| · | obligation to maintain sufficient capital reserves to absorb unexpected losses, pursuant to the rules proposed by the Basel Committee and implemented by the Central Bank. Basel III Frameworkframework The Basel III framework increases minimum capital requirements, and creates new conservation and countercyclical buffers, changes risk-based capital measures, and introduces a new leverage limit and new liquidity standards in comparison to the former framework. The new rules will be phased in gradually and each country is expected to adopt such recommendations in laws or regulations applicable to local financial institutions. The Basel III framework requires banks to maintain minimum capital levels corresponding to the following percentages of risk-weighted assets: (i) a minimum common equity capital ratio of 4.5%, composed of common shares; (ii) a minimum Tier 1 Capital ratio of 6.0%; and (iii) a minimum total capital ratio of 8.0%. In addition to the minimum capital requirements, Basel III requires a “capital conservation buffer” of 2.5% and each national regulator is given discretion to institute a “countercyclical buffer” if it perceives a greater system-wide risk to the banking system as the result of a build-up of excess credit growth in its jurisdiction. Basel III also introduces a new leverage ratio, defined as Tier 1 Capital divided by the bank’s total exposure. Basel III implemented a liquidity coverage ratio,Liquidity Coverage Ratio, or LCR, and a net stable funding ratio, or NSFR.Net Stable Funding Ratio (NSFR). The LCR requires affected banks to maintain sufficient high-quality liquid assets to cover the net cash outflows that could occur under a potential liquidity disruption scenario over a thirty-day period. The NFSR establishes a minimum amount of stable sources of funding that banks will be required to maintain based on the liquidity profile of the banks’ assets, as well as the potential for contingent liquidity needs arising from off-balance sheet commitments over a one-year period. Additional requirements apply to non-common equity Tier 1 Capital or Tier 2 Capital instruments issued by internationally active banks. To be included in Additional Tier 1 Capital or Tier 2 Capital, an instrument must contain a provision that requires that, at the discretion of the relevant authority, such instrument be either written-off or converted into common shares upon a “trigger event.” A “trigger event” is the decision of a competent authority pursuant to which, for a bank to remain a feasible financial institution, it is necessary:necessary (i) to write-off an instrument, or (ii) to inject government funds, or equivalent support, into such bank, whichever occurs first. The requirements are applicable to all instruments issued after January 1, 2013. The instruments qualified as capital issued before that date that do not comply with these requirements will be phased out of banks’ capital over a ten-year10-year period, beginning on January 1, 2013. Additional regulatory capital requirements apply to systemically important financial institutions, or G-SIFIs.Global Systemically Important Financial Institutions (G-SIFIs). The Basel Committee’s assessment methodology to determine which financial institutions are G-SIFIs is based on indicators that reflect the following aspects of G-SIFIs: (i) size; (ii) interconnectedness; (iii) lack of readily available substitute or financial institution infrastructure for the services provided; (iv) global or cross-jurisdictional activity; and (v) complexity, eachcomplexity. Each of these factors receivingreceives an equal weight of 20.0% in the assessment. The Basel Committee has also issued a framework for the regulation of domestic systemically important banks, or D-SIBs,Domestic Systemically Important Banks (D-SIBs), which 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. Implementation of Basel III in Brazil CMN and the Central Bank have issued several rules which detail the implementation of the Basel III framework in Brazil.
Brazilian banks’ minimum total capital ratio is calculated as the sum of the following two components: Regulatory Capital (patrimônio dereferência); and Additional Core Capital (adicional de capital principal). | • | Regulatory Capital (patrimônio de referência); and |
| • | Additional Core Capital (adicional de capital principal). |
Brazilian banks’ Regulatory Capital is comprised of Tier 1 Capital and Tier 2 Capital. Tier 1 Capital is further divided into two portions:elements: Common Equity Tier 1 Capital (common equity capital and profit reserves, orcapital principal) and Additional Tier 1 Capital (hybrid debt and equityinstrumentsequity instruments authorized by the Central Bank, orcapital complementar). In order to qualify as Additional Tier 1 Capital or Tier 2 Capital, all instruments issued after October 1, 2013 by a Brazilian bank must contain loss-absorbency provisions, including a requirement that such instruments be automatically written off or converted into equity upon a “trigger event“event”. A “trigger event” is the earlier of: (i) Common Equity Tier 1 Capital being less than 5.125% of the risk-weighted assets for Additional Tier 1 Capital instruments and 4.5% for Tier 2 Capital instruments; (ii) the execution of a firm irrevocable written agreement for the government to inject capital in the financial institution; (iii) the Central Bank declaring the beginning of a temporary special administration regime (Regime de AdministraçãoEspecial Temporária, or RAET) or intervention in the financial institution;or (iv) a decision by the Central Bank, according to criteria established by the CMN, that the write-off or conversion of the instrument is necessary to maintain the bank as a viable financial institution and to mitigate relevant risks to the Brazilian financial system. Specific procedures and criteria for the conversion of shares and the write-off of outstanding debt related to funding instruments eligible to qualify as regulatory capital are established by CMN
regulation. The legal framework applicable to financial bills (letras financeiras) was adapted to allow Brazilian financial institutions to issue Basel III-compliant debt instruments in the Brazilian market. Existing hybrid instruments and subordinated debt previously approved by the Central Bank as eligible capital instruments may continue to qualify as Additional Tier 1 Capital or Tier 2 Capital, as the case may be, provided that they comply with the above requirements and a new authorization from the Central Bank is obtained. Instruments that do not comply with these requirements will be phased out as eligible capital instruments by deducting 10.0% of their book value per year from the amount that qualifies as Additional Tier 1 Capital or Tier 2 Capital. The first deduction occurred on October 1, 2013, and subsequent deductions will take place annually starting January 1, 2014 until January 1, 2022. The Additional Core Capital requirement is subdivided into three elements: the capital conservation buffer (Adicional de CapitalPrincipal Conservação), the countercyclicalcapitalcountercyclical capital buffer (Adicional de Capital PrincipalContracíclico) and the higher loss absorbencyrequirementlossabsorbency requirement for domestic systemically important banks (Adicional de Capital PrincipalSistêmico). The capital conservation buffer isaimedis aimed at increasing the loss absorption ability of financial institutions. The countercyclical capital buffer can be imposed within a range by the Central Bank if it judges that credit growth is increasing systematic risk. The higher loss absorbency requirement for domestic systemically important banks seeks to address the impact that the distress or failure of Brazilian banks may have on the local economy. In the event of non-compliance with the Additional Core Capital requirement, certain restrictions will apply, including the inability of the financial institution to: (i) pay officers and directors their share of variable compensation; (ii) distribute dividends and interest on equity to stockholders; and (iii) repurchase its own shares and effect reductions in its share capital. From October 1, 2015, a minimum LCR in a standardized liquidity stress scenario is required for banks with total assets in excess of R$100 billion, individually or at the consolidated enterprise level (conglomerado prudencial), as the case may be. The calculation of the LCR follows the methodology set forth by the Central Bank which is aligned with the international guidelines. During periods of increased need for liquidity, banks may report a lower LCR than the minimum required ratio, provided that they also report to the Central Bank the causes for not meeting the minimum requirement, the contingent sources of liquidity it hasthey have available, and the measures it plansthey plan to adopt to be in compliance with the LCR requirement. Banks will also be required to effect public disclosures of their LCR on a quarterly basis after April 1, 2016. In January 2017, the Central Bank enacted a new rule amending the provisions regarding calculation methods and procedures for the disclosure of LCR information. The new regulation establishes a new possible stress scenario and indicates that, for LCR purposes, cash and time deposits are considered retail funding components. The following table presents the schedule for phased-in implementation by the Central Bank of the capital adequacy and liquidity coverage ratio requirements under Basel III, as applicable to Itaú Unibanco Holding. The figures presented below refer to the percentage of our risk-weighted assets. | | | | | | | | | | | | | | | (%) | | | | | | | | | | | | | | From January 1, | | | Basel III – Schedule | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | Common equity Tier 1 | | | 4.5 | | | | 4.5 | | | | 4.5 | | | | 4.5 | | | | 4.5 | | | Tier 1 Capital | | | 6.0 | | | | 6.0 | | | | 6.0 | | | | 6.0 | | | | 6.0 | | | Total regulatory capital | | | 11.0 | | | | 9.875 | | | | 9.25 | | | | 8.625 | | | | 8.0 | | | Additional common equity Tier 1 (ACP) | | | - | | | | 0.625 | | | | 1.5 | | | | 2.375 | | | | 3.5 | | | Capital conservation buffer | | | - | | | | 0.625 | | | | 1.25 | | | | 1.875 | | | | 2.5 | | | Countercyclical capital buffer(1) | | | - | | | | - | | | | - | | | | - | | | | - | | | Systemic | | | - | | | | - | | | | 0.25 | | | | 0.5 | | | | 1.0 | | | Common equity Tier 1 + ACP | | | 4.5 | | | | 5.1 | | | | 6.0 | | | | 6.9 | | | | 8.0 | | | Total regulatory capital + ACP | | | 11.0 | | | | 10.5 | | | | 10.8 | | | | 11.0 | | | | 11.5 | | | Prudential adjustments deductions | | | 40 | | | | 60 | | | | 80 | | | | 100 | | | | 100 | |
| (1) | According to Circular No. 3.769 of Central Bank, the ACP countercyclical requirement is zero. |
| | | From January 1, | | | Basel III - Schedule | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | | | (%) | | | Common equity Tier 1 | | | 4.5 | | | | 4.5 | | | | 4.5 | | | | 4.5 | | | | 4.5 | | | Tier 1 Capital | | | 6.0 | | | | 6.0 | | | | 6.0 | | | | 6.0 | | | | 6.0 | | | Total regulatory capital | | | 11.0 | | | | 9.875 | | | | 9.25 | | | | 8.625 | | | | 8.0 | | | Additional common equity Tier 1 (ACP) | | | - | | | | 0.625 | | | | 1.5 | | | | 2.375 | | | | 3.5 | | | Capital conservation buffer | | | - | | | | 0.625 | | | | 1.25 | | | | 1.875 | | | | 2.5 | | | Countercyclical capital buffer(1) | | | - | | | | - | | | | - | | | | - | | | | - | | | Systemic | | | - | | | | - | | | | 0.25 | | | | 0.5 | | | | 1.0 | | | Common equity Tier 1 + ACP | | | 4.5 | | | | 5.1 | | | | 6.0 | | | | 6.9 | | | | 8.0 | | | Total regulatory capital + ACP | | | 11.0 | | | | 10.5 | | | | 10.8 | | | | 11.0 | | | | 11.5 | | | Liquidity coverage ratio | | | 0.6 | | | | 0.7 | | | | 0.8 | | | | 0.9 | | | | 1.0 | | | Prudential adjustments deductions | | | 40 | | | | 60 | | | | 80 | | | | 100 | | | | 100 | |
(1) According to Circular No 3.769 of Central Bank, the ACP countercyclical requirement is zero. The Central Bank has also established the calculation methodology for the leverage ratio. However, it has not yet determined a minimum ratio. Banks are required to prepare public disclosures of their leverage ratios on a quarterly basis after October 1, 2015. CMN regulation also defines the entities that compose the consolidated enterprise level (conglomerado prudencial) of a Brazilian financial institution, and establishes the requirement that a financial institution prepare and file with the Central Bank monthly consolidatedcomplete financial statements at the consolidated enterprise level (conglomerado prudencial) pursuant to the parameters defined therein. Such financial statements should also be audited by external auditors on a semi-annual basis. As of January 1, 2015, minimum capital and ratio requirements apply at the consolidated enterprise level (conglomerado prudencial). In addition to the resolutions and circular lettersrules issued in accordance with the criteria set forth in Basel III, in July, 2013, Law No. 12,838 was issued, allowing the determination of deemed credit based on deferred tax creditsassets arising from temporary differences resulting from allowances for loan losses, which, in practice, exempts financial institutions from deducting this type of credit from its core capital. The law also changes the rules for the issue of financial bills, allowing forsubordinated debt, requiring the inclusion of clauses for the suspension of the stipulated compensation and the terminationextinction of the credit right or its conversion into shares, and conditions stockholders’ remuneration to compliance with the prudential requirements established by the CMN.
Brazilian financial institutions are also required to implement a capital management structure compatible with the nature of its transactions, the complexity of the products and services it offers, as well as with the extent of its exposure to risks. Capital management is defined as a process that includes: (i) monitoring and controlling the financial institution’s capital; (ii) assessing capital needs in light of the risks to which the financial institution is subject; and (iii) setting goals and conducting capital planning in order to meet capital needs due to changes in market conditions. Financial institutions should publish a report describing the structure of their capital management at least on an annual basis. Disclosure and reporting of risk management matters, risk-weighted asset calculation, and adequate compliance with regulatory capital requirements are regulated by the Central Bank and reflect the so-called “Pillar 3” of regulatory capital recommended under Basel III, aimed at improving governance and disclosure. G-SIFI assessment in Brazil The Central Bank has adopted the same indicators set out by the Basel Committee to determine if Brazilian financial institutions qualify as global systemically important financial institutions, or G-SIFIs, which include: (i) size; (ii) interconnectedness; (iii) lack of readily available substitute or financial institution infrastructureG-SIFIs. Please refer to section Our risk management, item Regulatory environment, Basel III framework, for the services provided; (iv) global or cross-jurisdictional activity; and (v) complexity, with each of these factors receiving an equal weight of 20.0% in the assessment.further details. This assessment should be carried out byis required of banks with total exposure – the denominator for the leverage ratio – in excess of R$500 billion, individually or at the consolidated enterprise level (conglomeradoprudencial), as the case may be. However, noadditionalno additional loss absorbency requirements for Brazilian G-SIFIs have been established. We were not included on the latest list of G-SIFIs issued on November 3, 2015.21, 2016. The next update is expected in November 2016.2017. Recovery plans for systematically important financial institutions On June 30, 2016, CMN enacted a rule providing stricter guidelines for recovery plans (Planos de Recuperação) for Brazil’s systemically important financial institutions. The new rule, which incorporated recommendations from the Financial Stability Board, requires financial institutions to prepare recovery plans that aim to re-establish adequate levels of capital and liquidity and to preserve the viability of such institutions under stress scenarios. The guidelines require, among other things, that subject financial institutions must identify their critical functions for the National Financial System (Sistema FinanceiroNacional) and their core business lines, monitor indicators and their critical levels, adopt stress-testing scenarios, predictrecovery strategies, assess possible risks and barriers related to the strategies and define clear and transparent governance procedures, as well as effective communication plans with key stakeholders. The rule provides for a phase-in implementation period from October 2016 to December 2017 to allow the relevant financial institutions to adapt their recovery plans to the new requirements. Segmentation for the proportional application of the prudential regulation On January 30, 2017, CMN enacted a resolution establishing segmentation for financial institutions, financial institution groups and other institutions authorized to operate by the Central Bank for proportional application of the prudential regulation, considering the size, international activity and risk profile of members of each segment. According to such resolution, the segments are qualified as follows: (i) Segment 1 is composed of multiservice banks, commercial banks, investment banks, foreign exchange banks and savings banks that (a) have a size equivalent or superior to 10% of its internal gross domestic product (GDP); or (b) perform relevant international activities, independently from the magnitude of the institution; (ii) Segment 2 is composed of multiservice banks, commercial banks, investment banks, foreign exchange banks and savings banks with (a) size below 10% of its internal GDP; and (b) other institutions of same magnitude equivalent or superior to 1% of its internal GDP; (iii) Segment 3 is composed of institutions with a size below 1% and equivalent or superior to 0.1% of its internal GDP; (iv) Segment 4 is composed of institutions of size below 0.1% of its internal GDP; and (v) Segment 5 is composed of (a) institutions with a size below 0.1% of its internal GDP that applies a simplified optional method for the verification of reference equity’s minimum requirements, except for multiservice banks, commercial banks, investment banks, foreign exchange banks and savings bank; and (b) institutions not subject to the verification of reference equity. Secured real estate bill In January 2017, the Central Bank enacted a public consultation regarding the secured real state bill (Letra Imobiliária Garantida – LIG – Brazilian covered bond), which aims to regulate the provisions of Law No. 13,097 of January 19, 2015. The secured real state bill would provide the sector with an alternative source of funding in an attempt to expand the real estate credit market in the next few years.
Passive provision for financial guarantees On July 28, 2016, CMN enacted a new rule, establishing specific accounting procedures for the assessment and registration of passive provisions (provisão passiva) that financial institutions must create in respect of financial guarantees. The accounting procedures established by this regulation seek to align the Brazilian standards with IFRS. Such resolution is effective since January 1, 2017. Foreign Currency Transactionscurrency transactions and Exposureexposure 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. There are no limits for long or short positions in foreign currency for banks authorized to carry out transactions on the foreign exchange market. The compulsory deposit requirement rate on the foreign currency short position held by financial institutions is currently 0%. In accordance with CMN regulation, financial institutions in Brazil may raise funds abroad, either through direct loans or through the issuance of debt securities. Funds raised accordingly may be freely invested in Brazil, including but not limited to on-lending to Brazilian companies and financial institutions. Brazilian banks authorized to operate in foreign currency markets which hold regulatory capital higher than R$5 billion may also use these funds to grant loans abroad to Brazilian companies, their offshore subsidiaries and to foreign companies controlled by Brazilians or to acquire securities issued or guaranteed by such companies in the primary market. Cross-border loans, in which one party is in Brazil and the other party is abroad, require previous registration with the Central Bank, which may establish limits on the conditions of such foreign currency loan transactions. Please refer to item Taxation for further details about tax on foreign exchange transactions. Financial institutions may also grant loans in or indexed to a foreign currency to their clients’ trade-related activities, such as by granting advances on foreign exchange contracts (Adiantamento sobre Contratode Câmbio), advances on delivered comercial papersexport register (Adiantamento sobre Cambiais Entregues) or export or import prepayment agreements(agreements (Pré-Pagamento deExportação e Financiamento à Importação), all in accordance with Brazilian regulations on foreign exchange markets and internationalandinternational capital flows. The Central Bank and the Brazilian government frequently change rules and regulations applicable to foreign currency borrowing and loans in accordance with the economic scenario and Brazilian monetary policy. BesideBesides that legislation sets forth that the total exposure in gold 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.
Liquidity and Fixed Assets Investment Regimefixed assets investment regime In accordance with CMN regulation, financial institutions may not hold, on a consolidated basis, permanent assets, including investments in unconsolidated subsidiaries, real estate, equipment and intangible assets, exceeding 50.0% of the adjusted regulatory capital. Lending Limitslimits Furthermore, we are legally prevented from granting loans or advances, and guarantees, entering intoincluding derivative transactions, underwriting or holding in our investment portfolio securities of any clients or group of affiliated clients that, in the aggregate, give rise to exposure to such client or group of affiliated clients that exceeds 25.0% of our regulatory capital. Credit Exposure Limitsexposure limits For the purpose of this limit, the following public sector entities are to be considered as separate customers: (i) the Brazilian government, (ii) an entity controlled directly or indirectly by the Brazilian government which is not financially dependent on another entity controlled directly or indirectly by the Brazilian government, (iii) entities controlled directly or indirectly by the Brazilian government which are financially dependent among themselves, (iv) a State or the Federal District, jointly with all entities directly or indirectly controlled by it, and (v) a municipal district, jointly with all entities directly or indirectly controlled by it. Risk Weighted Asset Calculationweighted asset calculation The calculation of risk exposure is based on several factors set forth by the Central Bank regulations and impacts the capital requirements. The components take into consideration the type of risk and include the parameters and procedures for calculation of the risk weighted asset (RWA) to determine the capital requirements resulting from each risk exposure. The Central Bank has been frequently changing and updating the rules and regulations for calculation of RWA.
Financial Billsbills Law No. 12,838 of July 9, 2013 adapted financial bills (letras financeiras) to the Basel III framework and granted the Central Bank power to limit the payment of dividends and interest on capital by financial institutions that do not comply with the CMN capital requirements. With the changes enacted by Law No. 12,838, Brazilian financial institutions will likely issue Basel III-compliant hybrid or subordinated debt instruments under the regulatory framework of financial bills. The main characteristics of financial bills changed by Law No. 12,838 are: Possibility of issuance of financial bills convertible into equity. The conversion may not be requested by the investor or the issuer financial institution; Suspension of payment of interest in case of non-compliance with capital requirement rules in case the financial bills are part of the regulatory capital of the financial institution. Additionally, in order to preserve the regular functioning of the Brazilian financial system, the Central Bank may determine that financial bills be converted into equity or writen-off. These determinations will not be considered a default by the financial institution and will not accelerate the maturity of its other debts; and Financial bills may include, as early maturity events, default on the payment of the interest of the financial bill or the dissolution of the financial institution. Anti-Corruption LawPrinciples and institutional policy
On November 24, 2016, CMNenacted a new rule establishing principles and institutional policies that must be observed by financial institutions and other institutions authorized to operate by the Central Bank with respect to their relationship with clients and users of financial products and services. In addition to ethical principles, responsibility, transparency and diligence, other measures are required such as: (i) promoting an organizational culture that incentivizes a cooperative and balanced relationship with clients and users; (ii) granting fair and equitable treatment to clients and users; and (iii) promoting legitimacy and compliance of products and services provided by financial institutions. The regulation will become effective on November 24, 2017. Establishment of a succession policy On November 24, 2016, CMN enacted a new resolution requiring that financial institutions and other institutions authorized to operate by the Central Bank establish a succession policy for their management. The new regulation requires that the Board of Directors of the institutions approves, supervises and controls the process of planning such policy, which must expressly assign the positions conditioned to the succession policy, taking into consideration the institution’s structure, risk profile and business model. The succession policy shall cover recruiting, promotion, election and retention processes, based on rules that regulate the identification, evaluation and training of senior management positions considering the following aspects: (i) conditions required by Brazilian law to exercise such positions; (ii) technical capacity; (iii) management capacity; (iv) interpersonal skills; (v) legislation and regulation knowledge regarding liability for their actions; and (vi) experience. The regulation provides for a phase-in implementation period from November 2016 to May 2017. Code of Corporate Governance In 2016, the Code of Corporate Governance for publicly-held companies (Código Brasileiro de Governança Corporativa – Companhias Abertas) was edited. It sets forth corporate governance-related principles, guidelines and actions applicable to publicly-held companies and determines that companies adopt the “apply or explain” model in respect of their principles, guidelines and actions. As a result of the edition of this Code, in December 2016 CVM submitted to public consultation the draft of a new ruling amending the current disclosure related ruling to adapt to the guidelines of the new Code. The new ruling probably will be applicable as from the end of the first semester of 2018. Anti-corruption law In January 2014, a new Brazilian anti-corruption law came into force which establishes that legal entities will have strict liability (regardless of fault or willful misconduct) if they are involved in any form of bribery. Although known as an anti-corruption law, it also encompasses other injurious acts contrary to the Brazilian or foreign public administration including bid rigging and obstruction of justice. The law provides for heavy penalties, both through administrative and judicial proceedings including determination of dissolution of a company, prohibition to undertakeagainst undertaking financing with public entities and prohibition to participateagainst participating in public biddings. In addition, the law authorizes the public administrative authorities responsible for the investigation to enter into leniency agreements. The self-disclosure of violations and cooperation by legal entities may result in the reduction of fines and other sanctions as determined by the new federal regulation issued in March 2015. Also, on December 2015, the Brazilian government enacted Provisional Measure No. 703 (MP 703) amending the rules applicable to leniency agreements. MP 703 authorizes the federal, state, and local governments, severally or jointly with the Prosecutor’s Office or the General Attorney, to enter into leniency agreements. In addition, MP 703 provides more details as to the procedure to execute such agreements. The definitive conversion into law of MP 703 still needs to be approved by the Brazilian Congress and, subsequently, sanctioned by the President. The new regulation also provides parameters for the application of the anti-corruption law including with respect to penalties and compliance programs. Please refer to to:
https://www.itau.com.br/_arquivosestaticos/RI/pdf/en/POLITICA_CORPORATIVA_DE_PREVENCAO_A_CORRUPCAO_ENGL.pdf from whichwhere you can electronically access further details about our Bribery PreventionAnti-corruption Corporate Policy. As https://www.itau.com.br/_arquivosestaticos/RI/pdf/en/HF5_-_DOC_RI_2016_(ingles).pdf where you can electronically access further details about our Integrity and Ethics Corporate Policy and guidelines for situations of 2014, the workforce's target segment had attended corruption prevention modules as partconflicts of training programs.interests. Compensation of Directorsdirectors and Officersofficers of Financial Institutionsfinancial institutions According to rules set forth by the CMN, Brazilian financial Institutionsinstitutions are required to have a compensation policy. If variable compensation is to be paid to management, at least 50% of the total compensation should be paid in shares or share-based instruments and at least 40% of the total compensation should be deferred for future payment for at least three years. If the institution records a significant decrease in the realized recurring profit or a negative result during the deferral period, the deferred and unpaid portions of the compensation should be reversed proportionally to the decrease in result, in order to minimize the loss incurred by the financial institutions and their stockholders. Our compensation policy, applicable to directors and officers in Brazil (major(constituting the major part of the management population of the Itaú Unibanco Group), complies with CMN’s regulatory requirements. Our compensation principles and practices worldwide are compliantcomply with each local regulation and seek to increase alignment between the interests of our stockholders and our management. For further information, see section Our Governance,governance, item Corporate Governance,governance, Directors’ and Senior Management’s Compensation.senior management’s compensation. Antitrust Regulationregulation The Brazilian Antitrust Law sets forthrequires that transactions resulting in economic concentration should be previously submitted for prior approval to CADE, the Brazilian antitrust regulator, provided that theyauthority, if the transactions meet the following criteria: (i) the economic group of any of the parties to a transaction recorded, in the fiscal year prior to that of the transaction, minimum gross revenues of R$750 million; and (ii) at least one of the other economic groups involved in the transaction recorded, for the same time period, minimum gross revenues of R$75 million. The closing of a transaction beforeprior to CADE’s approval subjects the parties to fines ranging from R$60,000 to R$60 million, the annulmentnullity of the relevant agreement and potential administrative proceedings. Financial conglomerates shall submit In addition to submitting such transactions in various industries to CADE’s approval. Additionally,approval, financial institutions are required by Circular No. 3,590/2012 of the Central Bank
requires submission of (updated by Circular No. 3,800/2016) to submit to the Central Bank’s antitrust approval any concentration acts involving two or more financial institutions to the Central Bank’s approval in the following cases: (i) acquisition of corporate control, (ii) a merger, (iii) acquisition or (iv) transfer of the business to another financial institution, and (v) another(iv) other transactions that lead institutions to increasewhich result in increased market share in the market segments which operates.they operate.
With respect to the conflict of jurisdiction to review and approve concentration acts involving financial institutions, the matter remains undefined, and theundefined. The uncertainty aroundconcerning whether the CADE or the Central Bank should review and approve concentration acts involving financial institutions has resulted in financial institutions submitting for antitrust approval all concentration acts in the banking sector not only to the Central Bank but also to CADE. Please refer to www.itau.com.br/_arquivosestaticos/RI/pdf/en/ANTITRUST_CORPORATE_POLICY_RI_2015.pdf for further details about our Antitrust Corporate Policy. Treatment of Past Due Debtspast due debts Brazilian financial institutions are required to classify their credit transactions (including leasing transactions and other transactions characterized as credit advances) at different levels and recognize provisions according to the level attributed to each such transaction. The classification is based on the financial condition of the clients the terms and conditions of the transaction and the period of time during which the transaction is past due, if any. For purposes of Central Bank requirements, transactions are classified as level AA, A, B, C, D, E, F, G or H, with AA being the highest classification. Credit classifications must be reviewed on a monthly basis and, apart from additional provisions required by the Central Bank which are deemed necessary by the management of financial institutions, each level has a specific allowance percentage that is applied to it and which we use to calculate our allowance for loan losses, as specified in more detail in the table below:following table: | Classification(1) | | AA | | A | | B | | C | | D | | E | | F | | G | | H | | Allowance (%) | | 0 | | 0.5 | | 1 | | 3 | | 10 | | 30 | | 50 | | 70 | | 100 | | Past due (in days) | | - | | - | | 15 to 30 | | 31 to 60 | | 61 to 90 | | 91 to 120 | | 121 to 150 | | 151 to 180 | | Over 180 |
| (1) | Our credit classification also takes into account the client´s credit profile, which may negatively impact the past due classification. |
| Classification (1) | | AA | | | A | | | B | | | C | | | D | | | E | | | F | | | G | | | H | | | Allowance (%) | | | 0 | | | | 0.5 | | | | 1 | | | | 3 | | | | 10 | | | | 30 | | | | 50 | | | | 70 | | | | 100 | | | Past due (in days) | | | - | | | | - | | | | 15 to 30 | | | | 31 to 60 | | | | 61 to 90 | | | | 91 to 120 | | | | 121 to 150 | | | | 151 to 180 | | | | Over 180 | |
(1) Our credit classification also takes into account the client´s credit profile, which may negatively impact the past due classification. Under IFRS, the allowance for loan losses is based on our internally developed incurred loss models, which calculate the allowance for loan losses by multiplying the probability of default by the clients or counterparty (PD) by the potential for recovery on defaulted credits (LGD) for each transaction, as described in Note 2.4(g) VIII2.4(d) X to our consolidatedcomplete financial statements under IFRS. The risk levels are categorized as “lower risk”, “satisfactory”, “higher risk”, and “impaired” based on the probability of default, following an internal scaling, as set out in Note 36 to our consolidatedcomplete financial statements under IFRS.
Bank insolvency The insolvency of financial institutions is handled pursuant to applicable laws and regulations by the Central Bank, which initiates and monitors all applicable administrative proceedings. There are three types of special regimes that may be imposed to either private-sector financial institutions (private or public, but not federal)state-owned (other than federal government-owned) financial institutions or similar institutions: (i) temporary special administration regime (RAET), (ii) intervention, and (iii) extrajudicial liquidation. Financial institutions may also be subject to the bankruptcy regime. In the course of the special regimes described below, the steering committee, the intervenor, and the liquidator may, when authorized by the Central Bank: (i) dispose of assets and rights of the financial institution to third parties and (ii) proceed with corporate restructuring processes in the financial institution or its subsidiaries, among other possible measures of similar effect. RAET The
RAET is a less severe special regime which allows financial institutions to continue to operate. Its main effect is that directors lose theirthe whole management loses its offices and areis replaced by a steering committee appointed by the Central Bank with broad management powers. Its duration is limited and its main objective is the adoption of measures aimed at the resumption of the financial institution’s regular activities. If resumption is not possible, this regime may be turned into an extrajudicial liquidation. Intervention Under this regime, the Central Bank appoints an intervenor that takes charge of the financial institution'sinstitution’s management, suspending its regular activities and dismissing the financial institution’s management. In general, the intervention is aimed at preventing the continuation of certain irregularities and the aggravation of the financial situation of the financial institution, which can put assets at risk and harm the financial institution’s creditors. The intervention is also time-limited and may be followed by the resumption of the financial institution’s regular activities or the declaration of extrajudicial liquidation or bankruptcy. The intervention suspends all actions related to payment obligations of the financial institution, prevents the early settlement or maturity of its obligations and freezes pre-existing deposits. Extrajudicial Liquidationliquidation Extrajudicial liquidation generally corresponds to the process of dissolution of the company in cases of unrecoverable insolvency or severe violations of the rules that regulate a financial institution’s activities. The extrajudicial liquidation aims at promoting the liquidation of the existing assets for the payment of creditors, with the return of any amounts left to stockholders. Controlling stockholders may be held responsible for remaining liabilities. The extrajudicial liquidation (i) suspends actions and executions related to the financial institution, (ii) accelerates the maturity of the financial institution’s obligations; and (iii) interrupts the statute of limitations of the financial institution'sinstitution’s obligations. In addition, the debt of the estate under liquidation will no longer accrue interest until all obligations to third parties are settled. Deposit Insuranceinsurance In the event of intervention, extrajudicial liquidation or liquidation of a financial institution in a bankruptcy proceeding, the Credit Insurance Fund, or FGC, a deposit insurance system, guarantees the maximum amount of R$250,000 for 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 economic group). The resources of the FGC come primarily from mandatory contributions from all Brazilian financial institutions that receive deposits from clients, currently at a monthly rate of 0.0125% of the amount of the balances of accounts corresponding to the financial instruments that are the subject matter of the ordinary guarantee, even if the related credits are not fully covered by FGC, and certain special contributions. Deposits and funds raised abroad are not guaranteed by the FGC. As from February 2016, credits of financial institutions and other institutions authorized to operate by the Brazilian Central Bank, complementary welfare entities, insurance companies, capitalization companies, investment clubs and investment funds, as well as those representing any interest in or financial instrument held by such entities, are not protected by the ordinary guarantee of FGC. Payment of Creditorscreditors in Liquidationliquidation In the event of extrajudicial liquidation of a financial institution or liquidation of a financial institution in a bankruptcy proceeding, the salaries of employees and the related labor claims up to a certain amount, secured credits and tax charges have priority in any claims against the entity in liquidation. The payment of unsecured credits, including deposits from regular retail clients that are not guaranteed by the FGC, is subject to the prior payment of preferred credits. Additionally, upon the payment of the deposits guaranteed by the FGC, the FGC becomes an unsecured creditor of the estate in liquidation.
Insurance Regulationregulation With governmental approval, insurance companies in Brazil may offer all types of insurance, except for workers’ compensation insurance, directly to clients or through qualified brokers. 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 securities market and subject to CMN regulations regarding the investment of technical reserves. In the event an insurance company is declared bankrupt, the insurance company will be subject to a special procedure administered by SUSEP or by ANS. If an insurance company is declared bankrupt and (i) its assets are not sufficient to guarantee at least half of the unsecured credits or (ii) procedures relating to acts that may be considered bankruptcy-related crimes are in place, the insurance company will be subject to ordinary bankruptcy procedures. There is currently no restriction on foreign investments in insurance companies in Brazil. Brazilian legislation establishes that insurance companies must buy reinsurance to the extent their liabilities exceed their technical limits under the rules of the regulatory body (CNSP and SUSEP), and reinsurance contracts may be entered into through a direct negotiation between the insurance and reinsurance companies or through a reinsurance broker authorized to operate in Brazil. Insurance companies, until December 31, 2016, when transferring their risks in reinsurance, must transfer 40.0% of each facultative or automatic contract to local reinsurers (companies domiciled in Brazil). From January 1, 2017, this percentage reduces to 30%, and will reduce annually until it reaches 15% inon January 1, 2020. In addition, until December 31, 2016, risk assignment between insurers and reinsurers belonging to the same economic group is limited to 20.0% of the premiums pertaining to each facultative or automatic contract. From January 1, 2017, this percentage has increased to 30%, and annually will increase until it reaches 75% on January 1, 2020. Anti-Money Laundering RegulationAnti-money laundering regulation
The Brazilian anti-money laundering law establishes the basic framework to prevent and punish money laundering as a crime. It prohibits the concealment or dissimulation of origin, location, availability, handling or ownership of assets, rights or financial resources directly or indirectly originated from crimes, subjecting the agents of these illegal practices to imprisonment, temporary disqualification from managing enterprises up to ten10 years and monetary fines. The Brazilian anti-money laundering law also created the Financial Activities Control Council, or COAF, which is the Brazilian financial intelligence unit that operates under the jurisdiction of the Ministry of Finance. COAF performs a key role in the Brazilian anti-money laundering and counter-terrorism financing system, and its legal responsibility is to coordinate the mechanisms for international cooperation and information exchange. In compliance with the Brazilian anti-money laundering law and related regulations enacted by the Central Bank, including the rules applicable to procedures that must be adopted by financial institutions to prevent and combat money laundering and terrorism financing, as well as in response to the recommendation of the Financial Action Task Force – FATF and United Nations Security Council, financial institutions in Brazil must establish internal control and procedures aiming at: identifying and knowing their clients, which includes determining if they are PEPs, and also identifying the ultimate beneficial owners (UBO) of the transactions. These records should be kept up-to-date; checking the compatibility between the movement of funds of a client and such client'sclient’s economic and financial capacity; checking the origin of funds; carrying out a prior analysis of new products and services, under the perspective of money laundering prevention; keeping records of all transactions carried out or financial services provided on behalf of a certain client or for that client; reporting to COAF, within one business day, any transaction deemed to be suspicious by the financial institution, as well as all transactions in cash equivalent to or higher than R$100,000, without informing the involved person or any third party; applying special attention to (i) unusual transactions or proposed transactions with no apparent economic or legal bases; (ii) transactions involving PEPs, (iii) indication of evading client identification and transaction registering procedures; (iv) client and transactions for which the UBO cannot be identified; (v) transactions originated from or destined to countries that do not fully comply with the recommendations of the Financial Action Task Force (FATF); and (vi) situations in which it is not possible to keep the clients’ identification records duly updated; determining criteria for hiring personnel and offering anti-money laundering training for employees; establishing procedures to be complied with by all branches and subsidiaries of a Brazilian financial institutions located abroad with respect to anti-money laundering; establishing that, any institutions authorized to operate in the Brazilian foreign exchange market with financial institutions located abroad must verify whether the foreign financial institution is physically located in the jurisdiction where it was organized and licensed, and that it is subject to effective supervision;
monitoring transactions and situations which could be considered suspicious for anti-money laundering purposes; reporting to COAF the occurrence of suspicious transactions, as required under applicable regulations, and also, at least once a year, whether or not suspicious transactions are verified, in order to certify the non-occurrence of transactions subject to reporting to COAF (negative report); requiring clients to inform the financial institution, at least one business day in advance, of their intention to withdraw amounts equal to or exceeding R$100,000; ensuring that policies, procedures and internal controls are commensurate with the size and volume of transactions; and unavailability of goods, values and rights of possession or ownership and all other rights, real or personal, owned, directly or indirectly, of natural or legal persons subject to sanctions by the Council resolutions of the United Nations Security United.Council. Non-compliance with any of the obligations above subjects the financial institution and its officers to penalties ranging from: (i) formal notice, (ii) fines (from 1.0% to 200.0% of the amount of the transaction, 200.0% of the profit generated thereby, or a fine of up to R$20,000,000), (iii) rendering executive officers ineligible for holding any management position in financial institutions, to (iv) the cancellation of the financial institution’s license to operate. In August 2013, the Brazilian Association of Banks (Federação Brasileira deBancos, or FEBRABAN) enacted an anti-money laundering and terrorismfinancingterrorism financing self-regulation. The purpose of the document is to improve the contribution of the Brazilian financial system to the prevention of money laundering and make consistent the practices adopted by all banks, encouraging them to reinforce their preventive procedures. Politically Exposed Personsexposed persons (PEPs) PEPs are public agents who hold or have held a relevant public position, as well as their representatives, family members or other close associates, over the past five years, in Brazil or other countries, territories and foreign jurisdictions. It also includes their legal entities. Financial institutions must develop and implement internal procedures to identify PEPs and obtain special approval from a more senior staff member, such as an officer, than otherwise would be required to approve relationships prior to establishing any relationship with those individuals. They should also adopt reinforced and continuous surveillance actions regarding transactions with PEPs and report all suspicious transactions to COAF. Portability of Credit Transactionscredit transactions The portability of credit transactions is regulated by the Central Bank since 2013. ItPortability consists of the transfer of a credit transaction from the original creditor to another institution, at the request of the debtor, maintaining the same outstanding balance and payment conditions. The regulation establishes standard procedures and deadlines for the exchange of information and the mandatory use of an electronic system authorized by the Central Bank for the transfer of funds between financial institutions, prohibiting the use of any alternative procedure to produce the same effects of the portability, including so-called "debt purchases"“debt purchases”. Rules Governinggoverning the Chargecharge of Feesfees on Bankingbanking and Credit Card Operationscredit card operations Banking fees and credit card operations are extensively regulated by the CMN and the Central Bank. According to Brazilian legislation, we must classify the services we provide to individuals under pre-determined categories and are subject to limitations on the collection of fees for such services. Brazilian financial institutions are generally not authorized to charge fees from individuals for providing services classified as “essential” with respect to checking and saving accounts, such as supplying debit cards, check books, withdrawals, statements and transfers, among others. Brazilian legislation also authorizes financial institutions to charge fees related to “priority services”, a standard set of services defined by Central Bank regulation. Financial institutions must offer to their individual clients “standard packages” of priority services. Clients may also choose between these or other packages offered by the financial institution, or to use and pay for services individually instead of selecting a package. Current rules also authorize financial institutions to charge fees for specific services called “additional services” (serviç(serviçosdiferenciados) diferenciados), provided that the accountholderaccount holder or user is informed of the use and payment conditions relating to such services, or that fees and collection methods are defined in the contract. The CMN also establishes rules applicable to credit cards, determining the events that allow for the collection of fees by issuers, as well as the information that must be disclosed in credit card statements and in the credit card agreement. There is also a list of priority services. The rules define two types of credit cards: (i) basic credit cards, with simpler services, without rewards programs and (ii) “special credit cards”, with benefits and reward programs. A minimum of 15% of the total outstanding credit card balance must be paid monthly by credit card holders.
A minimum 30-day prior notice to the public must precede the creation or increase of a fee, whereas fees related to priority services may only be increased 180 days after the date of a previous increase (while the reduction of a fee can take place at any time). With respect to credit cards, a 45-day prior notice to the public is required for any increase or creation of fees, and
such fees may only be increased 365 days after a previous increase. The period of 365 days is also subject to changes in the rules applicable to benefit or reward programs. Payroll DeductionAt the end of Credit Card
In 2015,2016 and the beginning of 2017, two major changes occurred in the Brazilian government increasedpayment market. In December 2016 a provisional measure was published authorizing the total payroll deduction limit from 30%surcharge by payment instrument as a way to 35% of an individual’s monthly income and authorized the use of payroll deductionstimulate retail sales, allowing retailers to pay credit card bills. 5% of such limit is required to be used exclusively forcharge different prices depending on the payment ofmethod. In January 2017 the Central Bank published a new resolution establishing that debits made with credit card bills. This measure results fromcards cannot have a revolving credit feature for more than one payment period. Financial institutions may offer to those clients an installment credit with lower interest rates than the conversion of Provisional Measure No. 681 into Law No. 13,172 of October 21, 2015.revolving credit line.
Leasing regulation Although leasing transactions are not classified as credit transactions under Brazilian legislation, the Central Bank of Brazil regulates and oversees leasing transactions. The parties involved in a leasing transaction are the “lessor” (the bank) and “lessee” (our client). The leased asset, owned by the lessor, is delivered to be used by the lessee until the end of the contract, when the lessee may opt to either acquire or return it to the lessor or renew the contract for a new period. Brazilian legislation establishes a specific methodology to account for the profits or losses in leasing transactions and all information that should be included in a lease agreement. The guaranteed residual amount paid by a lessee should correspond to a minimum return required for the transaction to be viable for the lessor, whether the purchase option is exercised or not. The laws and regulations applicable to financial institutions, such as those related to reporting requirements, capital adequacy and leverage, assets composition limits and allowance for losses, are also generally applicable to leasing companies. Correspondent agents We may engage other entities to provide certain services to our clients, including customer service. These entities are generally called correspondents, and our relationship with correspondents is regulated by the Central Bank. Among other requirements, the Central Bank establishes that employees of all correspondent agents must hold a technical certification authorizing them to serve customers involved in credit and leasing operations. Banking secrecy Brazilian financial institutions must maintain the secrecy of banking transactions and services provided to their clients. The only circumstances in which information about clients, services or transactions by Brazilian financial institutions or credit card companies may be disclosed to third parties are the following: the disclosure of information with the express consent of the interested parties; the exchange of information between financial institutions for record purposes; the disclosure of information to credit reference agencies based on data from the records of subscribers of checks drawn on accounts without sufficient funds and defaulting debtors; the disclosure of information to the competent authorities relating to the actual or suspected occurrence of criminal acts or administrative wrongdoings, including the disclosure of information on transactions involving funds related to any unlawful activities; the disclosure of some information established by law to tax authority; and | | involving funds related to any unlawful activities; and |
the disclosure of information in compliance with a judicial order. Except as permitted under the Brazilian legislation or by judicial order, a breach of bank secrecy is a criminal offense. Digitalization of documents and record keeping On March 31, 2016, CMN enacted a new resolution regulating the digitalization of documents with respect to transactions carried out by financial institutions and other institutions authorized to operate by the Central Bank. The regulation authorizes those institutions to maintain digital documents, instead of paper documents, for recordkeeping purposes, if certain requirements to ensure the documents authenticity, validity and protection are met. It also permits the disposal of original paper documents provided that this measure will not prejudice the institution’s ability to exercise any rights or to commence any proceeding or exercise any protective remedy related to the relevant document. Ombudsman In 2015, the CMN and the Central Bank updated the regulatory framework relatedregulation about the Ombudsman’s Office for Financial Institutions subject to supervision. The Ombudsman’s Office has been mandatory since 2007 and is the ombudsman (ouvidoria) structuremain channel of customer assistance and mediation of conflicts monitored by the Central Bank. In this update, the main duties of the entities subjectOmbudsman’s Office were reinforced, to Central Bank supervision. The new rules revoke the current applicable framework and give financial institutions until June 30, 2016 to adapt to the new provisions. The new framework aims at establishing a more effective and transparent ombudsman that is able to provide better assistance to the relevant financial institution’s customers. The ombudsman will have the following responsibilities:
provide assistance as final recourse to answer clients’ demands, after such demands have been analyzed by other client service channels (including banking correspondents and the Customer Service Attendance channel – SAC);
actcontinue acting as a communication channel betweenlast resource within the institutions and the clients, including for dispute mediation; and
inform the management of the ombudsman activities.
The new framework also sets forth a requirementcompany to record telephone conversationsresolve clients’ demands between clients and the ombudsman services.institution, and to attend to complaints not resolved in our primary channels.
Every six months, the Ombudsman has to prepare a report about the most critical complaints, root cause analysis and action plans to improve customer experience. This report is submitted to upper management and audit committee, as well as to Central Bank. The officer in chargerevised standard reduced SLAs from 15 to a maximum of the ombudsman office must prepare a report every six months, which must be provided10 days from client’s complaints. It also demanded more transparency and highlight to contact information, telephone number for access to the managementOmbudsman’s Office on the internet and auditing bodies, as well as be availablethe need to publish a public report on the Central Bank for at least five years.Ombudsman’s work. Itaú Unibanco has been in compliance since the mandatory date of June 30, 2016. Regulation of the Brazilian Securities Marketbrazilian securities market According to the Brazilian Corporate Law, a company is considered publiclypublicly-traded or closely-held depending on whether the securities issued by it are accepted for trading in the securities market or not. All publicly-held companies, such as ourselves,our company, are registered with the CVM and are subject to information disclosure and reporting requirements. Disclosure Requirementsrequirements Under CVM rules, publicly tradedpublicly-traded companies are subject to disclosure requirements and rules governing the use of material information. Any decision that may reasonably influence the price of the securities issued by a publicly-held company or the decision of investors to buy, sell, or hold these securities, is considered material. The CVM improved the quality of the information that must be presented in periodic filings by securities issuers by requiring such issuers to fileregister a “Reference Form” with the CVM.in its files. This form was modeled after IOSCO’s shelf registration system in gathering all of the issuer’s information in a single document.
Asset Management Regulationmanagement regulation The Brazilian asset management regulation requires asset managers to obtaina previous registration with the CVM to perform the services of portfolio management and fund administration. Itaú Unibanco Group provides several services in the capital markets and, in particular, performs activities related to fund administration and portfolio management under CVM registration according toand in accordance with CVM regulation. By providing these services, our entities engaged in the asset management business can be held civilcivilly and administratively liable for losses arising from either intentional acts or negligence in conducting ourtheir activities. The CVM has regulatory powers to oversee these activities, including powers to impose fines and other sanctions on registered asset managers.
Funds of foreign investors In March 2015, a new regulatory framework issued by the CMN and the CVM became effective regarding (i) foreign investment in the Brazilian financial and capital markets and (ii) depositary receipts. The most significant changes in the rules applicable to foreign investment in the Brazilian financial and capital markets introduced by the new regulation are: (i) a requirement that only financial institutions authorized to operate in Brazil may act as legal representatives of non-resident investors in Brazil for purposes of any investments made within the purview of such rule; (ii) clarification of requirements regarding simultaneous foreign exchange transactions (without the effective transfer of money) related to foreign investments; and (iii) clarification about the types of investments that can be made through a foreign investor account (conta de domiciliado no exterior) maintained at a bank in Brazil. The new regulation also amended the rules applicable to depositary receipts, by allowing the issuance of depositary receipts based on (i) any security issued by Brazilian companies registered with the CVM (companhias abertas), in contrast to the previous rules which limited the issuance of depository receipts to equity securities, and (ii) credit instruments issued by financial institutions and other types of institutions registered with the CVM and authorized by the Central Bank, and eligible to be included in the financial institution’s regulatory capital (Patrimônio de Referência). Some of the changes implemented by the CVM rules on registry, operations and disclosure of information related to foreign investment in the Brazilian financial and capital markets were made to detail the activities of legal representatives, to enlarge the scope of non-resident investor´s private transactions and to determine the exceptions of transfer between non-resident investors prohibited by the CMN. Internet and E-Commerce Regulatione-commerce regulation On April, 2014, a new law (Federal Law No. 12,965/2014) establishing the regulatory framework for Internet services was enacted in Brazil. This law sets forth principles and rules to be observed by internet providers and users, including the protection of privacy and personal data and the preservation and safeguard of net neutrality. Also, certain
Certain aspects of electronic commerce are regulated, including the validity of electronic documents in Brazil and electronic commerce transactions from the consumer protection standpoint. Current regulation on electronic commerce is intended to: (i) clearly identify the supplier and the product sold on the Internet;internet; (ii) provide an electronic service channel to clients; and (iii) guarantee cancellation and return of Internetinternet orders. In addition, computer hacking offenses were criminalized in Brazil in 2012.
In light of the increased use of electronic channels in the Brazilian banking industry, the CMN has enacted a number of resolutions over the past few years in order to provide or establish: that Brazilian residents may open deposit bank accounts by electronic means, which includes the Internet,internet, ATMs, telephone and other communication channels, provided that transfers of amounts from such accounts are allowed only between accounts of the same account holder or in the event of liquidation of investment products and funds of an account, of the same account holders who own the investment products or funds; the requirements related to the verification of a client’s identity; that all financial institutions that offer products and services through electronic means must guarantee the security, secrecy and reliability of all electronic transactions and disclose, in clear and precise terms, the risks and responsibilities involving the product or service acquired through these channels; and the opening of deposit bank and savings accounts that can be used exclusively through electronic means. On April 10, 25, 2016, CMN enacted a regulation on the opening and closing of banking accounts by electronic means, without the restrictions described above. Banks must adopt procedures and controls to confirm and guarantee the client’s identity and the authenticity of the information required to open an account. The regulation permits the use of digital signatures and the collection of signatures through electronic devices. The procedures and technologies used in the opening and closing of electronically deposit accounts must observe: I - integrity, authenticity and confidentiality of the information and electronic documents used; II - protection against access, use, modification, reproduction and unauthorized destruction of information and electronic documents; III - backup production of information and electronic documents; and IV - tracking and auditing procedures and technologies used in the process. Under the new regulation, customers must be afforded the option of closing banking accounts electronically. Federal Law No. 12,965/2014 and Federal No. Decree 8,771/2016 establish the regulatory framework for internet services in Brazil and set forth principles and rules to be observed by internet providers and users, including the protection of privacy and personal data and the preservation and safeguard of net neutrality. FEBRABAN, the Brazilian Federation of Banks, has issued a regulation on hiringextending credit through remote channels (such as ATM’s,ATMs, call centercenters and Internet Banking)internet banking), setting forth minimum guidelines and procedures to ensure reliability, quality, transparency and efficiency. Regulation on Paymentpayment Agents and Payment Arrangementspayment arrangements A Brazilian law enacted in October 2013 establishedestablishes the legal framework for “payment arrangements” (i.e., the set of rules governing a payment scheme, such as a credit or debit card transaction), and “payment agents” (i.e., any agent that issues a payment instrument or acquirersacquires a merchant for payment acceptance), which became part of the Brazilian Payments System and subject to oversight by the Central Bank. Payment agents, in spite of being regulated by the Central Bank, are not deemed to be financial institutions and are prohibited from engaging in activities that are exclusive of financial institutions. In November 2013, the CMN and the Central Bank published a set of rules referring toin November 2013 regulating payment arrangements and payment agents, which became effective in May 2014.agents. This regulation establishes:establishes, among other matters: (i) consumer protection and anti-money laundering compliance and loss prevention rules that should be followed by all entities supervised by the Central Bank when acting as payment agents and payment arrangers; (ii) the procedures for the incorporation, organization, authorization and operation of payment agents, as well for the transfer of control, subject to the Central Bank’s prior approval; (iii) capital requirements; (iv) definition of arrangements excluded from the Brazilian Payments System; (v) payment accounts, which are divided into prepaid and post-paid accounts; and (vi) a liquidity requirement for prepaid accounts that demands the allocation of their balance to a special account at the Central Bank or to be invested in government bonds, starting at 20% in 2014 and raising gradually up to the totality of the total account balance in 2019; among other matters.2019.
In October 2015, a new regulation was published by the Central Bank complementing the previous ones and bringing new rules and concepts, among them:regulating limitations on closed payment arrangements, the concept of domicile institution, obligation of centralized clearing and settlement for the payment arrangements, and transparency of the interoperability rules intra-arrangementwithin an arrangement and between arrangements. Provision of financial services through electronic channels On April 25, 2016, CMN enacted a new regulation, altering the exceptions to the general rule that obligates financial institutions to provide client access to traditional banking services channels, establishing that it is not required for collection and receipt services based on agreements that demand exclusively electronic channels.
Credit Performance Informationperformance information Brazilian law establishes rules for the organization and consultation of databases compiling positive credit history information of individuals and legal entities. The Central Bank regulates the provision of positive credit history information by financial institutions to such databases and the sharing of such information, such provision and sharing being subject to the express request or authorization of the client. Consumer Protection Code The Brazilian Consumer Protection Code or CDC,(CDC) sets forth consumer defense and protection rules applicable to clients’consumers’ relationships with suppliers of products or services. Brazilian higher courts understand that the CDC is also applicable to financial institutions. The basic consumer rights dealing with financial institutions are as follows: reverse burden of proof in court; financial institutions must ensure that proper and clear information is provided with respect to the different products and services offered, with accurate specifications for quantity, characteristics, composition, quality, and price, as well as on any risks such products pose; | | is provided with respect to the different products and services offered, with accurate specifications for quantity, characteristics, composition, quality, and price, as well as on any risks such products pose; |
financial institutions are prohibited from releasing misleading or abusive publicity or information about their contracts or services, as well as promoting overbearing or disloyal commercial practices; financial institutions are liable for any damages caused to their clientsconsumers by misrepresentations in their publicity or information provided; interest charged in connection with personal credit and consumer directed credit transactions must be proportionally reduced in case of early payment of debts; collection of credits cannot expose the client to embarrassment or be performed in a threatening manner; and amounts charged improperly may in limited circumstances have to be returned in an amount equal to twice what was paid in excess of due amounts. Such rule does not apply to cases of justifiable mistake, such as systemic failure or operational error. Moreover, the Brazilian Congress is considering enacting new legislation that, if signed into law as currently drafted,proposed, could have an adverse effect on us. For example, a proposed law to amend the Brazilian consumer protection code would allow courts to modify terms and conditions of credit agreements in certain circumstances, imposing certain difficulties forspecified restrictions on the collection of amounts from final consumers. In addition, local or state legislatures may, from time to time, consider bills intending to impose security measures and standards for customer services, such as limits in queues and accessibility requirements, that, if signed into law, could affect our operations. More recently, certain bills have passed (and others werehave been proposed) in certain Brazilian states or municipalities that impose, or aim to impose, restrictions on the ability of creditors to include the information about insolvent debtors in the records of credit protection bureaus, which could also adversely affect our ability to collect credit outstanding. Regulation of Independent Auditorsindependent auditors In accordance with CMN regulation establishing the rules that govern external audit services provided to financial institutions, the financial statements and financial information of financial institutions must be audited by independent auditors who are (i) duly registered with the CVM; (ii) qualified as specialists in audit of banks by the CFC and the IBRACON; and (iii) meet the requirements that ensure auditor independence. After issuing audit reports for five consecutive fiscal years, the responsible audit partner and audit team members with management responsibilities must rotate-off and cannot be part of the audit team of such institution for three consecutive fiscal years. CMN regulation 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) ownership of shares of or entering into financial transactions (either asset or liability) with the audited financial institution by the audit firm or members of the audit team involved in the audit work of the financial institution; and (iii) fees payable by the institution represent 25% or more of the total annual fees of the audit firm. Additionally, the audited financial institution is prohibited from hiring partners and members of the audit team with managerial responsibilities who were involved in the audit work at the financial institution during the preceding 12 months. In addition to the audit report, the independent auditor must prepare the following reports, as required by CMN regulation. Anan assessment of the internal controls and risk management procedures of the financial institution, including its electronic data processing system;
Aa description of non-compliance with legal and regulatory provisions that have, or may have, a significant impact on the audited financial statements or operations of the audited financial institution; and
Othersothers reports required by Central Bank.
These reports, as well as working papers, correspondence, service agreements and other documents related to the audit work must retained and made available to the Central Bank for at least five years. Under Brazilian law, our financial statements must be prepared in accordance with the accounting practices adopted in Brazil applicable to institutions authorized to operate by the Central Bank. We also prepare financial statements in accordance with the International Financial Reporting Standards (IFRS). as issued by IASB. Please refer to Context, item Context of this Report,report, About our financial information for further details. Financial institutions must have their financial statements audited every six months. Quarterly financial statements filed with the CVM must be reviewed by independent auditors of the financial institutions. CVM rules require publicly-held companies, including financial institutions, to disclose information related to non-audit services provided by independent auditors when they represent more than 5% of the fees for audit services. Such information should include the type of service, the amount paid and the percentage that they represent of the fees for audit of financial statements. Please refer to Our Governance,governance, item Audit Committee, for further details about Feesfees and services of the main auditors. Self regulators We are signatories of self-regulation codes that establish principles, rules and recommendations of best corporate governance practices and determined activities, as applicable. The self-regulatory entities that we are subject to are: Brazilian Association of Publicly-Held Companies (ABRASCA), Brazilian Association of Credit Cards and Services Companies (ABECS), Brazilian Financial and Capital Markets Association (ANBIMA), Brazilian Federation of the Main Auditors.Banks (FEBRABAN), amongst others. Taxation We summarize below the main taxes levied on the transactions entered into by entities in the Itaú Unibanco Group in Brazil. This description does not represent a comprehensive analysis of all tax considerations applicable to the Itaú Unibanco Group. For a more in-depth analysis, we recommend that potential investors consult their own tax advisors. The main taxes we are subject to, with respective rates, are as follows: | Tax | | Rate | | Tax calculation basis | | | | | | | | IRPJ (Corporate Income Tax) | | 15.0% plus a 10.0% surtax | | Net income with adjustments (exclusions, additions, and deductions) | | | | | | | | CSLL (Social Contribution on Net Income) | | 20.0% (financial institutions, insurance companies and capitalization entities) or 9.0% (other Itaú Unibanco Group companies) | | Net income with adjustments (exclusions, additions, and deductions) | | | | | | | | COFINS (Social Security Financing Contribution) | | 4.0% (financial institutions, insurance companies and capitalization entities) or 7.6% (other Itaú Unibanco Group companies) | | Gross revenue minus specific deductions | | | | | | | | PIS (Contribution on Social Integration Program) | | 0.65% (financial institutions, insurance companies and capitalization entities) or 1.65% (other Itaú Unibanco Group companies) | | Gross revenue minus specific deductions | | | | | | | | ISS (Service Tax) | | 2.0% to 5.0% | | Price of service rendered | | | | | | | | IOF (Tax on Financial Transactions) | | Depends on the type of the transaction, as described below. | | Transaction nominal value |
Corporate Income Taxincome tax and Social Contributionsocial contribution on Net Incomenet income In accordance with applicable legislation, corporate income tax (Imposto de Renda daPessoa Jurídica, or IRPJ), and social contributiononcontribution on profits (Contribuição Social Sobre o LucroLíquido, or CSLL) are determined by the taxableincometaxable income regime. Under this regime, our taxable income, on which IRPJ and CSLL will be levied, must be adjusted by additions, deductions, and exclusions, such as nondeductible expenses, operating costs and equity accounting, respectively. The IRPJ is levied at a basic 15.0% rate, and a 10.0% surtax is applicable when the total amount of profit for the fiscal period exceeds R$20,000 per month or R$240,000 per year. In other words, any portion of our profit exceeding this limit is taxed at an effective 25.0% rate.
CSLL is currently levied on our taxable income at a 20.0% rate, which is specific for financial institutions, insurance and similar companies. Note that this tax is generally levied at a 9.0% for non-financial legal entities. Nonetheless, the Federal Government increased such a rate initially to 15.0%, and then to 20.0%. Despite such increase, some Brazilian financial institutions, including us, are disputing the constitutionality of this higher CSLL tax rate. The amounts in dispute are accounted for as a tax liability provision in our balance sheet. In regard to this matter, it is worth mentioning that on the same rule that increased CSLL from 15.0% to 20.0% (Law 13,169), the Federal Government also determined that, as from January 1, 2019, the CSLL rate will be reduced to 15.0%. As other Brazilian legal entities, our companies may offset the historical nominal amount of tax losses determined in prior years against results of subsequent years at any time (i.e., with no limitations with respect to time periods), provided that such offsetting does not exceed 30.0% of the annual taxable income of such future year. For purposes of IRPJ and CSLL taxation, companies should consider their income abroad as well rather than income solely from Brazilian operations. Therefore, profits, capital gains and other income earned abroad by Itaú Unibanco Group entities in Brazil, their branches, representations, affiliates or subsidiaries, will also be computed for determination of the entities net income. However, Brazilian legislation provides for our deducting the amounts paid as corporate income tax abroad against the IRPJ due in Brazil and CSLL, provided certain limits are observed. Income Taxtax for Individualsindividuals and Foreign Investorsforeign investors On September 22, 2015, the President of Brazil enacted Provisional Measure No. 692, or MP 692, converted into Law No. 13,259 of March 16, 2016, which aimed at increasing the flat 15% rate of the income tax levied on capital gains derived by individuals, certain corporations and foreign investors (individuals and corporations) as a result of the disposal of assets and rights in general exceeding R$5 million, by adopting a system of progressive rates that may reach a 22.5% tax rate (for positive results exceeding R$30 million). Since capital gains arising from transactions executed through a securities exchange are subject to specific tax rules, which are not included under the scope of Law No. 13,259, it is possible to sustain the position that the provisions of this rule should not apply to such transactions. This rule applies since January 1, 2017. If the stockholder is a resident of or domiciled in a tax haven jurisdiction or a privileged tax regime, the capital gains are still subject to the withholding income tax at a 25% rate. In order to become effective in 2016, MP 692 had to be mandatorily converted into law before the end of 2015. Since it did not occur prior to the end of 2015, such rule will not have any legal effect in 2016. If the conversion into law occurs in 2016, the effective date of MP 692 would be postponed to January 1, 2017. If MP 692 is not converted into law within 120 days from its date of enactment, which will occur on February 29, 2016, it will not produce any legal effects. During the process of converting MP 692 into law, the provisions thereof may still be subject to changes.
Interest on Stockholders’ Equity
On September 30, 2015, the Brazilian government enacted Provisional Measure No. 694, or MP 694, which amended the income tax regulations concerning distributions of interest on stockholders’ equity by Brazilian companies. Under MP 694, the calculation of interest on stockholders’ equity will be limited to the (i) daily variation of the long term interest rate (Taxa de Juros de Longo Prazo, or TJLP), multiplied by the value of certain equity accounts of the Brazilian company or (ii) an annual 5% flat rate, whichever is lower. Moreover, MP 694 increases from 15% to 18% the withholding income tax rate levied on interest on stockholders’ equity payments made by Brazilian companies to non- Brazilian residents not domiciled in tax-haven jurisdictions, as defined by the Brazilian tax authorities. Because MP 694 was not converted into law during the effective period for such conversion, these amendments to the income tax regulations are no longer effective.
If the stockholder is a resident of or domiciled in a tax haven jurisdiction, the payment of interest on capital is subject to withholding income tax at a rate of 25%.
Contribution on Social Integration Programsocial integration program and Social Security Financing Contributionsocial security financing contribution In addition to IRPJ and CSLL, Brazilian legal entities are subject to the following taxes on revenue: contribution on social integration program (Contribuição Para o Programa daIntegração Social, or PIS) and social securityfinancingsecurity financing contribution (ContribuiçãoSocial Para oFinanciamento da Seguridade Social, or COFINS). In accordance with applicable legislation, financial institutions are subject to the cumulative regime for calculation of these taxes. Under the cumulative regime, financial institutions are required to pay PIS at a 0.65% rate and COFINS at a 4.0% rate. The cumulative regime provides for rates lower than those levied under the non-cumulative regime, which is explained below, but it prevents the use of tax credits. Some additional deductions are legally permitted to financial institutions, and therefore the calculation basis is similar to the profit margin. Some of our subsidiaries claim that the PIS and COFINS should be levied only on their revenue from the sale of products and services, rather than on the revenues from financial and other activities. The amounts in dispute are accounted for as tax contingencies in the balance sheets of these companies. Most non-financial companies, on the other hand, are authorized to pay PIS and COFINS contributions according to the non-cumulative regime. Under the non-cumulative regime, PIS is levied at a 1.65% rate and COFINS is levied at a 7.6% rate. The calculation basis of these taxes is the gross revenue earned by the entity; however, the taxpayer may offset credits calculated through the application of the same rates on the value paid on the purchase of certain inputs used in the entity’s production process. Currently, under such non-cumulative regime, the financial income (exceptof non-financial companies is subject to PIS and COFINS at the rate of 0.65% and 4%, respectively, except for income from interest on capital) of non-financial companiescapital, wich is not subjectsubjected to PIS and COFINS.COFINS at the rate of 1.65% and 7.6%, respectively. Please refer to section Performance, item Consolidated Financial Statements (IFRS), Note 37 – Supplementary Information and Note 32 – Provisions, contingencies and other commitments, IV – Program for Cash or Installment Payment of Federal Taxes, for information regarding Law No. 12,973/2014.Service tax
Service Tax
The tax on services (Imposto Sobre Serviços de Qualquer Natureza, or ISS) is generally levied on the price of services rendered (e.g., banking services) and is charged by the municipality where our branch or office rendering the service is located. The tax rates vary from 2.0% up to the maximum rate of 5.0%, depending on the municipality in which the service is provided and its respective nature. A new tax law enacted on December 30, 2016 effected a number of changes with respect to the Brazilian tax on service ISS. Among a series of modifications to the ISS, the new law introduced a minimum tax rate of 2%. The original proposed legislation approved by the Brazilian Congress provided changes related to ISS assessment on new activities such as credit card and leasing operations but the President vetoed these changes. Following the legislative procedure, there is a possibility that the Brazilian Congress overturns the presidential veto.
Tax on Financial Transactionsfinancial transactions The tax on financial transactions is levied at specific rates according to the transaction in question, and may be changed by a decree from the Executive Branchexecutive branch (which may become effective as of its publication date), rather than by a law enacted by the Brazilian Congress. The following table below summarizes the main IOF rates levied on our transactions. Notwithstanding, we note that IOF is a very comprehensive tax. Therefore, for a more in-depth analysis, we recommend that tax advisors be consulted accordingly. Typeof
transaction | | Applicable Rates (Rates may be changed by a decree enacted by the Brazilian government up to amaximum rate, as described below, which may become effective as of its publicationdate) | | | | | | Foreign exchange transactions | | IOF/FX: zero to 6.38% (depending on the transaction)
Maximum rate: 25%
| | | | | | Insurance transactions | | IOF/Insurance: zero to 7.38%
Maximum rate: 25%
| | | | | | Loans and credit transactions | | IOF/Credit: 0.0082% (individual) or 0.0041% (legal entities) per day, until it reaches 365 days, plus a flat 0.38% rate
Maximum rate: 1.5% per day (plus 0.38%)
| | | | | | Securities | | IOF/Securities: zero to 1.5% as a general rule (possible to be higher)
Maximum rate: 1.5% per day
| | | | | | Securities – Derivatives | | IOF/Securities –- Derivatives: zero
Maximum rate: 25%
|
U.S. Foreign Account Tax Compliance Act (FATCA) FATCA attempts to minimize tax avoidance by U.S. persons investing in foreign assets both through their own accounts and through their investments in foreign entities. FATCA requires U.S. withholding agents such as Itaú to provide information to the U.S. Internal Revenue Service (IRS) regarding their U.S. account holders including substantial U.S. owners of certain non-financial foreign entitiesNon-Financial Foreign Entities (NFFEs) and specified U.S. persons having an interest in certain professionally managed investment vehicles and trusts known as owner-documented foreign financial institutions (FFIs). To the extent a U.S. withholding agent is not able to properly document an account, it generally will be required to deduct 30% FATCA withholding on certain payments of U.S. source income. Gross proceeds from the sale of property that would yield U.S. source dividends or interest are subject to withholding beginning JanuraryJanuary 1, 2019. U.S. tax law has detailed rules for determining the source of income. Different rules apply for each type of income. Interest and dividends, two of the most common types of income for investors, are generally sourced by reference to the residence of the obligor. Specifically, dividends are generally treated as U.S. source income when paid by a U.S. corporation with respect to its stock, and interest is generally treated as U.S. source income when paid by a U.S. borrower of money. The United States collaborated with other governments to develop Intergovernmental Agreements (IGAs) to implement FATCA. IGAs with partner jurisdictions facilitate the effective and efficient implementation of FATCA. The purpose of these agreements is essentially to remove domestic legal impediments to compliance with FATCA and sharing of information and to reduce burdens on FFIs located in partner jurisdictions. More than 70 jurisdictions have signed an IGA, including Brazil, the Cayman Islands, Switzerland and United Kingdom. In addition, approximately 30 other jurisdictions are deemed as having an IGA in effect. Some countries signed a reciprocal agreement, meaning that the country (such as Brazil) and the U.S.United States will automatically exchange annually, on a reciprocal basis, specific account holder information. There are two types of IGAs – Model 1 IGA, where local FFIs are required to implement account opening and due diligence procedures to identify U.S. accounts and report them to the local tax authority for exchange with the IRS (examples of Model 1 IGA countries are Brazil, Cayman Islands, The Bahamas, Peru and Colombia), and Model 2 IGA, where local FFIs are required to implement account opening and due diligence procedures to identify U.S. accounts, but report such information directly to the IRS (examples of Model 2 IGA countries are Switzerland, Chile, Paraguay and Japan). The governments of Brazil and the United States entered into a Model 1 IGA on September 23, 2014, which became effective in Brazil on August 24, 2015, after the approval by the Brazilian Congress, ratification by the President and enactment of Decree 8,506 (IGA-BR). Under the IGA-BR, Brazilian financial institutions and other entities subject to FATCA disclosure requirements are generally required to provide certain information on their U.S. account holders to the Brazilian tax authorities, which will share this information with the U.S. Internal Revenue Service.
Furthermore, Normative Ruling No. 1,680, dated December 28, 2016, was enacted to introduce the so-called Common Reporting Standard (CRS) in Brazil, which seeks to implement a system of reporting financial accounts in a manner similar to FATCA. CRS is the result of discussions on the necessity of exchanging information between tax authorities of many countries in the context of the Base Erosion and Profit Shifting (BEPS) Project, coordinated by the Organization for Economic Co-operation and Development (OECD). In connection therewith, an ancillary obligation called “e-financeira” provided by Normative Ruling No. 1,571, dated July 2, 2016, will be the mandatory report filed by financial institutions in order to fulfill FATCA and CRS obligations. Moreover, on May 6, 2016, Brazilian tax authorities issued Normative Ruling No. 1,634, effective as of January 1, 2017, that amended the regulation applicable to the National Registry of Legal Entities (CNPJ). This regulation introduced a new rule providing an ancillary obligation by which certain entities have to indicate the “Final Beneficiary” in each CNPJ, which is defined as the natural person who ultimately, directly or indirectly, owns, controls or significantly influences a particular entity or on whose behalf a transaction is conducted. In addition, Normative Ruling No. 1,681 was enacted in December 28, 2016 providing the obligation to annually deliver the so-called Country-by-Country Statement, an ancillary obligation also arising from the discussions under the BEPS Project, before the Brazilian Federal Revenue Service (RFB), which in its turn is also expected to exchange such information with other countries’ tax authorities. Pursuant to FATCA, the issuer, any other financial institution or other entities subject to FATCA disclosure requirements to or through which any payment with respect to the preferred shares or ADSs is made may be required, pursuant to the IGA-BR or under applicable law, to (i) request certain information from holders or beneficial owners of our preferred shares or ADSs, which information may be provided to the U.S. Internal Revenue Service; and (ii) withhold U.S. federal tax at a 30.0% rate on some portion or all of the payments considered “pass-thru payments” made after December 31, 2018, with respect to the preferred shares or ADSs if such information is not duly provided by such a holder or beneficial owner (referred to under FATCA as a “recalcitrant account holder”). If the issuer or any other person is required to withhold amounts under or in connection with FATCA from any payments made in respect of the preferred shares or ADSs, holders and beneficial owners of the preferred shares or ADSs will not be entitled to receive any gross up or other additional amounts to compensate them for such withholding. The above description is based on guidance issued to date by the U.S. Treasury Department, including the final U.S. Treasury regulations and IGA-BR. Future guidance may affect the application of FATCA to the preferred shares or ADSs. Exchange controls Individuals or legal entities domiciled outside Brazil may own our stock through ADSs negotiated in a U.S. Exchange or through direct investments in the Brazilian Market. However, the right to convert dividend payments and proceeds from the sale of our shares in the Brazilian Market, into foreign currency and to remit such amounts abroad is subject to restrictions under foreign investment and foreign currency legislation. This legislation which generally requires, among other things, the documentary evidence that providesestablishes the validity and proves the economic legitimacy of the exchange operation and that the relevant investment behas registered with the Central Bank and the CVM, as applicable. In case the investment in our stock is made through ADS, the ADS holders benefit from the electronic certificate of foreign capital registration obtained in Brazil by the custodian of preferred shares underlying the ADSs, which permits the depositary bank to convert dividends and other distributions with respect to the preferred shares underlying the ADSs into foreign currency and remit the proceeds abroad. In case the investment in our stock is made directly in the Brazilian Market,market, such investment needs to be registered with the Central Bank either as (i) a foreign direct investment, the Electronic Declaratory Registration of Foreign Direct Investment (RDE-IED), or (ii) a portfolio investment, the Electronic Declaratory Registration of Portfolio (RDE – Portfolio). The foreign direct investment (RDE-IED) enables non-resident investors to hold stock of companies, although it, limits the ability of the investor to negotiate such stocks in Brazil.the Brazilian capital markets. On the other hand, the portfolio investment (RDE – Portfolio) entitles certain foreign investors to invest not only in stocks, but also in almost allother financial assets and securities, and to engage in almost alla variety of transactions available in the Brazilian financial and capital markets, provided that certain requirements of the regulation are fulfilled. Registration under RDE – Portfolio affords favorable tax treatment to non-resident investors who are not residents or domiciled in tax haven jurisdictions, as defined by Brazilian tax laws. 
Financial performancePerformance
Message from the Chief FinancialFinance Officer Dear reader, At Itaú Unibanco, we are strongly committedwork to transparencymaintain a sustainable performance for the purpose of creating value to our many stakeholders. To this end, we seek a transparent and close relationship with capital market agents. Our wish and mission is to be close to our shareholders,clients, commercial partners, stockholders, investors and investment analysts, explaining them onagents from the capital markets, reporting, in a cleartimely manner, our results, risks and timely basis the decisions made by our management, the performance of the organization and the risks inherent in our business.strategies. A number of initiatives make upIn order to become increasingly more accessible to the market, we invest in many communication initiatives. Some years ago, we combined our annual report, form 20-F, sustainability report and debt prospect in this communicationConsolidated Annual Report so as to centralize and transparency effort.homogenize the way we present the bank’s relevant information. In 2015, for example,2016, we held 2216 public meetings about our results, strategies and strategies, distributedprospects through cities of all regions of Brazil, by means of the APIMEC (Association of Capital Markets Analysts and Investment Professionals), and we participated in 30 conferences and 9 road shows, in Brazil and abroad. We frequently review our documents and financial statements, aiming at providing information that meet the market agents’ needs for assessment and understanding of our operation.
This report supplements these initiativesincludes the history of the bank, its strategies, main businesses, risks and shows our commitmentresults over six sections. I invite you all to constantly evolve in our disclosure practices. In 2013, we unified our annual report, 20-F form and debt prospects intoget to know a little bit more about the Annual Consolidated Report. Since then, we have searched for more objectivity and better alignment of that document with information required by other regulatory forms. In 2015, we were acknowledged in three categorieschanges in the IR Magazine Awards Brazil 2015, including the Best Annual Report. In this document, we comment on the organization’s profile, including its history, strategies, main shareholders, business and presence in Brazil and abroad. We also describe our structure and corporate governance practices that comprise, among other information items, the resumes of our management.Executive Committee and its members in the Our Governance section. In the section abouton risk management, we detailyou can learn more about our Risk Culture, an important instrument to ensure that all our employees take conscious risks. Together with our policies, procedures and processes, our Risk Culture strengthens the structureindividual and practicescollective responsibility of control and mitigation inherentall employees in the banking activity. Inmanagement of the same chapter,risks inherent to the performed activities. Also in this section, we reassessed the description ofdescribe our risk factors, which represent the main events that could significantly impactaffect our business. Lastly, we
In the section on Performance, I invite you all to understand, in detail, the financial performance of ItauItaú Unibanco in 2015,2016, which is presented in accordance with the International Financial Reporting Standards (IFRS). In it you will find the result of the application of the strategy described throughout this report by means of our main figures. Today, we are the largest private bank in Latin America and one of the world’s 20 largest financial institutions in market value. We are present in 19 countries with a staff of more than 90,000 employees who work for the satisfaction of our clients. We have new challenges ahead of us and they encourage us to continue seeking excellence in serving our stakeholders, making available different communication channelsto build an increasingly more sustainable, transparent and technological bank. In November 2016, we announced a number of changes to the market, among which we point outbank’s Executive Committee, including my own appointment to the position of General Wholesale Officer. I wish Caio Ibrahim David, who takes over as CFO and CRO of Itaú Unibanco Holding, a great deal of success in his new journey. Our team is always at the disposal of anyone interested in getting to know the bank better by means of the following communication channels: Investor Relations website: www.itau.com.br/ investor-relationswebsite (www.itau.com.br/relacoes-com-investidores) and our pages on Facebook (facebook.com/itauunibancori) and Twitter.Twitter (@itauunibanco_ri). We will be honored to receive yourappreciate any suggestions by email: investor.relations@itau-unibanco.com.br.received in the e-mail address: relacoes.investidores@itau-unibanco.com.br. I wish you all a good reading. Cordially,Best regards,
Eduardo Vassimon – CFO & CRO in 2016 Financial performance | A-113 |
Financial Performanceperformance Significant Accounting Policiesaccounting policies General Informationinformation The preparation of the consolidated financial statements included in this annual reportConsolidated Annual Report involves some assumptions that are based on our historical experience and other factors that we deem reasonable and material. Although we review these estimates and assumptions in the ordinary course of business, the presentation 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 of matters that are uncertain by nature. The comments below describe those aspects that require significant 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.accounting. Actual results may differ from those estimated under different variables, assumptions or conditions. Use of Estimatesestimates and Assumptionsassumptions The preparation of complete financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidatedcomplete financial statements, as well as the reported amounts of revenue, expenses and gains and losses during the reporting period because the actual results may differ from those determined based on such estimates and assumptions. All estimates and assumptions made by management are in accordance with IFRS and represent our best estimates made in conformity with applicable standards. Estimates and judgments are evaluated on an ongoing basis, based on past experience and other factors. Please refer to section Performance, item Complete Financial Statements (IFRS), Note 2.3 – Critical Accounting Estimates and Judments, for further details. Allowance for Loanloan and Lease Losseslease losses The allowance for loan and lease losses represents our estimate of the probable losses inherent to our loan portfolio at the end of each reporting period. In order to determine the amount of the allowance for loan and lease losses, a portfolio is classified into two categories with respect to which specific methodologies are used to estimate losses. Loans and leases are analyzed on an individual or portfolio basis. • | Loans and leases analyzed on an individual basis (corresponding to our corporate portfolio) are individually analyzed for impairment. For those considered to be impaired, we determine the amount of the allowance based on the expected cash flows of the company that will receive the loan. The loans that are not impaired are rated based on risk factors, and the inherent losses for each rating are estimated based on our historical experience, which involves judgments related to identifying risk factors and assigning a rating. | • | Loans analyzed on a portfolio basis (corresponding to the following portfolios: (i) Individuals, (ii) Very Small, Small and Medium Business and (iii) Foreign Units – Latin America) are further segregated into classes, when appropriate, based on their underlying risks and characteristics. The allowance for loan and lease losses is determined by portfolio based on historical experience, which also involves judgments and assumptions. |
Loans and leases analyzed on an individual basis (corresponding to our corporate portfolio) are individually analyzed for impairment. For those considered to be impaired, we determine the amount of the allowance based on the expected cash flows that the company that will receive from the loan. The loans analyzed on an individual basis that are not impaired are rated based on risk factors, and the inherent losses for each rating are estimated based on our historical experience, which involves judgments related to identifying risk factors and assigning a rating. Loans analyzed on a portfolio basis (corresponding to the following portfolios: (i) Individuals, (ii) Very Small, Small and Medium Business and (iii) Foreign Units – Latin America) are further segregated into classes, when appropriate, based on their underlying risks and characteristics. The allowance for loan and lease losses is determined by portfolio based on historical experience, which also involves judgments and assumptions. Many factors affect the estimate of losses in each of the categories for which we estimate the allowance on a portfolio basis, such as the methodology used to measure historical delinquency and the historical period to be used. Additionally, factors affecting the specific amount of the allowances to be recorded are subjective and include economic and political conditions, credit quality trends and volume and growth observed in each portfolio. We present information on our allowance for loan and lease losses in the table below:following table:
| Allowance for Loan and Leases Losses | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2012 | | | | | (In millions of R$, except percentages) | | | Amount Recognized in the Balance Sheet at the beginning of period | | | 26,844 | | | | 22,392 | | | | 22,235 | | | | 25,713 | | | | 23,873 | | | Write-offs | | | (24,251 | ) | | | (20,065 | ) | | | (18,675 | ) | | | (21,769 | ) | | | (22,142 | ) | | Individuals | | | (13,682 | ) | | | (11,235 | ) | | | (12,668 | ) | | | (13,541 | ) | | | (12,317 | ) | | Credit card | | | (4,905 | ) | | | (4,055 | ) | | | (3,784 | ) | | | (3,513 | ) | | | (4,073 | ) | | Personal loans | | | (6,745 | ) | | | (5,221 | ) | | | (5,150 | ) | | | (6,247 | ) | | | (4,895 | ) | | Payroll loans | | | (1,273 | ) | | | (622 | ) | | | (429 | ) | | | (480 | ) | | | (472 | ) | | Vehicles | | | (709 | ) | | | (1,294 | ) | | | (3,254 | ) | | | (3,263 | ) | | | (2,840 | ) | | Mortgage loans | | | (50 | ) | | | (43 | ) | | | (51 | ) | | | (38 | ) | | | (37 | ) | | Corporate | | | (4,985 | ) | | | (4,321 | ) | | | (672 | ) | | | (478 | ) | | | (556 | ) | | Small and Medium Businesses | | | (4,267 | ) | | | (3,981 | ) | | | (4,992 | ) | | | (7,573 | ) | | | (9,209 | ) | | Foreign Loans Latin America | | | (1,317 | ) | | | (528 | ) | | | (343 | ) | | | (177 | ) | | | (60 | ) | | Expense Recognized in the Income Statement | | | 24,379 | | | | 24,517 | | | | 18,832 | | | | 17,856 | | | | 23,982 | | | Amount Recognized in the Balance Sheet at the end of period (1) | | | 26,972 | | | | 26,844 | | | | 22,392 | | | | 22,235 | | | | 25,713 | | | Recovery of loans written off as loss | | | 3,742 | | | | 4,779 | | | | 5,054 | | | | 5,061 | | | | 4,663 | | | Individuals | | | 1,397 | | | | 1,886 | | | | 2,077 | | | | 2,058 | | | | 1,917 | | | Credit card | | | 450 | | | | 590 | | | | 663 | | | | 653 | | | | 515 | | | Personal loans | | | 426 | | | | 563 | | | | 577 | | | | 525 | | | | 427 | | | Payroll loans | | | 341 | | | | 458 | | | | 453 | | | | 278 | | | | 172 | | | Vehicles | | | 118 | | | | 202 | | | | 324 | | | | 499 | | | | 656 | | | Mortgage loans | | | 62 | | | | 73 | | | | 60 | | | | 103 | | | | 147 | | | Corporate | | | 929 | | | | 1,537 | | | | 1,642 | | | | 1,602 | | | | 1,380 | | | Small and Medium Businesses | | | 450 | | | | 666 | | | | 769 | | | | 891 | | | | 976 | | | Foreign Loans Latin America | | | 966 | | | | 690 | | | | 566 | | | | 510 | | | | 390 | | | Net Write-offs | | | (20,509 | ) | | | (15,286 | ) | | | (13,621 | ) | | | (16,708 | ) | | | (17,479 | ) | | Ratio of Write-offs during the period to average loans outstanding during the period (%) | | | 5.0 | | | | 4.3 | | | | 4.4 | | | | 5.7 | | | | 6.2 | | | Ratio of net write-offs during the period to average loans outstanding during the period (%) | | | 4.2 | | | | 3.3 | | | | 3.2 | | | | 4.4 | | | | 4.9 | | | Ratio of allowance for loan losses to total loans and leases (%) | | | 5.5 | | | | 5.7 | | | | 4.9 | | | | 5.4 | | | | 7.0 | |
(1) The carrying amount of the individual loans increased by R$435 million in 2013 due to the acquisition of companies as explained in the Consolidated Financial Statements (IFRS). | | | | | | | | | (In millions of R$, except percentages) | | | | | | | | | | | As of December 31, | | | Allowance for Loan and Leases Losses | | 2015 | | | 2014 | | | 2013 | | | 2012 | | | 2011 | | | Amount recognized in the balance sheet at the beginning of period | | | 22,392 | | | | 22,235 | | | | 25,713 | | | | 23,873 | | | | 19,994 | | | Write-offs | | | (20,065 | ) | | | (18,675 | ) | | | (21,769 | ) | | | (22,142 | ) | | | (16,159 | ) | | Individuals | | | (11,235 | ) | | | (12,668 | ) | | | (13,541 | ) | | | (12,317 | ) | | | (8,655 | ) | | Credit card | | | (4,055 | ) | | | (3,784 | ) | | | (3,513 | ) | | | (4,073 | ) | | | (3,038 | ) | | Personal loans | | | (5,221 | ) | | | (5,150 | ) | | | (6,247 | ) | | | (4,895 | ) | | | (3,222 | ) | | Payroll loans | | | (622 | ) | | | (429 | ) | | | (480 | ) | | | (472 | ) | | | (308 | ) | | Vehicles | | | (1,294 | ) | | | (3,254 | ) | | | (3,263 | ) | | | (2,840 | ) | | | (2,013 | ) | | Mortgage loans | | | (43 | ) | | | (51 | ) | | | (38 | ) | | | (37 | ) | | | (74 | ) | | Corporate | | | (4,321 | ) | | | (672 | ) | | | (478 | ) | | | (556 | ) | | | (122 | ) | | Small and medium businesses | | | (3,981 | ) | | | (4,992 | ) | | | (7,573 | ) | | | (9,209 | ) | | | (7,118 | ) | | Foreign loans Latin America | | | (528 | ) | | | (343 | ) | | | (177 | ) | | | (60 | ) | | | (264 | ) | | Expense recognized in the income statement | | | 24,517 | | | | 18,832 | | | | 17,856 | | | | 23,982 | | | | 20,038 | | | Amount recognized in the balance sheet at the end of period(1) | | | 26,844 | | | | 22,392 | | | | 22,235 | | | | 25,713 | | | | 23,873 | |
During the year ended December 31, 2016, we wrote off a total amount of R$24,251 million from our loan portfolio and our ratio of the allowance for loan and lease losses to total loans and leases was 5.5%. The increase in loans written off from the prior year is due to the worsening macroeconomic scenario, mainly in Brazil. Financial performance | A-114 |
| | | | | | (In millions of R$, except percentages) | | | | | | | | | | | | | | As of December 31, | | | Allowance for Loan and Leases Losses | | 2015 | | | 2014 | | | 2013 | | | 2012 | | | 2011 | | | Recovery of loans write-offs | | | 4,779 | | | | 5,054 | | | | 5,061 | | | | 4,663 | | | | 5,477 | | | Individuals | | | 1,886 | | | | 2,077 | | | | 2,058 | | | | 1,917 | | | | 2,362 | | | Credit card | | | 590 | | | | 663 | | | | 653 | | | | 515 | | | | 616 | | | Personal loans | | | 563 | | | | 577 | | | | 525 | | | | 427 | | | | 446 | | | Payroll loans | | | 458 | | | | 453 | | | | 278 | | | | 172 | | | | 160 | | | Vehicles | | | 202 | | | | 324 | | | | 499 | | | | 656 | | | | 956 | | | Mortgage loans | | | 73 | | | | 60 | | | | 103 | | | | 147 | | | | 184 | | | Corporate | | | 1,411 | | | | 1,518 | | | | 1,490 | | | | 1,274 | | | | 1,455 | | | Small and medium businesses | | | 792 | | | | 893 | | | | 1,003 | | | | 1,082 | | | | 1,355 | | | Foreign loans Latin America | | | 690 | | | | 566 | | | | 510 | | | | 390 | | | | 305 | | | Net write-offs | | | (15,286 | ) | | | (13,621 | ) | | | (16,708 | ) | | | (17,479 | ) | | | (10,682 | ) | | Ratio of write-offs during the period to average loans outstanding during the period (%) | | | 4.3 | | | | 4.4 | | | | 5.7 | | | | 6.2 | | | | 5.1 | | | Ratio of net write-offs during the period to average loans outstanding during the period (%) | | | 3.3 | | | | 3.2 | | | | 4.4 | | | | 4.9 | | | | 3.3 | | | Ratio of allowance for loan losses to total loans and leases (%) | | | 5.7 | | | | 4.9 | | | | 5.4 | | | | 7.0 | | | | 6.9 | |
(1) | The carrying amount of the individual loans increased by R$435 million in 2013 due to the acquisition of companies as explained in the Consolidated Financial Statements (IFRS). |
During the year ended December 31, 2015, we wrote off a total amount of R$20,065 million from our loan portfolio and our ratio of the allowance for loan and lease losses to total loans and leases was 5.7%. The increase in loans written off from the prior year is due to the worsening macroeconomic scenario, mainly in Brazil. During the year ended December 31, 2014, we wrote off a total amount of R$18,675 million from our loan portfolio and our ratio of the allowance for loan and lease losses to total loans and leases was 4.9%. The decrease in loans written off from the previous year from the prior year is a result of the adoption of a policy of stricter selectivity in origination, which gave rise to lower default levels compared to the previous year. During the year ended December 31, 2013, we wrote off a total amount of R$21,769 million from our loan portfolio and our ratio of the allowance for loan and lease losses to total loans and leases was 5.4%. The decrease in loans written off is a result of the adoption of a policy of stricter selectivity in origination, which gave rise to lower default levels compared to the previous year. During the year ended December 31, 2012, we wrote off a total amount of R$22,142 million from our loan portfolio and our ratio of the allowance for loan and lease losses to total loans and leases was 7.0%. TheThis represents an increase in loans written off from the loans written off for the year ended December 31, 2011, when we wrote off a total amount of R$ 16,159 million. This increase is due to the increase in defaults in 2011 and beginning of 2012, associated with the increase in the volume of our portfolio of credit card, personal loans, small and medium businesses. During the year ended December 31, 2011, we wrote off a total amountFair value of R$16,159 million from our loan portfolio and our ratio of the allowance for loan and lease losses to total loans and leases was 6.9%. Our ratio of allowance for loan and lease losses to total loans increased by 10 basis points when compared to the previous year, since the volume of loans and leases written off was maintained at the same level in 2011. This level was maintained as a result of the increase in default rates in 2009 and 2010, together with a strong growth of the loan and lease portfolio in 2011.financial instruments
Fair Value of Financial Instruments
Financial instruments recorded at fair value on our balance sheet include mainly securities classified as held-for-trading and available-for-sale as well as other trading assets, including derivatives. Securities classified as held-to-maturity are recorded at amortized historical cost on our balance sheet, and their corresponding fair values are shown in the notes to our consolidatedcomplete financial statements. We present information on the fair value of our financial instruments in the following table below as of December 31, 2016, 2015 2014 and 2013. | | | (In millions of R$, except percentages) | | | | | | | | As of December 31, | | | Financial instruments recorded at fair value | | 2015 | | | 2014 | | | 2013 | | | Assets | | | | | | | | | | | | | | Held-for-trading | | | 164,311 | | | | 132,944 | | | | 148,860 | | | Designated at fair value through profit or loss | | | 642 | | | | 733 | | | | 371 | | | Derivatives | | | 26,755 | | | | 14,156 | | | | 11,366 | | | Available-for-sale | | | 86,045 | | | | 78,360 | | | | 96,626 | | | Total | | | 277,753 | | | | 226,193 | | | | 257,223 | | | Share (derivatives/total – %) | | | 9.6 | | | | 6.3 | | | | 4.4 | | | Liabilities | | | | | | | | | | | | | | Held-for-trading | | | 412 | | | | 520 | | | | 371 | | | Derivatives | | | 31,071 | | | | 17,350 | | | | 11,405 | | | Total | | | 31,483 | | | | 17,870 | | | | 11,776 | | | Share (derivatives/total – %) | | | 98.7 | | | | 97.1 | | | | 96.8 | |
2014. Financial performance | A-115 |
| | | As of December 31, | | | Financial instruments recorded at fair value | | 2016 | | | 2015 | | | 2014 | | | | | (In millions of R$, except percentages) | | | Assets | | | | | | | | | | | | | | Held-for-trading | | | 204,648 | | | | 164,311 | | | | 132,944 | | | Designated at fair value through profit or loss | | | 1,191 | | | | 642 | | | | 733 | | | Derivatives | | | 24,231 | | | | 26,755 | | | | 14,156 | | | Available-for-sale | | | 88,277 | | | | 86,045 | | | | 78,360 | | | Total | | | 318,347 | | | | 277,753 | | | | 226,193 | | | Share (derivatives / total) | | | 7.6 | % | | | 9.6 | % | | | 6.3 | % | | Liabilities | | | | | | | | | | | | | | Held-for-trading | | | 519 | | | | 412 | | | | 520 | | | Derivatives | | | 24,698 | | | | 31,071 | | | | 17,350 | | | Total | | | 25,217 | | | | 31,483 | | | | 17,870 | | | Share (derivatives / total) | | | 97.9 | % | | | 98.7 | % | | | 97.1 | % |
We determine the fair value of our financial instruments based on International Financial Reporting Standard 13 (IFRS 13), which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. According to IFRS 13, there are different levels of inputs that may be used to measure the fair value of financial instruments classified as levels 1, 2 and 3. • | Level 1: observable inputs reflect the quoted prices (unadjusted) of identical assets or liabilities in active markets; | • | Level 2: observable inputs reflect the information on assets and liabilities that are either directly (such as prices) or indirectly (derived from prices) observable, except for the quoted prices included in Level 1; and | • | Level 3: information on assets and liabilities that are not based on observable market data due to little market activity on the measurement date. We present information on our level 3 financial instruments in the table below as of December 31, 2015, 2014 and 2013. |
Level 1: observable inputs reflect the quoted prices (unadjusted) of identical assets or liabilities in active markets; | | | (In millions of R$, except percentages) | | | | | | | | As of December 31, | | | Level 3 | | 2015 | | | 2014 | | | 2013 | | | Held-for-trading | | | 60 | | | | 790 | | | | 27 | | | Available-for-sale securities | | | 4,259 | | | | 5,404 | | | | 6,489 | | | Net position of derivatives | | | 1,218 | | | | 77 | | | | 119 | | | Total | | | 5,537 | | | | 6,271 | | | | 6,635 | | | (Held-for-trading + available-for-sale securities)/Total level 3 (%) | | | 78.0 | | | | 98.8 | | | | 98.2 | |
Level 2: observable inputs reflect the information on assets and liabilities that are either directly (such as prices) or indirectly (derived from prices) observable, except for the quoted prices included in Level 1; and Level 3: information on assets and liabilities that are not based on observable market data due to little market activity on the measurement date. We present information on our level 3 financial instruments in the following table as of December 31, 2016, 2015 and 2014. | | | As of December 31, | | | Level 3 | | 2016 | | | 2015 | | | 2014 | | | | | (In millions of R$, except percentages) | | | Held-for-trading | | | 1,005 | | | | 60 | | | | 790 | | | Available-for-sale securities | | | 9,534 | | | | 4,259 | | | | 5,404 | | | Net position of derivatives | | | 461 | | | | 1,218 | | | | 77 | | | Total | | | 11,000 | | | | 5,537 | | | | 6,271 | | | (Held-for-trading + Available-for-sale securities) / Total Level 3 | | | 95.8 | % | | | 78.0 | % | | | 98.8 | % |
Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 31 – Fair Value of Financial Instruments for further details. Judgments are also required to determine whether there is objective evidence that a financial asset or a group of financial assets is impaired. If there is any evidence of impairment for available-for-sale or held-to-maturity financial assets, the cumulative loss, measured as the difference between the acquisition cost and current fair value, is recognized in the statement of income. The primary factors that are used by management to determine whether there is objective evidence that a financial asset is impaired include the observed period of the loss, the level of the loss, whether we were required to sell the securities before the recovery and the expectation, on the date of analysis, of the possibility of realization of the security. Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 2 – Significant Accounting Policies for further details about other significant accounting policies. Contingent Liabilitiesliabilities Contingent liabilities arise mainly from judicial and administrative proceedings inherent to the ordinary course of our business and that are filed by third parties, including former employees and public bodies related to civil, labor, tax and social security claims.
These contingencies are assessed based on the best estimates of our management, taking into consideration the opinion of legal advisors when there is a probability that financial resources will be required to settle obligations and the amount of such obligations can be reliably measured. Contingencies are classified as follows, based on likelihood of loss: • | Probable: liabilities are recognized under “provisions” on our consolidated balance sheet; | • | Possible: liabilities are disclosed in our financial statements but no provisions are recorded; and | • | Remote: liabilities do not require provision or disclosure. |
Probable: liabilities are recognized under “provisions” on our consolidated balance sheet; Possible: liabilities are disclosed in our complete financial statements but no provisions are recorded; and Remote: liabilities do not require provision or disclosure. Contingent liabilities for which provisions are recorded and those classified as having a “possible” likelihood of loss are evaluated based on our best estimates, using models and criteria that allow for their proper evaluation despite the uncertainty that is inherent to terms and amounts. Significant Changeschanges in Accounting Standardsaccounting standards Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 2.2 – New Pronouncementsaccounting standards and New Accounting Standards Changes tonew accounting standards changes and Interpretations of Existing Pronouncementsinterpretations for further details about information on significant changes in accounting standards. Accounting Practices Adoptedpractices adopted in Brazil Our books and records are maintained in Brazilianreais, the official currency in Brazil, and our consolidatedcomplete financial statements, for statutory and regulatory purposes, are prepared in accordance with accounting practices adopted in Brazil, or Brazilian GAAP, which are applicable to institutions authorized to operate by the Brazilian Central Bank.Bank (BACEN) (“Brazilian GAAP”). The accounting principles and standards generally applicable under Brazilian GAAP include those established under Brazilian Corporate Law, by the Accounting Pronouncements Committee or CPC,(CPC), which started issuing standards in 2007, and by the Federal Accounting Council. In the case of companies subject to regulation by the Central Bank,BACEN, such as Itaú Unibanco Holding, the effectiveness of the accounting pronouncements issued by entities such as the CPC depends on approval of the pronouncement by the CMN, which also establishes the date of effectiveness of any pronouncements with respect to financial institutions. Additionally, the CVM and other regulatory bodies, such as SUSEP and the Central Bank, provide additional industry-specific guidelines. Financial performance | A-116 |
Regulation Applicableapplicable to the Presentationpresentation of the Financial Statementscomplete financial statements Brazilian regulations establish specific rules for the consolidation of complete financial statements by financial institutions. Under current Central BankBACEN regulations, financial institutions, except for credit cooperatives, are required to prepare consolidated financial statements including investments directly or indirectly held in other companies, individually or jointly controlled, and with respect to which such financial institutions have (i) the right to appoint or designate the majority of the company’s board of directors; (ii) the right to appoint or remove the majority of the company’s executives and directors; and/or (iii) operational or shareholding control. These regulations apply to the entire group to which a financial institution belongs. Assets Portfolio of Securitiessecurities and Derivative Financial Instrumentsderivative financial instruments General information We present below our portfolio of held-for-trading financial assets, available-for-sale financial assets, held-to-maturity financial assets and derivative financial instruments as of December 31, 2016, 2015 2014 and 2013.2014. The amounts exclude our investments in securities of unconsolidated companies. For further information on our investments in unconsolidated companies, see section Performance, item consolidatedcomplete financial statement (IFRS), Note 13 – Investments in associates and joint ventures. Held-for-trading and available-for-sale financial assets are stated at fair value and held-to-maturity financial assets are stated at amortized cost. Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 2 – Significant Accounting Policies for further details. As of December 31, 2015,2016, we held securities issued by the Brazilian federal government classified as “Government Securities – Domestic” with an aggregate book value and an aggregate market value of R$181,574221,973 million and R$177,101222,331 million, respectively, which represented 155.27%164.92% of our consolidated stockholders’ equity as of that date. As of December 31, 2015,2016, we did not hold securities of any other issuer the book value of which in the aggregate represented more than 10.0% of our consolidated stockholders’ equity. This is due to our conservative assetsasset and liabilities management and our liquidity in local currency maintained in securities issued by the Brazilian federal government. Additionally, securities issued by the Brazilian federal government are accepted as deposits in our operations in the market on BM&FBovespa.
Held-for-trading Held-for-trading
Listed below are the assets acquired and accrued mainly for the purpose of selling in the short term or when they are part of a portfolio of financial instruments that are managed as a whole and for which there is a recent history of sales in the short term. Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 7 – Financial Assets Held for Trading and Designated at Fair Value Through Profit or Loss, for further details. | | | | | | (In millions of R$, except percentages) | | | | | | | | | | | As of December 31, | | | | | 2015 | | | % of total | | | 2014 | | | % of total | | | 2013 | | | % of total | | | Held-for-trading financial assets | | | 164,311 | | | | 100.0 | | | | 132,944 | | | | 100.0 | | | | 148,860 | | | | 100.0 | | | Investment funds | | | 1,051 | | | | 0.6 | | | | 870 | | | | 0.7 | | | | 1,062 | | | | 0.7 | | | Government securities – domestic | | | 121,484 | | | | 73.9 | | | | 88,307 | | | | 66.4 | | | | 113,039 | | | | 75.9 | | | Brazilian government securities | | | 117,053 | | | | 71.2 | | | | 86,393 | | | | 65.0 | | | | 111,135 | | | | 74.7 | | | Brazilian external debt bonds | | | 4,431 | | | | 2.7 | | | | 1,914 | | | | 1.4 | | | | 1,904 | | | | 1.3 | | | Government securities – abroad | | | 1,149 | | | | 0.7 | | | | 1,540 | | | | 1.2 | | | | 679 | | | | 0.5 | | | Argentina | | | 696 | | | | 0.4 | | | | 628 | | | | 0.5 | | | | 99 | | | | 0.1 | | | United States | | | 132 | | | | 0.1 | | | | 448 | | | | 0.3 | | | | 18 | | | | 0.0 | | | Mexico | | | 3 | | | | 0.0 | | | | 3 | | | | 0.0 | | | | 182 | | | | 0.1 | | | Chile | | | 36 | | | | 0.0 | | | | 132 | | | | 0.1 | | | | 6 | | | | 0.0 | | | Paraguay | | | 68 | | | | 0.0 | | | | 128 | | | | 0.1 | | | | - | | | | - | | | Uruguay | | | 40 | | | | 0.0 | | | | 41 | | | | 0.0 | | | | 41 | | | | 0.0 | | | Colombia | | | 72 | | | | 0.0 | | | | 88 | | | | 0.1 | | | | 226 | | | | 0.2 | | | Belgium | | | - | | | | - | | | | - | | | | - | | | | 107 | | | | 0.1 | | | Other | | | 102 | | | | 0.1 | | | | 72 | | | | 0.1 | | | | - | | | | - | | | Corporate securities | | | 40,627 | | | | 24.7 | | | | 42,227 | | | | 31.8 | | | | 34,080 | | | | 22.9 | | | Shares | | | 2,161 | | | | 1.3 | | | | 2,351 | | | | 1.8 | | | | 2,896 | | | | 1.9 | | | Securitized real estate loans | | | - | | | | - | | | | 1 | | | | - | | | | 12 | | | | 0.0 | | | Bank deposit certificates | | | 2,583 | | | | 1.6 | | | | 3,281 | | | | 2.5 | | | | 3,006 | | | | 2.0 | | | Debentures | | | 4,522 | | | | 2.8 | | | | 4,243 | | | | 3.2 | | | | 5,097 | | | | 3.4 | | | Eurobonds and other | | | 991 | | | | 0.6 | | | | 1,061 | | | | 0.8 | | | | 1,278 | | | | 0.9 | | | Financial credit bills | | | 30,367 | | | | 18.5 | | | | 30,711 | | | | 23.1 | | | | 21,566 | | | | 14.5 | | | Promissory notes | | | - | | | | - | | | | 577 | | | | 0.4 | | | | 27 | | | | 0.0 | | | Other | | | 3 | | | | 0.0 | | | | 2 | | | | 0.0 | | | | 198 | | | | 0.1 | | | Held-for-trading financial assets as a percentage of total assets (%) | | | 12.9 | | | | | | | | 11.8 | | | | | | | | 14.5 | | | | | |
Financial performance | A-117 |
| | | As of December 31, | | | | | 2016 | | | % of total | | | 2015 | | | % of total | | | 2014 | | | % of total | | | | | (In millions of R$, except percentages) | | | Held-for-trading financial assets | | | 204,648 | | | | 100.0 | | | | 164,311 | | | | 100.0 | | | | 132,944 | | | | 100.0 | | | Investment funds | | | 1,173 | | | | 0.6 | | | | 1,051 | | | | 0.6 | | | | 870 | | | | 0.7 | | | Government securities - domestic | | | 165,349 | | | | 80.8 | | | | 121,484 | | | | 73.9 | | | | 88,307 | | | | 66.4 | | | Brazilian government securities | | | 160,024 | | | | 78.2 | | | | 117,053 | | | | 71.2 | | | | 86,393 | | | | 65.0 | | | Brazilian external debt bonds | | | 5,325 | | | | 2.6 | | | | 4,431 | | | | 2.7 | | | | 1,914 | | | | 1.4 | | | Government securities - abroad | | | 3,735 | | | | 1.8 | | | | 1,149 | | | | 0.7 | | | | 1,540 | | | | 1.2 | | | Argentina | | | 651 | | | | 0.3 | | | | 696 | | | | 0.4 | | | | 628 | | | | 0.5 | | | United States | | | 78 | | | | 0.0 | | | | 132 | | | | 0.1 | | | | 448 | | | | 0.3 | | | Mexico | | | 6 | | | | 0.0 | | | | 3 | | | | 0.0 | | | | 3 | | | | 0.0 | | | Chile | | | 127 | | | | 0.1 | | | | 36 | | | | 0.0 | | | | 132 | | | | 0.1 | | | Paraguay | | | 88 | | | | 0.0 | | | | 68 | | | | 0.0 | | | | 128 | | | | 0.1 | | | Uruguay | | | 32 | | | | 0.0 | | | | 40 | | | | 0.0 | | | | 41 | | | | 0.0 | | | Colombia | | | 2,669 | | | | 1.3 | | | | 72 | | | | 0.0 | | | | 88 | | | | 0.1 | | | Other | | | 84 | | | | 0.0 | | | | 102 | | | | 0.1 | | | | 72 | | | | 0.1 | | | Corporate securities | | | 34,391 | | | | 16.8 | | | | 40,627 | | | | 24.7 | | | | 42,227 | | | | 31.8 | | | Shares | | | 2,491 | | | | 1.2 | | | | 2,161 | | | | 1.3 | | | | 2,351 | | | | 1.8 | | | Securitized real estate loans | | | - | | | | - | | | | - | | | | - | | | | 1 | | | | - | | | Bank deposit certificates | | | 1,824 | | | | 0.9 | | | | 2,583 | | | | 1.6 | | | | 3,281 | | | | 2.5 | | | Debentures | | | 3,190 | | | | 1.6 | | | | 4,522 | | | | 2.8 | | | | 4,243 | | | | 3.2 | | | Eurobonds and other | | | 662 | | | | 0.3 | | | | 991 | | | | 0.6 | | | | 1,061 | | | | 0.8 | | | Financial credit bills | | | 25,893 | | | | 12.6 | | | | 30,367 | | | | 18.5 | | | | 30,711 | | | | 23.1 | | | Promissory Notes | | | - | | | | - | | | | - | | | | - | | | | 577 | | | | 0.4 | | | Other | | | 331 | | | | 0.2 | | | | 3 | | | | 0.0 | | | | 2 | | | | 0.0 | | | Held-for-trading financial assets as a percentage of total assets | | | 15.1 | % | | | | | | | 12.9 | % | | | | | | | 11.8 | % | | | | |
We note that Brazilian government securities represented over 71.2%78.2% of our portfolio of held-for-trading financial assets in 2015.2016. Brazilian government securities classified as Held-for-Trading represented 9.2%11.8% of our total assets in the same period. Please see Our risk management, item Risk factors, we have significant exposure to Brazilian federal government debt. Available-for-sale Listed below are financial assets that, according to management’s understanding, may be sold in response to, or before changes in, market conditions and are not classified as financial assets at fair value through profit or loss, loans and receivables or held to maturity. Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 10 – Available for Sale Financial Assets, for further details. | | | | | | | (In millions of R$, except percentages) | | | As of December 31, | | | | | | | | | | As of December 31, | | | 2016 | | | % of total | | | 2015 | | | % of total | | | 2014 | | | % of total | | | | | 2015 | | | % of total | | | 2014 | | | % of total | | | 2013 | | | % of total | | | (In millions of R$, except percentages) | | | Available-for-sale financial assets | | | 86,045 | | | | 100.0 | | | | 78,360 | | | | 100.0 | | | | 96,626 | | | | 100.0 | | | | 88,277 | | | | 100.0 | | | | 86,045 | | | | 100.0 | | | | 78,360 | | | | 100.0 | | | Investment funds | | | 218 | | | | 0.3 | | | | 141 | | | | 0.2 | | | | 211 | | | | 0.2 | | | | 42 | | | | 0.0 | | | | 218 | | | | 0.3 | | | | 141 | | | | 0.2 | | | Government securities – domestic | | | 29,108 | | | | 33.8 | | | | 25,625 | | | | 32.7 | | | | 39,648 | | | | 41.0 | | | | Government securities - domestic | | | | 32,003 | | | | 36.3 | | | | 29,108 | | | | 33.8 | | | | 25,625 | | | | 32.7 | | | Brazilian government securities | | | 11,796 | | | | 13.7 | | | | 14,391 | | | | 18.4 | | | | 27,939 | | | | 28.9 | | | | 17,938 | | | | 20.3 | | | | 11,796 | | | | 13.7 | | | | 14,391 | | | | 18.4 | | | Brazilian external debt bonds | | | 17,312 | | | | 20.1 | | | | 11,234 | | | | 14.3 | | | | 11,709 | | | | 12.1 | | | | 14,065 | | | | 15.9 | | | | 17,312 | | | | 20.1 | | | | 11,234 | | | | 14.3 | | | Government securities – abroad | | | 9,883 | | | | 11.5 | | | | 8,619 | | | | 11.0 | | | | 8,658 | | | | 9.0 | | | | Government securities - abroad | | | | 14,472 | | | | 16.4 | | | | 9,883 | | | | 11.5 | | | | 8,619 | | | | 11.0 | | | United States | | | 2,022 | | | | 2.3 | | | | 726 | | | | 0.9 | | | | 1,101 | | | | 1.1 | | | | 1,427 | | | | 1.6 | | | | 2,022 | | | | 2.3 | | | | 726 | | | | 0.9 | | | Italy | | | - | | | | - | | | | 70 | | | | 0.1 | | | | 94 | | | | 0.1 | | | | - | | | | - | | | | - | | | | - | | | | 70 | | | | 0.1 | | | Denmark | | | 2,548 | | | | 3.0 | | | | 2,699 | | | | 3.4 | | | | 2,631 | | | | 2.7 | | | | 819 | | | | 0.9 | | | | 2,548 | | | | 3.0 | | | | 2,699 | | | | 3.4 | | | Spain | | | 1,060 | | | | 1.2 | | | | 783 | | | | 1.0 | | | | - | | | | - | | | | 923 | | | | 1.0 | | | | 1,060 | | | | 1.2 | | | | 783 | | | | 1.0 | | | Korea | | | 1,626 | | | | 1.9 | | | | 1,782 | | | | 2.3 | | | | 2,455 | | | | 2.5 | | | | 2,673 | | | | 3.0 | | | | 1,626 | | | | 1.9 | | | | 1,782 | | | | 2.3 | | | Chile | | | 1,407 | | | | 1.6 | | | | 1,119 | | | | 1.4 | | | | 1,047 | | | | 1.1 | | | | 5,844 | | | | 6.6 | | | | 1,407 | | | | 1.6 | | | | 1,119 | | | | 1.4 | | | Paraguay | | | 912 | | | | 1.1 | | | | 849 | | | | 1.1 | | | | 638 | | | | 0.7 | | | | 1,111 | | | | 1.3 | | | | 912 | | | | 1.1 | | | | 849 | | | | 1.1 | | | Uruguay | | | 178 | | | | 0.2 | | | | 243 | | | | 0.3 | | | | 420 | | | | 0.4 | | | | 411 | | | | 0.5 | | | | 178 | | | | 0.2 | | | | 243 | | | | 0.3 | | | Colombia | | | | 1,155 | | | | 1.3 | | | | - | | | | - | | | | - | | | | - | | | Belgium | | | - | | | | - | | | | 57 | | | | 0.1 | | | | 51 | | | | 0.1 | | | | - | | | | - | | | | - | | | | - | | | | 57 | | | | 0.1 | | | France | | | - | | | | - | | | | 133 | | | | 0.2 | | | | 88 | | | | 0.1 | | | | - | | | | - | | | | - | | | | - | | | | 133 | | | | 0.2 | | | Netherlands | | | 122 | | | | 0.1 | | | | 151 | | | | 0.2 | | | | 126 | | | | 0.1 | | | | 101 | | | | 0.1 | | | | 122 | | | | 0.1 | | | | 151 | | | | 0.2 | | | Other | | | 8 | | | | 0.0 | | | | 7 | | | | 0.0 | | | | 7 | | | | 0.0 | | | | 8 | | | | 0.0 | | | | 8 | | | | 0.0 | | | | 7 | | | | 0.0 | | | Corporate securities | | | 46,836 | | | | 54.4 | | | | 43,975 | | | | 56.1 | | | | 48,109 | | | | 49.8 | | | | 41,760 | | | | 47.3 | | | | 46,836 | | | | 54.4 | | | | 43,975 | | | | 56.1 | | | Shares | | | 928 | | | | 1.1 | | | | 1,999 | | | | 2.6 | | | | 2,025 | | | | 2.1 | | | | 1,385 | | | | 1.6 | | | | 928 | | | | 1.1 | | | | 1,999 | | | | 2.6 | | | Securitized real estate loans | | | 2,037 | | | | 2.4 | | | | 2,522 | | | | 3.2 | | | | 12,275 | | | | 12.7 | | | | 2,095 | | | | 2.4 | | | | 2,037 | | | | 2.4 | | | | 2,522 | | | | 3.2 | | | Bank deposit certificates | | | 1,573 | | | | 1.8 | | | | 1,281 | | | | 1.6 | | | | 2,181 | | | | 2.3 | | | | 2,641 | | | | 3.0 | | | | 1,573 | | | | 1.8 | | | | 1,281 | | | | 1.6 | | | Debentures | | | 22,835 | | | | 26.5 | | | | 20,245 | | | | 25.8 | | | | 15,507 | | | | 16.0 | | | | 21,170 | | | | 24.0 | | | | 22,835 | | | | 26.5 | | | | 20,245 | | | | 25.8 | | | Eurobonds and others | | | 10,112 | | | | 11.8 | | | | 6,707 | | | | 8.6 | | | | 4,896 | | | | 5.1 | | | | 7,715 | | | | 8.7 | | | | 10,112 | | | | 11.8 | | | | 6,707 | | | | 8.6 | | | Promissory notes | | | 991 | | | | 1.2 | | | | 1,397 | | | | 1.8 | | | | 1,227 | | | | 1.3 | | | | 2,173 | | | | 2.5 | | | | 991 | | | | 1.2 | | | | 1,397 | | | | 1.8 | | | Rural product note | | | 1,130 | | | | 1.3 | | | | 1,408 | | | | 1.8 | | | | 625 | | | | 0.6 | | | | Rural Product Note | | | | 1,425 | | | | 1.6 | | | | 1,130 | | | | 1.3 | | | | 1,408 | | | | 1.8 | | | Financial credit bills | | | 6,846 | | | | 8.0 | | | | 8,005 | | | | 10.2 | | | | 8,804 | | | | 9.1 | | | | 2,816 | | | | 3.2 | | | | 6,846 | | | | 8.0 | | | | 8,005 | | | | 10.2 | | | Other | | | 384 | | | | 0.4 | | | | 411 | | | | 0.5 | | | | 569 | | | | 0.6 | | | | 340 | | | | 0.4 | | | | 384 | | | | 0.4 | | | | 411 | | | | 0.5 | | | Available-for-sale financial assets as a percentage of total assets (%) | | | 6.7 | | | | | | | | 7.0 | | | | | | | | 9.4 | | | | | | | | Available-for-sale financial assets as a percentage of total assets | | | | 6.5 | % | | | | | | | 6.7 | % | | | | | | | 7.0 | % | | | | |
Brazilian government securities and corporate securities represented 13.7%20.3% and 54.4%47.3%, respectively, of our portfolio of available-for-sale financial assets in 2015.2016. Brazilian government securities and corporate securities classified as available-for-sale financial assets, which are used as a hedge for our subordinated debt portfolio, represented 1.4%1.3% and 3.7%3.1%, respectively, of our total assets in the same period. Financial performance | A-118 |
Held-to-maturity
Listed below are non-derivative financial assets that with respect to which we have the intention and financial ability to held to maturity. Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 11– Held to Maturity Financial Assets, for further details. | | | | | | | (In millions of R$, except percentages) | | | As of December 31, | | | | | | | | | | As of December 31, | | | 2016 | | | % of total | | | 2015 | | | % of total | | | 2014 | | | % of total | | | | | 2015 | | | % of total | | | 2014 | | | % of total | | | 2013 | | | % of total | | | (In millions of R$, except percentages) | | | Held-to-maturity financial assets | | | 42,185 | | | | 100.0 | | | | 34,434 | | | | 100.0 | | | | 10,116 | | | | 100.0 | | | | 40,495 | | | | 100.0 | | | | 42,185 | | | | 100.0 | | | | 34,434 | | | | 100.0 | | | Government securities – domestic | | | 26,509 | | | | 62.9 | | | | 20,859 | | | | 60.6 | | | | 10,092 | | | | 99.8 | | | | 24,979 | | | | 61.7 | | | | 26,509 | | | | 62.9 | | | | 20,859 | | | | 60.6 | | | Brazilian government securities | | | 11,721 | | | | 27.8 | | | | 10,555 | | | | 30.7 | | | | 3,778 | | | | 37.4 | | | | 12,937 | | | | 31.9 | | | | 11,721 | | | | 27.8 | | | | 10,555 | | | | 30.7 | | | Brazilian external debt bonds | | | 14,788 | | | | 35.1 | | | | 10,304 | | | | 29.9 | | | | 6,314 | | | | 62.4 | | | | 12,042 | | | | 29.7 | | | | 14,788 | | | | 35.1 | | | | 10,304 | | | | 29.9 | | | Government securities – abroad | | | 15 | | | | - | | | | 26 | | | | 0.1 | | | | 23 | | | | 0.2 | | | | 539 | | | | 1.3 | | | | 15 | | | | - | | | | 26 | | | | 0.1 | | | Corporate securities | | | 15,661 | | | | 37.1 | | | | 13,549 | | | | 39.3 | | | | 1 | | | | 0.0 | | | | 14,977 | | | | 37.0 | | | | 15,661 | | | | 37.1 | | | | 13,549 | | | | 39.3 | | | Debentures | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 12 | | | | 0.0 | | | | - | | | | - | | | | - | | | | - | | | Eurobonds and others | | | 4 | | | | 0.0 | | | | 2 | | | | 0.0 | | | | 1 | | | | 0.0 | | | | 18 | | | | 0.0 | | | | 4 | | | | 0.0 | | | | 2 | | | | 0.0 | | | Securitized real estate loans | | | 15,657 | | | | 37.1 | | | | 13,547 | | | | 39.3 | | | | - | | | | - | | | | 14,487 | | | | 35.8 | | | | 15,657 | | | | 37.1 | | | | 13,547 | | | | 39.3 | | | Held-to-maturity financial assets as a percentage of total assets (%) | | | 3.3 | | | | | | | | 3.1 | | | | | | | | 1.0 | | | | | | | | Others | | | | 460 | | | | 1.1 | | | | - | | | | - | | | | - | | | | - | | | Held-to-maturity financial assets as a percentage of total assets | | | | 3.0 | % | | | | | | | 3.3 | % | | | | | | | 3.1 | % | | | | |
Derivatives Derivatives are classified on the date of their acquisition in accordance with management’s intention to use them as a hedging instrument, as determined by Brazilian regulations. Please refer to section Performance, item ConsolidatedComplete Financial Statements
(IFRS), Note 8 – Derivatives, for further detailsdetails. Our derivatives portfolio (assets and liabilities) is composed of futures, forward,forwards, swaps, options and credit derivatives, as stated in the table below:following table: | | | | | | | | | (In millions of R$, except percentages) | | | | | | | | | | | As of December 31, | | | Derivative Financial Instruments | | 2015 | | | % of total | | | 2014 | | | % of total | | | 2013 | | | % of total | | | Assets | | | | | | | | | | | | | | | | | | | | | | | | | | Futures | | | 529 | | | | 2.0 | | | | - | | | | - | | | | - | | | | - | | | Options premiums | | | 5,583 | | | | 20.9 | | | | 2,872 | | | | 20.3 | | | | 1,717 | | | | 15.1 | | | Forwards (Brazil) | | | 3,166 | | | | 11.9 | | | | 2,394 | | | | 16.9 | | | | 3,315 | | | | 29.2 | | | Swaps – difference receivable | | | 9,147 | | | | 34.2 | | | | 4,816 | | | | 34.0 | | | | 4,442 | | | | 39.1 | | | Credit derivative | | | 614 | | | | 2.3 | | | | 122 | | | | 0.9 | | | | 686 | | | | 6.0 | | | Forwards (offshore) | | | 3,430 | | | | 12.8 | | | | 2,106 | | | | 14.9 | | | | 555 | | | | 4.9 | | | Check of swap – companies | | | 355 | | | | 1.3 | | | | 93 | | | | 0.7 | | | | 88 | | | | 0.8 | | | Others | | | 3,931 | | | | 14.7 | | | | 1,753 | | | | 12.4 | | | | 563 | | | | 5.0 | | | Total derivative financial instruments assets | | | 26,755 | | | | 100.0 | | | | 14,156 | | | | 100.0 | | | | 11,366 | | | | 100.0 | | | Derivative financial instruments as percentage of total assets (%) | | | 2.1 | | | | | | | | 1.3 | | | | | | | | 1.1 | | | | | | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | Futures | | | - | | | | - | | | | (354 | ) | | | 2.0 | | | | (33 | ) | | | 0.3 | | | Options premiums | | | (5,783 | ) | | | 18.6 | | | | (3,057 | ) | | | 17.6 | | | | (1,921 | ) | | | 16.8 | | | Forwards (Brazil) | | | (833 | ) | | | 2.6 | | | | (682 | ) | | | 3.9 | | | | (1,862 | ) | | | 16.3 | | | Swaps – difference payable | | | (16,331 | ) | | | 52.6 | | | | (9,534 | ) | | | 55.0 | | | | (6,111 | ) | | | 53.6 | | | Credit derivative | | | (875 | ) | | | 2.8 | | | | (179 | ) | | | 1.0 | | | | (391 | ) | | | 3.4 | | | Forwards (offshore) | | | (3,142 | ) | | | 10.1 | | | | (1,693 | ) | | | 9.8 | | | | (560 | ) | | | 4.9 | | | Swaps with USD check – companies | | | (545 | ) | | | 1.8 | | | | (229 | ) | | | 1.3 | | | | (145 | ) | | | 1.3 | | | Others | | | (3,562 | ) | | | 11.5 | | | | (1,622 | ) | | | 9.3 | | | | (382 | ) | | | 3.3 | | | Total derivative financial instruments liabilities | | | (31,071 | ) | | | 100.0 | | | | (17,350 | ) | | | 100.0 | | | | (11,405 | ) | | | 100.0 | | | Derivative financial instruments as percentage of total liabilities and stockholder’s equity (%) | | | 2.4 | | | | | | | | 1.5 | | | | | | | | 1.1 | | | | | |
| | | As of December 31, | | | Derivative Financial Instruments | | 2016 | | | % of total | | | 2015 | | | % of total | | | 2014 | | | % of total | | | | | (In millions of R$, except percentages) | | | Assets | | | | | | | | | | | | | | | | | | | | | | | | | | Futures Contracts | | | 127 | | | | 0.5 | | | | 529 | | | | 2.0 | | | | - | | | | - | | | Options premiums | | | 4,792 | | | | 19.8 | | | | 5,583 | | | | 20.9 | | | | 2,872 | | | | 20.2 | | | Forwards (onshore) | | | 4,971 | | | | 20.5 | | | | 3,166 | | | | 11.8 | | | | 2,394 | | | | 16.9 | | | Swaps - difference receivable | | | 10,542 | | | | 43.5 | | | | 9,147 | | | | 34.2 | | | | 4,816 | | | | 34.0 | | | Credit derivatives - financial Institutions | | | 181 | | | | 0.7 | | | | 614 | | | | 2.3 | | | | 122 | | | | 0.9 | | | Forwards (offshore) | | | 3,459 | | | | 14.3 | | | | 3,430 | | | | 12.8 | | | | 2,106 | | | | 14.9 | | | Check of Swap - companies | | | 88 | | | | 0.4 | | | | 355 | | | | 1.3 | | | | 93 | | | | 0.7 | | | Others | | | 71 | | | | 0.3 | | | | 3,931 | | | | 14.7 | | | | 1,753 | | | | 12.4 | | | Total derivative financial instruments assets | | | 24,231 | | | | 100.0 | | | | 26,755 | | | | 100.0 | | | | 14,156 | | | | 100.0 | | | Derivative financial instruments as percentage of total assets | | | 1.8 | % | | | | | | | 2.1 | % | | | | | | | 1.3 | % | | | | | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | Futures Contracts | | | - | | | | - | | | | - | | | | - | | | | (354 | ) | | | 2.0 | | | Options premiums | | | (4,552 | ) | | | 18.4 | | | | (5,783 | ) | | | 18.6 | | | | (3,057 | ) | | | 17.6 | | | Forwards (onshore) | | | (3,530 | ) | | | 14.3 | | | | (833 | ) | | | 2.6 | | | | (682 | ) | | | 3.9 | | | Swaps - difference payable | | | (13,221 | ) | | | 53.5 | | | | (16,331 | ) | | | 52.6 | | | | (9,534 | ) | | | 55.0 | | | Credit derivatives - financial Institutions | | | (147 | ) | | | 0.6 | | | | (875 | ) | | | 2.8 | | | | (179 | ) | | | 1.1 | | | Forwards (offshore) | | | (2,825 | ) | | | 11.5 | | | | (3,142 | ) | | | 10.1 | | | | (1,693 | ) | | | 9.8 | | | Check of swap - Companies | | | (353 | ) | | | 1.4 | | | | (545 | ) | | | 1.8 | | | | (229 | ) | | | 1.3 | | | Other - Companies | | | (70 | ) | | | 0.3 | | | | (3,562 | ) | | | 11.5 | | | | (1,622 | ) | | | 9.3 | | | Total derivative financial instruments liabilities | | | (24,698 | ) | | | 100.0 | | | | (31,071 | ) | | | 100.0 | | | | (17,350 | ) | | | 100.0 | | | Derivative financial instruments as percentage of total liabilities and stockholder’s equity | | | 1.8 | % | | | | | | | 2.4 | % | | | | | | | 1.5 | % | | | | |
Financial performance | A-119 |
(In millions of R$, except percentages)
As of December 31, 2015
| | | | As of December 31, 2016 | | | Distribution of our financial assets by maturity | | R$ | | | No stated
maturity
Average
yield (%) | | | R$ | | | Due in 1
year or less
Average
yield (%) | | | R$ | | | Due after 1
year to 5 years
Average
yield (%) | | | R$ | | | Due after 5
years 10 years
Average
yield (%) | | | R$ | | | Due after
10 years
Average
yield (%) | | | R$ | | | Total
Average
yield(%) | | | No stated
maturity | | | Due in 1 year or less | | | Due after 1 year to 5
years | | | Due after 5 years to
10 years | | | Due after 10 years | | | Total | | | | | | R$ | | | Average
yield (%) | | | R$ | | | Average
yield (%) | | | R$ | | | Average
yield (%) | | | R$ | | | Average
yield (%) | | | R$ | | | Average
yield (%) | | | R$ | | | Average
yield (%) | | | | | | (In millions of R$, except percentages) | | | Held-for-trading financial assets, at fair value | | | 3,212 | | | | | | | | 32,722 | | | | | | | | 57,702 | | | | | | | | 65,436 | | | | | | | | 5,240 | | | | | | | | 164,311 | | | | | | | | 3,206 | | | | | | | | 31,000 | | | | | | | | 118,050 | | | | | | | | 42,284 | | | | | | | | 10,108 | | | | | | | | 204,648 | | | | | | | Investment funds(1) | | | 1,051 | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 1,051 | | | | 0.0 | % | | | 1,056 | | | | - | | | | 116 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,173 | | | | - | | | Government securities – domestic | | | - | | | | | | | | 17,502 | | | | | | | | 33,965 | | | | | | | | 64,829 | | | | | | | | 5,188 | | | | | | | | 121,484 | | | | | | | | Government securities - domestic | | | | - | | | | | | | | 12,948 | | | | | | | | 101,012 | | | | | | | | 41,398 | | | | | | | | 9,991 | | | | | | | | 165,349 | | | | | | | Brazilian government securities | | | - | | | | 0.0 | % | | | 17,304 | | | | 1.5 | % | | | 30,229 | | | | 2.8 | % | | | 64,482 | | | | 1.4 | % | | | 5,038 | | | | 1.1 | % | | | 117,053 | | | | 1.7 | % | | | - | | | | - | | | | 12,172 | | | | 2.6 | | | | 97,805 | | | | 1.9 | | | | 40,174 | | | | 1.4 | | | | 9,872 | | | | 0.5 | | | | 160,024 | | | | 1.8 | | | Brazilian external debt bonds | | | - | | | | 0.0 | % | | | 198 | | | | 0.0 | % | | | 3,735 | | | | 11.0 | % | | | 347 | | | | 14.6 | % | | | 150 | | | | 38.1 | % | | | 4,431 | | | | 11.7 | % | | | - | | | | - | | | | 775 | | | | 0.6 | | | | 3,207 | | | | 8.4 | | | | 1,223 | | | | 3.0 | | | | 119 | | | | 22.9 | | | | 5,325 | | | | 6.3 | | | Government securities – abroad | | | - | | | | | | | | 1,000 | | | | | | | | 110 | | | | | | | | 3 | | | | | | | | 38 | | | | | | | | 1,149 | | | | | | | | Government securities - abroad | | | | - | | | | | | | | 2,121 | | | | - | | | | 1,271 | | | | - | | | | 269 | | | | - | | | | 74 | | | | - | | | | 3,735 | | | | | | | Argentina | | | - | | | | 0.0 | % | | | 695 | | | | 1.4 | % | | | 1 | | | | 5.6 | % | | | 1 | | | | 5.3 | % | | | 0 | | | | 0.0 | % | | | 696 | | | | 1.4 | % | | | - | | | | - | | | | 618 | | | | 2.2 | | | | 30 | | | | 5.6 | | | | 3 | | | | 6.3 | | | | 0 | | | | 6.8 | | | | 651 | | | | 2.3 | | | United States | | | - | | | | 0.0 | % | | | 86 | | | | 0.0 | % | | | 46 | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 132 | | | | 0.0 | % | | | - | | | | - | | | | 78 | | | | 0.1 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 78 | | | | 0.1 | | | Mexico | | | - | | | | 0.0 | % | | | 1 | | | | 9.5 | % | | | 1 | | | | 6.7 | % | | | 0 | | | | 2.0 | % | | | 0 | | | | 12.6 | % | | | 3 | | | | 8.0 | % | | | - | | | | - | | | | - | | | | - | | | | 3 | | | | 11.0 | | | | 1 | | | | 5.4 | | | | 2 | | | | 16.8 | | | | 6 | | | | 12.3 | | | Chile | | | - | | | | 0.0 | % | | | 35 | | | | 0.6 | % | | | 0 | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 1 | | | | 0.0 | % | | | 36 | | | | 0.6 | % | | | - | | | | - | | | | 5 | | | | - | | | | 87 | | | | 0.4 | | | | 25 | | | | 0.1 | | | | 9 | | | | - | | | | 127 | | | | 0.3 | | | Paraguay | | | - | | | | 0.0 | % | | | 68 | | | | 0.1 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 68 | | | | 0.2 | % | | | - | | | | - | | | | 88 | | | | 0.1 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 88 | | | | 0.1 | | | Uruguay | | | - | | | | 0.0 | % | | | 29 | | | | 7.6 | % | | | 10 | | | | 10.5 | % | | | 1 | | | | 14.3 | % | | | 1 | | | | 8.2 | % | | | 40 | | | | 8.6 | % | | | - | | | | - | | | | 31 | | | | 4.0 | | | | - | | | | - | | | | 0 | | | | 18.4 | | | | 1 | | | | 13.5 | | | | 32 | | | | 4.2 | | | Colombia | | | - | | | | 0.0 | % | | | 32 | | | | 1.0 | % | | | 4 | | | | 3.6 | % | | | 1 | | | | 20.9 | % | | | 36 | | | | 3.8 | % | | | 72 | | | | 2.7 | % | | | - | | | | - | | | | 1,247 | | | | 1.6 | | | | 1,123 | | | | 2.1 | | | | 240 | | | | 4.4 | | | | 60 | | | | 3.9 | | | | 2,669 | | | | 2.1 | | | Other | | | - | | | | 0.0 | % | | | 53 | | | | 0.0 | % | | | 48 | | | | 0.0 | % | | | 1 | | | | 25.3 | % | | | 0 | | | | 21.6 | % | | | 102 | | | | 0.2 | % | | | - | | | | - | | | | 55 | | | | - | | | | 28 | | | | 0.0 | | | | - | | | | - | | | | 1 | | | | 32.4 | | | | 84 | | | | 0.3 | | | Corporate securities | | | 2,161 | | | | | | | | 14,220 | | | | | | | | 23,627 | | | | | | | | 604 | | | | | | | | 14 | | | | | | | | 40,627 | | | | | | | | 2,491 | | | | | | | | 15,473 | | | | - | | | | 15,767 | | | | - | | | | 617 | | | | - | | | | 43 | | | | - | | | | 34,391 | | | | | | | Shares | | | 2,161 | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 2,161 | | | | 0.0 | % | | | 2,491 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2,491 | | | | 0.0 | | | Securitized real estate loans | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | Bank deposit certificates | | | - | | | | 0.0 | % | | | 2,504 | | | | 0.2 | % | | | 79 | | | | 0.0 | % | | | 0 | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 2,583 | | | | 0.2 | % | | | - | | | | - | | | | 1,806 | | | | 1.4 | | | | 18 | | | | 0.1 | | | | - | | | | - | | | | - | | | | - | | | | 1,824 | | | | 1.4 | | | Debentures | | | - | | | | 0.0 | % | | | 474 | | | | 0.7 | % | | | 3,494 | | | | 1.3 | % | | | 552 | | | | 8.9 | % | | | 2 | | | | 0.1 | % | | | 4,522 | | | | 2.2 | % | | | - | | | | - | | | | 460 | | | | 0.3 | | | | 2,490 | | | | 6.8 | | | | 240 | | | | 19.4 | | | | - | | | | - | | | | 3,190 | | | | 6.8 | | | Eurobonds and other | | | - | | | | 0.0 | % | | | 167 | | | | 1.9 | % | | | 769 | | | | 2.5 | % | | | 43 | | | | 1.5 | % | | | 12 | | | | 10.5 | % | | | 991 | | | | 2.5 | % | | | - | | | | - | | | | 299 | | | | 1.9 | | | | 241 | | | | 2.9 | | | | 79 | | | | 2.5 | | | | 43 | | | | 1.1 | | | | 662 | | | | 2.3 | | | Financial credit bills | | | - | | | | 0.0 | % | | | 11,076 | | | | 3.7 | % | | | 19,285 | | | | 0.8 | % | | | 6 | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 30,367 | | | | 1.8 | % | | | - | | | | - | | | | 12,907 | | | | 0.8 | | | | 12,978 | | | | 2.5 | | | | 7 | | | | - | | | | - | | | | - | | | | 25,893 | | | | 1.6 | | | Promissory notes | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | Other | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 3 | | | | 0.8 | % | | | - | | | | 0.0 | % | | | 3 | | | | 0.7 | % | | | - | | | | - | | | | - | | | | - | | | | 40 | | | | 0.0 | | | | 291 | | | | 1.0 | | | | - | | | | - | | | | 331 | | | | 0.9 | | | Financial assets designated at fair value through profit or loss – Government securities – domestic – Brazilian external debt bonds | | | - | | | | | | | | - | | | | | | | | 642 | | | | | | | | - | | | | | | | | - | | | | | | | | 642 | | | | | | | | Financial assets designated at fair value through profit or loss - Government securities - domestic - Brazilian external debt bonds | | | | - | | | | | | | | 1,191 | | | | | | | | - | | | | | | | | - | | | | | | | | - | | | | | | | | 1,191 | | | | | | | Derivatives | | | - | | | | | | | | 15,845 | | | | | | | | 8,116 | | | | | | | | 2,794 | | | | | | | | | | | | | | | | 26,755 | | | | | | | | - | | | | | | | | 14,111 | | | | | | | | 6,940 | | | | | | | | 3,180 | | | | | | | | | | | | | | | | 24,231 | | | | | | | Available-for-sale financial assets, at fair value | | | 1,145 | | | | | | | | 21,778 | | | | | | | | 35,098 | | | | | | | | 15,682 | | | | | | | | 12,342 | | | | | | | | 86,045 | | | | | | | | 1,375 | | | | | | | | 22,261 | | | | | | | | 38,969 | | | | | | | | 12,329 | | | | | | | | 13,343 | | | | | | | | 88,277 | | | | | | | Investment funds(1) | | | 217 | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 1 | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 218 | | | | 0.0 | % | | | 42 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 42 | | | | - | | | Government securities – domestic | | | - | | | | | | | | 1,491 | | | | | | | | 7,210 | | | | | | | | 11,103 | | | | | | | | 9,304 | | | | | | | | 29,108 | | | | 0.0 | % | | | Government securities - domestic | | | | 100 | | | | - | | | | 3,568 | | | | - | | | | 10,116 | | | | | | | | 8,116 | | | | | | | | 10,203 | | | | | | | | 32,003 | | | | - | | | Brazilian government securities | | | - | | | | 0.0 | % | | | 1,491 | | | | 11.5 | % | | | 1,443 | | | | 16.6 | % | | | 4,183 | | | | 15.5 | % | | | 4,679 | | | | 19.0 | % | | | 11,796 | | | | 16.5 | % | | | - | | | | - | | | | 1,708 | | | | 11.5 | | | | 6,686 | | | | 5.6 | | | | 3,668 | | | | 13.5 | | | | 5,876 | | | | 17.0 | | | | 17,938 | | | | 11.5 | | | Brazilian external debt bonds | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 5,767 | | | | 6.1 | % | | | 6,920 | | | | 7.7 | % | | | 4,626 | | | | 7.9 | % | | | 17,312 | | | | 7.1 | % | | | - | | | | - | | | | 1,860 | | | | 2.8 | | | | 3,429 | | | | 8.9 | | | | 4,448 | | | | 11.2 | | | | 4,328 | | | | 34.2 | | | | 14,065 | | | | 16.5 | | | Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Government securities – abroad | | | - | | | | | | | | 8,066 | | | | | | | | 1,750 | | | | | | | | 66 | | | | | | | | 1 | | | | | | | | 9,883 | | | | | | | | Government securities - abroad | | | | - | | | | - | | | | 5,896 | | | | - | | | | 7,758 | | | | | | | | 795 | | | | | | | | 23 | | | | | | | | 14,472 | | | | | | | Argentina | | | | - | | | | - | | | | 0 | | | | 76.5 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | United States | | | - | | | | 0.0 | % | | | 1,120 | | | | 0.1 | % | | | 902 | | | | 0.2 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 2,022 | | | | 0.1 | % | | | - | | | | - | | | | 481 | | | | 0.2 | | | | 885 | | | | 0.5 | | | | 61 | | | | 0.6 | | | | - | | | | - | | | | 1,427 | | | | 0.4 | | | Italy | | | | | | | 0.0 | % | | | | | | | 0.0 | % | | | | | | | 0.0 | % | | | | | | | 0.0 | % | | | | | | | 0.0 | % | | | | | | | 0.0 | % | | | Denmark | | | - | | | | 0.0 | % | | | 2,061 | | | | 0.5 | % | | | 487 | | | | 0.5 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 2,548 | | | | 0.5 | % | | | - | | | | - | | | | 819 | | | | 0.5 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 819 | | | | 0.5 | | | Spain | | | - | | | | 0.0 | % | | | 1,060 | | | | 1.9 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 1,060 | | | | 1.9 | % | | | - | | | | - | | | | 682 | | | | 1.8 | | | | 241 | | | | 0.2 | | | | - | | | | - | | | | - | | | | - | | | | 923 | | | | 1.4 | | | Korea | | | - | | | | 0.0 | % | | | 1,626 | | | | 1.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 1,626 | | | | 1.0 | % | | | - | | | | - | | | | 2,024 | | | | 1.2 | | | | 649 | | | | 1.0 | | | | - | | | | - | | | | - | | | | - | | | | 2,673 | | | | 1.1 | | | % Chile | | | - | | | | 0.0 | % | | | 1,388 | | | | 2.8 | % | | | 19 | | | | 2.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 1,407 | | | | 2.8 | % | | | Chile | | | | - | | | | - | | | | 692 | | | | 0.4 | | | | 4,851 | | | | 0.4 | | | | 278 | | | | 0.4 | | | | 23 | | | | 0.5 | | | | 5,844 | | | | 0.4 | | | Paraguay | | | - | | | | 0.0 | % | | | 759 | | | | 3.7 | % | | | 153 | | | | 3.5 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 912 | | | | 3.7 | % | | | - | | | | - | | | | 853 | | | | 4.2 | | | | 258 | | | | 2.8 | | | | - | | | | - | | | | - | | | | - | | | | 1,111 | | | | 3.9 | | | Uruguay | | | - | | | | 0.0 | % | | | 52 | | | | 5.6 | % | | | 59 | | | | 4.2 | % | | | 66 | | | | 0.8 | % | | | 1 | | | | 0.9 | % | | | 178 | | | | 3.3 | % | | | - | | | | - | | | | 235 | | | | 6.6 | | | | 119 | | | | 0.5 | | | | 56 | | | | 0.8 | | | | 1 | | | | 0.9 | | | | 411 | | | | 4.0 | | | Belgium | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | France | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | Colombia | | | | - | | | | - | | | | - | | | | - | | | | 755 | | | | 3.9 | | | | 400 | | | | 3.0 | | | | - | | | | - | | | | 1,155 | | | | 3.6 | | | Netherlands | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 122 | | | | 0.4 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 122 | | | | 0.4 | % | | | - | | | | - | | | | 101 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 101 | | | | - | | | Other | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 8 | | | | 0.5 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 8 | | | | 0.5 | % | | | - | | | | - | | | | 8 | | | | 0.4 | | | | - | | | | - | | | | 0 | | | | - | | | | - | | | | - | | | | 8 | | | | 0.4 | | | % Corporate securities | | | 928 | | | | | | | | 12,221 | | | | | | | | 26,137 | | | | | | | | 4,513 | | | | | | | | 3,037 | | | | | | | | 46,836 | | | | | | | | Corporate securities | | | | 1,385 | | | | - | | | | 12,745 | | | | - | | | | 21,096 | | | | | | | | 3,418 | | | | | | | | 3,116 | | | | | | | | 41,760 | | | | | | | Shares | | | 928 | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 928 | | | | 0.0 | % | | | 1,385 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,385 | | | | - | | | Securitized real estate loans | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 2,037 | | | | 1.3 | % | | | 2,037 | | | | 1.3 | % | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2,095 | | | | 1.3 | | | | 2,095 | | | | 1.3 | | | Bank deposit certificates | | | - | | | | 0.0 | % | | | 1,571 | | | | 2.2 | % | | | - | | | | 0.0 | % | | | 2 | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 1,573 | | | | 2.2 | % | | | - | | | | - | | | | 2,469 | | | | 0.3 | | | | 152 | | | | 1.2 | | | | 20 | | | | 2.0 | | | | - | | | | - | | | | 2,641 | | | | 0.3 | | | Debentures | | | - | | | | 0.0 | % | | | 1,866 | | | | 11.5 | % | | | 16,123 | | | | 7.1 | % | | | 3,954 | | | | 8.0 | % | | | 892 | | | | 4.8 | % | | | 22,835 | | | | 7.5 | % | | | - | | | | - | | | | 1,960 | | | | 10.5 | | | | 15,152 | | | | 4.0 | | | | 3,218 | | | | 3.5 | | | | 840 | | | | 4.3 | | | | 21,170 | | | | 4.6 | | | Eurobonds and others | | | - | | | | 0.0 | % | | | 2,463 | | | | 1.0 | % | | | 7,071 | | | | 1.3 | % | | | 499 | | | | 0.3 | % | | | 79 | | | | 19.3 | % | | | 10,112 | | | | 1.3 | % | | | - | | | | - | | | | 3,659 | | | | 1.4 | | | | 3,876 | | | | 0.9 | | | | 180 | | | | 1.0 | | | | - | | | | - | | | | 7,715 | | | | 1.1 | | | Promissory notes | | | - | | | | 0.0 | % | | | 785 | | | | 4.6 | % | | | 206 | | | | 0.1 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 991 | | | | 3.7 | % | | | - | | | | - | | | | 1,731 | | | | 6.8 | | | | 442 | | | | 1.1 | | | | - | | | | - | | | | - | | | | - | | | | 2,173 | | | | 5.6 | | | Rural product note | | | - | | | | 0.0 | % | | | 633 | | | | 2.9 | % | | | 439 | | | | 4.7 | % | | | 58 | | | | 4.5 | % | | | - | | | | 0.0 | % | | | 1,130 | | | | 3.7 | % | | | - | | | | - | | | | 476 | | | | 0.4 | | | | 801 | | | | 0.2 | | | | - | | | | - | | | | 148 | | | | 0.0 | | | | 1,425 | | | | 0.2 | | | Financial credit bills | | | - | | | | 0.0 | % | | | 4,781 | | | | 15.8 | % | | | 2,065 | | | | 9.9 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 6,846 | | | | 14.0 | % | | | - | | | | - | | | | 2,383 | | | | 22.1 | | | | 433 | | | | 5.6 | | | | - | | | | - | | | | - | | | | - | | | | 2,816 | | | | 19.5 | | | Other | | | - | | | | 0.0 | % | | | 122 | | | | 3.7 | % | | | 233 | | | | 4.2 | % | | | - | | | | 0.0 | % | | | 29 | | | | 43.6 | % | | | 384 | | | | 7.0 | % | | | - | | | | - | | | | 67 | | | | 7.6 | | | | 240 | | | | 1.1 | | | | - | | | | - | | | | 33 | | | | 49.8 | | | | 340 | | | | 7.1 | | | Held-to-maturity financial assets, at amortized cost | | | - | | | | | | | | 661 | | | | | | | | 14,500 | | | | | | | | 18,870 | | | | | | | | 8,154 | | | | | | | | 42,185 | | | | | | | | - | | | | | | | | 2,498 | | | | | | | | 19,376 | | | | | | | | 10,957 | | | | | | | | 7,664 | | | | | | | | 40,495 | | | | | | | Government securities – domestic | | | - | | | | | | | | - | | | | | | | | 12,366 | | | | | | | | 11,397 | | | | | | | | 2,746 | | | | | | | | 26,509 | | | | | | | | Government securities - domestic | | | | - | | | | - | | | | 1,115 | | | | - | | | | 16,355 | | | | | | | | 4,599 | | | | | | | | 2,911 | | | | | | | | 24,979 | | | | | | | Brazilian government securities | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 7,547 | | | | 17.9 | % | | | 1,429 | | | | 56.0 | % | | | 2,746 | | | | 35.8 | % | | | 11,721 | | | | 26.8 | % | | | - | | | | - | | | | 276 | | | | 47.2 | | | | 9,750 | | | | 19.6 | | | | - | | | | - | | | | 2,911 | | | | 39.5 | | | | 12,937 | | | | 24.7 | | | Brazilian external debt bonds | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 4,820 | | | | 11.7 | % | | | 9,968 | | | | 17.2 | % | | | - | | | | 0.0 | % | | | 14,788 | | | | 15.4 | % | | | - | | | | - | | | | 839 | | | | 2.8 | | | | 6,605 | | | | 8.2 | | | | 4,599 | | | | 22.4 | | | | - | | | | - | | | | 12,042 | | | | 13.3 | | | Government securities – abroad | | | - | | | | | | | | - | | | | | | | | - | | | | | | | | 0 | | | | | | | | 15 | | | | | | | | 15 | | | | | | | | Government securities - abroad | | | | - | | | | - | | | | 526 | | | | - | | | | - | | | | | | | | - | | | | | | | | 13 | | | | | | | | 539 | | | | - | | | Colombia | | | | - | | | | - | | | | 526 | | | | 0.6 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 526 | | | | 0.6 | | | Uruguay | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 0 | | | | 0.0 | % | | | 15 | | | | 0.0 | % | | | 15 | | | | 0.0 | % | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 13 | | | | - | | | | 13 | | | | - | | | Corporate securities | | | - | | | | | | | | 661 | | | | | | | | 2,134 | | | | | | | | 7,472 | | | | | | | | 5,394 | | | | | | | | 15,661 | | | | | | | | - | | | | - | | | | 858 | | | | - | | | | 3,021 | | | | | | | | 6,358 | | | | | | | | 4,740 | | | | | | | | 14,977 | | | | - | | | Debentures | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | (0 | ) | | | 0.0 | % | | | - | | | | 0.0 | % | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 12 | | | | 84.1 | | | | - | | | | - | | | | 12 | | | | 85.8 | | | Eurobonds and others | | | - | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 0 | | | | 0.0 | % | | | 4 | | | | 0.0 | % | | | - | | | | 0.0 | % | | | 4 | | | | 0.0 | % | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 18 | | | | 0.1 | | | | - | | | | - | | | | 18 | | | | 0.1 | | | Securitized real estate loans | | | - | | | | 0.0 | % | | | 661 | | | | 9.8 | % | | | 2,134 | | | | 10.0 | % | | | 7,468 | | | | 2.4 | % | | | 5,394 | | | | 0.3 | % | | | 15,657 | | | | 3.0 | % | | | - | | | | - | | | | 399 | | | | 21.6 | | | | 3,020 | | | | 8.8 | | | | 6,328 | | | | 2.1 | | | | 4,740 | | | | 0.3 | | | | 14,487 | | | | 3.4 | | | Other | | | | - | | | | - | | | | 459 | | | | 0.5 | | | | 1 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 460 | | | | 0.5 | |
(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.
| | | Fair Value | | | Amortized cost | | | | | | Distribution of our financial assets by currency | | Held-for-trading
financial assets | | | Financial assets
designated at fair
value | | | Derivatives | | | Available-for-sale
financial assets | | | Held-to-maturity
financial assets | | | Total | | | | | (In millions of R$) | | | As of December 31, 2016 | | | 204,648 | | | | 1,191 | | | | 24,231 | | | | 88,277 | | | | 40,495 | | | | 358,842 | | | Denominated in Brazilian currency | | | 191,250 | | | | 1,191 | | | | 10,710 | | | | 52,859 | | | | 27,436 | | | | 283,446 | | | Denominated in Brazilian currency and indexed by foreign currency(1) | | | 2,653 | | | | - | | | | 4,634 | | | | 670 | | | | - | | | | 7,957 | | | Denominated in foreign currency(1) | | | 10,745 | | | | - | | | | 8,887 | | | | 34,748 | | | | 13,059 | | | | 67,439 | | | As of December 31, 2015 | | | 164,311 | | | | 642 | | | | 26,755 | | | | 86,045 | | | | 42,185 | | | | 319,938 | | | Denominated in Brazilian currency | | | 154,737 | | | | 505 | | | | 7,445 | | | | 51,621 | | | | 27,378 | | | | 241,686 | | | Denominated in Brazilian currency and indexed by foreign currency(1) | | | 3,043 | | | | - | | | | 10,044 | | | | 791 | | | | - | | | | 13,878 | | | Denominated in foreign currency(1) | | | 6,531 | | | | 137 | | | | 9,266 | | | | 33,633 | | | | 14,807 | | | | 64,374 | | | As of December 31, 2014 | | | 132,944 | | | | 733 | | | | 14,156 | | | | 78,360 | | | | 34,434 | | | | 260,627 | | | Denominated in Brazilian currency | | | 126,404 | | | | 626 | | | | 5,519 | | | | 55,152 | | | | 24,102 | | | | 211,803 | | | Denominated in Brazilian currency and indexed by foreign currency(1) | | | 2,190 | | | | - | | | | 2,948 | | | | 571 | | | | - | | | | 5,709 | | | Denominated in foreign currency(1) | | | 4,350 | | | | 107 | | | | 5,689 | | | | 22,637 | | | | 10,332 | | | | 43,115 | |
Financial performance | A-120 |
| | | | | | | | | | | | | | | (In millions of R$) | | | | | | | | Fair Value | | | | | | | | | | | | Distribution of our financial assets by currency | | Held-for-
trading
financial
assets | | | Financial
assets
designated
at fair
value | | | Derivatives | | | Available-for-
sale financial
assets | | | Amortized
cost
Held-to-
maturity
financial
assets | | | Total | | | As of December 31, 2015 | | | 164,311 | | | | 642 | | | | 26,755 | | | | 86,045 | | | | 42,185 | | | | 319,938 | | | Denominated in Brazilian currency | | | 154,737 | | | | 505 | | | | 7,445 | | | | 51,621 | | | | 27,378 | | | | 241,686 | | | Denominated in Brazilian currency and indexed by foreign currency(1) | | | 3,043 | | | | - | | | | 10,044 | | | | 791 | | | | - | | | | 13,878 | | | Denominated in foreign currency(1) | | | 6,531 | | | | 137 | | | | 9,266 | | | | 33,633 | | | | 14,807 | | | | 64,374 | | | As of December 31, 2014 | | | 132,944 | | | | 733 | | | | 14,156 | | | | 78,360 | | | | 34,434 | | | | 260,627 | | | Denominated in Brazilian currency | | | 126,404 | | | | 626 | | | | 5,519 | | | | 55,152 | | | | 24,102 | | | | 211,803 | | | Denominated in Brazilian currency and indexed by foreign currency(1) | | | 2,190 | | | | - | | | | 2,948 | | | | 571 | | | | - | | | | 5,709 | | | Denominated in foreign currency(1) | | | 4,350 | | | | 107 | | | | 5,689 | | | | 22,637 | | | | 10,332 | | | | 43,115 | | | As of December 31, 2013 | | | 148,860 | | | | 371 | | | | 11,366 | | | | 96,626 | | | | 10,116 | | | | 267,339 | | | Denominated in Brazilian currency | | | 141,958 | | | | 263 | | | | 5,682 | | | | 73,799 | | | | 3,779 | | | | 225,481 | | | Denominated in Brazilian currency and indexed by foreign currency(1) | | | 2,114 | | | | - | | | | 2,627 | | | | 484 | | | | - | | | | 5,225 | | | Denominated in foreign currency(1) | | | 4,788 | | | | 108 | | | | 3,057 | | | | 22,343 | | | | 6,337 | | | | 36,633 | |
(1) Predominantly U.S. dollars. For the purpose of analyzing the exposure of variations in foreign exchange rates, the following table below presents the composition of our derivative financial instruments on December 31, 20152016 inreais and in foreign currency, including the instruments denominated in foreign currencies. For the fair valuenotional amount of derivative financial instruments, please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 7 – Financial Assets Held for Trading and Designated at Fair Value Through Profit or Loss and Note 36 – Management of Financial Risks.8 - Derivatives. | | | | | (In millions of R$) | | | | | | | | As of December 31, 2015 | | | As of December 31, 2016 | | | Derivative financial instruments (notional amounts) | | Brazilian Currency | | | Denominated
in or linked to
Foreign Currency | | | Total | | | Brazilian Currency | | | Denominated in or linked to
Foreign Currency | | | Total | | | | | | (In millions of R$) | | | Swap contracts | | | | | | | | | | | | | | | | | | | | | | | | | | Buy (sale) commitments, net | | | 10,428 | | | | (19,276 | ) | | | (8,848 | ) | | | Buy (Sale) commitments, net | | | | 3,128 | | | | (7,574 | ) | | | (4,446 | ) | | Forward contracts | | | | | | | | | | | | | | | | | | | | | | | | | | Buy (sale) commitments, net | | | (38,984 | ) | | | (6,234 | ) | | | (45,218 | ) | | | Buy (Sale) commitments, net | | | | (10,990 | ) | | | 17,256 | | | | 6,266 | | | Future contracts | | | | | | | | | | | | | | | | | | | | | | | | | | Buy (sale) commitments, net | | | (116,248 | ) | | | (95,129 | ) | | | (211,377 | ) | | | Buy (Sale) commitments, net | | | | (225,845 | ) | | | (39,578 | ) | | | (265,423 | ) | | Option contracts | | | | | | | | | | | | | | | | | | | | | | | | | | Buy (sale) commitments, net | | | 3,726 | | | | 4,827 | | | | 8,553 | | | | Buy (Sale) commitments, net | | | | 22,927 | | | | 4,152 | | | | 27,079 | | | Others | | | | | | | | | | | | | | | | | | | | | | | | | | Buy (sale) commitments, net | | | (2,306 | ) | | | 13,796 | | | | 11,490 | | | | Buy (Sale) commitments, net | | | | 410 | | | | (624 | ) | | | (214 | ) |
Exposure to GIIPS Our gross exposure to the sovereign bonds of the GIIPS (Greece, Ireland, Italy, Portugal and Spain) countries, as well as to corporate clients and financial institutions domiciled in those countries as of December 31, 2015,2016, is set forth in the table below:following table: | | | | | | | | | | | | (In millions of R$) | | | | | | | | | | | | | | As of December 31, 2015 | | | Segment | | Credit | | | Co-obligation | | | Sovereign | | | Bond | | | Derivative | | | Total Exposure | | | Italy | | | 135 | | | | - | | | | - | | | | - | | | | - | | | | 135 | | | Corporate | | | 135 | | | | - | | | | - | | | | - | | | | - | | | | 135 | | | Financial | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Portugal | | | 240 | | | | - | | | | - | | | | - | | | | - | | | | 240 | | | Corporate | | | 240 | | | | - | | | | - | | | | - | | | | - | | | | 240 | | | Financial | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Spain | | | 1,350 | | | | 567 | | | | 1,060 | | | | - | | | | 13 | | | | 2,990 | | | Corporate | | | 1,350 | | | | 535 | | | | - | | | | - | | | | 1 | | | | 1,886 | | | Financial | | | - | | | | 32 | | | | 1,060 | | | | - | | | | 12 | | | | 1,104 | | | Total | | | 1,725 | | | | 567 | | | | 1,060 | | | | - | | | | 13 | | | | 3,365 | |
Financial performance | A-121 |
| | | As of December 31, 2016 | | | Segment | | Credit | | | Co-obligation | | | Sovereign | | | Bond | | | Derivative | | | Total Exposure | | | | | (In millions of R$) | | | Italy | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate | | | 106 | | | | - | | | | - | | | | - | | | | - | | | | 106 | | | Financial | | | - | | | | 3 | | | | - | | | | - | | | | - | | | | 3 | | | Portugal | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate | | | 111 | | | | - | | | | - | | | | - | | | | - | | | | 111 | | | Financial | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Spain | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate | | | 838 | | | | 269 | | | | - | | | | - | | | | 3 | | | | 1,110 | | | Financial | | | - | | | | 184 | | | | 923 | | | | | | | | 8 | | | | 1,115 | | | Total | | | 1,055 | | | | 456 | | | | 923 | | | | - | | | | 11 | | | | 2,445 | |
The total gross exposure presented above, primarily related to our exposure to corporate credits, that amounted to R$1,7251,055 million as of December 31, 2015,2016, and with co-obligations in the amount of R$567456 million. The exposure presented above has been calculated based on our estimated realizable value, which is updated depending on its nature (such as pledged amounts in current accounts used to collect customer receivables, financial investments, real estate, machinery and equipment or others), except for guarantees provided by third parties, in which case the amount corresponds to the outstanding debt. Our derivatives related to GIIPS countries amounted to R$1311 million as of December 31, 2015.2016.
