assessing, monitoring, controlling and mitigating operational risk. |
· | Report, on a |
· | Respond to requests from the Central Bank of Brazil, and other Brazilian regulatory authorities related to operational risk management, as well as monitor the adherence of business units and control areas |
III- | Business units exposed to underwriting risk |
· | Set out and/or adjust products to the requirements of the independent executive area responsible for risk control and the risk management area of the ITAÚ UNIBANCO HOLDING insurance subsidiaries. |
· | Respond to requests of the independent executive area responsible for risk control, preparing or providing databases and information for preparation of managerial reports or specific studies, when available. |
· | Guarantee the quality of the information used in probability of loss models and claim losses. |
· | Guarantee an appropriate level of knowledge about the concepts of risks for their identification and classification, ensuring the proper understanding for modeling by the independent executive area responsible for risk control and the risk management area of the insurance company. |
IV - Reinsurance area
IV - | Reinsurance area |
· | Formulate policies on access to reinsurance markets, regulating the underwriting operations aligned with the underwriting credit rating by the independent executive area responsible for risk control and the risk management area of the ITAÚ UNIBANCO HOLDING insurance subsidiaries. |
· | Guarantee an appropriate level of knowledge about the concepts of risks for their identification and classification, ensuring the proper understanding for modeling by the independent executive area responsible for risk control and the risk management area of the ITAÚ UNIBANCO HOLDING insurance subsidiaries. |
· | Submit |
· | Guarantee the update, reach, scope, accuracy and timeliness of information on reinsurance. |
V- | Risk management area of ITAÚ UNIBANCO HOLDING insurance subsidiaries |
· | Formulate underwriting policies and |
· | Develop strategic indicators, informing about possible gaps to higher levels. |
· | Submit managerial reports to the independent executive area responsible for risk control. |
· | Guarantee an appropriate level of knowledge about the concepts of risks for their identification and classification, ensuring the proper understanding and modeling by the independent executive area responsible for risk control. |
· | Monitor the risks incurred by business units exposed to underwriting risk. |
· | Report with quality and speed the required information under its responsibility to the Brazilian regulatory authorities. |
VI- | Actuarial area |
· | Construct and improve models of Provisions and Reserves and submit them duly documented to the independent executive area responsible for the risk control and the risk management area of ITAÚ UNIBANCO HOLDING insurance subsidiaries. |
· | Submit managerial reports to the independent executive area responsible for risk control. |
· | Guarantee the reach, scope, accuracy and timeliness of information related to operations for which the accounting reconciliation was properly carried out. |
· | Guarantee an appropriate level of knowledge about the concepts of risks for their identification and classification, ensuring the proper understanding and modeling by the independent executive area responsible for risk control. |
VII- Internal controls area
· | Check, on a regular basis, the adequacy of the internal controls system. |
· | Conduct periodic reviews of the risk process of Insurance operations to ensure completeness, accuracy and reasonableness. |
VIII- Internal audit
Carry out independent and periodic checks as to the effectiveness of the risk control process of insurance and private pension operations, according to the guidelines of the Audit Committee.audit committee.
Insurance and private pension managers work together with the investment manager to ensure that assets backing long-term products, with guaranteed minimum returns are managed according to the characteristics of the liabilities aiming at actuarial balance and long-term solvency.
A detailed mapping of the liabilities of long-term products that result in payment flows of projected future benefits is performed annually. This mapping is carried out in accordance with actuarial assumptions.
The investment manager, having this information, uses Asset Liability Management models to determinefind the best asset portfolio composition that enables the mitigationmitigating of risks entailed in this type of product, considering its long-term economic and financial feasibility. The portfolio of backing assets isare periodically balanced based on the fluctuations in market prices of assets, liquidity needs, and changes in the characteristics of liabilities.
F.109 |
k) | Market, credit and liquidity risk |
Market risk
Market risk is the possibility of incurring losses due to fluctuations in the market values of positions held by a financial institution, including risks of transactions subject to variations in foreign exchange and interest rates, share values, of prices indexes and commodity prices.prices, among other indexes on these risk factors.
The market risk limits are structured in accordance withlimit structureand warnings follow the guidelines establishedof the Board of Directors and is approved by the Superior Risk Committee (CSRisc), by evaluating after discussions and deliberations of the projected results, the amount of stockholders’ equitySuperior Institutional Treasury Committee (CSTI) on metrics and the risk profile of each legal entity, and are defined within risk metrics used by management.
The market risk limits. The review of this structure of limits is controlled by an area independent from the business areas, which is responsible for daily assessment and also reporting activities.performed at least annually.
Market risk is analyzed based on the following metrics:
· |
· | Losses in Stress Scenarios (Stress Test): simulation technique to assess the behavior of assets, liabilitiesand |
· | Sensitivity |
12/31/2011 | 12/31/2010 | 12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||
Class | Account balance | DV01 | Account balance | DV01 | Account balance | DV01 | Account balance | DV01 | ||||||||||||||||||||||||
(R$ million) | (R$ million) | |||||||||||||||||||||||||||||||
Government securities | ||||||||||||||||||||||||||||||||
NTN-C | 2,766 | (2.7 | ) | 2,648 | (2.8 | ) | 3,254 | (3.53 | ) | 2,936 | (2.66 | ) | ||||||||||||||||||||
NTN-B | 1,400 | (1.3 | ) | 667 | (1.0 | ) | 1,821 | (2.20 | ) | 1,544 | (1.29 | ) | ||||||||||||||||||||
NTN-F | 28 | - | 57 | - | 7 | - | 21 | (0.00 | ) | |||||||||||||||||||||||
LTN | 168 | (0.00 | ) | - | - | |||||||||||||||||||||||||||
DI Future | 1 | - | 19 | (0.00 | ) | |||||||||||||||||||||||||||
Private securities | ||||||||||||||||||||||||||||||||
Indexed to IGPM | 141 | - | 137 | - | 26 | (0.00 | ) | 139 | (0.02 | ) | ||||||||||||||||||||||
Indexed to IPCA | 224 | (0.2 | ) | 122 | (0.1 | ) | 289 | (0.22 | ) | 217 | (0.17 | ) | ||||||||||||||||||||
Indexed to PRE | 93 | - | - | - | 67 | (0.01 | ) | 74 | - | |||||||||||||||||||||||
Shares | 523 | 5.23 | 376 | 3.76 | ||||||||||||||||||||||||||||
Floating assets | 5,607 | - | 5,013 | - | 5,660 | - | 5,622 | - | ||||||||||||||||||||||||
Under agreements to resell - over | 6,433 | - | 4,408 | - | ||||||||||||||||||||||||||||
Total | 16,692 | (4.20 | ) | 13,052 | (3.90 | ) | ||||||||||||||||||||||||||
Under agreements to resell | 4,574 | - | 6,237 | - |
F.110 |
The column DV01 is the impact for a movement of + 0.01% (BPS) in the index rate. In this case, as they are asset positions, the positive impact on the rate contributes negatively for income.
Liquidity riskRisk
Liquidity risk is the risk that ITAÚ UNIBANCO HOLDING may have insufficient net funds available to honor its current obligations at a given moment. The liquidity risk is managed continuously based on the monitoring of payment flows related to its liabilities vis a visvis-à-vis the inflows generated by its operations and financial assets portfolio. Additionally, according to the principles of prudence and conservative accounting, ITAÚ UNIBANCO HOLDING has funds invested in short-term assets, available on demand, to cover its regular needs and any liquidity contingencies.
Liabilities | 12/31/2011 | 12/31/2010 | Assets | 12/31/2011 | 12/31/2010 | |||||||||||||||||||||||||||||
Technical provision | Amount | DU (*) | Amount | DU (*) | Backing asset | Amount | DU (*) | Amount | DU (*) | |||||||||||||||||||||||||
PPNG, PPNG-RVNE, PCP and OPT (1) | 1,690 | 12 | 1,232 | 13 | LFT, Repurchase Agreements, NTN-B, CDB, LF and Debentures | 1,690 | 7 | 1,232 | 5 | |||||||||||||||||||||||||
Reserve for premium deficiency | 233 | 187 | 199 | 172 | LFT, Repurchase Agreements, NTN-B, CDB, LF and Debentures | 233 | 7 | 199 | 4 | |||||||||||||||||||||||||
IBNR and Provision for unsettled claims (2) | 1,401 | 19 | 1,077 | 20 | LFT, Repurchase Agreements, NTN-B, CDB, LF and Debentures | 1,401 | 7 | 1,077 | 5 | |||||||||||||||||||||||||
Other Reserves | 303 | - | 299 | - | LFT, Repurchase Agreements, NTN-B, CDB and Debentures | 303 | - | 299 | - | |||||||||||||||||||||||||
Subtotal | 3,627 | 2,807 | Subtotal | 3,627 | 2,807 | |||||||||||||||||||||||||||||
Reserves | ||||||||||||||||||||||||||||||||||
Administrative expenses | 43 | 125 | 32 | 128 | LFT, Repurchase Agreements, NTN-B, CDB, LF and Debentures | 43 | 7 | 32 | 3 | |||||||||||||||||||||||||
Mathematical reserve for benefits granted | 977 | 126 | 860 | 128 | LFT, Repurchase Agreements, LTN, LTN-B, NTN-C, NTN-F, CDB, LF and Debentures | 977 | 124 | 860 | 130 | |||||||||||||||||||||||||
Mathematical reserve for benefits to be granted – PGBL/ VGBL | 57,626 | 109 | 46,037 | 116 | LFT, Repurchase Agreements, LTN, LTN-B, NTN-C, NTN-F, CDB, LF and Debentures (3) | 57,626 | 8 | 46,037 | 5 | |||||||||||||||||||||||||
Mathematical reserve for benefits to be granted – Traditional | 3,365 | 116 | 3,205 | 109 | LFT, Repurchase Agreements, NTN-B, NTN-C and Debentures | 3,365 | 109 | 3,205 | 101 | |||||||||||||||||||||||||
Insufficient contribution | 692 | 109 | 603 | 109 | LFT, Repurchase Agreements, NTN-B, CDB, LF and Debentures | 692 | 109 | 603 | 101 | |||||||||||||||||||||||||
Financial surplus | 477 | 109 | 461 | 109 | LFT, Repurchase Agreements, NTN-B, CDB, LF and Debentures | 477 | 109 | 461 | 101 | |||||||||||||||||||||||||
Subtotal | 63,180 | 51,198 | Subtotal | 63,180 | 51,198 | |||||||||||||||||||||||||||||
Total technical reserves | 66,807 | 54,005 | Total backing assets | 66,807 | 54,005 |
Liabilities | 12/31/2012 | 12/31/2011 | Assets | 12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||
Amount | DU (*) | Amount | DU (*) | Amount | DU (*) | Amount | DU (*) | |||||||||||||||||||||||||||
Technical provision | Backing asset | |||||||||||||||||||||||||||||||||
PPNG, PPNG-RVNE, PCP and OPT (1) | 1,746 | 17 | 1,690 | 12 | LFT, Repurchase Agreements, NTN-B, CDB, LF and Debentures | 1,746 | 7 | 1,690 | 7 | |||||||||||||||||||||||||
Reserve for premium deficiency | 253 | 182 | 233 | 187 | LFT, Repurchase Agreements, NTN-B, CDB, LF and Debentures | 253 | 7 | 233 | 7 | |||||||||||||||||||||||||
IBNR and Provision for unsettled claims (2) | 1,409 | 18 | 1,401 | 19 | LFT, Repurchase Agreements, NTN-B, CDB, LF and Debentures | 1,409 | 7 | 1,401 | 7 | |||||||||||||||||||||||||
Other Reserves | 345 | - | 303 | - | LFT, Repurchase Agreements, NTN-B, CDB and Debentures | 345 | - | 303 | - | |||||||||||||||||||||||||
Subtotal | 3,753 | 3,627 | Subtotal | 3,753 | 3,627 | |||||||||||||||||||||||||||||
Provisions | ||||||||||||||||||||||||||||||||||
Administrative expenses | 41 | 126 | 43 | 125 | LFT, Repurchase Agreements, NTN-B, CDB, LF and Debentures | 41 | 7 | 43 | 7 | |||||||||||||||||||||||||
Mathematical reserve for benefits granted | 1,066 | 126 | 977 | 126 | LFT, Repurchase Agreements, LTN, NTN-B, NTN-C, NTN-F, CDB, LF and Debentures | 1,066 | 136 | 977 | 124 | |||||||||||||||||||||||||
Mathematical reserve for benefits to be granted – PGBL/ VGBL | 75,055 | 133 | 57,626 | 109 | LFT, Repurchase Agreements, LTN, LTN-B, NTN-C, NTN-F, CDB, LF and Debentures (3) | 75,055 | 27 | 57,626 | 8 | |||||||||||||||||||||||||
Mathematical reserve for benefits to be granted – Traditional | 3,630 | 179 | 3,365 | 116 | LFT, Repurchase Agreements, NTN-B, NTN-C, Debentures | 3,630 | 136 | 3,365 | 109 | |||||||||||||||||||||||||
Insufficient contribution | 751 | 179 | 692 | 109 | LFT, Repurchase Agreements, NTN-B, CDB, LF and Debentures | 751 | 136 | 692 | 109 | |||||||||||||||||||||||||
Financial surplus | 515 | 179 | 477 | 109 | LFT, Repurchase Agreements, NTN-B, CDB, LF and Debentures | 515 | 136 | 477 | 109 | |||||||||||||||||||||||||
Subtotal | 81,058 | 63,180 | Subtotal | 81,058 | 63,180 | |||||||||||||||||||||||||||||
Total technical reserves | 84,811 | 66,807 | Total backing assets | 84,811 | 66,807 |
(*) DU – Duration in months.months
(1) Net Amountamount of Credit Right.
(2) Net of escrow deposits and reserves retained IRB.
(3) Excluding PGBL/PGBL / VGBL reserves allocated in variable income.
F.111 |
Credit riskRisk
For reinsurance operations, the internal policy prohibits excess concentration in only one reinsurer. At present the reinsurer with the largest share of our operations represents less than 37.22%39% of the total. In addition, we follow the SUSEP rules about reinsurers with which we operate, mainly with respect to “solvency rating, issued by a rating agency”, with the following minimum levels:
Rating agency | Minimum required level | ||
Standard & Poor's | BBB- | ||
Fitch | BBB- | ||
Moody´s | Baa3 | ||
AM Best | B+ |
Reinsurance |
Expenses and revenuerevenues from reinsurance premiums transferredceded are recognized onin the period when they occur, according to the accrual basis, with no offset of assets and liabilities related to reinsurance except ifin the event there is a contractual provision for the offset of accounts between the parties. Analyses of reinsurance required are made to meet the current needs of ITAÚ UNIBANCO HOLDING, maintaining the necessary flexibility to comply with changes in management strategy in response to the various scenarios to which it may be exposed.
With the approval of the Supplementary Law No. 126 of January 15, 2007, the reinsurance market was opened up to competition with the creation of three categories of companies authorized to operate in Brazil: local, admitted and occasional (the last two latter being foreignrespectively reinsurance companies respectively with or without a representative office in Brazil). The transition to the new market was made progressively, maintaining the right of local reinsurance companies toat 60% of premiums transferredceded by insurance companies until January 2010; after thatthis period, this percentage may be reduced to 40%. From March 31, 2011, this percentage of 40% mustshall be obligatorily be transferredceded to local reinsurance companies.
Reinsurance assets
Reinsurance assets |
Reinsurance assets represent the estimated amounts recoverable from reinsurers in connection with losses incurred. Such assets are recordedevaluated based on risk assignment contracts, and for cases of losses effectively paid, they are reassessed after 365 days as to the possibility of impairment,impairment; in case of doubts, such assets are reduced by recognizing an allowance for losses on reinsurance.
Reinsurance transferred
ITAÚ UNIBANCO HOLDING transfers, in the normal course of its businesses, reinsurance premiums to cover losses on underwriting risks to its policyholders and is in compliance with the operational limits established by the regulatoryregulating authority. In addition to proportional contracts, non-proportional contracts are also entered into in order to transfer a portion of the responsibility to the reinsurance company for losses that exceed a certain level of losses in the portfolio. Non-proportional reinsurance premiums are included in “otherOther assets - prepaid expenses”expenses and amortized to “otherOther operating expenses”expenses over the effectiveness period of the contract on a daily accrual basis.
I –
F.112 |
I- Changes in balances of transactions with reinsurance companies
Credits | Debits | Credits | Debits | |||||||||||||||||||||||||||||
12/31/2011 | 12/31/2010 | 12/31/2011 | 12/31/2010 | 12/31/2012 | 12/31/2013 | 12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||
Opening balance | 176 | 253 | 106 | 302 | 214 | 176 | 313 | 106 | ||||||||||||||||||||||||
Issued contracts | - | - | 926 | 561 | - | - | 1,106 | 926 | ||||||||||||||||||||||||
Recovered claims | 52 | 29 | - | - | ||||||||||||||||||||||||||||
Recoverable claims | 26 | 52 | - | - | ||||||||||||||||||||||||||||
Prepayments/Payments to Reinsurer | 32 | (82 | ) | (751 | ) | (754 | ) | (7 | ) | 32 | (1,043 | ) | (751 | ) | ||||||||||||||||||
Monetary adjustment and interest of claims | - | - | 32 | (3 | ) | - | - | 8 | 32 | |||||||||||||||||||||||
Other increase/ reversal | (46 | ) | (24 | ) | - | - | ||||||||||||||||||||||||||
Other increase/reversal | 1 | (46 | ) | - | - | |||||||||||||||||||||||||||
Closing balance | 214 | 176 | 313 | 106 | 234 | 214 | 384 | 313 |
II – Balances of technical reserves with reinsurance assets
12/31/2011 | 12/31/2010 | 1/1/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||
Reinsurance claims | 1,394 | 1,185 | 886 | 2,098 | 1,394 | |||||||||||||||
Reinsurance premiums | 535 | 404 | 529 | 700 | 535 | |||||||||||||||
Reinsurance commission | (58 | ) | (59 | ) | (59 | ) | (45 | ) | (58 | ) | ||||||||||
Closing balance | 1,871 | 1,530 | 1,356 | 2,753 | 1,871 |
III – Changes in balances of technical reserves for reinsurance claims
12/31/2011 | 12/31/2010 | 12/31/2012 | 12/31/2011 | |||||||||||||
Opening balance | 1,185 | 886 | 1,394 | 1,185 | ||||||||||||
Reported claims | 615 | 713 | 1,313 | 615 | ||||||||||||
Paid claims | (101 | ) | (390 | ) | (598 | ) | (101 | ) | ||||||||
Other increase/ reversal | (305 | ) | (24 | ) | ||||||||||||
Other increase/reversal | (11 | ) | (305 | ) | ||||||||||||
Closing balance | 1,394 | 1,185 | 2,098 | 1,394 |
IV -– Changes in balances of technical reserves for reinsurance premiums
12/31/2011 | 12/31/2010 | 12/31/2012 | 12/31/2011 | |||||||||||||
Opening balance | 404 | 529 | 535 | 404 | ||||||||||||
Receipts | 814 | 614 | 1,049 | 814 | ||||||||||||
Payments | (683 | ) | (739 | ) | (884 | ) | (683 | ) | ||||||||
Closing balance | 535 | 404 | 700 | 535 |
V -– Changes in balances of technical reserves for reinsurance commission
12/31/2011 | 12/31/2010 | 12/31/2012 | 12/31/2011 | |||||||||||||
Opening balance | (59 | ) | (59 | ) | (58 | ) | (59 | ) | ||||||||
Receipts | (50 | ) | (54 | ) | (64 | ) | (50 | ) | ||||||||
Payments | 51 | 54 | 77 | 51 | ||||||||||||
Closing balance | (58 | ) | (59 | ) | (45 | ) | (58 | ) |
F.113 |
m) Regulatory authorities
Insurance and private pension operations are regulated by the National Council of Private Insurance (CNSP) and the SuperintendencySuperintendence of Private Insurance (SUSEP). These authorities are responsible for regulating the market, and consequently for assisting in the mitigation of risks inherent in the business.
The National Council of Private Insurance (CNSP) is the regulatory authority of insurance activities in Brazil, created by Decree-Law No. 73, of November 21, 1966. The main attribution of CNSP, at the time of its creation, was to set out the guidelines and rules of government policy on private insurance segments, and with the enactment of Law No. 6,435, of July 15, 1977, (revoked by Supplementary Law No. 109/01), its attributions included private pension of public companies.
The SuperintendencySuperintendence of Private Insurance (SUSEP) is the authority responsible for controlling and overseeing the insurance, private pension, and reinsurance markets. An agency of the Ministry of Finance, it was created by the Decree-Law No. 73, of November 21, 1966, which also created the National System of Private Insurance, comprising the National Council of Private Insurance (CNSP), IRB Brasil Resseguros S.A. (IRB Brasil),– IRB Brasil Re, the companies authorized to have private pension plans and the open-ended private pension companies.
n) Capital requirements for insurance activity
The National Council of Private Insurance (CNSP), following the worldwide trend towards the strengthening of the insurance market, disclosed on December 6, 2010, CNSP Resolution No. 227, (which revoked Resolutions Nos.No. 178 of December 28, 2007 and No. 200 of December 16, 2008), and Circular No. 411 of December 22, 2010. These documents define the rules on the regulatory capital required for authorization and operation of insurance and private pension companies, and rules for the allocation of capital to underwriting risk for the various insurance lines. In January 2011, CNSP Resolution No. 228, of December 6, 2010, which provides for the criteria for establishment of additional capital based on the credit risk of the supervised companies, came into effect.
The adjusted stockholders’ equity of ITAÚ UNIBANCO HOLDING companies exclusively engaged in insurance and private pension activities is higher than the required regulatory capital. The insurance companies of ITAÚ UNIBANCO HOLDING present capital exceeding the regulatory minimum capital at R$ 1,362 (R$ 2,049 at 12/31/2011) in Itaú Seguros S.A., and R$ 2,049553 (R$ 1,4361,565 at 12/31/2010, R$ 898 at 01/01/2010) and in2011) Itaú Vida e Previdência S.A., R$ 1,565 (R$ 1,199 at 12/31/2010, R$ 733 at 01/01/2010).S.A..
F.114 |
NOTE 3031 – FAIR VALUE OF FINANCIAL INSTRUMENTS
In cases where market prices are not available, fair values are based on estimates using discounted cash flows or other valuation techniques. These techniques are significantly affected by the assumptions adopted, including the discount rate and estimate of future cash flows. The estimated fair value achieved through these techniques cannot be substantiated by comparison with independent markets and, in many cases, it cannot be realized in the immediate settlement of the instrument.
The following table summarizes the carrying and estimated fair values for financial instruments:
12/31/2011 | 12/31/2010 | 1/1/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||||||||||||||||||||||
Carrying value | Estimated fair value | Carrying value | Estimated fair value | Carrying value | Estimated fair value | Carrying value | Estimated fair value | Carrying value | Estimated fair value | |||||||||||||||||||||||||||||||
Financial assets | ||||||||||||||||||||||||||||||||||||||||
Cash and deposits on demand and Central Bank compulsory deposits | 108,721 | 108,721 | 95,948 | 95,948 | 24,540 | 24,540 | 77,668 | 77,668 | 108,721 | 108,721 | ||||||||||||||||||||||||||||||
Interbank deposits | 27,821 | 27,849 | 14,835 | 14,842 | 17,799 | 17,806 | 23,826 | 23,853 | 27,821 | 27,849 | ||||||||||||||||||||||||||||||
Securities purchased under agreements to resell | 92,248 | 92,248 | 88,682 | 88,682 | 135,820 | 135,820 | 162,737 | 162,737 | 92,248 | 92,248 | ||||||||||||||||||||||||||||||
Financial assets held for trading (*) | 121,889 | 121,889 | 115,497 | 115,497 | 55,552 | 55,552 | 145,516 | 145,516 | 121,889 | 121,889 | ||||||||||||||||||||||||||||||
Financial assets designated at fair value through profit or loss (*) | 186 | 186 | 306 | 306 | 373 | 373 | 220 | 220 | 186 | 186 | ||||||||||||||||||||||||||||||
Derivatives (*) | 8,754 | 8,754 | 7,777 | 7,777 | 5,589 | 5,589 | 11,597 | 11,597 | 8,754 | 8,754 | ||||||||||||||||||||||||||||||
Available-for-sale financial assets (*) | 47,510 | 47,510 | 44,539 | 44,539 | 41,302 | 41,302 | 90,869 | 90,869 | 47,510 | 47,510 | ||||||||||||||||||||||||||||||
Held-to-maturity financial assets | 3,105 | 3,713 | 3,170 | 3,787 | 2,429 | 2,792 | 3,202 | 4,517 | 3,105 | 3,713 | ||||||||||||||||||||||||||||||
Loan operations and lease operations | 322,391 | 323,021 | 274,843 | 275,684 | 224,168 | 225,009 | 341,271 | 343,375 | 322,391 | 323,021 | ||||||||||||||||||||||||||||||
Other financial assets | 40,254 | 40,254 | 40,945 | 40,945 | 26,931 | 26,931 | 44,492 | 44,492 | 40,254 | 40,254 | ||||||||||||||||||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||||||||||||||
Deposits | 242,636 | 242,554 | 202,688 | 202,607 | 190,716 | 190,636 | 243,200 | 243,127 | 242,636 | 242,554 | ||||||||||||||||||||||||||||||
Securities sold under repurchase agreements | 185,413 | 185,413 | 199,657 | 199,657 | 131,945 | 131,945 | 267,405 | 267,405 | 185,413 | 185,413 | ||||||||||||||||||||||||||||||
Financial liabilities held for trading (*) | 2,815 | 2,815 | 1,335 | 1,335 | 663 | 663 | 642 | 642 | 2,815 | 2,815 | ||||||||||||||||||||||||||||||
Derivatives (*) | 6,747 | 6,747 | 5,671 | 5,671 | 5,332 | 5,332 | 11,069 | 11,069 | 6,747 | 6,747 | ||||||||||||||||||||||||||||||
Interbank market debt | 90,498 | 90,350 | 62,599 | 62,542 | 44,675 | 43,398 | 97,073 | 96,858 | 90,498 | 90,350 | ||||||||||||||||||||||||||||||
Institutional market debt | 54,807 | 54,681 | 44,513 | 44,419 | 30,530 | 31,702 | 72,028 | 71,036 | 54,807 | 54,681 | ||||||||||||||||||||||||||||||
Liabilities for capitalization plans | 2,838 | 2,838 | 2,603 | 2,603 | 2,261 | 2,261 | 2,892 | 2,892 | 2,838 | 2,838 | ||||||||||||||||||||||||||||||
Other financial liabilities. | 44,119 | 44,119 | 41,012 | 41,012 | 26,825 | 26,825 | ||||||||||||||||||||||||||||||||||
Other financial liabilities | 50,255 | 50,255 | 44,119 | 44,119 |
(*) These assets and liabilities are recorded in the balance sheet at their fair value.
Financial instruments not included in the Balance Sheet (Note 35)36) are represented by Standby Letters of Credit and Guarantees Provided, which amount recorded in memorandum account totalsto R$ 51,530(R$38,37460,310 (R$ 51,530 at December 31, 2010 and R$32,431 at January 1, 2010) and12/31/2011) with an estimated fair value of R$ 695(R$537at December 31, 2010 and R$417728 (R$ 695 at January 1, 2010)12/31/2011).
The methods and assumptions adopted to estimate the fair value are defined below:
a) | Cash and Deposits on Demand, Central Bank Compulsory Deposits and Securities Purchased under Agreements to Resell |
b) | Interbank Deposits – |
c) | Financial Assets Held for Trading, including Derivatives (Assets and Liabilities), Financial Assets designated at Fair Value through Profit or Loss, Available-for-sale Financial Assets and Held-to-Maturity Financial Assets– |
· | Swaps: |
· | Futures and |
F.115 |
· | Options: The fair values are determined based on mathematical models (such as Black |
· | Credit Risk: |
d) | Loan operations and lease operations – |
e) |
And for:
In accordance with IFRS, ITAÚ UNIBANCO HOLDING classifies fair value measurements in a fair value hierarchy that reflects the significance of inputs adopted in the measurement process.
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. An active market is a market in which transactions for the asset or liability being measured occur often enough and with sufficient volume to provide pricing information on an ongoing basis.
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. Level 2 generally includes: (i) quoted prices for similar assets or liabilities in active markets; (ii) quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability, the prices are not current, or quoted priceprices vary substantially either over time or among market makers, or in which little information is released publicly; (iii) inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, etc.); (iv) inputs that are mainly derived from or corroborated by observable market data through correlation or by other means.
Level 3: Inputs are unobservable for the asset or liability. Unobservable information shall be used to measure fair value to the extent that observable information is not available, thus allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
Financial Assets Held for Trading, Available for Sale, and Designated at Fair Value through Profit or Loss:
Level 1: highly-liquidHighly-liquid securities with prices available in an active market are classified intoin Level 1 of the fair value hierarchy. This classification level includes most of the Brazilian Government Securities (mainly LTN, LFT, NTN-B, NTN-C and NTN-F), securities of foreign governments, shares and debentures traded on stock exchanges and other securities traded in an active market.
Level 2: whenWhen the pricing information is not available for a specific security, the assessment is usually based on prices quoted in the market for similar instruments, pricing information obtained for pricing services, such as Bloomberg, Reuters and brokers (only when the prices represent actual transactions) or discounted cash flows, which use information for assets actively traded in an active market. These securities are classified into Level 2 of the fair value hierarchy and are comprised of certain Brazilian government securities, debentures and some government securities quoted in a less-liquid market in relation to those classified into Level 1, and some share prices in investment funds. ITAÚ UNIBANCO HOLDING does not hold positions in alternative investment funds or private equity funds.
F.116 |
Level 3: whenWhen no pricing information in an active market, ITAÚ UNIBANCO HOLDING uses internally developed models, from curves generated according to the proprietary model. The Level 3 classification includes some Brazilian government and private securities (mainly NTN-I, NTN-A1, CRIsCRI, TDA and TDACCI falling due after 2025, CVS and CVS), promissory notesnotes) and securities that are not usually traded in an active market.
Derivatives:
Level 1: derivativesDerivatives traded on stock exchanges are classified in Level 1 of the hierarchy.
Level 2: forFor derivatives not traded on stock exchanges, ITAÚ UNIBANCO HOLDING estimates the fair value by adopting a variety of techniques, such as Black & Scholes,&Scholes, Garman & Kohlhagen, Monte Carlo or even the discounted cash flow models usually adopted in the financial market. Derivatives included in Level 2 are credit default swaps, cross currency swaps, interest ratesrate swaps, plain vanilla options, certain forwards and generally all swaps. All models adopted by ITAÚ UNIBANCO HOLDING are widely accepted in the financial services industry and reflect all derivative contractual terms. Considering that many of these models do not require a high level of subjectivity, since the methodologies adopted in the models do not require major decisions and information for the model are readily observed in the actively quotation markets, these products were classified in Level 2 of the measurement hierarchy.
Level 3: theThe derivatives with fair values based on non-observable information in an active market were classified into Level 3 of the fair value hierarchy, and are comprised of non-standard options, certain swaps indexed to non-observable information, and swaps with other products, such as swap with option and USD Check, credit derivatives and futures of certain commodities. These operations have their pricing derived from a range of volatility using the basis of historical volatility.
All aforementioned valuation methodologies may result in a fair value that may not be an indicative of the net realizable value or future fair values. However, ITAÚ UNIBANCO HOLDING believes that all methodologies used are appropriate and consistent with the other market participants. However, the adoption of other methodologies or assumptions different than those used by to estimate fair value may result in different fair value estimates at the balance sheet date.
F.117 |
Distribution by level
The following table presents the breakdown of risk levels at December 31, 12/31/2012 and 12/31/2011 2010 and January 1, 2010 for financial assets held for trading and available-for-sale financial assets.
12/31/2011 | 12/31/2010 | 1/1/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets held for trading | 100,041 | 21,558 | 290 | 121,889 | 100,445 | 14,893 | 159 | 115,497 | 40,665 | 14,326 | 561 | 55,552 | 118,548 | 26,948 | 20 | 145,516 | 100,041 | 21,558 | 290 | 121,889 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment funds | - | 1,339 | - | 1,339 | - | 1,748 | - | 1,748 | - | 1,619 | - | 1,619 | - | 1,468 | - | 1,468 | - | 1,339 | - | 1,339 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brazilian government securities | 93,727 | 187 | - | 93,914 | 86,422 | 277 | - | 86,699 | 35,328 | 807 | - | 36,135 | 111,045 | 161 | - | 111,206 | 93,727 | 187 | - | 93,914 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brazilian external debt bonds | 910 | - | - | 910 | 666 | - | - | 666 | 222 | - | - | 222 | 1,286 | - | - | 1,286 | 910 | - | - | 910 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Government securities – other countries | 722 | 80 | - | 802 | 9,036 | 317 | - | 9,353 | 936 | 121 | - | 1,057 | 710 | 162 | - | 872 | 722 | 80 | - | 802 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Argentina | 225 | - | - | 225 | 293 | - | - | 293 | 179 | - | - | 179 | 106 | - | - | 106 | 225 | - | - | 225 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
United States | 292 | - | - | 292 | 8,714 | - | - | 8,714 | 747 | - | - | 747 | 345 | - | - | 345 | 292 | - | - | 292 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mexico | 205 | - | - | 205 | 29 | - | - | 29 | 10 | - | - | 10 | 225 | - | - | 225 | 205 | - | - | 205 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chile | - | 50 | - | 50 | - | 248 | - | 248 | - | 77 | - | 77 | - | 108 | - | 108 | - | 50 | - | 50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Uruguay | - | 27 | - | 27 | - | 24 | - | 24 | - | 30 | - | 30 | - | 33 | - | 33 | - | 27 | - | 27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Russia | - | - | - | - | - | 45 | - | 45 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Colombia | 34 | - | - | 34 | - | 3 | - | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | - | 3 | - | 3 | - | - | - | - | - | 14 | - | 14 | - | 21 | - | 21 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate securities | 4,682 | 19,952 | 290 | 24,924 | 4,321 | 12,551 | 159 | 17,031 | 4,179 | 11,779 | 561 | 16,519 | 5,507 | 25,157 | 20 | 30,684 | 4,682 | 19,952 | 290 | 24,924 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | 2,241 | 56 | - | 2,297 | 3,208 | 40 | - | 3,248 | 2,641 | 69 | - | 2,710 | 2,815 | - | - | 2,815 | 2,241 | 56 | - | 2,297 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securitized real estate loans | - | 24 | - | 24 | - | 439 | 157 | 596 | - | 35 | - | 35 | - | 21 | - | 21 | - | 24 | - | 24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank deposit certificates | - | 7,820 | - | 7,820 | - | 8,932 | - | 8,932 | - | 9,490 | - | 9,490 | - | 2,933 | - | 2,933 | - | 7,820 | - | 7,820 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debentures | 2,434 | 1,092 | - | 3,526 | 1,112 | 1,688 | - | 2,800 | 1,536 | 1,560 | - | 3,096 | 2,692 | 1,944 | - | 4,636 | 2,434 | 1,092 | - | 3,526 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Eurobonds and others | 7 | 1,424 | - | 1,431 | - | 1,452 | - | 1,452 | 2 | 625 | - | 627 | - | 1,612 | - | 1,612 | 7 | 1,424 | - | 1,431 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory notes | - | - | 290 | 290 | - | - | - | - | - | - | 561 | 561 | - | - | 20 | 20 | - | - | 290 | 290 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial credit bills | - | 8,973 | - | 8,973 | - | - | - | - | - | - | - | - | - | 18,441 | - | 18,441 | - | 8,973 | - | 8,973 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | - | 563 | - | 563 | 1 | - | 2 | 3 | - | - | - | - | - | 206 | - | 206 | - | 563 | - | 563 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale financial assets | 20,988 | 24,926 | 1,596 | 47,510 | 18,898 | 23,994 | 1,647 | 44,539 | 17,839 | 21,374 | 2,089 | 41,302 | 48,351 | 40,029 | 2,489 | 90,869 | 20,988 | 24,926 | 1,596 | 47,510 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment funds | - | 806 | - | 806 | - | 770 | - | 770 | - | 1,273 | - | 1,273 | - | 255 | - | 255 | - | 806 | - | 806 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brazilian government securities | 12,120 | 45 | 259 | 12,424 | 9,753 | 6 | 320 | 10,079 | 13,370 | 14 | 334 | 13,718 | 25,131 | 25 | 306 | 25,462 | 12,120 | 45 | 259 | 12,424 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brazilian external debt bonds | 5,906 | - | - | 5,906 | 4,720 | - | - | 4,720 | 1,980 | - | - | 1,980 | 18,065 | - | - | 18,065 | 5,906 | - | - | 5,906 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Government securities – other countries | 11 | 4,306 | - | 4,317 | 679 | 3,880 | - | 4,559 | 17 | 7,224 | - | 7,241 | 602 | 6,535 | - | 7,137 | 11 | 4,306 | - | 4,317 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
United States | - | - | - | - | 679 | - | - | 679 | 17 | - | - | 17 | 375 | - | - | 375 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Austria | - | - | - | - | - | - | - | - | - | 213 | - | 213 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Denmark | - | 1,949 | - | 1,949 | - | 2,016 | - | 2,016 | - | 1,971 | - | 1,971 | - | 2,554 | - | 2,554 | - | 1,949 | - | 1,949 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Spain | - | 418 | - | 418 | - | 734 | - | 734 | - | 1,093 | - | 1,093 | - | - | - | - | - | 418 | - | 418 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Korea | - | 295 | - | 295 | - | 236 | - | 236 | - | 1,755 | - | 1,755 | - | 1,662 | - | 1,662 | - | 295 | - | 295 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mexico | 11 | - | - | 11 | - | - | - | - | - | - | - | - | - | - | - | - | 11 | - | - | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chile | - | 995 | - | 995 | - | 453 | - | 453 | - | 1,274 | - | 1,274 | - | 1,534 | - | 1,534 | - | 995 | - | 995 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paraguay | - | 344 | - | 344 | - | 256 | - | 256 | - | 417 | - | 417 | - | 491 | - | 491 | - | 344 | - | 344 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portugal | - | - | - | - | - | - | - | - | - | 26 | - | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Uruguay | - | 268 | - | 268 | - | 185 | - | 185 | - | 475 | - | 475 | - | 294 | - | 294 | - | 268 | - | 268 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Belgium | 71 | - | - | 71 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
France | 57 | - | - | 57 | - | 37 | - | 37 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
United Kingdom | 83 | - | - | 83 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | - | 37 | - | 37 | - | - | - | - | - | - | - | - | 16 | - | - | 16 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate securities | 2,951 | 19,769 | 1,337 | 24,057 | 3,746 | 19,338 | 1,327 | 24,411 | 2,472 | 12,863 | 1,755 | 17,090 | 4,553 | 33,214 | 2,183 | 39,950 | 2,951 | 19,769 | 1,337 | 24,057 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | 808 | 3,170 | - | 3,978 | 624 | 4,500 | - | 5,124 | 463 | 4,231 | - | 4,694 | 2,258 | 1,554 | - | 3,812 | 808 | 3,170 | - | 3,978 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securitized real estate loans | - | 7,323 | 691 | 8,014 | - | 6,913 | 62 | 6,975 | - | 4,168 | 126 | 4,294 | - | 7,200 | 1,368 | 8,568 | - | 7,323 | 691 | 8,014 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank deposit certificates | - | 274 | - | 274 | - | 559 | - | 559 | - | 99 | - | 99 | - | 391 | - | 391 | - | 274 | - | 274 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debentures | 2,103 | 5,133 | - | 7,236 | 3,122 | 3,512 | - | 6,634 | 1,883 | 2,651 | - | 4,534 | 2,280 | 11,684 | - | 13,964 | 2,103 | 5,133 | - | 7,236 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Eurobonds and others | 40 | 3,598 | - | 3,638 | - | 3,843 | - | 3,843 | 126 | 1,698 | - | 1,824 | 15 | 5,576 | 5 | 5,596 | 40 | 3,598 | - | 3,638 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory notes | - | - | 646 | 646 | - | - | 1,265 | 1,265 | - | - | 1,626 | 1,626 | - | - | 777 | 777 | - | - | 646 | 646 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rural Product Note | - | 778 | - | 778 | - | 108 | - | 108 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial credit bills | - | 5,720 | - | 5,720 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | - | 271 | - | 271 | - | 11 | - | 11 | - | 16 | 3 | 19 | - | 311 | 33 | 344 | - | 163 | - | 163 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets designated at fair value through profit or loss | - | 186 | - | 186 | - | 306 | - | 306 | - | 373 | - | 373 | - | 220 | - | 220 | - | 186 | - | 186 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brazilian government securities | - | 186 | - | 186 | - | 306 | - | 306 | - | 373 | - | 373 | - | 220 | - | 220 | - | 186 | - | 186 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial liabilities designated at fair value | - | (2,815 | ) | - | (2,815 | ) | - | (1,335 | ) | - | (1,335 | ) | - | (663 | ) | - | (663 | ) | - | 642 | - | 642 | - | 2,815 | - | 2,815 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Structured notes | - | (2,815 | ) | - | (2,815 | ) | - | (1,335 | ) | - | (1,335 | ) | - | (663 | ) | - | (663 | ) | - | 642 | - | 642 | - | 2,815 | - | 2,815 |
The following table presents the breakdown of risk levels at December 31, 2011, 201012/31/2012 and January 1, 201012/31/2011 for our derivative assets and liabilities.
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Derivatives - Assets | - | 11,284 | 313 | 11,597 | 17 | 7,832 | 905 | 8,754 | ||||||||||||||||||||||||
Options | - | 1,759 | 147 | 1,906 | - | 1,755 | 688 | 2,443 | ||||||||||||||||||||||||
Forwards | - | 3,528 | 2 | 3,530 | - | 1,876 | 3 | 1,879 | ||||||||||||||||||||||||
Swap – Differential receivable | - | 3,661 | 25 | 3,686 | - | 2,732 | 18 | 2,750 | ||||||||||||||||||||||||
Check of swap | - | 35 | - | 35 | - | 4 | - | 4 | ||||||||||||||||||||||||
Credit derivatives | - | 728 | - | 728 | - | 399 | - | 399 | ||||||||||||||||||||||||
Forwards | - | 379 | - | 379 | - | 450 | 1 | 451 | ||||||||||||||||||||||||
Futures | - | - | - | - | 17 | 9 | - | 26 | ||||||||||||||||||||||||
Other derivatives | - | 1,194 | 139 | 1,333 | - | 607 | 195 | 802 | ||||||||||||||||||||||||
Derivatives - Liabilities | (23 | ) | (10,877 | ) | (169 | ) | (11,069 | ) | - | (6,047 | ) | (700 | ) | (6,747 | ) | |||||||||||||||||
Options | - | (2,132 | ) | (149 | ) | (2,281 | ) | - | (1,930 | ) | (676 | ) | (2,606 | ) | ||||||||||||||||||
Forwards | - | (2,291 | ) | (2 | ) | (2,293 | ) | - | (811 | ) | (7 | ) | (818 | ) | ||||||||||||||||||
Swap – Differential payable | - | (5,053 | ) | (15 | ) | (5,068 | ) | - | (2,782 | ) | (16 | ) | (2,798 | ) | ||||||||||||||||||
Swap with USD check | - | (42 | ) | - | (42 | ) | - | (2 | ) | - | (2 | ) | ||||||||||||||||||||
Credit derivatives | - | (90 | ) | - | (90 | ) | - | (110 | ) | - | (110 | ) | ||||||||||||||||||||
Forwards | - | (343 | ) | (3 | ) | (346 | ) | - | (325 | ) | (1 | ) | (326 | ) | ||||||||||||||||||
Futures | (23 | ) | - | - | (23 | ) | - | - | - | - | ||||||||||||||||||||||
Other derivatives | - | (926 | ) | - | (926 | ) | - | (87 | ) | - | (87 | ) |
F.118 |
Measurement of Fair value Level 2 based on pricing services and brokers
12/31/2011 | 12/31/2010 | 1/1/2010 | ||||||||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||
Derivatives - Assets | 17 | 7,832 | 905 | 8,754 | - | 7,292 | 485 | 7,777 | - | 5,085 | 504 | 5,589 | ||||||||||||||||||||||||||||||||||||
Options | - | 1,755 | 688 | 2,443 | - | 1,696 | 56 | 1,752 | - | 1,649 | 177 | 1,826 | ||||||||||||||||||||||||||||||||||||
Forwards | - | 2,326 | 4 | 2,330 | - | 2,096 | - | 2,096 | - | 412 | - | 412 | ||||||||||||||||||||||||||||||||||||
Swap – Differential receivable | - | 2,732 | 18 | 2,750 | - | 2,932 | 5 | 2,937 | - | 2,579 | - | 2,579 | ||||||||||||||||||||||||||||||||||||
Swap with USD Check | - | 4 | - | 4 | - | - | - | - | - | - | 49 | 49 | ||||||||||||||||||||||||||||||||||||
Check of swap | - | - | - | - | - | - | - | - | - | - | 186 | 186 | ||||||||||||||||||||||||||||||||||||
Credit derivatives | - | 399 | - | 399 | - | - | 261 | 261 | - | - | 15 | 15 | ||||||||||||||||||||||||||||||||||||
Futures | 17 | 9 | - | 26 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Other derivatives | - | 607 | 195 | 802 | - | 568 | 163 | 731 | - | 445 | 77 | 522 | ||||||||||||||||||||||||||||||||||||
Derivatives - Liabilities | - | (6,047 | ) | (700 | ) | (6,747 | ) | (46 | ) | (5,290 | ) | (335 | ) | (5,671 | ) | (9 | ) | (4,694 | ) | (629 | ) | (5,332 | ) | |||||||||||||||||||||||||
Options | - | (1,930 | ) | (676 | ) | (2,606 | ) | - | (1,899 | ) | (188 | ) | (2,087 | ) | - | (1,599 | ) | (249 | ) | (1,848 | ) | |||||||||||||||||||||||||||
Forwards | - | (1,136 | ) | (8 | ) | (1,144 | ) | - | (1,191 | ) | - | (1,191 | ) | - | (474 | ) | - | (474 | ) | |||||||||||||||||||||||||||||
Swap – Differential payable | - | (2,782 | ) | (16 | ) | (2,798 | ) | - | (2,007 | ) | (6 | ) | (2,013 | ) | - | (2,108 | ) | (6 | ) | (2,114 | ) | |||||||||||||||||||||||||||
Swap with USD Check | - | - | - | - | - | - | - | - | - | - | (90 | ) | (90 | ) | ||||||||||||||||||||||||||||||||||
Check of swap | - | (2 | ) | - | (2 | ) | - | - | - | - | - | - | (140 | ) | (140 | ) | ||||||||||||||||||||||||||||||||
Credit derivatives | - | (110 | ) | - | (110 | ) | - | (10 | ) | (119 | ) | (129 | ) | - | - | (106 | ) | (106 | ) | |||||||||||||||||||||||||||||
Futures | - | - | - | - | (46 | ) | - | (9 | ) | (55 | ) | (9 | ) | (8 | ) | (9 | ) | (26 | ) | |||||||||||||||||||||||||||||
Other derivatives | - | (87 | ) | - | (87 | ) | - | (183 | ) | (13 | ) | (196 | ) | - | (505 | ) | (29 | ) | (534 | ) |
When pricing information is not available for securities classified as Level 2, pricing services, such as Bloomberg or brokers, are used to value such instruments.
In all cases, to assure that the fair value of these instruments is properly classified as Level 2, internal analysis of the information received are conducted, so as to understand the nature of the input used in the establishment of such values by the service provider.
Prices provided by pricing services that meet the following requirements are considered Level 2: input is immediately available, regularly distributed, provided by sources actively involved in significant markets and it is not proprietary.
Of the total of R$ 67,197 million in financial instruments classified as Level 2, at December 31, 2012, pricing service or brokers were used to evaluate securities at the fair value of R$ 20,545 million, substantially represented by:
· | Debentures: When available, we use price information for transactions recorded in the Brazilian Debenture System (SND), an electronic platform operated by CETIP, which provides multiple services for transactions involving debentures in the secondary market. Alternatively, prices of debentures provided by ANBIMA are used. Its methodology includes obtaining, on a daily basis, illustration and non-binding prices from a group of market players deemed to be significant. Such information is subject to statistical filters established in the methodology, with the purpose of eliminating outliers. |
· | Global and corporate securities: The pricing process for these securities consists in capturing from 2 to 8 quotes from Bloomberg, depending on the asset. The methodology consists in comparing the highest purchase prices and the lowest sale prices of trades provided by Bloomberg for the last day of the month. Such prices are compared with information from purchase orders that the Institutional Treasury of Itaú Unibanco provides for Bloomberg. Should the difference between them be lower than 0.5%, the average price of Bloomberg is used. Should it be higher than 0.5% or if the Institutional Treasury does not provide information on this specific security, the average price gathered directly from other banks is used. The price of the Institutional Treasury is used as a reference only and never in the computation of the final price. |
F.119 |
Level 3 recurring fair value measurements
The tables below show the changes in the balance sheet for financial instruments classified by ITAÚ UNIBANCO HOLDING in Level 3 of the fair value hierarchy:hierarchy.
Distribution by level
Fair value at 12/31/2011 | Total gains or losses (realized/unrealized) | Purchases and issues | Settlements | Transfers in and/or out of Level 3 | Fair value at 12/31/2012 | Total gains (losses) related to assets and liabilities still held at reporting date | ||||||||||||||||||||||
Financial assets held for trading | 290 | (238 | ) | 71 | (103 | ) | - | 20 | - | |||||||||||||||||||
Corporate securities | 290 | (238 | ) | 71 | (103 | ) | - | 20 | - | |||||||||||||||||||
Promissory notes | 290 | (238 | ) | 71 | (103 | ) | - | 20 | - | |||||||||||||||||||
Available-for-sale financial assets | 1,596 | 234 | 3,028 | (2,369 | ) | - | 2,489 | 638 | ||||||||||||||||||||
Brazilian government securities | 259 | 75 | 364 | (392 | ) | - | 306 | 17 | ||||||||||||||||||||
Corporate securities | 1,337 | 159 | 2,664 | (1,977 | ) | - | 2,183 | 621 | ||||||||||||||||||||
Securitized real estate loans | 691 | 123 | 684 | (130 | ) | - | 1,368 | 623 | ||||||||||||||||||||
Promissory notes | 646 | 37 | 1,941 | (1,847 | ) | - | 777 | - | ||||||||||||||||||||
Eurobonds and others | - | (3 | ) | 8 | - | - | 5 | (3 | ) | |||||||||||||||||||
Outros | - | 2 | 31 | - | - | 33 | 1 |
Fair value at 12/31/2010 | Total gains or losses (realized/ unrealized) | Purchases and issues | Settlements | Transfers in and/or out of Level 3 | Fair value at 12/31/2011 | Total gains (losses) related to assets and liabilities still held at 12/31/2011 | ||||||||||||||||||||||
Financial assets held for trading | 159 | 89 | 1,422 | (1,391 | ) | 11 | 290 | - | ||||||||||||||||||||
Corporate securities | 159 | 89 | 1,422 | (1,391 | ) | 11 | 290 | - | ||||||||||||||||||||
Securitized real estate loans | 157 | 85 | 562 | (804 | ) | - | - | - | ||||||||||||||||||||
Promissory notes | - | 3 | 697 | (410 | ) | - | 290 | - | ||||||||||||||||||||
Other | 2 | 1 | 163 | (177 | ) | 11 | - | - | ||||||||||||||||||||
Available-for-sale financial assets | 1,647 | 767 | 3,217 | (3,530 | ) | (505 | ) | 1,596 | 266 | |||||||||||||||||||
Brazilian government securities | 320 | - | 38 | (64 | ) | (35 | ) | 259 | (100 | ) | ||||||||||||||||||
Corporate securities | 1,327 | 767 | 3,179 | (3,466 | ) | (470 | ) | 1,337 | 366 | |||||||||||||||||||
Shares | - | - | 227 | - | (227 | ) | - | - | ||||||||||||||||||||
Securitized real estate loans | 62 | 686 | 1,125 | (1,103 | ) | (79 | ) | 691 | 366 | |||||||||||||||||||
Promissory notes | 1,265 | 78 | 1,666 | (2,363 | ) | - | 646 | - | ||||||||||||||||||||
Other | - | 3 | 161 | - | (164 | ) | - | - |
Fair value at 12/31/2011 | Total gains or losses (realized/unrealized) | Purchases and issues | Settlements | Transfers in and/or out of Level 3 | Fair value at 12/31/2012 | Total gains (losses) related to assets and liabilities still held at reporting date | ||||||||||||||||||||||
Derivatives - Assets | 905 | 20 | 243 | (855 | ) | - | 313 | 12 | ||||||||||||||||||||
Options | 688 | 25 | 218 | (784 | ) | - | 147 | 17 | ||||||||||||||||||||
Swap – Differential receivable | 18 | (6 | ) | 13 | - | - | 25 | 4 | ||||||||||||||||||||
Forwards | 3 | - | 6 | (7 | ) | - | 2 | 1 | ||||||||||||||||||||
Forwards | 1 | - | - | (1 | ) | - | - | - | ||||||||||||||||||||
Other derivatives | 195 | 1 | 6 | (63 | ) | - | 139 | (10 | ) | |||||||||||||||||||
Derivatives - Liabilities | (700 | ) | 19 | (238 | ) | 750 | - | (169 | ) | (30 | ) | |||||||||||||||||
Options | (676 | ) | 21 | (228 | ) | 734 | - | (149 | ) | (17 | ) | |||||||||||||||||
Forwards | (7 | ) | - | (7 | ) | 12 | - | (2 | ) | 1 | ||||||||||||||||||
Swap – Differential payable | (16 | ) | (2 | ) | - | 3 | - | (15 | ) | (14 | ) | |||||||||||||||||
Forwards | (1 | ) | - | (3 | ) | 1 | - | (3 | ) | - |
Fair value at 12/31/2010 | Total gains or losses (realized/ unrealized) | Purchases and issues | Settlements | Transfers in and/or out of Level 3 | Fair value at 12/31/2011 | Total gains (losses) related to assets and liabilities still held at 12/31/2011 | ||||||||||||||||||||||
Derivatives - Assets | 485 | 811 | 835 | (1,226 | ) | - | 905 | (93 | ) | |||||||||||||||||||
Options | 56 | 89 | 690 | (147 | ) | - | 688 | (63 | ) | |||||||||||||||||||
Swap – Differential receivable | 5 | (15 | ) | 28 | - | - | 18 | 3 | ||||||||||||||||||||
Swap with USD Check | - | - | 4 | - | - | 4 | - | |||||||||||||||||||||
Credit derivatives | 261 | 57 | 104 | (422 | ) | - | - | - | ||||||||||||||||||||
Other derivatives | 163 | 680 | 9 | (657 | ) | - | 195 | (33 | ) | |||||||||||||||||||
Derivatives - Liabilities | (335 | ) | 130 | (166 | ) | (329 | ) | - | (700 | ) | (316 | ) | ||||||||||||||||
Options | (188 | ) | 82 | (110 | ) | (460 | ) | - | (676 | ) | (302 | ) | ||||||||||||||||
Forwards | - | - | (8 | ) | - | - | (8 | ) | - | |||||||||||||||||||
Swap – Differential payable | (6 | ) | (13 | ) | (16 | ) | 19 | - | (16 | ) | (14 | ) | ||||||||||||||||
Credit derivatives | (119 | ) | 55 | (5 | ) | 69 | - | - | - | |||||||||||||||||||
Futures | (9 | ) | 6 | (27 | ) | 30 | - | - | - | |||||||||||||||||||
Other derivatives | (13 | ) | - | - | 13 | - | - | - |
Fair value at 12/31/2010 | Total gains or losses (realized/unrealized) | Purchases and issues | Settlements | Transfers in and/or out of Level 3 | Fair value at 12/31/2011 | Total gains (losses) related to assets and liabilities still held at reporting date | ||||||||||||||||||||||
Financial assets held for trading | 159 | 89 | 1,422 | (1,391 | ) | 11 | 290 | - | ||||||||||||||||||||
Corporate securities | 159 | 89 | 1,422 | (1,391 | ) | 11 | 290 | - | ||||||||||||||||||||
Securitized real estate loans | 157 | 85 | 562 | (804 | ) | - | - | - | ||||||||||||||||||||
Promissory notes | - | 3 | 697 | (410 | ) | - | 290 | - | ||||||||||||||||||||
Other | 2 | 1 | 163 | (177 | ) | 11 | - | - | ||||||||||||||||||||
Available-for-sale financial assets | 1,647 | 767 | 3,217 | (3,530 | ) | (505 | ) | 1,596 | 266 | |||||||||||||||||||
Brazilian government securities | 320 | - | 38 | (64 | ) | (35 | ) | 259 | (100 | ) | ||||||||||||||||||
Corporate securities | 1,327 | 767 | 3,179 | (3,466 | ) | (470 | ) | 1,337 | 366 | |||||||||||||||||||
Shares | - | - | 227 | - | (227 | ) | - | - | ||||||||||||||||||||
Securitized real estate loans | 62 | 686 | 1,125 | (1,103 | ) | (79 | ) | 691 | 366 | |||||||||||||||||||
Promissory notes | 1,265 | 78 | 1,666 | (2,363 | ) | - | 646 | - | ||||||||||||||||||||
Other | - | 3 | 161 | - | (164 | ) | - | - |
Fair value at 01/01/2010 | Total gains or losses (realized/ unrealized) | Purchases and issues | Settlements | Transfers in and/or out of Level 3 | Fair value at 12/31/2010 | Total gains (losses) related to assets and liabilities still held at 12/31/2010 | ||||||||||||||||||||||
Financial assets held for trading | 561 | 1 | 159 | (562 | ) | - | 159 | 2 | ||||||||||||||||||||
Corporate securities | 561 | 1 | 159 | (562 | ) | - | 159 | 2 | ||||||||||||||||||||
Securitized real estate loans | - | - | 157 | - | - | 157 | 2 | |||||||||||||||||||||
Promissory notes | 561 | 1 | - | (562 | ) | - | - | - | ||||||||||||||||||||
Other | - | - | 2 | - | - | 2 | - | |||||||||||||||||||||
Available-for-sale financial assets | 2,089 | 81 | 1,275 | (1,798 | ) | - | 1,647 | (1 | ) | |||||||||||||||||||
Brazilian government securities | 334 | 74 | - | (88 | ) | - | 320 | (1 | ) | |||||||||||||||||||
Corporate securities | 1,755 | 7 | 1,275 | (1,710 | ) | - | 1,327 | - | ||||||||||||||||||||
Securitized real estate loans | 127 | 5 | 14 | (82 | ) | - | 64 | - | ||||||||||||||||||||
Promissory notes | 1,628 | 2 | 1,261 | (1,628 | ) | - | 1,263 | - |
Fair value at 01/01/2010 | Total gains or losses (realized/ unrealized) | Purchases and issues | Settlements | Transfers in and/or out of Level 3 | Fair value at 12/31/2010 | Total gains (losses) related to assets and liabilities still held at 12/31/2010 | Fair value at 12/31/2010 | Total gains or losses (realized/unrealized) | Purchases and issues | Settlements | Transfers in and/or out of Level 3 | Fair value at 12/31/2011 | Total gains (losses) related to assets and liabilities still held at reporting date | |||||||||||||||||||||||||||||||||||||||||||
Derivatives - Assets | 504 | 56 | 408 | (483 | ) | - | 485 | (55 | ) | 485 | 811 | 835 | (1,226 | ) | - | 905 | (93 | ) | ||||||||||||||||||||||||||||||||||||||
Options | 177 | 30 | 36 | (187 | ) | - | 56 | - | 56 | 89 | 690 | (147 | ) | - | 688 | (63 | ) | |||||||||||||||||||||||||||||||||||||||
Swap – Differential receivable | - | - | 5 | - | - | 5 | - | 5 | (15 | ) | 28 | - | - | 18 | 3 | |||||||||||||||||||||||||||||||||||||||||
Check of swap | 186 | - | - | (186 | ) | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Swap with USD Check | 49 | - | - | (49 | ) | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Forwards | - | - | 3 | - | - | 3 | - | |||||||||||||||||||||||||||||||||||||||||||||||||
Credit derivatives | 15 | 87 | 256 | (97 | ) | - | 261 | 3 | 261 | 57 | 104 | (422 | ) | - | - | - | ||||||||||||||||||||||||||||||||||||||||
Forwards | - | - | 1 | - | - | 1 | - | |||||||||||||||||||||||||||||||||||||||||||||||||
Other derivatives | 77 | (61 | ) | 111 | 36 | - | 163 | (58 | ) | 163 | 680 | 9 | (657 | ) | - | 195 | (33 | ) | ||||||||||||||||||||||||||||||||||||||
Derivatives - Liabilities | (629 | ) | 372 | (294 | ) | 216 | - | (335 | ) | 10 | (335 | ) | 130 | (166 | ) | (329 | ) | - | (700 | ) | (316 | ) | ||||||||||||||||||||||||||||||||||
Options | (249 | ) | 83 | (151 | ) | 129 | - | (188 | ) | 45 | (188 | ) | 82 | (110 | ) | (460 | ) | - | (676 | ) | (302 | ) | ||||||||||||||||||||||||||||||||||
Forwards | - | - | (7 | ) | - | - | (7 | ) | - | |||||||||||||||||||||||||||||||||||||||||||||||
Swap – Differential payable | (6 | ) | - | - | - | - | (6 | ) | (5 | ) | (6 | ) | (13 | ) | (16 | ) | 19 | - | (16 | ) | (14 | ) | ||||||||||||||||||||||||||||||||||
Check of swap | (140 | ) | - | - | 140 | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Swap with USD Check | (90 | ) | - | - | 90 | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Credit derivatives | (106 | ) | 80 | (134 | ) | 41 | - | (119 | ) | (6 | ) | (119 | ) | 55 | (5 | ) | 69 | - | - | - | ||||||||||||||||||||||||||||||||||||
Forward | - | - | (1 | ) | - | - | (1 | ) | - | |||||||||||||||||||||||||||||||||||||||||||||||
Futures | (9 | ) | 227 | (9 | ) | (218 | ) | - | (9 | ) | (11 | ) | (9 | ) | 6 | (27 | ) | 30 | - | - | - | |||||||||||||||||||||||||||||||||||
Other derivatives | (29 | ) | (18 | ) | - | 34 | - | (13 | ) | (13 | ) | (13 | ) | - | - | 13 | - | - | - |
Derivative financial instruments classified in Level 3 mainly correspond to other derivatives – credit default swaps linked to shares.