Required Reserve Depositsreserve deposits with the Central Bank The Central Bank requires reserves for deposits from Brazilian financial institutions. The reserve requirements are tools utilized by the Central Bank to control the liquidity of the Brazilian financial system, for both monetary policy and risk mitigation purposes. These requirements are applied to balances on demand deposits, saving account deposits and time deposits. See below the required reserve for each type of deposit: | Required Reserve Deposits | | Regulation(1) | | Yield | | 2015 | | | 2014 | | | 2013 | | | Demand deposits | | | | | | | | | | | | | | | | | | Compulsory | | Circular No. 3,632 | | Zero | | | 45 | % | | | 45 | % | | | 44 | % | | Additional compulsory | | Circular No. 3,655 | | SELIC | | | 0 | % | | | 0 | % | | | 0 | % | | Rural(2) | | Resolution No. 4,096 | | Zero | | | 34 | % | | | 34 | % | | | 34 | % | | Microcredit(2) | | Resolution No. 4,000 | | Zero | | | 2 | % | | | 2 | % | | | 2 | % | | Savings accounts(3) | | | | | | | | | | | | | | | | | | Compulsory | | Circular No. 3,093 | | TR + 6.17% p.a. | | | 24.5 | % | | | 20 | % | | | 20 | % | | Additional compulsory | | Circular No. 3,655 | | SELIC | | | 5.5 | % | | | 10 | % | | | 10 | % | | Real estate financing(2) | | Resolution No. 3,932 | | Zero | | | 65 | % | | | 65 | % | | | 65 | % | | Time and interbank deposits received from leasing companies | | | | | | | | | | | | | | | | | | Compulsory | | Circular No. 3,569 | | SELIC | | | 25 | % | | | 20 | % | | | 20 | % | | Additional compulsory | | Circular No. 3,655 | | SELIC | | | 11 | % | | | 11 | % | | | 11 | % |
| Required reserve deposits | | Regulation (1) | | Yield | | 2016 | | | 2015 | | | 2014 | | | Demand Deposits | | | | | | | | | | | | | | | | | | Compulsory | | Circular No. 3,632 | | Zero | | | 45 | % | | | 45 | % | | | 45 | % | | Additional Compulsory | | Circular No. 3,655 | | SELIC | | | 0 | % | | | 0 | % | | | 0 | % | | Rural (2) | | Resolution No. 4,096 | | Zero | | | 34 | % | | | 34 | % | | | 34 | % | | Microcredit (2) | | Resolution No. 4,000 | | Zero | | | 2 | % | | | 2 | % | | | 2 | % | | Savings Accounts (3) | | | | | | | | | | | | | | | | | | Compulsory | | Circular No. 3,093 | | TR + 6.17% p.a. | | | 24.5 | % | | | 24.5 | % | | | 20 | % | | Additional Compulsory | | Circular No. 3,655 | | SELIC | | | 5.5 | % | | | 5.5 | % | | | 10 | % | | Real estate financing (2) | | Resolution No. 3,932 | | Zero | | | 65 | % | | | 65 | % | | | 65 | % | | Time and Interbank Deposits Received from Leasing Companies | | | | | | | | | | | | | | | | | | Compulsory | | Circular No. 3,569 | | SELIC | | | 25 | % | | | 25 | % | | | 20 | % | | Additional Compulsory | | Circular No. 3,655 | | SELIC | | | 11 | % | | | 11 | % | | | 11 | % |
| (1) | Most recent regulation on the matter. |
| (2) | This is a compulsory investment of resources that is made in eligible transactions, that is, the funds are granted to other economic entities. |
| (3) | Remuneration on funds in savings deposits: | | For deposits made until March 5, 2012, inclusive: TR + 6.17% per annum. | | For deposits made after March 5, 2012: (a) If the target of the Selic rate is higher than 8.5% per annum: TR + 6.17% per annum; (b) If the target of the Selic rate is lower than 8.5% per annum: TR + 70% of the target of the Selic rate per annum. |
For deposits made until March 5, 2012, inclusive: TR + 6.17% per annum. For deposits made after March 5, 2012: (a) If the target of the Selic rate is higher than 8.5% per annum: TR + 6.17% per annum; (b) If the target of the Selic rate is lower than 8.5% per annum: TR + 70% of the target of the Selic rate per annum. In 2015, the Central Bank enacted a set of rules changing the reserve requirements that Brazilian financial institutions are required to deposit with the Central Bank, as a mechanism to control the liquidity of the Brazilian financial system. The regulations that govern the compulsory deposit rates are frequently changed by the Central Bank in accordance with the economic scenario and its monetary policy goals. The compulsory reserve requirements imposed on time deposits (currently applicable to us at the general rate of 25.0%), demand deposits (currently at the general rate of 45.0%), and saving accounts (currently at the general rate of 24.5%, and 15.5% for rural savings deposits) represent almost the entirety of the amount that must be deposited at the Central Bank. Nonetheless, the Central Bank also determines an additional reserve requirement on deposits raised by full service banks, investment banks, commercial banks, development banks, finance, credit and investment companies, real estate credit companies and savings and loan associations, based on specific criteria. On December 31, 2015,2016, we recorded an amount of R$66,55685,700 million in compulsory deposits in cash compared to R$63,10666,556 million on December 31, 20142015 and R$62,76682,698 million in interest-bearing deposits compared to R$59,71462,766 million on December 2014,2015, as indicated in the table below.following table. Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 5 – Central Bank Compulsory Deposits for further details. | | | 2016 | | | 2015 | | | 2014 | | | Required reserve deposits | | R$ | | | % of total required
reserve deposits | | | R$ | | | % of total required
reserve deposits | | | R$ | | | % of total required
reserve deposits | | | | | (In millions of R$, except percentages) | | | Non-interest bearing deposits (1) | | | 3,002 | | | | 3.5 | | | | 3,790 | | | | 5.7 | | | | 3,392 | | | | 5.4 | | | Interest-bearing deposits (2) | | | 82,698 | | | | 96.5 | | | | 62,766 | | | | 94.3 | | | | 59,714 | | | | 94.6 | | | Total | | | 85,700 | | | | 100.0 | | | | 66,556 | | | | 100.0 | | | | 63,106 | | | | 100.0 | |
| | | | | | | | | | | | (In millions of R$, except percentages) | | | | | | | | | | | | | | As of December 31, | | | Required reserve deposits | | R$ | | | 2015
% of total
required
reserve
deposits | | | R$ | | | 2014
% of total
required
reserve
deposits | | | R$ | | | 2013
% of total
required
reserve
deposits | | | Non-interest bearing deposits(1) | | | 3,790 | | | | 5.7 | | | | 3,392 | | | | 5.4 | | | | 5,133 | | | | 6.7 | | | Interest-bearing deposits(2) | | | 62,766 | | | | 94.3 | | | | 59,714 | | | | 94.6 | | | | 71,877 | | | | 93.3 | | | Total | | | 66,556 | | | | 100.0 | | | | 63,106 | | | | 100.0 | | | | 77,010 | | | | 100.0 | |
| (1) | Mainly related to demand deposits. |
| (2) | Mainly related to time and savings deposits. |
Financial performance | A-122 |
Loan and lease operations Substantially all
Most of our loans are granted to clients domiciled in Brazil and are denominated in Brazilianreais. Additionally, 53.4%47.1% of our credit portfolio consists of transactions with fixed interest rates and 46.6%52.9% of transactions with variable interest rates. Indexation Most of our portfolio is denominated in Brazilianreais. 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 abroad represented 27.1%34.1%, 24.7%27.1% and 28.7%24.7% of our loan portfolio as of December 31, 2016, 2015 2014 and 2013,2014, respectively, see section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 36 – Management of financial risks – 5. Credit risk exposure.
Loan and lease operations by type The following table sets out the distribution of our credit portfolio according to the type of loan and lease operations, as follows: • | The Individuals portfolio consists primarily of credit cards, personal loans (primarily including consumer finance and overdrafts), vehicle financing 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; and | • | The Foreign Loans – Latin America portfolio consists primarily of loans granted primarily to individuals by our operations in Argentina, Chile, Paraguay and Uruguay. |
| | | | | | | | | | | | | | | (In millions of R$) | | | | | | | | | | | | | | | | | As of December 31, | | | Loan and Lease Operations, by type(1) | | Loan | | | 2015
Allowance | | | Loan | | | 2014
Allowance | | | Loan | | | 2013
Allowance | | | Individuals | | | 187,220 | | | | 14,717 | | | | 185,953 | | | | 13,385 | | | | 167,431 | | | | 13,853 | | | Credit card | | | 58,542 | | | | 4,141 | | | | 59,321 | | | | 3,740 | | | | 53,149 | | | | 2,952 | | | Personal loans | | | 28,396 | | | | 8,330 | | | | 27,953 | | | | 7,024 | | | | 26,635 | | | | 6,488 | | | Payroll loans | | | 45,434 | | | | 1,319 | | | | 40,525 | | | | 1,107 | | | | 22,571 | | | | 1,133 | | | Vehicles | | | 20,058 | | | | 874 | | | | 29,047 | | | | 1,469 | | | | 40,584 | | | | 3,245 | | | Mortgage loans | | | 34,790 | | | | 53 | | | | 29,107 | | | | 45 | | | | 24,492 | | | | 35 | | | Corporate | | | 139,989 | | | | 6,115 | | | | 135,928 | | | | 2,899 | | | | 121,185 | | | | 1,775 | | | Small and medium businesses | | | 78,576 | | | | 5,153 | | | | 79,912 | | | | 5,373 | | | | 81,558 | | | | 6,085 | | | Foreign loans Latin America | | | 68,463 | | | | 859 | | | | 50,638 | | | | 735 | | | | 41,528 | | | | 522 | | | Total loans and advances | | | 474,248 | | | | 26,844 | | | | 452,431 | | | | 22,392 | | | | 411,702 | | | | 22,235 | |
(1) | We classify 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 were R$19,458 million, R$16,514 million and R$18,065 million as of December 31, 2015, 2014 and 2013, respectively. The total of renegotiated loans in the balance of non-accrual loans reflected herein was R$3,417, R$3,346 million, and R$4,627 million as of December 31,2015, 2014 and 2013, respectively. Non-accrual loans are presented herein in the appropriate category of loan and lease operations. The interest income foregone on our non-accrual loans net of allowance for loan losses for 2015, 2014 and 2013 was R$1,882 million, R$1,623 million and R$1,681 million, respectively. |
The Individuals portfolio consists primarily of credit cards, personal loans (primarily including consumer finance and overdrafts), payroll loans, vehicle financing and residential mortgage loans; Financial performance | A-123 |
The Corporate portfolio consists primarily of loans made to large corporate clients; The Small and Medium Businesses portfolio consists primarily of loans to small and medium-sized companies; and The Foreign Loans – Latin America portfolio consists primarily of loans granted primarily to individuals by our operations in Argentina, Chile, Paraguay and Uruguay. | | | 2016 | | | 2015 | | | 2014 | | | Loan and Lease Operations, by type (1) | | Loan | | | Allowance | | | Loan | | | Allowance | | | Loan | | | Allowance | | | | | (In millions of R$) | | | Individuals | | | 183,147 | | | | 14,259 | | | | 187,220 | | | | 14,717 | | | | 185,953 | | | | 13,385 | | | Credit card | | | 59,022 | | | | 3,693 | | | | 58,542 | | | | 4,141 | | | | 59,321 | | | | 3,740 | | | Personal loans | | | 25,813 | | | | 7,756 | | | | 28,396 | | | | 8,330 | | | | 27,953 | | | | 7,024 | | | Payroll Loans | | | 44,636 | | | | 2,108 | | | | 45,434 | | | | 1,319 | | | | 40,525 | | | | 1,107 | | | Vehicles | | | 15,434 | | | | 644 | | | | 20,058 | | | | 874 | | | | 29,047 | | | | 1,469 | | | Mortgage loans | | | 38,242 | | | | 58 | | | | 34,790 | | | | 53 | | | | 29,107 | | | | 45 | | | Corporate | | | 121,754 | | | | 5,862 | | | | 152,527 | | | | 6,459 | | | | 147,002 | | | | 3,114 | | | Small and Medium Businesses | | | 58,935 | | | | 4,743 | | | | 66,038 | | | | 4,809 | | | | 68,838 | | | | 5,158 | | | Foreign Loans Latin America | | | 126,530 | | | | 2,108 | | | | 68,463 | | | | 859 | | | | 50,638 | | | | 735 | | | Total Loan operations and lease operations portfolio | | | 490,366 | | | | 26,972 | | | | 474,248 | | | | 26,844 | | | | 452,431 | | | | 22,392 | |
(1) We classify 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 were R$19,942 million, R$19,458 million and R$16,514 million as of December 31, 2016, 2015 and 2014, respectively. The total of renegotiated loans in the balance of non-accrual loans reflected herein was R$4,225 million, R$3,417 million and R$3,346 million as of December 31,2016, 2015 and 2014, respectively. Non-accrual loans are presented herein in the appropriate category of loan and lease operations. The interest income foregone on our non-accrual loans net of allowance for loan losses for 2016, 2015 and 2014 was R$2,017 million, R$1,882 million and R$1,623 million, respectively. Loan and lease operations by maturity The following table sets out the distribution of our credit portfolio by maturity, including non-overdue and overdue installments, according to the type of loan and lease:
| Non-Overdue Installments | | 12/31/2016 | | | Type of loan and lease | | Due in 30 days or less | | | Due in 31-90 days | | | Due in 91-180 days | | | Due in 181-360 days | | | Due in one year to five
years | | | Due after five years | | | Total Non-Overdue
Installments | | | | | (In millions of R$) | | | Individuals | | | 29,843 | | | | 22,919 | | | | 16,934 | | | | 18,401 | | | | 55,700 | | | | 30,254 | | | | 174,051 | | | Credit card | | | 23,093 | | | | 16,972 | | | | 9,185 | | | | 4,237 | | | | 199 | | | | - | | | | 53,686 | | | Personal loans | | | 4,353 | | | | 1,788 | | | | 1,986 | | | | 3,414 | | | | 11,188 | | | | 238 | | | | 22,967 | | | Payroll loans | | | 1,388 | | | | 2,551 | | | | 3,571 | | | | 6,552 | | | | 28,279 | | | | 1,854 | | | | 44,195 | | | Vehicles | | | 705 | | | | 1,236 | | | | 1,693 | | | | 3,113 | | | | 8,290 | | | | 20 | | | | 15,057 | | | Mortgage loans | | | 304 | | | | 372 | | | | 499 | | | | 1,085 | | | | 7,744 | | | | 28,142 | | | | 38,146 | | | Corporate | | | 12,970 | | | | 13,645 | | | | 15,232 | | | | 20,627 | | | | 48,332 | | | | 9,528 | | | | 120,334 | | | Small and Medium Businesses | | | 10,388 | | | | 11,661 | | | | 6,619 | | | | 9,566 | | | | 17,952 | | | | 292 | | | | 56,478 | | | Foreign Loans Latin America | | | 14,144 | | | | 14,743 | | | | 11,903 | | | | 13,641 | | | | 40,798 | | | | 27,431 | | | | 122,660 | | | Total(1) | | | 67,345 | | | | 62,968 | | | | 50,688 | | | | 62,235 | | | | 162,782 | | | | 67,505 | | | | 473,523 | |
| | | | | | | | | | | | | | | | | | (In millions of R$) | | | Non-Overdue Installments | | | | | | | | | | | | | | | | | As of December 31, 2015 | | | Type of loan and lease | | Due in
30 days
or less | | | Due in
31-90
days | | | Due in
91-180
days | | | Due in
181-360
days | | | Due in
one year to
five years | | | Due after
five years | | | Total
Non-Overdue
Installments | | | Individuals | | | 29,595 | | | | 23,792 | | | | 18,033 | | | | 20,223 | | | | 57,755 | | | | 27,667 | | | | 177,065 | | | Credit card | | | 21,997 | | | | 16,998 | | | | 9,193 | | | | 4,174 | | | | 161 | | | | - | | | | 52,523 | | | Personal loans | | | 4,909 | | | | 2,115 | | | | 2,314 | | | | 4,060 | | | | 11,777 | | | | 168 | | | | 25,343 | | | Payroll loans | | | 1,392 | | | | 2,591 | | | | 3,651 | | | | 6,692 | | | | 28,781 | | | | 1,936 | | | | 45,043 | | | Vehicles | | | 1,052 | | | | 1,760 | | | | 2,414 | | | | 4,301 | | | | 9,919 | | | | 1 | | | | 19,447 | | | Mortgage loans | | | 245 | | | | 328 | | | | 461 | | | | 996 | | | | 7,117 | | | | 25,562 | | | | 34,709 | | | Corporate | | | 15,551 | | | | 15,506 | | | | 14,688 | | | | 20,316 | | | | 58,874 | | | | 13,451 | | | | 138,386 | | | Small and medium businesses | | | 13,482 | | | | 14,450 | | | | 9,305 | | | | 13,103 | | | | 24,961 | | | | 571 | | | | 75,872 | | | Foreign loans Latin America | | | 8,599 | | | | 7,673 | | | | 8,045 | | | | 7,370 | | | | 19,313 | | | | 16,329 | | | | 67,329 | | | Total(1) | | | 67,227 | | | | 61,421 | | | | 50,071 | | | | 61,012 | | | | 160,903 | | | | 58,018 | | | | 458,652 | |
(1) Includes R$9,085 million related to non-overdue installments of the non-accrual loans. (1) | Includes R$8,399 million related to non-overdue installments of the non-accrual loans. |
| | | | | | | | | | | | | | | | | | (In millions of R$) | | | Non-Overdue Installments | | | | | | | | | | | | | | | | | As of December 31, 2014 | | | Type of loan and lease | | Due in
30 days
or less | | | Due in
31-90
days | | | Due in
91-180
days | | | Due in
181-360
days | | | Due in
one year to
five years | | | Due after
five years | | | Total
Non-Overdue
Installments | | | Individuals | | | 29,985 | | | | 25,941 | | | | 20,510 | | | | 23,392 | | | | 54,906 | | | | 22,651 | | | | 177,385 | | | Credit card | | | 21,658 | | | | 17,658 | | | | 9,841 | | | | 4,740 | | | | 217 | | | | - | | | | 54,114 | | | Personal loans | | | 5,137 | | | | 3,074 | | | | 3,488 | | | | 5,346 | | | | 8,749 | | | | 18 | | | | 25,812 | | | Payroll loans | | | 1,259 | | | | 2,328 | | | | 3,290 | | | | 6,082 | | | | 25,614 | | | | 1,744 | | | | 40,317 | | | Vehicles | | | 1,482 | | | | 2,516 | | | | 3,496 | | | | 6,348 | | | | 14,267 | | | | 1 | | | | 28,110 | | | Mortgage loans | | | 449 | | | | 365 | | | | 395 | | | | 876 | | | | 6,059 | | | | 20,888 | | | | 29,032 | | | Corporate | | | 13,397 | | | | 18,397 | | | | 13,604 | | | | 19,167 | | | | 57,446 | | | | 12,634 | | | | 134,645 | | | Small and medium businesses | | | 11,018 | | | | 16,891 | | | | 9,835 | | | | 13,802 | | | | 25,564 | | | | 440 | | | | 77,550 | | | Foreign loans Latin America | | | 7,494 | | | | 5,703 | | | | 5,394 | | | | 5,388 | | | | 14,055 | | | | 11,743 | | | | 49,777 | | | Total(1) | | | 61,894 | | | | 66,932 | | | | 49,343 | | | | 61,749 | | | | 151,971 | | | | 47,468 | | | | 439,357 | |
(1) | Includes R$7,533 million related to non-overdue installments of the non-accrual loans. |
| Non-Overdue Installments | | 12/31/2015 | | | Type of loan and lease | | Due in 30 days or less | | | Due in 31-90 days | | | Due in 91-180 days | | | Due in 181-360 days | | | Due in one year to five
years | | | Due after five years | | | Total Non-Overdue
Installments | | | | | | | | | | | | | | (In millions of R$) | | | | | | | | | | | | Individuals | | | 29,539 | | | | 23,792 | | | | 18,033 | | | | 20,223 | | | | 57,797 | | | | 27,682 | | | | 177,066 | | | Credit card | | | 21,997 | | | | 16,998 | | | | 9,193 | | | | 4,174 | | | | 161 | | | | - | | | | 52,523 | | | Personal loans | | | 4,924 | | | | 2,115 | | | | 2,314 | | | | 4,060 | | | | 11,766 | | | | 164 | | | | 25,343 | | | Payroll loans | | | 1,395 | | | | 2,591 | | | | 3,651 | | | | 6,692 | | | | 28,779 | | | | 1,935 | | | | 45,043 | | | Vehicles | | | 978 | | | | 1,760 | | | | 2,414 | | | | 4,301 | | | | 9,974 | | | | 21 | | | | 19,448 | | | Mortgage loans | | | 245 | | | | 328 | | | | 461 | | | | 996 | | | | 7,117 | | | | 25,562 | | | | 34,709 | | | Corporate | | | 16,696 | | | | 17,094 | | | | 16,745 | | | | 22,944 | | | | 63,454 | | | | 13,711 | | | | 150,644 | | | Small and Medium Businesses | | | 12,121 | | | | 12,862 | | | | 7,248 | | | | 10,475 | | | | 20,539 | | | | 368 | | | | 63,613 | | | Foreign Loans Latin America | | | 8,611 | | | | 7,673 | | | | 8,045 | | | | 7,370 | | | | 19,304 | | | | 16,326 | | | | 67,329 | | | Total(1) | | | 66,967 | | | | 61,421 | | | | 50,071 | | | | 61,012 | | | | 161,094 | | | | 58,087 | | | | 458,652 | |
| | | | | | | | | | | | | | | | | | (In millions of R$) | | | Non-Overdue Installments | | | | | | | | | | | | | | | | | As of December 31, 2013 | | | Type of loan and lease | | Due in
30 days
or less | | | Due in
31-90
days | | | Due in
91-180
days | | | Due in
181-360
Days | | | Due in
one year to
five years | | | Due after
five years | | | Total
Non-Overdue
Installments | | | Individuals | | | 27,605 | | | | 22,520 | | | | 17,913 | | | | 21,433 | | | | 52,257 | | | | 17,294 | | | | 159,022 | | | Credit card | | | 20,182 | | | | 15,184 | | | | 8,625 | | | | 4,357 | | | | 159 | | | | - | | | | 48,507 | | | Personal loans | | | 4,553 | | | | 2,760 | | | | 2,757 | | | | 4,565 | | | | 10,032 | | | | 12 | | | | 24,679 | | | Payroll loans | | | 730 | | | | 1,203 | | | | 1,725 | | | | 3,217 | | | | 15,534 | | | | 24 | | | | 22,433 | | | Vehicles | | | 1,942 | | | | 3,098 | | | | 4,389 | | | | 8,333 | | | | 21,266 | | | | 2 | | | | 39,030 | | | Mortgage loans | | | 198 | | | | 275 | | | | 417 | | | | 961 | | | | 5,266 | | | | 17,256 | | | | 24,373 | | | Corporate | | | 11,279 | | | | 15,958 | | | | 12,132 | | | | 19,411 | | | | 47,900 | | | | 13,555 | | | | 120,235 | | | Small and medium businesses | | | 12,700 | | | | 15,230 | | | | 9,456 | | | | 14,082 | | | | 26,798 | | | | 431 | | | | 78,697 | | | Foreign loans Latin America | | | 5,438 | | | | 4,792 | | | | 4,129 | | | | 4,665 | | | | 9,942 | | | | 11,791 | | | | 40,757 | | | Total(1) | | | 57,022 | | | | 58,500 | | | | 43,630 | | | | 59,591 | | | | 136,897 | | | | 43,071 | | | | 398,711 | |
(1) Includes R$8,399 million related to non-overdue installments of the non-accrual loans. | Non-Overdue Installments | | 12/31/2014 | | | Type of loan and lease | | Due in 30 days or less | | | Due in 31-90 days | | | Due in 91-180 days | | | Due in 181-360 days | | | Due in one year to five
years | | | Due after five years | | | Total Non-Overdue
Installments | | | | | (In millions of R$) | | | Individuals | | | 29,985 | | | | 25,941 | | | | 20,510 | | | | 23,392 | | | | 54,906 | | | | 22,651 | | | | 177,385 | | | Credit card | | | 21,658 | | | | 17,658 | | | | 9,841 | | | | 4,740 | | | | 217 | | | | - | | | | 54,114 | | | Personal loans | | | 5,137 | | | | 3,074 | | | | 3,488 | | | | 5,346 | | | | 8,749 | | | | 18 | | | | 25,812 | | | Payroll loans | | | 1,259 | | | | 2,328 | | | | 3,290 | | | | 6,082 | | | | 25,614 | | | | 1,744 | | | | 40,317 | | | Vehicles | | | 1,482 | | | | 2,516 | | | | 3,496 | | | | 6,348 | | | | 14,267 | | | | 1 | | | | 28,110 | | | Mortgage loans | | | 449 | | | | 365 | | | | 395 | | | | 876 | | | | 6,059 | | | | 20,888 | | | | 29,032 | | | Corporate | | | 14,481 | | | | 20,141 | | | | 15,446 | | | | 21,392 | | | | 61,447 | | | | 12,710 | | | | 145,617 | | | Small and Medium Businesses | | | 9,934 | | | | 15,147 | | | | 7,993 | | | | 11,577 | | | | 21,563 | | | | 364 | | | | 66,578 | | | Foreign Loans Latin America | | | 7,494 | | | | 5,703 | | | | 5,394 | | | | 5,388 | | | | 14,055 | | | | 11,743 | | | | 49,777 | | | Total(1) | | | 61,894 | | | | 66,932 | | | | 49,343 | | | | 61,749 | | | | 151,971 | | | | 47,468 | | | | 439,357 | |
(1) Includes R$7,533 million related to non-overdue installments of the non-accrual loans.
| Overdue Installments(1) | | 12/31/2016 | | | Type of loan and lease | | 01-30 days | | | 31-60 days | | | 61-90 days | | | 91-180 days | | | 181-360 days | | | One year or
more | | | Total overdue
installments | | | Total gross
loans | | | Allowance for
loan losses | | | Total net | | | | | (In millions of R$) | | | Individuals | | | 1,704 | | | | 931 | | | | 859 | | | | 2,318 | | | | 3,231 | | | | 53 | | | | 9,096 | | | | 183,147 | | | | (14,259 | ) | | | 168,888 | | | Credit card | | | 937 | | | | 443 | | | | 446 | | | | 1,273 | | | | 2,236 | | | | 1 | | | | 5,336 | | | | 59,022 | | | | (3,693 | ) | | | 55,329 | | | Personal loans | | | 514 | | | | 352 | | | | 319 | | | | 846 | | | | 800 | | | | 15 | | | | 2,846 | | | | 25,813 | | | | (7,756 | ) | | | 18,057 | | | Payroll loans | | | 71 | | | | 53 | | | | 48 | | | | 116 | | | | 123 | | | | 30 | | | | 441 | | | | 44,636 | | | | (2,108 | ) | | | 42,528 | | | Vehicles | | | 145 | | | | 64 | | | | 37 | | | | 69 | | | | 60 | | | | 2 | | | | 377 | | | | 15,434 | | | | (644 | ) | | | 14,790 | | | Mortgage loans | | | 37 | | | | 19 | | | | 9 | | | | 14 | | | | 12 | | | | 5 | | | | 96 | | | | 38,242 | | | | (58 | ) | | | 38,184 | | | Corporate | | | 484 | | | | 238 | | | | 201 | | | | 161 | | | | 315 | | | | 21 | | | | 1,420 | | | | 121,754 | | | | (5,862 | ) | | | 115,892 | | | Small and Medium Businesses | | | 481 | | | | 301 | | | | 223 | | | | 619 | | | | 799 | | | | 34 | | | | 2,457 | | | | 58,935 | | | | (4,743 | ) | | | 54,192 | | | Foreign Loans Latin America | | | 2,170 | | | | 523 | | | | 329 | | | | 386 | | | | 414 | | | | 48 | | | | 3,870 | | | | 126,530 | | | | (2,108 | ) | | | 124,422 | | | Total(2) | | | 4,839 | | | | 1,993 | | | | 1,612 | | | | 3,484 | | | | 4,759 | | | | 156 | | | | 16,843 | | | | 490,366 | | | | (26,972 | ) | | | 463,394 | |
(1) Defined as loans and leases contractually past due as to payment of interest or principal. (1) | Includes R$9,045 million related to non-overdue installments of the non-accrual loans. |
(2) Includes R$10,857 million related to overdue installments of the non-accrual loans. Financial performance | A-124 |
| Overdue Installments(1) | | 12/31/2015 | | | Type of loan and lease | | 01-30 days | | | 31-60 days | | | 61-90 days | | | 91-180 days | | | 181-360 days | | | One year or
more | | | Total overdue
installments | | | Total gross
loans | | | Allowance for
loan losses | | | Total net | | | | | (In millions of R$) | | | Individuals | | | 1,840 | | | | 1,000 | | | | 1,014 | | | | 2,708 | | | | 3,557 | | | | 35 | | | | 10,154 | | | | 187,220 | | | | (14,717 | ) | | | 172,503 | | | Credit card | | | 979 | | | | 418 | | | | 551 | | | | 1,598 | | | | 2,466 | | | | 7 | | | | 6,019 | | | | 58,542 | | | | (4,141 | ) | | | 54,401 | | | Personal loans | | | 540 | | | | 406 | | | | 347 | | | | 876 | | | | 875 | | | | 9 | | | | 3,053 | | | | 28,396 | | | | (8,330 | ) | | | 20,066 | | | Payroll loans | | | 72 | | | | 51 | | | | 44 | | | | 103 | | | | 105 | | | | 16 | | | | 391 | | | | 45,434 | | | | (1,319 | ) | | | 44,115 | | | Vehicles | | | 220 | | | | 109 | | | | 64 | | | | 118 | | | | 98 | | | | 1 | | | | 610 | | | | 20,058 | | | | (874 | ) | | | 19,184 | | | Mortgage loans | | | 29 | | | | 16 | | | | 8 | | | | 13 | | | | 13 | | | | 2 | | | | 81 | | | | 34,790 | | | | (53 | ) | | | 34,737 | | | Corporate | | | 825 | | | | 130 | | | | 125 | | | | 560 | | | | 238 | | | | 5 | | | | 1,883 | | | | 152,527 | | | | (6,459 | ) | | | 146,068 | | | Small and Medium Businesses | | | 557 | | | | 314 | | | | 267 | | | | 623 | | | | 647 | | | | 17 | | | | 2,425 | | | | 66,038 | | | | (4,809 | ) | | | 61,229 | | | Foreign Loans Latin America | | | 649 | | | | 120 | | | | 64 | | | | 118 | | | | 148 | | | | 35 | | | | 1,134 | | | | 68,463 | | | | (859 | ) | | | 67,604 | | | Total(2) | | | 3,871 | | | | 1,564 | | | | 1,470 | | | | 4,009 | | | | 4,590 | | | | 92 | | | | 15,596 | | | | 474,248 | | | | (26,844 | ) | | | 447,404 | |
(1) Defined as loans and leases contractually past due as to payment of interest or principal. (2) Includes R$11,059 million related to overdue installments of the non-accrual loans. | Overdue | | | | | | | | | | | | | | | | | | | | | | | | | | (In millions of R$) | | | Installments(1) | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2015 | | | Type of loan and lease | | 01-30
days | | | 31-60
days | | | 61-90
days | | | 91-180
days | | | 181-360
days | | | One year
or more | | | Total overdue
installments | | | Total gross
loans | | | Allowance for
loan losses | | | Total
net | | | Individuals | | | 1,840 | | | | 1,000 | | | | 1,014 | | | | 2,708 | | | | 3,557 | | | | 36 | | | | 10,155 | | | | 187,220 | | | | (14,717 | ) | | | 172,503 | | | Credit card | | | 979 | | | | 418 | | | | 551 | | | | 1,598 | | | | 2,466 | | | | 7 | | | | 6,019 | | | | 58,542 | | | | (4,141 | ) | | | 54,401 | | | Personal loans | | | 540 | | | | 406 | | | | 347 | | | | 876 | | | | 875 | | | | 9 | | | | 3,053 | | | | 28,396 | | | | (8,330 | ) | | | 20,066 | | | Payroll loans | | | 72 | | | | 51 | | | | 44 | | | | 103 | | | | 105 | | | | 16 | | | | 391 | | | | 45,434 | | | | (1,319 | ) | | | 44,115 | | | Vehicles | | | 220 | | | | 109 | | | | 64 | | | | 118 | | | | 98 | | | | 2 | | | | 611 | | | | 20,058 | | | | (874 | ) | | | 19,184 | | | Mortgage loans | | | 29 | | | | 16 | | | | 8 | | | | 13 | | | | 13 | | | | 2 | | | | 81 | | | | 34,790 | | | | (53 | ) | | | 34,737 | | | Corporate | | | 789 | | | | 94 | | | | 75 | | | | 445 | | | | 196 | | | | 4 | | | | 1,603 | | | | 139,989 | | | | (6,115 | ) | | | 133,874 | | | Small and medium businesses | | | 593 | | | | 350 | | | | 317 | | | | 738 | | | | 689 | | | | 17 | | | | 2,704 | | | | 78,576 | | | | (5,153 | ) | | | 73,423 | | | Foreign loans Latin America | | | 649 | | | | 120 | | | | 64 | | | | 118 | | | | 148 | | | | 35 | | | | 1,134 | | | | 68,463 | | | | (859 | ) | | | 67,604 | | | Total(2) | | | 3,871 | | | | 1,564 | | | | 1,470 | | | | 4,009 | | | | 4,590 | | | | 92 | | | | 15,596 | | | | 474,248 | | | | (26,844 | ) | | | 447,404 | |
(1) | Defined as loans and leases contractually past due as to payment of interest or principal. | (2) | Includes R$11,059 million related to overdue installments of the non-accrual loans. |
| Overdue | | | | | | | | | | | | | | | | | | | | | | | | | | (In millions of R$) | | | Installments(1) | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2014 | | | Type of loan and lease | | 01-30
days | | | 31-60
days | | | 61-90
days | | | 91-180
days | | | 181-360
days | | | One year
or more | | | Total overdue
installments | | | Total gross
loans | | | Allowance for
loan losses | | | Total
net | | | Individuals | | | 1,843 | | | | 910 | | | | 791 | | | | 1,980 | | | | 2,973 | | | | 71 | | | | 8,568 | | | | 185,953 | | | | (13,385 | ) | | | 172,568 | | | Credit card | | | 990 | | | | 467 | | | | 422 | | | | 1,166 | | | | 2,114 | | | | 48 | | | | 5,207 | | | | 59,321 | | | | (3,740 | ) | | | 55,581 | | | Personal loans | | | 433 | | | | 240 | | | | 243 | | | | 574 | | | | 645 | | | | 6 | | | | 2,141 | | | | 27,953 | | | | (7,024 | ) | | | 20,929 | | | Payroll loans | | | 56 | | | | 30 | | | | 24 | | | | 50 | | | | 42 | | | | 6 | | | | 208 | | | | 40,525 | | | | (1,107 | ) | | | 39,418 | | | Vehicles | | | 333 | | | | 161 | | | | 95 | | | | 179 | | | | 161 | | | | 8 | | | | 937 | | | | 29,047 | | | | (1,469 | ) | | | 27,578 | | | Mortgage loans | | | 31 | | | | 12 | | | | 7 | | | | 11 | | | | 11 | | | | 3 | | | | 75 | | | | 29,107 | | | | (45 | ) | | | 29,062 | | | Corporate | | | 663 | | | | 44 | | | | 78 | | | | 245 | | | | 253 | | | | - | | | | 1,283 | | | | 135,928 | | | | (2,899 | ) | | | 133,029 | | | Small and medium businesses | | | 522 | | | | 256 | | | | 264 | | | | 575 | | | | 702 | | | | 43 | | | | 2,362 | | | | 79,912 | | | | (5,373 | ) | | | 74,539 | | | Foreign loans Latin America | | | 449 | | | | 86 | | | | 56 | | | | 126 | | | | 103 | | | | 41 | | | | 861 | | | | 50,638 | | | | (735 | ) | | | 49,903 | | | Total(2) | | | 3,477 | | | | 1,296 | | | | 1,189 | | | | 2,926 | | | | 4,031 | | | | 155 | | | | 13,074 | | | | 452,431 | | | | (22,392 | ) | | | 430,039 | |
(1) | Defined as loans and leases contractually past due as to payment of interest or principal. | (2) | Includes R$8,981 million related to overdue installments of the non-accrual loans. |
| Overdue | | | | | | | | | | | | | | | | | | | | | | | | | | (In millions of R$) | | | Installments(1) | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2013 | | | Type of loan and lease | | 01-30
days | | | 31-60
days | | | 61-90
days | | | 91-180
days | | | 181-360
days | | | One year
or more | | | Total overdue
installments | | | Total gross
loans | | | Allowance for
loan losses | | | Total
net | | | Individuals | | | 1,875 | | | | 849 | | | | 781 | | | | 1,993 | | | | 2,820 | | | | 91 | | | | 8,409 | | | | 167,431 | | | | (13,853 | ) | | | 153,578 | | | Credit card | | | 932 | | | | 344 | | | | 375 | | | | 1,114 | | | | 1,841 | | | | 36 | | | | 4,642 | | | | 53,149 | | | | (2,952 | ) | | | 50,197 | | | Personal loans | | | 353 | | | | 223 | | | | 227 | | | | 534 | | | | 616 | | | | 3 | | | | 1,956 | | | | 26,635 | | | | (6,488 | ) | | | 20,147 | | | Payroll loans | | | 34 | | | | 17 | | | | 14 | | | | 32 | | | | 39 | | | | 2 | | | | 138 | | | | 22,571 | | | | (1,133 | ) | | | 21,438 | | | Vehicles | | | 481 | | | | 252 | | | | 158 | | | | 302 | | | | 314 | | | | 47 | | | | 1,554 | | | | 40,584 | | | | (3,245 | ) | | | 37,339 | | | Mortgage loans | | | 75 | | | | 13 | | | | 7 | | | | 11 | | | | 10 | | | | 3 | | | | 119 | | | | 24,492 | | | | (35 | ) | | | 24,457 | | | Corporate | | | 339 | | | | 204 | | | | 135 | | | | 173 | | | | 97 | | | | 2 | | | | 950 | | | | 121,185 | | | | (1,775 | ) | | | 119,410 | | | Small and medium businesses | | | 610 | | | | 292 | | | | 285 | | | | 658 | | | | 981 | | | | 35 | | | | 2,861 | | | | 81,558 | | | | (6,085 | ) | | | 75,473 | | | Foreign loans Latin America | | | 539 | | | | 76 | | | | 40 | | | | 51 | | | | 59 | | | | 6 | | | | 771 | | | | 41,528 | | | | (522 | ) | | | 41,006 | | | Total(2) | | | 3,363 | | | | 1,421 | | | | 1,241 | | | | 2,875 | | | | 3,957 | | | | 134 | | | | 12,991 | | | | 411,702 | | | | (22,235 | ) | | | 389,467 | |
(1) | Defined as loans and leases contractually past due as to payment of interest or principal. | (2) | Includes R$9,020 million related to overdue installments of the non-accrual loans. |
Financial performance | A-125 |
| Overdue Installments(1) | | 12/31/2014 | | | Type of loan and lease | | 01-30 days | | | 31-60 days | | | 61-90 days | | | 91-180 days | | | 181-360 days | | | One year or
more | | | Total overdue
installments | | | Total gross
loans | | | Allowance for
loan losses | | | Total net | | | | | (In millions of R$) | | | Individuals | | | 1,844 | | | | 910 | | | | 791 | | | | 1,980 | | | | 2,972 | | | | 71 | | | | 8,568 | | | | 185,953 | | | | (13,385 | ) | | | 172,568 | | | Credit card | | | 990 | | | | 467 | | | | 422 | | | | 1,166 | | | | 2,114 | | | | 48 | | | | 5,207 | | | | 59,321 | | | | (3,740 | ) | | | 55,581 | | | Personal loans | | | 433 | | | | 240 | | | | 243 | | | | 574 | | | | 645 | | | | 6 | | | | 2,141 | | | | 27,953 | | | | (7,024 | ) | | | 20,929 | | | Payroll loans | | | 56 | | | | 30 | | | | 24 | | | | 50 | | | | 42 | | | | 6 | | | | 208 | | | | 40,525 | | | | (1,107 | ) | | | 39,418 | | | Vehicles | | | 333 | | | | 161 | | | | 95 | | | | 179 | | | | 161 | | | | 8 | | | | 937 | | | | 29,047 | | | | (1,469 | ) | | | 27,578 | | | Mortgage loans | | | 32 | | | | 12 | | | | 7 | | | | 11 | | | | 10 | | | | 3 | | | | 75 | | | | 29,107 | | | | (45 | ) | | | 29,062 | | | Corporate | | | 697 | | | | 51 | | | | 99 | | | | 261 | | | | 274 | | | | 3 | | | | 1,385 | | | | 147,002 | | | | (3,114 | ) | | | 143,888 | | | Small and Medium Businesses | | | 488 | | | | 249 | | | | 243 | | | | 559 | | | | 681 | | | | 40 | | | | 2,260 | | | | 68,838 | | | | (5,158 | ) | | | 63,680 | | | Foreign Loans Latin America | | | 449 | | | | 86 | | | | 56 | | | | 126 | | | | 103 | | | | 41 | | | | 861 | | | | 50,638 | | | | (735 | ) | | | 49,903 | | | Total(2) | | | 3,478 | | | | 1,296 | | | | 1,189 | | | | 2,926 | | | | 4,030 | | | | 155 | | | | 13,074 | | | | 452,431 | | | | (22,392 | ) | | | 430,039 | |
(1) Defined as loans and leases contractually past due as to payment of interest or principal. (2) Includes R$8,981 million related to overdue installments of the non-accrual loans. Loan and Lease Operationslease operations by interest rate The following table sets out the classification of our credit portfolio into fixed and variables rates, including non-overdue and overdue installments: | | | | | | | | | | | | | | | (In millions of R$) | | | | | | | | | | | | | | | | | As of December 31, 2015 | | | Non-Overdue Installments | | Due in 30
days or less | | | Due in
31-90 days | | | Due in 91-180
days | | | Due in 181-
360 days | | | Due in one year to
five years | | | Due after
five years | | | Total Non-Overdue
Installments | | | Interest rate of loans to customers by maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rates | | | 17,424 | | | | 23,010 | | | | 19,880 | | | | 24,869 | | | | 79,466 | | | | 53,658 | | | | 218,307 | | | Fixed rates | | | 49,803 | | | | 38,411 | | | | 30,191 | | | | 36,143 | | | | 81,437 | | | | 4,360 | | | | 240,345 | | | Total(1) | | | 67,227 | | | | 61,421 | | | | 50,071 | | | | 61,012 | | | | 160,903 | | | | 58,018 | | | | 458,652 | |
(1) | Includes R$8,399 million related to non-overdue installments of the non-accrual loans. |
| | | | | | | | | | | | | | | | | | (In millions of R$) | | | | | | | | | | | | | | | | | | | | As of December 31, 2014 | | | Non-Overdue Installments(1) | | Due in 30
days or less | | | Due in
31-90 days | | | Due in 91-180
days | | | Due in 181-
360 days | | | Due in one year to
five years | | | Due after
five years | | | Total Non-Overdue
Installments | | | Interest rate of loans to customers by maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rates | | | 13,506 | | | | 23,137 | | | | 15,346 | | | | 21,499 | | | | 66,894 | | | | 42,765 | | | | 183,147 | | | Fixed rates | | | 48,388 | | | | 43,795 | | | | 33,997 | | | | 40,250 | | | | 85,077 | | | | 4,703 | | | | 256,210 | | | Total(1) | | | 61,894 | | | | 66,932 | | | | 49,343 | | | | 61,749 | | | | 151,971 | | | | 47,468 | | | | 439,357 | |
(1) | Includes R$7,533 million related to non-overdue installments of the non-accrual loans. |
| | | | | | | | | | | | | | | | | | (In millions of R$) | | | | | | | | | | | | | | | | | | | | As of December 31, 2013 | | | Non-Overdue Installments(1) | | Due in 30
days or less | | | Due in
31-90 days | | | Due in 91-180
days | | | Due in 181-
360 days | | | Due in one year to
five years | | | Due after
five years | | | Total Non-Overdue
Installments | | | Interest rate of loans to customers by maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rates | | | 11,263 | | | | 19,553 | | | | 12,867 | | | | 22,402 | | | | 55,621 | | | | 40,443 | | | | 162,149 | | | Fixed rates | | | 45,759 | | | | 38,947 | | | | 30,763 | | | | 37,189 | | | | 81,276 | | | | 2,628 | | | | 236,562 | | | Total(1) | | | 57,022 | | | | 58,500 | | | | 43,630 | | | | 59,591 | | | | 136,897 | | | | 43,071 | | | | 398,711 | |
(1) | Includes R$9,045 million related to non-overdue installments of the non-accrual loans. |
| | | | | | | | | | | | | | | | | | | | | (In millions of R$) | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2015 | | | Overdue Installments(1) | | 01-30
days | | | 31-60
days | | | 61-90
days | | | 91-180
days | | | 181-360
days | | | One year
or more | | | Total overdue
installments | | | Total
gross loans | | | Interest rate of loans to customers by maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rates | | | 1,166 | | | | 240 | | | | 156 | | | | 531 | | | | 347 | | | | 39 | | | | 2,479 | | | | 220,786 | | | Fixed rates | | | 2,705 | | | | 1,324 | | | | 1,314 | | | | 3,478 | | | | 4,243 | | | | 53 | | | | 13,117 | | | | 253,462 | | | Total(2) | | | 3,871 | | | | 1,564 | | | | 1,470 | | | | 4,009 | | | | 4,590 | | | | 92 | | | | 15,596 | | | | 474,248 | |
(1) | Defined as loans and leases contractually past due as to payment of interest or principal. | (2) | Includes R$11,059 million related to overdue installments of the non-accrual loans. |
| | | | | | | | | | | | | | | | | | | | | (In millions of R$) | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2014 | | | Overdue Installments(1) | | 01-30
days | | | 31-60
days | | | 61-90
days | | | 91-180
days | | | 181-360
days | | | One year
or more | | | Total overdue
installments | | | Total
gross loans | | | Interest rate of loans to customers by maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rates | | | 972 | | | | 146 | | | | 164 | | | | 375 | | | | 324 | | | | 44 | | | | 2,025 | | | | 185,172 | | | Fixed rates | | | 2,505 | | | | 1,150 | | | | 1,025 | | | | 2,551 | | | | 3,707 | | | | 111 | | | | 11,049 | | | | 267,259 | | | Total(2) | | | 3,477 | | | | 1,296 | | | | 1,189 | | | | 2,926 | | | | 4,031 | | | | 155 | | | | 13,074 | | | | 452,431 | |
(1) | Defined as loans and leases contractually past due as to payment of interest or principal. | (2) | Includes R$8,981 million related to overdue installments of the non-accrual loans. |
| | | | | | | | | | | | | | | | | | | | | (In millions of R$) | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2013 | | | Overdue Installments(1) | | 01-30
days | | | 31-60
days | | | 61-90
days | | | 91-180
days | | | 181-360
days | | | One year
or more | | | Total overdue
installments | | | Total
gross loans | | | Interest rate of loans to customers by maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rates | | | 755 | | | | 195 | | | | 165 | | | | 258 | | | | 185 | | | | 12 | | | | 1,570 | | | | 163,717 | | | Fixed rates | | | 2,608 | | | | 1,226 | | | | 1,076 | | | | 2,617 | | | | 3,772 | | | | 122 | | | | 11,421 | | | | 247,985 | | | Total(2) | | | 3,363 | | | | 1,421 | | | | 1,241 | | | | 2,875 | | | | 3,957 | | | | 134 | | | | 12,991 | | | | 411,702 | |
(1) | Defined as loans and leases contractually past due as to payment of interest or principal. | (2) | Includes R$9,020 million related to overdue installments of the non-accrual loans. |
Financial performance | A-126 |
| | | 12/31/2016 | | | Non-Overdue Installments | | Due in 30 days
or less | | | Due in 31-90
days | | | Due in 91-180
days | | | Due in 181-360
days | | | Due in one
year to five
years | | | Due after five
years | | | Total Non-
Overdue
Installments | | | | | (In millions of R$) | | | Interest rate of loans to customers by maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rates | | | 21,082 | | | | 28,062 | | | | 22,294 | | | | 28,525 | | | | 90,341 | | | | 64,232 | | | | 254,536 | | | Fixed rates | | | 46,263 | | | | 34,906 | | | | 28,394 | | | | 33,710 | | | | 72,441 | | | | 3,273 | | | | 218,987 | | | Total (1) | | | 67,345 | | | | 62,968 | | | | 50,688 | | | | 62,235 | | | | 162,782 | | | | 67,505 | | | | 473,523 | |
(1) Includes R$9,085 million related to non-overdue installments of the non-accrual loans. | | | 12/31/2015 | | | Non-Overdue Installments | | Due in 30 days
or less | | | Due in 31-90
days | | | Due in 91-180
days | | | Due in 181-360
days | | | Due in one
year to five
years | | | Due after five
years | | | Total Non-
Overdue
Installments | | | | | (In millions of R$) | | | Interest rate of loans to customers by maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rates | | | 17,424 | | | | 23,010 | | | | 19,880 | | | | 24,869 | | | | 79,466 | | | | 53,659 | | | | 218,308 | | | Fixed rates | | | 49,543 | | | | 38,411 | | | | 30,191 | | | | 36,143 | | | | 81,628 | | | | 4,428 | | | | 240,344 | | | Total (1) | | | 66,967 | | | | 61,421 | | | | 50,071 | | | | 61,012 | | | | 161,094 | | | | 58,087 | | | | 458,652 | |
(1) Includes R$8,399 million related to non-overdue installments of the non-accrual loans. | | | 12/31/2014 | | | Non-Overdue Installments | | Due in 30 days
or less | | | Due in 31-90
days | | | Due in 91-180
days | | | Due in 181-360
days | | | Due in one
year to five
years | | | Due after five
years | | | Total Non-
Overdue
Installments | | | | | (In millions of R$) | | | Interest rate of loans to customers by maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rates | | | 13,506 | | | | 23,137 | | | | 15,346 | | | | 21,499 | | | | 66,894 | | | | 42,765 | | | | 183,147 | | | Fixed rates | | | 48,388 | | | | 43,795 | | | | 33,997 | | | | 40,250 | | | | 85,077 | | | | 4,703 | | | | 256,210 | | | Total (1) | | | 61,894 | | | | 66,932 | | | | 49,343 | | | | 61,749 | | | | 151,971 | | | | 47,468 | | | | 439,357 | |
(1) Includes R$7,533 million related to non-overdue installments of the non-accrual loans. | | | 12/31/2016 | | | Overdue Installments (1) | | 01-30 days | | | 31-60 days | | | 61-90 days | | | 91-180 days | | | 181-360 days | | | One year or
more | | | Total overdue
installments | | | Total gross
loans | | | | | (In millions of R$) | | | Interest rate of loans to customers by maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rates | | | 2,513 | | | | 795 | | | | 512 | | | | 506 | | | | 686 | | | | 76 | | | | 5,088 | | | | 259,624 | | | Fixed rates | | | 2,326 | | | | 1,198 | | | | 1,100 | | | | 2,978 | | | | 4,073 | | | | 80 | | | | 11,755 | | | | 230,742 | | | Total (2) | | | 4,839 | | | | 1,993 | | | | 1,612 | | | | 3,484 | | | | 4,759 | | | | 156 | | | | 16,843 | | | | 490,366 | |
(1) Defined as loans and leases contractually past due as to payment of interest or principal. (2) Includes R$10,857 million related to overdue installments of the non-accrual loans. | | | 12/31/2015 | | | Overdue Installments (1) | | 01-30 days | | | 31-60 days | | | 61-90 days | | | 91-180 days | | | 181-360 days | | | One year or
more | | | Total overdue
installments | | | Total gross
loans | | | | | (In millions of R$) | | | Interest rate of loans to customers by maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rates | | | 1,166 | | | | 240 | | | | 156 | | | | 531 | | | | 347 | | | | 39 | | | | 2,479 | | | | 220,786 | | | Fixed rates | | | 2,705 | | | | 1,324 | | | | 1,314 | | | | 3,478 | | | | 4,243 | | | | 53 | | | | 13,117 | | | | 253,462 | | | Total (2) | | | 3,871 | | | | 1,564 | | | | 1,470 | | | | 4,009 | | | | 4,590 | | | | 92 | | | | 15,596 | | | | 474,248 | |
(1) Defined as loans and leases contractually past due as to payment of interest or principal. (2) Includes R$11,059 million related to overdue installments of the non-accrual loans. | | | 12/31/2014 | | | Overdue Installments (1) | | 01-30 days | | | 31-60 days | | | 61-90 days | | | 91-180 days | | | 181-360 days | | | One year or
more | | | Total overdue
installments | | | Total gross
loans | | | | | (In millions of R$) | | | Interest rate of loans to customers by maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rates | | | 972 | | | | 146 | | | | 164 | | | | 375 | | | | 324 | | | | 44 | | | | 2,025 | | | | 185,172 | | | Fixed rates | | | 2,506 | | | | 1,150 | | | | 1,025 | | | | 2,551 | | | | 3,706 | | | | 111 | | | | 11,049 | | | | 267,259 | | | Total (2) | | | 3,478 | | | | 1,296 | | | | 1,189 | | | | 2,926 | | | | 4,030 | | | | 155 | | | | 13,074 | | | | 452,431 | |
(1) Defined as loans and leases contractually past due as to payment of interest or principal. (2) Includes R$8,981 million related to overdue installments of the non-accrual loans. Loan and Lease Operationslease operations by economic activity The following table sets out the composition of our credit portfolio, including non-accrual loan operations, by economic activity of the borrower: | | | | | (In millions of R$, except percentages) | | | | | | | | | | | As of December 31, | | | | | | 2015 | | 2014 | | 2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Economic Activities | | Loan portfolio | | | % of Loan
portfolio | | | Loan portfolio | | | % of Loan
portfolio | | | Loan portfolio | | | % of Loan
portfolio | | | Loan
portfolio | | | % of Loan
portfolio | | | Loan
portfolio | | | % of Loan
portfolio | | | Loan
portfolio | | | % of Loan
portfolio | | | | | | (In millions of R$, except percentages) | | Public sector | | | 3,182 | | | | 0.7 | | | | 4,389 | | | | 1.0 | | | | 3,981 | | | | 1.0 | | | | 3,051 | | | | 0.6 | | | | 3,182 | | | | 0.7 | | | | 4,389 | | | | 1.0 | | | Industry and commerce | | | 125,386 | | | | 26.5 | | | | 116,506 | | | | 25.7 | | | | 115,025 | | | | 27.8 | | | | 112,067 | | | | 22.8 | | | | 125,386 | | | | 26.5 | | | | 116,506 | | | | 25.7 | | | Services | | | 104,226 | | | | 22.0 | | | | 99,855 | | | | 22.1 | | | | 87,103 | | | | 21.2 | | | | 118,102 | | | | 24.1 | | | | 104,226 | | | | 22.0 | | | | 99,855 | | | | 22.1 | | | Primary sector | | | 25,306 | | | | 5.3 | | | | 23,345 | | | | 5.2 | | | | 20,492 | | | | 5.0 | | | | Natural resources | | | | 24,362 | | | | 5.0 | | | | 25,306 | | | | 5.3 | | | | 23,345 | | | | 5.2 | | | Individuals | | | 213,622 | | | | 45.0 | | | | 206,094 | | | | 45.5 | | | | 183,548 | | | | 44.6 | | | | 229,945 | | | | 46.9 | | | | 213,622 | | | | 45.0 | | | | 206,094 | | | | 45.5 | | | Other sectors | | | 2,526 | | | | 0.5 | | | | 2,242 | | | | 0.5 | | | | 1,553 | | | | 0.4 | | | | 2,839 | | | | 0.6 | | | | 2,526 | | | | 0.5 | | | | 2,242 | | | | 0.5 | | | Total | | | 474,248 | | | | 100.0 | | | | 452,431 | | | | 100.0 | | | | 411,702 | | | | 100.0 | | | | 490,366 | | | | 100.0 | | | | 474,248 | | | | 100.0 | | | | 452,431 | | | | 100.0 | |
On December 31, 2015,2016, there was no concentration of loan and lease operations exceeding 10% of the total portfolio that had not been disclosed in a category of loan and losses. Loan and Lease Operationslease operations by concentration The following table presents the composition of our credit portfolio by concentration with respect to the amounts owed by the debtors: | | | | | | (In millions of R$, except percentages) | | | | | | | | As of December 31, | | | | | 2015 | | | 2014 | | | 2013 | | | Concentration | | Loan portfolio | | | % of Loan
portfolio | | | Loan portfolio | | | % of Loan
portfolio | | | Loan portfolio | | | % of Loan
portfolio | | | Largest debtor | | | 4,615 | | | | 1.0 | | | | 4,032 | | | | 0.9 | | | | 4,358 | | | | 1.1 | | | 10 largest debtors | | | 27,173 | | | | 5.7 | | | | 23,646 | | | | 5.2 | | | | 19,778 | | | | 4.8 | | | 20 largest debtors | | | 40,831 | | | | 8.6 | | | | 35,325 | | | | 7.8 | | | | 29,935 | | | | 7.3 | | | 50 largest debtors | | | 63,797 | | | | 13.5 | | | | 58,180 | | | | 12.9 | | | | 50,131 | | | | 12.2 | | | 100 largest debtors | | | 85,167 | | | | 18.0 | | | | 79,617 | | | | 17.6 | | | | 69,210 | | | | 16.8 | |
Financial performance | A-127 |
| | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | | | Loan | | | % of Loan | | | Loan | | | % of Loan | | | Loan | | | % of Loan | | | Concentration | | portfolio | | | portfolio | | | portfolio | | | portfolio | | | portfolio | | | portfolio | | | | | (In millions of R$, except percentages) | | | Largest debtor | | | 3,543 | | | | 0.7 | | | | 4,615 | | | | 1.0 | | | | 4,032 | | | | 0.9 | | | 10 largest debtors | | | 21,609 | | | | 4.4 | | | | 27,173 | | | | 5.7 | | | | 23,646 | | | | 5.2 | | | 20 largest debtors | | | 32,720 | | | | 6.7 | | | | 40,831 | | | | 8.6 | | | | 35,325 | | | | 7.8 | | | 50 largest debtors | | | 52,992 | | | | 10.8 | | | | 63,797 | | | | 13.5 | | | | 58,180 | | | | 12.9 | | | 100 largest debtors | | | 72,441 | | | | 14.8 | | | | 85,167 | | | | 18.0 | | | | 79,617 | | | | 17.6 | |
Rating of the Loanloan and Lease Portfolio lease portfolio The following table presents the rating of our loan and lease portfolio based on the probability of default for the periods indicated below.
| | | 12/31/2016 | | | Internal Rating | | Loans neither overdue nor
impaired | | | Loans overdue not
impaired (1) | | | Loans impaired | | | Total loans | | | | | (In millions of R$, except percentages) | | | Lower Risk | | | 363,954 | | | | 5,543 | | | | - | | | | 369,497 | | | Satisfactory | | | 62,883 | | | | 6,904 | | | | - | | | | 69,787 | | | Higher Risk | | | 13,767 | | | | 6,998 | | | | - | | | | 20,765 | | | Impaired (2) | | | - | | | | - | | | | 30,317 | | | | 30,317 | | | Total | | | 440,604 | | | | 19,445 | | | | 30,317 | | | | 490,366 | | | % | | | 89.8 | | | | 4.0 | | | | 6.2 | | | | 100.0 | |
| | | | | (In millions of R$, except percentages) | | | | | | | | | | | As of December 31, 2015 | | | 12/31/2015 | | Internal Rating | | Loans neither
overdue nor impaired | | | Loans overdue
not impaired(1) | | | Loans impaired | | | Total loans | | | Loans neither overdue nor
impaired | | | Loans overdue not
impaired (1) | | | Loans impaired | | | Total loans | | | Lower risk | | | 340,368 | | | | 3,838 | | | | - | | | | 344,206 | | | | | | | (In millions of R$, except percentages) | | | Lower Risk | | | | 340,368 | | | | 3,838 | | | | - | | | | 344,206 | | | Satisfactory | | | 76,940 | | | | 6,489 | | | | - | | | | 83,429 | | | | 76,940 | | | | 6,489 | | | | - | | | | 83,429 | | | Higher risk | | | 12,609 | | | | 6,847 | | | | - | | | | 19,456 | | | | Higher Risk | | | | 12,609 | | | | 6,847 | | | | - | | | | 19,456 | | | Impaired(2) | | | - | | | | - | | | | 27,157 | | | | 27,157 | | | | - | | | | - | | | | 27,157 | | | | 27,157 | | | Total | | | 429,917 | | | | 17,174 | | | | 27,157 | | | | 474,248 | | | | 429,917 | | | | 17,174 | | | | 27,157 | | | | 474,248 | | | % | | | 90.7 | | | | 3.6 | | | | 5.7 | | | | 100.0 | | | | 90.7 | | | | 3.6 | | | | 5.7 | | | | 100.0 | |
| | | | | (In millions of R$, except percentages) | | | | | | | | | | | As of December 31, 2014 | | | 12/31/2014 | | Internal Rating | | Loans neither
overdue nor impaired | | | Loans overdue
not impaired(1) | | | Loans impaired | | | Total loans | | | Loans neither overdue nor
impaired | | | Loans overdue not
impaired (1) | | | Loans impaired | | | Total loans | | | Lower risk | | | 324,908 | | | | 4,042 | | | | - | | | | 328,950 | | | | | | | (In millions of R$, except percentages) | | | Lower Risk | | | | 324,908 | | | | 4,042 | | | | - | | | | 328,950 | | | Satisfactory | | | 81,994 | | | | 6,989 | | | | - | | | | 88,983 | | | | 81,994 | | | | 6,989 | | | | - | | | | 88,983 | | | Higher risk | | | 11,439 | | | | 5,853 | | | | - | | | | 17,292 | | | | Higher Risk | | | | 11,439 | | | | 5,853 | | | | - | | | | 17,292 | | | Impaired(2) | | | - | | | | - | | | | 17,206 | | | | 17,206 | | | | - | | | | - | | | | 17,206 | | | | 17,206 | | | Total | | | 418,341 | | | | 16,884 | | | | 17,206 | | | | 452,431 | | | | 418,341 | | | | 16,884 | | | | 17,206 | | | | 452,431 | | | % | | | 92.5 | | | | 3.7 | | | | 3.8 | | | | 100.0 | | | | 92.5 | | | | 3.7 | | | | 3.8 | | | | 100.0 | |
| | | | | | | | | (In millions of R$, except percentages) | | | | | | | | | | | As of December 31, 2013 | | | Internal Rating | | Loans neither
overdue nor impaired | | | Loans overdue
not impaired(1) | | | Loans impaired | | | Total loans | | | Lower risk | | | 300,816 | | | | 4,354 | | | | - | | | | 305,170 | | | Satisfactory | | | 64,722 | | | | 7,676 | | | | - | | | | 72,398 | | | Higher risk | | | 11,273 | | | | 6,556 | | | | - | | | | 17,829 | | | Impaired(2) | | | - | | | | - | | | | 16,305 | | | | 16,305 | | | Total | | | 376,811 | | | | 18,586 | | | | 16,305 | | | | 411,702 | | | % | | | 91.5 | | | | 4.5 | | | | 4.0 | | | | 100.0 | |
(1) The operations classified as Loans Overdue Not Impaired are past due between 1 day and 90 days and the balance is the total of outstanding principal amount (Overdue and Non-Overdue). (1) | The operations classified as Loans Overdue Not Impaired are past due between 1 day and 90 days and the balance is the total of outstanding principal amount (Overdue and Non-Overdue). | (2) | We consider loans as impaired when (i) corporate transactions have a probability of default higher than 31.84%; (ii) transactions are overdue for more than 90 days; or (iii) renegotiated transactions are overdue for more than 60 days. |
(2) We consider loans as impaired when (i) corporate transactions have a probability of default higher than 31.84%; (ii) transactions are overdue for more than 90 days; or (iii) renegotiated transactions are overdue for more than 60 days. The credit rating in corporate transactions is based on information such as the economic and financial condition of the counterparty, 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 reporting to the Superior Credit Committee. Regarding retail transactions (individuals,(those involving individuals, small and middle-market companies) the rating is assigned based on the corresponding loan application and behavior score statistical models. Decisions are made based on scoring models that are continuously updated by an independent unit. In limited instances, there may also be an individualized analysis of specific cases where approval is subject to competenthigher credit approval levels. The risk ratings are grouped in four categories: (i) lower risk, (ii) satisfactory, (iii) higher risk and (iv) impaired. Please refer to section Performance, item Financial Performanceperformance – Allowance for Loanloan and Lease Losses,lease losses, for further details on the individual and collective analyses. Non-accrual Loans loans We consider all loans overdue for 60 days or more as non-accrual loans and, accordingly, cease the accrual of financial charges on such loans. Write-offs Loans and leases are written off against the allowance for loan and lease losses when the loan is not collected or is considered permanently Financial performance | A-128 |
impaired. We typically write off loans when they are overdue for 360 days, except for loans having an original maturity in excess of 36 months, which are written off when they are overdue for 540 days. However, write-offs may be recognized earlier than 360 days if we conclude that the loan is not recoverable. Please refer to section Performance, item Assets – Loan and Lease Operationslease operations – Renegotiated Loansloans for further details. Information on the Qualityquality of Loansloans and Leases leases The following table below shows our non-accrual loans together with certain asset quality ratios. | | | | | | | (In millions of R$, except percentages) | | | | | | | | | | | | | As of December 31, | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2012 | | | | | 2015 | | 2014 | | 2013 | | 2012 | | 2011 | | | (In millions of R$, except percentages) | | | Non-accrual loans | | | 19,458 | | | | 16,514 | | | | 18,065 | | | | 20,791 | | | | 20,439 | | | | 19,942 | | | | 19,458 | | | | 16,514 | | | | 18,065 | | | | 20,791 | | | Allowance for loan losses | | | 26,844 | | | | 22,392 | | | | 22,235 | | | | 25,713 | | | | 23,873 | | | | 26,972 | | | | 26,844 | | | | 22,392 | | | | 22,235 | | | | 25,713 | | | Total loans and leases operations portfolio | | | 474,248 | | | | 452,431 | | | | 411,702 | | | | 366,984 | | | | 346,264 | | | | 490,366 | | | | 474,248 | | | | 452,431 | | | | 411,702 | | | | 366,984 | | | Non-accrual loans as a percentage of total loans (%) | | | 4.1 | | | | 3.7 | | | | 4.4 | | | | 5.7 | | | | 5.9 | | | | 4.1 | | | | 4.1 | | | | 3.7 | | | | 4.4 | | | | 5.7 | | | Allowance for loan losses as a percentage of total loans (%) | | | 5.7 | | | | 4.9 | | | | 5.4 | | | | 7.0 | | | | 6.9 | | | | 5.5 | | | | 5.7 | | | | 4.9 | | | | 5.4 | | | | 7.0 | | | Allowance for loan losses as a percentage of non-accrual loans (%) | | | 138.0 | | | | 135.6 | | | | 123.1 | | | | 123.7 | | | | 116.8 | | | | 135.3 | | | | 138.0 | | | | 135.6 | | | | 123.1 | | | | 123.7 | |
Assessment We first assess whether there is objective evidence of loss individually allocated to individually significant loans or collectively allocated to loans that are not individually significant. To determine the amount of the allowance for individually significant loans with objective evidence of impairment, we use methodologies that consider both the client quality and the nature of the financing, including its collateral, to estimate the cash flow expected from these loans. If there is no objective evidence of loss for an individually assessed loan, whether significant or not, the loan is included in a group of loans with similar credit risk characteristics which are then collectively tested for impairment. Individually assessed loans 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 carrying amount of the asset and the present value of the estimated future cash flows (excluding future loan losses that have not been incurred), discounted at the financial asset’s effective interest rate. For collectively assessed loans, the calculation of the present value of the estimated future cash flows, for which collateral is received, reflects the historical performance and recovery of the fair value, considering the cash flows that may arise from the performances less costs for obtaining and selling that collateral. For the purpose of collectively assessing impairment, loans are aggregated based on similar credit risk characteristics. These characteristics are relevant to estimate the future cash flows of these loans since they may be an indicator of the difficulty of the debtor in paying the amounts due, in accordance with the contractual conditions of the loan that is being assessed. The future cash flows of a group of loans that are collectively assessed in order to identify the need for recognizing an impairment are estimated based on the contractual cash flows of the group of loans and the historical experience of loss for loans with similar credit risk characteristics. The historical loss experience is adjusted, based on current observable data, to reflect the effects of current conditions that have not impacted the period on which the historical loss experience is based and to exclude the effects of conditions in the historical period that are not currently in place. For individually significant loans with no objective evidence of impairment, such loans are classified into certain credit ratings based on several qualitative and quantitative factors applied to internally developed models. Considering the size and the different risk characteristics of each credit agreement, the ratings determined under internal models may be reviewed and modified by our Credit Committee, the members of which are executives and experts in corporate credit risk. We estimate the losses inherent in every rating, using the approach internally developed to low-default portfolios, which uses our historical experience to design internal models that are used to estimate the probability of default and the potential for recovery of non-performing loans. To determine the amount of the allowance for items that are not individually significant, loans are segregated into classes based on the underlying risks and the characteristics of each group. The allowance for loan and lease losses is determined for each of these classes through a process that considers the historical delinquency and the loan loss experience in the lastprior years. Financial performance | A-129 |
Allocation of the Allowanceallowance for Loanloan and Lease Losseslease losses The following table below presents the details, by segment and class, as defined in the segmentation of our portfolio, of the allowance for loan and lease losses, of this allowance as a percentage of the total loan and lease losses for the corresponding segment or class, and the percentage of the total loan and leases in each segment and class in relation to the total loans and leases. | | | | | | | | | | | | (In millions of R$, except percentages) | | | | | December 31, | | | | | 2015 | | | 2014 | | | 2013 | | | 2012 | | | 2011 | | | | | Allocated
allowance | | | Allocated
allowance
as a % of
total loans
and leases | | | Loans
category
as a % of
total loans | | | Allocated
allowance | | | Allocated
allowance
as a % of
total loans
and leases | | | Loans
category
as a % of
total loans | | | Allocated
allowance | | | Allocated
allowance
as a % of
total loans
and leases | | | Loans
category
as a % of
total loans | | | Allocated
allowance | | | Allocated
allowance
as a % of
total loans
and leases | | | Loans
category
as a % of
total loans | | | Allocated
allowance | | | Allocated
allowance
as a % of
total loans
and leases | | | Loans
category
as a % of
total loans | | | Individuals | | | 14,717 | | | | 3.1 | | | | 39.5 | | | | 13,385 | | | | 3.0 | | | | 41.1 | | | | 13,853 | | | | 3.4 | | | | 40.7 | | | | 14,844 | | | | 4.0 | | | | 41.1 | | | | 13,684 | | | | 4.0 | | | | 43.1 | | | Credit card | | | 4,141 | | | | 0.9 | | | | 12.4 | | | | 3,740 | | | | 0.8 | | | | 13.1 | | | | 2,952 | | | | 0.7 | | | | 12.9 | | | | 2,863 | | | | 0.8 | | | | 11.0 | | | | 3,825 | | | | 1.1 | | | | 11.3 | | | Personal loans | | | 8,330 | | | | 1.7 | | | | 6.0 | | | | 7,024 | | | | 1.6 | | | | 6.2 | | | | 6,488 | | | | 1.6 | | | | 6.5 | | | | 6,841 | | | | 1.9 | | | | 7.3 | | | | 4,842 | | | | 1.4 | | | | 7.5 | | | Payroll loans | | | 1,319 | | | | 0.3 | | | | 9.6 | | | | 1,107 | | | | 0.2 | | | | 9.0 | | | | 1,133 | | | | 0.3 | | | | 5.5 | | | | 867 | | | | 0.2 | | | | 3.7 | | | | 556 | | | | 0.2 | | | | 2.9 | | | Vehicles | | | 874 | | | | 0.2 | | | | 4.2 | | | | 1,469 | | | | 0.3 | | | | 6.4 | | | | 3,245 | | | | 0.8 | | | | 9.9 | | | | 4,227 | | | | 1.2 | | | | 14.1 | | | | 4,415 | | | | 1.3 | | | | 17.5 | | | Mortgage loans | | | 53 | | | | - | | | | 7.3 | | | | 45 | | | | - | | | | 6.4 | | | | 35 | | | | - | | | | 5.9 | | | | 46 | | | | - | | | | 5.0 | | | | 46 | | | | - | | | | 4.0 | | | Corporate | | | 6,115 | | | | 1.3 | | | | 29.5 | | | | 2,899 | | | | 0.6 | | | | 30.0 | | | | 1,775 | | | | 0.4 | | | | 29.4 | | | | 1,356 | | | | 0.4 | | | | 27.3 | | | | 703 | | | | 0.2 | | | | 26.6 | | | Small and medium businesses | | | 5,153 | | | | 1.1 | | | | 16.6 | | | | 5,373 | | | | 1.2 | | | | 17.7 | | | | 6,085 | | | | 1.5 | | | | 19.8 | | | | 9,091 | | | | 2.5 | | | | 23.2 | | | | 9,197 | | | | 2.7 | | | | 24.7 | | | Foreign loans Latin America | | | 859 | | | | 0.2 | | | | 14.4 | | | | 735 | | | | 0.2 | | | | 11.2 | | | | 522 | | | | 0.1 | | | | 10.1 | | | | 422 | | | | 0.1 | | | | 8.4 | | | | 289 | | | | 0.1 | | | | 5.6 | | | Total | | | 26,844 | | | | 5.7 | | | | 100.0 | | | | 22,392 | | | | 4.9 | | | | 100.0 | | | | 22,235 | | | | 5.4 | | | | 100.0 | | | | 25,713 | | | | 7.0 | | | | 100.0 | | | | 23,873 | | | | 6.9 | | | | 100.0 | |
| | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2012 | | | | | Allocated
allowance | | | Allocated
allowance as a
% of total loans
and leases | | | Loans category
as a % of total
loans | | | Allocated
allowance | | | Allocated
allowance as a
% of total loans
and leases | | | Loans category
as a % of total
loans | | | Allocated
allowance | | | Allocated
allowance as a
% of total loans
and leases | | | Loans category
as a % of total
loans | | | Allocated
allowance | | | Allocated
allowance as a
% of total loans
and leases | | | Loans category
as a % of total
loans | | | Allocated
allowance | | | Allocated
allowance as a
% of total loans
and leases | | | Loans category
as a % of total
loans | | | | | (In millions of R$, except percentages) | | | Individuals | | | 14,259 | | | | 2.9 | | | | 37.3 | | | | 14,717 | | | | 3.1 | | | | 39.5 | | | | 13,385 | | | | 3.0 | | | | 41.1 | | | | 13,853 | | | | 3.4 | | | | 40.7 | | | | 14,844 | | | | 4.1 | | | | 41.1 | | | Credit card | | | 3,693 | | | | 0.8 | | | | 12.0 | | | | 4,141 | | | | 0.9 | | | | 12.4 | | | | 3,740 | | | | 0.8 | | | | 13.1 | | | | 2,952 | | | | 0.7 | | | | 12.9 | | | | 2,863 | | | | 0.8 | | | | 11.0 | | | Personal loans | | | 7,756 | | | | 1.6 | | | | 5.3 | | | | 8,330 | | | | 1.7 | | | | 6.0 | | | | 7,024 | | | | 1.6 | | | | 6.2 | | | | 6,488 | | | | 1.6 | | | | 6.5 | | | | 6,841 | | | | 1.9 | | | | 7.3 | | | Payroll loans | | | 2,108 | | | | 0.4 | | | | 9.1 | | | | 1,319 | | | | 0.3 | | | | 9.6 | | | | 1,107 | | | | 0.2 | | | | 9.0 | | | | 1,133 | | | | 0.3 | | | | 5.5 | | | | 867 | | | | 0.2 | | | | 3.7 | | | Vehicles | | | 644 | | | | 0.1 | | | | 3.1 | | | | 874 | | | | 0.2 | | | | 4.2 | | | | 1,469 | | | | 0.3 | | | | 6.4 | | | | 3,245 | | | | 0.8 | | | | 9.9 | | | | 4,227 | | | | 1.2 | | | | 14.1 | | | Mortgage loans | | | 58 | | | | - | | | | 7.8 | | | | 53 | | | | - | | | | 7.3 | | | | 45 | | | | - | | | | 6.4 | | | | 35 | | | | - | | | | 5.9 | | | | 46 | | | | - | | | | 5.0 | | | Corporate | | | 5,862 | | | | 1.2 | | | | 24.8 | | | | 6,459 | | | | 1.4 | | | | 32.2 | | | | 3,114 | | | | 0.7 | | | | 32.5 | | | | 2,006 | | | | 0.5 | | | | 31.6 | | | | 1,594 | | | | 0.4 | | | | 29.6 | | | Small and Medium Businesses | | | 4,743 | | | | 1.0 | | | | 12.1 | | | | 4,809 | | | | 1.0 | | | | 13.9 | | | | 5,158 | | | | 1.1 | | | | 15.2 | | | | 5,854 | | | | 1.4 | | | | 17.6 | | | | 8,853 | | | | 2.4 | | | | 20.9 | | | Foreign Loans Latin America | | | 2,108 | | | | 0.4 | | | | 25.8 | | | | 859 | | | | 0.2 | | | | 14.4 | | | | 735 | | | | 0.2 | | | | 11.2 | | | | 522 | | | | 0.1 | | | | 10.1 | | | | 422 | | | | 0.1 | | | | 8.4 | | | Total | | | 26,972 | | | | 5.5 | | | | 100.0 | | | | 26,844 | | | | 5.7 | | | | 100.0 | | | | 22,392 | | | | 4.9 | | | | 100.0 | | | | 22,235 | | | | 5.4 | | | | 100.0 | | | | 25,713 | | | | 7.0 | | | | 100.0 | |
Renegotiated loans Renegotiated Loans
| | | Year Ended December 31, | | | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | | | | | (In millions of R$, except percentages) | | | Renegotiated loans (1) | | | 16,398 | | | | 14,932 | | | | 11,572 | | | | 12,880 | | | | 14,519 | | | Allowance for loan and lease losses | | | 7,341 | | | | 6,991 | | | | 5,459 | | | | 6,284 | | | | 6,767 | | | Allowance for loan and lease losses/renegotiated loans (%) | | | 44.8 | | | | 46.8 | | | | 47.2 | | | | 48.8 | | | | 46.6 | |
| | | | | | | | | (In millions of R$, except percentages) | | | | | | | | | | | | | | Year Ended December 31, | | | | | 2015 | | | 2014 | | | 2013 | | | 2012 | | | 2011 | | | Renegotiated loans(1) | | | 14,932 | | | | 11,572 | | | | 12,880 | | | | 14,519 | | | | 11,844 | | | Allowance for loan and lease losses | | | 6,991 | | | | 5,459 | | | | 6,284 | | | | 6,767 | | | | 5,355 | | | Allowance for loan and lease losses/renegotiated loans (%) | | | 46.8 | | | | 47.2 | | | | 48.8 | | | | 46.6 | | | | 45.2 | |
(1) Includes debt consolidation, deferment or any other arrangement that modifies the periods or conditions, of operations originally overdue. (1) | Includes debt consolidation deferment or any other arrangement that modifies the periods or conditions of operations originally overdue. Renegotiated loans overdue 30 days. |
Renegotiated loans include both loans for which the corresponding credit agreement’s original terms were amended (agreements)(amendments) and new loans originated in order to settle contracts or transactions with the same client (restructured loans), which were originally past due. Amendments and restructured loans usually reflect changes in contract terms, rates or payment conditions. In almost all cases for loan products, renegotiated loans require that at least one payment be made under the renegotiated terms in order for it to be removed from the non-performing and non-accrual status. Renegotiated loans return to non-performing and non-accrual status when they reach 60 days past due under the renegotiated terms, which typically corresponds to the borrower missing two or more payments. The fact that a loan or lease has been renegotiated is also taken into consideration when determining the allowance for loan and lease losses after the renegotiation. The past performance and the payment history of the client and the transaction, including the probability of another default for renegotiated transactions, are considered in our risk models in order to determine the probability of default. This probability of default is generally higher than the probability assigned to similar transactions that have never been renegotiated. Another factor considered in determining the appropriate level of the allowance for loan and lease losses is the additional collateral to be offered by the debtor. The resulting allowance levels are compatible with the risk profile of each transaction. Financial performance | A-130 |
Our renegotiated loan portfolio increased to 3.3% of our total loan portfolio as of December 31, 2016, compared to 3.1% as of December 31, 2015. At the end of 2016, the ratio of the renegotiated portfolio to the allowance for loan and lease losses was 44.8% compared to 46.8% as of December 31, 2015. This portfolio increased in 2016 due to the deteriorating macroeconomic scenario, mainly in Brazil, specifically in the corporate segment, and small and medium business segment as shown below in the table “Renegotiated loan and lease operations” where a breakdown by segment is presented. Our renegotiated loan portfolio increased to 3.1% of our total loan portfolio as of December 31, 2015, compared to 2.6% as of December 31, 2014. At the end of 2015, the ratio of the renegotiated portfolio to the allowance for loan and lease losses was 46.8% compared to 47.2% as of December 31, 2014. This portfolio increased in 2015 due to the worseningdeteriorating macroeconomic scenario, mainly in Brazil, specifically in the corporate segment, corporate, as shown below in the table “Renegotiated loan and lease operations” where a breakdown by segment is presented. Our renegotiated loan portfolio decreased to 2.6% of our total loan portfolio as of December 31, 2014, compared to 3.1% as of December 31, 2013. At the end of 2014, the ratio of the renegotiated portfolio to the allowance for loan and lease losses was 47.2% compared to 48.8% as of December 31, 2013. Throughout 2014, the allowance for loan and lease losses followed the evolution of the "mix" of portfolio credit risk in the renegotiated loan portfolio. Our renegotiated loan portfolio decreased to 3.1% of our total loan portfolio as of December 31, 2013, compared to 4.0% as of December 31, 2012. At the end of 2013, the ratio of the renegotiated portfolio to the allowance for loan and lease losses was 48.8% compared to 46.6% as of December 31, 2012. Throughout the year 2013, the allowance for loan and lease losses followed the evolution of the "mix" of portfolio credit risk in the renegotiated loan portfolio. Our renegotiated loan portfolio increased to 4.0% of our total loan portfolio as of December 31, 2012, compared to 3.4% as of December 31, 2011. At2012.At the end of 2012, the ratio of the renegotiated portfolio to the allowance for loan and lease losses was 46.6% compared to 45.2% as of December 31, 2011.. This ratio increased in 2012 mainly because of an increase in the redefaulted renegotiated loans in default to total renegotiated loans ratio, from 29.8% as of December 31, 2011 compared to 35.4% as of December 31, 2012.ratio. Since 2013, we maintained our policy for the recovery of overdue loans, including loans already written off as losses, and to reduce losses, we enhanced our collection and recovery initiatives. However, we still require that at least one installment is paid to consider the renegotiation to be valid and to treat it as a renegotiated agreement. We also adopted a policy of stricter selectivity in origination of loans, which led to lower levels of delinquency and a decreased volume of renegotiated loans. During 2012, the Brazilian economy experienced an increase in the default levels for individuals, mainly with respect to vehicle financing and personal loan portfolios. As one of the largest banks in Brazil, our loan portfolio was impacted by this increase in defaults. In order to increase the recovery of overdue loans, including loans already written off as losses, and to reduce losses, we enhanced our collection and recovery initiatives. However, we require that at least one installment is paid to consider the renegotiation to be valid and to treat it as a renegotiated agreement. The total amount of each type of renegotiated loan as of December 31, 2016, 2015 2014 and 20132014 is shown in the tables below.
| | | As of December 31, 2016 | | | Type of Loan | | Total Renegotiated
Loans | | | Total Allowance for
Loan Losses | | | Allowance for Loan
Losses/
Renegotiated Loans
(%) | | | Total Redefaulted
Renegotiated Loans
(1) | | | Redefaulted
Renegotiated Loans
(%) | | | | | (In millions of R$, except percentages) | | | Restructured Loans | | | 14,405 | | | | 6,740 | | | | 46.8 | | | | 3,930 | | | | 27.3 | | | Agreements | | | 1,993 | | | | 601 | | | | 30.2 | | | | 295 | | | | 14.8 | | | Total | | | 16,398 | | | | 7,341 | | | | 44.8 | | | | 4,225 | | | | 25.8 | |
| | | | | | | | | (In millions of R$, except percentages) | | | | | | | | | | | | | | As of December 31,2015 | | | Type of Loan | | Total
Renegotiated
Loans | | | Total Allowance
for Loan Losses | | | Allowance
for Loan Losses/
Renegotiated
Loans (%) | | | Total
Redefaulted
Renegotiated
Loans(1) | | | Redefaulted
Renegotiated
Loans (%) | | | Restructured loans | | | 11,985 | | | | 5,508 | | | | 46.0 | | | | 3,077 | | | | 25.7 | | | Agreements | | | 2,947 | | | | 1,483 | | | | 50.3 | | | | 340 | | | | 11.5 | | | Total | | | 14,932 | | | | 6,991 | | | | 46.8 | | | | 3,417 | | | | 22.9 | |
(1) Our redefaulted renegotiated loans are renegotiated transactions 60 days or more overdue. | | | | | | | | | (In millions of R$, except percentages) | | | | | | | | | | | | | | As of December 31, 2014 | | | Type of Loan | | Total
Renegotiated
Loans | | | Total Allowance
for Loan Losses | | | Allowance
for Loan Losses/
Renegotiated
Loans (%) | | | Total
Redefaulted
Renegotiated
Loans(1) | | | Redefaulted
Renegotiated
Loans (%) | | | Restructured loans | | | 10,284 | | | | 5,051 | | | | 49.1 | | | | 2,744 | | | | 26.7 | | | Agreements | | | 1,288 | | | | 408 | | | | 31.7 | | | | 602 | | | | 46.7 | | | Total | | | 11,572 | | | | 5,459 | | | | 47.2 | | | | 3,346 | | | | 28.9 | |
| | | As of December 31, 2015 | | | Type of Loan | | Total Renegotiated
Loans | | | Total Allowance for
Loan Losses | | | Allowance for Loan
Losses/
Renegotiated Loans
(%) | | | Total Redefaulted
Renegotiated Loans
(1) | | | Redefaulted
Renegotiated Loans (%) | | | | | (In millions of R$, except percentages) | | | Restructured Loans | | | 11,985 | | | | 5,508 | | | | 46.0 | | | | 3,077 | | | | 25.7 | | | Agreements | | | 2,947 | | | | 1,483 | | | | 50.3 | | | | 340 | | | | 11.5 | | | Total | | | 14,932 | | | | 6,991 | | | | 46.8 | | | | 3,417 | | | | 22.9 | |
(1) Our redefaulted renegotiated loans are renegotiated transactions 60 days or more overdue. | | | | | | | | | (In millions of R$, except percentages) | | | | | | | | | | | | | | As of December 31, 2013 | | | Type of Loan | | Total
Renegotiated
Loans | | | Total Allowance
for Loan Losses | | | Allowance
for Loan Losses/
Renegotiated
Loans (%) | | | Total
Redefaulted
Renegotiated
Loans(1) | | | Redefaulted
Renegotiated
Loans (%) | | | Restructured loans | | | 10,325 | | | | 5,064 | | | | 49.0 | | | | 3,072 | | | | 29.8 | | | Agreements | | | 2,555 | | | | 1,220 | | | | 47.7 | | | | 1,555 | | | | 60.9 | | | Total | | | 12,880 | | | | 6,284 | | | | 48.8 | | | | 4,627 | | | | 35.9 | |
| | | As of December 31, 2014 | | | Type of Loan | | Total Renegotiated
Loans | | | Total Allowance for
Loan Losses | | | Allowance for Loan
Losses/
Renegotiated Loans
(%) | | | Total Redefaulted
Renegotiated Loans
(1) | | | Redefaulted
Renegotiated Loans
(%) | | | | | (In millions of R$, except percentages) | | | Restructured Loans | | | 10,284 | | | | 5,051 | | | | 49.1 | | | | 2,744 | | | | 26.7 | | | Agreements | | | 1,288 | | | | 408 | | | | 31.7 | | | | 602 | | | | 46.7 | | | Total | | | 11,572 | | | | 5,459 | | | | 47.2 | | | | 3,346 | | | | 28.9 | |
(1) Our redefaulted renegotiated loans are renegotiated transactions 60 days or more overdue. Financial performance | A-131 |
The tables below present an additional breakdown of renegotiated loans by portfolio, in segments and types, based on the type of modification, as of December 31, 2016, 2015 2014 and 2013:2014:
| | | As of December 31, 2016 | | | | | Payment | | | Multiple | | | Multiple | | | | | | Renegotiated loan and lease operations | | extension (1) | | | concessions (2) | | | modifications (3) | | | Total | | | | | (In millions of R$) | | | Individuals | | | 138 | | | | 2,470 | | | | 5,209 | | | | 7,817 | | | Credit card | | | - | | | | 333 | | | | - | | | | 333 | | | Personal loans | | | - | | | | 1,964 | | | | 5,209 | | | | 7,173 | | | Payroll loans | | | - | | | | 173 | | | | - | | | | 173 | | | Vehicles | | | 68 | | | | - | | | | - | | | | 68 | | | Mortgage loans | | | 70 | | | | - | | | | - | | | | 70 | | | Corporate | | | - | | | | - | | | | 2,908 | | | | 2,908 | | | Small and medium businesses | | | 34 | | | | 2,102 | | | | 2,201 | | | | 4,337 | | | Foreign loans - Latin America | | | 188 | | | | 1,148 | | | | - | | | | 1,336 | | | Total renegotiated loan and lease operations | | | 360 | | | | 5,720 | | | | 10,318 | | | | 16,398 | |
| | | | | | | | | (In millions of R$) | | | | | | | | | | | As of December 31, 2015 | | | Renegotiated loan and lease operations | | Payment extension(1) | | | Multiple concessions(2) | | | Multiple modifications(3) | | | Total | | | Individuals | | | 213 | | | | 2,457 | | | | 5,123 | | | | 7,793 | | | Credit card | | | - | | | | 356 | | | | - | | | | 356 | | | Personal loans | | | - | | | | 1,965 | | | | 5,123 | | | | 7,088 | | | Payroll loans | | | - | | | | 136 | | | | - | | | | 136 | | | Vehicles | | | 163 | | | | - | | | | - | | | | 163 | | | Mortgage loans | | | 50 | | | | - | | | | - | | | | 50 | | | Corporate | | | - | | | | - | | | | 3,181 | | | | 3,181 | | | Small and medium businesses | | | 53 | | | | 2,348 | | | | 1,357 | | | | 3,758 | | | Foreign loans – Latin America | | | - | | | | 200 | | | | - | | | | 200 | | | Total renegotiated loan and lease operations | | | 266 | | | | 5,005 | | | | 9,661 | | | | 14,932 | |
(1) Represents loan and lease transactions subject to an amendment of contractual terms relating exclusively to payment due dates. (1) | Represents loan and lease transactions subject to an amendment of contractual terms relating exclusively to payment due dates. | (2) | Represents multiple loan and lease transactions which have been restructured, i.e., all such outstanding transactions are terminated and a single new transaction consolidating the terminated loan and lease transactions is entered into. | (3) | Represents individual loan and lease transactions entered into with a customer that are renegotiated for an amendment of the original contractual terms, which may include amendment of interest rates, discounts of outstanding amounts due and payment extensions. |
(2) Represents multiple loan and lease transactions which have been restructured, i.e., all such outstanding transactions are terminated and a single new transaction consolidating the terminated loan and lease transactions is entered into. | | | | | | | | | (In millions of R$) | | | | | | | | | | | As of December 31, 2014 | | | Renegotiated loan and lease operations | | Payment extension(1) | | | Multiple concessions(2) | | | Multiple modifications(3) | | | Total | | | Individuals | | | 648 | | | | 2,352 | | | | 4,330 | | | | 7,330 | | | Credit card | | | - | | | | 403 | | | | - | | | | 403 | | | Personal loans | | | - | | | | 1,906 | | | | 4,330 | | | | 6,236 | | | Payroll loans | | | - | | | | 43 | | | | - | | | | 43 | | | Vehicles | | | 577 | | | | - | | | | - | | | | 577 | | | Mortgage loans | | | 71 | | | | - | | | | - | | | | 71 | | | Corporate | | | - | | | | - | | | | 871 | | | | 871 | | | Small and medium businesses | | | 55 | | | | 2,610 | | | | 620 | | | | 3,285 | | | Foreign loans – Latin America | | | - | | | | 86 | | | | - | | | | 86 | | | Total renegotiated loan and lease operations | | | 703 | | | | 5,048 | | | | 5,821 | | | | 11,572 | |
(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. |
| | | | | | | | | (In millions of R$) | | | | | | | | | | | As of December 31, 2013 | | | Renegotiated loan and lease operations | | Payment extension(1) | | | Multiple concessions(2) | | | Multiple modifications(3) | | | Total | | | Individuals | | | 1,979 | | | | 2,046 | | | | 4,513 | | | | 8,538 | | | Credit card | | | - | | | | 335 | | | | - | | | | 335 | | | Personal loans | | | 1 | | | | 1,710 | | | | 4,513 | | | | 6,224 | | | Payroll loans | | | - | | | | 1 | | | | - | | | | 1 | | | Vehicles | | | 1,907 | | | | - | | | | - | | | | 1,907 | | | Mortgage loans | | | 71 | | | | - | | | | - | | | | 71 | | | Corporate | | | - | | | | - | | | | 476 | | | | 476 | | | Small and medium businesses | | | 102 | | | | 3,247 | | | | 481 | | | | 3,830 | | | Foreign loans – Latin America | | | - | | | | 36 | | | | - | | | | 36 | | | Total renegotiated loan and lease operations | | | 2,081 | | | | 5,329 | | | | 5,470 | | | | 12,880 | |
(1) | Represents loan and lease transactions subject to an amendment of contractual terms relating exclusively to payment due dates. | (2) | Represents multiple loan and lease transactions which have been restructured, i.e., all such outstanding transactions are terminated and a single new transaction consolidating the terminated loan and lease transactions is entered into. | (3) | Represents individual loan and lease transactions entered into with a customer that are renegotiated for an amendment of the original contractual terms, which may include amendment of interest rates, discounts of outstanding amounts due and payment extensions. |
Financial performance | A-132 |
| | | As of December 31, 2015 | | | | | Payment | | | Multiple | | | Multiple | | | | | | Renegotiated loan and lease operations | | extension (1) | | | concessions (2) | | | modifications (3) | | | Total | | | | | (In millions of R$) | | | Individuals | | | 213 | | | | 2,457 | | | | 5,123 | | | | 7,793 | | | Credit card | | | - | | | | 356 | | | | - | | | | 356 | | | Personal loans | | | - | | | | 1,965 | | | | 5,123 | | | | 7,088 | | | Payroll loans | | | - | | | | 136 | | | | - | | | | 136 | | | Vehicles | | | 163 | | | | - | | | | - | | | | 163 | | | Mortgage loans | | | 50 | | | | - | | | | - | | | | 50 | | | Corporate | | | - | | | | - | | | | 3,181 | | | | 3,181 | | | Small and medium businesses | | | 53 | | | | 2,348 | | | | 1,357 | | | | 3,758 | | | Foreign loans - Latin America | | | - | | | | 200 | | | | - | | | | 200 | | | Total renegotiated loan and lease operations | | | 266 | | | | 5,005 | | | | 9,661 | | | | 14,932 | |
(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. | | | As of December 31, 2014 | | | | | Payment | | | Multiple | | | Multiple | | | | | | Renegotiated loan and lease operations | | extension (1) | | | concessions (2) | | | modifications (3) | | | Total | | | | | (In millions of R$) | | | Individuals | | | 648 | | | | 2,352 | | | | 4,330 | | | | 7,330 | | | Credit card | | | - | | | | 403 | | | | - | | | | 403 | | | Personal loans | | | - | | | | 1,906 | | | | 4,330 | | | | 6,236 | | | Payroll loans | | | - | | | | 43 | | | | - | | | | 43 | | | Vehicles | | | 577 | | | | - | | | | - | | | | 577 | | | Mortgage loans | | | 71 | | | | - | | | | - | | | | 71 | | | Corporate | | | - | | | | - | | | | 871 | | | | 871 | | | Small and medium businesses | | | 55 | | | | 2,610 | | | | 620 | | | | 3,285 | | | Foreign loans - Latin America | | | - | | | | 86 | | | | - | | | | 86 | | | Total renegotiated loan and lease operations | | | 703 | | | | 5,048 | | | | 5,821 | | | | 11,572 | |
(1) Represents loan and lease transactions subject to an amendment of contractual terms relating exclusively to payment due dates. (2) Represents multiple loan and lease transactions which have been restructured, i.e., all such outstanding transactions are terminated and a single new transaction consolidating the terminated loan and lease transactions is entered into. (3) Represents individual loan and lease transactions entered into with a customer that are renegotiated for an amendment of the original contractual terms, which may include amendment of interest rates, discounts of outstanding amounts due and payment extensions.
The following tables present an additional breakdown of renegotiated loans and leases by segment and class, as of December 31, 2016, 2015 2014 and 2013:2014: | | | | | | | | | | | | (In millions of R$) | | | | | | | | | | | | | | As of December 31, 2015 | | | Renegotiated loan and lease operations | | Impaired
performing | | | Non-impaired
performing | | | Impaired non-
performing | | | Non-impaired
non-performing | | | Total | | | Individuals | | | - | | | | 4,133 | | | | 2,118 | | | | 1,542 | | | | 7,793 | | | Credit card | | | - | | | | 356 | | | | - | | | | - | | | | 356 | | | Personal loans | | | - | | | | 3,679 | | | | 1,919 | | | | 1,490 | | | | 7,088 | | | Payroll loans | | | - | | | | 83 | | | | 28 | | | | 25 | | | | 136 | | | Vehicles | | | - | | | | 13 | | | | 135 | | | | 15 | | | | 163 | | | Mortgage loans | | | - | | | | 2 | | | | 36 | | | | 12 | | | | 50 | | | Corporate | | | 2,796 | | | | 198 | | | | 187 | | | | - | | | | 3,181 | | | Small and medium businesses | | | - | | | | 1,666 | | | | 1,207 | | | | 885 | | | | 3,758 | | | Foreign loans – Latin America | | | - | | | | 95 | | | | 69 | | | | 36 | | | | 200 | | | Total renegotiated loan and lease operations(1) | | | 2,796 | | | | 6,092 | | | | 3,581 | | | | 2,463 | | | | 14,932 | |
1. | Our renegotiated loans and lease operations increased in 2015 due to the worsening macroeconomic scenario, mainly in Brazil, specially in the corporate segment. |
| | | As of December 31, 2016 | | | | | Impaired | | | Non-impaired | | | Impaired non- | | | Non-impaired non- | | | | | | Renegotiated loan and lease operations | | performing | | | performing | | | performing | | | performing | | | Total | | | | | (In millions of R$) | | | Individuals | | | - | | | | 4,162 | | | | 2,162 | | | | 1,493 | | | | 7,817 | | | Credit card | | | - | | | | 333 | | | | - | | | | - | | | | 333 | | | Personal loans | | | - | | | | 3,689 | | | | 2,033 | | | | 1,451 | | | | 7,173 | | | Payroll loans | | | - | | | | 104 | | | | 55 | | | | 14 | | | | 173 | | | Vehicles | | | - | | | | 32 | | | | 29 | | | | 7 | | | | 68 | | | Mortgage loans | | | - | | | | 4 | | | | 45 | | | | 21 | | | | 70 | | | Corporate | | | 2,113 | | | | 135 | | | | 633 | | | | 27 | | | | 2,908 | | | Small and medium businesses | | | - | | | | 2,064 | | | | 1,293 | | | | 980 | | | | 4,337 | | | Foreign loans - Latin America | | | 22 | | | | 733 | | | | 292 | | | | 289 | | | | 1,336 | | | Total renegotiated loan and lease operations | | | 2,135 | | | | 7,094 | | | | 4,380 | | | | 2,789 | | | | 16,398 | |
| | | | | | | | | (In millions of R$) | | | As of December 31, 2015 | | | | | | | | | | | | As of December 31, 2014 | | | Impaired | | Non-impaired | | Impaired non- | | Non-impaired non- | | | | | | Renegotiated loan and lease operations | | Impaired
performing | | | Non-impaired
performing | | | Impaired non-
performing | | | Non-impaired non-
performing | | | Total | | | performing | | | performing | | | performing | | | performing | | | Total | | | | | | (In millions of R$) | | | Individuals | | | - | | | | 3,922 | | | | 2,019 | | | | 1,389 | | | | 7,330 | | | | - | | | | 4,133 | | | | 2,118 | | | | 1,542 | | | | 7,793 | | | Credit card | | | - | | | | 403 | | | | - | | | | - | | | | 403 | | | | - | | | | 356 | | | | - | | | | - | | | | 356 | | | Personal loans | | | - | | | | 3,445 | | | | 1,486 | | | | 1,305 | | | | 6,236 | | | | - | | | | 3,679 | | | | 1,919 | | | | 1,490 | | | | 7,088 | | | Payroll loans | | | - | | | | 23 | | | | 17 | | | | 3 | | | | 43 | | | | - | | | | 83 | | | | 28 | | | | 25 | | | | 136 | | | Vehicles | | | - | | | | 37 | | | | 478 | | | | 62 | | | | 577 | | | | - | | | | 13 | | | | 135 | | | | 15 | | | | 163 | | | Mortgage loans | | | - | | | | 14 | | | | 38 | | | | 19 | | | | 71 | | | | - | | | | 2 | | | | 36 | | | | 12 | | | | 50 | | | Corporate | | | 236 | | | | 408 | | | | 227 | | | | - | | | | 871 | | | | 2,796 | | | | 198 | | | | 187 | | | | - | | | | 3,181 | | | Small and medium businesses | | | - | | | | 1,406 | | | | 1,116 | | | | 763 | | | | 3,285 | | | | - | | | | 1,666 | | | | 1,207 | | | | 885 | | | | 3,758 | | | Foreign loans – Latin America | | | - | | | | 55 | | | | 12 | | | | 19 | | | | 86 | | | | Total renegotiated loan and lease operations | | | 236 | | | | 5,791 | | | | 3,374 | | | | 2,171 | | | | 11,572 | | | | Foreign loans - Latin America | | | | - | | | | 95 | | | | 69 | | | | 36 | | | | 200 | | | Total renegotiated loan and lease operations (1) | | | | 2,796 | | | | 6,092 | | | | 3,581 | | | | 2,463 | | | | 14,932 | |
| | | | | | | | | (In millions of R$) | | | As of December 31, 2014 | | | | | | | | | | | | As of December 31, 2013 | | | Impaired | | Non-impaired | | Impaired non- | | Non-impaired non- | | | | | | Renegotiated loan and lease operations | | Impaired
performing | | | Non-impaired
performing | | | Impaired non-
performing | | | Non-impaired
non-performing | | | Total | | | performing | | | performing | | | performing | | | performing | | | Total | | | | | | (In millions of R$) | | | Individuals | | | - | | | | 3,832 | | | | 3,097 | | | | 1,609 | | | | 8,538 | | | | - | | | | 3,922 | | | | 2,019 | | | | 1,389 | | | | 7,330 | | | Credit card | | | - | | | | 335 | | | | - | | | | - | | | | 335 | | | | - | | | | 403 | | | | - | | | | - | | | | 403 | | | Personal loans | | | - | | | | 3,324 | | | | 1,642 | | | | 1,258 | | | | 6,224 | | | | - | | | | 3,445 | | | | 1,486 | | | | 1,305 | | | | 6,236 | | | Payroll loans | | | - | | | | 1 | | | | - | | | | - | | | | 1 | | | | - | | | | 23 | | | | 17 | | | | 3 | | | | 43 | | | Vehicles | | | - | | | | 162 | | | | 1,417 | | | | 328 | | | | 1,907 | | | | - | | | | 37 | | | | 478 | | | | 62 | | | | 577 | | | Mortgage loans | | | - | | | | 10 | | | | 38 | | | | 23 | | | | 71 | | | | - | | | | 14 | | | | 38 | | | | 19 | | | | 71 | | | Corporate | | | 111 | | | | 260 | | | | 51 | | | | 54 | | | | 476 | | | | 236 | | | | 408 | | | | 227 | | | | - | | | | 871 | | | Small and medium businesses | | | - | | | | 1,516 | | | | 1,486 | | | | 828 | | | | 3,830 | | | | - | | | | 1,406 | | | | 1,116 | | | | 763 | | | | 3,285 | | | Foreign loans – Latin America | | | - | | | | 20 | | | | 6 | | | | 10 | | | | 36 | | | | Foreign loans - Latin America | | | | - | | | | 55 | | | | 12 | | | | 19 | | | | 86 | | | Total renegotiated loan and lease operations | | | 111 | | | | 5,628 | | | | 4,640 | | | | 2,501 | | | | 12,880 | | | | 236 | | | | 5,791 | | | | 3,374 | | | | 2,171 | | | | 11,572 | |
(1) Our renegotiated loan and lease operations increased in 2015 due to the worsening macroeconomic scenario, mainly in Brazil, specifically in the segment corporate. The following table below presents the changes in our loan and lease portfolio with loss event, including the changes of the renegotiated loans and leases with loss event related to each year as of December 31, 2016, 2015 2014 and 2013:2014: | | | | | | (In millions of R$) | | | Impaired Loans | | 2015 | | | 2014 | | | 2013 | | | Balance at the beginning of the period | | 17,206 | | | 16,305 | | | 19,511 | | | (+) Loan operations added | | | 21,701 | | | | 12,521 | | | | 9,882 | | | (+) Loan operations added due to redefault | | | 4,587 | | | | 3,915 | | | | 5,029 | | | (-) Loans removed due to write-off | | | (9,474 | ) | | | (10,006 | ) | | | (12,460 | ) | | (-) Loans removed due to renegotiation (including amendments) | | | (5,703 | ) | | | (4,505 | ) | | | (4,595 | ) | | (-) Loans removed due to total or partial pay-off | | | (1,160 | ) | | | (1,024 | ) | | | (1,062 | ) | | Balance at the end of the period | | | 27,157 | | | | 17,206 | | | | 16,305 | |
Financial performance | A-133 |
| Impaired loans | | 2016 | | | 2015 | | | 2014 | | | | | (In millions of R$) | | | Balance at the beginning of the period | | | 27,157 | | | | 17,206 | | | | 16,305 | | | (+) Loan operations added | | | 21,075 | | | | 21,701 | | | | 12,521 | | | (+) Loan operations added due to redefault | | | 5,188 | | | | 4,587 | | | | 3,915 | | | (-) Loans removed due to write-off | | | (10,737 | ) | | | (9,474 | ) | | | (10,006 | ) | | (-) Loans removed due to renegotiation (including amendments) | | | (1,453 | ) | | | (1,160 | ) | | | (1,024 | ) | | (-) Loans removed due to total or partial pay-off | | | (10,913 | ) | | | (5,703 | ) | | | (4,505 | ) | | Balance at the end of the period | | | 30,317 | | | | 27,157 | | | | 17,206 | |
Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS),in IFRS Note 12 – Loan operations and lease operations portfolio for further details.
Cross border outstanding Cross border outstanding are monetary assets which are denominated in non-local currency and exceeded 1% of our total assets in the case of transactions with foreign clients entered into by our subsidiaries in the United Kingdom (our former subsidiary in Portugal), the Cayman Islands, the Bahamas and Uruguay.Chile. The aggregate cross border outstanding breakdown of these subsidiaries for the periods indicated below is as follows: | | | (In millions of R$, except percentages) | | | | | As of December 31, | | | Cross border outstanding | | 2015(1) | | | % | | | 2014 | | | % | | | 2013(2) | | | % | | | Cash and deposits on demand | | | 52,649 | | | | 4.1 | | | | 4,187 | | | | 0.4 | | | | 4,897 | | | | 0.5 | | | Interbank deposits | | | 139,190 | | | | 10.9 | | | | 64,491 | | | | 5.7 | | | | 33,630 | | | | 3.3 | | | Securities purchased under agreements to resell | | | 20,187 | | | | 1.6 | | | | 24,606 | | | | 2.2 | | | | 2,877 | | | | 0.3 | | | Central Bank compulsory deposits | | | 2,891 | | | | 0.2 | | | | 3 | | | | 0.0 | | | | 3 | | | | 0.0 | | | Financial assets held for trading | | | 6,995 | | | | 0.5 | | | | 5,978 | | | | 0.5 | | | | 5,848 | | | | 0.6 | | | Derivatives | | | 15,409 | | | | 1.2 | | | | 9,321 | | | | 0.8 | | | | 8,008 | | | | 0.8 | | | Available for sale financial assets | | | 69,331 | | | | 5.4 | | | | 39,850 | | | | 3.5 | | | | 38,296 | | | | 3.7 | | | Financial assets held to maturity | | | 15,446 | | | | 1.2 | | | | 10,767 | | | | 1.0 | | | | 6,723 | | | | 0.7 | | | Loan and lease operations | | | 70,010 | | | | 5.5 | | | | 97,740 | | | | 8.7 | | | | 57,834 | | | | 5.6 | | | Total outstanding | | | 392,108 | | | | 30.7 | | | | 256,943 | | | | 22.8 | | | | 158,116 | | | | 15.4 | |
| (1) | Increase in interbank deposits is largely explained by the U.S. dollar exposure on a dollar denominated deposit at the Nassau entity. |
| (2) | On February 1, 2013, Banco Itaú BBA International S.A., headquartered in Portugal, was merged into Itau BBA International Limited, headquartered in the United Kingdom. On May 17, 2013, the entity was registered as a public limited company under the trade name Itau BBA International plc. The purpose of this restructuring process is to allow Itau BBA International to improve its performance and sources of funding, expand its client base, strengthen its position as an international platform for Itaú Unibanco Group, achieve greater diversification of risk and increase profitability indicator 2013 data reflects non-British pound sterling cross-border outstandings. |
| Cross border outstanding | | 12/31/2016 | | | % | | | 12/31/2015 | | | % | | | 12/31/2014 | | | % | | | | | (In millions of R$, except percentages) | | | Cash and deposits on demand | | | 41,234 | | | | 3.1 | | | | 52,649 | | | | 4.1 | | | | 4,187 | | | | 0.4 | | | Interbank deposits | | | 97,934 | | | | 7.2 | | | | 139,190 | | | | 10.9 | | | | 64,491 | | | | 5.7 | | | Securities purchased under agreements to resell | | | 22,267 | | | | 1.6 | | | | 20,187 | | | | 1.6 | | | | 24,606 | | | | 2.2 | | | Central Bank compulsory deposits | | | 266 | | | | 0.0 | | | | 2,891 | | | | 0.2 | | | | 3 | | | | 0.0 | | | Financial assets held for trading | | | 12,121 | | | | 0.9 | | | | 6,995 | | | | 0.5 | | | | 5,978 | | | | 0.5 | | | Derivatives | | | 10,153 | | | | 0.8 | | | | 15,409 | | | | 1.2 | | | | 9,321 | | | | 0.8 | | | Available for sale financial assets | | | 47,002 | | | | 3.5 | | | | 69,331 | | | | 5.4 | | | | 39,850 | | | | 3.5 | | | Financial assets held to maturity | | | 12,595 | | | | 0.9 | | | | 15,446 | | | | 1.2 | | | | 10,767 | | | | 1.0 | | | Loan and lease operations | | | 59,667 | | | | 4.4 | | | | 70,010 | | | | 5.5 | | | | 97,740 | | | | 8.7 | | | Total outstanding | | | 303,239 | | | | 22.4 | | | | 392,108 | | | | 30.7 | | | | 256,943 | | | | 22.8 | |
Short-term borrowings Short-term borrowings are included in our balance sheet under the “Securities sold under repurchase agreement” line item. The main category for short-term borrowings is “Deposits Received under Securities Repurchase Agreements with Own and Third-Party Financial Assets”. The following table below shows our short-term borrowings as of December 31, 2016, 2015 2014 and 2013:2014: | | | (In millions of R$, except percentages) | | | | As of December 31, | | | Securities sold under repurchase agreements | | 2015 | | | 2014 | | | 2013 | | | | | | | | | | | | | | Amount outstanding | | | 336,643 | | | | 288,683 | | | | 266,682 | | | Maximum amount outstanding during the period | | | 336,643 | | | | 288,683 | | | | 271,621 | | | Weighted average interest rate at period-end (%) | | | 9.9 | | | | 9.9 | | | | 9.4 | | | Average amount outstanding during period | | | 295,817 | | | | 266,527 | | | | 256,025 | | | Weighted average interest rate (%) | | | 9.7 | | | | 9.5 | | | | 9.2 | |
| | | As of December 31, | | | Securities sold under repurchase agreements | | 2016 | | | 2015 | | | 2014 | | | | | (In millions of R$, except percentages) | | | Amount outstanding | | | 349,164 | | | | 336,643 | | | | 288,683 | | | Maximum amount outstanding during the period | | | 358,781 | | | | 336,643 | | | | 288,683 | | | Weighted average interest rate at period-end (%) | | | 12.1 | | | | 11.7 | | | | 10.2 | | | Average amount outstanding during period | | | 339,416 | | | | 297,509 | | | | 266,527 | | | Weighted average interest rate (%) | | | 11.9 | | | | 12.3 | | | | 11.1 | |
Liabilities Funding Main sources Our current funding strategy is to continue to use all of our sources of funds in accordance with their costs and availability and our general asset and liability management strategy. In order to fund our operations, we intensified the use of the liquidity generated by savings deposits, interbank deposits, debt in the interbank market and debt in the institutional market during 2016, 2015 2014 and 2013.2014. We also used Brazilian debentures subject to repurchase as a source of funding, reported as deposits received under securities repurchase agreements and offered to institutional clients as well as private banking, corporate banking and retail clients. This funding is designed to provide increased profitability through higher spreads in our savings deposits and higher fees earned on market funds. Our ability to obtain funding depends on several factors, including credit ratings, general economic conditions and investors’ perception of emerging markets in general and of Brazil (particularly, current political and economic conditions in Brazil and government regulations for foreign currency funding). Part of our long-term debt provides for the advance payment of the outstanding principal balance upon the occurrence of certain facts, as is customary for long-term financing agreements. As of December 31, 2014,2016, none of these events, including default events and non-compliance with any financial covenant, had occurred, and we have no reason to believe that any of these events are likely to occur in 2015.2017. Our main sources of funding are our deposits, which are split into demand deposits, savings deposits, time deposits and interbank deposits. As of December 31, 2015,2016, total deposits were R$292,610329,414 million, which represented 36.3% of total funding. As of December 31, 2015, total deposits amounted to R$292,610 million, representing 33.2% of total funding. As of December 31, 2014, total deposits amounted to R$294,773 million, representing 37.8% of total funding. As of December 31, 2013, total deposits amounted to R$274,383 million, representing 37.9% of our total funding. Our time deposits represent one of our
major sources of funding which, as of December 31, 2016, 2015 2014 and 20132014 accounted for 12.0%17.2%, 13.9%12.0% and 16.2%13.9% of total funding, respectively. Financial performance | A-134 |
The following table below shows the breakdown of our main sources of funds as of December 31, 2016, 2015 2014 and 2013:2014: | | | (In millions of R$, except percentages) | | | | | As of December 31, | | | Breakdown of the main sources of funds | | 2015 | | | % of total funding | | | 2014 | | | % of total funding | | | 2013 | | | % of total funding | | | | | | | | | | | | | | | | | | | | | | | Deposits | | | 292,610 | | | | 33.2 | | | | 294,773 | | | | 37.8 | | | | 274,383 | | | | 37.9 | | | Demand deposits | | | 61,092 | | | | 6.9 | | | | 48,733 | | | | 6.3 | | | | 42,892 | | | | 5.9 | | | Savings deposits | | | 111,319 | | | | 12.6 | | | | 118,449 | | | | 15.1 | | | | 106,166 | | | | 14.7 | | | Time deposits | | | 105,250 | | | | 12.0 | | | | 108,466 | | | | 13.9 | | | | 117,131 | | | | 16.2 | | | Interbank deposits | | | 14,949 | | | | 1.7 | | | | 19,125 | | | | 2.5 | | | | 8,194 | | | | 1.1 | | | Securities sold under repurchase agreements | | | 336,643 | | | | 38.3 | | | | 288,683 | | | | 37.0 | | | | 266,682 | | | | 36.8 | | | Interbank market debt | | | 156,886 | | | | 17.8 | | | | 122,586 | | | | 15.8 | | | | 111,376 | | | | 15.4 | | | Mortgage notes | | | 139 | | | | - | | | | 143 | | | | - | | | | 181 | | | | 0.0 | | | Real estate credit bills | | | 14,452 | | | | 1.6 | | | | 10,832 | | | | 1.4 | | | | 8,919 | | | | 1.2 | | | Agribusiness credit bills | | | 13,775 | | | | 1.6 | | | | 7,811 | | | | 1.0 | | | | 7,273 | | | | 1.0 | | | Financial credit bills | | | 18,496 | | | | 2.1 | | | | 10,645 | | | | 1.4 | | | | 13,823 | | | | 1.9 | | | Import and export Financing | | | 65,566 | | | | 7.5 | | | | 43,381 | | | | 5.6 | | | | 33,614 | | | | 4.6 | | | Onlending-domestic | | | 38,804 | | | | 4.4 | | | | 45,230 | | | | 5.8 | | | | 43,015 | | | | 5.9 | | | Liabilities from transactions related to credit assignments | | | 5,654 | | | | 0.6 | | | | 4,544 | | | | 0.6 | | | | 4,514 | | | | 0.6 | | | Other | | | - | | | | - | | | | - | | | | - | | | | 37 | | | | 0.0 | | | Institutional market debt | | | 93,918 | | | | 10.7 | | | | 73,242 | | | | 9.4 | | | | 72,055 | | | | 9.9 | | | Subordinated debt | | | 65,785 | | | | 7.5 | | | | 55,617 | | | | 7.1 | | | | 56,564 | | | | 7.8 | | | Foreign borrowings through securities | | | 24,188 | | | | 2.7 | | | | 15,392 | | | | 2.0 | | | | 15,491 | | | | 2.1 | | | Structured Operations Certificates | | | 3,945 | | | | 0.4 | | | | 2,233 | | | | 0.3 | | | | - | | | | - | | | Total | | | 880,057 | | | | 100.0 | | | | 779,284 | | | | 100.0 | | | | 724,496 | | | | 100.0 | |
| | | | | | % of total | | | | | | % of total | | | | | | % of total | | | Breakdown of the main sources of funds | | 2016 | | | funding | | | 2015 | | | funding | | | 2014 | | | funding | | | | | (In millions of R$, except percentages) | | | Deposits | | | 329,414 | | | | 36.3 | | | | 292,610 | | | | 33.2 | | | | 294,773 | | | | 37.8 | | | Demand deposits | | | 61,133 | | | | 6.7 | | | | 61,092 | | | | 6.9 | | | | 48,733 | | | | 6.3 | | | Savings deposits | | | 108,250 | | | | 12.0 | | | | 111,319 | | | | 12.6 | | | | 118,449 | | | | 15.1 | | | Time deposits | | | 156,274 | | | | 17.2 | | | | 105,250 | | | | 12.0 | | | | 108,466 | | | | 13.9 | | | Interbank deposits | | | 3,757 | | | | 0.4 | | | | 14,949 | | | | 1.7 | | | | 19,125 | | | | 2.5 | | | Securities sold under repurchase agreements | | | 349,164 | | | | 38.2 | | | | 336,643 | | | | 38.3 | | | | 288,683 | | | | 37.0 | | | Interbank market debt | | | 135,483 | | | | 14.9 | | | | 156,886 | | | | 17.8 | | | | 122,586 | | | | 15.8 | | | Mortgage notes | | | - | | | | - | | | | 139 | | | | - | | | | 143 | | | | - | | | Real estate credit bills | | | 19,179 | | | | 2.1 | | | | 14,452 | | | | 1.6 | | | | 10,832 | | | | 1.4 | | | Agribusiness credit bills | | | 15,442 | | | | 1.7 | | | | 13,775 | | | | 1.6 | | | | 7,811 | | | | 1.0 | | | Financial credit bills | | | 19,566 | | | | 2.2 | | | | 18,496 | | | | 2.1 | | | | 10,645 | | | | 1.4 | | | Import and export Financing | | | 45,633 | | | | 5.0 | | | | 65,566 | | | | 7.5 | | | | 43,381 | | | | 5.6 | | | Onlending-domestic | | | 29,828 | | | | 3.3 | | | | 38,804 | | | | 4.4 | | | | 45,230 | | | | 5.8 | | | Liabilities from transactions related to credit assignments | | | 5,835 | | | | 0.6 | | | | 5,654 | | | | 0.6 | | | | 4,544 | | | | 0.6 | | | Institutional market debt | | | 96,239 | | | | 10.6 | | | | 93,918 | | | | 10.7 | | | | 73,242 | | | | 9.4 | | | Subordinated debt | | | 57,420 | | | | 6.3 | | | | 65,785 | | | | 7.5 | | | | 55,617 | | | | 7.1 | | | Foreign borrowings through securities | | | 33,583 | | | | 3.7 | | | | 24,188 | | | | 2.7 | | | | 15,392 | | | | 2.0 | | | Structured Operations Certificates | | | 5,236 | | | | 0.6 | | | | 3,945 | | | | 0.4 | | | | 2,233 | | | | 0.3 | | | Total | | | 910,300 | | | | 100.0 | | | | 880,057 | | | | 100.0 | | | | 779,284 | | | | 100.0 | |
Deposits by maturity The following table below shows the maturity profile of our deposits as of December 31, 2016, 2015 2014 and 2013:2014: | | | (In millions of R$) | | | | | | As of December 31, 2015 | | | 2016 | | | Deposits by maturity | | 0-30 days | | 31-180 days | | 181-365 days | | Over 365 days | | | Total | | | 0-30 days | | | 31-180 days | | | 181-365 days | | | Over 365 days | | | Total | | | | | | (In millions of R$) | | | Non-interest bearing deposits | | | 61,092 | | | | - | | | | - | | | | - | | | | 61,092 | | | | 61,133 | | | | - | | | | - | | | | - | | | | 61,133 | | | Demand deposits | | | 61,092 | | | | - | | | | - | | | | - | | | | 61,092 | | | | 61,133 | | | | - | | | | - | | | | - | | | | 61,133 | | | Interest bearing deposits | | | 129,260 | | | | 27,979 | | | | 14,288 | | | | 59,991 | | | | 231,518 | | | | 139,982 | | | | 30,166 | | | | 17,734 | | | | 80,399 | | | | 268,281 | | | Savings deposits | | | 111,319 | | | | - | | | | - | | | | - | | | | 111,319 | | | | 108,250 | | | | - | | | | - | | | | - | | | | 108,250 | | | Time deposits | | | 13,466 | | | | 19,252 | | | | 13,276 | | | | 59,256 | | | | 105,250 | | | | 30,555 | | | | 28,248 | | | | 17,109 | | | | 80,362 | | | | 156,274 | | | Interbanks deposits | | | 4,475 | | | | 8,727 | | | | 1,012 | | | | 735 | | | | 14,949 | | | | Interbanks Deposits | | | | 1,177 | | | | 1,918 | | | | 625 | | | | 37 | | | | 3,757 | | | Total | | | 190,352 | | | | 27,979 | | | | 14,288 | | | | 59,991 | | | | 292,610 | | | | 201,115 | | | | 30,166 | | | | 17,734 | | | | 80,399 | | | | 329,414 | |
| | | (In millions of R$) | | | | | | As of December 31, 2014 | | | 2015 | | | Deposits by maturity | | 0-30 days | | 31-180 days | | 181-365 days | | Over 365 days | | | Total | | | 0-30 days | | | 31-180 days | | | 181-365 days | | | Over 365 days | | | Total | | | | | | (In millions of R$) | | | Non-interest bearing deposits | | | 48,733 | | | | - | | | | - | | | | - | | | | 48,733 | | | | 61,092 | | | | - | | | | - | | | | - | | | | 61,092 | | | Demand deposits | | | 48,733 | | | | - | | | | - | | | | - | | | | 48,733 | | | | 61,092 | | | | - | | | | - | | | | - | | | | 61,092 | | | Interest bearing deposits | | | 134,841 | | | | 36,829 | | | | 8,537 | | | | 65,833 | | | | 246,040 | | | | 129,260 | | | | 27,979 | | | | 14,288 | | | | 59,991 | | | | 231,518 | | | Savings deposits | | | 118,449 | | | | - | | | | - | | | | - | | | | 118,449 | | | | 111,319 | | | | - | | | | - | | | | - | | | | 111,319 | | | Time deposits | | | 11,705 | | | | 23,656 | | | | 7,775 | | | | 65,330 | | | | 108,466 | | | | 13,466 | | | | 19,252 | | | | 13,276 | | | | 59,256 | | | | 105,250 | | | Interbanks deposits | | | 4,687 | | | | 13,173 | | | | 762 | | | | 503 | | | | 19,125 | | | | Interbanks Deposits | | | | 4,475 | | | | 8,727 | | | | 1,012 | | | | 735 | | | | 14,949 | | | Total | | | 183,574 | | | | 36,829 | | | | 8,537 | | | | 65,833 | | | | 294,773 | | | | 190,352 | | | | 27,979 | | | | 14,288 | | | | 59,991 | | | | 292,610 | |
| | | (In millions of R$) | | | | | As of December 31, 2013 | | | Deposits by maturity | | 0-30 days | | | 31-180 days | | | 181-365 days | | | Over 365 days | | | Total | | | Non-interest bearing deposits | | | 42,892 | | | | - | | | | - | | | | - | | | | 42,892 | | | Demand deposits | | | 42,892 | | | | - | | | | - | | | | - | | | | 42,892 | | | Interest bearing deposits | | | 120,194 | | | | 33,345 | | | | 12,107 | | | | 65,845 | | | | 231,491 | | | Savings deposits | | | 106,166 | | | | - | | | | - | | | | - | | | | 106,166 | | | Time deposits | | | 12,260 | | | | 29,436 | | | | 9,961 | | | | 65,474 | | | | 117,131 | | | Interbanks deposits | | | 1,768 | | | | 3,909 | | | | 2,146 | | | | 371 | | | | 8,194 | | | Total | | | 163,086 | | | | 33,345 | | | | 12,107 | | | | 65,845 | | | | 274,383 | |
| | | 2014 | | | Deposits by maturity | | 0-30 days | | | 31-180 days | | | 181-365 days | | | Over 365 days | | | Total | | | | | (In millions of R$) | | | Non-interest bearing deposits | | | 48,733 | | | | - | | | | - | | | | - | | | | 48,733 | | | Demand deposits | | | 48,733 | | | | - | | | | - | | | | - | | | | 48,733 | | | Interest bearing deposits | | | 134,841 | | | | 36,829 | | | | 8,537 | | | | 65,833 | | | | 246,040 | | | Savings deposits | | | 118,449 | | | | - | | | | - | | | | - | | | | 118,449 | | | Time deposits | | | 11,705 | | | | 23,656 | | | | 7,775 | | | | 65,330 | | | | 108,466 | | | Interbanks Deposits | | | 4,687 | | | | 13,173 | | | | 762 | | | | 503 | | | | 19,125 | | | Total | | | 183,574 | | | | 36,829 | | | | 8,537 | | | | 65,833 | | | | 294,773 | |
Financial performance | A-135 |
The following table below sets forth the maturity of outstanding time deposits with balances in excess of US$100,000 (or its equivalent) issued by us as of December 31, 2016, 2015 2014 and 2013:2014: | | | (In millions of R$) | | | | | 2015 | | | 2014 | | | 2013 | | | Maturity within three months | | | 26,545 | | | | 32,549 | | | | 21,737 | | | Maturity after three months to six months | | | 10,512 | | | | 13,782 | | | | 6,066 | | | Maturity after six months to twelve months | | | 8,925 | | | | 6,097 | | | | 5,273 | | | Maturity after twelve months | | | 17,443 | | | | 34,251 | | | | 47,116 | | | Total time deposits in excess of US$100,000 | | | 63,425 | | | | 86,679 | | | | 80,192 | |
| | | 2016 | | | 2015 | | | 2014 | | | | | (In millions of R$) | | | Maturity within three months | | | 30,560 | | | | 26,545 | | | | 32,549 | | | Maturity after three months to six months | | | 11,124 | | | | 10,512 | | | | 13,782 | | | Maturity after six months to twelve months | | | 12,509 | | | | 8,925 | | | | 6,097 | | | Maturity after twelve months | | | 35,167 | | | | 17,443 | | | | 34,251 | | | Total time deposits in excess of US$100,000 | | | 89,360 | | | | 63,425 | | | | 86,679 | |
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, 2016, 2015 2014 and 2013:2014: | | | | | | | | | (%) | | | | | 2015 | | | 2014 | | | 2013 | | | Retail | | | 8.3 | | | | 3.4 | | | | 6.2 | | | Itaú Personnalité | | | 17.3 | | | | 19.4 | | | | 17.1 | | | Middle market | | | 28.5 | | | | 26.2 | | | | 28.0 | | | Corporate | | | 44.2 | | | | 35.6 | | | | 48.7 | | | Institutional | | | 1.7 | | | | 15.5 | | | | | | | Total | | | 100.0 | | | | 100.0 | | | | 100.0 | |
| | | 2016 | | | 2015 | | | 2014 | | | | | (%) | | | Retail | | | 8.1 | | | | 8.3 | | | | 3.4 | | | Itaú Personnalité | | | 14.3 | | | | 17.3 | | | | 19.4 | | | Middle market | | | 39.7 | | | | 28.5 | | | | 26.2 | | | Corporate | | | 32.5 | | | | 44.2 | | | | 35.6 | | | Institutional | | | 5.4 | | | | 1.7 | | | | 15.5 | | | Total | | | 100.0 | | | | 100.0 | | | | 100.0 | |
Other sources We also act as a financial agent in borrowing funds from BNDES and FINAME, and lending such funds at a spread determined by the Brazilian government to targeted sectors of the economy. We obtain U.S. dollar-denominated lines of credit from our affiliates, including Itaú Unibanco Holding – Grand Cayman branch, Banco Itaú Chile and Itaú BBA S.A. – Nassau branch to provide trade finance funding for Brazilian companies. For further details on on Lending domestic and import and export financing, please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 19 – Securities Sold under Repurchase Agreements and Interbank and Institutional Market Debts. Litigation Overview We are not defendants in any significant administrative proceeding before the CVM, SUSEP, the Central Bank or any municipalities. As part of the ordinary course of our business, we are subject to, and we are party to various legal and administrative proceedings (including consumer complaints) filed against us with SUSEP, certain municipalities or the Central Bank. Our complete 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. 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 business, 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. Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 32 – Provisions, Contingencies and Other Commitments, for further information and details about the changes in the provisions and respective escrow deposits for tax and social security lawsuits and main types of tax disputes. The following table sets forth our provisions for such contingencies as of December 31, 2016, 2015 2014 and 2013:2014 | | | (In millions of R$) | | | | | As of December 31, | | | Provision | | 2015 | | | 2014 | | | 2013 | | | Civil | | | 5,227 | | | | 4,643 | | | | 4,473 | | | Labor | | | 6,132 | | | | 5,598 | | | | 5,192 | | | Tax and social security | | | 7,500 | | | | 6,627 | | | | 8,974 | | | Other | | | 135 | | | | 159 | | | | 223 | | | Total | | | 18,994 | | | | 17,027 | | | | 18,862 | |
| Provision | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | | | (In millions of R$) | | | Civil | | | 5,172 | | | | 5,227 | | | | 4,643 | | | Labor | | | 7,232 | | | | 6,132 | | | | 5,598 | | | Tax and social security | | | 8,246 | | | | 7,500 | | | | 6,627 | | | Other | | | 259 | | | | 135 | | | | 159 | | | Total | | | 20,909 | | | | 18,994 | | | | 17,027 | |
No class actions alleging unfair competition, trust or monopoly practices were brought against us in 2015. Civil Litigation
Litigation Arising from Government Monetary Stabilization Plans
From 1986 to 1994, the Brazilian federal government implemented several consecutive monetary stabilization plans, or MSP, 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 MSPs 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 MSPs.
We are defendants in numerous standardized lawsuits filed by individuals in respect of the MSPs. We record provisions for such claims upon service of process for a claim.2016.
Financial performance | A-136 |
A-143 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’ offices (Ministério Público) on behalf of holders of savings accounts. Holders of savings accounts may collect any amount owing on account of a final decision. We record provisions when individual plaintiffs apply to enforce any such decisions, using the same criteria used to determine provisions for individual lawsuits.Civil litigation
The Federal Supreme Court (Supremo TribunalLitigation arising from government monetary stabilization plansFederal, or STF) has issued
We are a numberdefendant in lawsuits for the collection of decisionsin favor ofunderstated inflation adjustment for savings resulting from the holders of savings accounts, but has not issued a final ruling with respect toeconomic plans implemented in the constitutionality of the MSPs as applicable to savings accounts. In relation to a similar dispute with respect to the constitutionality of the MSPs as applicable to time deposits1980s and other private agreements, the Federal Supreme Court has decided that the laws were in accordance with1990s by the Brazilian federal constitution. In responseFederal Government as a measure to this discrepancy, theConfederação Nacionaldo Sistema Financeiro, or CONSIF, an associationof Brazilian financial institutions, filed a special proceeding with the Federal Supreme Court (Arguição de Descumprimento de PreceitoFundamental nº 165), in which the Central Bankhas filed an amicus brief, arguing that holders of savings accounts did not incur actual damagescombat inflation. Please refer to section Our risk management, item Risk factors, Legal and that the MSPs as applicable to savings accounts were in accordance with the federal constitution. Accordingly, the STF suspended the ruling of all appeals involving this matter until it hands down a final decision. However, there is no estimate of when the STF will render a judgment in the case, as there has not been a sufficient quorum to decide the issue. In addition, the STJ, which is the highest court responsible for decidingregulatory risks, Decision on federal laws, is about to rule on several aspects that will directly determine the amount due, in case the STF rules against the constitutionality of the MSPs. The most relevant of such decisions will be: (i) the accrual of compensatory interests on the amountlawsuits due to the plaintiff, in filings that carry no specific claim to such interests; (ii) the initial date of default interests, in regard to class actions; and (iii) the possibility of compensating the negative difference arising in the month of the MSP implementation, between interest actually paidgovernment monetary stabilization plans may have a material adverse effect on saving accounts and the inflation rate of the same period, with the positive difference arising in the months subsequent to the MSP implementation, between interest actually paid on saving accounts and the inflation rate of the same period. In relevant trials during 2015, the STJ ruled that: (i) compensatory interest would not be included in judgment awards , unless the ruling in question specifically providesus, for the award thereof; and (ii) compensatory interest shall not be required to be paid to savings accountholders once the institution in question can prove that the corresponding savings account has been terminated. In addition, such rulings also confirmed that inflationary effects from MSPs that became effective after those that are subject to the judicial action in question may be included in the claim for purposes of determining the amounts due thereunder, even without the express request of the account holder seeking judicial relief.
In addition, the STJ ruled that the term for filing class actions expired five years from the date of the MSP implementation. As a consequence, numerous class actions have been extinct by the Judiciary since such ruling.further information.
Other Civil Litigationcivil 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. Labor Litigationlitigation In 2015,2016, we and our subsidiaries were not exposed to any labor liabilities or labor contingencies which individually significantly impacted our results. The pool of labor claims for our subsidiaries in such period comprises labor claims filed by employees, former employees and outsourced service providers. Labor unions and former employees have filed labor claims against us, seeking compensation for alleged breaches of employment agreements or rights under the applicable labor laws. As of December 31, 2015,2016, there were 66,84168,386 labor claims filed against us. The main requests in the labor claims filed by our current and former employees include: Salarysalary differences arising from the application of the 30 working hours per week limit, provided for in art. 224 of the Brazilian Labor Laws Consolidation (CLT), wichwhich is applicable to bank employees whose function does not require special trust from the employer;
Salarysalary differences arising from overtime not duly registered in the internal systems;
Claimsclaims with respect to the method to establish the overtime work pay; and
Salarysalary parity.
Labor class actions filed against us mainly relate to the continuation of health care plans, safety rules and strikes. We are also defendants in connection with labor claims filed by the labor prosecution office regarding union classification, outsourcing, occupational diseases, health and safety and compliance with the minimum quotas for disabled personnel. In the fiscal year ended December 31, 2015,2016, we paid approximately R$1,711 2,453 million in direct labor expenses, mainly in settlements and convictions involving former employees, in accordance to the agreements signed and to the rulings imposed by labor courts. Regarding labor claims filed by outsourced service providers, they generally involve allegations of subsidiary liability of the companies within our group. Financial performance | A-137 |
Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 32 – Provisions, Contingencies and Other Commitments, for further information about labor claims. Tax Litigationlitigation 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. Contingent liabilities arising from We classify as legal liability tax disputesdue when we discuss the legality and / or unconstitutionality of the legislation in force. Legal liability taxes are recorded accordingprovisioned regardless of the likelihood of loss. Tax contingencies correspond to the principal amount of taxes involved in dispute,tax, administrative or judicial challenges, subject to tax assessment notices, plus interest and, ifwhen applicable, penaltiesfines and other administrative charges. A provision for such 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 of whether a currently enforceable law is constitutional or unconstitutional. In any other situation, a provision is recognized if a loss is probable (prevailing inwhenever the litigationchance of prevailing is less likely than a loss).not. We participated in a program (Programade Pagamento ou Parcelamento de Tributos Federais) for the payment of federal taxes through installments, as established by Law No. 13,043 of November, 2014 and Law No. 13,097 of January, 2015 which discharges taxpayer debts in litigation with certain discounts as to penalties and interest. In addition, we took advantage of a program (Programa de Pagamento ou Parcelamentode Tributos Municipais), established by LawNo. 16,097Laws: (Law No. 5,854, of December 29, 2014April 27, 2015) Rio de Janeiro; (Law No. 8,927, of October 22, 2015 and Decree No. 26,624 of October 26, 2015) Salvador; (Law No. 18,181, of November 30, 2015 and Decree No. 29,275 of November 30, 2015) Recife; (Supplementary Law No. 95, of October 19, 2015) Curitiba for the payment of municipal tax debts with certain discounts as to penalties and interest. In both cases (federal and municipal) weWe settled the contested tax liabilities in question in cases with respect to which we had the lowest chances of success, according to our tax advisors. On June 25, 2013, we received a notice of deficiency from the Brazilian tax authorities alleging that Itaú Unibanco Holdingwe failed to pay approximately R$11,844.7 million of IRPJ, plus accrued penalties and interest, and approximately R$6,867.0 million of CSLL, plus accrued penalties and interest, in fiscal year 2008, as a result of the corporate transaction that led to the association of Itaú Holding and Unibanco Holdings S.A. The Brazilian tax authorities allege that corporate transactions of a different kind should
have been used. However, the transaction suggested by the Brazilian tax authorities is not supported in the rules applicable rules to financial institutions. On January 30, 2014, we were advised that the Brazilian tax authorities confirmed the notifications in a non-unanimous ruling. On February 28, 2014 we appealed the decision at the Administrative Tax Appeals Tribunal. We continue to defend that the transactions conducted were appropriate and legitimate, having been approved by the involved companies’ management bodies and their respective stockholders, and subsequently sanctioned as well by the relevant regulatory authorities, including the CVM, the Central Bank and the CADE. We and our external counsel assess the risk of loss in this tax proceeding as remote. On April 10, 2017, the Administrative Board of Tax Appeals (CARF), by the Ordinary Instance, rendered a favorable decision to the Company, canceling the tax assessment notice. Currently, we are awaiting Administrative Tax Appeals Tribunal’s decision on the appeal.formalization of the judgment. Additionally, we received inrelating to the same transaction on November 14, 2013, still about the same operation,we received a notice of tax assessment issued on behalf of Itaú Unibanco S.A., charging R$ 1.439, 91,439.9 million of Income Tax (IRPJ) and R$ 502,56502.56 million of (CSLL), plus accrued penalties and interest. This case isWe also assess the risk of losschances in prevailing in this litigation as remotemore likely than not. We filed a voluntary appeal that was dismissed by our lawyers. TheCARF. Currently, the proceeding is pending judgment of judgment in the administrative court.special appeal filed by the company with the Superior Administrative Court of Federal Tax Appeals (CSRF). Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 32 – Provisions, Contingencies and Other Commitments, for further details about the changes in the provisions and respective escrow deposits for tax and social security lawsuits and main types of tax disputes. Derivative Instrumentsinstruments that Qualifyqualify for Hedge Accountinghedge accounting Hedging transactions may be classified into three categories: hedge of fair value, cash flows and net investment of foreign operations. | · | Fair value hedge: is aimed at protecting us against changes in market risk due to changes in the fair value of interest subject to variable rates. |
| · | Cash flow hedge: is aimed at protecting us against future cash flows of payments of interest. |
| · | Hedge of net investment of foreign operations: it is aimed at protecting us against changes in future cash flows of foreign exchange variations in net investments of foreign operations. |
Fair value hedge: is aimed at protecting us against changes in market risk due to changes in the fair value of interest subject to variable rates. Cash flow hedge: is aimed at protecting us against future cash flows of payments of interest. Hedge of net investment of foreign operations: it is aimed at protecting us against changes in future cash flows of foreign exchange variations in net investments of foreign operations. Please refer to section Our Risk Managementrisk management item Risk and capital management, Market risk for further details about hedge. Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 9 – Hedge Accounting, for further details. With respect to the hedge accounting policy, please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 2.4 g IIId V – Summary of Main Accounting Practices. Tabular disclosure of contractual obligations Financial performance | A-138 |
Tabular Disclosure of Contractual Obligations
The following table below summarizes the maturity profile of our consolidated long-term debt, operating leases and other contractual commitments as of December 31, 2015:2016: | | | Payments due by period | | | Contractual Obligations | | Total | | | Less than 1
year | | | 1-3 years | | | 3-5 years | | | More than 5
years | | | | | (In millions of R$) | | | Interbank market debt (1)(3) | | | 152,081 | | | | 81,103 | | | | 38,982 | | | | 18,136 | | | | 13,860 | | | Institutional market debt (2)(3) | | | 114,423 | | | | 22,795 | | | | 33,125 | | | | 20,417 | | | | 38,086 | | | Time Deposits(3) | | | 192,387 | | | | 72,266 | | | | 22,488 | | | | 34,763 | | | | 62,870 | | | Operating and capital (finance) lease obligations | | | 6,764 | | | | 1,362 | | | | 3,272 | | | | 1,417 | | | | 713 | | | Endorsements and sureties | | | 70,793 | | | | 17,848 | | | | 7,157 | | | | 2,818 | | | | 42,970 | | | Letters of credit to be released | | | 6,660 | | | | 6,660 | | | | - | | | | - | | | | - | | | Pension Obligations | | | 517 | | | | 50 | | | | 100 | | | | 102 | | | | 265 | | | Health Benefits | | | 221 | | | | 15 | | | | 32 | | | | 37 | | | | 137 | | | Total | | | 543,846 | | | | 202,099 | | | | 105,156 | | | | 77,690 | | | | 158,901 | |
| | | (In millions of R$) | | | | | | | | Payments due by period | | | | | | Contractual Obligations | | Total | | | Less than 1 year | | | 1-3 years | | | 3-5 years | | | More than 5 years | | | | | | | | | | | | | | | | | | | | Interbank market debt (1)(3) | | | 175,028 | | | | 88,068 | | | | 58,606 | | | | 15,334 | | | | 13,020 | | | Institutional market debt(2)(3) | | | 117,316 | | | | 19,278 | | | | 45,584 | | | | 12,014 | | | | 40,440 | | | Time deposits(3) | | | 121,678 | | | | 48,533 | | | | 14,128 | | | | 19,560 | | | | 39,457 | | | Operating and capital (finance) lease obligations | | | 6,812 | | | | 1,758 | | | | 2,836 | | | | 1,233 | | | | 985 | | | Endorsements and sureties | | | 74,244 | | | | 15,838 | | | | 7,652 | | | | 2,482 | | | | 48,272 | | | Letters of credit to be released | | | 6,936 | | | | 6,936 | | | | - | | | | - | | | | - | | | Pension Obligations | | | 310,583 | | | | 26,336 | | | | 54,865 | | | | 58,138 | | | | 171,245 | | | Health Benefits | | | 178,811 | | | | 13,285 | | | | 29,529 | | | | 33,491 | | | | 102,506 | | | Total | | | 991,407 | | | | 220,031 | | | | 213,200 | | | | 142,251 | | | | 415,925 | |
| (1) | Includes mortgage notes, real estate credit bills, agribusiness credit bills, financial credit bills, import and export financing and on-lending –- domestic. |
| (2) | Includes subordinated debt, debentures and foreign borrowings through securities. |
| (3) | 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. |
Our strategy to manage interest rate risk on our long-term debt does not include fixed interest rate swaps or similar derivatives. Please refer to section Performance, item Consolidated Financial Statements (IFRS), Note 19 – Deposits Received Under Securities Repurchase Agreements and Funds from Interbank and Institutional Markets for further details.
Purchases of Sharesshares by the Issuerissuer and Affiliated Purchasersaffiliated purchasers In conformity with best corporate governance practices, on November 18, 2004, we started to voluntarily disclose our Policy for Trading Itaú Unibanco Holding S.A. Securities. Please refer to www.itau.com.br/_arquivosestaticos/RI/pdf/TreasuryStock.pdf for further details. We disclose to the market the transactions carried out with our own shares by our Treasury through an “Announcement to the Market” on a monthly basis, as well as the other disclosure requirements imposed by the Brazilian securities regulation. The repurchase program initially effective in 20152016 was approved by our Board of Directors on NovemberAugust 27, 20142015 with limits of 50.0 million preferred shares and 10.0 million common shares. On July 30, 2015February 1, 2016, our Board of Directors approved the renewal of our share repurchase program through August 4, 2016, authorizing the purchase of up to 11.0 million common shares and 55.0 million preferred shares. On August 27, 2015, our Board of Directors approved the renewal of our share repurchase program through August 26, 2016, authorizing the purchase, in the aggregate, of up to 11.0 million common shares and 50.0 million preferred shares. On February 1, 2016 our Board of Directors once again renewed our share repurchase program through August 2, 2017, authorizing the purchase, in the aggregate with respect to all shares purchased under the program, of up to 10.0 million
common shares and 50.0 million preferred shares issued by us, without reducing our capital stock. The share acquisition process has the following potential objectives: (i) to maximize the allocation of capital through the efficient application of available funds; (ii) to provide for the delivery of shares to the employees and management of the Company and those of its subsidiaries within the scope of the compensation models and the long termlong-term incentive plans; and (iii) to use the acquired shares in the event of business opportunities arising in the future. All purchases shall be open market purchases made through stock exchanges. Financial performance | A-139 |
| Period(1) | | (a) Total number of preferred shares purchased(2) | | | (b) Average price paid per preferred share(2)(3) | | | (c) Total number of preferred shares purchased as part of publicly announced plans or programs(2) | | | (d) Maximum number of preferred shares that may yet be purchased under the plans or programs | | | 01/02 to 01/30/2015 | | | 11,000,000 | | | | 34.13 | | | | 12,000,000 | | | | 38,000,000 | | | 02/02 to 02/27/2015 | | | 3,596,600 | | | | 34.68 | | | | 15,596,600 | | | | 34,403,400 | | | 03/02 to 03/31/2015 | | | 2,000,000 | | | | 34.07 | | | | 17,596,600 | | | | 32,403,400 | | | 04/01 to 04/29/2015 | | | - | | | | - | | | | 17,596,600 | | | | 32,403,400 | | | 05/01 to 05/29/2015 | | | - | | | | - | | | | 17,596,600 | | | | 32,403,400 | | | 06/01 to 06/30/2015 | | | 19,990,000 | | | | 33.96 | | | | 37,586,600 | | | | 12,413,400 | | | 07/01 to 07/30/2015 | | | 2,568,200 | | | | 34.11 | | | | 40,154,800 | | | | 9,845,200 | | | 08/05 to 08/27/2015 | | | 30,380,000 | | | | 27.11 | | | | 30,380,000 | | | | 24,620,000 | | | 08/28 to 08/31/2015 | | | - | | | | - | | | | - | | | | 50,000,000 | | | 09/01 to 09/30/2015 | | | 13,250,000 | | | | 27.29 | | | | 13,250,000 | | | | 36,750,000 | | | 10/01 to 10/30/2015 | | | - | | | | - | | | �� | 13,250,000 | | | | 36,750,000 | | | 11/02 to 11/30/2015 | | | 8,540,000 | | | | 28.31 | | | | 21,790,000 | | | | 28,210,000 | | | 12/01 to 12/31/2015 | | | 20,200,000 | | | | 27.85 | | | | 41,990,000 | | | | 8,010,000 | | | 01/02 to 01/29/2016 | | | 7,990,000 | | | | 25.06 | | | | 49,980,000 | | | | 20,000 | | | 02/01 to 02/29/2016 | | | - | | | | - | | | | - | | | | 50,000,000 | | | 03/01 to 03/31/2016 | | | - | | | | - | | | | - | | | | 50,000,000 | |
| Period(1) | | (a) Total number of preferred
shares purchased(2) | | | (b) Average price paid per
preferred share(2)(3) | | | (c) Total number of preferred
shares purchased as part of
publicly announced plans or
programs(2) | | | (d) Maximum number of
preferred shares that may yet be
purchased under the plans or
programs | | | 01/02 to 01/29/2016 | | | 7,990,000 | | | | 25.06 | | | | 49,980,000 | | | | 20,000 | | | 02/01 to 02/29/2016 | | | - | | | | - | | | | - | | | | 50,000,000 | | | 03/01 to 03/31/2016 | | | - | | | | - | | | | - | | | | 50,000,000 | | | 04/01 to 04/29/2016 | | | - | | | | - | | | | - | | | | 50,000,000 | | | 05/02 to 05/31/2016 | | | - | | | | - | | | | - | | | | 50,000,000 | | | 06/01 to 06/30/2016 | | | - | | | | - | | | | - | | | | 50,000,000 | | | 07/01 to 07/29/2016 | | | - | | | | - | | | | - | | | | 50,000,000 | | | 08/01 to 08/31/2016 | | | - | | | | - | | | | - | | | | 50,000,000 | | | 09/01 to 09/30/2016 | | | - | | | | - | | | | - | | | | 50,000,000 | | | 10/03 to 10/31/2016 | | | - | | | | - | | | | - | | | | 50,000,000 | | | 11/01 to 11/30/2016 | | | 1,000,000 | | | | 35.71 | | | | 1,000,000 | | | | 49,000,000 | | | 12/01 to 12/30/2016 | | | 21,650,000 | | | | 32.86 | | | | 22,650,000 | | | | 27,350,000 | | | 01/02 to 01/31/2017 | | | 6,350,000 | | | | 35.21 | | | | 29,000,000 | | | | 21,000,000 | | | 02/01 to 02/28/2017 | | | - | | | | - | | | | 29,000,000 | | | | 21,000,000 | | 03/01 to 03/31/2017 | | | 1,626,000 | | | | 38.26 | | | | 30,626,000 | | | | 19,374,000 | |
| (1) | On NovemberAugust 27, 2014 our Board of Directors approved the purchase of up to 10,000,000 common shares and 50,000,000 preferred shares, ending on December 15, 2015, on July 30, 2015 our Board of Directors approved the renewal of our share repurchase program, with the limits of 11,000,000 common shares and 55,000,000 preferred shares, ending on August 4, 2016 and on August 27, 2015, for the second time our Board of Directors approved the renewal of our share repurchase program through August 26, 2016, authorizing the purchase of up to 11,000,000 common shares and 50,000,000 preferred shares, andending on August 26, 2016, on February 1, 2016 our Board of Directors once again renewedapproved the renewal of our share repurchase program through August 2, 2017, authorizing the purchase, in the aggregate with respect to all shares purchased under the program, of up to 10.0 million common shares and 50.0 million preferred shares.shares |
| (2) | All amounts were not adjusted at the 10% bonus for our shares. Considering the 10% bonus for our shares, occurred in July 2015,October 2016, we acquired (a) 115.431.4 million preferred shares of our own issue, in the total amount of R$3.3 billion,947.4 million, at the average price of R$28.8030.13 per share. |
| (3) | Includes brokerage costs. |
Capital Expendituresexpenditures In accordance with our practice in the last few years, our capital expenditures in the twelve-month12-month period ended December 31, 20152016 were funded with internal resources. We cannot provide assurance that we will make capital expenditures in the future and, if made, that the amounts will correspond to the current estimates. The following table below show our capital expenditures as of December 31, 2016, 2015 2014 and 2013:2014: (In millions of R$, except percentages)
| | | For the Year Ended December 31, | | Variation | | | For the Year Ended December 31, | | | Variation | | | Capital Expenditures | | 2015 | | 2014 | | 2013 | | 2015-2014 | | 2014-2013 | | | 2016 | | | 2015 | | | 2014 | | | 2016-2015 | | | 2015-2014 | | | | | | (In millions of R$, except percentages) | | | Fixed Assets | | | 1,466 | | | | 3,966 | | | | 2,534 | | | | (2,500 | ) | | | (63.0 | )% | | | 1,432 | | | | 56.5 | % | | | 1,430 | | | | 1,466 | | | | 3,966 | | | | (36 | ) | | | (2.5 | )% | | | (2,500 | ) | | | (63.0 | )% | | Fixed assets under construction | | | 198 | | | | 1,485 | | | | 735 | | | | (1,287 | ) | | | (86.7 | )% | | | 750 | | | | 102.0 | % | | | 341 | | | | 198 | | | | 1,485 | | | | 143 | | | | 72.2 | % | | | (1,287 | ) | | | (86.7 | )% | | Land and buildings | | | 6 | | | | 14 | | | | 22 | | | | (8 | ) | | | (57.1 | )% | | | (8 | ) | | | (36.4 | )% | | | 127 | | | | 6 | | | | 14 | | | | 121 | | | | 2016.7 | % | | | (8 | ) | | | (57.1 | )% | | Leasehold improvements | | | 139 | | | | 169 | | | | 148 | | | | (30 | ) | | | (17.8 | )% | | | 21 | | | | 14.2 | % | | | 137 | | | | 139 | | | | 169 | | | | (2 | ) | | | (1.4 | )% | | | (30 | ) | | | (17.8 | )% | | Furniture and data processing equipment | | | 1,040 | | | | 2,236 | | | | 1,511 | | | | (1,196 | ) | | | (53.5 | )% | | | 725 | | | | 48.0 | % | | | 602 | | | | 1,040 | | | | 2,236 | | | | (438 | ) | | | (42.1 | )% | | | (1,196 | ) | | | (53.5 | )% | | Other | | | 83 | | | | 62 | | | | 118 | | | | 21 | | | | 33.9 | % | | | (56 | ) | | | (47.5 | )% | | | 223 | | | | 83 | | | | 62 | | | | 140 | | | | 168.7 | % | | | 21 | | | | 33.9 | % | | Intangible Assets | | | 1,062 | | | | 1,199 | | | | 2,035 | | | | (137 | ) | | | (11.4 | )% | | | (836 | ) | | | (41.1 | )% | | | 2,846 | | | | 1,062 | | | | 1,199 | | | | 1,784 | | | | 168.0 | % | | | (137 | ) | | | (11.4 | )% | | Acquisition of rights to credit payroll | | | 109 | | | | 109 | | | | 195 | | | | - | | | | 0.0 | % | | | (86 | ) | | | (44.1 | )% | | | 342 | | | | 109 | | | | 109 | | | | 233 | | | | 213.8 | % | | | - | | | | 0.0 | % | | Association for the promotion and offer of financial products and services | | | 39 | | | | 36 | | | | 340 | | | | 3 | | | | 8.3 | % | | | (304 | ) | | | (89.4 | )% | | | 719 | | | | 39 | | | | 36 | | | | 680 | | | | 1743.6 | % | | | 3 | | | | 8.3 | % | | Software developed or obtained for internal use | | | 899 | | | | 1,044 | | | | 1,202 | | | | (145 | ) | | | (13.9 | )% | | | (158 | ) | | | (13.1 | )% | | | 1,508 | | | | 899 | | | | 1,044 | | | | 609 | | | | 67.7 | % | | | (145 | ) | | | (13.9 | )% | | Other intangibles | | | 15 | | | | 10 | | | | 298 | | | | 5 | | | | 50.0 | % | | | (288 | ) | | | (96.6 | )% | | | 277 | | | | 15 | | | | 10 | | | | 262 | | | | 1746.7 | % | | | 5 | | | | 50.0 | % | | Total | | | 2,528 | | | | 5,165 | | | | 4,569 | | | | (2,637 | ) | | | (51.1 | )% | | | 596 | | | | 13.0 | % | | | 4,276 | | | | 2,528 | | | | 5,165 | | | | 1,748 | | | | 69.1 | % | | | (2,637 | ) | | | (51.1 | )% |
Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS), Note 15 – Fixed Assets and Note 16 – Intangible Assets for further details.
Fixed assets property, plant and equipment Property, Plant and Equipment
As of December 31, 2015,2016, we own and leaserent our principal administrative offices, which included 820 office buildings in 10 different addresses, having a total area of 420,036445,707 square meters, located primarily in São Paulo, Brazil. These offices include our head office, and a number of other administrative buildings, where administrative functions are performed, such as commercial department, back offices, wholesale and investment bank activities, and also our data processing center. AsIn July 2016, we successfully completed the migration of December 31, 2015, we completed our IT investments plannedall of Itaú Unibanco’s business processing and operation to the new datacenter in the city of Mogi Mirim. This move marks the end of the enormous investment made in and detailed implementation planning of the new technological center, which will allow for the period from 2012sustainability of the business over the coming decades, as well as for innovation, competitiveness and, more importantly, the opportunity to 2015, which we funded fromdigitalize our business and internal resources. These investments were made in data processing systems, purchase of software, system developmentdepartments, thus creating a new experience for our employees and in our new Data Center built in the State of São Paulo, which opened in March 2015. This technology center will provide an increase in the processing and storage capacity of our operations by 25 times, in addition to providing a 43% reduction in the use of energy, as compared to our current consumption. The new data center will support our growth up to 2050, ensuring the high performance and availability of our operations.clients.
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 half of 20162017 (which are in the process of being renewed under similar terms) to the fourth quarter of 2036. As of December 31, 2015,2016, we owned approximately 19%25% of our administrative offices and branches (including electronic service points, banking sites and parking lots) and leased approximately 81%75%.
Financial performance | A-140 |
Capitalization The following table below presents our capitalization as of December 31, 2015.2016. The information described is derived from our consolidated financial statements as of and for the year ended December 31, 2015.2016. As of the date of this Consolidated Annual Report, there has been no material change in our capitalization since December 31, 2015.2016. You should read the following table below in conjunction with the information included in section Our profile, item In numbers, Selected Financial Data – IFRS, section Performance and section Attachments, item Selected Statistical Information for further details. | | | (In millions of R$, except percentages) | | | | | As of December 31, 2015 | | | Capitalization | | R$ | | | US$(1) | | | Current liabilities | | | | | | | | | | Deposits | | | 232,619 | | | | 59,573 | | | Securities sold under repurchase agreements | | | 181,198 | | | | 46,404 | | | Financial liabilities held for trading | | | 34 | | | | 9 | | | Derivatives | | | 14,507 | | | | 3,715 | | | Interbank market debt | | | 80,547 | | | | 20,628 | | | Institutional market debt | | | 15,859 | | | | 4,061 | | | Other financial liabilities | | | 68,478 | | | | 17,537 | | | Reserves for insurance and private pension | | | 4,864 | | | | 1,246 | | | Liabilities for capitalization plans | | | 3,044 | | | | 779 | | | Provisions | | | 3,848 | | | | 985 | | | Tax liabilities | | | 2,364 | | | | 605 | | | Other liabilities | | | 24,975 | | | | 6,396 | | | Total | | | 632,337 | | | | 161,938 | | | Long-term liabilities | | | | | | | | | | Deposits | | | 59,991 | | | | 15,363 | | | Securities sold under repurchase agreements | | | 155,445 | | | | 39,809 | | | Financial liabilities held for trading | | | 378 | | | | 97 | | | Derivatives | | | 16,564 | | | | 4,242 | | | Interbank market debt | | | 76,339 | | | | 19,550 | | | Institutional market debt | | | 78,059 | | | | 19,991 | | | Other financial liabilities | | | 237 | | | | 61 | | | Reserves for insurance and private pension | | | 124,441 | | | | 31,869 | | | Liabilities for capitalization plans | | | - | | | | - | | | Provisions | | | 15,146 | | | | 3,879 | | | Tax liabilities | | | 2,237 | | | | 573 | | | Other liabilities | | | 812 | | | | 208 | | | Total | | | 529,649 | | | | 135,641 | | | Income tax and social contribution – deferred | | | 370 | | | | 95 | | | Non-controlling interests | | | 1,807 | | | | 463 | | | Stockholders’ equity (2) | | | 112,252 | | | | 28,747 | | | Total capitalization (3) | | | 1,276,415 | | | | 326,884 | | | BIS ratio(4) (%) | | | 17.8 | | | | | |
| | | As of December 31, 2016 | | | Capitalization | | R$ | | | US$ (1) | | | | | (In millions of R$, except percentages) | | | | | | | | | | | Current liabilities | | | | | | | | | | Deposits | | | 249,015 | | | | 76,406 | | | Securities sold under repurchase agreements | | | 234,569 | | | | 71,974 | | | Financial liabilities held for trading | | | 134 | | | | 41 | | | Derivatives | | | 10,810 | | | | 3,317 | | | Interbank market debt | | | 75,352 | | | | 23,120 | | | Institutional market debt | | | 19,053 | | | | 5,846 | | | Other financial liabilities | | | 71,798 | | | | 22,030 | | | Reserves for insurance and private pension | | | 1,450 | | | | 445 | | | Liabilities for capitalization plans | | | 3,147 | | | | 966 | | | Provisions | | | 4,434 | | | | 1,360 | | | Tax liabilities | | | 1,741 | | | | 534 | | | Other liabilities | | | 25,968 | | | | 7,968 | | | Total | | | 697,471 | | | | 214,007 | | | Long-term liabilities | | | | | | | | | | Deposits | | | 80,399 | | | | 24,669 | | | Securities sold under repurchase agreements | | | 114,595 | | | | 35,162 | | | Financial liabilities held for trading | | | 385 | | | | 118 | | | Derivatives | | | 13,888 | | | | 4,261 | | | Interbank market debt | | | 60,131 | | | | 18,450 | | | Institutional market debt | | | 77,186 | | | | 23,683 | | | Other financial liabilities | | | 34 | | | | 10 | | | Reserves for insurance and private pension | | | 152,626 | | | | 46,831 | | | Provisions | | | 16,475 | | | | 5,055 | | | Tax liabilities | | | 3,452 | | | | 1,059 | | | Other liabilities | | | 1,142 | | | | 350 | | | Total | | | 520,313 | | | | 159,648 | | | Income tax and social contribution - deferred | | | 643 | | | | 197 | | | Non-controlling interests | | | 12,232 | | | | 3,753 | | | Stockholders’ equity attributed to the owners of the parent company (2) | | | 122,582 | | | | 37,612 | | | Total capitalization (3) | | | 1,353,241 | | | | 415,217 | | | BIS ratio (4) | | | 19.1 | % | | | | |
| (1) | Convenience translation at 3.90483.2591reais per U.S. dollar, the exchange rate in effect on December 31, 2015.2016. |
| (2) | Itaú Unibanco Holding’s authorized and outstanding share capital consists of 3,047,040,1983,351,744,217 common shares and 3,036,875,7513,230,563,326 preferred shares, all of which are fully paid. For more information regarding our share capital see Note 21 to our consolidated financial statements as of and for the period ended December 31, 2015.2016. |
| (3) | Total capitalization corresponds to the sum of total current liabilities, long-term liabilities.liabilities, deferred income, minority interest in subsidiaries and stockholders’ equity. |
| (4) | Calculated by dividing total regulatory capital by risk weight assets. |
Off-Balance Sheet ArrangementsOff-balance sheet arrangements
We do not have any off-balance sheet arrangements, other than the guarantees we granted that are described in Note 36 – Management of Financial Risks, item 3 – Collateral and policies for mitigating credit risk and item 5 – Credit risk exposure of our consolidated financial statements and derivative financial instruments discussed above. Please refer to section Our Risk Management, item Risk and Capital Management, Exchange Rate Sensitivity for further details. Results Highlights The highlights for the years ended December 31, 2015,2016, December 31, 20142015 and December 31, 20132014 are presented below: Net income(attributable to the owners of theparentthe parent company):p increased 19.4% decreased 9.6% in 2016 compared to 2015 and increased19.4% in 2015 compared to 2014 and increased 31.2% in 2014 compared to 2013. 2014. For 2016, our net income attributable to the owners of the parent company was R$23,263 million and decreased by 9.6% compared to 2015, when our net income was R$25,740 million. For the year ended December 31, 2015, our net income attributable to the owners of the parent company was R$25,740 million and increased by 19.4% compared to 2014, when our net income reached R$21,555 million. For the year ended December 31, 2014, our net income attributable to the owners of the parent company increased 31.2% when compared to the year ended December 31, 2013,2014, when our net income attributable to the owners of the parent company was R$16,42421,555 million. Our performance ratio, ROAE (return on average equity), calculated by dividing net income attributable to owners of the parent company by the quarterly average stockholders’ equity attributed to the owners of the parent company excluding quarterly average proposed dividends recorded, reachedwas 20.1% in 2016, a decrease of 470 basis points compared to 2015 when our performance ratio was 24.8% in 2015,, an increase of 50 basis points compared to 2014 when our performance ratio reachedROAE was 24.3%, an increase of 320 basis points when compared to 2013 when our ROAE reached 21.1%. Stockholders’ equity(attributable to theownersthe owners of the parent company):p increased by 9.2% as of December 31, 2016compared to December 31, 2015 and increased by 13.1% in 2015 compared to 2014 and increased 19.3% in 2014 compared to 2013.2014. As of December 31, 20152016 our total stockholders’Stockholders’ equity attributed to the owners of the parent company increased 13.1%by 9.2% compared to December 31, 2014,2015, and reached R$122,582 million. As of December 31, 2015, our stockholders’ equity amounted to R$112,252 million. As of December 31, 2014,2015 our total stockholders’ equity amountedgrew 13.1% compared to Financial performance | A-141 |
R$99,260 million. As stockholder equity as of December 31, 2014, our stockholders’ equity grew 19.3% compared to thatwhich was R$99,260 million.
Loan and lease portfolio:increased by 3.4% as of December 31, 2013, which was R$83,223 million. Loan2016 compared to December 31, 2015 and lease portfolio:pincreased 4.8%by4.8% as of December 31, 2015 compared to December 31, 20142014.
Loans and increased 9.9% aslease to individuals: As of December 31, 20142016 loans and lease to individuals totaled R$183,147 million, a decrease of 2.2% compared to December 31, 2013. Loans2015. The decrease primarily is a result of the decrease of 23.1% in vehicle financing as a result of our continued application of stricter requirements for granting such loans, which has led to higher down payment requirements and leaseshorter financing terms, partially offset by the increases of (i) 9.9% in mortgage loans to individuals:R$38,242 million, mainly due to our focus on portfolios with lower delinquency rates, and (ii) 0.8% in credit card loans as we are the leading player in the Brazilian credit card market according to ABECS (Associação Brasileira das Empresas de Cartões de Crédito e Serviços), through Itaucard, Hipercard, Hiper, Credicard, joint ventures and commercial agreements with leading companies in sectors such as telecom, vehicles, retail and aviation operating in the Brazilian market.
As of December 31, 2015 loans and lease to individuals totaled R$187,220 million, an increase of 0.7% compared to December 31, 2014. The increase is primarily a result of the increases of (i) 19.5% in mortgage loans to R$34,790 million, mainly due to our focus on portfolios with lower delinquency rates, and (ii) 12.1% in payroll loans to R$45,434 million, due to a continued growth in our retail branch payroll loan operations and to the association agreement withthrough Banco Itaú BMG Consignado S.A., a financial institution aimed at the offering, distributiondistributing and sale ofmarketing payroll loans through the incorporation of a new financial institution, Itaú BMG Consignado. This association supplemented our payroll loan distribution strategy and improved the risk profile of our loan portfolio.loans. Vehicle financing decreased by 30.9% as of December 31, 2015 compared to December 31, 2014, totaling R$20,058 million, as a result of our continued application of stricter requirements for granting such loans, which has led to higher down payment requirements and shorter financing terms.periods. Loans and lease to companies: As of December 31, 20142016 loans and leases to individualscompanies, which includes corporate and small and medium business operations, totaled R$185,953180,689 million, an increaserepresenting a decrease of 11.1%R$37,876 million, or 17.3%, compared to December 31, 2013. The increase is primarily a result of the increases of (i) 11.6% in credit card loans2015. Loans and leases to R$59,321 million, (ii) 18.8% in mortgage loans to R$29,107 million, mainly due to our focus on portfolios with lower delinquency rates,small and (iii) 79.5% in payroll loans to R$40,525 million, due to a continued growth in our retail branch payroll loan operations. Vehicle financingmedium businesses decreased 28.4%10.8% as of December 31, 20142016 compared to December 31, 2013,2015, totaling R$29,047 million. 58,935 million as of December 31, 2016. Loans and leaseleases to companies:corporate clients decreased 20.2% as of December 31, 2016 compared to December 31, 2015, totaling R$121,754 million as of December 31, 2016. As of December 31, 2015 loans and leases to companies totaled R$218,565 million, representing an increase of R$2,725 million, or 1.3%, compared to December 31, 2014. Loans and leases to small and medium businesses decreased 1.7%4.1% as of December 31, 2015 compared to December 31, 2014, totaling R$78,57666,038 million. Loans and leases to corporate clients increased 3.0%3.8% as of December 31, 2015 when compared to December 31, 2014, totaling R$139,989152,527 million as of December 31, 2015. As of December 31, 2014 loans and leases to companies totaled R$215,840 million, representing an increase of R$13,097 million, or 6.5%, compared to December 31, 2013 when loans and leases to companies totaled R$202,743 million. Loans and leases to small and medium businesses as of December 31, 2014 totaled R$79,912 million, representing a decreased of 2.0% compared to 2013. Loans and leases to corporate clients as of December 31, 2014 totaled R$135,928, representing an increase of 12.2% when compared to 2013.
In addition, the depreciation of thereal against other currencies, especially the U.S. dollar, also contributed to the growth of our medium to large companies’ portfolio since a portion of our loans are denominated or originated in such currencies.
Foreign loans and leases – Latin America: The balance of our foreign loans and leases from our operations in Latin America outside Brazil (Argentina, Chile, Colombia, Panama, Paraguay, Peru and Uruguay) totaled R$126,530 million as of December 31, 2016, an increase of 84.8% compared
to December 31, 2015 when the balance was R$68,463 million, mostly as a result of the merger between our subsidiary Banco Itaú Chile and CorpBanca in the second quarter of 2016 which represents an important step in our internationalization process. The balance of our foreign loans and leases from our operations in Latin America outside Brazil (Argentina, Chile, Colombia, Paraguay and Uruguay) totaled R$68,463 million as of December 31, 2015, an increase of 35.2% compared to December 31, 2014 when the balance was R$50,638 million, mostly as a result of the organic growth of operations in the countries where we operate. As of December 31, 2014 the balance of loans and leases from our operations in Latin America outside Brazil (Argentina, Chile, Colombia, Paraguay and Uruguay) totaled R$50,638 million, representing an increase of 21.9% compared to December 31, 2013, when such balance was R$41,528 million.
Credit quality (90-day NPL ratio):pdecreased 10 basis points as of December 31, 2016 compared to December 31, 2015and increased 40 basis points as of December 31, 2015 compared to December 31, 2014 and improved 60 basis points as of December 31, 2014 compared to December 31, 2013.2014. The 90-day’s90-day non-performing loans ratio (90-day NPL ratio), is calculated by dividing 90-day’s non-performing loans by our loan portfolio. As of December 31, 2016, our 90-day NPL ratio reached 3.4%, a reduction of 10 basis points due to a decrease in the 90-day NPL ratio for individuals. The ratio for companies as of December 31, 2016 increased by 20 basis points compared to December 31, 2015. As of December 31, 2015, our 90-day NPL ratio reached 3.5%, an increase due to increases in the 90-day NPL ratios for both individuals and companies. The ratio for individuals increased by 70of 40 basis points compared to December 31, 2014. As of December 31, 2014, our 90-day NPL ratio reached 3.1%, an improvement due to decreases in the 90-day NPL ratios for individuals and companies compared to December 31, 2013. The coverage ratio, calculated by dividing the provisions for allowance for loan and lease losses by 90-day’s90-day non-performing loans, reflects the mechanics of our provisioning model and reached 160% as of December 31, 2016 compared to a ratio of 164% as of December 31, 2015 compared to a2015. The coverage ratio ofwas 160% as of December 31, 2014. As of Interest and similar income:increased by 9.3% for the year ended December 31, 20132016 compared to the coverage ratio was 147%. Interest Income:
Interest on loanyear endedDecember 31, 2015 and lease operations:pincreased 14.6%by 23.0% for the year ended December 31, 2015 compared to the same period in 2014year ended December 31, 2014.
Interest and similar expenses:increased 16.3%by 26.7% for the year ended December 31, 20142016 compared to the same period in 2013. Interestyear endedDecember 31, 2015 and similar expenses:pincreased by 2.9% for the year ended December 31, 2015 compared to the same period in 2014 and year ended December 31, 2014.
Banking service fees:increased 57.4%by 8.4% for the year ended December 31, 20142016 compared to the same period in 2013. Financial performance | A-142 |
Banking service fees:pyear ended December 31,2015 and increased by 11.8% for the year ended December 31, 2015 compared to the same period in 2014 and increased 16.0% for the year ended December 31, 2014 compared to the same period 2013.2014.
Income from insurance, private pension plan and capitalization operations (premium bonds) before claim and selling expenses:qdecreased by 11.9% for the year ended December 31, 2016 compared to the year ended December 31, 2015 anddecreased by 3.1% for the year ended December 31, 2015 compared to the same period in 2014year ended December 31, 2014. General and administrative expenses:increased 3.8%by 6.9% for the year ended December 31, 20142016 compared to the same period in 2013. Generalyearended December 31, 2015 and administrative expenses:pincreased by 11.9% for the year ended December 31, 2015 compared to the same period in 2014 and increased 6.6% for the year ended December 31, 2014 compared to the same period in 2013.2014.
Expenses for allowance for loan and lease losses:pdecreased by 0.6% for the year ended December 31, 2016 compared tothe year ended December 31, 2015 and increased by 30.2% for the year ended December 31, 2015 compared to the same period in 2014 and increased 5.5% for the year ended December 31, 2014 compared to the same period in 2013.2014. Impaired loans:pincreased from R$17,206 million as of December 31, 2014 to R$27,157 million as of December 31, 2015 an increaseto R$30,317 million as of December 31, 2016, anincrease mainly with respect to impaired loans in our corporate portfolio due to a more challenging economic environment in Brazil and increased from R$16,305 million asBrazil. As of December 31, 2013 to2014 the balance of impaired loans was R$17,206 million as of December 31, 2014.million. (For further details, refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS),in IFRS, Note 36.6 – Credit Quality of Financial Assets). Loans under renegotiation:pcredit transactions under renegotiation, including extended, modified and deferred repayments,increased 29.0%6.1% as of December 31, 2015,2016 compared to December 31, 20142015 due to (i) an increase in our portfolio of renegotiated corporate loans and also (ii) the effect of the exchange rate variation in 2015.loans. As of December 31, 2015,2016, loans under renegotiation represented 3.1%5.0% of the total loan portfolio. As
| | | For the Year Ended December 31, | | | Highlights | | 2016 | | | 2015 | | | 2014 | | | | | (In millions of R$, except percentages) | | | Statement of Income | | | | | | | | | | | | | | Net Income (attributable to the owners of the parent company) | | | 23,263 | | | | 25,740 | | | | 21,555 | | | Banking Product | | | 118,661 | | | | 92,011 | | | | 91,657 | | | Shares (R$) | | | | | | | | | | | | | | Earnings per share - Basic (Common and Preferred) | | | 3.57 | | | | 3.91 | | | | 3.26 | | | Weight Average Number of Outstanding Shares – Basic (in thousands) (1) | | | | | | | | | | | | | | Common | | | 3,351,741 | | | | 3,351,741 | | | | 3,351,741 | | | Preferred | | | 3,171,216 | | | | 3,228,881 | | | | 3,266,347 | | | Average price of preferred share on the last trading day of the period (1) | | | 33.68 | | | | 23.91 | | | | 28.69 | | | Market Capitalization (2) | | | 219,348 | | | | 155,732 | | | | 190,161 | | | Market Capitalization (In millions of US$) (3) | | | 67,303 | | | | 39,882 | | | | 71,592 | | | Performance Ratios (%) | | | | | | | | | | | | | | Net income as a percentage of average stockholder’s equity – Annualized (4) | | | 20.1 | | | | 24.8 | | | | 24.3 | | | Net income as a percentage of total assets – Annualized (5) | | | 1.8 | | | | 2.2 | | | | 2.0 | | | Solvency Ratio (BIS Ratio) - Prudential Conglomerate (6) | | | 19.1 | | | | 17.8 | | | | 16.9 | | | Non-performing Loans Index (NPL over 90 days) | | | 3.4 | | | | 3.5 | | | | 3.1 | | | Non-performing Loans Index (NPL 15-90 days) | | | 2.5 | | | | 2.6 | | | | 2.5 | | | Efficiency Ratio (ER) (7) | | | 46.7 | | | | 44.0 | | | | 47.0 | | | Risk Adjusted Efficiency Ratio (RAER) (7) | | | 69.2 | | | | 63.0 | | | | 62.9 | |
| | | As of December 31, | | | | | 2016 | | | 2015 | | | 2014 | | | Balance Sheet | | | | | | | | | | | | | | Total Assets | | | 1,353,241 | | | | 1,276,415 | | | | 1,127,203 | | | Total Loan Portfolio | | | 490,366 | | | | 474,248 | | | | 452,431 | | | Total Stockholders’ Equity | | | 134,814 | | | | 114,059 | | | | 100,617 | | | Total Stockholders’ Equity attributed to the owners of the parent company | | | 122,582 | | | | 112,252 | | | | 99,260 | |
(1) The number of outstanding shares was adjusted to reflect the share bonus of 10% granted on June 05, 2014, July 17, 2015 and September 14, 2016. (2) Total number of outstanding shares (common and preferred shares) multiplied by the average price of the preferred share on the last trading day in the period. (3) The US$/R$ exchange rate was R$3.2591 as of December 31,2016, R$3.9048 as of December 31, 2014, credit transactions under renegotiation, including extended, modified2015 and deferred repayments decreased 10.2% compared toR$2.6562 as of December 31, 2013.2014. (4) Annualized Return was calculated by dividing net income attributable to owners of the parent company by the quarterly average stockholders’ equity attributed to the owners of the parent company excluding quarterly average proposed dividends recorded. | | | (In millions of R$, except percentages) | | | | | For the Year Ended December 31, | | | Highlights | | 2015 | | | 2014 | | | 2013 | | | Statement of income | | | | | | | | | | | | | | Net income (attributable to the owners of the parent company) | | | 25,740 | | | | 21,555 | | | | 16,424 | | | Banking product | | | 92,011 | | | | 91,657 | | | | 79,387 | | | Shares (R$) | | | | | | | | | | | | | | Earnings per share – Basic (Common and Preferred) | | | 4.30 | | | | 3.58 | | | | 2.73 | | | Payout (%)(1) | | | 27.9 | | | | 30.4 | | | | 30.8 | | | Dividend yield (%)(2) | | | 4.7 | | | | 3.5 | | | | 3.3 | | | Weight average number of outstanding shares – Basic (in thousands)(3) | | | | | | | | | | | | | | Common | | | 3,047,037 | | | | 3,047,037 | | | | 3,047,037 | | | Preferred | | | 2,935,346 | | | | 2,969,406 | | | | 2,961,435 | | | Average price of preferred share on the last trading day of the period(3) | | | 26.30 | | | | 31.56 | | | | 26.16 | | | Market capitalization(4) | | | 155,732 | | | | 190,161 | | | | 156,957 | | | Market capitalization (In millions of US$)(5) | | | 39,882 | | | | 71,592 | | | | 67,001 | | | Performance ratios (%) | | | | | | | | | | | | | | Net income as a percentage of average stockholder’s equity – Annualized(6) | | | 24.8 | | | | 24.3 | | | | 21.1 | | | Net income as a percentage of total assets – Annualized(7) | | | 2.2 | | | | 2.0 | | | | 1.7 | | | Solvency ratio (BIS ratio) – Prudential Conglomerate(8) | | | 17.8 | | | | 16.9 | | | | 16.6 | | | Non-performing Loans Index (NPL over 90 days) | | | 3.5 | | | | 3.1 | | | | 3.7 | | | Non-performing Loans Index (NPL 15-90 days) | | | 2.6 | | | | 2.5 | | | | 3.0 | | | Efficiency Ratio (ER)(9) | | | 44.0 | | | | 47.0 | | | | 49.2 | | | Risk Adjusted Efficiency Ratio (RAER)(9) | | | 63.0 | | | | 62.9 | | | | 68.2 | |
(5) Annualized Return was computed by dividing Net Income by Average Assets. | | | | | | As of December 31, | | | | 2015 | | | 2014 | | | 2013 | | | Balance Sheet | | | | | | | | | | | | | | Total Assets | | | 1,276,415 | | | | 1,127,203 | | | | 1,027,297 | | | Total Loan Portfolio | | | 474,248 | | | | 452,431 | | | | 411,702 | | | Total Stockholders’ Equity | | | 114,059 | | | | 100,617 | | | | 84,192 | | | Total Stockholders’ Equity attributed to the owners of the parent company | | | 112,252 | | | | 99,260 | | | | 83,223 | |
(1) | Dividends and interest on capital – paid/provisioned for (net)/net income of the year. | (2) | Dividends paid per share in the period/price of our preferred share (ITUB4) at final date of the period. | (3) | The number of outstanding shares was adjusted to reflect the share bonus of 10% granted on May 20, 2013, June 05, 2014 and July 17, 2015. | (4) | Total number of outstanding shares (common and preferred shares) multiplied by the average price of the preferred share on the last trading day in the period. | (5) | The US$/R$ exchange rate was R$3,9048 as of December 31,2015, R$2,6562 as of December 31, 2014 and R$2,3426 as of December 31, 2013. | (6) | Annualized Return was calculated by dividing net income attributable to owners of the parent company by the quarterly average stockholders’ equity attributed to the owners of the parent company excluding quarterly average proposed dividends recorded. | (7) | Annualized Return was computed by dividing Net Income by Average Assets. | (8) | (6) Up to 2014, this ratio was calculated based on the financial conglomerate. | (9) | The Efficiency Ratio and Risk Adjusted Efficiency Ratio are calculated based on managerial information (for more details on the calculation methodology of both Efficiency and Risk Adjusted Efficiency ratios, please see Basis of Segment Information Presentation). |
Financial performance | A-143 |
(7) The Efficiency Ratio and Risk Adjusted Efficiency Ratio are calculated based on managerial information (for more details on the calculation methodology of both Efficiency and Risk Adjusted Efficiency ratios, please see Basis of Segment Information Presentation). When thereal depreciates, we incur losses on our liabilities denominated in or indexed to foreign currencies, such as our U.S. dollar-denominated long-term debt and short-term borrowings, because the cost inreais of the related interest expense increases. At the same time, we realize gains on monetary assets denominated in or indexed to foreign currencies, such as our dollar-indexed trading securities and loans, due to increased interest income from such assets when translated toreais. When thereal appreciates, the effects are the opposite of those described above. Consequently, the management of the gap in foreign currencies can have material effects on our net income. Unless otherwise indicated, the discussion in this section relates to our average interest rates and yields. Interest rates cited are measured inreais and include the effect of the variation of thereal against foreign currencies. Please refer to section Our Risk Management,risk management, item Risk Factors,factors, Instability of foreign exchange rates may negatively affect us and item Market Riskrisk for further details. Net income The following table shows the main components of our net income for the years ended December 31, 2016, 2015 December 31, 2014 and December 31, 2013:2014:
| | | | | | | | | | | (In millions of R$, except percentages) | | | | | | For the Year Ended December 31, | | Variation | | | For the Year Ended December 31, | | | Variation | | | Consolidated Statement of Income | | 2015 | | | 2014 | | | 2013 | | | 2015-2014 | | | 2014-2013 | | | 2016 | | | 2015 | | | 2014 | | | 2016-2015 | | | 2015-2014 | | | | | | (In millions of R$, except percentages) | | | Banking product | | | 92,011 | | | | 91,657 | | | | 79,387 | | | | 354 | | | | 0.4 | % | | | 12,270 | | | | 15.5 | % | | | 118,661 | | | | 92,011 | | | | 91,657 | | | | 26,650 | | | | 29.0 | % | | | 354 | | | | 0.4 | % | | Interest and similar income | | | 147,789 | | | | 120,115 | | | | 94,127 | | | | 27,674 | | | | 23.0 | % | | | 25,988 | | | | 27.6 | % | | | 161,495 | | | | 147,789 | | | | 120,115 | | | | 13,706 | | | | 9.3 | % | | | 27,674 | | | | 23.0 | % | | Interest and similar expense | | | (75,064 | ) | | | (72,977 | ) | | | (46,361 | ) | | | (2,087 | ) | | | 2.9 | % | | | (26,616 | ) | | | 57.4 | % | | | (95,126 | ) | | | (75,064 | ) | | | (72,977 | ) | | | (20,062 | ) | | | 26.7 | % | | | (2,087 | ) | | | 2.9 | % | | Dividend income | | | 98 | | | | 215 | | | | 205 | | | | (117 | ) | | | (54.4 | )% | | | 10 | | | | 4.9 | % | | | 288 | | | | 98 | | | | 215 | | | | 190 | | | | 193.9 | % | | | (117 | ) | | | (54.4 | )% | | Net gain (loss) from investment securities and derivatives | | | (11,862 | ) | | | (724 | ) | | | (5,924 | ) | | | (11,138 | ) | | | 1,538.4 | % | | | 5,200 | | | | (87.8 | )% | | | 7,311 | | | | (11,862 | ) | | | (724 | ) | | | 19,173 | | | | (161.6 | )% | | | (11,138 | ) | | | 1,538.4 | % | | Foreign exchange results and exchange variation on transactions | | | (6,353 | ) | | | 9,644 | | | | 6,594 | | | | (15,997 | ) | | | (165.9 | )% | | | 3,050 | | | | 46.3 | % | | | 5,513 | | | | (6,353 | ) | | | 9,644 | | | | 11,866 | | | | (186.8 | )% | | | (15,997 | ) | | | (165.9 | )% | | Banking service fees | | | 29,452 | | | | 26,342 | | | | 22,712 | | | | 3,110 | | | | 11.8 | % | | | 3,630 | | | | 16.0 | % | | | 31,918 | | | | 29,452 | | | | 26,342 | | | | 2,466 | | | | 8.4 | % | | | 3,110 | | | | 11.8 | % | | Income from insurance. private pension and capitalization operations before claim and selling expenses | | | 6,672 | | | | 6,888 | | | | 6,639 | | | | (216 | ) | | | (3.1 | )% | | | 249 | | | | 3.8 | % | | | Income related to insurance, private pension plans and capitalization operations before claim and selling expenses | | | | 5,880 | | | | 6,672 | | | | 6,888 | | | | (792 | ) | | | (11.9 | )% | | | (216 | ) | | | (3.1 | )% | | Other income | | | 1,279 | | | | 2,154 | | | | 1,395 | | | | (875 | ) | | | (40.6 | )% | | | 759 | | | | 54.4 | % | | | 1,382 | | | | 1,279 | | | | 2,154 | | | | 103 | | | | 8.1 | % | | | (875 | ) | | | (40.6 | )% | | Losses on loans and claims | | | (21,335 | ) | | | (15,801 | ) | | | (14,870 | ) | | | (5,534 | ) | | | 35.0 | % | | | (931 | ) | | | 6.3 | % | | | (22,122 | ) | | | (21,335 | ) | | | (15,801 | ) | | | (787 | ) | | | 3.7 | % | | | (5,534 | ) | | | 35.0 | % | | Expenses for allowance for loan and lease losses | | | (24,517 | ) | | | (18,832 | ) | | | (17,856 | ) | | | (5,685 | ) | | | 30.2 | % | | | (976 | ) | | | 5.5 | % | | | (24,379 | ) | | | (24,517 | ) | | | (18,832 | ) | | | 138 | | | | (0.6 | )% | | | (5,685 | ) | | | 30.2 | % | | Recovery of loans written off as loss | | | 4,779 | | | | 5,054 | | | | 5,061 | | | | (275 | ) | | | (5.4 | )% | | | (7 | ) | | | (0.1 | )% | | | 3,742 | | | | 4,779 | | | | 5,054 | | | | (1,037 | ) | | | (21.7 | )% | | | (275 | ) | | | (5.4 | )% | | Expenses for claims | | | (1,611 | ) | | | (2,430 | ) | | | (3,155 | ) | | | 819 | | | | (33.7 | )% | | | 725 | | | | (23.0 | )% | | | (1,555 | ) | | | (1,611 | ) | | | (2,430 | ) | | | 56 | | | | (3.5 | )% | | | 819 | | | | (33.7 | )% | | Recovery of claims under reinsurance | | | 14 | | | | 407 | | | | 1,080 | | | | (393 | ) | | | (96.6 | )% | | | (673 | ) | | | (62.3 | )% | | | 70 | | | | 14 | | | | 407 | | | | 56 | | | | 400.0 | % | | | (393 | ) | | | (96.6 | )% | | Banking Product net of losses on loans and claims | | | 70,676 | | | | 75,856 | | | | 64,517 | | | | (5,180 | ) | | | (6.8 | )% | | | 11,339 | | | | 17.6 | % | | | Operating margin | | | | 96,539 | | | | 70,676 | | | | 75,856 | | | | 25,863 | | | | 36.6 | % | | | (5,180 | ) | | | (6.8 | )% | | Other operating income (expenses) | | | (52,411 | ) | | | (47,048 | ) | | | (43,652 | ) | | | (5,363 | ) | | | 11.4 | % | | | (3,396 | ) | | | 7.8 | % | | | (58,347 | ) | | | (52,411 | ) | | | (47,048 | ) | | | (5,936 | ) | | | 11.3 | % | | | (5,363 | ) | | | 11.4 | % | | General and administrative expenses | | | (47,626 | ) | | | (42,550 | ) | | | (39,914 | ) | | | (5,076 | ) | | | 11.9 | % | | | (2,636 | ) | | | 6.6 | % | | | (50,904 | ) | | | (47,626 | ) | | | (42,550 | ) | | | (3,278 | ) | | | 6.9 | % | | | (5,076 | ) | | | 11.9 | % | | Tax expenses | | | (5,405 | ) | | | (5,063 | ) | | | (4,341 | ) | | | (342 | ) | | | 6.8 | % | | | (722 | ) | | | 16.6 | % | | | (7,971 | ) | | | (5,405 | ) | | | (5,063 | ) | | | (2,566 | ) | | | 47.5 | % | | | (342 | ) | | | 6.8 | % | | Share of profit or (loss) of unconsolidated companies | | | 620 | | | | 565 | | | | 603 | | | | 55 | | | | 9.7 | % | | | (38 | ) | | | (6.3 | )% | | | Share of profit or (loss) in associates and joint ventures | | | | 528 | | | | 620 | | | | 565 | | | | (92 | ) | | | (14.8 | )% | | | 55 | | | | 9.7 | % | | Income before income tax and social contribution | | | 18,265 | | | | 28,808 | | | | 20,865 | | | | (10,543 | ) | | | (36.6 | )% | | | 7,943 | | | | 38.1 | % | | | 38,192 | | | | 18,265 | | | | 28,808 | | | | 19,927 | | | | 109.1 | % | | | (10,543 | ) | | | (36.6 | )% | | Current income tax and social contribution | | | (8,965 | ) | | | (7,209 | ) | | | (7,503 | ) | | | (1,756 | ) | | | 24.4 | % | | | 294 | | | | (3.9 | )% | | | (3,898 | ) | | | (8,965 | ) | | | (7,209 | ) | | | 5,067 | | | | (56.5 | )% | | | (1,756 | ) | | | 24.4 | % | | Deferred income tax and social contribution | | | 16,856 | | | | 262 | | | | 3,160 | | | | 16,594 | | | | 6,333.6 | % | | | (2,898 | ) | | | (91.7 | )% | | | (10,712 | ) | | | 16,856 | | | | 262 | | | | (27,568 | ) | | | (163.6 | )% | | | 16,594 | | | | 6,333.6 | % | | Net income | | | 26,156 | | | | 21,861 | | | | 16,522 | | | | 4,295 | | | | 19.6 | % | | | 5,339 | | | | 32.3 | % | | | 23,582 | | | | 26,156 | | | | 21,861 | | | | (2,574 | ) | | | (9.8 | )% | | | 4,295 | | | | 19.6 | % | | Net income attributable to non-controlling interests | | | 416 | | | | 306 | | | | 98 | | | | 110 | | | | 35.9 | % | | | 208 | | | | 212.2 | % | | | 319 | | | | 416 | | | | 306 | | | | (97 | ) | | | (23.3 | )% | | | 110 | | | | 35.9 | % | | Net income attributable to owners of the parent company | | | 25,740 | | | | 21,555 | | | | 16,424 | | | | 4,185 | | | | 19.4 | % | | | 5,131 | | | | 31.2 | % | | | 23,263 | | | | 25,740 | | | | 21,555 | | | | (2,477 | ) | | | (9.6 | )% | | | 4,185 | | | | 19.4 | % |
Banking Product (Operating Revenues)product (operating revenues) Banking product (operating revenues) is the sum of our operating revenues, net of funding costs, as detailed in the table above. Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS),in IFRS, Note 23 – Interest and Similar Income and Expense and Net Gain (Loss) from Investment Securities and Derivatives, Note 24 – Banking Service Fees and Note 25 – Other Income for further details. The following table shows the main components of our interest and similar income for the years ended December 31, 2015,2016, December 31, 20142015 and December 31, 2013:2014: | | | | | | (In millions of R$, except percentages) | | | | | For the Year Ended December 31, | | | Variation | | | Interest and similar income | | 2015 | | | 2014 | | | 2013 | | | 2015-2014 | | | 2014-2013 | | | Interest on Central Bank compulsory deposits | | | 5,748 | | | | 5,904 | | | | 4,314 | | | | (156 | ) | | | (2.6 | )% | | | 1,590 | | | | 36.9 | % | | Interest on interbank deposits | | | 1,628 | | | | 1,286 | | | | 583 | | | | 342 | | | | 26.6 | % | | | 703 | | | | 120.6 | % | | Interest on securities purchased under agreements to resell | | | 27,572 | | | | 17,929 | | | | 12,630 | | | | 9,643 | | | | 53.8 | % | | | 5,299 | | | | 42.0 | % | | Interest on financial assets held for trading | | | 19,826 | | | | 15,128 | | | | 10,860 | | | | 4,698 | | | | 31.1 | % | | | 4,268 | | | | 39.3 | % | | Interest on available-for-sale financial assets | | | 8,979 | | | | 7,272 | | | | 5,067 | | | | 1,707 | | | | 23.5 | % | | | 2,205 | | | | 43.5 | % | | Interest on held-to-maturity financial assets | | | 3,758 | | | | 2,347 | | | | 486 | | | | 1,411 | | | | 60.1 | % | | | 1,861 | | | | 382.9 | % | | Interest on loans and leases operations | | | 79,392 | | | | 69,248 | | | | 59,546 | | | | 10,144 | | | | 14.6 | % | | | 9,702 | | | | 16.3 | % | | Other financial assets | | | 886 | | | | 1,001 | | | | 641 | | | | (115 | ) | | | (11.5 | )% | | | 360 | | | | 56.2 | % | | Total interest and similar income | | | 147,789 | | | | 120,115 | | | | 94,127 | | | | 27,674 | | | | 23.0 | % | | | 25,988 | | | | 27.6 | % |
Financial performance | A-144 |
| | | For the Year Ended December 31, | | | Variation | | | Interest and similar income | | 2016 | | | 2015 | | | 2014 | | | 2016-2015 | | | 2015 - 2014 | | | | | (In millions of R$, except percentages) | | | Interest on Central Bank compulsory deposits | | | 6,920 | | | | 5,748 | | | | 5,904 | | | | 1,172 | | | | 20.4 | % | | | (156 | ) | | | (2.6 | )% | | Interest on interbank deposits | | | 677 | | | | 1,628 | | | | 1,286 | | | | (951 | ) | | | (58.4 | )% | | | 342 | | | | 26.6 | % | | Interest on securities purchased under agreements to resell | | | 34,162 | | | | 27,572 | | | | 17,929 | | | | 6,590 | | | | 23.9 | % | | | 9,643 | | | | 53.8 | % | | Interest on financial assets held for trading | | | 23,669 | | | | 19,826 | | | | 15,128 | | | | 3,843 | | | | 19.4 | % | | | 4,698 | | | | 31.1 | % | | Interest on available-for-sale financial assets | | | 11,160 | | | | 8,979 | | | | 7,272 | | | | 2,181 | | | | 24.3 | % | | | 1,707 | | | | 23.5 | % | | Interest on held-to-maturity financial assets | | | 3,788 | | | | 3,758 | | | | 2,347 | | | | 30 | | | | 0.8 | % | | | 1,411 | | | | 60.1 | % | | Interest on loans and leases operations | | | 80,118 | | | | 79,392 | | | | 69,248 | | | | 726 | | | | 0.9 | % | | | 10,144 | | | | 14.6 | % | | Other financial assets | | | 1,001 | | | | 886 | | | | 1,001 | | | | 115 | | | | 13.0 | % | | | (115 | ) | | | (11.5 | )% | | Total interest and similar income | | | 161,495 | | | | 147,789 | | | �� | 120,115 | | | | 13,706 | | | | 9.3 | % | | | 27,674 | | | | 23.0 | % |
In the year ended December 31, 2016, the 9.3% increase in interest and similar income compared to the year ended December 31, 2015 was mainly due to increases in interest on securities purchased under agreements to resell, in interest on financial assets held for trading and in interest on available-for-sale financial assets. These increases are related to the growth in volume of these interest-earnings assets. Also, increases in the cumulative SELIC rate which increased to 14.0% in 2016 from 13.8% in 2015 contributed to the increase in interest and similar income. In the year ended December 31, 2015, the 23.0% increase in interest and similar income compared to the year ended December 31, 2014 was mainly due to increases in interest on loans and leases, in interest on securities purchased under agreements to resell and in interest on financial assets held for trading. The increase of 14.6% in interest on loans and leases operations is mainly due to the 35.2% growth in our Latin America loan portfolio when compared to the previous year. The increase in interest for trading is related to increases in the cumulative SELIC rate to 13.8% in 2015 from 10.9% in 2014. In 2014, the 27.6% increase in interest and similar income compared to 2013 was mainly due to increases in interest on loans and leases, in interest on held for trading, available-for-sale and held-to-maturity financial assets, and in interest on compulsory Central Bank deposits. The increases in interest for trading, available-for-sale and held-to-maturity financial assets and on Central Bank compulsory deposits are related to increases in the cumulative SELIC rate to 10.9% in 2014 from 8.3% in 2013. The increase in 2014 of 16.3% in interest on loans and leases compared to 2013 is mainly due to the 9.9% growth in our loan portfolio combined with the growth short-term duration products such as overdrafts and credit cards.
The following table shows the composition of the carrying amount of loan and lease transactions by type which primarily account for the variation between our total loan and lease transactions as of December 31, 2016, 2015 December 31, 2014 and December 31, 2013:2014: | | | (In millions of R$, except percentages) | | | | | | For the Year Ended December 31, | | Variation | | | For the Year Ended December 31, | | | Variation | | | Loan and lease operations by type | | 2015 | | | 2014 | | | 2013 | | | 2015-2014 | | | 2014-2013 | | | 2016 | | 2015 | | 2014 | | 2016-2015 | | 2015 - 2014 | | | | | | (In millions of R$, except percentages) | | | Individuals | | | 187,220 | | | | 185,953 | | | | 167,431 | | | | 1,267 | | | | 0.7 | % | | | 18,522 | | | | 11.1 | % | | | 183,147 | | | | 187,220 | | | | 185,953 | | | | (4,073 | ) | | | (2.2 | )% | | | 1,267 | | | | 0.7 | % | | Credit card | | | 58,542 | | | | 59,321 | | | | 53,149 | | | | (779 | ) | | | (1.3 | )% | | | 6,172 | | | | 11.6 | % | | | 59,022 | | | | 58,542 | | | | 59,321 | | | | 480 | | | | 0.8 | % | | | (779 | ) | | | (1.3 | )% | | Personal loans | | | 28,396 | | | | 27,953 | | | | 26,635 | | | | 443 | | | | 1.6 | % | | | 1,318 | | | | 4.9 | % | | | 25,813 | | | | 28,396 | | | | 27,953 | | | | (2,583 | ) | | | (9.1 | )% | | | 443 | | | | 1.6 | % | | Payroll loans | | | 45,434 | | | | 40,525 | | | | 22,571 | | | | 4,909 | | | | 12.1 | % | | | 17,954 | | | | 79.5 | % | | | 44,636 | | | | 45,434 | | | | 40,525 | | | | (798 | ) | | | (1.8 | )% | | | 4,909 | | | | 12.1 | % | | Vehicles | | | 20,058 | | | | 29,047 | | | | 40,584 | | | | (8,989 | ) | | | (30.9 | )% | | | (11,537 | ) | | | (28.4 | )% | | | 15,434 | | | | 20,058 | | | | 29,047 | | | | (4,624 | ) | | | (23.1 | )% | | | (8,989 | ) | | | (30.9 | )% | | Mortgage loans | | | 34,790 | | | | 29,107 | | | | 24,492 | | | | 5,683 | | | | 19.5 | % | | | 4,615 | | | | 18.8 | % | | | 38,242 | | | | 34,790 | | | | 29,107 | | | | 3,452 | | | | 9.9 | % | | | 5,683 | | | | 19.5 | % | | Corporate | | | 139,989 | | | | 135,928 | | | | 121,185 | | | | 4,061 | | | | 3.0 | % | | | 14,743 | | | | 12.2 | % | | | 121,754 | | | | 152,527 | | | | 147,002 | | | | (30,773 | ) | | | (20.2 | )% | | | 5,525 | | | | 3.8 | % | | Small and medium businesses | | | 78,576 | | | | 79,912 | | | | 81,558 | | | | (1,336 | ) | | | (1.7 | )% | | | (1,646 | ) | | | (2.0 | )% | | | 58,935 | | | | 66,038 | | | | 68,838 | | | | (7,103 | ) | | | (10.8 | )% | | | (2,800 | ) | | | (4.1 | )% | | Foreign loans – Latin America | | | 68,463 | | | | 50,638 | | | | 41,528 | | | | 17,825 | | | | 35.2 | % | | | 9,110 | | | | 21.9 | % | | | Foreign loans - Latin America | | | | 126,530 | | | | 68,463 | | | | 50,638 | | | | 58,067 | | | | 84.8 | % | | | 17,825 | | | | 35.2 | % | | Total loan and lease operations | | | 474,248 | | | | 452,431 | | | | 411,702 | | | | 21,816 | | | | 4.8 | % | | | 40,729 | | | | 9.9 | % | | | 490,366 | | | | 474,248 | | | | 452,431 | | | | 16,118 | | | | 3.4 | % | | | 21,817 | | | | 4.8 | % |
As of December 31, 2016, our total loan and lease portfolio reached R$490,366 million, a 3.4% increase from the previous year mainly due to the increase in (i) the volume of loans to Latin American (not including Brazil) borrowers, due to the merger between our subsidiary Banco Itaú Chile and CorpBanca in the second quarter of 2016, and (ii) mortgage loans due to our focus on portfolios with lower delinquency rates. These increases were partially offset by decreases in loans to corporate, small and medium businesses due to a more challenging economic environment in Brazil. As of December 31, 2015, our total loan portfolio reached R$474,248 million, a 4.8% increase from the previous year, influenced by the increase in the average volumes of loan and lease transactions, mainly due to the increase in the volume of payroll loans, mortgage loans and loans to corporate clients. As of December 31, 2014, our loan portfolio reached R$452,431 million, a 9.9% increase from December 31, 2013.2014. Since 2011, we have focused on reducing the credit risk of our loan portfolio. As a result, our mortgage, payroll corporate and Latin America (ex-Brazil)(not including Brazil) loan portfolios have grown more rapidly, while our vehicle, corporate and small companies’ portfolios have decreased. Our mortgage loan portfolio has grown in line with the market and we maintained a conservative approach regarding collateral. The portfolio LTV quarterly average (Loan-to-Value: ratio between the loans and the underlying collateral) reached 55.3%41.8% in the fourth quarter of 2015.2016. Our payroll loan portfolio has grown more than our personal loan portfolio not only due to a continued growth in our retail branch payroll loan operations and through Banco Itaú BMG Consignado S.A., a financial institution aimed at offering, distributing and marketing payroll loans. We maintain an association, as stated in the emphasis we have givennew commercial agreement for the distribution of payroll loans of Banco Itaú BMG Consignado and its affiliates, on an exclusive basis, through certain distribution channels linked to it within our branch network but also because of our association with Banco BMG for payroll loan origination.and its affiliates. In Latin America, excluding Brazil (i.e., Argentina, Chile, Colombia, Panama, Paraguay and Uruguay) our loan portfolio grew 35.2% whenby 84.8% compared to December 31, 20142015 and 21.9%35.2% in December 31, 20142015 compared to December 31, 2013, both2014. In 2016, the growth in our Latin America portfolio was due to organic growththe merger between our subsidiary Banco Itaú Chile and CorpBanca in the depreciationsecond quarter of thereal against the currencies of those countries.2016 and represents an important step in our globalization process. For further details please refer to the table above of loan and lease operations by type. | | | (In millions of R$, except percentages) | | | | | For the Year Ended December 31, | | | Variation | | | Interest and similar expense | | 2015 | | | 2014 | | | 2013 | | | 2015-2014 | | | 2014-2013 | | | Interest on deposits | | | (13,587 | ) | | | (12,064 | ) | | | (9,802 | ) | | | (1,523 | ) | | | 12.6 | % | | | (2,262 | ) | | | 23.1 | % | | Interest on securities sold under repurchase agreements | | | (32,879 | ) | | | (26,771 | ) | | | (16,865 | ) | | | (6,108 | ) | | | 22.8 | % | | | (9,906 | ) | | | 58.7 | % | | Interbank market debt | | | (7,970 | ) | | | (14,404 | ) | | | (6,245 | ) | | | 6,434 | | | | (44.7 | )% | | | (8,159 | ) | | | 130.6 | % | | Institutional market debt | | | (8,030 | ) | | | (10,695 | ) | | | (9,971 | ) | | | 2,665 | | | | (24.9 | )% | | | (724 | ) | | | 7.3 | % | | Financial expense from technical reserves for insurance | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (12,556 | ) | | | (8,987 | ) | | | (3,436 | ) | | | (3,569 | ) | | | 39.7 | % | | | (5,551 | ) | | | 161.6 | % | | and private pension plans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other | | | (42 | ) | | | (56 | ) | | | (42 | ) | | | 14 | | | | (25.0 | )% | | | (14 | ) | | | 33.3 | % | | Total interest and similar expense | | | (75,064 | ) | | | (72,977 | ) | | | (46,361 | ) | | | (2,087 | ) | | | 2.9 | % | | | (26,616 | ) | | | 57.4 | % |
Financial performance | A-145 |
| | | For the Year Ended December 31, | | | Variation | | | Interest and similar expense | | 2016 | | | 2015 | | | 2014 | | | 2016-2015 | | | 2015 - 2014 | | | | | (In millions of R$, except percentages) | | | Interest on deposits | | | (14,701 | ) | | | (13,587 | ) | | | (12,064 | ) | | | (1,114 | ) | | | 8.2 | % | | | (1,523 | ) | | | 12.6 | % | | Interest on securities sold under repurchase agreements | | | (45,932 | ) | | | (32,879 | ) | | | (26,771 | ) | | | (13,053 | ) | | | 39.7 | % | | | (6,108 | ) | | | 22.8 | % | | Interbank market debt | | | (8,348 | ) | | | (7,970 | ) | | | (14,404 | ) | | | (378 | ) | | | 4.7 | % | | | 6,434 | | | | (44.7 | )% | | Institutional market debt | | | (8,248 | ) | | | (8,030 | ) | | | (10,695 | ) | | | (218 | ) | | | 2.7 | % | | | 2,665 | | | | (24.9 | )% | | Financial expense from technical reserves for insurance and private pension plans | | | (17,790 | ) | | | (12,556 | ) | | | (8,987 | ) | | | (5,234 | ) | | | 41.7 | % | | | (3,569 | ) | | | 39.7 | % | | Other | | | (107 | ) | | | (42 | ) | | | (56 | ) | | | (65 | ) | | | 154.8 | % | | | 14 | | | | (25.0 | )% | | Total interest and similar expense | | | (95,126 | ) | | | (75,064 | ) | | | (72,977 | ) | | | (20,062 | ) | | | 26.7 | % | | | (2,087 | ) | | | 2.9 | % |
The changes in the SELIC rate also affected our total interest expenses.expenses. In 2015,2016, the cumulative SELIC rate increased to 14.0% as of December 31, 2016 compared to 13.8% as of December 2015 compared to 10.9% as of December 31, 2014.2015. As of December 31, 2013,2014, the cumulative SELIC rate was 8.3%10.9%. In 2015the years ended December 31, 2016 and 2014,2015, the increase in volume and in the SELIC rate increased our interest expenses for securities sold under repurchase agreements and reserves for insurance and private pension plans and liabilities for capitalization plans (premium bonds). Please refer to section Performance, item Financial Performance,performance, Liabilities, Funding, for further information. Dividend income totaled R$288 million for the year ended December 31, 2016, compared to R$98 million for the year ended December 31, 2015, compared2015. This increase was due to higher income from dividends on investments. Dividend income totaled R$215 million for the year ended December 31, 2014. This decrease was due to lower income from dividends on investments. For the year ended December 31, 2013, dividend income totaled R$205 million. Net gain (loss) from investment securities and derivatives totaled a lossgain of R$11,8627,311 million for the year ended December 31, 20152016 compared to a loss of R$72411,862 million in the same period in 2014.2015. For the year ended December 31, 2013,2014, net gain (loss) from investment securities and derivatives totaled a loss of R$5,924724 million. These results were mainly due to our risk management strategies, particularly those associated with derivative instruments used to hedge our investments abroad and due to the depreciation of thereal against the U.S. dollar during 2015 and 2014. abroad. Foreign exchange results and exchange variation on transactions totaled a gain of R$5,513 million for the year ended December 31, 2016 compared to a loss of R$6,353 million for the year ended December 31, 2015 compared toand a gain of R$9,644 million for the year ended December 31, 2014 and a gain of R$6,594 million for the year ended December 31, 2013.2014. The changes were due mainly to the effect from derivative financial instruments used to hedge the impact of exchange rate variationvariations on our investments in subsidiaries abroad. The following table shows the main components of our non-interest income for the years ended December 31, 2016, 2015 and 2014:
| | | For the Year Ended December 31, | | | Variation | | | Non-interest income | | 2016 | | | 2015 | | | 2014 | | | 2016-2015 | | | 2015-2014 | | | | | (In millions of R$, except percentages) | | | Banking Service Fees | | | 31,918 | | | | 29,452 | | | | 26,342 | | | | 2,466 | | | | 8.4 | % | | | 3,110 | | | | 11.8 | % | | Current account services | | | 9,528 | | | | 8,815 | | | | 7,725 | | | | 713 | | | | 8.1 | % | | | 1,090 | | | | 14.1 | % | | Asset management fees | | | 3,514 | | | | 2,932 | | | | 2,660 | | | | 582 | | | | 19.8 | % | | | 272 | | | | 10.2 | % | | Collection commissions | | | 1,315 | | | | 1,250 | | | | 1,279 | | | | 65 | | | | 5.2 | % | | | (29 | ) | | | (2.3 | )% | | Fees from credit card services | | | 13,330 | | | | 12,722 | | | | 11,507 | | | | 608 | | | | 4.8 | % | | | 1,215 | | | | 10.6 | % | | Fees for guarantees issued and credit lines | | | 1,773 | | | | 1,609 | | | | 1,407 | | | | 164 | | | | 10.2 | % | | | 202 | | | | 14.4 | % | | Brokerage commission | | | 295 | | | | 248 | | | | 262 | | | | 47 | | | | 19.0 | % | | | (14 | ) | | | (5.3 | )% | | Other | | | 2,163 | | | | 1,876 | | | | 1,502 | | | | 287 | | | | 15.3 | % | | | 374 | | | | 24.9 | % | | Income related to insurance, private pension plans and capitalization operations before claim and selling expenses | | | 5,880 | | | | 6,672 | | | | 6,888 | | | | (792 | ) | | | (11.9 | )% | | | (216 | ) | | | (3.1 | )% | | Other Income | | | 1,382 | | | | 1,279 | | | | 2,154 | | | | 103 | | | | 8.1 | % | | | (875 | ) | | | (40.6 | )% | | Total non-interest income | | | 39,180 | | | | 37,403 | | | | 35,384 | | | | 1,777 | | | | 4.8 | % | | | 2,019 | | | | 5.7 | % |
In the year ended December 31, 2014 and2016, our non-interest income amounted to R$39,180 million, representing a growth of 4.8% from the year ended December 31, 2013: | | | (In millions of R$, except percentages) | | | | | For the Year Ended December 31, | | | Variation | | | Non-interest income | | 2015 | | | 2014 | | | 2013 | | | 2015-2014 | | | 2014-2013 | | | Banking Service Fees | | | 29,452 | | | | 26,342 | | | | 22,712 | | | | 3,110 | | | | 11.8 | % | | | 3,630 | | | | 16.0 | % | | Current account services | | | 8,815 | | | | 7,725 | | | | 6,450 | | | | 1,090 | | | | 14.1 | % | | | 1,275 | | | | 19.8 | % | | Asset management fees | | | 2,932 | | | | 2,660 | | | | 2,501 | | | | 272 | | | | 10.2 | % | | | 159 | | | | 6.4 | % | | Collection commissions | | | 1,250 | | | | 1,279 | | | | 1,213 | | | | (29 | ) | | | (2.3 | )% | | | 66 | | | | 5.4 | % | | Fees from credit card services | | | 12,722 | | | | 11,507 | | | | 9,701 | | | | 1,215 | | | | 10.6 | % | | | 1,806 | | | | 18.6 | % | | Fees for guarantees issued and credit lines | | | 1,609 | | | | 1,407 | | | | 1,240 | | | | 202 | | | | 14.4 | % | | | 167 | | | | 13.5 | % | | Brokerage commission | | | 248 | | | | 262 | | | | 337 | | | | (14 | ) | | | (5.3 | )% | | | (75 | ) | | | (22.3 | )% | | Other | | | 1,876 | | | | 1,502 | | | | 1,270 | | | | 374 | | | | 24.9 | % | | | 232 | | | | 18.3 | % | | Income from insurance, private pension and premium bond operations before claim and selling expenses | | | 6,672 | | | | 6,888 | | | | 6,639 | | | | (216 | ) | | | (3.1 | )% | | | 249 | | | | 3.8 | % | | Other Income | | | 1,279 | | | | 2,154 | | | | 1,395 | | | | (875 | ) | | | (40.6 | )% | | | 759 | | | | 54.4 | % | | Total non-interest income | | | 37,403 | | | | 35,384 | | | | 30,746 | | | | 2,019 | | | | 5.7 | % | | | 4,638 | | | | 15.1 | % |
2015, mainly due to the growth of 8.4% in banking service fees. In the year ended December 31, 2015, our non-interest income amounted to R$37,403 million, representing a growth of 5.7% from the same period in the previous year ended December 31, 2014, mainly due to the growth of 11.8% in banking service fees. In 2014, our non-interest income amounted to R$35,384 million, representing a growth of 15.1% from the same period in the previous year, due to the growth in banking service fees. Banking service fees refer to the sum of fees from current account services, asset management, collection, credit card services, guarantees issued and credit lines, brokerage commission and other fees. In the year ended December 31, 2016, the increase in banking service fee revenues was mainly due to: (i) income from current account services, largely due to the offering of differentiated products and services, (ii) income from fees from credit card services, due to higher revenues from equipment rental and higher transaction volume during 2016 and (iii) asset management fees due to the increase in volume of assets under management. In 2015, the increase in banking service fee revenues was mainly due to: (i) income from fees from credit card services influenced by higher revenues from interchange, MDR (Merchant Discount Rate) and annual fees, and by the increase in the number of POS equipment rented in the period, and (ii) income from current account services, influenced mainly due to the offering of differentiated products and services. These products include differentiated current account service packages for individuals and the convenience and versatility of products offered to companies.fees. The growth in banking service fees and other feesfee income is in line with our strategy to diversify our income, mainly to make itwhile becoming less dependent on changes in interest rates. In 2014,the year ended December 31, 2016, income related to insurance, private pension plans and capitalization operations (premium bonds) before claim and selling expenses decreased by R$792 million compared to the year ended December 31, 2015. The decrease was influenced by the increase of R$3,030 million in reserves for insurance and private pension plans, partially offset by the increase in banking service fee revenues was mainly due to: (i) income from fees from credit card services, influencedrelated to insurance and private pension of R$2,215 million and by the increasedincrease of R$28 million in revenues from credit card annual fees, increases in sales and an increase incapitalization plans. In the number of equipment (POS) rented during the period, as well as the acquisition of Credicard, and (ii) income from current account services, influenced by the expansion of our account holder base and the increase in the offering of differentiated products and services. Inyear ended December 31, 2015, income fromrelated to insurance, private pension and capitalization operations (premium bonds) before claim and selling expenses decreased R$216 million compared to the year ended December 31, 2014. The decrease was influenced by the
Financial performance | A-146 |
decrease ofIn the year ended December 31, 2016, other income increased R$1,024103 million in reserves for insurance and private pension plans, partially offset bycompared to the year ended December 31, 2015, due primarily to an increase in reinsurance premiums of R$942 million due togains on the sale of our large risk insurance operationsassets held for sale, fixed assets and investments in 2014associates and byjoint ventures. In the increase of R$29 million in revenues from capitalization plans.
In 2014, income from insurance, private pension and capitalization operations (premium bonds) before claim and selling expenses increased R$249 million compared to 2013. The increase was influenced by (i) the lower reinsurance premium of R$492 million due to the sale of our large risk insurance operations in 2014, (ii)year ended December 31, 2015, the decrease of R$192 million in changes in reserves for insurance and private pension and (iii) by the increase of R$95 million in revenue from capitalization plans. These variations were partially offset by the decrease in income from insurance and private pension, mainly due to the decrease income in VGBL, mandatory insurance for personal injury caused by motor vehicles (DPVAT) and large risk products.
In 2015, other income decreased R$875 million compared to 2014,was due primarily to a decrease in gains on the sale of assets held for sale, fixed assets and investments in associates and joint ventures where revenues receiveda non-recurring revenue in the amount of R$1,151 million from the sale of assets held by Itaú Seguros Soluções Corporativas S.A.(ISSC) werewas reflected in 2014.
In 2014, other income increased R$759 million compared to 2013, due primarily to revenues received from the sale of assets held by ISSC in the amount of R$1,151 duringyear ended December 31, 2014.
The following chart shows the composition of the banking service fees for years ended December 31, 2016, 2015 December 31, 2014 and December 31, 2013:2014:  
Below is the composition of our losses on loans and claims for the years ended December 31, 2016, 2015 December 31, 2014 and December 31, 2013:2014: | | | (In millions of R$, except percentages) | | | | | | For the Year Ended December 31, | | Variation | | | For the Year Ended December 31, | | | Variation | | | Losses on loans and claims | | 2015 | | | 2014 | | | 2013 | | | 2015-2014 | | | 2014-2013 | | | 2016 | | | 2015 | | | 2014 | | | 2016-2015 | | | 2015-2014 | | | | | | (In millions of R$, except percentages) | | | Expenses for allowance for loan and lease losses | | | (24,517 | ) | | | (18,832 | ) | | | (17,856 | ) | | | (5,685 | ) | | | 30.2 | % | | | (976 | ) | | | 5.5 | % | | | (24,379 | ) | | | (24,517 | ) | | | (18,832 | ) | | | 138 | | | | (0.6 | )% | | | (5,685 | ) | | | 30.2 | % | | Recovery of loans written-off as loss | | | 4,779 | | | | 5,054 | | | | 5,061 | | | | (275 | ) | | | (5.4 | )% | | | (7 | ) | | | (0.1 | )% | | | 3,742 | | | | 4,779 | | | | 5,054 | | | | (1,037 | ) | | | (21.7 | )% | | | (275 | ) | | | (5.4 | )% | | Expenses for claims | | | (1,611 | ) | | | (2,430 | ) | | | (3,155 | ) | | | 819 | | | | (33.7 | )% | | | 725 | | | | (23.0 | )% | | | (1,555 | ) | | | (1,611 | ) | | | (2,430 | ) | | | 56 | | | | (3.5 | )% | | | 819 | | | | (33.7 | )% | | Recovery of claims under reinsurance | | | 14 | | | | 407 | | | | 1,080 | | | | (393 | ) | | | (96.6 | )% | | | (673 | ) | | | (62.3 | )% | | | 70 | | | | 14 | | | | 407 | | | | 56 | | | | 400.0 | % | | | (393 | ) | | | (96.6 | )% | | Total losses on loans and claims | | | (21,335 | ) | | | (15,801 | ) | | | (14,870 | ) | | | (5,534 | ) | | | 35.0 | % | | | (931 | ) | | | 6.3 | % | | | (22,122 | ) | | | (21,335 | ) | | | (15,801 | ) | | | (787 | ) | | | 3.7 | % | | | (5,534 | ) | | | 35.0 | % |
Evolution of the expenses for allowance for loan and lease losses The chart below shows the changes in the components making up our expenses for allowance for loan and lease losses which primarily account for the variation between expenses for allowance for loan and lease losses for the years ended December 31, 2016, 2015 and 2014: 
For the year ended December 31, 20142016, our expenses for allowance for loan and lease losses remained relatively stable compared to the year ended December 31, 2013: 
(1) Includes Payroll Loans.
(2) Includes Credit Card Loans, Mortgage Loans, Vehicles2015, primarily as a result of the decrease in our expenses for allowance loan and lease losses for companies being offset by increases in expenses for allowance and loan losses for our Latin America Loans.segment mainly as a result of the merger between Banco Itaú Chile and CorpBanca.
Financial performance | A-147 |
For the year ended December 31, 2015, our expenses for allowance for loan and lease losses increased by 30.2% compared to the same period inyear ended December 31, 2014. The growth is mainly due to a more challenging economic environment.environment in Brazil. Please refer to section Macroeconomic context – item Brazilian context for further details. For the year ended December 31, 2014, our expenses for allowance for loan and lease losses increased 5.5% compared to the same period in 2013 despite an increase of 9.9% in our loan portfolio in this period. This was the result of our continued application of stricter requirements for granting loans, which has led to higher down payment requirements and shorter financing terms and due to the acquisition of Credicard, which increased our loan portfolio by R$8.2 billion in December 2013.
As of December 31, 2015,2016, the NPL ratio for operations overdue from 15 to 90 days (NPL 15-90) reached 2.6%2.5% and NPL ratio for operations overdue for over 90 days (NPL 90) reached 3.5%3.4%. The chart below shows the changes in the NPL ratios.  
In the year ended December 31, 2016, the recovery of loans written off as losses reached R$3,742 million, representing a decrease of 21.7% compared to the year ended December 31, 2015 as a result of the challenging economic scenario in Brazil. In the year ended December 31, 2015, the recovery of loans written off as losses reached R$4,779 million, representing a decrease of 5.4% compared to the year ended December 31, 2014. In the year ended December 31, 2014, the recovery of loans written off as losses remained relatively stable2016, expenses for claims decreased by R$56 million compared to the year ended December 31, 2013same period in the previous year. The reduction in expenses for claims is related to the early termination of the extended warranty agreement between Itaú Seguros S.A. and reached R$5,054 million, representing a 0.1% decrease. Via Varejo in the third quarter of 2014. In 2015, expenses for claims decreased by R$819 million when compared to 2014, mainly due to a decrease in claims of large risk insurance operations due to the sale of the large risk portfolio, in addition to decreasing
claims in mandatory insurance for personal injury caused by motor vehicles (Seguro Obrigatório de Danos Pessoais Causados porpor Veículos Automotores de Via Terrestre, or DPVAT). In the year endedDecember 31, 2014, expenses for claims decreased by R$725 million, mainly due to a decrease in claims of corporate insurance risks, individual and group accident insurance segments for the year ended December 31, 2014 compared to the year ended December 31, 2013. RecoveryIn 2016, recovery of claims under reinsurance decreasedincreased by R$39356 million in 2015 from R$40714 million for the year ended December 31, 2014 to2015 reaching R$1470 million, in the year ended December 31, 2015, mainly due to a decrease in the recovery of claims in our segment of large risk insurance products.claims. In the year ended December 31, 2014,2015, recovery of claims under reinsurance decreased by R$673393 million compared to the year ended December 31, 2013, also2014, mainly due to a decrease in the recovery of claims in our segment of large risk insurance products.
Below isThe following table presents the composition of our general and administrative expenses for the years ended December 31, 2016, 2015 December 31, 2014 and December 31, 2013:2014:
| | | | | (In millions of R$, except percentages) | | | For the Year Ended December 31, | | | Variation | | | General and | | For the Year Ended | | | | | | | administrative | | December 31, | | Variation | | | | expenses | | 2015 | | | 2014 | | | 2013 | | | 2015-2014 | | | 2014-2013 | | | | General and administrative expenses | | | 2016 | | | 2015 | | | 2014 | | | 2016-2015 | | | 2015-2014 | | | | | | (In millions of R$, except percentages) | | | Personnel expenses | | | (19,573 | ) | | | (17,071 | ) | | | (15,860 | ) | | | (2,503 | ) | | | 14.7 | % | | | (1,211 | ) | | | 7.6 | % | | | (22,360 | ) | | | (19,573 | ) | | | (17,071 | ) | | | (2,787 | ) | | | 14.2 | % | | | (2,503 | ) | | | 14.7 | % | | Administrative expenses | | | (15,112 | ) | | | (14,325 | ) | | | (13,257 | ) | | | (787 | ) | | | 5.5 | % | | | (1,068 | ) | | | 8.1 | % | | | (15,959 | ) | | | (15,112 | ) | | | (14,325 | ) | | | (847 | ) | | | 5.6 | % | | | (787 | ) | | | 5.5 | % | | Depreciation | | | (1,688 | ) | | | (1,641 | ) | | | (1,522 | ) | | | (47 | ) | | | 2.9 | % | | | (119 | ) | | | 7.8 | % | | | (1,702 | ) | | | (1,688 | ) | | | (1,641 | ) | | | (14 | ) | | | 0.8 | % | | | (47 | ) | | | 2.9 | % | | Amortization | | | (910 | ) | | | (827 | ) | | | (808 | ) | | | (83 | ) | | | 10.0 | % | | | (19 | ) | | | 2.4 | % | | | (1,292 | ) | | | (910 | ) | | | (827 | ) | | | (382 | ) | | | 42.0 | % | | | (83 | ) | | | 10.0 | % | | Insurance acquisition expenses | | | (1,138 | ) | | | (1,214 | ) | | | (1,147 | ) | | | 76 | | | | (6.3 | )% | | | (67 | ) | | | 5.8 | % | | | (721 | ) | | | (1,138 | ) | | | (1,214 | ) | | | 417 | | | | (36.6 | )% | | | 76 | | | | (6.3 | )% | | Other expenses | | | (9,205 | ) | | | (7,472 | ) | | | (7,320 | ) | | | (1,733 | ) | | | 23.2 | % | | | (152 | ) | | | 2.1 | % | | | (8,870 | ) | | | (9,205 | ) | | | (7,472 | ) | | | 335 | | | | (3.6 | )% | | | (1,733 | ) | | | 23.2 | % | | Total general and administrative expenses | | | (47,626 | ) | | | (42,550 | ) | | | (39,914 | ) | | | (5,077 | ) | | | 11.9 | % | | | (2,636 | ) | | | 6.6 | % | | | (50,904 | ) | | | (47,626 | ) | | | (42,550 | ) | | | (3,278 | ) | | | 6.9 | % | | | (5,076 | ) | | | 11.9 | % |
We kept a tight control on costs and have partially offset the potential rise in costs (brought by the growth of operations, the rise in salaries and benefits due to collective labor agreements and the impact of inflation on our administrative costs) with efficiency gains. Between December 31, 2015, and December 31, 2016, our number of employees increased by 4.9% to 94,779 mainly as a result of the merger between Banco Itaú Chile and CorpBanca. Between December 31, 2014 and December 31, 2015, our number of employees decreased by 3.1% to 90,320 mainly as a result of our natural turn-over. Between December 31, 2013, and December 31, 2014, our number of employees decreased 2.6% to 93,175. Part of this decrease was due to the sale of our large risk operation in October 2014. General and administrative expenses increased by R$5,0773,278 million, or 11.9%6.9%, in 2015the year ended December 31, 2016 compared to 2014.the year ended December 31, 2015. In 2014,the year ended December 31, 2015, these expenses increased 6.6%by 11.9% compared to 2013.the year ended December 31, 2014. In 2015,the year ended December 31, 2016, the increase of R$2,5032,787 million in personnel expenses compared to the year ended December 31, 2015 was mainly a result of the increase in expenses related to compensation, defined contribution planwelfare benefits and provisionprovisions for labor claims. Also, the increase in the number of employees in Latin America as a result of the merger between Banco Itaú Chile and CorpBanca contributed to this increase in the year ended December 31, 2016 compared to the year ended December 31, 2015. The annual collective labor agreement reached in October 2015,third quarter, increased compensation by 10.0%8.0% starting from September 2015,2016 and also established the lump-sum bonus to employees, and impacted the year ended December 31, 20152016 compared to the same period of 2014.year ended December 31, 2015. In 2014,the year ended December 31, 2015, the increase of R$1,2112,503 million in personnel expenses compared to 2014 was mainly a result of the increase in expenses related to compensation,defined contribution plan and provisions for labor claims. Financial performance | A-148 |
payroll taxes, benefits and profit sharing. The annual collective labor agreement reached in October 2014, increased compensation by 8.5% starting from September 2014, and impactedIn the year ended December 31, 20142016, administrative expenses increased by R$847 million, or 5.6%, compared to the same period of 2013.
Inyear ended December 31, 2015 administrative expenses increased R$787 million, or 5.5%, mainly because ofdue to increases in costs related to data processingthird-party services, financial services, utilities and telecommunications, advertising, promotions and publications and other expenses.rent. The increase in these expenses was due to the organic growth of our operations and, the effect of inflation on most contracts and costs in the year ended December 31, 2015.2016. In 2014, the year ended December 31, 2015, administrative expenses increased R$1,068787 million, or 8.1%5.5%, mainly because of increases in third-party services,costs related to data processing and telecommunications, rent, securityadvertising, promotions and financial services.
publications and other expenses. In the year ended December 31, 2016, other expenses decreased R$335 million, or 3.6% compared to the year ended December 31, 2015, mainly in provisions for civil lawsuits. In 2015, other expenses grew R$1,733 million, or 23.2%, mainly due to the increases of R$724 million in selling expenses related to credit cards, R$390 million in provisions for tax and social security lawsuits and R$361 million in provisions for civil lawsuits. In 2014, other expenses increased R$152 million, or 2.1%, mainly due to the growth in selling expenses related to credit cards which represented R$817 million, partially offset by lower provisions in connection with civil lawsuits, which provisions represented R$566 million in the year ended December 31, 2014. In the year ended December 31, 2015,2016, tax expenses (ISS, PIS, Cofins and other tax expenses) amounted to R$5,4057,971 million, an increase of R$3422,566 million compared to the year ended December 31, 2014,2015, and growthincrease of R$722342 million for the year ended December 31, 20142015 compared to the year ended December 31, 2013,2014, reflecting the increase in our banking product (operating revenues). Certain amounts of income and expenses are recognized in our income statement but do not affect our taxable basis. Conversely, certain amounts are considered taxable income or deductible expenses in the calculation of our taxes on income but do not affect our income statement. Those items are referred to as “timing differences”. Our total income tax and social contribution includes current income tax and social contribution as well as deferred income tax and social contribution. The former is the tax expense under Brazilian tax laws for the period, and the latter is the tax expense resulting from timing differences. In the year ended December 31, 2015,2016, income tax and social contribution amounted to an expense of R$14,610 million compared to a credit of R$7,891 million compared to an expense of R$6,947 million for the year ended December 31, 2014.2015. This decreaseincrease in expense was mainly due to an increase in income before tax and social contribution and due to the effect on the balance of the social contribution tax credit resulting from the rate increase from 15% to 20% as established by Provisional Measure No. 675/2015 of May 2015 (converted into Law No. 13,169/2015 in October 2015) and to the tax effect on the hedge of our equity investments abroad, as exchange rate variations on such investments are not taxable but the hedge of such investments is taxable. In the year ended December 31, 2014, income tax and social contribution amounted to R$4,343 million, representing an increaseexpense of R$2,604 million compared to the year ended December 31, 2013.6,947 million. Basis of Segment Information Presentation segment information presentation Our segment information is based on reports used by senior management to assess the financial performance of our businesses and to make decisions regarding the allocation of funds for investment and other purposes. Segment information is prepared according to accounting practices adopted in Brazil (our segment information is not prepared in accordance with IFRS) but includes the following pro forma adjustments: (i) the recognition of the impact related to allocated capital using a proprietary model; (ii) the use of funding and cost of capital, according to market prices, using certain managerial criteria; (iii) the exclusion of non-recurring events from our results and (iv) the reclassification of the tax effects from hedging transactions we enter into for our investments abroad. Please refer to section Performance, item ConsolidatedComplete Financial Statements (IFRS),in IFRS, Note 34 – Segment Information for further details. The impacts associated towith capital allocation are included in the financial information. Accordingly, adjustments were made to the consolidated financial statements, based on a proprietary model. The Allocated Economic Capital (AEC) model was adopted for the consolidated financial statements by segments, and as from 2015, we changed the calculation methodology. The AEC considers, in addition to Tier l Capital, the effects of the calculation of expected loan losses, supplementary to the requirements of the Central Bank of Brazil, pursuant to CMN Circular No. 2,682/99. Accordingly, the Allocated Capital comprises the following components: Credit risk (including expected loss), operational risk, market risk and insurance underwriting risk. Based on the portion of Tier 1 Capital, we calculated the Return on Economic Allocated Capital, which corresponds to an operational performance indicator consistently adjusted to the capital required to support the risk associated to asset and liability positions assumed, in conformity with our risk appetite. As of the first quarter of 2016, we have adopted the Basel III rules in our managerial capital allocation model. The Efficiency Ratio and Risk Adjusted Efficiency Ratio are calculated based on managerial information, as presented below: Efficiency Ratio = | Non-Interest Expenses(1) | | (Banking Product(2)-Tax Expenses for ISS, PIS, Cofins and Other Taxes) | |
Risk Adjusted | Non-Interest Expenses(1)+Result from Loan Losses | | Efficiency Ratio = | (Banking Product(2)-Tax Expenses for ISS,PIS,Cofins and Other Taxes) | |
(1) | For the calculation of Efficiency and Risk Adjusted Efficiency Ratios, Non-Interest Expenses consider Personnel Expenses, Administrative Expenses, Operating Expenses and Other Expenses. | (2) | For the calculation of Efficiency and Risk Adjusted Efficiency Ratios, Banking Product is net of Insurance Selling Expenses and Retained Claims. |
Financial performance | A-149 |
The Efficiency Ratio and Risk Efficiency Ratio are non-GAAP measures and we disclose them herein as we consider them to be an important measure to understand how we manage our overhead costs. We disclose this measure to the market on a quarterly basis. Low efficiency ratios indicate a better performance, since this ratio measures the proportion of expenses over revenues. The risk-adjusted efficiency ratio includes the risk portions associated with banking transactions (result of the allowance for loan and lease losses and recovery of loans written off as losses). As from the first quarter of 2015, we changed the presentation of our segments in order to reflect the bank’s current organizational structure. We applied the same changes to 2014 and 2013 in order to allow comparability. Information is reportedreport information with respect to the following segments: (i) Retail Banking, (ii) Wholesale Banking and (iii) Activities with the Market and Corporation. The Retail Banking segment now covers the former segments Commercial Banking – Retail and Consumer Credit – Retail, with the transfer of operations from the Private Banking and Latin America (excluding Brazil) units, which were previously allocated to the Commercial Banking – Retail segment, to the Wholesale Banking segment. These changes are reflected in the presentation of information set out below with respect to periods that were previously reported using the prior business segment categories.
It is important to note that the change in the segments is not reflected in the annual report as of and for the year ended December 31, 2014 or any prior periods.
The current operational and reporting segments are described below: Retail Banking: The result of the Retail Banking segment derives from the offer of banking products and services to a diversified client base of account holders and non-account holders, individuals and companies. The segment includes retail clients, high net worth clients (Itaú Uniclass and Personnalité), and very small and small companies. This segment comprises financing and lending activities carried out in units other than the branch network, and offering of credit cards, in addition to operations with Itaú BMG Consignado.
Wholesale Banking: The result of the Wholesale Banking segment derives from the products and services offered to middle-market companies, private banking clients, from the activities of Latin America units (excluding Brazil), and the activities of Itaú BBA, the unit in charge of commercial operations with large companies as well as performing as an investment banking unit.
Activities with the Market and Corporation: This segment records the results derived from capital surplus, subordinated debt surplus and the net balance of tax credits and debits. It also shows the financial margin with the market, the Treasury operating cost, the equity in earnings of companies not associated to each segment and the interest in Porto Seguro.
| · | Retail Banking: The result of the Retail Banking segment is derived from the offer of banking products and services to a diversified client base of account holders and non-account holders, individuals and companies. The segment includes retail clients, high-income clients (Itaú Uniclass and Personnalité), and very small and small companies. This segment comprises financing and lending activities carried out in units other than the branch network, and offering of credit cards, in addition to operations with Itaú BMG Consignado; |
| · | Wholesale Banking: The result of the Wholesale Banking segment is derived from the products and services offered to middle-market companies, private banking clients, from the activities of Latin America units (excluding Brazil), including those of CorpBanca as of the second quarter of 2016 following the merger between Banco Itaú Chile and CorpBanca, and the activities of Itaú BBA, the unit in charge of commercial operations with large companies as well as performing as an investment banking unit; and |
| · | Activities with the Market and Corporation: This segment records the results derived from capital surplus, subordinated debt surplus and the net balance of tax credits and debits. It also shows the financial margin with the market, the treasury operating cost, the equity in earnings of companies not associated to each segment and the interest in Porto Seguro. |
We present below a summary of the results from our operating segments for 2015.the year ended December 31, 2016. Similar information for 2014the years ended December 31, 2015 and 20132014 is included in the audited consolidated financial statements, in Note 34 regarding segment information in section Performance, items Consolidateditem Complete Financial Statements (IFRS).in IFRS. The following discussion should be read in conjunction with our audited consolidatedcomplete financial statements, especially Note 34 regarding segment information in section Performance, item ConsolidatedComplete Financial Statements (IFRS).in IFRS. The adjustments column shown in the Note 34 presents effects of the differences between the segmented results (substantially in lineaccording with the accounting practices adopted in Brazil) and those calculated according to the principles adopted in our consolidatedcomplete financial statements in IFRS.
Consolidated Statement of Income
from January 1 to December 31, 2016 | | Retail
Banking | | | Wholesale
Banking | | | Activities with
the Market +
Corporation | | | ITAÚ
UNIBANCO | | | Adjustments | | | IFRS
consolidated | | | | | | | | | | | (In millions of R$) | | | | | | | | | Banking product | | | 69,577 | | | | 28,324 | | | | 9,412 | | | | 107,313 | | | | 11,348 | | | | 118,661 | | | Interest margin (1) | | | 39,154 | | | | 19,755 | | | | 9,264 | | | | 68,173 | | | | 11,308 | | | | 79,481 | | | Banking service fees | | | 22,659 | | | | 8,072 | | | | 59 | | | | 30,790 | | | | 1,128 | | | | 31,918 | | | Income related to insurance, private pension and capitalization operations before claim and selling expenses | | | 7,764 | | | | 497 | | | | 89 | | | | 8,350 | | | | (2,470 | ) | | | 5,880 | | | Other revenues | | | - | | | | - | | | | - | | | | - | | | | 1,382 | | | | 1,382 | | | Losses on loans and claims | | | (14,901 | ) | | | (8,471 | ) | | | 71 | | | | (23,301 | ) | | | 1,179 | | | | (22,122 | ) | | Expenses for allowance for loan and lease losses | | | (16,717 | ) | | | (8,914 | ) | | | 71 | | | | (25,560 | ) | | | 1,181 | | | | (24,379 | ) | | Recovery of credits written off as loss | | | 3,242 | | | | 502 | | | | - | | | | 3,744 | | | | (2 | ) | | | 3,742 | | | Expenses for claims / recovery of claims under reinsurance | | | (1,426 | ) | | | (59 | ) | | | - | | | | (1,485 | ) | | | - | | | | (1,485 | ) | | Operating margin | | | 54,676 | | | | 19,853 | | | | 9,483 | | | | 84,012 | | | | 12,527 | | | | 96,539 | | | Other operating income (expenses) | | | (37,202 | ) | | | (13,410 | ) | | | (2,387 | ) | | | (52,999 | ) | | | (5,348 | ) | | | (58,347 | ) | | Non-interest expenses (2) | | | (32,883 | ) | | | (12,034 | ) | | | (1,616 | ) | | | (46,533 | ) | | | (4,371 | ) | | | (50,904 | ) | | Tax expenses for ISS, PIS and COFINS and other | | | (4,319 | ) | | | (1,376 | ) | | | (771 | ) | | | (6,466 | ) | | | (1,505 | ) | | | (7,971 | ) | | Share of profit or (loss) in associates and joint ventures | | | - | | | | - | | | | - | | | | - | | | | 528 | | | | 528 | | | Net income before income tax and social contribution | | | 17,474 | | | | 6,443 | | | | 7,096 | | | | 31,013 | | | | 7,179 | | | | 38,192 | | | Income tax and social contribution | | | (6,328 | ) | | | (1,081 | ) | | | (1,237 | ) | | | (8,646 | ) | | | (5,964 | ) | | | (14,610 | ) | | Non-controlling interest in subsidiaries | | | (223 | ) | | | 79 | | | | (1 | ) | | | (145 | ) | | | (174 | ) | | | (319 | ) | | Net income | | | 10,923 | | | | 5,441 | | | | 5,858 | | | | 22,222 | | | | 1,041 | | | | 23,263 | |
| | | (In millions of R$) | | | | | | | | | | | Activities with | | | | | | | | | | | | Consolidated Statement of Income from | | | | | Wholesale | | | the Market + | | | ITAÚ | | | | | | | | | January 1 to December 31, 2015 | | Retail Banking | | | Banking | | | Corporation | | | UNIBANCO | | | Adjustments | | | IFRS consolidated | | | Banking product | | | 70,495 | | | | 25,774 | | | | 7,641 | | | | 103,910 | | | | (11,899 | ) | | | 92,011 | | | Net interest(1) | | | 40,997 | | | | 18,047 | | | | 7,513 | | | | 66,557 | | | | (11,949 | ) | | | 54,608 | | | Revenue from services | | | 21,159 | | | | 7,282 | | | | 59 | | | | 28,500 | | | | 952 | | | | 29,452 | | | Income related to insurance, private pension and capitalization operations before claim and selling expenses | | | 8,339 | | | | 445 | | | | 69 | | | | 8,853 | | | | (2,181 | ) | | | 6,672 | | | Other revenues | | | - | | | | - | | | | - | | | | - | | | | 1,279 | | | | 1,279 | | | Losses on loans and claims | | | (13,893 | ) | | | (5,931 | ) | | | 98 | | | | (19,726 | ) | | | (1,609 | ) | | | (21,335 | ) | | Expenses for allowance for loan and lease losses | | | (16,232 | ) | | | (6,764 | ) | | | 98 | | | | (22,898 | ) | | | (1,619 | ) | | | (24,517 | ) | | Recovery of credits written off as loss | | | 3,886 | | | | 883 | | | | - | | | | 4,769 | | | | 10 | | | | 4,779 | | | Expenses for claims/recovery of claims under reinsurance | | | (1,547 | ) | | | (50 | ) | | | - | | | | (1,597 | ) | | | - | | | | (1,597 | ) | | Banking product net of losses on loans and claims | | | 56,602 | | | | 19,843 | | | | 7,739 | | | | 84,184 | | | | (13,508 | ) | | | 70,676 | | | Other operating income (expenses) | | | (35,924 | ) | | | (11,130 | ) | | | (1,948 | ) | | | (49,002 | ) | | | (3,409 | ) | | | (52,411 | ) | | Non-interest expenses(2) | | | (31,547 | ) | | | (9,877 | ) | | | (1,522 | ) | | | (42,946 | ) | | | (4,680 | ) | | | (47,626 | ) | | Tax expenses for ISS, PIS and COFINS and other | | | (4,377 | ) | | | (1,253 | ) | | | (426 | ) | | | (6,056 | ) | | | 651 | | | | (5,405 | ) | | Share of profit or (loss) in associates and joint ventures | | | - | | | | - | | | | - | | | | - | | | | 620 | | | | 620 | | | Net income before income tax and social contribution | | | 20,678 | | | | 8,713 | | | | 5,791 | | | | 35,182 | | | | (16,917 | ) | | | 18,265 | | | Income tax and social contribution | | | (7,263 | ) | | | (2,691 | ) | | | (1,040 | ) | | | (10,994 | ) | | | 18,885 | | | | 7,891 | | | Non-controlling interest in subsidiaries | | | (342 | ) | | | - | | | | (14 | ) | | | (356 | ) | | | (60 | ) | | | (416 | ) | | Net income | | | 13,073 | | | | 6,022 | | | | 4,737 | | | | 23,832 | | | | 1,908 | | | | 25,740 | |
| (1) | Includes net interest and similar income and expenses of R$72,72566,369 dividend income of R$98,288, net gain (loss) on investment securities and derivatives of R$(11,862)7,311 and results from foreign exchange results and exchange variation of transactions abroad of R$(6,353).5,513. |
| (2) | Refers to general and administrative expenses including depreciation expenses of R$1,688,1,702, amortization expenses of R$9101,292 and insurance acquisition expenses of R$1,138. |
Financial performance | A-150 |
Revenues from Operationsoperations in Brazil and Abroadabroad We conduct most of our business activities in Brazil, but we do not break down our revenues by geographic markets within Brazil. Our interest income from loans and leases, banking service fees and income from insurance, private pension plans and premium bonds transactions are divided between revenues earned in Brazil and abroad.outside of Brazil. The following information is presented in IFRS, after eliminations on consolidation. The following table sets forth the consolidated statement of income with respect to our revenues from operations in Brazil and abroad for the years ended December 31, 2016, 2015 2014 and 2013:2014: | | | (In millions of R$, except percentages) | | | | | | For the Year Ended December 31, | | Variation | | | For the Year Ended December 31, | | | Variation | | | Revenues from operations in Brazil and abroad | | 2015 | | | 2014 | | | 2013 | | | 2015-2014 | | | 2014-2013 | | | 2016 | | | 2015 | | | 2014 | | | 2016-2015 | | | 2015-2014 | | | | | | (In millions of R$, except percentages) | | | Income Related to Financial Operations(1) | | | 129,672 | | | | 129,250 | | | | 95,002 | | | | 422 | | | | 0.3 | % | | | 34,248 | | | | 36.0 | % | | | 174,607 | | | | 129,672 | | | | 129,250 | | | | 44,935 | | | | 34.7 | % | | | 422 | | | | 0.3 | % | | Brazil | | | 117,140 | | | | 118,946 | | | | 86,481 | | | | (1,806 | ) | | | (1.5 | )% | | | 32,465 | | | | 37.5 | % | | | 154,653 | | | | 117,140 | | | | 118,946 | | | | 37,513 | | | | 32.0 | % | | | (1,806 | ) | | | (1.5 | )% | | Abroad | | | 12,532 | | | | 10,304 | | | | 8,521 | | | | 2,228 | | | | 21.6 | % | | | 1,783 | | | | 20.9 | % | | | 19,954 | | | | 12,532 | | | | 10,304 | | | | 7,422 | | | | 59.2 | % | | | 2,228 | | | | 21.6 | % | | Banking Service Fees | | | 29,452 | | | | 26,342 | | | | 22,712 | | | | 3,110 | | | | 11.8 | % | | | 3,630 | | | | 16.0 | % | | | 31,918 | | | | 29,452 | | | | 26,342 | | | | 2,466 | | | | 8.4 | % | | | 3,110 | | | | 11.8 | % | | Brazil | | | 27,072 | | | | 24,550 | | | | 21,140 | | | | 2,522 | | | | 10.3 | % | | | 3,410 | | | | 16.1 | % | | | 29,061 | | | | 27,072 | | | | 24,550 | | | | 1,989 | | | | 7.3 | % | | | 2,522 | | | | 10.3 | % | | Abroad | | | 2,380 | | | | 1,792 | | | | 1,572 | | | | 588 | | | | 32.8 | % | | | 220 | | | | 14.0 | % | | | 2,857 | | | | 2,380 | | | | 1,792 | | | | 477 | | | | 20.0 | % | | | 588 | | | | 32.8 | % | | Income from insurance, private pension and capitalization operations before claim and selling expenses | | | 6,672 | | | | 6,888 | | | | 6,639 | | | | (216 | ) | | | (3.1 | )% | | | 249 | | | | 3.8 | % | | | Income related to insurance, private pension and capitalization operations before claim and selling expenses | | | | 5,880 | | | | 6,672 | | | | 6,888 | | | | (792 | ) | | | (11.9 | )% | | | (216 | ) | | | (3.1 | )% | | Brazil | | | 6,570 | | | | 6,834 | | | | 6,568 | | | | (264 | ) | | | (3.9 | )% | | | 266 | | | | 4.0 | % | | | 5,748 | | | | 6,570 | | | | 6,834 | | | | (822 | ) | | | (12.5 | )% | | | (264 | ) | | | (3.9 | )% | | Abroad | | | 102 | | | | 54 | | | | 71 | | | | 48 | | | | 88.9 | % | | | (17 | ) | | | (23.9 | )% | | | 132 | | | | 102 | | | | 54 | | | | 30 | | | | 29.4 | % | | | 48 | | | | 88.9 | % |
| (1) | Includes interest and similar income.income, dividend income, net gain (loss) on investment securities and derivatives.derivatives, and foreign exchange results and exchange variation on transactions. |
Retail Banking The following table sets forth the consolidated statement of income with respect to our Retail Banking segment for the years ended December 31, 2016, 2015 2014 and 2013:2014:
| | | For the Year Ended December 31, | | | Variation | | | Consolidated Statement of Income | | 2016 | | | 2015 | | | 2014 | | | 2016-2015 | | | 2015-2014 | | | | | (In millions of R$, except percentages) | | | Banking Product | | | 69,577 | | | | 70,495 | | | | 65,516 | | | | (918 | ) | | | (1.3 | )% | | | 4,979 | | | | 7.6 | % | | Interest margin | | | 39,154 | | | | 40,997 | | | | 37,880 | | | | (1,843 | ) | | | (4.5 | )% | | | 3,117 | | | | 8.2 | % | | Banking service fees | | | 22,659 | | | | 21,159 | | | | 19,234 | | | | 1,500 | | | | 7.1 | % | | | 1,925 | | | | 10.0 | % | | Income from insurance, private pension and capitalization operations before claim and selling expenses | | | 7,764 | | | | 8,339 | | | | 8,402 | | | | (575 | ) | | | (6.9 | )% | | | (63 | ) | | | (0.7 | )% | | Losses on loans and claims | | | (14,901 | ) | | | (13,893 | ) | | | (11,840 | ) | | | (1,008 | ) | | | 7.3 | % | | | (2,053 | ) | | | 17.3 | % | | Expenses for allowance for loan and lease losses | | | (16,717 | ) | | | (16,232 | ) | | | (14,503 | ) | | | (485 | ) | | | 3.0 | % | | | (1,729 | ) | | | 11.9 | % | | Recovery of loans written-off as losses | | | 3,242 | | | | 3,886 | | | | 4,642 | | | | (644 | ) | | | (16.6 | )% | | | (756 | ) | | | (16.3 | )% | | Expenses for claims/Recovery of claims under reinsurance | | | (1,426 | ) | | | (1,547 | ) | | | (1,979 | ) | | | 121 | | | | (7.8 | )% | | | 432 | | | | (21.8 | )% | | Operating margin | | | 54,676 | | | | 56,602 | | | | 53,676 | | | | (1,926 | ) | | | (3.4 | )% | | | 2,926 | | | | 5.5 | % | | Other operating income (expenses) | | | (37,202 | ) | | | (35,924 | ) | | | (34,200 | ) | | | (1,278 | ) | | | 3.6 | % | | | (1,724 | ) | | | 5.0 | % | | Non-interest expenses | | | (32,883 | ) | | | (31,547 | ) | | | (30,243 | ) | | | (1,336 | ) | | | 4.2 | % | | | (1,304 | ) | | | 4.3 | % | | Tax expenses for ISS, PIS and COFINS and other | | | (4,319 | ) | | | (4,377 | ) | | | (3,957 | ) | | | 58 | | | | (1.3 | )% | | | (420 | ) | | | 10.6 | % | | Income before income tax and social contribution | | | 17,474 | | | | 20,678 | | | | 19,476 | | | | (3,204 | ) | | | (15.5 | )% | | | 1,202 | | | | 6.2 | % | | Income tax and social contribution | | | (6,328 | ) | | | (7,263 | ) | | | (6,761 | ) | | | 935 | | | | (12.9 | )% | | | (502 | ) | | | 7.4 | % | | Non-controlling interest in subsidiaries | | | (223 | ) | | | (342 | ) | | | (305 | ) | | | 119 | | | | (34.8 | )% | | | (37 | ) | | | 12.1 | % | | Net income | | | 10,923 | | | | 13,073 | | | | 12,410 | | | | (2,150 | ) | | | (16.4 | )% | | | 663 | | | | 5.3 | % | | Performance Measures | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Efficiency Ratio | | | 51.1 | % | | | 48.0 | % | | | 49.8 | % | | | | | | | | | | | | | | | | | | Risk Adjusted Efficiency Ratio | | | 72.4 | % | | | 67.4 | % | | | 66.7 | % | | | | | | | | | | | | | | | | | | Balance Sheet Information | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loan, Lease and Other Credit Transactions | | | 214,025 | | | | 222,774 | | | | 226,239 | | | | | | | | | | | | | | | | | | | Total Assets | | | 909,779 | | | | 873,202 | | | | 811,185 | | | | | | | | | | | | | | | | | |
Net income for the Retail Banking segment decreased by 16.4% in the year ended December 31, 2016 from the year ended December 31, 2015, mainly due to the negative impact of the R$1,843 million decrease in interest margin, as a result of the challenging economic scenario in Brazil. Non-interest expenses increased by R$1,336 million, with an increase in personnel expenses, which were impacted by events related to terminations, labor claims, and lump-sum bonus payment to employees in 2016. | | | (In millions of R$, except percentages) | | | | | For the Year Ended December 31, | | | Variation | | | Consolidated Statement of Income | | 2015 | | | 2014 | | | 2013 | | | 2015-2014 | | | 2014-2013 | | | Banking product | | | 70,495 | | | | 65,516 | | | | 57,504 | | | | 4,979 | | | | 7.6 | % | | | 8,012 | | | | 13.9 | % | | Interest margin | | | 40,997 | | | | 37,880 | | | | 32,932 | | | | 3,117 | | | | 8.2 | % | | | 4,948 | | | | 15.0 | % | | Banking service fees | | | 21,159 | | | | 19,234 | | | | 16,437 | | | | 1,925 | | | | 10.0 | % | | | 2,797 | | | | 17.0 | % | | Income from insurance, private pension and capitalization operations before claim and selling expenses | | | 8,339 | | | | 8,402 | | | | 8,135 | | | | (63 | ) | | | (0.7 | )% | | | 267 | | | | 3.3 | % | | Losses on loans and claims | | | (13,893 | ) | | | (11,840 | ) | | | (13,471 | ) | | | (2,053 | ) | | | 17.3 | % | | | 1,631 | | | | (12.1 | )% | | Expenses for allowance for loan and lease losses | | | (16,232 | ) | | | (14,503 | ) | | | (16,270 | ) | | | (1,729 | ) | | | 11.9 | % | | | 1,767 | | | | (10.9 | )% | | Recovery of loans written-off as losses | | | 3,886 | | | | 4,642 | | | | 4,837 | | | | (756 | ) | | | (16.3 | )% | | | (195 | ) | | | (4.0 | )% | | Expenses for claims/Recovery of claims under reinsurance | | | (1,547 | ) | | | (1,979 | ) | | | (2,038 | ) | | | 432 | | | | (21.8 | )% | | | 59 | | | | (2.9 | )% | | Banking product net of losses on loans and claims | | | 56,602 | | | | 53,676 | | | | 44,033 | | | | 2,926 | | | | 5.5 | % | | | 9,643 | | | | 21.9 | % | | Other operating income (expenses) | | | (35,924 | ) | | | (34,200 | ) | | | (31,288 | ) | | | (1,724 | ) | | | 5.0 | % | | | (2,912 | ) | | | 9.3 | % | | Non-interest expenses | | | (31,547 | ) | | | (30,243 | ) | | | (27,698 | ) | | | (1,304 | ) | | | 4.3 | % | | | (2,545 | ) | | | 9.2 | % | | Tax expenses for ISS, PIS and COFINS and other | | | (4,377 | ) | | | (3,957 | ) | | | (3,590 | ) | | | (420 | ) | | | 10.6 | % | | | (367 | ) | | | 10.2 | % | | Income before income tax and social contribution | | | 20,678 | | | | 19,476 | | | | 12,745 | | | | 1,202 | | | | 6.2 | % | | | 6,731 | | | | 52.8 | % | | Income tax and social contribution | | | (7,263 | ) | | | (6,761 | ) | | | (4,189 | ) | | | (502 | ) | | | 7.4 | % | | | (2,572 | ) | | | 61.4 | % | | Non-controlling interest in subsidiaries | | | (342 | ) | | | (305 | ) | | | (125 | ) | | | (37 | ) | | | 12.1 | % | | | (180 | ) | | | 144.0 | % | | Net income | | | 13,073 | | | | 12,410 | | | | 8,431 | | | | 663 | | | | 5.3 | % | | | 3,979 | | | | 47.2 | % | | Performance measures | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Efficiency ratio | | | 48.0 | % | | | 49.8 | % | | | 51.4 | % | | | | | | | | | | | | | | | | | | Risk adjusted efficiency ratio | | | 67.4 | % | | | 66.7 | % | | | 76.4 | % | | | | | | | | | | | | | | | | | | Balance sheet information | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loan, lease and other credit transactions | | | 222,774 | | | | 226,239 | | | | 205,586 | | | | | | | | | | | | | | | | | | | Total assets | | | 873,202 | | | | 811,185 | | | | 798,550 | | | | | | | | | | | | | | | | | |
Banking service fees increased by 7.1% from the year ended December 31, 2015 to the year ended December 31, 2016, which had a positive impact on net income mainly due to higher revenues from current account services and credit cards. Financial performance | A-151 |
Net income for the Retail Banking segment increased by 5.3% infrom the year ended December 31, 2014 to the year ended December 31, 2015, from the same period of 2014, mainly due to the positive impact of the R$3,117 million increase in interest margin and of the R$1,925 million increase in banking service fees with higher revenues from current account services and credit cards. On the other hand, with a negative impact on the net income, losses Losses on loans and claims increased by 17.3% from the same period ofyear ended December 31, 2014, mainly due to higher expenses for allowance for loan and lease losses for individuals and small and very small companies due to a more challenging economic environment.environment in Brazil. Non-interest expenses increased by 4.3%, with an increase in personnel expenses, which were affected by the collective labor agreements reached in 2014 and 2015.
Net income for the Retail Banking segment increased 47.2% in the year ended December 31, 2014 from the same period of 2013, mainly due to the positive impact of a 15.0% increase in interest margin and a 17.0% increase in banking service fees with higher revenues from current account services, credit card, consortia and collection services. These impacts are mainly influenced by the migration of the middle market companies from the Wholesale Banking segment. Furthermore, losses on loans and claims decreased R$1,631 million or 12.1% from 2013, despite the 10.0% growth on loan, lease and other credit transactions balance mainly due to the change in the credit profile of our portfolio during 2014.
On the other hand, with a negative impact on net income, non-interest expenses increased 9.2%. This increase was also a consequence of the above-mentioned reclassification along with a higher volume of transactions (as a result of a growth in our banking operations), and an increase in personnel expenses, which were affected by the collective labor agreements reached in 2013 and 2014.
Wholesale Banking
The following table sets forth the consolidated statement of income with respect to our Wholesale Banking segment for the years ended December 31, 2016, 2015 2014 and 2013: | | | (In millions of R$. except percentages) | | | | | For the Year Ended December 31, | | | Variation | | | Consolidated Statement of Income | | 2015 | | | 2014 | | | 2013 | | | 2015-2014 | | | 2014-2013 | | | Banking Product | | | 25,774 | | | | 20,408 | | | | 17,032 | | | | 5,366 | | | | 26.3 | % | | | 3,376 | | | | 19.8 | % | | Interest margin | | | 18,047 | | | | 13,685 | | | | 11,097 | | | | 4,362 | | | | 31.9 | % | | | 2,588 | | | | 23.3 | % | | Banking service fees | | | 7,282 | | | | 6,321 | | | | 5,495 | | | | 961 | | | | 15.2 | % | | | 826 | | | | 15.0 | % | | Income from insurance, private pension and capitalization operations before claim and selling expenses | | | 445 | | | | 402 | | | | 440 | | | | 43 | | | | 10.7 | % | | | (38 | ) | | | (8.6 | )% | | Losses on loans and claims | | | (5,931 | ) | | | (3,202 | ) | | | (1,807 | ) | | | (2,729 | ) | | | 85.2 | % | | | (1,395 | ) | | | 77.2 | % | | Expenses for allowance for loan and lease losses | | | (6,764 | ) | | | (3,565 | ) | | | (2,008 | ) | | | (3,199 | ) | | | 89.7 | % | | | (1,557 | ) | | | 77.5 | % | | Recovery of loans written-off as losses | | | 883 | | | | 407 | | | | 248 | | | | 476 | | | | 117.0 | % | | | 159 | | | | 64.1 | % | | Expenses for claims/Recovery of claims under reinsurance | | | (50 | ) | | | (44 | ) | | | (47 | ) | | | (6 | ) | | | 13.6 | % | | | 3 | | | | (6.4 | )% | | Banking product net of losses on loans and claims | | | 19,843 | | | | 17,206 | | | | 15,225 | | | | 2,637 | | | | 15.3 | % | | | 1,981 | | | | 13.0 | % | | Other operating income (expenses) | | | (11,130 | ) | | | (9,150 | ) | | | (8,700 | ) | | | (1,980 | ) | | | 21.6 | % | | | (450 | ) | | | 5.2 | % | | Non-interest expenses | | | (9,877 | ) | | | (8,158 | ) | | | (7,839 | ) | | | (1,719 | ) | | | 21.1 | % | | | (319 | ) | | | 4.1 | % | | Tax expenses for ISS, PIS and COFINS and other | | | (1,253 | ) | | | (992 | ) | | | (861 | ) | | | (261 | ) | | | 26.3 | % | | | (131 | ) | | | 15.2 | % | | Income before income tax and social contribution | | | 8,713 | | | | 8,056 | | | | 6,525 | | | | 657 | | | | 8.2 | % | | | 1,531 | | | | 23.5 | % | | Income tax and social contribution | | | (2,691 | ) | | | (2,591 | ) | | | (2,215 | ) | | | (100 | ) | | | 3.9 | % | | | (376 | ) | | | 17.0 | % | | Net income | | | 6,022 | | | | 5,465 | | | | 4,310 | | | | 557 | | | | 10.2 | % | | | 1,155 | | | | 26.8 | % | | Performance measures | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Efficiency ratio | | | 40.4 | % | | | 42.1 | % | | | 48.5 | % | | | | | | | | | | | | | | | | | | Risk adjusted efficiency ratio | | | 64.4 | % | | | 58.4 | % | | | 59.6 | % | | | | | | | | | | | | | | | | | | Balance sheet information | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loan, lease and other credit transactions | | | 251,056 | | | | 221,950 | | | | 201,688 | | | | | | | | | | | | | | | | | | | Total assets | | | 547,236 | | | | 436,872 | | | | 355,632 | | | | | | | | | | | | | | | | | |
2014: Financial performance | A-152 |
| | | For the Year Ended December 31, | | | Variation | | | Consolidated Statement of Income | | 2016 | | | 2015 | | | 2014 | | | 2016-2015 | | | 2015-2014 | | | | | (In millions of R$, except percentages) | | | Banking Product | | | 28,324 | | | | 25,774 | | | | 20,408 | | | | 2,550 | | | | 9.9 | % | | | 5,366 | | | | 26.3 | % | | Interest margin | | | 19,755 | | | | 18,047 | | | | 13,685 | | | | 1,708 | | | | 9.5 | % | | | 4,362 | | | | 31.9 | % | | Banking service fees | | | 8,072 | | | | 7,282 | | | | 6,321 | | | | 790 | | | | 10.8 | % | | | 961 | | | | 15.2 | % | | Income from insurance, private pension and capitalization operations before claim and selling expenses | | | 497 | | | | 445 | | | | 402 | | | | 52 | | | | 11.7 | % | | | 43 | | | | 10.7 | % | | Losses on loans and claims | | | (8,471 | ) | | | (5,931 | ) | | | (3,202 | ) | | | (2,540 | ) | | | 42.8 | % | | | (2,729 | ) | | | 85.2 | % | | Expenses for allowance for loan and lease losses | | | (8,914 | ) | | | (6,764 | ) | | | (3,565 | ) | | | (2,150 | ) | | | 31.8 | % | | | (3,199 | ) | | | 89.7 | % | | Recovery of loans written-off as losses | | | 502 | | | | 883 | | | | 407 | | | | (381 | ) | | | (43.1 | )% | | | 476 | | | | 117.0 | % | | Expenses for claims/Recovery of claims under reinsurance | | | (59 | ) | | | (50 | ) | | | (44 | ) | | | (9 | ) | | | 18.0 | % | | | (6 | ) | | | 13.6 | % | | Operating margin | | | 19,853 | | | | 19,843 | | | | 17,206 | | | | 10 | | | | 0.1 | % | | | 2,637 | | | | 15.3 | % | | Other operating income (expenses) | | | (13,410 | ) | | | (11,130 | ) | | | (9,150 | ) | | | (2,280 | ) | | | 20.5 | % | | | (1,980 | ) | | | 21.6 | % | | Non-interest expenses | | | (12,034 | ) | | | (9,877 | ) | | | (8,158 | ) | | | (2,157 | ) | | | 21.8 | % | | | (1,719 | ) | | | 21.1 | % | | Tax expenses for ISS, PIS and COFINS and other | | | (1,376 | ) | | | (1,253 | ) | | | (992 | ) | | | (123 | ) | | | 9.8 | % | | | (261 | ) | | | 26.3 | % | | Income before income tax and social contribution | | | 6,443 | | | | 8,713 | | | | 8,056 | | | | (2,270 | ) | | | (26.1 | )% | | | 657 | | | | 8.2 | % | | Income tax and social contribution | | | (1,081 | ) | | | (2,691 | ) | | | (2,591 | ) | | | 1,610 | | | | (59.8 | )% | | | (100 | ) | | | 3.9 | % | | Non-controlling interest in subsidiaries | | | 79 | | | | - | | | | - | | | | 79 | | | | - | | | | - | | | | - | | | Net income | | | 5,441 | | | | 6,022 | | | | 5,465 | | | | (581 | ) | | | (9.6 | )% | | | 557 | | | | 10.2 | % | | Performance Measures | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Efficiency Ratio | | | 44.8 | % | | | 40.4 | % | | | 42.1 | % | | | | | | | | | | | | | | | | | | Risk Adjusted Efficiency Ratio | | | 76.0 | % | | | 64.4 | % | | | 58.4 | % | | | | | | | | | | | | | | | | | | Balance Sheet Information | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loan, Lease and Other Credit Transactions | | | 277,200 | | | | 251,056 | | | | 221,950 | | | | | | | | | | | | | | | | | | | Total Assets | | | 585,088 | | | | 547,236 | | | | 436,872 | | | | | | | | | | | | | | | | | |
In the year ended December 31, 2016, net income for our Wholesale Banking segment decreased by 9.6% from the previous year. Our banking product increased by 9.9% as the interest margin and the banking service fees were 9.5% and 10.8% higher than in the year ended December 31, 2015. The increase in interest margin was due to the growth in our Latin America portfolio as a result of the merger between our subsidiary Banco Itaú Chile and CorpBanca in the second quarter of 2016. Non-interest expenses increased by 21.8% for the year ended December 31, 2016 compared to the year ended December 31, 2015. Losses on loans and claims increased by 42.8% for the year ended December 31, 2016 compared to the year ended December 31, 2015 mainly due to the higher provision for loan losses, which totaled R$8,914 million in 2016, mainly related to higher provisions for specific economic groups due to the challenging economic scenario in Brazil. Additionally, income from recovery of loans written-off as losses decreased by 43.1% in 2016 compared to the previous year. In the year ended December 31, 2015, net income for our Wholesale Banking segment increased by 10.2% from the previous year. Our banking product increased by 26.3% as the interest margin and the banking service fees were 31.9% and 15.2% higher than in 2014. The increase in our corporate loan portfolio during 2015 contributed to the improvement in the interest margin for the period when compared to the interest margin for 2014. Losses on loans and claims increased by 85.2%, mainly due to the increase in expenses for allowance for loan losses for companies of the corporate segment in 2015. The increase of 117.0 % in recovery of loans written-off as losses compared to 2014 was mainly driven by the restructuring with respect to amounts owed by a specific client ofin the corporate segment. Also, the non-interest expenses increased by 21.1%, having a negative impact on net income. In 2014, net income for our Wholesale Banking segment increased 26.8% from the previous year, mainly due to higher interest margin, which increased 23.3% from 2013. Banking services fees increased 15.0% from 2013 on higher revenues from Merger and Acquisitions and Fixed Income operations.
Our expenses for allowance for loan and lease losses increased R$1,557 million in 2014 compared to 2013. Non-interest expenses increased 4.1% in 2014 compared to 2013, less than the Brazilian Inflation rate (IPCA) which was 6.41% in 2014.
Activities with the Market and Corporation The following table sets forth the consolidated statement of income with respect to our Activities with the Market and Corporation segment for the years ended December 31, 2016, 2015 2014 and 2013: | | | (In millions of R$, except percentages) | | | | | For the Year Ended December 31, | | | Variation | | | Consolidated Statement of Income | | 2015 | | | 2014 | | | 2013 | | | 2015-2014 | | | 2014-2013 | | | Banking product | | | 7,641 | | | | 3,916 | | | | 3,940 | | | | 3,725 | | | | 95.1 | % | | | (24 | ) | | | (0.6 | )% | | Interest margin | | | 7,513 | | | | 3,590 | | | | 3,608 | | | | 3,923 | | | | 109.3 | % | | | (18 | ) | | | (0.5 | )% | | Banking service fees | | | 59 | | | | 222 | | | | 216 | | | | (163 | ) | | | (73.4 | )% | | | 6 | | | | 2.8 | % | | Income from insurance, private pension and capitalization operations before claim and selling expenses | | | 69 | | | | 104 | | | | 116 | | | | (35 | ) | | | (33.7 | )% | | | (12 | ) | | | (10.3 | )% | | Losses on loans and claims | | | 98 | | | | (3 | ) | | | (332 | ) | | | 101 | | | | (3,366.7 | )% | | | 329 | | | | (99.1 | )% | | Expenses for allowance for loan and lease losses | | | 98 | | | | (3 | ) | | | (302 | ) | | | 101 | | | | (3,366.7 | )% | | | 299 | | | | (99.0 | )% | | Recovery of loans written-off as losses | | | - | | | | - | | | | (40 | ) | | | - | | | | - | | | | 40 | | | | (100.0 | )% | | Expenses for claims/Recovery of claims under reinsurance | | | - | | | | - | | | | 10 | | | | - | | | | - | | | | (10 | ) | | | (100.0 | )% | | Banking product net of losses on loans and claims | | | 7,739 | | | | 3,913 | | | | 3,608 | | | | 3,826 | | | | 97.8 | % | | | 305 | | | | 8.5 | % | | Other operating income (expenses) | | | (1,948 | ) | | | (1,089 | ) | | | (282 | ) | | | (859 | ) | | | 78.9 | % | | | (807 | ) | | | 286.2 | % | | Non-interest expenses | | | (1,522 | ) | | | (1,182 | ) | | | (450 | ) | | | (340 | ) | | | 28.8 | % | | | (732 | ) | | | 162.7 | % | | Tax expenses for ISS, PIS and COFINS and other | | | (426 | ) | | | 93 | | | | 168 | | | | (519 | ) | | | (558.1 | )% | | | (75 | ) | | | (44.6 | )% | | Income before income tax and social contribution | | | 5,791 | | | | 2,824 | | | | 3,326 | | | | 2,967 | | | | 105.1 | % | | | (502 | ) | | | (15.1 | )% | | Income tax and social contribution | | | (1,040 | ) | | | (74 | ) | | | (219 | ) | | | (966 | ) | | | 1,305.4 | % | | | 145 | | | | (66.2 | )% | | Non-controlling interest in subsidiaries | | | (14 | ) | | | (6 | ) | | | (12 | ) | | | (8 | ) | | | 133.3 | % | | | 6 | | | | (50.0 | )% | | Net income | | | 4,737 | | | | 2,744 | | | | 3,095 | | | | 1,993 | | | | 72.6 | % | | | (351 | ) | | | (11.3 | )% | | Performance measures | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Efficiency ratio | | | 21.0 | % | | | 29.5 | % | | | 21.0 | % | | | | | | | | | | | | | | | | | | Risk adjusted efficiency ratio | | | 19.7 | % | | | 29.5 | % | | | 19.7 | % | | | | | | | | | | | | | | | | | | Balance sheet information | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loan, lease and other credit transactions | | | - | | | | 3,572 | | | | 4,966 | | | | | | | | | | | | | | | | | | | Total assets | | | 127,716 | | | | 107,174 | | | | 116,625 | | | | | | | | | | | | | | | | | |
2014: Financial performance | A-153 |
| | | For the Year Ended December 31, | | | Variation | | | Consolidated Statement of Income | | 2016 | | | 2015 | | | 2014 | | | 2016-2015 | | | 2015-2014 | | | | | (In millions of R$, except percentages) | | | Banking Product | | | 9,412 | | | | 7,641 | | | | 3,916 | | | | 1,771 | | | | 23.2 | % | | | 3,725 | | | | 95.1 | % | | Interest margin | | | 9,264 | | | | 7,513 | | | | 3,590 | | | | 1,751 | | | | 23.3 | % | | | 3,923 | | | | 109.3 | % | | Banking service fees | | | 59 | | | | 59 | | | | 222 | | | | - | | | | 0.0 | % | | | (163 | ) | | | (73.4 | )% | | Income from insurance, private pension and capitalization operations before claim and selling expenses | | | 89 | | | | 69 | | | | 104 | | | | 20 | | | | 29.0 | % | | | (35 | ) | | | (33.7 | )% | | Losses on loans and claims | | | 71 | | | | 98 | | | | (3 | ) | | | (27 | ) | | | (27.6 | )% | | | 101 | | | | (3366.7 | )% | | Expenses for allowance for loan and lease losses | | | 71 | | | | 98 | | | | (3 | ) | | | (27 | ) | | | (27.6 | )% | | | 101 | | | | (3366.7 | )% | | Recovery of loans written-off as losses | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Expenses for claims/Recovery of claims under reinsurance | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Banking Product net of losses on loans and claims | | | 9,483 | | | | 7,739 | | | | 3,913 | | | | 1,744 | | | | 22.5 | % | | | 3,826 | | | | 97.8 | % | | Other operating income (expenses) | | | (2,387 | ) | | | (1,948 | ) | | | (1,089 | ) | | | (439 | ) | | | 22.5 | % | | | (859 | ) | | | 78.9 | % | | Non-interest expenses | | | (1,616 | ) | | | (1,522 | ) | | | (1,182 | ) | | | (94 | ) | | | 6.2 | % | | | (340 | ) | | | 28.8 | % | | Tax expenses for ISS, PIS and COFINS and other | | | (771 | ) | | | (426 | ) | | | 93 | | | | (345 | ) | | | 81.0 | % | | | (519 | ) | | | (558.1 | )% | | Income before income tax and social contribution | | | 7,096 | | | | 5,791 | | | | 2,824 | | | | 1,305 | | | | 22.5 | % | | | 2,967 | | | | 105.1 | % | | Income tax and social contribution | | | (1,237 | ) | | | (1,040 | ) | | | (74 | ) | | | (197 | ) | | | 18.9 | % | | | (966 | ) | | | 1305.4 | % | | Non-controlling interest in subsidiaries | | | (1 | ) | | | (14 | ) | | | (6 | ) | | | 13 | | | | (92.9 | )% | | | (8 | ) | | | 133.3 | % | | Net income | | | 5,858 | | | | 4,737 | | | | 2,744 | | | | 1,121 | | | | 23.7 | % | | | 1,993 | | | | 72.6 | % | | Performance Measures | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Efficiency Ratio | | | 18.6 | % | | | 21.0 | % | | | 29.5 | % | | | | | | | | | | | | | | | | | | Risk Adjusted Efficiency Ratio | | | 17.8 | % | | | 19.7 | % | | | 29.5 | % | | | | | | | | | | | | | | | | | | Balance Sheet Information | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loan, Lease and Other Credit Transactions | | | - | | | | - | | | | 3,572 | | | | | | | | | | | | | | | | | | | Total Assets | | | 114,956 | | | | 127,716 | | | | 107,174 | | | | | | | | | | | | | | | | | |
Activities with the Market and Corporation segment includes the result from the investment of our excess capital, costs from our excess subordinated debt and the net balance of tax assets and liabilities. It also includes 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 as adjustments related to minority shareholdings in subsidiaries and our interest in Porto Seguro S.A. In 2015,2016, net income from Activities with the Market and Corporation increased 72.6% fromby 23.7% compared to the previous year. With positive effects on our net income, interest margin increased by R$1,751 million or 23.3%. This increase is a result of an increase in the interest margin of R$3,923 million or 109.3%, for the year ended December 31, 2015 compared to the prior year (mainly due to higher results on our treasury transactions undertaken for purposes of asset and liability management and proprietary portfolio management). Non-interest expenses increased by 28.8% in 2015 when compared to 2014. In 2014, net income from Activities with the Market and Corporation decreased 11.3% from the previous year. Having a negative effect on net income, non-interest expenses increased 162.7% in 2014 when compared to 2013, mainly due to pre-operational costs of our new data center. Banking Product decreased R$24 million or 0.6%, mainly due to lower results with respect to our treasury transactions undertaken for purposes of asset and liability management and proprietary portfolio management.