There were no significant transfers between Level 1 and Level 2 during the yearsperiods ended December 31, 201112/31/2012 and 2010.12/31/2011.
F.120 |
There were transfers from Level 3 to Level 2 in view of the extension of curves verified in the market.
Sensitivity analyses foroperations of Level 3 operations
The fair value of financial instruments classified in Level 3 is measured through assessment techniques comprising assumptions not evidenced by current transaction prices in active markets, as explained in item f above. The table below shows the sensitivity of these fair values in scenarios in which it is reasonably likely thatof changes will occur in the prices of assets, interest rates, asset prices, or in scenarios mixing shocks in prices with shocks in volatility for non-linear assets (volatility arising from lack of alignment between the derivative and underlying asset prices).:
Types | I | II | III | |||||||||
Interest rate | (1 | ) | (17 | ) | (34 | ) | ||||||
Impact on income | - | (1 | ) | (2 | ) | |||||||
Impact on stockholders' equity | (1 | ) | (16 | ) | (32 | ) | ||||||
Currencies, Commodities and Ratios | (1 | ) | (1 | ) | - | |||||||
Impact on income | (1 | ) | (1 | ) | - | |||||||
Impact on stockholders' equity | - | - | - | |||||||||
Non Linear | (30 | ) | (56 | ) | - | |||||||
Impact on income | (30 | ) | (56 | ) | - | |||||||
Impact on stockholders' equity | - | - | - | |||||||||
TOTAL | (32 | ) | (74 | ) | (34 | ) | ||||||
Impact on income | (31 | ) | (58 | ) | (2 | ) | ||||||
Impact on stockholders' equity | (1 | ) | (16 | ) | (32 | ) |
(Amounts in R$ million) | ||||||||||
Sensitivity – Level III Operations | 12/31/2012 | |||||||||
Impact | ||||||||||
Risk factor groups | Scenarios | Result | Stockholders' equity | |||||||
Interest rates | I | (0.0 | ) | (1.1 | ) | |||||
II | (0.4 | ) | (27.5 | ) | ||||||
III | (0.9 | ) | (54.3 | ) | ||||||
Currency, commodities, and ratios | I | (0.4 | ) | - | ||||||
II | (0.8 | ) | - | |||||||
Nonlinear | I | (3.6 | ) | - | ||||||
II | (8.3 | ) | - |
The following scenarios are used to measure the sensitivity:
Interest rate
Shocks at 1, 25 and 50 basebasis points (scenarios I, II and III respectively) in the interest curves, both for increase and decrease, considering the largest losses resulting in each scenario.
Currencies, Commodities and Ratios
Shocks at 5 and 10 percentagebasis points (scenarios I and II respectively) in prices of currencies, commodities and ratios, both for increase and decrease, considering the largest losses resulting in each scenario.
Non Linearlinear
Scenario I:I: Combined shocks at 5 percentage points in prices and 25 percentage points in volatility, both for increase and decrease, considering the largest losses resulting in each scenario.
Scenario II:II: Combined shocks at 10 percentage points in prices and 25 percentage points in volatility, both for increase and decrease, considering the largest losses resulting in each scenario.
NOTE 3132 – PROVISIONS, CONTINGENCIES AND OTHER COMMITMENTS
Provision | 12/31/2011 | 12/31/2010 | 1/1/2010 | 12/31/2012 | 12/31/2011 | |||||||||||||||
Civil | 3,166 | 2,974 | 2,394 | 3,732 | 3,166 | |||||||||||||||
Labor | 4,014 | 3,986 | 3,156 | 4,852 | 4,014 | |||||||||||||||
Tax and social security | 8,645 | 7,324 | 7,886 | 10,433 | 8,645 | |||||||||||||||
Other | 165 | 173 | 192 | 192 | 165 | |||||||||||||||
Total | 15,990 | 14,457 | 13,628 | 19,209 | 15,990 | |||||||||||||||
Current | 3,140 | 2,720 | 2,410 | 4,116 | 3,140 | |||||||||||||||
Non-current | 12,850 | 11,736 | 11,218 | 15,093 | 12,850 |
In the ordinary course of its businesses, ITAÚ UNIBANCO HOLDING is subject to contingencies that may be classified as follows.follows:
a) Contingent assets:there are no contingent assets recorded.
b) Provisions and contingencies:the criteria to quantify contingencies are appropriate to the specific characteristics of civil, labor and tax litigation, as well as other risks.
- | Civil lawsuits |
Collective lawsuits (related to claims of a similar nature and with individual amounts not considered significant): contingencies are determined on a monthly basis and the expected amount of losses is accrued according to statistical references that take into account the type of lawsuit and the characteristics of the court (Small Claims Court or Regular Court).
Individual lawsuits (related to claims with unusual characteristics or involving significant amounts): determined periodically, based on the amount claimed and the likelihood of loss, which, in turn, is estimated according to the factual and legal characteristics related to such lawsuit. The amounts considered as probable losses are recorded as provisions.
Contingencies generally arise from revision of contracts and compensation for damages and pain and suffering; most of these lawsuits are filed in the Small Claims Court and therefore limited to 40 minimum monthly wages. ITAÚ UNIBANCO HOLDING is also party to specific lawsuits over alleged understated inflation adjustments to savings accounts in connection with economic plans implemented by the Brazilian government.
The case law at the Federal Supreme Court (STF) is favorable to banks in relation to economic phenomena similar to savings, as in the case of adjustment to time deposits and contracts in general. Additionally, the Federal SupremeSuperior Court of Justice (STJ) has recently decided that the term for filing public civil actions over understated inflation is five years. In view of such decision, some of the lawsuits may be dismissed because they were filed after the five-year period.
No amount is recognized in the financial statements in relation to civil lawsuits which represent possible losses and which have a total estimated risk of R$ 603;1,660 (R$ 603 at 12/31/2011); these refer to claims for compensation or collection, the individual amounts of which are not significant and in this total there are no values resulting from interestinterests in joint ventures.Joint Ventures.
F.122 |
- | Labor |
Collective lawsuits (related to claims of a similar nature and with individual amounts not considered significant): the expected amount of loss is determined and accrued monthly based on the moving average of payments in relation to lawsuits settled in the last 12 months,statistical share pricing model plus the average cost of legal fees. These are adjusted for the amounts deposited as guarantee for their execution when realized.
Individual lawsuits (related to claims with unusual characteristics or involving significant amounts): determined periodically, based on the amount claimed and the likelihood of loss, which, in turn, is estimated according to the factual and legal characteristics related to such lawsuit. The amounts considered as probable losses are recorded as provisions.
Contingencies are related to lawsuits in which alleged labor rights based on labor legislation, such as overtime, salary equalization, reinstatement, transfer allowance, pension plan supplement and other, are claimed;claimed.
There are no off balanceoff-balance sheet contingencies regardingrelating to labor claims.
- | Other risks |
These are quantified and recorded as provisions mainly based on the evaluation of agribusiness credit transactions with joint obligation and FCVS (salary variations compensation fund) credits transferred to Banco Nacional.
F.123 |
The table below shows the changes in the balances of provisions for contingent liabilitiescivil, labor and other provision and the respective escrow deposits:
01/01 to 12/31/2011 | 01/01 to 12/31/2012 | |||||||||||||||||||||||||||||||
Civil | Labor | Other | Total | Civil | Labor | Other | Total | |||||||||||||||||||||||||
Opening balance | 2,974 | 3,986 | 173 | 7,133 | 3,166 | 4,014 | 165 | 7,345 | ||||||||||||||||||||||||
(-) Contingencies guaranteed by indemnity clauses (Note 2.4t) | (309 | ) | (1,113 | ) | - | (1,422 | ) | |||||||||||||||||||||||||
(-) Contingencies guaranteed by indemnity clause (Note 2.4.t) | (137 | ) | (930 | ) | - | (1,067 | ) | |||||||||||||||||||||||||
Subtotal | 2,665 | 2,873 | 173 | 5,711 | 3,029 | 3,084 | 165 | 6,278 | ||||||||||||||||||||||||
Interest | 113 | 110 | - | 223 | ||||||||||||||||||||||||||||
Changes in the year reflected in results | 1,503 | 784 | (8 | ) | 2,279 | |||||||||||||||||||||||||||
Interest (Note 26) | 146 | 126 | - | 272 | ||||||||||||||||||||||||||||
Changes in the period reflected in results (Note 26) | 2,183 | 1,610 | 27 | 3,820 | ||||||||||||||||||||||||||||
Increase (*) | 1,981 | 992 | 12 | 2,985 | 3,161 | 1,672 | 34 | 4,867 | ||||||||||||||||||||||||
Reversal | (478 | ) | (208 | ) | (20 | ) | (706 | ) | (978 | ) | (62 | ) | (7 | ) | (1,047 | ) | ||||||||||||||||
Payment | (1,252 | ) | (683 | ) | - | (1,935 | ) | (1,744 | ) | (916 | ) | - | (2,660 | ) | ||||||||||||||||||
Subtotal | 3,029 | 3,084 | 165 | 6,278 | 3,614 | 3,904 | 192 | 7,710 | ||||||||||||||||||||||||
(+) Contingencies guaranteed by indemnity clause (Note 2.4t) | 137 | 930 | - | 1,067 | ||||||||||||||||||||||||||||
(+) Contingencies guaranteed by indemnity clause (Note 2.4.t) | 118 | 948 | - | 1,066 | ||||||||||||||||||||||||||||
Closing balance | 3,166 | 4,014 | 165 | 7,345 | 3,732 | 4,852 | 192 | 8,776 | ||||||||||||||||||||||||
Escrow deposits at 12/31/2011 | 2,023 | 2,409 | - | 4,432 | ||||||||||||||||||||||||||||
Escrow deposits at 12/31/2012 (Note 20a) | 2,048 | 2,471 | - | 4,519 |
(*) Civil provisions include the provision for economic plans amounting to R$ 526.
01/01 to 12/31/2011 | ||||||||||||||||
Civil | Labor | Other | Total | |||||||||||||
Opening balance | 2,974 | 3,986 | 173 | 7,133 | ||||||||||||
(-) Contingencies guaranteed by indemnity clause (Note 2.4.t) | (309 | ) | (1,113 | ) | - | (1,422 | ) | |||||||||
Subtotal | 2,665 | 2,873 | 173 | 5,711 | ||||||||||||
Interest (Note 26) | 113 | 110 | - | 223 | ||||||||||||
Changes in the period reflected in results (Note 26) | 1,503 | 784 | (8 | ) | 2,279 | |||||||||||
Increase (*) | 1,981 | 992 | 12 | 2,985 | ||||||||||||
Reversal | (478 | ) | (208 | ) | (20 | ) | (706 | ) | ||||||||
Payment | (1,252 | ) | (683 | ) | - | (1,935 | ) | |||||||||
Subtotal | 3,029 | 3,084 | 165 | 6,278 | ||||||||||||
(+) Contingencies guaranteed by indemnity clause (Note 2.4.t) | 137 | 930 | - | 1,067 | ||||||||||||
Closing balance | 3,166 | 4,014 | 165 | 7,345 | ||||||||||||
Escrow deposits at 12/31/2011 | 2,023 | 2,409 | - | 4,432 |
(*) Civil provisions include the provision for economic plans amounting to R$ 431.
01/01 to 12/31/2010 | ||||||||||||||||
Civil | Labor | Other | Total | |||||||||||||
Opening balance | 2,394 | 3,156 | 192 | 5,742 | ||||||||||||
(-) Contingencies guaranteed by indemnity clauses (Note 2.4t) | (98 | ) | (573 | ) | - | (671 | ) | |||||||||
Subtotal | 2,296 | 2,583 | 192 | 5,071 | ||||||||||||
Interest | 142 | 77 | - | 219 | ||||||||||||
Changes in the year reflected in results | 1,185 | 803 | (19 | ) | 1,969 | |||||||||||
Increase (*) | 1,801 | 905 | - | 2,706 | ||||||||||||
Reversal | (616 | ) | (102 | ) | (19 | ) | (737 | ) | ||||||||
Payment | (958 | ) | (590 | ) | - | (1,548 | ) | |||||||||
Subtotal | 2,665 | 2,873 | 173 | 5,711 | ||||||||||||
(+) Contingencies guaranteed by indemnity clause (Note 2.4t) | 309 | 1,113 | - | 1,422 | ||||||||||||
Closing balance | 2,974 | 3,986 | 173 | 7,133 | ||||||||||||
Escrow deposits at 12/31/2010 | 1,619 | 2,318 | - | 3,937 |
01/01 to 12/31/2010 | ||||||||||||||||
Civil | Labor | Other | Total | |||||||||||||
Opening balance | 2,394 | 3,156 | 192 | 5,742 | ||||||||||||
(-) Contingencies guaranteed by indemnity clause (Note 2.4.t) | (98 | ) | (573 | ) | - | (671 | ) | |||||||||
Subtotal | 2,296 | 2,583 | 192 | 5,071 | ||||||||||||
Interest (Note 26) | 142 | 77 | - | 219 | ||||||||||||
Changes in the period reflected in results (Note 26) | 1,185 | 803 | (19 | ) | 1,969 | |||||||||||
Increase (*) | 1,801 | 905 | - | 2,706 | ||||||||||||
Reversal | (616 | ) | (102 | ) | (19 | ) | (737 | ) | ||||||||
Payment | (958 | ) | (590 | ) | - | (1,548 | ) | |||||||||
Subtotal | 2,665 | 2,873 | 173 | 5,711 | ||||||||||||
(+) Contingencies guaranteed by indemnity clause (Note 2.4.t) | 309 | 1,113 | - | 1,422 | ||||||||||||
Closing balance | 2,974 | 3,986 | 173 | 7,133 | ||||||||||||
Escrow deposits at 12/31/2010 | 1,619 | 2,318 | - | 3,937 |
(*) Civil provisions include the provision for economic plans amounting to R$ 708.
F.124 |
- | Tax and social security lawsuits |
Contingencies are equivalent to the principal amount of taxes involved in tax, administrative or judicial disputes, subject to tax assessment notices, plus interest and, when applicable, fines and charges. The amount is recorded as a provision when it involves a legal liability, regardless of the likelihood of loss, that is, a favorable outcome is dependent upon the recognition of the unconstitutionality of the applicable law in force. In other cases, a provision is set up whenever the loss is considered probable.
The table below shows the changes in the balances of provisions and respective escrow deposits for tax and social security lawsuits:
Provision | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||
Opening balance | 7,324 | 7,886 | ||||||
(-) Contingencies guaranteed by indemnity clause | (44 | ) | (35 | ) | ||||
Subtotal | 7,280 | 7,851 | ||||||
Interest | 548 | 400 | ||||||
Changes in the year reflected in results | 917 | 1,074 | ||||||
Increase | 1,046 | 1,728 | ||||||
Reversal (1) | (129 | ) | (654 | ) | ||||
Payment (1) | (157 | ) | (2,045 | ) | ||||
Subtotal | 8,588 | 7,280 | ||||||
(+) Contingencies guaranteed by indemnity clause | 57 | 44 | ||||||
Closing balance (Notes 13c and 14c) (2) | 8,645 | 7,324 |
Provision | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | |||||||||
Opening balance | 8,645 | 7,324 | 7,886 | |||||||||
(-) Contingencies guaranteed by indemnity clause | (58 | ) | (44 | ) | (35 | ) | ||||||
Subtotal | 8,587 | 7,280 | 7,851 | |||||||||
Interest (1) | 906 | 548 | 400 | |||||||||
Changes in the period reflected in results | 973 | 917 | 1,074 | |||||||||
Increase (1) | 1,215 | 1,046 | 1,728 | |||||||||
Reversal (1) | (242 | ) | (129 | ) | (654 | ) | ||||||
Payment | (94 | ) | (157 | ) | (2,045 | ) | ||||||
Subtotal | 10,372 | 8,588 | 7,280 | |||||||||
(+) Contingencies guaranteed by indemnity clause | 61 | 57 | 44 | |||||||||
Closing balance (2) | 10,433 | 8,645 | 7,324 |
(1) ITAÚ UNIBANCO HOLDINGThe amounts are included in the headings Tax Expenses, General and its subsidiaries adhered to the Program for Cash settlement or Installment Payment of Federal Taxes, established by Law No. 11,941, of May 27, 2009. In the first half of 2010, taxes administered by the Federal Reserve Service of Brazil were included, mainly relating to the increase of the calculation basis of PISAdministrative Expenses and COFINS, set forth in paragraph 1 of article 3 of Law No. 9,718, of November 27, 1998.
Current Income Tax and Social Contribution.
(2) Includes amounts arising from investments in joint ventures of R$ 3.9.
Escrow Deposits | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||
Opening balance | 4,677 | 5,076 | ||||||
Appropriation of interest | 365 | 296 | ||||||
Changes in the period | 136 | (696 | ) | |||||
Deposits made | 265 | 496 | ||||||
Withdrawals | (115 | ) | (1,146 | ) | ||||
Deposits released | (14 | ) | (46 | ) | ||||
Closing balance | 5,178 | 4,676 |
F.125 |
Escrow deposits | 12/31/2012 | 12/31/2011 | ||||||
Opening balance | 5,178 | 4,677 | ||||||
Appropriation of interest | 302 | 365 | ||||||
Changes in the period | (25 | ) | 136 | |||||
Deposits made | 239 | 265 | ||||||
Withdrawals | (246 | ) | (115 | ) | ||||
Deposits released | (18 | ) | (14 | ) | ||||
Closing balance (Note 20a) | 5,455 | 5,178 | ||||||
Reclassification of assets pledged as collateral for contingencies (Note 32d) | (898 | ) | - | |||||
Closing balance after Reclassification | 4,557 | 5,178 |
The main discussions related to “Provisions” for tax are described as follows:
· | PIS and COFINS – Calculation basis – R$ |
· | CSLL – Isonomy – R$ |
· | IRPJ and CSLL |
· | PIS – |
Contingencies for taxTax contingencies not recognized in the balance sheet - -Inin the accounting recordsbooks no amount is recognized in relation to tax and social security lawsuits with likelihood ofpossible loss, possible, which total an estimated risk ofis R$ 5,930.8,395. The main discussions are as follows:
· | INSS – Non-compensatory amounts – R$ |
· |
· | IRPJ |
· | IRPJ and CSLL - Losses and discounts granted on receipt of credits – R$ 454: deductibility of effective losses as operating expense – credit assignment and renegotiation. |
· | ISS – Banking Institutions – R$ 392: these are banking operations, the revenue from which cannot be interpreted as compensation for service rendered and/or arise from activities not listed in a Supplementary Law. |
· | IRPJ and CSLL – Goodwill – Deductibility – R$ 370: deductibility of goodwill on acquisition of portfolio of clients and/or investments with future expected profitability. |
· | IRPJ and CSLL – Profit made available abroad R$ 329: Application of the Brazilian tax rule (taxable income) - IN 213/2002 and non availability of profit with the simple transfer of capital between the Holding’s investees. |
c) | Receivables - Reimbursement of contingencies |
The receivablesReceivables balance arising from reimbursements of contingencies totals R$ 790 (R$ 626 (R$ 903 at December 31, 2010)12/31/2011) (Note 19a)20a), basically represented by the guarantee received in the Banco Banerj S.A. privatization process of 1997, whereby the State of Rio de Janeiro created a fund to guarantee the equity recomposition with respect to civil, labor and tax contingencies.
d) | Assets pledged as collateral for contingencies |
Assets pledged as collateral for lawsuits involving contingent liabilities are restricted or deposited as shown below:
12/31/2011 | 12/31/2010 | |||||||
Securities (basically Financial Treasury Bills) | 1,512 | 1,516 | ||||||
Deposits in guarantee | 3,233 | 3,292 |
12/31/2012 | 12/31/2011 | |||||||
Financial assets held for trading and Available-for-sale financial assets (basically Financial Treasury Bills) | 1,528 | 1,696 | ||||||
Escrow deposits (Note 20a) | 4,040 | 3,233 |
Escrow deposits are generally required to be made with the court in connection with lawsuits in Brazil and they are held by the court until a decision is made by the relevant court. In case of a decision against ITAÚ UNIBANCO HOLDING, the deposited amount is released from escrow and transferred to the counterparty in the lawsuit. In case of a decision in favor of ITAÚ UNIBANCO HOLDING, the deposited amount is released at the full amount deposited adjusted.
In general, provisions related to lawsuits of ITAÚ UNIBANCO HOLDING litigation provisions are long term, liabilities considering the time required to conclude legal cases throughfor the courttermination of these lawsuits in the Brazilian judicial system, in Brazil. Due to this fact, we note that it is difficult to make accurate estimates regarding thereason why estimate for specific year that a legal casein which these lawsuits will be concluded, particularly in the earlier stages of a case. For this reason, the ITAÚ UNIBANCO HOLDING hasterminated have not included estimates regarding future settlement date for the most significant provisions resulting from litigation.been disclosed.
In the opinion of the legal advisors, ITAÚ UNIBANCO HOLDING and its subsidiaries are not parties to any other administrative proceedings or legal lawsuits that could significantly impact the results of their operations.
NOTE 3233 – REGULATORY CAPITAL
ITAÚ UNIBANCO HOLDING is subject to regulation by the Central Bank of Brazil which issues rules and instructions regarding currency and credit policies for financial institutions operating in Brazil. The Central Bank also determines minimum capital requirements, fixed assets limits, lending limits, accounting practices and compulsory deposit requirements, and requires banks to comply with regulation based on the Basel Accord as regards to capital adequacy. Furthermore, the National Council of Private Insurance and SUSEP issue regulations on capital requirements which affect our insurance, private pension and capitalization operations.
The Basel Accord requires banks to have a ratio of regulatory capital to risk exposure assets of a minimum of 8%. The regulatory capital is basically comprisescomposed of two tiers:
· | Tier I: |
· | Tier II: includes, among other items and subject to certain limitations, asset revaluation reserves, general allowance for losses and subordinated debt, and is limited to the amount of Tier I Capital. |
However, the Basel Accord allows the regulatory authorities of each country to establish their own parameters for regulatory capital composition and to determine the portions exposed to risk. Among the main differences arising from the adoption of own parameter pursuant to the Brazilian legislation are the following: (i) the requirement of a ratio of regulatory capital to risk-weighted assets at a minimum of 11%; (ii) certain risk-weighted factors attributed to certain assets and other exposures; (iii) the requirement that banks allocate a portion of their equity to cover operational risks, ranging from 12% to 18% of the average gross income from financial operations. In addition, in accordance with Central Bank rules, banks can calculate compliance with the minimum requirement:
· | Based on the consolidation of all financial subsidiaries supervised by the Central Bank, including branches and investments abroad, |
· | Based on full consolidation, considering all companies which are statutorily or operationally controlled by ITAÚ UNIBANCO HOLDING, regardless of whether they are supervised or not by the Central Bank. |
Management manages capital with the intention to meet the minimalminimum capital required by the Central Bank of Brazil. During the period weITAÚ UNIBANCO HOLDING complied with all externally imposed capital requirements to which we are subject.
The following table summarizes the rulescomposition of regulatory capital, the minimum capital required and the Basel ratio computed in accordance with the Central Bank of Brazil, both on a financial institution consolidation basis and on a full consolidation basis.
12/31/2011 | 12/31/2010 | 1/1/2010 | ||||||||||||||||||||||
Financial institutions (partial consolidation) | Full consolidation | Financial institutions (partial consolidation) | Full consolidation | Financial institutions (partial consolidation) | Full consolidation | |||||||||||||||||||
Regulatory capital | ||||||||||||||||||||||||
Tier I | 71,052 | 71,601 | 60,192 | 62,240 | 55,624 | 57,705 | ||||||||||||||||||
Tier II | 21,564 | 21,565 | 18,652 | 18,652 | 12,837 | 12,837 | ||||||||||||||||||
Other deductions required by Central Bank of Brazil | (55 | ) | (55 | ) | (173 | ) | (173 | ) | (28 | ) | (28 | ) | ||||||||||||
Total | 92,561 | 93,111 | 78,671 | 80,719 | 68,433 | 70,514 | ||||||||||||||||||
Requirement for Coverage of Risk Exposures: | ||||||||||||||||||||||||
Credit | 59,189 | 57,629 | 50,979 | 53,442 | 41,734 | 43,949 | ||||||||||||||||||
Market | 1,079 | 1,076 | 997 | 954 | 682 | 681 | ||||||||||||||||||
Operational | 3,460 | 3,851 | 2,746 | 3,129 | 1,882 | 1,882 | ||||||||||||||||||
Minimum Regulatory Capital Required | 63,728 | 62,556 | 54,722 | 57,525 | 44,298 | 46,512 | ||||||||||||||||||
Excess of Regulatory Capital over Minimum Regulatory Capital Required | 28,833 | 30,555 | 23,949 | 23,194 | 24,135 | 24,002 | ||||||||||||||||||
Exposure Weighted by Risk | 579,338 | 568,693 | 497,468 | 522,952 | 402,713 | 422,840 | ||||||||||||||||||
Capital to risk-weighted assets ratio - % | 16.0 | 16.4 | 15.8 | 15.4 | 17.0 | 16.7 |
12/31/2012 | 12/31/2011 | |||||||||||||||
Financial institutions (partial consolidation) | Full consolidation | Financial institutions (partial consolidation) | Full consolidation | |||||||||||||
Regulatory capital | ||||||||||||||||
Tier 1 | 79,711 | 72,007 | 71,052 | 71,601 | ||||||||||||
Tier 2 | 40,654 | 37,833 | 21,564 | 21,565 | ||||||||||||
Other deductions required by Central Bank of Brazil | (420 | ) | (420 | ) | (55 | ) | (55 | ) | ||||||||
Total | 119,945 | 109,421 | 92,561 | 93,111 | ||||||||||||
Requirement for coverage of risk exposures: | ||||||||||||||||
Credit | 65,964 | 64,580 | 59,189 | 57,629 | ||||||||||||
Market | 3,027 | 3,100 | 1,079 | 1,076 | ||||||||||||
Operational | 3,807 | 4,356 | 3,460 | 3,851 | ||||||||||||
Minimum regulatory capital required | 72,798 | 72,036 | 63,728 | 62,556 | ||||||||||||
Excess of regulatory capital over minimum regulatory capital required | 47,148 | 37,385 | 28,833 | 30,555 | ||||||||||||
Exposure weighted by risk | 661,797 | 654,872 | 579,338 | 568,693 | ||||||||||||
Capital to risk-weighted assets ratio - % | 18.1 | 16.7 | 16.0 | 16.4 |
F.128 |
The funds obtained through the issue of subordinated debt securities are considered Capitalcapital Tier II for purposes of capital to risk-weighted assets ratio, as follows:
Name of security | Issue | Maturity | Return p.a. | Principal R$ | ||||||||||
Subordinated CDB | ||||||||||||||
2007 | 2012 | 103.5% to 104% of CDI | 4,970 | |||||||||||
100% of CDI + 0.35% to 0.45% | 732 | |||||||||||||
IGPM + 7.31 to 7.35% | 278 | |||||||||||||
2002 | 2012 | 102.5% of CDI | 200 | |||||||||||
2008 | 2013 | 100% of CDI + 0.5% to 0.6% | 1,558 | |||||||||||
106% to 107% of CDI | 48 | |||||||||||||
2003 | 2013 | 102% of CDI | 40 | |||||||||||
2007 | 2014 | 100% of CDI + 0.35% to 0.6% | 1,865 | |||||||||||
2007 | 2014 | IGPM 7.35% | 33 | |||||||||||
2008 | 2014 | 112% of CDI | 1,000 | |||||||||||
2008 | 2015 | 119.8% of CDI | 400 | |||||||||||
2010 | 2015 | 113% of CDI | 50 | |||||||||||
2006 | 2016 | 100% of CDI + 0.47% (*) | 466 | |||||||||||
2010 | 2016 | 110% to 114% of CDI | 2,664 | |||||||||||
2010 | 2016 | IPCA + 7.33% | 123 | |||||||||||
2010 | 2017 | IPCA + 7.45% | 367 | |||||||||||
TOTAL | 14,793 | |||||||||||||
Subordinated financial credit bills | ||||||||||||||
2010 | 2016 | 100% of CDI + 1.35% to 1.36% | 365 | |||||||||||
2010 | 2016 | 112% to 112.5% of CDI | 1,873 | |||||||||||
2010 | 2016 | IPCA + 7% | 30 | |||||||||||
2010 | 2017 | IPCA + 6.95% to 7.2% | 206 | |||||||||||
2011 | 2017 | 108% to 112% of CDI | 3,011 | |||||||||||
2011 | 2017 | IPCA + 6.15% to 7.8% | 343 | |||||||||||
2011 | 2017 | IGPM + 6.55% to 7.6% | 55 | |||||||||||
2011 | 2017 | 100% of CDI + 1.29% to 1.52% | 3,650 | |||||||||||
2011 | 2018 | IGPM + 7% | 42 | |||||||||||
2011 | 2018 | IPCA + 7.53% to 7.7% | 30 | |||||||||||
2011 | 2019 | 109% of 109.7% to CDI | 1 | |||||||||||
2011 | 2021 | 109.25 of 110.5% to CDI | 6 | |||||||||||
TOTAL | 9,612 | |||||||||||||
Subordinated euronotes | ||||||||||||||
2010 | 2020 | 6.2% | 1,731 | |||||||||||
2010 | 2021 | 5.8% | 1,694 | |||||||||||
2011 | 2021 | 5.8% | 401 | |||||||||||
2011 | 2021 | 6.2% | 765 | |||||||||||
TOTAL | 4,591 | |||||||||||||
Preferred shares | ||||||||||||||
2002 | 2015 | 3.04% | 1,389 |
Name of security / Currency | Principal Amount (Original Currency) | Issue | Maturity | Return p.a. | Account Balance | |||||||||||||
Subordinated CDB - BRL | ||||||||||||||||||
1,558 | 2008 | 2013 | 100% of CDI + 0.5% to 0.6% | 2,597 | ||||||||||||||
48 | 106% to 107% of CDI | 79 | ||||||||||||||||
40 | 2003 | 2013 | 102% of CDI | 121 | ||||||||||||||
1,865 | 2007 | 2014 | 100% of CDI + 0.35% to 0.6% | 3,329 | ||||||||||||||
33 | IGPM + 7.22% | 68 | ||||||||||||||||
1,000 | 2008 | 2014 | 112% of CDI | 1,554 | ||||||||||||||
400 | 2008 | 2015 | 119.8% of CDI | 657 | ||||||||||||||
50 | 2010 | 2015 | 113% of CDI | 69 | ||||||||||||||
466 | 2006 | 2016 | 100% of CDI + 0.7% (*) | 892 | ||||||||||||||
2,665 | 2010 | 2016 | 110% to 114% of CDI | 3,654 | ||||||||||||||
122 | IPCA + 7.21% | 173 | ||||||||||||||||
367 | 2010 | 2017 | IPCA + 7.33% | 524 | ||||||||||||||
8,614 | TOTAL | 13,717 | ||||||||||||||||
Subordinated financial bills - BRL | ||||||||||||||||||
365 | 2010 | 2016 | 100% of CDI + 1.35% to 1.36% | 375 | ||||||||||||||
1,874 | 112% to 112.5% of CDI | 1,924 | ||||||||||||||||
30 | IPCA + 7% | 39 | ||||||||||||||||
206 | 2010 | 2017 | IPCA + 6.95% to 7.2% | 244 | ||||||||||||||
3,224 | 2011 | 2017 | 108% to 112% of CDI | 3,309 | ||||||||||||||
352 | IPCA + 6.15% to 7.8% | 408 | ||||||||||||||||
138 | IGPM + 6.55% to 7.6% | 163 | ||||||||||||||||
3,650 | 100% of CDI + 1.29% to 1.52% | 3,716 | ||||||||||||||||
42 | 2011 | 2018 | IGPM + 7% | 50 | ||||||||||||||
30 | IPCA + 7.53% to 7.7% | 34 | ||||||||||||||||
2 | 2011 | 2019 | 109% to 109.7% of CDI | 2 | ||||||||||||||
500 | 2012 | 2017 | 100% of CDI + 1.12% | 503 | ||||||||||||||
6 | 2011 | 2021 | 109.25% to 110.50% of CDI | 7 | ||||||||||||||
461 | 2012 | 2018 | IPCA + 4.40% to 6.58% | 508 | ||||||||||||||
2,597 | 100% of CDI + 1.05% to 1.32% | 2,640 | ||||||||||||||||
5,761 | 108% to 113% of CDI | 5,902 | ||||||||||||||||
112 | PRE + 9.95 to 11.95% | 118 | ||||||||||||||||
12 | 2012 | 2019 | PRE + 11.96% | 13 | ||||||||||||||
100 | IPCA + 4.70% to 6.30% | 108 | ||||||||||||||||
1 | 110% of CDI | 1 | ||||||||||||||||
20 | 2012 | 2020 | IPCA + 6.% to 6.17% | 22 | ||||||||||||||
1 | 111% of CDI | 1 | ||||||||||||||||
1,317 | 2012 | 2022 | IPCA + 5.40% to 5.83% | 1,375 | ||||||||||||||
20 | 20 | |||||||||||||||||
20,821 | TOTAL | 21,482 | ||||||||||||||||
Subordinated euronotes - USD | ||||||||||||||||||
990 | 2010 | 2020 | 6.2% | 2,043 | ||||||||||||||
1,000 | 2010 | 2021 | 5.75% | 2,095 | ||||||||||||||
730 | 2011 | 2021 | 5.75% to 6.2% | 1,493 | ||||||||||||||
550 | 2012 | 2021 | 6.2% | 1,140 | ||||||||||||||
2,600 | 2012 | 2022 | 5.50% to 5.65% | 5,354 | ||||||||||||||
1,851 | 2012 | 2023 | 5.13% | 3,810 | ||||||||||||||
7,721 | TOTAL | 15,935 | ||||||||||||||||
TOTAL | 51,134 |
(*) Subordinated CDBs may be redeemed from November 2011;2011.