Changes in Cash Flowscash flows The following table sets forth the main variations in our cash flows for the years ended December 31, 2016, 2015 December 31, 2014 and December 31, 2013:2014: | | | (In millions of R$) | | | | | For the Year Ended December 31, | | | Changes in Cash Flows | | 2015 | | | 2014 | | | 2013 | | | Net cash provided (used in) by operating activities | | | (34,459 | ) | | | 89,726 | | | | 32,530 | | | Net cash provided (used in) by investing activities | | | (361 | ) | | | 2,676 | | | | (14,500 | ) | | Net cash (used in) financing activities | | | (8,529 | ) | | | (21,688 | ) | | | (10,606 | ) | | Net increase (decrease) in cash and cash equivalents | | | (43,350 | ) | | | 70,714 | | | | 7,425 | |
| | | For the Year Ended December 31, | | | Changes in Cash Flows | | 2016 | | | 2015 | | | 2014 | | | | | (In millions of R$) | | | Net cash from (used in) operating activities | | | 30,311 | | | | (34,459 | ) | | | 89,726 | | | Net cash from (used in) investing activities | | | 14,429 | | | | (361 | ) | | | 2,676 | | | Net cash from (used in) financing activities | | | (22,329 | ) | | | (8,529 | ) | | | (21,688 | ) | | Net increase (decrease) in cash and cash equivalents | | | 22,411 | | | | (43,350 | ) | | | 70,714 | |
In 2015,2016, our net decreaseincrease of R$43,35022,411 million in cash and cash equivalents was attributed to the use ofprovided by R$34,45930,311 million in net cash provided by operating activities, by R$36114,429 million in investing activities and by the use of R$8,52922,329 million in financing activities. Operating Activitiesactivities In the year ended December 31, 2016, net cash from operating activities was R$30,311 million as a result of decreases in securities purchased under agreements to resell, in other tax assets and by the decrease in loan operations. There was also a decrease in funds from interbank markets partially compensated by an increase in deposits received under securities repurchase agreements. In 2015, net cash used in operating activities was R$34,459 million due to increases in financial assets held for trading, loan operations (as a result of the credit portfolio increases) and securities purchased under agreements to resell. In 2014, the changes in cash flows from operating activities resulted from a decrease in financial assets held for trading and an increase in deposits received under securities repurchase agreements, partially offset by increases in loan operations. In 2013, the changes in cash flows from operating activities resulted primarily from an increase in funds from interbank markets offset by our loan operations. Management believes cash flows from operations, available cash balances and funds from interbank markets will be sufficient to fund our operating liquidity needs. Investing Activitiesactivities The
In the year ended December 31, 2016 the increase in cash from investing activities includewas related to CorpBanca’s consolidation as a result of the merger between our subsidiary Banco Itaú Chile and CorpBanca in the second quarter of 2016 and due to the cash received on the sale of available-for-sale assets, held to maturity assets, other receivables and investment securities.financial assets. In 2015, the purchase of available-for-sale assets and purchase of held-to-maturity financial assets were the main cause for the outflows in our cash flow from investing activities. In 2014, the sale of large risk insurance operations and the sale of available-for-sale assets was the main cause for the inflows in our cash flow from investing activities, offset by cash paid for the purchase of available-for-sale assets. In 2013, the Credicard acquisition and the increase in purchase of available-for-sale assets were the main reason for the outflows in our cash flow from investing activities, offset by cash received from sale of available-for-sale assets. Financing Activitiesactivities In the years ended December 31, 2016, 2015 2014 and 2013,2014, the changes in cash flows from financing activities were primarily a result of an increase in redemptions of our subordinated debt in institutional markets. Furthermore,Further, we paid dividends and interest on capital paid in the amount of R$ 7,673 million, R$7,008 million and R$6,319 million in 2016, 2015 and 2014, respectively. In 2016, we purchased R$5,369 947 million in 2015, 2014 and 2013, respectively. In 2015, we purchased an amount oftreasury shares compared to R$3,324 million in treasury shares in 2015, which both generated a cash outflowoutflows of the same amount.amounts. Liquidity and Capital Resourcescapital resources Our board of directors determines our policy regarding liquidity risk management, and establishes broad quantitative liquidity risk management limits in line with our risk appetite. CSRML, composed of members of senior management, is responsible for strategic liquidity risk management in line with the board-approved liquidity risk framework and risk appetite. In establishing our guidelines, CSRML considers the liquidity implications of each market segment and product. The institutional treasury unit of Itaú Unibanco Holding is responsible for day-to-day management of the Itaú Unibanco Group’s liquidity profile, within the parameters set by the Board of Directors and the CSRML. This includes an oversight responsibility with respect to all business units operating outside of Brazil. Financial performance | A-154 |
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 and the entities used by the Brazilian operations for funding and serving their clients abroad. Each subsidiary in Latin America (e.g., in Chile, Argentina, Uruguay, Colombia and Paraguay) and in Europe has its own treasury function with appropriate 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 rarely liquidity transfers between subsidiaries or between the head office and a subsidiary, except under very specific circumstances (e.g., targeted capital increases). Brazil, Argentina, United KingdonKingdom and Colombia are the only countries in which we operate where local regulators have established minimum liquidity levels. CMN regulations also establish capital conservation and countercyclical buffers for Brazilian financial institutions, and determines their minimum percentages as well as which sanctions and limitations will apply in case of non-compliance with such additional requirements. We define our consolidated group operational liquidity reserve as the total amount of assets that can be rapidly turned into cash, based on local market practices and legal restrictions. The operational liquidity reserve generally includes: cash and deposits on demand, funded positions of securities purchased under agreements to resell and unencumbered government securities. The following table presents our operational liquidity reserve as of December 31, 2016, 2015 2014 and 2013:2014: | | | (In millions of R$) | | | | | | | | | | | | | 2015 | | | | | | As of December 31, | | Average | | | As of December 31, | | | 2016 Average | | | Cash in Cash Flows | | 2015 | | | 2014 | | | 2013 | | | Balance(1) | | | 2016 | | | 2015 | | | 2014 | | | Balance(1) | | | | | | | | | (In millions of R$) | | | | | | Cash and deposits on demand | | | 18,544 | | | | 17,527 | | | | 16,576 | | | | 18,180 | | | | 18,542 | | | | 18,544 | | | | 17,527 | | | | 19,500 | | | Funded positions of securities purchased under agreements to resell(2) | | | 72,091 | | | | 74,275 | | | | 23,979 | | | | 56,045 | | | | 77,452 | | | | 72,091 | | | | 74,275 | | | | 73,945 | | | Unencumbered government securities | | | 65,965 | | | | 45,587 | | | | 50,573 | | | | 56,052 | | | | 81,458 | | | | 65,965 | | | | 45,587 | | | | 64,988 | | | Operational reserve | | | 156,600 | | | | 137,389 | | | | 91,128 | | | | 130,277 | | | | 174,627 | | | | 156,600 | | | | 137,389 | | | | 158,433 | |
| (1) | Average calculated based on interim financial statements. |
| (2) | Net of R$4,329 (R$9,461 (R$at 12/31/2015 and R$5,945 at 12/31/2014 and R$3,333 at 12/31/2013)2014), which securities are restricted to guarantee transactions at BM&FBovespa and the Central Bank. |
Management controls our liquidity reserves by projecting the resources that will be available for investment by our treasury department. The technique we employ involves the statistical projection of scenarios for our assets and liabilities, considering the liquidity profiles of our counterparties. Short-term minimum liquidity limits are defined according to guidelines set by the CSRML. These limits aim to ensure that the Itaú Unibanco Group always has sufficient liquidity available, sufficient to cover unforeseen market events. These limits are revised periodically, based on the projection of cash needs in atypical market situations (i.e., stress scenarios). Management of liquidity makes it possible for us to simultaneously meet our operating requirements, protect our capital and exploit market opportunities. Our strategy is to maintain adequate liquidity to meet our present and future financial obligations and to capitalize on business opportunities as they arise. We are exposed to effects of the disruptions and volatility in the global financial markets and the economies in those countries where we do business, especially Brazil. However, due to our stable sources of funding, which include a large deposit base, the large number of correspondent banks with which we have long-standing relationships, as well as facilities in place which
enable us to access further funding when required, we have not historically experienced liquidity challenges, even during periods of disruption in the international financial markets. Financial performance | A-155 |
The following table sets forth our average deposits and borrowings for the years ended December 31, 2015, 2014 and 2013:
| | | (In millions of R$, except percentages) | | | For the Year Ended December 31, | | | | | For the Year Ended December 31, | | | 2016 | | | 2015 | | | 2014 | | | Average deposits and borrowings | | 2015 | | 2014 | | 2013 | | | Average
balance | | | % of total | | | Average
balance | | | % of total | | | Average
balance | | | % of total | | | | | Average | | | | | | Average | | | | | | Average | | | | | | | | | balance | | | % of total | | | balance | | | % of total | | | balance | | | % of total | | | (In millions of R$, except percentages) | | | Interest-bearing liabilities | | | 875,904 | | | | 81.2 | | | | 793,069 | | | | 82.4 | | | | 738,535 | | | | 83.4 | | | | 969,461 | | | | 81.9 | % | | | 875,904 | | | | 81.2 | % | | | 793,069 | | | | 82.4 | | | Interest-bearing deposits | | | 236,314 | | | | 21.9 | | | | 233,999 | | | | 24.3 | | | | 209,347 | | | | 23.6 | | | | 244,121 | | | | 20.6 | % | | | 236,314 | | | | 21.9 | % | | | 233,999 | | | | 24.3 | | | Savings deposits | | | 114,500 | | | | 10.6 | | | | 111,473 | | | | 11.6 | | | | 92,964 | | | | 10.5 | | | | 106,838 | | | | 9.0 | % | | | 114,500 | | | | 10.6 | % | | | 111,473 | | | | 11.6 | | | Interbank deposits | | | 19,633 | | | | 1.8 | | | | 6,131 | | | | 0.6 | | | | 7,446 | | | | 0.8 | | | | 7,304 | | | | 0.6 | % | | | 19,633 | | | | 1.8 | % | | | 6,131 | | | | 0.6 | | | Time deposits | | | 102,182 | | | | 9.5 | | | | 116,395 | | | | 12.1 | | | | 108,937 | | | | 12.3 | | | | 129,979 | | | | 11.0 | % | | | 102,182 | | | | 9.5 | % | | | 116,395 | | | | 12.1 | | | Securities sold under repurchase agreements | | | 297,509 | | | | 27.6 | | | | 266,527 | | | | 27.7 | | | | 256,025 | | | | 28.9 | | | | 339,416 | | | | 28.7 | % | | | 297,509 | | | | 27.6 | % | | | 266,527 | | | | 27.7 | | | Interbank market debt and Institutional market debt | | | 219,463 | | | | 20.3 | | | | 183,981 | | | | 19.1 | | | | 174,834 | | | | 19.7 | | | | 240,563 | | | | 20.4 | % | | | 219,463 | | | | 20.3 | % | | | 183,981 | | | | 19.1 | | | Interbank market debt | | | 134,637 | | | | 12.5 | | | | 113,522 | | | | 11.8 | | | | 104,002 | | | | 11.7 | | | | 144,968 | | | | 12.2 | % | | | 134,637 | | | | 12.5 | % | | | 113,522 | | | | 11.8 | | | Institutional market debt | | | 84,826 | | | | 7.9 | | | | 70,459 | | | | 7.3 | | | | 70,832 | | | | 8.0 | | | | 95,595 | | | | 8.1 | % | | | 84,826 | | | | 7.9 | % | | | 70,459 | | | | 7.3 | | | Reserves for insurance private pension and liabilities for capitalization plans | | | 121,856 | | | | 11.3 | | | | 107,880 | | | | 11.2 | | | | 97,818 | | | | 11.0 | | | | 144,387 | | | | 12.2 | % | | | 121,856 | | | | 11.3 | % | | | 107,880 | | | | 11.2 | | | Other Interest-bearing liabilities | | | 761 | | | | 0.1 | | | | 682 | | | | 0.1 | | | | 511 | | | | 0.1 | | | | 974 | | | | 0.1 | % | | | 761 | | | | 0.1 | % | | | 682 | | | | 0.1 | | | Non-interest-bearing liabilities | | | 203,377 | | | | 18.8 | | | | 169,247 | | | | 17.6 | | | | 147,338 | | | | 16.6 | | | | 214,024 | | | | 18.1 | % | | | 203,377 | | | | 18.8 | % | | | 169,247 | | | | 17.6 | | | Non-interest bearing deposits | | | 54,148 | | | | 5.0 | | | | 43,840 | | | | 4.6 | | | | 36,726 | | | | 4.1 | | | | 61,895 | | | | 5.2 | % | | | 54,148 | | | | 5.0 | % | | | 43,840 | | | | 4.6 | | | Derivatives | | | 29,488 | | | | 2.7 | | | | 13,107 | | | | 1.4 | | | | 10,355 | | | | 1.2 | | | | 29,752 | | | | 2.5 | % | | | 29,488 | | | | 2.7 | % | | | 13,107 | | | | 1.4 | | | Other non-interest bearing liabilities | | | 119,740 | | | | 11.1 | | | | 112,300 | | | | 11.7 | | | | 100,257 | | | | 11.3 | | | | 122,377 | | | | 10.3 | % | | | 119,740 | | | | 11.1 | % | | | 112,300 | | | | 11.7 | | | Total | | | 1,079,280 | | | | 100.0 | | | | 962,316 | | | | 100.0 | | | | 885,873 | | | | 100.0 | | | | 1,183,485 | | | | 100.0 | | | | 1,079,280 | | | | 100.0 | | | | 962,315 | | | | 100.0 | |
Our principalmain sources of funding are interest-bearing deposits, deposits received under repurchase agreements, on-lending from government financial institutions, lines of credit with foreign banks and the issuance of securities abroad. Please refer to section Performance, item Consolidated Financial Statements, Note 17 – Deposits for further details about funding. We may from time to time seek to retire or purchase our outstanding debt, including our subordinated notes (subject to the approval of the Central Bank), and senior notes, through cash purchases in the open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. Notes repurchased may be held, cancelled or resold and any resale thereof will only be in compliance with applicable requirements or exemptions under the relevant securities laws. 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. Up to December 31, 2015,2016, none of these events, including any events of default or failure to satisfy financial covenants, have occurred. 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 they are allowed to make deposits in Itaú Unibanco Holding, which represent interbank certificates of deposit (Certificado de Depósito Interbancário). These restrictions have not had, and are not expected to have, a material impact on our ability to meet our cash obligations. 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. In addition, there is a certain seasonality at the end of the year in our pension plan business, when the thirteenth salarysalaries are paid. 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. Information on trends We expect many factors to affect our future results of operations, liquidity and capital resources, including: the Brazilian economic environment (please refer to section Context,context, item Macroeconomic Context, Brazilian Context and section Our Risk Management,risk management, item Risk Factors,factors, Macroeconomic Risksrisks for further details); legal and regulatory developments (please refer to section Context, item Macroeconomic Context,context, Brazilian Contextcontext, section Our risk management, item Regulatory environment and section Our Risk Management,risk management, item Risk Factors,factors, Legal and Regulatory Risksregulatory risks for further details); Financial performance | A-156 |
the effects of any ongoing international financial turmoil, including on the liquidity and capital required (please refer to section Context, item Macroeconomic Context,context, Global Contextcontext, section Our risk management, item Regulatory environment and section Our Risk Management,risk management, item Risk Factors,factors, Macroeconomic Risksrisks for further details);
the inflation effects on the result of our operations (please refer to section Context, item Macroeconomic Context,context, Brazilian Contextcontext and section Our Risk Management,risk management, item Risk Factors,factors, Macroeconomic Risks, Inflationrisks, inflation and fluctuations in interest rates may have a material adverse effect on us, for further details); | • | the effects of the variations in the value of the Brazilianreal, foreign exchange rates and interest rates on our net interest income (please refer to section Performance, item Financial Performance,performance, Results, and section Our Risk Management,risk management, item Risk Factors,factors, Macroeconomic Risks,risks, for further details); and |
any acquisitions we may make in the future (please refer to section Our Risk Management,risk management, item Risk Factors,factors, The integration of acquired or merged businesses involves certain risks that may have a material adverse effect on us)us for further details). As part of our strategy, we continue to review growth opportunities, both in Brazil and outside of Brazil. Additionally, please refer to section Our Risk Management,risk management, item Risk Factorsfactors for comments on the risks faced in our operations and that could affect our business, results of operations or financial condition. Financial performance | A-157 |
A-164 ConsolidatedComplete Financial Statements (IFRS)
The following financial statements, together with the report of the independent auditor, are part of this annual report: Management’sManagement´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 controls 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 a decline in the level of compliance with policies or procedures may occur. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015.2016. In making this assessment, our management used the criteria set forth in “Internal Control – Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (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, 2015.2016. In connection with the evaluation required by the Exchange Act Rule 13a-15(d), our management, concluded that the changes that occurred during the year ended December 31, 20152016 have not materially affected, or are not reasonably likely to materially affect, our internal control over financial reporting. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2015,2016, has been audited by PricewaterhouseCoopers Auditores Independentes, an independent registered public accounting firm, as stated in their report which appears herein. | By: | /s/ Roberto Egydio Setubal | | By: | /s/ Eduardo Mazzilli de VassimonCaio Ibrahim David | | Name: Roberto Egydio Setubal | | Eduardo Mazzilli de Vassimon | Name: Caio Ibrahim David | | Title: Chief Executive Officer | | | Title: 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: April 29, 201620, 2017 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, comprehensive income, changes in stockholders’ equity and cash flows present fairly, in all material respects, the financial position of Itaú Unibanco Holding S.A. and its subsidiaries (“Itaú Unibanco Holding”) at December 31, 20152016 and December 31, 20142015 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015,2016, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, Itaú Unibanco Holdingthe Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015,2016, based on criteria established inInternal Control -– Integrated Framework 2013issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Itaú Unibanco Holding’sThe 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’sManagement’s Report on Internal Control over Financial Reporting”. Reporting. Our responsibility is to express opinions on these financial statements and on the Itaú Unibanco Holding’sCompany’s internal control over financial reporting based on our integrated audits. 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;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 PricewaterhouseCoopers Auditores Independentes
São Paulo, Brazil
April 20, 2017 April 29, 2016
ITAÚ UNIBANCO HOLDING S.A. Consolidated Balance Sheet (In millions of Reais) | Assets | | Note | | 12/31/2015 | | | 12/31/2014 | | | Cash and deposits on demand | | 4 | | | 18,544 | | | | 17,527 | | | Central Bank compulsory deposits | | 5 | | | 66,556 | | | | 63,106 | | | Interbank deposits | | 6 | | | 30,525 | | | | 23,081 | | | Securities purchased under agreements to resell | | 6 | | | 254,404 | | | | 208,918 | | | Financial assets held for trading | | 7a | | | 164,311 | | | | 132,944 | | | Pledged as collateral | | | | | 11,008 | | | | 37,366 | | | Other | | | | | 153,303 | | | | 95,578 | | | Financial assets designated at fair value through profit or loss | | 7b | | | 642 | | | | 733 | | | Derivatives | | 8 and 9 | | | 26,755 | | | | 14,156 | | | Available-for-sale financial assets | | 10 | | | 86,045 | | | | 78,360 | | | Pledged as collateral | | | | | 16,706 | | | | 22,250 | | | Other | | | | | 69,339 | | | | 56,110 | | | Held-to-maturity financial assets | | 11 | | | 42,185 | | | | 34,434 | | | Pledged as collateral | | | | | 9,460 | | | | 6,102 | | | Other | | | | | 32,725 | | | | 28,332 | | | Loan operations and lease operations portfolio, net | | 12 | | | 447,404 | | | | 430,039 | | | Loan operations and lease operations portfolio | | | | | 474,248 | | | | 452,431 | | | (-) Allowance for loan and lease losses | | | | | (26,844 | ) | | | (22,392 | ) | | Other financial assets | | 20a | | | 53,506 | | | | 53,649 | | | Investments in associates and joint ventures | | 13 | | | 4,399 | | | | 4,090 | | | Goodwill | | 3a | | | 2,057 | | | | 1,961 | | | Fixed assets, net | | 15 | | | 8,541 | | | | 8,711 | | | Intangible assets, net | | 16 | | | 6,295 | | | | 6,134 | | | Tax assets | | | | | 52,149 | | | | 35,243 | | | Income tax and social contribution - current | | | | | 2,088 | | | | 3,329 | | | Income tax and social contribution - deferred | | 27b | | | 47,453 | | | | 31,129 | | | Other | | | | | 2,608 | | | | 785 | | | Assets held for sale | | 36 | | | 486 | | | | 196 | | | Other assets | | 20a | | | 11,611 | | | | 13,921 | | | Total assets | | | | | 1,276,415 | | | | 1,127,203 | |
The accompanying notes are an integral part of these consolidated financial statements.
| | Note | | 12/31/2016 | | | 12/31/2015 | | | Assets | | | | | | | | | | | | | | | | | | | | Cash and deposits on demand | | 4 | | | 18,542 | | | | 18,544 | | | Central Bank compulsory deposits | | 5 | | | 85,700 | | | | 66,556 | | | Interbank deposits | | 6 | | | 22,692 | | | | 30,525 | | | Securities purchased under agreements to resell | | 6 | | | 265,051 | | | | 254,404 | | | Financial assets held for trading | | 7a | | | 204,648 | | | | 164,311 | | | Pledged as collateral | | | | | 12,950 | | | | 11,008 | | | Other | | | | | 191,698 | | | | 153,303 | | | Financial assets designated at fair value through profit or loss | | 7b | | | 1,191 | | | | 642 | | | Derivatives | | 8 and 9 | | | 24,231 | | | | 26,755 | | | Available-for-sale financial assets | | 10 | | | 88,277 | | | | 86,045 | | | Pledged as collateral | | | | | 17,435 | | | | 16,706 | | | Other | | | | | 70,842 | | | | 69,339 | | | Held-to-maturity financial assets | | 11 | | | 40,495 | | | | 42,185 | | | Pledged as collateral | | | | | 11,778 | | | | 9,460 | | | Other | | | | | 28,717 | | | | 32,725 | | | Loan operations and lease operations portfolio, net | | 12 | | | 463,394 | | | | 447,404 | | | Loan operations and lease operations portfolio | | | | | 490,366 | | | | 474,248 | | | (-) Allowance for loan and lease losses | | | | | (26,972 | ) | | | (26,844 | ) | | Other financial assets | | 20a | | | 53,917 | | | | 53,506 | | | Investments in associates and joint ventures | | 13 | | | 5,073 | | | | 4,399 | | | Goodwill | | 3 | | | 9,675 | | | | 2,057 | | | Fixed assets, net | | 15 | | | 8,042 | | | | 8,541 | | | Intangible assets, net | | 16 | | | 7,381 | | | | 6,295 | | | Tax assets | | | | | 44,274 | | | | 52,149 | | | Income tax and social contribution - current | | | | | 2,703 | | | | 2,088 | | | Income tax and social contribution - deferred | | 27b | | | 37,395 | | | | 47,453 | | | Other | | | | | 4,176 | | | | 2,608 | | | Assets held for sale | | 36.7 | | | 631 | | | | 486 | | | Other assets | | 20a | | | 10,027 | | | | 11,611 | | | Total assets | | | | | 1,353,241 | | | | 1,276,415 | |
ITAÚ UNIBANCO HOLDING S.A.
Consolidated Balance Sheet
(In millions of Reais)
| Liabilities and stockholders' equity | | Note | | 12/31/2015 | | | 12/31/2014 | | | Deposits | | 17 | | | 292,610 | | | | 294,773 | | | Securities sold under repurchase agreements | | 19a | | | 336,643 | | | | 288,683 | | | Financial liabilities held for trading | | 18 | | | 412 | | | | 520 | | | Derivatives | | 8 and 9 | | | 31,071 | | | | 17,350 | | | Interbank market debt | | 19a | | | 156,886 | | | | 122,586 | | | Institutional market debt | | 19b | | | 93,918 | | | | 73,242 | | | Other financial liabilities | | 20b | | | 68,715 | | | | 71,492 | | | Reserves for insurance and private pension | | 30c II | | | 129,305 | | | | 109,778 | | | Liabilities for capitalization plans | | | | | 3,044 | | | | 3,010 | | | Provisions | | 32 | | | 18,994 | | | | 17,027 | | | Tax liabilities | | | | | 4,971 | | | | 4,465 | | | Income tax and social contribution - current | | | | | 2,364 | | | | 2,835 | | | Income tax and social contribution - deferred | | 27b II | | | 370 | | | | 201 | | | Other | | | | | 2,237 | | | | 1,429 | | | Other liabilities | | 20b | | | 25,787 | | | | 23,660 | | | Total liabilities | | | | | 1,162,356 | | | | 1,026,586 | | | Capital | | 21a | | | 85,148 | | | | 75,000 | | | Treasury shares | | 21a | | | (4,353 | ) | | | (1,328 | ) | | Additional paid-in capital | | 21c | | | 1,733 | | | | 1,508 | | | Appropriated reserves | | 21d | | | 10,067 | | | | 8,210 | | | Unappropriated reserves | | 21e | | | 20,947 | | | | 16,301 | | | Cumulative other comprehensive income | | | | | (1,290 | ) | | | (431 | ) | | Total stockholders’ equity attributed to the owners of the parent company | | | | | 112,252 | | | | 99,260 | | | Non-controlling interests | | | | | 1,807 | | | | 1,357 | | | Total stockholders’ equity | | | | | 114,059 | | | | 100,617 | | | Total liabilities and stockholders' equity | | | | | 1,276,415 | | | | 1,127,203 | |
The accompanying notes are an integral part of these consolidated financial statements.
ITAÚ UNIBANCO HOLDING S.A.
Consolidated Statement of Income
Periods ended
(In millions of Reais, except for number of shares and earnings per share information)
| | | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | | | Note | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | Banking product | | | | | 92,011 | | | | 91,657 | | | | 79,387 | | | Interest and similar income | | 23a | | | 147,789 | | | | 120,115 | | | | 94,127 | | | Interest and similar expense | | 23b | | | (75,064 | ) | | | (72,977 | ) | | | (46,361 | ) | | Dividend income | | | | | 98 | | | | 215 | | | | 205 | | | Net gain (loss) on investment securities and derivatives | | 23c | | | (11,862 | ) | | | (724 | ) | | | (5,924 | ) | | Foreign exchange results and exchange variations on transactions | | | | | (6,353 | ) | | | 9,644 | | | | 6,594 | | | Banking service fees | | 24 | | | 29,452 | | | | 26,342 | | | | 22,712 | | | Income related to insurance, private pension and capitalization operations before claim and selling expenses | | | | | 6,672 | | | | 6,888 | | | | 6,639 | | | Income related to insurance and private pension | | 30b III | | | 22,634 | | | | 22,797 | | | | 23,327 | | | Reinsurance Premiums | | 30b III | | | (89 | ) | | | (1,031 | ) | | | (1,523 | ) | | Change in reserves for insurance and private pension | | | | | (16,460 | ) | | | (15,436 | ) | | | (15,628 | ) | | Revenue from capitalization plans | | | | | 587 | | | | 558 | | | | 463 | | | Other income | | 25 | | | 1,279 | | | | 2,154 | | | | 1,395 | | | Losses on loans and claims | | | | | (21,335 | ) | | | (15,801 | ) | | | (14,870 | ) | | Expenses for allowance for loan and lease losses | | 12b | | | (24,517 | ) | | | (18,832 | ) | | | (17,856 | ) | | Recovery of loans written-off as loss | | | | | 4,779 | | | | 5,054 | | | | 5,061 | | | Expenses for claims | | | | | (1,611 | ) | | | (2,430 | ) | | | (3,155 | ) | | Recovery of claims under reinsurance | | | | | 14 | | | | 407 | | | | 1,080 | | | Banking product net of losses on loans and claims | | | | | 70,676 | | | | 75,856 | | | | 64,517 | | | Other operating income (expenses) | | | | | (52,411 | ) | | | (47,048 | ) | | | (43,652 | ) | | General and administrative expenses | | 26 | | | (47,626 | ) | | | (42,550 | ) | | | (39,914 | ) | | Tax expenses | | | | | (5,405 | ) | | | (5,063 | ) | | | (4,341 | ) | | Share of profit or (loss) in associates and joint ventures | | 13 | | | 620 | | | | 565 | | | | 603 | | | Income before income tax and social contribution | | 27 | | | 18,265 | | | | 28,808 | | | | 20,865 | | | Current income tax and social contribution | | | | | (8,965 | ) | | | (7,209 | ) | | | (7,503 | ) | | Deferred income tax and social contribution | | | | | 16,856 | | | | 262 | | | | 3,160 | | | Net income | | | | | 26,156 | | | | 21,861 | | | | 16,522 | | | Net income attributable to owners of the parent company | | 28 | | | 25,740 | | | | 21,555 | | | | 16,424 | | | Net income attributable to non-controlling interests | | | | | 416 | | | | 306 | | | | 98 | | | Earnings per share - basic | | 28 | | | | | | | | | | | | | | Common | | | | | 4.30 | | | | 3.58 | | | | 2.73 | | | Preferred | | | | | 4.30 | | | | 3.58 | | | | 2.73 | | | Earnings per share - diluted | | 28 | | | | | | | | | | | | | | Common | | | | | 4.28 | | | | 3.56 | | | | 2.72 | | | Preferred | | | | | 4.28 | | | | 3.56 | | | | 2.72 | | | Weighted average number of shares outstanding - basic | | 28 | | | | | | | | | | | | | | Common | | | | | 3,047,037,403 | | | | 3,047,037,403 | | | | 3,047,037,403 | | | Preferred | | | | | 2,935,346,437 | | | | 2,969,406,420 | | | | 2,961,435,158 | | | Weighted average number of shares outstanding - diluted | | 28 | | | | | | | | | | | | | | Common | | | | | 3,047,037,403 | | | | 3,047,037,403 | | | | 3,047,037,403 | | | Preferred | | | | | 2,969,647,577 | | | | 3,001,704,485 | | | | 2,986,498,093 | |
The accompanying notes are an integral part of these consolidated financial statements.
ITAÚ UNIBANCO HOLDING S.A.
Consolidated Statement of Comprehensive Income
Periods ended
(In millions of Reais)
| | | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | | | Note | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | Net income | | | | | 26,156 | | | | 21,861 | | | | 16,522 | | | Available-for-sale financial assets | | | | | (2,171 | ) | | | 583 | | | | (3,187 | ) | | Change in fair value | | | | | (6,518 | ) | | | 20 | | | | (6,166 | ) | | Income tax effect | | | | | 2,659 | | | | 14 | | | | 2,476 | | | (Gains) / losses transferred to income statement | | 23c | | | 2,812 | | | | 915 | | | | 839 | | | Income tax effect | | | | | (1,124 | ) | | | (366 | ) | | | (336 | ) | | Hedge | | | | | (1,739 | ) | | | (143 | ) | | | (317 | ) | | Cash flow hedge | | 9 | | | 1,148 | | | | 336 | | | | 312 | | | Change in fair value | | | | | 2,104 | | | | 644 | | | | 541 | | | Income tax effect | | | | | (956 | ) | | | (308 | ) | | | (229 | ) | | Hedge of net investment in foreign operation | | 9 | | | (2,887 | ) | | | (479 | ) | | | (629 | ) | | Change in fair value | | | | | (5,134 | ) | | | (830 | ) | | | (1,049 | ) | | Income tax effect | | | | | 2,247 | | | | 351 | | | | 420 | | | Remeasurements of liabilities for post-employment benefits(*) | | | | | (48 | ) | | | 202 | | | | (379 | ) | | Remeasurements | | 29 | | | (68 | ) | | | 332 | | | | (633 | ) | | Income tax effect | | | | | 20 | | | | (130 | ) | | | 254 | | | Foreign exchange differences on foreign investments | | | | | 3,099 | | | | 440 | | | | 635 | | | Total comprehensive income | | | | | 25,297 | | | | 22,943 | | | | 13,274 | | | Comprehensive income attributable to non-controlling interests | | | | | 416 | | | | 306 | | | | 98 | | | Comprehensive income attributable to the owners of the parent company | | | | | 24,881 | | | | 22,637 | | | | 13,176 | |
(*) Amounts that will not be subsequently reclassified to income.
The accompanying notes are an integral part of these consolidated financial statements. ITAÚ UNIBANCO HOLDING S.A. Consolidated Balance Sheet (In millions of Reais)
| | Note | | 12/31/2016 | | | 12/31/2015 | | | Liabilities and stockholders' equity | | | | | | | | | | | | | | | | | | | | Deposits | | 17 | | | 329,414 | | | | 292,610 | | | Securities sold under repurchase agreements | | 19a | | | 349,164 | | | | 336,643 | | | Financial liabilities held for trading | | 18 | | | 519 | | | | 412 | | | Derivatives | | 8 and 9 | | | 24,698 | | | | 31,071 | | | Interbank market debt | | 19a | | | 135,483 | | | | 156,886 | | | Institutional market debt | | 19b | | | 96,239 | | | | 93,918 | | | Other financial liabilities | | 20b | | | 71,832 | | | | 68,715 | | | Reserves for insurance and private pension | | 30c ll | | | 154,076 | | | | 129,305 | | | Liabilities for capitalization plans | | | | | 3,147 | | | | 3,044 | | | Provisions | | 32 | | | 20,909 | | | | 18,994 | | | Tax liabilities | | | | | 5,836 | | | | 4,971 | | | Income tax and social contribution - current | | | | | 1,741 | | | | 2,364 | | | Income tax and social contribution - deferred | | 27b II | | | 643 | | | | 370 | | | Other | | | | | 3,452 | | | | 2,237 | | | Other liabilities | | 20b | | | 27,110 | | | | 25,787 | | | Total liabilities | | | | | 1,218,427 | | | | 1,162,356 | | | Capital | | 21a | | | 97,148 | | | | 85,148 | | | Treasury shares | | 21a | | | (1,882 | ) | | | (4,353 | ) | | Additional paid-in capital | | 21c | | | 1,785 | | | | 1,733 | | | Appropriated reserves | | 21d | | | 3,443 | | | | 10,067 | | | Unappropriated reserves | | 21e | | | 25,362 | | | | 20,947 | | | Cumulative other comprehensive income | | | | | (3,274 | ) | | | (1,290 | ) | | Total stockholders’ equity attributed to the owners of the parent company | | | | | 122,582 | | | | 112,252 | | | Non-controlling interests | | 21f | | | 12,232 | | | | 1,807 | | | Total stockholders’ equity | | | | | 134,814 | | | | 114,059 | | | Total liabilities and stockholders' equity | | | | | 1,353,241 | | | | 1,276,415 | |
The accompanying notes are an integral part of these consolidated financial statements. ITAÚ UNIBANCO HOLDING S.A. Consolidated Statement of Income Periods ended (In millions of Reais, except for number of shares and earnings per share information)
| | | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | | | Note | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Banking product | | | | | 118,661 | | | | 92,011 | | | | 91,657 | | | Interest and similar income | | 23a | | | 161,495 | | | | 147,789 | | | | 120,115 | | | Interest and similar expense | | 23b | | | (95,126 | ) | | | (75,064 | ) | | | (72,977 | ) | | Dividend income | | | | | 288 | | | | 98 | | | | 215 | | | Net gain (loss) on investment securities and derivatives | | 23c | | | 7,311 | | | | (11,862 | ) | | | (724 | ) | | Foreign exchange results and exchange variations on transactions | | | | | 5,513 | | | | (6,353 | ) | | | 9,644 | | | Banking service fees | | 24 | | | 31,918 | | | | 29,452 | | | | 26,342 | | | Income related to insurance, private pension and capitalization operations before claim and selling expenses | | | | | 5,880 | | | | 6,672 | | | | 6,888 | | | Income related to insurance and private pension | | 30b III | | | 24,849 | | | | 22,634 | | | | 22,797 | | | Reinsurance Premiums | | 30b III | | | (94 | ) | | | (89 | ) | | | (1,031 | ) | | Change in reserves for insurance and private pension | | | | | (19,490 | ) | | | (16,460 | ) | | | (15,436 | ) | | Revenue from capitalization plans | | | | | 615 | | | | 587 | | | | 558 | | | Other income | | 25 | | | 1,382 | | | | 1,279 | | | | 2,154 | | | Losses on loans and claims | | | | | (22,122 | ) | | | (21,335 | ) | | | (15,801 | ) | | Expenses for allowance for loan and lease losses | | 12b | | | (24,379 | ) | | | (24,517 | ) | | | (18,832 | ) | | Recovery of loans written-off as loss | | | | | 3,742 | | | | 4,779 | | | | 5,054 | | | Expenses for claims | | | | | (1,555 | ) | | | (1,611 | ) | | | (2,430 | ) | | Recovery of claims under reinsurance | | | | | 70 | | | | 14 | | | | 407 | | | Banking product net of losses on loans and claims | | | | | 96,539 | | | | 70,676 | | | | 75,856 | | | Other operating income (expenses) | | | | | (58,347 | ) | | | (52,411 | ) | | | (47,048 | ) | | General and administrative expenses | | 26 | | | (50,904 | ) | | | (47,626 | ) | | | (42,550 | ) | | Tax expenses | | | | | (7,971 | ) | | | (5,405 | ) | | | (5,063 | ) | | Share of profit or (loss) in associates and joint ventures | | 13 | | | 528 | | | | 620 | | | | 565 | | | Income before income tax and social contribution | | 27 | | | 38,192 | | | | 18,265 | | | | 28,808 | | | Current income tax and social contribution | | | | | (3,898 | ) | | | (8,965 | ) | | | (7,209 | ) | | Deferred income tax and social contribution | | | | | (10,712 | ) | | | 16,856 | | | | 262 | | | Net income | | | | | 23,582 | | | | 26,156 | | | | 21,861 | | | Net income attributable to owners of the parent company | | 28 | | | 23,263 | | | | 25,740 | | | | 21,555 | | | Net income (loss) attributable to non-controlling interests | | 21f | | | 319 | | | | 416 | | | | 306 | | | Earnings per share - basic | | 28 | | | | | | | | | | | | | | Common | | | | | 3.57 | | | | 3.91 | | | | 3.26 | | | Preferred | | | | | 3.57 | | | | 3.91 | | | | 3.26 | | | Earnings per share - diluted | | 28 | | | | | | | | | | | | | | Common | | | | | 3.54 | | | | 3.89 | | | | 3.24 | | | Preferred | | | | | 3.54 | | | | 3.89 | | | | 3.24 | | | Weighted average number of shares outstanding - basic | | 28 | | | | | | | | | | | | | | Common | | | | | 3,351,741,143 | | | | 3,351,741,143 | | | | 3,351,741,143 | | | Preferred | | | | | 3,171,215,661 | | | | 3,228,881,081 | | | | 3,266,347,063 | | | Weighted average number of shares outstanding - diluted | | 28 | | | | | | | | | | | | | | Common | | | | | 3,351,741,143 | | | | 3,351,741,143 | | | | 3,351,741,143 | | | Preferred | | | | | 3,216,235,372 | | | | 3,270,734,307 | | | | 3,305,545,129 | |
The accompanying notes are an integral part of these consolidated financial statements. ITAÚ UNIBANCO HOLDING S.A. Consolidated Statement of Comprehensive Income Periods ended (In millions of Reais)
| | | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | | | Note | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Net income | | | | | 23,582 | | | | 26,156 | | | | 21,861 | | | Available-for-sale financial assets | | | | | 2,040 | | | | (2,171 | ) | | | 583 | | | Change in fair value | | | | | 2,780 | | | | (6,518 | ) | | | 20 | | | Income tax effect | | | | | (1,251 | ) | | | 2,659 | | | | 14 | | | (Gains) / losses transferred to income statement | | 23c | | | 851 | | | | 2,812 | | | | 915 | | | Income tax effect | | | | | (340 | ) | | | (1,124 | ) | | | (366 | ) | | Hedge | | | | | (697 | ) | | | (1,739 | ) | | | (143 | ) | | Cash flow hedge | | 9 | | | (2,815 | ) | | | 1,148 | | | | 336 | | | Change in fair value | | | | | (5,041 | ) | | | 2,104 | | | | 644 | | | Income tax effect | | | | | 2,226 | | | | (956 | ) | | | (308 | ) | | Hedge of net investment in foreign operation | | 9 | | | 2,118 | | | | (2,887 | ) | | | (479 | ) | | Change in fair value | | | | | 3,760 | | | | (5,134 | ) | | | (830 | ) | | Income tax effect | | | | | (1,642 | ) | | | 2,247 | | | | 351 | | | Remeasurements of liabilities for post-employment benefits (*) | | | | | (590 | ) | | | (48 | ) | | | 202 | | | Remeasurements | | 29 | | | (1,048 | ) | | | (68 | ) | | | 332 | | | Income tax effect | | | | | 458 | | | | 20 | | | | (130 | ) | | Foreign exchange differences on foreign investments | | | | | (2,737 | ) | | | 3,099 | | | | 440 | | | Total comprehensive income | | | | | 21,598 | | | | 25,297 | | | | 22,943 | | | Comprehensive income attributable to non-controlling interests | | | | | 319 | | | | 416 | | | | 306 | | | Comprehensive income attributable to the owners of the parent company | | | | | 21,279 | | | | 24,881 | | | | 22,637 | |
(*) Amounts that will not be subsequently reclassified to income. The accompanying notes are an integral part of these consolidated financial statements.
ITAÚ UNIBANCO HOLDING S.A. Consolidated Statement of Changes in Stockholders’ Equity (Notes 21 and 22) Periods ended December 31, 2016, 2015 2014 and 20132014 (In millions of Reais)
| | | Attributed to owners of the parent company | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other comprehensive income | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | stockholders’ | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cumulative | | | | | | equity – | | | stockholders’ | | | | | | | | | | | | | | Additional | | | | | | | | | | | | | | | Remeasurements of | | | translation | | | Gains and | | | owners of the | | | equity – non- | | | | | | | | | | | Treasury | | | paid-in | | | Appropriated | | | Unappropriated | | | Retained | | | Available | | | liabilities of post- | | | adjustments | | | losses – | | | parent | | | controlling | | | | | | | | Capital | | | shares | | | capital | | | reserves | | | reserves | | | earnings | | | for sale(1) | | | employment benefits | | | abroad | | | hedge(2) | | | company | | | interests | | | Total | | | Balance at 01/01/2013 | | | 45,000 | | | | (1,523 | ) | | | 888 | | | | 22,423 | | | | 7,379 | | | | - | | | | 2,004 | | | | - | | | | 648 | | | | (917 | ) | | | 75,902 | | | | 96 | | | | 75,998 | | | Transactions with owners | | | 15,000 | | | | (331 | ) | | | 96 | | | | (12,404 | ) | | | - | | | | (5,842 | ) | | | - | | | | - | | | | - | | | | - | | | | (3,481 | ) | | | 775 | | | | (2,706 | ) | | Capital increase - Statutory Reserve | | | 15,000 | | | | - | | | | - | | | | (15,000 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Treasury shares - granting of stock options - exercised options | | | - | | | | (331 | ) | | | 96 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (235 | ) | | | - | | | | (235 | ) | | Granting of stock options – exercised options | | | - | | | | 331 | | | | (116 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 215 | | | | - | | | | 215 | | | Acquisition of treasury shares (Note 21a) | | | - | | | | (662 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (662 | ) | | | - | | | | (662 | ) | | Granted options recognized | | | - | | | | - | | | | 212 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 212 | | | | - | | | | 212 | | | (Increase) / Reduction of interest of controlling stockholders (Note 2.4a I and 3a) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 812 | | | | 812 | | | Dividends / interest on capital – Special profit reserve (Note 21b) | | | - | | | | - | | | | - | | | | 2,596 | | | | - | | | | (5,842 | ) | | | - | | | | - | | | | - | | | | - | | | | (3,246 | ) | | | (37 | ) | | | (3,283 | ) | | Dividends / Interest on capital paid in 2013 - Year 2012 - Special profit reserve | | | - | | | | - | | | | - | | | | (1,730 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1,730 | ) | | | - | | | | (1,730 | ) | | Corporate reorganizations (Note 2.4 a III) | | | - | | | | - | | | | - | | | | (640 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (640 | ) | | | - | | | | (640 | ) | | Other | | | - | | | | - | | | | - | | | | - | | | | (4 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (4 | ) | | | - | | | | (4 | ) | | Total comprehensive income | | | - | | | | - | | | | - | | | | - | | | | - | | | | 16,424 | | | | (3,187 | ) | | | (379 | ) | | | 635 | | | | (317 | ) | | | 13,176 | | | | 98 | | | | 13,274 | | | Net income | | | - | | | | - | | | | - | | | | - | | | | - | | | | 16,424 | | | | - | | | | - | | | | - | | | | - | | | | 16,424 | | | | 98 | | | | 16,522 | | | Other comprehensive income for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (3,187 | ) | | | (379 | ) | | | 635 | | | | (317 | ) | | | (3,248 | ) | | | - | | | | (3,248 | ) | | Appropriations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Legal reserve | | | - | | | | - | | | | - | | | | 583 | | | | - | | | | (583 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Statutory reserve | | | - | | | | - | | | | - | | | | 5,236 | | | | 4,763 | | | | (9,999 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Balance at 12/31/2013 | | | 60,000 | | | | (1,854 | ) | | | 984 | | | | 13,468 | | | | 12,138 | | | | - | | | | (1,183 | ) | | | (379 | ) | | | 1,283 | | | | (1,234 | ) | | | 83,223 | | | | 969 | | | | 84,192 | | | Change in the period | | | 15,000 | | | | (331 | ) | | | 96 | | | | (8,955 | ) | | | 4,759 | | | | - | | | | (3,187 | ) | | | (379 | ) | | | 635 | | | | (317 | ) | | | 7,321 | | | | 873 | | | | 8,194 | | | Balance at 01/01/2014 | | | 60,000 | | | | (1,854 | ) | | | 984 | | | | 13,468 | | | | 12,138 | | | | - | | | | (1,183 | ) | | | (379 | ) | | | 1,283 | | | | (1,234 | ) | | | 83,223 | | | | 969 | | | | 84,192 | | | Transactions with owners | | | 15,000 | | | | 526 | | | | 524 | | | | (12,053 | ) | | | - | | | | (7,344 | ) | | | - | | | | - | | | | - | | | | - | | | | (3,347 | ) | | | 82 | | | | (3,265 | ) | | Capital increase - Statutory Reserve | | | 15,000 | | | | - | | | | - | | | | (15,000 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Treasury shares - granting of stock options | | | - | | | | 526 | | | | 223 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 749 | | | | - | | | | 749 | | | Granting of stock options – exercised options | | | - | | | | 561 | | | | (26 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 535 | | | | - | | | | 535 | | | Acquisition of treasury shares (Note 21a) | | | - | | | | (35 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (35 | ) | | | - | | | | (35 | ) | | Granted options recognized | | | - | | | | - | | | | 249 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 249 | | | | - | | | | 249 | | | Share-based payment – variable compensation | | | - | | | | - | | | | 301 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 301 | | | | - | | | | 301 | | | (Increase) / Reduction of interest of controlling stockholders (Note 2.4a I and 3a) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 167 | | | | 167 | | | Dividends and interest on capital - Statutory Reserve (Note 21b) | | | - | | | | - | | | | - | | | | 2,947 | | | | - | | | | (7,344 | ) | | | - | | | | - | | | | - | | | | - | | | | (4,397 | ) | | | (85 | ) | | | (4,482 | ) | | Dividends / Interest on capital paid in 2014 - Year 2013 - Special profit reserve | | | - | | | | - | | | | - | | | | (2,597 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,597 | ) | | | - | | | | (2,597 | ) | | Corporate reorganizations (Note 2.4 a III) | | | - | | | | - | | | | - | | | | (639 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (639 | ) | | | - | | | | (639 | ) | | Other | | | - | | | | - | | | | - | | | | (17 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (17 | ) | | | - | | | | (17 | ) | | Total comprehensive income | | | - | | | | - | | | | - | | | | - | | | | - | | | | 21,555 | | | | 583 | | | | 202 | | | | 440 | | | | (143 | ) | | | 22,637 | | | | 306 | | | | 22,943 | | | Net income | | | - | | | | - | | | | - | | | | - | | | | - | | | | 21,555 | | | | - | | | | - | | | | - | | | | - | | | | 21,555 | | | | 306 | | | | 21,861 | | | Other comprehensive income for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 583 | | | | 202 | | | | 440 | | | | (143 | ) | | | 1,082 | | | | - | | | | 1,082 | | | Appropriations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Legal reserve | | | - | | | | - | | | | - | | | | 870 | | | | - | | | | (870 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Statutory reserve | | | - | | | | - | | | | - | | | | 9,178 | | | | 4,163 | | | | (13,341 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Balance at 12/31/2014 | | | 75,000 | | | | (1,328 | ) | | | 1,508 | | | | 8,210 | | | | 16,301 | | | | - | | | | (600 | ) | | | (177 | ) | | | 1,723 | | | | (1,377 | ) | | | 99,260 | | | | 1,357 | | | | 100,617 | | | Change in the period | | | 15,000 | | | | 526 | | | | 524 | | | | (5,258 | ) | | | 4,163 | | | | - | | | | 583 | | | | 202 | | | | 440 | | | | (143 | ) | | | 16,037 | | | | 388 | | | | 16,425 | | | Balance at 01/01/2015 | | | 75,000 | | | | (1,328 | ) | | | 1,508 | | | | 8,210 | | | | 16,301 | | | | - | | | | (600 | ) | | | (177 | ) | | | 1,723 | | | | (1,377 | ) | | | 99,260 | | | | 1,357 | | | | 100,617 | | | Transactions with owners | | | 10,148 | | | | (3,025 | ) | | | 225 | | | | (7,445 | ) | | | - | | | | (8,207 | ) | | | - | | | | - | | | | - | | | | - | | | | (8,304 | ) | | | 34 | | | | (8,270 | ) | | Capital increase - Statutory Reserve | | | 10,148 | | | | - | | | | - | | | | (10,148 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Treasury shares - granting of stock options | | | - | | | | (3,025 | ) | | | 101 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,924 | ) | | | - | | | | (2,924 | ) | | Granting of stock options – exercised options | | | - | | | | 299 | | | | 45 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 344 | | | | - | | | | 344 | | | Acquisition of treasury shares (Note 21a) | | | - | | | | (3,324 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (3,324 | ) | | | - | | | | (3,324 | ) | | Granted options recognized | | | - | | | | - | | | | 56 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 56 | | | | - | | | | 56 | | | Share-based payment – variable compensation | | | - | | | | - | | | | 124 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 124 | | | | - | | | | 124 | | | (Increase) / Reduction of interest of controlling stockholders (Note 2.4a I and 3c) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 276 | | | | 276 | | | Dividends / interest on capital – Special profit reserve (Note 21b) | | | - | | | | - | | | | - | | | | 2,703 | | | | - | | | | (8,207 | ) | | | - | | | | - | | | | - | | | | - | | | | (5,504 | ) | | | (242 | ) | | | (5,746 | ) | | Dividends / Interest on capital paid in 2015 - Year 2014 - Special profit reserve | | | - | | | | - | | | | - | | | | (2,936 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,936 | ) | | | - | | | | (2,936 | ) | | Corporate reorganizations (Note 2.4 a III) | | | - | | | | - | | | | - | | | | (639 | ) | | | | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (639 | ) | | | - | | | | (639 | ) | | Other | | | - | | | | - | | | | - | | | | - | | | | (10 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (10 | ) | | | - | | | | (10 | ) | | Total comprehensive income | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,740 | | | | (2,171 | ) | | | (48 | ) | | | 3,099 | | | | (1,739 | ) | | | 24,881 | | | | 416 | | | | 25,297 | | | Net income | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,740 | | | | - | | | | - | | | | - | | | | - | | | | 25,740 | | | | 416 | | | | 26,156 | | | Other comprehensive income for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,171 | ) | | | (48 | ) | | | 3,099 | | | | (1,739 | ) | | | (859 | ) | | | - | | | | (859 | ) | | Appropriations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Legal reserve | | | - | | | | - | | | | - | | | | 1,054 | | | | - | | | | (1,054 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Statutory reserve | | | - | | | | - | | | | - | | | | 11,823 | | | | 4,656 | | | | (16,479 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Balance at 12/31/2015 | | | 85,148 | | | | (4,353 | ) | | | 1,733 | | | | 10,067 | | | | 20,947 | | | | - | | | | (2,771 | ) | | | (225 | ) | | | 4,822 | | | | (3,116 | ) | | | 112,252 | | | | 1,807 | | | | 114,059 | | | Change in the period | | | 10,148 | | | | (3,025 | ) | | | 225 | | | | 1,857 | | | | 4,646 | | | | - | | | | (2,171 | ) | | | (48 | ) | | | 3,099 | | | | (1,739 | ) | | | 12,992 | | | | 450 | | | | 13,442 | |
| | | Attributed to owners of the parent company | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other comprehensive income | | | Total | | | Total | | | | | | | | Capital | | | Treasury
shares | | | Additional
paid-in
capital | | | Appropriated
reserves | | | Unappropriated
reserves | | | Retained
earnings | | | Available
for sale(1) | | | Remeasurements of
liabilities of post-
employment benefits | | | Cumulative
translation
adjustments
abroad | | | Gains and
losses –
hedge (2) | | | stockholders’
equity – owners
of the parent
company | | | stockholders’
equity – non-
controlling
interests | | | Total | | | Balance at 01/01/2014 | | | 60,000 | | | | (1,854 | ) | | | 984 | | | | 13,468 | | | | 12,138 | | | | - | | | | (1,183 | ) | | | (379 | ) | | | 1,283 | | | | (1,234 | ) | | | 83,223 | | | | 969 | | | | 84,192 | | | Transactions with owners | | | 15,000 | | | | 526 | | | | 524 | | | | (12,053 | ) | | | - | | | | (7,344 | ) | | | - | | | | - | | | | - | | | | - | | | | (3,347 | ) | | | 82 | | | | (3,265 | ) | | Capital increase - Statutory Reserve | | | 15,000 | | | | - | | | | - | | | | (15,000 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Treasury shares - granting of stock options - exercised options | | | - | | | | 526 | | | | 223 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 749 | | | | - | | | | 749 | | | Granting of stock options – exercised options | | | - | | | | 561 | | | | (26 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 535 | | | | - | | | | 535 | | | Acquisition of treasury shares (Note 21a) | | | - | | | | (35 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (35 | ) | | | - | | | | (35 | ) | | Granted options recognized | | | - | | | | - | | | | 249 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 249 | | | | - | | | | 249 | | | Share-based payment – variable compensation | | | - | | | | - | | | | 301 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 301 | | | | - | | | | 301 | | | (Increase) / Reduction of interest of controlling stockholders (Note 2.4a I and 3a) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 167 | | | | 167 | | | Dividends / interest on capital – Special profit reserve (Note 21b) | | | - | | | | - | | | | - | | | | 2,947 | | | | - | | | | (7,344 | ) | | | - | | | | - | | | | - | | | | - | | | | (4,397 | ) | | | (85 | ) | | | (4,482 | ) | | Dividends / Interest on capital paid in 2014 - Year 2013 - Special profit reserve | | | - | | | | - | | | | - | | | | (2,597 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,597 | ) | | | - | | | | (2,597 | ) | | Corporate reorganizations (Note 2.4 a III) | | | - | | | | - | | | | - | | | | (639 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (639 | ) | | | - | | | | (639 | ) | | Other | | | - | | | | - | | | | - | | | | (17 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (17 | ) | | | - | | | | (17 | ) | | Total comprehensive income | | | - | | | | - | | | | - | | | | - | | | | - | | | | 21,555 | | | | 583 | | | | 202 | | | | 440 | | | | (143 | ) | | | 22,637 | | | | 306 | | | | 22,943 | | | Net income | | | - | | | | - | | | | - | | | | - | | | | - | | | | 21,555 | | | | - | | | | - | | | | - | | | | - | | | | 21,555 | | | | 306 | | | | 21,861 | | | Other comprehensive income for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 583 | | | | 202 | | | | 440 | | | | (143 | ) | | | 1,082 | | | | - | | | | 1,082 | | | Appropriations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Legal reserve | | | - | | | | - | | | | - | | | | 870 | | | | - | | | | (870 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Statutory reserve | | | - | | | | - | | | | - | | | | 9,178 | | | | 4,163 | | | | (13,341 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Balance at 12/31/2014 | | | 75,000 | | | | (1,328 | ) | | | 1,508 | | | | 8,210 | | | | 16,301 | | | | - | | | | (600 | ) | | | (177 | ) | | | 1,723 | | | | (1,377 | ) | | | 99,260 | | | | 1,357 | | | | 100,617 | | | Change in the period | | | 15,000 | | | | 526 | | | | 524 | | | | (5,258 | ) | | | 4,163 | | | | - | | | | 583 | | | | 202 | | | | 440 | | | | (143 | ) | | | 16,037 | | | | 388 | | | | 16,425 | | | Balance at 01/01/2015 | | | 75,000 | | | | (1,328 | ) | | | 1,508 | | | | 8,210 | | | | 16,301 | | | | - | | | | (600 | ) | | | (177 | ) | | | 1,723 | | | | (1,377 | ) | | | 99,260 | | | | 1,357 | | | | 100,617 | | | Transactions with owners | | | 10,148 | | | | (3,025 | ) | | | 225 | | | | (7,445 | ) | | | - | | | | (8,207 | ) | | | - | | | | - | | | | - | | | | - | | | | (8,304 | ) | | | 34 | | | | (8,270 | ) | | Capital increase - Statutory Reserve | | | 10,148 | | | | - | | | | - | | | | (10,148 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Treasury shares - granting of stock options | | | - | | | | (3,025 | ) | | | 101 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,924 | ) | | | - | | | | (2,924 | ) | | Granting of stock options – exercised options | | | - | | | | 299 | | | | 45 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 344 | | | | - | | | | 344 | | | Acquisition of treasury shares (Note 21a) | | | - | | | | (3,324 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (3,324 | ) | | | - | | | | (3,324 | ) | | Granted options recognized | | | - | | | | - | | | | 56 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 56 | | | | - | | | | 56 | | | Share-based payment – variable compensation | | | - | | | | - | | | | 124 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 124 | | | | - | | | | 124 | | | (Increase) / Reduction of interest of controlling stockholders (Note 2.4a I and 3) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 276 | | | | 276 | | | Dividends and interest on capital - Statutory Reserve (Note 21b) | | | - | | | | - | | | | - | | | | 2,703 | | | | - | | | | (8,207 | ) | | | - | | | | - | | | | - | | | | - | | | | (5,504 | ) | | | (242 | ) | | | (5,746 | ) | | Dividends / Interest on capital paid in 2015 - Year 2014 - Special profit reserve | | | - | | | | - | | | | - | | | | (2,936 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,936 | ) | | | - | | | | (2,936 | ) | | Corporate reorganizations (Note 2.4 a III) | | | - | | | | - | | | | - | | | | (639 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (639 | ) | | | - | | | | (639 | ) | | Other | | | - | | | | - | | | | - | | | | - | | | | (10 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (10 | ) | | | - | | | | (10 | ) | | Total comprehensive income | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,740 | | | | (2,171 | ) | | | (48 | ) | | | 3,099 | | | | (1,739 | ) | | | 24,881 | | | | 416 | | | | 25,297 | | | Net income | | | - | | | | - | | | | - | | | | - | | | | - | | | | 25,740 | | | | - | | | | - | | | | - | | | | - | | | | 25,740 | | | | 416 | | | | 26,156 | | | Other comprehensive income for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,171 | ) | | | (48 | ) | | | 3,099 | | | | (1,739 | ) | | | (859 | ) | | | - | | | | (859 | ) | | Appropriations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Legal reserve | | | - | | | | - | | | | - | | | | 1,054 | | | | - | | | | (1,054 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Statutory reserve | | | - | | | | - | | | | - | | | | 11,823 | | | | 4,656 | | | | (16,479 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Balance at 12/31/2015 | | | 85,148 | | | | (4,353 | ) | | | 1,733 | | | | 10,067 | | | | 20,947 | | | | - | | | | (2,771 | ) | | | (225 | ) | | | 4,822 | | | | (3,116 | ) | | | 112,252 | | | | 1,807 | | | | 114,059 | | | Change in the period | | | 10,148 | | | | (3,025 | ) | | | 225 | | | | 1,857 | | | | 4,646 | | | | - | | | | (2,171 | ) | | | (48 | ) | | | 3,099 | | | | (1,739 | ) | | | 12,992 | | | | 450 | | | | 13,442 | | | Balance at 01/01/2016 | | | 85,148 | | | | (4,353 | ) | | | 1,733 | | | | 10,067 | | | | 20,947 | | | | - | | | | (2,771 | ) | | | (225 | ) | | | 4,822 | | | | (3,116 | ) | | | 112,252 | | | | 1,807 | | | | 114,059 | | | Transactions with owners | | | 12,000 | | | | 2,471 | | | | 52 | | | | (9,620 | ) | | | - | | | | (11,574 | ) | | | - | | | | - | | | | - | | | | - | | | | (6,671 | ) | | | 10,106 | | | | 3,435 | | | Capital increase - Statutory Reserve | | | 12,000 | | | | - | | | | - | | | | (12,000 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Treasury shares - granting of stock options | | | - | | | | 2,471 | | | | 39 | | | | (2,670 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (160 | ) | | | - | | | | (160 | ) | | Granting of stock options – exercised options | | | - | | | | 748 | | | | (17 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 731 | | | | - | | | | 731 | | | Acquisition of treasury shares (Note 21a) | | | - | | | | (947 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (947 | ) | | | - | | | | (947 | ) | | Cancellation of shares - ESM of April 27, 2016 – Approved on June 7, 2016 | | | - | | | | 2,670 | | | | - | | | | (2,670 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Granted options recognized | | | - | | | | - | | | | 56 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 56 | | | | - | | | | 56 | | | Share-based payment – variable compensation | | | - | | | | - | | | | 13 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 13 | | | | - | | | | 13 | | | (Increase) / Reduction of interest of controlling stockholders (Note 2.4a I and 3) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 10,199 | | | | 10,199 | | | Dividends / interest on capital – Special profit reserve (Note 21b) | | | - | | | | - | | | | - | | | | 5,050 | | | | - | | | | (11,574 | ) | | | - | | | | - | | | | - | | | | - | | | | (6,524 | ) | | | (93 | ) | | | (6,617 | ) | | Dividends / Interest on capital paid in 2016 - Year 2015 - Special profit reserve | | | - | | | | - | | | | - | | | | (2,697 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,697 | ) | | | - | | | | (2,697 | ) | | Corporate reorganizations (Note 2.4 a III) | | | - | | | | - | | | | - | | | | (1,586 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1,586 | ) | | | - | | | | (1,586 | ) | | Other | | | - | | | | - | | | | - | | | | - | | | | 5 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 5 | | | | - | | | | 5 | | | Total comprehensive income | | | - | | | | - | | | | - | | | | - | | | | - | | | | 23,263 | | | | 2,040 | | | | (590 | ) | | | (2,737 | ) | | | (697 | ) | | | 21,279 | | | | 319 | | | | 21,598 | | | Net income | | | - | | | | - | | | | - | | | | - | | | | - | | | | 23,263 | | | | - | | | | - | | | | - | | | | - | | | | 23,263 | | | | 319 | | | | 23,582 | | | Other comprehensive income for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2,040 | | | | (590 | ) | | | (2,737 | ) | | | (697 | ) | | | (1,984 | ) | | | - | | | | (1,984 | ) | | Appropriations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Legal reserve | | | - | | | | - | | | | - | | | | 943 | | | | - | | | | (943 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Statutory reserve | | | - | | | | - | | | | - | | | | 6,336 | | | | 4,410 | | | | (10,746 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Balance at 12/31/2016 | | | 97,148 | | | | (1,882 | ) | | | 1,785 | | | | 3,443 | | | �� | 25,362 | | | | - | | | | (731 | ) | | | (815 | ) | | | 2,085 | | | | (3,813 | ) | | | 122,582 | | | | 12,232 | | | | 134,814 | | | Change in the period | | | 12,000 | | | | 2,471 | | | | 52 | | | | (6,624 | ) | | | 4,415 | | | | - | | | | 2,040 | | | | (590 | ) | | | (2,737 | ) | | | (697 | ) | | | 10,330 | | | | 10,425 | | | | 20,755 | |
(1) Includes Share of other comprehensive income in associates and joint ventures – 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. ITAÚ UNIBANCO HOLDING S.A. Consolidated Statement of Cash Flows (In millions of Reais)
| | | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | | | Note | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | Adjusted net income | | | | | 56,881 | | | | 58,231 | | | | 47,706 | | | Net income | | | | | 26,156 | | | | 21,861 | | | | 16,522 | | | Adjustments to net income: | | | | | 30,725 | | | | 36,370 | | | | 31,184 | | | Granted options recognized and share-based payment – variable compensation | | | | | 180 | | | | 550 | | | | 212 | | | Effects of changes in exchange rates on cash and cash equivalents | | | | | (9,681 | ) | | | 1,186 | | | | (2,590 | ) | | Expenses for allowance for loan and lease losses | | 12b | | | 24,517 | | | | 18,832 | | | | 17,856 | | | Interest and foreign exchange expense from operations with subordinated debt | | | | | 15,409 | | | | 7,879 | | | | 4,940 | | | Interest expense from operations with debentures | | | | | - | | | | - | | | | 41 | | | Change in reserves for insurance and private pension | | | | | 16,460 | | | | 15,436 | | | | 15,628 | | | Revenue from capitalization plans | | | | | (587 | ) | | | (558 | ) | | | (463 | ) | | Depreciation and amortization | | 15 and 16 | | | 2,828 | | | | 2,544 | | | | 2,333 | | | Interest expense from provision for contingent and legal liabilities | | | | | 1,479 | | | | 1,019 | | | | 801 | | | Provision for contingent and legal liabilities | | | | | 3,948 | | | | 3,380 | | | | 4,534 | | | Interest income related to escrow deposits | | | | | (285 | ) | | | (377 | ) | | | (265 | ) | | Deferred taxes (excluding hedge tax effects) | | 27b | | | (1,869 | ) | | | (262 | ) | | | (3,160 | ) | | Share of profit or (loss) in associates and joint ventures | | | | | (620 | ) | | | (565 | ) | | | (603 | ) | | (Gain) loss on available-for-sale securities | | 23c | | | 2,812 | | | | 915 | | | | 839 | | | Interest and foreign exchange income related to available-for-sale financial assets | | | | | (16,941 | ) | | | (9,012 | ) | | | (8,482 | ) | | Interest and foreign exchange income related to held-to-maturity financial assets | | | | | (6,821 | ) | | | (3,517 | ) | | | (544 | ) | | (Gain) loss on sale of assets held for sale | | 25 and 26 | | | 36 | | | | 35 | | | | 1 | | | (Gain) loss on sale of investments | | 25 and 26 | | | 43 | | | | 14 | | | | (10 | ) | | (Gain) loss on sale of fixed assets | | 25 and 26 | | | 11 | | | | 41 | | | | 10 | | | (Gain) loss from sale of investment of ISSC | | 3c | | | - | | | | (1,151 | ) | | | - | | | Other | | | | | (194 | ) | | | (19 | ) | | | 107 | | | Change in assets and liabilities (*) | | | | | (91,340 | ) | | | 31,495 | | | | (15,176 | ) | | (Increase) decrease in assets | | | | | (149,459 | ) | | | 8,195 | | | | (48,638 | ) | | Interbank deposits | | | | | 3,308 | | | | 12,099 | | | | 520 | | | Securities purchased under agreements to resell | | | | | (88,250 | ) | | | 11,327 | | | | 27,601 | | | Compulsory deposits with the Central Bank of Brazil | | | | | (2,762 | ) | | | 13,893 | | | | (13,180 | ) | | Financial assets held for trading | | | | | (31,056 | ) | | | 26,073 | | | | (3,347 | ) | | Derivatives (assets / liabilities) | | | | | 3,008 | | | | 4,525 | | | | 582 | | | Financial assets designated at fair value through profit or loss | | | | | 435 | | | | (303 | ) | | | (151 | ) | | Loan operations | | | | | (28,103 | ) | | | (42,309 | ) | | | (56,661 | ) | | Financial assets | | | | | 2,476 | | | | (35,546 | ) | | | (3,921 | ) | | Other tax assets | | | | | (15,037 | ) | | | 1,203 | | | | 1,059 | | | Other assets | | | | | 6,522 | | | | 17,233 | | | | (1,139 | ) | | (Decrease) increase in liabilities | | | | | 58,119 | | | | 23,300 | | | | 33,462 | | | Deposits | | | | | (16,696 | ) | | | (4,353 | ) | | | 29,466 | | | Deposits received under securities repurchase agreements | | | | | 47,833 | | | | 22,013 | | | | (723 | ) | | Financial liabilities held for trading | | | | | (434 | ) | | | 47 | | | | (271 | ) | | Funds from interbank markets | | | | | 33,199 | | | | 3,946 | | | | 14,196 | | | Other financial liabilities | | | | | (5,222 | ) | | | 4,711 | | | | 5,894 | | | Technical reserve for insurance and private pension | | | | | 3,067 | | | | (383 | ) | | | (6,923 | ) | | Liabilities for capitalization plans | | | | | 621 | | | | 536 | | | | 603 | | | Provisions | | | | | (2,005 | ) | | | (4,852 | ) | | | (4,286 | ) | | Tax liabilities | | | | | 6,931 | | | | 8,119 | | | | 3,509 | | | Other liabilities | | | | | (2,693 | ) | | | 1,237 | | | | (1,247 | ) | | Payment of income tax and social contribution | | | | | (6,482 | ) | | | (7,721 | ) | | | (6,756 | ) | | Net cash from (used in) operating activities | | | | | (34,459 | ) | | | 89,726 | | | | 32,530 | | | Interest on capital / dividends received from investments in associates and joint ventures | | | | | 243 | | | | 213 | | | | 62 | | | Cash received on sale of available-for-sale financial assets | | | | | 12,214 | | | | 60,768 | | | | 29,518 | | | Cash received from redemption of held-to-maturity financial assets | | | | | 3,160 | | | | 2,667 | | | | 465 | | | Cash upon sale of assets held for sale | | | | | 123 | | | | 68 | | | | 111 | | | Cash upon sale of investments in associates and joint ventures | | | | | (43 | ) | | | (14 | ) | | | 15 | | | Cash and cash equivalents net assets and liabilities due from ISSC sale | | 3c | | | - | | | | 1,474 | | | | - | | | Cash and cash equivalents, net assets and liabilities due from BMG Seguradora acquisition | | 3a | | | - | | | | (88 | ) | | | - | | | Cash upon sale of fixed assets | | 15 | | | 104 | | | | 62 | | | | 60 | | | Cash upon sale of intangible assets | | 16 | | | 69 | | | | 222 | | | | 201 | | | Purchase of available-for-sale financial assets | | | | | (9,516 | ) | | | (46,165 | ) | | | (38,738 | ) | | Purchase of held-to-maturity financial assets | | | | | (4,090 | ) | | | (11,322 | ) | | | (585 | ) | | Cash and cash equivalents net assets and liabilities due from Credicard acquisition | | 3a | | | - | | | | - | | | | (2,875 | ) | | Purchase of investments in associates and joint ventures | | 13 | | | (0 | ) | | | (10 | ) | | | (379 | ) | | Purchase of fixed assets | | 15 | | | (1,466 | ) | | | (3,966 | ) | | | (2,516 | ) | | Purchase of intangible assets | | 16 | | | (1,158 | ) | | | (1,232 | ) | | | 161 | | | Net cash from (used in) investing activities | | | | | (361 | ) | | | 2,676 | | | | (14,500 | ) | | Funding from institutional markets | | | | | 6,667 | | | | 207 | | | | 121 | | | Redemptions in institutional markets | | | | | (5,242 | ) | | | (16,158 | ) | | | (5,166 | ) | | (Acquisition) / Disposal of interest of non-controlling stockholders | | | | | 276 | | | | 167 | | | | 292 | | | Granting of stock options – exercised options | | | | | 344 | | | | 535 | | | | 215 | | | Purchase of treasury shares | | | | | (3,324 | ) | | | (35 | ) | | | (662 | ) | | Dividends and interest on capital paid to non-controlling interests | | | | | (242 | ) | | | (85 | ) | | | (37 | ) | | Dividends and interest on capital paid | | | | | (7,008 | ) | | | (6,319 | ) | | | (5,369 | ) | | Net cash from (used in) financing activities | | | | | (8,529 | ) | | | (21,688 | ) | | | (10,606 | ) | | | | | | | | | | | | | | | | | | Net increase (decrease) in cash and cash equivalents | | 2.4c and 4 | | | (43,350 | ) | | | 70,714 | | | | 7,425 | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the beginning of the period | | 4 | | | 125,318 | | | | 55,790 | | | | 45,775 | | | Effects of changes in exchange rates on cash and cash equivalents | | | | | 9,681 | | | | (1,186 | ) | | | 2,590 | | | Cash and cash equivalents at the end of the period | | 4 | | | 91,649 | | | | 125,318 | | | | 55,790 | | | Additional information on cash flow | | | | | | | | | | | | | | | | Interest received | | | | | 136,277 | | | | 117,079 | | | | 92,411 | | | Interest paid | | | | | 58,436 | | | | 67,559 | | | | 52,338 | | | Non-cash transactions | | | | | | | | | | | | | | | | Loans transferred to assets held for sale | | | | | - | | | | - | | | | - | | | Dividends and interest on capital declared and not yet paid | | | | | 2,458 | | | | 2,270 | | | | 1,070 | |
| | | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | | | Note | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Adjusted net income | | | | | 97,507 | | | | 56,881 | | | | 58,231 | | | Net income | | | | | 23,582 | | | | 26,156 | | | | 21,861 | | | Adjustments to net income: | | | | | 73,925 | | | | 30,725 | | | | 36,370 | | | Granted options recognized and share-based payment – variable compensation | | | | | 69 | | | | 180 | | | | 550 | | | Effects of changes in exchange rates on cash and cash equivalents | | | | | 17,941 | | | | (9,681 | ) | | | 1,186 | | | Expenses for allowance for loan and lease losses | | 12b | | | 24,379 | | | | 24,517 | | | | 18,832 | | | Interest and foreign exchange expense from operations with subordinated debt | | | | | 942 | | | | 15,409 | | | | 7,879 | | | Change in reserves for insurance and private pension | | | | | 19,490 | | | | 16,460 | | | | 15,436 | | | Revenue from capitalization plans | | | | | (615 | ) | | | (587 | ) | | | (558 | ) | | Depreciation and amortization | | 15 and 16 | | | 3,233 | | | | 2,828 | | | | 2,544 | | | Interest expense from provision for contingent and legal liabilities | | | | | 1,610 | | | | 1,479 | | | | 1,019 | | | Provision for contingent and legal liabilities | | | | | 4,246 | | | | 3,948 | | | | 3,380 | | | Interest income related to escrow deposits | | | | | (383 | ) | | | (285 | ) | | | (377 | ) | | Deferred taxes (excluding hedge tax effects) | | 27b | | | 4,172 | | | | (1,869 | ) | | | (262 | ) | | Share of profit or (loss) in associates and joint ventures | | | | | (528 | ) | | | (620 | ) | | | (565 | ) | | (Gain) loss on available-for-sale securities | | 23c | | | 851 | | | | 2,812 | | | | 915 | | | Interest and foreign exchange income related to available-for-sale financial assets | | | | | (1,719 | ) | | | (16,941 | ) | | | (9,012 | ) | | Interest and foreign exchange income related to held-to-maturity financial assets | | | | | (185 | ) | | | (6,821 | ) | | | (3,517 | ) | | (Gain) loss on sale of assets held for sale | | 25 and 26 | | | 124 | | | | 36 | | | | 35 | | | (Gain) loss on sale of investments | | 25 and 26 | | | (69 | ) | | | 43 | | | | 14 | | | (Gain) loss on sale of fixed assets | | 25 and 26 | | | (14 | ) | | | 11 | | | | 41 | | | (Gain) loss from sale of investment of ISSC | | | | | - | | | | - | | | | (1,151 | ) | | Other | | | | | 381 | | | | (194 | ) | | | (19 | ) | | Change in assets and liabilities (*) | | | | | (67,196 | ) | | | (91,340 | ) | | | 31,495 | | | (Increase) decrease in assets | | | | | (30,405 | ) | | | (149,459 | ) | | | 8,195 | | | Interbank deposits | | | | | 521 | | | | 3,308 | | | | 12,099 | | | Securities purchased under agreements to resell | | | | | 2,675 | | | | (88,250 | ) | | | 11,327 | | | Compulsory deposits with the Central Bank of Brazil | | | | | (20,390 | ) | | | (2,762 | ) | | | 13,893 | | | Financial assets held for trading | | | | | (34,950 | ) | | | (31,056 | ) | | | 26,073 | | | Derivatives (assets / liabilities) | | | | | (4,047 | ) | | | 3,008 | | | | 4,525 | | | Financial assets designated at fair value through profit or loss | | | | | (655 | ) | | | 435 | | | | (303 | ) | | Loan operations | | | | | 23,416 | | | | (28,103 | ) | | | (42,309 | ) | | Financial assets | | | | | 881 | | | | 2,476 | | | | (35,546 | ) | | Other tax assets | | | | | 5,262 | | | | (15,037 | ) | | | 1,203 | | | Other assets | | | | | (3,118 | ) | | | 6,522 | | | | 17,233 | | | (Decrease) increase in liabilities | | | | | (36,791 | ) | | | 58,119 | | | | 23,300 | | | Deposits | | | | | (18,136 | ) | | | (16,696 | ) | | | (4,353 | ) | | Deposits received under securities repurchase agreements | | | | | 8,534 | | | | 47,833 | | | | 22,013 | | | Financial liabilities held for trading | | | | | 206 | | | | (434 | ) | | | 47 | | | Funds from interbank markets | | | | | (27,017 | ) | | | 33,199 | | | | 3,946 | | | Other financial liabilities | | | | | 1,915 | | | | (5,222 | ) | | | 4,711 | | | Technical reserve for insurance and private pension | | | | | 5,141 | | | | 3,067 | | | | (383 | ) | | Liabilities for capitalization plans | | | | | 718 | | | | 621 | | | | 536 | | | Provisions | | | | | (2,993 | ) | | | (2,005 | ) | | | (4,852 | ) | | Tax liabilities | | | | | 6,359 | | | | 6,931 | | | | 8,119 | | | Other liabilities | | | | | (5,095 | ) | | | (2,693 | ) | | | 1,237 | | | Payment of income tax and social contribution | | | | | (6,423 | ) | | | (6,482 | ) | | | (7,721 | ) | | Net cash from (used in) operating activities | | | | | 30,311 | | | | (34,459 | ) | | | 89,726 | | | Interest on capital / dividends received from investments in associates and joint ventures | | | | | 287 | | | | 243 | | | | 213 | | | Cash received on sale of available-for-sale financial assets | | | | | 18,760 | | | | 12,214 | | | | 60,768 | | | Cash received from redemption of held-to-maturity financial assets | | | | | 3,473 | | | | 3,160 | | | | 2,667 | | | Cash upon sale of assets held for sale | | | | | 336 | | | | 123 | | | | 68 | | | Cash upon sale of investments in associates and joint ventures | | | | | 69 | | | | (43 | ) | | | (14 | ) | | Cash and cash equivalents, net of assets and liabilities due from CorpBanca acquisition | | 3 | | | 5,869 | | | | - | | | | - | | | Cash and cash equivalents, net of assets and liabilities due from Recovery acquisition | | 3 | | | (714 | ) | | | - | | | | - | | | Cash and cash equivalents, net assets and liabilities due from BMG Seguradora acquisition | | 3a | | | - | | | | - | | | | (88 | ) | | Cash and cash equivalents, net assets and liabilities due from ISSC sale | | | | | - | | | | - | | | | 1,474 | | | Cash upon sale of fixed assets | | 15 | | | 109 | | | | 104 | | | | 62 | | | Cash upon sale of intangible assets | | 16 | | | 10 | | | | 69 | | | | 222 | | | Purchase of available-for-sale financial assets | | | | | (9,959 | ) | | | (9,516 | ) | | | (46,165 | ) | | Purchase of held-to-maturity financial assets | | | | | (1,363 | ) | | | (4,090 | ) | | | (11,322 | ) | | Purchase of investments in associates and joint ventures | | 13 | | | (381 | ) | | | (0 | ) | | | (10 | ) | | Purchase of fixed assets | | 15 | | | (991 | ) | | | (1,466 | ) | | | (3,966 | ) | | (Cash upon sale) Purchase of intangible assets / Goodwill | | 16 | | | (1,076 | ) | | | (1,158 | ) | | | (1,232 | ) | | Net cash from (used in) investing activities | | | | | 14,429 | | | | (361 | ) | | | 2,676 | | | Funding from institutional markets | | | | | 4,864 | | | | 6,667 | | | | 207 | | | Redemptions in institutional markets | | | | | (18,198 | ) | | | (5,242 | ) | | | (16,158 | ) | | (Acquisition) / Disposal of interest of non-controlling stockholders | | | | | (1,013 | ) | | | 276 | | | | 167 | | | Granting of stock options – exercised options | | | | | 731 | | | | 344 | | | | 535 | | | Purchase of treasury shares | | | | | (947 | ) | | | (3,324 | ) | | | (35 | ) | | Dividends and interest on capital paid to non-controlling interests | | | | | (93 | ) | | | (242 | ) | | | (85 | ) | | Dividends and interest on capital paid | | | | | (7,673 | ) | | | (7,008 | ) | | | (6,319 | ) | | Net cash from (used in) financing activities | | | | | (22,329 | ) | | | (8,529 | ) | | | (21,688 | ) | | Net increase (decrease) in cash and cash equivalents | | 2.4c and 4 | | | 22,411 | | | | (43,350 | ) | | | 70,714 | | | Cash and cash equivalents at the beginning of the period | | 4 | | | 91,649 | | | | 125,318 | | | | 55,790 | | | Effects of changes in exchange rates on cash and cash equivalents | | | | | (17,941 | ) | | | 9,681 | | | | (1,186 | ) | | Cash and cash equivalents at the end of the period | | 4 | | | 96,119 | | | | 91,649 | | | | 125,318 | | | Additional information on cash flow | | | | | | | | | | | | | | | | Interest received | | | | | 168,708 | | | | 136,277 | | | | 117,079 | | | Interest paid | | | | | 79,227 | | | | 58,436 | | | | 67,559 | | | Non -cash transactions | | | | | | | | | | | | | | | | Loans transferred to assets held for sale | | | | | - | | | | - | | | | - | | | Dividends and interest on capital declared and not yet paid | | | | | 2,869 | | | | 2,458 | | | | 2,270 | |
(*) Includes the amounts of interest received and paid as shown above.
The accompanying notes are an integral part of these consolidated financial statements. ITAÚ UNIBANCO HOLDING S.A. Notes to the Consolidated Financial Statements At December 31, 20152016 and December 31, 20142015 for balance sheet accounts and From January 1 to December 31, 2016, 2015 2014 and 20132014 for income statement accounts (In millions of Reais, except information per share) Note 1 - Overview ITAÚ UNIBANCO HOLDING S.A. (ITAÚ UNIBANCO HOLDING) 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 financial products and services to individual and corporate clients in Brazil and abroad, as to whether these clients have Brazilian links or not through its international branches, subsidiaries and affiliates. In Brazil we serve retail clients through the branch network of Itaú Unibanco S.A. (“Itaú Unibanco”) and to wholesale clients 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, the US (New York and Miami), and Europe (Lisbon, London, Luxembourg and Switzerland), Cayman Islands, Paraguay, Uruguay and Colombia. 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, and (ii) Companhia E.JohnstonE. Johnston de Participações (“E.Johnston”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 34, the operations of ITAÚ UNIBANCO HOLDING are divided into three operating and reportable segments:(1) Retail Banking, which comprises the retail and high net worth clients (Itaú Uniclass and Personnalité) and the corporate segment (very small and small companies); (2) Wholesale Banking, which covers the wholesale products and services for middle-market and large companies, as well as the investment banking, in addition to the activities of the Latin America unit and (3) Activities with the Market + Corporation, which mainly manages the financial results associated with capital surplus, subordinated debt, and net debt of tax credits and debits of ITAÚ UNIBANCO HOLDING. These consolidated financial statements were approved by the Executive Board of Directors on April 29, 2016.February 6, 2017. Note 2 – Significant accounting policies | 2.1. | Basis of Preparationpreparation |
These Consolidated Financial Statements of ITAÚ UNIBANCO HOLDING were prepared taking into account the requirements and guidelines set out by the National Monetary Council (“CMN”)(CMN), which established that as from December 31, 2010 annual Consolidated Financial Statements shallare to be prepared in accordance with the International Financial Reporting Standards (“IFRS”)(IFRS), as approved by the International Accounting Standards Board (“IASB”)(IASB). In the preparation of these consolidated financial statements, ITAÚ UNIBANCO HOLDING adopted the criteria for recognition, measurement and disclosure established in the IFRS and the interpretations of the International Financial Reporting Interpretation Committee (IFRIC). The Consolidated Statement of Cash Flows shows the changes in cash and cash equivalents during the period, arising from operating, investing, and financing activities, and include highly-liquid 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 are classified as operating cash flows. Management believes that the information included in these Consolidated Financial Statements is relevant and a faithful representation of the information used in the management of the ITAÚ UNIBANCO HOLDING. | 2.2. | New accounting standards and new accounting standards changes and interpretations |
| a) | Accounting standards applicable for period ended December 31, 20152016 |
| · | IASB Annual Improvement Cycle (2012-2014) – Annually IASB makes minor amendments to a series of pronouncements to clarify the standards and avoid double interpretation. In this cycle IFRS 5 – “Non-Current Assets Held for Sale and Discontinued Operations”, IFRS 7 – “Financial Instruments: Disclosures”, IAS 19 – “Employee Benefits”, and IAS 34 – the entity should take into account the contributions by employees and third parties in the recording of defined benefit plans. There are no impacts from this change, since ITAÚ UNIBANCO HOLDING has already considered these procedures. |
| b) | Accounting standards 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:
| · | IFRS 16 – “Leases” – The pronouncement replaces IAS 17 - Leases, and related interpretations (IFRIC 4, SIC 15 and SIC 27). It eliminates the accounting for operating lease agreements for the lessee, presenting only one lease model, that consists of: (a) recognizing leases which terms exceeds 12 months and with substantial amounts; (b) initially recognizing lease in assets and liabilities at present value; and (c) recognizing depreciation and interest from lease separately in the result. For the lessor, accounting will continue to be segregated between operating and financial lease.“Interim Financial Reporting” were reviewed. Effective for annual periods beginning on January 1, 2019. Possible2016. No material impacts arising from the adoption of this standard are being assessed and will be completed by the date this standard is effective. |
| · | Amendment to IAS 12 – “Income Taxes” – The amendment includes clarification about the recognition of deferred taxes for unrealized losses in debt instruments measured at fair value. Applicable to the years beginning on January 1, 2017. Possible impacts arising from the adoption of this change are being analyzed and will be completed until its effective date.on the consolidated financial statements of ITAÚ UNIBANCO HOLDING were identified. |
| · | IFRS 9 – “Financial instruments” – The purpose of the pronouncement is to replace IAS 39 - “Financial instruments: recognition and measurement”. IFRS 9 includes: (a) a logical classification and measurement model; (b) a single impairment model for financial instruments, which offers a response to expected losses; (c) the removal of volatility in income arising from own credit risk; and (d) a new hedge accounting approach. Effective for annual periods beginning on January 1, 2018. Any possible impacts arising from adopting these changes are being assessed and will be completed up to the date this standard is effective. |
| · | IFRS 15 – “Revenue from Contracts with Customers” – The purpose of the pronouncement is to replace IAS 18 and IAS 11, as well as interpretations related thereto (IFRICs 13, 15 and 18). It requires that revenue is recognized in a way that shows the transfer of assets or services to the client for an amount that reflects the company’s expectation of having in consideration the rights to these assets or services. Effective for annual periods beginning on January 1, 2018. Possible |
impacts arising from this change are being analyzed and will be completed by the date the standard is effective.
| · | Amendment to IFRS 11 – “Joint Arrangement” – The change establishes criteria for recognition of acquisition of joint operations, which activity constitutes one business, according to the methodology established in IFRS 3 – Business Combinations. Effective for the years beginning on January 1, 2016 and early adoption is permitted by IASB. Impacts of this change will occur only if there is an acquisition of a joint operation that constitutes a business. |
| · | Amendment to IAS 16 – “Property, Plant and Equipment” and IAS 38 “Intangible Assets” – The amendment clarifies the base principle for depreciation and amortization as being the expected standard of consumption of future economic benefits embodied in the asset. Effective for annual periods beginning on January 1, 2016, with early adoption permitted by IASB. No material impacts arising from this amendment were identified for the consolidated financial statements of ITAÚ UNIBANCO HOLDING. |
| · | Amendment to IFRS 10 – “Consolidated Financial Statements” and IAS 28 – “Investments in Associates and Joint Ventures” - Changes refer to an inconsistency between the requirements of IFRS 10 and IAS 28, when addressing the sale or contribution of assets between and investor and its associate or joint venture. The effective date has not been defined by IASB yet. No material impacts arising from this change on the consolidated financial statements of ITAÚ UNIBANCO HOLDING were identified. |
| · | IASB Annual Improvement Cycle (2012-2014) – Annually IASB makes minor amendments to a series of pronouncements to clarify the standards and avoid double interpretation. In this cycle IFRS 5 – “Non-Current Assets Held for Sale and Discontinued Operations”, IFRS 7 – “Financial Instruments: Disclosures”, IAS 19 – “Employee Benefits”, and IAS 34 – “Interim Financial Reporting” were reviewed. Effective for annual periods beginning on January 1, 2016. No material impacts arising from this change on the consolidated financial statements of ITAÚ UNIBANCO HOLDING were identified. |
| · | Amendment to IAS 1 – “Presentation of Financial Statements” – The amendments are aimed at encouraging companies to identify which information is sufficiently material to be disclosed in the financial statements. It also clarifies that materiality is applicable to the full set of financial statements, including the notes to the financial statements, and it is applicable to any and all disclosure requirements of the IFRS standards. Effective for periods beginning on January 1, 2016. Main effects identified are related to the disclosure of accounting policies and judgment of materiality in the notes to the financial statements. |
| · | Amendments to IAS 28, IFRS 10 and IFRS 12: “Investment Entities: Applying Consolidation Exception”: This document comprises guidance for applying the Investment Entities concept. Effective for annual periods beginning on January 1, 2016. No material impacts arising from this change on the consolidated financial statements of ITAÚ UNIBANCO HOLDING were identified. |
| b) | Accounting standards 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: | · | IFRS 9 – Financial Instruments – This standard replaces IAS 39 – Financial Instruments: Recognition and Measurement. IFRS 9 applies to financial instruments and will be adopted retrospectively at its effective date, on January 1, 2018. This standard is structured to cover the pillars (I) classification and measurement of financial assets (II) impairment, and (III) hedge accounting. Among the amendments, the items below may have the most significant impacts: |
| (I) | Classification and measurement of financial assets: the classification of financial assets should depend on two criteria: the entity´s business model for managing its financial assets and the characteristics of the contractual cash flow of financial assets. |
| (II) | Impairment: The new standards introduced the expected loss approach and classification into three phases. |
| (III) | Hedge accounting: The hedge accounting requirements are closed aligned with risk management and should be applied on a prospective basis. |
IFRS 9 is in process of implementation by ITAÚ UNIBANCO HOLDING, and an evaluation of the possible impacts resulting from the adoption of this standard has been conducted and will be completed through its effective date. The adoption of the expected loss in relation to the incurred loss approach is likely to require an increase in the allowance for loan and lease losses since the recognition of losses will be anticipated. The finance, risks, and technology departments as well as Management are involved in the implementation process. | · | IFRS 15 – “Revenue from Contracts with Customers” – The pronouncement replaces IAS 18 and IAS 11, as well as interpretations related thereto (IFRICs 13, 15 and 18). It requires that revenue is recognized in a way that shows the transfer of assets or services to the client for an amount that reflects the company’s expectation of having in consideration the rights to these assets or services. ITAU UNIBANCO HOLDING will adopt IFRS 15 retrospectively only for contracts with remaining obligations until the date this standard comes into effect. Other effects should be adjusted with a counter-entry to Retained Earnings (Losses). This standard is effective for annual periods beginning on January 1, 2018. No material impacts arising from the adoption of this standard were identified. |
| · | IFRS 16 – “Leases” – The pronouncement replaces IAS 17 - Leases, and related interpretations (IFRIC 4, SIC 15 and SIC 27). It eliminates the accounting for operating lease agreements for the lessee, presenting only one lease model, that consists of: (a) recognizing leases which terms exceeds 12 months and with substantial amounts; (b) initially recognizing lease in assets and liabilities at present value; and (c) recognizing depreciation and interest from lease separately in the result. For the lessor, accounting will continue to be segregated between operating and financial lease. This standard is effective for annual periods beginning on January 1, 2019. Possible impacts arising from the adoption of this standard are being assessed and will be completed by the date this standard is effective. |
| · | Amendment to IFRS 10 – “Consolidated Financial Statements” and IAS 28 – “Investments in Associates and Joint Ventures” – The amendments refer to an inconsistency between IFRS 10 and IAS 28 requirements, when addressing the sale or contribution of assets between an investor and its associate or joint venture. The effective date has not been defined by IASB yet. No material impacts arising from this change on the consolidated financial statements of ITAÚ UNIBANCO HOLDING were identified. |
| 2.3. | Critical 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. | 2.3.1 | Critical accounting estimates |
2.3.1 Critical accounting estimates All estimates and assumptions made by Management are in accordance with IFRS and represent the current best estimates made in compliance with the applicable standards. Estimates are evaluated continuously, considering past experience and other factors. The Consolidated 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 loan and lease losses |
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 Statements of Income with respect to certain receivables or group of receivables, ITAÚ UNIBANCO HOLDING exercises its judgment to determine whether objective evidence indicates that an event of loss has occurred. This evidence may include observable data that indicates that an adverse change has occurred in the cash flows received in relation to thethose 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. 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)2.4d X). 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 2015 and in 2014, there were no such improvements of model assumptions. Methodology and assumptions used by Management are detailed in Note 2.4g VIII.2.4d X. Allowance for loan losses is detailed in Note 12b. | b) | Deferred income tax and social contribution |
As explained in Note 2.4n,2.4k, Deferred tax assets are recognized only in relation to temporary differences and tax assets and loss for offset to the extent it is probable that ITAÚ UNIBANCO HOLDING will generate future taxable profit for its use. The expected realization of deferred tax assets is based on the projection of future taxable profits and technical studies, as disclosed in Note 27. | c) | Fair value of financial instruments, including derivatives |
The fair value of financial instruments is measured recurrently, in conformity with the requirements of IAS 39 – Financial Instruments: Recognition and Measurement. The Fairfair value of financial instruments, including derivatives that are not traded in active markets, is determined by using valuation techniques. This calculation is based on assumptions that take into consideration Management’s judgment based on market information and conditions in place at the balance sheet date. ITAÚ UNIBANCO HOLDING ranks fair value measurements using a fair value hierarchy that reflects the significance of inputs used in the measurement process. The fair value of financial instruments, including Derivatives, as well as the fair value hierarchy, are detailed in Note 31. The team in charge of the pricing of assets, in accordance with the governance defined by the committee and regulatory circulars, carries out critical analyses of the information extracted from the market and from time to time reassesses the long term of indexes. At the end of the monthly closings, the areas meet for a new round of analyses for the maintenance of the classification in connection with the fair value hierarchy. 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 31. | d) | Defined benefit pension plan |
The current amount of pension plan obligations is obtained from actuarial calculations that use a set 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 and 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. The main assumptions on Pension plan obligations are based on, in part, current market conditions. Additional information is disclosed in Note 29. | e) | Provisions, contingencies and other commitments |
ITAÚ UNIBANCO HOLDING periodically reviews its contingencies. These contingencies are evaluated based on Management´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 Sheet under Provisions. Contingent amounts are measured using appropriate models and criteria, despite the uncertainty surrounding the ultimate timing and amounts, as detailed in Note 32. Provisions, contingencies and other commitments are detailed in Note 32. | f) | Technical provisions for insurance and pension plan |
Technical provisions are liabilities arising from obligations of ITAÚ UNIBANCO HOLDING to its policyholders and participants. These obligations may be shorttermshort term liabilities (property and casualty insurance) or medium and longtermlong 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 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. 2.3.2 Critical judgments in accounting policies
| 2.3.2 | Critical judgments in accounting policies |
The impairment test for goodwill involves estimates and significant judgments, including the identification of cash generation units and the allocation of goodwill to such units based on the expectations of which ones will benefit from the acquisition. Determining the expected cash flows and a risk-adjusted interest rate for each unit requires that management exercises judgment and estimates. AnnuallySemi-annually submitted to the impairment test and, at December 31, 20152016 and 2014,2015, ITAÚ UNIBANCO HOLDING did not identify goodwill impairment losses. | 2.4. | Summary of main accounting practices |
Before January 1, 2013, ITAÚ UNIBANCO HOLDING consolidated its subsidiaries, in accordance with IAS 27 – “Separate Financial Statements”, and its special purpose entities, in accordance with SIC 12 – “Consolidation – Special Purpose Entities”, in its Consolidated Financial Statements. Effective January 1, 2013, ITAÚ UNIBANCO HOLDING adopted IFRS 10 – “Consolidated Financial Statements”, which replaced IAS 27 and SIC 12. In accordance with IFRS 10, subsidiaries are all entities in which ITAÚ UNIBANCO HOLDING holds control. ITAÚ UNIBANCO HOLDING controls an entity when it is exposed to, or is entitled to, its variable returns derived from its involvement with such entity, and has the capacity to impact such returns. Subsidiaries are fully consolidated as from the date in which ITAÚ UNIBANCO HOLDING obtains control and are no longer consolidated as from the date such control is lost. On January 1, 2013, ITAÚ UNIBANCO HOLDING assessed its investments to determine whether the conclusions of consolidation in accordance with IFRS 10 were different from those in accordance with IAS 27 and SIC 12. The application of the standard did not have significant impacts. The following table shows the main consolidated companies, which together represent over 95% of total consolidated assets, as well as the interests of ITAÚ UNIBANCO HOLDING in their voting capital at 12/31/20152016 and 12/31/20142015. | | | | | | | | | Interest in voting | | Interest in total | | | | Interest in voting | | Interest in total | | | | | | | Incorporation | | | | capital at | | capital at | | | | | Incorporation | | | | capital at | | | capital at | | | | | | | country | | Activity | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2015 | | | 12/31/2014 | | | | | country | | Activity | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2016 | | | 12/31/2015 | | | | | | | | | | | | | | | Banco CorpBanca Colombia S.A. | | | (Note 3) | | Colombia | | Financial institution | | | 23.67 | % | | | 0.00 | % | | | 23.67 | % | | | 0.00 | % | | Banco Itaú Argentina S.A. | | | | Argentina | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Argentina | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Banco Itaú BBA S.A. | | | | Brazil | | Financial institution | | | 100.00 | % | | | 99.99 | % | | | 100.00 | % | | | 99.99 | % | | 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 | % | | (Note 3) | | Chile | | Financial institution | | | - | | | | 99.99 | % | | | - | | | | 99.99 | % | | Banco Itaú BMG Consignado S.A | | (Note 3b) | | Brazil | | Financial institution | | | 60.00 | % | | | 60.00 | % | | | 60.00 | % | | | 60.00 | % | | | Banco Itaú Consignado S.A(*) | | | Brazil | | Financial institution | | | 100.00 | % | | | 60.00 | % | | | 100.00 | % | | | 60.00 | % | | Banco Itaú Paraguay S.A. | | | | Paraguay | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Paraguay | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Banco Itaú Suisse S.A. | | | | Switzerland | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | Banco Itaú (Suisse) S.A. | | | Switzerland | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Banco Itaú Uruguay S.A. | | | | Uruguay | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | 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 | % | | 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 | % | | Brazil | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Cia. Itaú de Capitalização | | | | Brazil | | Capitalization | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Brazil | | Capitalization | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Dibens Leasing S.A. - Arrendamento Mercantil | | | | Brazil | | Leasing | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Brazil | | Leasing | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento | | | | Brazil | | Consumer finance credit | | | 50.00 | % | | | 50.00 | % | | | 50.00 | % | | | 50.00 | % | | Brazil | | Consumer finance credit | | | 50.00 | % | | | 50.00 | % | | | 50.00 | % | | | 50.00 | % | | Hipercard Banco Múltiplo S.A. | | | | Brazil | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Brazil | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Itau Bank, Ltd. | | | | Cayman Islands | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Cayman Islands | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Itau BBA Colombia S.A. Corporación Financiera | | | | Colombia | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Colombia | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Itau BBA International plc | | | | United Kingdom | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | United Kingdom | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Itaú BBA USA Securities Inc. | | | | United States | | Broker | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | United States | | Broker | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Itaú BMG Seguradora S.A. | | (Note 3a) | | Brazil | | Insurance | | | 60.00 | % | | | 60.00 | % | | | 60.00 | % | | | 60.00 | % | | Brazil | | Insurance | | | 99.99 | % | | | 60.00 | % | | | 99.99 | % | | | 60.00 | % | | Itaú CorpBanca | | | (Note 3) | | Chile | | Financial institution | | | 35.71 | % | | | 0.00 | % | | | 35.71 | % | | | 0.00 | % | | Itaú Corretora de Valores S.A. | | | | Brazil | | Broker | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Brazil | | Broker | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Itaú Seguros S.A. | | | | Brazil | | Insurance | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Brazil | | Insurance | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Itaú Unibanco Financeira S.A. - Crédito, Financiamento e Investimento | | (*) | | Brazil | | Consumer finance credit | | | - | | | | 100.00 | % | | | - | | | | 100.00 | % | | | Itaú Unibanco S.A. | | | | Brazil | | Financial institution | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Brazil | | Financial institution | | | 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 | % | | Brazil | | Pension plan | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Luizacred S.A. Soc. Cred. Financiamento Investimento | | | | Brazil | | Consumer finance credit | | | 50.00 | % | | | 50.00 | % | | | 50.00 | % | | | 50.00 | % | | Brazil | | Consumer finance credit | | | 50.00 | % | | | 50.00 | % | | | 50.00 | % | | | 50.00 | % | | Redecard S.A. - REDE | | | | Brazil | | Acquirer | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | Brazil | | Acquirer | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % |
(*) Company merged in 01/31/2015 byNew company name of Banco Itaú Unibanco S.A. and Itaú BBA Participações S.ABMG Consignado S.A.. ITAÚ UNIBANCO HOLDING is committed to maintaining the minimum capital required by all these joint ventures, noteworthy is that for all FIC - Financeira Itaú CBD S.A Crédito, Financiamento e Investimento (FIC) the minimum capital percentage is 25% higher than that required by the Central Bank of Brazil (Note 33). Accounting for business combinations under IFRS 3 is only applicable when a business is acquired. Under IFRS 3, 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, 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, accounting under the purchase method is required. The acquisition cost is measured at the fair value of the assets 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 fair value at the date of acquisition, regardless of the existence of non-controlling interests. The excess of the acquisition cost, plus non-controlling 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 2.4k.2.4h. If the cost of acquisition, plus non-controlling interests, if any, is lower than the fair value of identifiable net assets acquired, the difference is directly recognized 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. | III. | Transactions with non-controlling stockholders |
IFRS 10 – “Consolidated financial statements” establishes that, changes in an ownership interest in a subsidiary, which do not result in a loss of control, are accounted for as capital transactions and any difference between the amount paid and the carrying amount of non-controlling stockholders is recognized directly in consolidated stockholders’stockholders' equity. | b) | Foreign currency translation |
| I. | Functional and presentation currency |
The consolidated financial statements of ITAÚ UNIBANCO HOLDING are presented in Brazilian Reais, which is its functional and presentation currency. For each subsidiary and investment in associates and joint ventures, ITAÚ UNIBANCO HOLDING defined the functional currency, as set forth in IAS 21. The assets and liabilities of subsidiaries with a functional currency other than the Brazilian realReal are translated as follows: | · | assets and liabilities are translated at the closing rate at the balance sheet date. |
| · | income and expenses are translated at monthly average exchange rates. |
| · | 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 part of foreign exchange results and exchange variations on transactions. In the case of monetary assets classified as available-for-sale, 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 cash and deposits on demand 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 4. | d) | Financial Assets and Liabilities |
In accordance with IAS 39, all financial assets and liabilities, including derivative financial instruments, should be recognized in the Balance Sheet, and measured in accordance with the category in which the instrument was classified. Financial assets and liabilities may be classified as follows: | Categories | | Recognition and Measurement | | · Financial assets and liabilities at fair value through profit or loss – held for trading | | ·Initially and subsequently recognized at fair value; ·Transaction costs are directly recognized in the Consolidated Statement of Income; | | · Financial assets and liabilities at fair value through profit or loss – designated at fair value | | · Gains and losses arising from changes in fair value are directly included in Net gain (loss) from investments in securities and derivatives. | | | · Initially and subsequently recognized at fair value plus transaction costs; | | ·Available-for-sale financial assets (*) | | · Unrealized gains and losses (except losses for impairment, foreign exchange differences, dividends and interest income) are recognized, net of applicable taxes, in Other comprehensive income. | ·Held-to-maturity financial assets (*) ·Loans and receivables ·Financial liabilities at amortized cost | | ·Initially recognized at fair value plus transaction costs; · Subsequently measured at amortized cost, using the effective interest rate method. |
(*)Interest, including the amortization of premiums and discounts, is recognized in the Consolidated Statement of income under Interest and similar income. The classification of financial assets and liabilities 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. Effective interest rate–when calculating the effective interest rate, ITAÚ UNIBANCO HOLDINGestimates cash flows including all contractual terms of the financial instrument, but does not include future credit losses. The calculation includes all commissions paid or received between parties to the contract, transaction costs, and all other premiums or discounts. Interest and similar income and expense are recognized in the Consolidated Statement of Income, in Interest and similar income and Interest and similar expense, respectively. ITAÚ UNIBANCO HOLDING classifies as loans and receivables and financial liabilities at amortized cost the following Balance Sheet headings: | Loans and receivables | | Financial liabilities at amortized cost | · Central Bank compulsory deposits (Note 2.4dl and Note 5); ·Interbank deposits (Note 6); · Securities purchased under agreements to resell (Note 2.4dll and Note 6); · Loan operations (Note 2.4dVIII and Note 12); and ·Other financial assets (Note 20a). | | ·Deposits (Note 17); ·Securities sold under repurchase agreements (Note 2.4dll and Note 19a); ·Funds from interbank markets (Note 19a); ·Funds from institutional markets (Note 19b); ·Liabilities for capitalization plans; and ·Other financial liabilities (Note 20b). |
Regular purchases and sales of financial assets are recognized and derecognized, respectively, on the trade date. Financial assets are derecognized when rights to receive cash flows expire or when ITAÚ UNIBANCO HOLDING transfers substantially all risks and rewards of ownership, and such transfer qualifies for write-off in accordance with IAS 39 requirements. Otherwise, control should be assessed to determine whether the continuous involvement related to any retained control does not prevent write-off. Financial liabilities are derecognized when settled 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 intention to settle them on a net basis, or simultaneously realize the asset and settle the liability. | I. | 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. Compulsory deposits are initially recognized at fair value and subsequently at amortized cost, using the effective interest rate method as detailed in Note 2.4g VI.
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 2.4g VI.
| f)II. | Securities purchased under agreements to resell and sold under repurchase agreements |
ITAÚ UNIBANCO HOLDING has purchased securities with resale agreement (resale agreements), and sold securities with repurchase agreement (repurchase agreement) of financial assets. Resale and repurchase agreements are accounted for under Securities purchased under agreements to resell and Securities sold under repurchase agreements, respectively. The amounts invested in resale agreement transactions and borrowed in repurchase agreement transactions are initially recognized 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 in resale agreement transactions and incurred in repurchase agreement transactions is recognized in Interest and similar income and Interest and similar 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. ITAÚ UNIBANCO HOLDING strictly monitors the fair value of financial assets received as collateral under our resale agreements and adjusts 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 re-pledge such instruments, they are presented in the balance sheet under the appropriate class of financial 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 financial assets |
| · | Financial liabilities at amortized cost |
Classification of financial assets and liabilities depend 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 classifies as loans and receivables the following classes of balance sheet headings: Cash and deposits on demand, Central Bank compulsory deposits (Note 2.4d), Interbank deposits (Note 2.4e), Securities purchased under agreement to resell (Note 2.4f), Loan operations (Note 2.4g VI) and Other financial assets (Note 2.4g IX).
Regular purchases and sales of financial assets are recognized and derecognized, respectively, on the trade date.
Financial assets are derecognized when rights to receive cash flows expire or when ITAÚ UNIBANCO HOLDING transfers substantially all risks and rewards of ownership, and such transfer qualifies for write-off in accordance with IAS 39 requirements. Otherwise, control should be assessed to determine whether the continuous involvement related to any retained control does not prevent write-off. Financial liabilities are derecognized when settled or extinguished. 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 intention to settle them on a net basis, or simultaneously realize the asset and settle the liability.
| I-III- | 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 trading transactions. 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 “Net gain (loss) from investments in securities and derivatives”. Interest and similar income and expense are recognized in Interest and similar income and Interest and similar expense, respectively.
| II-IV- | 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). In accordance with IAS 39, the fair value option can only be applied if it reduces or eliminates accounting mismatches in income or 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 debt instruments and embedded derivatives that should otherwise be separated. Assets and liabilities of this category are granted the same accounting treatment as those recorded in Financial assets and liabilities held for trading.
Derivatives are initially recognized on the date derivative contracts are entered into, and subsequently recorded at 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 Net gain (loss) on investment securities and derivatives. Derivatives can be designated 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 are 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 presents three hedge accounting categories: fair value hedge, cash flow hedge, and hedge of net investments in a foreign 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 9. 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 hedge, the effective portion of derivative gains or losses are recognized in Other comprehensive income – Cash flow hedge, and reclassified to Income 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 Other comprehensive income and subsequently reclassified to Income 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 ITAU UNIBANCO HOLDING redesignates a hedge, any cumulative gain or loss existing in Other comprehensive income is frozen and is recognized in income when the hedged item is ultimately recognized in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss recognized in Other Comprehensive Income is immediately transferred to the statement of income. Hedge of net investments in foreign operations A hedge of a net investment in a foreign operation, including 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 income. |
Gains or losses on the hedging instrument related to the effective portion of the hedge which is recognized in comprehensive income are reclassified to the income statement upon the disposal of the investment in the foreign operation. | IV - VI- | Available-for-sale financial assets |
In accordance with IAS 39, financial assets are classified as available-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 Other comprehensive income. Interest, including the amortization of premiums and discounts, is recognized in the consolidated statement of income under Interest and similar income. The average cost is used to determine the realized Gains and losses on Disposal of available-for-sale financial assets, which are recorded in the consolidated statement of income under Net gain (loss) on financial assetsInvestments in Securities and liabilitiesDerivatives – Available-for-sale financial assets. Dividends on available-for-sale assets are recognized in the consolidated statement of income as Dividend income when ITAÚ UNIBANCO HOLDING is entitled to receive such dividends and inflow of economic benefits is probable.
At the balance sheet date, ITAÚ UNIBANCO HOLDING assesses whether there is evidence that a financial asset or a group of similar financial assets is impaired and, for equity instruments, 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 acquisition cost and 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 Other comprehensive income.
Both impairment of available-for-sale financial assets and reversal of this loss are recorded in the Consolidated statement of income.
| V-VII- | 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 for which ITAÚ 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. Interest income, including the amortization of premiums and discounts, is recognized in the consolidated statement of income under Interest and similar income.
Both impairment of held-to-maturity financial assets and reversal of this loss are recorded, when applicable, in the Consolidated statement of income. Loan operations are initially recognized at fair value, plus transaction costs and are subsequently measured at amortized cost using the effective interest rate method.
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.
ITAÚ UNIBANCO HOLDING classifies a loan operation as on non-accrual status if the payment of the principal or interest has been in default for 60 days or more. In this case, accrual of interest is no longer recognized. 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. Both the credit risk and the finance areas are responsible for defining the methodologies used to measure the allowance for loan losses and for assessing changes in the provision amounts on a recurring basis. These areas monitor the trends observed in allowance for loan losses by 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. 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, in order to understand the underlying reasons for the trends observed and for deciding whether changes are required in our credit policies. VII - Lease operations (as lessor)
| IX- | 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 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 rate of return on the net investment of ITAÚ UNIBANCO HOLDING and is recognized in the consolidated statement of income under Interest and similar income. Performance | F-22X- | Allowance for loan and lease losses |
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) 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 as 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 portfolio of similar receivables. Considering the representativeness of several homogeneous groups, management chose to use a twelve month period as being the most representative. For portfolios of loans that are individually evaluated for impairment this period is at most 12 months, considering the review cycle for each loan operation. 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, methodologies are used 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 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 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 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 can be reviewed and modified by our Corporate Credit Committee, the members of which are executives and officers in corporate credit risk. ITAÚ 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 given default.)default). To determine the amount of the allowance for individually insignificant 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. 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: 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. Each of the four portfolio areas 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. 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 areas. The methodology is based on two components to determine the amount of the allowance: The probability of default by the client or counterparty (PD), and the potential economic 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 is 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 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 of economic conditions, in the performance of the portfolio or when a change is made in 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 statistical 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 of approval of model reviews. Considering the different characteristics of the loans at each of the four portfolio areas (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 areas. Management believes that the fact that different areas focus on each of the four portfolios results in increased knowledge, specialization and awareness of the teams as to the factors that are more relevant for each portfolio area 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 mainlyaremainly 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 quantitative and qualitative) are used as inputs to the internal model developed to determine the corresponding rating category. This approach is also applied to the corporate credit portfolio inside and outside Brazil. |
| · | Individuals–factors considered and inputs used are mainly the history of the customer relationshipcustomerrelationship with us, and information available through credit bureaus (negative information). |
| · | Small / Medium Businesses–factors considered and inputs used include, in addition to the historythehistory 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 moreitsmore recent nature, the models are simpler and use the past due status and an internal rating of the customer as main factors. |
Reversal, write-off, and renegotiation 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 Income under Expense for allowance for loan and lease losses. When a loan is uncollectible, it is written-off in the balance sheet under allowance for loan and lease losses. Write-off as losses occur after 360 days of credits have matured or after 540 days for loans with maturities over 36 months. In almost all cases for loan products, renegotiated loans require at least one payment to be made under the renegotiated terms 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 |
They are initially recognized at fair value and subsequently at amortized cost, using the effective interest rate method. The composition is presented in Note 20a.
Interest income is recognized in the consolidated statement of income under Interest and similar income.
| X- | Financial liabilities at amortized cost |
They are initially recognized at fair value and subsequently at amortized cost, using the effective interest rate method. Interest expense is presented in the Consolidated Statement of Income under Interest and similar expense.
The following financial liabilities are presented in the consolidated balance sheet and recognized at amortized cost:
| · | Securities sold under repurchase agreements (Note 2.4f). |
| · | Funds from interbank markets (Note 19a). |
| · | Funds from institutional markets (Note 19b). |
| · | Liabilities for capitalization plans. |
| · | Other financial liabilities (Note 20b). |
| h)e) | Investments in associates and joint ventures |
I – Associates In conformity with IAS 28 - Investments in Associates and Joint Ventures, associates are companies in which the investor has a significant influence but does not hold control. Investments in these companies are initially recognized at cost of acquisition and subsequently accounted for using the equity method. Investments in associates and joint ventures include the goodwill identified upon acquisition, net of any cumulative impairment loss. II – Joint arrangements Before Januaryjanuary 1, 2013, ITAÚ UNIBANCO HOLDING proportionally consolidated its interest held in joint ventures, as required by IAS 31 – Interests in Joint Ventures. From that date on, it adopted IFRS 11 – Joint arrangements, changing its accounting policy from interest in joint arrangements to the equity method. ITAÚ UNIBANCO HOLDING has assessed the nature of its joint business and concluded that it has both joint operations and joint ventures. There was no change in the accounting treatment for joint operations. For joint ventures, ITAÚ UNIBANCO HOLDING adopted the new policy on interest in joint ventures, in accordance with the IFRS 11 transition provisions. The effects arising from adopting IFRS 11, which gave rise to a change in the accounting policy, have not had significant impacts on the Consolidated financial statements of ITAÚ UNIBANCO HOLDING. ITAÚ UNIBANCO HOLDING’s share in profits or losses of its associates and joint ventures after acquisition is recognized in the consolidated statement of income. Its share of the changes in the reserves of corresponding stockholders’ equity of its associates and joint ventures is recognized in its own reserves of 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 associates and joint ventureisventures is equal or above its interest in the associates and joint ventures, 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 associates and joint ventures. Unrealized profits on transactions between ITAÚ UNIBANCO HOLDING and its associates and joint ventures 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 on associates and joint ventures are consistent with the policies adopted by ITAÚ UNIBANCO HOLDING. If the interest in the associates and joint ventures decreases, but ITAÚ UNIBANCO HOLDING retains significant influence or joint control, only the proportional amount of the previously recognized amounts in Other comprehensive income is reclassified in Income, when appropriate. Gains and losses from dilution arising from investments in associates and joint ventures are recognized in the consolidated statement of income. | i)f) | Lease commitments (as lessee) |
As a lessee, ITAÚ UNIBANCO HOLDING has finance and operating lease agreements. ITAÚ UNIBANCO HOLDING leases certain fixed assets, and those substantially holding the risks and benefits incidental to the ownership are classified as finance leases. Each lease installment paid is allocated part to liabilities and part to financial charges, so that a constant rate is obtained for the outstanding debt balance. Corresponding obligations, net of future financial charges, are included in Other financial liabilities. Interest expenses are recognized in the Consolidated Statement of Income over the lease term, to produce a constant periodic interest rate on the remaining liabilities balance for each period. Expenses related to operating leases are recognized in the consolidated statement of income, on a straight-line basis, over the period of 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. In accordance with IAS 16 – Property, plant and equipment, fixed assets are recognized at cost of acquisition less accumulated depreciation, which is calculated using the straight-line method and rates based on the estimated useful lives of these assets. These rates and additional details are presented in Note 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 – Impairment of 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 reliably determined. Gains and losses on disposals of fixed assets are recognized in the consolidated statement of income under Other income or General and administrative expenses. In accordance with IFRS 3 (R) – “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 and contingent liabilities of the acquiree. Goodwill is not amortized, but its recoverable amount is tested for impairment annuallysemi-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. Goodwill arising from the acquisition of subsidiaries is presented in the Consolidated Balance Sheet under the line Goodwill. Goodwill of associates and joint venturesisventures is reported as part of investment in the consolidated balance sheet under Investments in associates and joint ventures, and the impairment test is carried out in relation to the total balance of the investments (including goodwill). 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 periodically tested in order to identify any impairment. ITAÚ UNIBANCO HOLDING semi-annually assesses its intangible assets in order to identify whether any indications of impairment exist, as well as 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. As set forth in IAS 38, ITAÚ UNIBANCO HOLDING elected the cost model to measure its intangible assets after its initial recognition. The breakdown of intangible assets is described in Note 16. Assets held for sale are recognized in the balance sheet when they are actually repossessed or there is intention to sell. These assets are initially recorded at the lower of: (i) the fair value of the asset less the estimated selling expenses, or (ii) the carrying amount of the related asset held for sale. | n)k) | 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 – income tax and social contribution - current and tax liabilities – income tax and Social contribution – current, respectively. Deferred income tax and social contribution represented by deferred tax assets and liabilities are obtained 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 offsetting. Deferred tax assets and liabilities are recognized in the balance sheet under Tax assets – Income tax and social contribution – Deferred and Tax liabilities – Income tax and social contribution - 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 Other 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/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: | | | 12/31/20152016 | | | Income tax | | | 15.00 | % | | Additional income tax | | | 10.00 | % | | Social contribution(*) | | | 20.00 | % |
(*) On Octoberoctober 06, 2015, Law No. 13,169, a conversion of Provisional Measure No. 675, which increased the Social Contribution tax rate from 15.00% to 20.00% until Decemberdecember 31, 2018, for financial institutions, insurance companies and credit card management companies, was introduced. For the other companies, the tax rate remains at 9.00%. On May 14, 2014, Law No. 12,973 was enacted to change the federal tax legislation about IRPJ, CSLL, PIS and COFINS, which effects started on 01/01/2015, since ITAÚ UNIBANCO HOLDING did not exercise the option of advancing the effects pursuant to articles 75 and 96. Among other matters, said Law provides for:
| · | the revocation of the Transition Tax Regime – RTT, established by Law No. 11,638/07, amended by Law No. 11,941/09; |
| · | taxation of legal entities domiciled in Brazil, in connection with the equity increase arising from the interest in profit earned abroad by subsidiaries and affiliates and profit earned by individuals resident in Brazil by means of a legal entity controlled abroad. |
Said law has not had significant accounting effects on the consolidated financial statements of ITAÚ UNIBANCO HOLDING.
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%. | o)l) | Insurance contracts and private pension |
IFRS 4 – “Insurance contracts” defines insurance contracts as contracts under which the issuer accepts a significant insurance risk of the counterparty, by agreeing to compensate it if a specified uncertain future event adversely affects it. An insurance risk is significant only if the insurance 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. At the time of the first-time adoption of IFRS, ITAÚ UNIBANCO HOLDING decided not to change its accounting policies for insurance contracts, which follow the accounting practices generally accepted in Brazil (“BRGAAP”). Although investment agreements with discretionary participation characteristics are financial instruments, they are treated as insurance contracts, as established by IFRS 4, as well as those transferring a significant financial risk. These agreements may be reclassified as insurance contracts after their initial classification should the insurance risk become significant. 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 expired. Note 30 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 insurance 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.Private pension plans
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. Insurance premiums Insurance premiums are recognized by issuing an insurance policy or 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. Reinsurance Reinsurance premiums are recognized 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. Acquisition costs 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 Change in reserves for insurance and private pension. Embedded derivatives 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 was conducted by adopting the current actuarial assumptions for future cash flows of all insurance contracts in force on the balance sheet date. Should the analysis show insufficiency, any deficiency identified will be immediately accounted for in income for the period. The assumptions used to conduct the liability adequacy test are detailed in Note 30. 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)n) | Post-employments 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 general and administrative expenses, when incurred. Additionally, ITAÚ UNIBANCO HOLDING also sponsors Defined Benefit Plans and Defined Contribution Plans, accounted for in accordance with IAS 19 (R1) – “Employee benefits”. Pension plans - Defined benefit plans The liability (or asset, as the case may be) recognized in the Consolidated Balance Sheet with respect to the defined benefit plan corresponds to the present value of defined benefit obligations at the balance sheet date less the fair value of plan assets. The present value of defined benefit obligations is determined by discounting the estimated amount of future cash flows of benefit payments based on Brazilian government securities denominated in Reais and with maturity periods similar to the term of the pension plan liabilities. They are recognized in the Consolidated statement of income: | · | current service cost – defined as the increase in the present value of obligations resulting from employee service in the current period. |
| · | interest on the net amount of assets (liabilities) of defined benefit plans is the change, during the period, in the net amount recognized in assets and liabilities, due to the time elapsed, which comprises the interest income on plan assets, interest expense on the obligations of the defined benefit plan and interest on the asset ceiling effects. |
Actuarial gains and losses arising from the non-adoption of the assumptions established in the latest evaluation, as compared to those effectively carried out or changes in such assumptions, are fully recognized in Other comprehensive income. Pension plans - defined contribution For defined contribution plans, contributions to plans made by ITAÚ UNIBANCO HOLDING, through pension plan funds, are recognized as an expense when due. Other post-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 contractual committed to maintain such benefits over specific periods, as well as in relation to the benefits granted due to a judicial ruling. These obligations are assessed annually by independent and qualified actuaries, and costs expected from these benefits are accumulated during the employment period and gains and losses arising from adjustments of practices and changes in actuarial assumptions are recognized in Stockholders’ equity, under Other comprehensive income, in the period they occurred. Share-based payment 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). The fulfillment of on-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 of 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 based compensation plans established by ITAÚ UNIBANCO HOLDING correspond to plans that can be settled exclusively through the delivery of shares. ITAÚ UNIBANCO HOLDING recognizes the fair value of the guarantees issued in the consolidated balance sheet under Other liabilities. Fair value is generally represented by the fee charged to 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. After issuance, if based on the best estimate ITAÚ 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. | t)q) | Provisions, contingent assets and contingent liabilities |
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 offset 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 Management’s best estimates, and are classified as: | · | Probable:in which liabilities are recognized in the consolidated balance sheet under Provisions. |
| · | Possible:which are disclosed in the Consolidated Financial Statements, but no provision is recorded.isrecorded. |
| · | Remote:which require neither a provision nor disclosure. |
Contingent liabilities recorded under 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 32. The amount of court escrow deposits is adjusted 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. Common and preferred shares, which are equivalent to common shares but without voting rights are classified in Stockholders’ equity. The additional costs directly attributable to the issue of new shares are included in Stockholders’ equity as a deduction from the proceeds, net of taxes. Common and preferred shares repurchased are recorded in Stockholders’ equity under Treasury shares at their average purchase price. Shares that are subsequently sold, such as those sold to grantees under our share-based payment, 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 Additional paid-in capital. The cancellation of treasury shares is recorded as a reduction in Treasury shares against Appropriated reserves, at the average price of treasury shares at the cancellation date. | w)t) | Dividends and interest on capital |
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 liability when approved by stockholders at a Stockholders´ Meeting. Interest on capital is treated for accounting purposes as a dividend, and it is presented as a reduction of stockholders'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 Brazilian accounting standards and regulations for financial institutions and not based on these consolidated financial statements prepared under IFRS. Dividends and interest on capital are presented in Note 21. 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. ITAÚ UNIBANCO HOLDING grants stock-based compensation whose dilutive effect is reflected in diluted earnings per share, with the application of the “treasury stock 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 were used to purchase shares of ITAÚ UNIBANCO HOLDING. Earnings per share are presented in Note 28. | y)v) | Revenue from services |
Services related to current accounts are offered to clients either in formal packages or individually, and their income is recognized when these services are provided. Revenue from certain services, such as fees from funds management, performance, collection for retail clients and custody, 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 24. Segment information is disclosed consistently with the internal report prepared for the Executive Committee, which makes the operational decisions of ITAÚ UNIBANCO HOLDING. ITAÚ UNIBANCO HOLDING has three reportable segments: (i) Retail Banking (ii) Wholesale Banking and (iii) Activities with the Market + Corporation. Segment information is presented in Note 34.
Note 3 – Business development Credit Intelligence Bureau (“CIB”) In January 21, 2016, the ITAÚ UNIBANCO HOLDING, through its subsidiary Itaú Unibanco S.A., sidnedd a Memorandum of Understanding with Banco Bradesco S.A. Banco do Brasil S.A., Banco Santander S.A. and Caixa Econômica Federal in order to create a credit intelligence bureau (“CIB”) which will enable greater efficiency in the management and granting of credit lines at long and medium terms. CIB will be structured as a corporation and the Parties, each of them holding a 20% equity ownership, will share its control. CIB’s incorporation is subject to the execution of definitive documents among the Parties, as well as the satisfaction of certain conditions precedent, including the approval by applicable regulatory authorities. The transaction was approved by CADE on November 9, 2016. Banco Itaú BMG Consignado S.A. On September 29, 2016, ITAÚ UNIBANCO HOLDING, through its subsidiary Itaú Unibanco S.A. (Itaú Unibanco), entered into a purchase and sale agreement with Banco BMG S.A. (BMG) for acquisition of a 40% interest in the capital of Banco Itaú BMG Consignado S.A. (Itaú BMG Consignado), corresponding to BMG’s total interest in Itaú BMG Consignado, for the amount of R$ 1,460, and now holds 100% of Itaú BMG Consignado. Itaú Unibanco and BMG will maintain an association by means of the execution of a new commercial agreement for the distribution of payroll loans of Itaú BMG Consignado and its affiliates, on an exclusive basis, through certain distribution channels linked to BMG and its affiliates. After compliance with conditions precedent and approval by proper regulatory authorities, the transaction was completed on December 28, 2016. Currently, Itaú BMG Consignado is controlled by ITAÚ UNIBANCO HOLDING and, therefore, this acquisition did not have accounting effects on its results on initial recognition. ConectCarSoluções de Mobilidade Eletrônica S.A. On October 21, 2015, ITAÚ UNIBANCO HOLDING, through its subsidiary Redecard S.A. (Rede), entered into a share purchase and sale commitment with Odebrecht Transport S.A. for the acquisition of 50% of capital stock ofConectCar Soluções de Mobilidade Eletrônica S.A. (ConectCar) for the amount of R$ 170. ConectCar, located in Barueri, São Paulo, is an institution engaged in own payment arrangements and a provider of intermediation services for automatic payment of tolls, fuels and parking lots, ranked as the second largest company in the sector, currently operating in 12 States and in the Federal District. It was organized in 2012 as the result of a partnership between Odebrecht Transport S.A. and Ipiranga Produtos de Petróleo S.A., a company controlled by Ultrapar Participações S.A., which currently holds the remaining 50% of ConectCar’s capital stock. After compliance with the conditions precedent and approval of proper regulatory authorities, the operation was closed on January 29, 2016. The investment acquired is measured using the equity method (Note 2.4e II). The acquisition will not have accounting effects on the results of ITAÚ UNIBANCO HOLDING on initial recognition. Recovery do Brasil Consultoria S.A. At December 31, 2015, ITAÚ UNIBANCO HOLDING, through its subsidiary Itaú Unibanco S.A., entered into an agreement for purchase and sale and other covenants with Banco BTG Pactual S.A. (BTG) for acquisition of 81.94% interest in the capital of Recovery do Brasil Consultoria S.A. (Recovery), corresponding to BTG’s total interest in Recovery, for the amount of R$ 640. In the same transaction, ITAÚ UNIBANCO HOLDING agreed on the acquisition of approximately 70% of the portfolio of R$ 38 billion in credit rights related to the recovery of portfolios held by BTG, for the amount of R$ 570. Established in 2000 in Argentina and present in Brazil since 2006, Recovery is the market leader in the management of overdue receivables portfolio. Recovery’s activities consist in prospecting and assessing portfolios, structuring and managing operations, acting in all segments, from individual to corporate loans, with financial and non-financial institutions, and offering a competitive advantage to its clients. Effective acquisitionsAfter the compliance with the conditions precedent and financial settlements will occur afterapproval by regulatory authorities, the fulfillment of certain contractual conditions and obtainment of regulatory and government authorizations required.transaction was closed on March 31, 2016.
The transaction willacquisition did not have significant accounting effecteffects on the results of ITAÚ UNIBANCO HOLDING.
ConectCar Soluções de Mobilidade Eletrônica S.A.HOLDING on initial recognition.
On October 21, 2015,July 7, 2016, ITAÚ UNIBANCO HOLDING,HOLDNG, through its subsidiary RedecardItaú Unibanco S.A. (Rede), entered intoacquired, from International Finance Corporation, a share purchase and sale commitment with Odebrecht Transport S.A. for the acquisition of 50% of capital stock ofConectCar Soluções de Mobilidade Eletrônica S.A. (ConectCar)6.92% additional interest, for the amount of R$ 170. ConectCar is an institution engaged in own payment arrangements59, and a providernow holds 96% of intermediation services for automatic payment of tolls, fuels and parking lots, ranked as the second largest company in the sector, currently operating in 12 States and in the Federal District. It was organized in 2012 as the result of a partnership between Odebrecht Transport S.A. and Ipiranga Produtos de Petróleo S.A., a company controlled by Ultrapar Participações S.A., which currently holds the remaining 50% of ConectCar’s capital stock.
The operation was approved by BACEN on December 23, 2015.
Governance will be shared with the Ultra group, and the effective acquisition and financial settlement will occur after the fulfillment of certain contractual conditions.
The transaction will not have significant accounting effect on the results of ITAÚ UNIBANCO HOLDING.Recovery’s capital.
Itaú CorpBanca On January 29, 2014, ITAÚ UNIBANCO HOLDING, through its subsidiary Banco Itaú Chile S.A. (BIC), entered into aTransaction Agreement with CorpBanca and its controlling shareholdersstockholders (Corp Group), establishing the terms and conditions forof the unificationmerger of operations of BIC and CorpBanca in Chile and in the other jurisdictions in which CorpBanca operates. CorpBanca is a commercial bank headquartered in Chile, which also operates in Colombia and Panama, focused on individuals and large and middle-market companies. In 2015, an accordance with the Chilean Superintendence of Banks, it was one of the largest private banks in Chile, in terms of overall size of loan portfolio, with a market share of 7.1%. This agreement represents an important step in ITAÚ UNIBANCO HOLDING’s internationalization process. The merger was approved by the stockholders of CorpBanca and BIC and by all proper regulatory authorities in Chile, Brazil, Colombia and Panama. As set forth in the amendment to theTransactionAgreement, entered into on June 2, 2015, the parties closed the operation on April 1, 2016, when they hadfull conditions for the corporate reorganization process. The operation will bewas consummated through:by means of: | i. | Capital increaseIncrease in BICBIC’ capital in the amount of US$ 6522,309 million to be made by ITAÚ UNIBANCO HOLDING or one of its subsidiaries,concluded on March 22, 2016; |
| ii. | Merger of BIC into CorpBanca, with the cancellation of BIC’s shares and issue of new shares by CorpBanca, at the estimated rate of 85,420.0780,240 shares of CorpBanca for each 1one share of BIC, to be approved in the shareholders meeting of CorpBanca so that the interests in the bank resulting from the merger, which will be callednamed Itaú CorpBanca, will beare 33.58% for ITAÚ UNIBANCO HOLDING and 33.13% for Corp Group, and |
| iii. | Subsequent integration of Itaú BBA Colômbia S.A. into the operations of Itaú CorpBanca or its subsidiaries.Group. |
The following corporate structure resulted from the transaction: PerformanceOwnership interest | F-38 | | | | ITAÚ UNIBANCO HOLDING | | | 33.58 | % | | Corp Group | | | 33.13 | % | | Other non-controlling stockholders | | | 33.29 | % |
The Itaú CorpBanca will bewas controlled byfrom the April 1, 2016 fur ITAÚ UNIBANCO HOLDING. On the same date, ITAU UNIBANCO HOLDING which will enterentered into a shareholders’ agreement with Corp Group, whenwhich sets forth, among others, the operation is consummated. This agreement will entitle ITAUright of ITAÚ UNIBANCO HOLDING and Corp Group to appoint members for the Board of Directors of Itaú CorpBanca in accordance to their interests in capital stock, and this group of shareholders will have the privilege of electingright to appoint the majority of members of the Board of Directors of Itaú CorpBanca and ITAÚ UNIBANCO HOLDING will be entitled to electappoint the majority of these members. The chairmen of the Boards of Directors of Itaú CorpBanca and its subsidiaries will be appointedmembers elected by Corp Group, and their vice-chairmen by ITAÚ UNIBANCO HOLDING. The executives of Itaú CorpBanca and its subsidiaries will be proposed by ITAÚ UNIBANCO HOLDING and ratified by the Board of Directors of Itaú CorpBanca. The shareholders agreement will also set forth that Corp Group will be entitled to approve, together with ITAÚ UNIBANCO HOLDING,this block. Except for certain strategic matters of Itaú CorpBanca, and it will include provisionson which Corp Group has the right of veto, the members of the board of directors appointed by Corp Group should vote as recommended by ITAÚ UNIBANCO HOLDING. The fair value of the consideration transferred by ITAÚ UNIBANCO HOLDING due to its interest in Itaú CorpBanca was R$ 10,517, based on the transferquotation of CorpBanca’s shares on the Santiago Stock Exchange. The consideration transferred resulted in goodwill for future expected profitability of R$ 6,928. Additionally, a goodwill of R$ 692 was generated in Brazil due to the difference between ITAUthe equity value of BIC and the equity value of Itaú CorpBanca resulting from the merger. This amount will not be deducted for tax purposes, except in case of disposal or merger of the investment. The table below summarizes the main assets acquired and liabilities assumed on the acquisition date: CorpBanca | Assets | | 04/01/2016 | | | Cash and deposits on demand | | | 5,869 | | | Interbank deposits | | | 3,712 | | | Securities purchased under agreements to resell | | | 186 | | | Financial assets held for trading | | | 5,684 | | | Derivatives | | | 6,628 | | | Available-for-sale financial assets | | | 7,164 | | | Held-to-maturity financial assets | | | 236 | | | Loan operations and lease operations portfolio, net | | | 75,222 | | | Other financial assets | | | 3,018 | | | Goodwill | | | 888 | | | Fixed assets, net | | | 494 | | | Intangible assets, net | | | 2,603 | | | Tax assets | | | 1,413 | | | Assets held for sale | | | 2 | | | Other assets | | | 1,257 | | | Total assets | | | 114,376 | | | | | | | | Liabilities and stockholders’ equity | | | 04/01/2016 | | | Deposits | | | 68,387 | | | Securities sold under repurchase agreements | | | 4,052 | | | Derivatives | | | 5,749 | | | Interbank market debt | | | 6,429 | | | Institucional market debt | | | 17,025 | | | Other financial liabilities | | | 1,583 | | | Provisions | | | 140 | | | Tax liabilities | | | 1,341 | | | Other liabilities | | | 2,619 | | | Total liabilities | | | 107,325 | | | Plan net assets | | | 7,051 | | | Non-controlling interests | | | 1,515 | | | Net assets assumed | | | 5,536 | | | Adjustment to fair value of net assets assumed | | | (1,946 | ) | | Net assets assumed at fair value | | | 3,590 | |
Up to one year from acquisition date, adjustments to the reported amounts will be made to reflect any new information obtained about facts and circumstances that existed at the transaction completion date, as provided for in IFRS 3 – Business Combinations. Contingent liabilities have not been recorded due to the acquisition. Additionally, on October 26, 2016, ITAÚ UNIBANCO HOLDING, by means of its controlled subsidiary, ITB Holding Brasil Participações Ltda., it has indirectly acquired 10,908,002,836 shares of Itaú CorpBanca, for equivalent to R$ 288.1. The possibility of implementing the acquisition of such Shares was already set forth in the shareholders’ agreement entered into on April 1st, 2016 between ITAÚ UNIBANCO HOLDING and Corp Group and third parties.certain of its affiliates. As a consequence, ITAÚ UNIBANCO HOLDING’s ownership in Itaú CorpBanca increased from approximately 33.58% to 35.71%, without altering its current governance. This transaction was implemented by means of the acquisition of 100% of the capital stock of a company named CGB II SpA, which is the current holder of the shares. All the required regulatory approvals have been obtained on October of 2016. Approvals for the merger were obtained from CorpBanca and BIC shareholders, and from all proper regulatory authorities in Chile, Brazil, Colombia and Panamá. However, as set forth in the amendment to the Transaction Agreement, celebrated on June 2, 2015, the parties agreed that the operation will be closed by May 2, 2016, when they will be fully prepared for the corporate reorganization process.
It is estimated that said transaction willThe acquisitions did not have significant accounting effects on the resultsnet income of ITAÚ UNIBANCO HOLDING which will consolidate Itaú CorpBanca after the closing of the operation.on initial recognition.
MasterCard Brasil Soluções de Pagamento Ltda.
On March 13, 2015, o ITAÚ UNIBANCO HOLDING, through its subsidiary Itaú Unibanco S.A., entered into an agreement with MasterCard Brasil Soluções de Pagamento Ltda. to create an alliance in the payment solutions market in Brazil.
The purposes of the operation are (a) to focus on the expansion of its issue and acquisition business, particularly related to the new payment solutions network, (b) to have access to new payment solutions technologies, (c) to obtain significant scale and efficiency gains, and (d) to benefit from MasterCard’s expertise in the management of payment solution brands.
The effectiveness of the alliance is subject to the satisfaction of certain conditions precedent and approval by proper regulatory authorities.
MaxiPago On September 3, 2014, ITAÚ UNIBANCO HOLDING, through its subsidiary Redecard S.A. (Rede) entered into a share purchase agreement with the controlling shareholders of MaxiPago Serviços de Internet S.A. (MaxiPago), a gateway company – network interconnection for mobile electronic payments. On the same date, subscription and payment of 13,33619,336 shares (33.33%) and acquisition of 24,174 shares (41.67%) were carried out, so that Rede became the holder of 43,510 common shares, representing 75% of total voting capital of MaxiPago. After the compliance with the conditions precedent and approval by proper regulatory authorities, the operation was closed on January 8, 2015. The difference between the amount paid and net assets at fair value resulted in the recognition of goodwill due to expected future profitability. | Purchase price | | | 15 | | | (-) Fair value of identified assets and liabilities | | | (4 | ) | | (=) Goodwill | | | 11 | |
Tecnologia Bancária S.A. (TECBAN) – New Shareholders’ Agreement
On July 17, 2014,In the second semester of 2016, ITAÚ UNIBANCO HOLDING together with other financial institutions, signed the New Shareholders’ Agreement, which came into effect as from the operation closing date.
In line with the global trend towards best practices, the agreement establishes that, approximately within 4 years, the Parties should replace part of their external ATM networks by Banco24Horas network, generating increased efficiency, greater quality and capillarity of customer service. In addition to the Parties, approximately 40 other banks are clients of TECBAN.
After the compliance with the conditions precedent and approval by proper regulatory authorities, the operation was closed on November 14, 2014.
| Interest | | Current | | | Previous | | | Shares | | | 935,995,448 | | | | 974,021,768 | | | % | | | 24.93 | % | | | 25.94 | % |
MCC Securities e MCC Corredora de Bolsa
On July 20, 2011, ITAÚ UNIBANCO HOLDING,CONSOLIDATED, through its subsidiary Banco Itaú Chile S.A. (BIC), entered into a share purchase agreement with MCC Inversiones Globales (MCC Inversiones)Rede, increasead the capital of MaxiPago by 21.98 and MCC Beneficial Owners (Chilean individuals), for phased acquisitionacquired additional interest ownership of total shares of MCC Securities.
On August 1, 2011, the parties entered into an agreement for phased acquisition of total shares of MCC Corredora de Bolsa.
On August 18, 2014, they entered into a new agreement for acquiring in advance the remaining shares of MCC Securities and MCC Corredora de Bolsa.
| | | Current | | | Previous | | | | | MCC Securities | | | MCC Corredora | | | MCC Securities | | | MCC Corredora | | | Shares | | | 6,000,000 | | | | 2,046 | | | | 3,000,001 | | | | 1,024 | | | % | | | 100 | % | | | 100 | % | | | 50 | % | | | 50.05 | % |
Accordingly, with this operation ITAÚ UNIBANCO HOLDING validates its relevant share in the Chilean private banking market, as it now fully consolidates MCC Securities and MCC Corredora de Bolsa in its financial statements from August 31, 2014 onwards.
The difference between the amount paid and net assets at fair value resulted in the recognition of goodwill due to expected future profitability and intangible assets.
| | In millions of US$ | | Purchase price | | | 77 | | (-) Fair value of identified assets and liabilities | | | (13 | ) | (-) Brand | | | (2 | ) | (=) Goodwill | | | 62 | |
BMG Seguradora S.A.
On June 25, 2013, ITAÚ UNIBANCO HOLDING, through its subsidiary Banco Itaú BMG Consignado S.A.3.02%, entered into a share purchase agreement with the controlling shareholders of Banco BMG S.A., for the acquisition of 99.996% of the shares of BMG Seguradora S.A., represented by 35,292,627 shares for the amount of R$ 88 thousand.
BMG Seguradora S.A. entered into an exclusivity agreement with Banco BMG S.A.2, and Itaú BMG Consignado for the distributionnow holds 100% of insurance products to be linked to the products sold by these banks. The purpose of the acquisition is to expand the insurance activities of ITAÚ UNIBANCO HOLDING.
After the compliance with the conditions precedent and approval by proper regulatory authorities, the transaction was closed on January 27, 2014.
The difference between the amount paid and net assets at fair value resulted in the recognition of goodwill due to expected future profitability.MaxiPago’s capital stock.
Purchase price | | | 88 | | (-) Fair value of identified assets and liabilities | | | (65 | ) | (=) Goodwill | | | 23 | |
Citibank N.A. Uruguay Branch
On July 28, 2013, ITAÚ UNIBANCO HOLDING, through its subsidiary Banco Itaú Uruguay S.A. (BIU), entered into an agreement with Citibank N.A. Uruguay Branch, with rules for the acquisition of retail transactions in Uruguay.
As a result of this operation, BIU assumed a client portfolio related to retail transactions (current account, savings accounts and time deposits). The assets acquired involved mainly credit card transactions that Citibank developed in the country under Visa, Mastercard and Diners brands.
After the compliance with the conditions precedent and approval by proper regulatory authorities, the operation was closed on December 31, 2013.
The difference between the amount paid and net assets at fair value resulted in the recognition of goodwill due to expected future profitability and intangible assets.
| | In millions of US$ | | Purchase price | | | 26 | | (-) Intangible Assets Subject to Amortization | | | (1 | ) | (=) Goodwill | | | 25 | |
Credicard
On May 14, 2013, ITAÚ UNIBANCO HOLDING, through its subsidiary Banco Itaucard S.A., entered into a share and quota purchase agreement with Banco Citibank, for the acquisition of Banco Citicard S.A. and Citifinancial Promotora de Vendas Ltda., including the “Credicard” brand, for R$ 2,948. These entities were responsible for the offer and distribution of financial products and services of the “Credicard” brand, particularly personal loans and credit cards.
After the compliance with the conditions precedent and approval by proper regulatory authorities, the operation was closed on December 20, 2013.
Due to this operation, ITAÚ UNIBANCO HOLDING fully consolidated Banco Citicard and Citifinancial Promotora de Vendas in its financial statements as from December 2013. On August 31, 2014, Banco Citicard was merged into Banco Itaucard S.A.
The difference between the amount paid and net assets at fair value resulted in the recognition of goodwill due to expected future profitability and intangible assets.
Purchase price | | | 2,948 | | (-) Fair value of identified assets and liabilities | | | (1,069 | ) | (-) Brand | | | (27 | ) | (+) Deferred Tax Liability | | | 11 | | (=) Goodwill | | | 1,863 | |
| b) | Partnerships and Associations |
Association with Banco BMG S.A.
On July 9, 2012, ITAÚ UNIBANCO HOLDING entered into an Association Agreement with Banco BMG S.A. (BMG) aiming at the offering, distribution and sale of payroll loans through the organization of the financial institution Banco Itaú BMG Consignado S.A., in which ITAÚ UNIBANCO HOLDING held control with a 70% interest in total voting capital, and BMG held the remaining 30%. The capital subscribed by shareholders was R$ 1,000, proportionally to each interest.
ITAÚ UNIBANCO HOLDING contributed with its economic and financial capacity, administrative experience and controls, and BMG contributed with its commercial and operating competence, in addition to the technological platform required for the development of activities.
After the compliance with the conditions precedent and approval by proper regulatory authorities, the transaction was closed on January 7, 2013.
On April 29, 2014, the agreement establishing the unification of payroll loans business, concentrating the transactions at Itaú BMG Consignado, was entered into. Starting July 25, 2014 and during the term of the association, Itaú BMG Consignado is BMG’s exclusive channel for the offer of payroll loans in the Brazilian territory, subject to certain exceptions.
In consideration for the business unification, on July 25, 2014 BMG increased the capital of Itaú BMG Consignado by R$ 181 and, therefore, ITAÚ UNIBANCO HOLDING started to hold a 60% interest in the total voting capital and BMG started to hold the remaining 40%. The possibility of this unification had already been initially considered.
This transaction had no significant accounting effects on the results and ITAÚ UNIBANCO HOLDING continued to consolidate Itaú BMG Consignado in its financial statements.
Fiat Group Automobiles S.p.A. and Fiat Automóveis S.A.
On August 20, 2013, ITAÚ UNIBANCO HOLDING, through its subsidiary Itaú Unibanco S.A., renewed the commercial cooperation agreement maintained with Fiat Group Automobiles S.p.A. and Fiat Automóveis S.A. This agreement sets forth exclusivity for the offer of financing in promotional campaigns of car maker Fiat for the sale of new cars and exclusive use of Fiat brand in activities related to vehicle financing.
The operation did not have significant accounting effects on the financial statements of ITAÚ UNIBANCO HOLDING.
Major Risk Insurance Operation
On July 4, 2014, ITAÚ UNIBANCO HOLDING, through its subsidiary Itaú Unibanco S.A., entered into a share purchase agreement with ACE Ina International Holdings Ltd. (ACE), through which the former undertook to sell 100% of its interest in Itaú Seguros Soluções Corporativas S.A. (ISSC).
ISSC held the major risks operations of ITAÚ UNIBANCO HOLDING, which clients were middle-market and large companies with policies with high amounts insured.
After the compliance with the conditions precedent and approval by proper regulatory authorities, ACE paid R$ 1.5 billion to ITAÚ UNIBANCO HOLDING and its subsidiaries, through ISSC. On October 31, 2014, ISSC transferred the shares upon financial settlement by ACE, updating the price of operation considering the shareholders equity position on the operation closing date, in the amount of R$ 379.
This transaction is linked with ITAÚ UNIBANCO HOLDING’s strategy of selling retail personal and property insurance, typically related to retail banking.
Major risks operations of ITAÚ UNIBANCO HOLDING were classified in the “Retail Banking” segment in the financial statements.
Via Varejo
On October 1, 2014, ITAÚ UNIBANCO HOLDING, through its subsidiary Itaú Seguros S.A., received from Via Varejo the amount of R$ 584 due to the early termination of operating agreements related to the offer of extended warranty insurance in Ponto Frio and Casas Bahia stores. The amount received refers substantially to the refund of amounts disbursed under contractual terms, duly restated.
The operation had no relevant accounting effects on the financial statements of ITAÚ UNIBANCO HOLDING.
Note 4 - Cash and cash equivalents For purposes of consolidated statements of cash flows, Cash and cash equivalents in this note comprises the following items: | | | 12/31/2015 | | | 12/31/2014 | | | Cash and deposits on demand | | | 18,544 | | | | 17,527 | | | Interbank deposits | | | 22,022 | | | | 13,939 | | | Securities purchased under agreements to resell | | | 51,083 | | | | 93,852 | | | Total | | | 91,649 | | | | 125,318 | |
| | | 12/31/2016 | | | 12/31/2015 | | | Cash and deposits on demand | | | 18,542 | | | | 18,544 | | | Interbank deposits | | | 13,358 | | | | 22,022 | | | Securities purchased under agreements to resell | | | 64,219 | | | | 51,083 | | | Total | | | 96,119 | | | | 91,649 | |
Amounts related to interbank deposits and securities purchased under agreements to resell not included in cash equivalents are R$ 8,5039,334 (R$ 9,1428,503 at 12/31/2014)2015) and R$ 203,321200,832 (R$ 115,066203,321 at 12/31/2014)2015), respectively. Note 5 - Central Bank compulsory deposits | | | 12/31/2015 | | | 12/31/2014 | | | Non-interest bearing deposits | | | 3,790 | | | | 3,392 | | | Interest-bearing deposits | | | 62,766 | | | | 59,714 | | | Total | | | 66,556 | | | | 63,106 | |
| | | 12/31/2016 | | | 12/31/2015 | | | Non-interest bearing deposits | | | 3,002 | | | | 3,790 | | | Interest-bearing deposits | | | 82,698 | | | | 62,766 | | | Total | | | 85,700 | | | | 66,556 | |
Note 6 - Interbank deposits and securities purchased under agreements to resell | | | 12/31/2015 | | | 12/31/2014 | | | | | Current | | | Non-
current | | | Total | | | Current | | | Non-
current | | | Total | | | Interbank deposits | | | 29,769 | | | | 756 | | | | 30,525 | | | | 22,135 | | | | 946 | | | | 23,081 | | | Securities purchased under agreements to resell(*) | | | 254,404 | | | | - | | | | 254,404 | | | | 208,918 | | | | - | | | | 208,918 | | | Total | | | 284,173 | | | | 756 | | | | 284,929 | | | | 231,053 | | | | 946 | | | | 231,999 | |
| | | 12/31/2016 | | 12/31/2015 | | | | | Current | | | Non-
current | | | Total | | | Current | | | Non-
current | | | Total | | | Interbank deposits | | | 21,503 | | | | 1,189 | | | | 22,692 | | | | 29,769 | | | | 756 | | | | 30,525 | | | Securities purchased under agreements to resell (*) | | | 264,740 | | | | 311 | | | | 265,051 | | | | 254,404 | | | | - | | | | 254,404 | | | Total | | | 286,243 | | | | 1,500 | | | | 287,743 | | | | 284,173 | | | | 756 | | | | 284,929 | |
(*) The amounts of R$ 9,4614,329 (R$ 5,9459,461 at 12/31/2014)2015) are pledged in guarantee of operations on BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros and Central Bank and the amounts of R$ 152,551178,070 (R$ 88,716152,551 at 12/31/2014)2015) are pledged in guarantee of repurchase agreement transactions, in conformity with the policies described in Note 2.4f.2.4d. Note 7 – 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: | | | 12/31/2015 | | | 12/31/2014 | | | | | | | | Accumulated gain / | | | | | | | | | Accumulated gain / | | | | | | | | | | | (loss) reflected in | | | | | | | | | (loss) reflected in | | | | | | | | Cost | | | income | | | Fair value | | | Cost | | | income | | | Fair value | | | Investment funds | | | 1,110 | | | | (59 | ) | | | 1,051 | | | | 870 | | | | - | | | | 870 | | | Brazilian government securities(1a) | | | 117,848 | | | | (795 | ) | | | 117,053 | | | | 86,796 | | | | (403 | ) | | | 86,393 | | | Brazilian external debt bonds(1b) | | | 4,672 | | | | (241 | ) | | | 4,431 | | | | 1,894 | | | | 20 | | | | 1,914 | | | Government securities – abroad(1c) | | | 1,140 | | | | 9 | | | | 1,149 | | | | 1,502 | | | | 38 | | | | 1,540 | | | Argentina | | | 682 | | | | 14 | | | | 696 | | | | 594 | | | | 34 | | | | 628 | | | Chile | | | 36 | | | | - | | | | 36 | | | | 132 | | | | - | | | | 132 | | | Colombia | | | 77 | | | | (5 | ) | | | 72 | | | | 85 | | | | 3 | | | | 88 | | | United States | | | 132 | | | | - | | | | 132 | | | | 447 | | | | 1 | | | | 448 | | | Mexico | | | 3 | | | | - | | | | 3 | | | | 3 | | | | - | | | | 3 | | | Paraguay | | | 68 | | | | - | | | | 68 | | | | 128 | | | | - | | | | 128 | | | Uruguay | | | 40 | | | | - | | | | 40 | | | | 41 | | | | - | | | | 41 | | | Other | | | 102 | | | | - | | | | 102 | | | | 72 | | | | - | | | | 72 | | | Corporate securities(1d) | | | 40,659 | | | | (32 | ) | | | 40,627 | | | | 42,207 | | | | 20 | | | | 42,227 | | | Shares | | | 2,231 | | | | (70 | ) | | | 2,161 | | | | 2,383 | | | | (32 | ) | | | 2,351 | | | Bank deposit certificates | | | 2,583 | | | | - | | | | 2,583 | | | | 3,281 | | | | - | | | | 3,281 | | | Securitized real estate loans | | | - | | | | - | | | | - | | | | 1 | | | | - | | | | 1 | | | Debentures | | | 4,460 | | | | 62 | | | | 4,522 | | | | 4,203 | | | | 40 | | | | 4,243 | | | Eurobonds and other | | | 1,015 | | | | (24 | ) | | | 991 | | | | 1,049 | | | | 12 | | | | 1,061 | | | Financial credit bills | | | 30,367 | | | | - | | | | 30,367 | | | | 30,711 | | | | - | | | | 30,711 | | | Promissory notes | | | - | | | | - | | | | - | | | | 577 | | | | - | | | | 577 | | | Other | | | 3 | | | | - | | | | 3 | | | | 2 | | | | - | | | | 2 | | | Total(2) | | | 165,429 | | | | (1,118 | ) | | | 164,311 | | | | 133,269 | | | | (325 | ) | | | 132,944 | |
| (1) | Assets held for trading pledged as collateral of funding transactions of financial institutions and clients were: a) R$ 7,384 (R$ 36,544 at 12/31/2014), b) R$ 3,541 (R$ 531 at 12/31/2014), c) R$ 68 (R$ 249 at 12/31/2014) and d) 15 (R$ 42 at 12/31/2014), totaling R$ 11,008 (R$ 37,366 at 12/31/2014). |
| | | 12/31/2016 | | 12/31/2015 | | | | | | | | Accumulated gain / | | | | | | | | | Accumulated gain / | | | | | | | | | | | (loss) reflected in | | | | | | | | | (loss) reflected in | | | | | | | | Cost | | | income | | | Fair value | | | Cost | | | income | | | Fair value | | | Investment funds | | | 1,170 | | | | 3 | | | | 1,173 | | | | 1,110 | | | | (59 | ) | | | 1,051 | | | Brazilian government securities (1a) | | | 159,602 | | | | 422 | | | | 160,024 | | | | 117,848 | | | | (795 | ) | | | 117,053 | | | Brazilian external debt bonds (1b) | | | 5,275 | | | | 50 | | | | 5,325 | | | | 4,672 | | | | (241 | ) | | | 4,431 | | | Government securities – abroad (1c) | | | 3,714 | | | | 21 | | | | 3,735 | | | | 1,140 | | | | 9 | | | | 1,149 | | | Argentina | | | 634 | | | | 17 | | | | 651 | | | | 682 | | | | 14 | | | | 696 | | | Chile | | | 126 | | | | 1 | | | | 127 | | | | 36 | | | | - | | | | 36 | | | Colombia | | | 2,666 | | | | 3 | | | | 2,669 | | | | 77 | | | | (5 | ) | | | 72 | | | United States | | | 78 | | | | - | | | | 78 | | | | 132 | | | | - | | | | 132 | | | Mexico | | | 6 | | | | - | | | | 6 | | | | 3 | | | | - | | | | 3 | | | Paraguay | | | 88 | | | | - | | | | 88 | | | | 68 | | | | - | | | | 68 | | | Uruguay | | | 32 | | | | - | | | | 32 | | | | 40 | | | | - | | | | 40 | | | Other | | | 84 | | | | - | | | | 84 | | | | 102 | | | | - | | | | 102 | | | Corporate securities (1d) | | | 34,425 | | | | (34 | ) | | | 34,391 | | | | 40,659 | | | | (32 | ) | | | 40,627 | | | Shares | | | 2,598 | | | | (107 | ) | | | 2,491 | | | | 2,231 | | | | (70 | ) | | | 2,161 | | | Bank deposit certificates | | | 1,824 | | | | - | | | | 1,824 | | | | 2,583 | | | | - | | | | 2,583 | | | Debentures | | | 3,129 | | | | 61 | | | | 3,190 | | | | 4,460 | | | | 62 | | | | 4,522 | | | Eurobonds and other | | | 654 | | | | 8 | | | | 662 | | | | 1,015 | | | | (24 | ) | | | 991 | | | Financial credit bills | | | 25,893 | | | | - | | | | 25,893 | | | | 30,367 | | | | - | | | | 30,367 | | | Other | | | 327 | | | | 4 | | | | 331 | | | | 3 | | | | - | | | | 3 | | | Total (2) | | | 204,186 | | | | 462 | | | | 204,648 | | | | 165,429 | | | | (1,118 | ) | | | 164,311 | |
(1) Assets held for trading pledged as collateral of funding transactions of financial institutions and clients were: a) R$ 7,696 (R$ 7,384 at 12/31/2015), b) R$ 4,045 (R$ 3,541 at 12/31/2015), c) 1,183 (R$ 68 at 12/31/2015) and d) R$ 26 (R$ 15 at 12/31/2015), totaling R$ 12,950 (R$ 11,008 at 12/31/2015).
| (2) | In the period, there was no reclassification of held for trading financial assets to other categories of financial assets. |
The cost and fair value of financial assets held for trading by maturity are as follows: | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | 12/31/2015 | | | | | Cost | | | Fair value | | | Cost | | | Fair value | | | Cost | | Fair value | | Cost | | Fair value | | | Current | | | 36,045 | | | | 35,934 | | | | 53,436 | | | | 53,451 | | | | 34,302 | | | | 34,206 | | | | 36,045 | | | | 35,934 | | | Non-stated maturity | | | 3,341 | | | | 3,212 | | | | 3,253 | | | | 3,220 | | | | 3,356 | | | | 3,206 | | | | 3,341 | | | | 3,212 | | | Up to one year | | | 32,704 | | | | 32,722 | | | | 50,183 | | | | 50,231 | | | | 30,946 | | | | 31,000 | | | | 32,704 | | | | 32,722 | | | Non-current | | | 129,384 | | | | 128,377 | | | | 79,833 | | | �� | 79,493 | | | | 169,884 | | | | 170,442 | | | | 129,384 | | | | 128,377 | | | From one to five years | | | 57,923 | | | | 57,700 | | | | 57,278 | | | | 57,074 | | | | 117,748 | | | | 118,050 | | | | 57,923 | | | | 57,700 | | | From five to ten years | | | 66,148 | | | | 65,437 | | | | 16,400 | | | | 16,279 | | | | 42,135 | | | | 42,284 | | | | 66,148 | | | | 65,437 | | | After ten years | | | 5,313 | | | | 5,240 | | | | 6,155 | | | | 6,140 | | | | 10,001 | | | | 10,108 | | | | 5,313 | | | | 5,240 | | | Total | | | 165,429 | | | | 164,311 | | | | 133,269 | | | | 132,944 | | | | 204,186 | | | | 204,648 | | | | 165,429 | | | | 164,311 | |
Financial assets held for trading include assets with a fair value of R$ 117,128142,081 (R$ 97,184117,128 at 12/31/2014)2015) that belong to investment funds wholly owned by Itaú Vida e Previdência S.A. The return of 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. b)Financial assets designated at fair value through profit or loss are presented in the following table: | | | 12/31/2015 | | | | | | | | Accumulated gain/(loss) | | | | | | | | Cost | | | reflected in income | | | Fair value | | | Brazilian external debt bonds | | | 493 | | | | 13 | | | | 506 | | | Government securities – abroad | | | 143 | | | | (7 | ) | | | 136 | | | Total | | | 636 | | | | 6 | | | | 642 | |
| | | 12/31/2016 | | | | | Cost | | | Accumulated gain / (loss)
reflected in income | | | Fair value | | | Brazilian external debt bonds | | | 1,183 | | | | 8 | | | | 1,191 | | | Total | | | 1,183 | | | | 8 | | | | 1,191 | |
| | | 12/31/2014 | | | | | | | | Accumulated gain/(loss) | | | | | | | | Cost | | | reflected in income | | | Fair value | | | Brazilian external debt bonds | | | 601 | | | | 25 | | | | 626 | | | Government securities – abroad | | | 109 | | | | (2 | ) | | | 107 | | | Total | | | 710 | | | | 23 | | | | 733 | |
| | | 12/31/2015 | | | | | Cost | | | Accumulated gain/(loss)
reflected in income | | | Fair value | | | Brazilian external debt bonds | | | 493 | | | | 13 | | | | 506 | | | Government securities – abroad | | | 143 | | | | (7 | ) | | | 136 | | | Total | | | 636 | | | | 6 | | | | 642 | |
The cost and fair value by maturity of financial assets designated as fair value through profit or loss were as follows: | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | 12/31/2015 | | | | | Cost | | | Fair value | | | Cost | | | Fair value | | | Cost | | Fair value | | Cost | | Fair value | | | Current | | | - | | | | - | | | | 468 | | | | 493 | | | | 1,183 | | | | 1,191 | | | | - | | | | - | | | Up to one year | | | - | | | | - | | | | 468 | | | | 493 | | | | 1,183 | | | | 1,191 | | | | - | | | | - | | | Non-current | | | 636 | | | | 642 | | | | 242 | | | | 240 | | | | - | | | | - | | | | 636 | | | | 642 | | | From one to five years | | | 636 | | | | 642 | | | | 242 | | | | 240 | | | | | | | | - | | | | 636 | | | | 642 | |
Note 8 – Derivatives ITAÚ UNIBANCO HOLDING enters into derivative financial 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 instrumentfinancialinstrument 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. Forwards–Interest forward contracts are agreements to exchange payments on a specified future date, based onbasedon 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 ordateor 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 limitedalimited time a financial instrument including a flow of 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 toassociatedto 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 undergoes 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 by ITAÚ UNIBANCO HOLDING was R$ 7,75712,246 (R$ 3,8267,757 at 12/31/2014)2015) and was basically comprised of government securities. The following table shows the composition of derivatives by index: | | | Off-balance sheet | | | | | | | | | | | | | notional amount | | | Amortized cost | | | Gains / (losses) | | | Fair value | | | Off-balance sheet
notional amount | | Balance sheet account
receivable / (received)
(payable) paid | | Adjustment to market
value (in results /
stockholders’ equity) | | Fair value | | | | | 12/31/2015 | | | 12/31/2015 | | | 12/31/2015 | | | 12/31/2015 | | | 12/31/2016 | | 12/31/2016 | | 12/31/2016 | | 12/31/2016 | | | Futures contracts | | | 589,451 | | | | (71 | ) | | | 600 | | | | 529 | | | | 666,927 | | | | 61 | | | | 66 | | | | 127 | | | Purchase commitments | | | 189,037 | | | | 702 | | | | 624 | | | | 1,326 | | | | 200,752 | | | | (237 | ) | | | 86 | | | | (151 | ) | | Commodities | | | 316 | | | | - | | | | - | | | | - | | | | 147 | | | | - | | | | - | | | | - | | | Indices | | | 60,485 | | | | 702 | | | | (6 | ) | | | 696 | | | | 47,295 | | | | (213 | ) | | | 3 | | | | (210 | ) | | Interbank market | | | 88,411 | | | | (40 | ) | | | 1 | | | | (39 | ) | | | 109,649 | | | | 1 | | | | - | | | | 1 | | | Foreign currency | | | 34,228 | | | | 40 | | | | 629 | | | | 669 | | | | 31,141 | | | | (25 | ) | | | 83 | | | | 58 | | | Securities | | | 5,508 | | | | - | | | | - | | | | - | | | | 12,520 | | | | - | | | | - | | | | - | | | Other | | | 89 | | | | - | | | | - | | | | - | | | | Commitments to sell | | | 400,414 | | | | (773 | ) | | | (24 | ) | | | (797 | ) | | | 466,175 | | | | 298 | | | | (20 | ) | | | 278 | | | Commodities | | | 158 | | | | - | | | | - | | | | - | | | | 284 | | | | - | | | | - | | | | - | | | Indices | | | 73,466 | | | | (754 | ) | | | 8 | | | | (746 | ) | | | 169,930 | | | | 306 | | | | (1 | ) | | | 305 | | | Interbank market | | | 190,855 | | | | 60 | | | | - | | | | 60 | | | | 213,991 | | | | (11 | ) | | | 1 | | | | (10 | ) | | Foreign currency | | | 129,357 | | | | (79 | ) | | | (32 | ) | | | (111 | ) | | | 70,719 | | | | 3 | | | | (22 | ) | | | (19 | ) | | Fixed rate | | | | 941 | | | | - | | | | 2 | | | | 2 | | | Securities | | | 6,260 | | | | - | | | | - | | | | - | | | | 10,275 | | | | - | | | | - | | | | - | | | Other | | | 318 | | | | - | | | | - | | | | - | | | | 35 | | | | - | | | | - | | | | - | | | Swap contracts | | | | | | | (8,848 | ) | | | 1,664 | | | | (7,184 | ) | | | | | | | (4,446 | ) | | | 1,767 | | | | (2,679 | ) | | Asset position | | | 327,834 | | | | 4,764 | | | | 4,383 | | | | 9,147 | | | | 471,221 | | | | 6,602 | | | | 3,940 | | | | 10,542 | | | Commodities | | | 4 | | | | - | | | | - | | | | - | | | | 5 | | | | - | | | | - | | | | - | | | Indices | | | 134,426 | | | | (18 | ) | | | 1,050 | | | | 1,032 | | | | 196,505 | | | | 794 | | | | 456 | | | | 1,250 | | | Interbank market | | | 60,888 | | | | 426 | | | | 818 | | | | 1,244 | | | | 47,210 | | | | 1,897 | | | | 7 | | | | 1,904 | | | Foreign currency | | | 14,668 | | | | 3,068 | | | | 1,234 | | | | 4,302 | | | | 13,582 | | | | 1,136 | | | | (1 | ) | | | 1,135 | | | Floating rate | | | 11,491 | | | | 377 | | | | 143 | | | | 520 | | | | 38,262 | | | | (21 | ) | | | 1,471 | | | | 1,450 | | | Fixed rate | | | 106,316 | | | | 911 | | | | 1,138 | | | | 2,049 | | | | 175,609 | | | | 2,795 | | | | 2,007 | | | | 4,802 | | | Securities | | | 25 | | | | - | | | | - | | | | - | | | | 12 | | | | - | | | | - | | | | - | | | Other | | | 16 | | | | - | | | | - | | | | - | | | | 36 | | | | 1 | | | | - | | | | 1 | | | Liability position | | | 336,682 | | | | (13,612 | ) | | | (2,719 | ) | | | (16,331 | ) | | | 475,667 | | | | (11,048 | ) | | | (2,173 | ) | | | (13,221 | ) | | Commodities | | | 15 | | | | - | | | | - | | | | - | | | | 131 | | | | - | | | | - | | | | - | | | Indices | | | 100,826 | | | | (2,316 | ) | | | (311 | ) | | | (2,627 | ) | | | 147,560 | | | | (2,729 | ) | | | (2,115 | ) | | | (4,844 | ) | | Interbank market | | | 37,889 | | | | (233 | ) | | | (1,167 | ) | | | (1,400 | ) | | | 36,554 | | | | (328 | ) | | | (68 | ) | | | (396 | ) | | Foreign currency | | | 33,944 | | | | (6,084 | ) | | | (756 | ) | | | (6,840 | ) | | | 21,156 | | | | (915 | ) | | | 17 | | | | (898 | ) | | Floating rate | | | 11,195 | | | | (155 | ) | | | (560 | ) | | | (715 | ) | | | 36,438 | | | | (140 | ) | | | (1,204 | ) | | | (1,344 | ) | | Fixed rate | | | 152,593 | | | | (4,795 | ) | | | 70 | | | | (4,725 | ) | | | 233,780 | | | | (6,926 | ) | | | 1,195 | | | | (5,731 | ) | | Securities | | | 64 | | | | (29 | ) | | | 5 | | | | (24 | ) | | | 20 | | | | (10 | ) | | | 2 | | | | (8 | ) | | Other | | | 156 | | | | - | | | | - | | | | - | | | | 28 | | | | - | | | | - | | | | - | | | Option contracts | | | 285,405 | | | | 136 | | | | (336 | ) | | | (200 | ) | | | 583,527 | | | | (2,108 | ) | | | 2,348 | | | | 240 | | | Purchase commitments – long position | | | 61,880 | | | | 2,288 | | | | 1,661 | | | | 3,949 | | | | 163,069 | | | | 1,490 | | | | (625 | ) | | | 865 | | | Commodities | | | 481 | | | | 25 | | | | (11 | ) | | | 14 | | | | 404 | | | | 16 | | | | 1 | | | | 17 | | | Indices | | | 5,505 | | | | 66 | | | | (25 | ) | | | 41 | | | | 99,978 | | | | 111 | | | | (8 | ) | | | 103 | | | Interbank market | | | 5,116 | | | | 15 | | | | 6 | | | | 21 | | | | 1,247 | | | | 1 | | | | 20 | | | | 21 | | | Foreign currency | | | 44,802 | | | | 2,073 | | | | 1,474 | | | | 3,547 | | | | 45,106 | | | | 1,205 | | | | (835 | ) | | | 370 | | | Fixed rate | | | 6 | | | | - | | | | - | | | | - | | | | 11 | | | | - | | | | - | | | | - | | | Securities | | | 5,872 | | | | 101 | | | | 208 | | | | 309 | | | | 16,254 | | | | 150 | | | | 187 | | | | 337 | | | Other | | | 98 | | | | 8 | | | | 9 | | | | 17 | | | | 69 | | | | 7 | | | | 10 | | | | 17 | | | Commitments to sell – long position | | | 85,099 | | | | 1,481 | | | | 153 | | | | 1,634 | | | | 142,234 | | | | 1,713 | | | | 2,214 | | | | 3,927 | | | Commodities | | | 159 | | | | 9 | | | | 12 | | | | 21 | | | | 162 | | | | 4 | | | | 5 | | | | 9 | | | Indices | | | 27,824 | | | | 133 | | | | 16 | | | | 149 | | | | 92,088 | | | | 106 | | | | (9 | ) | | | 97 | | | Interbank market | | | 12,347 | | | | 16 | | | | (16 | ) | | | - | | | | 7,533 | | | | 6 | | | | (2 | ) | | | 4 | | | Foreign currency | | | 36,526 | | | | 1,024 | | | | (557 | ) | | | 467 | | | | 33,078 | | | | 1,348 | | | | 2,101 | | | | 3,449 | | | Fixed rate | | | 179 | | | | 8 | | | | (1 | ) | | | 7 | | | | 145 | | | | 6 | | | | (3 | ) | | | 3 | | | Securities | | | 8,015 | | | | 291 | | | | 698 | | | | 989 | | | | 9,211 | | | | 243 | | | | 122 | | | | 365 | | | Other | | | 49 | | | | - | | | | 1 | | | | 1 | | | | 17 | | | | - | | | | - | | | | - | | | Purchase commitments – short position | | | 58,929 | | | | (2,020 | ) | | | (2,141 | ) | | | (4,161 | ) | | | 129,392 | | | | (2,674 | ) | | | 1,721 | | | | (953 | ) | | Commodities | | | 249 | | | | (6 | ) | | | - | | | | (6 | ) | | | 239 | | | | (3 | ) | | | (8 | ) | | | (11 | ) | | Indices | | | 5,418 | | | | (66 | ) | | | 21 | | | | (45 | ) | | | 83,283 | | | | (161 | ) | | | 29 | | | | (132 | ) | | Interbank market | | | 5,146 | | | | (21 | ) | | | (30 | ) | | | (51 | ) | | | 95 | | | | - | | | | - | | | | - | | | Foreign currency | | | 42,750 | | | | (1,864 | ) | | | (1,902 | ) | | | (3,766 | ) | | | 39,900 | | | | (2,447 | ) | | | 1,875 | | | | (572 | ) | | Fixed rate | | | 112 | | | | - | | | | - | | | | - | | | | 94 | | | | (1 | ) | | | - | | | | (1 | ) | | Securities | | | 5,156 | | | | (55 | ) | | | (221 | ) | | | (276 | ) | | | 5,599 | | | | (54 | ) | | | (166 | ) | | | (220 | ) | | Other | | | 98 | | | | (8 | ) | | | (9 | ) | | | (17 | ) | | | 182 | | | | (8 | ) | | | (9 | ) | | | (17 | ) | | Commitments to sell – short position | | | 79,497 | | | | (1,613 | ) | | | (9 | ) | | | (1,622 | ) | | | 148,832 | | | | (2,637 | ) | | | (962 | ) | | | (3,599 | ) | | Commodities | | | 290 | | | | (22 | ) | | | (39 | ) | | | (61 | ) | | | 268 | | | | (17 | ) | | | (3 | ) | | | (20 | ) | | Indices | | | 30,277 | | | | (158 | ) | | | (23 | ) | | | (181 | ) | | | 104,268 | | | | (137 | ) | | | 51 | | | | (86 | ) | | Interbank market | | | 7,694 | | | | (10 | ) | | | 10 | | | | - | | | | 3,438 | | | | (10 | ) | | | 2 | | | | (8 | ) | | Foreign currency | | | 33,751 | | | | (1,147 | ) | | | 740 | | | | (407 | ) | | | 34,132 | | | | (2,258 | ) | | | (884 | ) | | | (3,142 | ) | | Fixed rate | | | 22 | | | | (1 | ) | | | - | | | | (1 | ) | | | 28 | | | | (1 | ) | | | - | | | | (1 | ) | | Securities | | | 7,414 | | | | (275 | ) | | | (696 | ) | | | (971 | ) | | | 6,681 | | | | (214 | ) | | | (128 | ) | | | (342 | ) | | Other | | | 49 | | | | - | | | | (1 | ) | | | (1 | ) | | | 17 | | | | - | | | | - | | | | - | |
| | | Off-balance sheet
notional amount | | | Balance sheet account
receivable / (received)
(payable) paid | | | Adjustment to market
value (in results /
stockholders’ equity) | | | Fair value | | | | | 12/31/2016 | | | 12/31/2016 | | | 12/31/2016 | | | 12/31/2016 | | | Forward operations (onshore) | | | 13,429 | | | | 1,446 | | | | (5 | ) | | | 1,441 | | | Purchases receivable | | | 1,186 | | | | 1,240 | | | | (5 | ) | | | 1,235 | | | Floating rate | | | 546 | | | | 545 | | | | 1 | | | | 546 | | | Fixed rate | | | 395 | | | | 450 | | | | - | | | | 450 | | | Securities | | | 245 | | | | 245 | | | | (6 | ) | | | 239 | | | Purchases payable | | | - | | | | (971 | ) | | | - | | | | (971 | ) | | Floating rate | | | - | | | | (545 | ) | | | - | | | | (545 | ) | | Fixed rate | | | - | | | | (421 | ) | | | - | | | | (421 | ) | | Securities | | | - | | | | (5 | ) | | | - | | | | (5 | ) | | Sales receivable | | | 8,139 | | | | 3,734 | | | | 2 | | | | 3,736 | | | Interbank market | | | 4,396 | | | | 8 | | | | - | | | | 8 | | | Floating rate | | | 300 | | | | 300 | | | | - | | | | 300 | | | Fixed rate | | | 2,250 | | | | 2,257 | | | | - | | | | 2,257 | | | Securities | | | 1,193 | | | | 1,169 | | | | 2 | | | | 1,171 | | | Sales deliverable | | | 4,104 | | | | (2,557 | ) | | | (2 | ) | | | (2,559 | ) | | Interbank market | | | 4,104 | | | | - | | | | (2 | ) | | | (2 | ) | | Floating rate | | | - | | | | (300 | ) | | | - | | | | (300 | ) | | Fixed rate | | | - | | | | (2,257 | ) | | | - | | | | (2,257 | ) | | Credit derivatives | | | 12,100 | | | | - | | | | 34 | | | | 34 | | | Asset position | | | 5,306 | | | | 190 | | | | (9 | ) | | | 181 | | | Foreign currency | | | 3,876 | | | | 188 | | | | (56 | ) | | | 132 | | | Fixed rate | | | 114 | | | | - | | | | 2 | | | | 2 | | | Securities | | | 1,161 | | | | 2 | | | | 41 | | | | 43 | | | Other | | | 155 | | | | - | | | | 4 | | | | 4 | | | Liability position | | | 6,794 | | | | (190 | ) | | | 43 | | | | (147 | ) | | Foreign currency | | | 5,487 | | | | (189 | ) | | | 70 | | | | (119 | ) | | Fixed rate | | | 33 | | | | (1 | ) | | | - | | | | (1 | ) | | Securities | | | 974 | | | | - | | | | (21 | ) | | | (21 | ) | | Other | | | 300 | | | | - | | | | (6 | ) | | | (6 | ) | | Forwards operations (offshore) | | | 250,775 | | | | 472 | | | | 162 | | | | 634 | | | Asset position | | | 134,049 | | | | 3,283 | | | | 176 | | | | 3,459 | | | Commodities | | | 206 | | | | 18 | | | | 1 | | | | 19 | | | Indices | | | 148 | | | | 9 | | | | - | | | | 9 | | | Foreign currency | | | 133,693 | | | | 3,256 | | | | 175 | | | | 3,431 | | | Securities | | | 2 | | | | - | | | | - | | | | - | | | Liability position | | | 116,726 | | | | (2,811 | ) | | | (14 | ) | | | (2,825 | ) | | Commodities | | | 244 | | | | (27 | ) | | | 2 | | | | (25 | ) | | Indices | | | 27 | | | | - | | | | - | | | | - | | | Foreign currency | | | 116,437 | | | | (2,784 | ) | | | (16 | ) | | | (2,800 | ) | | Securities | | | 18 | | | | - | | | | - | | | | - | | | Check of swap | | | 1,493 | | | | (326 | ) | | | 61 | | | | (265 | ) | | Asset position - Foreign currency | | | 923 | | | | 18 | | | | 70 | | | | 88 | | | Liability position - Interbank market | | | 570 | | | | (344 | ) | | | (9 | ) | | | (353 | ) | | Other derivative financial instruments | | | 4,217 | | | | 45 | | | | (44 | ) | | | 1 | | | Asset position | | | 2,569 | | | | 48 | | | | 23 | | | | 71 | | | Foreign currency | | | 148 | | | | (3 | ) | | | 8 | | | | 5 | | | Fixed rate | | | 1,174 | | | | 48 | | | | (5 | ) | | | 43 | | | Securities | | | 940 | | | | 3 | | | | 14 | | | | 17 | | | Other | | | 307 | | | | - | | | | 6 | | | | 6 | | | Liability position | | | 1,648 | | | | (3 | ) | | | (67 | ) | | | (70 | ) | | Commodities | | | 2 | | | | - | | | | - | | | | - | | | Foreign currency | | | 84 | | | | - | | | | (32 | ) | | | (32 | ) | | Fixed rate | | | 81 | | | | (1 | ) | | | (1 | ) | | | (2 | ) | | Securities | | | 1,317 | | | | (2 | ) | | | (30 | ) | | | (32 | ) | | Other | | | 164 | | | | - | | | | (4 | ) | | | (4 | ) | | | | | Asset | | | | 18,379 | | | | 5,852 | | | | 24,231 | | | | | | Liability | | | | (23,235 | ) | | | (1,463 | ) | | | (24,698 | ) | | | | | Total | | | | (4,856 | ) | | | 4,389 | | | | (467 | ) |
| | | Off-balance sheet | | | | | | | | | | | | | | notional amount | | | Amortized cost | | | Gains / (losses) | | | Fair value | | | | | 12/31/2015 | | | 12/31/2015 | | | 12/31/2015 | | | 12/31/2015 | | | Forward operations (onshore) | | | 40,227 | | | | 2,253 | | | | 80 | | | | 2,333 | | | Purchases receivable | | | 516 | | | | 636 | | | | - | | | | 636 | | | Foreign currency | | | - | | | | 1 | | | | - | | | | 1 | | | Floating rate | | | 354 | | | | 353 | | | | - | | | | 353 | | | Fixed rate | | | 154 | | | | 273 | | | | - | | | | 273 | | | Securities | | | 8 | | | | 9 | | | | - | | | | 9 | | | Purchases payable | | | - | | | | (508 | ) | | | - | | | | (508 | ) | | Floating rate | | | - | | | | (353 | ) | | | - | | | | (353 | ) | | Fixed rate | | | - | | | | (154 | ) | | | - | | | | (154 | ) | | Securities | | | - | | | | (1 | ) | | | - | | | | (1 | ) | | Sales receivable | | | 23,208 | | | | 2,448 | | | | 82 | | | | 2,530 | | | Interbank market | | | 20,697 | | | | - | | | | 73 | | | | 73 | | | Floating rate | | | 164 | | | | 164 | | | | - | | | | 164 | | | Fixed rate | | | 153 | | | | 157 | | | | - | | | | 157 | | | Securities | | | 2,194 | | | | 2,127 | | | | 9 | | | | 2,136 | | | Sales deliverable | | | 16,503 | | | | (323 | ) | | | (2 | ) | | | (325 | ) | | Interbank market | | | 16,503 | | | | - | | | | (3 | ) | | | (3 | ) | | Foreign currency | | | - | | | | (2 | ) | | | - | | | | (2 | ) | | Floating rate | | | - | | | | (164 | ) | | | 1 | | | | (163 | ) | | Fixed rate | | | - | | | | (157 | ) | | | - | | | | (157 | ) | | Credit derivatives | | | 12,662 | | | | 58 | | | | (319 | ) | | | (261 | ) | | Asset position | | | 4,605 | | | | 353 | | | | 261 | | | | 614 | | | Foreign currency | | | 3,625 | | | | 353 | | | | 212 | | | | 565 | | | Securities | | | 788 | | | | - | | | | 45 | | | | 45 | | | Other | | | 192 | | | | - | | | | 4 | | | | 4 | | | Liability position | | | 8,057 | | | | (295 | ) | | | (580 | ) | | | (875 | ) | | Foreign currency | | | 4,360 | | | | (290 | ) | | | (267 | ) | | | (557 | ) | | Fixed rate | | | 547 | | | | (6 | ) | | | (3 | ) | | | (9 | ) | | Securities | | | 2,763 | | | | 1 | | | | (275 | ) | | | (274 | ) | | Other | | | 387 | | | | - | | | | (35 | ) | | | (35 | ) | | Forwards operations (offshore) | | | 148,477 | | | | 203 | | | | 85 | | | | 288 | | | Asset position | | | 71,227 | | | | 3,285 | | | | 145 | | | | 3,430 | | | Commodities | | | 419 | | | | 47 | | | | - | | | | 47 | | | Indices | | | 22 | | | | 1 | | | | - | | | | 1 | | | Foreign currency | | | 70,786 | | | | 3,237 | | | | 145 | | | | 3,382 | | | Liability position | | | 77,250 | | | | (3,082 | ) | | | (60 | ) | | | (3,142 | ) | | Commodities | | | 152 | | | | (13 | ) | | | 2 | | | | (11 | ) | | Indices | | | 77 | | | | (3 | ) | | | - | | | | (3 | ) | | Foreign currency | | | 77,020 | | | | (3,066 | ) | | | (62 | ) | | | (3,128 | ) | | Securities | | | 1 | | | | - | | | | - | | | | - | | | Check of swap | | | 2,817 | | | | (330 | ) | | | 140 | | | | (190 | ) | | Asset position | | | 1,697 | | | | 199 | | | | 156 | | | | 355 | | | Interbank market | | | 591 | | | | - | | | | - | | | | - | | | Foreign currency | | | 1,106 | | | | 199 | | | | 156 | | | | 355 | | | Liability position - Foreign currency | | | 1,120 | | | | (529 | ) | | | (16 | ) | | | (545 | ) | | Other derivative financial instruments | | | 16,651 | | | | 117 | | | | 252 | | | | 369 | | | Asset position | | | 15,508 | | | | 2,964 | | | | 967 | | | | 3,931 | | | Foreign currency | | | 10,468 | | | | 2,883 | | | | 588 | | | | 3,471 | | | Fixed rate | | | 1,464 | | | | 71 | | | | 63 | | | | 134 | | | Securities | | | 3,113 | | | | 10 | | | | 279 | | | | 289 | | | Other | | | 463 | | | | - | | | | 37 | | | | 37 | | | Liability position | | | 1,143 | | | | (2,847 | ) | | | (715 | ) | | | (3,562 | ) | | Foreign currency | | | 283 | | | | (2,847 | ) | | | (687 | ) | | | (3,534 | ) | | Securities | | | 743 | | | | - | | | | (25 | ) | | | (25 | ) | | Other | | | 117 | | | | - | | | | (3 | ) | | | (3 | ) | | | | | Asset | | | | 18,347 | | | | 8,408 | | | | 26,755 | | | | | | Liability | | | | (24,829 | ) | | | (6,242 | ) | | | (31,071 | ) | | | | | Total | | | | (6,482 | ) | | | 2,166 | | | | (4,316 | ) |
| Derivative contracts mature as follows (in days): | | Off-balance sheet – notional amount | | 0 - 30 | | | 31 - 180 | | | 181 - 365 | | | Over 365 | | | 12/31/2016 | | | Futures contractsK | | | 184,309 | | | | 221,487 | | | | 50,749 | | | | 210,382 | | | | 666,927 | | | Swaps contracts - difference payable | | | 17,588 | | | | 67,405 | | | | 50,000 | | | | 329,626 | | | | 464,619 | | | Options | | | 191,242 | | | | 191,998 | | | | 175,220 | | | | 25,067 | | | | 583,527 | | | Forwards (onshore) | | | 9,197 | | | | 4,230 | | | | 2 | | | | - | | | | 13,429 | | | Credit derivatives | | | - | | | | 1,233 | | | | 1,098 | | | | 9,769 | | | | 12,100 | | | Forwards (offshore) | | | 63,764 | | | | 124,695 | | | | 42,700 | | | | 19,616 | | | | 250,775 | | | Check of swap | | | - | | | | 180 | | | | 913 | | | | 400 | | | | 1,493 | | | Other derivative financial instruments | | | 32 | | | | 579 | | | | 418 | | | | 3,188 | | | | 4,217 | |
| Derivative contracts mature as follows (in days): | | Off-balance sheet – notional amount | | 0 - 30 | | | 31 - 180 | | | 181 - 365 | | | Over 365 | | | 12/31/2015 | | | Futures contracts | | | 152,087 | | | | 138,545 | | | | 74,365 | | | | 224,454 | | | | 589,451 | | | Swaps contracts - difference payable | | | 10,654 | | | | 39,702 | | | | 46,157 | | | | 226,557 | | | | 323,070 | | | Options | | | 93,587 | | | | 123,391 | | | | 40,860 | | | | 27,567 | | | | 285,405 | | | Forwards (onshore) | | | 6,591 | | | | 22,349 | | | | 10,118 | | | | 1,169 | | | | 40,227 | | | Credit derivatives | | | - | | | | 1,436 | | | | 428 | | | | 10,798 | | | | 12,662 | | | Forwards (offshore) | | | 43,651 | | | | 70,688 | | | | 23,365 | | | | 10,773 | | | | 148,477 | | | Check of swap | | | - | | | | - | | | | - | | | | 1,697 | | | | 1,697 | | | Other derivative financial instruments | | | 1,550 | | | | 3,254 | | | | 502 | | | | 11,345 | | | | 16,651 | |
The following table shows the composition of derivatives by index: | | | Off-balance sheet | | | | | | | | | | | | | notional amount | | | Amortized cost | | | Gains / (losses) | | | Fair value | | | Off-balance sheet
notional amount | | | Balance sheet account
receivable / (received)
(payable) paid | | | Adjustment to market
value (in results /
stockholders’ equity) | | | Fair value | | | | | 12/31/2014 | | | 12/31/2014 | | | 12/31/2014 | | | 12/31/2014 | | | 12/31/2015 | | | 12/31/2015 | | | 12/31/2015 | | | 12/31/2015 | | | Futures contracts | | | 331,022 | | | | (375 | ) | | | 21 | | | | (354 | ) | | | 589,451 | | | | (71 | ) | | | 600 | | | | 529 | | | Purchase commitments | | | 97,931 | | | | (694 | ) | | | 48 | | | | (646 | ) | | | 189,037 | | | | 702 | | | | 624 | | | | 1,326 | | | Commodities | | | 157 | | | | - | | | | - | | | | - | | | | 316 | | | | - | | | | - | | | | - | | | Indices | | | 43,126 | | | | (624 | ) | | | (9 | ) | | | (633 | ) | | | 60,485 | | | | 702 | | | | (6 | ) | | | 696 | | | Interbank market | | | 29,994 | | | | 49 | | | | - | | | | 49 | | | | 88,411 | | | | (40 | ) | | | 1 | | | | (39 | ) | | Foreign currency | | | 17,797 | | | | (119 | ) | | | 57 | | | | (62 | ) | | | 34,228 | | | | 40 | | | | 629 | | | | 669 | | | Fixed rate | | | 41 | | | | - | | | | - | | | | - | | | | Securities | | | 6,811 | | | | - | | | | - | | | | - | | | | 5,508 | | | | - | | | | - | | | | - | | | Other | | | 5 | | | | - | | | | - | | | | - | | | | 89 | | | | - | | | | - | | | | - | | | Commitments to sell | | | 233,091 | | | | 319 | | | | (27 | ) | | | 292 | | | | 400,414 | | | | (773 | ) | | | (24 | ) | | | (797 | ) | | Commodities | | | 341 | | | | - | | | | - | | | | - | | | | 158 | | | | - | | | | - | | | | - | | | Indices | | | 19,289 | | | | 311 | | | | 5 | | | | 316 | | | | 73,466 | | | | (754 | ) | | | 8 | | | | (746 | ) | | Interbank market | | | 82,595 | | | | (117 | ) | | | 1 | | | | (116 | ) | | | 190,855 | | | | 60 | | | | - | | | | 60 | | | Foreign currency | | | 123,068 | | | | 125 | | | | (33 | ) | | | 92 | | | | 129,357 | | | | (79 | ) | | | (32 | ) | | | (111 | ) | | Securities | | | 7,798 | | | | - | | | | - | | | | - | | | | 6,260 | | | | - | | | | - | | | | - | | | Other | | | | 318 | | | | - | | | | - | | | | - | | | Swap contracts | | | | | | | (5,132 | ) | | | 414 | | | | (4,718 | ) | | | | | | | (8,848 | ) | | | 1,664 | | | | (7,184 | ) | | Asset position | | | 270,219 | | | | 4,011 | | | | 805 | | | | 4,816 | | | | 327,834 | | | | 4,764 | | | | 4,383 | | | | 9,147 | | | Commodities | | | | 4 | | | | - | | | | - | | | | - | | | Indices | | | 103,921 | | | | 588 | | | | 137 | | | | 725 | | | | 134,426 | | | | (18 | ) | | | 1,050 | | | | 1,032 | | | Interbank market | | | 68,534 | | | | 345 | | | | 456 | | | | 801 | | | | 60,888 | | | | 426 | | | | 818 | | | | 1,244 | | | Foreign currency | | | 12,057 | | | | 1,323 | | | | 70 | | | | 1,393 | | | | 14,668 | | | | 3,068 | | | | 1,234 | | | | 4,302 | | | Floating rate | | | 3,763 | | | | 115 | | | | 77 | | | | 192 | | | | 11,491 | | | | 377 | | | | 143 | | | | 520 | | | Fixed rate | | | 81,917 | | | | 1,640 | | | | 65 | | | | 1,705 | | | | 106,316 | | | | 911 | | | | 1,138 | | | | 2,049 | | | Securities | | | 16 | | | | - | | | | - | | | | - | | | | 25 | | | | - | | | | - | | | | - | | | Other | | | 11 | | | | - | | | | - | | | | - | | | | 16 | | | | - | | | | - | | | | - | | | Liability position | | | 275,351 | | | | (9,143 | ) | | | (391 | ) | | | (9,534 | ) | | | 336,682 | | | | (13,612 | ) | | | (2,719 | ) | | | (16,331 | ) | | Commodities | | | 25 | | | | - | | | | - | | | | - | | | | 15 | | | | - | | | | - | | | | - | | | Indices | | | 72,197 | | | | (2,510 | ) | | | 39 | | | | (2,471 | ) | | | 100,826 | | | | (2,316 | ) | | | (311 | ) | | | (2,627 | ) | | Interbank market | | | 51,284 | | | | (71 | ) | | | (601 | ) | | | (672 | ) | | | 37,889 | | | | (233 | ) | | | (1,167 | ) | | | (1,400 | ) | | Foreign currency | | | 24,796 | | | | (2,359 | ) | | | 155 | | | | (2,204 | ) | | | 33,944 | | | | (6,084 | ) | | | (756 | ) | | | (6,840 | ) | | Floating rate | | | 5,665 | | | | (74 | ) | | | (129 | ) | | | (203 | ) | | | 11,195 | | | | (155 | ) | | | (560 | ) | | | (715 | ) | | Fixed rate | | | 121,048 | | | | (4,065 | ) | | | 131 | | | | (3,934 | ) | | | 152,593 | | | | (4,795 | ) | | | 70 | | | | (4,725 | ) | | Securities | | | 88 | | | | (41 | ) | | | 12 | | | | (29 | ) | | | 64 | | | | (29 | ) | | | 5 | | | | (24 | ) | | Other | | | 248 | | | | (23 | ) | | | 2 | | | | (21 | ) | | | 156 | | | | - | | | | - | | | | - | | | Option contracts | | | 503,836 | | | | (93 | ) | | | (92 | ) | | | (185 | ) | | | 285,405 | | | | 136 | | | | (336 | ) | | | (200 | ) | | Purchase commitments – long position | | | 88,641 | | | | 1,120 | | | | 853 | | | | 1,973 | | | | 61,880 | | | | 2,288 | | | | 1,661 | | | | 3,949 | | | Commodities | | | 614 | | | | 17 | | | | (2 | ) | | | 15 | | | | 481 | | | | 25 | | | | (11 | ) | | | 14 | | | Indices | | | 35,438 | | | | 102 | | | | (22 | ) | | | 80 | | | | 5,505 | | | | 66 | | | | (25 | ) | | | 41 | | | Interbank market | | | 12,430 | | | | 48 | | | | 34 | | | | 82 | | | | 5,116 | | | | 15 | | | | 6 | | | | 21 | | | Foreign currency | | | 36,918 | | | | 898 | | | | 566 | | | | 1,464 | | | | 44,802 | | | | 2,073 | | | | 1,474 | | | | 3,547 | | | Floating rate | | | 8 | | | | - | | | | - | | | | - | | | | Fixed rate | | | 2 | | | | - | | | | - | | | | - | | | | 6 | | | | - | | | | - | | | | - | | | Securities | | | 3,153 | | | | 49 | | | | 268 | | | | 317 | | | | 5,872 | | | | 101 | | | | 208 | | | | 309 | | | Other | | | 78 | | | | 6 | | | | 9 | | | | 15 | | | | 98 | | | | 8 | | | | 9 | | | | 17 | | | Commitments to sell – long position | | | 142,059 | | | | 1,049 | | | | (150 | ) | | | 899 | | | | 85,099 | | | | 1,481 | | | | 153 | | | | 1,634 | | | Commodities | | | 176 | | | | 6 | | | | 7 | | | | 13 | | | | 159 | | | | 9 | | | | 12 | | | | 21 | | | Indices | | | 77,500 | | | | 163 | | | | (1 | ) | | | 162 | | | | 27,824 | | | | 133 | | | | 16 | | | | 149 | | | Interbank market | | | 23,359 | | | | 44 | | | | (42 | ) | | | 2 | | | | 12,347 | | | | 16 | | | | (16 | ) | | | - | | | Foreign currency | | | 30,936 | | | | 625 | | | | (419 | ) | | | 206 | | | | 36,526 | | | | 1,024 | | | | (557 | ) | | | 467 | | | Floating rate | | | 163 | | | | 1 | | | | (1 | ) | | | - | | | | Fixed rate | | | 114 | | | | 5 | | | | - | | | | 5 | | | | 179 | | | | 8 | | | | (1 | ) | | | 7 | | | Securities | | | 9,778 | | | | 205 | | | | 305 | | | | 510 | | | | 8,015 | | | | 291 | | | | 698 | | | | 989 | | | Other | | | 33 | | | | - | | | | 1 | | | | 1 | | | | 49 | | | | - | | | | 1 | | | | 1 | | | Purchase commitments – short position | | | 88,218 | | | | (1,136 | ) | | | (910 | ) | | | (2,046 | ) | | | 58,929 | | | | (2,020 | ) | | | (2,141 | ) | | | (4,161 | ) | | Commodities | | | 433 | | | | (8 | ) | | | (1 | ) | | | (9 | ) | | | 249 | | | | (6 | ) | | | - | | | | (6 | ) | | Indices | | | 38,388 | | | | (73 | ) | | | (15 | ) | | | (88 | ) | | | 5,418 | | | | (66 | ) | | | 21 | | | | (45 | ) | | Interbank market | | | 7,380 | | | | (33 | ) | | | (31 | ) | | | (64 | ) | | | 5,146 | | | | (21 | ) | | | (30 | ) | | | (51 | ) | | Foreign currency | | | 34,500 | | | | (990 | ) | | | (579 | ) | | | (1,569 | ) | | | 42,750 | | | | (1,864 | ) | | | (1,902 | ) | | | (3,766 | ) | | Fixed rate | | | 68 | | | | - | | | | - | | | | - | | | | 112 | | | | - | | | | - | | | | - | | | Securities | | | 7,371 | | | | (26 | ) | | | (275 | ) | | | (301 | ) | | | 5,156 | | | | (55 | ) | | | (221 | ) | | | (276 | ) | | Other | | | 78 | | | | (6 | ) | | | (9 | ) | | | (15 | ) | | | 98 | | | | (8 | ) | | | (9 | ) | | | (17 | ) | | Commitments to sell – short position | | | 184,918 | | | | (1,126 | ) | | | 115 | | | | (1,011 | ) | | | 79,497 | | | | (1,613 | ) | | | (9 | ) | | | (1,622 | ) | | Commodities | | | 328 | | | | (18 | ) | | | (25 | ) | | | (43 | ) | | | 290 | | | | (22 | ) | | | (39 | ) | | | (61 | ) | | Indices | | | 123,694 | | | | (92 | ) | | | (90 | ) | | | (182 | ) | | | 30,277 | | | | (158 | ) | | | (23 | ) | | | (181 | ) | | Interbank market | | | 20,849 | | | | (24 | ) | | | 23 | | | | (1 | ) | | | 7,694 | | | | (10 | ) | | | 10 | | | | - | | | Foreign currency | | | 30,937 | | | | (801 | ) | | | 506 | | | | (295 | ) | | | 33,751 | | | | (1,147 | ) | | | 740 | | | | (407 | ) | | Fixed rate | | | 3 | | | | - | | | | - | | | | - | | | | 22 | | | | (1 | ) | | | - | | | | (1 | ) | | Securities | | | 9,074 | | | | (191 | ) | | | (298 | ) | | | (489 | ) | | | 7,414 | | | | (275 | ) | | | (696 | ) | | | (971 | ) | | Other | | | 33 | | | | - | | | | (1 | ) | | | (1 | ) | | | 49 | | | | - | | | | (1 | ) | | | (1 | ) |
| | | Off-balance sheet
notional amount | | | Balance sheet account
receivable / (received)
(payable) paid | | | Adjustment to market
value (in results /
stockholders equity) | | | Fair value | | | | | 12/31/2015 | | | 12/31/2015 | | | 12/31/2015 | | | 12/31/2015 | | | Forwards operations (onshore) | | | 40,227 | | | | 2,253 | | | | 80 | | | | 2,333 | | | Purchases receivable | | | 516 | | | | 636 | | | | - | | | | 636 | | | Foreign currency | | | - | | | | 1 | | | | - | | | | 1 | | | Floating rate | | | 354 | | | | 353 | | | | - | | | | 353 | | | Fixed rate | | | 154 | | | | 273 | | | | - | | | | 273 | | | Securities | | | 8 | | | | 9 | | | | - | | | | 9 | | | Purchases payable | | | - | | | | (508 | ) | | | - | | | | (508 | ) | | Floating rate | | | - | | | | (353 | ) | | | - | | | | (353 | ) | | Fixed rate | | | - | | | | (154 | ) | | | - | | | | (154 | ) | | Securities | | | - | | | | (1 | ) | | | - | | | | (1 | ) | | Sales receivable | | | 23,208 | | | | 2,448 | | | | 82 | | | | 2,530 | | | Interbank market | | | 20,697 | | | | - | | | | 73 | | | | 73 | | | Floating rate | | | 164 | | | | 164 | | | | - | | | | 164 | | | Fixed rate | | | 153 | | | | 157 | | | | - | | | | 157 | | | Securities | | | 2,194 | | | | 2,127 | | | | 9 | | | | 2,136 | | | Sales deliverable | | | 16,503 | | | | (323 | ) | | | (2 | ) | | | (325 | ) | | Interbank market | | | 16,503 | | | | - | | | | (3 | ) | | | (3 | ) | | Foreign currency | | | - | | | | (2 | ) | | | - | | | | (2 | ) | | Floating rate | | | - | | | | (164 | ) | | | 1 | | | | (163 | ) | | Fixed rate | | | - | | | | (157 | ) | | | - | | | | (157 | ) | | Credit derivatives | | | 12,662 | | | | 58 | | | | (319 | ) | | | (261 | ) | | Asset position | | | 4,605 | | | | 353 | | | | 261 | | | | 614 | | | Foreign currency | | | 3,625 | | | | 353 | | | | 212 | | | | 565 | | | Securities | | | 788 | | | | - | | | | 45 | | | | 45 | | | Other | | | 192 | | | | - | | | | 4 | | | | 4 | | | Liability position | | | 8,057 | | | | (295 | ) | | | (580 | ) | | | (875 | ) | | Foreign currency | | | 4,360 | | | | (290 | ) | | | (267 | ) | | | (557 | ) | | Fixed rate | | | 547 | | | | (6 | ) | | | (3 | ) | | | (9 | ) | | Securities | | | 2,763 | | | | 1 | | | | (275 | ) | | | (274 | ) | | Other | | | 387 | | | | - | | | | (35 | ) | | | (35 | ) | | Forwards operations (offshore) | | | 148,477 | | | | 203 | | | | 85 | | | | 288 | | | Asset position | | | 71,227 | | | | 3,285 | | | | 145 | | | | 3,430 | | | Commodities | | | 419 | | | | 47 | | | | - | | | | 47 | | | Indices | | | 22 | | | | 1 | | | | - | | | | 1 | | | Foreign currency | | | 70,786 | | | | 3,237 | | | | 145 | | | | 3,382 | | | Liability position | | | 77,250 | | | | (3,082 | ) | | | (60 | ) | | | (3,142 | ) | | Commodities | | | 152 | | | | (13 | ) | | | 2 | | | | (11 | ) | | Indices | | | 77 | | | | (3 | ) | | | - | | | | (3 | ) | | Foreign currency | | | 77,020 | | | | (3,066 | ) | | | (62 | ) | | | (3,128 | ) | | Securities | | | 1 | | | | - | | | | - | | | | - | | | Check of swap | | | 1,676 | | | | (330 | ) | | | 140 | | | | (190 | ) | | Asset position - Foreign currency | | | 1,106 | | | | 199 | | | | 156 | | | | 355 | | | Liability position - Interbank market | | | 570 | | | | (529 | ) | | | (16 | ) | | | (545 | ) | | Other derivative financial instruments | | | 16,651 | | | | 117 | | | | 252 | | | | 369 | | | Asset position | | | 15,508 | | | | 2,964 | | | | 967 | | | | 3,931 | | | Foreign currency | | | 10,468 | | | | 2,883 | | | | 588 | | | | 3,471 | | | Fixed rate | | | 1,464 | | | | 71 | | | | 63 | | | | 134 | | | Securities | | | 3,113 | | | | 10 | | | | 279 | | | | 289 | | | Other | | | 463 | | | | - | | | | 37 | | | | 37 | | | Liability position | | | 1,143 | | | | (2,847 | ) | | | (715 | ) | | | (3,562 | ) | | Foreign currency | | | 283 | | | | (2,847 | ) | | | (687 | ) | | | (3,534 | ) | | Securities | | | 743 | | | | - | | | | (25 | ) | | | (25 | ) | | Other | | | 117 | | | | - | | | | (3 | ) | | | (3 | ) | | | | | Asset | | | | 18,347 | | | | 8,408 | | | | 26,755 | | | | | | Liability | | | | (24,829 | ) | | | (6,242 | ) | | | (31,071 | ) | | | | | Total | | | | (6,482 | ) | | | 2,166 | | | | (4,316 | ) |
| | | Off-balance sheet | | | | | | | | | | | | | | notional amount | | | Amortized cost | | | Gains / (losses) | | | Fair value | | | | | 12/31/2014 | | | 12/31/2014 | | | 12/31/2014 | | | 12/31/2014 | | | Forwards operations (onshore) | | | 7,939 | | | | 1,723 | | | | (11 | ) | | | 1,712 | | | Purchases receivable | | | 162 | | | | 163 | | | | 1 | | | | 164 | | | Floating rate | | | 66 | | | | 65 | | | | 1 | | | | 66 | | | Fixed rate | | | 94 | | | | 96 | | | | - | | | | 96 | | | Securities | | | 2 | | | | 2 | | | | - | | | | 2 | | | Purchases payable | | | - | | | | (162 | ) | | | - | | | | (162 | ) | | Floating rate | | | - | | | | (65 | ) | | | - | | | | (65 | ) | | Fixed rate | | | - | | | | (95 | ) | | | - | | | | (95 | ) | | Securities | | | - | | | | (2 | ) | | | - | | | | (2 | ) | | Sales receivable | | | 2,201 | | | | 2,231 | | | | (1 | ) | | | 2,230 | | | Floating rate | | | 122 | | | | 124 | | | | - | | | | 124 | | | Fixed rate | | | 386 | | | | 462 | | | | - | | | | 462 | | | Securities | | | 1,693 | | | | 1,645 | | | | (1 | ) | | | 1,644 | | | Sales deliverable | | | 5,576 | | | | (509 | ) | | | (11 | ) | | | (520 | ) | | Interbank market | | | 5,576 | | | | - | | | | (8 | ) | | | (8 | ) | | Floating rate | | | - | | | | (124 | ) | | | (2 | ) | | | (126 | ) | | Fixed rate | | | - | | | | (385 | ) | | | (1 | ) | | | (386 | ) | | Credit derivatives | | | 11,161 | | | | 25 | | | | (82 | ) | | | (57 | ) | | Asset position | | | 6,804 | | | | 178 | | | | (56 | ) | | | 122 | | | Foreign currency | | | 1,806 | | | | 118 | | | | (68 | ) | | | 50 | | | Fixed rate | | | 3,932 | | | | 59 | | | | (28 | ) | | | 31 | | | Securities | | | 826 | | | | 1 | | | | 34 | | | | 35 | | | Other | | | 240 | | | | - | | | | 6 | | | | 6 | | | Liability position | | | 4,357 | | | | (153 | ) | | | (26 | ) | | | (179 | ) | | Foreign currency | | | 1,790 | | | | (110 | ) | | | 57 | | | | (53 | ) | | Fixed rate | | | 563 | | | | (31 | ) | | | 19 | | | | (12 | ) | | Securities | | | 1,935 | | | | (12 | ) | | | (101 | ) | | | (113 | ) | | Other | | | 69 | | | | - | | | | (1 | ) | | | (1 | ) | | Forwards operations (offshore) | | | 101,874 | | | | 336 | | | | 77 | | | | 413 | | | Asset position | | | 54,432 | | | | 2,078 | | | | 28 | | | | 2,106 | | | Commodities | | | 182 | | | | 14 | | | | 1 | | | | 15 | | | Foreign currency | | | 54,212 | | | | 2,061 | | | | 27 | | | | 2,088 | | | Securities | | | 38 | | | | 3 | | | | - | | | | 3 | | | Liability position | | | 47,442 | | | | (1,742 | ) | | | 49 | | | | (1,693 | ) | | Commodities | | | 152 | | | | (24 | ) | | | 6 | | | | (18 | ) | | Foreign currency | | | 47,290 | | | | (1,717 | ) | | | 43 | | | | (1,674 | ) | | Securities | | | - | | | | (1 | ) | | | - | | | | (1 | ) | | Check of swap | | | 2,537 | | | | (209 | ) | | | 73 | | | | (136 | ) | | Asset position | | | 1,618 | | | | - | | | | 93 | | | | 93 | | | Interbank market | | | 710 | | | | - | | | | - | | | | - | | | Foreign currency | | | 908 | | | | - | | | | 93 | | | | 93 | | | Liability position - Foreign currency | | | 919 | | | | (209 | ) | | | (20 | ) | | | (229 | ) | | Other derivative financial instruments | | | 11,276 | | | | 109 | | | | 22 | | | | 131 | | | Asset position | | | 6,817 | | | | 1,504 | | | | 249 | | | | 1,753 | | | Foreign currency | | | 2,647 | | | | 1,399 | | | | 183 | | | | 1,582 | | | Fixed rate | | | 628 | | | | 42 | | | | (26 | ) | | | 16 | | | Securities | | | 3,454 | | | | 63 | | | | 91 | | | | 154 | | | Other | | | 88 | | | | - | | | | 1 | | | | 1 | | | Liability position | | | 4,459 | | | | (1,395 | ) | | | (227 | ) | | | (1,622 | ) | | Foreign currency | | | 3,474 | | | | (1,395 | ) | | | (209 | ) | | | (1,604 | ) | | Securities | | | 766 | | | | - | | | | (14 | ) | | | (14 | ) | | Other | | | 219 | | | | - | | | | (4 | ) | | | (4 | ) | | | | | Asset | | | | 12,334 | | | | 1,822 | | | | 14,156 | | | | | | Liability | | | | (15,950 | ) | | | (1,400 | ) | | | (17,350 | ) | | | | | Total | | | | (3,616 | ) | | | 422 | | | | (3,194 | ) |
| Derivative contracts mature as follows (in days): | | | Off-balance sheet - notional amount | | 0 - 30 | | | 31 - 180 | | | 181 - 365 | | | Over 365 | | | 12/31/2015 | | | Futures contracts | | | 152,087 | | | | 138,545 | | | | 74,365 | | | | 224,454 | | | | 589,451 | | | Swaps contracts - difference payable | | | 10,654 | | | | 39,702 | | | | 46,157 | | | | 226,557 | | | | 323,070 | | | Options | | | 93,587 | | | | 123,391 | | | | 40,860 | | | | 27,567 | | | | 285,405 | | | Forwards (onshore) | | | 6,591 | | | | 22,349 | | | | 10,118 | | | | 1,169 | | | | 40,227 | | | Credit derivatives | | | - | | | | 1,436 | | | | 428 | | | | 10,798 | | | | 12,662 | | | Forwards (offshore) | | | 43,651 | | | | 70,688 | | | | 23,365 | | | | 10,773 | | | | 148,477 | | | Check of swap | | | - | | | | - | | | | - | | | | 1,676 | | | | 1,676 | | | Other derivative financial instruments | | | 1,550 | | | | 3,254 | | | | 502 | | | | 11,345 | | | | 16,651 | |
| Derivative contracts mature as follows (in days): | | Off-balance sheet - notional amount | | 0 - 30 | | | 31 - 180 | | | 181 - 365 | | | Over 365 | | | 12/31/2014 | | | Futures contracts | | | 26,358 | | | | 119,027 | | | | 47,279 | | | | 138,358 | | | | 331,022 | | | Swaps contracts - difference payable | | | 13,374 | | | | 72,365 | | | | 22,292 | | | | 158,177 | | | | 266,208 | | | Options | | | 231,624 | | | | 203,454 | | | | 52,421 | | | | 16,337 | | | | 503,836 | | | Forwards (onshore) | | | 2,325 | | | | 4,455 | | | | 838 | | | | 321 | | | | 7,939 | | | Credit derivatives | | | 291 | | | | 2,757 | | | | 500 | | | | 7,613 | | | | 11,161 | | | Forwards (offshore) | | | 36,297 | | | | 42,057 | | | | 16,510 | | | | 7,010 | | | | 101,874 | | | Check of swap | | | - | | | | - | | | | 277 | | | | 1,341 | | | | 1,618 | | | Other derivative financial instruments | | | 171 | | | | 868 | | | | 1,785 | | | | 8,452 | | | | 11,276 | |
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. | | | 12/31/2015 | | | | | | | | | | | 0-30 | | | 31-90 | | | 91-180 | | | 181-365 | | | 366-720 | | | Over 720 | | | | | Fair value | | | % | | | days | | | days | | | days | | | days | | | days | | | days | | | Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Futures contracts - BM&FBOVESPA | | | 529 | | | | 2.0 | | | | 639 | | | | (155 | ) | | | (18 | ) | | | (49 | ) | | | 76 | | | | 36 | | | Swaps – difference receivable | | | 9,147 | | | | 34.2 | | | | 666 | | | | 224 | | | | 403 | | | | 1,513 | | | | 1,935 | | | | 4,406 | | | BM&FBOVESPA | | | 662 | | | | 2.5 | | | | 17 | | | | 13 | | | | 25 | | | | 104 | | | | 126 | | | | 377 | | | Companies | | | 5,127 | | | | 19.1 | | | | 627 | | | | 29 | | | | 46 | | | | 1,037 | | | | 838 | | | | 2,550 | | | Financial institutions | | | 2,826 | | | | 10.6 | | | | 21 | | | | 177 | | | | 325 | | | | 329 | | | | 657 | | | | 1,317 | | | Individuals | | | 532 | | | | 2.0 | | | | 1 | | | | 5 | | | | 7 | | | | 43 | | | | 314 | | | | 162 | | | Option premiums | | | 5,583 | | | | 20.8 | | | | 2,413 | | | | 676 | | | | 609 | | | | 715 | | | | 692 | | | | 478 | | | BM&FBOVESPA | | | 2,597 | | | | 9.7 | | | | 2,074 | | | | 228 | | | | 140 | | | | 113 | | | | 31 | | | | 11 | | | Companies | | | 1,278 | | | | 4.8 | | | | 118 | | | | 147 | | | | 131 | | | | 194 | | | | 412 | | | | 276 | | | Financial institutions | | | 1,697 | | | | 6.3 | | | | 221 | | | | 300 | | | | 337 | | | | 399 | | | | 249 | | | | 191 | | | Individuals | | | 11 | | | | 0.0 | | | | - | | | | 1 | | | | 1 | | | | 9 | | | | - | | | | - | | | Forwards (onshore) | | | 3,166 | | | | 11.9 | | | | 1,204 | | | | 1,417 | | | | 538 | | | | 6 | | | | 1 | | | | - | | | BM&FBOVESPA | | | 2,218 | | | | 8.3 | | | | 368 | | | | 1,313 | | | | 530 | | | | 6 | | | | 1 | | | | - | | | Companies | | | 530 | | | | 2.0 | | | | 418 | | | | 104 | | | | 8 | | | | - | | | | - | | | | - | | | Financial institutions | | | 418 | | | | 1.6 | | | | 418 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Credit derivatives - financial Institutions | | | 614 | | | | 2.3 | | | | - | | | | - | | | | 2 | | | | 2 | | | | 26 | | | | 584 | | | Forwards (offshore) | | | 3,430 | | | | 12.8 | | | | 1,030 | | | | 794 | | | | 526 | | | | 434 | | | | 233 | | | | 413 | | | BM&FBOVESPA | | | 47 | | | | 0.2 | | | | 3 | | | | 19 | | | | 7 | | | | 18 | | | | - | | | | - | | | Companies | | | 1,453 | | | | 5.4 | | | | 177 | | | | 327 | | | | 288 | | | | 294 | | | | 135 | | | | 232 | | | Financial institutions | | | 1,927 | | | | 7.2 | | | | 850 | | | | 447 | | | | 230 | | | | 121 | | | | 98 | | | | 181 | | | Individuals | | | 3 | | | | 0.0 | | | | - | | | | 1 | | | | 1 | | | | 1 | | | | - | | | | - | | | Check of swap - Companies | | | 355 | | | | 1.3 | | | | - | | | | - | | | | - | | | | - | | | | 355 | | | | - | | | Other | | | 3,931 | | | | 14.7 | | | | 88 | | | | 1,269 | | | | 867 | | | | 32 | | | | 112 | | | | 1,563 | | | Companies | | | 415 | | | | 1.6 | | | | 3 | | | | 13 | | | | 14 | | | | 14 | | | | 74 | | | | 297 | | | Financial institutions | | | 3,516 | | | | 13.1 | | | | 85 | | | | 1,256 | | | | 853 | | | | 18 | | | | 38 | | | | 1,266 | | | Total(*) | | | 26,755 | | | | 100.0 | | | | 6,040 | | | | 4,225 | | | | 2,927 | | | | 2,653 | | | | 3,430 | | | | 7,480 | | | % per maturity term | | | | | | | | | | | 22.6 | | | | 15.8 | | | | 10.9 | | | | 9.9 | | | | 12.8 | | | | 28.0 | |
| (*) | Of the total asset portfolio of Derivative Financial Instruments, R$ 15,845 refers to current and R$ 10,910 to non-current. |
| | | 12/31/2016 | | | | | Fair value | | | % | | | 0-30
days | | | 31-90
days | | | 91-180
days | | | 181-365
days | | | 366-720
days | | | Over 720
days | | | Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Futures contracts | | | 127 | | | | 0.5 | | | | 85 | | | | 51 | | | | 13 | | | | (18 | ) | | | (6 | ) | | | 2 | | | BM&FBOVESPA | | | 128 | | | | 0.5 | | | | 85 | | | | 52 | | | | 13 | | | | (18 | ) | | | (6 | ) | | | 2 | | | Financial institutions | | | (1 | ) | | | 0.0 | | | | - | | | | (1 | ) | | | - | | | | - | | | | - | | | | - | | | Swaps – difference receivable | | | 10,542 | | | | 43.5 | | | | 828 | | | | 723 | | | | 585 | | | | 659 | | | | 1,497 | | | | 6,250 | | | BM&FBOVESPA | | | 1,417 | | | | 5.8 | | | | 178 | | | | 156 | | | | 218 | | | | 58 | | | | 206 | | | | 601 | | | Companies | | | 4,585 | | | | 18.9 | | | | 322 | | | | 354 | | | | 227 | | | | 390 | | | | 764 | | | | 2,528 | | | Financial institutions | | | 4,256 | | | | 17.6 | | | | 319 | | | | 197 | | | | 122 | | | | 196 | | | | 447 | | | | 2,975 | | | Individuals | | | 284 | | | | 1.2 | | | | 9 | | | | 16 | | | | 18 | | | | 15 | | | | 80 | | | | 146 | | | Option premiums | | | 4,792 | | | | 19.7 | | | | 354 | | | | 582 | | | | 759 | | | | 1,540 | | | | 1,397 | | | | 160 | | | BM&FBOVESPA | | | 1,679 | | | | 6.9 | | | | 144 | | | | 209 | | | | 182 | | | | 1,075 | | | | 41 | | | | 28 | | | Companies | | | 507 | | | | 2.1 | | | | 23 | | | | 19 | | | | 88 | | | | 134 | | | | 188 | | | | 55 | | | Financial institutions | | | 2,603 | | | | 10.7 | | | | 187 | | | | 354 | | | | 488 | | | | 329 | | | | 1,168 | | | | 77 | | | Individuals | | | 3 | | | | 0.0 | | | | - | | | | - | | | | 1 | | | | 2 | | | | - | | | | - | | | Forwards (onshore) | | | 4,971 | | | | 20.6 | | | | 3,947 | | | | 735 | | | | 287 | | | | 2 | | | | - | | | | - | | | BM&FBOVESPA | | | 1,418 | | | | 5.9 | | | | 427 | | | | 703 | | | | 286 | | | | 2 | | | | - | | | | - | | | Companies | | | 2,783 | | | | 11.5 | | | | 2,750 | | | | 32 | | | | 1 | | | | - | | | | - | | | | - | | | Financial institutions | | | 770 | | | | 3.2 | | | | 770 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Credit derivatives - financial Institutions | | | 181 | | | | 0.7 | | | | - | | | | - | | | | 3 | | | | 5 | | | | 13 | | | | 160 | | | Forwards (offshore) | | | 3,459 | | | | 14.3 | | | | 601 | | | | 1,252 | | | | 444 | | | | 579 | | | | 245 | | | | 338 | | | BM&FBOVESPA | | | 305 | | | | 1.3 | | | | 82 | | | | 123 | | | | 56 | | | | 44 | | | | - | | | | - | | | Companies | | | 1,243 | | | | 5.1 | | | | 185 | | | | 344 | | | | 216 | | | | 231 | | | | 200 | | | | 67 | | | Financial institutions | | | 1,908 | | | | 7.9 | | | | 333 | | | | 783 | | | | 172 | | | | 304 | | | | 45 | | | | 271 | | | Individuals | | | 3 | | | | 0.0 | | | | 1 | | | | 2 | | | | - | | | | - | | | | - | | | | - | | | Check of swap - Companies | | | 88 | | | | 0.4 | | | | - | | | | - | | | | 35 | | | | 53 | | | | - | | | | - | | | Other | | | 71 | | | | 0.3 | | | | - | | | | - | | | | 1 | | | | 6 | | | | 13 | | | | 51 | | | Companies | | | 29 | | | | 0.1 | | | | - | | | | - | | | | - | | | | 5 | | | | 8 | | | | 16 | | | Financial institutions | | | 42 | | | | 0.2 | | | | - | | | | - | | | | 1 | | | | 1 | | | | 5 | | | | 35 | | | Total (*) | | | 24,231 | | | | 100.0 | | | | 5,815 | | | | 3,343 | | | | 2,127 | | | | 2,826 | | | | 3,159 | | | | 6,961 | | | % per maturity term | | | | | | | | | | | 24.0 | | | | 13.8 | | | | 8.8 | | | | 11.7 | | | | 13.0 | | | | 28.7 | |
(*) Of the total asset portfolio of Derivative Financial Instruments, R$ 14,111 refers to current and R$ 10,120 to non-current. 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. | | | 12/31/2014 | | | 12/31/2015 | | | | | | | | | | 0-30 | | 31-90 | | 91-180 | | 181-365 | | 366-720 | | Over 720 | | | Fair value | | % | | 0-30
days | | 31-90
days | | 91-180
days | | 181-365
days | | 366-720
days | | Over 720
days | | | | | Fair value | | | % | | | days | | | days | | | days | | | days | | | days | | | days | | | | | | | | | | | | | | | | | | | | Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Futures - BM&FBOVESPA | | | | 529 | | | | 2.0 | | | | 639 | | | | (155 | ) | | | (18 | ) | | | (49 | ) | | | 76 | | | | 36 | | | Swaps – difference receivable | | | 4,816 | | | | 34.0 | | | | 448 | | | | 150 | | | | 429 | | | | 233 | | | | 643 | | | | 2,913 | | | | 9,147 | | | | 34.2 | | | | 666 | | | | 224 | | | | 403 | | | | 1,513 | | | | 1,935 | | | | 4,406 | | | BM&FBOVESPA | | | 109 | | | | 0.8 | | | | 1 | | | | 22 | | | | 12 | | | | 8 | | | | 11 | | | | 55 | | | | 662 | | | | 2.5 | | | | 17 | | | | 13 | | | | 25 | | | | 104 | | | | 126 | | | | 377 | | | Companies | | | 2,961 | | | | 20.8 | | | | 278 | | | | 62 | | | | 186 | | | | 125 | | | | 461 | | | | 1,849 | | | | 5,127 | | | | 19.1 | | | | 627 | | | | 29 | | | | 46 | | | | 1,037 | | | | 838 | | | | 2,550 | | | Financial institutions | | | 1,354 | | | | 9.6 | | | | 165 | | | | 53 | | | | 38 | | | | 75 | | | | 128 | | | | 895 | | | | 2,826 | | | | 10.6 | | | | 21 | | | | 177 | | | | 325 | | | | 329 | | | | 657 | | | | 1,317 | | | Individuals | | | 392 | | | | 2.8 | | | | 4 | | | | 13 | | | | 193 | | | | 25 | | | | 43 | | | | 114 | | | | 532 | | | | 2.0 | | | | 1 | | | | 5 | | | | 7 | | | | 43 | | | | 314 | | | | 162 | | | Option premiums | | | 2,872 | | | | 20.2 | | | | 481 | | | | 738 | | | | 384 | | | | 598 | | | | 308 | | | | 363 | | | | 5,583 | | | | 20.8 | | | | 2,413 | | | | 676 | | | | 609 | | | | 715 | | | | 692 | | | | 478 | | | BM&FBOVESPA | | | 647 | | | | 4.5 | | | | 140 | | | | 246 | | | | 72 | | | | 165 | | | | 23 | | | | 1 | | | | 2,597 | | | | 9.7 | | | | 2,074 | | | | 228 | | | | 140 | | | | 113 | | | | 31 | | | | 11 | | | Companies | | | 613 | | | | 4.3 | | | | 37 | | | | 45 | | | | 56 | | | | 143 | | | | 140 | | | | 192 | | | | 1,278 | | | | 4.8 | | | | 118 | | | | 147 | | | | 131 | | | | 194 | | | | 412 | | | | 276 | | | Financial institutions | | | 1,611 | | | | 11.4 | | | | 304 | | | | 447 | | | | 255 | | | | 290 | | | | 145 | | | | 170 | | | | 1,697 | | | | 6.3 | | | | 221 | | | | 300 | | | | 337 | | | | 399 | | | | 249 | | | | 191 | | | Individuals | | | 1 | | | | - | | | | - | | | | - | | | | 1 | | | | - | | | | - | | | | - | | | | 11 | | | | 0.0 | | | | - | | | | 1 | | | | 1 | | | | 9 | | | | - | | | | - | | | Forwards (onshore) | | | 2,394 | | | | 16.9 | | | | 846 | | | | 832 | | | | 714 | | | | 2 | | | | - | | | | - | | | | 3,166 | | | | 11.9 | | | | 1,204 | | | | 1,417 | | | | 538 | | | | 6 | | | | 1 | | | | - | | | BM&FBOVESPA | | | 1,646 | | | | 11.6 | | | | 163 | | | | 796 | | | | 685 | | | | 2 | | | | - | | | | - | | | | 2,218 | | | | 8.3 | | | | 368 | | | | 1,313 | �� | | | 530 | | | | 6 | | | | 1 | | | | - | | | Companies | | | 406 | | | | 2.9 | | | | 341 | | | | 36 | | | | 29 | | | | - | | | | - | | | | - | | | | 530 | | | | 2.0 | | | | 418 | | | | 104 | | | | 8 | | | | - | | | | - | | | | - | | | Financial institutions | | | 342 | | | | 2.4 | | | | 342 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 418 | | | | 1.6 | | | | 418 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Credit derivatives - financial institutions | | | 122 | | | | 0.9 | | | | - | | | | - | | | | 1 | | | | 6 | | | | 8 | | | | 107 | | | | 614 | | | | 2.3 | | | | - | | | | - | | | | 2 | | | | 2 | | | | 26 | | | | 584 | | | Forwards (offshore) | | | 2,106 | | | | 14.9 | | | | 631 | | | | 519 | | | | 287 | | | | 406 | | | | 149 | | | | 114 | | | | 3,430 | | | | 12.8 | | | | 1,030 | | | | 794 | | | | 526 | | | | 434 | | | | 233 | | | | 413 | | | BM&FBOVESPA | | | | 47 | | | | 0.2 | | | | 3 | | | | 19 | | | | 7 | | | | 18 | | | | - | | | | - | | | Companies | | | 914 | | | | 6.5 | | | | 101 | | | | 280 | | | | 152 | | | | 195 | | | | 94 | | | | 92 | | | | 1,453 | | | | 5.4 | | | | 177 | | | | 327 | | | | 288 | | | | 294 | | | | 135 | | | | 232 | | | Financial institutions | | | 1,190 | | | | 8.4 | | | | 530 | | | | 237 | | | | 135 | | | | 211 | | | | 55 | | | | 22 | | | | 1,927 | | | | 7.2 | | | | 850 | | | | 447 | | | | 230 | | | | 121 | | | | 98 | | | | 181 | | | Individuals | | | 2 | | | | - | | | | - | | | | 2 | | | | - | | | | - | | | | - | | | | - | | | | 3 | | | | 0.0 | | | | - | | | | 1 | | | | 1 | | | | 1 | | | | - | | | | - | | | Check of swap - Companies | | | 93 | | | | 0.7 | | | | - | | | | - | | | | - | | | | 7 | | | | - | | | | 86 | | | | 355 | | | | 1.3 | | | | - | | | | - | | | | - | | | | - | | | | 355 | | | | - | | | Other | | | 1,753 | | | | 12.4 | | | | 2 | | | | 16 | | | | 3 | | | | 986 | | | | 69 | | | | 677 | | | | 3,931 | | | | 14.7 | | | | 88 | | | | 1,269 | | | | 867 | | | | 32 | | | | 112 | | | | 1,563 | | | Companies | | | 211 | | | | 1.5 | | | | 1 | | | | 3 | | | | 3 | | | | 10 | | | | 59 | | | | 135 | | | | 415 | | | | 1.6 | | | | 3 | | | | 13 | | | | 14 | | | | 14 | | | | 74 | | | | 297 | | | Financial institutions | | | 1,542 | | | | 10.9 | | | | 1 | | | | 13 | | | | - | | | | 976 | | | | 10 | | | | 542 | | | | 3,516 | | | | 13.1 | | | | 85 | | | | 1,256 | | | | 853 | | | | 18 | | | | 38 | | | | 1,266 | | | Total(*) | | | 14,156 | | | | 100.0 | | | | 2,408 | | | | 2,255 | | | | 1,818 | | | | 2,238 | | | | 1,177 | | | | 4,260 | | | | 26,755 | | | | 100.0 | | | | 6,040 | | | | 4,225 | | | | 2,927 | | | | 2,653 | | | | 3,430 | | | | 7,480 | | | % per maturity term | | | | | | | | | | | 17.0 | | | | 15.9 | | | | 12.8 | | | | 15.8 | | | | 8.3 | | | | 30.1 | | | | | | | | | | | | 22.6 | | | | 15.8 | | | | 10.9 | | | | 9.9 | | | | 12.8 | | | | 28.0 | |
(*) Of the total asset portfolio of Derivative Financial Instruments, R$ 8,71915,845 refers to current and R$ 5,43710,910 to non-current. | | | 12/31/2016 | | | | | Fair value | | | % | | | 0 - 30
days | | | 31 - 90
days | | | 91 - 180
days | | | 181 - 365
days | | | 366 - 720
days | | | Over 720
days | | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Swaps – Difference payable | | | (13,221 | ) | | | 53.4 | | | | (461 | ) | | | (228 | ) | | | (742 | ) | | | (732 | ) | | | (2,352 | ) | | | (8,706 | ) | | BM&FBOVESPA | | | (1,614 | ) | | | 6.5 | | | | (304 | ) | | | (75 | ) | | | (124 | ) | | | (97 | ) | | | (125 | ) | | | (889 | ) | | Companies | | | (2,531 | ) | | | 10.2 | | | | (67 | ) | | | (32 | ) | | | (90 | ) | | | (248 | ) | | | (573 | ) | | | (1,521 | ) | | Financial institutions | | | (4,106 | ) | | | 16.6 | | | | (79 | ) | | | (103 | ) | | | (128 | ) | | | (311 | ) | | | (554 | ) | | | (2,931 | ) | | Individuals | | | (4,970 | ) | | | 20.1 | | | | (11 | ) | | | (18 | ) | | | (400 | ) | | | (76 | ) | | | (1,100 | ) | | | (3,365 | ) | | Option premiums | | | (4,552 | ) | | | 18.5 | | | | (837 | ) | | | (659 | ) | | | (516 | ) | | | (713 | ) | | | (1,116 | ) | | | (711 | ) | | BM&FBOVESPA | | | (1,437 | ) | | | 5.8 | | | | (524 | ) | | | (216 | ) | | | (201 | ) | | | (455 | ) | | | (30 | ) | | | (11 | ) | | Companies | | | (631 | ) | | | 2.6 | | | | (48 | ) | | | (28 | ) | | | (103 | ) | | | (170 | ) | | | (200 | ) | | | (82 | ) | | Financial institutions | | | (2,463 | ) | | | 10.0 | | | | (265 | ) | | | (414 | ) | | | (208 | ) | | | (81 | ) | | | (882 | ) | | | (613 | ) | | Individuals | | | (21 | ) | | | 0.1 | | | | - | | | | (1 | ) | | | (4 | ) | | | (7 | ) | | | (4 | ) | | | (5 | ) | | Forwards (onshore) | | | (3,530 | ) | | | 14.3 | | | | (3,530 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | BM&FBOVESPA | | | (6 | ) | | | 0.0 | | | | (6 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Companies | | | (2,754 | ) | | | 11.2 | | | | (2,754 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Financial institutions | | | (770 | ) | | | 3.1 | | | | (770 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Credit derivatives - Financial institutions | | | (147 | ) | | | 0.6 | | | | - | | | | - | | | | - | | | | (2 | ) | | | (10 | ) | | | (135 | ) | | Forwards (offshore) | | | (2,825 | ) | | | 11.5 | | | | (466 | ) | | | (881 | ) | | | (527 | ) | | | (299 | ) | | | (99 | ) | | | (553 | ) | | BM&FBOVESPA | | | (259 | ) | | | 1.0 | | | | (102 | ) | | | (76 | ) | | | (41 | ) | | | (40 | ) | | | - | | | | - | | | Companies | | | (648 | ) | | | 2.6 | | | | (166 | ) | | | (158 | ) | | | (124 | ) | | | (129 | ) | | | (37 | ) | | | (34 | ) | | Financial institutions | | | (1,916 | ) | | | 7.9 | | | | (198 | ) | | | (647 | ) | | | (360 | ) | | | (130 | ) | | | (62 | ) | | | (519 | ) | | Individuals | | | (2 | ) | | | 0.0 | | | | - | | | | - | | | | (2 | ) | | | - | | | | - | | | | - | | | Check of swap - Companies | | | (353 | ) | | | 1.4 | | | | - | | | | - | | | | - | | | | (214 | ) | | | (139 | ) | | | - | | | Other - Companies | | | (70 | ) | | | 0.3 | | | | - | | | | (1 | ) | | | (1 | ) | | | (1 | ) | | | (10 | ) | | | (57 | ) | | Total (*) | | | (24,698 | ) | | | 100.0 | | | | (5,294 | ) | | | (1,769 | ) | | | (1,786 | ) | | | (1,961 | ) | | | (3,726 | ) | | | (10,162 | ) | | % per maturity term | | | | | | | | | | | 21.4 | | | | 7.2 | | | | 7.2 | | | | 7.9 | | | | 15.1 | | | | 41.2 | |
| | | 12/31/2015 | | | | | | | | | | | | | | 31 - 90 | | | 91 - 180 | | | 181 - 365 | | | 366 - 720 | | | Over 720 | | | | | Fair value | | | % | | | 0 - 30 days | | | days | | | days | | | days | | | days | | | days | | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Swaps – Difference payable | | | (16,331 | ) | | | 52.6 | | | | (783 | ) | | | (481 | ) | | | (989 | ) | | | (1,898 | ) | | | (2,618 | ) | | | (9,562 | ) | | BM&FBOVESPA | | | (1,107 | ) | | | 3.6 | | | | (9 | ) | | | (10 | ) | | | (35 | ) | | | (145 | ) | | | (340 | ) | | | (568 | ) | | Companies | | | (5,912 | ) | | | 19.0 | | | | (703 | ) | | | (422 | ) | | | (279 | ) | | | (953 | ) | | | (1,339 | ) | | | (2,216 | ) | | Financial institutions | | | (3,530 | ) | | | 11.4 | | | | (60 | ) | | | (21 | ) | | | (662 | ) | | | (644 | ) | | | (284 | ) | | | (1,859 | ) | | Individuals | | | (5,782 | ) | | | 18.6 | | | | (11 | ) | | | (28 | ) | | | (13 | ) | | | (156 | ) | | | (655 | ) | | | (4,919 | ) | | Option premiums | | | (5,783 | ) | | | 18.6 | | | | (1,460 | ) | | | (1,285 | ) | | | (895 | ) | | | (845 | ) | | | (805 | ) | | | (493 | ) | | BM&FBOVESPA | | | (2,365 | ) | | | 7.6 | | | | (1,112 | ) | | | (565 | ) | | | (510 | ) | | | (130 | ) | | | (40 | ) | | | (8 | ) | | Companies | | | (661 | ) | | | 2.1 | | | | (71 | ) | | | (45 | ) | | | (63 | ) | | | (150 | ) | | | (144 | ) | | | (188 | ) | | Financial institutions | | | (2,748 | ) | | | 8.8 | | | | (277 | ) | | | (674 | ) | | | (321 | ) | | | (560 | ) | | | (620 | ) | | | (296 | ) | | Individuals | | | (9 | ) | | | 0.1 | | | | - | | | | (1 | ) | | | (1 | ) | | | (5 | ) | | | (1 | ) | | | (1 | ) | | Forwards (onshore) | | | (833 | ) | | | 2.6 | | | | (828 | ) | | | (4 | ) | | | (1 | ) | | | - | | | | - | | | | - | | | BM&FBOVESPA | | | (5 | ) | | | 0.0 | | | | - | | | | (4 | ) | | | (1 | ) | | | - | | | | - | | | | - | | | Companies | | | (411 | ) | | | 1.3 | | | | (411 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Financial institutions | | | (417 | ) | | | 1.3 | | | | (417 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Credit derivatives - Financial institutions | | | (875 | ) | | | 2.8 | | | | - | | | | (9 | ) | | | (9 | ) | | | (5 | ) | | | (105 | ) | | | (747 | ) | | Forwards (offshore) | | | (3,142 | ) | | | 10.1 | | | | (692 | ) | | | (727 | ) | | | (785 | ) | | | (581 | ) | | | (233 | ) | | | (124 | ) | | BM&FBOVESPA | | | (41 | ) | | | 0.1 | | | | (8 | ) | | | (10 | ) | | | (10 | ) | | | (13 | ) | | | - | | | | - | | | Companies | | | (1,948 | ) | | | 6.3 | | | | (260 | ) | | | (478 | ) | | | (565 | ) | | | (356 | ) | | | (179 | ) | | | (110 | ) | | Financial institutions | | | (1,151 | ) | | | 3.7 | | | | (424 | ) | | | (238 | ) | | | (210 | ) | | | (211 | ) | | | (54 | ) | | | (14 | ) | | Individuals | | | (2 | ) | | | 0.0 | | | | - | | | | (1 | ) | | | - | | | | (1 | ) | | | - | | | | - | | | Check of swap - Companies | | | (545 | ) | | | 1.8 | | | | - | | | | - | | | | - | | | | - | | | | (335 | ) | | | (210 | ) | | Other | | | (3,562 | ) | | | 11.5 | | | | (87 | ) | | | (1,267 | ) | | | (857 | ) | | | (19 | ) | | | (8 | ) | | | (1,324 | ) | | Companies | | | (817 | ) | | | 2.6 | | | | (1 | ) | | | (3 | ) | | | (6 | ) | | | (4 | ) | | | (8 | ) | | | (795 | ) | | Financial institutions | | | (2,745 | ) | | | 8.9 | | | | (86 | ) | | | (1,264 | ) | | | (851 | ) | | | (15 | ) | | | - | | | | (529 | ) | | Total(*) | | | (31,071 | ) | | | 100.0 | | | | (3,850 | ) | | | (3,773 | ) | | | (3,536 | ) | | | (3,348 | ) | | | (4,104 | ) | | | (12,460 | ) | | % per maturity term | | | | | | | | | | | 12.4 | | | | 12.1 | | | | 11.4 | | | | 10.8 | | | | 13.2 | | | | 40.1 | |
| (*) | Of the total liability portfolio of Derivative Financial Instruments, R$ (14,507) refers to current and R$ (16,564) to non-current. |
(*) Of the total liability portfolio of Derivative Financial Instruments, R$ (10,810) refers to current and R$ (13,888) to non-current. | | | 12/31/2015 | | | | | Fair value | | | % | | | 0 - 30
days | | | 31 - 90
days | | | 91 - 180
days | | | 181 - 365
days | | | 366 - 720
days | | | Over 720
days | | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Swaps – difference payable | | | (16,331 | ) | | | 52.6 | | | | (783 | ) | | | (481 | ) | | | (989 | ) | | | (1,898 | ) | | | (2,618 | ) | | | (9,562 | ) | | BM&FBOVESPA | | | (1,107 | ) | | | 3.6 | | | | (9 | ) | | | (10 | ) | | | (35 | ) | | | (145 | ) | | | (340 | ) | | | (568 | ) | | Companies | | | (5,912 | ) | | | 19.0 | | | | (703 | ) | | | (422 | ) | | | (279 | ) | | | (953 | ) | | | (1,339 | ) | | | (2,216 | ) | | Financial institutions | | | (3,530 | ) | | | 11.4 | | | | (60 | ) | | | (21 | ) | | | (662 | ) | | | (644 | ) | | | (284 | ) | | | (1,859 | ) | | Individuals | | | (5,782 | ) | | | 18.6 | | | | (11 | ) | | | (28 | ) | | | (13 | ) | | | (156 | ) | | | (655 | ) | | | (4,919 | ) | | Option premiums | | | (5,783 | ) | | | 18.6 | | | | (1,460 | ) | | | (1,285 | ) | | | (895 | ) | | | (845 | ) | | | (805 | ) | | | (493 | ) | | BM&FBOVESPA | | | (2,365 | ) | | | 7.6 | | | | (1,112 | ) | | | (565 | ) | | | (510 | ) | | | (130 | ) | | | (40 | ) | | | (8 | ) | | Companies | | | (661 | ) | | | 2.1 | | | | (71 | ) | | | (45 | ) | | | (63 | ) | | | (150 | ) | | | (144 | ) | | | (188 | ) | | Financial institutions | | | (2,748 | ) | | | 8.8 | | | | (277 | ) | | | (674 | ) | | | (321 | ) | | | (560 | ) | | | (620 | ) | | | (296 | ) | | Individuals | | | (9 | ) | | | 0.1 | | | | - | | | | (1 | ) | | | (1 | ) | | | (5 | ) | | | (1 | ) | | | (1 | ) | | Forwards (onshore) | | | (833 | ) | | | 2.6 | | | | (828 | ) | | | (4 | ) | | | (1 | ) | | | - | | | | - | | | | - | | | BM&FBOVESPA | | | (5 | ) | | | 0.0 | | | | - | | | | (4 | ) | | | (1 | ) | | | - | | | | - | | | | - | | | Companies | | | (411 | ) | | | 1.3 | | | | (411 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Financial institutions | | | (417 | ) | | | 1.3 | | | | (417 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Credit derivatives - Financial institutions | | | (875 | ) | | | 2.8 | | | | - | | | | (9 | ) | | | (9 | ) | | | (5 | ) | | | (105 | ) | | | (747 | ) | | Forwards (offshore) | | | (3,142 | ) | | | 10.1 | | | | (692 | ) | | | (727 | ) | | | (785 | ) | | | (581 | ) | | | (233 | ) | | | (124 | ) | | BM&FBOVESPA | | | (41 | ) | | | 0.1 | | | | (8 | ) | | | (10 | ) | | | (10 | ) | | | (13 | ) | | | - | | | | - | | | Companies | | | (1,948 | ) | | | 6.3 | | | | (260 | ) | | | (478 | ) | | | (565 | ) | | | (356 | ) | | | (179 | ) | | | (110 | ) | | Financial institutions | | | (1,151 | ) | | | 3.7 | | | | (424 | ) | | | (238 | ) | | | (210 | ) | | | (211 | ) | | | (54 | ) | | | (14 | ) | | Individuals | | | (2 | ) | | | 0.0 | | | | - | | | | (1 | ) | | | - | | | | (1 | ) | | | - | | | | - | | | Check of swap - Companies | | | (545 | ) | | | 1.8 | | | | - | | | | - | | | | - | | | | - | | | | (335 | ) | | | (210 | ) | | Other | | | (3,562 | ) | | | 11.5 | | | | (87 | ) | | | (1,267 | ) | | | (857 | ) | | | (19 | ) | | | (8 | ) | | | (1,324 | ) | | Companies | | | (817 | ) | | | 2.6 | | | | (1 | ) | | | (3 | ) | | | (6 | ) | | | (4 | ) | | | (8 | ) | | | (795 | ) | | Financial institutions | | | (2,745 | ) | | | 8.9 | | | | (86 | ) | | | (1,264 | ) | | | (851 | ) | | | (15 | ) | | | - | | | | (529 | ) | | Total (*) | | | (31,071 | ) | | | 100.0 | | | | (3,850 | ) | | | (3,773 | ) | | | (3,536 | ) | | | (3,348 | ) | | | (4,104 | ) | | | (12,460 | ) | | % per maturity term | | | | | | | | | | | 12.4 | | | | 12.1 | | | | 11.4 | | | | 10.8 | | | | 13.2 | | | | 40.1 | |
| | | 12/31/2014 | | | | | | | | | | | | | | 31 - 90 | | | 91 - 180 | | | 181 - 365 | | | 366 - 720 | | | Over 720 | | | | | Fair value | | | % | | | 0 - 30 days | | | days | | | days | | | days | | | days | | | days | | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Futures - BM&FBOVESPA | | | (354 | ) | | | 2.0 | | | | 29 | | | | 150 | | | | (192 | ) | | | (207 | ) | | | (63 | ) | | | (71 | ) | | Swaps – difference payable | | | (9,534 | ) | | | 55.0 | | | | (241 | ) | | | (335 | ) | | | (706 | ) | | | (720 | ) | | | (778 | ) | | | (6,754 | ) | | BM&FBOVESPA | | | (367 | ) | | | 2.1 | | | | (2 | ) | | | (20 | ) | | | (144 | ) | | | (8 | ) | | | (15 | ) | | | (178 | ) | | Companies | | | (3,825 | ) | | | 22.1 | | | | (209 | ) | | | (247 | ) | | | (355 | ) | | | (536 | ) | | | (520 | ) | | | (1,958 | ) | | Financial institutions | | | (1,552 | ) | | | 9.0 | | | | (27 | ) | | | (40 | ) | | | (47 | ) | | | (161 | ) | | | (155 | ) | | | (1,122 | ) | | Individuals | | | (3,790 | ) | | | 21.8 | | | | (3 | ) | | | (28 | ) | | | (160 | ) | | | (15 | ) | | | (88 | ) | | | (3,496 | ) | | Option premiums | | | (3,057 | ) | | | 17.6 | | | | (431 | ) | | | (761 | ) | | | (534 | ) | | | (558 | ) | | | (353 | ) | | | (420 | ) | | BM&FBOVESPA | | | (545 | ) | | | 3.1 | | | | (121 | ) | | | (194 | ) | | | (127 | ) | | | (60 | ) | | | (43 | ) | | | - | | | Companies | | | (378 | ) | | | 2.2 | | | | (9 | ) | | | (27 | ) | | | (19 | ) | | | (55 | ) | | | (100 | ) | | | (168 | ) | | Financial institutions | | | (2,133 | ) | | | 12.3 | | | | (300 | ) | | | (540 | ) | | | (388 | ) | | | (443 | ) | | | (210 | ) | | | (252 | ) | | Individuals | | | (1 | ) | | | - | | | | (1 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Forwards (onshore) | | | (682 | ) | | | 4.0 | | | | (681 | ) | | | (1 | ) | | | - | | | | - | | | | - | | | | - | | | BM&FBOVESPA | | | (8 | ) | | | 0.1 | | | | (7 | ) | | | (1 | ) | | | - | | | | - | | | | - | | | | - | | | Companies | | | (332 | ) | | | 1.9 | | | | (332 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Financial institutions | | | (342 | ) | | | 2.0 | | | | (342 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Credit derivatives | | | (179 | ) | | | 1.1 | | | | - | | | | (1 | ) | | | - | | | | (14 | ) | | | (39 | ) | | | (125 | ) | | Companies | | | (13 | ) | | | 0.1 | | | | - | | | | - | | | | - | | | | (13 | ) | | | - | | | | - | | | Financial institutions | | | (166 | ) | | | 1.0 | | | | - | | | | (1 | ) | | | - | | | | (1 | ) | | | (39 | ) | | | (125 | ) | | Forwards (offshore) | | | (1,693 | ) | | | 9.7 | | | | (404 | ) | | | (472 | ) | | | (352 | ) | | | (343 | ) | | | (78 | ) | | | (44 | ) | | Companies | | | (867 | ) | | | 5.0 | | | | (146 | ) | | | (272 | ) | | | (139 | ) | | | (214 | ) | | | (62 | ) | | | (34 | ) | | Financial institutions | | | (823 | ) | | | 4.7 | | | | (258 | ) | | | (199 | ) | | | (211 | ) | | | (129 | ) | | | (16 | ) | | | (10 | ) | | Individuals | | | (3 | ) | | | - | | | | - | | | | (1 | ) | | | (2 | ) | | | - | | | | - | | | | - | | | Check of swap - Companies | | | (229 | ) | | | 1.3 | | | | - | | | | - | | | | - | | | | (36 | ) | | | - | | | | (193 | ) | | Other | | | (1,622 | ) | | | 9.3 | | | | - | | | | - | | | | (1 | ) | | | (1,002 | ) | | | (17 | ) | | | (602 | ) | | Companies | | | (278 | ) | | | 1.6 | | | | - | | | | - | | | | (1 | ) | | | (2 | ) | | | (7 | ) | | | (268 | ) | | Financial institutions | | | (1,344 | ) | | | 7.7 | | | | - | | | | - | | | | - | | | | (1,000 | ) | | | (10 | ) | | | (334 | ) | | Total(*) | | | (17,350 | ) | | | 100.0 | | | | (1,728 | ) | | | (1,420 | ) | | | (1,785 | ) | | | (2,880 | ) | | | (1,328 | ) | | | (8,209 | ) | | % per maturity term | | | | | | | | | | | 10.0 | | | | 8.2 | | | | 10.3 | | | | 16.6 | | | | 7.7 | | | | 47.3 | |
| (*) | Of the total liability portfolio of Derivative Financial Instruments, R$ (7,813) refers to current and R$ (9,537) to non-current. |
(*) Of the total liability portfolio of Derivative Financial Instruments, R$ (14,507) refers to current and R$ (16,564) to non-current. a) Information on credit derivatives ITAÚ UNIBANCO HOLDING buys and sells credit protection mainly related to 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 seller are credit default swaps, total return swaps and 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. | | | 12/31/2015 | | | | | | Maximum potential | | | | | | | | | | | | | | | | of future | | | | From 1 to 3 | | From 3 to 5 | | Over 5 | | | 12/31/2016 | | | | | payments, gross | | | Before 1 year | | | years | | | years | | | years | | | Maximum potential
of future
payments, gross | | | Before 1 year | | | From 1 to 3
years | | | From 3 to 5
years | | | Over 5
years | | | By instrument | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CDS | | | 8,799 | | | | 1,781 | | | | 3,301 | | | | 3,717 | | | | - | | | | 8,094 | | | | 1,989 | | | | 3,487 | | | | 2,585 | | | | 33 | | | Total by instrument | | | 8,799 | | | | 1,781 | | | | 3,301 | | | | 3,717 | | | | - | | | | 8,094 | | | | 1,989 | | | | 3,487 | | | | 2,585 | | | | 33 | | | By risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Investment grade | | | 8,799 | | | | 1,781 | | | | 3,301 | | | | 3,717 | | | | - | | | | 8,094 | | | | 1,989 | | | | 3,487 | | | | 2,585 | | | | 33 | | | Total by risk | | | 8,799 | | | | 1,781 | | | | 3,301 | | | | 3,717 | | | | - | | | | 8,094 | | | | 1,989 | | | | 3,487 | | | | 2,585 | | | | 33 | | | By reference entity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Private entities | | | 8,799 | | | | 1,781 | | | | 3,301 | | | | 3,717 | | | | - | | | | 8,094 | | | | 1,989 | | | | 3,487 | | | | 2,585 | | | | 33 | | | Total by entity | | | 8,799 | | | | 1,781 | | | | 3,301 | | | | 3,717 | | | | - | | | | 8,094 | | | | 1,989 | | | | 3,487 | | | | 2,585 | | | | 33 | |
| | | 12/31/2014 | | | | | | Maximum potential | | | | | | | | | | | | | | | of future | | | | | | From 1 to 3 | | From 3 to 5 | | Over 5 | | | 12/31/2015 | | | | | payments, gross | | | Before 1 year | | | years | | | years | | | years | | | Maximum potential
of future
payments, gross | | | Before 1 year | | | From 1 to 3
years | | | From 3 to 5
years | | | Over 5
years | | | By instrument | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CDS | | | 6,829 | | | | 1,578 | | | | 2,341 | | | | 2,644 | | | | 266 | | | | 8,799 | | | | 1,781 | | | | 3,301 | | | | 3,717 | | | | - | | | TRS | | | 1,671 | | | | 1,671 | | | | - | | | | - | | | | - | | | | Total by instrument | | | 8,500 | | | | 3,249 | | | | 2,341 | | | | 2,644 | | | | 266 | | | | 8,799 | | | | 1,781 | | | | 3,301 | | | | 3,717 | | | | - | | | By risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Investment grade | | | 8,500 | | | | 3,249 | | | | 2,341 | | | | 2,644 | | | | 266 | | | | 8,799 | | | | 1,781 | | | | 3,301 | | | | 3,717 | | | | - | | | Total by risk | | | 8,500 | | | | 3,249 | | | | 2,341 | | | | 2,644 | | | | 266 | | | | 8,799 | | | | 1,781 | | | | 3,301 | | | | 3,717 | | | | - | | | By reference entity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Private entities | | | 8,500 | | | | 3,249 | | | | 2,341 | | | | 2,644 | | | | 266 | | | | 8,799 | | | | 1,781 | | | | 3,301 | | | | 3,717 | | | | - | | | Total by entity | | | 8,500 | | | | 3,249 | | | | 2,341 | | | | 2,644 | | | | 266 | | | | 8,799 | | | | 1,781 | | | | 3,301 | | | | 3,717 | | | | - | |
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 any loss related to credit derivative contracts. The following table presents the notional amount of purchased credit derivatives whose underlying amounts are identical to those for which ITAÚ UNIBANCO HOLDING operates as seller of the credit protection. | | | 12/31/2015 | | | | | | | | Notional amount of credit protection | | | | | | | | | Notional amount of credit | | purchased with identical underlying | | | | | 12/31/2016 | | | | | protection sold | | | amount | | | Net position | | | Notional amount of credit
protection sold | | | Notional amount of credit protection
purchased with identical underlying
amount | | | Net position | | | CDS | | | (8,799 | ) | | | 3,863 | | | | (4,936 | ) | | | (8,094 | ) | | | 4,006 | | | | (4,088 | ) | | Total | | | (8,799 | ) | | | 3,863 | | | | (4,936 | ) | | | (8,094 | ) | | | 4,006 | | | | (4,088 | ) |
| | | 12/31/2014 | | | | | | | | | Notional amount of credit protection | | | | | | | | | Notional amount of credit | | purchased with identical underlying | | | | | 12/31/2015 | | | | | protection sold | | | amount | | | Net position | | | Notional amount of credit
protection sold | | | Notional amount of credit protection
purchased with identical underlying
amount | | | Net position | | | CDS | | | (6,829 | ) | | | 2,661 | | | | (4,168 | ) | | | (8,799 | ) | | | 3,863 | | | | (4,936 | ) | | TRS | | | (1,671 | ) | | | - | | | | (1,671 | ) | | | Total | | | (8,500 | ) | | | 2,661 | | | | (5,839 | ) | | | (8,799 | ) | | | 3,863 | | | | (4,936 | ) |
b) Financial instruments subject to offsetting, enforceable master netting arrangements and similar agreements The following tables set forth the financial assets and liabilities that are subject to offsetting, enforceable master netting arrangements, as well as how these financial assets and liabilities have been presented in ITAÚ UNIBANCO HOLDING's consolidated financial statements. These tables also reflect the amounts of collateral pledged or received in relation to financial assets and liabilities subject to enforceable arrangements that have not been presented on a net basis in accordance with IAS 32. Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements: | | | 12/31/2015 | | | | | | Gross amount of | | | | | | Net amount of financial assets | | Related amounts not offset in the statement of financial | | | | | | 12/31/2016 | | | | | recognized financial | | Gross amount offset in the | | presented in the statement of | | position(2) | | | | | Gross amount of
recognized financial | | Gross amount offset in the | | Net amount of financial assets
presented in the statement of | | Related amounts not offset in the
statement of financial position(2) | | | | | | | | assets(1) | | | statement of financial position | | | financial position | | | Financial instruments(3) | | | Cash collateral received | | | Net amount | | | assets(1) | | | statement of financial position | | | financial position | | | Financial instruments(3) | | | Cash collateral received | | | Net amount | | | Securities purchased under agreements to resell | | | 254,404 | | | | - | | | | 254,404 | | | | (2,569 | ) | | | - | | | | 251,835 | | | | 265,051 | | | | - | | | | 265,051 | | | | (334 | ) | | | - | | | | 264,717 | | | Derivatives | | | 26,755 | | | | - | | | | 26,755 | | | | (8,150 | ) | | | - | | | | 18,605 | | | | 24,231 | | | | - | | | | 24,231 | | | | (4,039 | ) | | | (540 | ) | | | 19,652 | |
| | | 12/31/2014 | | | | | | Gross amount of | | | | Net amount of financial assets | | Related amounts not offset in the statement of financial | | | | | | 12/31/2015 | | | | | recognized financial | | | Gross amount offset in the | | | presented in the statement of | | position(2) | | | | | Gross amount of
recognized financial | | Gross amount offset in the | | Net amount of financial assets
presented in the statement of | | Related amounts not offset in the
statement of financial position(2) | | | | | | | | assets(1) | | | statement of financial position | | | financial position | | | Financial instruments(3) | | | Cash collateral received | | | Net amount | | | assets(1) | | statement of financial position | | financial position | | Financial instruments(3) | | Cash collateral received | | Net amount | | | Securities purchased under agreements to resell | | | 208,918 | | | | - | | | | 208,918 | | | | - | | | | - | | | | 208,918 | | | | 254,404 | | | | - | | | | 254,404 | | | | (2,569 | ) | | | - | | | | 251,835 | | | Derivatives | | | 15,039 | | | | (883 | ) | | | 14,156 | | | | (4,059 | ) | | | - | | | | 10,097 | | | | 26,755 | | | | - | | | | 26,755 | | | | (8,150 | ) | | | - | | | | 18,605 | |
Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements: | | | 12/31/2015 | | | | | Gross amount of | | | | | | Net amount of financial liabilities | | | Related amounts not offset in the statement of financial | | | | | | | | recognized financial | | | Gross amount offset in the | | | presented in the statement of | | | position(2) | | | | | | | | liabilities(1) | | | statement of financial position | | | financial position | | | Financial instruments(3) | | | Cash collateral pledged | | | Net amount | | | Securities sold under repurchase agreements | | | 336,643 | | | | - | | | | 336,643 | | | | (22,158 | ) | | | - | | | | 314,485 | | | Derivatives | | | 31,071 | | | | - | | | | 31,071 | | | | (8,150 | ) | | | (24 | ) | | | 22,897 | |
| | | 12/31/2016 | | | | | Gross amount of | | | | | | Net amount of financial liabilities | | | Related amounts not offset in the | | | | | | | | recognized financial | | | Gross amount offset in the | | | presented in the statement of | | | statement of financial position(2) | | | | | | | | liabilities(1) | | | statement of financial position | | | financial position | | | Financial instruments(3) | | | Cash collateral pledged | | | Net amount | | | Securities sold under repurchase agreements | | | 349,164 | | | | - | | | | 349,164 | | | | (17,829 | ) | | | - | | | | 331,335 | | | Derivatives | | | 24,698 | | | | - | | | | 24,698 | | | | (4,039 | ) | | | - | | | | 20,659 | |
| | | 12/31/2014 | | | 12/31/2015 | | | | | Gross amount of | | | | | | Net amount of financial liabilities | | Related amounts not offset in the statement of financial | | | | | | Gross amount of | | | | | | Net amount of financial liabilities | | Related amounts not offset in the | | | | | | | | recognized financial | | | Gross amount offset in the | | | presented in the statement of | | | position(2) | | | | | | recognized financial | | Gross amount offset in the | | presented in the statement of | | statement of financial position(2) | | | | | | | | liabilities(1) | | | statement of financial position | | | financial position | | | Financial instruments(3) | | | Cash collateral pledged | | | Net amount | | | liabilities(1) | | | statement of financial position | | | financial position | | | Financial instruments(3) | | | Cash collateral pledged | | | Net amount | | | Securities sold under repurchase agreements | | | 288,683 | | | | - | | | | 288,683 | | | | (14,382 | ) | | | - | | | | 274,301 | | | | 336,643 | | | | - | | | | 336,643 | | | | (22,158 | ) | | | - | | | | 314,485 | | | Derivatives | | | 17,350 | | | | - | | | | 17,350 | | | | (4,059 | ) | | | (55 | ) | | | 13,236 | | | | 31,071 | | | | - | | | | 31,071 | | | | (8,150 | ) | | | (24 | ) | | | 22,897 | |
| (1) | Includes amounts of master offset agreements and other such agreements, both enforceable and unenforceable. |
| (2) | Limited to amounts subject to enforceable master offset agreements and other such agreements. |
| (3) | Includes amounts subject to enforceable master offset agreements and other such agreements, and guarantees in financial instruments. |
(1) Includes amounts of master offset agreements and other such agreements, both enforceable and unenforceable. (2) Limited to amounts subject to enforceable master offset agreements and other such agreements. (3) Includes amounts subject to enforceable master offset agreements and other such agreements, and guarantees in financial instruments. Financial assets and financial liabilities are offset in the balance sheet only when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. Derivatives and repurchase agreements not set off in the balance sheet relate to transactions in which there are enforceable master netting agreements or similar agreements, but the offset criteria have not been met in accordance with paragraph 42 of IAS 32 mainly because ITAÚ UNIBANCO HOLDING has no intention to settle on a net basis, or realize the asset and settle the liability simultaneously. Note 9 – Hedge accounting There are three types of hedge relations: Fair value hedge, Cash flow hedge, and Hedge of net investment in foreign operations. Cash flow hedge
To hedge the variation of future cash flows of interest payment and receipts and exposure to futures interest rate, ITAÚ UNIBANCO HOLDING uses futures contracts traded at BM&FBOVESPA and Chicago Stock Exchange, related to certain fixed assets and liabilities, denominated in Brazilian Reais and US Dollars, futures Euro-Dollar and interest rate swaps, related to redeemable preferred shares, denominated in US Dollars, issued by one of our subsidiaries, DDI Futures contracts, traded on BM&FBOVESPA, related to highly probable forecast transactions denominated in US Dollars and NDF (Non Deliverable Forward) and currency swap, contracts traded in the over-the-counter market, related to highly probable forecast transactions not accounted for. Under a DI Futures contract, a net payment (receipt) is made for the difference between an amount multiplied by the CDI rate and an amount computed and multiplied by a fixed rate. Under an interest rate swap, currency and futures Euro-Dollar, a net payment (receipt) is made for the difference between an amount computed multiplied by the LIBOR rate and the an amount computed and multiplied by a fixed rate. In DDI Future contracts, NDF and Forwards, the gain (loss) on exchange variation is computed as the difference between two periods of market quotation between the US Dollar and the contracted currency. The cash flow hedge strategies of ITAÚ UNIBANCO HOLDING consist of a hedge of exposure to variations in cash flows, payment of interest and exposure to interest rate, which are attributable to changes in interest rates related to assets and liabilities recognized and changes in interest rates of unrecognized assets and 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 rate. |
| · | Hedge of redeemable preferred shares: hedge of the variability in cash flows of interest payments resulting from changes in the LIBOR interest rate. |
| · | Hedge of subordinated certificates of deposit (CDB): hedge of the variability in the cash flows of interest payments resulting from changes in the CDI interest rate. |
| · | Hedge of highly probable forecast transactions: Protecting the risk associated to variation in the amount of commitments, when measured in Brazilian Reais (parent company’s functional currency) arising from variations in foreign exchange rates. |
| · | Hedge of Syndicated Loan: hedge the variability in cash flow of interest payments resulting from changes in the LIBOR interest rate. |
| · | Hedge of asset transactions: to hedge the variations in cash flows of interest receipts resulting from changes in the CDI rate. |
| · | Hedge of assets denominated in UF*: to hedge the variations in cash flows of interest receipts resulting from changes in the UF*. |
| · | Hedge of Funding: to hedge the variations in cash flows of interest payments resulting from changes in the TPM* rate and foreign exchange. |
| · | Hedge of loan operations: variations in cash flows of interest receipts resulting from changes in the TPM* rate. |
| · | Hedge of asset-backed securities under repurchase agreements: changes in cash flows from interest received on changes in Selic (benchmark interest rate). |
*UF – Chilean unit of account / TPM – Monetary policy rate 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. All hedge relationships were designated between 2008 and 2015.2016. Periods in which expected cash flows should be paid and affect the income statement are as follows: | · | Hedge of time deposits and agreements to resell: interest paid/received daily. |
| · | Hedge of redeemable preferred shares: interest paid/received every half year. |
| · | Hedge of highly probable forecast transactions: foreign exchange amount paid /received/ received on future dates. |
| · | Hedge of Syndicated Loan: interest paid/paid / received daily. |
| · | Hedge of asset transactions: interest paid/paid / received monthly. |
| · | Hedge of assets denominated in UF*: interest received monthly. |
| · | Hedge of funding: interest paid monthly. |
| · | Hedge of loan operations: interest received monthly. |
Following we present gains (or losses) of the effective and ineffective of the strategies of cash flow hedge. | | | 12/31/2016 | | | 12/31/2015 | | | Hedge instruments | | Accumulated
effective portion | | | Ineffective portion | | | Accumulated
effective portion | | | Ineffective portion | | | Interest rate futures | | | (2,051 | ) | | | 10 | | | | 2,947 | | | | 80 | | | NDF | | | - | | | | - | | | | 16 | | | | - | | | Interest rate swap | | | (27 | ) | | | (2 | ) | | | - | | | | - | | | Total | | | (2,078 | ) | | | 8 | | | | 2,963 | | | | 80 | |
The effective portion is recognized in the stockholders' equity, under other comprehensive income and the ineffective portion is recognized in the statement of income under net gain (loss) on investment securities and derivatives. To hedge future cash flows of highly probable forecast transactions, arising from futures contracts in foreign currency, against the exposure to future interest rate, ITAÚ UNIBANCO HOLDING negotiated DDI Futures contracts on BM&FBOVESPA and NDF (Non Deliverable Forward) contracts traded in the over-the-counter market. During the second quarter of 2015, part of the flow of these agreements was realized, and , accordingly, Asset Valuation Adjustment was reclassified and included in the deemed cost of assets related to Hedge of Highly Probable Forecast Transaction. At 12/31/2016, the gain (loss) on cash flow hedge expected to be reclassified from Comprehensive Income to Income in the following 12 months is R$ 130 (R$ 452 at 12/31/2015). b) Hedge of net investment in foreign operations 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, Financial Assets and Forward contracts or NDF contracts entered into by our subsidiaries abroad. In DDI Future contracts, the gain (loss) on exchange variation is computed as the difference between two periods of market quotation between the US Dollar and Brazilian Real. In the Forward or NDF contracts and Financial Assets, the gain (loss) on exchange variation is computed as the difference between two periods of market quotation between the functional currency and the US Dollar. 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 Reais (the head office’s functional currency), arising from changes in exchange rates between the functional currency of the investment abroad and the Brazilian Real. |
To hedge the risk of variation in the investment amount, when measured in Brazilian Reais (the head office’s functional currency), arising from changes in exchange rates between the functional currency of the investment abroad and the Brazilian Real. 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 2012 and the hedge instruments will mature on the sale of investments abroad, which will be in the period when the cash flows of exchange variation are expected to occur and affect the statement of income. Following we present gains (or losses) of the effective and ineffective of the strategies of Hedge of net investment in foreign operations. | | | 12/31/2016 | | | 12/31/2015 | | | Hedge instrument | | Accumulated
effective portion | | | Ineffective portion | | | Accumulated
effective portion | | | Ineffective portion | | | DDI futures | | | (7,490 | ) | | | (51 | ) | | | (11,728 | ) | | | (6 | ) | | Forward | | | 683 | | | | (48 | ) | | | 669 | | | | 44 | | | NDF | | | 2,312 | | | | (35 | ) | | | 2,801 | | | | 76 | | | Financial assets | | | 43 | | | | 2 | | | | 46 | | | | - | | | Total | | | (4,452 | ) | | | (132 | ) | | | (8,212 | ) | | | 114 | |
The effective portion is recognized in the stockholders' equity, under other comprehensive income and the ineffective portion is recognized in the statement of income under net gain (loss) on investment securities and derivatives. 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. 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. c) Fair value hedge The fair value hedge strategy of ITAÚ UNIBANCO HOLDING consists in hedging the exposure to variation in fair value, in the receipt and payment of interest related to recognized assets and liabilities. To hedge the market risk variation in the receipt and payment of interest, ITAÚ UNIBANCO HOLDING uses interest rate swap contracts related to prefixed assets and liabilities expressed in UF (Chilean Unit of Accounts - CLF), and Euros and US Dollars, issued by subsidiaries in Chile, London and London,Colombia, respectively. Under an interest rate swap contract, net receipt (payment) is made for the difference between the amount computed and multiplied by variable rate 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 and payment of interest resulting from variations in the fair value of variable rates involved. |
| · | To hedge the variations in cash flows of interest receipts resulting from changes in the CDI rate. |
To evaluate the effectiveness and to measure the ineffectiveness of such strategy, ITAÚ UNIBANCO HOLDING uses the percentage approach and dollar offset 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. |
| · | The dollar offset method is calculated based on the difference between the variation of the fair value of the hedging instrument and the variation in the fair value of the hedged item attributed to changes in the interest rate. |
Hedge relationships were designated between 2012 and 2014,2016, and maturities of related swaps will occur between 20162017 and 2030. Receipts (payments) of interest flows are expected to occur on a monthly basis, and they will affect the statement of income. Following we present gains (or losses) of the effective and ineffective portions of the strategies of cash flow hedge, hedge of net investment in foreign operations and fair value hedge. | | | 12/31/2016 | | | 12/31/2015 | | | Hedge instrument used | | Accumulated
effective portion | | | Ineffective portion | | | Accumulated
effective portion | | | Ineffective portion | | | Interest rate swap | | | (90 | ) | | | (6 | ) | | | (54 | ) | | | (3 | ) | | Total | | | (90 | ) | | | (6 | ) | | | (54 | ) | | | (3 | ) |
a) Cash flow hedge
| | | 12/31/2015 | | | 12/31/2014 | | | | | Accumulated | | | | | | Accumulated | | | | | | Hedge instruments | | effective portion | | | Ineffective portion | | | effective portion | | | Ineffective portion | | | Interest rate futures | | | 2,947 | | | | 80 | | | | 793 | | | | 45 | | | Interest rate swap | | | - | | | | - | | | | 66 | | | | - | | | NDF | | | 16 | | | | - | | | | - | | | | - | | | Total | | | 2,963 | | | | 80 | | | | 859 | | | | 45 | |
The effective portion is recognized in the stockholders' equity, under other comprehensive income and the ineffective portion is recognized in the statement of income under net gain (loss) on investment securities and derivatives.
To hedge future cash flows of highly probable forecast transactions, arising from futures contracts in foreign currency, against the exposure to future interest rate, ITAÚ UNIBANCO HOLDING negotiated DDI Futures contracts on BM&FBOVESPA and NDF (Non Deliverable Forward) contracts traded in the over-the-counter market. During the second quarter of 2015, part of the flow of these agreements was realized, and , accordingly, Asset Valuation Adjustment was reclassified and included in the deemed cost of assets related to Hedge of Highly Probable Forecast Transaction.
At 12/31/2015, the gain (loss) on cash flow hedge expected to be reclassified from Comprehensive Income to Income in the following 12 months is R$ 452 (R$ (213) at 12/31/2014 and R$ (117) at 12/31/2013).
b) Hedge of a net investment in foreign operations
| | | 12/31/2015 | | | 12/31/2014 | | | | | Accumulated | | | | | | Accumulated | | | | | | Hedge instrument | | effective portion | | | Ineffective portion | | | effective portion | | | Ineffective portion | | | DDI futures | | | (11,728 | ) | | | (6 | ) | | | (4,641 | ) | | | 25 | | | Forward | | | 669 | | | | 44 | | | | 297 | | | | 22 | | | NDF | | | 2,801 | | | | 76 | | | | 1,280 | | | | 5 | | | Financial assets | | | 46 | | | | - | | | | (14 | ) | | | - | | | Total | | | (8,212 | ) | | | 114 | | | | (3,078 | ) | | | 52 | |
The effective portion is recognized in the stockholders' equity, under other comprehensive income and the ineffective portion is recognized in the statement of income under net gain (loss) on investment securities and derivatives.
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.