F.129 |
NOTE 3334 – SEGMENT INFORMATION
ITAÚ UNIBANCO HOLDING is a banking institution that offers to its customers a wide range of financial products and services.
The four operational and reporting segments of ITAÚ UNIBANCO HOLDING are: Commercial Bank, Itaú BBA, Consumer Credit, and CorporateActivities with the Market + Corporation.
The current operational and Treasury, whichreporting segments of ITAÚ UNIBANCO HOLDING are described below:
· | Itaú Unibanco – Commercial Bank |
The Commercial Bank segment provides a broad range of banking services to a diversified client base of individuals and companies, among which are the following: retail clients (individuals and very small companies), high net worth clients, private banking clients, and small and medium-sized companies.
The products and services provided by the Commercial Bank include insurance, private pension and capitalization plans, credit cards, asset management and loans, among others. The segment provides solutions specifically developed to meet the needs of clients, devising marketing strategies appropriate to each of the different profiles and using the most convenient distribution channels. Accordingly, ITAÚ UNIBANCO HOLDING is constantly seeking to increase the number of products provided to clients, diversifying the sources of income. The segment is an important source of funding for theto our operations and provides significant interest and banking services income.
Itaú Unibanco – Itaú BBA
Itaú BBA is the segment responsible for banking operations of large companies and investment banking services. Itaú BBA offers a wide range of products and services to the largest economic groups of Brazil. The management model of Itaú BBA is focused on the development of close relationships with its clients, gaining an in-depth knowledge of their needs and providing customized solutions. The investment banking activities comprise lending to the corporate segment that arecomposed of funds through fixed and variable income instruments. In addition, it performs activities related to mergers and acquisitions.
· | Itaú Unibanco – Consumer Credit |
The Consumer Credit segment is responsible for the development of the strategy of increasing the range of financial products and services beyond the universe of clients who are account holders. Thus the consumer credit segment comprises vehicle financing services provided by units other than the branch network, credit cards to clients who are not account holders, and credit to low income individuals. The business of vehicle financing comprises: new vehicles, used vehicles, heavy vehicles and motorcycles. The credit approval process of vehicle operations is based on scoring models that provides prompt approval of credit proposals for the clients, using the Internet to process these proposals with security and efficiency.
· | Itaú Unibanco – |
The Corporate and TreasuryActivities with the Market + Corporation segment basically manages the interest income associated with ITAÚ UNIBANCO HOLDING capital surplus, subordinated debt surplus and the net balance of tax credits and debits, as well as the net interest income from the trading of financial assets through proprietary positions (desks), management of currency interest rate gaps and other risk factors, arbitrage opportunities in the foreign and domestic markets, and mark-to-marketmark to market of financial assets. In this segment, it is also presented the effect of non-recurring items that are not considered in the managerial statement of income.income is also presented.
F.130 |
Basis of presentation of segment information
Segment information is prepared based on the reports used by top management (Executive Committee) to assess the performance and to make decisions regarding the allocation of funds for investment and other purposes.
The top management (Executive Committee) of ITAÚ UNIBANCO HOLDING uses a variety of information for such purposes including financial and non-financial information that areis measured on different bases as well as the information prepared based on accounting practices adopted in Brazil.
The segment information has been prepared following accounting practices adopted in Brazil modified for the adjustments described below. Financial segment information differs from accounting practices adopted in Brazil because: (i) itIt includes recognition of the impact related to allocated capital using a proprietary model; (ii) it presents net interest income using certain management criteria. The main impacts are described below:
Capital allocation to each segment
The book value of stockholders' equity and subordinated debt were replaced by funding at estimated market price, and interest income and expense were allocated to the segments, based on Tier I Capital, following a proprietary model, with the surplus capital and subordinated debt being allocated to the Corporate and TreasuryActivities with the Market + Corporation segment. The tax effects of payments of interest on capital by each segment have been reversed and reallocated to the segments in amounts proportional to the amount of the Tier I capital. Share of incomeprofit of unconsolidated companies which are not related to each segment and non-controlling interest were allocated to the Corporate and TreasuryActivities with the Market + Corporation segment.
Net interest incomeInterest Income
ITAÚ UNIBANCO HOLDING adopts a strategy to manage the foreign exchange risk of subsidiaries outside Brazil in order to economically hedge against impacts on the results arising from variation in exchange rates. In order to achieve this objective, it is used derivative instruments to hedge against such foreign currency risk.risk are used. Hedge accounting is not applied for those derivatives,derivatives; they are recorded instead at fair value with gains and losses included in income.
The hedging strategy considers all tax effects, eithereffects: Either the ones not related to taxes or to the non-deductibility of the exchange variation on the investments abroad, or the gains and losses on derivative financial instruments used. When the parity of the Brazilian Real against foreign currencies is considerable, there is a significant impact on interest income and expense.
As a result of the above, it is adopted a managerial statement of income to report segment information.information is adopted. The managerial statement of income is prepared by making reclassifications to the financial statements in accordance with the accounting practices adopted in Brazil. Tax effects of the hedge of these investments abroad, which are presented in tax expenses (PIS and COFINS), and income tax and social contribution expense were reclassified for the segment information.
Additionally, the managerial financial margin includes, for each operation, allocation of its opportunity cost.
In theThe adjustments and reclassifications column it is presentedshows the effects of the differences between the accounting principles followed for the presentation of segment information, which are substantially in line with the accounting practices adopted in Brazil, except as described above, and the policies used in the preparation of these consolidated financial statements according to IFRS.
Consolidated Statement of Income | COMMERCIAL BANK | ITAÚ BBA | CONSUMER CREDIT | CORPORATE + TREASURY | ITAÚ UNIBANCO | ADJUSTMENTS | IFRS CONSOLIDATED | |||||||||||||||||||||
Banking product | 48,236 | 6,897 | 14,102 | 5,109 | 74,257 | 19 | 74,276 | |||||||||||||||||||||
Interest margin (1) | 31,584 | 4,896 | 8,356 | 4,801 | 49,601 | (1,238 | ) | 48,363 | ||||||||||||||||||||
Banking service fees | 10,915 | 2,123 | 5,719 | 309 | 19,048 | 362 | 19,410 | |||||||||||||||||||||
Income from insurance, private pension and capitalization operations before claim and selling expenses | 5,229 | - | (13 | ) | (1 | ) | 5,215 | 130 | 5,345 | |||||||||||||||||||
Other income | 508 | (122 | ) | 40 | - | 393 | 765 | 1,158 | ||||||||||||||||||||
Losses on loans and claims | (11,011 | ) | (134 | ) | (4,270 | ) | (521 | ) | (15,936 | ) | (136 | ) | (16,072 | ) | ||||||||||||||
Expenses for allowance for loan losses | (13,845 | ) | (266 | ) | (5,270 | ) | (531 | ) | (19,912 | ) | (126 | ) | (20,038 | ) | ||||||||||||||
Recovery of loans written-off as loss | 4,346 | 132 | 1,000 | 10 | 5,488 | (11 | ) | 5,477 | ||||||||||||||||||||
Expenses for claims | (1,512 | ) | - | - | - | (1,512 | ) | 1 | (1,511 | ) | ||||||||||||||||||
Operating margin | 37,225 | 6,763 | 9,832 | 4,588 | 58,321 | (117 | ) | 58,204 | ||||||||||||||||||||
Other operating income (expenses) | (25,829 | ) | (2,911 | ) | (7,911 | ) | (390 | ) | (37,025 | ) | (2,928 | ) | (39,953 | ) | ||||||||||||||
Non-interest expenses (2) | (23,315 | ) | (2,605 | ) | (6,948 | ) | (935 | ) | (33,787 | ) | (1,887 | ) | (35,674 | ) | ||||||||||||||
Tax expenses for ISS, PIS and COFINS and Other | (2,596 | ) | (341 | ) | (953 | ) | 51 | (3,839 | ) | (327 | ) | (4,166 | ) | |||||||||||||||
Share of comprehensive income of unconsolidated companies, net | (43 | ) | 6 | - | 447 | 410 | (523 | ) | (113 | ) | ||||||||||||||||||
Other | 125 | 29 | (10 | ) | 47 | 191 | (191 | ) | - | |||||||||||||||||||
Income before income tax and social contribution | 11,396 | 3,852 | 1,921 | 4,198 | 21,296 | (3,045 | ) | 18,251 | ||||||||||||||||||||
Income tax and social contribution | (3,833 | ) | (1,287 | ) | (477 | ) | (244 | ) | (5,841 | ) | 2,200 | (3,641 | ) | |||||||||||||||
Non-controlling interest in subsidiaries | - | - | - | (885 | ) | (814 | ) | 41 | (773 | ) | ||||||||||||||||||
NET INCOME | 7,563 | 2,565 | 1,444 | 3,069 | 14,641 | (804 | ) | 13,837 |
ITAÚ UNIBANCO HOLDING S.A. From January 1 to December 31, 2012 (In millions of reais, except for share information)
(1) Includes net interest and similar |
Total assets (1) | 571,315 | 191,620 | 101,453 | 115,171 | 851,332 | (33,196 | ) | 818,136 | ||||||||||||||||||||
Total liabilities | 542,701 | 181,226 | 91,820 | 90,325 | 777,845 | (35,045 | ) | 742,800 | ||||||||||||||||||||
(1) Includes: | ||||||||||||||||||||||||||||
Investments in unconsolidated companies | - | 3 | - | 1,681 | 1,684 | 860 | 2,544 | |||||||||||||||||||||
Fixed assets, net | 4,454 | 366 | 467 | - | 5,287 | 71 | 5,358 | |||||||||||||||||||||
Intangible assets, net | 2,803 | 339 | 668 | - | 3,810 | 15 | 3,825 |
The Consolidated figures do not represent the sum of the segments because there are intercompany transactions that were eliminated only in the consolidated financial statements. Segments are assessed by top management, net of income and expenses between related parties.of R$ 48,297, dividend income of R$ 323, net gain (loss) from investment securities and derivatives of R$ 1,463, and results from foreign exchange results and exchange variation of transactions abroad of R$ 3,755.
(2) Refers to general and administrative expenses including depreciation expenses of R$ 1,346 and amortization expenses of R$ 844.
The management reviews the financial margin on a net basis.
Consolidated Statement of Income | COMMERCIAL BANK | ITAÚ BBA | CONSUMER CREDIT | CORPORATE + TREASURY | ITAÚ UNIBANCO | ADJUSTMENTS | IFRS CONSOLIDATED | |||||||||||||||||||||
Banking product | 41,238 | 6,400 | 15,148 | 3,657 | 66,390 | 3,025 | 69,415 | |||||||||||||||||||||
Interest margin (1) | 27,068 | 4,601 | 9,044 | 3,356 | 44,050 | 1,940 | 45,990 | |||||||||||||||||||||
Banking service fees | 9,246 | 1,932 | 5,765 | 182 | 17,101 | (9 | ) | 17,092 | ||||||||||||||||||||
Income from insurance, private pension and capitalization operations before claim and selling expenses | 4,469 | - | 254 | (12 | ) | 4,711 | 212 | 4,923 | ||||||||||||||||||||
Other income | 455 | (133 | ) | 85 | 131 | 528 | 882 | 1,410 | ||||||||||||||||||||
Losses on loans and claims | (9,523 | ) | 186 | (3,754 | ) | (2 | ) | (13,093 | ) | 155 | (12,938 | ) | ||||||||||||||||
Expenses for allowance for loan losses | (10,808 | ) | (182 | ) | (4,702 | ) | (2 | ) | (15,694 | ) | 147 | (15,547 | ) | |||||||||||||||
Recovery of loans written-off as loss | 2,893 | 368 | 948 | - | 4,209 | (14 | ) | 4,195 | ||||||||||||||||||||
Expenses for claims | (1,608 | ) | - | - | - | (1,608 | ) | 22 | (1,586 | ) | ||||||||||||||||||
Operating margin | 31,715 | 6,586 | 11,394 | 3,655 | 53,297 | 3,180 | 56,477 | |||||||||||||||||||||
Other operating income (expenses) | (22,927 | ) | (2,721 | ) | (7,826 | ) | (860 | ) | (34,327 | ) | (4,120 | ) | (38,447 | ) | ||||||||||||||
Non-interest expenses (2) | (20,827 | ) | (2,379 | ) | (6,857 | ) | (1,005 | ) | (31,062 | ) | (3,570 | ) | (34,632 | ) | ||||||||||||||
Tax expenses for ISS, PIS and COFINS and Other | (2,139 | ) | (387 | ) | (969 | ) | (274 | ) | (3,769 | ) | (395 | ) | (4,164 | ) | ||||||||||||||
Share of comprehensive income of unconsolidated companies, net | 19 | (6 | ) | - | 409 | 423 | (74 | ) | 349 | |||||||||||||||||||
Other | 20 | 51 | - | 10 | 81 | (81 | ) | - | ||||||||||||||||||||
Income before income tax and social contribution | 8,788 | 3,865 | 3,568 | 2,795 | 18,970 | (940 | ) | 18,030 | ||||||||||||||||||||
Income tax and social contribution | (2,509 | ) | (1,023 | ) | (1,054 | ) | (495 | ) | (5,081 | ) | (455 | ) | (5,536 | ) | ||||||||||||||
Non-controlling interest in subsidiaries | 2 | - | - | (914 | ) | (866 | ) | 80 | (786 | ) | ||||||||||||||||||
NET INCOME | 6,281 | 2,842 | 2,514 | 1,386 | 13,023 | (1,315 | ) | 11,708 |
Total assets (1) | 532,928 | 209,988 | 92,125 | 66,287 | 751,443 | (24,361 | ) | 727,082 | 745,032 | 233,430 | 90,096 | 134,544 | 1,014,425 | (57,271 | ) | 957,154 | ||||||||||||||||||||||||||||||||||||||||
Total liabilities | 511,868 | 197,266 | 84,214 | 43,589 | 687,052 | (27,522 | ) | 659,530 | 710,521 | 220,137 | 79,982 | 117,418 | 939,302 | (58,146 | ) | 881,156 | ||||||||||||||||||||||||||||||||||||||||
(1)Includes: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in unconsolidated companies | - | 1 | - | 2,058 | 2,059 | 889 | 2,948 | - | 5 | 847 | 1,293 | 2,144 | 861 | 3,005 | ||||||||||||||||||||||||||||||||||||||||||
Fixed assets, net | 3,661 | 232 | 835 | - | 4,728 | 73 | 4,801 | 4,672 | 395 | 499 | - | 5,566 | 62 | 5,628 | ||||||||||||||||||||||||||||||||||||||||||
Intangible assets, net | 2,321 | 11 | 602 | - | 2,934 | - | 2,934 | 1,813 | 411 | 1,255 | 1,109 | 4,589 | 82 | 4,671 |
The Consolidated figures do not represent the sum of the segments because there are intercompany transactions that were eliminated only in the consolidated financial statements. Segments are assessed by top management, net of income and expenses between related parties.
The management reviews the financial margin on a net basis.
F.132 |
ITAÚ UNIBANCO HOLDING S.A.
From January 1 to December 31, 2011
(In millions of reais except per share information)
Consolidated Statement of Income | COMMERCIAL BANK | ITAÚ BBA | CONSUMER CREDIT | ACTIVITIES WITH THE MARKET + CORPORATION | ITAÚ UNIBANCO | ADJUSTMENTS | IFRS CONSOLIDATED | |||||||||||||||||||||
Banking product | 48,236 | 6,897 | 14,102 | 5,109 | 74,257 | 19 | 74,276 | |||||||||||||||||||||
Interest margin(1) | 31,584 | 4,896 | 8,356 | 4,801 | 49,601 | (1,238 | ) | 48,363 | ||||||||||||||||||||
Banking service fees | 10,915 | 2,123 | 5,719 | 309 | 19,048 | 362 | 19,410 | |||||||||||||||||||||
Income from insurance, private pension, and capitalization operations before claim and selling expenses | 5,229 | - | (13 | ) | (1 | ) | 5,215 | 130 | 5,345 | |||||||||||||||||||
Other income | 508 | (122 | ) | 40 | - | 393 | 765 | 1,158 | ||||||||||||||||||||
Losses on loans and claims | (11,011 | ) | (134 | ) | (4,270 | ) | (521 | ) | (15,936 | ) | (136 | ) | (16,072 | ) | ||||||||||||||
Expenses for allowance for loan and lease losses | (13,845 | ) | (266 | ) | (5,270 | ) | (531 | ) | (19,912 | ) | (126 | ) | (20,038 | ) | ||||||||||||||
Recovery of loans written off as loss | 4,346 | 132 | 1,000 | 10 | 5,488 | (11 | ) | 5,477 | ||||||||||||||||||||
Expenses for claims/Recovery of claims under reinsurance | (1,512 | ) | - | - | - | (1,512 | ) | 1 | (1,511 | ) | ||||||||||||||||||
Operating margin | 37,225 | 6,763 | 9,832 | 4,588 | 58,321 | (117 | ) | 58,204 | ||||||||||||||||||||
Other operating income (expenses) | (25,829 | ) | (2,911 | ) | (7,911 | ) | (390 | ) | (37,025 | ) | (2,928 | ) | (39,953 | ) | ||||||||||||||
Non-interest expenses(2) | (23,315 | ) | (2,605 | ) | (6,948 | ) | (935 | ) | (33,787 | ) | (1,887 | ) | (35,674 | ) | ||||||||||||||
Tax expenses for ISS, PIS and COFINS and Other | �� | (2,596 | ) | (341 | ) | (953 | ) | 51 | (3,839 | ) | (327 | ) | (4,166 | ) | ||||||||||||||
Share of profit or (loss) of unconsolidated companies, net | (43 | ) | 6 | - | 447 | 410 | (523 | ) | (113 | ) | ||||||||||||||||||
Other | 125 | 29 | (10 | ) | 47 | 191 | (191 | ) | - | |||||||||||||||||||
Income before income tax and social contribution | 11,396 | 3,852 | 1,921 | 4,198 | 21,296 | (3,045 | ) | 18,251 | ||||||||||||||||||||
Income tax and social contribution | (3,833 | ) | (1,287 | ) | (477 | ) | (244 | ) | (5,841 | ) | 2,200 | (3,641 | ) | |||||||||||||||
Non-controlling interest in subsidiaries | - | - | - | (885 | ) | (814 | ) | 41 | (773 | ) | ||||||||||||||||||
NET INCOME | 7,563 | 2,565 | 1,444 | 3,069 | 14,641 | (804 | ) | 13,837 |
(1) Includes net interest and similar income and expenses of R$ 41,753, net income of R$ 361, net gain (loss) from investment securities and derivatives of R$ 1,251 and foreign exchange results and exchange variation on transactions of abroad R$ 4,998.
(2) Refers to general and administrative expenses including depreciation expenses R$ 1,184 and amortization R$ 984.
Total assets(1) | 571,315 | 191,620 | 101,453 | 115,171 | 851,332 | (33,196 | ) | 818,136 | ||||||||||||||||||||
Total liabilities | 542,701 | 181,226 | 91,820 | 90,325 | 777,845 | (35,045 | ) | 742,800 | ||||||||||||||||||||
(1) Includes: | ||||||||||||||||||||||||||||
Investments in unconsolidated companies | - | 3 | - | 1,681 | 1,684 | 860 | 2,544 | |||||||||||||||||||||
Fixed assets, net | 4,454 | 366 | 467 | - | 5,287 | 71 | 5,358 | |||||||||||||||||||||
Intangible assets, net | 2,803 | 339 | 668 | - | 3,810 | 15 | 3,825 |
The Consolidated figures do not represent the sum of the segments because there are intercompany transactions that were eliminated only in the consolidated financial statements. Segments are assessed by top management, net of income and expenses between related parties.
The management reviews the financial margin on a net basis.
F.133 |
ITAÚ UNIBANCO HOLDING S.A.
From January 1 to December 31, 2010
(In millions of Reais, except per share information)
Consolidated Statement of Income | COMMERCIAL BANK | ITAÚ BBA | CONSUMER CREDIT | CORPORATE + TREASURY | ITAÚ UNIBANCO | ADJUSTMENTS | IFRS CONSOLIDATED | |||||||||||||||||||||
Banking product | 41,238 | 6,400 | 15,148 | 3,657 | 66,390 | 3,025 | 69,415 | |||||||||||||||||||||
Interest margin(1) | 27,068 | 4,601 | 9,044 | 3,356 | 44,050 | 1,940 | 45,990 | |||||||||||||||||||||
Banking service fees | 9,246 | 1,932 | 5,765 | 182 | 17,101 | (9 | ) | 17,092 | ||||||||||||||||||||
Income from insurance, private pension and capitalization operations before claim and selling expenses | 4,469 | - | 254 | (12 | ) | 4,711 | 212 | 4,923 | ||||||||||||||||||||
Other income | 455 | (133 | ) | 85 | 131 | 528 | 882 | 1,410 | ||||||||||||||||||||
Losses on loans and claims | (9,523 | ) | 186 | (3,754 | ) | (2 | ) | (13,093 | ) | 155 | (12,938 | ) | ||||||||||||||||
Expenses for allowance for loan and lease losses | (10,808 | ) | (182 | ) | (4,702 | ) | (2 | ) | (15,694 | ) | 147 | (15,547 | ) | |||||||||||||||
Recovery of loans written-off as loss | 2,893 | 368 | 948 | - | 4,209 | (14 | ) | 4,195 | ||||||||||||||||||||
Expenses for claims/Recovery of claims under reinsurance | (1,608 | ) | - | - | - | (1,608 | ) | 22 | (1,586 | ) | ||||||||||||||||||
Operating margin | 31,715 | 6,586 | 11,394 | 3,655 | 53,297 | 3,180 | 56,477 | |||||||||||||||||||||
Other operating income (expenses) | (22,927 | ) | (2,721 | ) | (7,826 | ) | (860 | ) | (34,327 | ) | (4,120 | ) | (38,447 | ) | ||||||||||||||
Non-interest expenses(2) | (20,827 | ) | (2,379 | ) | (6,857 | ) | (1,005 | ) | (31,062 | ) | (3,570 | ) | (34,632 | ) | ||||||||||||||
Tax expenses for ISS, PIS and COFINS and Other | (2,139 | ) | (387 | ) | (969 | ) | (274 | ) | (3,769 | ) | (395 | ) | (4,164 | ) | ||||||||||||||
Share of comprehensive income of unconsolidated companies, net | 19 | (6 | ) | - | 409 | 423 | (74 | ) | 349 | |||||||||||||||||||
Other | 20 | 51 | - | 10 | 81 | (81 | ) | - | ||||||||||||||||||||
Income before income tax and social contribution | 8,788 | 3,865 | 3,568 | 2,795 | 18,970 | (940 | ) | 18,030 | ||||||||||||||||||||
Income tax and social contribution | (2,509 | ) | (1,023 | ) | (1,054 | ) | (495 | ) | (5,081 | ) | (455 | ) | (5,536 | ) | ||||||||||||||
Non-controlling interest in subsidiaries | 2 | - | - | (914 | ) | (866 | ) | 80 | (786 | ) | ||||||||||||||||||
NET INCOME | 6,281 | 2,842 | 2,514 | 1,386 | 13,023 | (1,315 | ) | 11,708 |
(1) Includes net interest and similar income and expenses of R$ 40,978. dividend income of R$ 326, net gains (loss) from investment securities and derivatives of R$ 2,862 and foreign exchange results and exchange variation on transactions of R$ 1,824.
(2) Refers to general and administrative expenses including depreciation expenses R$ 1,166 and amortization R$ 977.
Total assets(1) | 532,928 | 209,988 | 92,125 | 66,287 | 751,443 | (24,361 | ) | 727,082 | ||||||||||||||||||||
Total liabilities | 511,868 | 197,266 | 84,214 | 43,589 | 687,052 | (27,522 | ) | 659,530 | ||||||||||||||||||||
(1) Includes: | ||||||||||||||||||||||||||||
Investments in unconsolidated companies | - | 1 | - | 2,058 | 2,059 | 889 | 2,948 | |||||||||||||||||||||
Fixed assets, net | 3,661 | 232 | 835 | - | �� | 4,728 | 73 | 4,801 | ||||||||||||||||||||
Intangible assets, net | 2,321 | 11 | 602 | - | 2,934 | - | 2,934 |
The Consolidated figures do not represent the sum of the segments because there are intercompany transactions that were eliminated only in the consolidated financial statements. Segments are assessed by top management, net of income and expenses between related parties.
The management reviews the financial margin on a net basis.
F.134 |
Information on Incomeincome from financial operationoperations by geographical area is as follows:
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | |||||||||||||||||||||||
Brazil | Foreign | Total | Brazil | Foreign | Total | |||||||||||||||||||
Income from financial operations (*) | 99,083 | 4,879 | 103,962 | 79,236 | 3,594 | 82,830 | ||||||||||||||||||
Non-current assets | 8,487 | 696 | 9,183 | 7,145 | 590 | 7,735 |
01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | ||||||||||||||||||||||||||||||||||
Brazil | Foreign | Total | Brazil | Foreign | Total | Brazil | Foreign | Total | ||||||||||||||||||||||||||||
Income from financial operations (*) | 95,063 | 6,842 | 101,905 | 99,083 | 4,879 | 103,962 | 79,236 | 3,594 | 82,830 | |||||||||||||||||||||||||||
Non-current assets | 9,515 | 784 | 10,299 | 8,487 | 696 | 9,183 | 7,145 | 590 | 7,735 |
(*) Includes interest and similar income, dividend income, net gain (loss) from financial assets and liabilities, foreign exchange results, and exchange variation on transactions.
NOTE 3435 – RELATED PARTIES
a) | Transactions between related parties are carried out at amounts, terms and average rates in accordance with normal market practices during the period, as well as under reciprocal conditions. |
Transactions between companies included in the consolidation (Note 2.4a) were eliminated infrom the consolidated financial statements and take into consideration the absence of risk.
The unconsolidated related parties are the following:
· | Itaú Unibanco Participações S.A. (IUPAR) and ITAÚSA, parent companies of ITAÚ UNIBANCO |
· | The non-financial subsidiaries of ITAÚSA, especially: Itautec S.A., Duratex S.A., Elekeiroz S.A. and Itaúsa Empreendimentos |
· | Fundação Itaubanco, FUNBEP – Fundo de Pensão Multipatrocinado, Caixa de Previdência dos Funcionários do BEG (PREBEG), Fundação Bemgeprev, Itaubank Sociedade de Previdência Privada, UBB – Prev Previdência Complementar, and Fundação Banorte Manuel Baptista da Silva de Seguridade Social, closed-end private pension entities, that administer supplementary retirement plans sponsored by ITAÚ UNIBANCO HOLDING and/or its |
· | Fundação Itaú Social, Instituto Itaú Cultural, Instituto Unibanco, Instituto Assistencial Pedro Di Perna, Instituto Unibanco de Cinema and Associação Clube “A”, entities sponsored by ITAÚ UNIBANCO HOLDING and subsidiaries to act in their respective areas of |
· | Investments in unconsolidated companies (Note |
Additionally, there are operations with entities under joint control, particularly Banco Investcred Unibanco S.A., Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento, Luizacred S.A. Soc. Créd. Financiamento Investimento, FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento (Note 3b), FIC Promotora de Vendas Ltda. and Ponto Frio Leasing S.A. Arrendamento Mercantil.
The transactions with these related parties are mainly as follows:
ITAÚ UNIBANCO HOLDING CONSOLIDATED | ||||||||||||||||||||||
ASSETS/(LIABILITIES) | REVENUE/(EXPENSES) | |||||||||||||||||||||
Annual Rate | 12/31/2011 | 12/31/2010 | 1/1/2010 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | |||||||||||||||||
Interbank deposits | 1,836 | 726 | 1,123 | 189 | 112 | |||||||||||||||||
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento | 103.90% of CDI10.58% to 13.79% Pre-fixed average 12.00% Pre-fixed | 619 | 427 | 338 | 56 | 35 | ||||||||||||||||
FAI - Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento | 103.90 of CDI 10.81% to 13.25% Pre-fixed average 11.94% Pre-fixed | 236 | 282 | 212 | 31 | 18 | ||||||||||||||||
Luizacred S.A. Sociedade de Crédito, Financiamento e Investimento | 103.90 of CDI 11.63% to 12.11% Pre-fixed average 11.92% Pre-fixed | 981 | - | 573 | 102 | 59 | ||||||||||||||||
Other | - | 17 | - | - | - | |||||||||||||||||
Deposits | (77 | ) | (93 | ) | (59 | ) | - | (16 | ) | |||||||||||||
Duratex S.A. | (2 | ) | (46 | ) | (18 | ) | - | - | ||||||||||||||
Elekeiroz S.A. | - | (31 | ) | - | - | - | ||||||||||||||||
Itautec S.A. | - | (8 | ) | - | - | - | ||||||||||||||||
Porto Seguro S.A. | - | (2 | ) | - | - | (16 | ) | |||||||||||||||
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento | (57 | ) | - | - | - | - | ||||||||||||||||
FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento | (18 | ) | - | - | - | - | ||||||||||||||||
Ponto Frio Leasing S.A. Arrendamento Mercantil | - | (5 | ) | - | - | - | ||||||||||||||||
ITH Zux Cayman Company Ltd. | - | - | (41 | ) | - | - | ||||||||||||||||
Other | - | (1 | ) | - | - | - | ||||||||||||||||
Securities sold under repurchase agreements | (100 | ) | (104 | ) | (109 | ) | (21 | ) | (18 | ) | ||||||||||||
Maxfácil Participações S.A. | 100% to the SELIC | (64 | ) | - | - | (7 | ) | - | ||||||||||||||
Itaúsa Empreendimentos S.A. | - | (52 | ) | (48 | ) | - | - | |||||||||||||||
Duratex S.A. | - | (8 | ) | (19 | ) | (4 | ) | (2 | ) | |||||||||||||
Elekeiroz S.A. | - | - | (10 | ) | (3 | ) | (2 | ) | ||||||||||||||
Itautec S.A. | - | (18 | ) | - | - | - | ||||||||||||||||
FIC Promotora de Venda Ltda. | 100% to the SELIC | (6 | ) | (6 | ) | (4 | ) | (1 | ) | - | ||||||||||||
Facilita Promotora S.A. | 100% to the SELIC | (7 | ) | - | (4 | ) | (1 | ) | - | |||||||||||||
Olimpia Promoção e Serviços S.A. | 100% to the SELIC | (2 | ) | (9 | ) | (13 | ) | - | - | |||||||||||||
Banco Investcred Unibanco S.A. | 10,90%Pre-fixed | (14 | ) | (9 | ) | (2 | ) | (1 | ) | (1 | ) | |||||||||||
Other | 10,90%Pre-fixed | (7 | ) | (2 | ) | (9 | ) | (4 | ) | (13 | ) | |||||||||||
Amounts receivable from (payable to) related companies | (98 | ) | (79 | ) | (65 | ) | - | - | ||||||||||||||
Itaúsa Investimentos S.A. | - | - | (73 | ) | - | - | ||||||||||||||||
Porto Seguro S.A. | 11 | 39 | - | - | - | |||||||||||||||||
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento | - | 6 | 2 | - | - | |||||||||||||||||
FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento | (1 | ) | (1 | ) | (2 | ) | - | - | ||||||||||||||
Luizacred S.A. Sociedade de Crédito, Financiamento e Investimento | (1 | ) | (25 | ) | 2 | - | - | |||||||||||||||
Caixa de Prev.dos Func. do Banco Beg - PREBEG | (9 | ) | - | - | - | - | ||||||||||||||||
Fundação Bemgeprev | (3 | ) | (13 | ) | - | - | - | |||||||||||||||
UBB Prev Previdência Complementar | (19 | ) | (17 | ) | - | - | - | |||||||||||||||
Fundação Banorte Manuel Baptista da Silva de Seguridade Social | (76 | ) | (79 | ) | - | - | - | |||||||||||||||
Other | - | 11 | 6 | - | - | |||||||||||||||||
Banking service fees (expenses) | - | - | - | (16 | ) | 4 | ||||||||||||||||
Fundação Itaubanco | - | - | - | 21 | 10 | |||||||||||||||||
FUNBEP - Fundo de Pensão Multipatrocinado | - | - | - | 5 | 3 | |||||||||||||||||
Itaúsa Investimentos S.A. | - | - | - | 1 | 1 | |||||||||||||||||
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento | - | - | - | (20 | ) | 2 | ||||||||||||||||
FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento | - | - | - | (2 | ) | - | ||||||||||||||||
Porto Seguro S.A. | - | - | - | (26 | ) | (18 | ) | |||||||||||||||
UBB Prev Previdência Complementar | - | - | - | 1 | 3 | |||||||||||||||||
Other | - | - | - | 4 | 3 | |||||||||||||||||
Rental revenues (expenses) | - | - | - | (37 | ) | (29 | ) | |||||||||||||||
Itaúsa Investimentos S.A. | - | - | - | - | (1 | ) | ||||||||||||||||
Fundação Itaubanco | - | - | - | (27 | ) | (15 | ) | |||||||||||||||
FUNBEP - Fundo de Pensão Multipatrocinado | - | - | - | (10 | ) | (8 | ) | |||||||||||||||
Paraná Companhia de Seguros | - | - | - | - | (4 | ) | ||||||||||||||||
Other | - | - | - | - | (1 | ) | ||||||||||||||||
Donation expenses | - | - | - | (57 | ) | (45 | ) | |||||||||||||||
Instituto Itaú Cultural | - | - | - | (56 | ) | (44 | ) | |||||||||||||||
Other | - | - | - | (1 | ) | (1 | ) | |||||||||||||||
Data processing expenses | - | - | - | (315 | ) | (296 | ) | |||||||||||||||
Itautec S.A. | - | - | - | (315 | ) | (296 | ) | |||||||||||||||
Other revenues | - | - | - | 48 | - | |||||||||||||||||
Itaúsa | - | - | - | 48 | - |
F.135 |
ITAÚ UNIBANCO HOLDING CONSOLIDATED | ||||||||||||||||||||||
ASSETS/ (LIABILITIES) | REVENUE /(EXPENSES) | |||||||||||||||||||||
Annual rate | 12/31/2012 | 12/31/2011 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to 12/31/2010 | |||||||||||||||||
Interbank deposits | 1,604 | 1,836 | 144 | 189 | 112 | |||||||||||||||||
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento | 103% of CDI 7,25% to 13,79% Pre-fixed average 7,95% | 614 | 619 | 48 | 56 | 35 | ||||||||||||||||
FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento | - | 236 | 14 | 31 | 18 | |||||||||||||||||
Luizacred S.A. Sociedade de Crédito, Financiamento e Investimento | 103% of CDI | 990 | 981 | 82 | 102 | 59 | ||||||||||||||||
Deposits | (3 | ) | (77 | ) | (1 | ) | - | (16 | ) | |||||||||||||
Duratex S.A. | (2 | ) | (2 | ) | (1 | ) | - | - | ||||||||||||||
Porto Seguro S.A. | (1 | ) | - | - | - | (16 | ) | |||||||||||||||
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento | - | (57 | ) | - | - | - | ||||||||||||||||
FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento | - | (18 | ) | - | - | - | ||||||||||||||||
Securities sold under repurchase agreements | (54 | ) | (100 | ) | (7 | ) | (21 | ) | (18 | ) | ||||||||||||
Duratex S.A. | 100% of SELIC | (11 | ) | - | (2 | ) | (4 | ) | (2 | ) | ||||||||||||
Elekeiroz S.A. | - | - | (1 | ) | (3 | ) | (2 | ) | ||||||||||||||
Itautec S.A. | 100% of SELIC | (2 | ) | - | - | - | - | |||||||||||||||
FIC Promotora de Venda Ltda. | 100% of SELIC | (18 | ) | (6 | ) | (1 | ) | (1 | ) | - | ||||||||||||
Facilita Promotora S.A. | 100% of SELIC | (2 | ) | (7 | ) | - | (1 | ) | - | |||||||||||||
Banco Investcred Unibanco S.A. | 100% of SELIC | (19 | ) | (14 | ) | (2 | ) | (1 | ) | (1 | ) | |||||||||||
Maxfácil Participações S.A. | - | (64 | ) | - | (7 | ) | - | |||||||||||||||
Other | (2 | ) | (9 | ) | (1 | ) | (4 | ) | (13 | ) | ||||||||||||
Amounts receivable from (payable to) related companies | (117 | ) | (97 | ) | - | - | - | |||||||||||||||
Porto Seguro S.A. | 12 | 11 | - | - | - | |||||||||||||||||
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento | (4 | ) | - | - | - | - | ||||||||||||||||
FIC Promotora de Venda Ltda. | - | - | - | - | - | |||||||||||||||||
FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento | - | (1 | ) | - | - | - | ||||||||||||||||
Luizacred S.A. Sociedade de Crédito, Financiamento e Investimento | (5 | ) | (1 | ) | - | - | - | |||||||||||||||
Fundação Itaubanco | 1 | 1 | - | - | - | |||||||||||||||||
Caixa de Prev.dos Func. do Banco Beg - PREBEG | (6 | ) | (9 | ) | - | - | - | |||||||||||||||
Fundação BEMGEPREV | (9 | ) | (3 | ) | - | - | - | |||||||||||||||
UBB Prev Previdência Complementar | (25 | ) | (19 | ) | - | - | - | |||||||||||||||
Fundação Banorte Manuel Baptista da Silva de Seguridade Social | (81 | ) | (76 | ) | - | - | - | |||||||||||||||
Banking service fees (expenses) | - | - | 57 | (17 | ) | 4 | ||||||||||||||||
Fundação Itaubanco | - | - | 25 | 21 | 10 | |||||||||||||||||
FUNBEP - Fundo de Pensão Multipatrocinado | - | - | 5 | 5 | 3 | |||||||||||||||||
Itaúsa Investimentos S.A. | - | - | 1 | 1 | 1 | |||||||||||||||||
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento | - | - | 1 | (20 | ) | 2 | ||||||||||||||||
FAI Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento | - | - | - | (2 | ) | - | ||||||||||||||||
Porto Seguro S.A. | - | - | 32 | (26 | ) | (18 | ) | |||||||||||||||
UBB Prev Previdência Complementar | - | - | - | - | 3 | |||||||||||||||||
Other | - | - | (7 | ) | 4 | 3 | ||||||||||||||||
Rental revenues (expenses) | - | - | (37 | ) | (38 | ) | (29 | ) | ||||||||||||||
Itaúsa Investimentos S.A. | - | - | - | - | (1 | ) | ||||||||||||||||
Fundação Itaubanco | - | - | (27 | ) | (27 | ) | (15 | ) | ||||||||||||||
FUNBEP - Fundo de Pensão Multipatrocinado | - | - | (10 | ) | (10 | ) | (8 | ) | ||||||||||||||
Other | - | - | - | (1 | ) | (1 | ) | |||||||||||||||
Donation expenses | - | - | (72 | ) | (56 | ) | (45 | ) | ||||||||||||||
Associação Clube "A" | - | - | (3 | ) | - | - | ||||||||||||||||
Instituto Itaú Cultural | - | - | (69 | ) | (56 | ) | (44 | ) | ||||||||||||||
Other | - | - | - | - | (1 | ) | ||||||||||||||||
Data processing expenses | - | - | (270 | ) | (314 | ) | (296 | ) | ||||||||||||||
Itautec S.A. | - | - | (270 | ) | (314 | ) | (296 | ) | ||||||||||||||
Other revenues | - | - | - | 48 | - | |||||||||||||||||
Itaúsa | - | - | - | 48 | - |
In addition to the aforementioned operations, ITAÚ UNIBANCO HOLDING and non-consolidated related parties, as an integral part of ITAÚ UNIBANCO HOLDING Agreement for Apportionment of Common Costs, recorded in General and Administrative Expenses - Other, the amount of R$ 8 (R$ 8 from 01/01 to 12/31/2011 and R$ 17 from 01/01 to 12/31/2010) due to of the use of the common structure.
Pursuant to the current rules, financial institutions cannot grant loans and leasesor advances to the following:
a) any individuals or companies that control the Institution or any entity under common control with the institution, or any executive officer, director, member of the fiscal council, or the immediate family members of these individuals;
b) any entity controlled by the institution; or
c) any entity in which the institutionbank directly or indirectly holds more than 10% of the capital stock.
Therefore, no loans and leasesor advances were granted to any subsidiary, executive officer, director or their family members.
F.136 |
ITAÚ UNIBANCO HOLDING has made donations regularly to Fundação Itaú Social, a charitable foundation whose objectives are: to create the “Programa Itaú Social” (Itaú Social Program), aimed at coordinating activities of interest to the community, supporting and developing social, scientific and cultural projects, mainly in the elementary education and healthcarehealth care areas; to support ongoing projects or initiatives, supported or sponsored by entities qualified under "Programa Itaú Social”. ITAÚ UNIBANCO HOLDING is the founding partner and maintainer of Instituto Itaú Cultural - IIC, an entity whose purpose is the promotion and preservation of the Brazilian cultural heritage.
b) | Compensation of the key management personnel |
Compensation for the period paid to key management members of ITAÚ UNIBANCO HOLDING consisted of:
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | 01/01 to 12/31/2012 | 01/01 to 12/31/2011 | 01/01 to | ||||||||||||||||
Compensation | 271 | 294 | 244 | 271 | 294 | |||||||||||||||
Board of Directors | 5 | 3 | ||||||||||||||||||
Board of directors | 8 | 5 | 3 | |||||||||||||||||
Executives | 266 | 291 | 236 | 266 | 291 | |||||||||||||||
Profit sharing | 192 | 261 | 160 | 192 | 261 | |||||||||||||||
Board of Directors | 1 | 2 | ||||||||||||||||||
Board of directors | 2 | 1 | 2 | |||||||||||||||||
Executives | 191 | 259 | 158 | 191 | 259 | |||||||||||||||
Contributions to pension plans | 5 | 8 | 8 | 5 | 8 | |||||||||||||||
Board of Directors | - | 1 | ||||||||||||||||||
Board of directors | - | - | 1 | |||||||||||||||||
Executives | 5 | 7 | 8 | 5 | 7 | |||||||||||||||
Stock option plan – Management members | 150 | 128 | ||||||||||||||||||
Stock option plan – executives | 163 | 150 | 128 | |||||||||||||||||
Total | 618 | 691 | 575 | 618 | 691 |
NOTE 3536 – MANAGEMENT OF FINANCIAL RISKS
Credit Risk
1. | Credit risk measurement |
Credit risk is defined as the possibility of incurring financial losses in connection with:with (i) the breach by the borrower or counterpartycounterpart of theirthe respective agreed-upon financial obligations, under agreed conditions, (ii) the lossdevaluation of value of a financial asset as resultloan agreement due to downgrading of the downgrade of the counterparty’sborrower’s risk rating, (iii) the reduction in gains or income, concessionscompensation, or (iv) advantages given upon renegotiation or due to recovery costs.
In line with the principles of CMN Resolution No. 3,721, of April 30, 2009, ITAÚ UNIBANCO HOLDING has a structure and corporate guidelines on renegotiationcredit risk management, approved by its Board of the financial assetsDirectors, applicable to companies and (iv) the costs of recovery.subsidiaries in Brazil and abroad.
ITAÚ UNIBANCO HOLDING manages credit risk withaims at creating shareholder value, by means of the objectiveanalysis of maximizing thereturn adjusted to risk, and return ratio of its assets,focused on maintaining the creditquality of the loan portfolio quality atin levels appropriate to each market segmentarea in which it operates.
ITAÚ UNIBANCO HOLDING takes into account the probability of default by customer or counterparty (PD), the estimated value of the exposure at default (EAD) and loss given default (LGD), in addition to the concentration on borrowers and its relation among the several economic activity sectors to calculate credit risk. The strategyassessment of these risk components is aimed at creating value for stockholders greater thana part of the minimum risk-adjusted return.credit granting process, the portfolio management and definition of limits.
ITAÚ UNIBANCO HOLDING defines the concentration maximum risk and its correlation deemed as adequate by the Conglomerate. The ongoing monitoring on the concentration level of portfolios, by assessing the economic activity sectors and major debtors, enables it to take preventive measures to prevent that defined limits be breached and ensure a properly diversified customer distribution.
ITAÚ UNIBANCO HOLDING establishes its credit policies based on internal and external factors. Among the internal factors, we highlightsuch as the client rating criteria, analysisperformance of evolution of the portfolios, observedand changes in portfolio, default levels, of default, actual rates of return rates, and the quality of the portfolio and allocated economic capital. Externalcapital; and external factors, are related to the economic environment, in Brazil and abroad, including factors such as market share, interest rates, market default indicators, inflation, and increase (or decrease)changes in levels of consumer spending.consumption.
The centralized control area analyzes the impact of creating or changing credit policies or products, before its implementation, so as to permit the identification and quantification of uncertainties inherent in each business unit. The process for makinganalyzing the policy and products enables Itaú Unibanco to identify potential risks, so as to make sure that credit decisions make sense from an economic and establishingrisk perspective.
The centralized process for validation and validation of the approval of credit policypolicies and models of ITAÚ UNIBANCO HOLDING is designed to achieve coordinatedassures the synchrony of credit actions and optimization of business opportunities, through a structure of committees and commissions. With respect to retail lending, decisions about granting and managing the credit portfolio are made based on scoring models that are continuously monitored. With respect to wholesale lending, several committees are subordinated to the Management Committee responsible for credit risk management through a structure of levels of approval that ensures detailed analysis of the risk of the transaction, as well as provides the necessary timeliness and flexibility for the approval process.opportunities.
ITAÚ UNIBANCO HOLDING takes into account three components to quantify the credit risk: the probability of default by the client or counterparty (PD), the estimated exposure in the event of default (EAD), and the potential for recovery on defaulted credits (LGD). Measurement and assessment of these risk components is part of the process for granting credit and for managing the portfolio.portfolio and the setting of limits.
The credit risk rating of customers and of economic groups reflect their probability of default, and is a fundamental element in the process for measuring risk, because it is used to determine the credit limits. The following table below shows the relationshipcorrespondence between the risk levels ofattributed by the group’s internal models (Strong, Satisfactory, Higher Risk, Impairment) of the Group(strong, satisfactory, higher risk and impairment) and the probability of default associated with each of these levels.
Internal | PD | |
Strong | Lower than 4.44% | |
Satisfactory | From 4.44% up to 25.95% | |
Higher | Higher than 25.95% | |
Corporate operations with a PD higher than 31.84% | ||
Operations past due for over 90 days | ||
Renegotiated operations past due for over 60 days |
F.138 |
The credit rating in corporate transactions is based on information such as economic and financial condition of the potential borrower, its cash-generating capabilities, the economic group to which it belongs, the current and prospective situation of the economic sector in which it operates, the collateral offered and the use of proceeds. The credit proposals are analyzed on a case by case basis, through an approval-level mechanism subordinated to the Superior Credit Committee.
With respect toRegarding retail transactions (individuals, and small and medium businesses)middle-market companies), the rating is assigned based on statistical models of creditapplication and behavior score statistical models. Decisions are made based on scoring in line with the Basel Committee requirements. Occasionally,models that are continuously followed up by an individualindependent structure. Exceptionally, there may also be individualized analysis of specific cases may be performed, in which casewhere approval is subject to competent credit approval follows the applicable approval levels.
Government securities and other debt instruments are classified by ITAÚ UNIBANCO HOLDING according to their credit quality with the purpose ofaiming at managing the credit risktheir exposures.
2. |
Itaú Unibanco HoldingITAÚ UNIBANCO HOLDING maintains control ofmanagement credit risk on a centralized and independent basis, whereas creditsegregated from other business units and internal audit, as required by regulation. Credit risk is managed onin a decentralized basismanner by each business unit.
The centralized management of portfolios is maintained by an independent executive area responsible for controllingmanagement credit risk, which uses risk and performance indicators to analyze the credit portfolio on an aggregate basis, by business line, segment,areas, product and other variables that it deems relevant.
This process aims at aligning the strategies established by the organization considering changes in the credit scenario.
The decentralized management of portfólios,portfolios, focused on management, is performed by all credit áreasareas of the business units, which assess the portfóliosportfolios in detail. Monitoring for management purposes analyzes the loan portfolio in detail, and it may be performed on a detailedan aggregate basis (preferably following the same parameters used in credit policy) or in client level.
The groupITAÚ UNIBANCO HOLDING strictly controls the credit exposure of clients and counterparties, taking action to address situations in which the actual exposure exceeds the desired one. For that purpose, the loan contracts include provisions in certain circumstancescontractually provided actions can be taken, such as right to demand early payment or requirement of additional collateral.
3. |
As a way to control the credit risk, ITAÚ UNIBANCO HOLDING manages collateral in order to reducehas corporate guidelines that establish general rules and responsibilities for the amountuse of losses on transactions that present credit risk. Collaterals are used in order to enhanceguarantees; additionally, each business unit responsible for the potential for credit recovery in the event of default and not to reduce the exposure from clients or counterparties.
Collaterals are an important credit risk management tool, and for this reason, they are only accepted when they meetformalizes the criteria established by the Group.use of such guarantees in its credit policies.
ITAÚ UNIBANCO HOLDING uses guarantees to increase its recovery capacity in transactions involving credit risk. The guarantees used may be personal, collateral, legal structures with mitigation power and offset agreements.
For the guarantees to be considered a risk mitigating instrument, requirements and guidelines of the standards that regulate them, either internal or external ones, must be complied with.
ITAÚ INIBANCO HOLDING ensures that any collateral kept is sufficient, legally valid (effective), enforceable and periodically reassessed.
ITAÚ UNIBANCO HOLDING also uses credit derivatives, such as single name CDS, to mitigate thecredit risk of its portfolios of loans and securities; these instruments are priced based on models that use the fair value of market inputs, such as credit spreads, recovery rates, correlations and interest rates.
Commitments to grantThe credit (e.g. overdraft limits, pre-approved limits, commitments to grant credit, standby letters of credit, and other guarantees) represent undrawn amounts of loans available. The maximum exposure, considering the total utilization of the limits, is shown in the table below. The limits are continually monitored and changed according to customer behavior. Thus, the potential loss values represent a fraction of the amount available.
4. | Policy on the |
The policies for recognition ofon the allowance for loan lossesprovision adopted by ITAÚ UNIBANCO HOLDING are aligned with the guidelines of IFRS and the Basel Accord. As a result, an allowance for loan losses is recognized as from moment when there are indications of the impairment of the portfolio and taketakes into account a horizon of loss appropriate for each type of transaction. We consider asimpaired loans overdue for more than 90 days, renegotiated loans overdue by more than 60 days and corporate loanscorporateloans below a specific internal rating. Loans are written-down 360 days after such loans become past due or 540 days of being past due in the case of loans with original maturities over 36 months.
F.139 |
5. | Credit risk exposure |
12/31/2011 | 12/31/2010 | 1/1/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brazil | Abroad | Total | Brazil | Abroad | Total | Brazil | Abroad | Total | Brazil | Abroad | Total | Brazil | Abroad | Total | ||||||||||||||||||||||||||||||||||||||||||||||
Interbank deposits | 9,820 | 18,001 | 27,821 | 4,684 | 10,151 | 14,835 | 1,361 | 16,438 | 17,799 | 9,254 | 14,572 | 23,826 | 9,820 | 18,001 | 27,821 | |||||||||||||||||||||||||||||||||||||||||||||
Securities purchased under agreements to resell | 91,643 | 605 | 92,248 | 87,396 | 1,286 | 88,682 | 135,026 | 794 | 135,820 | 162,235 | 502 | 162,737 | 91,643 | 605 | 92,248 | |||||||||||||||||||||||||||||||||||||||||||||
Financial assets held for trading | 116,615 | 5,274 | 121,889 | 101,815 | 13,682 | 115,497 | 51,124 | 4,428 | 55,552 | 139,699 | 5,817 | 145,516 | 116,615 | 5,274 | 121,889 | |||||||||||||||||||||||||||||||||||||||||||||
Financial assets designated at fair value through profit or loss | - | 186 | 186 | - | 306 | 306 | - | 373 | 373 | 4 | 216 | 220 | - | 186 | 186 | |||||||||||||||||||||||||||||||||||||||||||||
Derivatives | 5,864 | 2,890 | 8,754 | 5,571 | 2,206 | 7,777 | 4,560 | 1,029 | 5,589 | 7,615 | 3,982 | 11,597 | 5,864 | 2,890 | 8,754 | |||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale financial assets | 7,323 | 40,187 | 47,510 | 19,602 | 24,937 | 44,539 | 23,407 | 17,895 | 41,302 | 36,214 | 54,655 | 90,869 | 7,323 | 40,187 | 47,510 | |||||||||||||||||||||||||||||||||||||||||||||
Held-to-maturity financial assets | 2,500 | 605 | 3,105 | 2,478 | 692 | 3,170 | 1,643 | 786 | 2,429 | 2,656 | 546 | 3,202 | 2,500 | 605 | 3,105 | |||||||||||||||||||||||||||||||||||||||||||||
Loan operations and lease operations | 251,034 | 71,357 | 322,391 | 220,835 | 54,008 | 274,843 | 187,032 | 37,136 | 224,168 | 259,540 | 81,731 | 341,271 | 251,034 | 71,357 | 322,391 | |||||||||||||||||||||||||||||||||||||||||||||
Other financial assets | 41,284 | 3,208 | 44,492 | 38,199 | 2,055 | 40,254 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Off balance sheet | 254,711 | 14,830 | 269,541 | 214,962 | 7,074 | 222,036 | 186,710 | 4,273 | 190,983 | 274,822 | 14,653 | 289,475 | 254,711 | 14,830 | 269,541 | |||||||||||||||||||||||||||||||||||||||||||||
Endorsements and sureties | 48,908 | 2,622 | 51,530 | 36,510 | 1,864 | 38,374 | 31,055 | 1,376 | 32,431 | 56,470 | 3,840 | 60,310 | 48,908 | 2,622 | 51,530 | |||||||||||||||||||||||||||||||||||||||||||||
Letters of credit | 11,172 | - | 11,172 | 8,628 | - | 8,628 | 5,704 | - | 5,704 | 14,605 | - | 14,605 | 11,172 | - | 11,172 | |||||||||||||||||||||||||||||||||||||||||||||
Commitments to be released | 194,631 | 12,208 | 206,839 | 169,824 | 5,210 | 175,034 | 149,951 | 2,897 | 152,848 | 203,747 | 10,813 | 214,560 | 194,631 | 12,208 | 206,839 | |||||||||||||||||||||||||||||||||||||||||||||
Mortgage loans | 14,308 | - | 14,308 | 9,064 | - | 9,064 | 6,291 | - | 6,291 | 13,004 | - | 13,004 | 14,308 | - | 14,308 | |||||||||||||||||||||||||||||||||||||||||||||
Overdraft accounts | 91,904 | - | 91,904 | 82,299 | - | 82,299 | 54,744 | - | 54,744 | 96,935 | - | 96,935 | 91,904 | - | 91,904 | |||||||||||||||||||||||||||||||||||||||||||||
Credit cards | 83,767 | 489 | 84,256 | 72,034 | 522 | 72,556 | 68,891 | 506 | 69,397 | 82,478 | 669 | 83,147 | 83,767 | 489 | 84,256 | |||||||||||||||||||||||||||||||||||||||||||||
Other pre-approved limits | 4,652 | 11,719 | 16,371 | 6,427 | 4,688 | 11,115 | 20,025 | 2,391 | 22,416 | 11,330 | 10,144 | 21,474 | 4,652 | 11,719 | 16,371 | |||||||||||||||||||||||||||||||||||||||||||||
Total | 739,510 | 153,935 | 893,445 | 657,343 | 114,342 | 771,685 | 590,863 | 83,152 | 674,015 | 933,323 | 179,882 | 1,113,205 | 777,709 | 155,990 | 933,699 |
F.140 |
The table above presents the maximum exposure at December 31, 20112012 and 2010,December 31, 2011, without considering any collateral received or other additional creditscredit improvements.
For assets recognized in the balance sheet, the exposures presented are based on net carrying amounts. Thisamounts.This analysis includes only financial assets subject to credit risk andriskand excludes non-financial assets.
The contractual amounts of endorsements and sureties and letters of credit represent the maximum potential of credit risk in the event the counterparty does not meet the terms of the agreement. Theagreement.The vast majority of commitments (real estate loans, overdraft accounts, credit card and other pré-approvedpre-approved limits) mature without being drawn, since they are renewed monthly and we have the power to cancel them at any time. Astime.As a result, the total contractual amount does not represent our effective future exposure to credit risk or the liquidity needs arising from such commitments.
As shown in the table, the most significant exposures correspond to loan operations, financial assets held for trading, and securities purchased under agreements to resell, in addition to sureties, endorsements and other commitments..commitments.
The maximum exposure to the quality of the financial assets presented highlights that:
· |
· | only |
· |
5.1) Maximum exposure of financial assets segregated by business sector
a) | Loan operations and lease operations portfolio |
12/31/2011 | % | 12/31/2010 | % | 1/1/2010 | % | 12/31/2012 | % | 12/31/2011 | % | |||||||||||||||||||||||||||||||
Public sector | 1,990 | 0.57 | % | 1,138 | 0.39 | % | 1,620 | 0.66 | % | 877 | 0.2 | % | 1,990 | 0.6 | % | |||||||||||||||||||||||||
Industry and commerce | 99,859 | 28.85 | % | 84,997 | 28.82 | % | 67,902 | 27.78 | % | 107,405 | 29.3 | % | 99,859 | 28.9 | % | |||||||||||||||||||||||||
Services | 70,642 | 20.40 | % | 60,295 | 20.45 | % | 48,657 | 19.91 | % | 77,922 | 21.2 | % | 70,642 | 20.4 | % | |||||||||||||||||||||||||
Primary sector | 16,109 | 4.65 | % | 13,933 | 4.73 | % | 13,299 | 5.44 | % | |||||||||||||||||||||||||||||||
Natural resources | 16,649 | 4.5 | % | 16,109 | 4.7 | % | ||||||||||||||||||||||||||||||||||
Individuals | 156,167 | 45.10 | % | 132,289 | 44.86 | % | 111,657 | 45.69 | % | 2,194 | 0.6 | % | 1,497 | 0.4 | % | |||||||||||||||||||||||||
Other sectors | 1,497 | 0.43 | % | 2,185 | 0.75 | % | 1,278 | 0.52 | % | 161,937 | 44.2 | % | 156,167 | 45.1 | % | |||||||||||||||||||||||||
Total | 346,264 | 100.00 | % | 294,837 | 100.00 | % | 244,413 | 100.00 | % | 366,984 | 100.0 | % | 346,264 | 100.0 | % |
b) | Other financial assets (*) |
12/31/2011 | % | 12/31/2010 | % | 1/1/2010 | % | 12/31/2012 | % | 12/31/2011 | % | |||||||||||||||||||||||||||||||
Primary sector | 1,029 | 0.34 | % | 581 | 0.21 | % | 1,572 | 0.61 | % | |||||||||||||||||||||||||||||||
Natural resources | 1,924 | 0.4 | % | 1,029 | 0.3 | % | ||||||||||||||||||||||||||||||||||
Public sector | 88,174 | 29.26 | % | 85,364 | 31.07 | % | 52,709 | 20.37 | % | 110,012 | 25.1 | % | 88,174 | 29.3 | % | |||||||||||||||||||||||||
Industry and commerce | 5,381 | 1.78 | % | 5,614 | 2.04 | % | 2,932 | 1.13 | % | 7,563 | 1.7 | % | 5,381 | 1.8 | % | |||||||||||||||||||||||||
Services | 72,281 | 23.97 | % | 72,491 | 26.38 | % | 44,872 | 17.33 | % | 129,223 | 29.5 | % | 72,281 | 24.0 | % | |||||||||||||||||||||||||
Other sectors | 14,574 | 4.83 | % | 7,218 | 2.63 | % | 3,130 | 1.21 | % | 2,633 | 0.6 | % | 14,574 | 4.8 | % | |||||||||||||||||||||||||
Individuals | 5 | 0.00 | % | 21 | 0.01 | % | 30 | 0.01 | % | 49 | 0.0 | % | 5 | 0.0 | % | |||||||||||||||||||||||||
Financial | 120,069 | 39.82 | % | 103,517 | 37.66 | % | 153,619 | 59.34 | % | 186,563 | 42.6 | % | 120,069 | 39.8 | % | |||||||||||||||||||||||||
Total | 301,513 | 100.00 | % | 274,806 | 100.00 | % | 258,864 | 100.00 | % | 437,967 | 100.0 | % | 301,513 | 100.0 | % |
(*) Includes financial assets held for trading, derivatives, assets designated at fair value through profit or loss, available-for-sale financial assets, held-to-maturity financial assets, interbank deposits and securities purchased under agreements to resell.