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.
c) Fair value hedge
| | | 12/31/2015 | | | 12/31/2014 | | | | | Accumulated | | | | | | Accumulated | | | | | | Hedge instrument used | | effective portion | | | Ineffective portion | | | effective portion | | | Ineffective portion | | | Interest rate swap | | | (54 | ) | | | 3 | | | | (60 | ) | | | - | | | Total | | | (54 | ) | | | 3 | | | | (60 | ) | | | - | |
The effective and ineffective portion are recognized in the statement of income under net gain (loss) on investment securities and derivatives. The tables below present, for each strategy, the notional amount and the fair value adjustments of hedge instruments and the carrying amount of the hedged item: | | | 12/31/2015 | | | 12/31/2014 | | | | | Hedge instruments | | | Hedged item | | | Hedge instruments | | | Hedged item | | | Strategies | | Notional amount | | | Fair value | | | Carrying value | | | Notional
amount | | | Fair value | | | Carrying value | | | Hedge of deposits and repurchase agreements | | | 77,905 | | | | 43 | | | | 77,922 | | | | 53,198 | | | | (92 | ) | | | 53,198 | | | Hedge of redeemable preferred shares | | | - | | | | - | | | | - | | | | 1,044 | | | | 66 | | | | 1,044 | | | Hedge of syndicated loan | | | 8,200 | | | | (90 | ) | | | 8,200 | | | | 5,578 | | | | (15 | ) | | | 5,578 | | | Hedge of highly probable forecast transactions | | | 1,125 | | | | 16 | | | | 1,125 | | | | 81 | | | | - | | | | 83 | | | Hedge of net investment in foreign operations(*) | | | 21,927 | | | | (427 | ) | | | 12,815 | | | | 14,764 | | | | 296 | | | | 8,858 | | | Hedge of fixed rate loan operations | | | 4,346 | | | | 59 | | | | 4,346 | | | | 2,612 | | | | 40 | | | | 2,612 | | | Hedge of structured funding | | | 781 | | | | - | | | | 781 | | | | 531 | | | | - | | | | 531 | | | Hedge of assets transactions | | | 7,405 | | | | (263 | ) | | | 7,876 | | | | - | | | | - | | | | - | | | Total | | | 121,689 | | | | (662 | ) | | | 113,065 | | | | 77,808 | | | | 295 | | | | 71,904 | |
| (*) | Hedge instruments include the overhedge rate of 44.65% regarding taxes. |
| | | 12/31/2016 | | | 12/31/2015 | | | | | Hedge instruments | | | Hedged item | | | Hedge instruments | | | Hedged item | | | Strategies | | Notional
amount | | | Fair value
adjustments | | | Carrying value | | | Notional
amount | | | Fair value
adjustments | | | Carrying value | | | Hedge of deposits and repurchase agreements | | | 83,068 | | | | (8 | ) | | | 83,580 | | | | 77,905 | | | | 43 | | | | 77,922 | | | Hedge of syndicated loan | | | 6,844 | | | | (46 | ) | | | 6,844 | | | | 8,200 | | | | (90 | ) | | | 8,200 | | | Hedge of highly probable forecast transactions | | | - | | | | - | | | | - | | | | 1,125 | | | | 16 | | | | 1,125 | | | Hedge of net investment in foreign operations(*) | | | 21,449 | | | | 221 | | | | 12,330 | | | | 21,927 | | | | (427 | ) | | | 12,815 | | | Hedge of loan operations (Cash flow) | | | 1,121 | | | | 15 | | | | 1,121 | | | | - | | | | - | | | | - | | | Hedge of assets transactions | | | 24,168 | | | | 312 | | | | 26,495 | | | | 7,405 | | | | (263 | ) | | | 7,876 | | | Hedge of assets denominated in UF | | | 13,147 | | | | (20 | ) | | | 13,147 | | | | - | | | | - | | | | - | | | Hedge of funding (Cash flow) | | | 4,273 | | | | (22 | ) | | | 4,273 | | | | - | | | | - | | | | - | | | Hedge of Asset-backed securities under repurchase agreements | | | 2,546 | | | | 24 | | | | 2,524 | | | | - | | | | - | | | | - | | | Hedge of loan operations (Market risk) | | | 2,692 | | | | (91 | ) | | | 2,692 | | | | 4,346 | | | | 59 | | | | 4,346 | | | Hedge of available-for-sale securities | | | 472 | | | | (14 | ) | | | 472 | | | | - | | | | - | | | | - | | | Hedge of funding (Market risk) | | | 8,659 | | | | 9 | | | | 8,659 | | | | 781 | | | | - | | | | 781 | | | Total | | | 168,439 | | | | 380 | | | | 162,137 | | | | 121,689 | | | | (662 | ) | | | 113,065 | |
(*) Hedge instruments include the overhedge rate of 44.65% regarding taxes. The table below shows the breakdown by maturity of the hedging strategies: | | | 12/31/2015 | | | Strategies | | 0-1 year | | | 1-2 years | | | 2-3 years | | | 3-4 years | | | 4-5 years | | | 5-10 years | | | Over 10 years | | | Total | | | Hedge of deposits and repurchase agreements | | | 13,324 | | | | 28,185 | | | | 25,779 | | | | 6,460 | | | | 1,402 | | | | 2,755 | | | | - | | | | 77,905 | | | Hedge of syndicated loan | | | - | | | | 8,200 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 8,200 | | | Hedge of highly probable forecast transactions | | | 1,125 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,125 | | | Hedge of assets transactions | | | - | | | | 4,627 | | | | 2,778 | | | | - | | | | - | | | | - | | | | - | | | | 7,405 | | | Hedge of fixed rate loan operations | | | 339 | | | | 276 | | | | 474 | | | | 898 | | | | 88 | | | | 447 | | | | 1,824 | | | | 4,346 | | | Hedge of structured funding | | | 781 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 781 | | | Hedge of net investment in foreign operations(*) | | | 21,927 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 21,927 | | | Total | | | 37,496 | | | | 41,288 | | | | 29,031 | | | | 7,358 | | | | 1,490 | | | | 3,202 | | | | 1,824 | | | | 121,689 | |
| (*) | Classified as current, since instruments are frequently renewed. |
| | | 12/31/2016 | | | Strategies | | 0-1 year | | | 1-2 years | | | 2-3 years | | | 3-4 years | | | 4-5 years | | | 5-10 years | | | Over 10 years | | | Total | | | Hedge of deposits and repurchase agreements | | | - | | | | 32,132 | | | | 28,616 | | | | 10,188 | | | | 5,646 | | | | 6,486 | | | | - | | | | 83,068 | | | Hedge of syndicated loan | | | 6,844 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 6,844 | | | Hedge of highly probable forecast transactions | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Hedge of assets transactions | | | 4,627 | | | | 13,719 | | | | 4,890 | | | | - | | | | 932 | | | | - | | | | - | | | | 24,168 | | | Hedge of fixed rate loan operations (Cash flow) | | | 123 | | | | - | | | | - | | | | 24 | | | | 141 | | | | 833 | | | | - | | | | 1,121 | | | Hedge of net investment in foreign operations(*) | | | 21,449 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 21,449 | | | Hedge of assets denominated in UF | | | 8,940 | | | | 2,598 | | | | 1,558 | | | | - | | | | 51 | | | | - | | | | - | | | | 13,147 | | | Hedge of funding (Cash flow) | | | 121 | | | | 1,485 | | | | 73 | | | | 536 | | | | 774 | | | | 1,284 | | | | - | | | | 4,273 | | | Hedge of loan operations (Market risk) | | | 189 | | | | 422 | | | | 63 | | | | 29 | | | | 93 | | | | 335 | | | | 1,561 | | | | 2,692 | | | Hedge of available-for-sale securities | | | - | | | | - | | | | - | | | | 218 | | | | - | | | | 254 | | | | - | | | | 472 | | | Hedge of funding (Market risk) | | | 1,266 | | | | 2,460 | | | | 3,433 | | | | 701 | | | | 72 | | | | 488 | | | | 239 | | | | 8,659 | | | Hedge of Asset-backed securities under repurchase | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | agreements | | | - | | | | - | | | | 1,465 | | | | 918 | | | | 163 | | | | - | | | | - | | | | 2,546 | | | Total | | | 43,559 | | | | 52,816 | | | | 40,098 | | | | 12,614 | | | | 7,872 | | | | 9,680 | | | | 1,800 | | | | 168,439 | |
| | | 12/31/2014 | | | Strategies | | 0-1 year | | | 1-2 years | | | 2-3 years | | | 3-4 years | | | 4-5 years | | | 5-10 years | | | Over 10 years | | | Total | | | Hedge of deposits and repurchase agreements | | | 12,542 | | | | 6,278 | | | | 14,718 | | | | 18,082 | | | | 1,500 | | | | 78 | | | | - | | | | 53,198 | | | Hedge of redeemable preferred shares | | | 1,044 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,044 | | | Hedge of syndicated loan | | | - | | | | - | | | | 5,578 | | | | - | | | | - | | | | - | | | | - | | | | 5,578 | | | Hedge of highly probable forecast transactions | | | 81 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 81 | | | Hedge of fixed rate loan operations | | | - | | | | 257 | | | | 209 | | | | 161 | | | | 575 | | | | 382 | | | | 1,028 | | | | 2,612 | | | Hedge of structured funding | �� | | - | | | | 531 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 531 | | | Hedge of net investment in foreign operations(*) | | | 14,764 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 14,764 | | | Total | | | 28,431 | | | | 7,066 | | | | 20,505 | | | | 18,243 | | | | 2,075 | | | | 460 | | | | 1,028 | | | | 77,808 | |
| (*) | Classified as current, since instruments are frequently renewed. |
(*) Classified as current, since instruments are frequently renewed. | | | 12/31/2015 | | | Strategies | | 0-1 year | | | 1-2 years | | | 2-3 years | | | 3-4 years | | | 4-5 years | | | 5-10 years | | | Over 10 years | | | Total | | | Hedge of deposits and repurchase agreements | | | 13,324 | | | | 28,185 | | | | 25,779 | | | | 6,460 | | | | 1,402 | | | | 2,755 | | | | - | | | | 77,905 | | | Hedge of syndicated loan | | | - | | | | 8,200 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 8,200 | | | Hedge of highly probable forecast transactions | | | 1,125 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,125 | | | Hedge of assets transactions | | | - | | | | 4,627 | | | | 2,778 | | | | - | | | | - | | | | - | | | | - | | | | 7,405 | | | Hedge of fixed rate loan operations | | | 339 | | | | 276 | | | | 474 | | | | 898 | | | | 88 | | | | 447 | | | | 1,824 | | | | 4,346 | | | Hedge of structured funding (Market risk) | | | 781 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 781 | | | Hedge of net investment in foreign operations(*) | | | 21,927 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 21,927 | | | Total | | | 37,496 | | | | 41,288 | | | | 29,031 | | | | 7,358 | | | | 1,490 | | | | 3,202 | | | | 1,824 | | | | 121,689 | |
(*) Classified as current, since instruments are frequently renewed. Note 10 – Available-for-sale financial assets The fair value and corresponding cost of available-for-sale financial assets are as follows: | | | 12/31/2015 | | | 12/31/2014 | | | | | | | | Accumulated gain / | | | | | | | | | Accumulated gain / | | | | | | | | | | | (loss) reflected in other | | | | | | | | | (loss) reflected in other | | | | | | | | Cost | | | comprehensive income | | | Fair value | | | Cost | | | comprehensive income | | | Fair value | | | Investment funds | | | 218 | | | | - | | | | 218 | | | | 136 | | | | 5 | | | | 141 | | | Brazilian external debt bonds(1b) | | | 19,843 | | | | (2,531 | ) | | | 17,312 | | | | 11,247 | | | | (13 | ) | | | 11,234 | | | Brazilian government securities(1a) | | | 12,702 | | | | (906 | ) | | | 11,796 | | | | 14,791 | | | | (400 | ) | | | 14,391 | | | Government securities – abroad(1c) | | | 9,942 | | | | (59 | ) | | | 9,883 | | | | 8,692 | | | | (73 | ) | | | 8,619 | | | Belgium | | | - | | | | - | | | | - | | | | 57 | | | | - | | | | 57 | | | Chile | | | 1,409 | | | | (2 | ) | | | 1,407 | | | | 1,128 | | | | (9 | ) | | | 1,119 | | | Korea | | | 1,626 | | | | - | | | | 1,626 | | | | 1,782 | | | | - | | | | 1,782 | | | Denmark | | | 2,548 | | | | - | | | | 2,548 | | | | 2,699 | | | | - | | | | 2,699 | | | Spain | | | 1,060 | | | | - | | | | 1,060 | | | | 783 | | | | - | | | | 783 | | | United States | | | 2,028 | | | | (6 | ) | | | 2,022 | | | | 726 | | | | - | | | | 726 | | | France | | | - | | | | - | | | | - | | | | 131 | | | | 2 | | | | 133 | | | Netherlands | | | 122 | | | | - | | | | 122 | | | | 149 | | | | 2 | | | | 151 | | | Italy | | | - | | | | - | | | | - | | | | 70 | | | | - | | | | 70 | | | Paraguay | | | 955 | | | | (43 | ) | | | 912 | | | | 911 | | | | (62 | ) | | | 849 | | | Uruguay | | | 185 | | | | (7 | ) | | | 178 | | | | 249 | | | | (6 | ) | | | 243 | | | Other | | | 9 | | | | (1 | ) | | | 8 | | | | 7 | | | | - | | | | 7 | | | Corporate securities(1d) | | | 47,380 | | | | (544 | ) | | | 46,836 | | | | 43,917 | | | | 58 | | | | 43,975 | | | Shares | | | 706 | | | | 222 | | | | 928 | | | | 1,982 | | | | 17 | | | | 1,999 | | | Rural product note | | | 1,176 | | | | (46 | ) | | | 1,130 | | | | 1,431 | | | | (23 | ) | | | 1,408 | | | Bank deposit certificates | | | 1,576 | | | | (3 | ) | | | 1,573 | | | | 1,281 | | | | - | | | | 1,281 | | | Securitized real estate loans | | | 2,244 | | | | (207 | ) | | | 2,037 | | | | 2,489 | | | | 33 | | | | 2,522 | | | Debentures | | | 23,153 | | | | (318 | ) | | | 22,835 | | | | 20,187 | | | | 58 | | | | 20,245 | | | Eurobonds and others | | | 10,180 | | | | (68 | ) | | | 10,112 | | | | 6,672 | | | | 35 | | | | 6,707 | | | Financial bills | | | 6,893 | | | | (47 | ) | | | 6,846 | | | | 8,063 | | | | (58 | ) | | | 8,005 | | | Promissory notes | | | 1,060 | | | | (69 | ) | | | 991 | | | | 1,398 | | | | (1 | ) | | | 1,397 | | | Other | | | 392 | | | | (8 | ) | | | 384 | | | | 414 | | | | (3 | ) | | | 411 | | | Total(2) | | | 90,085 | | | | (4,040 | ) | | | 86,045 | | | | 78,783 | | | | (423 | ) | | | 78,360 | |
| (1) | Available-for-sale assets pledged as collateral of funding of financial institutions and Clients were: a) R$ 1,755 (R$ 10,321 at 12/31/2014), b) R$ 14,135 (R$ 2,081 at 12/31/2014), c) R$ 8 (R$ 8 at 12/31/2014) and d)R$ 808 (R$ 9,840 at 12/31/2014), totaling R$ 16,706 (R$ 22,250 at 12/31/2014); |
| (2) | In the period, there was no reclassification of available-for-sale financial assets to other categories of financial assets. |
| | | 12/31/2016 | | | 12/31/2015 | | | | | | | | Accumulated gain / | | | | | | | | | Accumulated gain / | | | | | | | | | | | (loss) reflected in other | | | | | | | | | (loss) reflected in other | | | | | | | | Cost | | | comprehensive income | | | Fair value | | | Cost | | | comprehensive income | | | Fair value | | | Investment funds | | | 42 | | | | - | | | | 42 | | | | 218 | | | | - | | | | 218 | | | Brazilian external debt bonds(1b) | | | 14,465 | | | | (400 | ) | | | 14,065 | | | | 19,843 | | | | (2,531 | ) | | | 17,312 | | | Brazilian government securities(1a) | | | 17,652 | | | | 286 | | | | 17,938 | | | | 12,702 | | | | (906 | ) | | | 11,796 | | | Government securities – abroad(1c) | | | 14,488 | | | | (16 | ) | | | 14,472 | | | | 9,942 | | | | (59 | ) | | | 9,883 | | | Colombia | | | 1,105 | | | | 50 | | | | 1,155 | | | | - | | | | - | | | | - | | | Chile | | | 5,832 | | | | 12 | | | | 5,844 | | | | 1,409 | | | | (2 | ) | | | 1,407 | | | Korea | | | 2,673 | | | | - | | | | 2,673 | | | | 1,626 | | | | - | | | | 1,626 | | | Denmark | | | 819 | | | | - | | | | 819 | | | | 2,548 | | | | - | | | | 2,548 | | | Spain | | | 923 | | | | - | | | | 923 | | | | 1,060 | | | | - | | | | 1,060 | | | United States | | | 1,446 | | | | (19 | ) | | | 1,427 | | | | 2,028 | | | | (6 | ) | | | 2,022 | | | Netherlands | | | 101 | | | | - | | | | 101 | | | | 122 | | | | - | | | | 122 | | | Paraguay | | | 1,167 | | | | (56 | ) | | | 1,111 | | | | 955 | | | | (43 | ) | | | 912 | | | Uruguay | | | 413 | | | | (2 | ) | | | 411 | | | | 185 | | | | (7 | ) | | | 178 | | | Other | | | 9 | | | | (1 | ) | | | 8 | | | | 9 | | | | (1 | ) | | | 8 | | | Corporate securities(1d) | | | 42,176 | | | | (416 | ) | | | 41,760 | | | | 47,380 | | | | (544 | ) | | | 46,836 | | | Shares | | | 1,020 | | | | 365 | | | | 1,385 | | | | 706 | | | | 222 | | | | 928 | | | Rural product note | | | 1,477 | | | | (52 | ) | | | 1,425 | | | | 1,176 | | | | (46 | ) | | | 1,130 | | | Bank deposit certificates | | | 2,639 | | | | 2 | | | | 2,641 | | | | 1,576 | | | | (3 | ) | | | 1,573 | | | Securitized real estate loans | | | 2,150 | | | | (55 | ) | | | 2,095 | | | | 2,244 | | | | (207 | ) | | | 2,037 | | | Debentures | | | 21,863 | | | | (693 | ) | | | 21,170 | | | | 23,153 | | | | (318 | ) | | | 22,835 | | | Eurobonds and others | | | 7,671 | | | | 44 | | | | 7,715 | | | | 10,180 | | | | (68 | ) | | | 10,112 | | | Financial bills | | | 2,822 | | | | (6 | ) | | | 2,816 | | | | 6,893 | | | | (47 | ) | | | 6,846 | | | Promissory notes | | | 2,191 | | | | (18 | ) | | | 2,173 | | | | 1,060 | | | | (69 | ) | | | 991 | | | Other | | | 343 | | | | (3 | ) | | | 340 | | | | 392 | | | | (8 | ) | | | 384 | | | Total(2) | | | 88,823 | | | | (546 | ) | | | 88,277 | | | | 90,085 | | | | (4,040 | ) | | | 86,045 | |
(1) Available-for-sale assets pledged as collateral of funding of financial institutions and Clients were: a) R$ 9,120 (R$ 1,755 at 12/31/2015), b) R$ 3,240 (R$ 14,135 at 12/31/2015), c) (R$ 8 at 12/31/2015) and d) R$ 5,075 (R$ 808 at 12/31/2015), totaling R$ 17,435 (R$ 16,706 at 12/31/2015); (2) In the period, there was no reclassification of available-for-sale financial assets to other categories of financial assets. The cost and fair value of available-for-sale financial assets by maturity are as follows:
| | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | | | Cost | | | Fair value | | | Cost | | | Fair value | | | Cost | | | Fair value | | | Cost | | | Fair value | | | Current | | | 22,754 | | | | 22,923 | | | | 22,176 | | | | 22,220 | | | | 23,516 | | | | 23,636 | | | | 22,754 | | | | 22,923 | | | Non-stated maturity | | | 923 | | | | 1,145 | | | | 2,118 | | | | 2,141 | | | | 1,010 | | | | 1,375 | | | | 923 | | | | 1,145 | | | Up to one year | | | 21,831 | | | | 21,778 | | | | 20,058 | | | | 20,079 | | | | 22,506 | | | | 22,261 | | | | 21,831 | | | | 21,778 | | | Non-current | | | 67,331 | | | | 63,122 | | | | 56,607 | | | | 56,140 | | | | 65,307 | | | | 64,641 | | | | 67,331 | | | | 63,122 | | | From one to five years | | | 35,739 | | | | 35,098 | | | | 29,853 | | | | 29,743 | | | | 39,149 | | | | 38,969 | | | | 35,739 | | | | 35,098 | | | From five to ten years | | | 17,041 | | | | 15,682 | | | | 12,779 | | | | 12,650 | | | | 12,521 | | | | 12,329 | | | | 17,041 | | | | 15,682 | | | After ten years | | | 14,551 | | | | 12,342 | | | | 13,975 | | | | 13,747 | | | | 13,637 | | | | 13,343 | | | | 14,551 | | | | 12,342 | | | Total | | | 90,085 | | | | 86,045 | | | | 78,783 | | | | 78,360 | | | | 88,823 | | | | 88,277 | | | | 90,085 | | | | 86,045 | |
Note 11 - Held-to maturity financial assets The amortized cost of held-to-maturity financial assets is as follows: | | | 12/31/2015 | | | 12/31/2014 | | | | | Amortized cost | | | Amortized cost | | | Corporate securities | | | 15,661 | | | | 13,549 | | | Brazilian external debt bonds(1) | | | 14,788 | | | | 10,304 | | | Brazilian government securities | | | 11,721 | | | | 10,555 | | | Government securities – abroad | | | 15 | | | | 26 | | | Total(2) | | | 42,185 | | | | 34,434 | |
| (1) | Held-to-maturity financial assets pledged as collateral of funding transactions of financial institutions and clients were R$ 9,460 (R$ 6,102 at 12/31/2014). |
| (2) | In the period, there was no reclassification of held-to maturity financial assets to other categories of financial assets. |
| | | 12/31/2016 | | | 12/31/2015 | | | | | Amortized cost | | | Amortized cost | | | Corporate securities | | | 14,977 | | | | 15,661 | | | Brazilian external debt bonds(1b) | | | 12,042 | | | | 14,788 | | | Brazilian government securities(1a) | | | 12,937 | | | | 11,721 | | | Government securities – abroad | | | 539 | | | | 15 | | | Total(2) | | | 40,495 | | | | 42,185 | |
(1) Held-to-maturity financial assets pledged as collateral of funding transactions of financial institutions and clients were a) (R$ 9,460 at 12/31/2015), b) R$ 11,778. (2) In the period, there was no reclassification of held-to maturity financial assets to other categories of financial assets. The interest income related to held-to-maturity financial assets was R$ 3,7583,788 (R$ 2,3473,758 from 01/01 to 12/31/2014 and R$ 486 from 01/01 to 12/31/2013)2015). The fair value of held-to-maturity financial assets is disclosed in Note 31. The amortized cost of Held-to-Maturity Financial assets by maturity is as follows: | | | 12/31/2015 | | | 12/31/2014 | | | | | Amortized cost | | | Amortized cost | | | Current | | | 661 | | | | 980 | | | Up to one year | | | 661 | | | | 980 | | | Non-current | | | 41,524 | | | | 33,454 | | | From one to five years | | | 14,500 | | | | 13,609 | | | From five to ten years | | | 18,870 | | | | 11,582 | | | After ten years | | | 8,154 | | | | 8,263 | | | Total | | | 42,185 | | | | 34,434 | |
| | | 12/31/2016 | | | 12/31/2015 | | | | | Amortized cost | | | Amortized cost | | | Current | | | 2,498 | | | | 661 | | | Up to one year | | | 2,498 | | | | 661 | | | Non-current | | | 37,997 | | | | 41,524 | | | From one to five years | | | 19,376 | | | | 14,500 | | | From five to ten years | | | 10,957 | | | | 18,870 | | | After ten years | | | 7,664 | | | | 8,154 | | | Total | | | 40,495 | | | | 42,185 | |
Note 12 - Loan operations and lease operations portfolio | a) | Composition of loan operations and lease operations |
Below is the composition of the carrying amount of loan operations and lease operations by type, sector of debtor, maturity and concentration: | Loan operations and lease operations by type | | 12/31/2015 | | | 12/31/2014 | | | Individuals | | | 187,220 | | | | 185,953 | | | Credit card | | | 58,542 | | | | 59,321 | | | Personal loan | | | 28,396 | | | | 27,953 | | | Payroll loans | | | 45,434 | | | | 40,525 | | | Vehicles | | | 20,058 | | | | 29,047 | | | Mortgage loans | | | 34,790 | | | | 29,107 | | | | | | | | | | | | | Corporate | | | 139,989 | | | | 135,928 | | | | | | | | | | | | | Small and medium businesses | | | 78,576 | | | | 79,912 | | | | | | | | | | | | | Foreign loans - Latin America | | | 68,463 | | | | 50,638 | | | Total loan operations and lease operations | | | 474,248 | | | | 452,431 | | | | | | | | | | | | | Allowance for loan and lease losses | | | (26,844 | ) | | | (22,392 | ) | | | | | | | | | | | | Total loan operations and lease operations, net of allowance for loan and lease losses | | | 447,404 | | | | 430,039 | |
| Loan operations and lease operations by type | | 12/31/2016 | | | 12/31/2015 | | | Individuals | | | 183,147 | | | | 187,220 | | | Credit card | | | 59,022 | | | | 58,542 | | | Personal loan | | | 25,813 | | | | 28,396 | | | Payroll loans | | | 44,636 | | | | 45,434 | | | Vehicles | | | 15,434 | | | | 20,058 | | | Mortgage loans | | | 38,242 | | | | 34,790 | | | | | | | | | | | | | Corporate | | | 121,754 | | | | 152,527 | | | | | | | | | | | | | Small and medium businesses | | | 58,935 | | | | 66,038 | | | | | | | | | | | | | Foreign loans - Latin America | | | 126,530 | | | | 68,463 | | | | | | | | | | | | | Total loan operations and lease operations | | | 490,366 | | | | 474,248 | | | | | | | | | | | | | Allowance for loan and lease losses | | | (26,972 | ) | | | (26,844 | ) | | | | | | | | | | | | Total loan operations and lease operations, net of allowance for loan and lease losses | | | 463,394 | | | | 447,404 | |
| By maturity | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | Overdue as from 1 day | | | 15,596 | | | | 13,074 | | | | 16,843 | | | | 15,596 | | | Falling due up to 3 months | | | 128,389 | | | | 128,365 | | | | 130,313 | | | | 128,389 | | | Falling due more than 3 months but less than 1 year | | | 111,083 | | | | 111,092 | | | | 112,923 | | | | 111,083 | | | Falling due after 1 year | | | 219,180 | | | | 199,900 | | | | 230,287 | | | | 219,180 | | | | | | | | | | | | | | Total loan operations and lease operations | | | 474,248 | | | | 452,431 | | | | 490,366 | | | | 474,248 | |
| By concentration | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | Largest debtor | | | 4,615 | | | | 4,032 | | | | 3,543 | | | | 4,615 | | | 10 largest debtors | | | 27,173 | | | | 23,646 | | | | 21,609 | | | | 27,173 | | | 20 largest debtors | | | 40,831 | | | | 35,325 | | | | 32,720 | | | | 40,831 | | | 50 largest debtors | | | 63,797 | | | | 58,180 | | | | 52,992 | | | | 63,797 | | | 100 largest debtors | | | 85,167 | | | | 79,617 | | | | 72,441 | | | | 85,167 | |
The breakdown of the Loan and Lease Operations Portfoliolease 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 of 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$ 2,017, R$ 1,882 and R$ 1,623 and R$ 1,681 in interest and similar income as of 12/31/2016, 12/31/2015 and 12/31/2014 and 12/31/2013, respectively, with the same impact on the allowance for loan and lease losses expenses. b) Allowance for loan and lease losses | b) | Allowance for loan and lease losses |
The changes in the allowance for loan and lease losses are shown in the table below: | | | Opening | | | Balance arising from the | | | | | | | | | Closing | | | | | balance | | | aquisition of companies | | | | | | Net increase / | | | balance | | | Composition of the carrying amount by class of assets | | 12/31/2014 | | | (Note 2.4a I) | | | Write-offs | | | (Reversal) | | | 12/31/2015 | | | Individuals | | | 13,385 | | | | - | | | | (11,235 | ) | | | 12,567 | | | | 14,717 | | | Credit card | | | 3,740 | | | | - | | | | (4,055 | ) | | | 4,456 | | | | 4,141 | | | Personal loans | | | 7,024 | | | | - | | | | (5,221 | ) | | | 6,527 | | | | 8,330 | | | Payroll loans | | | 1,107 | | | | - | | | | (622 | ) | | | 834 | | | | 1,319 | | | Vehicles | | | 1,469 | | | | - | | | | (1,294 | ) | | | 699 | | | | 874 | | | Mortgage loans | | | 45 | | | | - | | | | (43 | ) | | | 51 | | | | 53 | | | Corporate | | | 2,899 | | | | - | | | | (4,321 | ) | | | 7,537 | | | | 6,115 | | | Small and medium businesses | | | 5,373 | | | | - | | | | (3,981 | ) | | | 3,761 | | | | 5,153 | | | Foreign loans - Latin America | | | 735 | | | | - | | | | (528 | ) | | | 652 | | | | 859 | | | Total | | | 22,392 | | | | - | | | | (20,065 | ) | | | 24,517 | | | | 26,844 | |
| Composition of the carrying amount by class of assets | | Opening
Balance
12/31/2015 | | | Write-offs | | | Net increase /
(Reversal) | | | Closing
balance
12/31/2016 | | | | | | | | | | | | | | | | | Individuals | | | 14,717 | | | | (13,682 | ) | | | 13,224 | | | | 14,259 | | | Credit card | | | 4,141 | | | | (4,905 | ) | | | 4,457 | | | | 3,693 | | | Personal loans | | | 8,330 | | | | (6,745 | ) | | | 6,171 | | | | 7,756 | | | Payroll loans | | | 1,319 | | | | (1,273 | ) | | | 2,062 | | | | 2,108 | | | Vehicles | | | 874 | | | | (709 | ) | | | 479 | | | | 644 | | | Mortgage loans | | | 53 | | | | (50 | ) | | | 55 | | | | 58 | | | Corporate | | | 6,459 | | | | (4,985 | ) | | | 4,388 | | | | 5,862 | | | Small and medium businesses | | | 4,809 | | | | (4,267 | ) | | | 4,201 | | | | 4,743 | | | Foreign loans - Latin America | | | 859 | | | | (1,317 | ) | | | 2,566 | | | | 2,108 | | | Total | | | 26,844 | | | | (24,251 | ) | | | 24,379 | | | | 26,972 | |
| Composition of the carrying amount by class of assets | | | Opening
balance
12/31/2014 | | | Write-offs | | | Net increase /
(Reversal) | | | Closing
balance
12/31/2015 | | | | | Opening | | Balance arising from the | | | | | | | | Closing | | | | | | | | | | | | | | balance | | aquisition of companies | | | | Net increase / | | balance | | | | Composition of the carrying amount by class of assets | | 12/31/2013 | | | (Note 2.4a I) | | | Write-offs | | | (Reversal) | | | 12/31/2014 | | | | Individuals | | | 13,853 | | | | - | | | | (12,668 | ) | | | 12,200 | | | | 13,385 | | | | 13,385 | | | | (11,235 | ) | | | 12,567 | | | | 14,717 | | | Credit card | | | 2,952 | | | | - | | | | (3,784 | ) | | | 4,572 | | | | 3,740 | | | | 3,740 | | | | (4,055 | ) | | | 4,456 | | | | 4,141 | | | Personal loans | | | 6,488 | | | | - | | | | (5,150 | ) | | | 5,686 | | | | 7,024 | | | | 7,024 | | | | (5,221 | ) | | | 6,527 | | | | 8,330 | | | Payroll loans | | | 1,133 | | | | - | | | | (429 | ) | | | 403 | | | | 1,107 | | | | 1,107 | | | | (622 | ) | | | 834 | | | | 1,319 | | | Vehicles | | | 3,245 | | | | - | | | | (3,254 | ) | | | 1,478 | | | | 1,469 | | | | 1,469 | | | | (1,294 | ) | | | 699 | | | | 874 | | | Mortgage loans | | | 35 | | | | - | | | | (51 | ) | | | 61 | | | | 45 | | | | 45 | | | | (43 | ) | | | 51 | | | | 53 | | | Corporate | | | 1,775 | | | | - | | | | (672 | ) | | | 1,796 | | | | 2,899 | | | | 3,114 | | | | (4,321 | ) | | | 7,666 | | | | 6,459 | | | Small and medium businesses | | | 6,085 | | | | - | | | | (4,992 | ) | | | 4,280 | | | | 5,373 | | | | 5,158 | | | | (3,981 | ) | | | 3,632 | | | | 4,809 | | | Foreign loans - Latin America | | | 522 | | | | - | | | | (343 | ) | | | 556 | | | | 735 | | | | 735 | | | | (528 | ) | | | 652 | | | | 859 | | | Total | | | 22,235 | | | | - | | | | (18,675 | ) | | | 18,832 | | | | 22,392 | | | | 22,392 | | | | (20,065 | ) | | | 24,517 | | | | 26,844 | |
| Composition of the carrying amount by class of assets | | | Opening
balance
12/31/2013 | | | Write-offs | | | Net increase /
(Reversal) | | | Closing
balance
12/31/2014 | | | | | Opening | | Balance arising from the | | | | | | | | Closing | | | | | | | | | | | | | | balance | | aquisition of companies | | | | Net increase / | | balance | | | | Composition of the carrying amount by class of assets | | 12/31/2012 | | | (Note 2.4a I) | | | Write-offs | | | (Reversal) | | | 12/31/2013 | | | | Individuals | | | 14,844 | | | | 435 | | | | (13,541 | ) | | | 12,115 | | | | 13,853 | | | | 13,853 | | | | (12,668 | ) | | | 12,200 | | | | 13,385 | | | Credit card | | | 2,863 | | | | 357 | | | | (3,513 | ) | | | 3,245 | | | | 2,952 | | | | 2,952 | | | | (3,784 | ) | | | 4,572 | | | | 3,740 | | | Personal loans | | | 6,841 | | | | 78 | | | | (6,247 | ) | | | 5,816 | | | | 6,488 | | | | 6,488 | | | | (5,150 | ) | | | 5,686 | | | | 7,024 | | | Payroll loans | | | 867 | | | | - | | | | (480 | ) | | | 746 | | | | 1,133 | | | | 1,133 | | | | (429 | ) | | | 403 | | | | 1,107 | | | Vehicles | | | 4,227 | | | | - | | | | (3,263 | ) | | | 2,281 | | | | 3,245 | | | | 3,245 | | | | (3,254 | ) | | | 1,478 | | | | 1,469 | | | Mortgage loans | | | 46 | | | | - | | | | (38 | ) | | | 27 | | | | 35 | | | | 35 | | | | (51 | ) | | | 61 | | | | 45 | | | Corporate | | | 1,356 | | | | - | | | | (478 | ) | | | 897 | | | | 1,775 | | | | 2,006 | | | | (672 | ) | | | 1,780 | | | | 3,114 | | | Small and medium businesses | | | 9,091 | | | | - | | | | (7,573 | ) | | | 4,567 | | | | 6,085 | | | | 5,854 | | | | (4,992 | ) | | | 4,296 | | | | 5,158 | | | Foreign loans - Latin America | | | 422 | | | | - | | | | (177 | ) | | | 277 | | | | 522 | | | | 522 | | | | (343 | ) | | | 556 | | | | 735 | | | Total | | | 25,713 | | | | 435 | | | | (21,769 | ) | | | 17,856 | | | | 22,235 | | | | 22,235 | | | | (18,675 | ) | | | 18,832 | | | | 22,392 | |
The composition of the allowance for loan and lease losses by customer sector is shown in the following table: | | | 12/31/2015 | | | 12/31/2014 | | | Public sector | | | 2 | | | | 6 | | | Industry and commerce | | | 4,314 | | | | 4,146 | | | Services | | | 6,001 | | | | 3,682 | | | Natural resources | | | 922 | | | | 391 | | | Other sectors | | | 18 | | | | 16 | | | Individuals | | | 15,587 | | | | 14,151 | | | Total | | | 26,844 | | | | 22,392 | |
| | | 12/31/2016 | | | 12/31/2015 | | | Public sector | | | 5 | | | | 2 | | | Industry and commerce | | | 5,253 | | | | 4,314 | | | Services | | | 5,237 | | | | 6,001 | | | Natural resources | | | 872 | | | | 922 | | | Other sectors | | | 19 | | | | 18 | | | Individuals | | | 15,586 | | | | 15,587 | | | Total | | | 26,972 | | | | 26,844 | |
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,or, in aggregate, for financial assets that are not individually significant (Note 2.4g VIII)2.4d X). The composition of the allowance for loan and lease losses by type of assessment for objective evidence of impairment is shown in the following table: | | | 12/31/2015 | | | 12/31/2014 | | | | | Impaired | | | Not impaired | | | Total | | | Impaired | | | Not impaired | | | Total | | | | | Loan | | | Allowance | | | Loan | | | Allowance | | | Loan | | | Allowance | | | Loan | | | Allowance | | | Loan | | | Allowance | | | Loan | | | Allowance | | | I – Individually evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate(*) | | | 11,339 | | | | 5,528 | | | | 128,650 | | | | 587 | | | | 139,989 | | | | 6,115 | | | | 3,749 | | | | 1,731 | | | | 132,179 | | | | 1,168 | | | | 135,928 | | | | 2,899 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | II- Collectively evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Individuals | | | 11,579 | | | | 6,587 | | | | 175,641 | | | | 8,130 | | | | 187,220 | | | | 14,717 | | | | 9,727 | | | | 5,641 | | | | 176,226 | | | | 7,744 | | | | 185,953 | | | | 13,385 | | | Credit card | | | 4,072 | | | | 2,436 | | | | 54,470 | | | | 1,705 | | | | 58,542 | | | | 4,141 | | | | 3,332 | | | | 1,944 | | | | 55,989 | | | | 1,796 | | | | 59,321 | | | | 3,740 | | | Personal loans | | | 5,049 | | | | 3,442 | | | | 23,347 | | | | 4,888 | | | | 28,396 | | | | 8,330 | | | | 3,886 | | | | 2,619 | | | | 24,067 | | | | 4,405 | | | | 27,953 | | | | 7,024 | | | Payroll loans | | | 1,242 | | | | 227 | | | | 44,192 | | | | 1,092 | | | | 45,434 | | | | 1,319 | | | | 626 | | | | 163 | | | | 39,899 | | | | 944 | | | | 40,525 | | | | 1,107 | | | Vehicles | | | 880 | | | | 459 | | | | 19,178 | | | | 415 | | | | 20,058 | | | | 874 | | | | 1,633 | | | | 897 | | | | 27,414 | | | | 572 | | | | 29,047 | | | | 1,469 | | | Mortgage loans | | | 336 | | | | 23 | | | | 34,454 | | | | 30 | | | | 34,790 | | | | 53 | | | | 250 | | | | 18 | | | | 28,857 | | | | 27 | | | | 29,107 | | | | 45 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Small and medium businesses | | | 3,564 | | | | 2,545 | | | | 75,012 | | | | 2,608 | | | | 78,576 | | | | 5,153 | | | | 3,225 | | | | 2,640 | | | | 76,687 | | | | 2,733 | | | | 79,912 | | | | 5,373 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Foreign loans - Latin America | | | 675 | | | | 313 | | | | 67,788 | | | | 546 | | | | 68,463 | | | | 859 | | | | 505 | | | | 267 | | | | 50,133 | | | | 468 | | | | 50,638 | | | | 735 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 27,157 | | | | 14,973 | | | | 447,091 | | | | 11,871 | | | | 474,248 | | | | 26,844 | | | | 17,206 | | | | 10,279 | | | | 435,225 | | | | 12,113 | | | | 452,431 | | | | 22,392 | |
| | | 12/31/2016 | | | 12/31/2015 | | | | | Impaired | | | Not impaired | | | Total | | | Impaired | | | Not impaired | | | Total | | | | | Loan | | | Allowance | | | Loan | | | Allowance | | | Loan | | | Allowance | | | Loan | | | Allowance | | | Loan | | | Allowance | | | Loan | | | Allowance | | | I – Individually evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate(*) | | | 14,138 | | | | 5,351 | | | | 107,616 | | | | 511 | | | | 121,754 | | | | 5,862 | | | | 11,627 | | | | 5,716 | | | | 140,900 | | | | 743 | | | | 152,527 | | | | 6,459 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | II- Collectively evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Individuals | | | 10,763 | | | | 6,756 | | | | 172,384 | | | | 7,503 | | | | 183,147 | | | | 14,259 | | | | 11,579 | | | | 6,587 | | | | 175,641 | | | | 8,130 | | | | 187,220 | | | | 14,717 | | | Credit card | | | 3,512 | | | | 2,150 | | | | 55,510 | | | | 1,543 | | | | 59,022 | | | | 3,693 | | | | 4,072 | | | | 2,436 | | | | 54,470 | | | | 1,705 | | | | 58,542 | | | | 4,141 | | | Personal loans | | | 4,837 | | | | 3,302 | | | | 20,976 | | | | 4,454 | | | | 25,813 | | | | 7,756 | | | | 5,049 | | | | 3,442 | | | | 23,347 | | | | 4,888 | | | | 28,396 | | | | 8,330 | | | Payroll loans | | | 1,431 | | | | 954 | | | | 43,205 | | | | 1,154 | | | | 44,636 | | | | 2,108 | | | | 1,242 | | | | 227 | | | | 44,192 | | | | 1,092 | | | | 45,434 | | | | 1,319 | | | Vehicles | | | 591 | | | | 326 | | | | 14,843 | | | | 318 | | | | 15,434 | | | | 644 | | | | 880 | | | | 459 | | | | 19,178 | | | | 415 | | | | 20,058 | | | | 874 | | | Mortgage loans | | | 392 | | | | 24 | | | | 37,850 | | | | 34 | | | | 38,242 | | | | 58 | | | | 336 | | | | 23 | | | | 34,454 | | | | 30 | | | | 34,790 | | | | 53 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Small and medium businesses | | | 3,646 | | | | 2,523 | | | | 55,289 | | | | 2,220 | | | | 58,935 | | | | 4,743 | | | | 3,276 | | | | 2,357 | | | | 62,762 | | | | 2,452 | | | | 66,038 | | | | 4,809 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Foreign loans - Latin America | | | 1,770 | | | | 727 | | | | 124,760 | | | | 1,381 | | | | 126,530 | | | | 2,108 | | | | 675 | | | | 313 | | | | 67,788 | | | | 546 | | | | 68,463 | | | | 859 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 30,317 | | | | 15,357 | | | | 460,049 | | | | 11,615 | | | | 490,366 | | | | 26,972 | | | | 27,157 | | | | 14,973 | | | | 447,091 | | | | 11,871 | | | | 474,248 | | | | 26,844 | |
(*) As detailed in Note 2.4.g.VIII,2.4.d X, 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. | 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: | | | 12/31/2015 | | | | | Minimum future | | | Future financial | | | Present | | | | | payments | | | income | | | value | | | Current | | | 3,075 | | | | (794 | ) | | | 2,281 | | | Up to 1 year | | | 3,075 | | | | (794 | ) | | | 2,281 | | | Non-current | | | 3,402 | | | | (1,050 | ) | | | 2,352 | | | From 1 to 5 years | | | 3,172 | | | | (1,014 | ) | | | 2,158 | | | Over 5 years | | | 230 | | | | (36 | ) | | | 194 | | | Total | | | 6,477 | | | | (1,844 | ) | | | 4,633 | |
| | | 12/31/2016 | | | | | Minimum future | | | Future financial | | | Present | | | | | payments | | | income | | | value | | | Current | | | 3,572 | | | | (1,636 | ) | | | 1,936 | | | Up to 1 year | | | 3,572 | | | | (1,636 | ) | | | 1,936 | | | Non-current | | | 9,726 | | | | (2,955 | ) | | | 6,771 | | | From 1 to 5 years | | | 5,741 | | | | (2,778 | ) | | | 2,963 | | | Over 5 years | | | 3,985 | | | | (177 | ) | | | 3,808 | | | Total | | | 13,298 | | | | (4,591 | ) | | | 8,707 | |
| | | 12/31/2014 | | | 12/31/2015 | | | | | Minimum future | | Future financial | | Present | | | Minimum future | | Future financial | | Present | | | | | payments | | income | | value | | | payments | | | income | | | value | | | Current | | | 4,109 | | | | (713 | ) | | | 3,396 | | | | 3,075 | | | | (794 | ) | | | 2,281 | | | Up to 1 year | | | 4,109 | | | | (713 | ) | | | 3,396 | | | | 3,075 | | | | (794 | ) | | | 2,281 | | | Non-current | | | 4,133 | | | | (1,089 | ) | | | 3,044 | | | | 3,402 | | | | (1,050 | ) | | | 2,352 | | | From 1 to 5 years | | | 3,947 | | | | (1,061 | ) | | | 2,886 | | | | 3,172 | | | | (1,014 | ) | | | 2,158 | | | Over 5 years | | | 186 | | | | (28 | ) | | | 158 | | | | 230 | | | | (36 | ) | | | 194 | | | Total | | | 8,242 | | | | (1,802 | ) | | | 6,440 | | | | 6,477 | | | | (1,844 | ) | | | 4,633 | |
The allowance for loan and lease losses related to the lease portfolio amounts to: R$ 176254 (R$ 302176 at 12/31/2014)2015). | d) | Sale or transfer of financial assets |
ITAÚ UNIBANCO HOLDING carried out operations related to the sale or transfer of financial assets in which there was the retention of credit risks of the financial assets transferred, through joint obligation clauses. Therefore, such operations remained recorded as loan operations and represent the following amounts at December 31, 20152016 and December 31, 2014:2015: | | | 12/31/2015 | | | 12/31/2014 | | | | Assets | | | Liabilities(*) | | | Assets | | | Liabilities(*) | | | | | Book | | | Fair | | | Book | | | Fair | | | Book | | | Fair | | | Book | | | Fair | | | Nature of operation | | value | | | value | | | value | | | value | | | value | | | value | | | value | | | value | | | Companies – working capital | | | 2,806 | | | | 2,763 | | | | 2,805 | | | | 2,752 | | | | 1,106 | | | | 1,106 | | | | 1,106 | | | | 1,106 | | | Individuals – mortgage loan | | | 2,849 | | | | 2,849 | | | | 2,849 | | | | 2,849 | | | | 3,439 | | | | 3,433 | | | | 3,438 | | | | 3,418 | | | Total | | | 5,655 | | | | 5,612 | | | | 5,654 | | | | 5,601 | | | | 4,545 | | | | 4,539 | | | | 4,544 | | | | 4,524 | |
| | | 12/31/2016 | | | 12/31/2015 | | | | | Assets | | | Liabilities(1) | | | Assets | | | Liabilities(1) | | | Nature of operation | | Book
value | | | Farir
value | | | Book
value | | | Fair
value | | | Book
value | | | Fair
value | | | Book
value | | | Fair
value | | | Companies – working capital | | | 2,768 | | | | 2,768 | | | | 2,768 | | | | 2,768 | | | | 2,849 | | | | 2,849 | | | | 2,849 | | | | 2,849 | | | Companies - loan(2) | | | - | | | | - | | | | 8 | | | | 8 | | | | - | | | | - | | | | - | | | | - | | | Individuals - vehicles(2) | | | - | | | | - | | | | 4 | | | | 4 | | | | - | | | | - | | | | - | | | | - | | | Individuals – mortgage loan | | | 3,061 | | | | 2,960 | | | | 3,055 | | | | 2,944 | | | | 2,806 | | | | 2,763 | | | | 2,805 | | | | 2,752 | | | Total | | | 5,829 | | | | 5,728 | | | | 5,835 | | | | 5,724 | | | | 5,655 | | | | 5,612 | | | | 5,654 | | | | 5,601 | |
(*)
(1) Under Interbank Market Debt. (2) Assignment of operations that had already been written down to losses Note 13 - Investments in associates and joint ventures a) The following table shows the main investments of ITAÚ UNIBANCO HOLDING: | | | Interest % | | | | | | | | | | | | | | | | | | | | | | | at 12/31/2015 | | | 12/31/2015 | | | | | | | | | | | | | | Other | | | | | | | | | | | | | | | | | | | | | | | Stockholders’ | | | Comprehensive | | | | | | | | | Equity in | | | | | | | | Total | | | Voting | | | equity | | | Income | | | Net income | | | Investment | | | earnings | | | Market value(g) | | | Associates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Porto Seguro Itaú Unibanco Participações S.A.(a) (b) | | | 42.93 | | | | 42.93 | | | | 3,931 | | | | (26 | ) | | | 708 | | | | 2,464 | | | | 289 | | | | 2,830 | | | BSF Holding S.A.(c) | | | 49.00 | | | | 49.00 | | | | 1,561 | | | | - | | | | 447 | | | | 1,348 | | | | 219 | | | | - | | | IRB-Brasil Resseguros S.A.(a) (d) | | | 15.01 | | | | 15.01 | | | | 3,213 | | | | 12 | | | | 674 | | | | 475 | | | | 102 | | | | - | | | Other(e) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 106 | | | | 12 | | | | - | | | Joint Ventures - Other(f) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 6 | | | | (2 | ) | | | - | | | Total | | | - | | | | - | | | | - | | | | - | | | | - | | | | 4,399 | | | | 620 | | | | - | |
| | | Interest % | | | | | | | | at 12/31/2016 | | | 12/31/2016 | | | | | Total | | | Voting | | | Stockholders’
equity | | | Other
Comprehensive
Income | | | Net income | | | Investment | | | Equity in
earnings | | | Market value(g) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Associates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Porto Seguro Itaú Unibanco Participações S.A.(a) (b) | | | 42.93 | | | | 42.93 | | | | 4,251 | | | | 26 | | | | 293 | | | �� | 2,587 | | | | 241 | | | | 2,644 | | | BSF Holding S.A.(c) | | | 49.00 | | | | 49.00 | | | | 2,067 | | | | (1 | ) | | | 396 | | | | 1,687 | | | | 194 | | | | - | | | IRB-Brasil Resseguros S.A.(a) (d) | | | 15.01 | | | | 15.01 | | | | 3,230 | | | | (17 | ) | | | 745 | | | | 478 | | | | 109 | | | | - | | | Other(e) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 114 | | | | 13 | | | | - | | | Joint Ventures - Other(f) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 207 | | | | (29 | ) | | | - | | | Total | | | - | | | | - | | | | - | | | | - | | | | - | | | | 5,073 | | | | 528 | | | | - | |
| | | Interest % | | | | | | | | | | | | | | | | | | | | | at 12/31/2014 | | | 12/31/2014 | | | 12/31/2013 | | | Interest % | | | | | | | | | | | | | | | | | Other | | | | | | | | | | | | | | | | | at 12/31/2015 | | | 12/31/2015 | | | 12/31/2014 | | | | | | | | | Stockholders’ | | comprehensive | | | | | | Equity in | | | | | | Equity in | | | Total | | | Voting | | | Stockholders’
equity | | | Other
comprehensive
income | | | Net income | | | Investment | | | Equity in
earnings | | | Market value(g) | | | Equity in
earnings | | | | | Total | | | Voting | | | equity | | | income | | | Net income | | | Investment | | | earnings | | | Market value(g) | | | earnings | | | | | | | | | | | | | | | | | | | | | | Associates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Porto Seguro Itaú Unibanco Participações S.A.(a) (b) | | | 42.93 | | | | 42.93 | | | | 3,647 | | | | 7 | | | | 492 | | | | 2,357 | | | | 196 | | | | 2,988 | | | | 466 | | | | 42.93 | | | | 42.93 | | | | 3,931 | | | | (26 | ) | | | 708 | | | | 2,464 | | | | 289 | | | | 2,830 | | | | 196 | | | BSF Holding S.A.(c) | | | 49.00 | | | | 49.00 | | | | 1,232 | | | | - | | | | 413 | | | | 1,187 | | | | 202 | | | | - | | | | 104 | | | | 49.00 | | | | 49.00 | | | | 1,561 | | | | - | | | | 447 | | | | 1,348 | | | | 219 | | | | - | | | | 202 | | | IRB-Brasil Resseguros S.A.(a) (d) | | | 15.01 | | | | 15.01 | | | | 3,016 | | | | - | | | | 890 | | | | 445 | | | | 134 | | | | - | | | | 12 | | | | 15.01 | | | | 15.01 | | | | 3,213 | | | | 12 | | | | 674 | | | | 475 | | | | 102 | | | | - | | | | 134 | | | Other(e) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 97 | | | | 36 | | | | - | | | | 15 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 106 | | | | 12 | | | | - | | | | 36 | | | Joint Ventures - Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | MCC Securities Inc.(h) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2 | | | | Other(f) | | | - | | | | - | | | | - | | | | - | | | | - | | | | 4 | | | | (3 | ) | | | - | | | | 4 | | | | Joint Ventures - Other(f) | | | | | | | | | | | | | | | | | | | | | | | | 6 | | | | (2 | ) | | | | | | | (3 | ) | | Total | | | - | | | | - | | | | - | | | | - | | | | - | | | | 4,090 | | | | 565 | | | | - | | | | 603 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 4,399 | | | | 620 | | | | - | | | | 565 | |
(a) For purpose of recording the participation in earnings, at 12/31/2016 the position at 11/30/2016 was used and at 12/31/2015 the position at 11/30/2015 was used and at 12/31/2014 the position at 11/30/2014 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$ 762 at 12/31/2016 and R$ 776 at 12/31/2015 and R$ 791 at 12/31/2014 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 book value. (c) In May 2012 Itaú Unibanco S.A. acquired 137,004,000 common shares of BSF Holding S.A. (parent company of Banco Carrefour) for R$ 816 which corresponds to 49% of interest in its capital. The investment amount includes R$ 583 at582 to goodwill and R$ 92 to dividends provisioned not received on 12/31/2015 which correspond to goodwill.2016. (d) Previously accounted for as a financial instrument. As from the 4th quarter of 2013, after completing the privatization process, ITAÚ UNIBANCO HOLDING started to exercise a significant influence over IRB. Accordingly, as from this date, the investment has been accounted for under the equity method. (e) At 12/31/2015,2016, includes interest in total capital and voting capital of the following companies: Compañia Uruguaya de Medios de Procesamiento S.A. (38.39%(39.58% total and voting capital ),and 38,39% on 12/31/2015), Rias Redbanc S.A. (25% total and voting capital; 20% atcapital and 25% on 12/31/2014),2015) and Tecnologia Bancária S.A. (24.91% total capital and voting capital). Latosol Empreendimentos e Participação Ltda (32.11% totalcapital and voting capital) company settled in24,91% on 12/30/2014.31/2015). (f) At 12/31/2015,2016, includes interest in total capital and voting capital of the following companies: Olimpia Promoção e Serviços S.A. (50% total and voting capital)capital and 50% on 12/31/2015); Conectcar Soluções de Mobilidade Eletronica S.A.(50% capital total e votante) acquired at 01/29/2016 and includes income not arising from profit subsidiaries. (g) Disclosed only for public companies. (h)The total investment was purchased in August 2014. – Note 3a.
At 12/31/2015,2016, ITAÚ UNIBANCO HOLDING receives / recognizes dividends and interest on capital of the unconsolidated companies being the main IRB - Brasil Resseguros S.A. in the amount of R$ 104 (R$ 73 at 12/31/2015 and R$ 46 on 12/31/2014), BSF Holding S.A in the amount of R$ 62 (R$ 58 at 12/31/2015) and Porto Seguro Itaú Unibanco Participações S.A. in the amount of R$ 240222 (R$ 336240 at 12/31/20142015 and R$ 175 at336 on 12/31/2013); IRB - Brasil Resseguros S.A. in the amount of R$ 73 (R$ 46 at 12/31/2014) and BSF Holding S.A in the amount of R$ 58.. b) Other information The table below shows the summary of the aggregate financial information of the investees under the equity method of accounting. | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | Total Assets(*) | | | 20,183 | | | | 17,812 | | | | 17,131 | | | Total Liabilities(*) | | | 11,477 | | | | 9,917 | | | | 10,072 | | | Total Income(*) | | | 22,083 | | | | 6,907 | | | | 3,860 | | | Total Expenses(*) | | | (20,255 | ) | | | (5,112 | ) | | | (2,394 | ) |
| | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Total Assets (*) | | | 20,819 | | | | 20,183 | | | | 17,812 | | | Total Liabilities (*) | | | 11,272 | | | | 11,477 | | | | 9,917 | | | Total Income (*) | | | 14,868 | | | | 22,083 | | | | 6,907 | | | Total Expenses (*) | | | (13,401 | ) | | | (20,255 | ) | | | (5,112 | ) |
(*) Represented by IRB-Brasil Resseguros S.A., in the amount of R$ 14,69014,313 (R$ 12,93314,690 at 12/31/2014)2015) related to assets, R$ 11,47711,083 (R$ 9,91711,477 at 12/31/2014)2015) related to liabilities, R$ 20,92814,142 (R$ 5,85220,928 at 12/31/2014)2015) related to income and of R$ (20,254)(13,397) (R$ (4,962)(20,254) at 12/31/2014)2015) related to expenses. The investees do not have contingent liabilities to which ITAÚ UNIBANCO HOLDING is significantly exposed. Note 14 – Lease commitments as lessee 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$ 51726 (R$ 804517 at 12/31/2014)2015). The table below shows the total future minimum payments: | | | 12/31/2015 | | | 12/31/2014 | | | Current | | | 491 | | | | 394 | | | Up to 1 year | | | 491 | | | | 394 | | | Non-current | | | 26 | | | | 410 | | | From 1 to 5 years | | | 26 | | | | 410 | | | Total future minimum payments | | | 517 | | | | 804 | | | (-) Future interest | | | - | | | | - | | | Present value | | | 517 | | | | 804 | |
| | | 12/31/2016 | | | 12/31/2015 | | | Current | | | 26 | | | | 491 | | | Up to 1 year | | | 26 | | | | 491 | | | Non-current | | | - | | | | 26 | | | From 1 to 5 years | | | - | | | | 26 | | | Total future minimum payments | | | 26 | | | | 517 | | | (-) Future interest | | | - | | | | - | | | Present value | | | 26 | | | | 517 | |
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 escalations clauses. No lease agreement imposes any restriction on our ability to pay dividends, enter into further lease agreements or engage in debt or equity financing transactions, and there is no contingent payments related to the agreements. The expenses related to operating lease agreements recognized under General and Administrative Expenses total R$ 1,145 from 01/01 to 12/31/2016 (R$ 1,102 from 01/01 to 12/31/2015 (R$and R$ 1,018 from 01/01 to 12/31/2014 and R$ 933 from 01/01 to 12/31/2013)2014). ITAÚ UNIBANCO HOLDING has no relevant sublease contracts. Minimum payments of initiated and remaining lease agreements with non-cancelable clauses are as follows: | | | 12/31/2015 | | | 12/31/2014 | | | Current | | | 1,267 | | | | 1,199 | | | Up to 1 year | | | 1,267 | | | | 1,199 | | | Non-current | | | 5,028 | | | | 4,213 | | | From 1 to 5 years | | | 4,043 | | | | 3,539 | | | Over 5 years | | | 985 | | | | 674 | | | Total future minimum payments | | | 6,295 | | | | 5,412 | |
| | | 12/31/2016 | | | 12/31/2015 | | | Current | | | 1,336 | | | | 1,267 | | | Up to 1 year | | | 1,336 | | | | 1,267 | | | Non-current | | | 5,402 | | | | 5,028 | | | From 1 to 5 years | | | 4,689 | | | | 4,043 | | | Over 5 years | | | 713 | | | | 985 | | | Total future minimum payments | | | 6,738 | | | | 6,295 | |
Note 15 - Fixed assets | | | | | | Real estate in use(2) | | | Other fixed assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other | | | | | | | | Fixed assets | | | | | | | | | | | | | | | | | | | | | (communication, | | | | | | | | under | | | | | | | | | | | | | | | Furniture and | | | | | | security and | | | | | | Fixed Assets(1) | | construction | | | Land | | | Buildings | | | Improvements | | | Installations | | | equipment | | | EDP systems(3) | | | transportation) | | | Total | | | Annual depreciation rates | | | | | | | | 4% | | | 10% | | | 10 to 20% | | | 10 to 20% | | | 20 to 50% | | | 10 to 20% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | 2,277 | | | | 1,011 | | | | 2,220 | | | | 1,468 | | | | 1,116 | | | | 916 | | | | 7,419 | | | | 773 | | | | 17,200 | | | Acquisitions | | | 198 | | | | - | | | | 6 | | | | 139 | | | | 75 | | | | 141 | | | | 824 | | | | 83 | | | | 1,466 | | | Disposal | | | - | | | | (6 | ) | | | (13 | ) | | | (112 | ) | | | 182 | | | | (68 | ) | | | (533 | ) | | | (5 | ) | | | (555 | ) | | Exchange variation | | | - | | | | 3 | | | | 35 | | | | 81 | | | | 6 | | | | 8 | | | | 6 | | | | 6 | | | | 145 | | | Transfers | | | (1,681 | ) | | | - | | | | 777 | | | | 63 | | | | 422 | | | | - | | | | 419 | | | | - | | | | - | | | Other | | | (2 | ) | | | - | | | | 1 | | | | 34 | | | | - | | | | (22 | ) | | | 82 | | | | 1 | | | | 94 | | | Balance at 12/31/2015 | | | 792 | | | | 1,008 | | | | 3,026 | | | | 1,673 | | | | 1,801 | | | | 975 | | | | 8,217 | | | | 858 | | | | 18,350 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | - | | | | - | | | | (1,695 | ) | | | (754 | ) | | | (519 | ) | | | (504 | ) | | | (4,538 | ) | | | (479 | ) | | | (8,489 | ) | | Accumulated depreciation | | | - | | | | - | | | | (74 | ) | | | (257 | ) | | | (129 | ) | | | (93 | ) | | | (1,057 | ) | | | (78 | ) | | | (1,688 | ) | | Disposal | | | - | | | | - | | | | 9 | | | | 109 | | | | (183 | ) | | | 13 | | | | 489 | | | | 3 | | | | 440 | | | Exchange variation | | | - | | | | - | | | | (6 | ) | | | (27 | ) | | | (2 | ) | | | 1 | | | | (7 | ) | | | (3 | ) | | | (44 | ) | | Other | | | - | | | | - | | | | 2 | | | | (1 | ) | | | (8 | ) | | | 4 | | | | (25 | ) | | | - | | | | (28 | ) | | Balance at 12/31/2015 | | | - | | | | - | | | | (1,764 | ) | | | (930 | ) | | | (841 | ) | | | (579 | ) | | | (5,138 | ) | | | (557 | ) | | | (9,809 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Additions/ assumptions | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Reversals | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Balance at 12/31/2015 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2015 | | | 792 | | | | 1,008 | | | | 1,262 | | | | 743 | | | | 960 | | | | 396 | | | | 3,079 | | | | 301 | | | | 8,541 | |
| (1) | The contractual commitments for purchase of the fixed assets totaled R$ 59, achievable by 2016 (Note 36 - Off balance sheet). |
| (2) | Includes the amount of R$ 4 related to attached real estate. |
| (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. |
| | | | | | Real estate in use(2) | | | Other fixed assets(2) (3) | | | | | | Fixed Assets(1) | | Fixed assets
under
construction | | | Land | | | Buildings | | | Improvements | | | Installations | | | Furniture and
equipment | | | EDP systems(3) | | | Other
(communication,
security and
transportation) | | | Total | | | Annual depreciation rates | | | | | | | | 4% | | | 10% | | | 10 a 20% | | | 10 a 20% | | | 20 a 50% | | | 10 a 20% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2015 | | | 792 | | | | 1,008 | | | | 3,026 | | | | 1,673 | | | | 1,801 | | | | 975 | | | | 8,217 | | | | 858 | | | | 18,350 | | | Acquisitions | | | 341 | | | | 57 | | | | 70 | | | | 137 | | | | 47 | | | | 309 | | | | 246 | | | | 223 | | | | 1,430 | | | Disposal | | | - | | | | (4 | ) | | | (13 | ) | | | (56 | ) | | | (15 | ) | | | (8 | ) | | | (449 | ) | | | (6 | ) | | | (551 | ) | | Exchange variation | | | (2 | ) | | | (15 | ) | | | (11 | ) | | | (22 | ) | | | (3 | ) | | | (67 | ) | | | 151 | | | | 3 | | | | 34 | | | Transfers | | | (738 | ) | | | - | | | | 27 | | | | 125 | | | | - | | | | 1 | | | | 515 | | | | 4 | | | | (66 | ) | | Other | | | (6 | ) | | | 1 | | | | - | | | | - | | | | 71 | | | | (5 | ) | | | (137 | ) | | | (7 | ) | | | (83 | ) | | Balance at 12/31/2016 | | | 387 | | | | 1,047 | | | | 3,099 | | | | 1,857 | | | | 1,901 | | | | 1,205 | | | | 8,543 | | | | 1,075 | | | | 19,114 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2015 | | | - | | | | - | | | | (1,764 | ) | | | (930 | ) | | | (841 | ) | | | (579 | ) | | | (5,138 | ) | | | (557 | ) | | | (9,809 | ) | | Accumulated depreciation | | | - | | | | - | | | | (80 | ) | | | (245 | ) | | | (142 | ) | | | (102 | ) | | | (1,038 | ) | | | (95 | ) | | | (1,702 | ) | | Disposal | | | - | | | | - | | | | 11 | | | | 53 | | | | 6 | | | | 5 | | | | 377 | | | | 4 | | | | 456 | | | Exchange variation | | | - | | | | - | | | | (8 | ) | | | 8 | | | | 9 | | | | (1 | ) | | | (101 | ) | | | (8 | ) | | | (101 | ) | | Other | | | - | | | | - | | | | 1 | | | | - | | | | (18 | ) | | | 3 | | | | 96 | | | | 2 | | | | 84 | | | Balance at 12/31/2016 | | | - | | | | - | | | | (1,840 | ) | | | (1,114 | ) | | | (986 | ) | | | (674 | ) | | | (5,804 | ) | | | (654 | ) | | | (11,072 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2015 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Additions/ assumptions | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Reversals | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Balance at 12/31/2016 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2016 | | | 387 | | | | 1,047 | | | | 1,259 | | | | 743 | | | | 915 | | | | 531 | | | | 2,739 | | | | 421 | | | | 8,042 | |
(1) The contractual commitments for purchase of the fixed assets totaled R$ 48, achievable by 2017 (Note 36 - Off balance sheet). (2) Includes the amount of R$ 4 related to attached real estate. (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. | | | | | | Real estate in use(2) | | | Other fixed assets(2) (3) | | | | | | Fixed assets(1) | | Fixed assets
under
construction | | | Land | | | Buildings | | | Improvements | | | Installations | | | Furniture and
equipment | | | EDP systems(3) | | | Other
(communication,
security and
transportation) | | | Total | | | Annual depreciation rates | | | | | | | | 4% | | | 10% | | | 10 a 20% | | | 10 a 20% | | | 20 a 50% | | | 10 a 20% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | 2,277 | | | | 1,011 | | | | 2,220 | | | | 1,468 | | | | 1,116 | | | | 916 | | | | 7,419 | | | | 773 | | | | 17,200 | | | Acquisitions | | | 198 | | | | - | | | | 6 | | | | 139 | | | | 75 | | | | 141 | | | | 824 | | | | 83 | | | | 1,466 | | | Disposal | | | - | | | | (6 | ) | | | (13 | ) | | | (112 | ) | | | 182 | | | | (68 | ) | | | (533 | ) | | | (5 | ) | | | (555 | ) | | Exchange variation | | | - | | | | 3 | | | | 35 | | | | 81 | | | | 6 | | | | 8 | | | | 6 | | | | 6 | | | | 145 | | | Transfers | | | (1,681 | ) | | | - | | | | 777 | | | | 63 | | | | 422 | | | | - | | | | 419 | | | | - | | | | - | | | Other | | | (2 | ) | | | - | | | | 1 | | | | 34 | | | | - | | | | (22 | ) | | | 82 | | | | 1 | | | | 94 | | | Balance at 12/31/2015 | | | 792 | | | | 1,008 | | | | 3,026 | | | | 1,673 | | | | 1,801 | | | | 975 | | | | 8,217 | | | | 858 | | | | 18,350 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | - | | | | - | | | | (1,695 | ) | | | (754 | ) | | | (519 | ) | | | (504 | ) | | | (4,538 | ) | | | (479 | ) | | | (8,489 | ) | | Accumulated depreciation | | | - | | | | - | | | | (74 | ) | | | (257 | ) | | | (129 | ) | | | (93 | ) | | | (1,057 | ) | | | (78 | ) | | | (1,688 | ) | | Disposal | | | - | | | | - | | | | 9 | | | | 109 | | | | (183 | ) | | | 13 | | | | 489 | | | | 3 | | | | 440 | | | Exchange variation | | | - | | | | - | | | | (6 | ) | | | (27 | ) | | | (2 | ) | | | 1 | | | | (7 | ) | | | (3 | ) | | | (44 | ) | | Other | | | - | | | | - | | | | 2 | | | | (1 | ) | | | (8 | ) | | | 4 | | | | (25 | ) | | | - | | | | (28 | ) | | Balance at 12/31/2015 | | | - | | | | - | | | | (1,764 | ) | | | (930 | ) | | | (841 | ) | | | (579 | ) | | | (5,138 | ) | | | (557 | ) | | | (9,809 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Additions/ assumptions | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Reversals | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Balance at 12/31/2015 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2015 | | | 792 | | | | 1,008 | | | | 1,262 | | | | 743 | | | | 960 | | | | 396 | | | | 3,079 | | | | 301 | | | | 8,541 | |
| | | | | | Real estate in use(2) | | | Other fixed assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other | | | | | | | | Fixed assets | | | | | | | | | | | | | | | | | | | | | (communication, | | | | | | | | under | | | | | | | | | | | | | | | Furniture and | | | | | | security and | | | | | | Fixed assets(1) | | construction | | | Land | | | Buildings | | | Improvements | | | Installations | | | equipment | | | EDP systems(3) | | | transportation) | | | Total | | | Annual depreciation rates | | | | | | | | 4% | | | 10% | | | 10 to 20% | | | 10 to 20% | | | 20 to 50% | | | 10 to 20% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | 948 | | | | 1,019 | | | | 2,236 | | | | 1,283 | | | | 1,043 | | | | 925 | | | | 6,279 | | | | 725 | | | | 14,458 | | | Acquisitions | | | 1,485 | | | | 3 | | | | 11 | | | | 169 | | | | 117 | | | | 74 | | | | 2,045 | | | | 62 | | | | 3,966 | | | Disposal | | | - | | | | (1 | ) | | | (6 | ) | | | (163 | ) | | | (9 | ) | | | (89 | ) | | | (829 | ) | | | (5 | ) | | | (1,102 | ) | | Exchange variation | | | - | | | | - | | | | (7 | ) | | | 22 | | | | 4 | | | | (12 | ) | | | 4 | | | | (11 | ) | | | - | | | Transfers | | | (157 | ) | | | - | | | | - | | | | 157 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Other | | | 1 | | | | (10 | ) | | | (14 | ) | | | - | | | | (39 | ) | | | 18 | | | | (80 | ) | | | 2 | | | | (122 | ) | | Balance at 12/31/2014 | | | 2,277 | | | | 1,011 | | | | 2,220 | | | | 1,468 | | | | 1,116 | | | | 916 | | | | 7,419 | | | | 773 | | | | 17,200 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | - | | | | - | | | | (1,651 | ) | | | (667 | ) | | | (439 | ) | | | (487 | ) | | | (4,230 | ) | | | (411 | ) | | | (7,885 | ) | | Accumulated depreciation | | | - | | | | - | | | | (58 | ) | | | (247 | ) | | | (85 | ) | | | (79 | ) | | | (1,098 | ) | | | (74 | ) | | | (1,641 | ) | | Disposal | | | - | | | | - | | | | 3 | | | | 162 | | | | 2 | | | | 60 | | | | 768 | | | | 4 | | | | 999 | | | Exchange variation | | | - | | | | - | | | | - | | | | 1 | | | | 2 | | | | 12 | | | | (13 | ) | | | - | | | | 2 | | | Other | | | - | | | | - | | | | 11 | | | | (3 | ) | | | 1 | | | | (10 | ) | | | 35 | | | | 2 | | | | 36 | | | Balance at 12/31/2014 | | | - | | | | - | | | | (1,695 | ) | | | (754 | ) | | | (519 | ) | | | (504 | ) | | | (4,538 | ) | | | (479 | ) | | | (8,489 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | - | | | | - | | | | - | | | | - | | | | - | | | | (9 | ) | | | - | | | | - | | | | (9 | ) | | Additions/ assumptions | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Reversals | | | - | | | | - | | | | - | | | | - | | | | - | | | | 9 | | | | - | | | | - | | | | 9 | | | Balance at 12/31/2014 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | 2,274 | | | | 1,011 | | | | 525 | | | | 714 | | | | 597 | | | | 415 | | | | 2,881 | | | | 294 | | | | 8,711 | |
| (1) | The contractual commitments for purchase of the fixed assets totaled R$ 67, achievable by 2016 (Note 36 - Off balance sheet). |
| (2) | Includes the amount of R$ 4 related to attached real estate. |
| (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. |
(1) The contractual commitments for purchase of the fixed assets totaled R$ 59, achievable by 2016 (Note 36 - Off balance sheet). (2) Includes the amount of R$ 4 related to attached real estate. (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. | | | | | | Real estate in use(2) | | | Other fixed assets | | | | | | Fixed assets(1) | | Fixed assets
under
construction | | | Land | | | Buildings | | | Improvements | | | Installations | | | Furniture and
equipment | | | EDP systems(3) | | | Other
(communication,
security and
transportation) | | | Total | | | Annual depreciation rates | | | | | | | | 4% | | | 10% | | | 10 to 20% | | | 10 to 20% | | | 20 to 50% | | �� | 10 to 20% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | 948 | | | | 1,019 | | | | 2,236 | | | | 1,283 | | | | 1,043 | | | | 925 | | | | 6,279 | | | | 725 | | | | 14,458 | | | Acquisitions | | | 1,485 | | | | 3 | | | | 11 | | | | 169 | | | | 117 | | | | 74 | | | | 2,045 | | | | 62 | | | | 3,966 | | | Disposal | | | - | | | | (1 | ) | | | (6 | ) | | | (163 | ) | | | (9 | ) | | | (89 | ) | | | (829 | ) | | | (5 | ) | | | (1,102 | ) | | Exchange variation | | | - | | | | - | | | | (7 | ) | | | 22 | | | | 4 | | | | (12 | ) | | | 4 | | | | (11 | ) | | | - | | | Transfers | | | (157 | ) | | | - | | | | - | | | | 157 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Other | | | 1 | | | | (10 | ) | | | (14 | ) | | | - | | | | (39 | ) | | | 18 | | | | (80 | ) | | | 2 | | | | (122 | ) | | Balance at 12/31/2014 | | | 2,277 | | | | 1,011 | | | | 2,220 | | | | 1,468 | | | | 1,116 | | | | 916 | | | | 7,419 | | | | 773 | | | | 17,200 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | - | | | | - | | | | (1,651 | ) | | | (667 | ) | | | (439 | ) | | | (487 | ) | | | (4,230 | ) | | | (411 | ) | | | (7,885 | ) | | Accumulated depreciation | | | - | | | | - | | | | (58 | ) | | | (247 | ) | | | (85 | ) | | | (79 | ) | | | (1,098 | ) | | | (74 | ) | | | (1,641 | ) | | Disposal | | | - | | | | - | | | | 3 | | | | 162 | | | | 2 | | | | 60 | | | | 768 | | | | 4 | | | | 999 | | | Exchange variation | | | - | | | | - | | | | - | | | | 1 | | | | 2 | | | | 12 | | | | (13 | ) | | | - | | | | 2 | | | Other | | | - | | | | - | | | | 11 | | | | (3 | ) | | | 1 | | | | (10 | ) | | | 35 | | | | 2 | | | | 36 | | | Balance at 12/31/2014 | | | - | | | | - | | | | (1,695 | ) | | | (754 | ) | | | (519 | ) | | | (504 | ) | | | (4,538 | ) | | | (479 | ) | | | (8,489 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | - | | | | - | | | | - | | | | - | | | | - | | | | (9 | ) | | | - | | | | - | | | | (9 | ) | | Additions/ assumptions | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Reversals | | | - | | | | - | | | | - | | | | - | | | | - | | | | 9 | | | | - | | | | - | | | | 9 | | | Balance at 12/31/2014 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | 2,274 | | | | 1,011 | | | | 525 | | | | 714 | | | | 597 | | | | 415 | | | | 2,881 | | | | 294 | | | | 8,711 | |
| | | | | | Real estate in use(2) | | | Other fixed assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other | | | | | | | | Fixed assets | | | | | | | | | | | | | | | | | | | | | (communication, | | | | | | | | under | | | | | | | | | | | | | | | Furniture and | | | | | | security and | | | | | | Fixed Assets(1) | | construction | | | Land | | | Buildings | | | Improvements | | | Installations | | | equipment | | | EDP systems(3) | | | transportation) | | | Total | | | Annual depreciation rates | | | | | | | | 4% | | | 10% | | | 10 to 20% | | | 10 to 20% | | | 20 to 50% | | | 10 to 20% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2012 | | | 356 | | | | 1,029 | | | | 2,237 | | | | 1,186 | | | | 872 | | | | 877 | | | | 5,480 | | | | 606 | | | | 12,643 | | | Acquisitions | | | 735 | | | | - | | | | 22 | | | | 148 | | | | 183 | | | | 66 | | | | 1,262 | | | | 118 | | | | 2,534 | | | Disposal | | | - | | | | (8 | ) | | | (13 | ) | | | (211 | ) | | | (11 | ) | | | (15 | ) | | | (474 | ) | | | (3 | ) | | | (735 | ) | | Exchange variation | | | (7 | ) | | | - | | | | 2 | | | | 7 | | | | 4 | | | | (3 | ) | | | 9 | | | | 3 | | | | 15 | | | Transfers | | | (136 | ) | | | - | | | | - | | | | 136 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Other | | | - | | | | (2 | ) | | | (12 | ) | | | 17 | | | | (5 | ) | | | - | | | | 2 | | | | 1 | | | | 1 | | | Balance at 12/31/2013 | | | 948 | | | | 1,019 | | | | 2,236 | | | | 1,283 | | | | 1,043 | | | | 925 | | | | 6,279 | | | | 725 | | | | 14,458 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2012 | | | - | | | | - | | | | (1,607 | ) | | | (613 | ) | | | (358 | ) | | | (417 | ) | | | (3,664 | ) | | | (347 | ) | | | (7,006 | ) | | Accumulated depreciation | | | - | | | | - | | | | (70 | ) | | | (235 | ) | | | (80 | ) | | | (83 | ) | | | (987 | ) | | | (67 | ) | | | (1,522 | ) | | Disposal | | | - | | | | - | | | | 10 | | | | 209 | | | | 7 | | | | 7 | | | | 430 | | | | 2 | | | | 665 | | | Exchange variation | | | - | | | | - | | | | - | | | | (2 | ) | | | 3 | | | | 9 | | | | (11 | ) | | | - | | | | (1 | ) | | Other | | | - | | | | - | | | | 16 | | | | (26 | ) | | | (11 | ) | | | (3 | ) | | | 2 | | | | 1 | | | | (21 | ) | | Balance at 12/31/2013 | | | - | | | | - | | | | (1,651 | ) | | | (667 | ) | | | (439 | ) | | | (487 | ) | | | (4,230 | ) | | | (411 | ) | | | (7,885 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2012 | | | - | | | | - | | | | - | | | | - | | | | - | | | | (9 | ) | | | - | | | | - | | | | (9 | ) | | Additions / assumptions | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Reversals | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Balance at 12/31/2013 | | | - | | | | - | | | | - | | | | - | | | | - | | | | (9 | ) | | | - | | | | - | | | | (9 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | 946 | | | | 1,019 | | | | 585 | | | | 616 | | | | 604 | | | | 431 | | | | 2,049 | | | | 314 | | | | 6,564 | |
| (1) | The contractual commitments for purchase of the fixed assets totaled R$ 1,212, achievable by 2016 (Note 36 - Off balance sheet). |
| (2) | Includes the amount of R$ 4 related to attached real estate; |
| (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. |
(1) The contractual commitments for purchase of the fixed assets totaled R$ 67, achievable by 2016 (Note 36 - Off balance sheet). (2) Includes the amount of R$ 4 related to attached real estate. (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. Note 16 - Intangible assets | | | | | | Other intangible assets | | | | | | | | | | | Association for the | | | | | | | | | | | | | | | | | Acquisition of | | | promotion and offer | | | | | | | | | | | | | | | | | rights to credit | | | of financial products | | | Acquisition of | | | Development of | | | Other intangible | | | | | | Intangible assets(1) | | payroll | | | and services | | | software | | | software | | | assets | | | Total | | | Amortization rates p.a. | | 20% | | | 8% | | | 20% | | | 20% | | | 10 to 20% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | 1,067 | | | | 1,582 | | | | 1,965 | | | | 2,836 | | | | 791 | | | | 8,241 | | | Acquisitions | | | 109 | | | | 39 | | | | 410 | | | | 489 | | | | 15 | | | | 1,062 | | | Terminated agreements/ write off | | | (169 | ) | | | (195 | ) | | | (134 | ) | | | (14 | ) | | | (4 | ) | | | (516 | ) | | Exchange variation | | | - | | | | - | | | | 109 | | | | - | | | | 185 | | | | 294 | | | Other | | | (2 | ) | | | (17 | ) | | | 12 | | | | - | | | | (27 | ) | | | (34 | ) | | Balance at 12/31/2015 | | | 1,005 | | | | 1,409 | | | | 2,362 | | | | 3,311 | | | | 960 | | | | 9,047 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Amortization(2) | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | (556 | ) | | | (337 | ) | | | (918 | ) | | | (113 | ) | | | (149 | ) | | | (2,073 | ) | | Amortization expense | | | (213 | ) | | | (144 | ) | | | (358 | ) | | | (138 | ) | | | (287 | ) | | | (1,140 | ) | | Terminated agreements/ write off | | | 169 | | | | 144 | | | | 134 | | | | - | | | | - | | | | 447 | | | Exchange variation | | | - | | | | - | | | | (51 | ) | | | - | | | | (150 | ) | | | (201 | ) | | Other | | | - | | | | 7 | | | | 3 | | | | (1 | ) | | | 244 | | | | 253 | | | Balance at 12/31/2015 | | | (600 | ) | | | (330 | ) | | | (1,190 | ) | | | (252 | ) | | | (342 | ) | | | (2,714 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment(3) | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | (18 | ) | | | (2 | ) | | | - | | | | (14 | ) | | | - | | | | (34 | ) | | Additions / assumptions | | | - | | | | - | | | | - | | | | (4 | ) | | | - | | | | (4 | ) | | Write off | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Balance at 12/31/2015 | | | (18 | ) | | | (2 | ) | | | - | | | | (18 | ) | | | - | | | | (38 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2015 | | | 387 | | | | 1,077 | | | | 1,172 | | | | 3,041 | | | | 618 | | | | 6,295 | |
| (1) | The contractual commitments for the purchase of new intangible assets totaled R$ 281, achievable by 2016 (Note 36 - Off balance seet). |
| (2) | All intangible assets have a defined useful life. |
| | | | | | Other intangible assets | | | | | | Intangible assets(1) | | Acquisition of
rights to credit
payroll | | | Association for the
promotion and offer
of financial products
and services | | | Acquisition of
software | | | Development of
software | | | Other intangible
assets | | | Total | | | Amortization rates p.a. | | 20% | | | 8% | | | 20% | | | 20% | | | 10 a 20% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2015 | | | 1,005 | | | | 1,409 | | | | 2,362 | | | | 3,311 | | | | 960 | | | | 9,047 | | | Acquisitions | | | 342 | | | | 719 | | | | 1,293 | | | | 215 | | | | 277 | | | | 2,846 | | | Terminated agreements/ write off | | | (308 | ) | | | (73 | ) | | | (3 | ) | | | (1 | ) | | | - | | | | (385 | ) | | Exchange variation | | | - | | | | (12 | ) | | | 120 | | | | - | | | | (130 | ) | | | (22 | ) | | Other | | | 7 | | | | (295 | ) | | | 68 | | | | - | | | | (29 | ) | | | (249 | ) | | Balance at 12/31/2016 | | | 1,046 | | | | 1,748 | | | | 3,840 | | | | 3,525 | | | | 1,078 | | | | 11,237 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Amortization(2) | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2015 | | | (600 | ) | | | (330 | ) | | | (1,190 | ) | | | (252 | ) | | | (342 | ) | | | (2,714 | ) | | Amortization expense | | | (261 | ) | | | (263 | ) | | | (429 | ) | | | (280 | ) | | | (298 | ) | | | (1,531 | ) | | Terminated agreements/ write off | | | 306 | | | | 67 | | | | 1 | | | | - | | | | - | | | | 374 | | | Exchange variation | | | - | | | | 84 | | | | (107 | ) | | | - | | | | 110 | | | | 87 | | | Other | | | - | | | | 66 | | | | 24 | | | | - | | | | 246 | | | | 336 | | | Balance at 12/31/2016 | | | (555 | ) | | | (376 | ) | | | (1,701 | ) | | | (532 | ) | | | (284 | ) | | | (3,448 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment(3) | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2015 | | | (18 | ) | | | (2 | ) | | | - | | | | (18 | ) | | | - | | | | (38 | ) | | Additions / assumptions | | | (1 | ) | | | - | | | | (57 | ) | | | (317 | ) | | | - | | | | (375 | ) | | Write off | | | - | | | | 2 | | | | 3 | | | | - | | | | - | | | | 5 | | | Balance at 12/31/2016 | | | (19 | ) | | | - | | | | (54 | ) | | | (335 | ) | | | - | | | | (408 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2016 | | | 472 | | | | 1,372 | | | | 2,085 | | | | 2,658 | | | | 794 | | | | 7,381 | |
(1) The contractual commitments for the purchase of new intangible assets totaled R$ 262, achievable by 2017 (Note 36 - Off balance sheet). (2) All intangible assets have a defined useful life. (3) Note 2.4i. | | | | | | Other intangible assets | | | | | | Intangible assets (1) | | Acquisition of
rights to credit
payroll | | | Association for the
promotion and offer
of financial products
and services | | | Acquisition of
software | | | Development of
software | | | Other intangible
assets | | | Total | | | Amortization rates p.a. | | 20% | | | 8% | | | 20% | | | 20% | | | 10 a 20% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | 1,067 | | | | 1,582 | | | | 1,965 | | | | 2,836 | | | | 791 | | | | 8,241 | | | Acquisitions | | | 109 | | | | 39 | | | | 410 | | | | 489 | | | | 15 | | | | 1,062 | | | Terminated agreements / write off | | | (169 | ) | | | (195 | ) | | | (134 | ) | | | (14 | ) | | | (4 | ) | | | (516 | ) | | Exchange variation | | | - | | | | - | | | | 109 | | | | - | | | | 185 | | | | 294 | | | Other | | | (2 | ) | | | (17 | ) | | | 12 | | | | - | | | | (27 | ) | | | (34 | ) | | Balance at 12/31/2015 | | | 1,005 | | | | 1,409 | | | | 2,362 | | | | 3,311 | | | | 960 | | | | 9,047 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Amortization (2) | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | (556 | ) | | | (337 | ) | | | (918 | ) | | | (113 | ) | | | (149 | ) | | | (2,073 | ) | | Amortization expense | | | (213 | ) | | | (144 | ) | | | (358 | ) | | | (138 | ) | | | (287 | ) | | | (1,140 | ) | | Terminated agreements / write off | | | 169 | | | | 144 | | | | 134 | | | | - | | | | - | | | | 447 | | | Exchange variation | | | - | | | | - | | | | (51 | ) | | | - | | | | (150 | ) | | | (201 | ) | | Other | | | - | | | | 7 | | | | 3 | | | | (1 | ) | | | 244 | | | | 253 | | | Balance at 12/31/2015 | | | (600 | ) | | | (330 | ) | | | (1,190 | ) | | | (252 | ) | | | (342 | ) | | | (2,714 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment (3) | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | (18 | ) | | | (2 | ) | | | - | | | | (14 | ) | | | - | | | | (34 | ) | | Additions / assumptions | | | - | | | | - | | | | - | | | | (4 | ) | | | - | | | | (4 | ) | | Reversals | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Balance at 12/31/2015 | | | (18 | ) | | | (2 | ) | | | - | | | | (18 | ) | | | - | | | | (38 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2015 | | | 387 | | | | 1,077 | | | | 1,172 | | | | 3,041 | | | | 618 | | | | 6,295 | |
| | | | | | Other intangible assets | | | | | | | | | | | Association for the | | | | | | | | | | | | | | | | | Acquisition of | | | promotion and offer | | | | | | | | | | | | | | | | | rights to credit | | | of financial products | | | Acquisition of | | | Development of | | | Other intangible | | | | | | Intangible assets(1) | | payroll | | | and services | | | software | | | software | | | assets | | | Total | | | Amortization rates p.a. | | 20% | | | 8% | | | 20% | | | 20% | | | 10 to 20% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | 1,165 | | | | 1,688 | | | | 1,839 | | | | 2,195 | | | | 1,019 | | | | 7,906 | | | Acquisitions | | | 109 | | | | 36 | | | | 393 | | | | 651 | | | | 10 | | | | 1,199 | | | Terminated agreements / write off | | | (214 | ) | | | (104 | ) | | | (201 | ) | | | (10 | ) | | | (300 | ) | | | (829 | ) | | Exchange variation | | | - | | | | (2 | ) | | | (23 | ) | | | - | | | | 43 | | | | 18 | | | Other | | | 7 | | | | (36 | ) | | | (43 | ) | | | - | | | | 19 | | | | (53 | ) | | Balance at 12/31/2014 | | | 1,067 | | | | 1,582 | | | | 1,965 | | | | 2,836 | | | | 791 | | | | 8,241 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Amortization(2) | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | (535 | ) | | | (256 | ) | | | (868 | ) | | | (47 | ) | | | (352 | ) | | | (2,058 | ) | | Amortization expense | | | (225 | ) | | | (157 | ) | | | (324 | ) | | | (66 | ) | | | (131 | ) | | | (903 | ) | | Terminated agreements / write off | | | 204 | | | | 81 | | | | 201 | | | | - | | | | 119 | | | | 605 | | | Exchange variation | | | - | | | | - | | | | 10 | | | | - | | | | (34 | ) | | | (24 | ) | | Other | | | - | | | | (5 | ) | | | 63 | | | | - | | | | 249 | | | | 307 | | | Balance at 12/31/2014 | | | (556 | ) | | | (337 | ) | | | (918 | ) | | | (113 | ) | | | (149 | ) | | | (2,073 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment(3) | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | (18 | ) | | | (27 | ) | | | - | | | | (6 | ) | | | - | | | | (51 | ) | | Additions / assumptions | | | - | | | | - | | | | - | | | | (8 | ) | | | - | | | | (8 | ) | | Reversals | | | - | | | | 25 | | | | - | | | | - | | | | - | | | | 25 | | | Balance at 12/31/2014 | | | (18 | ) | | | (2 | ) | | | - | | | | (14 | ) | | | - | | | | (34 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | 493 | | | | 1,243 | | | | 1,047 | | | | 2,709 | | | | 642 | | | | 6,134 | |
| (1) | The contractual commitments for the purchase of new intangible assets totaled R$ 508, achievable by 2016 (Note 36 - Off balance seet). |
| (2) | All intangible assets have a defined useful life. |
(1) The contractual commitments for the purchase of new intangible assets totaled R$ 281, achievable by 2016 (Note 36 - Off balance sheet). (2) All intangible assets have a defined useful life. (3) Note 2.4i. | | | | | | Other intangible assets | | | | | | Intangible assets (1) | | Acquisition of
rights to credit
payroll | | | Association for the
promotion and offer
of financial products
and services | | | Acquisition of
software | | | Development of
software | | | Other intangible
assets | | | Total | | | Amortization rates p.a. | | 20% | | | 8% | | | 20% | | | 20% | | | 10 to 20% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | 1,165 | | | | 1,688 | | | | 1,839 | | | | 2,195 | | | | 1,019 | | | | 7,906 | | | Acquisitions | | | 109 | | | | 36 | | | | 393 | | | | 651 | | | | 10 | | | | 1,199 | | | Terminated agreements / write off | | | (214 | ) | | | (104 | ) | | | (201 | ) | | | (10 | ) | | | (300 | ) | | | (829 | ) | | Exchange variation | | | - | | | | (2 | ) | | | (23 | ) | | | - | | | | 43 | | | | 18 | | | Other | | | 7 | | | | (36 | ) | | | (43 | ) | | | - | | | | 19 | | | | (53 | ) | | Balance at 12/31/2014 | | | 1,067 | | | | 1,582 | | | | 1,965 | | | | 2,836 | | | | 791 | | | | 8,241 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Amortization (2) | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | (535 | ) | | | (256 | ) | | | (868 | ) | | | (47 | ) | | | (352 | ) | | | (2,058 | ) | | Amortization expense | | | (225 | ) | | | (157 | ) | | | (324 | ) | | | (66 | ) | | | (131 | ) | | | (903 | ) | | Terminated agreements / write off | | | 204 | | | | 81 | | | | 201 | | | | - | | | | 119 | | | | 605 | | | Exchange variation | | | - | | | | - | | | | 10 | | | | - | | | | (34 | ) | | | (24 | ) | | Other | | | - | | | | (5 | ) | | | 63 | | | | - | | | | 249 | | | | 307 | | | Balance at 12/31/2014 | | | (556 | ) | | | (337 | ) | | | (918 | ) | | | (113 | ) | | | (149 | ) | | | (2,073 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment (3) | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | (18 | ) | | | (27 | ) | | | - | | | | (6 | ) | | | - | | | | (51 | ) | | Additions / assumptions | | | - | | | | - | | | | - | | | | (8 | ) | | | - | | | | (8 | ) | | Reversals | | | - | | | | 25 | | | | - | | | | - | | | | - | | | | 25 | | | Balance at 12/31/2014 | | | (18 | ) | | | (2 | ) | | | - | | | | (14 | ) | | | - | | | | (34 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2014 | | | 493 | | | | 1,243 | | | | 1,047 | | | | 2,709 | | | | 642 | | | | 6,134 | |
| | | | | | Other intangible assets | | | | | | | | | | | Association for the | | | | | | | | | | | | | | | | | Acquisition of | | | promotion and offer | | | | | | | | | | | | | | | | | rights to credit | | | of financial products | | | Acquisition of | | | Development of | | | Other intangible | | | | | | Intangible assets(1) | | payroll | | | and services | | | software | | | software | | | assets | | | Total | | | Amortization rates p.a. | | Up to 9 | | | Up to 5 | | | 20% | | | 20% | | | 10 to 20% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2012 | | | 1,497 | | | | 1,333 | | | | 1,736 | | | | 1,553 | | | | 688 | | | | 6,807 | | | Acquisitions | | | 195 | | | | 340 | | | | 382 | | | | 820 | | | | 298 | | | | 2,035 | | | Terminated agreements/ write off | | | (527 | ) | | | (83 | ) | | | (161 | ) | | | (178 | ) | | | (1 | ) | | | (950 | ) | | Exchange variation | | | - | | | | 1 | | | | (10 | ) | | | - | | | | 39 | | | | 30 | | | Other | | | - | | | | 97 | | | | (108 | ) | | | - | | | | (5 | ) | | | (16 | ) | | Balance at 12/31/2013 | | | 1,165 | | | | 1,688 | | | | 1,839 | | | | 2,195 | | | | 1,019 | | | | 7,906 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Amortization(2) | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2012 | | | (781 | ) | | | (178 | ) | | | (881 | ) | | | (11 | ) | | | (264 | ) | | | (2,115 | ) | | Amortization expense | | | (273 | ) | | | (137 | ) | | | (291 | ) | | | (36 | ) | | | (74 | ) | | | (811 | ) | | Terminated agreements/ write off | | | 519 | | | | 68 | | | | 158 | | | | - | | | | 1 | | | | 746 | | | Exchange variation | | | - | | | | - | | | | 14 | | | | - | | | | (25 | ) | | | (11 | ) | | Other | | | - | | | | (9 | ) | | | 132 | | | | - | | | | 10 | | | | 133 | | | Balance at 12/31/2013 | | | (535 | ) | | | (256 | ) | | | (868 | ) | | | (47 | ) | | | (352 | ) | | | (2,058 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment(3) | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2012 | | | (18 | ) | | | (3 | ) | | | - | | | | - | | | | - | | | | (21 | ) | | Additions / assumptions | | | - | | | | (27 | ) | | | - | | | | (6 | ) | | | - | | | | (33 | ) | | Reversals | | | - | | | | 3 | | | | - | | | | - | | | | - | | | | 3 | | | Balance at 12/31/2013 | | | (18 | ) | | | (27 | ) | | | - | | | | (6 | ) | | | - | | | | (51 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Book value | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at 12/31/2013 | | | 612 | | | | 1,405 | | | | 971 | | | | 2,142 | | | | 667 | | | | 5,797 | |
| (1) | The contractual commitments for the purchase of new intangible assets totaled R$ 760, achievable by 2016 (Note 36 - Off balance seet). |
| (2) | All intangible assets have a defined useful life. |
(1) The contractual commitments for the purchase of new intangible assets totaled R$ 508, achievable by 2016 (Note 36 - Off balance sheet). (2) All intangible assets have a defined useful life. (3) Note 2.4i. Note 17 - Deposits The table below shows the breakdown of deposits: | | | 12/31/2015 | | | 12/31/2014 | | | | | Current | | | Non-current | | | Total | | | Current | | | Non-current | | | Total | | | Interest-bearing deposits | | | 171,527 | | | | 59,991 | | | | 231,518 | | | | 180,207 | | | | 65,833 | | | | 246,040 | | | Time deposits | | | 45,994 | | | | 59,256 | | | | 105,250 | | | | 43,136 | | | | 65,330 | | | | 108,466 | | | Interbank deposits | | | 14,214 | | | | 735 | | | | 14,949 | | | | 18,622 | | | | 503 | | | | 19,125 | | | Savings deposits | | | 111,319 | | | | - | | | | 111,319 | | | | 118,449 | | | | - | | | | 118,449 | | | Non-interest bearing deposits | | | 61,092 | | | | - | | | | 61,092 | | | | 48,733 | | | | - | | | | 48,733 | | | Demand deposits | | | 61,092 | | | | - | | | | 61,092 | | | | 48,733 | | | | - | | | | 48,733 | | | Total | | | 232,619 | | | | 59,991 | | | | 292,610 | | | | 228,940 | | | | 65,833 | | | | 294,773 | |
| | | 12/31/2016 | | | 12/31/2015 | | | | | Current | | | Non-current | | | Total | | | Current | | | Non-current | | | Total | | | | | | | | | | | | | | | | | | | | | | | Interest-bearing deposits | | | 187,882 | | | | 80,399 | | | | 268,281 | | | | 171,527 | | | | 59,991 | | | | 231,518 | | | Time deposits | | | 75,913 | | | | 80,361 | | | | 156,274 | | | | 45,994 | | | | 59,256 | | | | 105,250 | | | Interbank deposits | | | 3,719 | | | | 38 | | | | 3,757 | | | | 14,214 | | | | 735 | | | | 14,949 | | | Savings deposits | | | 108,250 | | | | - | | | | 108,250 | | | | 111,319 | | | | - | | | | 111,319 | | | Non-interest bearing deposits | | | 61,133 | | | | - | | | | 61,133 | | | | 61,092 | | | | - | | | | 61,092 | | | Demand deposits | | | 61,133 | | | | - | | | | 61,133 | | | | 61,092 | | | | - | | | | 61,092 | | | Total | | | 249,015 | | | | 80,399 | | | | 329,414 | | | | 232,619 | | | | 59,991 | | | | 292,610 | |
Note 18 – Financial liabilities held for trading Financial liabilities held for trading are presented in the following table: | | | 12/31/2015 | | | 12/31/2014 | | | Structured notes | | | | | | | | | | Shares | | | 57 | | | | 73 | | | Debt securities | | | 355 | | | | 447 | | | Total | | | 412 | | | | 520 | |
| | | 12/31/2016 | | | 12/31/2015 | | | Structured notes | | | | | | | | | | Shares | | | 49 | | | | 57 | | | Debt securities | | | 470 | | | | 355 | | | Total | | | 519 | | | | 412 | |
The effect of the changes in credit risk of these instruments is not significant at 12/31/20152016 and 12/31/2014.2015. 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 financial liabilities held for trading by maturity is as follows: | | | 12/31/2015 | | | 12/31/2014 | | | | | Cost / Fair value | | | Cost / Fair value | | | Current - up to one year | | | 34 | | | | 220 | | | Non-current | | | 378 | | | | 300 | | | From one to five years | | | 364 | | | | 122 | | | From five to ten years | | | 5 | | | | 149 | | | After ten years | | | 9 | | | | 29 | | | Total | | | 412 | | | | 520 | |
| | | 12/31/2016 | | | 12/31/2015 | | | | | Cost / Fair value | | | Cost / Fair value | | | Current - up to one year | | | 134 | | | | 34 | | | Non-current | | | 385 | | | | 378 | | | From one to five years | | | 295 | | | | 364 | | | From five to ten years | | | 52 | | | | 5 | | | After ten years | | | 38 | | | | 9 | | | Total | | | 519 | | | | 412 | |
Note 19 – Securities sold under repurchase agreements and interbank and institutional market debts | a) | Securities sold under repurchase agreements and interbank market debt |
a) Securities sold under repurchase agreements and interbank market debt The table below shows the breakdown of funds: | | | 12/31/2015 | | | 12/31/2014 | | | | | | | | Non- | | | | | | | | | Non- | | | | | | | | Current | | | current | | | Total | | | Current | | | current | | | Total | | | Securities sold under repurchase agreements | | | 181,198 | | | | 155,445 | | | | 336,643 | | | | 152,093 | | | | 136,590 | | | | 288,683 | | | Transactions backed by own financial assets(*) | | | 64,955 | | | | 155,445 | | | | 220,400 | | | | 76,343 | | | | 136,590 | | | | 212,933 | | | Transactions backed by third party financial assets | | | 116,243 | | | | - | | | | 116,243 | | | | 75,750 | | | | - | | | | 75,750 | | | Interbank market debt | | | 80,547 | | | | 76,339 | | | | 156,886 | | | | 68,818 | | | | 53,768 | | | | 122,586 | | | Mortgage notes | | | 31 | | | | 108 | | | | 139 | | | | 32 | | | | 111 | | | | 143 | | | Real estate credit bills | | | 12,441 | | | | 2,011 | | | | 14,452 | | | | 10,395 | | | | 437 | | | | 10,832 | | | Agribusiness credit bills | | | 6,695 | | | | 7,080 | | | | 13,775 | | | | 5,229 | | | | 2,582 | | | | 7,811 | | | Financial credit bills | | | 3,860 | | | | 14,636 | | | | 18,496 | | | | 6,284 | | | | 4,361 | | | | 10,645 | | | Import and export financing | | | 45,633 | | | | 19,933 | | | | 65,566 | | | | 27,916 | | | | 15,465 | | | | 43,381 | | | On-lending - domestic | | | 11,884 | | | | 26,920 | | | | 38,804 | | | | 18,942 | | | | 26,288 | | | | 45,230 | | | Liabilities from transactions related to credit assignments (Note 12d) | | | 3 | | | | 5,651 | | | | 5,654 | | | | 20 | | | | 4,524 | | | | 4,544 | |
| (*) | It includes R$ 152,215 (R$ 139,910 at 12/31/2014) related to Debentures of own issue. |
| | | 12/31/2016 | | | 12/31/2015 | | | | | Current | | | Non-
current | | | Total | | | Current | | | Non-
current | | | Total | | | Securities sold under repurchase agreements | | | 234,569 | | | | 114,595 | | | | 349,164 | | | | 181,198 | | | | 155,445 | | | | 336,643 | | | Transactions backed by own financial assets (*) | | | 101,400 | | | | 114,595 | | | | 215,995 | | | | 64,955 | | | | 155,445 | | | | 220,400 | | | Transactions backed by third party financial assets | | | 133,169 | | | | - | | | | 133,169 | | | | 116,243 | | | | - | | | | 116,243 | | | Interbank market debt | | | 75,352 | | | | 60,131 | | | | 135,483 | | | | 80,547 | | | | 76,339 | | | | 156,886 | | | Mortgage notes | | | - | | | | - | | | | - | | | | 31 | | | | 108 | | | | 139 | | | Real estate credit bills | | | 12,830 | | | | 6,349 | | | | 19,179 | | | | 12,441 | | | | 2,011 | | | | 14,452 | | | Agribusiness credit bills | | | 9,158 | | | | 6,284 | | | | 15,442 | | | | 6,695 | | | | 7,080 | | | | 13,775 | | | Financial credit bills | | | 5,976 | | | | 13,590 | | | | 19,566 | | | | 3,860 | | | | 14,636 | | | | 18,496 | | | Import and export financing | | | 38,123 | | | | 7,510 | | | | 45,633 | | | | 45,633 | | | | 19,933 | | | | 65,566 | | | On-lending - domestic | | | 9,205 | | | | 20,623 | | | | 29,828 | | | | 11,884 | | | | 26,920 | | | | 38,804 | | | Liabilities from transactions related to credit assignments (Note 12d) | | | 60 | | | | 5,775 | | | | 5,835 | | | | 3 | | | | 5,651 | | | | 5,654 | |
(*) It includes R$ 132,149 (R$ 152,215 at 12/31/2015) related to Debentures of own issue. 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(*) | | 49%8,5% of CDI to 17.36% | | 0.48%0.63% to 3.84%1.85% | | Mortgage notes | | - | | 3%2.5% to 7%8% | | Real estate credit bills | | 81%83% to 100% of CDI | | - | | Financial credit bills | | IGPM to 113% | | - | | Agribusiness credit bills | | 70%83% to 98% of CDI | | - | | Import and export financing | | 2.5%1.1% to 6.0% | | 0.3%0.4% to 18%9.5% | | On-lending - domestic | | 2.5% to 14.5% | | - | | Liabilities from transactions related to credit assignments | | 6.38% to 13.17% | | 0.3% to 18%- |
In “Securities sold under repurchase agreements”, we 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 49% CDI to 17.36%. The deadline for repurchase expires in January 2027.
(*)Note 2,4d presents the operations comprising Deposits received under securities repurchased agreements.Final repurchase dates are set until December 2032.
| b) | Institutional market debt |
The table below presents the breakdown of funds obtained in Institutional markets: | | | 12/31/2015 | | | 12/31/2014 | | | | | | | | Non- | | | | | | | | | Non- | | | | | | | | Current | | | current | | | Total | | | Current | | | current | | | Total | | | Subordinated debt(1) | | | 10,209 | | | | 55,576 | | | | 65,785 | | | | 2,832 | | | | 52,785 | | | | 55,617 | | | Foreign borrowing through securities | | | 4,757 | | | | 19,431 | | | | 24,188 | | | | 3,142 | | | | 12,250 | | | | 15,392 | | | Structured Operations Certificates(2) | | | 893 | | | | 3,052 | | | | 3,945 | | | | 1,080 | | | | 1,153 | | | | 2,233 | | | Total | | | 15,859 | | | | 78,059 | | | | 93,918 | | | | 7,054 | | | | 66,188 | | | | 73,242 | |
| | | 12/31/2016 | | | 12/31/2015 | | | | | Current | | | Non-
current | | | Total | | | Current | | | Non-
current | | | Total | | | Subordinated debt (1) | | | 11,056 | | | | 46,364 | | | | 57,420 | | | | 10,209 | | | | 55,576 | | | | 65,785 | | | Foreign borrowing through securities | | | 5,947 | | | | 27,636 | | | | 33,583 | | | | 4,757 | | | | 19,431 | | | | 24,188 | | | Structured Operations Certificates (2) | | | 2,050 | | | | 3,186 | | | | 5,236 | | | | 893 | | | | 3,052 | | | | 3,945 | | | Total | | | 19,053 | | | | 77,186 | | | | 96,239 | | | | 15,859 | | | | 78,059 | | | | 93,918 | |
(1)At 12/31/2015,2016, the amount of R$ 64,86151,875 (R$ 53,86564,861 at 12/31/2014)2015) 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. (2)As at December 31, 2015,2016, the market value of the funding from Structured Operations Certificates issued is R$ 4,510.5,816. The interest rate for each one of the operations (p.a.) is presented in the table below. | | | Brazil | | Foreign | | Subordinated debt | | CDI+ 0.7%1% to IGPM + 7.7%7.6% | | 5.1%3.5% to 6.2%10.79% | | Foreign borrowing through securities | | 0.89% to 12.73% | | 0.091%0.63% to 27.75%25.04% | | Structured Operations Certificates | | IPA + 2.59%3.28% to 16.27%16.54% | | - |
Note 20 - Other assets and liabilities a) Other assets | | | 12/31/2015 | | | 12/31/2014 | | | | | | | | Non- | | | | | | | | | Non- | | | | | | | | Current | | | current | | | Total | | | Current | | | current | | | Total | | | Financial(1) | | | 41,546 | | | | 11,960 | | | | 53,506 | | | | 40,984 | | | | 12,665 | | | | 53,649 | | | Receivables from credit card issuers | | | 25,191 | | | | - | | | | 25,191 | | | | 24,203 | | | | - | | | | 24,203 | | | Insurance and reinsurance operations | | | 1,367 | | | | - | | | | 1,367 | | | | 1,388 | | | | - | | | | 1,388 | | | Deposits in guarantee for contingent liabilities (Note 32) | | | 2,131 | | | | 10,502 | | | | 12,633 | | | | 2,128 | | | | 11,478 | | | | 13,606 | | | Deposits in guarantee for foreign borrowing program | | | 409 | | | | - | | | | 409 | | | | 624 | | | | - | | | | 624 | | | Negotiation and intermediation of securities | | | 7,725 | | | | - | | | | 7,725 | | | | 3,964 | | | | - | | | | 3,964 | | | Receivables from reimbursement of contingent liabilities (Note 32c) | | | 335 | | | | 758 | | | | 1,093 | | | | 53 | | | | 623 | | | | 676 | | | Receivables from services provided | | | 2,333 | | | | 149 | | | | 2,482 | | | | 2,394 | | | | 81 | | | | 2,475 | | | Rights receivable from sales operations or transfer of financial assets | | | - | | | | - | | | | - | | | | 5,894 | | | | - | | | | 5,894 | | | Amounts receivable from FCVS – Salary Variations Compensation Fund(2) | | | - | | | | 551 | | | | 551 | | | | - | | | | 483 | | | | 483 | | | Foreign exchange portfolio | | | 444 | | | | - | | | | 444 | | | | - | | | | - | | | | - | | | Operations without credit granting characteristics | | | 1,611 | | | | - | | | | 1,611 | | | | 336 | | | | - | | | | 336 | | | Non-financial | | | 7,005 | | | | 4,606 | | | | 11,611 | | | | 10,906 | | | | 3,015 | | | | 13,921 | | | Prepaid expenses | | | 2,196 | | | | 1,012 | | | | 3,208 | | | | 3,594 | | | | 434 | | | | 4,028 | | | Retirement plan assets (Notes 29c and d) | | | - | | | | 2,183 | | | | 2,183 | | | | - | | | | 2,456 | | | | 2,456 | | | Sundry domestic | | | 602 | | | | - | | | | 602 | | | | 1,862 | | | | - | | | | 1,862 | | | Premiums from loan operations | | | 814 | | | | 850 | | | | 1,664 | | | | 2,371 | | | | - | | | | 2,371 | | | Sundry foreign | | | 1,542 | | | | 550 | | | | 2,092 | | | | 2,058 | | | | 125 | | | | 2,183 | | | Other | | | 1,851 | | | | 11 | | | | 1,862 | | | | 1,021 | | | | - | | | | 1,021 | |
| | | 12/31/2016 | | | 12/31/2015 | | | | | Current | | | Non-
current | | | Total | | | Current | | | Non-
current | | | Total | | | Financial (1) | | | 41,648 | | | | 12,269 | | | | 53,917 | | | | 41,546 | | | | 11,960 | | | | 53,506 | | | Receivables from credit card issuers | | | 26,124 | | | | - | | | | 26,124 | | | | 25,191 | | | | - | | | | 25,191 | | | Insurance and reinsurance operations | | | 1,306 | | | | 14 | | | | 1,320 | | | | 1,367 | | | | - | | | | 1,367 | | | Deposits in guarantee for contingent liabilities (Note 32) | | | 2,118 | | | | 11,144 | | | | 13,262 | | | | 2,131 | | | | 10,502 | | | | 12,633 | | | Deposits in guarantee for foreign borrowing program | | | 893 | | | | - | | | | 893 | | | | 409 | | | | - | | | | 409 | | | Negotiation and intermediation of securities | | | 6,770 | | | | - | | | | 6,770 | | | | 7,725 | | | | - | | | | 7,725 | | | Receivables from reimbursement of contingent liabilities (Note 32c) | | | 258 | | | | 870 | | | | 1,128 | | | | 335 | | | | 758 | | | | 1,093 | | | Receivables from services provided | | | 2,510 | | | | - | | | | 2,510 | | | | 2,333 | | | | 149 | | | | 2,482 | | | Amounts receivable from FCVS – Salary Variations Compensation Fund (2) | | | 7 | | | | 234 | | | | 241 | | | | - | | | | 551 | | | | 551 | | | Foreign exchange portfolio | | | - | | | | - | | | | - | | | | 444 | | | | - | | | | 444 | | | Operations without credit granting characteristics | | | 1,662 | | | | 7 | | | | 1,669 | | | | 1,611 | | | | - | | | | 1,611 | | | Non-financial | | | 7,804 | | | | 2,223 | | | | 10,027 | | | | 7,005 | | | | 4,606 | | | | 11,611 | | | Prepaid expenses | | | 2,101 | | | | 687 | | | | 2,788 | | | | 2,196 | | | | 1,012 | | | | 3,208 | | | Retirement plan assets (Notes 29c and d) | | | - | | | | 1,113 | | | | 1,113 | | | | - | | | | 2,183 | | | | 2,183 | | | Sundry domestic | | | 1,634 | | | | 32 | | | | 1,666 | | | | 602 | | | | - | | | | 602 | | | Premiums from loan operations | | | 531 | | | | 319 | | | | 850 | | | | 814 | | | | 850 | | | | 1,664 | | | Sundry foreign | | | 1,776 | | | | 65 | | | | 1,841 | | | | 1,542 | | | | 550 | | | | 2,092 | | | Other | | | 1,762 | | | | 7 | | | | 1,769 | | | | 1,851 | | | | 11 | | | | 1,862 | |
(1) There were no impairment losses for other financial assets in these periods. (2) The Salary Variation 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.
| | | 12/31/2015 | | | 12/31/2014 | | | | | | | | Non- | | | | | | | | | Non- | | | | | | | | Current | | | current | | | Total | | | Current | | | current | | | Total | | | Financial | | | 68,478 | | | | 237 | | | | 68,715 | | | | 69,610 | | | | 1,882 | | | | 71,492 | | | Credit card operations | | | 56,143 | | | | - | | | | 56,143 | | | | 58,596 | | | | - | | | | 58,596 | | | Foreign exchange portfolio | | | - | | | | - | | | | - | | | | 784 | | | | - | | | | 784 | | | Negotiation and intermediation of securities | | | 10,920 | | | | 177 | | | | 11,097 | | | | 5,749 | | | | 1,439 | | | | 7,188 | | | Finance leases (Note 14a) | | | 491 | | | | 26 | | | | 517 | | | | 394 | | | | 410 | | | | 804 | | | Funds from consortia participants | | | 45 | | | | - | | | | 45 | | | | 30 | | | | - | | | | 30 | | | Liabilities from sales operations or transfer of financial assets | | | - | | | | - | | | | - | | | | 3,477 | | | | 33 | | | | 3,510 | | | Other | | | 879 | | | | 34 | | | | 913 | | | | 580 | | | | - | | | | 580 | | | Non-financial | | | 24,975 | | | | 812 | | | | 25,787 | | | | 22,612 | | | | 1,048 | | | | 23,660 | | | Collection and payment of taxes and contributions | | | 239 | | | | - | | | | 239 | | | | 226 | | | | - | | | | 226 | | | Sundry creditors - domestic | | | 1,681 | | | | 75 | | | | 1,756 | | | | 1,680 | | | | 48 | | | | 1,728 | | | Funds in transit | | | 10,893 | | | | - | | | | 10,893 | | | | 8,906 | | | | - | | | | 8,906 | | | Provision for sundry payments | | | 1,944 | | | | 199 | | | | 2,143 | | | | 2,161 | | | | 378 | | | | 2,539 | | | Social and statutory | | | 5,110 | | | | - | | | | 5,110 | | | | 4,678 | | | | 41 | | | | 4,719 | | | Related to insurance operations | | | 253 | | | | - | | | | 253 | | | | 260 | | | | - | | | | 260 | | | Liabilities for official agreements and rendering of payment services | | | 808 | | | | - | | | | 808 | | | | 933 | | | | - | | | | 933 | | | Provision for retirement plan benefits (Note 29c and e) | | | - | | | | 491 | | | | 491 | | | | - | | | | 516 | | | | 516 | | | Personnel provision | | | 1,336 | | | | 47 | | | | 1,383 | | | | 1,317 | | | | 65 | | | | 1,382 | | | Provision for health insurance | | | 716 | | | | - | | | | 716 | | | | 685 | | | | - | | | | 685 | | | Deferred income | | | 1,909 | | | | - | | | | 1,909 | | | | 1,386 | | | | - | | | | 1,386 | | | Other | | | 86 | | | | - | | | | 86 | | | | 380 | | | | - | | | | 380 | |
| | | 12/31/2016 | | | 12/31/2015 | | | | | Current | | | Non-
current | | | Total | | | Current | | | Non-
current | | | Total | | | Financial | | | 71,798 | | | | 34 | | | | 71,832 | | | | 68,478 | | | | 237 | | | | 68,715 | | | Credit card operations | | | 58,920 | | | | - | | | | 58,920 | | | | 56,143 | | | | - | | | | 56,143 | | | Foreign exchange portfolio | | | 620 | | | | - | | | | 620 | | | | - | | | | - | | | | - | | | Negotiation and intermediation of securities | | | 10,538 | | | | - | | | | 10,538 | | | | 10,920 | | | | 177 | | | | 11,097 | | | Finance leases (Note 14a) | | | 26 | | | | - | | | | 26 | | | | 491 | | | | 26 | | | | 517 | | | Funds from consortia participants | | | 84 | | | | - | | | | 84 | | | | 45 | | | | - | | | | 45 | | | Other | | | 1,610 | | | | 34 | | | | 1,644 | | | | 879 | | | | 34 | | | | 913 | | | Non-financial | | | 25,968 | | | | 1,142 | | | | 27,110 | | | | 24,975 | | | | 812 | | | | 25,787 | | | Collection and payment of taxes and contributions | | | 297 | | | | - | | | | 297 | | | | 239 | | | | - | | | | 239 | | | Sundry creditors - domestic | | | 2,488 | | | | 117 | | | | 2,605 | | | | 1,681 | | | | 75 | | | | 1,756 | | | Funds in transit | | | 10,214 | | | | 190 | | | | 10,404 | | | | 10,893 | | | | - | | | | 10,893 | | | Provision for sundry payments | | | 2,007 | | | | 203 | | | | 2,210 | | | | 1,944 | | | | 199 | | | | 2,143 | | | Social and statutory | | | 5,541 | | | | 35 | | | | 5,576 | | | | 5,110 | | | | - | | | | 5,110 | | | Related to insurance operations | | | 224 | | | | - | | | | 224 | | | | 253 | | | | - | | | | 253 | | | Liabilities for official agreements and rendering of payment services | | | 864 | | | | - | | | | 864 | | | | 808 | | | | - | | | | 808 | | | Provision for retirement plan benefits (Note 29c and e) | | | 201 | | | | 548 | | | | 749 | | | | - | | | | 491 | | | | 491 | | | Personnel provision | | | 1,352 | | | | 49 | | | | 1,401 | | | | 1,336 | | | | 47 | | | | 1,383 | | | Provision for health insurance | | | 742 | | | | - | | | | 742 | | | | 716 | | | | - | | | | 716 | | | Deferred income | | | 1,975 | | | | - | | | | 1,975 | | | | 1,909 | | | | - | | | | 1,909 | | | Other | | | 63 | | | | - | | | | 63 | | | | 86 | | | | - | | | | 86 | |
Note 21 – Stockholders’ equity The Extraordinary Stockholders’ Meeting held on April 29, 2015September 14, 2016 approved anthe increase of subscribed and paid-up capital by R$ 10,148,12,000, with the capitalization of the amounts recorded in Revenue Reserve – Statutory Reserve, with a 10% bonus share.shares. Bonus shares started being traded on 07/17/2015October 21,2016 and the process was approved by the Central Bank on 06/25/2015.September 23,2016. Accordingly, capital stock was increased by 553,083,268598,391,594 shares. The Extraordinary Stockholders` Meeting of April 27, 2016 approved the cancellation of 100,000,000 preferred shares of own issue held in treasury, without change to the capital stock, through the capitalization of amounts recorded in Revenue Reserves – Statutory Reserve. This process was approved by the Central Bank of Brazil on June 7, 2016. Capital comprises 6,083,915,9496,582,307,543 book-entry shares with no par value, of which 3,047,040,1983,351,744,217 are common and 3,036,875,7513,230,563,326 are preferred shares without voting rights; preferred shares haverights, but with tag-along rights, in the event of a possible change in control,the public offer of common shares, at a price equal to 80% of the amount paid per share paid forwith voting rights in the controlling stake, as well as a dividend at least equal to that of the common shares. Capital stock amounts to R$ 85,148 (R$ 75,00097,148 (85,148 at 12/31/2014)2015), of which R$ 58,283 (R$ 51,56365,534 (58,284 at 12/31/2014)2015) refers to stockholders residentdomiciled in Brazilthe country and R$ 26,86431,614 (R$ 23,43726,864 at 12/31/2014)2015) refers to stockholders residentdomiciled 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 period: | | | 12/31/2015 | | | | | Number | | | | | | | | Common | | | Preferred | | | Total | | | Amount | | | Residents in Brazil at 12/31/2014 | | | 2,758,685,730 | | | | 1,043,799,342 | | | | 3,802,485,072 | | | | | | | Residents abroad at 12/31/2014 | | | 11,350,814 | | | | 1,716,996,795 | | | | 1,728,347,609 | | | | | | | Shares of capital stock at 12/31/2014 | | | 2,770,036,544 | | | | 2,760,796,137 | | | | 5,530,832,681 | | | | | | | Bonus Shares – ESM of 04/29/2015 – made effective on 06/25/2015 | | | 277,003,654 | | | | 276,079,614 | | | | 553,083,268 | | | | | | | Shares of capital stock at 12/31/2015 | | | 3,047,040,198 | | | | 3,036,875,751 | | | | 6,083,915,949 | | | | | | | Residents in Brazil at 12/31/2015 | | | 3,033,657,386 | | | | 1,130,776,196 | | | | 4,164,433,582 | | | | | | | Residents abroad at 12/31/2015 | | | 13,382,812 | | | | 1,906,099,555 | | | | 1,919,482,367 | | | | | | | Treasury shares at 12/31/2014(1) | | | 2,541 | | | | 53,828,551 | | | | 53,831,092 | | | | (1,328 | ) | | Purchase of shares | | | - | | | | 111,524,800 | | | | 111,524,800 | | | | (3,324 | ) | | Exercised options – granting of stock options | | | - | | | | (5,873,741 | ) | | | (5,873,741 | ) | | | 4 | | | Disposals – stock option plan | | | - | | | | (5,342,874 | ) | | | (5,342,874 | ) | | | 295 | | | Bonus Shares – ESM of 04/29/2015 | | | 254 | | | | 8,425,914 | | | | 8,426,168 | | | | - | | | Treasury shares at 12/31/2015(1) | | | 2,795 | | | | 162,562,650 | | | | 162,565,445 | | | | (4,353 | ) | | Outstanding shares at 12/31/2015 | | | 3,047,037,403 | | | | 2,874,313,101 | | | | 5,921,350,504 | | | | | | | Outstanding shares at 12/31/2014(2) | | | 3,047,037,403 | | | | 2,977,664,345 | | | | 6,024,701,748 | | | | | |
| | | 12/31/2016 | | | | | Number | | | | | | | | Common | | | Preferred | | | Total | | | Amount | | | | | | | | | | | | | | | | | Residents in Brazil at 12/31/2015 | | | 3,033,657,386 | | | | 1,130,776,196 | | | | 4,164,433,582 | | | | | | | Residents abroad at 12/31/2015 | | | 13,382,812 | | | | 1,906,099,555 | | | | 1,919,482,367 | | | | | | | Shares of capital stock at 12/31/2015 | | | 3,047,040,198 | | | | 3,036,875,751 | | | | 6,083,915,949 | | | | | | | (-) Cancellation of shares - ESM of April 27, 2016 – Approved on June 7, 2016 | | | - | | | | (100,000,000 | ) | | | (100,000,000 | ) | | | | | | Bonus Shares - ESM of 09/14/2016 - Carried out at 09/23/2016 | | | 304,704,019 | | | | 293,687,575 | | | | 598,391,594 | | | | | | | Shares of capital stock at 12/31/2016 | | | 3,351,744,217 | | | | 3,230,563,326 | | | | 6,582,307,543 | | | | | | | Residents in Brazil at 12/31/2016 | | | 3,335,350,311 | | | | 1,104,963,731 | | | | 4,440,314,042 | | | | | | | Residents abroad at 12/31/2016 | | | 16,393,906 | | | | 2,125,599,595 | | | | 2,141,993,501 | | | | | | | Treasury shares at 12/31/2015 (1) | | | 2,795 | | | | 162,562,650 | | | | 162,565,445 | | | | (4,353 | ) | | Purchase of shares | | | - | | | | 30,640,000 | | | | 30,640,000 | | | | (947 | ) | | Exercised options – granting of stock options | | | - | | | | (19,931,626 | ) | | | (19,931,626 | ) | | | 315 | | | Disposals – stock option plan | | | - | | | | (8,293,957 | ) | | | (8,293,957 | ) | | | 433 | | | (-) Cancellation of shares - ESM of April 27, 2016 – Approved on June 7, 2016 | | | - | | | | (100,000,000 | ) | | | (100,000,000 | ) | | | 2,670 | | | Bonus Shares - ESM of 09/14/2016 | | | 279 | | | | 4,627,395 | | | | 4,627,674 | | | | - | | | Treasury shares at 12/31/2016 (1) | | | 3,074 | | | | 69,604,462 | | | | 69,607,536 | | | | (1,882 | ) | | Outstanding shares at 12/31/2016 | | | 3,351,741,143 | | | | 3,160,958,864 | | | | 6,512,700,007 | | | | | | | Outstanding shares at 12/31/2015 (2) | | | 3,351,741,143 | | | | 3,161,744,411 | | | | 6,513,485,554 | | | | | |
| | | 12/31/2014 | | | | | Number | | | | | | | | Common | | | Preferred | | | Total | | | Amount | | | Residents in Brazil at 12/31/2013 | | | 2,752,543,169 | | | | 1,082,328,262 | | | | 3,834,871,431 | | | | | | | Residents abroad at 12/31/2013 | | | 17,493,375 | | | | 1,678,467,875 | | | | 1,695,961,250 | | | | | | | Shares of capital stock at 12/31/2013 | | | 2,770,036,544 | | | | 2,760,796,137 | | | | 5,530,832,681 | | | | | | | Bonus shares - ESM of 04/23/2014 – made effective on 06/06/2014 | | | 277,003,654 | | | | 276,079,614 | | | | 553,083,268 | | | | | | | Shares of capital stock at 12/31/2014 | | | 3,047,040,198 | | | | 3,036,875,751 | | | | 6,083,915,949 | | | | | | | Residents in Brazil at 12/31/2014 | | | 3,034,554,303 | | | | 1,148,179,276 | | | | 4,182,733,579 | | | | | | | Residents abroad at 12/31/2014 | | | 12,485,895 | | | | 1,888,696,475 | | | | 1,901,182,370 | | | | | | | Treasury shares at 12/31/2013(1) | | | 2,541 | | | | 75,753,711 | | | | 75,756,252 | | | | (1,854 | ) | | Purchase of shares | | | - | | | | 1,100,000 | | | | 1,100,000 | | | | (35 | ) | | Exercised options - granting of stock options | | | - | | | | (19,003,419 | ) | | | (19,003,419 | ) | | | 413 | | | Disposals – stock option plan | | | - | | | | (4,978,546 | ) | | | (4,978,546 | ) | | | 148 | | | Bonus shares - ESM of 04/23/2014 – made effective on 06/06/2014 | | | 254 | | | | 6,339,660 | | | | 6,339,914 | | | | - | | | Treasury shares at 12/31/2014(1) | | | 2,795 | | | | 59,211,406 | | | | 59,214,201 | | | | (1,328 | ) | | Outstanding shares at 12/31/2014(2) | | | 3,047,037,403 | | | | 2,977,664,345 | | | | 6,024,701,748 | | | | | | | Outstanding shares at 12/31/2013(2) | | | 3,047,037,403 | | | | 2,953,546,669 | | | | 6,000,584,072 | | | | | |
| | | 12/31/2015 | | | | | Number | | | | | | | | Common | | | Preferred | | | Total | | | Amount | | | | | | | | | | | | | | | | | Residents in Brazil at 12/31/2014 | | | 3,034,554,303 | | | | 1,148,179,276 | | | | 4,182,733,579 | | | | | | | Residents abroad at 12/31/2014 | | | 12,485,895 | | | | 1,888,696,475 | | | | 1,901,182,370 | | | | | | | Shares of capital stock at 12/31/2014 | | | 3,047,040,198 | | | | 3,036,875,751 | | | | 6,083,915,949 | | | | | | | Bonus shares - ESM of 04/29/2015 – made effective on 06/25/2015 | | | 304,704,019 | | | | 303,687,575 | | | | 608,391,594 | | | | | | | Shares of capital stock at 12/31/2015 | | | 3,351,744,217 | | | | 3,340,563,326 | | | | 6,692,307,543 | | | | | | | Residents in Brazil at 12/31/2015 | | | 3,337,023,124 | | | | 1,243,853,815 | | | | 4,580,876,939 | | | | | | | Residents abroad at 12/31/2015 | | | 14,721,093 | | | | 2,096,709,511 | | | | 2,111,430,604 | | | | | | | Treasury shares at 12/31/2014 (1) | | | 2,795 | | | | 59,211,406 | | | | 59,214,201 | | | | (1,328 | ) | | Purchase of shares | | | - | | | | 122,677,280 | | | | 122,677,280 | | | | (3,324 | ) | | Exercised options - granting of stock options | | | - | | | | (6,461,115 | ) | | | (6,461,115 | ) | | | 4 | | | Disposals – stock option plan | | | - | | | | (5,877,161 | ) | | | (5,877,161 | ) | | | 295 | | | Bonus shares - ESM of 04/29/2015 | | | 279 | | | | 9,268,505 | | | | 9,268,784 | | | | - | | | Treasury shares at 12/31/2015 (1) | | | 3,074 | | | | 178,818,915 | | | | 178,821,989 | | | | (4,353 | ) | | Outstanding shares at 12/31/2015 (2) | | | 3,351,741,143 | | | | 3,161,744,411 | | | | 6,513,485,554 | | | | | | | Outstanding shares at 12/31/2014 (2) | | | 3,351,741,143 | | | | 3,275,430,780 | | | | 6,627,171,923 | | | | | |
(1) Own shares, purchased based on authorization of the Board of Directors, to be held in Treasury for subsequent cancellation of replacement in the market. (2) For better comparability, outstanding shares were adjusted to reflect the bonuses of 06/25/2015.09/23/2016. We detail below of the cost of shares purchased in the period, as well the average cost of treasury shares and their market price (in Brazilian Reais per share): | | | 01/01 to 12/31/2015 | | | Cost / market value | | Common | | | Preferred | | | Minimum | | | - | | | | 24.96 | | | Weighted average | | | - | | | | 28.80 | | | Maximum | | | - | | | | 31.86 | | | Treasury shares | | | | | | | | | | Average cost | | | 7.25 | | | | 26.78 | | | Market value at 12/31/2015 | | | 24.58 | | | | 26.33 | |
| | | 01/01 to 12/31/2016 | | | Cost / market value | | Common | | | Preferred | | | Minimum | | | - | | | | 23.79 | | | Weighted average | | | - | | | | 30.13 | | | Maximum | | | - | | | | 36.05 | | | Treasury shares | | | | | | | | | | Average cost | | | 6.59 | | | | 27.04 | | | Market value at 12/31/2016 | | | 30.00 | | | | 33.85 | |
| | | 01/01 to 12/31/2014 | | | Cost / market value | | Common | | | Preferred | | | Minimum | | | - | | | | 31.03 | | | Weighted average | | | - | | | | 31.59 | | | Maximum | | | - | | | | 31.88 | | | Treasury shares | | | | | | | | | | Average cost | | | 7.25 | | | | 22.43 | | | Market value at 12/31/2014 | | | 32.30 | | | | 34.60 | |
| | 01/01 to 12/31/2015 | | | Cost / market value | | Common | | | Preferred | | | Minimum | | | - | | | | 24.96 | | | Weighted average | | | - | | | | 28.80 | | | Maximum | | | - | | | | 31.86 | | | Treasury shares | | | | | | | | | | Average cost | | | 7.25 | | | | 26.78 | | | Market value at 12/31/2015 | | | 24.58 | | | | 26.33 | |
Stockholders are entitled to an annual mandatory 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 non-cumulative to be paid to 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, amounting to R$ 0.015 per share. Below is a statement from dividends and interest on equity and the calculation of the minimum mandatory dividend:
Calculation of dividends and interest on capital | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | Statutory net income | | | 21,084 | | | | 17,392 | | | | 11,661 | | | Adjustments: | | | | | | | | | | | | | | (-) Legal reserve | | | (1,054 | ) | | | (870 | ) | | | (583 | ) | | Dividend calculation basis | | | 20,030 | | | | 16,522 | | | | 11,078 | | | Mandatory dividend - 25% | | | 5,007 | | | | 4,130 | | | | 2,769 | | | Dividends and interest on capital – paid / provisioned for | | | 7,305 | | | | 6,635 | | | | 5,095 | |
| | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Statutory net income | | | 18,853 | | | | 21,084 | | | | 17,392 | | | Adjustments: | | | | | | | | | | | | | | (-) Legal reserve | | | (943 | ) | | | (1,054 | ) | | | (870 | ) | | Dividend calculation basis | | | 17,910 | | | | 20,030 | | | | 16,522 | | | Mandatory dividend - 25% | | | 4,478 | | | | 5,007 | | | | 4,130 | | | Dividends and interest on capital – paid / provisioned for | | | 10,000 | | | | 7,305 | | | | 6,635 | |
Payments / provision for interest on capital and dividends | | | 12/31/2015 | | | | | Gross | | | WHT | | | Net | | | Paid / prepaid | | | 3,002 | | | | (311 | ) | | | 2,691 | | | Dividends - 11 monthly installments of R$ 0.015 per share paid from February to December 2015 | | | 932 | | | | - | | | | 932 | | | Interest on capital - R$ 0.3460 per share paid on 08/25/2015 | | | 2,070 | | | | (311 | ) | | | 1,759 | | | | | | | | | | | | | | | | | Declared until 12/31/2015 (recorded in other liabilities) | | | 2,502 | | | | (186 | ) | | | 2,316 | | | Dividends - 1 monthly installment of R$ 0.015 per share paid on 01/04/2015 | | | 89 | | | | - | | | | 89 | | | Dividends - R$ 0.1980 | | | 1,173 | | | | | | | | 1,173 | | | Interest on capital - R$ 0.2090 per share, credited on 12/30/2015, paid by 04/30/2016 | | | 1,240 | | | | (186 | ) | | | 1,054 | | | | | | | | | | | | | | | | | Declared after 12/31/2015 (Recorded in Revenue Reserves - Dividends equalization) | | | 2,703 | | | | (405 | ) | | | 2,298 | | | Interest on capital - R$ 0.4564 per share | | | 2,703 | | | | (405 | ) | | | 2,298 | | | | | | | | | | | | | | | | | Total from 01/01 to 12/31/2015 - R$ 1.2376 net per share | | | 8,207 | | | | (902 | ) | | | 7,305 | |
| | | 12/31/2016 | | | | | Gross | | | WHT | | | Net | | | Paid / prepaid | | | 3,355 | | | | (355 | ) | | | 3,000 | | | Dividends - 11 monthly installments of R$ 0.015 per share paid from February to December 2016 | | | 987 | | | | - | | | | 987 | | | Interest on capital - R$ 0.3990 per share paid on 08/25/2016 | | | 2,368 | | | | (355 | ) | | | 2,013 | | | | | | | | | | | | | | | | | Declared until 12/31/2016 (recorded in other liabilities) | | | 3,169 | | | | (461 | ) | | | 2,708 | | | Dividends - 1 monthly installment of R$ 0.015 per share paid on 01/02/2017 | | | 98 | | | | - | | | | 98 | | | Interest on capital - R$ 0.4714 per share, credited on 12/30/2016, paid by 04/28/2017 | | | 3,071 | | | | (461 | ) | | | 2,610 | | | | | | | | | | | | | | | | | Declared after 12/31/2016 (Recorded in Revenue Reserves - Dividends equalization) | | | 5,050 | | | | (758 | ) | | | 4,292 | | | Interest on capital - R$ 0.7754 per share | | | 5,050 | | | | (758 | ) | | | 4,292 | | | | | | | | | | | | | | | | | Total from 01/01 to 12/31/2016 - R$ 1.5789 net per share | | | 11,574 | | | | (1,574 | ) | | | 10,000 | |
| | | 12/31/2014 | | | | | Gross | | | WHT | | | Net | | | Paid / prepaid | | | 2,637 | | | | (267 | ) | | | 2,370 | | | Dividends - 11 monthly installments of R$ 0.015 per share paid from February to December 2014 | | | 857 | | | | - | | | | 857 | | | Interest on capital - R$ 0.3256 per share paid on 08/25/2014 | | | 1,780 | | | | (267 | ) | | | 1,513 | | | | | | | | | | | | | | | | | Declared until 12/31/2014 (recorded in other liabilities) | | | 1,760 | | | | - | | | | 1,760 | | | Dividends - 1 monthly installment of R$ 0.015 per share paid on 01/02/2015 | | | 82 | | | | - | | | | 82 | | | Dividends - R$ 0.3063 per share | | | 1,678 | | | | - | | | | 1,678 | | | | | | | | | | | | | | | | | Declared after 12/31/2014 (Recorded in Revenue Reserves - Unrealized Profits Reserve) | | | 2,947 | | | | (442 | ) | | | 2,505 | | | Interest on capital - R$ 0.5380 per share | | | 2,947 | | | | (442 | ) | | | 2,505 | | | | | | | | | | | | | | | | | Total from 01/01 to 12/31/2014 - R$ 1.2204 net per share | | | 7,344 | | | | (709 | ) | | | 6,635 | |
| | | 12/31/2015 | | | | | Gross | | | WHT | | | Net | | | Paid / prepaid | | | 3,002 | | | | (311 | ) | | | 2,691 | | | Dividends - 11 monthly installments of R$ 0.015 per share paid from February to December 2015 | | | 932 | | | | - | | | | 932 | | | Interest on capital - R$ 0.3460 per share paid on 08/25/2015 | | | 2,070 | | | | (311 | ) | | | 1,759 | | | | | | | | | | | | | | | | | Declared until 12/31/2015 (recorded in other liabilities) | | | 2,502 | | | | (186 | ) | | | 2,316 | | | Dividends - 1 monthly installment of R$ 0.015 per share paid on 01/04/2016 | | | 89 | | | | - | | | | 89 | | | Dividends provision - R$ 0.1980 per share | | | 1,173 | | | | | | | | 1,173 | | | Interest on capital - R$ 0.2090 per share, credited on 12/30/2015, paid by 04/30/2016 | | | 1,240 | | | | (186 | ) | | | 1,054 | | | | | | | | | | | | | | | | | Declared after 12/31/2015 (Recorded in Revenue Reserves - Unrealized Profits Reserve) | �� | | 2,703 | | | | (405 | ) | | | 2,298 | | | Interest on capital - R$ 0.4564 per share | | | 2,703 | | | | (405 | ) | | | 2,298 | | | | | | | | | | | | | | | | | Total from 01/01 to 12/31/2015 - R$ 1.2376 net per share | | | 8,207 | | | | (902 | ) | | | 7,305 | |
Payments / provision for interest on capital and dividends | | | 12/31/2013 | | | | | Gross | | | WHT | | | Net | | | Paid / prepaid | | | 2,162 | | | | (206 | ) | | | 1,956 | | | Dividends - 11 monthly installments of R$ 0.015 per share paid from February to December 2013 | | | 786 | | | | - | | | | 786 | | | Interest on capital - R$ 0.2774 per share paid on 08/21/2013 | | | 1,376 | | | | (206 | ) | | | 1,170 | | | | | | | | | | | | | | | | | Declared until 12/31/2013 (recorded in other liabilities) | | | 1,084 | | | | (152 | ) | | | 933 | | | Dividends - 1 monthly installment of R$ 0.015 per share paid on 01/02/2014 | | | 74 | | | | - | | | | 74 | | | Interest on capital - R$ 0.2036 per share, credited on 12/30/2013, paid on 02/28/2014 | | | 1,010 | | | | (152 | ) | | | 859 | | | | | | | | | | | | | | | | | Declared after 12/31/2013 (Recorded in Revenue Reserves - Unrealized Profits Reserve) | | | 2,596 | | | | (389 | ) | | | 2,207 | | | Interest on capital - R$ 0.5236 per share | | | 2,596 | | | | (389 | ) | | | 2,207 | | | | | | | | | | | | | | | | | Total from 01/01 to 12/31/2013 - R$ 1.0340 net per share | | | 5,842 | | | | (747 | ) | | | 5,095 | |
| | | 12/31/2014 | | | | | Gross | | | WHT | | | Net | | | Paid / prepaid | | | 2,637 | | | | (267 | ) | | | 2,370 | | | Dividends - 11 monthly installments of R$ 0.015 per share paid from February to December 2014 | | | 857 | | | | - | | | | 857 | | | Interest on capital - R$ 0.3256 per share paid on 08/25/2014 | | | 1,780 | | | | (267 | ) | | | 1,513 | | | | | | | | | | | | | | | | | Declared until 12/31/2014 (recorded in other liabilities) | | | 1,760 | | | | - | | | | 1,760 | | | Dividends - 1 monthly installment of R$ 0.015 per share paid on 01/02/2015 | | | 82 | | | | - | | | | 82 | | | Interest on capital - R$ 0.3063 per share | | | 1,678 | | | | - | | | | 1,678 | | | | | | | | | | | | | | | | | Declared after 12/31/2014 (Recorded in Revenue Reserves - Unrealized Profits Reserve) | | | 2,947 | | | | (442 | ) | | | 2,505 | | | Interest on capital - R$ 0.5380 per share | | | 2,947 | | | | (442 | ) | | | 2,505 | | | | | | | | | | | | | | | | | Total from 01/01 to 12/31/2014 - R$ 1.2204 net per share | | | 7,344 | | | | (709 | ) | | | 6,635 | |
c) Additional paid-in capital | 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 and variable compensation. d) Appropriated reserves | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | Capital reserves(1) | | | 285 | | | | 285 | | | | 285 | | | Premium on subscription of shares | | | 284 | | | | 284 | | | | 284 | | | Reserves from tax incentives, restatement of equity securities and other | | | 1 | | | | 1 | | | | 1 | | | Revenue reserves | | | 9,782 | | | | 7,925 | | | | 13,183 | | | Legal(2) | | | 6,895 | | | | 5,841 | | | | 4,971 | | | Statutory | | | 9,461 | | | | 7,775 | | | | 13,615 | | | Dividends equalization(3) | | | 3,355 | | | | 2,885 | | | | 3,901 | | | Working capital increase(4) | | | 1,655 | | | | 1,162 | | | | 3,003 | | | Increase in capital of investees(5) | | | 4,451 | | | | 3,728 | | | | 6,711 | | | Corporate reorganizations (Note 2.4 a III) | | | (9,277 | ) | | | (8,638 | ) | | | (7,999 | ) | | Unrealized profits(6) | | | 2,703 | | | | 2,947 | | | | 2,596 | | | Total reserves at parent company | | | 10,067 | | | | 8,210 | | | | 13,468 | |
| | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Capital reserves (1) | | | 285 | | | | 285 | | | | 285 | | | Premium on subscription of shares | | | 284 | | | | 284 | | | | 284 | | | Reserves from tax incentives, restatement of equity securities and other | | | 1 | | | | 1 | | | | 1 | | | Revenue reserves | | | 3,158 | | | | 9,782 | | | | 7,925 | | | Legal (2) | | | 7,838 | | | | 6,895 | | | | 5,841 | | | Statutory | | | 1,132 | | | | 9,461 | | | | 7,775 | | | Dividends equalization (3) | | | 337 | | | | 3,355 | | | | 2,885 | | | Working capital increase (4) | | | - | | | | 1,655 | | | | 1,162 | | | Increase in capital of investees (5) | | | 795 | | | | 4,451 | | | | 3,728 | | | Corporate reorganizations (Note 2.4 a III) | | | (10,862 | ) | | | (9,277 | ) | | | (8,638 | ) | | Unrealized profits (6) | | | 5,050 | | | | 2,703 | | | | 2,947 | | | Total reserves at parent company | | | 3,443 | | | | 10,067 | | | | 8,210 | |
| (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 reserve - may be used to increase capital or to absorb losses, but it cannot be distributed as dividends. |
| (3) | Reserve for dividends equalization - its purpose is to reserve funds for the payment or advances on dividends, including interest on capital, to maintain the flow of the stockholders' compensation. |
| (4) | Reserve for working capital - its purpose is to guarantee funds for operations. |
| (5) | Reserve for increase in capital of investees - its purpose is to guarantee the preemptive right in the capital increases of investees. |
| (6) | Refers to interest on capital declared after December 31 of each period. |
| e) | Unappropriated reserves |
Refers to balance of profit remaining after the distribution of dividends and appropriations to statutory reserves in the statutory accounts of ITAÚ UNIBANCO HOLDING. f) Non-controlling interests | | | Stockholders’ equity | | | Net Income | | | | | | | | | | | 01/01 to | | | 01/01 to | | | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2016 | | | 12/31/2015 | | | Itaú CorpBanca (Note 3) | | | 10,117 | | | | - | | | | 119 | | | | - | | | Banco CorpBanca Colômbia S.A. (Note 3) | | | 1,231 | | | | - | | | | 22 | | | | - | | | Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento | | | 519 | | | | 428 | | | | 119 | | | | 118 | | | Banco Itaú Consignado S.A. | | | - | | | | 983 | | | | (20 | ) | | | 217 | | | Luizacred S.A. Soc. Cred. Financiamento Investimento | | | 275 | | | | 282 | | | | 51 | | | | 62 | | | Others | | | 90 | | | | 114 | | | | 28 | | | | 19 | | | Total | | | 12,232 | | | | 1,807 | | | | 319 | | | | 416 | |
Note 22 – Share-based payment ITAÚ UNIBANCO HOLDING and its subsidiaries have share-based payment programs aimed at involving its management members and employees in the medium and long term corporate development process. These payments are only made in years where there are sufficient profits to enable the distribution of mandatory dividends, in order to limit the maximum dilutive effect to which stockholders are subject, and at a quantity that does not exceed the limit of 0.5% of the total shares held by the controlling and minority stockholders at the balance sheet date. These programs are settled through the delivery of ITUB4 treasury shares to stockholders. At the ESM of September 14, 2016 a capital increase with 10% share bonus was approved and ratified by BACEN on September 23, 2016. The new shares will be included in the share position on October 21, 2016. Therefore, for better comparability, the number of shares shown in this note consider the bonus shares. From 01/01 to 12/31/2015,2016, the accounting effect of the share-based payment in income was R$ (591) (R$ (734) (R$from 01/01 to 12/31/2015 and R$ (441) from 01/01 to 12/31/2014 and R$ (322) from 01/01 to 12/31/2013)2014)). I – Stock Option Plan (Simple Options) ITAÚ UNIBANCO HOLDING has a Stock Option Plan (“Simple Options”) aimed at involving management members and employees in the medium and long term corporate development program of ITAÚ UNIBANCO HOLDING and its subsidiaries, offering them the opportunity benefit from the appreciation that their work and dedication bring to the shares. In addition to the grants provided under the Plan, ITAÚ UNIBANCO HOLDING also maintains control over the rights and obligations in connection with the options granted under the plans approved at the Extraordinary Stockholders’ Meetings held on April 24, 2009 and April 19, 2013 related to the Unibanco – União de Bancos Brasileiros S.A. and to Unibanco Holdings S.A., and to Redecard S.A. (“Rede”) stock option plans, respectively. Accordingly, the exchange of shares for ITUB4 did not have a relevant financial impact. Simple options have the following characteristics: | a) | Exercise price:calculated based on the average prices of shares in the three months of the year prior topriorto the grant date. The prices determined will be restated to the last business day of the month prior to the option exercise date based on IGP-M or, in its absence, on an index to be determined internally, and should be paid within the period in force for the settlement of operations on BM&FBOVESPA. |
| b) | Vesting period:determined upon issue, from one to seven years, counted from the grant date. The vestingThevesting period is normally determined at five years. |
| c) | Fair value and economic assumptions for cost recognition:the fair value of Simple Options is calculatediscalculated on the grant date based on the Binominal model. Economic assumptions used are as follows: |
| (i) | Exercise price: exercise price previously agreed upon the option issue, adjusted by the IGP-M variation; |
| (ii) | Price of the underlying asset (ITUB4 shares): closing price on BM&FBOVESPA on the calculation base date. |
| (iii) | Expected dividends: the average annual return rate for the last three years of dividends paid plus interest on capital of the ITUB4 share; |
| (iv) | Risk-free interest rate: IGP-M coupon rate at the expiration date of the Simple Option; |
| (v) | Expected volatility: calculated based on the standard deviation from the history of the last 84 monthly returns of the ITUB4 share closing prices, disclosed by BM&FBOVESPA, adjusted by the IGP-M variation. |
Summary of changes in the plan | | | Simple options | | | Simple options | | | | | | | | Weighted average | | Weighted average | | | | | | Weighted average | | Weighted average | | | | | Quantity | | | exercise price | | | market value | | | Quantity | | | exercise price | | | market value | | | Opening balance 12/31/2014 | | | 55,162,112 | | | | 32.43 | | | | | | | | Opening balance 12/31/2015 | | | | 50,543,148 | | | | 31.89 | | | | | | | Options exercisable at the end of the period | | | 28,872,290 | | | | 32.15 | | | | | | | | 35,647,958 | | | | 33.40 | | | | | | | Options outstanding but not exercisable | | | 26,289,822 | | | | 32.73 | | | | | | | | 14,895,190 | | | | 28.29 | | | | | | | Options: | | | | | | | | | | | | | | | | | | | | | | | | | | Granted | | | - | | | | - | | | | | | | | - | | | | - | | | | | | | Canceled / Forfeited(*) | | | (9,062,437 | ) | | | 40.08 | | | | | | | | (127,798 | ) | | | 35.91 | | | | | | | Exercised | | | (151,358 | ) | | | 24.32 | | | | 34.36 | | | | (12,381,844 | ) | | | 26.92 | | | | 35.15 | | | Balance at 12/31/2015 | | | 45,948,317 | | | | 35.08 | | | | | | | | Balance at 12/31/2016 | | | | 38,033,506 | | | | 36.94 | | | | | | | Options exercisable at the end of the period | | | 32,407,235 | | | | 36.74 | | | | | | | | 23,440,177 | | | | 40.98 | | | | | | | Options outstanding but not exercisable | | | 13,541,082 | | | | 31.12 | | | | | | | | 14,593,329 | | | | 30.45 | | | | | | | Range of exercise prices | | | | | | | | | | | | | | | | | | | | | | | | | | Granting 2008-2009 | | | | | | | 26.34 - 40.28 | | | | | | | | Granting 2010-2012 | | | | | | | 23.88 - 42.79 | | | | | | | | Granting 2009-2010 | | | | | | | | 25,66 - 41,69 | | | | | | | Granting 2011-2012 | | | | | | | | 30,45 - 40,72 | | | | | | | Weighted average of the remaining contractual life (in years) | | | 2.60 | | | | | | | | | | | | 2.63 | | | | | | | | | |
(*) Refers to non-exercise based on the beneficiary’s decision. | | | Simple options | | | Simple options | | | | | | | | Weighted average | | Weighted average | | | | | | Weighted average | | Weighted average | | | | | Quantity | | | exercise price | | | market value | | | Quantity | | | exercise price | | | market value | | | Opening balance 12/31/2013 | | | 71,848,530 | | | | 29.86 | | | | | | | | Opening balance 12/31/2014 | | | | 60,678,323 | | | | 29.48 | | | | | | | Options exercisable at the end of the period | | | 36,008,273 | | | | 27.65 | | | | | | | | 31,759,519 | | | | 29.23 | | | | | | | Options outstanding but not exercisable | | | 35,840,257 | | | | 32.95 | | | | | | | | 28,918,804 | | | | 29.75 | | | | | | | Options: | | | | | | | | | | | | | | | | | | | | | | | | | | Granted | | | - | | | | - | | | | | | | | - | | | | - | | | | | | | Canceled / Forfeited(*) | | | (1,531,443 | ) | | | 31.80 | | | | | | | | (9,968,681 | ) | | | 36.44 | | | | | | | Exercised | | | (15,154,975 | ) | | | 27.28 | | | | 33.39 | | | | (166,494 | ) | | | 22.11 | | | | 31.24 | | | Opening balance 12/31/2014 | | | 55,162,112 | | | | 32.43 | | | | | | | | Opening balance 12/31/2015 | | | | 50,543,148 | | | | 31.89 | | | | | | | Options exercisable at the end of the period | | | 28,872,290 | | | | 32.15 | | | | | | | | 35,647,958 | | | | 33.40 | | | | | | | Options outstanding but not exercisable | | | 26,289,822 | | | | 32.73 | | | | | | | | 14,895,190 | | | | 28.29 | | | | | | | Range of exercise prices | | | | | | | | | | | | | | | | | | | | | | | | | | Granting 2006-2009 | | | | | | | 23.80 - 39.87 | | | | | | | | Granting 2008-2009 | | | | | | | | 23,95 - 36,62 | | | | | | | Granting 2010-2012 | | | | | | | 23.88 - 38.66 | | | | | | | | | | | | 21,71 - 38,90 | | | | | | | Weighted average of the remaining contractual life (in years) | | | 2.56 | | | | | | | | | | | | 2.60 | | | | | | | | | |
(*) Refers to non-exercise based on the beneficiary’s decision. | | | Simple options | | | Simple options | | | | | | | | Weighted average | | Weighted average | | | | | | Weighted average | | Weighted average | | | | | Quantity | | | exercise price | | | market value | | | Quantity | | | exercise price | | | market value | | | Opening balance 12/31/2012 | | | 78,845,712 | | | | 28.45 | | | | | | | | Opening balance 12/31/2013 | | | | 79,033,384 | | | | 27.15 | | | | | | | Options exercisable at the end of the period | | | 25,971,551 | | | | 28.80 | | | | | | | | 39,609,101 | | | | 25.14 | | | | | | | Options outstanding but not exercisable | | | 52,874,161 | | | | 28.29 | | | | | | | | 39,424,283 | | | | 29.96 | | | | | | | Options: | | | | | | | | | | | | | | | | | | | | | | | | | | Granted | | | 616,298 | | | | 23.88 | | | | | | | | - | | | | - | | | | | | | Canceled / Forfeited(*) | | | (3,022,248 | ) | | | 32.57 | | | | | | | | (1,684,588 | ) | | | 28.91 | | | | | | | Exercised | | | (4,591,232 | ) | | | 25.68 | | | | 30.40 | | | | (16,670,473 | ) | | | 24.80 | | | | 33.39 | | | Opening balance 12/31/2013 | | | 71,848,530 | | | | 30.30 | | | | | | | | Opening balance 12/31/2014 | | | | 60,678,323 | | | | 29.48 | | | | | | | Options exercisable at the end of the period | | | 36,008,273 | | | | 27.65 | | | | | | | | 31,759,519 | | | | 29.23 | | | | | | | Options outstanding but not exercisable | | | 35,840,257 | | | | 32.95 | | | | | | | | 28,918,804 | | | | 29.75 | | | | | | | Range of exercise prices | | | | | | | | | | | | | | | | | | | | | | | | | | Granting 2006-2009 | | | | | | | 22.95 - 38.56 | | | | | | | | | | | | 21,64 - 36,25 | | | | | | | Granting 2010-2012 | | | | | | | 23.88 - 37.30 | | | | | | | | | | | | 21,71 - 35,15 | | | | | | | Weighted average of the remaining contractual life (in years) | | | 3.57 | | | | | | | | | | | | 2.56 | | | | | | | | | |
(*) Refers to non-exercise based on the beneficiary’s decision. ll – Partner Plan The employees and management members of ITAÚ UNIBANCO HOLDING and its subsidiaries may be selected to participate in the program investing a percentage of their bonus to acquire ITUB4 shares and share-based instruments. Accordingly, the ownership of these shares should be held by the beneficiaries for a period from three to five years, counted from the initial investment, and are thus subject to market price variations. After complying with the suspensive conditions set forth in the program, beneficiaries will be entitled to receive ITUB4 as consideration, in accordance with the numbers of shares provided for in the program regulations. The acquisition prices of own shares and Share-Based Instruments are established every six months and is equivalent to the average of the ITUB4 quotation in the 30 days prior to the determination of the acquisition price. The fair value of the ITUB4 as consideration is the market price at the grant date, less expected dividends. The weighted average of the fair value of the ITUB4 shares as consideration was estimated at R$ 29.2219.45 per share at 12/31/2016 (R$ 26.56 per share at 12/31/2015 (R$ 29.65and R$ 26.95 per share at 12/31/2014 and R$ 28.20 per share at 12/31/2013)2014). Law No. 12,973/14, which adjusted the tax legislation to the international accounting standards and terminated the Transitional Tax Regime (RTT), set up a new legal framework for payments made in shares. We made changes to the Partner Plan, and adjusted its tax effects, to conform to this new legislation. Changes in the Partner Program | | | Quantity | | Balance at 12/31/20142015 | | | 26,734,42833,666,355 | | | New granted | | | 10,402,54112,392,845 | | | Cancelled | | | (808,809370,039 | ) | | Exercised | | | (5,722,38310,226,782 | ) | | Balance at 12/31/2016 | | | 35,462,379 | | | Weighted average of remaining contractual life (years) | | | 2.73 | |
| | Quantity | | | Balance at 12/31/2014 | | | 29,407,871 | | | New granted | | | 11,442,795 | | | Cancelled | | | (889,690 | ) | | Exercised | | | (6,294,621 | ) | | Balance at 12/31/2015 | | | 30,605,77733,666,355 | | | Weighted average of remaining contractual life (years) | | | 2.02 | |
| | | Quantity | | | Balance at 12/31/2013 | | | 20,187,00222,205,702 | | | New granted | | | 12,107,90913,318,700 | | | Cancelled | | | (1,712,0391,883,243 | ) | | Exercised | | | (3,848,4444,233,288 | ) | | Balance at 12/31/2014 | | | 26,734,42829,407,871 | | | Weighted average of remaining contractual life (years) | | | 2.05 | |
| | Quantity | | Balance at 12/31/2012 | | | 19,002,047 | | New granted | | | 6,287,169 | | Cancelled | | | (718,857 | ) | Exercised | | | (4,383,357 | ) | Balance at 12/31/2013 | | | 20,187,002 | | Weighted average of remaining contractual life (years) | | | 2.05 | |
III- Variable compensation | III- | Variable compensation |
The policy established in compliance with CMN Resolution No. 3,921/10 sets forth that fifty percent (50%) of the management’s variable compensation should be paid in cash and fifty percent (50%) should be paid in shares for a period of three years. Shares are delivered on a deferred basis, of which one-third (1/3) per year, will be contingent upon the executive’s remaining with the institution. The deferred unpaid portions may be reversed proportionally to the significant reduction of the recurring income realized or the negative income for the period. The fair value of the ITUB4 share is the market price at its grant date. The weighted average of the fair value of ITUB4 shares was estimated at R$ 31.2421.96 per share at 12/31/2016 (R$ 28.40 per share at 12/31/2015 (R$ 25.33and R$ 23.03 per share at 12/31/2014 and R$ 25.91 per share at 12/31/2013)2014). Change in variable compensation in shares | | Quantity | | | Opening balance 12/31/2015 | | | 22,325,573 | | | New | | | 13,422,462 | | | Delivered | | | (11,136,079 | ) | | Cancelled | | | (72,550 | ) | | Balance at 12/31/2016 | | | 24,539,406 | |
Change in variable compensation in shares | | | Quantity | | | Opening balance 12/31/2014 | | | 15,901,82317,492,005 | | | New | | | 12,538,65213,792,517 | | | Delivered | | | (7,551,0318,306,134 | ) | | Cancelled | | | (593,468652,815 | ) | | Balance at 12/31/2015 | | | 20,295,97622,325,573 | |
Change in variable compensation in shares Change in variable compensation in shares | | | | | | | Quantity | | | Opening balance 12/31/2013 | | | 8,290,7519,119,826 | | | New | | | 11,002,63012,102,893 | | | Delivered | | | (2,954,7583,250,234 | ) | | Cancelled | | | (436,800480,480 | ) | | Balance at 12/31/2014 | | | 15,901,82317,492,005 | |
Change in variable compensation in shares | | | | | | Quantity | | Opening balance 12/31/2012 | | | - | | New | | | 8,368,685 | | Delivered | | | (35,790 | ) | Cancelled | | | (42,144 | ) | Balance at 12/31/2013 | | | 8,290,751 | |
Note 23 - Interest and similar income and expense and net gain (loss) on investment securities and derivatives | a) | Interest and similar income |
a) Interest and similar income | | | 01/01 to | | 01/01 to | | 01/01 to | | | 01/01 to | | 01/01 to | | 01/01 to | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Central Bank compulsory deposits | | | 5,748 | | | | 5,904 | | | | 4,314 | | | | 6,920 | | | | 5,748 | | | | 5,904 | | | Interbank deposits | | | 1,628 | | | | 1,286 | | | | 583 | | | | 677 | | | | 1,628 | | | | 1,286 | | | Securities purchased under agreements to resell | | | 27,572 | | | | 17,929 | | | | 12,630 | | | | 34,162 | | | | 27,572 | | | | 17,929 | | | Financial assets held for trading | | | 19,826 | | | | 15,128 | | | | 10,860 | | | | 23,669 | | | | 19,826 | | | | 15,128 | | | Available-for-sale financial assets | | | 8,979 | | | | 7,272 | | | | 5,067 | | | | 11,160 | | | | 8,979 | | | | 7,272 | | | Held-to-maturity financial assets | | | 3,758 | | | | 2,347 | | | | 486 | | | | 3,788 | | | | 3,758 | | | | 2,347 | | | Loan and lease operations | | | 79,392 | | | | 69,248 | | | | 59,546 | | | | 80,118 | | | | 79,392 | | | | 69,248 | | | Other financial assets | | | 886 | | | | 1,001 | | | | 641 | | | | 1,001 | | | | 886 | | | | 1,001 | | | Total | | | 147,789 | | | | 120,115 | | | | 94,127 | | | | 161,495 | | | | 147,789 | | | | 120,115 | |
| b) | Interest and similar expense |
b) Interest and similar expense | | | 01/01 to | | 01/01 to | | 01/01 to | | | 01/01 to | | 01/01 to | | 01/01 to | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Deposits | | | (13,587 | ) | | | (12,064 | ) | | | (9,802 | ) | | | (14,701 | ) | | | (13,587 | ) | | | (12,064 | ) | | Securities sold under repurchase agreements | | | (32,879 | ) | | | (26,771 | ) | | | (16,865 | ) | | | (45,932 | ) | | | (32,879 | ) | | | (26,771 | ) | | Interbank market debt | | | (7,970 | ) | | | (14,404 | ) | | | (6,245 | ) | | | (8,348 | ) | | | (7,970 | ) | | | (14,404 | ) | | Institutional market debt | | | (8,030 | ) | | | (10,695 | ) | | | (9,971 | ) | | | (8,248 | ) | | | (8,030 | ) | | | (10,695 | ) | | Financial expense from technical reserves for insurance and private pension | | | (12,556 | ) | | | (8,987 | ) | | | (3,436 | ) | | | (17,790 | ) | | | (12,556 | ) | | | (8,987 | ) | | Other | | | (42 | ) | | | (56 | ) | | | (42 | ) | | | (107 | ) | | | (42 | ) | | | (56 | ) | | Total | | | (75,064 | ) | | | (72,977 | ) | | | (46,361 | ) | | | (95,126 | ) | | | (75,064 | ) | | | (72,977 | ) |
| c) | Net gain (loss) on investment securities and derivatives |
c) Net gain (loss) on investment securities and derivatives | | | 01/01 to | | 01/01 to | | 01/01 to | | | 01/01 to | | 01/01 to | | 01/01 to | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Financial assets held for trading | | | (3,158 | ) | | | 41 | | | | (2,736 | ) | | | 2,514 | | | | (1,625 | ) | | | 215 | | | Derivatives(*) | | | (6,071 | ) | | | 119 | | | | (2,517 | ) | | | 7,320 | | | | (6,071 | ) | | | 119 | | | Financial assets designated at fair value through profit or loss | | | 51 | | | | 32 | | | | 15 | | | | 49 | | | | 51 | | | | 32 | | | Available-for-sale financial assets | | | (2,812 | ) | | | (915 | ) | | | (839 | ) | | | (1,685 | ) | | | (4,345 | ) | | | (1,089 | ) | | Held-to-Maturity Financial Assets (Permanent Loss) | | | | (740 | ) | | | - | | | | - | | | Finacial liabilities held for trading | | | 128 | | | | (1 | ) | | | 153 | | | | (147 | ) | | | 128 | | | | (1 | ) | | Total | | | (11,862 | ) | | | (724 | ) | | | (5,924 | ) | | | 7,311 | | | | (11,862 | ) | | | (724 | ) |
(*) Includes the ineffective derivatives portion related to hedge accounting. During the periods ended 12/31/2015 and 12/31/2014, ITAÚ UNIBANCO HOLDING has not recognized any impairment losses on held-to-maturity financial assets. During the period ended 12/31/2015,2016, ITAÚ UNIBANCO HOLDING recognized impairment losses on available-for-sale financial assetsexpenses in the amount of R$ 1,533 (R$ 174 at 12/31/20141,882, out of which R$ 1,142 on Available-for-Sale Financial Assets and R$ 3 at 12/31/2013),740 on Held-to-Maturity Financial Assets. Total loss, net of reversals, amounted to R$ 1,522 and was recorded in the statement of income in the line item Net gain (loss) on investment securities and derivatives.