(*) includes financial assets held for trading, derivatives, assets designated at fair value through profit or loss, available-for-sale financial assets, held-to-maturity financial assets, interbank deposits and securities purchased under agreements to resell. |
c) | The credit risks of |
F.141 |
6. Credit quality of financial assets
6.1 The following table shows the breakdown of loans operations and lease operations portfolio considering: loans neithernot overdue nor impaired and loans overdue noteither impaired and loansor not impaired:
12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Internal Rating | Loans neither overdue nor impaired | Loans overdue not impaired | Loans impaired | Total loans | Loans neither overdue nor impaired | Loans overdue not impaired | Loans impaired | Total loans | Loans neither overdue nor impaired | Loans overdue not impaired | Loans impaired | Total loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Internal rating | Loans not overdue and not impaired | Loans overdue not impaired | Loans overdue and impaired | Total loans | Loans not overdue and not impaired | Loans overdue and not impaired | Loans overdue and impaired | Total loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lower Risk | 221,315 | 5,800 | - | 227,115 | 195,988 | 4,346 | - | 200,334 | 142,004 | 9,763 | - | 151,767 | 249,282 | 5,438 | - | 254,720 | 221,315 | 5,800 | - | 227,115 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Satisfactory | 63,763 | 10,921 | - | 74,684 | 52,561 | 8,053 | - | 60,614 | 57,677 | 3,580 | - | 61,257 | 61,075 | 9,436 | - | 70,511 | 63,762 | 10,956 | - | 74,718 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Higher Risk | 16,910 | 8,703 | - | 25,613 | 13,663 | 6,348 | - | 20,011 | 12,259 | 5,103 | - | 17,362 | 14,190 | 8,052 | - | 22,242 | 16,911 | 9,135 | - | 26,046 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment | - | - | 18,852 | 18,852 | - | - | 13,878 | 13,878 | - | - | 14,027 | 14,027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impaired | - | - | 19,511 | 19,511 | - | - | 18,385 | 18,385 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 301,988 | 25,424 | 18,852 | 346,264 | 262,212 | 18,747 | 13,878 | 294,837 | 211,940 | 18,446 | 14,027 | 244,413 | 324,547 | 22,926 | 19,511 | 366,984 | 301,988 | 25,891 | 18,385 | 346,264 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
% | 87.3 | % | 7.3 | % | 5.4 | % | 100.0 | % | 88.9 | % | 6.4 | % | 4.7 | % | 100 | % | 86.8 | % | 7.5 | % | 5.7 | % | 100 | % | 88.5 | % | 6.2 | % | 5.3 | % | 100.0 | % | 87.2 | % | 7.5 | % | 5.3 | % | 100.0 | % |
The following table shows the breakdown of loans operations and lease operations by portfolios of areas and classes, based on indicators of credit quality:
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||||||||||||
Lower Risk | Satisfactory | Higher Risk | Impaired | Total | Lower Risk | Satisfactory | Higher Risk | Impaired | Total | |||||||||||||||||||||||||||||||
Individuals | 85,616 | 40,781 | 12,889 | 11,593 | 150,879 | 74,483 | 49,346 | 14,859 | 10,589 | 149,277 | ||||||||||||||||||||||||||||||
Credit cards | 24,551 | 11,692 | 1,992 | 2,296 | 40,531 | 19,332 | 13,061 | 3,485 | 3,083 | 38,961 | ||||||||||||||||||||||||||||||
Personal | 14,402 | 13,543 | 7,848 | 4,862 | 40,655 | 8,894 | 15,986 | 8,143 | 3,380 | 36,403 | ||||||||||||||||||||||||||||||
Vehicles | 29,887 | 14,493 | 3,016 | 4,250 | 51,646 | 33,934 | 19,379 | 3,134 | 4,016 | 60,463 | ||||||||||||||||||||||||||||||
Mortgage loans | 16,776 | 1,053 | 33 | 185 | 18,047 | 12,323 | 920 | 97 | 110 | 13,450 | ||||||||||||||||||||||||||||||
Corporate | 97,655 | 4,648 | 1 | 1,467 | 103,771 | 87,224 | 3,500 | 343 | 1,012 | 92,079 | ||||||||||||||||||||||||||||||
Small and medium businesses | 47,825 | 22,129 | 8,896 | 6,335 | 85,185 | 51,548 | 17,452 | 9,928 | 6,721 | 85,649 | ||||||||||||||||||||||||||||||
Foreign loans - Latin America | 23,624 | 2,953 | 456 | 116 | 27,149 | 13,860 | 4,420 | 916 | 63 | 19,259 | ||||||||||||||||||||||||||||||
Total | 254,720 | 70,511 | 22,242 | 19,511 | 366,984 | 227,115 | 74,718 | 26,046 | 18,385 | 346,264 | ||||||||||||||||||||||||||||||
% | 69.4 | % | 19.2 | % | 6.1 | % | 5.3 | % | 100.0 | % | 65.6 | % | 21.6 | % | 7.5 | % | 5.3 | % | 100.0 | % |
F.142 |
The table below shows the breakdown of loans operations and lease operations portfolio not overdue and not impaired, by portfolio of segments and classes, based on indicators of credit quality:quality.
12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lower Risk | Satisfactory | Higher Risk | Impairment | TOTAL | Lower Risk | Satisfactory | Higher Risk | Impairment | TOTAL | Lower Risk | Satisfactory | Higher Risk | Impairment | TOTAL | ||||||||||||||||||||||||||||||||||||||||||||||
Individuals | 73,354 | 49,320 | 14,467 | 10,986 | 148,127 | 65,564 | 41,080 | 10,057 | 8,086 | 124,787 | 58,831 | 26,924 | 12,750 | 8,527 | 107,032 | |||||||||||||||||||||||||||||||||||||||||||||
Credit cards | 19,332 | 13,061 | 3,485 | 3,083 | 38,961 | 15,538 | 12,142 | 2,950 | 2,411 | 33,041 | 12,627 | 10,571 | 2,104 | 2,446 | 27,748 | |||||||||||||||||||||||||||||||||||||||||||||
Personal | 7,765 | 15,985 | 8,048 | 3,455 | 35,253 | 10,129 | 7,001 | 4,203 | 2,195 | 23,528 | 6,593 | 7,018 | 4,890 | 2,686 | 21,187 | |||||||||||||||||||||||||||||||||||||||||||||
Vehicles | 33,934 | 19,357 | 2,843 | 4,329 | 60,463 | 32,321 | 21,666 | 2,849 | 3,315 | 60,151 | 37,011 | 7,493 | 5,139 | 3,206 | 52,849 | |||||||||||||||||||||||||||||||||||||||||||||
Mortgage loans | 12,323 | 917 | 91 | 119 | 13,450 | 7,576 | 271 | 55 | 165 | 8,067 | 2,600 | 1,842 | 617 | 189 | 5,248 | |||||||||||||||||||||||||||||||||||||||||||||
Corporate | 88,353 | 3,500 | 343 | 1,033 | 93,229 | 73,051 | 2,505 | 143 | 884 | 76,583 | 47,484 | 2,084 | 229 | 631 | 50,428 | |||||||||||||||||||||||||||||||||||||||||||||
Small and Medium Businesses | 51,548 | 17,444 | 9,887 | 6,770 | 85,649 | 48,254 | 17,029 | 9,811 | 4,856 | 79,950 | 38,565 | 28,947 | 3,616 | 4,796 | 75,924 | |||||||||||||||||||||||||||||||||||||||||||||
Foreign Loans and Latin America | 13,860 | 4,420 | 916 | 63 | 19,259 | 13,465 | - | - | 52 | 13,517 | 6,887 | 3,302 | 767 | 73 | 11,029 | |||||||||||||||||||||||||||||||||||||||||||||
Total | 227,115 | 74,684 | 25,613 | 18,852 | 346,264 | 200,334 | 60,614 | 20,011 | 13,878 | 294,837 | 151,767 | 61,257 | 17,362 | 14,027 | 244,413 | |||||||||||||||||||||||||||||||||||||||||||||
% | 65.6 | % | 21.6 | % | 7.4 | % | 5.4 | % | 100.0 | % | 67.9 | % | 20.6 | % | 6.8 | % | 4.7 | % | 100.0 | % | 62.1 | % | 25.1 | % | 7.1 | % | 5.7 | % | 100.0 | % |
The following table shows the breakdown of loans neither overdue nor impaired, by portfolios of segments and classes, based on indicators of credit quality:
12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2012 | 12/31/2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lower Risk | Satisfactory | Higher Risk | Total | Lower Risk | Satisfactory | Higher Risk | Total | Lower Risk | Satisfactory | Higher Risk | Total | Lower risk | Satisfactory | Higher risk | Total | Lower risk | Satisfactory | Higher risk | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
I – Individually-evaluated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
I – Individually evaluated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate | 86,992 | 3,423 | 314 | 90,729 | 72,602 | 2,499 | 134 | 75,235 | 47,017 | 1,998 | 200 | 49,215 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
II – Collectively-evaluated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Large companies | 96,859 | 4,647 | - | 101,506 | 85,842 | 3,423 | 314 | 89,579 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
II- Collectively-evaluated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individuals | 70,501 | 40,321 | 8,952 | 119,774 | 62,956 | 33,892 | 6,256 | 103,104 | 51,361 | 25,400 | 8,826 | 85,587 | 82,227 | 32,970 | 7,540 | 122,737 | 71,651 | 40,320 | 8,953 | 120,924 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit card | 19,245 | 12,580 | 2,503 | 34,328 | 15,447 | 11,571 | 2,083 | 29,101 | 11,971 | 10,049 | 1,600 | 23,620 | 24,385 | 11,076 | 1,352 | 36,813 | 19,246 | 12,580 | 2,502 | 34,328 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Personal loans | 7,648 | 14,893 | 5,870 | 28,411 | 9,816 | 6,447 | 3,178 | 19,441 | 6,076 | 6,808 | 3,793 | 16,677 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Personal | 14,211 | 12,659 | 5,439 | 32,309 | 8,798 | 14,893 | 5,870 | 29,561 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vehicles | 31,516 | 12,248 | 565 | 44,329 | 30,327 | 15,752 | 976 | 47,055 | 30,793 | 6,857 | 2,992 | 40,642 | 27,347 | 8,737 | 736 | 36,820 | 31,515 | 12,247 | 567 | 44,329 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage loans | 12,092 | 600 | 14 | 12,706 | 7,366 | 122 | 19 | 7,507 | 2,521 | 1,686 | 441 | 4,648 | 16,284 | 498 | 13 | 16,795 | 12,092 | 600 | 14 | 12,706 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Small and medium businesses | 50,774 | 15,899 | 6,828 | 73,501 | 47,789 | 16,170 | 7,273 | 71,232 | 37,241 | 27,214 | 2,663 | 67,118 | 47,163 | 20,739 | 6,293 | 74,195 | 50,774 | 15,899 | 6,828 | 73,501 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign loans and Latin America | 13,048 | 4,120 | 816 | 17,984 | 12,641 | - | - | 12,641 | 6,385 | 3,065 | 570 | 10,020 | 23,033 | 2,719 | 357 | 26,109 | 13,048 | 4,120 | 816 | 17,984 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 221,315 | 63,763 | 16,910 | 301,988 | 195,988 | 52,561 | 13,663 | 262,212 | 142,004 | 57,677 | 12,259 | 211,940 | 249,282 | 61,075 | 14,190 | 324,547 | 221,315 | 63,762 | 16,911 | 301,988 |
6.1.1 Loan operations overdue not impaired,and lease operations by portfolios of segmentsareas and classes, are classified by maturity as follows:follows (Loans overdue not impaired):
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||||
Overdue by up to 30 days | Overdue from 31 to 60 days | Overdue from 61 to 90 days | Total | Overdue by up to 30 days | Overdue from 31 to 60 days | Overdue from 61 to 90 days | Total | |||||||||||||||||||||||||
Individuals | 10,732 | 4,075 | 1,743 | 16,550 | 11,765 | 4,112 | 1,908 | 17,785 | ||||||||||||||||||||||||
Credit card | 832 | 308 | 283 | 1,423 | 805 | 344 | 401 | 1,550 | ||||||||||||||||||||||||
Personal | 2,045 | 991 | 449 | 3,485 | 2,056 | 871 | 555 | 3,482 | ||||||||||||||||||||||||
Vehicles | 7,099 | 2,559 | 918 | 10,576 | 8,457 | 2,760 | 902 | 12,119 | ||||||||||||||||||||||||
Mortgage loans | 756 | 217 | 93 | 1,066 | 447 | 137 | 50 | 634 | ||||||||||||||||||||||||
Corporate | 686 | 88 | 23 | 797 | 1,232 | 185 | 51 | 1,468 | ||||||||||||||||||||||||
Small and medium businesses | 2,912 | 1,171 | 572 | 4,655 | 3,433 | 1,349 | 645 | 5,427 | ||||||||||||||||||||||||
Foreign loans - Latin America | 794 | 98 | 32 | 924 | 1,144 | 41 | 26 | 1,211 | ||||||||||||||||||||||||
Total | 15,124 | 5,432 | 2,370 | 22,926 | 17,574 | 5,687 | 2,630 | 25,891 |
12/31/2011 | 12/31/2010 | 01/01/2010 | ||||||||||||||||||||||||||||||||||||||||||||||
Overdue up to 30 days | Overdue from 31 to 60 days | Overdue from 61 to 90 days | Total | Overdue up to 30 days | Overdue from 31 to 60 days | Overdue from 61 to 90 days | Total | Overdue up to 30 days | Overdue from 31 to 60 days | Overdue from 61 to 90 days | Total | |||||||||||||||||||||||||||||||||||||
Individuals | 11,764 | 4,112 | 1,491 | 17,367 | 9,234 | 3,280 | 1,091 | 13,605 | 8,576 | 3,129 | 1,215 | 12,920 | ||||||||||||||||||||||||||||||||||||
Credit cards | 805 | 344 | 401 | 1,550 | 871 | 352 | 306 | 1,529 | 1,013 | 346 | 323 | 1,682 | ||||||||||||||||||||||||||||||||||||
Personal | 2,056 | 871 | 460 | 3,387 | 1,227 | 507 | 202 | 1,936 | 1,194 | 465 | 218 | 1,877 | ||||||||||||||||||||||||||||||||||||
Vehicles | 8,456 | 2,760 | 589 | 11,805 | 6,851 | 2,331 | 564 | 9,746 | 6,106 | 2,203 | 640 | 8,949 | ||||||||||||||||||||||||||||||||||||
Mortgage loans | 447 | 137 | 41 | 625 | 285 | 90 | 19 | 394 | 263 | 115 | 34 | 412 | ||||||||||||||||||||||||||||||||||||
Corporate | 1,232 | 185 | 51 | 1,468 | 367 | 55 | 42 | 464 | 281 | 140 | 161 | 582 | ||||||||||||||||||||||||||||||||||||
Small and Medium Businesses | 3,433 | 1,349 | 596 | 5,378 | 2,275 | 1,114 | 473 | 3,862 | 2,763 | 846 | 399 | 4,008 | ||||||||||||||||||||||||||||||||||||
Foreign Loans and Latin America | 1,144 | 41 | 26 | 1,211 | 771 | 31 | 14 | 816 | 824 | 80 | 32 | 936 | ||||||||||||||||||||||||||||||||||||
Total | 17,573 | 5,687 | 2,164 | 25,424 | 12,647 | 4,480 | 1,620 | 18,747 | 12,444 | 4,195 | 1,807 | 18,446 |
F.143 |
6.1.2 The table below shows other financial assets, individually evaluated, classified by rating:
12/31/2011 | ||||||||||||||||||||||||||||
Internal Rating | Interbank deposits and securities purchased under agreements to resell | Held for trading financial assets | Financial assets designated at fair value through profit or loss | Derivatives assets | Available-for- sale financial assets | Held-to-maturity financial assets | Total | |||||||||||||||||||||
Lower Risk | 120,069 | 111,938 | 186 | 4,750 | 26,849 | 3,101 | 266,893 | |||||||||||||||||||||
Satisfactory | - | 9,197 | - | 3,742 | 20,580 | 4 | 33,523 | |||||||||||||||||||||
Higher Risk | - | 754 | - | 262 | 81 | - | 1,097 | |||||||||||||||||||||
Total | 120,069 | 121,889 | 186 | 8,754 | 47,510 | 3,105 | 301,513 | |||||||||||||||||||||
% | 39.8 | % | 40.4 | % | 0.1 | % | 2.9 | % | 15.8 | % | 1.0 | % | 100.0 | % |
12/31/2012 | ||||||||||||||||||||||||||||
Internal rating | Interbank deposits and securities purchased under agreements to resell | Held-for-trading financial assets | Financial assets designated at fair value through profit or loss | Derivatives assets | Available-for- sale financial assets | Held-to- maturity financial assets | Total | |||||||||||||||||||||
Lower Risk | 186,563 | 98,147 | 220 | 4,458 | 22,808 | 3,084 | 315,280 | |||||||||||||||||||||
Satisfactory | - | 47,369 | - | 7,122 | 68,037 | 118 | 122,646 | |||||||||||||||||||||
Higher risk | - | - | - | 17 | 24 | - | 41 | |||||||||||||||||||||
Total | 186,563 | 145,516 | 220 | 11,597 | 90,869 | 3,202 | 437,967 | |||||||||||||||||||||
% | 42.7 | % | 33.2 | % | 0.1 | % | 2.6 | % | 20.7 | % | 0.7 | % | 100.0 | % |
12/31/2010 | 12/31/2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Internal Rating | Interbank deposits and securities purchased under agreements to | Held for trading financial assets | Financial assets designated at fair value through profit or loss | Derivatives assets | Available-for- sale financial assets | Held-to-maturity financial assets | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Internal rating | Interbank deposits and securities purchased under agreements to resell | Held-for-trading financial assets | Financial assets designated at fair value through profit or loss | Derivatives assets | Available-for- sale financial assets | Held-to- maturity financial assets | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Lower Risk | 103,517 | 107,798 | 306 | 5,140 | 22,055 | 3,163 | 241,979 | 120,069 | 111,938 | 186 | 4,750 | 26,849 | 3,101 | 266,893 | ||||||||||||||||||||||||||||||||||||||||||
Satisfactory | - | 7,564 | - | 2,577 | 22,428 | 7 | 32,576 | - | 9,197 | - | 3,742 | 20,580 | 4 | 33,523 | ||||||||||||||||||||||||||||||||||||||||||
Higher Risk | - | 135 | - | 60 | 56 | - | 251 | - | 754 | - | 262 | 81 | - | 1,097 | ||||||||||||||||||||||||||||||||||||||||||
Total | 103,517 | 115,497 | 306 | 7,777 | 44,539 | 3,170 | 274,806 | 120,069 | 121,889 | 186 | 8,754 | 47,510 | 3,105 | 301,513 | ||||||||||||||||||||||||||||||||||||||||||
% | 37.7 | % | 42.0 | % | 0.1 | % | 2.8 | % | 16.2 | % | 1.2 | % | 100.0 | % | 39.8 | % | 40.4 | % | 0.1 | % | 2.9 | % | 15.8 | % | 1.0 | % | 100.0 | % |
01/01/2010 | ||||||||||||||||||||||||||||
Internal Rating | Interbank deposits and securities purchased under agreements to | Held for trading financial assets | Financial assets designated at fair value through profit or loss | Derivatives assets | Available-for- sale financial assets | Held-to-maturity financial assets | Total | |||||||||||||||||||||
Lower Risk | 153,619 | 27,565 | 373 | 377 | 23,439 | 2,358 | 207,731 | |||||||||||||||||||||
Satisfactory | - | 24,319 | - | 5,212 | 17,710 | 71 | 47,312 | |||||||||||||||||||||
Higher Risk | - | 3,668 | - | - | 153 | - | 3,821 | |||||||||||||||||||||
Total | 153,619 | 55,552 | 373 | 5,589 | 41,302 | 2,429 | 258,864 | |||||||||||||||||||||
% | 59.3 | % | 21.5 | % | 0.1 | % | 2.2 | % | 16.0 | % | 0.9 | % | 100.0 | % |
F.144 |
6.1.3 Collateral held for loan and lease operations portfolio
12/31/2011 | 12/31/2010 | 1/1/2010 | ||||||||||||||||||||||||||||||||||||||||||||||
Financial effect of collateral | (I) Over-collateralised assets | (II) Under-collateralised assets | (I) Over-collateralised assets | (II) Under-collateralised assets | (I) Over-collateralised assets | (II) Under-collateralised assets | ||||||||||||||||||||||||||||||||||||||||||
Carrying value of the assets | Fair value of collateral | Carrying value of the assets | Fair value of collateral | Carrying value of the assets | Fair value of collateral | Carrying value of the assets | Fair value of collateral | Carrying value of the assets | Fair value of collateral | Carrying value of the assets | Fair value of collateral | |||||||||||||||||||||||||||||||||||||
Loans to individuals | 75,802 | 152,646 | 30 | 19 | 70,111 | 98,605 | 12 | 10 | 54,425 | 67,384 | 2 | 1 | ||||||||||||||||||||||||||||||||||||
Personal Loans | 1,136 | 2,735 | 25 | 15 | 85 | 303 | 12 | 10 | 258 | 568 | 2 | 1 | ||||||||||||||||||||||||||||||||||||
Vehicles | 61,274 | 88,881 | 5 | 4 | 62,910 | 79,866 | - | - | 50,152 | 56,268 | - | - | ||||||||||||||||||||||||||||||||||||
Mortgage Loans | 13,392 | 61,030 | - | - | 7,116 | 18,436 | - | - | 4,015 | 10,548 | - | - | ||||||||||||||||||||||||||||||||||||
Companies | 146,817 | 269,179 | 30,373 | 12,504 | 120,279 | 246,473 | 6,774 | 5,018 | 108,538 | 232,544 | 5,819 | 3,011 | ||||||||||||||||||||||||||||||||||||
Argentina/Chile/Uruguay/Paraguay | - | - | 19,259 | 13,497 | - | - | 13,509 | 12,479 | - | - | 11,015 | 8,523 | ||||||||||||||||||||||||||||||||||||
Total of collateral and loans and lease operations | 222,619 | 421,825 | 49,662 | 26,020 | 190,390 | 345,078 | 20,295 | 17,507 | 162,963 | 299,928 | 16,836 | 11,535 |
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||||
(l) Over-collateralized assets | (II) Under-collateralized assets | (l) Over-collateralized assets | (II) Under-collateralized assets | |||||||||||||||||||||||||||||
Financial effect of collateral | Carrying value of the assets | Fair value of collateral | Carrying value of the assets | Fair value of collateral | Carrying value of the assets | Fair value of collateral | Carrying value of the assets | Fair value of collateral | ||||||||||||||||||||||||
Individuals | 60,635 | 140,466 | 8,021 | 6,933 | 67,786 | 146,078 | 7,608 | 6,924 | ||||||||||||||||||||||||
Personal | 329 | 946 | 17 | 12 | 635 | 1,607 | 88 | 70 | ||||||||||||||||||||||||
Vehicles | 42,610 | 73,709 | 7,809 | 6,813 | 54,062 | 82,309 | 7,216 | 6,638 | ||||||||||||||||||||||||
Mortgage loans | 17,695 | 65,812 | 196 | 108 | 13,089 | 62,162 | 304 | 216 | ||||||||||||||||||||||||
Small, Medium Businesses and Corporate | 127,655 | 439,665 | 33,917 | 14,408 | 115,349 | 238,458 | 61,710 | 42,887 | ||||||||||||||||||||||||
Foreign loans - Latin America | 5,441 | 8,695 | 21,708 | 12,053 | - | - | 19,259 | 13,497 | ||||||||||||||||||||||||
Total | 193,731 | 588,827 | 63,646 | 33,394 | 183,135 | 384,536 | 88,577 | 63,308 |
The difference between the total loan portfolio and the collateralized loan portfolio is generated by noncollateralizednon-collateralized loans amounting to R$ 73,983 as of 12/31/2011109,607 (R$ 84,152 as of 12/31/2010 and R$ 64,614 as of 01/01/2010)74,553 at December 31, 2011).
ITAÚ UNIBANCO HOLDING uses collateral to reduce the occurrence of losses in operations with credit risk and manages and regularly reviews its collateral with the objective that collateral held is sufficient, legally exercisable (effective) and feasible. Thus, collateral is used to maximize the recuperabilityrecoverability potential of impaired loans and not to reduce the exposure value of customers and counterparties.
Loans to individualsIndividuals
Personal Loans -– This category of credit products usually requires collaterals,collateral, focusing on endorsements and sureties.
Vehicles -– For this type of operation, clientesclients' assets serverserve as collateral, which isare also the leased assets in leasing operations.
Mortgage Loans - Buildings– Regards buildings themselves are given in guarantee.
Companies -Small, Medium Businesses and Corporate – For thosethese operations, itany collateral can be used any collateral within the credit policy of ITAÚ UNIBANCO HOLDING (Chattel Mortgage, Assignment Trust, Surety/(chattel mortgage, assignment trust, surety/joint debtor, outreach, Mortgage and others).
Argentina/Chile/Uruguay/ParaguayForeign loans - Latin America – For thosethese operations, itany collateral can be used any collateral within the credit policy of ITAÚ UNIBANCO HOLDING (Chattel Mortgage, Assignment Trust, Surety/(chattel mortgage, assignment trust, surety/joint debtor, outresch, Mortgage and others).
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7. Renegotiated loan operations
Renegotiation activities include agreements for changes in maturities, payment schedules and deferral of payments. After the restructuring, the client status (previously overdue) is no longer considered to be past due and is rated (considering all available information including the renegotiation) in the appropriate rating category.
The total amount of Renegotiated credit operations that would otherwise be overdue totaledLoans, of R$ 14,57019,483 (R$ 9,03214,570 at December 31, 2010 and2011), includes operations arising from current operations or operations overdue for less than 30 days, an effect of changes in the original contractual terms, in the amount of R$ 7,6694,964 (R$ 2,726 at January 1, 2010)December 31, 2011 ).
Accordingly, Renegotiated loan operations totaled R$ 14,519 (R$ 11,844 at December 31, 2011).
8. Repossessed assets
Repossessed assets are recognized as assets when possession is effectively obtained.
Assets received from the foreclosure of loans, including real estate, are initially recorded at the lower of: (i) the fair value of the asset less the estimated selling expenses, and (ii) the carrying amount of the loan.
Further impairment of assets is recorded as a provision, with a corresponding charge to income. The maintenance costs of these assets are expensed as incurred.incurred
The policy for sales of these assets (assets not for use) includes periodic auctions that are announced in advance and considers that the assets cannot be held for more than one year as stipulated by the BACEN. This period may be extended at the discretion of BACEN.
The amounts below represent total assets repossessed in the periodsperiod from January 1 to December 31, 20112012 and 2010.January 1 to December 31, 2011.
01/01 to 12/31/2011 | 01/01 to 12/31/2010 | |||||||
Real estate not for own use | 8 | 3 | ||||||
Residential properties – mortgage loans | 34 | 21 | ||||||
Vehicles – linked to loan operations | 4 | 68 | ||||||
Other (vehicles/real estate/equipment) – payment in kind | 1 | 2 | ||||||
Total | 47 | 94 |
01/01 to 12/31/2012 | 01/01 to 12/31/2011 | |||||||
Real estate not for own use | 4 | 8 | ||||||
Residential properties - mortgage loans | 67 | 34 | ||||||
Vehicles - linked to loan operations | 2 | 4 | ||||||
Other (Vehicles/Furniture/Equipments) - Dation | 9 | 1 | ||||||
Total | 82 | 47 |
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Market risk
Market risk is the possibility of losses resulting from fluctuations in the market values of positions held by a financial institution, including risks of transactions subject to variationsvariations in foreign exchange and interest rates, share, of prices indexes and commodity prices.prices among other indexes on these risk factors.
Market risk management is the process through which the institution plans, monitors and controls risks arising from changes in market prices of financial instruments, aiming at maximizing the risk-return ratio, through adequate limit structure, models and management tools.
The market risk control exercised by ITAÚ UNIBANCO HOLDING includes all financial instruments of its subsidiaries. Accordingly, the corporate guidelines of risk management is in line with the principles of CMN Resolution No. 3,464, of June 26, 2007 and posterior amendments, comprising a set of principles that drive the institution’s strategy of control and management of market risks in all business units and legal entities of ITAÚ UNIBANCO HOLDING.
The document set forth by the corporate guidelines on market risk management may be viewed on the websitewww.itau-unibanco.com.br/ri, in the section Corporate Governance/Rules and Policies/Public Access Report - Market Risk.
The risk management strategy of ITAÚ UNIBANCO HOLDING tries to achieving a balance between business objectives, considering among others:
· | Political, economic and market context; |
· | Market risk portfolio ofITAÚ UNIBANCO HOLDING; |
· | Capacity to operate in specific markets. |
The process for managing market risk of ITAÚ UNIBANCO HOLDING occurs within the governance and hierarchy of committees and limits approved specifically for this purpose, and that covers from the monitoring of aggregate indicators of risk (portfolio level) to the monitoring of granular limits (individual desks level), assuring effectiveness and coverage of control. These limits are dimensioned considering the projected results of the balance sheet, the level of equity and the profile of risk of each organization unit, which are defined in terms of risk measures used by management. Limits are monitored and controlled daily and excesses are reported and discussed in the corresponding committees.
The limit structure and warnings follow the guidelines of the Board of Directors and is established and approved by the Superior Risk Committee (CSRisc) after discussions and resolutions of the Superior Institutional Treasury Committee (CSTI) on metrics and market risk limits. The review of this structure of limits is performed at least annually.
The purpose of this structure is:
· | Providing more assurance to all executive levels that the assumption of market risks is in line with the ITAÚ UNIBANCO HOLDING and the risk-return objective, by conducting an organized and educated dialogue on the risk profile and its development; |
· | Promoting the disciplined and educated discussion on the global risk profile and its evolution over time; |
· | Increasing transparency on the way the business seeks the optimization of results; |
· | Providing early warning mechanisms in order to make the effective risk management easier, without jeopardizing the business purposes; and |
· | Avoiding risk concentration. |
ITAÚ UNIBANCO HOLDING uses proprietary systems to measure the consolidated market risk. The processing of these systems basicallymainly takes place in São Paulo, in an access-controlled, of high availability, environment, with data safekeeping and recovery processes, and counts on such an infrastructure to ensure the continuity of business in contingency (disaster recovery) situations. The use of market solutions is currently in analysis to supplement the risk technology architecture as part of the evolutionary process that will meet any future regulatory and managerial requirements.
The market risk control exercised by ITAÚ UNIBANCO HOLDING includes all financial instruments of its subsidiaries. Accordingly, its market risk management policy is in line with the principles of CMN Resolution No. 3,464, of June 26, 2007, comprising a set of principles that drive the institution’s strategy of control and management of market risks in all business units and legal entities of ITAÚ UNIBANCO HOLDING.
The guidelines set forth by the internal policy on market risk management may be viewed on the websitewww.itau-unibanco.com.br/ri, in the section Corporate Governance/Rules and Policies/Public Access Report - Market Risk.
The strategy of ITAÚ UNIBANCO HOLDING is based on the comprehensive and complementary use of methods, as well as quantitative tools to estimate, monitor and manage risks, based on the best market practices.
In this context, the risk management strategy of ITAÚ UNIBANCO HOLDING aims at achieving a balance between business objectives, considering the following:
The market risk is controlled by an area independent from the business areas, which is responsible for carrying out daily measurement, assessment and reporting activities through control units operating in the different legal entities OF ITAÚ UNIBANCO HOLDING. Moreover, it also carries out the consolidated monitoring, assessment and reporting of market risk information, including possible exceeding risk limits, by reporting any such event to the business unit in charge and following up the actions required for adjusting the position and/or risk level. For that purpose, the bank has a structured reporting and information process, with the objective of providing input for the follow-up by senior-level committees and complying with the requirements of Brazilian and foreign regulatory agencies.
The market risk control and management process is periodically reviewed with the purpose of keeping the process aligned with best market practices and complyingcomplies with continuous improvement processes at ITAÚ UNIBANCO HOLDING.
AccordingThe market risk is controlled by an area independent from the business areas, which is responsible for carrying out daily measurement, assessment, analysis and reporting activities to the areas and people in charge, in accordance with the governance established and following up the actions required for adjusting the position and/or risk level. For that purpose, the ITAÚ UNIBANCO HOLDING has a structured reporting and information flow with the objective of providing input for the follow-up by senior-level committees and complying with the requirements of Brazilian and foreign regulatory agents.
ITAÚ UNIBANCO HOLDING hedges transactions with clients and proprietary positions, including foreign investments, aiming at mitigating risks arising from fluctuations in significant market factors and adjusting the transactions into the current exposure limits. Derivatives are the most frequently used instruments for thesehedges. When these transactions are designed for as hedge accounting, specific supporting documentation is prepared, including continuous review of the hedge effectiveness and other changes in the accounting process. Accounting and managerial hedge are governed by corporate guidelines of ITAÚ UNIBANCO HOLDING.
Measurement of market risk segregates operations in the trading portfolio and the banking portfolio, pursuant to the criteria for classification of operations provided forset forth in BACENthe New Capital Accord and regulations: Basel II and in the CMN Resolution No. 3,464 of June 26, 2007 and BACEN Circular No. 3,354 of June 27, 2007 and the New Capital Accord – Basel II, the financial instruments, including all transactions with derivatives, are segmented into Trading and Banking portfolios. Market risk measurement is performed observing this segmentation.instructions.
The trading portfolio consists of all transactions, including derivatives, which are entered into with the intention of trading or hedging other financial instruments of this portfolio, and which are not subject to trading restrictions. These are transactions expected to benefit from changes in expected or actual prices in the short term, or for entering into arbitrage activities.arbitration opportunities.
The banking portfolio consists of all transactions not classified inwithin the trading book. These are transactions not intended for tradingTreasury operations in the short term and their respective hedges, as well as transactions entered into forBanking portfolio are carried out jointly with the active management of financial risks that may or may not be carried out with derivatives.
inherent in the global balance of ITAÚ UNIBANCO HOLDING hedges transactions with clients and proprietary positions, including foreign investments, aiming at mitigating risks arising from fluctuations in significant market factors and adjusting the transactions into the current exposure limits. Derivatives are the most frequently used instrumentsheld not for these hedges. When these transactions are designated for as hedge accounting, specific supporting documentation is prepared, including the continuous review of the hedge effectiveness and other changestrading in the accounting process (retrospective and prospective) and other changes in the accounting process, as defined by ITAÚ UNIBANCO HOLDING internal policies.short term. Its composition may include derivatives.
The exposures to market risks ofinherent in the various products, including derivatives, are broken down into a number of risk factors. A risk factor refers to a market benchmark whose change results in an impact on income, and theMarket factors are primary components of pricing. The main risk factors measured by ITAÚ UNIBANCO HOLDING are:
· | Interest rates risk:risk of financial losses on operations subject to changes in interest rates, including the following: |
- | Fixed rates in Brazilian |
- | Rates of couponindexed to certaininterest |
· | Foreign exchange linked interest rate:risk of losses on positions in operations subject to foreign currency coupon |
· | Foreign |
· | Price indices:risk of financial losses on operations subject to changes in price index coupon |
· | Shares:risk of loss on transactions subject to changes in |
The process for managing market risks of ITAÚ UNIBANCO HOLDING occurs within the governance and hierarchy of committees and limits approved specifically for this purpose, and that covers from the monitoring of aggregate indicators of risk, to the monitoring of granular limits, assuring effectiveness and coverage of control. These limits are dimensioned considering the projected results of the balance sheet, the level of equity and the profile of risk of each legal entity, which are defined in terms of risk measures used by management. Limits are monitored daily and excesses are reported and discussed in the corresponding committees.
In this last quarter, ITAÚ UNIBANCO HOLDING improved its structure to control market risk limits, by making it more detailed and aligned with the business structure, segregating metrics into risk factors groups, according to the business areas. This new limit control structure aims at:
· |
In this control structure,Market risk for interest rate in the limits, now even more detailed,Banking Portfolio is managed by a combination of processes, including marking-to-market positions, determining sensitivity to interest rate variations, Value at Risk (VaR) modelling and running stress tests across the portfolio. These processes are monitoredconsistent with ITAÚ UNIBANCO HOLDING’s institutional policies incorporated into the market risk framework.
To evaluate the share position of the banking and trading portfolios, Value at Risk (VaR) is applied, in addition to stress tests, as presented below in the limit reached warning trigger decision-making discussions on positions.paragraph about metrics.
Market risk is analyzed based on the following metrics:
· |
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· | Losses in stress scenarios (Stress Test):simulation technique to assess the behavior of assets, liabilities and |
· | Stop |
· |
In addition to the risk measures, sensitivity and loss control measures are also analyzed. They include:comprise:
· | Gap analysis:accumulated exposure, by risk factor, of cash flows expressed at market value, allocated at the maturity |
· | Sensitivity |
· | Sensitivity to the Several Risk Factors |
· | Stop |
VaR - Consolidated ITAÚ UNIBANCO HOLDING
The internal VaR model used by ITAÚ UNIBANCO HOLDING considers a one-day holding period and a 99% confidence level. Volatilities and correlations are estimated based on a volatility weighted methodology that givegives greater weight to the most recent information.
The Consolidated Global VaR table provides an analysis of the exposure to market risk of ITAÚ UNIBANCO HOLDING portfolios, as ofand to its foreign subsidiaries (Bancoby showing where the largest concentrations of market risk are found. (foreign subsidiaries: Banco Itaú BBA International S.A., Banco Itaú Argentina S.A., Banco Itaú Chile S.A., Banco Itaú UruguayUruguai S.A., Banco Itaú Paraguai S.A. and Banco Itaú ParaguayBBA Colômbia S.A.); – Corporación Financiera).
In April 2012, we obtained authorization to incorporate Itaú BBA Colômbia S.A.–Corporación Financiera. This new unit was incorporated in June 2012 and the operation license was issued by showing wheretheSuperintendencia Financiera de Colombia in October 2012. The unit will gradually strengthen operations over 2013.
With the largest concentrationspurpose of enhancing quality of quantitative information of Market Risk, in the second quarter of 2012 ITAÚ UNIBANCO HOLDING relocated risk factors within their respective groups in the VaR table. This relocation does not affect the institution’s exposure to market risk, are found.which may be observed by the lack of changes in the values of Total Global Var. The figures presented in this publication that refer to cumulative amounts in current and prior years already reflect this relocation of risk factors, making comparison easier.
The consolidated ITAÚ UNIBANCO HOLDING maintaining its conservative management and portfolio diversification, continued with its policy of operating within low limits in relation to its capital.
In this period, the average global VaR was R$ 142.0290 million, or 0.19%0.38% of total stockholders’ equity (throughout 20102011 it was R$ 109,4142 million or 0.16%0.19%).
(in R$ million) | ||||||||||||||||||||||||||||||||||||
VaR Global (*) | ||||||||||||||||||||||||||||||||||||
Average | Minimum(**) | Maximum(**) | 12/31/2011 | Average | Minimum(**) | Maximum(**) | 12/31/2010 | 1/1/2010 | ||||||||||||||||||||||||||||
Risk factor group | ||||||||||||||||||||||||||||||||||||
Interest rate | 105.3 | 27.0 | 229.2 | 114.8 | 109.5 | 47.3 | 207.8 | 123.7 | 86.4 | |||||||||||||||||||||||||||
Foreign exchange linked interest rate | 29.5 | 12.6 | 59.0 | 23.6 | 18.4 | 3.7 | 50.8 | 17.3 | 13.5 | |||||||||||||||||||||||||||
Foreign exchange | 38.1 | 14.2 | 69.2 | 29.0 | 31.8 | 3.3 | 98.1 | 33.9 | 20.5 | |||||||||||||||||||||||||||
Prices index linked interest rate | 17.7 | 2.5 | 41.6 | 21.1 | 17.1 | 6.4 | 30.0 | 18.6 | 16.2 | |||||||||||||||||||||||||||
Equities | 13.4 | 3.7 | 26.1 | 4.4 | 15.1 | 5.1 | 27.7 | 14.4 | 7.4 | |||||||||||||||||||||||||||
Foreign units | ||||||||||||||||||||||||||||||||||||
Itaú BBA International | 2.9 | 0.4 | 6.5 | 1.5 | 1.3 | 0.5 | 3.4 | 0.6 | 1.7 | |||||||||||||||||||||||||||
Itaú Argentina | 4.0 | 1.6 | 9.4 | 3.7 | 1.0 | 0.4 | 2.3 | 1.6 | 1.4 | |||||||||||||||||||||||||||
Itaú Chile | 5.3 | 1.9 | 10.3 | 5.3 | 5.1 | 2.6 | 9.4 | 3.3 | 0.8 | |||||||||||||||||||||||||||
Itaú Uruguay | 0.5 | 0.2 | 1.1 | 0.7 | 0.4 | 0.2 | 0.8 | 0.2 | 0.3 | |||||||||||||||||||||||||||
Itaú Paraguay | 0.6 | 0.2 | 1.7 | 0.2 | 0.6 | 0.2 | 1.6 | 0.9 | - | |||||||||||||||||||||||||||
Effect of diversification | (53.4 | ) | (82.8 | ) | (61.1 | ) | ||||||||||||||||||||||||||||||
Risk Global | 142.0 | 74.0 | 278.5 | 150.9 | 109.4 | 61.6 | 181.8 | 131.9 | 87.2 |
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(in R$ million)
VaR Global (*) | ||||||||||||||||||||||||||||||||
Average | Minimum | Maximum | 12/31/2012 | Average | Minimum | Maximum | 12/31/2011 | |||||||||||||||||||||||||
Risk factor group | ||||||||||||||||||||||||||||||||
Brazilian Interest rate | 191.2 | 71.8 | 427.6 | 348.7 | 100.9 | 24.6 | 222.6 | 104.8 | ||||||||||||||||||||||||
Other Interest rate | 20.4 | 7.3 | 49.6 | 11.4 | 29.5 | 12.6 | 59.0 | 23.6 | ||||||||||||||||||||||||
FX rate | 25.7 | 4.6 | 53.9 | 8.8 | 19.1 | 5.2 | 38.8 | 18.0 | ||||||||||||||||||||||||
Brazilian Inflation Indexes | 110.3 | 14.8 | 325.0 | 51.2 | 17.7 | 2.5 | 41.6 | 21.1 | ||||||||||||||||||||||||
Equities and Commodities | 24.2 | 13.6 | 43.5 | 16.8 | 36.9 | 17.4 | 57.1 | 25.2 | ||||||||||||||||||||||||
Foreign units (**) | ||||||||||||||||||||||||||||||||
Itaú BBA International | 1.7 | 0.7 | 5.1 | 1.1 | 2.9 | 0.4 | 6.5 | 1.5 | ||||||||||||||||||||||||
Itaú Argentina | 3.0 | 1.7 | 5.6 | 5.5 | 4.0 | 1.6 | 9.4 | 3.7 | ||||||||||||||||||||||||
Itaú Chile | 5.5 | 3.2 | 9.6 | 4.4 | 5.3 | 1.9 | 10.3 | 5.3 | ||||||||||||||||||||||||
Itaú Uruguay | 1.7 | 0.3 | 3.4 | 2.0 | 0.5 | 0.2 | 1.1 | 0.7 | ||||||||||||||||||||||||
Itaú Paraguay | 0.4 | 0.2 | 1.4 | 1.0 | 0.6 | 0.2 | 1.7 | 0.2 | ||||||||||||||||||||||||
Itaú BBA Colombia | - | - | - | - | ||||||||||||||||||||||||||||
Effect of diversification | (77.1 | ) | (53.4 | ) | ||||||||||||||||||||||||||||
Global Risk | 289.7 | 118.0 | 601.4 | 373.7 | 142.0 | 74.0 | 278.5 | 150.9 |
(*) Adjusted to reflect the tax treatment of individual classes of assets.
(**) Determined in local currency and converted into Brazilian reais at the closing price on the reporting date.
Interest rate
Management of interest rate risk is performed based on mark-to-market amounts at maturity of several products, grouping them by common dates, calculating the sensitivity to interstinterest rates and applying shocks in the interest rates. The table on the position of accounts subject to interest rate risk shows a different view, grouping them by products, book value of accounts distributed by maturity. This table is not used directly to manage interest rate risks; it is mostly used to enable the assessment of mismatchingsmismatching between accounts and products associated thereto and to identify possible risk concentration.
The following table sets forth our interest-earning assets and interest-bearing liabilities and therefore does not reflect interest rate gap positions that may exist as of any given date. In addition, variations in interest rate sensitivity may exist within the repricing periods presented due to differing repricing dates within the periodperiod.
Position of accounts subject to interest rate risk (1)
12/31/2011 | 12/31/2010 | 1/1/2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0-30 days | 31-180 days | 181-365 days | 1-3 years | Over 3 years | Total | 0-30 days | 31-180 days | 181-365 days | 1-3 years | Over 3 years | Total | 0-30 days | 31-180 days | 181-365 days | 1-3 years | Over 3 years | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing assets | 236,921 | 142,241 | 90,272 | 164,644 | 111,752 | 745,830 | 222,161 | 145,250 | 69,989 | 151,046 | 66,973 | 655,419 | 185,406 | 110,533 | 62,486 | 116,286 | 42,435 | 517,146 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interbank deposits | 18,911 | 3,226 | 3,247 | 2,122 | 315 | 27,821 | 8,209 | 2,954 | 3,153 | 518 | 1 | 14,835 | 8,836 | 4,020 | 4,406 | 528 | 9 | 17,799 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities purchased under agreements to resell | 50,131 | 40,462 | 1,655 | - | - | 92,248 | 47,929 | 32,267 | 1,898 | 5,165 | 1,423 | 88,682 | 102,959 | 20,125 | 1,143 | 5,350 | 6,243 | 135,820 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Central Bank compulsory deposits | 98,053 | - | - | - | - | 98,053 | 85,776 | - | - | - | - | 85,776 | 13,869 | - | - | - | - | 13,869 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets held for trading | 7,188 | 3,369 | 27,149 | 49,914 | 34,269 | 121,889 | 28,366 | 19,403 | 10,936 | 29,507 | 27,285 | 115,497 | 9,284 | 8,136 | 8,527 | 17,314 | 12,291 | 55,552 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets held for trading and designated at fair value through profit or loss | 186 | - | - | - | - | 186 | 306 | - | - | - | - | 306 | 373 | - | - | - | - | 373 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale financial assets | 6,139 | 3,997 | 3,768 | 13,221 | 20,385 | 47,510 | 6,809 | 8,098 | 4,659 | 8,249 | 16,724 | 44,539 | 8,756 | 6,727 | 5,529 | 10,058 | 10,232 | 41,302 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Held-to-maturity financial assets | 87 | - | 33 | 190 | 2,795 | 3,105 | 4 | 144 | 136 | 295 | 2,591 | 3,170 | 5 | 11 | 25 | 414 | 1,974 | 2,429 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | 2,277 | 2,199 | 1,473 | 1,531 | 1,274 | 8,754 | 1,142 | 2,602 | 1,315 | 1,212 | 1,506 | 7,777 | 1,382 | 1,270 | 842 | 1,469 | 626 | 5,589 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan and lease operations | 53,949 | 88,988 | 52,947 | 97,666 | 52,714 | 346,264 | 43,620 | 79,782 | 47,892 | 106,100 | 17,443 | 294,837 | 39,942 | 70,244 | 42,014 | 81,153 | 11,060 | 244,413 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities | 167,707 | 69,188 | 47,978 | 167,503 | 104,446 | 556,822 | 172,825 | 58,287 | 49,042 | 135,939 | 77,436 | 493,529 | 136,355 | 48,951 | 30,153 | 107,801 | 57,981 | 381,241 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Savings deposits | 67,170 | - | - | - | - | 67,170 | 57,900 | - | - | - | - | 57,900 | 48,222 | - | - | - | - | 48,222 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time deposits | 30,918 | 19,167 | 11,475 | 41,702 | 41,207 | 144,469 | 15,332 | 16,714 | 21,476 | 33,002 | 29,892 | 116,416 | 16,332 | 15,437 | 14,175 | 43,817 | 24,863 | 114,624 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interbank deposits | 665 | 683 | 445 | 242 | 30 | 2,065 | 348 | 836 | 505 | 203 | 37 | 1,929 | 570 | 730 | 543 | 84 | 65 | 1,992 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment deposits | - | - | - | - | - | - | 906 | - | - | - | - | 906 | 997 | - | - | - | - | 997 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits received under securities repurchase agreements | 55,866 | 11,403 | 11,139 | 83,623 | 23,382 | 185,413 | 89,010 | 21,369 | 12,067 | 60,200 | 17,011 | 199,657 | 64,843 | 16,128 | 7,449 | 30,272 | 13,253 | 131,945 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interbank market | 5,904 | 24,588 | 16,773 | 30,133 | 13,100 | 90,498 | 4,905 | 16,209 | 11,438 | 20,897 | 9,150 | 62,599 | 4,120 | 12,160 | 6,361 | 15,546 | 6,488 | 44,675 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional market | 2,772 | 11,248 | 5,881 | 9,565 | 25,341 | 54,807 | 658 | 1,419 | 1,857 | 20,261 | 20,318 | 44,513 | 192 | 718 | 654 | 16,547 | 12,419 | 30,530 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | 1,526 | 1,245 | 1,364 | 1,541 | 1,071 | 6,747 | 1,113 | 1,423 | 1,408 | 1,090 | 637 | 5,671 | 1,077 | 1,409 | 850 | 1,477 | 519 | 5,332 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial liabilities held for trading | 48 | 854 | 901 | 697 | 315 | 2,815 | 50 | 317 | 291 | 286 | 391 | 1,335 | 2 | 108 | 121 | 58 | 374 | 663 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities for capitalization plans | 2,838 | - | - | - | - | 2,838 | 2,603 | - | - | - | - | 2,603 | - | 2,261 | - | - | - | 2,261 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Difference asset/ liability (2) | 69,214 | 73,053 | 42,294 | (2,859 | ) | 7,306 | 189,008 | 49,336 | 86,963 | 20,947 | 15,107 | (10,463 | ) | 161,890 | 49,051 | 61,582 | 32,333 | 8,485 | (15,546 | ) | 135,905 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative difference | 69,214 | 142,267 | 184,561 | 181,702 | 189,008 | 49,336 | 136,299 | 157,246 | 172,353 | 161,890 | 49,051 | 110,633 | 142,966 | 151,451 | 135,905 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of cumulative difference to total interest-bearing assets | 9.3 | % | 19.1 | % | 24.7 | % | 24.4 | % | 25.3 | % | 7.5 | % | 20.8 | % | 24.0 | % | 26.3 | % | 24.7 | % | 9.5 | % | 21.4 | % | 27.6 | % | 29.3 | % | 26.3 | % |
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||||||||||||||||||||
0-30 days | 31-180 days | 181-365 days | 1-5 years | Over 5 years | Total | 0-30 days | 31-180 days | 181-365 days | 1-5 years | Over 5 years | Total | |||||||||||||||||||||||||||||||||||||
Interest-bearing assets | 255,232 | 191,194 | 78,496 | 246,502 | 97,228 | 868,652 | 236,921 | 142,241 | 90,272 | 221,692 | 54,704 | 745,830 | ||||||||||||||||||||||||||||||||||||
Interbank deposits | 15,321 | 3,274 | 4,835 | 395 | 1 | 23,826 | 18,911 | 3,226 | 3,247 | 2,177 | 260 | 27,821 | ||||||||||||||||||||||||||||||||||||
Securities purchased under agreements to resell | 87,829 | 71,539 | 3,190 | 179 | - | 162,737 | 50,131 | 40,462 | 1,655 | - | - | 92,248 | ||||||||||||||||||||||||||||||||||||
Central Bank compulsory deposits | 63,701 | - | - | - | - | 63,701 | 98,053 | - | - | - | - | 98,053 | ||||||||||||||||||||||||||||||||||||
Held-for-trading financial assets | 17,163 | 7,251 | 7,920 | 85,581 | 27,601 | 145,516 | 7,188 | 3,369 | 27,149 | 72,088 | 12,095 | 121,889 | ||||||||||||||||||||||||||||||||||||
Financial assets held for trading and designated at fair value through profit or loss | 220 | - | - | - | - | 220 | 186 | - | - | - | - | 186 | ||||||||||||||||||||||||||||||||||||
Available-for-sale financial assets | 13,120 | 7,914 | 5,481 | 29,470 | 34,884 | 90,869 | 6,139 | 3,997 | 3,768 | 17,042 | 16,564 | 47,510 | ||||||||||||||||||||||||||||||||||||
Held-to-maturity financial assets | - | 118 | 70 | 147 | 2,867 | 3,202 | 87 | - | 33 | 242 | 2,743 | 3,105 | ||||||||||||||||||||||||||||||||||||
Derivatives | 1,943 | 3,581 | 1,390 | 3,742 | 941 | 11,597 | 2,277 | 2,199 | 1,473 | 2,315 | 490 | 8,754 | ||||||||||||||||||||||||||||||||||||
Loan and lease operations portfolio | 55,935 | 97,517 | 55,610 | 126,988 | 30,934 | 366,984 | 53,949 | 88,988 | 52,947 | 127,828 | 22,552 | 346,264 | ||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities | 233,991 | 78,742 | 59,229 | 210,743 | 76,688 | 659,393 | 167,707 | 69,188 | 47,978 | 220,434 | 51,515 | 556,822 | ||||||||||||||||||||||||||||||||||||
Savings deposits | 83,451 | - | - | - | - | 83,451 | 67,170 | - | - | - | - | 67,170 | ||||||||||||||||||||||||||||||||||||
Time deposits | 12,369 | 20,861 | 16,667 | 62,226 | 5,109 | 117,232 | 30,918 | 19,167 | 11,475 | 79,542 | 3,367 | 144,469 | ||||||||||||||||||||||||||||||||||||
Interbank deposits | 2,643 | 3,550 | 1,201 | 207 | - | 7,601 | 665 | 683 | 445 | 272 | - | 2,065 | ||||||||||||||||||||||||||||||||||||
Deposits received under repurchase agreements | 123,001 | 17,838 | 16,281 | 82,424 | 27,861 | 267,405 | 55,866 | 11,403 | 11,139 | 89,261 | 17,744 | 185,413 | ||||||||||||||||||||||||||||||||||||
Interbank market | 5,606 | 26,871 | 21,065 | 38,802 | 4,729 | 97,073 | 5,904 | 24,588 | 16,773 | 38,781 | 4,452 | 90,498 | ||||||||||||||||||||||||||||||||||||
Institutional market | 2,299 | 7,018 | 2,753 | 22,062 | 37,896 | 72,028 | 2,772 | 11,248 | 5,881 | 9,565 | 25,341 | 54,807 | ||||||||||||||||||||||||||||||||||||
Derivatives | 1,724 | 2,582 | 1,211 | 4,500 | 1,052 | 11,069 | 1,526 | 1,245 | 1,364 | 2,104 | 508 | 6,747 | ||||||||||||||||||||||||||||||||||||
Financial liabilities held for trading | 6 | 22 | 51 | 522 | 41 | 642 | 48 | 854 | 901 | 909 | 103 | 2,815 | ||||||||||||||||||||||||||||||||||||
Liabilities for capitalization plans | 2,892 | - | - | - | - | 2,892 | 2,838 | - | - | - | - | 2,838 | ||||||||||||||||||||||||||||||||||||
Difference asset/ liability (2) | 21,241 | 112,452 | 19,267 | 35,759 | 20,540 | 209,259 | 69,214 | 73,053 | 42,294 | 1,258 | 3,189 | 189,008 | ||||||||||||||||||||||||||||||||||||
Cumulative difference | 21,241 | 133,693 | 152,960 | 188,719 | 209,259 | 69,214 | 142,267 | 184,561 | 185,819 | 189,008 | ||||||||||||||||||||||||||||||||||||||
Ratio of cumulative difference to total interest-bearing assets | 2.4 | % | 15.4 | % | 17.6 | % | 21.7 | % | 24.1 | % | 9.3 | % | 19.1 | % | 24.7 | % | 24.9 | % | 25.3 | % |
(1) Remaining contractual terms.
(2) The difference arises from the mismatch between the maturities of all remunerated assets and liabilities, at the respective baseperiod-end date, considering the contractually agreed terms.
F.151 |
Position of accounts subject to currency risk
12/31/2011 | 12/31/2012 | |||||||||||||||||||||||||||||||||||||||
ASSETS | Dollar | Euro | Yen | Other | Total | Dollar | Euro | Yen | Other | Total | ||||||||||||||||||||||||||||||
Cash and deposits on demand | 2,560 | 323 | 64 | 2,221 | 5,168 | 5,681 | 388 | 39 | 2,602 | 8,710 | ||||||||||||||||||||||||||||||
Central Bank compulsory deposits | - | 13 | - | 2,098 | 2,111 | - | - | 1 | 2,528 | 2,529 | ||||||||||||||||||||||||||||||
Interbank deposits | 15,681 | 1,274 | 2 | 1,044 | 18,001 | 11,160 | 1,209 | 1 | 2,202 | 14,572 | ||||||||||||||||||||||||||||||
Securities purchased under agreements to resell | 478 | - | - | 127 | 605 | 463 | - | - | 39 | 502 | ||||||||||||||||||||||||||||||
Held-for-trading financial assets | 4,327 | 643 | - | 304 | 5,274 | |||||||||||||||||||||||||||||||||||
Financial assets held for trading | 4,909 | 646 | - | 262 | 5,817 | |||||||||||||||||||||||||||||||||||
Financial assets designated at fair value through profit or loss | - | 186 | - | - | 186 | - | 216 | - | - | 216 | ||||||||||||||||||||||||||||||
Derivatives | 2,018 | 614 | - | 258 | 2,890 | 3,100 | 588 | - | 294 | 3,982 | ||||||||||||||||||||||||||||||
Available-for-sale financial assets | 37,880 | 98 | - | 2,209 | 40,187 | 50,828 | 354 | - | 3,473 | 54,655 | ||||||||||||||||||||||||||||||
Held-to-maturity financial assets | 605 | - | - | - | 605 | 546 | - | - | - | 546 | ||||||||||||||||||||||||||||||
Loan operations, net | 40,494 | 5,338 | 2,832 | 22,693 | 71,357 | |||||||||||||||||||||||||||||||||||
Loan operations and lease operations portfolio, net | 44,417 | 4,950 | 1 | 32,363 | 81,731 | |||||||||||||||||||||||||||||||||||
TOTAL ASSETS | 104,043 | 8,489 | 2,898 | 30,954 | 146,384 | 121,104 | 8,351 | 42 | 43,763 | 173,260 |
12/31/2011 | 12/31/2012 | |||||||||||||||||||||||||||||||||||||||
LIABILITIES | Dollar | Euro | Yen | Other | Total | Dollar | Euro | Yen | Other | Total | ||||||||||||||||||||||||||||||
Deposits | 36,830 | 2,390 | 409 | 19,438 | 59,067 | 32,602 | 1,917 | 441 | 26,836 | 61,796 | ||||||||||||||||||||||||||||||
Deposits received under securities repurchase agreements | 7,228 | - | - | 176 | 7,404 | |||||||||||||||||||||||||||||||||||
Securities sold under repurchase agreements | 17,156 | - | - | 622 | 17,778 | |||||||||||||||||||||||||||||||||||
Financial liabilities held for trading | - | 2,815 | - | - | 2,815 | - | 720 | - | - | 720 | ||||||||||||||||||||||||||||||
Derivatives | 1,684 | 537 | - | 137 | 2,358 | 2,755 | 493 | - | 205 | 3,453 | ||||||||||||||||||||||||||||||
Interbank market debts | 28,022 | 643 | 2 | 2,015 | 30,682 | |||||||||||||||||||||||||||||||||||
Institutional market debts | 47,643 | 3,530 | - | 1,230 | 52,403 | |||||||||||||||||||||||||||||||||||
Interbank market debt | 27,430 | 150 | - | 2,393 | 29,973 | |||||||||||||||||||||||||||||||||||
Institutional market debt | 52,421 | 3,065 | - | 2,411 | 57,897 | |||||||||||||||||||||||||||||||||||
TOTAL LIABILITIES | 121,407 | 9,915 | 411 | 22,996 | 154,729 | 132,364 | 6,345 | 441 | 32,467 | 171,617 | ||||||||||||||||||||||||||||||
NET POSITION | (17,364 | ) | (1,426 | ) | 2,487 | 7,958 | (8,345 | ) | (11,260 | ) | 2,006 | (399 | ) | 11,296 | 1,643 |
The exposure to share price risk is disclosed in Note 67 related to financial assets held for trading and Note 9,10, related to available-for-sale financial assets.