Note 24 - Banking service fees | | | 01/01 to | | 01/01 to | | 01/01 to | | | 01/01 to | | 01/01 to | | 01/01 to | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Current account services | | | 8,815 | | | | 7,725 | | | | 6,450 | | | | 9,528 | | | | 8,815 | | | | 7,725 | | | Asset management fees | | | 2,932 | | | | 2,660 | | | | 2,501 | | | | 3,514 | | | | 2,932 | | | | 2,660 | | | Collection commissions | | | 1,250 | | | | 1,279 | | | | 1,213 | | | | 1,315 | | | | 1,250 | | | | 1,279 | | | Fees from credit card services | | | 12,722 | | | | 11,507 | | | | 9,701 | | | | 13,330 | | | | 12,722 | | | | 11,507 | | | Fees for guarantees issued and credit lines | | | 1,609 | | | | 1,407 | | | | 1,240 | | | | 1,773 | | | | 1,609 | | | | 1,407 | | | Brokerage commission | | | 248 | | | | 262 | | | | 337 | | | | 295 | | | | 248 | | | | 262 | | | Other | | | 1,876 | | | | 1,502 | | | | 1,270 | | | | 2,163 | | | | 1,876 | | | | 1,502 | | | Total | | | 29,452 | | | | 26,342 | | | | 22,712 | | | | 31,918 | | | | 29,452 | | | | 26,342 | |
Note 25 - Other income | | | 01/01 to | | 01/01 to | | 01/01 to | | | 01/01 to | | 01/01 to | | 01/01 to | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Gains on sale of assets held for sale, fixed assets and investments in associates and joint ventures(*) | | | 97 | | | | 1,194 | | | | 131 | | | | Gains on sale of assets held for sale, fixed assets and investments in associates and joint ventures | | | | 233 | | | | 97 | | | | 1,194 | | | Recovery of expenses | | | 210 | | | | 207 | | | | 110 | | | | 331 | | | | 210 | | | | 207 | | | Reversal of provisions | | | 455 | | | | 179 | | | | 119 | | | | 156 | | | | 455 | | | | 179 | | | Program for Cash or Installment Payment of Federal Taxes (Note 32e) | | | 65 | | | | 158 | | | | 624 | | | | Program for Cash or Installment Payment of Federal Taxes | | | | 13 | | | | 65 | | | | 158 | | | Other | | | 452 | | | | 416 | | | | 411 | | | | 649 | | | | 452 | | | | 416 | | | Total | | | 1,279 | | | | 2,154 | | | | 1,395 | | | | 1,382 | | | | 1,279 | | | | 2,154 | |
(*) From 01/01 to 12/31/2014 refers basically to the profit on disposal of investment due from ISSC in the amount of R$ 1,151.
Note 26 - General and administrative expenses | | | 01/01 to | | 01/01 to | | 01/01 to | | | 01/01 to | | 01/01 to | | 01/01 to | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Personnel expenses | | | (19,573 | ) | | | (17,071 | ) | | | (15,860 | ) | | | (22,360 | ) | | | (19,573 | ) | | | (17,071 | ) | | Compensation | | | (7,982 | ) | | | (7,046 | ) | | | (6,503 | ) | | | (8,752 | ) | | | (7,982 | ) | | | (7,046 | ) | | Payroll taxes | | | (2,540 | ) | | | (2,364 | ) | | | (2,181 | ) | | | (2,567 | ) | | | (2,540 | ) | | | (2,364 | ) | | Welfare benefits | | | (2,472 | ) | | | (2,133 | ) | | | (1,983 | ) | | | (3,070 | ) | | | (2,472 | ) | | | (2,133 | ) | | Retirement plans and post-employment benefits (Note 29) | | | (240 | ) | | | 33 | | | | 7 | | | | 279 | | | | (240 | ) | | | 33 | | | Defined benefit | | | (78 | ) | | | (30 | ) | | | (37 | ) | | | (81 | ) | | | (78 | ) | | | (30 | ) | | Defined contribution | | | (162 | ) | | | 63 | | | | 44 | | | | 360 | | | | (162 | ) | | | 63 | | | Stock option plan (Note 22d) | | | (214 | ) | | | (231 | ) | | | (188 | ) | | | (306 | ) | | | (214 | ) | | | (231 | ) | | Training | | | (202 | ) | | | (186 | ) | | | (185 | ) | | | (192 | ) | | | (202 | ) | | | (186 | ) | | Employee profit sharing | | | (3,387 | ) | | | (3,324 | ) | | | (2,850 | ) | | | (3,610 | ) | | | (3,387 | ) | | | (3,324 | ) | | Dismissals | | | (351 | ) | | | (377 | ) | | | (327 | ) | | | (571 | ) | | | (351 | ) | | | (377 | ) | | Provision for labor claims (Note 32) | | | (2,185 | ) | | | (1,443 | ) | | | (1,650 | ) | | | (3,571 | ) | | | (2,185 | ) | | | (1,443 | ) | | Administrative expenses | | | (15,112 | ) | | | (14,325 | ) | | | (13,257 | ) | | | (15,959 | ) | | | (15,112 | ) | | | (14,325 | ) | | Data processing and telecommunications | | | (4,052 | ) | | | (3,870 | ) | | | (3,700 | ) | | | (3,966 | ) | | | (4,052 | ) | | | (3,870 | ) | | Third party services | | | (4,044 | ) | | | (4,189 | ) | | | (3,215 | ) | | | (4,340 | ) | | | (4,044 | ) | | | (4,189 | ) | | Installations | | | (1,022 | ) | | | (924 | ) | | | (964 | ) | | | (1,161 | ) | | | (1,022 | ) | | | (924 | ) | | Advertising, promotions and publications | | | (1,095 | ) | | | (972 | ) | | | (1,361 | ) | | | (1,036 | ) | | | (1,095 | ) | | | (972 | ) | | Rent | | | (1,289 | ) | | | (1,216 | ) | | | (1,100 | ) | | | (1,480 | ) | | | (1,289 | ) | | | (1,216 | ) | | Transportation | | | (411 | ) | | | (432 | ) | | | (454 | ) | | | (391 | ) | | | (411 | ) | | | (432 | ) | | Materials | | | (380 | ) | | | (365 | ) | | | (356 | ) | | | (313 | ) | | | (380 | ) | | | (365 | ) | | Financial services | | | (614 | ) | | | (544 | ) | | | (496 | ) | | | (731 | ) | | | (614 | ) | | | (544 | ) | | Security | | | (675 | ) | | | (627 | ) | | | (549 | ) | | | (716 | ) | | | (675 | ) | | | (627 | ) | | Utilities | | | (418 | ) | | | (289 | ) | | | (248 | ) | | | (425 | ) | | | (418 | ) | | | (289 | ) | | Travel | | | (212 | ) | | | (204 | ) | | | (194 | ) | | | (199 | ) | | | (212 | ) | | | (204 | ) | | Other | | | (900 | ) | | | (693 | ) | | | (620 | ) | | | (1,201 | ) | | | (900 | ) | | | (693 | ) | | Depreciation | | | (1,688 | ) | | | (1,641 | ) | | | (1,522 | ) | | | (1,702 | ) | | | (1,688 | ) | | | (1,641 | ) | | Amortization | | | (910 | ) | | | (827 | ) | | | (808 | ) | | | (1,292 | ) | | | (910 | ) | | | (827 | ) | | Insurance acquisition expenses | | | (1,138 | ) | | | (1,214 | ) | | | (1,147 | ) | | | (721 | ) | | | (1,138 | ) | | | (1,214 | ) | | Other expenses | | | (9,205 | ) | | | (7,472 | ) | | | (7,320 | ) | | | (8,870 | ) | | | (9,205 | ) | | | (7,472 | ) | | Expenses related to credit cards | | | (3,415 | ) | | | (2,691 | ) | | | (1,874 | ) | | | (3,165 | ) | | | (3,415 | ) | | | (2,691 | ) | | Losses with third party frauds | | | (468 | ) | | | (472 | ) | | | (566 | ) | | | (571 | ) | | | (468 | ) | | | (472 | ) | | Loss on sale of assets held for sale, fixed assets and investments in associates and joint ventures | | | (187 | ) | | | (133 | ) | | | (132 | ) | | | (274 | ) | | | (187 | ) | | | (133 | ) | | Provision for civil lawsuits (Note 32) | | | (2,069 | ) | | | (1,708 | ) | | | (2,274 | ) | | | (1,489 | ) | | | (2,069 | ) | | | (1,708 | ) | | Provision for tax and social security lawsuits | | | (1,361 | ) | | | (971 | ) | | | (1,311 | ) | | | (915 | ) | | | (1,361 | ) | | | (971 | ) | | Refund of interbank costs | | | (262 | ) | | | (229 | ) | | | (227 | ) | | | (294 | ) | | | (262 | ) | | | (229 | ) | | Other | | | (1,443 | ) | | | (1,268 | ) | | | (936 | ) | | | (2,162 | ) | | | (1,443 | ) | | | (1,268 | ) | | Total | | | (47,626 | ) | | | (42,550 | ) | | | (39,914 | ) | | | (50,904 | ) | �� | | (47,626 | ) | | | (42,550 | ) |
Note 27 – Income tax and social contribution ITAÚ UNIBANCO HOLDING and each of its subsidiaries file separate, for each fiscal year, corporate income tax returns and social contribution on net income. | a) | Composition of income tax and social contribution expenses |
I - Demonstration of Income tax and social contribution expense calculation:
| | | 01/01 to | | 01/01 to | | 01/01 to | | | 01/01 to | | 01/01 to | | 01/01 to | | | Due on operations for the period | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Income before income tax and social contribution | | | 18,265 | | | | 28,808 | | | | 20,865 | | | | 38,192 | | | | 18,265 | | | | 28,808 | | | Charges (income tax and social contribution) at the rates in effect (Note 2.4 n) | | | (7,611 | ) | | | (11,523 | ) | | | (8,346 | ) | | | Charges (income tax and social contribution) at the rates in effect (Note 2.4 k) | | | | (17,187 | ) | | | (7,611 | ) | | | (11,523 | ) | | Increase / decrease in income tax and social contribution charges arising from: | | | | | | | | | | | | | | | | | | | | | | | | | | Share of profit or (loss) of associates and joint ventures net | | | 176 | | | | 109 | | | | 243 | | | | 165 | | | | 176 | | | | 109 | | | Foreign exchange variation on assets and liabilities abroad | | | 8,329 | | | | 1,471 | | | | 1,054 | | | | (4,313 | ) | | | 8,329 | | | | 1,471 | | | Interest on capital | | | 2,585 | | | | 1,738 | | | | 1,619 | | | | 3,617 | | | | 2,585 | | | | 1,738 | | | Corporate reorganizations (Note 2.4 a III) | | | 631 | | | | 639 | | | | 639 | | | | 628 | | | | 631 | | | | 639 | | | Dividends and interest on external debt bonds | | | 271 | | | | 311 | | | | 172 | | | | 365 | | | | 271 | | | | 311 | | | Other nondeductible expenses net of non taxable income(*) | | | (13,346 | ) | | | 46 | | | | (2,884 | ) | | | 12,827 | | | | (13,346 | ) | | | 46 | | | Income tax and social contribution expenses | | | (8,965 | ) | | | (7,209 | ) | | | (7,503 | ) | | | (3,898 | ) | | | (8,965 | ) | | | (7,209 | ) | | Related to temporary differences | | | | | | | | | | | | | | | | | | | | | | | | | | Increase (reversal) for the period | | | 13,006 | | | | 1,341 | | | | 3,617 | | | | (10,774 | ) | | | 13,006 | | | | 1,341 | | | Increase (reversal) of prior periods | | | (71 | ) | | | (1,079 | ) | | | (457 | ) | | | 62 | | | | (71 | ) | | | (1,079 | ) | | Increase in the social contribution tax rate (Note 27b III) | | | 3,921 | | | | - | | | | - | | | | - | | | | 3,921 | | | | - | | | (Expenses)/Income related to deferred taxes | | | 16,856 | | | | 262 | | | | 3,160 | | | | (10,712 | ) | | | 16,856 | | | | 262 | | | Total income tax and social contribution expenses | | | 7,891 | | | | (6,947 | ) | | | (4,343 | ) | | | (14,610 | ) | | | 7,891 | | | | (6,947 | ) |
(*) Includes temporary (additions) and exclusions. b) Deferred taxes I - The deferred tax asset balance and respective changes are as follows: | | | | | Realization / | | | | | | | | | | 12/31/2014 | | | reversal | | | Increase | | | 12/31/2015 | | | 12/31/2015 | | | Realization /
reversal | | | Increase(1) | | | 12/31/2016 | | | Reflected in income | | | 32,513 | | | | (7,009 | ) | | | 23,407 | | | | 48,911 | | | | 48,911 | | | | (16,508 | ) | | | 15,480 | | | | 47,883 | | | Allowance for loan and lease losses | | | 18,909 | | | | (2,319 | ) | | | 8,982 | | | | 25,572 | | | | 25,572 | | | | (6,337 | ) | | | 7,740 | | | | 26,975 | | | Related to income tax and social contribution tax carryforwards | | | 5,430 | | | | (239 | ) | | | 1,464 | | | | 6,655 | | | | 6,655 | | | | (288 | ) | | | 561 | | | | 6,928 | | | Provision for contingent liabilities | | | 4,298 | | | | (1,364 | ) | | | 2,451 | | | | 5,385 | | | | 5,385 | | | | (1,784 | ) | | | 2,106 | | | | 5,707 | | | Civil lawsuits | | | 1,818 | | | | (624 | ) | | | 955 | | | | 2,149 | | | | 2,149 | | | | (701 | ) | | | 507 | | | | 1,955 | | | Labor claims | | | 1,460 | | | | (382 | ) | | | 734 | | | | 1,812 | | | | 1,812 | | | | (1,010 | ) | | | 1,366 | | | | 2,168 | | | Tax and social security | | | 1,009 | | | | (351 | ) | | | 762 | | | | 1,420 | | | | 1,420 | | | | (71 | ) | | | 233 | | | | 1,582 | | | Other | | | 11 | | | | (7 | ) | | | - | | | | 4 | | | | 4 | | | | (2 | ) | | | - | | | | 2 | | | Goodwill on purchase of investments | | | 721 | | | | (210 | ) | | | - | | | | 511 | | | | 511 | | | | (346 | ) | | | - | | | | 165 | | | Legal liabilities – tax and social security | | | 394 | | | | (698 | ) | | | 812 | | | | 508 | | | | 508 | | | | (200 | ) | | | 79 | | | | 387 | | | Adjustments of operations carried out on the futures settlement market | | | 3 | | | | (4 | ) | | | 1,254 | | | | 1,253 | | | | 1,253 | | | | (797 | ) | | | 29 | | | | 485 | | | Adjustment to market value of financial assets held for trading and derivatives | | | 109 | | | | (109 | ) | | | 4,951 | | | | 4,951 | | | | 4,951 | | | | (4,951 | ) | | | 145 | | | | 145 | | | Provision related to health insurance operations | | | 274 | | | | - | | | | 48 | | | | 322 | | | | 322 | | | | (22 | ) | | | - | | | | 300 | | | Other | | | 2,375 | | | | (2,066 | ) | | | 3,445 | | | | 3,754 | | | | 3,754 | | | | (1,783 | ) | | | 4,820 | | | | 6,791 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Reflected in stockholders’ equity | | | 4,106 | | | | (1,527 | ) | | | 1,674 | | | | 4,253 | | | | 4,253 | | | | (1,970 | ) | | | 711 | | | | 2,994 | | | Corporate reorganizations (Note 2.4 a III) | | | 2,514 | | | | (631 | ) | | | - | | | | 1,883 | | | | 1,883 | | | | (627 | ) | | | - | | | | 1,256 | | | Adjustment to market value of available-for-sale securities | | | 539 | | | | (142 | ) | | | 1,583 | | | | 1,980 | | | | 1,980 | | | | (1,338 | ) | | | - | | | | 642 | | | Cash flow hedge | | | 50 | | | | - | | | | 87 | | | | 137 | | | | 137 | | | | - | | | | 706 | | | | 843 | | | Other | | | 1,003 | | | | (754 | ) | | | 4 | | | | 253 | | | | 253 | | | | (5 | ) | | | 5 | | | | 253 | | | Total(1)(2) | | | 36,619 | | | | (8,536 | ) | | | 25,081 | | | | 53,164 | | | | Total (2)(3) | | | | 53,164 | | | | (18,478 | ) | | | 16,191 | | | | 50,877 | |
(1)Includes balance arising from the Corpbanca acquisition R$ 1,221 and Recovery acquisition R$ 45 (Note 3). (1) (2)Deferred income tax and social contribution assets and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 47,45337,395 and R$ 370.643.
(2) (3)The accounting records of deferred tax assets on income tax losses and/or social contribution loss carryforwards, as well as those arising from temporary differences, are based on technical feasibility studies which consider the expected generation of future taxable income, considering the history of profitability for each subsidiary individually, and for the consolidated taken as a whole. For the subsidiaries, Itaú Unibanco S.A. and Banco Itaucard S.A., a petition has been sent to Central Bank of Brazil, in compliance with paragraph 7 of article 1 of Resolution No. 4,441/15 and pursuant to Circular 3,776/15.
| | | | | | Realization / | | | | | | | | | | | 12/31/2013 | | | reversal | | | Increase | | | 12/31/2014 | | | 12/31/2014 | | | Realization /
reversal | | | Increase | | | 12/31/2015 | | | Reflected in income | | | 35,043 | | | | (12,477 | ) | | | 9,947 | | | | 32,513 | | | | 32,513 | | | | (7,009 | ) | | | 23,407 | | | | 48,911 | | | Allowance for loan and lease losses | | | 17,896 | | | | (4,889 | ) | | | 5,902 | | | | 18,909 | | | | 18,909 | | | | (2,319 | ) | | | 8,982 | | | | 25,572 | | | Related to income tax and social contribution tax carryforwards | | | 6,137 | | | | (714 | ) | | | 7 | | | | 5,430 | | | | 5,430 | | | | (239 | ) | | | 1,464 | | | | 6,655 | | | Provision for contingent liabilities | | | 3,973 | | | | (1,515 | ) | | | 1,840 | | | | 4,298 | | | | 4,298 | | | | (1,364 | ) | | | 2,451 | | | | 5,385 | | | Civil lawsuits | | | 1,706 | | | | (435 | ) | | | 547 | | | | 1,818 | | | | 1,818 | | | | (624 | ) | | | 955 | | | | 2,149 | | | Labor claims | | | 1,400 | | | | (894 | ) | | | 954 | | | | 1,460 | | | | 1,460 | | | | (382 | ) | | | 734 | | | | 1,812 | | | Tax and social security | | | 849 | | | | (179 | ) | | | 339 | | | | 1,009 | | | | 1,009 | | | | (351 | ) | | | 762 | | | | 1,420 | | | Other | | | 18 | | | | (7 | ) | | | - | | | | 11 | | | | 11 | | | | (7 | ) | | | - | | | | 4 | | | Goodwill on purchase of investments | | | 1,515 | | | | (794 | ) | | | - | | | | 721 | | | | 721 | | | | (210 | ) | | | - | | | | 511 | | | Legal liabilities – tax and social security | | | 1,479 | | | | (1,389 | ) | | | 304 | | | | 394 | | | | 394 | | | | (698 | ) | | | 812 | | | | 508 | | | Adjustments of operations carried out in futures settlement market | | | 653 | | | | (662 | ) | | | 12 | | | | 3 | | | | 3 | | | | (4 | ) | | | 1,254 | | | | 1,253 | | | Adjustment to market value of financial assets held for trading and derivatives | | | 439 | | | | (439 | ) | | | 109 | | | | 109 | | | | 109 | | | | (109 | ) | | | 4,951 | | | | 4,951 | | | Provision related to health insurance operations | | | 262 | | | | - | | | | 12 | | | | 274 | | | | 274 | | | | - | | | | 48 | | | | 322 | | | Other | | | 2,689 | | | | (2,075 | ) | | | 1,761 | | | | 2,375 | | | | 2,375 | | | | (2,066 | ) | | | 3,445 | | | | 3,754 | | | | | | | | | | | | | | | | | | | | | | Reflected in stockholders’ equity | | | 4,502 | | | | (915 | ) | | | 519 | | | | 4,106 | | | | 4,106 | | | | (1,527 | ) | | | 1,674 | | | | 4,253 | | | Corporate reorganizations (Note 2.4 a III) | | | 3,153 | | | | (639 | ) | | | - | | | | 2,514 | | | | 2,514 | | | | (631 | ) | | | - | | | | 1,883 | | | Adjustment to market value of available-for-sale securities | | | 814 | | | | (275 | ) | | | - | | | | 539 | | | | 539 | | | | (142 | ) | | | 1,583 | | | | 1,980 | | | Cash flow hedge | | | 426 | | | | - | | | | 376 | | | | 802 | | | | 50 | | | | - | | | | 87 | | | | 137 | | | Other | | | 109 | | | | (1 | ) | | | 143 | | | | 251 | | | | 1,003 | | | | (754 | ) | | | 4 | | | | 253 | | | Total(*) | | | 39,545 | | | | (13,392 | ) | | | 10,466 | | | | 36,619 | | | | 36,619 | | | | (8,536 | ) | | | 25,081 | | | | 53,164 | |
(*) Deferred income tax and social contribution assets and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 31,12947,453 and R$ 201.370. II- The provision for deferred tax liability balance and respective changes are as follows: | | | | | Realization / | | | | | | | | | | | Realization / | | | | | | | | | 12/31/2014 | | | reversal | | | Increase | | | 12/31/2015 | | | 12/31/2015 | | | reversal | | | Increase(1) | | 12/31/2016 | | | Reflected in income | | | 4,735 | | | | (1,801 | ) | | | 1,343 | | | | 4,277 | | | | 4,277 | | | | (2,283 | ) | | | 11,513 | | | | 13,507 | | | Depreciation in excess – finance lease | | | 2,508 | | | | (1,021 | ) | | | - | | | | 1,487 | | | | 1,487 | | | | (551 | ) | | | - | | | | 936 | | | Adjustment of escrow deposits and contingent liabilities | | | 876 | | | | (425 | ) | | | 679 | | | | 1,130 | | | | 1,130 | | | | (168 | ) | | | 231 | | | | 1,193 | | | Pension plans | | | 336 | | | | (34 | ) | | | 34 | | | | 336 | | | | 336 | | | | (143 | ) | | | 40 | | | | 233 | | | Adjustments of operations carried out on the futures settlement market | | | 4 | | | | (12 | ) | | | 59 | | | | 51 | | | | 51 | | | | (100 | ) | | | 1,144 | | | | 1,095 | | | Adjustment to market value of financial assets held for trading and derivatives | | | 6 | | | | (6 | ) | | | 198 | | | | 198 | | | | 198 | | | | (198 | ) | | | 7,293 | | | | 7,293 | | | Taxation of results abroad – capital gains | | | 563 | | | | (277 | ) | | | - | | | | 286 | | | | 286 | | | | - | | | | 1,216 | | | | 1,502 | | | Other | | | 442 | | | | (26 | ) | | | 373 | | | | 789 | | | | 789 | | | | (1,123 | ) | | | 1,589 | | | | 1,255 | | | Reflected in stockholders’ equity accounts | | | 956 | | | | (97 | ) | | | 945 | | | | 1,804 | | | | 1,804 | | | | (1,639 | ) | | | 453 | | | | 618 | | | Adjustment to market value of available-for-sale securities | | | 132 | | | | (79 | ) | | | - | | | | 53 | | | | 53 | | | | - | | | | 433 | | | | 486 | | | Cash flow hedge | | | 373 | | | | - | | | | 940 | | | | 1,313 | | | | 1,313 | | | | (1,250 | ) | | | - | | | | 63 | | | Provision for pension plan benefits | | | 442 | | | | (18 | ) | | | - | | | | 424 | | | | 424 | | | | (389 | ) | | | - | | | | 35 | | | Other | | | 9 | | | | - | | | | 5 | | | | 14 | | | | 14 | | | | - | | | | 20 | | | | 34 | | | Total(*) | | | 5,691 | | | | (1,898 | ) | | | 2,288 | | | | 6,081 | | | | Total(2) | | | | 6,081 | | | | (3,922 | ) | | | 11,966 | | | | 14,125 | |
(1)Includes balance arising from the Corpbanca acquisition R$ 994 (Note 3).
(2)Deferred income tax and social contribution asset and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 37,395 and R$ 643. | | | 12/31/2014 | | | Realization /
reversal | | | Increase | | | 12/31/2015 | | | Reflected in income | | | 4,735 | | | | (1,801 | ) | | | 1,343 | | | | 4,277 | | | Depreciation in excess – finance lease | | | 2,508 | | | | (1,021 | ) | | | - | | | | 1,487 | | | Adjustment of escrow deposits and contingent liabilities | | | 876 | | | | (425 | ) | | | 679 | | | | 1,130 | | | Pension plans | | | 336 | | | | (34 | ) | | | 34 | | | | 336 | | | Adjustments of operations carried out on the futures settlement market | | | 4 | | | | (12 | ) | | | 59 | | | | 51 | | | Adjustment to market value of financial assets held for trading and derivatives | | | 6 | | | | (6 | ) | | | 198 | | | | 198 | | | Taxation of results abroad – capital gains | | | 563 | | | | (277 | ) | | | - | | | | 286 | | | Other | | | 442 | | | | (26 | ) | | | 373 | | | | 789 | | | Reflected in stockholders’ equity accounts | | | 956 | | | | (97 | ) | | | 945 | | | | 1,804 | | | Adjustment to market value of available-for-sale securities | | | 132 | | | | (79 | ) | | | - | | | | 53 | | | Cash flow hedge | | | 373 | | | | - | | | | 940 | | | | 1,313 | | | Provision for pension plan benefits | | | 442 | | | | (18 | ) | | | - | | | | 424 | | | Other | | | 9 | | | | - | | | | 5 | | | | 14 | | | Total(*) | | | 5,691 | | | | (1,898 | ) | | | 2,288 | | | | 6,081 | |
(*) Deferred income tax and social contribution asset and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 47,453 and R$ 370. | | | | | | Realization / | | | | | | | | | | | 12/31/2013 | | | reversal | | | Increase | | | 12/31/2014 | | | Reflected in income | | | 7,527 | | | | (3,289 | ) | | | 497 | | | | 4,735 | | | Depreciation in excess – finance lease | | | 4,165 | | | | (1,657 | ) | | | - | | | | 2,508 | | | Adjustment of escrow deposits and contingent liabilities | | | 981 | | | | (155 | ) | | | 50 | | | | 876 | | | Pension plans | | | 355 | | | | (118 | ) | | | 99 | | | | 336 | | | Adjustments of operations carried out on the futures settlement market | | | 392 | | | | (388 | ) | | | - | | | | 4 | | | Adjustment to market value of financial assets held for trading and derivatives | | | 157 | | | | (157 | ) | | | 6 | | | | 6 | | | Taxation of results abroad – capital gains | | | 267 | | | | - | | | | 296 | | | | 563 | | | Other | | | 1,210 | | | | (814 | ) | | | 46 | | | | 442 | | | Reflected in stockholders’ equity accounts | | | 460 | | | | - | | | | 496 | | | | 956 | | | Adjustment to market value of available-for-sale securities | | | 64 | | | | - | | | | 68 | | | | 132 | | | Cash flow hedge | | | 84 | | | | - | | | | 289 | | | | 373 | | | Provision for pension plan benefits | | | 311 | | | | - | | | | 131 | | | | 442 | | | Other | | | 1 | | | | - | | | | 8 | | | | 9 | | | Total(*) | | | 7,987 | | | | (3,289 | ) | | | 993 | | | | 5,691 | |
(*) Deferred income tax and social contribution asset and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 31,129 and R$ 201.
| III - | - The estimate of realization and present value of tax credits and social contribution to offset, arising from Provisional Measure 2,158-35 of 08/24/2001 and from the Provision for Deferred Income Tax and Social Contribution existing at 12/31/2015,2016, are: |
| | | Deferred tax assets | | | | | | | | | | | | Deferred tax assets | | | | | | | | | | | | | | | | | | | Tax loss / social | | | | | | | | | | | | | | | | Net | | | | | | Temporary
differences | | | % | | | Tax loss / social
contribution loss
carryforwards | | | % | | | Total | | | % | | | Deferred tax
liabilities | | | % | | | Net
deferred
taxes | | | % | | | | | Temporary | | | | contribution loss | | | | | | | | Deferred tax | | | | | | deferred | | | | | | | | | differences | | | % | | | carryforwards | | | % | | | Total | | | % | | | liabilities | | | % | | | taxes | | | % | | | | 2016 | | | 14,911 | | | | 32 | % | | | 113 | | | | 2 | % | | | 15,024 | | | | 28 | % | | | (1,080 | ) | | | 18 | % | | | 13,944 | | | | 30 | % | | | 2017 | | | 6,895 | | | | 15 | % | | | 293 | | | | 5 | % | | | 7,188 | | | | 14 | % | | | (924 | ) | | | 16 | % | | | 6,264 | | | | 13 | % | | | 21,863 | | | | 50 | % | | | 37 | | | | 1 | % | | | 21,900 | | | | 43 | % | | | (1,260 | ) | | | 8 | % | | | 20,640 | | | | 56 | % | | 2018 | | | 6,732 | | | | 14 | % | | | 498 | | | | 7 | % | | | 7,230 | | | | 14 | % | | | (1,297 | ) | | | 21 | % | | | 5,933 | | | | 13 | % | | | 10,363 | | | | 23 | % | | | 151 | | | | 2 | % | | | 10,514 | | | | 21 | % | | | (646 | ) | | | 5 | % | | | 9,868 | | | | 27 | % | | 2019 | | | 6,778 | | | | 15 | % | | | 264 | | | | 4 | % | | | 7,042 | | | | 13 | % | | | (387 | ) | | | 6 | % | | | 6,655 | | | | 14 | % | | | 4,682 | | | | 11 | % | | | 2,060 | | | | 30 | % | | | 6,742 | | | | 13 | % | | | (2,372 | ) | | | 17 | % | | | 4,370 | | | | 12 | % | | 2020 | | | 2,287 | | | | 5 | % | | | 3,016 | | | | 45 | % | | | 5,303 | | | | 10 | % | | | (427 | ) | | | 7 | % | | | 4,876 | | | | 10 | % | | | 1,130 | | | | 3 | % | | | 2,416 | | | | 35 | % | | | 3,546 | | | | 7 | % | | | (1,363 | ) | | | 10 | % | | | 2,183 | | | | 6 | % | | After 2020 | | | 8,906 | | | | 19 | % | | | 2,471 | | | | 37 | % | | | 11,377 | | | | 21 | % | | | (1,966 | ) | | | 32 | % | | | 9,411 | | | | 20 | % | | | 2021 | | | | 598 | | | | 1 | % | | | 1,775 | | | | 25 | % | | | 2,373 | | | | 5 | % | | | (366 | ) | | | 3 | % | | | 2,007 | | | | 5 | % | | After 2021 | | | | 5,313 | | | | 12 | % | | | 489 | | | | 7 | % | | | 5,802 | | | | 11 | % | | | (8,118 | ) | | | 57 | % | | | (2,316 | ) | | | -6 | % | | Total | | | 46,509 | | | | 100 | % | | | 6,655 | | | | 100 | % | | | 53,164 | | | | 100 | % | | | (6,081 | ) | | | 100 | % | | | 47,083 | | | | 100 | % | | | 43,949 | | | | 100 | % | | | 6,928 | | | | 100 | % | | | 50,877 | | | | 100 | % | | | (14,125 | ) | | | 100 | % | | | 36,752 | | | | 100 | % | | Present value(*) | | | 40,660 | | | | | | | | 5,230 | | | | | | | | 45,890 | | | | | | | | (5,031 | ) | | | | | | | 40,859 | | | | | | | | 40,415 | | | | | | | | 5,937 | | | | | | | | 46,352 | | | | | | | | (11,370 | ) | | | | | | | 34,982 | | | | | |
(*) 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 the taxable income, due to differences between the accounting criteria and tax legislation, in addition to corporate aspects. Accordingly, it is recommended that the trends for the realization of deferred tax assets arising from temporary differences, and tax loss carry forwards should not be used as an indication of future net income. Considering the temporary effects of Law 13,169/15, which increases the Social Contribution tax rate to 20% until December 31, 2018, tax credits were accounted for based on their expected realization. TheAt 12/31/2015 the effect on the consolidated statement of income was R$ 3,921. There are no unrecorded deferred tax assets at 12/31/20152016 and 12/31/2014.2015. Note 28 – 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 stockholder 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 by the company. Diluted earnings per share are computed on a similar way, but with the adjustment made in the denominator when assuming the conversion of all shares that may be diluted. | Net income attributable to owners of the parent company – basic earnings per | | 01/01 to | | 01/01 to | | 01/01 to | | | 01/01 to | | 01/01 to | | 01/01 to | | | share | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Net income | | | 25,740 | | | | 21,555 | | | | 16,424 | | | | 23,263 | | | | 25,740 | | | | 21,555 | | | Minimum non-cumulative dividend on preferred shares in accordance with our bylaws | | | (65 | ) | | | (65 | ) | | | (65 | ) | | | Minimum non-cumulative dividend on preferred shares in accordance with our | | | | | | | | | | | | | | | bylaws | | | | (70 | ) | | | (71 | ) | | | (72 | ) | | Subtotal | | | 25,675 | | | | 21,490 | | | | 16,359 | | | | 23,193 | | | | 25,669 | | | | 21,483 | | | Retained earnings to be distributed to common equity owners in an amount per share equal to the minimum dividend payable to preferred equity owners | | | (67 | ) | | | (67 | ) | | | (67 | ) | | | Retained earnings to be distributed to common equity owners in an amount per | | | | | | | | | | | | | | | share equal to the minimum dividend payable to preferred equity owners | | | | (73 | ) | | | (74 | ) | | | (74 | ) | | Subtotal | | | 25,608 | | | | 21,423 | | | | 16,292 | | | | 23,120 | | | | 25,595 | | | | 21,409 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Retained earnings to be distributed to common and preferred equity owners on a pro-rata basis | | | | | | | | | | | | | | | | | | | | | | | | | | To common equity owners | | | 13,043 | | | | 10,850 | | | | 8,262 | | | | 11,880 | | | | 13,036 | | | | 10,843 | | | To preferred equity owners | | | 12,565 | | | | 10,573 | | | | 8,030 | | | | 11,240 | | | | 12,559 | | | | 10,566 | | | | | | | | | | | | | | | | | | Total net income available to common equity owners | | | 13,110 | | | | 10,917 | | | | 8,329 | | | | 11,953 | | | | 13,110 | | | | 10,917 | | | Total net income available to preferred equity owners | | | 12,630 | | | | 10,638 | | | | 8,095 | | | | 11,310 | | | | 12,630 | | | | 10,638 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Weighted average number of shares outstanding (Note 21a) | | | | | | | | | | | | | | | | | | | | | | | | | | Common shares | | | 3,047,037,403 | | | | 3,047,037,403 | | | | 3,047,037,403 | | | | 3,351,741,143 | | | | 3,351,741,143 | | | | 3,351,741,143 | | | Preferred shares | | | 2,935,346,437 | | | | 2,969,406,420 | | | | 2,961,435,158 | | | | 3,171,215,661 | | | | 3,228,881,081 | | | | 3,266,347,063 | | | | | | | | | | | | | | | | | | Earnings per share - basic – R$ | | | | | | | | | | | | | | | | | | | | | | | | | | Common shares | | | 4.30 | | | | 3.58 | | | | 2.73 | | | | 3.57 | | | | 3.91 | | | | 3.26 | | | Preferred shares | | | 4.30 | | | | 3.58 | | | | 2.73 | | | | 3.57 | | | | 3.91 | | | | 3.26 | |
| Net income attributable to owners of the parent company – diluted earnings per | | 01/01 to | | 01/01 to | | 01/01 to | | | 01/01 to | | 01/01 to | | 01/01 to | | | share | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Total net income available to preferred equity owners | | | 12,630 | | | | 10,638 | | | | 8,095 | | | | 11,310 | | | | 12,630 | | | | 10,638 | | | Dividend on preferred shares after dilution effects | | | 74 | | | | 58 | | | | 35 | | | | 82 | | | | 83 | | | | 64 | | | Net income available to preferred equity owners considering preferred shares after the dilution effect | | | 12,704 | | | | 10,696 | | | | 8,130 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,392 | | | | 12,713 | | | | 10,702 | | | Total net income available to ordinary equity owners | | | 13,110 | | | | 10,917 | | | | 8,329 | | | | 11,953 | | | | 13,110 | | | | 10,917 | | | Dividend on preferred shares after dilution effects | | | (74 | ) | | | (58 | ) | | | (35 | ) | | | (82 | ) | | | (83 | ) | | | (64 | ) | | Net income available to ordinary equity owners considering preferred shares after the dilution effect | | | 13,036 | | | | 10,859 | | | | 8,294 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,871 | | | | 13,027 | | | | 10,853 | | | Adjusted weighted average of shares (Note 21a) | | | | | | | | | | | | | | | | | | | | | | | | | | Common shares | | | 3,047,037,403 | | | | 3,047,037,403 | | | | 3,047,037,403 | | | | 3,351,741,143 | | | | 3,351,741,143 | | | | 3,351,741,143 | | | Preferred shares | | | 2,969,647,577 | | | | 3,001,704,485 | | | | 2,986,498,093 | | | | 3,216,235,372 | | | | 3,270,734,307 | | | | 3,305,545,129 | | | Preferred shares | | | 2,935,346,437 | | | | 2,969,406,420 | | | | 2,961,435,158 | | | | 3,171,215,661 | | | | 3,228,881,081 | | | | 3,266,347,063 | | | Incremental shares from stock options granted under our share-based payment | | | 34,301,140 | | | | 32,298,065 | | | | 25,062,935 | | | | 45,019,711 | | | | 41,853,226 | | | | 39,198,066 | | | | | | | | | | | | | | | | | | Earnings per share - diluted – R$ | | | | | | | | | | | | | | | | | | | | | | | | | | Common shares | | | 4.28 | | | | 3.56 | | | | 2.72 | | | | 3.54 | | | | 3.89 | | | | 3.24 | | | Preferred shares | | | 4.28 | | | | 3.56 | | | | 2.72 | | | | 3.54 | | | | 3.89 | | | | 3.24 | |
Potential anti-dilution effects of shares under our share-based payment, which were excluded from the calculation of diluted earnings per share, totaled 7,110,7026,901,686 preferred shares at 12/31/2016, 4,805,473 preferred shares at 12/31/2015 6,418,385and 3,494,779 preferred shares at 12/31/2014 and 9,544,743 preferred shares at 12/31/2013.2014. Note 29 – Post-employment benefits As prescribed in IAS 19 (R1), we present theThe accounting policies ofand procedures adopted by ITAÚ UNIBANCO HOLDING and its subsidiaries regardingCONSOLIDATED for employee benefits as well as the accounting procedures adopted.are summarized below:
The total amounts recognized in Income for the Period and Stockholders’ Equity – Other comprehensive income were as follows: Total amounts recognized in Income for the period | | | Defined benefit | | | Defined contribution(*) | | | Other benefits | | | Total | | | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Cost of current service | | | (62 | ) | | | (68 | ) | | | (74 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (62 | ) | | | (68 | ) | | | (74 | ) | | Net interest | | | (13 | ) | | | (6 | ) | | | (32 | ) | | | 239 | | | | 219 | | | | 196 | | | | (19 | ) | | | (17 | ) | | | (14 | ) | | | 207 | | | | 196 | | | | 150 | | | Contribution | | | - | | | | - | | | | - | | | | 121 | | | | (381 | ) | | | (133 | ) | | | - | | | | - | | | | - | | | | 121 | | | | (381 | ) | | | (133 | ) | | Benefits paid | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 13 | | | | 13 | | | | 9 | | | | 13 | | | | 13 | | | | 9 | | | Total Amounts Recognized | | | (75 | ) | | | (74 | ) | | | (106 | ) | | | 360 | | | | (162 | ) | | | 63 | | | | (6 | ) | | | (4 | ) | | | (5 | ) | | | 279 | | | | (240 | ) | | | (48 | ) |
| | | Defined benefit | | | Defined contribution | | | Other benefits | | | Total | | | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | Cost of current service | | | (68 | ) | | | (74 | ) | | | (103 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (68 | ) | | | (74 | ) | | | (103 | ) | | Net interest | | | (6 | ) | | | (32 | ) | | | 2 | | | | 219 | | | | 196 | | | | 180 | | | | (17 | ) | | | (14 | ) | | | (12 | ) | | | 196 | | | | 150 | | | | 170 | | | Contribution(*) | | | - | | | | - | | | | - | | | | (381 | ) | | | (133 | ) | | | (136 | ) | | | - | | | | - | | | | - | | | | (381 | ) | | | (133 | ) | | | (136 | ) | | Benefits paid | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 13 | | | | 9 | | | | 7 | | | | 13 | | | | 9 | | | | 7 | | | Total Amounts Recognized | | | (74 | ) | | | (106 | ) | | | (101 | ) | | | (162 | ) | | | 63 | | | | 44 | | | | (4 | ) | | | (5 | ) | | | (5 | ) | | | (240 | ) | | | (48 | ) | | | (62 | ) |
(*) In 2015, includes a provision to settle the surplus of social security fund, in the amount of R$ 236. In the period, contributions to the defined contributions plan, including PGBL, totaled R$ 339 (R$ 207 (R$from 01/01 to 12/31/2015 and R$ 190 from 01/01 to 12/31/2014 and2014), of which R$ 183115 (R$ 144 from 01/01 to 12/31/2013), of which2015 and R$ 144 (R$ 133 from 01/01 to 12/31/2014 and R$ 136 from 01/01 to 12/31/2013)2014) arising from social security funds. Total amounts recognized in Stockholders’ Equity – Other comprehensive income | | | Defined benefit | | | Defined contribution | | | Other benefits | | | Total | | | Defined benefit | | | Defined contribution | | | Other benefits | | | Total | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | At the beginning of the period | | | (75 | ) | | | (354 | ) | | | - | | | | (221 | ) | | | (286 | ) | | | - | | | | (8 | ) | | | 7 | | | | - | | | | (304 | ) | | | (633 | ) | | | - | | | | (45 | ) | | | (75 | ) | | | (354 | ) | | | (314 | ) | | | (221 | ) | | | (286 | ) | | | (13 | ) | | | (8 | ) | | | 7 | | | | (372 | ) | | | (304 | ) | | | (633 | ) | | Effects on asset ceiling | | | (103 | ) | | | (453 | ) | | | 1,036 | | | | (38 | ) | | | 77 | | | | 43 | | | | - | | | | - | | | | - | | | | (141 | ) | | | (376 | ) | | | 1,079 | | | | Effects on asset ceiling (*) | | | | (633 | ) | | | (103 | ) | | | (453 | ) | | | (1,244 | ) | | | (38 | ) | | | 77 | | | | - | | | | - | | | | - | | | | (1,877 | ) | | | (141 | ) | | | (376 | ) | | Remeasurements | | | 133 | | | | 732 | | | | (1,390 | ) | | | (55 | ) | | | (12 | ) | | | (329 | ) | | | (5 | ) | | | (15 | ) | | | 7 | | | | 73 | | | | 705 | | | | (1,712 | ) | | | 608 | | | | 133 | | | | 732 | | | | 236 | | | | (55 | ) | | | (12 | ) | | | (36 | ) | | | (5 | ) | | | (15 | ) | | | 808 | | | | 73 | | | | 705 | | | Total Amounts Recognized | | | (45 | ) | | | (75 | ) | | | (354 | ) | | | (314 | ) | | | (221 | ) | | | (286 | ) | | | (13 | ) | | | (8 | ) | | | 7 | | | | (372 | ) | | | (304 | ) | | | (633 | ) | | | (70 | ) | | | (45 | ) | | | (75 | ) | | | (1,322 | ) | | | (314 | ) | | | (221 | ) | | | (49 | ) | | | (13 | ) | | | (8 | ) | | | (1,441 | ) | | | (372 | ) | | | (304 | ) |
(*) The revision of the estimate for recognition of the social security fund resulted in the reversal of future contributions by R$ 1,053. a) Retirement plans ITAÚ UNIBANCO HOLDING and some of its subsidiaries sponsor defined benefit plans, including variable contribution plans, whose 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 regulations. 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 regulations, which does not require actuarial calculation, except as described in Note 29c. Employees hired prior to July 31, 2002, for those who came from Itaú, and prior to February 27, 2009 for those who came from Unibanco, are beneficiaries of the above-mentioned plans. As regards the new employees hired after these dates, they have the option to voluntarily participate in a variable contribution plan (PGBL), managed by Itaú Vida e Previdência S.A. Retirement plans are managed by closed-end private pension entities (EFPC), with independent legal structures, as detailed below: | Entity | | Benefit plan | | Fundação Itau Unibanco - 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 Defined Contribution Plan(3) | | | | Itaubank Retirement Plan(3) | | | | Itaú Defined Benefit Plan(1) | | | | Itaú Defined Contribution Plan(2) | | | | Unibanco Pension Plan(3) | | | | PrebegbenefitPrebeg benefit plan(1) | | | | UBB PREV defined benefit plan(1) | | | | Benefit plan II(1) | | | | Supplementary Retirement Plan – Flexible Premium Annuity (ACMV)(1) | | | | REDECARD Basic Retirement Plan(1) | | | | REDECARD Supplementary Retirement Plan(2) | | | | REDECARD Pension Plan(3) | | | | ITAUCARD Defined Benefit Retirement Plan(1) | | | | ITAUCARD Supplementary Retirement Plan(2) | | Funbep Fundo de Pensão Multipatrocinado | | Funbep I Benefit Plan(1) | | | | Funbep II Benefit Plan(2) |
(1)Defined benefit plan; (2)Variable contribution plan; (3)Defined contribution plan.
b) Governance The closed-end private pension entities (EFPC) and the benefit plans they manage are regulated in conformity with the related specific legislation. The EFPC are managed by the Executive Board, Advisory Council and Fiscal Council, with some members appointed by the sponsors and others appointed as representatives of active and other participants, pursuant to the respective Entity’s bylaws.by laws. The main purpose of the EFPC is to pay benefits to eligible participants, pursuant to the Plan Regulations, maintaining the plans assets invested separately and independently from ITAÚ UNIBANCO HOLDING. c) Defined benefit plans I - Main assumptions used in actuarial valuation of retirement plans | | 12/31/2016 | | 12/31/2015 | | 12/31/2014 | | 12/31/2013 | | Discount rate(1) | 10.24% p.a. | | 11.28% p.a. | | 10.24% p.a. | | 9.72% p.a. | | Mortality table(2) | | AT-2000 | | AT-2000 | | AT-2000 | | Turnover(3) | | Exp.Itaú 2008/2010 | | Exp.Itaú 2008/2010 | | Exp.Itaú 2008/2010 | | Future salary growth | | 5.04% to 7.12% p.a. | | 5.04% to 7.12% p.a. | | 5.04 to 7.12% a.a.p.a. | | Growth of the pension fund and social security benefits | 4.00% p.a. | | 4.00% p.a. | | 4.00% p.a. | | Inflation | 4.00% p.a. | | 4.00% p.a. | | 4.00% a.a. | Inflation | | 4.00% p.a. | | 4.00% p.a. | | 4.00% a.a. | | Actuarial method(4) | | Projected Unit Credit | | Projected Unit Credit | | Projected Unit Credit |
(1) The adoption of this assumption is based on interest rates obtained from the actual interest curve in IPCA, for medium term liabilities of retirement plans sponsored by ITAÚ UNIBANCO HOLDING. At 12/31/20152016 assumptions were adopted consistently with the economic scenario at the balance sheet date rate, considering the volatility of the interest markets and the models adopted. (2) The mortality tables adopted correspond to those disclosed by Society of Actuaries (SOA), the North-American entity which corresponds to Brazilian Institute of Actuarial Science (IBA), which reflects a 10% increase in the probabilities of survival compared to the respective basic tables. Thetables.The life expectancy in years per the AT-2000 mortality table for participants aged 55 years is 27 and 31 years for men and women, respectively. (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. (4) Using the Projected Unit Credit method, the mathematical reserve is determined based on 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. In case of benefits sponsored by foreign subsidiaries, actuarial assumptions adequate to the group of participants and the country's economic scenario are adopted. Biometric/demographic assumptions adopted are consistent with the group of participants of each benefit plan, pursuant to the studies carried out by an independent external actuarial consulting company. II- Risk Exposure -Through its defined benefit plans, ITAÚ UNIBANCO HOLDING is exposed to a number of risks, the most significant ones are:onesare: -- Volatility of Assets -The actuarial liability is calculated by adopting a discount rate defined on the income related to securities issued by thebythe Brazilian treasury (government securities). If the actual income related to plan assets is lower than expected, this may give rise to a deficit. The plans have a significant percentage of fixed-income securities pegged to the plan commitments, aimed at minimizing volatility and short and medium term risk. -- Changes in Investment Income -A decrease in income related to public securities will imply a decrease in the discount rate and,therefore, will increase the plan's actuarial liability. The effect will be partially offset by the recognition of these securities at market value. -- Inflation Risk -Most of the employee benefit plans are pegged to the inflation rates, and a higher inflation will lead to higher obligations. Theobligations.The effect will also be partially offset because a significant portion of the plan assets is pegged to government securities restated at the inflation rate. -- Life Expectancy -Most of the plan obligations are to provide life benefits, and therefore an increase in life expectancy will result in increasedinincreased plan liabilities. III - Management of defined benefit plan assets
| III | - Management of defined benefit plan assets |
The general purpose of managing EFPCs funds is to search for a long term balance between assets and obligations to pay retirement benefits, by exceeding the actuarial targets (discount rate plus benefit adjustment index, established in the plan regulations). Regarding the assets guaranteeing the actuarial liability reserves, management should ensure the payment capacity of retirement benefits in the long term by avoiding the risk of mismatching assets and liabilities in each pension plan. The allocation of plan assets and the allocation target by type of asset are as follows: | | | Fair Value | | | % Allocation | | Fair Value | | | % Allocation | | | Types | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 2016 Target | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Meta 2017 | | | Fixed income securities | | | 12,369 | | | | 12,250 | | | | 11,251 | | | | 90.73 | % | | | 91.16 | % | | | 89.92 | % | | 53% to 100% | | | 15,134 | | | | 12,369 | | | | 12,250 | | | | 91.61 | % | | | 90.73 | % | | | 91.16 | % | | | 53% to 100% | | | Variable income securities | | | 537 | | | | 641 | | | | 709 | | | | 3.94 | % | | | 4.77 | % | | | 5.67 | % | | 0% to 20% | | | 685 | | | | 537 | | | | 641 | | | | 4.15 | % | | | 3.94 | % | | | 4.77 | % | | | 0% to 20% | | | Structured investments | | | 27 | | | | 22 | | | | 18 | | | | 0.20 | % | | | 0.17 | % | | | 0.14 | % | | 0% to 10% | | | 9 | | | | 27 | | | | 22 | | | | 0.05 | % | | | 0.20 | % | | | 0.17 | % | | | 0% to 10% | | | Real estate | | | 633 | | | | 488 | | | | 508 | | | | 4.64 | % | | | 3.63 | % | | | 4.06 | % | | 0% to 7% | | | 623 | | | | 633 | | | | 488 | | | | 3.77 | % | | | 4.64 | % | | | 3.63 | % | | | 0% to 7% | | | Loans to participants | | | 67 | | | | 37 | | | | 26 | | | | 0.49 | % | | | 0.27 | % | | | 0.21 | % | | 0% to 5% | | | 69 | | | | 67 | | | | 37 | | | | 0.42 | % | | | 0.49 | % | | | 0.27 | % | | | 0% to 5% | | | Total | | | 13,633 | | | | 13,438 | | | | 12,512 | | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % | | | | | 16,520 | | | | 13,633 | | | | 13,438 | | | | 100.00 | % | | | 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$ 575 (R$ 452 (R$at 12/31/2015 and R$ 554 at 12/31/2014 and R$ 596 at 12/31/2013)2014), and real estate rented to Group companies, with a fair value of R$ 597 (R$ 606 (R$at 12/31/2015 and R$ 455 at 12/31/2014 and R$ 474 at 12/31/2013)2014). Fair Value The fair value of the plan assets is adjusted up to the Balance Sheet date, as follows: Fixed-Income Securities and Structured Investments–accounted for at market value, considering the average trading price on the calculation date,calculationdate, net realizable value obtained upon the technical addition of pricing, considering, at least, the payment terms and maturity, credit risk and the indexing unit. Variable income securities–accounted for at market value, taken to be the share average quotation at the last day of the month or at the closest dateclosestdate on the stock exchange on which the share has posted the highest liquidity rate. Real Estate–stated at acquisition or construction cost, adjusted to market value based on reappraisals made in 2015, supported by technical appraisaltechnicalappraisal reports. Depreciation is calculated under the straight line method, considering the useful life of the real estate. Loans to participants– adjusted up to the report date, in compliance with the respective agreements. Fund Allocation Target The fund allocation target is based on Investment Policies that are currently revised and approved by the Advisory Council of each EFPC, considering a five-year period, which establishes guidelines for investing funds guaranteeing Actuarial Liability and for classifying securities. IV- Net amount recognized in the balance sheet Following is the calculation of the net amount recognized in the balance sheet, corresponding to the defined benefit plan: | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | 1 - Net assets of the plans | | | 13,633 | | | | 13,438 | | | | 12,512 | | | | 16,520 | | | | 13,633 | | | | 13,438 | | | 2- Actuarial liabilities | | | (11,587 | ) | | | (11,695 | ) | | | (11,577 | ) | | | (13,723 | ) | | | (11,587 | ) | | | (11,695 | ) | | 3- Surplus (1-2) | | | 2,046 | | | | 1,743 | | | | 935 | | | | 2,797 | | | | 2,046 | | | | 1,743 | | | 4- Asset ceiling(*) | | | (2,134 | ) | | | (1,847 | ) | | | (1,293 | ) | | | (3,008 | ) | | | (2,134 | ) | | | (1,847 | ) | | 5- Net amount recognized in the balance sheet (3-4) | | | (88 | ) | | | (104 | ) | | | (358 | ) | | | (211 | ) | | | (88 | ) | | | (104 | ) | | Amount recognized in assets (Note 20a) | | | 224 | | | | 242 | | | | 222 | | | | 317 | | | | 224 | | | | 242 | | | Amount recognized in liabilities (Note 20b) | | | (312 | ) | | | (346 | ) | | | (580 | ) | | | (528 | ) | | | (312 | ) | | | (346 | ) |
(*) Corresponds to the excess of the present value of the available economic benefit, in conformity with paragraph 58 of IAS 19. V- Changes in the net amount recognized in the balance sheet: | | | 12/31/2015 | | | | | | Plan net | | Actuarial | | | | | | Asset | | Recognized | | | 12/31/2016 | | | | | assets | | | liabilities | | | Surplus | | | ceiling | | | amount | | | Plan net
assets | | | Actuarial
liabilities | | | Surplus | | | Asset
ceiling | | | Recognized
amount | | | Value at the beginning of the period | | | 13,438 | | | | (11,695 | ) | | | 1,743 | | | | (1,847 | ) | | | (104 | ) | | | 13,633 | | | | (11,587 | ) | | | 2,046 | | | | (2,134 | ) | | | (88 | ) | | Cost of current service | | | - | | | | (68 | ) | | | (68 | ) | | | - | | | | (68 | ) | | | - | | | | (62 | ) | | | (62 | ) | | | - | | | | (62 | ) | | Net interest(1) | | | 1,334 | | | | (1,151 | ) | | | 183 | | | | (189 | ) | | | (6 | ) | | | 1,483 | | | | (1,255 | ) | | | 228 | | | | (241 | ) | | | (13 | ) | | Benefits paid | | | (908 | ) | | | 908 | | | | - | | | | - | | | | - | | | | (1,060 | ) | | | 1,060 | | | | - | | | | - | | | | - | | | Contributions of sponsors | | | 60 | | | | - | | | | 60 | | | | - | | | | 60 | | | | 149 | | | | - | | | | 149 | | | | - | | | | 149 | | | Contributions of participants | | | 15 | | | | - | | | | 15 | | | | - | | | | 15 | | | | 15 | | | | - | | | | 15 | | | | - | | | | 15 | | | Effects on asset ceiling | | | - | | | | - | | | | - | | | | (103 | ) | | | (103 | ) | | | - | | | | - | | | | - | | | | (633 | ) | | | (633 | ) | | Balance arising from the CoprBanca acquisition (Note 3) | | | | - | | | | (207 | ) | | | (207 | ) | | | - | | | | (207 | ) | | Exchange Variation | | | | (8 | ) | | | 43 | | | | 35 | | | | - | | | | 35 | | | Remeasurements(2) (3) | | | (306 | ) | | | 419 | | | | 113 | | | | 5 | | | | 118 | | | | 2,308 | | | | (1,715 | ) | | | 593 | | | | - | | | | 593 | | | Value end of the period | | | 13,633 | | | | (11,587 | ) | | | 2,046 | | | | (2,134 | ) | | | (88 | ) | | | 16,520 | | | | (13,723 | ) | | | 2,797 | | | | (3,008 | ) | | | (211 | ) |
| | | 12/31/2014 | | | | | | Plan net | | Actuarial | | | | | | Asset | | Recognized | | | 12/31/2015 | | | | | assets | | | liabilities | | | Surplus | | | ceiling | | | amount | | | Plan net
assets | | | Actuarial
liabilities | | | Surplus | | | Asset
ceiling | | | Recognized
amount | | | Value at the beginning of the period | | | 12,512 | | | | (11,577 | ) | | | 935 | | | | (1,293 | ) | | | (358 | ) | | | 13,438 | | | | (11,695 | ) | | | 1,743 | | | | (1,847 | ) | | | (104 | ) | | Cost of current service | | | - | | | | (74 | ) | | | (74 | ) | | | - | | | | (74 | ) | | | - | | | | (68 | ) | | | (68 | ) | | | - | | | | (68 | ) | | Net interest(1) | | | 1,178 | | | | (1,087 | ) | | | 91 | | | | (123 | ) | | | (32 | ) | | | 1,334 | | | | (1,151 | ) | | | 183 | | | | (189 | ) | | | (6 | ) | | Benefits paid | | | (780 | ) | | | 780 | | | | - | | | | - | | | | - | | | | (908 | ) | | | 908 | | | | - | | | | - | | | | - | | | Contributions of sponsors | | | 81 | | | | - | | | | 81 | | | | - | | | | 81 | | | | 60 | | | | - | | | | 60 | | | | - | | | | 60 | | | Contributions of participants | | | 15 | | | | - | | | | 15 | | | | - | | | | 15 | | | | 15 | | | | - | | | | 15 | | | | - | | | | 15 | | | Effects on asset ceiling | | | - | | | | - | | | | - | | | | (453 | ) | | | (453 | ) | | | - | | | | - | | | | - | | | | (103 | ) | | | (103 | ) | | Remeasurements(2) (3) | | | 432 | | | | 263 | | | | 695 | | | | 22 | | | | 717 | | | | (306 | ) | | | 419 | | | | 113 | | | | 5 | | | | 118 | | | Value end of the period | | | 13,438 | | | | (11,695 | ) | | | 1,743 | | | | (1,847 | ) | | | (104 | ) | | | 13,633 | | | | (11,587 | ) | | | 2,046 | | | | (2,134 | ) | | | (88 | ) |
| | | 12/31/2013 | | | | | Plan net | | | Actuarial | | | | | | Asset | | | Recognized | | | | | assets | | | liabilities | | | Surplus | | | ceiling | | | amount | | | Value beginning of the period | | | 15,072 | | | | (12,906 | ) | | | 2,166 | | | | (2,137 | ) | | | 29 | | | Cost of current service | | | - | | | | (103 | ) | | | (103 | ) | | | - | | | | (103 | ) | | Net interest(1) | | | 1,202 | | | | (1,025 | ) | | | 177 | | | | (175 | ) | | | 2 | | | Benefits paid | | | (739 | ) | | | 739 | | | | - | | | | - | | | | - | | | Contributions of sponsors | | | 68 | | | | - | | | | 68 | | | | - | | | | 68 | | | Contributions of participants | | | 16 | | | | - | | | | 16 | | | | - | | | | 16 | | | Effects on asset ceiling | | | - | | | | - | | | | - | | | | 1,036 | | | | 1,036 | | | Remeasurements(2) (3) | | | (3,107 | ) | | | 1,718 | | | | (1,389 | ) | | | (17 | ) | | | (1,406 | ) | | Value end of the period | | | 12,512 | | | | (11,577 | ) | | | 935 | | | | (1,293 | ) | | | (358 | ) |
| | | 12/31/2014 | | | | | Plan net
assets | | | Actuarial
liabilities | | | Surplus | | | Asset
ceiling | | | Recognized
amount | | | Value beginning of the period | | | 12,512 | | | | (11,577 | ) | | | 935 | | | | (1,293 | ) | | | (358 | ) | | Cost of current service | | | - | | | | (74 | ) | | | (74 | ) | | | - | | | | (74 | ) | | Net interest(1) | | | 1,178 | | | | (1,087 | ) | | | 91 | | | | (123 | ) | | | (32 | ) | | Benefits paid | | | (780 | ) | | | 780 | | | | - | | | | - | | | | - | | | Contributions of sponsors | | | 81 | | | | - | | | | 81 | | | | - | | | | 81 | | | Contributions of participants | | | 15 | | | | - | | | | 15 | | | | - | | | | 15 | | | Effects on asset ceiling | | | - | | | | - | | | | - | | | | (453 | ) | | | (453 | ) | | Remeasurements(2) (3) | | | 432 | | | | 263 | | | | 695 | | | | 22 | | | | 717 | | | Value end of the period | | | 13,438 | | | | (11,695 | ) | | | 1,743 | | | | (1,847 | ) | | | (104 | ) |
(1) Corresponds to the amount calculated on 01/01/20152016 based on the beginning amount (Net Assets, Actuarial Liabilities and Asset ceiling), taking into account the estimated amount of payments/ receipts of benefits/ contributions, multiplied by the discount rate of 10.24%11.28% p.a. (At 01/01/20142015 used by the discount rate of 9.72%10.24% p.a.) (2) Remeasurements recorded in net assets and asset ceiling correspond to the income earned above/below the expected return rate. (3) The actual return on assets amounted to R$ 3,791 (R$ 1,028 (R$ 1,611at 12/31/2015 and R$ 1,610 at 12/31/2014 and R$ (1,905) at 12/31/2013).).
During the period, the contributions made totaled R$ 149 (R$ 60 (R$from 01/01 to 12/31/2015 and R$ 81 from 01/01 to 12/31/2014 and R$ 68 from 01/01 to 12/31/2013)2014). The contribution rate increases based on the beneficiary’s salary. In 2016,2017, contribution to the retirement plans sponsored by ITAÚ UNIBANCO HOLDING is expected to amount to R$ 55.71. The estimate for payment of benefits for the next 10 years is as follows: | | | Payment | | | | Period | | estimate | | | Payment
estimate | | | 2016 | | | 949 | | | | 2017 | | | 977 | | | | 1,071 | | | 2018 | | | 1,009 | | | | 1,112 | | | 2019 | | | 1,042 | | | | 1,160 | | | 2020 | | | 1,083 | | | | 1,212 | | | 2021 to 2025 | | | 5,935 | | | | 2021 | | | | 1,266 | | | 2022 to 2026 | | | | 7,098 | |
VI- Sensitivity of defined benefit obligation The impact, due to the change in the assumption – discount rate by 0.5%, which would be recognized in Actuarial liabilities of the plans, as well as in Stockholders’ Equity – Other Comprehensive Income of the sponsor (before taxes) would amount to: | | | | | | | Effect which would be | | | | | | Effects on actuarial | | recognized in | | | Change in Assumption | | | liabilities of the plan | | | Stockholders’ Equity(*) | | | | | | | | Effect which would be | | | | | | Percentage of | | | | | | | | Effects on actuarial | | recognized in | | | | | | actuarial | | | | | | | | liabilities of the plan | | | Stockholders’ Equity(*) | | | Value | | | liabilities | | | Value | | | | | | | | Percentage of | | | | | | | | | | | actuarial | | | | | | Change in Assumption | | Value | | | liabilities | | | Value | | | | - Decrease by 0.5% | | | 566 | | | | 4.92 | % | | | (281 | ) | | | 703 | | | | 5.13 | % | | | (271 | ) | | - Increase by 0.5% | | | (520 | ) | | | (4.51 | )% | | | 201 | | | | (644 | ) | | | (4.70 | )% | | | 235 | |
(*) Net of effects of asset ceiling d) Defined contribution plans | d) | 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 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. I - Change in the net amount recognized in the Balance sheet: | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | | | Pension plan | | | | Recognized | | Pension plan | | | | Recognized | | Pension plan | | | | Recognized | | | Pension plan | | | | Recognized | | Pension plan | | | | Recognized | | Pension plan | | | | Recognized | | | | | fund | | | Asset ceiling | | | amount | | | fund | | | Asset ceiling | | | amount | | | fund | | | Asset ceiling | | | amount | | | fund | | | Asset ceiling | | | amount | | | fund | | | Asset ceiling | | | amount | | | fund | | | Asset ceiling | | | amount | | | Value beginning of the period | | | 2,438 | | | | (224 | ) | | | 2,214 | | | | 2,361 | | | | (275 | ) | | | 2,086 | | | | 2,646 | | | | (318 | ) | | | 2,328 | | | | 2,229 | | | | (270 | ) | | | 1,959 | | | | 2,438 | | | | (224 | ) | | | 2,214 | | | | 2,361 | | | | (275 | ) | | | 2,086 | | | Net interest | | | 239 | | | | (20 | ) | | | 219 | | | | 223 | | | | (27 | ) | | | 196 | | | | 206 | | | | (26 | ) | | | 180 | | | | 269 | | | | (30 | ) | | | 239 | | | | 239 | | | | (20 | ) | | | 219 | | | | 223 | | | | (27 | ) | | | 196 | | | Contribution (Note 29) | | | (381 | ) | | | - | | | | (381 | ) | | | (133 | ) | | | - | | | | (133 | ) | | | (136 | ) | | | - | | | | (136 | ) | | | 121 | | | | - | | | | 121 | | | | (381 | ) | | | - | | | | (381 | ) | | | (133 | ) | | | - | | | | (133 | ) | | Effects on asset ceiling | | | - | | | | (38 | ) | | | (38 | ) | | | - | | | | 77 | | | | 77 | | | | - | | | | 43 | | | | 43 | | | | Receivables – allocation of funds (*) | | | | (515 | ) | | | - | | | | (515 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Effects on asset ceiling (Note 29) | | | | (1,053 | ) | | | (191 | ) | | | (1,244 | ) | | | - | | | | (38 | ) | | | (38 | ) | | | - | | | | 77 | | | | 77 | | | Remeasurements | | | (67 | ) | | | 12 | | | | (55 | ) | | | (13 | ) | | | 1 | | | | (12 | ) | | | (355 | ) | | | 26 | | | | (329 | ) | | | 236 | | | | - | | | | 236 | | | | (67 | ) | | | 12 | | | | (55 | ) | | | (13 | ) | | | 1 | | | | (12 | ) | | Value end of the period (Note 20a) | | | 2,229 | | | | (270 | ) | | | 1,959 | | | | 2,438 | | | | (224 | ) | | | 2,214 | | | | 2,361 | | | | (275 | ) | | | 2,086 | | | | 1,287 | | | | (491 | ) | | | 796 | | | | 2,229 | | | | (270 | ) | | | 1,959 | | | | 2438 | | | | -224 | | | | 2214 | |
| e)(*) | Refers to the allocation of the surplus of Plano Itaubanco CD’s social security fund. |
| e) | 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 acquisition agreements signed by ITAÚ UNIBANCO HOLDING, as well as in relation to the benefits granted due to a judicial sentence, in accordance with the terms and conditions established, in which health plans are totally or partially sponsored for specific groups of former workers and beneficiaries. 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: | I- | Change in the net amount recognized in the balance sheet: |
I- Change in the net amount recognized in the balance sheet: | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | At the beginning of the period | | | (170 | ) | | | (146 | ) | | | (148 | ) | | | (179 | ) | | | (170 | ) | | | (146 | ) | | Interest cost | | | (17 | ) | | | (14 | ) | | | (12 | ) | | | (19 | ) | | | (17 | ) | | | (14 | ) | | Benefits paid | | | 13 | | | | 9 | | | | 7 | | | | 13 | | | | 13 | | | | 9 | | | Remeasurements | | | (5 | ) | | | (19 | ) | | | 7 | | | | (36 | ) | | | (5 | ) | | | (19 | ) | | At the end of the period (Note 20b) | | | (179 | ) | | | (170 | ) | | | (146 | ) | | | (221 | ) | | | (179 | ) | | | (170 | ) |
The estimate for payment of benefits for the next 10 years is as follows: | Period | | Payment estimate | | | Payment estimate | | | 2016 | | | 12 | | | | 2017 | | | 13 | | | | 13 | | | 2018 | | | 14 | | | | 14 | | | 2019 | | | 15 | | | | 15 | | | 2020 | | | 15 | | | | 16 | | | 2021 to 2025 | | | 91 | | | | 2021 | | | | 17 | | | 2022 to 2026 | | | | 103 | |
| II- | Assumptions and sensitivity - medical care cost |
II- Assumptions and sensitivity - medical care cost For calculation of projected benefits obligations in addition to the assumptions used for the defined benefit plans (Note 29c 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: | | | Recognition | | 1% increase | | | 1% decrease | | | Recognition | | 1% increase | | | 1% decrease | | | Service cost and interest cost | | Income | | | 4 | | | | (3 | ) | | Income | | | 3 | | | | (2 | ) | | Present value of obligation | | Other comprehensive income | | | 20 | | | | (17 | ) | | Other comprehensive income | | | 26 | | | | (22 | ) |
Note 30 – Insurance contracts ITAÚ UNIBANCO HOLDING, through its subsidiaries, offers to the market insurance and private pension products, with the purpose of assuming risks and restoring the economic balance of the assets of the policyholder if damaged. 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. I - Insurance The contract entered into between the parties aims at guaranteeing the protection of the client's assets. Upon payment of a premium, the policyholder is protected through previously-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's loss in the event of claims of insured risks. The insurance risks sold by insurance companies of ITAÚ UNIBANCO HOLDING are divided into property and casualty, that covers losses, damages or liabilities for assets or persons, and life insurance, that includes coverage for death and personal accidents. | | | Loss ratio | | Sales ratio | | | | | | % | | | % | | | Loss ratio | | Sales ratio | | | | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | | % | | | % | | | Main insurance lines | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2015 | | | 12/31/2014 | | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | | | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2016 | | | 12/31/2015 | | | Group accident insurance | | | 5.8 | | | | 7.0 | | | | 42.0 | | | | 39.0 | | | | 5.0 | | | | 5.8 | | | | 42.1 | | | | 42.0 | | | Individual accident | | | 19.5 | | | | 17.8 | | | | 11.4 | | | | 10.6 | | | | 19.5 | | | | 19.5 | | | | 12.4 | | | | 11.4 | | | Commercial multiple peril | | | 44.6 | | | | 46.2 | | | | 20.9 | | | | 17.5 | | | | 63.3 | | | | 44.6 | | | | 21.1 | | | | 20.9 | | | Internal credit | | | 113.7 | | | | 77.6 | | | | 18.3 | | | | 26.3 | | | | 221.7 | | | | 113.7 | | | | 3.9 | | | | 18.3 | | | Mandatory insurance for personal injury caused by motor vehicles (DPVAT) | | | 86.7 | | | | 87.1 | | | | 1.4 | | | | 1.4 | | | | Mandatory insurance for personal injury caused by motor vehicles | | | | | | | | | | | | | | | | | | | (DPVAT) | | | | 85.7 | | | | 86.7 | | | | 1.4 | | | | 1.4 | | | Serious or terminal diseases | | | 16.1 | | | | 13.6 | | | | 10.7 | | | | 10.7 | | | | 22.1 | | | | 16.1 | | | | 10.7 | | | | 10.7 | | | Extended warranty - assets | | | 16.8 | | | | 16.8 | | | | 64.6 | | | | 64.0 | | | | 17.1 | | | | 16.8 | | | | 63.8 | | | | 64.6 | | | Credit Life | | | 15.6 | | | | 14.8 | | | | 21.8 | | | | 21.1 | | | | 18.7 | | | | 15.6 | | | | 19.0 | | | | 21.8 | | | Petroleum risks | | | - | | | | 77.2 | | | | - | | | | 11.8 | | | | Multiple risks | | | 7.4 | | | | 5.2 | | | | 62.2 | | | | 57.3 | | | | 7.8 | | | | 7.4 | | | | 62.1 | | | | 62.2 | | | Specified and operational risks | | | - | | | | 57.8 | | | | - | | | | 4.1 | | | | Home insurance in market policies – Credit Life | | | 15.0 | | | | 13.0 | | | | (2.8 | ) | | | (1.6 | ) | | | 14.7 | | | | 15.0 | | | | (0.3 | ) | | | (2.8 | ) | | Group life | | | 46.7 | | | | 52.9 | | | | 13.0 | | | | 13.9 | | | | 46.8 | | | | 46.7 | | | | 13.6 | | | | 13.0 | |
II - Private pension Developed as a solution to ensure the maintenance of the quality of life of participants, as a supplement to the government plans, through long term investments, private pension products are divided into three major groups: | · | PGBL - Plan Generator of Benefits:The main objective of this plan is the accumulation of financial resources,financialresources, but it can be purchased with additional risk coverage. Recommended for clients that file the full version of income tax return, (rather than the simplified version), because they can deduct contributions paid for tax purposes up to 12% of the annual taxable gross income. |
| · | VGBL - Redeemable Life Insurance:This is an insurance structured as a pension plan. Its taxation differstaxationdiffers from the PGBL; in this case, the tax basis is the earned income. |
| · | FGB - Fund Generator of Benefits:This is a pension plan with minimum income guarantee, and possibilityandpossibility of receiving earnings from asset performance. Once recognized the distribution of earnings at a certain percentage, as established by the FGB policy, it is not at management's discretion, but instead represents an obligation to ITAÚ UNIBANCO HOLDING. Although there are plans still in existence, they are no longer sold. |
represents an obligation to ITAÚ UNIBANCO HOLDING. Although there are plans still in existence, they are no longer sold.
III – Income related to insurance and private pension The revenue from the main insurance and private pension products is as follows: | | | Premiums and contributions issued | | | Reinsurance | | | Retained premiums and contributions | | | Premiums and contributions issued | | | Reinsurance | | | Retained premiums and contributions | | | | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | 01/01 to | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Group accident insurance | | | 862 | | | | 796 | | | | 698 | | | | (2 | ) | | | (2 | ) | | | (2 | ) | | | 860 | | | | 794 | | | | 696 | | | | 780 | | | | 862 | | | | 796 | | | | (4 | ) | | | (2 | ) | | | (2 | ) | | | 776 | | | | 860 | | | | 794 | | | Individual accident | | | 214 | | | | 186 | | | | 155 | | | | (11 | ) | | | (2 | ) | | | (3 | ) | | | 203 | | | | 184 | | | | 152 | | | | 224 | | | | 214 | | | | 186 | | | | (12 | ) | | | (11 | ) | | | (2 | ) | | | 212 | | | | 203 | | | | 184 | | | Commercial multiple peril | | | 57 | | | | 139 | | | | 199 | | | | - | | | | (25 | ) | | | (45 | ) | | | 57 | | | | 114 | | | | 154 | | | | 56 | | | | 57 | | | | 139 | | | | - | | | | - | | | | (25 | ) | | | 56 | | | | 57 | | | | 114 | | | Internal Credit | | | 151 | | | | 105 | | | | 59 | | | | - | | | | - | | | | - | | | | 151 | | | | 105 | | | | 59 | | | | 63 | | | | 151 | | | | 105 | | | | - | | | | - | | | | - | | | | 63 | | | | 151 | | | | 105 | | | Mandatory insurance for personal injury caused by motor vehicles (DPVAT) | | | 37 | | | | 243 | | | | 366 | | | | - | | | | - | | | | - | | | | 37 | | | | 243 | | | | 366 | | | | 37 | | | | 37 | | | | 243 | | | | - | | | | - | | | | - | | | | 37 | | | | 37 | | | | 243 | | | Serious or terminal diseases | | | 169 | | | | 159 | | | | 139 | | | | (2 | ) | | | (1 | ) | | | (1 | ) | | | 167 | | | | 158 | | | | 138 | | | | 167 | | | | 169 | | | | 159 | | | | (1 | ) | | | (2 | ) | | | (1 | ) | | | 166 | | | | 167 | | | | 158 | | | Warranty extension - assets | | | 252 | | | | 1,202 | | | | 1,293 | | | | - | | | | - | | | | - | | | | 252 | | | | 1,202 | | | | 1,293 | | | | 112 | | | | 252 | | | | 1,202 | | | | - | | | | | | | | | | | | 112 | | | | 252 | | | | 1,202 | | | Disability Savings Pension | | | 256 | | | | 194 | | | | 151 | | | | (6 | ) | | | (5 | ) | | | (6 | ) | | | 250 | | | | 189 | | | | 145 | | | | 298 | | | | 256 | | | | 194 | | | | (3 | ) | | | (6 | ) | | | (5 | ) | | | 295 | | | | 250 | | | | 189 | | | PGBL | | | 1,840 | | | | 1,665 | | | | 1,532 | | | | - | | | | - | | | | - | | | | 1,840 | | | | 1,665 | | | | 1,532 | | | | 1,955 | | | | 1,840 | | | | 1,665 | | | | - | | | | | | | | | | | | 1,955 | | | | 1,840 | | | | 1,665 | | | Credit Life | | | 726 | | | | 802 | | | | 726 | | | | (1 | ) | | | - | | | | - | | | | 725 | | | | 802 | | | | 726 | | | | 570 | | | | 726 | | | | 802 | | | | - | | | | (1 | ) | | | | | | | 570 | | | | 725 | | | | 802 | | | Petroleum risks | | | - | | | | 284 | | | | 471 | | | | - | | | | (252 | ) | | | (408 | ) | | | - | | | | 32 | | | | 63 | | | | - | | | | - | | | | 284 | | | | - | | | | - | | | | (252 | ) | | | - | | | | - | | | | 32 | | | Multiple risks | | | 172 | | | | 223 | | | | 231 | | | | - | | | | (53 | ) | | | (69 | ) | | | 172 | | | | 170 | | | | 162 | | | | 162 | | | | 172 | | | | 223 | | | | - | | | | - | | | | (53 | ) | | | 162 | | | | 172 | | | | 170 | | | Specified and all risks | | | - | | | | 501 | | | | 606 | | | | - | | | | (393 | ) | | | (487 | ) | | | - | | | | 108 | | | | 119 | | | | - | | | | - | | | | 501 | | | | - | | | | - | | | | (393 | ) | | | - | | | | - | | | | 108 | | | Home Insurance in Market Policies – Credit Life | | | 224 | | | | 187 | | | | 152 | | | | (19 | ) | | | (19 | ) | | | (15 | ) | | | 205 | | | | 168 | | | | 137 | | | | 261 | | | | 224 | | | | 187 | | | | (18 | ) | | | (19 | ) | | | (19 | ) | | | 243 | | | | 205 | | | | 168 | | | Traditional | | | 159 | | | | 174 | | | | 180 | | | | - | | | | - | | | | - | | | | 159 | | | | 174 | | | | 180 | | | | 142 | | | | 159 | | | | 174 | | | | - | | | | - | | | | - | | | | 142 | | | | 159 | | | | 174 | | | VGBL | | | 15,501 | | | | 13,532 | | | | 13,675 | | | | - | | | | - | | | | - | | | | 15,501 | | | | 13,532 | | | | 13,675 | | | | 18,153 | | | | 15,501 | | | | 13,532 | | | | - | | | | | | | | | | | | 18,153 | | | | 15,501 | | | | 13,532 | | | Group life | | | 1,453 | | | | 1,414 | | | | 1,392 | | | | (37 | ) | | | (28 | ) | | | (25 | ) | | | 1,416 | | | | 1,386 | | | | 1,367 | | | | 1,278 | | | | 1,453 | | | | 1,414 | | | | (44 | ) | | | (37 | ) | | | (28 | ) | | | 1,234 | | | | 1,416 | | | | 1,386 | | | Other lines | | | 561 | | | | 991 | | | | 1,302 | | | | (11 | ) | | | (251 | ) | | | (462 | ) | | | 550 | | | | 740 | | | | 840 | | | | 591 | | | | 561 | | | | 991 | | | | (12 | ) | | | (11 | ) | | | (251 | ) | | | 579 | | | | 550 | | | | 740 | | | Total | | | 22,634 | | | | 22,797 | | | | 23,327 | | | | (89 | ) | | | (1,031 | ) | | | (1,523 | ) | | | 22,545 | | | | 21,766 | | | | 21,804 | | | | 24,849 | | | | 22,634 | | | | 22,797 | | | | (94 | ) | | | (89 | ) | | | (1,031 | ) | | | 24,755 | | | | 22,545 | | | | 21,766 | |
| c) | Technical reserves for insurance and private pension |
The technical provisions of insurance and pension plan are recognized according to the technical notes approved by SUSEP and criteria established by current legislation. I - Insurance and private pension: | · | Provision for unearned premiums –this provision is recognized, based on insurance premiums, for theforthe coverage of amounts payable related to claims and expenses to be incurred, throughout their terms maturity, in connection with the risks assumed at the calculation base date. The calculation is performed on the level of policies or endorsement of agreements in force, on apro rata-diebasis. The basis.The provision includes an estimate for effective and not issued risks (PPNG-RVNE). |
| · | Provision for unsettled claims –this provision isrecognizedis recognized for the coverage of amounts payable relatedpayablerelated to lump-sum payments and income overdue from claims reported up to the calculation base date, but not yet paid. The provision covers administrative and legal claims, gross of accepted coinsurance operations and reinsurance operations and net of ceded coinsurance operations. The provision should include, whenever required, IBNER (claims incurred but not sufficiently reported) for the aggregate development of claims reported but not paid, which amounts may be changed throughout the process up to final settlement. |
| · | Provision for claims incurred and not reported - IBNR–this provision is recognized for the coverage of expectedofexpected unsettled amounts related to claims incurred but not reported up to the calculation base date, gross of accepted coinsurance operations and reinsurance operations, and net of ceded coinsurance operations. |
| · | Mathematical provisions for benefits to be granted -recognized for the coverage of commitments assumedcommitmentsassumed to participants or policyholders, based on the assumptions set forth in the contract, while the event that gave rise to the benefit and/or indemnity has not occurred. The provision is calculated in accordance with the methodology approved in the actuarial technical note to the product. |
| · | Mathematical provisions for granted benefits -recognized after the event triggering the benefit occurs,for the coverage of the commitments assumed to the participants or insured parties, based on the assumptions established in the agreement. The provision is calculated in accordance with the methodologies approved in the technical actuarial note on the product. |
| · | Provision for financial surplus –it is recognized to ensure the amounts intended for distribution of financial surplus,financialsurplus, if the event is stated in the agreement. Corresponds to the financial income exceeding the minimum return guaranteed in the product. |
| · | Other technical provisions –it is recognized when insufficiency of premiums or contributions are identified relatedidentifiedrelated to payments of benefits and indemnities. |
| · | Provision for redemptions and other amounts to regularize –it comprises the amounts related to redemptionstoredemptions to regularize, returns of premiums or funds, portability requested but, for any reason, not yet transferred to the insurance company or open private pension entity beneficiary, and premiums received but not quoted. |
| · | Provision for related expenses -It is recognized for the coverage of expected amounts related to expenses withexpenseswith benefits and indemnities, due to events incurred and to be incurred. |
II - 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: II.I - Change in technical provisions | | | 12/31/2015 | | | 12/31/2014 | | | | | | Property, | | | | | | | | | | Property, | | | | | | | | | | | | | individuals | | | | Life with | | | | | | individuals | | | | Life with | | | | | | | | | and life | | Private | | survivor | | | | | | and life | | Private | | survivor | | | | | | 12/31/2016 | | | 12/31/2015 | | | | | insurance | | | pension | | | benefits | | | Total | | | insurance | | | pension | | | benefits | | | Total | | | 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 | | | 5,872 | | | | 28,228 | | | | 75,678 | | | | 109,778 | | | | 10,275 | | | | 25,252 | | | | 63,496 | | | | 99,023 | | | | 4,755 | | | | 32,688 | | | | 91,862 | | | | 129,305 | | | | 5,872 | | | | 28,228 | | | | 75,678 | | | | 109,778 | | | (+) Additions arising from premiums / contribution | | | 4,825 | | | | 2,255 | | | | 15,501 | | | | 22,581 | | | | 7,267 | | | | 2,034 | | | | 13,541 | | | | 22,842 | | | | 4,302 | | | | 2,395 | | | | 18,153 | | | | 24,850 | | | | 4,825 | | | | 2,255 | | | | 15,501 | | | | 22,581 | | | (-) Deferral of risk | | | (5,780 | ) | | | (253 | ) | | | - | | | | (6,033 | ) | | | (7,154 | ) | | | (192 | ) | | | - | | | | (7,346 | ) | | | (5,124 | ) | | | (297 | ) | | | - | | | | (5,421 | ) | | | (5,780 | ) | | | (253 | ) | | | - | | | | (6,033 | ) | | (-) Payment of claims / benefits | | | (1,553 | ) | | | (337 | ) | | | (19 | ) | | | (1,909 | ) | | | (2,395 | ) | | | (204 | ) | | | (10 | ) | | | (2,609 | ) | | | (1,623 | ) | | | (370 | ) | | | (39 | ) | | | (2,032 | ) | | | (1,553 | ) | | | (337 | ) | | | (19 | ) | | | (1,909 | ) | | (+) Reported claims | | | 1,712 | | | | - | | | | - | | | | 1,712 | | | | 2,219 | | | | - | | | | - | | | | 2,219 | | | | 1,620 | | | | - | | | | - | | | | 1,620 | | | | 1,712 | | | | - | | | | - | | | | 1,712 | | | (-) Redemptions | | | (2 | ) | | | (1,479 | ) | | | (8,720 | ) | | | (10,201 | ) | | | (1 | ) | | | (1,249 | ) | | | (7,929 | ) | | | (9,179 | ) | | | (1 | ) | | | (1,939 | ) | | | (13,277 | ) | | | (15,217 | ) | | | (2 | ) | | | (1,479 | ) | | | (8,720 | ) | | | (10,201 | ) | | (+/-) Net portability | | | - | | | | 886 | | | | 504 | | | | 1,390 | | | | - | | | | 266 | | | | 347 | | | | 613 | | | | - | | | | 380 | | | | 709 | | | | 1,089 | | | | - | | | | 886 | | | | 504 | | | | 1,390 | | | (+) Adjustment of reserves and financial surplus | | | 9 | | | | 3,244 | | | | 9,052 | | | | 12,305 | | | | 7 | | | | 2,249 | | | | 6,319 | | | | 8,575 | | | | 20 | | | | 4,371 | | | | 13,171 | | | | 17,562 | | | | 9 | | | | 3,244 | | | | 9,052 | | | | 12,305 | | | (+/-) Business development (Notes 3a and b) | | | - | | | | - | | | | - | | | | - | | | | (4,402 | ) | | | - | | | | - | | | | (4,402 | ) | | | (+/-) Other (recognition / reversal) | | | (328 | ) | | | 144 | | | | (134 | ) | | | (318 | ) | | | 56 | | | | 72 | | | | (86 | ) | | | 42 | | | | (23 | ) | | | 451 | | | | 1,892 | | | | 2,320 | | | | (328 | ) | | | 144 | | | | (134 | ) | | | (318 | ) | | Reserves for insurance and private pension | | | 4,755 | | | | 32,688 | | | | 91,862 | | | | 129,305 | | | | 5,872 | | | | 28,228 | | | | 75,678 | | | | 109,778 | | | | 3,926 | | | | 37,679 | | | | 112,471 | | | | 154,076 | | | | 4,755 | | | | 32,688 | | | | 91,862 | | | | 129,305 | |
II.II - Technical provisions balances | | | Insurance | | | Private pension | | | Total | | | Insurance | | | Private pension | | | Total | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2016 | | | 12/31/2015 | | | Unearned premiums | | | 3,027 | | | | 4,015 | | | | 15 | | | | 12 | | | | 3,042 | | | | 4,027 | | | | 2,204 | | | | 3,027 | | | | 17 | | | | 15 | | | | 2,221 | | | | 3,042 | | | Mathematical reserve for benefits to be granted and benefits granted | | | 24 | | | | 13 | | | | 122,914 | | | | 102,311 | | | | 122,938 | | | | 102,324 | | | | 24 | | | | 24 | | | | 148,341 | | | | 122,914 | | | | 148,365 | | | | 122,938 | | | Redemptions and Other Unsettled Amounts | | | 23 | | | | 21 | | | | 166 | | | | 168 | | | | 189 | | | | 189 | | | | 11 | | | | 23 | | | | 210 | | | | 166 | | | | 221 | | | | 189 | | | Financial surplus | | | 1 | | | | 1 | | | | 547 | | | | 519 | | | | 548 | | | | 520 | | | | 2 | | | | 1 | | | | 581 | | | | 547 | | | | 583 | | | | 548 | | | Unsettled claims(1) | | | 783 | | | | 760 | | | | 18 | | | | 15 | | | | 801 | | | | 775 | | | | 769 | | | | 783 | | | | 23 | | | | 18 | | | | 792 | | | | 801 | | | IBNR | | | 424 | | | | 635 | | | | 24 | | | | 19 | | | | 448 | | | | 654 | | | | 435 | | | | 424 | | | | 27 | | | | 24 | | | | 462 | | | | 448 | | | Administrative and Related Expenses | | | 42 | | | | 42 | | | | 50 | | | | 70 | | | | 92 | | | | 112 | | | | 39 | | | | 42 | | | | 71 | | | | 50 | | | | 110 | | | | 92 | | | Other | | | 431 | | | | 385 | | | | 816 | | | | 792 | | | | 1,247 | | | | 1,177 | | | | 442 | | | | 431 | | | | 880 | | | | 816 | | | | 1,322 | | | | 1,247 | | | Total(2) | | | 4,755 | | | | 5,872 | | | | 124,550 | | | | 103,906 | | | | 129,305 | | | | 109,778 | | | | 3,926 | | | | 4,755 | | | | 150,150 | | | | 124,550 | | | | 154,076 | | | | 129,305 | |
(1) The provision for unsettled claims is detailed in Note 30e. (2)This table covers the amendments established by Susep Circular No. 517, de 07/30/2015, also for comparison purposes.
| d) | Deferred selling expenses |
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 01/01/2016 | | | 901 | | | Increase | | | 902 | | | Amortization | | | (1,374 | ) | | Balance at 12/31/2016 | | | 429 | | | Balance to be amortized in up to 12 months | | | 335 | | | Balance to be amortized after 12 months | | | 94 | | | | | | | | Balance at 01/01/2015 | | | 1,647 | | | Increase | | | 1,133 | | | Amortization | | | (1,879 | ) | | Balance at 12/31/2015 | | | 901 | | | Balance to be amortized in up to 12 months | | | 644 | | | Balance to be amortized after 12 months | | | 257 | | | | | | | Balance at 01/01/2014 | | | 2,205 | | Increase | | | 1,747 | | Amortization | | | (2,263 | ) | Corporate reorganizations | | | 31 | | Sale of major risk portfolio | | | (73 | ) | Balance at 12/31/2014 | | | 1,647 | | Balance to be amortized in up to 12 months | | | 972 | | Balance to be amortized after 12 months | | | 675 | | The amounts of deferred selling expenses from reinsurance are stated in Note 30I. | | | | |
The amounts of deferred selling expenses from reinsurance are stated in Note 30I. | 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. The first part of the table shows how the final loss estimate changes through time. The second part of the table reconciles the amounts pending payment and the liability disclosed in the balance sheet. I – Gross of reinsurance I – Gross of reinsurance | | | | | | | | | Reserve for unsettled claims(*) | | | 801792 | | | (-) DPVAT operations | | | 1719 | | | (-) IBNER (claims incurred but not sufficiently reported) | | | 227240 | | | (-) Retrocession and other estimates | | | 23 | | | Liability claims presented in the development table (Ia + Ib) | | | 555530 | |
(*) Provision for unsettled claims stated in Note 30c II.II of 12/31/2015,30/2016, gross of reinsurance Ia - Administratives claims - gross of reinsurance | Occurrence date | | 12/31/2011 | | | 12/31/2012 | | | 12/31/2013 | | | 12/31/2014 | | | 12/31/2015 | | | Total | | | At the end of reporting period | | | 928 | | | | 1,061 | | | | 1,221 | | | | 1,302 | | | | 855 | | | | | | | After 1 year | | | 933 | | | | 1,054 | | | | 1,221 | | | | 1,318 | | | | - | | | | | | | After 2 years | | | 934 | | | | 1,059 | | | | 1,222 | | | | - | | | | - | | | | | | | After 3 years | | | 937 | | | | 1,058 | | | | - | | | | - | | | | - | | | | | | | After 4 years | | | 935 | | | | - | | | | - | | | | - | | | | - | | | | | | | Current estimate | | | 935 | | | | 1,058 | | | | 1,222 | | | | 1,318 | | | | 855 | | | | | | | Accumulated payments through base date | | | 929 | | | | 1,055 | | | | 1,216 | | | | 1,304 | | | | 596 | | | | 5,100 | | | Liabilities recognized in the balance sheet | | | 6 | | | | 3 | | | | 6 | | | | 14 | | | | 258 | | | | 287 | | | Liabilities in relation to prior years | | | | | | | | | | | | | | | | | | | | | | | 13 | | | Total administratives claims included in balance sheet | | | | | | | | | | | | | | | | | | | | | | | 300 | |
| Occurrence date | | 12/31/2012 | | | 12/31/2013 | | | 12/31/2014 | | | 12/31/2015 | | | 12/31/2016 | | | Total | | | At the end of reporting period | | | 1,230 | | | | 1,168 | | | | 1,142 | | | | 1,243 | | | | 1,310 | | | | | | | After 1 year | | | 1,221 | | | | 1,166 | | | | 1,130 | | | | 1,286 | | | | | | | | | | | After 2 years | | | 1,227 | | | | 1,172 | | | | 1,150 | | | | | | | | | | | | | | | After 3 years | | | 1,227 | | | | 1,177 | | | | | | | | | | | | | | | | | | | After 4 years | | | 1,229 | | | | | | | | | | | | | | | | | | | | | | | Current estimate | | | 1,229 | | | | 1,177 | | | | 1,150 | | | | 1,286 | | | | 1,310 | | | | | | | Accumulated payments through base date | | | 1,226 | | | | 1,173 | | | | 1,142 | | | | 1,262 | | | | 1,098 | | | | 5,901 | | | Liabilities recognized in the balance sheet | | | 3 | | | | 4 | | | | 8 | | | | 24 | | | | 212 | | | | 251 | | | Liabilities in relation to prior years | | | | | | | | | | | | | | | | | | | | | | | 27 | | | Total administratives claims included in balance sheet | | | | | | | | | | | | | | | | | | | | | | | 278 | |
Ib - Judicial claims - gross of reinsurance | Occurrence date | | 12/31/2011 | | | 12/31/2012 | | | 12/31/2013 | | | 12/31/2014 | | | 12/31/2015 | | | Total | | | At the end of reporting period | | | 30 | | | | 50 | | | | 32 | | | | 33 | | | | 28 | | | | | | | After 1 year | | | 55 | | | | 58 | | | | 49 | | | | 42 | | | | - | | | | | | | After 2 years | | | 63 | | | | 67 | | | | 54 | | | | - | | | | - | | | | | | | After 3 years | | | 70 | | | | 70 | | | | - | | | | - | | | | - | | | | | | | After 4 years | | | 71 | | | | - | | | | - | | | | - | | | | - | | | | | | | Current estimate | | | 71 | | | | 70 | | | | 54 | | | | 42 | | | | 28 | | | | | | | Accumulated payments through base date | | | 43 | | | | 50 | | | | 37 | | | | 27 | | | | 15 | | | | 172 | | | Liabilities recognized in the balance sheet | | | 28 | | | | 20 | | | | 17 | | | | 15 | | | | 13 | | | | 93 | | | Liabilities in relation to prior years | | | | | | | | | | | | | | | | | | | | | | | 162 | | | Total judicial claims included in balance sheet | | | | | | | | | | | | | | | | | | | | | | | 255 | |
| Occurrence date | | 12/31/2012 | | | 12/31/2013 | | | 12/31/2014 | | | 12/31/2015 | | | 12/31/2016 | | | Total | | | At the end of reporting period | | | 54 | | | | 32 | | | | 32 | | | | 35 | | | | 34 | | | | | | | After 1 year | | | 64 | | | | 49 | | | | 44 | | | | 48 | | | | | | | | | | | After 2 years | | | 72 | | | | 59 | | | | 56 | | | | | | | | | | | | | | | After 3 years | | | 78 | | | | 70 | | | | | | | | | | | | | | | | | | | After 4 years | | | 85 | | | | | | | | | | | | | | | | | | | | | | | Current estimate | | | 85 | | | | 70 | | | | 56 | | | | 48 | | | | 34 | | | | | | | Accumulated payments through base date | | | 65 | | | | 50 | | | | 40 | | | | 33 | | | | 24 | | | | 212 | | | Liabilities recognized in the balance sheet | | | 20 | | | | 20 | | | | 17 | | | | 15 | | | | 10 | | | | 82 | | | Liabilities in relation to prior years | | | | | | | | | | | | | | | | | | | | | | | 170 | | | Total judicial claims included in balance sheet | | | | | | | | | | | | | | | | | | | | | | | 252 | |
II - Net of reinsurance | Reserve for unsettled claims(1) | | | 801792 | | | (-) DPVAT operations | | | 1719 | | | (-) IBNER | | | 227240 | | | (-) Reinsurance(2) | | | 3631 | | | (-) Retrocession and other estimates | | | 23 | | | Liability claims presented in the development table (IIa + IIb) | | | 519499 | |
(1) Provision refers to provision for unsettled claims stated in Note 30c II.II of 12/31/2015.
| (1) | Provision refers to provision for unsettled claims stated in Note 30c II.II of 12/31/2016. |
(2) Reinsurance operations stated in Note 30l III of 12/31/2015.
| (2) | Reinsurance operations stated in Note 30l III of 12/31/2016. |
IIa - Administratives claims - net of reinsurance | Occurrence date | | 12/31/2011 | | | 12/31/2012 | | | 12/31/2013 | | | 12/31/2014 | | | 12/31/2015 | | | Total | | | At the end of reporting period | | | 913 | | | | 1,018 | | | | 1,190 | | | | 1,279 | | | | 849 | | | | | | | After 1 year | | | 913 | | | | 1,008 | | | | 1,188 | | | | 1,295 | | | | - | | | | | | | After 2 years | | | 915 | | | | 1,013 | | | | 1,189 | | | | - | | | | - | | | | | | | After 3 years | | | 917 | | | | 1,013 | | | | - | | | | - | | | | - | | | | | | | After 4 years | | | 915 | | | | - | | | | - | | | | - | | | | - | | | | | | | Current estimate | | | 915 | | | | 1,013 | | | | 1,189 | | | | 1,295 | | | | 849 | | | | | | | Accumulated payments through base date | | | 912 | | | | 1,010 | | | | 1,184 | | | | 1,281 | | | | 612 | | | | 4,999 | | | Liabilities recognized in the balance sheet | | | 3 | | | | 3 | | | | 6 | | | | 14 | | | | 237 | | | | 263 | | | Liabilities in relation to prior years | | | | | | | | | | | | | | | | | | | | | | | 17 | | | Total administratives claims included in balance sheet | | | | | | | | | | | | | | | | | | | | | | | 280 | |
| Occurrence date | | 12/31/2012 | | | 12/31/2013 | | | 12/31/2014 | | | 12/31/2015 | | | 12/31/2016 | | | Total | | | At the end of reporting period | | | 1,186 | | | | 1,144 | | | | 1,129 | | | | 1,221 | | | | 1,298 | | | | | | | After 1 year | | | 1,175 | | | | 1,142 | | | | 1,116 | | | | 1,253 | | | | | | | | | | | After 2 years | | | 1,181 | | | | 1,148 | | | | 1,131 | | | | | | | | | | | | | | | After 3 years | | | 1,182 | | | | 1,152 | | | | | | | | | | | | | | | | | | | After 4 years | | | 1,183 | | | | | | | | | | | | | | | | | | | | | | | Current estimate | | | 1,183 | | | | 1,152 | | | | 1,131 | | | | 1,253 | | | | 1,298 | | | | | | | Accumulated payments through base date | | | 1,180 | | | | 1,149 | | | | 1,123 | | | | 1,229 | | | | 1,092 | | | | 5,773 | | | Liabilities recognized in the balance sheet | | | 3 | | | | 4 | | | | 8 | | | | 24 | | | | 206 | | | | 245 | | | Liabilities in relation to prior years | | | | | | | | | | | | | | | | | | | | | | | 18 | | | Total administratives claims included in balance sheet | | | | | | | | | | | | | | | | | | | | | | | 263 | |
IIb - Judicial claims - net of reinsurance | Occurrence date | | 12/31/2011 | | | 12/31/2012 | | | 12/31/2013 | | | 12/31/2014 | | | 12/31/2015 | | | Total | | | At the end of reporting period | | | 30 | | | | 50 | | | | 32 | | | | 33 | | | | 28 | | | | | | | After 1 year | | | 55 | | | | 58 | | | | 49 | | | | 41 | | | | - | | | | | | | After 2 years | | | 62 | | | | 66 | | | | 55 | | | | - | | | | - | | | | | | | After 3 years | | | 69 | | | | 70 | | | | - | | | | - | | | | - | | | | | | | After 4 years | | | 71 | | | | - | | | | - | | | | - | | | | - | | | | | | | Current estimate | | | 71 | | | | 70 | | | | 55 | | | | 41 | | | | 28 | | | | | | | Accumulated payments through base date | | | 43 | | | | 50 | | | | 38 | | | | 27 | | | | 15 | | | | 173 | | | Liabilities recognized in the balance sheet | | | 27 | | | | 20 | | | | 17 | | | | 15 | | | | 13 | | | | 92 | | | Liabilities in relation to prior years | | | | | | | | | | | | | | | | | | | | | | | 147 | | | Total judicial claims included in balance sheet | | | | | | | | | | | | | | | | | | | | | | | 239 | |
In the breakdown of the table on change of claims, historic claims were excluded from major risk insurance operations, as informed in Note 3c.
| Occurrence date | | 12/31/2012 | | | 12/31/2013 | | | 12/31/2014 | | | 12/31/2015 | | | 12/31/2016 | | | Total | | | At the end of reporting period | | | 54 | | | | 32 | | | | 32 | | | | 35 | | | | 31 | | | | | | | After 1 year | | | 64 | | | | 49 | | | | 44 | | | | 47 | | | | | | | | | | | After 2 years | | | 72 | | | | 59 | | | | 56 | | | | | | | | | | | | | | | After 3 years | | | 77 | | | | 70 | | | | | | | | | | | | | | | | | | | After 4 years | | | 84 | | | | | | | | | | | | | | | | | | | | | | | Current estimate | | | 84 | | | | 70 | | | | 56 | | | | 47 | | | | 31 | | | | | | | Accumulated payments through base date | | | 64 | | | | 50 | | | | 40 | | | | 33 | | | | 21 | | | | 208 | | | Liabilities recognized in the balance sheet | | | 20 | | | | 20 | | | | 17 | | | | 14 | | | | 10 | | | | 81 | | | Liabilities in relation to prior years | | | | | | | | | | | | | | | | | | | | | | | 155 | | | Total judicial claims included in balance sheet | | | | | | | | | | | | | | | | | | | | | | | 236 | |
The breakdown of the table development of claims between administrative and legal evidences the reallocation of claims up to a certain base date and that become legal ones afterwards, which may give the wrong impression of need for adjusting the provisions in each breakdown. | 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 cash flow of its future obligations. 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 for periods ended 2016, 2015 2014 and 2013.2014. The assumptions used in the test are periodically reviewed and are based on the best practices and the analysis of subsidiaries’ experience, therefore representing the best estimates for cash flow projections. Methodology and Test Grouping 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 run-off triangle of quarterly frequency. Cash flows for the deferral and the assignment phases are tested on a separate basis for social security products. The risk grouping criterion considers groups subject to similar risks that are jointly managed as a single portfolio. Biometric Tables Biometric tables are instruments to measure the biometric risk represented by the probability of death, survival or disability of a participant. For death and survival estimates, biometricthe Brazilian Market Insurer Experience (BR-EMS) tables broken down by genderin effect are used, adjusted according to life expectancy development (improvement),of Scale G, and the Álvaro Vindas table is adopted to estimate benefit requests for disability.disability Risk-free Interest Rate The relevant risk-free forward interest-rate structure is an indicator of the pure time value of money used to price the set of projected cash flows. 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 policy of ITAÚ UNIBANCO HOLDING, considering the addition of spread, which took into account the impact of the market result of held-to-maturity securities of the guarantee assets portfolio. Income conversion rate The income conversion rate represents the expected conversion of balances accumulated by participants in retirement benefits. The decision of conversion into income by participants is influenced by behavioral, economic and tax factors. Other Assumptions Related expenses, cancellations and partial redemptions, future increases and contributions, among others, are assumptions that affect the estimate of projected cash flows since they represent expenses and income arising from insurance agreements assumed. | g) | Insurance risk – effect of 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/or amount of claim indemnities may result in unexpected losses. Life insurance and pension plans are, in general, 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). Products offering financial guarantee predetermined under contract involve financial risk inherent in 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, on benchmarks and the experience of the actuaries. To measure the effects of changes in the key actuarial assumptions, sensitivity tests were conducted in the amounts of current estimates of future liability cash flows. The sensitivity analysis considers a vision of the impacts caused by changes in assumptions, which could affect the income for the period and stockholders’ equity at the balance sheet date. This type of analysis is usually conducted under theceteris paribuscondition, in which the sensitivity of a system is measured when one variable of interest is changed and all the others remain unchanged. The results obtained are shown in the table below: The sensitivity analysis considers a vision of the impacts caused by changes in assumptions, which could affect the income for the period and stockholders’ equity at the balance sheet date. Results were as follows: | | | Impact in Results and Stockholders’ Equity(*) | | | Impact in Results and Stockholders’ Equity(1) | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | | | Supplementary | | | Insurance | | | Supplementary | | | Insurance | | | Supplementary | | | Insurance | | | Supplementary | | | Insurance | | | | | Retirement Plans and | | | Gross of | | | Net of | | | Retirement Plans and | | | Gross of | | | Net of | | | Retirement Plans and | | Gross of | | Net of | | Retirement Plans and | | Gross of | | Net of | | | Sensitivity analysis | | Life with Living Benefits | | | reinsurance | | | reinsurance | | | Life with Living Benefits | | | reinsurance | | | reinsurance | | | Life with Living Benefits | | | reinsurance | | | reinsurance | | | Life with Living Benefits | | | reinsurance | | | reinsurance | | | | | | | | | | | | | | | | | | | 5% increase in mortality rates | | | 8 | | | | (4 | ) | | | (3 | ) | | | 3 | | | | (5 | ) | | | (5 | ) | | | 21 | | | | (3 | ) | | | (3 | ) | | | 8 | | | | (4 | ) | | | (3 | ) | | 5% decrease in mortality rates | | | (8 | ) | | | 3 | | | | 3 | | | | (3 | ) | | | 5 | | | | 5 | | | | (23 | ) | | | 3 | | | | 3 | | | | (8 | ) | | | 3 | | | | 3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.1% increase in risk-free interest rates | | | 38 | | | | 7 | | | | 7 | | | | 30 | | | | 7 | | | | 7 | | | | 49 | | | | 6 | | | | 6 | | | | 38 | | | | 7 | | | | 7 | | | 0.1% decrease in risk-free interest rates | | | (39 | ) | | | (7 | ) | | | (7 | ) | | | (31 | ) | | | (7 | ) | | | (7 | ) | | | (50 | ) | | | (6 | ) | | | (6 | ) | | | (39 | ) | | | (7 | ) | | | (7 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5% increase in conversion in income rates | | | (12 | ) | | | - | | | | - | | | | (11 | ) | | | - | | | | - | | | | (6 | ) | | | - | | | | - | | | | (12 | ) | | | - | | | | - | | | 5% decrease in conversion in income rates | | | 12 | | | | - | | | | - | | | | 11 | | | | - | | | | - | | | | 6 | | | | - | | | | - | | | | 12 | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5% increase in claims | | | - | | | | (62 | ) | | | (60 | ) | | | - | | | | (62 | ) | | | (59 | ) | | | 0 | | | | (50 | ) | | | (48 | ) | | | - | | | | (62 | ) | | | (60 | ) | | 5% decrease in claims | | | - | | | | 63 | | | | 60 | | | | - | | | | 62 | | | | 59 | | | | 0 | | | | 50 | | | | 48 | | | | - | | | | 63 | | | | 60 | |
(*)(1) Amounts net of tax effects.
| 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 define 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 for 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 theThe extended warranty product, this is marketed by the retail company that sells the product to 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.
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 was adopted, in accordance with certain lines shown below for the year 2014 and 2013: | | | 01/01 to 12/31/2015 | | | 01/01 to 12/31/2014 | | | 01/01 to 12/31/2013 | | | 01/01 to 12/31/2016 | | | 01/01 to 12/31/2015 | | | 01/01 to 12/31/2014 | | | | | Insurance | | Retained | | Retention | | Insurance | | Retained | | Retention | | Insurance | | Retained | | Retention | | | Insurance | | Retained | | Retention | | Insurance | | Retained | | Retention | | Insurance | | Retained | | Retention | | | | | premiums | | | premium | | | (%) | | | premiums | | | premium | | | (%) | | | premiums | | | premium | | | (%) | | | premiums | | | premium | | | (%) | | | premiums | | | premium | | | (%) | | | premiums | | | premium | | | (%) | | | Property and casualty | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mandatory personal injury caused by motor vehicle (DPVAT) | | | 37 | | | | 37 | | | | 100.0 | | | | 243 | | | | 243 | | | | 100.0 | | | | 366 | | | | 366 | | | | 100.0 | | | | 37 | | | | 37 | | | | 100.0 | | | | 37 | | | | 37 | | | | 100.0 | | | | 243 | | | | 243 | | | | 100.0 | | | Extended warranty | | | 252 | | | | 252 | | | | 100.0 | | | | 1,202 | | | | 1,202 | | | | 100.0 | | | | 1,293 | | | | 1,293 | | | | 100.0 | | | | 112 | | | | 112 | | | | 100.0 | | | | 252 | | | | 252 | | | | 100.0 | | | | 1,202 | | | | 1,202 | | | | 100.0 | | | Credit life | | | 726 | | | | 725 | | | | 99.9 | | | | 802 | | | | 802 | | | | 100.0 | | | | 726 | | | | 726 | | | | 100.0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Individuals | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Group accident insurance | | | 862 | | | | 860 | | | | 99.7 | | | | 796 | | | | 794 | | | | 99.8 | | | | 698 | | | | 696 | | | | 99.7 | | | | 780 | | | | 776 | | | | 99.5 | | | | 862 | | | | 860 | | | | 99.7 | | | | 796 | | | | 794 | | | | 99.8 | | | Individual accident | | | 214 | | | | 203 | | | | 94.8 | | | | 186 | | | | 184 | | | | 98.9 | | | | 155 | | | | 152 | | | | 98.1 | | | | 224 | | | | 212 | | | | 94.8 | | | | 214 | | | | 203 | | | | 94.8 | | | | 186 | | | | 184 | | | | 98.9 | | | Credit life | | | | 570 | | | | 570 | | | | 100.0 | | | | 726 | | | | 725 | | | | 99.9 | | | | 802 | | | | 802 | | | | 100.0 | | | Group life | | | 1,453 | | | | 1,416 | | | | 97.5 | | | | 1,414 | | | | 1,386 | | | | 98.2 | | | | 1,392 | | | | 1,367 | | | | 98.2 | | | | 1,278 | | | | 1,234 | | | | 96.5 | | | | 1,453 | | | | 1,416 | | | | 97.5 | | | | 1,414 | | | | 1,386 | | | | 98.2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Large risks | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Engineering | | | - | | | | - | | | | - | | | | 46 | | | | 8 | | | | 17.4 | | | | 120 | | | | 16 | | | | 13.3 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 46 | | | | 8 | | | | 17.4 | | | Petroleum risks | | | - | | | | - | | | | - | | | | 284 | | | | 32 | | | | 11.3 | | | | 471 | | | | 63 | | | | 13.4 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 284 | | | | 32 | | | | 11.3 | | | Specified and operational risks | | | - | | | | - | | | | - | | | | 501 | | | | 108 | | | | 21.6 | | | | 606 | | | | 119 | | | | 19.6 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 501 | | | | 108 | | | | 21.6 | |
| i) | Insurance, pension plan and capitalization management structure |
The products that make up the portfolios of ITAÚ UNIBANCO HOLDING’s insurance companies are related to the life insurance and elementary, pension plan and capitalization lines. Therefore, we understand that the major risks inherent in these products are as follows: | · | SubscriptionUnderwriting risk is the possibility of losses arising from operations of insurance, pension plan and capitalization that go against the organization’s expectations, directly or indirectly associated with the technical and actuarial bases adopted to calculate premiums, contributions and provisions. |
| · | Market risk is the possibility of incurring losses due to fluctuations in the market values of assets and liabilities comprising the actuarial technical reserves. |
| · | Credit risk is the possibility of a certain debtor failing to meet any obligations in connection with the settlement of operations involving the trade of financial assets or reinsurance. |
| · | Operational risk is the possibility of incurring losses arising from the failure, deficiency or inadequacy or internal processes, personnel and systems, or external events impacting the achievement of strategic, tactical or operational purposes of the insurance, pension plan and capitalization operations. |
| · | Liquidity risk in insurance operations is the possibility of the institution being unable to honor its obligations on a timely basis before policyholders and beneficiaries due to lack of liquidity of assets that make up their actuarial technical reserves. |
| j) | Duties and responsibilities |
In line with good national and international practices and to ensure that the risks arising from insurance, pension plan and capitalization products are properly identified, measured, assesses, reported and approved in proper bodies, the ITAÚ UNIBANCO HOLDING has a risk management structure which guidelines are established in an internal policy, approved by its Board of Directors, applicable to the companies and subsidiaries exposed to insurance, pension plan and capitalization risks in Brazil and abroad. The management process of insurance, pension plan and capitalization risks is based on responsibilities established and distributed between the control and business areas, assuring independence among them and focusing on the specificities of each risk, in accordance with the guidelines established by ITAÚ UNIBANCO HOLDING. Also, as part of the risk management process, there is a governance structure where decisions may be escalated to panels, ensuring compliance with a number of internal and regulatory requirements, as well as balanced decisions regarding risks. The purpose of ITAÚ UNIBANCO HOLDING is 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. Considering actuarial assumptions, a detailed mapping of the liabilities of long-term products that result in payment flows of projected future benefits is performed annually. Based on this mapping, Asset Liability Management models are used to find the best asset portfolio composition that enables the neutralize the risks entailed in this type of product, considering its long-term economic and financial feasibility. The portfolios of backing assets are periodically rebalanced based on the fluctuations in market prices of assets, the company’s liquidity needs, and changes in characteristics of liabilities. | k) | Market, credit and liquidity risk |
Market risk is analyzed, in relation to insurance operations, based on the following metrics and sensitivity and loss control measures:Value at Risk (VaR), Losses in Stress Scenarios (Stress Test), Sensitivity (DV01- Delta Variation) and Concentration.ForConcentration. For a detailed description of metrics, see Note 36 – Market risk. In the table, the sensitivity analysis (DV01 – Delta Variation) is presented in relation to insurance operations that demonstrate the impact on the cash flows market value when submitted to a 1 annual basis point increase in the current interest rates or index rate and 1 percentage point in the share price and currency. | | | (R$ million) | | | | | | 12/31/2015 | | | 12/31/2014 | | | | | | Account | | | | | | Account | | | | | | 12/31/2016 | | | 12/31/2015 | | | Class | | balance | | | DV01 | | | balance | | | DV01 | | | Account
balance | | | DV01 | | | Account
balance | | | DV01 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Government securities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NTN-C | | | 4,821 | | | | (3.20 | ) | | | 4,299 | | | | (3.39 | ) | | | 5,141 | | | | (3.03 | ) | | | 4,821 | | | | (3.20 | ) | | NTN-B | | | 2,055 | | | | (1.95 | ) | | | 1,950 | | | | (2.17 | ) | | | 2,969 | | | | (3.53 | ) | | | 2,055 | | | | (1.95 | ) | | LTN | | | - | | | | - | | | | 0 | | | | (0.00 | ) | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | DI Future | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Private securities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Indexed to IPCA | | | 209 | | | | (0.09 | ) | | | 337 | | | | (0.22 | ) | | | 307 | | | | (0.14 | ) | | | 209 | | | | (0.09 | ) | | Indexed to PRE | | | 77 | | | | (0.00 | ) | | | 64 | | | | (0.01 | ) | | | 240 | | | | (0.00 | ) | | | 77 | | | | (0.00 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares | | | 1 | | | | 0.01 | | | | 2 | | | | 0.02 | | | | 0 | | | | 0.00 | | | | 1 | | | | 0.01 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Floating assets | | | 4,998 | | | | - | | | | 8,177 | | | | - | | | | 5,852 | | | | - | | | | 4,998 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Under agreements to resell | | | 4,977 | | | | - | | | | 7,746 | | | | - | | | | 6,266 | | | | - | | | | 4,977 | | | | - | |
| Annual Report2015II) | Liquidity Risk |
Liquidity Risk
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, for insurance operation, continuously based on the monitoring of payment flows related to its liabilities vis a vis the inflows generated by its operations and financial assets portfolio. Financial assets are managed in order to optimize the risk-return ratio of investments, considering, on a careful basis, the characteristics of their liabilities. The risk integrated control considers the concentration limits by issuer and credit risk, sensitivities and market risk limits and control over asset liquidity risk. Thus, investments are concentrated in government and private securities with good credit quality in active and liquid markets, keeping a considerable amount invested in short-term assets, available on demand, to cover regular needs and any liquidity contingencies. Additionally, ITAÚ UNIBANCO HOLDING constantly monitors the solvency conditions of its insurance operations. | Liabilities | | Assets | | 12/31/2015 | | 12/31/2014 | | | Assets | | 12/31/2016 | | | 12/31/2015 | | | | | | Liabilities | | Liabilities | | Assets | | Liabilities | | Liabilities | | Assets | | | | | Liabilities | | Liabilities | | Assets | | Liabilities | | Liabilities | | Assets | | | | | | amounts(1) | | DU(2) | | DU(2) | | amounts(1) | | DU(2) | | DU(2) | | | | | amounts(1) | | | DU(2) | | | DU(2) | | | amounts(1) | | | DU(2) | | | DU(2) | | | Insurance operations | | Backing asset | | | | | | | | | | | | | | | Backing asset | | | | | | | | | | | | | | | Unearned premiums | | LFT, repurchase agreements, NTN-B, CDB, LF and debentures | | | 3,025 | | | | 15.8 | | | | 13.8 | | | | 4,014 | | | | 15.8 | | | | 12.1 | | | LFT, repurchase agreements, NTN-B, CDB, LF and debentures | | | 2,202 | | | | 13.5 | | | | | | | | 3,025 | | | | 15.8 | | | | 13.8 | | | IBNR, PDR e PSL | | LFT, repurchase agreements, NTN-B, CDB, LF and debentures | | | 1,243 | | | | 15.7 | | | | 16.9 | | | | 1,435 | | | | 15.8 | | | | 14.9 | | | LFT, repurchase agreements, NTN-B, CDB, LF and debentures | | | 1,242 | | | | 13.8 | | | | | | | | 1,243 | | | | 15.7 | | | | 16.9 | | | Other provisions | | LFT, repurchase agreements, NTN-B, CDB, LF and debentures | | | 434 | | | | 104.6 | | | | 22.7 | | | | 388 | | | | 108.7 | | | | 21.8 | | | LFT, repurchase agreements, NTN-B, CDB, LF and debentures | | | 446 | | | | 119.0 | | | | | | | | 434 | | | | 104.6 | | | | 22.7 | | | Subtotal | | Subtotal | | | 4,702 | | | | | | | | | | | | 5,837 | | | | | | | | | | | Subtotal | | | 3,890 | | | | | | | | | | | | 4,702 | | | | | | | | | | | Pension plan, VGBL and individual life operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Related expenses | | LFT, repurchase agreements, NTN-B, CDB, LF and debentures | | | 50 | | | | 102.7 | | | | 85.7 | | | | 70 | | | | 92.0 | | | | 94.1 | | | LFT, repurchase agreements, NTN-B, CDB, LF and debentures | | | 71 | | | | 107.4 | | | | 80.9 | | | | 50 | | | | 102.7 | | | | 85.7 | | | Unearned premiums | | LFT, repurchase agreements, NTN-B, CDB and debentures | | | 17 | | | | - | | | | 12.2 | | | | 14 | | | | - | | | | 12.2 | | | LFT, repurchase agreements, NTN-B, CDB and debentures | | | 19 | | | | - | | | | 14.1 | | | | 17 | | | | - | | | | 12.2 | | | Unsettled claims | | LFT, repurchase agreements, NTN-B, CDB and debentures | | | 20 | | | | - | | | | 12.3 | | | | 17 | | | | - | | | | 12.2 | | | LFT, repurchase agreements, NTN-B, CDB and debentures | | | 25 | | | | - | | | | 13.9 | | | | 20 | | | | - | | | | 12.3 | | | IBNR | | LFT, repurchase agreements, NTN-B, CDB and debentures | | | 28 | | | | 9.8 | | | | 10.5 | | | | 20 | | | | 12.1 | | | | 12.2 | | | LFT, repurchase agreements, NTN-B, CDB and debentures | | | 27 | | | | 11.4 | | | | 14.1 | | | | 28 | | | | 9.8 | | | | 10.5 | | | Redemptions and Other Unsettled Amounts | | LFT, repurchase agreements, NTN-B, CDB and debentures | | | 190 | | | | - | | | | 12.3 | | | | 188 | | | | - | | | | 12.2 | | | LFT, repurchase agreements, NTN-B, CDB and debentures | | | 221 | | | | - | | | | 14.0 | | | | 190 | | | | - | | | | 12.3 | | | Mathematical reserve for benefits granted | | LFT, repurchase agreements, LTN, NTN-B, NTN-C, NTN-F, CDB, LF and debentures | | | 1,540 | | | | 102.7 | | | | 85.8 | | | | 1,254 | | | | 92.0 | | | | 94.4 | | | LFT, repurchase agreements, LTN, NTN-B, NTN-C, NTN-F, CDB, LF and debentures | | | 1,737 | | | | 107.4 | | | | 81.1 | | | | 1,540 | | | | 102.7 | | | | 85.8 | | | Mathematical reserve for benefits to be granted – PGBL/ VGBL | | LFT, repurchase agreements, LTN, NTN-B, NTN-C, NTN-F, CDB, LF and debentures(3) | | | 117,073 | | | | 160.6 | | | | 23.9 | | | | 97,141 | | | | 169.6 | | | | 14.8 | | | LFT, repurchase agreements, LTN, NTN-B, NTN-C, NTN-F, CDB, LF and debentures(3) | | | 142,039 | | | | 169.9 | | | | 39.4 | | | | 117,073 | | | | 160.6 | | | | 23.9 | | | Mathematical reserve for benefits to be granted – traditional | | LFT, repurchase agreements, NTN-B, NTN-C, Debentures | | | 4,321 | | | | 208.1 | | | | 79.4 | | | | 3,926 | | | | 187.7 | | | | 86.6 | | | LFT, repurchase agreements, NTN-B, NTN-C, Debentures | | | 4,584 | | | | 210.9 | | | | 92.0 | | | | 4,321 | | | | 208.1 | | | | 79.4 | | | Other provisions | | LFT, repurchase agreements, NTN-B, NTN-C, CDB, LF and debentures | | | 816 | | | | 208.1 | | | | 79.4 | | | | 791 | | | | 187.7 | | | | 86.6 | | | LFT, repurchase agreements, NTN-B, NTN-C, CDB, LF and debentures | | | 880 | | | | 210.9 | | | | 92.0 | | | | 816 | | | | 208.1 | | | | 79.4 | | | Financial surplus | | LFT, repurchase agreements, NTN-B, NTN-C, CDB, LF and debentures | | | 548 | | | | 207.8 | | | | 79.2 | | | | 520 | | | | 187.4 | | | | 86.4 | | | LFT, repurchase agreements, NTN-B, NTN-C, CDB, LF and debentures | | | 583 | | | | 210.6 | | | | 91.8 | | | | 548 | | | | 207.8 | | | | 79.2 | | | Subtotal | | Subtotal | | | 124,603 | | | | | | | | | | | | 103,941 | | | | | | | | | | | Subtotal | | | 150,186 | | | | | | | | | | | | 124,603 | | | | | | | | | | | Total technical reserves | | Total backing assets | | | 129,305 | | | | | | | | | | | | 109,778 | | | | | | | | | | | Total backing assets | | | 154,076 | | | | | | | | | | | | 129,305 | | | | | | | | | |
| (1) | (1) Gross amounts of Credit Rights, Escrow Deposits and Reinsurance. |
| (2) | DU = Duration in months |
| (3) | Excluding PGBL / VGBL reserves allocated in variable income. |
(2) DU = Duration in months
(3) Excluding PGBL / VGBL reserves allocated in variable income.
Annual Report2015 | III) | Credit Risk |
Credit Risk
I - Reinsurers – Breakdown
TheWe present below the division of risks assignedgranted by the ITAÚ UNIBANCO HOLDING’s insurance companies to reinsurance companies and their rating according the Standard & Poor’s is presented below:companies:
| - | Insurance Operations:reinsurance premiums operations are basically represented by: IRB Brasil RessegurosBrasilResseguros with 86.70% (38.57%56.14% (66.67% at 12/31/2014)2015) and Munich Re do Brasil with 13.23% (5.34%43.33% (32.94% at 12/31/2014). Only at 12/31/2014, Lloyd's (A+) with 17.48%, Mapfre Re, Cia de Reaseguros,S.A. (A) with 4.21% and American Home Assurance Company (A) with 4.01%2015). |
| - | Social Security Operations:social security operations related to reinsurance premiums are entirely representedentirelyrepresented by General Reinsurance AG with 50% (50% at 12/31/2014) and Munich Re do Brasil with 50%70% (50% at 12/31/2014). For insurance operations, transfers of reinsurance premiums are deployed between Munich Re do Brasil2015) and General Reinsurance AG with 60.26% (55.46%30% (50% at 12/31/2014) and IRB Brasil Resseguros with 39.74% (44.54% at 12/31/2014)2015). |
II -IV) Risk level of financial assets
The table below shows insurance financial assets, individually evaluated, classified by rating: | | | 12/31/2015 | | | | | | Interbank deposits and | | | | Financial assets
designated at fair | | | | Available-for- | | Held-to- | | | | | | | | | securities purchased under | | Held-for-trading | | value through profit | | Derivatives | | sale financial | | maturity | | | | | 12/31/2016 | | | Internal rating(*) | | agreements to resell | | | financial assets | | | or loss | | | assets | | | assets | | | financial assets | | | Total | | | Interbank deposits and
securities purchased under
agreements to resell | | Held-for-trading
financial assets | | Derivatives
assets | | Available-for-
sale financial
assets | | Held-to-
maturity
financial assets | | Total | | | | | | | | | | | | | | | | | | | Lower risk | | | 5,667 | | | | 94,709 | | | | - | | | | 126 | | | | 2,732 | | | | 4,320 | | | | 107,554 | | | | 7,859 | | | | 125,944 | | | | 284 | | | | 3,558 | | | | 4,629 | | | | 142,274 | | | Satisfactory | | | - | | | | 16 | | | | - | | | | - | | | | - | | | | - | | | | 16 | | | | - | | | | 13 | | | | - | | | | - | | | | - | | | | 13 | | | Higher Risk | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Total | | | 5,667 | | | | 94,725 | | | | - | | | | 126 | | | | 2,732 | | | | 4,320 | | | | 107,570 | | | | 7,859 | | | | 125,957 | | | | 284 | | | | 3,558 | | | | 4,629 | | | | 142,287 | | | % | | | 5.3 | | | | 88.1 | | | | - | | | | 0.1 | | | | 2.5 | | | | 4.0 | | | | 100.0 | | | | 5.5 | | | | 88.5 | | | | 0.2 | | | | 2.5 | | | | 3.3 | | | | 100.0 | |
(*) Internal risk level ratings, with due associated probability of default, are detailed in Note 36. | | | 12/31/2014 | | | | | | Interbank deposits and | | | | | | Financial assets
designated at fair | | | | Available-for- | | Held-to- | | | | | | | | securities purchased under | | Held-for-trading | | value through profit | | Derivatives | | sale financial | | maturity | | | | | | 12/31/2015 | | | Internal rating(*) | | agreements to resell | | | financial assets | | | or loss | | | assets | | | assets | | | financial assets | | | Total | | | Interbank deposits and
securities purchased under
agreements to resell | | Held-for-trading
financial assets | | Derivatives
assets | | Available-for-
sale financial
assets | | Held-to-
maturity
financial assets | | Total | | | Lower risk | | 9,721 | | 66,781 | | - | | 105 | | 2,389 | | 3,958 | | 82,954 | | | | 5,667 | | | | 94,709 | | | | 126 | | | | 2,732 | | | | 4,320 | | | | 107,554 | | | Satisfactory | | | - | | | | 3 | | | | - | | | | - | | | | - | | | | - | | | | 3 | | | | - | | | | 16 | | | | - | | | | - | | | | - | | | | 16 | | | Higher Risk | | | - | | | | 3 | | | | - | | | | - | | | | - | | | | - | | | | 3 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Total | | | 9,721 | | | | 66,787 | | | | - | | | | 105 | | | | 2,389 | | | | 3,958 | | | | 82,960 | | | | 5,667 | | | | 94,725 | | | | 126 | | | | 2,732 | | | | 4,320 | | | | 107,570 | | | % | | | 11.7 | | | | 80.5 | | | | - | | | | 0.1 | | | | 2.9 | | | | 4.8 | | | | 100.0 | | | | 5.3 | | | | 88.1 | | | | 0.1 | | | | 2.5 | | | | 4.0 | | | | 100.0 | |
(*) Internal risk level ratings, with due associated probability of default, are detailed in Note 36.
Expenses and revenues from reinsurance premiums ceded are recognized in the period when they occur, according to the accrual basis, with no offset of assets and liabilities related to reinsurance except in 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 exposed. Reinsurance assets Reinsurance assets are valued according to consistent basis of risk assignment contracts, and in the event of losses effectively paid, as from December 2015; they are revalued after 180 days have elapsed in relation to the possibility of non-recovery. For previous periods, revaluation term is 365 days. This amendment was for compliance with the SUSEP Circular in force. In case of doubt, these assets are reduced based on the provision recognized for credit risk associated to reinsurance. Reinsurance transferred ITAÚ UNIBANCO HOLDING transfers, in the normal course of its businesses, reinsurance premiums to cover losses on underwriting risks to its policyholderspolicy holders and is in compliance with the operational limits established by the regulating 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 Other assets - prepaid expenses and amortized to Other operating expenses over the effectiveness period of the contract on a daily accrual basis. I- Changes in balances of transactions with reinsurance companies | | | Credits | | | Debits | | | Credits | | | Debits | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2016 | | | 12/31/2015 | | | Opening balance | | | 262 | | | | 297 | | | | 610 | | | | 631 | | | | 18 | | | | 262 | | | | 103 | | | | 610 | | | Issued contracts | | | - | | | | - | | | | 75 | | | | 983 | | | | - | | | | - | | | | 79 | | | | 75 | | | Recoverable claims | | | - | | | | (16 | ) | | | - | | | | 1 | | | | 32 | | | | - | | | | - | | | | - | | | Prepayments / payments to reinsurer | | | 12 | | | | - | | | | (36 | ) | | | (1,006 | ) | | | (3 | ) | | | 12 | | | | (108 | ) | | | (36 | ) | | Other increase / reversal | | | (256 | ) | | | (19 | ) | | | (546 | ) | | | 1 | | | | (1 | ) | | | (256 | ) | | | - | | | | (546 | ) | | Closing balance | | | 18 | | | | 262 | | | | 103 | | | | 610 | | | | 46 | | | | 18 | | | | 74 | | | | 103 | |
II – Balances of technical reserves with reinsurance assets | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | Reinsurance claims | | | 52 | | | | 2,456 | | | | 52 | | | | 52 | | | Reinsurance premiums | | | 24 | | | | 949 | | | | 15 | | | | 24 | | | Reinsurance commission | | | - | | | | (37 | ) | | | Closing balance | | | 76 | | | | 3,368 | | | | 67 | | | | 76 | |
III – Changes in balances of technical reserves for reinsurance claims | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | Opening balance | | | 2,456 | | | | 2,729 | | | | 52 | | | | 2,456 | | | Reported claims | | | 32 | | | | 340 | | | | 70 | | | | 32 | | | Paid claims | | | (25 | ) | | | (737 | ) | | | (99 | ) | | | (25 | ) | | Other increase / reversal | | | (2,412 | ) | | | 30 | | | | 2 | | | | (2,412 | ) | | Monetary adjustment and interest of claims | | | 1 | | | | 94 | | | | 27 | | | | 1 | | | Closing balance(*) | | | 52 | | | | 2,456 | | | | 52 | | | | 52 | |
(*) Includes Reserve for unsettled claims, IBNER (Reserve for claims not sufficiently warned), IBNR (Reserve for claims incurred but not reported), not covered by the table of loss development net of reinsurance Note 30 eII. IV – Changes in balances of technical reserves for reinsurance premiums | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | Opening balance | | | 949 | | | | 979 | | | | 24 | | | | 949 | | | Receipts | | | 61 | | | | 889 | | | | 65 | | | | 61 | | | Payments | | | (45 | ) | | | (919 | ) | | | (74 | ) | | | (45 | ) | | Other increase / reversal | | | (941 | ) | | | - | | | | - | | | | (941 | ) | | Closing balance | | | 24 | | | | 949 | | | | 15 | | | | 24 | |
V – Changes in balances of technical reserves for reinsurance commission | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | Opening balance | | | (37 | ) | | | (47 | ) | | | - | | | | (37 | ) | | Receipts | | | 4 | | | | 44 | | | | 6 | | | | 4 | | | Payments | | | (4 | ) | | | (34 | ) | | | (6 | ) | | | (4 | ) | | Other increase / reversal | | | 37 | | | | - | | | | | | | | 37 | | | Closing balance | | | - | | | | (37 | ) | | | - | | | | - | |
Insurance and private pension operations are regulated by the National Council of Private Insurance (CNSP) and the Superintendence 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 CNSP is the regulatory authority of insurance activities in Brazil, created by Decree-Law N° 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 N° 6,435, of July 15, 1977, its attributions included private pension of public companies. The Superintendence of Private Insurance (SUSEP) is the authority responsible for controlling and overseeing the insurance, and reinsurance markets. An agency of the Ministry of Finance, it was created by the Decree-Law N° 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 Re, the companies authorized to have plans and the open-ended private pension companies. Note 31 – 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:
| | | 12/31/2016 | | | 12/31/2015 | | | | | Carrying value | | | Estimated
fair value | | | Carrying value | | | Estimated
fair value | | | Financial assets | | | | | | | | | | | | | | | | | | Cash and deposits on demand and Central Bank compulsory deposits | | | 104,242 | | | | 104,242 | | | | 85,100 | | | | 85,100 | | | Interbank deposits | | | 22,692 | | | | 22,731 | | | | 30,525 | | | | 30,525 | | | Securities purchased under agreements to resell | | | 265,051 | | | | 265,051 | | | | 254,404 | | | | 254,404 | | | Financial assets held for trading(*) | | | 204,648 | | | | 204,648 | | | | 164,311 | | | | 164,311 | | | Financial assets designated at fair value through profit or loss(*) | | | 1,191 | | | | 1,191 | | | | 642 | | | | 642 | | | Derivatives(*) | | | 24,231 | | | | 24,231 | | | | 26,755 | | | | 26,755 | | | Available-for-sale financial assets(*) | | | 88,277 | | | | 88,277 | | | | 86,045 | �� | | | 86,045 | | | Held-to-maturity financial assets | | | 40,495 | | | | 40,749 | | | | 42,185 | | | | 38,892 | | | Loan operations and lease operations | | | 463,394 | | | | 472,704 | | | | 447,404 | | | | 446,787 | | | Other financial assets | | | 53,917 | | | | 53,917 | | | | 53,506 | | | | 53,506 | | | Financial liabilities | | | | | | | | | | | | | | | | | | Deposits | | | 329,414 | | | | 329,371 | | | | 292,610 | | | | 292,775 | | | Securities sold under repurchase agreements | | | 349,164 | | | | 349,164 | | | | 336,643 | | | | 336,643 | | | Financial liabilities held for trading(*) | | | 519 | | | | 519 | | | | 412 | | | | 412 | | | Derivatives(*) | | | 24,698 | | | | 24,698 | | | | 31,071 | | | | 31,071 | | | Interbank market debt | | | 135,483 | | | | 134,730 | | | | 156,886 | | | | 156,174 | | | Institutional market debt | | | 96,239 | | | | 95,012 | | | | 93,918 | | | | 95,461 | | | Liabilities for capitalization plans | | | 3,147 | | | | 3,147 | | | | 3,044 | | | | 3,044 | | | Other financial liabilities | | | 71,832 | | | | 71,832 | | | | 68,715 | | | | 68,715 | |
| | | 12/31/2015 | | | 12/31/2014 | | | | | | | | Estimated | | | | | | Estimated | | | | | Carrying value | | | fair value | | | Carrying value | | | fair value | | | Financial assets | | | | | | | | | | | | | | | | | | Cash and deposits on demand and Central Bank compulsory deposits | | | 85,100 | | | | 85,100 | | | | 80,633 | | | | 80,633 | | | Interbank deposits | | | 30,525 | | | | 30,525 | | | | 23,081 | | | | 23,081 | | | Securities purchased under agreements to resell | | | 254,404 | | | | 254,404 | | | | 208,918 | | | | 208,918 | | | Financial assets held for trading(*) | | | 164,311 | | | | 164,311 | | | | 132,944 | | | | 132,944 | | | Financial assets designated at fair value through profit or loss(*) | | | 642 | | | | 642 | | | | 733 | | | | 733 | | | Derivatives(*) | | | 26,755 | | | | 26,755 | | | | 14,156 | | | | 14,156 | | | Available-for-sale financial assets(*) | | | 86,045 | | | | 86,045 | | | | 78,360 | | | | 78,360 | | | Held-to-maturity financial assets | | | 42,185 | | | | 38,892 | | | | 34,434 | | | | 34,653 | | | Loan operations and lease operations | | | 447,404 | | | | 446,787 | | | | 430,039 | | | | 432,544 | | | Other financial assets | | | 53,506 | | | | 53,506 | | | | 53,649 | | | | 53,649 | | | Financial liabilities | | | | | | | | | | | | | | | | | | Deposits | | | 292,610 | | | | 292,775 | | | | 294,773 | | | | 294,924 | | | Securities sold under repurchase agreements | | | 336,643 | | | | 336,643 | | | | 288,683 | | | | 288,683 | | | Financial liabilities held for trading(*) | | | 412 | | | | 412 | | | | 520 | | | | 520 | | | Derivatives(*) | | | 31,071 | | | | 31,071 | | | | 17,350 | | | | 17,350 | | | Interbank market debt | | | 156,886 | | | | 156,174 | | | | 122,586 | | | | 122,016 | | | Institutional market debt | | | 93,918 | | | | 95,461 | | | | 73,242 | | | | 72,391 | | | Liabilities for capitalization plans | | | 3,044 | | | | 3,044 | | | | 3,010 | | | | 3,010 | | | Other financial liabilities | | | 68,715 | | | | 68,715 | | | | 71,492 | | | | 71,492 | |
(*) These assets and liabilities are recorded in the balance sheet at their fair value.