Position of accounts subject to currency risk
12/31/2010 | 12/31/2011 | |||||||||||||||||||||||||||||||||||||||
ASSETS | Dollar | Euro | Yen | Other | Total | Dollar | Euro | Yen | Other | Total | ||||||||||||||||||||||||||||||
Cash and deposits on demand | 3,433 | 124 | 130 | 1,154 | 4,841 | 2,560 | 323 | 64 | 2,221 | 5,168 | ||||||||||||||||||||||||||||||
Central Bank compulsory deposits | - | 8 | - | 898 | 906 | - | 13 | - | 2,098 | 2,111 | ||||||||||||||||||||||||||||||
Interbank deposits | 6,726 | 2,724 | - | 701 | 10,151 | 15,681 | 1,274 | 2 | 1,044 | 18,001 | ||||||||||||||||||||||||||||||
Securities purchased under agreements to resell | 1,177 | - | - | 109 | 1,286 | 478 | - | - | 127 | 605 | ||||||||||||||||||||||||||||||
Held-for-trading financial assets | 12,447 | 694 | - | 541 | 13,682 | |||||||||||||||||||||||||||||||||||
Financial assets held for trading | 4,327 | 643 | - | 304 | 5,274 | |||||||||||||||||||||||||||||||||||
Financial assets designated at fair value through profit or loss | - | 306 | - | - | 306 | - | 186 | - | - | 186 | ||||||||||||||||||||||||||||||
Derivatives | 1,974 | 111 | - | 121 | 2,206 | 2,018 | 614 | - | 258 | 2,890 | ||||||||||||||||||||||||||||||
Available-for-sale financial assets | 22,320 | 47 | - | 2,570 | 24,937 | 37,880 | 98 | - | 2,209 | 40,187 | ||||||||||||||||||||||||||||||
Held-to-maturity financial assets | 692 | - | - | - | 692 | 605 | - | - | - | 605 | ||||||||||||||||||||||||||||||
Loan operations, net | 30,558 | 4,158 | 2,511 | 16,781 | 54,008 | |||||||||||||||||||||||||||||||||||
Loan operations and lease operations portfolio, net | 40,494 | 5,338 | 2,832 | 22,693 | 71,357 | |||||||||||||||||||||||||||||||||||
TOTAL ASSETS | 79,327 | 8,172 | 2,641 | 22,875 | 113,015 | 104,043 | 8,489 | 2,898 | 30,954 | 146,384 |
12/31/2010 | 12/31/2011 | |||||||||||||||||||||||||||||||||||||||
LIABILITIES | Dollar | Euro | Yen | Other | Total | Dollar | Euro | Yen | Other | Total | ||||||||||||||||||||||||||||||
Deposits | 21,603 | 1,435 | 274 | 13,822 | 37,134 | 36,830 | 2,390 | 409 | 19,438 | 59,067 | ||||||||||||||||||||||||||||||
Deposits received under securities repurchase agreements | 15,327 | - | - | 259 | 15,586 | |||||||||||||||||||||||||||||||||||
Securities sold under securities repurchase agreements | 7,228 | - | - | 176 | 7,404 | |||||||||||||||||||||||||||||||||||
Financial liabilities held for trading | - | 1,335 | - | - | 1,335 | - | 2,815 | - | - | 2,815 | ||||||||||||||||||||||||||||||
Derivatives | 1,684 | 119 | - | 130 | 1,933 | 1,684 | 537 | - | 137 | 2,358 | ||||||||||||||||||||||||||||||
Interbank market debts | 25,013 | 712 | 1 | 1,360 | 27,086 | |||||||||||||||||||||||||||||||||||
Institutional market debts | 27,355 | 1,333 | - | 932 | 29,620 | |||||||||||||||||||||||||||||||||||
Interbank market debt | 28,022 | 643 | 2 | 2,015 | 30,682 | |||||||||||||||||||||||||||||||||||
Institutional market debt | 47,643 | 3,530 | - | 1,230 | 52,403 | |||||||||||||||||||||||||||||||||||
TOTAL LIABILITIES | 90,982 | 4,934 | 275 | 16,503 | 112,694 | 121,407 | 9,915 | 411 | 22,996 | 154,729 | ||||||||||||||||||||||||||||||
NET POSITION | (11,655 | ) | 3,238 | 2,366 | 6,372 | 321 | (17,364 | ) | (1,426 | ) | 2,487 | 7,958 | (8,345 | ) |
The exposure to share price risk is disclosed in Note 67 related to financial assets held for trading and Note 9,10, related to available-for-sale financial assets.
Position of accounts subject to currency risk
F.152 |
01/01/2010 | ||||||||||||||||||||
ASSETS | Dollar | Euro | Yen | Other | Total | |||||||||||||||
Cash and deposits on demand | 4,993 | 120 | 90 | 980 | 6,183 | |||||||||||||||
Central Bank compulsory deposits | 32 | 81 | - | 1,195 | 1,308 | |||||||||||||||
Interbank deposits | 13,183 | 2,585 | 2 | 668 | 16,438 | |||||||||||||||
Securities purchased under agreements to resell | 657 | - | - | 137 | 794 | |||||||||||||||
Held-for-trading financial assets | 3,441 | 686 | - | 301 | 4,428 | |||||||||||||||
Financial assets designated at fair value through profit or loss | 4 | 360 | - | 9 | 373 | |||||||||||||||
Derivatives | 762 | 109 | - | 158 | 1,029 | |||||||||||||||
Available-for-sale financial assets | 15,113 | 361 | - | 2,421 | 17,895 | |||||||||||||||
Held-to-maturity financial assets | 786 | - | - | - | 786 | |||||||||||||||
Loan operations, net | 18,670 | 4,229 | 33 | 14,204 | 37,136 | |||||||||||||||
TOTAL ASSETS | 57,641 | 8,531 | 125 | 20,073 | 86,370 |
01/01/2010 | ||||||||||||||||||||
LIABILITIES | Dollar | Euro | Yen | Other | Total | |||||||||||||||
Deposits | 17,732 | 2,154 | 216 | 11,995 | 32,097 | |||||||||||||||
Deposits received under securities repurchase agreements | 1,232 | - | - | 343 | 1,575 | |||||||||||||||
Financial liabilities held for trading | - | - | - | - | - | |||||||||||||||
Derivatives | 809 | 137 | - | 150 | 1,096 | |||||||||||||||
Interbank market debts | 17,982 | 859 | - | 1,272 | 20,113 | |||||||||||||||
Institutional market debts | 16,140 | 1,226 | - | 136 | 17,502 | |||||||||||||||
TOTAL LIABILITIES | 53,895 | 4,376 | 216 | 13,896 | 72,383 | |||||||||||||||
NET POSITION | 3,746 | 4,155 | (91 | ) | 6,177 | 13,987 |
The exposure to share price risk is disclosed in Note 6 related to financial assets held for trading and Note 9, related to available-for-sale financial assets.
Liquidity risk
Liquidity risk is defined as the existence of imbalances between marketable assets and liabilities due – “mismatching”mismatching between payments and receipts - which may affect the institution’s payment capacityof ITAÚ UNIBANCO HOLDING, taking into consideration the different currencies and payment terms and thetheir respective rights and obligations.
Policies and procedures
ManagementThe management of liquidity riskrisks seeks to adopt best practicesguarantee liquidity sufficient to avoid having insufficient cash availablesupport possible outflows in market stress situations, as well as the compatibility between funding and to avoid difficulties in meeting obligations as they fall due.the terms and liquidity of assets.
ITAÚ UNIBANCO HOLDING has a structure dedicated to improve the monitoring, control and analysis, through models of projections of the variables that affect cash flows and the level of reserves in local and foreign currencies.
The liquidity risk measurement process makes use of corporate and own in-house developed application systems.ITAÚ UNIBANCO HOLDING manages proprietary IT systems to support the liquidity risk measurement process.
Additionally, ITAÚ UNIBANCO HOLDING establishes guidelines and limits. Compliance with these guidelines and limits is periodically analyzed in technical committees, and their purpose is to provide an additional safety margin to the minimum projected needs. The liquidity management policies and the respective limits are established based on prospective scenarios periodically reviewed and on the definitions of the top management.
These scenarios may be reviewed as necessary, considering thein view of cash requirements due toresulting from atypical market situations or arising from strategic decisions.decisions of ITAÚ UNIBANCO HOLDING.
In compliance with the requirements of CMN Resolution No. 2,804 of December 21, 2000 and BACEN Resolution 2,804/00 and Circular 3,393/08No. 3,393 of June 3, 2008 , the Central Bank of Brazil, a Statement of Liquidity Risk (DRL) is sent to BACEN on a monthly to the Central Bank,basis, and periodically the following items are sent to top management for monitoring and supportsupporting decisions are periodically prepared and submitted to the decision-making process:top management:
· | Different scenarios projected for changes in liquidity. |
· | Contingency plans for crisis situations. |
· | Reports and charts that describe the risk positions. |
· | Assessment of funding costs and alternative sources of funding. |
· | Monitoring of changes in funding through a constant control over sources of funding, considering the type of investor and maturities, among other factors. |
Primary sources of funding
ITAÚ UNIBANCO HOLDING has different sources of funding, of which a significant portion is from the retail segment. Total funding from clients reached R$ 481.1 billion (R$ 448.1 billion reais in 2011,at 12/31/2011), particularly funding from time deposits. A considerable portion of these funds – 30.2%29.4% of total, or R$ 135.5141.4 billion – is available on demand to the client. However, the historical behavior of the accumulated balance of the two largest items in this group – demand and savings deposits - is relatively consistent with the balances increasing over time and inflows exceeding outflows for monthly average amounts.
12/31/2011 | 12/31/2010 | 1/1/2010 | ||||||||||||||||||||||||||||||||||
Funding from clients | 0-30 days | Total | % | 0-30 days | Total | % | 0-30 days | Total | % | |||||||||||||||||||||||||||
Deposits | 127,686 | 242,638 | 100,018 | 202,688 | 91,011 | 190,773 | ||||||||||||||||||||||||||||||
Demand deposits | 28,933 | 28,933 | 6.5 | 25,537 | 25,537 | 7.0 | 24,837 | 24,837 | 8.4 | |||||||||||||||||||||||||||
Savings deposits | 67,170 | 67,170 | 15.0 | 57,899 | 57,899 | 16.0 | 48,222 | 48,222 | 16.3 | |||||||||||||||||||||||||||
Time deposits | 30,917 | 144,469 | 32.2 | 15,333 | 116,417 | 32.1 | 16,374 | 114,671 | 38.7 | |||||||||||||||||||||||||||
Other | 666 | 2,066 | 0.5 | 1,249 | 2,835 | 0.8 | 1,578 | 3,043 | 1.0 | |||||||||||||||||||||||||||
Funds from acceptances and issuance of securities (1) | 4,862 | 51,557 | 11.5 | 3,408 | 25,592 | 6.7 | 2,303 | 17,320 | 5.8 | |||||||||||||||||||||||||||
Funds from own issue (2) | 2,913 | 114,155 | 25.5 | 3,983 | 101,284 | 27.9 | 4,170 | 65,457 | 22.1 | |||||||||||||||||||||||||||
Subordinated debt | 60 | 39,715 | 8.9 | 28 | 34,488 | 9.5 | 13 | 22,726 | 7.7 | |||||||||||||||||||||||||||
Total | 135,521 | 448,065 | 107,437 | 364,052 | 97,497 | 296,275 |
F.153 |
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||
Funding from clients | 0-30 days | Total | % | 0-30 days | Total | % | ||||||||||||||||||
Deposits | 133,377 | 243,199 | 127,686 | 242,638 | ||||||||||||||||||||
Demand deposits | 34,916 | 34,916 | 7.3 | 28,933 | 28,933 | 6.5 | ||||||||||||||||||
Savings deposits | 83,451 | 83,451 | 17.3 | 67,170 | 67,170 | 15.0 | ||||||||||||||||||
Time deposits | 12,368 | 117,232 | 24.4 | 30,917 | 144,469 | 32.2 | ||||||||||||||||||
Other | 2,642 | 7,600 | 1.6 | 666 | 2,066 | 0.5 | ||||||||||||||||||
Funds from acceptances and issuance of securities (1) | 3,863 | 55,108 | 11.5 | 4,862 | 51,557 | 11.5 | ||||||||||||||||||
Funds from own issue (2) | 3,394 | 127,652 | 26.5 | 2,913 | 114,155 | 25.5 | ||||||||||||||||||
Subordinated debt | 797 | 55,179 | 11.5 | 60 | 39,715 | 8.9 | ||||||||||||||||||
Total | 141,431 | 481,138 | 135,521 | 448,065 |
(1) Includes mortgage notes, real estate credit bills, agribusiness and financial credit bills recorded in interbank and institutional market debts and liabilities for Issueissue of debentures and foreign borrowings and securities recorded in funds from institutional markets.
(2) Refer to deposits received under securities repurchase agreements with securities from own issue.
Control over liquidity
ITAÚ UNIBANCO HOLDING manages its liquidity reserves based on estimates of funds that will be available for investment, considering the continuity of business in normal conditions.
During 2011,2012, ITAÚ UNIBANCO HOLDING maintained appropriate levels of liquidity in Brazil and abroad. Liquid assets (cash and deposits on demand, funded positions of securities purchased under agreements to resell - funded position and free government securities available)securities) totaled R$ 80.8120.8 billion and accounted for 59.6%85.4% of the short-term redeemable obligations, 18.0%25.1% of total funding, and 15.4%17.7% of total assets.
The table below shows the indicators used by ITAÚ UNIBANCO HOLDING in the management of liquidity risk:
Liquidity indicators | 12/31/2012 % | 12/31/2011 % | ||||||
Net assets (1) / funds within 30 days (2) | 85.4 | 59.6 | ||||||
Net assets (1) / total funds(3) | 25.1 | 18.0 | ||||||
Net assets(1) / total assets(4) | 17.7 | 15.4 |
(1) Net assets: Cash and deposits on demand, Securities purchased under agreements to resell – Funded position and Government securities - available. Detailed in the table Undiscounted future flows – Financial Assets
(2) Table Funding from clients (Total Funding from clients 0-30 days)
(3) Table Funding from clients (Total Funding from clients)
(4) Detailed in the table Undiscounted future flows – Financial Assets, total present value regards R$ 682,867 (R$ 524,416 at 12/31/2011).
F.155 |
The following table presents assets and liabilities according to their remaining contractual maturities, considering their undiscounted flows.
R$ Million
Undiscounted future flows except for derivatives | 12/31/2011 | 12/31/2010 | 01/01/2010 | 12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ASSETS (1) | 0 - 30 days | 31 - 365 days | 366-720 days | Over 720 days | Total | 0 - 30 days | 31 - 365 days | 366-720 days | Over 720 days | Total | 0 - 30 days | 31 - 365 days | 366-720 days | Over 720 days | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL ASSETS(1) | 0 - 30 days | 31 - 365 days | 366-720 days | Over 720 days | Total | 0 - 30 days | 31 - 365 days | 366-720 days | Over 720 days | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and deposits on demand | 10,633 | - | - | - | 10,633 | 10,097 | - | - | - | 10,097 | 10,594 | - | - | - | 10,594 | 13,967 | - | - | - | 13,967 | 10,633 | - | - | - | 10,633 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interbank investments | 68,277 | 36,721 | 2,295 | 287 | 107,580 | 50,739 | 24,031 | 469 | 172 | 75,411 | 110,149 | 17,079 | 487 | 213 | 127,928 | 109,340 | 61,934 | 320 | 159 | 171,753 | 68,277 | 36,721 | 2,295 | 287 | 107,580 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities purchased under agreements to resell - Funded position (2) | 25,438 | - | - | - | 25,438 | 24,773 | - | - | - | 24,773 | 52,577 | - | - | - | 52,577 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities purchased under agreements to resell - Financed position | 23,948 | 29,706 | - | - | 53,654 | 17,764 | 17,617 | - | - | 35,381 | 48,988 | 8,312 | - | - | 57,300 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities purchased under agreements to resell – Funded position (2) | 22,895 | - | - | 1 | 22,896 | 25,438 | - | - | - | 25,438 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities purchased under agreements to resell – Financed position | 71,124 | 53,678 | - | - | 124,802 | 23,948 | 29,706 | - | - | 53,654 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interbank deposits | 18,891 | 7,015 | 2,295 | 287 | 28,488 | 8,202 | 6,414 | 469 | 172 | 15,257 | 8,584 | 8,767 | 487 | 213 | 18,051 | 15,321 | 8,256 | 320 | 158 | 24,055 | 18,891 | 7,015 | 2,295 | 287 | 28,488 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities | 50,127 | 5,368 | 3,979 | 54,096 | 113,570 | 50,962 | 25,808 | 5,130 | 58,920 | 140,820 | 29,065 | 6,766 | 3,912 | 15,715 | 55,458 | 102,046 | 7,293 | 9,261 | 78,689 | 197,289 | 50,127 | 5,368 | 3,979 | 54,096 | 113,570 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Government securities - available | 44,741 | - | - | - | 44,741 | 23,473 | - | - | - | 23,473 | 17,177 | - | - | - | 17,177 | 83,980 | - | - | - | 83,980 | 44,741 | - | - | - | 44,741 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Government securities - subject to repurchase commitments | 686 | 1,779 | 916 | 23,210 | 26,591 | 21,488 | 19,063 | 3,694 | 38,588 | 82,833 | 5,604 | 855 | 1,220 | 2,218 | 9,897 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Government securities – subject to repurchase commitments | 13,581 | 2,208 | 1,024 | 37,165 | 53,978 | 686 | 1,779 | 916 | 23,210 | 26,591 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Private securities - available | 4,693 | 3,299 | 2,332 | 28,648 | 38,972 | 5,954 | 6,193 | 1,411 | 17,748 | 31,306 | 6,254 | 5,681 | 2,458 | 13,222 | 27,615 | 4,482 | 4,229 | 7,968 | 37,201 | 53,880 | 4,693 | 3,299 | 2,332 | 28,648 | 38,972 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Private securities - Subject to repurchase commitments | 7 | 290 | 731 | 2,238 | 3,266 | 47 | 552 | 25 | 2,584 | 3,208 | 30 | 230 | 234 | 275 | 769 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Private securities – subject to repurchase commitments | 3 | 856 | 269 | 4,323 | 5,451 | 7 | 290 | 731 | 2,238 | 3,266 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | 2,277 | 3,672 | 960 | 1,845 | 8,754 | 1,145 | 3,914 | 753 | 1,965 | 7,777 | 1,383 | 2,112 | 1,124 | 970 | 5,589 | 1,943 | 4,971 | 1,756 | 2,927 | 11,597 | 2,277 | 3,672 | 960 | 1,845 | 8,754 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan and lease operations (3) | 48,966 | 133,015 | 78,609 | 110,750 | 371,340 | 41,720 | 116,494 | 62,832 | 99,394 | 320,440 | 39,587 | 102,113 | 46,525 | 74,703 | 262,928 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan and lease operations portfolio (3) | 48,460 | 153,079 | 82,459 | 116,066 | 400,064 | 48,966 | 133,015 | 78,609 | 110,750 | 371,340 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
180,280 | 178,776 | 85,843 | 166,978 | 611,877 | 154,663 | 170,247 | 69,184 | 160,451 | 554,545 | 190,778 | 128,070 | 52,048 | 91,601 | 462,497 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Financial Assets | 275,756 | 227,277 | 93,796 | 197,841 | 794,670 | 180,280 | 178,776 | 85,843 | 166,978 | 611,877 |
(1) The assets portfolio does not take into consideration the balance of compulsory deposits in Central Bank, amounting to R$ 98,05363,701 (R$ 85,77698,053 at December 31, 2010 and R$ 27,087 at January 1, 2010)2011), which release of funds is linked to the maturity of the liability portfolios. The amounts of PGBL and VGBL are not considered in the assets portfolio because they are covered in Note 29.30.
(2) Net of R$ 7,2279,106 (R$ 8,6707,227 at 12/31/2010 and R$ 9,288 at 01/01/2010)2011) which securities are restricted to guarantee transactions at BM&FBovespa&FBOVESPA S.A. and the Central Bank of Brazil.
(3) Net of payment to merchants of R$ 27,382 (R$ 25,749 (R$18,758 at 12/31/2010 and R$14,714 at 01/01/2010)2011).
F.156 |
R$ Million
Undiscounted future flows except for derivatives | 12/31/2011 | 12/31/2010 | 1/1/2010 | 12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LIABILITIES | 0 - 30 days | 31- 365 days | 365- 720 days | Over 720 days | Total | 0-30 days | 31-365 days | 365- 720 days | Over 720 days | Total | 0 - 30 days | 31 - 365 days | 365- 720 days | Over 720 days | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL LIABILITIES | 0 – 30 days | 31 – 365 days | 365 – 720 days | Over 720 days | Total | 0 – 30 days | 31 – 365 days | 365 – 720 days | Over 720 days | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | 122,173 | 38,410 | 33,101 | 67,913 | 261,597 | 100,235 | 43,094 | 18,217 | 63,733 | 225,279 | 91,067 | 30,240 | 32,072 | 52,393 | 205,772 | 133,310 | 42,494 | 15,290 | 74,632 | 265,726 | 122,173 | 38,410 | 33,101 | 67,913 | 261,597 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Demand deposits | 28,933 | - | - | - | 28,933 | 25,537 | - | - | - | 25,537 | 24,837 | - | - | - | 24,837 | 34,916 | - | - | - | 34,916 | 28,933 | - | - | - | 28,933 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Savings deposits | 67,170 | - | - | - | 67,170 | 57,899 | - | - | - | 57,899 | 48,222 | - | - | - | 48,222 | 83,451 | - | - | - | 83,451 | 67,170 | - | - | - | 67,170 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time deposit | 25,423 | 37,239 | 32,903 | 67,806 | 163,371 | 15,531 | 41,687 | 18,159 | 63,534 | 138,911 | 16,429 | 28,863 | 31,989 | 52,255 | 129,536 | 12,261 | 37,620 | 15,150 | 74,402 | 139,433 | 25,423 | 37,239 | 32,903 | 67,806 | 163,371 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interbank deposit | 647 | 1,171 | 198 | 107 | 2,123 | 362 | 1,407 | 58 | 199 | 2,026 | 582 | 1,377 | 83 | 138 | 2,180 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other deposits | - | - | - | - | - | 906 | - | - | - | 906 | 997 | - | - | - | 997 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interbank deposits | 2,682 | 4,874 | 140 | 230 | 7,926 | 647 | 1,171 | 198 | 107 | 2,123 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compulsory Deposits | (39,562 | ) | (15,790 | ) | (13,951 | ) | (28,750 | ) | (98,053 | ) | (31,547 | ) | (18,323 | ) | (7,981 | ) | (27,925 | ) | (85,776 | ) | (19,331 | ) | (1,979 | ) | (2,194 | ) | (3,583 | ) | (27,087 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compulsory deposits | (35,238 | ) | (9,761 | ) | (3,744 | ) | (14,959 | ) | (63,702 | ) | (39,562 | ) | (15,790 | ) | (13,951 | ) | (28,750 | ) | (98,053 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Demand deposits | (9,939 | ) | - | - | - | (9,939 | ) | (8,210 | ) | - | - | - | (8,210 | ) | (5,679 | ) | - | - | - | (5,679 | ) | (8,590 | ) | - | - | - | (8,590 | ) | (9,939 | ) | - | - | - | (9,939 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Savings deposits | (18,843 | ) | - | - | - | (18,843 | ) | (16,511 | ) | - | - | - | (16,511 | ) | (12,525 | ) | - | - | - | (12,525 | ) | (23,582 | ) | - | - | - | (23,582 | ) | (18,843 | ) | - | - | - | (18,843 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Time deposit | (10,780 | ) | (15,790 | ) | (13,951 | ) | (28,750 | ) | (69,271 | ) | (6,826 | ) | (18,323 | ) | (7,981 | ) | (27,925 | ) | (61,055 | ) | (1,127 | ) | (1,979 | ) | (2,194 | ) | (3,583 | ) | (8,883 | ) | (3,066 | ) | (9,761 | ) | (3,744 | ) | (14,959 | ) | (31,530 | ) | (10,780 | ) | (15,790 | ) | (13,951 | ) | (28,750 | ) | (69,271 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Securities sold under repurchase agreements (1) | 56,618 | 24,205 | 45,139 | 91,587 | 217,549 | 89,375 | 35,558 | 27,096 | 62,490 | 214,519 | 65,036 | 24,671 | 47,564 | 4,325 | 141,596 | 134,028 | 35,529 | 54,086 | 85,195 | 308,838 | 56,618 | 24,205 | 45,139 | 91,587 | 217,549 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Funds from acceptances and issuance of securities (2) | 4,365 | 25,714 | 12,998 | 13,274 | 56,351 | 3,455 | 11,825 | 5,854 | 6,224 | 27,358 | 2,319 | 8,276 | 3,833 | 3,560 | 17,988 | 3,793 | 29,349 | 11,049 | 15,526 | 59,717 | 4,365 | 25,714 | 12,998 | 13,274 | 56,351 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings and onlending (3) | 3,339 | 25,276 | 10,617 | 24,484 | 63,716 | 2,372 | 19,742 | 17,343 | 16,935 | 56,392 | 2,059 | 12,592 | 15,516 | 11,171 | 41,338 | 2,938 | 27,596 | 11,277 | 24,083 | 65,894 | 3,339 | 25,276 | 10,617 | 24,484 | 63,716 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subordinated debt (4) | 69 | 11,338 | 3,174 | 40,941 | 55,522 | 28 | 2,039 | 14,801 | 29,396 | 46,264 | 13 | 941 | 1,234 | 27,770 | 29,958 | 831 | 4,352 | 7,726 | 61,698 | 74,607 | 69 | 11,338 | 3,174 | 40,941 | 55,522 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | 1,526 | 2,609 | 885 | 1,727 | 6,747 | 1,113 | 2,831 | 743 | 984 | 5,671 | 1,077 | 2,259 | 1,096 | 900 | 5,332 | 1,724 | 3,793 | 2,154 | 3,398 | 11,069 | 1,526 | 2,609 | 885 | 1,727 | 6,747 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
148,528 | 111,762 | 91,963 | 211,176 | 563,429 | 165,031 | 96,766 | 76,073 | 151,837 | 489,707 | 142,240 | 77,000 | 99,121 | 96,536 | 414,897 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Financial Liabilities | 241,386 | 133,352 | 97,838 | 249,573 | 722,149 | 148,528 | 111,762 | 91,963 | 211,176 | 563,429 |
(1) Includes Own and Third Parties’ Portfolios.
(2) Includes mortgage notes, real estate credit bills, agribusiness and financial bills recorded in interbank and institutional market funds and liabilities for Issueissue of debentures and foreign securities recorded in funds from institutional markets.
(3) Recorded in funds from Interbank Markets.interbank markets.
(4) Recorded in funds from Institutional Markets.institutional markets.
The above table does not include the financial effect on liquidity of endorsements, sureties and other loans commitments because these have a 0,03% probability of materialization, in accordance with historical data. For the notional amounts we refer to Note 35.5.
NOTE 36 – TRANSACTION WITH CARREFOUR
On April 14, 2011, ITAÚ UNIBANCO HOLDING entered into with Carrefour Comércio e Indústria Ltda. ("Carrefour Brazil"), an Agreement for Purchase and Sale of Shares to acquire 49% of Banco CSF S.A. (Banco Carrefour) for R$ 725 million, corresponding to a 2010 price/earnings ratio of 11.6. The completion of this transaction depends on the approval from the Central Bank of Brazil.
F.157 |
NOTE 37 – SUBSEQUENT EVENTS
12/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||||||||||||
Off Balance sheet | 0 – 30 days | 31 – 365 days | 365 – 720 days | Over 720 days | Total | 0 – 30 days | 31 – 365 days | 365 – 720 days | Over 720 days | Total | ||||||||||||||||||||||||||||||
Endorsements and sureties | 1,526 | 13,271 | 3,078 | 42,435 | 60,310 | 1,014 | 10,488 | 4,269 | 35,759 | 51,530 | ||||||||||||||||||||||||||||||
Commitments to be released | 94,197 | 25,452 | 15,675 | 79,236 | 214,560 | 92,260 | 22,068 | 12,993 | 79,518 | 206,839 | ||||||||||||||||||||||||||||||
Letters of credit to be released | 14,605 | - | - | - | 14,605 | 11,172 | - | - | - | 11,172 | ||||||||||||||||||||||||||||||
Total | 110,328 | 38,723 | 18,753 | 121,671 | 289,475 | 104,446 | 32,556 | 17,262 | 115,277 | 269,541 |
Transaction with Redecard
F.158 |
Itaú Unibanco Holding communicated to its stockholders and announced to the market, on February 7, 2012, as a Material Fact, its intention to acquire, directly or through its subsidiary companies, the shares held by non-controlling shareholders of Redecard S.A., within the scope of a unified public offering and subsequently cancel the registration of Redecard as a public company and withdrawal thereof from theNovo Mercado segment of BM&FBOVESPA S.A. - Brazilian Mercantile and Futures Exchange (“Novo Mercado” segment).
The Public Offering will target 336,390.251 common shares issued by Redecard, which represent 49.9859% of Redecard’s capital. The cap price to be tendered will be R$35.00 (thirty-five Brazilian reais) per share, payable in national currency.
The performance of the aforesaid public offering is subject to approval by regulatory authorities and the other terms and conditions of the offering will be disclosed to the market in due course, according to the applicable rules.
ITEM 19 EXHIBITS
Exhibit | ||||
Number | Description | |||
1.1 | Bylaws of Itaú Unibanco Holding S.A. (unofficial English translation). | (4) | ||
2.(a) | Amended and Restated Deposit Agreement among the Registrant, The Bank of New York, as depositary, and the Holders from time to time of American Depositary Shares issued thereunder, including the form of American Depositary Receipts. | (1) | ||
4.(a)1 | Share Purchase and Sale Agreement, dated November 4, 2002, among Fernão Carlos Botelho Bracher, Antonio Beltran Martinez and Banco Itaú S.A. | (2) | ||
4.(a)2 | Shareholders’ Agreement, dated as of January 27, 2009, between Itaúsa — Investimentos Itaú S.A. and the Moreira Salles family (unofficial English translation). | (3) | ||
6 | See note 27 to our consolidated financial statements explaining how earnings per share information was calculated under IFRS. See “Item 3A. Selected Financial Data – Earnings and Dividend per Share Information” for information explaining how earnings per share information was calculated under Brazilian Corporate Law. | * | ||
8.1 | List of subsidiaries. | * | ||
11.1 | Code of Ethics (unofficial English translation) | (3) | ||
11.2 | Corporate Governance Policy (unofficial English translation) | (3) | ||
12.1 | Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | * | ||
12.2 | Chief Risk Officer and Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | * | ||
13 | Chief Executive Officer, Chief Risk Officer and Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350 as Enacted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | * |
ITEM 19 | EXHIBITS | |
Exhibit | ||
Number | Description | |
1.1 | Bylaws of Itaú Unibanco Holding S.A. (unofficial English translation). | * |
2.(a) | Amended and Restated Deposit Agreement among the Registrant, The Bank of New York, as depositary, and the Holders from time to time of American Depositary Shares issued thereunder, including the form of American Depositary Receipts. | (1) |
4.(a)1 | Share Purchase and Sale Agreement, dated November 4, 2002, among Fernão Carlos Botelho Bracher, Antonio Beltran Martinez and Banco Itaú S.A. | (2) |
4.(a)2 | Shareholders’ Agreement, dated as of January 27, 2009, between Itaúsa — Investimentos Itaú S.A. and the Moreira Salles family (unofficial English translation). | (3) |
6 | See note 28 to our consolidated financial statements explaining how earnings per share information was calculated under IFRS. See “Item 3A. Selected Financial Data — Earnings and Dividend per Share Information” for information explaining how earnings per share information was calculated under Brazilian Corporate Law. | * |
8.1 | List of subsidiaries. | * |
11.1 | Code of Ethics (unofficial English translation) | * |
11.2 | Corporate Governance Policy (unofficial English translation) | * |
12.1 | Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | * |
12.2 | Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | * |
13 | Chief Executive Officer and Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350 as Enacted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | * |
We hereby agree to furnish to the SEC copies of any of our long term debt instruments and agreements as the SEC requests.
(1) | Incorporated herein by reference to our annual report on F-6 filed with the Commission on February 20, 2009. |
(2) | Incorporated herein by reference to our annual report on Form 20-F filed with the Commission on June 30, 2003. |
(3) | Incorporated herein by reference to our annual report on Form 20-F filed with the Commission on May 17, 2010. |
* | Filed herewith. |
236 |
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act, as amended, the registrant certifies that it meets all of the requirements for filing this annual report on Form 20-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.
ITAÚ UNIBANCO HOLDING S.A. | ||
By: | /s/ Roberto Egydio Setubal | |
Name: Roberto Egydio Setubal | ||
Title: Chief Executive | ||
By: | /s/ Caio Ibrahim David | |
Name: Caio Ibrahim David | ||
Title: Chief Financial Officer |
Dated: March 30, 2012April 29, 2013
237 |