Financial instruments not included in the Balance Sheet (Note 36) are represented by Standby letters of credit and guarantees provided, which amount to R$ 81.18077,453 (R$ 73,75981,180 at 12/31/2014)2015) with an estimated fair value of R$ 1.1431,066 (R$ 1,1401,143 at 12/31/2014)2015). The methods and assumptions adopted to estimate the fair value are defined below: | a) | Cash and deposits on demand, Central Bank compulsory deposits, Securities purchased under agreements to resell, Securities sold under repurchase agreements and liabilities for capitalization plans –The carrying amounts for these instruments approximate their fair values. |
| b) | Interbank deposits, deposits, Interbank market debt and Institutional market debt–ITAÚ UNIBANCO HOLDINGstimatesUNIBANCOHOLDING estimates the fair values by discounting the estimated cash flows and adopting the market interest rates. |
| 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, Held-to-maturity financial assets and Financial liabilities held for trading –Under normal conditions, market prices are thearethe best indicators of the fair values of financial instruments. However, not all instruments have liquidity or quoted market prices and, in such cases, the adoption of present value estimates and other pricing techniques are required. In the absence of quoted prices from National Association of Financial Market Institutions (ANBIMA), the fair values of bonds are calculated based on the interest rates provided by others on the market (brokers). The fair values of corporate debt securities are computed by adopting criteria similar to those applied to interbank deposits, as described above. The fair values of shares are computed based on their prices quoted in the market. The fair values of derivative financial instruments were determined as follows: |
| · | Swaps:The cash flows are discounted to present value based on yield curves that reflect the appropriatetheappropriate risk factors. These yield curves may be drawn mainly based on the exchange price of derivatives at BM&FBOVESPA, of Brazilian government securities in the secondary market or derivatives and securities traded abroad. These yield curves may be used to obtain the fair value of currency swaps, interest rate swaps and swaps based on other risk factors (commodities, stock exchange indices, etc.). |
| · | Futures and forwards:Quotations on exchanges or criteria identical to those applied to swaps. |
| · | Options:The fair values are determined based on mathematical models (such as Black&Scholes) that arethatare fed with implicit volatility data, interest rate yield curve and fair value of the underlying asset. Current market prices of options are used to compute the implicit volatilities. All these data are obtained from different sources (usually Bloomberg). |
| · | Credit:Inversely related to the probability of default (PD) in a financial instrument subject to credit risk. Therisk.The process of adjusting the market price of these spreads is based on the differences between the yield curves with no risk and the yield curves adjusted for credit risk. |
| d) | Loan operations and lease operations –Fair value is estimated based on groups of loans with similar financialsimilarfinancial and risk characteristics, using valuation models. The fair value of fixed-rate loans was determined by discounting estimated cash flows, applying current interest rates for similar loans. For the majority of loans at floating rate, the carrying amount was considered close to their fair value. The fair value of loan and lease operations not overdue was calculated by discounting the expected payments of principal and interest through maturity, at the aforementioned rates. The fair value of overdue loan and lease transactions was based on the discount of estimated cash flows, using a rate proportional to the risk associated with the estimated cash flows, or on the underlying collateral. The assumptions related to cash flows and discount rates are determined using information available in the market and the borrower’s specific information of the debtor. |
| e) | Deposits–The fair value of fixed-rate loans with maturity dates was determined by discounting estimated cashestimatedcash flows, applying current interest rates for similar funding operations. Cash deposits are not considered in the fair value estimate. The assumptions related to cash flows and discount rates are determined based on information available in the market and information specific for each operation. |
| f) | Other financial assets / liabilities–primarily composed of receivables from credit card issuers, deposits in guaranteeinguarantee for contingent liabilities and trading and intermediation of securities. The carrying amounts for these assets/liabilities substantially approximate their fair values, since they principally represent amounts to be received in the short term from credit card holders and to be paid to credit card acquirers, judicially required deposits (indexed to market rates) made by ITAÚ UNIBANCO HOLDING as guarantees for lawsuits or very short-term receivables (generally with a maturity of approximately 5 (five) business days). All of these items represent assets/assets / liabilities without significant associated market, credit and liquidity risks. |
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.activemarkets. 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 directlyeitherdirectly 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 prices 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 fairmeasurefair 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 for trading, Available for sale, and Designated at fair value through profit or loss: Level 1:Highly-liquid securities with prices available in an active market are classified in Level 1 of the fair valuefairvalue hierarchy. This classification level includes most of the Brazilian Government Securities, securities of foreign governments, shares and debentures traded on stock exchanges and other securities traded in an active market. Level 2:When the pricing information is not available for a specific security, the assessment is usually based on pricesonprices 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, 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. Level 3:When no pricing information in an active market, ITAÚ UNIBANCO HOLDING uses internally developedinternallydeveloped models, from curves generated according to the proprietary model. The Level 3 classification includes some Brazilian government and private securities falling due after 2025 and securities that are not usually traded in an active market. Derivatives: Level 1:Derivatives traded on stock exchanges are classified in Level 1 of the hierarchy. Level 2:For derivatives not traded on stock exchanges, ITAÚ UNIBANCO HOLDING estimates the fair value by adoptingbyadopting a variety of techniques, such as Black&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 rate 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:The derivatives with fair values based on non-observable information in an active market were classifiedwereclassified 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 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 to estimate fair value may result in different fair value estimates at the balance sheet date.
Distribution by level The following table presents the breakdown of risk levels at 12/31/20152016 and 12/31/20142015 for financial assets held for trading and available-for-sale financial assets. | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | | | 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 | | | 123,948 | | | | 40,303 | | | | 60 | | | | 164,311 | | | | 91,024 | | | | 41,130 | | | | 790 | | | | 132,944 | | | | 165,883 | | | | 37,760 | | | | 1,005 | | | | 204,648 | | | | 123,948 | | | | 40,303 | | | | 60 | | | | 164,311 | | | Investment funds | | | 19 | | | | 1,032 | | | | - | | | | 1,051 | | | | 6 | | | | 864 | | | | - | | | | 870 | | | | 14 | | | | 1,159 | | | | - | | | | 1,173 | | | | 19 | | | | 1,032 | | | | - | | | | 1,051 | | | Brazilian government securities | | | 114,007 | | | | 3,043 | | | | 3 | | | | 117,053 | | | | 84,265 | | | | 2,128 | | | | - | | | | 86,393 | | | | 157,369 | | | | 2,654 | | | | 1 | | | | 160,024 | | | | 114,007 | | | | 3,043 | | | | 3 | | | | 117,053 | | | Brazilian external debt bonds | | | 4,431 | | | | - | | | | - | | | | 4,431 | | | | 1,914 | | | | - | | | | - | | | | 1,914 | | | | 5,325 | | | | - | | | | - | | | | 5,325 | | | | 4,431 | | | | - | | | | - | | | | 4,431 | | | Government securities – other countries | | | 933 | | | | 216 | | | | - | | | | 1,149 | | | | 1,151 | | | | 389 | | | | - | | | | 1,540 | | | | 819 | | | | 2,916 | | | | - | | | | 3,735 | | | | 933 | | | | 216 | | | | - | | | | 1,149 | | | Argentina | | | 696 | | | | - | | | | - | | | | 696 | | | | 628 | | | | - | | | | - | | | | 628 | | | | 651 | | | | - | | | | - | | | | 651 | | | | 696 | | | | - | | | | - | | | | 696 | | | Chile | | | - | | | | 36 | | | | - | | | | 36 | | | | - | | | | 132 | | | | - | | | | 132 | | | | - | | | | 127 | | | | - | | | | 127 | | | | - | | | | 36 | | | | - | | | | 36 | | | Colombia | | | - | | | | 72 | | | | - | | | | 72 | | | | - | | | | 88 | | | | - | | | | 88 | | | | - | | | | 2,669 | | | | - | | | | 2,669 | | | | - | | | | 72 | | | | - | | | | 72 | | | United States | | | 132 | | | | - | | | | - | | | | 132 | | | | 448 | | | | - | | | | - | | | | 448 | | | | 78 | | | | - | | | | - | | | | 78 | | | | 132 | | | | - | | | | - | | | | 132 | | | Mexico | | | 3 | | | | - | | | | - | | | | 3 | | | | 3 | | | | - | | | | - | | | | 3 | | | | 6 | | | | - | | | | - | | | | 6 | | | | 3 | | | | - | | | | - | | | | 3 | | | Paraguay | | | - | | | | 68 | | | | - | | | | 68 | | | | - | | | | 128 | | | | - | | | | 128 | | | | - | | | | 88 | | | | - | | | | 88 | | | | - | | | | 68 | | | | - | | | | 68 | | | Uruguay | | | - | | | | 40 | | | | - | | | | 40 | | | | - | | | | 41 | | | | - | | | | 41 | | | | - | | | | 32 | | | | - | | | | 32 | | | | - | | | | 40 | | | | - | | | | 40 | | | Other | | | 102 | | | | - | | | | - | | | | 102 | | | | 72 | | | | - | | | | - | | | | 72 | | | | 84 | | | | - | | | | - | | | | 84 | | | | 102 | | | | - | | | | - | | | | 102 | | | Corporate securities | | | 4,558 | | | | 36,012 | | | | 57 | | | | 40,627 | | | | 3,688 | | | | 37,749 | | | | 790 | | | | 42,227 | | | | 2,356 | | | | 31,031 | | | | 1,004 | | | | 34,391 | | | | 4,558 | | | | 36,012 | | | | 57 | | | | 40,627 | | | Shares | | | 2,161 | | | | - | | | | - | | | | 2,161 | | | | 2,351 | | | | - | | | | - | | | | 2,351 | | | | 1,533 | | | | - | | | | 958 | | | | 2,491 | | | | 2,161 | | | | - | | | | - | | | | 2,161 | | | Bank deposit certificates | | | 19 | | | | 2,564 | | | | - | | | | 2,583 | | | | 12 | | | | 3,269 | | | | - | | | | 3,281 | | | | 12 | | | | 1,812 | | | | - | | | | 1,824 | | | | 19 | | | | 2,564 | | | | - | | | | 2,583 | | | Securitized real estate loans | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1 | | | | 1 | | | | Debentures | | | 2,333 | | | | 2,141 | | | | 48 | | | | 4,522 | | | | 1,313 | | | | 2,720 | | | | 210 | | | | 4,243 | | | | 216 | | | | 2,949 | | | | 25 | | | | 3,190 | | | | 2,333 | | | | 2,141 | | | | 48 | | | | 4,522 | | | Eurobonds and others | | | 45 | | | | 940 | | | | 6 | | | | 991 | | | | 10 | | | | 1,049 | | | | 2 | | | | 1,061 | | | | 595 | | | | 49 | | | | 18 | | | | 662 | | | | 45 | | | | 940 | | | | 6 | | | | 991 | | | Financial credit bills | | | - | | | | 30,367 | | | | - | | | | 30,367 | | | | - | | | | 30,711 | | | | - | | | | 30,711 | | | | - | | | | 25,893 | | | | - | | | | 25,893 | | | | - | | | | 30,367 | | | | - | | | | 30,367 | | | Promissory notes | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 577 | | | | 577 | | | | Other | | | - | | | | - | | | | 3 | | | | 3 | | | | 2 | | | | - | | | | - | | | | 2 | | | | - | | | | 328 | | | | 3 | | | | 331 | | | | - | | | | - | | | | 3 | | | | 3 | | | Available-for-sale financial assets | | | 32,439 | | | | 49,347 | | | | 4,259 | | | | 86,045 | | | | 30,787 | | | | 42,169 | | | | 5,404 | | | | 78,360 | | | | 34,840 | | | | 43,903 | | | | 9,534 | | | | 88,277 | | | | 32,439 | | | | 49,347 | | | | 4,259 | | | | 86,045 | | | Investment funds | | | 6 | | | | 98 | | | | 114 | | | | 218 | | | | 3 | | | | 138 | | | | - | | | | 141 | | | | - | | | | 42 | | | | - | | | | 42 | | | | 6 | | | | 98 | | | | 114 | | | | 218 | | | Brazilian government securities | | | 10,793 | | | | 791 | | | | 212 | | | | 11,796 | | | | 13,570 | | | | 572 | | | | 249 | | | | 14,391 | | | | 17,039 | | | | 671 | | | | 228 | | | | 17,938 | | | | 10,793 | | | | 791 | | | | 212 | | | | 11,796 | | | Brazilian external debt bonds | | | 17,312 | | | | - | | | | - | | | | 17,312 | | | | 11,234 | | | | - | | | | - | | | | 11,234 | | | | 14,065 | | | | - | | | | - | | | | 14,065 | | | | 17,312 | | | | - | | | | - | | | | 17,312 | | | Government securities – other countries | | | 2,152 | | | | 7,702 | | | | 29 | | | | 9,883 | | | | 1,153 | | | | 7,453 | | | | 13 | | | | 8,619 | | | | 1,536 | | | | 12,850 | | | | 86 | | | | 14,472 | | | | 2,152 | | | | 7,702 | | | | 29 | | | | 9,883 | | | Belgium | | | - | | | | - | | | | - | | | | - | | | | 57 | | | | - | | | | - | | | | 57 | | | | Chile | | | - | | | | 1,378 | | | | 29 | | | | 1,407 | | | | - | | | | 1,106 | | | | 13 | | | | 1,119 | | | | - | | | | 5,758 | | | | 86 | | | | 5,844 | | | | - | | | | 1,378 | | | | 29 | | | | 1,407 | | | Colombia | | | | - | | | | 1,155 | | | | - | | | | 1,155 | | | | - | | | | - | | | | - | | | | - | | | Korea | | | - | | | | 1,626 | | | | - | | | | 1,626 | | | | - | | | | 1,782 | | | | - | | | | 1,782 | | | | - | | | | 2,673 | | | | - | | | | 2,673 | | | | - | | | | 1,626 | | | | - | | | | 1,626 | | | Denmark | | | - | | | | 2,548 | | | | - | | | | 2,548 | | | | - | | | | 2,699 | | | | - | | | | 2,699 | | | | - | | | | 819 | | | | - | | | | 819 | | | | - | | | | 2,548 | | | | - | | | | 2,548 | | | Spain | | | - | | | | 1,060 | | | | - | | | | 1,060 | | | | - | | | | 783 | | | | - | | | | 783 | | | | - | | | | 923 | | | | - | | | | 923 | | | | - | | | | 1,060 | | | | - | | | | 1,060 | | | United States | | | 2,022 | | | | - | | | | - | | | | 2,022 | | | | 726 | | | | - | | | | - | | | | 726 | | | | 1,427 | | | | - | | | | - | | | | 1,427 | | | | 2,022 | | | | - | | | | - | | | | 2,022 | | | France | | | - | | | | - | | | | - | | | | - | | | | 133 | | | | - | | | | - | | | | 133 | | | | Netherlands | | | 122 | | | | - | | | | - | | | | 122 | | | | 151 | | | | - | | | | - | | | | 151 | | | | 101 | | | | - | | | | - | | | | 101 | | | | 122 | | | | - | | | | - | | | | 122 | | | Italy | | | - | | | | - | | | | - | | | | - | | | | 70 | | | | - | | | | - | | | | 70 | | | | Paraguay | | | | | | | 912 | | | | - | | | | 912 | | | | 9 | | | | 840 | | | | - | | | | 849 | | | | - | | | | 1,111 | | | | - | | | | 1,111 | | | | - | | | | 912 | | | | - | | | | 912 | | | Uruguay | | | - | | | | 178 | | | | - | | | | 178 | | | | - | | | | 243 | | | | - | | | | 243 | | | | - | | | | 411 | | | | - | | | | 411 | | | | - | | | | 178 | | | | - | | | | 178 | | | Other | | | 8 | | | | - | | | | - | | | | 8 | | | | 7 | | | | - | | | | - | | | | 7 | | | | 8 | | | | - | | | | - | | | | 8 | | | | 8 | | | | - | | | | - | | | | 8 | | | Corporate securities | | | 2,176 | | | | 40,756 | | | | 3,904 | | | | 46,836 | | | | 4,827 | | | | 34,006 | | | | 5,142 | | | | 43,975 | | | | 2,200 | | | | 30,340 | | | | 9,220 | | | | 41,760 | | | | 2,176 | | | | 40,756 | | | | 3,904 | | | | 46,836 | | | Shares | | | 661 | | | | - | | | | 267 | | | | 928 | | | | 1,998 | | | | 1 | | | | - | | | | 1,999 | | | | 817 | | | | - | | | | 568 | | | | 1,385 | | | | 661 | | | | - | | | | 267 | | | | 928 | | | Rural Product Note | | | - | | | | 1,078 | | | | 52 | | | | 1,130 | | | | - | | | | 1,357 | | | | 51 | | | | 1,408 | | | | - | | | | 876 | | | | 549 | | | | 1,425 | | | | - | | | | 1,078 | | | | 52 | | | | 1,130 | | | Bank deposit certificates | | | - | | | | 1,443 | | | | 130 | | | | 1,573 | | | | - | | | | 1,223 | | | | 58 | | | | 1,281 | | | | - | | | | 2,527 | | | | 114 | | | | 2,641 | | | | - | | | | 1,443 | | | | 130 | | | | 1,573 | | | Securitized real estate loans | | | - | | | | - | | | | 2,037 | | | | 2,037 | | | | - | | | | - | | | | 2,522 | | | | 2,522 | | | | - | | | | - | | | | 2,095 | | | | 2,095 | | | | - | | | | - | | | | 2,037 | | | | 2,037 | | | Debentures | | | 410 | | | | 21,581 | | | | 844 | | | | 22,835 | | | | 2,732 | | | | 16,807 | | | | 706 | | | | 20,245 | | | | 277 | | | | 16,007 | | | | 4,886 | | | | 21,170 | | | | 410 | | | | 21,581 | | | | 844 | | | | 22,835 | | | Eurobonds and others | | | 1,105 | | | | 8,981 | | | | 26 | | | | 10,112 | | | | 97 | | | | 6,557 | | | | 53 | | | | 6,707 | | | | 1,105 | | | | 5,615 | | | | 995 | | | | 7,715 | | | | 1,105 | | | | 8,981 | | | | 26 | | | | 10,112 | | | Financial credit bills | | | - | | | | 6,479 | | | | 367 | | | | 6,846 | | | | - | | | | 7,735 | | | | 270 | | | | 8,005 | | | | - | | | | 2,816 | | | | - | | | | 2,816 | | | | - | | | | 6,479 | | | | 367 | | | | 6,846 | | | Promissory notes | | | - | | | | 937 | | | | 54 | | | | 991 | | | | - | | | | - | | | | 1,397 | | | | 1,397 | | | | 1 | | | | 2,172 | | | | - | | | | 2,173 | | | | - | | | | 937 | | | | 54 | | | | 991 | | | Other | | | - | | | | 257 | | | | 127 | | | | 384 | | | | - | | | | 326 | | | | 85 | | | | 411 | | | | - | | | | 327 | | | | 13 | | | | 340 | | | | - | | | | 257 | | | | 127 | | | | 384 | | | Financial assets designated at fair value through profit or loss | | | 642 | | | | - | | | | - | | | | 642 | | | | 733 | | | | - | | | | - | | | | 733 | | | | 1,191 | | | | - | | | | - | | | | 1,191 | | | | 642 | | | | - | | | | - | | | | 642 | | | Brazilian government securities | | | 506 | | | | - | | | | - | | | | 506 | | | | 626 | | | | - | | | | - | | | | 626 | | | | 1,191 | | | | - | | | | - | | | | 1,191 | | | | 506 | | | | - | | | | - | | | | 506 | | | Government securities – other countries | | | 136 | | | | - | | | | - | | | | 136 | | | | 107 | | | | - | | | | - | | | | 107 | | | | - | | | | - | | | | - | | | | - | | | | 136 | | | | - | | | | - | | | | 136 | | | Financial liabilities held for trading | | | - | | | | 412 | | | | - | | | | 412 | | | | - | | | | 448 | | | | 72 | | | | 520 | | | | - | | | | 519 | | | | - | | | | 519 | | | | - | | | | 412 | | | | - | | | | 412 | | | Structured notes | | | - | | | | 412 | | | | - | | | | 412 | | | | - | | | | 448 | | | | 72 | | | | 520 | | | | - | | | | 519 | | | | - | | | | 519 | | | | - | | | | 412 | | | | - | | | | 412 | |
The following table presents the breakdown of risk levels at 12/31/20152016 and 12/31/20142015 for our derivative assets and liabilities. | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | | | 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 | | | Derivatives - assets | | | 529 | | | | 24,975 | | | | 1,251 | | | | 26,755 | | | | (218 | ) | | | 14,253 | | | | 121 | | | | 14,156 | | | | 127 | | | | 23,583 | | | | 521 | | | | 24,231 | | | | 529 | | | | 24,975 | | | | 1,251 | | | | 26,755 | | | Futures | | | 529 | | | | - | | | | - | | | | 529 | | | | - | | | | - | | | | - | | | | - | | | | 127 | | | | - | | | | - | | | | 127 | | | | 529 | | | | - | | | | - | | | | 529 | | | Swap – differential receivable | | | - | | | | 7,958 | | | | 1,189 | | | | 9,147 | | | | - | | | | 4,783 | | | | 33 | | | | 4,816 | | | | - | | | | 10,074 | | | | 468 | | | | 10,542 | | | | - | | | | 7,958 | | | | 1,189 | | | | 9,147 | | | Options | | | - | | | | 5,550 | | | | 33 | | | | 5,583 | | | | - | | | | 2,856 | | | | 16 | | | | 2,872 | | | | - | | | | 4,745 | | | | 47 | | | | 4,792 | | | | - | | | | 5,550 | | | | 33 | | | | 5,583 | | | Forwards (onshore) | | | - | | | | 3,166 | | | | - | | | | 3,166 | | | | - | | | | 2,394 | | | | - | | | | 2,394 | | | | - | | | | 4,971 | | | | - | | | | 4,971 | | | | - | | | | 3,166 | | | | - | | | | 3,166 | | | Credit derivatives | | | - | | | | 614 | | | | - | | | | 614 | | | | - | | | | 122 | | | | - | | | | 122 | | | | - | | | | 181 | | | | - | | | | 181 | | | | - | | | | 614 | | | | - | | | | 614 | | | Forwards (offshore) | | | - | | | | 3,430 | | | | - | | | | 3,430 | | | | - | | | | 2,106 | | | | - | | | | 2,106 | | | | - | | | | 3,459 | | | | - | | | | 3,459 | | | | - | | | | 3,430 | | | | - | | | | 3,430 | | | Check of swap | | | - | | | | 355 | | | | - | | | | 355 | | | | - | | | | 93 | | | | - | | | | 93 | | | | - | | | | 88 | | | | - | | | | 88 | | | | - | | | | 355 | | | | - | | | | 355 | | | Other derivatives | | | - | | | | 3,902 | | | | 29 | | | | 3,931 | | | | (218 | ) | | | 1,899 | | | | 72 | | | | 1,753 | | | | - | | | | 65 | | | | 6 | | | | 71 | | | | - | | | | 3,902 | | | | 29 | | | | 3,931 | | | Derivatives - liabilities | | | - | | | | (31,038 | ) | | | (33 | ) | | | (31,071 | ) | | | (310 | ) | | | (16,996 | ) | | | (44 | ) | | | (17,350 | ) | | | - | | | | (24,638 | ) | | | (60 | ) | | | (24,698 | ) | | | - | | | | (31,038 | ) | | | (33 | ) | | | (31,071 | ) | | Futures | | | - | | | | - | | | | - | | | | - | | | | (354 | ) | | | - | | | | - | | | | (354 | ) | | | Swap – differential payable | | | - | | | | (16,310 | ) | | | (21 | ) | | | (16,331 | ) | | | - | | | | (9,496 | ) | | | (38 | ) | | | (9,534 | ) | | | - | | | | (13,165 | ) | | | (56 | ) | | | (13,221 | ) | | | - | | | | (16,310 | ) | | | (21 | ) | | | (16,331 | ) | | Options | | | - | | | | (5,771 | ) | | | (12 | ) | | | (5,783 | ) | | | - | | | | (3,051 | ) | | | (6 | ) | | | (3,057 | ) | | | - | | | | (4,548 | ) | | | (4 | ) | | | (4,552 | ) | | | - | | | | (5,771 | ) | | | (12 | ) | | | (5,783 | ) | | Forwards (onshore) | | | - | | | | (833 | ) | | | - | | | | (833 | ) | | | - | | | | (682 | ) | | | - | | | | (682 | ) | | | - | | | | (3,530 | ) | | | - | | | | (3,530 | ) | | | - | | | | (833 | ) | | | - | | | | (833 | ) | | Credit derivatives | | | - | | | | (875 | ) | | | - | | | | (875 | ) | | | - | | | | (179 | ) | | | - | | | | (179 | ) | | | - | | | | (147 | ) | | | - | | | | (147 | ) | | | - | | | | (875 | ) | | | - | | | | (875 | ) | | Forwards (offshore) | | | - | | | | (3,142 | ) | | | - | | | | (3,142 | ) | | | - | | | | (1,693 | ) | | | - | | | | (1,693 | ) | | | - | | | | (2,825 | ) | | | - | | | | (2,825 | ) | | | - | | | | (3,142 | ) | | | - | | | | (3,142 | ) | | Check of swap | | | - | | | | (545 | ) | | | - | | | | (545 | ) | | | - | | | | (229 | ) | | | - | | | | (229 | ) | | | - | | | | (353 | ) | | | - | | | | (353 | ) | | | - | | | | (545 | ) | | | - | | | | (545 | ) | | Other derivatives | | | - | | | | (3,562 | ) | | | - | | | | (3,562 | ) | | | 44 | | | | (1,666 | ) | | | - | | | | (1,622 | ) | | | - | | | | (70 | ) | | | - | | | | (70 | ) | | | - | | | | (3,562 | ) | | | - | | | | (3,562 | ) |
There were no significant transfer between Level 1 and Level 2 during the period from December 31, 20152016 and December 31, 2014.2015. Transfers to and from Level 3 are presented in movements of Level 3.
Measurement of fair value Level 2 based on pricing services and brokers 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$ 89.65081,633 million in financial instruments classified as Level 2, at December 31, 2015,2016, pricing service or brokers were used to evaluate securities at the fair value of R$ 41.56140,388 million, substantially represented by: | · | Debentures:When available, we use price information for transactions recorded in the Brazilian Debenture SystemDebentureSystem (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 quotes8quotes 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 HOLDING 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. |
Level 3 recurring fair value measurements The departments in charge of defining and applying the pricing models are segregated from the business areas. The models are documented, submitted to validation by an independent area and approved by a specific committee. The daily process of price capture, calculation and disclosure are periodically checked according to formally defined testing and criteria and the information is stored in a single and corporate history data base. The most recurring cases of assets classified as Level 3 are justified by the discount factors used. Factors such as the fixed interest curve in Brazilian Reais and the TR coupon curve – and, as a result, its related factors – have inputs with terms shorter than the maturities of these fixed-income assets. For swaps, the analysis is carried out by index for both parties. There are some cases in which the inputs periods are shorter than the maturity of the derivative.
Level 3 recurring fair value changes The tables below show the changes in balance sheet for financial instruments classified by ITAÚ UNIBANCO HOLDING in Level 3 of the fair value hierarchy. Derivative financial instruments classified in Level 3 mainly correspond to other derivatives linked to shares. | | | | | | | | | | | | | | | | | Total gains (losses) | | | | | | Fair value | | Total gains or | | | | | | | | Transfers in | | Fair value | | related to assets and | | | | | | at | | losses (realized / | | | | | | and / or out of | | at | | liabilities still held at | | | | | | 12/31/2014 | | | unrealized) | | | Purchases | | | Settlements | | | Level 3 | | | 12/31/2015 | | | 12/31/2015 | | | Fair value
at
12/31/2015 | | Total gains or
losses (realized /
unrealized) | | Purchases | | Settlements | | Transfers in
and / or out of
Level 3 | | Fair value
at
12/31/2016 | | Total gains (losses)
related to assets and
liabilities still held at
12/31/2016 | | | Financial assets held for trading | | | 790 | | | | 33 | | | | 102 | | | | (865 | ) | | | - | | | | 60 | | | | - | | | | 60 | | | | (151 | ) | | | 87 | | | | (344 | ) | | | 1,353 | | | | 1,005 | | | | (154 | ) | | Brazilian government securities | | | - | | | | 4 | | | | - | | | | (1 | ) | | | - | | | | 3 | | | | - | | | | 3 | | | | - | | | | - | | | | (2 | ) | | | - | | | | 1 | | | | - | | | Corporate securities | | | 790 | | | | 29 | | | | 102 | | | | (864 | ) | | | - | | | | 57 | | | | - | | | | 57 | | | | (151 | ) | | | 87 | | | | (342 | ) | | | 1,353 | | | | 1,004 | | | | (154 | ) | | Securitized real estate loans | | | 1 | | | | - | | | | - | | | | (1 | ) | | | - | | | | - | | | | - | | | | Shares | | | | - | | | | (114 | ) | | | - | | | | - | | | | 1,072 | | | | 958 | | | | (152 | ) | | Debentures | | | 210 | | | | (13 | ) | | | 66 | | | | (215 | ) | | | - | | | | 48 | | | | - | | | | 48 | | | | (37 | ) | | | 33 | | | | (306 | ) | | | 287 | | | | 25 | | | | (2 | ) | | Promissory notes | | | 577 | | | | 54 | | | | - | | | | (631 | ) | | | - | | | | - | | | | - | | | | Eurobonds and others | | | 2 | | | | (6 | ) | | | 27 | | | | (17 | ) | | | - | | | | 6 | | | | - | | | | 6 | | | | - | | | | 54 | | | | (36 | ) | | | (6 | ) | | | 18 | | | | - | | | Other | | | - | | | | (6 | ) | | | 9 | | | | - | | | | - | | | | 3 | | | | | | | | 3 | | | | - | | | | - | | | | - | | | | - | | | | 3 | | | | - | | | Available-for-sale financial assets | | | 5,404 | | | | (1,241 | ) | | | 4,453 | | | | (4,624 | ) | | | 267 | | | | 4,259 | | | | (451 | ) | | | 4,259 | | | | (677 | ) | | | 4,626 | | | | (4,380 | ) | | | 5,706 | | | | 9,534 | | | | (685 | ) | | Investment funds | | | - | | | | (1,128 | ) | | | 1,242 | | | | - | | | | - | | | | 114 | | | | - | | | | 114 | | | | 313 | | | | - | | | | (427 | ) | | | - | | | | - | | | | - | | | Brazilian government securities | | | 249 | | | | (116 | ) | | | 85 | | | | (6 | ) | | | - | | | | 212 | | | | (22 | ) | | | 212 | | | | (208 | ) | | | - | | | | 220 | | | | 4 | | | | 228 | | | | 11 | | | Government securities – abroad - Chile | | | 13 | | | | (1 | ) | | | 101 | | | | (84 | ) | | | - | | | | 29 | | | | - | | | | 29 | | | | (44 | ) | | | 321 | | | | (220 | ) | | | - | | | | 86 | | | | - | | | Corporate securities | | | 5,142 | | | | 4 | | | | 3,025 | | | | (4,534 | ) | | | 267 | | | | 3,904 | | | | (429 | ) | | | 3,904 | | | | (738 | ) | | | 4,305 | | | | (3,953 | ) | | | 5,702 | | | | 9,220 | | | | (696 | ) | | Shares | | | - | | | | - | | | | - | | | | - | | | | 267 | | | | 267 | | | | - | | | | 267 | | | | 119 | | | | - | | | | (227 | ) | | | 409 | | | | 568 | | | | 76 | | | Rural Product Note | | | 51 | | | | 1 | | | | 9 | | | | (9 | ) | | | - | | | | 52 | | | | - | | | | 52 | | | | (54 | ) | | | 1,205 | | | | (851 | ) | | | 197 | | | | 549 | | | | (57 | ) | | Bank deposit certificates | | | 58 | | | | 7 | | | | 201 | | | | (136 | ) | | | - | | | | 130 | | | | - | | | | 130 | | | | 2 | | | | 483 | | | | (501 | ) | | | - | | | | 114 | | | | - | | | Securitized real estate loans | | | 2,522 | | | | (142 | ) | | | 68 | | | | (411 | ) | | | - | | | | 2,037 | | | | (207 | ) | | | 2,037 | | | | 58 | | | | 11 | | | | (10 | ) | | | (1 | ) | | | 2,095 | | | | (55 | ) | | Debentures | | | 706 | | | | (12 | ) | | | 915 | | | | (765 | ) | | | - | | | | 844 | | | | (222 | ) | | | 844 | | | | (739 | ) | | | 2,111 | | | | (994 | ) | | | 3,664 | | | | 4,886 | | | | (653 | ) | | Eurobonds and others | | | 53 | | | | (8 | ) | | | 94 | | | | (113 | ) | | | - | | | | 26 | | | | 2 | | | | 26 | | | | (130 | ) | | | 446 | | | | (837 | ) | | | 1,490 | | | | 995 | | | | (7 | ) | | Financial credit bills | | | 270 | | | | 48 | | | | 49 | | | | - | | | | - | | | | 367 | | | | (2 | ) | | | 367 | | | | 14 | | | | - | | | | (301 | ) | | | (80 | ) | | | - | | | | - | | | Promissory notes | | | 1,397 | | | | 72 | | | | 1,574 | | | | (2,989 | ) | | | - | | | | 54 | | | | - | | | | 54 | | | | - | | | | - | | | | (54 | ) | | | - | | | | - | | | | - | | | Other | | | 85 | | | | 38 | | | | 115 | | | | (111 | ) | | | - | | | | 127 | | | | - | | | | 127 | | | | (8 | ) | | | 49 | | | | (178 | ) | | | 23 | | | | 13 | | | | - | |
| | | | | | | | | | | | | | | | Total gains (losses) | | | | | | Fair value | | Total gains or | | | | | | | | Transfers in | | Fair value | | related to assets and | | | | | | at | | losses (realized / | | | | | | and / or out of | | at | | liabilities still held at | | | | | | 12/31/2014 | | | unrealized) | | | Purchases | | | Settlements | | | Level 3 | | | 12/31/2015 | | | 12/31/2015 | | | Fair value
at
12/31/2015 | | Total gains or
losses (realized /
unrealized) | | Purchases | | Settlements | | Transfers in
and / or out of
Level 3 | | Fair value
at
12/31/2016 | | Total gains (losses)
related to assets and
liabilities still held at
12/31/2016 | | | Derivatives - assets | | | 121 | | | | 369 | | | | 316 | | | | (219 | ) | | | 664 | | | | 1,251 | | | | 31 | | | | 1,251 | | | | (713 | ) | | | 254 | | | | (728 | ) | | | 457 | | | | 521 | | | | (7 | ) | | Swap – differential receivable | | | 33 | | | | 318 | | | | 192 | | | | (18 | ) | | | 664 | | | | 1,189 | | | | - | | | | 1,189 | | | | (731 | ) | | | 8 | | | | (455 | ) | | | 457 | | | | 468 | | | | 21 | | | Options | | | 16 | | | | (29 | ) | | | 124 | | | | (78 | ) | | | | | | | 33 | | | | (10 | ) | | | 33 | | | | 36 | | | | 246 | | | | (268 | ) | | | - | | | | 47 | | | | (28 | ) | | Other derivatives | | | 72 | | | | 80 | | | | - | | | | (123 | ) | | | - | | | | 29 | | | | 41 | | | | 29 | | | | (18 | ) | | | - | | | | (5 | ) | | | - | | | | 6 | | | | - | | | Derivatives - liabilities | | | (44 | ) | | | (40 | ) | | | (95 | ) | | | 148 | | | | (2 | ) | | | (33 | ) | | | - | | | | (33 | ) | | | 18 | | | | (35 | ) | | | 96 | | | | (106 | ) | | | (60 | ) | | | (2 | ) | | Swap – differential payable | | | (38 | ) | | | (38 | ) | | | (11 | ) | | | 68 | | | | (2 | ) | | | (21 | ) | | | - | | | | (21 | ) | | | 9 | | | | (5 | ) | | | 67 | | | | (106 | ) | | | (56 | ) | | | (8 | ) | | Options | | | (6 | ) | | | (2 | ) | | | (84 | ) | | | 80 | | | | - | | | | (12 | ) | | | - | | | | (12 | ) | | | 9 | | | | (30 | ) | | | 29 | | | | - | | | | (4 | ) | | | 6 | |
| | | | | | | | | | | | | | | | Total gains (losses) | | | | | | Fair value | | Total gains or | | | | | | | | Transfers in | | | | | | related to assets and | | | | | | at | | losses (realized / | | | | | | and / or out of | | Fair value at | | liabilities still held at | | | | | | 12/31/2013 | | | unrealized) | | | Purchases | | | Settlements | | | Level 3 | | | 12/31/2014 | | | 12/31/2014 | | | Fair value
at
12/31/2014 | | Total gains or
losses (realized /
unrealized) | | Purchases | | Settlements | | Transfers in
and / or out of
Level 3 | | Fair value at
12/31/2015 | | Total gains (losses)
related to assets and
liabilities still held at
12/31/2015 | | | Financial assets held for trading | | | 27 | | | | 695 | | | | 230 | | | | (372 | ) | | | - | | | | 790 | | | | - | | | | 790 | | | | 33 | | | | 102 | | | | (865 | ) | | | - | | | | 60 | | | | - | | | Brazilian government securities | | | | - | | | | 4 | | | | - | | | | (1 | ) | | | - | | | | 3 | | | | - | | | Corporate securities | | | 27 | | | | 695 | | | | 230 | | | | (372 | ) | | | - | | | | 790 | | | | - | | | | 790 | | | | 29 | | | | 102 | | | | (864 | ) | | | - | | | | 57 | | | | - | | | Securitized real estate loans | | | - | | | | 10 | | | | - | | | | (9 | ) | | | - | | | | 1 | | | | - | | | | 1 | | | | - | | | | - | | | | (1 | ) | | | - | | | | - | | | | - | | | Debêntures | | | - | | | | 29 | | | | 705 | | | | (524 | ) | | | - | | | | 210 | | | | - | | | | 210 | | | | (13 | ) | | | 66 | | | | (215 | ) | | | - | | | | 48 | | | | - | | | Promissory notes | | | 27 | | | | 562 | | | | 230 | | | | (242 | ) | | | - | | | | 577 | | | | - | | | | 577 | | | | 54 | | | | - | | | | (631 | ) | | | - | | | | - | | | | - | | | Eurobonds and others | | | - | | | | 123 | | | | - | | | | (121 | ) | | | - | | | | 2 | | | | - | | | | 2 | | | | (6 | ) | | | 27 | | | | (17 | ) | | | - | | | | 6 | | | | - | | | Other | | | | - | | | | (6 | ) | | | 9 | | | | - | | | | - | | | | 3 | | | | | | | Available-for-sale financial assets | | | 6,489 | | | | 1,581 | | | | 6,303 | | | | (9,020 | ) | | | - | | | | 5,404 | | | | (5 | ) | | | 5,404 | | | | (1,241 | ) | | | 4,453 | | | | (4,624 | ) | | | 267 | | | | 4,259 | | | | (451 | ) | | Investment funds | | | | - | | | | (1,128 | ) | | | 1,242 | | | | - | | | | - | | | | 114 | | | | - | | | Brazilian government securities | | | 258 | | | | (272 | ) | | | 267 | | | | (4 | ) | | | - | | | | 249 | | | | - | | | | 249 | | | | (116 | ) | | | 85 | | | | (6 | ) | | | - | | | | 212 | | | | (22 | ) | | Government securities – abroad - Chile | | | 34 | | | | (17 | ) | | | 40 | | | | (44 | ) | | | - | | | | 13 | | | | - | | | | 13 | | | | (1 | ) | | | 101 | | | | (84 | ) | | | - | | | | 29 | | | | - | | | Corporate securities | | | 6,197 | | | | 1,870 | | | | 5,996 | | | | (8,972 | ) | | | - | | | | 5,142 | | | | (5 | ) | | | 5,142 | | | | 4 | | | | 3,025 | | | | (4,534 | ) | | | 267 | | | | 3,904 | | | | (429 | ) | | Shares | | | | - | | | | - | | | | - | | | | - | | | | 267 | | | | 267 | | | | - | | | Rural Product Note | | | - | | | | - | | | | 51 | | | | - | | | | - | | | | 51 | | | | - | | | | 51 | | | | 1 | | | | 9 | | | | (9 | ) | | | - | | | | 52 | | | | - | | | Bank deposit certificates | | | 33 | | | | 12 | | | | 97 | | | | (84 | ) | | | - | | | | 58 | | | | - | | | | 58 | | | | 7 | | | | 201 | | | | (136 | ) | | | - | | | | 130 | | | | - | | | Securitized real estate loans | | | 4,834 | | | | 1,538 | | | | 14 | | | | (3,864 | ) | | | - | | | | 2,522 | | | | (8 | ) | | | 2,522 | | | | (142 | ) | | | 68 | | | | (411 | ) | | | - | | | | 2,037 | | | | (207 | ) | | Debêntures | | | - | | | | 313 | | | | 706 | | | | (313 | ) | | | - | | | | 706 | | | | - | | | | 706 | | | | (12 | ) | | | 915 | | | | (765 | ) | | | - | | | | 844 | | | | (222 | ) | | Eurobonds and others | | | 74 | | | | 23 | | | | - | | | | (44 | ) | | | - | | | | 53 | | | | 3 | | | | 53 | | | | (8 | ) | | | 94 | | | | (113 | ) | | | - | | | | 26 | | | | 2 | | | Financial credit bills | | | - | | | | 4 | | | | 266 | | | | - | | | | - | | | | 270 | | | | - | | | | 270 | | | | 48 | | | | 49 | | | | - | | | | - | | | | 367 | | | | (2 | ) | | Promissory notes | | | 1,227 | | | | (22 | ) | | | 4,858 | | | | (4,666 | ) | | | - | | | | 1,397 | | | | - | | | | 1,397 | | | | 72 | | | | 1,574 | | | | (2,989 | ) | | | - | | | | 54 | | | | - | | | Other | | | 29 | | | | 2 | | | | 55 | | | | (1 | ) | | | - | | | | 85 | | | | - | | | | 85 | | | | 38 | | | | 115 | | | | (111 | ) | | | - | | | | 127 | | | | - | |
| | | | | | | | | | | | | | | | Total gains (losses) | | | | | | Fair value | | Total gains or | | | | | | | | Transfers in | | | | | | related to assets and | | | | | | at | | losses (realized / | | | | | | and / or out of | | Fair value at | | liabilities still held at | | | Fair value
at
12/31/2014 | | Total gains or
losses (realized /
unrealized) | | Purchases | | Settlements | | Transfers in
and / or out of
Level 3 | | Fair value at
12/31/2015 | | Total gains (losses)
related to assets and
liabilities still held at
12/31/2015 | | | | | 12/31/2013 | | | unrealized) | | | Purchases | | | Settlements | | | Level 3 | | | 12/31/2014 | | | 12/31/2014 | | | | | | | | | | | | | | | | | | Derivatives - Assets | | | 124 | | | | 73 | | | | 92 | | | | (172 | ) | | | 4 | | | | 121 | | | | - | | | | 121 | | | | 369 | | | | 316 | | | | (219 | ) | | | 664 | | | | 1,251 | | | | 31 | | | Swaps -differential receivable | | | - | | | | 37 | | | | 2 | | | | (10 | ) | | | 4 | | | | 33 | | | | - | | | | 33 | | | | 318 | | | | 192 | | | | (18 | ) | | | 664 | | | | 1,189 | | | | - | | | Options | | | 13 | | | | 24 | | | | 18 | | | | (39 | ) | | | - | | | | 16 | | | | - | | | | 16 | | | | (29 | ) | | | 124 | | | | (78 | ) | | | - | | | | 33 | | | | (10 | ) | | Other derivatives | | | 111 | | | | 12 | | | | 72 | | | | (123 | ) | | | - | | | | 72 | | | | - | | | | 72 | | | | 80 | | | | - | | | | (123 | ) | | | - | | | | 29 | | | | 41 | | | Derivatives - Liabilities | | | (5 | ) | | | 2 | | | | (10 | ) | | | (18 | ) | | | (13 | ) | | | (44 | ) | | | - | | | | (44 | ) | | | (40 | ) | | | (95 | ) | | | 148 | | | | (2 | ) | | | (33 | ) | | | - | | | Swaps -differential payable | | | - | | | | (23 | ) | | | 1 | | | | (3 | ) | | | (13 | ) | | | (38 | ) | | | - | | | | (38 | ) | | | (38 | ) | | | (11 | ) | | | 68 | | | | (2 | ) | | | (21 | ) | | | - | | | Options | | | (5 | ) | | | 25 | | | | (11 | ) | | | (15 | ) | | | - | | | | (6 | ) | | | - | | | | (6 | ) | | | (2 | ) | | | (84 | ) | | | 80 | | | | - | | | | (12 | ) | | | - | |
Sensitivity analyses operations of Level 3 The fair value of financial instruments classified in Level 3 (in which prices negotiated are not easily noticeable in active markets) is measured through assessment techniques based on correlations and associated products traded in active markets, internal estimates and internal models. Significant unverifiable inputs used for measurement of the fair value of instruments classified in Level 3 are: interest rates, underlying asset prices and volatility. Significant variations in any of these inputs separately may give rise to significant changes in the fair value. The table below shows the sensitivity of these fair values in scenarios of changes of interest rates, asset prices, or in scenarios vary in prices with shocks and the volatility for non-linear assets: | Sensitivity – Level 3 Operations | | 12/31/2015 | | | | | | | Impact | | | Risk factor groups | | Scenarios | | Result | | | Stockholders'
equity | | | | | I | | | (2.6 | ) | | | (6.3 | ) | | Interest rates | | II | | | (65.3 | ) | | | (154.0 | ) | | | | III | | | (130.5 | ) | | | (300.9 | ) | | Currency, commodities, and ratios | | I | | | (5.7 | ) | | | - | | | | | II | | | (11.4 | ) | | | - | | | Nonlinear | | I | | | (21.9 | ) | | | - | | | | | II | | | (38.9 | ) | | | - | |
| Sensitivity – Level 3 Operations | | | | 12/31/2016 | | | | | | | Impact | | | Risk factor groups | | Scenarios | | Result | | | Stockholders'
equity | | | | | I | | | (2.3 | ) | | | (1.8 | ) | | Interest rates | | II | | | (57.6 | ) | | | (44.2 | ) | | | | III | | | (115.2 | ) | | | (87.9 | ) | | | | | | | | | | | | | | Currency, commodities, and ratios | | I | | | (76.3 | ) | | | - | | | | II | | | (152.6 | ) | | | - | | | | | | | | | | | | | | | Nonlinear | | I | | | (13.5 | ) | | | - | | | | II | | | (19.8 | ) | | | - | |
The following scenarios are used to measure the sensitivity: Interest rate Shocks at 1, 25 and 50 basis 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 percentage 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 linear Scenario I:Shocks at 5 percentage points in prices and 25 percentage points the level in volatility, both for increaseforincrease and decrease, considering the largest losses resulting in each scenario. Scenario II:Shocks at 10 percentage points in prices and 25 percentage points the level in volatility, both for increaseforincrease and decrease, considering the largest losses resulting in each scenario. Note 32 – Provisions, contingencies and other commitments | Provision | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | 12/31/2015 | | | Civil | | | 5,227 | | | | 4,643 | | | | 5,172 | | | | 5,227 | | | Labor | | | 6,132 | | | | 5,598 | | | | 7,232 | | | | 6,132 | | | Tax and social security | | | 7,500 | | | | 6,627 | | | | 8,246 | | | | 7,500 | | | Other | | | 135 | | | | 159 | | | | 259 | | | | 135 | | | Total | | | 18,994 | | | | 17,027 | | | | 20,909 | | | | 18,994 | | | Current | | | 3,848 | | | | 3,268 | | | | 4,434 | | | | 3,848 | | | Non-current | | | 15,146 | | | | 13,759 | | | | 16,475 | | | | 15,146 | |
InITAÚ UNIBANCO HOLDING, as a result of the ordinary course of its businesses, ITAÚ UNIBANCO HOLDING is subjectbusiness, may be a party to legal lawsuits of labor, civil and tax nature. The contingencies that may berelated to these lawsuits are classified as follows:
a) Contingent assets:there are no contingent assets recorded.
| 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.
| b) | Provisions and contingencies:The criteria to quantify contingencies are adequate in relation to the specificcharacteristics of civil, labor and tax lawsuits portfolios, as well as other risks, taking into consideration the opinion of its legal advisors, the nature of the lawsuits, the similarity with previous lawsuits and the prevailing previous court decisions. |
In general, contingencies arise from claims related to the revision of contracts and compensation for damages and pain and suffering and the lawsuits are classified as follows: Collective lawsuits (related(related to claims of a similar nature and with individual amounts that are not considered significant)consideredsignificant): contingencies are determined on a monthly basis and the expected amount of losses is accrued based onaccording to statistical modelsreferences that take into account the typenature of the lawsuit and the characteristics of the court (Small Claims Court or Regular Court). Contingencies and provisions are adjusted to reflect the amounts deposited as guarantee for their execution when realized. Individual lawsuits (related(related to claims with unusual characteristics or involving significant amounts):calculation is carried out Theseare periodically calculated based on a periodic basis, from the calculation of the claimed amount claimed. Probability of loss, which in turn, is estimated based on thede jure orde facto characteristics related to thatof the lawsuit. The amounts considered as representing probable losses are recorded as provisions. In general, contingencies arise from revisions of contracts and compensation for damages and pain and suffering.It should be mentioned that ITAÚ UNIBANCO HOLDING is also a party to specific lawsuits related to the collection of understated inflation adjustments to savings accounts resulting from economic plans.plans implemented in the 80’s and 90’s as a measure to combat inflation.
From 1986 to 1994,Although ITAÚ UNIBANCO HOLDING complied with the Brazilian federal government implemented several consecutive monetary stabilization plans (MSPs) to combat hyperinflation. 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.
Savings account holdersrules in effect at the time, when these MSPs were implemented challenged the constitutionality of the laws in connection with such plans, claiming, from the banks in which they held savings accounts, additional interest based on the inflation rates applied to the deposit accounts based on the MSPs.
ITAÚ UNIBANCO HOLDINGcompany is a defendant in numerous standardized lawsuits filed by individuals in respect of the MSP, and records provisions for such claims upon service of a process for a claim. In addition, ITAÚ UNIBANCO HOLDING is defendantthat address this topic, as well as in class actions similar to the lawsuits brought by individuals, filed by either:by: (i) consumer protection associations, orassociations; and (ii) the Public Prosecution Office on behalf of savings account holders. Holders of savings accounts may claim any amount due based on such a decision.With respect to these lawsuits, ITAÚ UNIBANCO HOLDING records provisions when individual plaintiffsit is served and when the individuals apply to enforce such decisions,the decision rendered by the Judicial Branch, using the same criteria adopted to determine provisions for individual lawsuits.
The Federal Supreme Court (STF) has issued some decisions favorable to savings account holders, but it has not issued a final rulingestablished its understanding with respect to the constitutionality of the MSPs as applicableeconomic plans and their applicability to savings accounts. In relation to a similar dispute with respect toCurrently, the constitutionality of the MSPs as applicable to time deposits and other private agreements, the STF has determined that the bills were constitutional. As a response to this discrepancy, the National Confederation of the Financial System (CONSIF) an association of Brazilian financial institutions, filed a special proceeding with the STF (Action against the violation of a constitutional fundamental right No. 165 - “ADPF” No. 165), in which the Central Bank filed an amicus brief, arguing that savings account holders did not incur actual damages and that the MSPs as applicable to savings accounts were in accordance with the federal constitution. Accordingly, the STF suspended the rulings on all appeals involving this matterthese matters are suspended, as determined by the STF, until it pronounces a final decision. However, there is no estimate when the judgment by STF will occur, since, due to the disqualification of certain ministers, there is no sufficient quorum at this time to resolve on the issue.
The most important rulings will address the following issues: (i) the accrual of compensatory interest on the amount due to the plaintiff, on filings that carry no specific claim to such interest; (ii) the initial date of default interest, for class actions; and (iii) the possibility of compensating the negative difference arising in the month of the MSP implementation, between the interests actually paid on savings accounts and the inflation rate for the same period, with the positive difference arising in the months subsequent to the MSP implementation, between the interests actually paid on savings accounts and the inflation rate of the same period. In relevant sentences in 2015, the STJ decided that: (i) the inclusion of interest in the calculation of execution is not applicable if there is no express sentence for this; and (ii) there shall be no payment of interest to holders of savings accounts after the proven closing date of those accounts. The thesis that understated inflation of plans subsequent to those challenged in the lawsuit can be included as full monetary correction of the debt, even with no express claim by the holder of savings account, has been reaffirmed. Additionally, STJ reaffirmed that the term for filling collection lawsuits expired within five years counted from the implementation date of the monetary stabilization plan (MSP). Accordingly, various collective lawsuits continue being extinguished by the Judiciary Branch as a result of this decision.
No amount is recorded as a provision in relation to civilCivil lawsuits which representlikelihood of loss is considered possible, losses and which have a total estimated risk ofis R$ 2,4603,388 (R$ 1,8002,460 at 12/31/2014)2015), these refer to claims for compensation or collection, the individual amounts of which are not significant and in this totalamount there are no values resulting from interests in joint ventures. Contingencies arise from lawsuits in which labor rights provided for in labor legislation specific to the related profession are discussed, such as: overtime, salary equalization, reinstatement, transfer allowance, pension plan supplement, among others, are discussed. These lawsuits are classified as follows: Collective lawsuits (related(related to claims of aconsidered similar nature and with individual amounts not considered significant)that are notconsidered relevant): the The expected amount of loss amount is determined and accrued on a monthly based on thebasis in accordance with a statistical share pricing model and is reassessed taking into account the court rulings. These contingencies are adjusted to reflect the amounts deposited as guarantee for their execution when realized. Individual lawsuits (related(related to claims with unusual characteristics or involving significant amounts):determined Theseare periodically calculated based on the calculation of the amount claimed and the likelihoodclaimed. Probability of loss which, in turn, is estimated according toin accordance with the factualactual and legal characteristics related to suchthat 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 allowances, pension plan supplements and other matters are claimed.
No amount is recorded as a provision for labor claims for which the likelihood of loss is considered possible, and for which the total estimated risk is R$ 79 (R$ 829 (R$ 416of 12/31/2014)2015). 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. The table below shows the changes in the balances of provisions for civil, labor and other provision and the respective escrow deposit balances: | | | 01/01 to 12/31/2015 | | | 01/01 to 12/31/2016 | | | | | Civil | | | Labor | | | Other | | | Total | | | Civil | | | Labor | | | Other | | | Total | | | Opening balance | | | 4,643 | | | | 5,598 | | | | 159 | | | | 10,400 | | | | 5,227 | | | | 6,132 | | | | 135 | | | | 11,494 | | | Balance arising from Corpbanca acquisition (Note 3) | | | | 2 | | | | 5 | | | | 133 | | | | 140 | | | (-) Contingencies guaranteed by indemnity clause (Note 2.4.t) | | | (132 | ) | | | (1,029 | ) | | | - | | | | (1,161 | ) | | | (236 | ) | | | (1,089 | ) | | | - | | | | (1,325 | ) | | Subtotal | | | 4,511 | | | | 4,569 | | | | 159 | | | | 9,239 | | | | 4,993 | | | | 5,048 | | | | 268 | | | | 10,309 | | | Interest (Note 26) | | | 322 | | | | 548 | | | | - | | | | 870 | | | | 248 | | | | 625 | | | | - | | | | 873 | | | Changes in the period reflected in results (Note 26) | | | 1,747 | | | | 1,637 | | | | (24 | ) | | | 3,360 | | | | 1,241 | | | | 2,946 | | | | (9 | ) | | | 4,178 | | | Increase(*) | | | 2,698 | | | | 1,795 | | | | (21 | ) | | | 4,472 | | | | 1,901 | | | | 3,149 | | | | (7 | ) | | | 5,043 | | | Reversal | | | (951 | ) | | | (158 | ) | | | (3 | ) | | | (1,112 | ) | | | (660 | ) | | | (203 | ) | | | (2 | ) | | | (865 | ) | | Payment | | | (1,589 | ) | | | (1,711 | ) | | | - | | | | (3,300 | ) | | | (1,566 | ) | | | (2,453 | ) | | | - | | | | (4,019 | ) | | Subtotal | | | 4,991 | | | | 5,043 | | | | 135 | | | | 10,169 | | | | 4,916 | | | | 6,166 | | | | 259 | | | | 11,341 | | | (+) Contingencies guaranteed by indemnity clause (Note 2.4.t) | | | 236 | | | | 1,089 | | | | - | | | | 1,325 | | | | 256 | | | | 1,066 | | | | - | | | | 1,322 | | | Closing balance | | | 5,227 | | | | 6,132 | | | | 135 | | | | 11,494 | | | | 5,172 | | | | 7,232 | | | | 259 | | | | 12,663 | | | Escrow deposits at 12/31/2015 (Note 20a) | | | 1,741 | | | | 2,218 | | | | - | | | | 3,959 | | | | Escrow deposits at 12/31/2016 (Note 20a) | | | | 1,541 | | | | 2,337 | | | | - | | | | 3,878 | | | | | | | | | | | | | | | | | | | | | | (*) Civil provisions include the provision for economic plans amounting to R$ 408. | | (*) Civil provisions include the provision for economic plans amounting to R$ 408. |
(*) Civil provisions include the provision for economic plans amounting to R$ 233.
| | | 01/01 to 12/31/2015 | | | | | Civil | | | Labor | | | Other | | | Total | | | Opening balance | | | 4,643 | | | | 5,598 | | | | 159 | | | | 10,400 | | | (-) Contingencies guaranteed by indemnity clause (Note 2.4.t) | | | (132 | ) | | | (1,029 | ) | | | - | | | | (1,161 | ) | | Subtotal | | | 4,511 | | | | 4,569 | | | | 159 | | | | 9,239 | | | Interest (Note 26) | | | 322 | | | | 548 | | | | - | | | | 870 | | | Changes in the period reflected in results (Note 26) | | | 1,747 | | | | 1,637 | | | | (24 | ) | | | 3,360 | | | Increase(*) | | | 2,698 | | | | 1,795 | | | | (21 | ) | | | 4,472 | | | Reversal | | | (951 | ) | | | (158 | ) | | | (3 | ) | | | (1,112 | ) | | Payment | | | (1,589 | ) | | | (1,711 | ) | | | - | | | | (3,300 | ) | | Subtotal | | | 4,991 | | | | 5,043 | | | | 135 | | | | 10,169 | | | (+) Contingencies guaranteed by indemnity clause (Note 2.4.t) | | | 236 | | | | 1,089 | | | | - | | | | 1,325 | | | Closing balance | | | 5,227 | | | | 6,132 | | | | 135 | | | | 11,494 | | | Escrow deposits at 12/31/2015 (Note 20a) | | | 1,741 | | | | 2,218 | | | | - | | | | 3,959 | | | | | | | | | | | | | | | | | | | | | (*) Civil provisions include the provision for economic plans amounting to R$ 233. |
| | | 01/01 to 12/31/2014 | | | | | Civil | | | Labor | | | Other | | | Total | | | Opening balance | | | 4,473 | | | | 5,192 | | | | 223 | | | | 9,888 | | | (-) Contingencies guaranteed by indemnity clause (Note 2.4.t) | | | (134 | ) | | | (811 | ) | | | - | | | | (945 | ) | | Subtotal | | | 4,339 | | | | 4,381 | | | | 223 | | | | 8,943 | | | Interest (Note 26) | | | 184 | | | | 320 | | | | - | | | | 504 | | | Changes in the period reflected in results (Note 26) | | | 1,524 | | | | 1,123 | | | | (64 | ) | | | 2,583 | | | Increase(*) | | | 2,100 | | | | 1,459 | | | | 23 | | | | 3,582 | | | Reversal | | | (576 | ) | | | (336 | ) | | | (87 | ) | | | (999 | ) | | Payment | | | (1,536 | ) | | | (1,255 | ) | | | - | | | | (2,791 | ) | | Subtotal | | | 4,511 | | | | 4,569 | | | | 159 | | | | 9,239 | | | (+) Contingencies guaranteed by indemnity clause (Note 2.4.t) | | | 132 | | | | 1,029 | | | | - | | | | 1,161 | | | Closing balance | | | 4,643 | | | | 5,598 | | | | 159 | | | | 10,400 | | | Escrow deposits at 12/31/2014 (Note 20a) | | | 2,073 | | | | 2,567 | | | | - | | | | 4,640 | | | | | | | | | | | | | | | | | | | |
(*)Civil provisions include the provision for economic plans amounting to R$ 210. | | | 01/01 to 12/31/2013 | | | | | Civil | | | Labor | | | Other | | | Total | | | Opening balance | | | 3,732 | | | | 4,852 | | | | 192 | | | | 8,776 | | | Effect of change in consolidation criteria (Note 2.4a I) | | | 13 | | | | 14 | | | | - | | | | 27 | | | Balance arising from the aquisition of companies (Note 3) | | | 192 | | | | 99 | | | | - | | | | 291 | | | (-) Contingencies guaranteed by indemnity clause (Note 2.4.t) | | | (118 | ) | | | (948 | ) | | | - | | | | (1,066 | ) | | Subtotal | | | 3,819 | | | | 4,017 | | | | 192 | | | | 8,028 | | | Interest (Note 26) | | | 163 | | | | 236 | | | | - | | | | 399 | | | Changes in the period reflected in results (Note 26) | | | 2,111 | | | | 1,398 | | | | 31 | | | | 3,540 | | | Increase (*) | | | 2,778 | | | | 1,591 | | | | 34 | | | | 4,403 | | | Reversal | | | (667 | ) | | | (193 | ) | | | (3 | ) | | | (863 | ) | | Payment | | | (1,754 | ) | | | (1,270 | ) | | | - | | | | (3,024 | ) | | Subtotal | | | 4,339 | | | | 4,381 | | | | 223 | | | | 8,943 | | | (+) Contingencies guaranteed by indemnity clause (Note 2.4.t) | | | 134 | | | | 811 | | | | - | | | | 945 | | | Closing balance | | | 4,473 | | | | 5,192 | | | | 223 | | | | 9,888 | | | Escrow deposits at 12/31/2013 | | | 2,169 | | | | 2,451 | | | | - | | | | 4,620 | |
(*) Civil provisions include the provision for economic plans amounting to R$ 247.
| - | Tax and social security lawsuits |
ContingenciesITAÚ UNIBANCO HOLDING classify as legal liability the lawsuits filed to discuss the legality and unconstitutionality of the legislation in force, which are equivalentthe subject matter of a provision, regardless of the probability of loss.
Tax contingencies correspond to the principal amount of taxes involved in tax, administrative or judicial disputes,challenges, subject to tax assessment notices, plus interest and, when applicable, fines and charges. The amountA provision is recorded as a provision when it involves a legal liability, regardless ofrecognized whenever the likelihood of loss that is a favorable outcome for the institution is dependent upon the recognition of the unconstitutionality of the applicable laws 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 balance of escrow deposits for tax and social security lawsuits: | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | Provision | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | Opening balance | | | 6,627 | | | | 8,974 | | | | 10,433 | | | Balance arising from the aquisition of companies (Note 2.4a I) | | | - | | | | - | | | | 32 | | | (-) Contingencies guaranteed by indemnity clause | | | (61 | ) | | | (57 | ) | | | (61 | ) | | Subtotal | | | 6,566 | | | | 8,917 | | | | 10,404 | | | Interest(*) | | | 609 | | | | 515 | | | | 402 | | | Changes in the period reflected in results | | | 588 | | | | 797 | | | | 993 | | | Increase(*) | | | 1,170 | | | | 1,156 | | | | 1,231 | | | Reversal(*) | | | (582 | ) | | | (359 | ) | | | (238 | ) | | Payment | | | (328 | ) | | | (3,663 | ) | | | (2,882 | ) | | Subtotal | | | 7,435 | | | | 6,566 | | | | 8,917 | | | (+) Contingencies guaranteed by indemnity clause | | | 65 | | | | 61 | | | | 57 | | | Closing balance | | | 7,500 | | | | 6,627 | | | | 8,974 | |
| Provision | | 01/01 to
12/31/2016 | | | 01/01 to
12/31/2015 | | | 01/01 to
12/31/2014 | | | Opening balance | | | 7,500 | | | | 6,627 | | | | 8,974 | | | (-) Contingencies guaranteed by indemnity clause | | | (65 | ) | | | (61 | ) | | | (57 | ) | | Subtotal | | | 7,435 | | | | 6,566 | | | | 8,917 | | | Interest(*) | | | 737 | | | | 609 | | | | 515 | | | Changes in the period reflected in results | | | 68 | | | | 588 | | | | 797 | | | Increase(*) | | | 287 | | | | 1,170 | | | | 1,156 | | | Reversal(*) | | | (219 | ) | | | (582 | ) | | | (359 | ) | | Payment | | | (63 | ) | | | (328 | ) | | | (3,663 | ) | | Subtotal | | | 8,177 | | | | 7,435 | | | | 6,566 | | | (+) Contingencies guaranteed by indemnity clause | | | 69 | | | | 65 | | | | 61 | | | Closing balance | | | 8,246 | | | | 7,500 | | | | 6,627 | |
(*) The amounts are included in the headings Tax Expenses, General and Administrative Expenses and Current Income Tax and Social Contribution. | | | 01/01 to | | | 01/01 to | | | 01/01 to | | | Escrow deposits | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | Opening balance | | | 4,736 | | | | 5,658 | | | | 4,557 | | | Balance arising from the aquisition of companies (Note 2.4a I) | | | - | | | | - | | | | 167 | | | Appropriation of interest | | | 285 | | | | 377 | | | | 265 | | | Changes in the period | | | (682 | ) | | | (1,299 | ) | | | 668 | | | Deposits made | | | 355 | | | | 193 | | | | 1,406 | | | Withdrawals | | | (944 | ) | | | (5 | ) | | | (21 | ) | | Deposits released | | | (93 | ) | | | (1,487 | ) | | | (717 | ) | | Closing balance (Note 20a) | | | 4,339 | | | | 4,736 | | | | 5,657 | | | Reclassification of assets pledged as collateral for contingencies (Note 32d) | | | - | | | | - | | | | 1 | | | Closing balance after reclassification | | | 4,339 | | | | 4,736 | | | | 5,658 | |
| Escrow deposits | | 01/01 to
12/31/2016 | | | 01/01 to
12/31/2015 | | | 01/01 to
12/31/2014 | | | Opening balance | | | 4,339 | | | | 4,736 | | | | 5,658 | | | Appropriation of interest | | | 383 | | | | 285 | | | | 377 | | | Changes in the period | | | 125 | | | | (682 | ) | | | (1,299 | ) | | Deposits made | | | 217 | | | | 355 | | | | 193 | | | Withdrawals | | | (66 | ) | | | (944 | ) | | | (5 | ) | | Deposits released | | | (26 | ) | | | (93 | ) | | | (1,487 | ) | | Closing balance (Note 20a) | | | 4,847 | | | | 4,339 | | | | 4,736 | |
Main discussions related to the provisions recognized for Tax and Social Securities Lawsuits are described as follows: | · | CSLL – Isonomy – R$ 1,098: as1,207: the company is discussing the lack of constitutional support for the increase, establishes by law increasednº 11,727/08, of the CSLL rate for financial and insurance companies from 9% to 15%, we argue that there is no constitutional support for this measure and, due to the principle of isonomy, we believe we should only pay the regular rate of 9%. The corresponding escrowbalance of the deposit balancein court totals R$ 1,084;1,191; |
| · | INSS – Accident Prevention Accident Factor (FAP) – R$ 834: it challenges1,004: the company is discussing the legality of FAP and inconsistent procedures appliedcalculations made by the INSS upon its calculation.INSS. The corresponding escrowbalance of the deposit balancein court totals R$ 98;110; |
| · | PIS and COFINS – Calculation basis – R$ 613: we are claiming that those contributions650: the company is defending the levy of PIS and COFINS on revenue, which should be applied only to theunderstood as revenue from the sales of assets and services. The corresponding escrowbalance of the deposit balancein court totals R$ 540;571; |
| · | IRPJ and CSLL – Taxation of profits earned abroad –Profits abroad– R$ 559: we are challenging599: the company is discussing the calculation basis for these taxes onbases with respect to profits earned abroad and argue thatdefending the inapplicability of the SRF Regulatory Instruction SRF No. 213-02 is not applicable since it goes beyond213/02, which exceeds the textcorresponding legal provision. The balance of the law. The corresponding escrow deposit balancein court totals R$ 215.229. |
Off-balance sheet contingencies – The estimatedamountsamounts involved in tax and social security lawsuits for which the likelihood of loss is possible are not recognized in a provision. The estimated amounts at risk in the main tax and social security lawsuits with a likelihood of loss deemed possible, which total R$ 16,165,18,106, are described below: | · | INSS – Non-compensatory amounts – R$ 4,429: we defend4,770: the non-taxationcompany defends the non-levy of this contribution on these amounts, mainlyamong which are profit sharing, stock options, plan, transportation vouchers and sole bonuses; |
| · | IRPJ and CSLL – Goodwill – DeductibilityDeduction – R$ 2,867:3,122: the deductibility of goodwill on acquisition of investments with future expected profitability on the acquisition of investments, and R$ 612665 of this amount is guaranteed in company purchase agreements; |
| · | IRPJ, CSLL, PIS and COFINS – Requests for offsetting dismissed - R$ 1,365:1,613: cases in which the liquidity and the ability of offset credits are discussed; |
| · | IRPJ and CSLL -– Interest on capital -– R$ 1,301:1,406: the company is defending the deductibility of interest on capital declared to stockholders based on the Brazilian longtermlong term interest rate applied to(TJLP) on the stockholders’ equity for the year and for prior years; |
| · | ISS – Banking Institutions – R$ 960:930: these are banking operations, the revenue from which may not be interpreted as prices for services rendered, and/or which arises from activities not listed under Supplementary Law No. 116/03 or Decree Law No. 406/68. |
| · | IRPJ and CSLL – Disallowance of Tax Losses – R$ 606: Discussion on the amount of tax loss carryforwards, which may reduce the calculation basis of such taxes. |
| · | IRPJ/ CSLL – Deductibility of Losses in a Supplementary Law.Credit Operations – R$ 601 – Assessments drawn up to require the payment of IRPJ and CSLL due to the alleged non-observance of the legal criteria for the deduction of losses upon the receipt of credits. |
| c) | Receivables - Reimbursement of contingencies |
The Receivables balance arising from reimbursements of contingencies totals R$ 1,0931,128 (R$ 6761,093 at 12/31/2014)2015) (Note 20a),. This value is derived from basically represented by the guarantee received forin the privatization process of the Banco Banerj S.A. privatization process which occurred 1997, where the State of Rio de Janeiro created a fund to guarantee 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: | | | 12/31/2015 | | | 12/31/2014 | | | Financial assets held for trading and Available-for-sale financial assets (basically financial treasury bills) | | | 793 | | | | 821 | | | Escrow deposits (Note 20a) | | | 4,335 | | | | 4,230 | |
| | | 12/31/2016 | | | 12/31/2015 | | | Financial assets held for trading and Available-for-sale financial assets | | | | | | | | | | (basically financial treasury bills) | | | 950 | | | | 793 | | | Escrow deposits (Note 20a) | | | 4,537 | | | | 4,335 | |
Escrow deposits are generally requiredDeposits related to lawsuits must be made in court and can be withdrawn by the winning party in the lawsuit, with the court in connection with lawsuits in Brazil, and they are heldrespective additions provided for by the respective court until a decision is made. In case of a decision against ITAÚ UNIBANCO HOLDING, the deposited amount is released from escrow and transferredlaw, according to the counterparty to the lawsuit. In the case of a decision in favor of ITAÚ UNIBANCO HOLDING, the deposited amount is released at the full deposited and updated amount.court decision.
In general, the provisions related to the lawsuits of ITAÚ UNIBANCO HOLDING are long term, considering the time required for the termination of these lawsuits in the Brazilian judicial system, which is thesystem. For this reason, why no estimate of the specific year in which these lawsuits will be terminated has been disclosed. InAccording to the opinion of theits legal advisors, ITAÚ UNIBANCO HOLDING and its subsidiaries areCONSOLIDATED is not parties toinvolved in any other administrative or judicial proceedings or legal lawsuits that couldmay significantly impact the results of their operations.
| e) | Program for Cash or Installment Payment of Federal Taxes – Law No. 12,865 of October 9, 2013, as amended by Provisional Measure No. 627 of November 11, 2013. |
| | ITAÚ UNIBANCO HOLDING and subsidiaries adhered to the Program for Cash or Installment Payment of Federal Taxes, enacted by Law No. 12,865 of October 9, 2013. The program included the debits administered by the Federal Reserve Service of Brazil and the General Attorney’s Office of the National Treasury past due, and is defined in accordance with the Articles below: |
| · | REFIS – PIS and COFINS (Article 39 of Law No. 12,865) |
The debits with the National Treasury related to PIS (social integration program) and COFINS (tax for social security financing), addressed by Chapter I of Law No. 9,718 of November 27, 1998 (legal entities governed by private law), due by financial institutions and insurance companies, past due up to December 31, 2012;
| · | REFIS – Profits Abroad (Article 40 of Law No. 12,865) |
The debits with the National Treasury related to IRPJ (corporate income tax) and CSLL (social contribution on net income), arising from profits earned by subsidiaries or affiliates abroad (Article 74 of Provisional Measure No. 2,158-35, of August 24, 2001), past due up to December 31, 2012;
| · | REFIS – crisis event (Article 17 of Law No. 12,865) |
This program refers to the renegotiation of federal debits administered by the Federal Reserve Service of Brazil and the General Attorney’s Office of the National Treasury past due, either registered or not as overdue tax liabilities, even when a tax foreclosure has been filed.
The net effect in income amounted to R$ 508, recorded under tax expenses, other income and income tax and social contribution.
| f) | Program for Cash or Installment Payment of Taxes |
ITAÚ UNIBANCO HOLDING and its subsidiaries adhered to the Programe) Programs for Cash or Installment Payment of Municipal Taxes
ITAÚ UNIBANCO HOLDING adhere to PPIs – Installment Payment Incentive Programs substantially related to the Federal area,local level, established the following by laws: Law No. 13,097,5,854, of JanuaryApril 27, 2015 - Rio de Janeiro; Law No. 8,927, of October 22, 2015 and Decree-Law No. 26,624, of October 26, 2015 - Salvador; Law No. 18,181, of November 30, 2015 and Decree Law No. 29,275, of November 30, 2015 - Recife; Supplementary Law No. 95, of October 19, 2015 and- Curitiba; Law No. 13,043/2014. The program included debits managed by the Federal Reserve Service3,546, of Brazil and was established in accordance with the main article as follows:December 18, 2015 – Salto; Law No. 12,457, of October 03,2016 – Londrina. | · | Refis of Capital Gain Earned in the Merger of Shares from Nova Bolsa |
Law 13,097/15 article 145 – ArisingThe PPIs promote the regularization of debts mentioned in these laws, arising from capital gain earned until December 31, 2008 duetax and non-tax credits, either recognized or not, including those that are part of the Enforceable Debt, either filed or to the sale of shares resulting from the conversion of equity securities from nonprofit associations.be filed in court.
The net effect of the program in the results was R$ 27, and is reflected in Other Operating Income, Income Tax and Social Contribution.
| g) | Programs for Cash or Installment Payment of Municipal Taxes |
ITAÚ UNIBANCO HOLDING and its subsidiaries adhered to the Programs for Incentivized Installment Payment substantially related to the municipal level, established by Laws:São Paulo (Law No. 16,097, of 12/29/2014); (Law No. 55,828, of 01/07/2015); Rio de Janeiro (Law No. 5,854, of 04/27/2015). The programs included debts managed by said municipalities and can be defined as follows:
| · | PPI – Incentivized Installment Payment –the programs promote the regularization of debts mentioned in these laws, arising from tax and non-tax credits, either recognized or not, including those that are part of the Enforceable Debt, either filed or to be filed in court. |
The net effect of the programsPPIs in result was R$ 9,14, and it is recorded in Other Operating Income, Income Tax and Social Contribution.Income.
Note 33 – Regulatory capital ITAÚ UNIBANCO HOLDING is subject to regulation by the Central Bank of Brazil (BACEN), which issues rules and instructions regarding currency and credit policies for financial institutions operating in Brazil. The Central BankBACEN also determines minimum capital requirements, procedures for verification of information for assessment of the global systemic importance of financial institutions, limits for fixed assets, limits lending limits,for loans, accounting practices and requirements of compulsory deposit requirements, and requiresdeposits, requiring banks to comply with the regulation based on the Basel Accord as regards toon capital adequacy. Furthermore,Additionally, the National Council of Private Insurance (CNSP) and SUSEP issue regulations on capital requirementsrequirement, which affect our insurance, private pension plan and capitalization operations. a) Capital Requirements in Place and In Progress ITAÚ UNIBANCO HOLDING’s minimum capital requirements comply with the set of BACEN resolutions and circulars which established in Brazil the global capital requirement standards known as Basel III. These are expressed as indices obtained from the ratio between capital - represented by the Referential Equity (PR), or Total Capital, composed by the Tier I Capital (which comprises the Common Equity and Additional Tier I Capital) and Tier II Capital, and the risk-weighted assets (RWA). The Basel Accord requires banksTotal Capital, Tier 1 Capital and Common Equity Tier I Capital ratios are calculated on a consolidated basis, applied to have a ratioentities that are part of Prudential Conglomerate, which comprises not only financial institutions but also collective financing plans (“consórcios”), payment entities, factoring companies or companies that directly or indirectly assume credit risk, and investment funds in which ITAÚ UNIBANCO HOLDING retains substantially all risks and rewards. For purposes of calculating these minimum capital requirements, the total RWA is determined as the sum of the risk weighted asset amounts for credit, market, and operational risks. ITAÚ UNIBANCO HOLDING uses the standardized approaches to calculate credit and operational risk-weighted asset amounts. From September 1, 2016, BACEN authorized ITAÚ UNIBANCO HOLDING to use internal market risk models to determine the total amount of regulatory capital, using for its daily calculation the portion of RWAmint, replacing the portion RWAmpad, as set out in BACEN Circular 3,646. For units which are not considered significant in calculating regulatory capital for market risk, the standardized approach is used. Therefore, the internal models are not used for Argentina, Chile, Itaú BBAInternational, Itaú BBA Colombia, Paraguay, and Uruguay units. From January 1, 2016 to December 31, 2016, the minimum Total Capital ratio required is 9.875%. The required minimum Total Capital ratio between October 1, 2013 and December 31, 2015 was 11%, reducing gradually to 8% on January 1, 2019. In addition to the minimum regulatory capital requirements, BACEN rules calls for Additional Common Equity Tier I Capital (ACP), corresponding to the sum of the components ACPConservation, ACPCountercyclical and ACPSystemic, which, in conjunction with the requirements mentioned, increase capital requirements over time. Under CMN Resolution 4,193, the value of each of the components ACPConservation and ACPCountercyclicalwill increase gradually from 0.625%, as from January 1, 2016, to 2.5%, as from January 1, 2019. However, component ACPCountercyclicalis triggered during the phase of expansion of the credit cycle and, in accordance with BACEN Circular 3,769, the value currently required for component ACPCountercyclical is equal to zero. Also, if this component increases, the new percentage rate will take effect only twelve months after the announcement. In the case of component ACPSystemic, under BACEN Circular 3,768, the current requirement applicable to ITAÚ UNIBANCO HOLDING is 0%, increasing gradually from 0.25%, as from January 2017, to 1%, as from January 1, 2019. The Basel III regulatory reform also redefined the requirements for the qualification of instruments eligible for Tier I or Tier II Capital, as regulated by CMN Resolution 4,192, including a gradual reduction calendar for instruments already considered in the capital, issued prior to the effective date of the standard, which do not fully meet the new requirements. The table below shows Basel III implementation calendar for Brazil, as defined by BACEN, in which the figures refer to the percentage of ITAÚ UNIBANCO HOLDING’s risk-weighted assets. | | | From January 1, | | | Basel III Implentation Calendar | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | Common Equity Tier I | | | | | | | | | | | | | | | | | | | | | | Tier I | | | 6.0 | % | | | 6.0 | % | | | 6.0 | % | | | 6.0 | % | | | 6.0 | % | | Total Capital | | | 11 | % | | | 9.875 | % | | | 9.25 | % | | | 8.625 | % | | | 8.0 | % | | Additional Common Equity Tier I (ACP) | | | 0.0 | % | | | 0.625 | % | | | 1.50 | % | | | 2.375 | % | | | 3.5 | % | | Conservation | | | 0 | % | | | 0.625 | % | | | 1.25 | % | | | 1.875 | % | | | 2.5 | % | | Countercyclical(1) | | | 0 | % | | | 0 | % | | | 0 | % | | | 0 | % | | | 0 | % | | Systemic | | | 0 | % | | | 0 | % | | | 0.25 | % | | | 0.5 | % | | | 1.0 | % | | Common Equity Tier I + ACP | | | 4.5 | % | | | 5.125 | % | | | 6.0 | % | | | 6.875 | % | | | 8.0 | % | | Total Capital + ACP | | | 11.0 | % | | | 10.5 | % | | | 10.75 | % | | | 11.0 | % | | | 11.5 | % | | Prudential Adjustments Deductions | | | 40 | % | | | 60 | % | | | 80 | % | | | 100 | % | | | 100 | % |
(1) According to BACEN Circular 3,769, the current requirement for component ACPcountercyclical is equal to zero. Additionally, in March 2015, Circular BACEN 3,751 came into force, It provides for the calculation of the relevant indicators for assessing the Global Systemically Important Banks (G-SIBs) of financial institutions in Brazil. Information on the values of the G-SIBs indicators, which are not part of its financial statements, can be found at www.itau.com.br/investor-relations, “Corporate Governance” section, “Global Systemically Important Banks”. The Leverage Ratio is defined as the ratio between the Tier I Capital and Total Exposure, calculated as prescribed by BACEN Circular 3,748. The objective of this ratio is to be a simple, risk-insensitive leverage measure. Therefore, it does not take into consideration risk-weighting or mitigation factors. In line with the instructions set out in BACEN Circular 3,706, since October 2015, ITAÚ UNIBANCO HOLDING has reported its Leverage Ratio to BACEN on a monthly basis. However, according to recommendations in Basel III Accord, a minimum Leverage Ratio should be required in 2018, which will be defined based on the period over which the ratio’s behavior was monitored, since its implementation in 2011 up to 2017. More information on the composition of the Leverage Ratio, which are not part of its financial statements, is available atwww.itau.com.br/investors-relations, “Governança Corporate Governance section/Risk and Capital Management – Pillar 3. b) Capital Management The Board of Directors is the main body in the management of ITAÚ UNIBANCO HOLDING’s capital and it is responsible for approving the institutional capital management policy and guidelines regarding the institution’s capitalization level. The Board is also responsible for fully approving the ICAAP report, a process which is intended to assess the adequacy of ITAÚ UNIBANCO HOLDING’s capital by identifying material risks; defining the need for additional capital for such risks and the internal capital quantification methodologies; preparing a capital plan, both for normal and stress situations; and structuring a capital contingency plan. At the executive level, corporate bodies are responsible for approving risk exposure assetsassessment and capital calculation methodologies, as well as revising, monitoring and recommending capital-related documents and topics to the Board of Directors. To support the governance of its management bodies, ITAÚ UNIBANCO HOLDING has a dedicated capital management structure, which coordinates and consolidates information and related processes, all of which subject to verification by independent validation, internal control and audit areas. In order to provide Executives and the Board of Directors with necessary information to support the decision-making process, management reportS are prepared and presented at corporate bodies, keeping them informed of ITAÚ UNIBANCO HOLDING as well as of projections of future capital levels under normal and stress situations. The “Public Access Report – Capital Management“, which are not part of its financial statements, which provides the guidelines established in the institutional capital management policy can be accessed at www.itau.com.br/investor-relations, under Corporate Governance, Regulations and Policies. c) Risk appetite ITAÚ UNIBANCO HOLDING’s risk appetite is a set of guidelines and limits defining acceptable levels of risk for ITAÚ UNIBANCO HOLDING, aligned with the institution’s strategy. Divided into four dimensions consisting of a set of metrics of the key risks involved, risk appetite combines complementary forms of risk measurement, in order to give a comprehensive overview of the institution’s exposure. The capitalization dimension reflects the level of protection of the bank against significant losses. This dimension establishes the minimum capitalization guidelines of 8%. ITAÚ UNIBANCO HOLDING in relation to its risks, according to which management uses ITAÚ UNIBANCO HOLDING’s capital in accordance with acceptable leverage levels and funding costs. The regulatory capitalliquidity dimension reflects the level of protection against a long period of funding stress, which could lead to a lack of liquidity. This dimension establishes the guidelines regarding the minimum liquidity levels, acceptable levels of mismatch of terms and funding structure. The business composition dimension, in turn, seeks to ensure, by means of concentration limits, proper portfolio composition, aiming at low volatility and sustainability of the businesses. Whereas, the franchise dimension addresses risks that may impact the value of the brand and reputation of ITAÚ UNIBANCO HOLDING with stakeholders. The Board of Directors holds the highest approval authority for risk appetite guidelines and limits, carrying out its responsibilities with the support of its Risk and Capital Management Committee, which submits reports and recommendations on the issue for the Board’s approval. The acceptable risk levels should be in line with the risk appetite limits approved by the Board of Directors. Executive and operational functions are the responsibility of the Executive Board and the risk commissions, whose members include the Chief Risk Officer (CRO) and the CEO of the institution. In addition to regularly monitoring and supervising the metrics, the risk commissions are also responsible for implementing the risk appetite framework. Also, the Audit Committee monitors the evolution of the risk appetite and helps in its management. d) Composição do Capital The Referential Equity (PR) used to monitor compliance with the operational limits imposed by BACEN is basically composedthe sum of two tiers:three items, namely: | ·- | Common Equity Tier I: the sum of Principal Capital, determined in general by capital, certain reserves and retained earnings, less deductions and prudential adjustments, and Supplementary Capital.adjustments. |
| ·- | Additional Tier II: includes eligibleI Capital: consists of instruments primarily subordinated debt, subject to prudential limitations.of a perpetual nature, which meet eligibility requirements. Together with Common Equity |
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%; with timeline to achieve 8% in 2019; (ii) certain risk-weighted factors attributed to certain assets and other exposures. 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.Tier I it makes up Tier I.
Management manages capital- Tier II: consists of subordinated debt instruments with the intention todefined maturity dates that meet the minimum capital required by the Central Bank of Brazil. During the period ITAÚ UNIBANCO HOLDING compliedeligibility requirements. Together with all externally imposed capital requirements to which we are subject.Common Equity Tier I and Additional Tier I Capital, makes up Total Capital.
The following table summarizesbelow presents the composition of regulatory capital, the minimum capitalreferential equity segregated into Common Equity Tier I, Additional Tier I Capital and Tier II Capital, taking into consideration their respective prudential adjustments, as required and the Basel ratio computed in accordance with the Central Bank of Brazil, on a financial institution consolidation basis.by current regulations. | | 12/31/2015 | | | | Consolidated | | | | Prudential(*) | | Regulatory Capital | | | | | Tier I | | | 101,001 | | Common Equity Tier I | | | 100,955 | | Additional Tier I Capital | | | 46 | | Tier II | | | 27,464 | | Total | | | 128,465 | | Requirement for coverage of risk-weighted assets | | | | | Credit | | | 679,593 | | Market | | | 14,252 | | Operational | | | 28,623 | | Risk-weighted assets | | | 722,468 | | Minimum Required Regulatory Capital | | | 79,471 | | Excess capital in relation to Minimum Required Regulatory Capital | | | 48,994 | | Capital to risk-weighted assets ratio - % | | | 17.8 | % |
(*) Consolidated financial statements including financial companies and the like: As from the base date January 2015, in accordance with Circular 4,278, this is the basis for the consolidation calculation.
| Composition of Referential Equity | | 12/31/2016 | | | 12/31/2015 | | | Stockholders’ equity Itaú Unibanco Holding S.A. (Consolidated) | | | 115,590 | | | | 106,462 | | | Non-controlling Interests | | | 11,568 | | | | 916 | | | Changes in Subsidiaries´ Interests in Capital Transactions | | | 2,777 | | | | 3,683 | | | Consolidated Stockholders’ Equity (BACEN) | | | 129,935 | | | | 111,061 | | | Common Equity Tier I Prudential Adjustments | | | (14,527 | ) | | | (10,107 | ) | | Common Equity Tier I | | | 115,408 | | | | 100,955 | | | Additional Tier I Prudential Adjustments | | | 532 | | | | 46 | | | Additional Tier I Capital | | | 532 | | | | 46 | | | Tier I (Common Equity Tier I + Additional Tier I Capital) | | | 115,940 | | | | 101,001 | | | Instruments Eligible to Comprise Tier II | | | 23,488 | | | | 27,403 | | | Tier II Prudential Adjustments | | | 49 | | | | 61 | | | Tier II | | | 23,537 | | | | 27,464 | | | Referential Equity (Tier I + Tier II) | | | 139,477 | | | | 128,465 | |
The table below shows the most significant Prudential Adjustments for ITAÚ UNIBANCO HOLDING. Together, they correspond to more than 90% of the prudential adjustments as at December 31, 2016. | Composition of Prudential Adjustments | | 12/31/2016 | | | 12/31/2015 | | | Goodwill paid on the acquisition of investments | | | 7,408 | | | | 2,926 | | | Intangible assets | | | 3,254 | | | | 1,078 | | | Tax credits | | | 3,678 | | | | 2,389 | | | Surplus of Common Equity Tier I Capital - Noncontrolling interests | | | 909 | | | | 152 | | | Adjustments relating to the fair value of derivatives used as cash flow | | | | | | | | | | hedge, for hedged items that do not have their mark-to-market | | | (1,254 | ) | | | - | | | adjustments accounted for | | | | | | | | | | Other | | | 532 | | | | 3,562 | | | Total | | | 14,527 | | | | 10,107 | |
During 2016, ITAÚ UNIBANCO HOLDING bought back shares in the amount of R$ 947. These shares are recorded in line item “Treasury Shares”, which totaled R$ (1,882) as at December 31, 2016. Treasury shares reduce the institution´s Equity, causing its capital base to be decreased. In this period, the amount of dividends and interest on capital paid / accrued that affected the base of the institution’s capital totaled R$ 9,221. Dividends are deducted from the institution´s Equity, thus reducing the base of its capital. Whereas, interest on capital, which is accounted for as an expense directly in profit (loss), reduces the institution´s net income and, consequently, the base of its capital. For details on capital requirements, which are not part of its financial statements, are available at www.itau.com.br/investors-relations, Corporate Governance section / Risk and Capital Management – Pillar 3. The funds obtained through the issuance of subordinated debt securities are considered Tier II capital for the purpose of capital to risk-weighted assets ratio, as follows. According to current legislation, the accounting balance of subordinated debt as of December 2012 was used for the calculation of reference equity as of December 2015,2016, considering instruments approved after the closing date to compose Tier II, totaling R$ 51,134. | | | Principal amount | | | | | | | | | | | | | Name of security / currency | | (original currency) | | | Issue | | | Maturity | | | Return p.a. | | Account balance | | | Principal amount
(original currency) | | Issue | | Maturity | | Return p.a. | | Saldo
Contábil
12/31/2016 | | | Subordinated CDB - BRL | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 466 | | | | 2006 | | | | 2016 | | | 100% of CDI + 0.7% (*) | | | 1,235 | | | | 367 | | | | 2010 | | | | 2017 | | | IPCA + 7,21% to 7,33% | | | 929 | | | | | | 2,665 | | | | 2010 | | | | 2016 | | | 110% to 114% of CDI | | | 5,154 | | | | 367 | | | | | | | | | | | Total | | | 929 | | | | | | 123 | | | | | | | | | | | IPCA + 7.21% to 7.33% | | | 268 | | | | | | | 367 | | | | 2010 | | | | 2017 | | | IPCA + 7.21% to 7.33% | | | 806 | | | | | | | 3,621 | | | | | | | | | | | Total | | | 7,463 | | | | Subordinated financial bills - BRL | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 365 | | | | 2010 | | | | 2016 | | | 100% of CDI + 1.35% to 1.36% | | | 385 | | | | | | | 1,874 | | | | | | | | | | | 112% to 112.5% of CDI | | | 1,973 | | | | | | | 30 | | | | | | | | | | | IPCA + 7% | | | 59 | | | | | | | 206 | | | | 2010 | | | | 2017 | | | IPCA + 6.95% to 7.2% | | | 312 | | | | | | | 3,224 | | | | 2011 | | | | 2017 | | | 108% to 112% of CDI | | | 3,493 | | | | 206 | | | | 2010 | | | | 2017 | | | IPCA + 6,95% to 7,2% | | | 337 | | | | | | 352 | | | | | | | | | | | IPCA + 6.15% to 7.8% | | | 578 | | | | 3,224 | | | | 2011 | | | | 2017 | | | 108% to 112% of CDI | | | 3,565 | | | | | | 138 | | | | | | | | | | | IGPM + 6.55% to 7.6% | | | 241 | | | | 3,650 | | | | | | | | | | | 100% of CDI + 1,29% to 1,52% | | | 3,802 | | | | | | 3,650 | | | | | | | | | | | 100% of CDI + 1.29% to 1.52% | | | 3,790 | | | | 352 | | | | | | | | | | | IPCA + 6,15% to 7,8% | | | 647 | | | | | | 500 | | | | 2012 | | | | 2017 | | | 100% of CDI + 1.12% | | | 506 | | | | 138 | | | | | | | | | | | IGPM + 6,55% to 7,6% | | | 276 | | | | | | 42 | | | | 2011 | | | | 2018 | | | IGPM + 7% | | | 60 | | | | 500 | | | | 2012 | | | | 2017 | | | 100% of CDI + 1,12% | | | 506 | | | | | | 30 | | | | | | | | | | | IPCA + 7.53% to 7.7% | | | 44 | | | | 42 | | | | 2011 | | | | 2018 | | | IGPM + 7% | | | 65 | | | | | | 461 | | | | 2012 | | | | 2018 | | | IPCA + 4.4% to 6.58% | | | 690 | | | | 30 | | | | | | | | | | | IPCA + 7,53% to 7,7% | | | 48 | | | | | | 3,782 | | | | | | | | | | | 100% of CDI + 1.01% to 1.32% | | | 3,900 | | | | 6,373 | | | | 2012 | | | | 2018 | | | 108% to 113% of CDI | | | 7,250 | | | | | | 6,373 | | | | | | | | | | | 108% to 113% of CDI | | | 7,027 | | | | 461 | | | | | | | | | | | IPCA + 4,4% to 6,58% | | | 760 | | | | | | 112 | | | | | | | | | | | 9.95% to 11.95% | | | 158 | | | | 3,782 | | | | | | | | | | | 100% of CDI + 1,01% to 1,32% | | | 3,904 | | | | | | 2 | | | | 2011 | | | | 2019 | | | 109% to 109.7% of CDI | | | 3 | | | | 112 | | | | | | | | | | | 9,95% to 11,95% | | | 174 | | | | | | 12 | | | | 2012 | | | | 2019 | | | 11.96% | | | 19 | | | | 2 | | | | 2011 | | | | 2019 | | | 109% to 109,7% of CDI | | | 4 | | | | | | 101 | | | | | | | | | | | IPCA + 4.7% to 6.3% | | | 148 | | | | 1 | | | | 2012 | | | | 2019 | | | 110% of CDI | | | 2 | | | | | | 1 | | | | | | | | | | | 110% of CDI | | | 2 | | | | 12 | | | | | | | | | | | 11.96% | | | 21 | | | | | | 20 | | | | 2012 | | | | 2020 | | | IPCA + 6% to 6.17% | | | 33 | | | | 101 | | | | | | | | | | | IPCA + 4,7% to 6,3% | | | 163 | | | | | | 1 | | | | | | | | | | | 111% of CDI | | | 2 | | | | 1 | | | | 2012 | | | | 2020 | | | 111% of CDI | | | 2 | | | | | | 6 | | | | 2011 | | | | 2021 | | | 109.25% to 110.5% of CDI | | | 10 | | | | 20 | | | | | | | | | | | IPCA + 6% to 6,17% | | | 37 | | | | | | 2,307 | | | | 2012 | | | | 2022 | | | IPCA + 5.15% to 5.83% | | | 3,454 | | | | 6 | | | | 2011 | | | | 2021 | | | 109,25% to 110,5% of CDI | | | 11 | | | | | | 20 | | | | | | | | | | | IGPM + 4.63% | | | 25 | | | | 2,307 | | | | 2012 | | | | 2022 | | | IPCA + 5,15% to 5,83% | | | 3,885 | | | | | | 23,609 | | | | | | | | | | | Total | | | 26,912 | | | | 20 | | | | | | | | | | | IGPM + 4,63% | | | 27 | | | | | | | | | | | | | | | | | | | | | | | | 21,340 | | | | | | | | | | | Total | | | 25,486 | | | Subordinated euronotes - USD | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 990 | | | | 2010 | | | | 2020 | | | 6.20% | | | 3,908 | | | | 990 | | | | 2010 | | | | 2020 | | | 6.20% | | | 3,264 | | | | | | 1,000 | | | | 2010 | | | | 2021 | | | 5.75% | | | 3,890 | | | | 1,000 | | | | 2010 | | | | 2021 | | | 5.75% | | | 3,352 | | | | | | 730 | | | | 2011 | | | | 2021 | | | 5.75% to 6.20% | | | 2,998 | | | | 730 | | | | 2011 | | | | 2021 | | | 5,75% to 6,20% | | | 2,396 | | | | | | 550 | | | | 2012 | | | | 2021 | | | 6.20% | | | 2,148 | | | | 550 | | | | 2012 | | | | 2021 | | | 6.20% | | | 1,793 | | | | | | 2,600 | | | | 2012 | | | | 2022 | | | 5.50% to 5.65% | | | 10,264 | | | | 2,600 | | | | 2012 | | | | 2022 | | | 5,50% to 5,65% | | | 8,580 | | | | | | 1,851 | | | | 2012 | | | | 2023 | | | 5.13% | | | 7,278 | | | | 1,851 | | | | 2012 | | | | 2023 | | | 5.13% | | | 6,075 | | | | | | 7,721 | | | | | | | | | | | Total | | | 30,486 | | | | 7,721 | | | | | | | | | | | Total | | | 25,460 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | 64,861 | | | | | | | | | | | | | | | | | | 51,875 | |
(*) Subordinated CDBs may be redeemed from November 2011. e) Risk-weighted Assets (RWA) According to CMN Resolution 4,193, and subsequent amendments, for assessing the minimum capital requirements, the RWA must be calculated by adding the following portions: RWA = RWACPAD + RWAMINT+ RWAOPAD RWACPAD = portion related to exposures to credit risk calculated using standardized approach;
RWAMINT = portion related to the market risk capital requirement, using internal approach, according to BACEN Circular 3,646; RWAOPAD = portion related to the operational risk capital requirement, calculated using standardized approach. The table below shows the amounts of risk weighted assets for Credit Risk (RWACPAD): | | | 12/31/2016 | | | 12/31/2015 | | | | | | | | | | | Risk exposures | | | | | | | | Exposure Weighted by Credit Risk (RWACPAD) | | | 669,284 | | | | 679,593 | | | a) Per Weighting Factor (FPR): | | | | | | | | | | FPR at 2% | | | 105 | | | | 179 | | | FPR at 20% | | | 8,011 | | | | 7,000 | | | FPR at 35% | | | 12,056 | | | | 11,695 | | | FPR at 50% | | | 44,251 | | | | 46,025 | | | FPR at 75% | | | 142,194 | | | | 136,104 | | | FPR at 85% | | | 82,494 | | | | 129,884 | | | FPR at 100% | | | 325,890 | | | | 288,057 | | | FPR at 250% | | | 33,213 | | | | 37,858 | | | FPR at 300% | | | 7,357 | | | | 10,751 | | | FPR up to 1250%(*) | | | 1,608 | | | | 1,990 | | | Derivatives - Changes in the Counterparty Credit Quality | | | 6,168 | | | | 4,924 | | | Derivatives - Future Potential Gain | | | 5,937 | | | | 5,126 | | | b) Per Type: | | | | | | | | | | Securities | | | 45,741 | | | | 51,085 | | | Loan Operations - Retail | | | 114,481 | | | | 109,882 | | | Loan Operations - Non-Retail | | | 247,911 | | | | 237,365 | | | Joint Liabilities - Retail | | | 205 | | | | 242 | | | Joint Liabilities - Non-Retail | | | 47,108 | | | | 46,655 | | | Loan Commitments - Retail | | | 27,504 | | | | 25,972 | | | Loan Commitments - Non-Retail | | | 10,234 | | | | 12,924 | | | Other Exposures | | | 176,100 | | | | 195,468 | |
(*) Taking into consideration the application of the “F” factor required by Article 29 of BACEN Circular 3,644. We present below the breakdown of Risk-weighted assets of market risk (RWAMINT), as follows: | | | 12/31/2016(1) | | | 12/31/2015(2) | | | | | | | | | | | Risk-weighted assets of market risk (RWAMINT) | | | 24,130 | | | | 14,252 | | | Operations subject to interest rate variations | | | 24,919 | | | | 11,291 | | | Fixed rate denominated in Real | | | 4,952 | | | | 2,127 | | | Foreign currency coupon | | | 15,497 | | | | 6,700 | | | Price index coupon | | | 4,470 | | | | 2,464 | | | Operations subject to commodity price variation | | | 353 | | | | 473 | | | Operations subject to stock price variation | | | 401 | | | | 952 | | | Operations subject to risk exposures in gold, foreign currency and foreign | | | 1,138 | | | | 1,536 | | | Capital benefit – Internal models | | | (2,681 | ) | | | | |
| (1) | Market risk-weighted assets calculated based on internal models. |
| (2) | Market risk-weighted assets calculated based on standard models. |
The capital requirement for the market risk portion is the maximum of the internal model and 90% of the standardized model. As at December 31, 2016, RWAMPAD was R$ 26,811; hence, the regulatory capital for market risk (RWAMINT amounted to R$ 24,130, or 90% of the standardized model. The table below shows the amounts of risk weighted assets for Operational Risk (RWAOPAD): | | | 12/31/2016 | | | 12/31/2015 | | | | | | | | | | | Risk-weighted assets of operational risk (RWAOPAD) | | | 37,826 | | | | 28,623 | | | | | | | | | | | | | Retail | | | 10,887 | | | | 7,470 | | | Commercial | | | 24,166 | | | | 16,491 | | | Corporate finance | | | 2,789 | | | | 1,380 | | | Negotiation and sales | | | (11,026 | ) | | | (4,927 | ) | | Payments and settlement | | | 3,418 | | | | 3,074 | | | Financial agent services | | | 3,471 | | | | 2,873 | | | Asset management | | | 4,109 | | | | 2,145 | | | Retail brokerage | | | 12 | | | | 118 | |
f) Capital Adequacy Assessment In annually assessing its capital adequacy, ITAÚ UNIBANCO HOLDING adopts the following flow: | - | Identification of risks to which the institution is exposed and analysis of their materiality; |
| - | Evaluation of capital requirements for material risks; |
| - | Development of methodologies for quantifying additional capital; |
| - | Quantification and internal capital adequacy evaluation; |
| - | Sending the capital adequacy report to BACEN. |
Under ICAAP, a fundamental component for ITAÚ UNIBANCO HOLDING's internal capital management, noteworthy is the stress testing, a most significant element. This process provides for assessing capital by way of adverse scenarios, approved on a yearly basis by the Board of Directors, and whose purpose is measuring and assessing whether, even in severe adverse scenarios, the institution would have adequate capital levels that would not generate restrictions to the development of its activities. The result of the last ICAAP – conducted as of December 2015 – indicated that, in addition to capital to face all material risks, ITAÚ UNIBANCO HOLDING has significant capital surplus, thus assuring the institution’s equity soundness. g) Capital Adequacy ITAÚ UNIBANCO HOLDING, through the ICAAP, assesses the adequacy of its capital to face the incurred risks. For ICAAP, capital is composed by regulatory capital for credit, market and operational risks and by the necessary capital to face other risks. In order to ensure the soundness of ITAÚ UNIBANCO HOLDING and the availability of capital to support business growth, ITAÚ UNIBANCO HOLDING maintains PR levels above the minimum level required to face risks, as evidenced by the Common Equity, Tier I Capital and Basel ratios. | Composition of Referential Equity (PR) | | 12/31/2016 | | | 09/30/2016 | | | 12/31/2015 | | | | | | | | | | | | | | Tier I | | | 115,940 | | | | 115,936 | | | | 101,001 | | | Common Equity Tier I | | | 115,408 | | | | 115,364 | | | | 100,955 | | | Additional Tier I Capital | | | 532 | | | | 572 | | | | 46 | | | Tier II | | | 23,537 | | | | 23,622 | | | | 27,464 | | | Referential Equity | | | 139,477 | | | | 139,557 | | | | 128,465 | | | Minimum Referential Equity Required | | | 72,210 | | | | 72,672 | | | | 79,471 | | | Surplus Capital in relation to the Minimum Referential Equity Required | | | 67,267 | | | | 66,885 | | | | 48,994 | | | Additional Common Equity Tier I Required (ACPRequired) | | | 4,570 | | | | 4,600 | | | | | | | Referential equity calculated for covering the interest rate risk on operations not classified in the trading portfolio (RBAN) | | | 2,264 | | | | 2,332 | | | | 1,275 | |
The table below shows the Basel and Fixed Asset Ratios: | | | 12/31/2016 | | | 09/30/2016 | | | 12/31/2015 | | | | | | | | | | | | | | Basel Ratio | | | 19.1 | % | | | 19.0 | % | | | 17.8 | % | | Tier I | | | 15.9 | % | | | 15.8 | % | | | 14.0 | % | | Common Equity Tier I | | | 15.8 | % | | | 15.7 | % | | | 14.0 | % | | Additional Tier I Capital | | | 0.1 | % | | | 0.1 | % | | | 0.0 | % | | Tier II | | | 3.2 | % | | | 3.2 | % | | | 3.8 | % | | Fixed Asset Ratio | | | 25.4 | % | | | 23.6 | % | | | 27.7 | % | | Surplus Capital in Relation to Fixed Assets | | | 34,298 | | | | 36,837 | | | | 28,616 | |
Considering our current capital base at December 31, 2016, should the Basel III rules established by BACEN be immediately and fully applied, the principal capital ratio would be 14.0% (13.6% at 12/31/2015 considering the use of tax credit), taking into consideration the payment of additional interest on capital expected for March 2017, the merger of Citibank and the use of tax credit. h) Stress testing Stress testing is performed by Itaú Unibanco to evaluate the institution’s solvency in hypothetical, however, plausible, situations of systemic crisis and identify areas most susceptible to the impact of the stress that may require risk mitigation. Since 2010, Itaú Unibanco has performed a process that simulates the impact of extreme economic and market conditions on the results and capital of the institution. To perform the test, macroeconomic variables for each stress scenario are estimated by the economic research department. The scenarios are defined based on their relevance for the bank´s results and likelihood to occur and are submitted to the Board of Directors for approval. Projections of macroeconomic variables (GDP, benchmark interest rate and inflation) and of the credit market (fundraising, loans, default rate, spread and fees) for these scenarios are generated based on exogenous shocks or by using models validated by an independent area. The projections calculated sensitize the budgeted results and balance sheet and, consequently, affect the risk weighted assets and the capital and liquidity ratios. This information allows to identify potential factors of risks on businesses, supporting the Board of Directors’ strategic decisions, the budgetary process and discussions on credit granting policies, in addition to being used as input for risk appetite metrics.
Note 34 – Segment Information ITAÚ UNIBANCO HOLDING is a banking institution that offers its customers a wide range of financial products and services. As from the first quarter of 2015 and the comparison with 2014, the way of presenting the segments was changed in order to adjust it to the bank’s current organizational structure. The following segments will be reported: Retail Banking, Wholesale Banking, and Activities with the Market + Corporation. The Retail Banking now covers the former segments Commercial Banking, – Retail and Consumer Credit – Retail, with the transfer of operations from Private Banking and Latam to the Wholesale Banking and these are the main changes of this presentation.
The current operational and reporting segments of ITAÚ UNIBANCO HOLDING are described below: The result of the Retail Banking segment arises from the offer of banking products and services to a diversified client base of account holders and non-account holders, individuals and companies. The segment includes retail clients, high net worth clients (Itaú Uniclass and Personnalité), and the corporate segment (very small and small companies). This segment comprises financing and lending activities carried out in units other than the branch network, and offering of credit cards, in addition to operations with Itaú BMG Consignado. The result of the Wholesale Banking segment arises from the products and services offered to middle-market companies, private banking clients, from the activities of Latin America units, and the activities of Itaú BBA, the unit in charge of commercial operations with large companies and performing as an investment banking unit. | · | Activities with the Market + Corporation |
This segment records the result arising from capital surplus, subordinated debt surplus and the net balance of tax credits and debits. It also shows the financial margin with the market, the Treasury operating cost, the equity in earnings of companies not associated to each segment and the interest in Porto Seguro. 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 is measured on different bases as well as information prepared based on accounting practices adopted in Brazil. The main index used to monitor the business performance is the Recurring Net Income and the Economic Capital allocated to each segment. The segment information has been prepared following accounting practices adopted in Brazil modified for the adjustments described below: | · | Allocated capital and income tax rate |
· Allocated capital and income tax rate Based on the managerial income statement, the segment information considers the application of the following criteria: Allocated capital:The impacts associated to capital allocation are included in the financial information. Accordingly,information.Accordingly, adjustments were made to the financial statements, based on a proprietary model. The Allocated Economic Capital (AEC) model was adopted for the financial statements by segments, and as from 2015, we changed the calculation methodology. The AEC considers, in addition to Tier Il allocated capital, the effects of the calculation of expected loan losses, supplementary to the requirements of the Central Bank of Brazil, pursuant to CMN Circular No. 2.682/99. Accordingly, the Allocated Capital comprises the following components: Credit risk (including expected loss), operational risk, market risk and insurance underwriting risk. Based on the portion of allocated capital tier I, we calculated the Return on Allocated Economic Allocated Capital, which corresponds to an operational performance indicator consistently adjusted to the capital required to support the risk associated to asset and liability positions assumed, in conformity with our risk appetite. Income tax rate:We consider the total income tax rate, net of the tax effect from the payment of interest on capital,oncapital, for the Retail Banking, Wholesale Bank and Activities with the Market segments. The difference between the income tax amount calculated by segment and the effective income tax amount, as stated in the consolidated financial statements, is allocated to the Activities with the Market + Corporation column. | · | Reclassification and application of managerial criteria |
The managerial statement of income was used to prepare information per segment. These statements were obtained based on the statement of income adjusted by the impact of non-recurring events and the managerial reclassifications in income. From the first quarter of 2013 on, some changes were made in the consolidation criteria for managerial results presented in order to better reflect the way Management monitors the bank’s figures. These adjustments change the order of presentation of the lines only and, therefore, do not affect the net income disclosed. Through these reclassifications, ITAÚ UNIBANCO HOLDING seeks to align the way it presents its results and enables a better comparison and understanding of the bank’s performance assessment.
We describe below the main reclassifications between the accounting and managerial results: Banking product:The banking product considers the opportunity cost for each operation. The financial statementsfinancialstatements were adjusted so that the stockholders' equity was replaced by funding at market price. Subsequently, the financial statements were adjusted to include revenues related to capital allocated to each segment. The cost of subordinated debt and the respective remuneration at market price were proportionally allocated to the segments, based on the economic allocated capital. Hedge tax effects:The tax effects of the hedge of investments abroad were adjusted – adjusted–these were originallywereoriginally recorded in the tax expenses (PIS and COFINS) and Income Tax and Social Contribution on net income lines – and are now reclassified to the margin. The strategy to manage the foreign exchange risk associated to the capital invested abroad aims at preventing the effects of the exchange rates variation on income. In order to achieve this objective, we used derivative instruments to hedge against such foreign currency risk, with investments remunerated in Brazilian Reais. The hedge strategy for foreign investments also considers the impact of all tax effects levied. Insurance:Insurance business revenues and expenses were concentrated in Income related to Insurance,pension plan and capitalization operations. The main reclassifications of revenues refer to the financial margins obtained with the technical provisions of insurance, pension plan and capitalization, in addition to revenue from management of pension plan funds. Other reclassifications:Other Income, Share of Income of Associates, Non-Operating Income, Profit SharingProfitSharing of Management Members and Expenses for Credit Card Reward Program were reclassified to those lines representing the way the institution manages its business, enabling greater understanding for performance analysis. Accordingly, equity in earnings of investment in Banco CSF S.A. (“Banco Carrefour”) was reclassified to the financial margin line. Additionally, for better comparison with the new consolidation criteria, 100% of the results from partnerships were consolidated (they were previously proportionally consolidated), and expenses for provisions associated to securities and derivatives were reclassified (from Non-interest expenses income to Expenses for allowance for loan losses). The adjustments and reclassifications 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 for financial institutions in Brazil, except as described above, and the policies used in the preparation of these consolidated financial statements according to IFRS. Main adjustments are as follows: | · | Allowance for Loan Losses, which, under IFRS (IAS 39), should be recognized upon objective evidence that loan operations are impaired (incurred loss), and the Expected Loss concept is adopted according to Brazilian accounting standards; |
| · | Shares and units classified as permanent investments were stated at fair value under IFRS (IAS 39 and 32), and their gains and losses were directly recorded to Stockholders’ Equity, not passing through income for the period; |
| · | Effective interest rates, financial assets and liabilities stated at amortized cost, are recognized by the effective interest rate method, allocating revenues and costs directly attributable to acquisition, issue or disposal for the transaction period of the operation; according to Brazilian standards, fee expenses and income are recognized as these transactions are engaged. |
| · | Business combinations are accounted for under the acquisition method in IFRS (IFRS 3), in which the purchase price is allocated among assets and liabilities of the acquired company, and the amount not subject to allocation, if any, is recognized as goodwill. Such amount is not amortized, but is subject to an impairment test. |
ITAÚ UNIBANCO HOLDING S.A. From January 1 to December 31, 20152016 (In millions of Reais, except for share information) | | | | | | | | Activities with | | | | | | | | | | | | | Retail | | Wholesale | | the Market + | | ITAÚ | | | | | | IFRS | | | | Consolidated Statement of Income | | Banking | | | Banking | | | Corporation | | | UNIBANCO | | | Adjustments | | | consolidated | | | Retail
Banking | | Wholesale
Banking | | Activities with
the Market +
Corporation | | ITAÚ
UNIBANCO | | Adjustments | | IFRS
consolidated | | | Banking product | | | 70,495 | | | | 25,774 | | | | 7,641 | | | | 103,910 | | | | (11,899 | ) | | | 92,011 | | | | 69,577 | | | | 28,324 | | | | 9,412 | | | | 107,313 | | | | 11,348 | | | | 118,661 | | | Interest margin(1) | | | 40,997 | | | | 18,047 | | | | 7,513 | | | | 66,557 | | | | (11,949 | ) | | | 54,608 | | | | 39,154 | | | | 19,755 | | | | 9,264 | | | | 68,173 | | | | 11,308 | | | | 79,481 | | | Banking service fees | | | 21,159 | | | | 7,282 | | | | 59 | | | | 28,500 | | | | 952 | | | | 29,452 | | | | 22,659 | | | | 8,072 | | | | 59 | | | | 30,790 | | | | 1,128 | | | | 31,918 | | | Income related to insurance, private pension, and capitalization operations before claim and selling expenses | | | 8,339 | | | | 445 | | | | 69 | | | | 8,853 | | | | (2,181 | ) | | | 6,672 | | | | Income related to insurance, private pension, and capitalization | | | | | | | | | | | | | | | | | | | | | | | | | | | operations before claim and selling expenses | | | | 7,764 | | | | 497 | | | | 89 | | | | 8,350 | | | | (2,470 | ) | | | 5,880 | | | Other income | | | - | | | | - | | | | - | | | | - | | | | 1,279 | | | | 1,279 | | | | - | | | | - | | | | - | | | | - | | | | 1,382 | | | | 1,382 | | | Losses on loans and claims | | | (13,893 | ) | | | (5,931 | ) | | | 98 | | | | (19,726 | ) | | | (1,609 | ) | | | (21,335 | ) | | | (14,901 | ) | | | (8,471 | ) | | | 71 | | | | (23,301 | ) | | | 1,179 | | | | (22,122 | ) | | Expenses for allowance for loan and lease losses | | | (16,232 | ) | | | (6,764 | ) | | | 98 | | | | (22,898 | ) | | | (1,619 | ) | | | (24,517 | ) | | | (16,717 | ) | | | (8,914 | ) | | | 71 | | | | (25,560 | ) | | | 1,181 | | | | (24,379 | ) | | Recovery of loans written off as loss | | | 3,886 | | | | 883 | | | | - | | | | 4,769 | | | | 10 | | | | 4,779 | | | | 3,242 | | | | 502 | | | | - | | | | 3,744 | | | | (2 | ) | | | 3,742 | | | Expenses for claims / recovery of claims under reinsurance | | | (1,547 | ) | | | (50 | ) | | | - | | | | (1,597 | ) | | | - | | | | (1,597 | ) | | | (1,426 | ) | | | (59 | ) | | | - | | | | (1,485 | ) | | | - | | | | (1,485 | ) | | Operating margin | | | 56,602 | | | | 19,843 | | | | 7,739 | | | | 84,184 | | | | (13,508 | ) | | | 70,676 | | | | 54,676 | | | | 19,853 | | | | 9,483 | | | | 84,012 | | | | 12,527 | | | | 96,539 | | | Other operating income (expenses) | | | (35,924 | ) | | | (11,130 | ) | | | (1,948 | ) | | | (49,002 | ) | | | (3,409 | ) | | | (52,411 | ) | | | (37,202 | ) | | | (13,410 | ) | | | (2,387 | ) | | | (52,999 | ) | | | (5,348 | ) | | | (58,347 | ) | | Non-interest expenses(2) | | | (31,547 | ) | | | (9,877 | ) | | | (1,522 | ) | | | (42,946 | ) | | | (4,680 | ) | | | (47,626 | ) | | | (32,883 | ) | | | (12,034 | ) | | | (1,616 | ) | | | (46,533 | ) | | | (4,371 | ) | | | (50,904 | ) | | Tax expenses for ISS, PIS and COFINS and Other | | | (4,377 | ) | | | (1,253 | ) | | | (426 | ) | | | (6,056 | ) | | | 651 | | | | (5,405 | ) | | | (4,319 | ) | | | (1,376 | ) | | | (771 | ) | | | (6,466 | ) | | | (1,505 | ) | | | (7,971 | ) | | Share of profit or (loss) in associates and joint ventures | | | - | | | | - | | | | - | | | | - | | | | 620 | | | | 620 | | | | - | | | | - | | | | - | | | | - | | | | 528 | | | | 528 | | | Net income before income tax and social contribution | | | 20,678 | | | | 8,713 | | | | 5,791 | | | | 35,182 | | | | (16,917 | ) | | | 18,265 | | | | 17,474 | | | | 6,443 | | | | 7,096 | | | | 31,013 | | | | 7,179 | | | | 38,192 | | | Income tax and social contribution | | | (7,263 | ) | | | (2,691 | ) | | | (1,040 | ) | | | (10,994 | ) | | | 18,885 | | | | 7,891 | | | | (6,328 | ) | | | (1,081 | ) | | | (1,237 | ) | | | (8,646 | ) | | | (5,964 | ) | | | (14,610 | ) | | Non-controlling interest in subsidiaries | | | (342 | ) | | | - | | | | (14 | ) | | | (356 | ) | | | (60 | ) | | | (416 | ) | | | (223 | ) | | | 79 | | | | (1 | ) | | | (145 | ) | | | (174 | ) | | | (319 | ) | | Net income | | | 13,073 | | | | 6,022 | | | | 4,737 | | | | 23,832 | | | | 1,908 | | | | 25,740 | | | | 10,923 | | | | 5,441 | | | | 5,858 | | | | 22,222 | | | | 1,041 | | | | 23,263 | |
(1) Includes net interest and similar income and expenses of R$ 72,72566,369 dividend income of R$ 98,288, net gain (loss) on investment securities and derivatives of R$ (11.862)7,311 and results from foreign exchange results and exchange variation of transactions abroad of R$ (6,353).5,513. (2) Refers to general and administrative expenses including depreciation expenses of R$ 1,688,1,702, amortization expenses of R$ 9101,292 and insurance acquisition expenses of R$ 1,138.721. | Total assets(1) - 12/31/2015 | | | 873,202 | | | | 547,236 | | | | 127,716 | | | | 1,359,172 | | | | (82,757 | ) | | | 1,276,415 | | | | Total liabilities - 12/31/2015 | | | 840,033 | | | | 502,887 | | | | 97,017 | | | | 1,250,955 | | | | (88,599 | ) | | | 1,162,356 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total assets (1) - 12/31/2016 | | | | 909,779 | | | | 585,088 | | | | 114,956 | | | | 1,425,639 | | | | (72,398 | ) | | | 1,353,241 | | | Total liabilities - 12/31/2016 | | | | 877,792 | | | | 525,390 | | | | 79,365 | | | | 1,298,423 | | | | (79,996 | ) | | | 1,218,427 | | | (1) Includes: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Investments in associates and joint ventures | | | 1,064 | | | | - | | | | 2,436 | | | | 3,500 | | | | 899 | | | | 4,399 | | | | 1,325 | | | | - | | | | 3,106 | | | | 4,431 | | | | 642 | | | | 5,073 | | | Goodwill | | | 232 | | | | - | | | | - | | | | 232 | | | | 1,825 | | | | 2,057 | | | | 1,398 | | | | 6,171 | | | | - | | | | 7,569 | | | | 2,106 | | | | 9,675 | | | Fixed assets, net | | | 5,781 | | | | 1,274 | | | | - | | | | 7,055 | | | | 1,486 | | | | 8,541 | | | | 5,635 | | | | 1,177 | | | | - | | | | 6,812 | | | | 1,230 | | | | 8,042 | | | Intangible assets, net | | | 6,606 | | | | 857 | | | | - | | | | 7,463 | | | | (1,168 | ) | | | 6,295 | | | | 6,559 | | | | 1,105 | | | | - | | | | 7,664 | | | | (283 | ) | | | 7,381 | |
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. ITAÚ UNIBANCO HOLDING S.A. From January 1 to December 31, 2015 (In millions of Reais except per share information)
| Consolidated Statement of Income | | Retail
Banking | | | Wholesale
Banking | | | Actitivities with
the Market +
Corporation | | | ITAÚ
UNIBANCO | | | Adjustments | | | IFRS
consolidated | | | Banking product | | | 70,495 | | | | 25,774 | | | | 7,641 | | | | 103,910 | | | | (11,899 | ) | | | 92,011 | | | Interest margin(1) | | | 40,997 | | | | 18,047 | | | | 7,513 | | | | 66,557 | | | | (11,949 | ) | | | 54,608 | | | Banking service fees | | | 21,159 | | | | 7,282 | | | | 59 | | | | 28,500 | | | | 952 | | | | 29,452 | | | Income related to insurance, private pension, and capitalization operations before claim and selling expenses | | | 8,339 | | | | 445 | | | | 69 | | | | 8,853 | | | | (2,181 | ) | | | 6,672 | | | Other income | | | - | | | | - | | | | - | | | | - | | | | 1,279 | | | | 1,279 | | | Losses on loans and claims | | | (13,893 | ) | | | (5,931 | ) | | | 98 | | | | (19,726 | ) | | | (1,609 | ) | | | (21,335 | ) | | Expenses for allowance for loan and lease losses | | | (16,232 | ) | | | (6,764 | ) | | | 98 | | | | (22,898 | ) | | | (1,619 | ) | | | (24,517 | ) | | Recovery of loans written off as loss | | | 3,886 | | | | 883 | | | | - | | | | 4,769 | | | | 10 | | | | 4,779 | | | Expenses for claims / recovery of claims under reinsurance | | | (1,547 | ) | | | (50 | ) | | | - | | | | (1,597 | ) | | | - | | | | (1,597 | ) | | Operating margin | | | 56,602 | | | | 19,843 | | | | 7,739 | | | | 84,184 | | | | (13,508 | ) | | | 70,676 | | | Other operating income (expenses) | | | (35,924 | ) | | | (11,130 | ) | | | (1,948 | ) | | | (49,002 | ) | | | (3,409 | ) | | | (52,411 | ) | | Non-interest expenses(2) | | | (31,547 | ) | | | (9,877 | ) | | | (1,522 | ) | | | (42,946 | ) | | | (4,680 | ) | | | (47,626 | ) | | Tax expenses for ISS, PIS and COFINS and Other | | | (4,377 | ) | | | (1,253 | ) | | | (426 | ) | | | (6,056 | ) | | | 651 | | | | (5,405 | ) | | Share of profit or (loss) in associates and joint ventures | | | - | | | | - | | | | - | | | | - | | | | 620 | | | | 620 | | | Net income before income tax and social contribution | | | 20,678 | | | | 8,713 | | | | 5,791 | | | | 35,182 | | | | (16,917 | ) | | | 18,265 | | | Income tax and social contribution | | | (7,263 | ) | | | (2,691 | ) | | | (1,040 | ) | | | (10,994 | ) | | | 18,885 | | | | 7,891 | | | Non-controlling interest in subsidiaries | | | (342 | ) | | | - | | | | (14 | ) | | | (356 | ) | | | (60 | ) | | | (416 | ) | | Net income | | | 13,073 | | | | 6,022 | | | | 4,737 | | | | 23,832 | | | | 1,908 | | | | 25,740 | |
(1) Includes net interest and similar income and expenses of R$ 72,725, dividend income of R$ 98, net gain (loss) on investment securities and derivatives of R$ (11,862) and foreign exchange results and exchange variation on transactions of abroad R$ (6,353). (2) Refers to general and administrative expenses including depreciation expenses of R$ 1,688, amortization expenses of R$ 910 and insurance acquisition expenses of R$ 1,138.
| Total assets(1) - 12/31/2015 | | | 873,202 | | | | 547,236 | | | | 127,716 | | | | 1,359,172 | | | | (82,757 | ) | | | 1,276,415 | | | Total liabilities - 12/31/2015 | | | 840,033 | | | | 502,887 | | | | 97,017 | | | | 1,250,955 | | | | (88,599 | ) | | | 1,162,356 | | | (1) Includes: | | | | | | | | | | | | | | | | | | | | | | | | | | Investments in associates and joint ventures | | | 1,064 | | | | - | | | | 2,436 | | | | 3,500 | | | | 899 | | | | 4,399 | | | Goodwill | | | 232 | | | | - | | | | - | | | | 232 | | | | 1,825 | | | | 2,057 | | | Fixed assets, net | | | 5,781 | | | | 1,274 | | | | - | | | | 7,055 | | | | 1,486 | | | | 8,541 | | | Intangible assets, net | | | 6,606 | | | | 857 | | | | - | | | | 7,463 | | | | (1,168 | ) | | | 6,295 | |
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. ITAÚ UNIBANCO HOLDING S.A. From January 1 to December 31, 2014 (In millions of Reais except per share information)
| | | | | | | | | Actitivities with | | | | | | | | | | | | | | Retail | | | Wholesale | | | the Market + | | | ITAÚ | | | | | | IFRS | | | Consolidated Statement of Income | | Banking | | | Banking | | | Corporation | | | UNIBANCO | | | Adjustments | | | consolidated | | | Banking product | | | 65,516 | | | | 20,408 | | | | 3,916 | | | | 89,840 | | | | 1,817 | | | | 91,657 | | | Interest margin(1) | | | 37,880 | | | | 13,685 | | | | 3,590 | | | | 55,155 | | | | 1,118 | | | | 56,273 | | | Banking service fees | | | 19,234 | | | | 6,321 | | | | 222 | | | | 25,777 | | | | 565 | | | | 26,342 | | | Income related to insurance, private pension, and capitalization operations before claim and selling expenses | | | 8,402 | | | | 402 | | | | 104 | | | | 8,908 | | | | (2,020 | ) | | | 6,888 | | | Other income | | | - | | | | - | | | | - | | | | - | | | | 2,154 | | | | 2,154 | | | Losses on loans and claims | | | (11,840 | ) | | | (3,202 | ) | | | (3 | ) | | | (15,045 | ) | | | (756 | ) | | | (15,801 | ) | | Expenses for allowance for loan and lease losses | | | (14,503 | ) | | | (3,565 | ) | | | (3 | ) | | | (18,071 | ) | | | (761 | ) | | | (18,832 | ) | | Recovery of loans written off as loss | | | 4,642 | | | | 407 | | | | - | | | | 5,049 | | | | 5 | | | | 5,054 | | | Expenses for claims / recovery of claims under reinsurance | | | (1,979 | ) | | | (44 | ) | | | - | | | | (2,023 | ) | | | - | | | | (2,023 | ) | | Operating margin | | | 53,676 | | | | 17,206 | | | | 3,913 | | | | 74,795 | | | | 1,061 | | | | 75,856 | | | Other operating income (expenses) | | | (34,200 | ) | | | (9,150 | ) | | | (1,089 | ) | | | (44,439 | ) | | | (2,609 | ) | | | (47,048 | ) | | Non-interest expenses(2) | | | (30,243 | ) | | | (8,158 | ) | | | (1,182 | ) | | | (39,583 | ) | | | (2,967 | ) | | | (42,550 | ) | | Tax expenses for ISS, PIS and COFINS and Other | | | (3,957 | ) | | | (992 | ) | | | 93 | | | | (4,856 | ) | | | (207 | ) | | | (5,063 | ) | | Share of profit or (loss) in associates and joint ventures | | | - | | | | - | | | | - | | | | - | | | | 565 | | | | 565 | | | Net income before income tax and social contribution | | | 19,476 | | | | 8,056 | | | | 2,824 | | | | 30,356 | | | | (1,548 | ) | | | 28,808 | | | Income tax and social contribution | | | (6,761 | ) | | | (2,591 | ) | | | (74 | ) | | | (9,426 | ) | | | 2,479 | | | | (6,947 | ) | | Non-controlling interest in subsidiaries | | | (305 | ) | | | - | | | | (6 | ) | | | (311 | ) | | | 5 | | | | (306 | ) | | Net income | | | 12,410 | | | | 5,465 | | | | 2,744 | | | | 20,619 | | | | 936 | | | | 21,555 | |
| Consolidated Statement of Income | | Retail
Banking | | | Wholesale
Banking | | | Actitivities with
the Market +
Corporation | | | ITAÚ
UNIBANCO | | | Adjustments | | | IFRS
consolidated | | | Banking product | | | 65,516 | | | | 20,408 | | | | 3,916 | | | | 89,840 | | | | 1,817 | | | | 91,657 | | | Interest margin(1) | | | 37,880 | | | | 13,685 | | | | 3,590 | | | | 55,155 | | | | 1,118 | | | | 56,273 | | | Banking service fees | | | 19,234 | | | | 6,321 | | | | 222 | | | | 25,777 | | | | 565 | | | | 26,342 | | | Income related to insurance, private pension, and capitalization operations before claim and selling expenses | | | 8,402 | | | | 402 | | | | 104 | | | | 8,908 | | | | (2,020 | ) | | | 6,888 | | | Other income | | | - | | | | - | | | | - | | | | - | | | | 2,154 | | | | 2,154 | | | Losses on loans and claims | | | (11,840 | ) | | | (3,202 | ) | | | (3 | ) | | | (15,045 | ) | | | (756 | ) | | | (15,801 | ) | | Expenses for allowance for loan and lease losses | | | (14,503 | ) | | | (3,565 | ) | | | (3 | ) | | | (18,071 | ) | | | (761 | ) | | | (18,832 | ) | | Recovery of loans written off as loss | | | 4,642 | | | | 407 | | | | - | | | | 5,049 | | | | 5 | | | | 5,054 | | | Expenses for claims / recovery of claims under reinsurance | | | (1,979 | ) | | | (44 | ) | | | - | | | | (2,023 | ) | | | - | | | | (2,023 | ) | | Operating margin | | | 53,676 | | | | 17,206 | | | | 3,913 | | | | 74,795 | | | | 1,061 | | | | 75,856 | | | Other operating income (expenses) | | | (34,200 | ) | | | (9,150 | ) | | | (1,089 | ) | | | (44,439 | ) | | | (2,609 | ) | | | (47,048 | ) | | Non-interest expenses(2) | | | (30,243 | ) | | | (8,158 | ) | | | (1,182 | ) | | | (39,583 | ) | | | (2,967 | ) | | | (42,550 | ) | | Tax expenses for ISS, PIS and COFINS and Other | | | (3,957 | ) | | | (992 | ) | | | 93 | | | | (4,856 | ) | | | (207 | ) | | | (5,063 | ) | | Share of profit or (loss) in associates and joint ventures | | | - | | | | - | | | | - | | | | - | | | | 565 | | | | 565 | | | Net income before income tax and social contribution | | | 19,476 | | | | 8,056 | | | | 2,824 | | | | 30,356 | | | | (1,548 | ) | | | 28,808 | | | Income tax and social contribution | | | (6,761 | ) | | | (2,591 | ) | | | (74 | ) | | | (9,426 | ) | | | 2,479 | | | | (6,947 | ) | | Non-controlling interest in subsidiaries | | | (305 | ) | | | - | | | | (6 | ) | | | (311 | ) | | | 5 | | | | (306 | ) | | Net income | | | 12,410 | | | | 5,465 | | | | 2,744 | | | | 20,619 | | | | 936 | | | | 21,555 | |
(1) Includes net interest and similar income and expenses of R$ 47,138, dividend income of R$ 215, net gain (loss) on investment securities and derivatives of R$ (724) and foreign exchange results and exchange variation on transactions of abroad R$ 9,644. (2) Refers to general and administrative expenses including depreciation expenses of R$ 1,641, amortization expenses of R$ 827 and insurance acquisition expenses of R$ 1,214.
| Total assets(1) - 12/31/2014 | | | 811,185 | | | | 436,872 | | | | 107,174 | | | | 1,208,702 | | | | (81,499 | ) | | | 1,127,203 | | | Total liabilities - 12/31/2014 | | | 770,528 | | | | 399,544 | | | | 86,897 | | | | 1,110,439 | | | | (83,853 | ) | | | 1,026,586 | | | (1) Includes: | | | | | | | | | | | | | | | | | | | | | | | | | | Investments in associates and joint ventures | | | 982 | | | | - | | | | 2,117 | | | | 3,099 | | | | 991 | | | | 4,090 | | | Goodwill | | | 204 | | | | - | | | | - | | | | 204 | | | | 1,757 | | | | 1,961 | | | Fixed assets, net | | | 6,693 | | | | 868 | | | | - | | | | 7,561 | | | | 1,150 | | | | 8,711 | | | Intangible assets, net | | | 7,841 | | | | 791 | | | | - | | | | 8,632 | | | | (2,498 | ) | | | 6,134 | |
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.
ITAÚ UNIBANCO HOLDING S.A.
From January 1 to December 31, 2013
(In millions of Reais except per share information)
| | | | | | | | | Actitivities with | | | | | | | | | | | | | | Retail | | | Wholesale | | | the Market + | | | ITAÚ | | | | | | IFRS | | | Consolidated Statement of Income | | Banking | | | Banking | | | Corporation | | | UNIBANCO | | | Adjustments | | | consolidated | | | Banking product | | | 57,504 | | | | 17,032 | | | | 3,940 | | | | 78,476 | | | | 911 | | | | 79,387 | | | Interest margin(1) | | | 32,932 | | | | 11,097 | | | | 3,608 | | | | 47,637 | | | | 1,004 | | | | 48,641 | | | Banking service fees | | | 16,437 | | | | 5,495 | | | | 216 | | | | 22,148 | | | | 564 | | | | 22,712 | | | Income related to insurance, private pension, and capitalization operations before claim and selling expenses | | | 8,135 | | | | 440 | | | | 116 | | | | 8,691 | | | | (2,052 | ) | | | 6,639 | | | Other income | | | - | | | | - | | | | - | | | | - | | | | 1,395 | | | | 1,395 | | | Losses on loans and claims | | | (13,471 | ) | | | (1,807 | ) | | | (332 | ) | | | (15,610 | ) | | | 740 | | | | (14,870 | ) | | Expenses for allowance for loan and lease losses | | | (16,270 | ) | | | (2,008 | ) | | | (302 | ) | | | (18,580 | ) | | | 724 | | | | (17,856 | ) | | Recovery of loans written off as loss | | | 4,837 | | | | 248 | | | | (40 | ) | | | 5,045 | | | | 16 | | | | 5,061 | | | Expenses for claims / Recovery of claims under reinsurance | | | (2,038 | ) | | | (47 | ) | | | 10 | | | | (2,075 | ) | | | - | | | | (2,075 | ) | | Operating margin | | | 44,033 | | | | 15,225 | | | | 3,608 | | | | 62,866 | | | | 1,651 | | | | 64,517 | | | Other operating income (expenses) | | | (31,288 | ) | | | (8,700 | ) | | | (282 | ) | | | (40,270 | ) | | | (3,382 | ) | | | (43,652 | ) | | Non-interest expenses(2) | | | (27,698 | ) | | | (7,839 | ) | | | (450 | ) | | | (35,987 | ) | | | (3,927 | ) | | | (39,914 | ) | | Tax expenses for ISS, PIS and COFINS and Other | | | (3,590 | ) | | | (861 | ) | | | 168 | | | | (4,283 | ) | | | (58 | ) | | | (4,341 | ) | | Share of profit or (loss) in associates and joint ventures | | | - | | | | - | | | | - | | | | - | | | | 603 | | | | 603 | | | Income before income tax and social contribution | | | 12,745 | | | | 6,525 | | | | 3,326 | | | | 22,596 | | | | (1,731 | ) | | | 20,865 | | | Income tax and social contribution | | | (4,189 | ) | | | (2,215 | ) | | | (219 | ) | | | (6,623 | ) | | | 2,280 | | | | (4,343 | ) | | Non-controlling interest in subsidiaries | | | (125 | ) | | | - | | | | (12 | ) | | | (137 | ) | | | 39 | | | | (98 | ) | | Net income | | | 8,431 | | | | 4,310 | | | | 3,095 | | | | 15,836 | | | | 588 | | | | 16,424 | |
(1) Includes net interest and similar income and expenses of R$ 47,766 dividend income of R$ 205, net gain (loss) on investment securities and derivatives of R$ (5,924) and foreign exchange results and exchange variation on transactions of abroad R$ 6,594.
(2) Refers to general and administrative expenses including depreciation expenses of R$ 1,522, amortization expenses of R$ 808 and insurance acquisition expenses of R$ 1,147.
| Total assents(1)- 12/31/2013 | | | 798,550 | | | | 355,632 | | | | 116,625 | | | | 1,105,721 | | | | (78,424 | ) | | | 1,027,297 | | | Total liabilities - 12/31/2013 | | | 772,996 | | | | 328,704 | | | | 86,179 | | | | 1,022,793 | | | | (79,688 | ) | | | 943,105 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1) Includes: | | | | | | | | | | | | | | | | | | | | | | | | | | Investments in associates and joint ventures | | | 773 | | | | 93 | | | | 2,124 | | | | 2,990 | | | | 941 | | | | 3,931 | | | Goodwill | | | 1,732 | | | | 189 | | | | - | | | | 1,921 | | | | (16 | ) | | | 1,905 | | | Fixed assets, net | | | 5,846 | | | | 664 | | | | - | | | | 6,510 | | | | 54 | | | | 6,564 | | | Intangible assets, net | | | 4,906 | | | | 813 | | | | - | | | | 5,719 | | | | 78 | | | | 5,797 | |
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.
Information on the result of main services and products and noncurrent assets by geographic area are as follows: | | | 01/01 to 12/31/2015 | | | 01/01 to 12/31/2014 | | | 01/01 to 12/31/2013 | | | | | Brazil | | | Abroad | | | Total | | | Brazil | | | Abroad | | | Total | | | Brazil | | | Abroad | | | Total | | | Income related to financial operations(1) (2) | | | 117,140 | | | | 12,532 | | | | 129,672 | | | | 118,946 | | | | 10,304 | | | | 129,250 | | | | 86,481 | | | | 8,521 | | | | 95,002 | | | Income related to insurance, private pension and capitalization operations before claim and selling expenses | | | 6,570 | | | | 102 | | | | 6,672 | | | | 6,834 | | | | 54 | | | | 6,888 | | | | 6,568 | | | | 71 | | | | 6,639 | | | Banking service fees | | | 27,072 | | | | 2,380 | | | | 29,452 | | | | 24,550 | | | | 1,792 | | | | 26,342 | | | | 21,140 | | | | 1,572 | | | | 22,712 | | | Non-current assets(3) | | | 13,841 | | | | 995 | | | | 14,836 | | | | 14,038 | | | | 807 | | | | 14,845 | | | | 11,537 | | | | 824 | | | | 12,361 | |
| | | 01/01 to 12/31/2016 | | | 01/01 to 12/31/2015 | | | 01/01 to 12/31/2014 | | | | | Brazil | | | Abroad | | | Total | | | Brazil | | | Abroad | | | Total | | | Brazil | | | Abroad | | | Total | | | Income related to financial operations(1) (2) | | | 154,653 | | | | 19,954 | | | | 174,607 | | | | 117,140 | | | | 12,532 | | | | 129,672 | | | | 118,946 | | | | 10,304 | | | | 129,250 | | | Income related to insurance, private pension and capitalization operations before claim and selling expenses | | | 5,748 | | | | 132 | | | | 5,880 | | | | 6,570 | | | | 102 | | | | 6,672 | | | | 6,834 | | | | 54 | | | | 6,888 | | | Banking service fees | | | 29,061 | | | | 2,857 | | | | 31,918 | | | | 27,072 | | | | 2,380 | | | | 29,452 | | | | 24,550 | | | | 1,792 | | | | 26,342 | | | Non-current assets | | | 13,299 | | | | 2,124 | | | | 15,423 | | | | 13,841 | | | | 995 | | | | 14,836 | | | | 14,038 | | | | 807 | | | | 14,845 | |
| (1) | Includes interest and similar income, dividend income, net gain (loss) on investment securities and derivatives, foreign exchange results, and exchange variation on transactions. |
(1) Includes interest and similar income, dividend income, net gain (loss) on investment securities and derivatives, foreign exchange results, and exchange variation on transactions.
| (2) | ITAÚ UNIBANCO HOLDING does not have clients representing 10% or higher of its revenues. |
(2) ITAÚ UNIBANCO HOLDING does not have clients representing 10% or higher of its revenues.
(3) The amounts for comparative purposes refer to the 12/31/2014 and 12/31/2013.
Note 35 – 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 consolidation (Note 2.4a) were eliminated from the consolidated financial statements and the absence of risk is taken into consideration. The unconsolidated related parties are as follows: | · | Itaú Unibanco Participações S.A. (IUPAR), Companhia E. Johnston de Participações S.A. (shareholder of IUPAR) and ITAÚSA, direct and indirect shareholders of ITAÚ UNIBANCO HOLDING; |
| · | The non-financial subsidiaries of ITAÚSA, especially: Itautec S.A., Duratex S.A., Elekeiroz S.A., ITH Zux Cayman Company Ltd and Itaúsa Empreendimentos S.A.; |
| · | Fundação Itaú Unibanco - Previdência Complementar and FUNBEP – Fundo de Pensão Multipatrocinado, Fundação Bemgeprev, UBB Prev - Previdência Complementar, and Fundação Banorte Manuel Baptista da Silva de Seguridade Social, closed-end supplementary pension entities, that administer retirement plans sponsored by ITAÚ UNIBANCO HOLDING and / or its subsidiaries; |
| · | Fundação Itaú Social, Instituto Itaú Cultural, Instituto Unibanco, Instituto Assistencial Pedro Di Perna, Instituto Unibanco de Cinema, and Associação Itaú Viver Mais and Associação Cubo Coworking Itaú, entities sponsored by ITAÚ UNIBANCO HOLDING and subsidiaries to act in their respective areas of interest; and |
| · | Investments in Porto Seguro Itaú Unibanco Participações S.A. and BSF Holding S.A. |
The transactions with these related parties are mainly as follows: | | | ITAÚ UNIBANCO HOLDING CONSOLIDATED | | | | | | | Assets / (liabilities) | | | Revenue / (expenses) | | | ITAÚ UNIBANCO HOLDING CONSOLIDATED | | | | | | | | | | | | 01/01 to | | 01/01 to | | 01/01 to | | | | | Assets / (liabilities) | | | Revenue / (expenses) | | | | | | | | Annual rate | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | Annual rate | | 12/31/2016 | | 12/31/2015 | | 01/01 to
12/31/2016 | | 01/01 to
12/31/2015 | | 01/01 a
31/12/2014 | | | Securities sold under repurchase agreements | | | | | (249 | ) | | | (142 | ) | | | (20 | ) | | | (13 | ) | | | (14 | ) | | | | | (77 | ) | | | (249 | ) | | | (19 | ) | | | (20 | ) | | | (13 | ) | | Duratex S.A. | | 99% to 101.5% of CDI | | | (41 | ) | | | (100 | ) | | | (9 | ) | | | (10 | ) | | | (10 | ) | | 97.5% to 100% CDI | | | (18 | ) | | | (41 | ) | | | (4 | ) | | | (9 | ) | | | (10 | ) | | Elekeiroz S.A. | | 99% to 100% of CDI | | | (8 | ) | | | (6 | ) | | | (1 | ) | | | (2 | ) | | | (2 | ) | | 97.5% to 100% CDI | | | (3 | ) | | | (8 | ) | | | (1 | ) | | | (1 | ) | | | (2 | ) | | Itautec S.A. | | 100% of CDI | | | (110 | ) | | | (2 | ) | | | - | | | | - | | | | (2 | ) | | 96.5% to 100.1% CDI | | | (1 | ) | | | (110 | ) | | | (3 | ) | | | - | | | | - | | | Itaúsa Empreendimentos S.A. | | 99.5% to 100.5% of CDI | | | (64 | ) | | | (26 | ) | | | (7 | ) | | | - | | | | - | | | | - | | | | (64 | ) | | | (7 | ) | | | (7 | ) | | | - | | | Olimpia Promoção e Serviços S.A. | | 100% of SELIC | | | (11 | ) | | | - | | | | (1 | ) | | | - | | | | - | | | | (14 | ) | | | (11 | ) | | | (2 | ) | | | (1 | ) | | | - | | | Conectcar Soluções de Mobilidade Eletrônica S.A. | | | | (24 | ) | | | - | | | | - | | | | - | | | | - | | | Other | | | | | (15 | ) | | | (8 | ) | | | (2 | ) | | | (1 | ) | | | - | | | | (17 | ) | | | (15 | ) | | | (2 | ) | | | (2 | ) | | | (1 | ) | | Amounts receivable from (payable to) related companies / Banking service fees(expenses) | | | | | (116 | ) | | | (109 | ) | | | 20 | | | | 8 | | | | 41 | | | | Itaúsa Investimentos Itaú S.A. | | | | | - | | | | - | | | | 2 | | | | - | | | | 1 | | | | Itaúsa Empreendimentos S.A. | | | | | - | | | | - | | | | - | | | | - | | | | - | | | | Amounts receivable from (payable to) related companies / Banking service fees (expenses) | | | | | (129 | ) | | | (116 | ) | | | 28 | | | | 20 | | | | 8 | | | Olimpia Promoção e Serviços S.A. | | | | | (2 | ) | | | - | | | | (28 | ) | | | - | | | | - | | | | (2 | ) | | | (2 | ) | | | (25 | ) | | | (28 | ) | | | - | | | Fundação Itaú Unibanco - Previdência Complementar | | | | | (114 | ) | | | (13 | ) | | | 39 | | | | 35 | | | | 33 | | | | (127 | ) | | | (114 | ) | | | 44 | | | | 39 | | | | 35 | | | FUNBEP - Fundo de Pensão Multipatrocinado | | | | | - | | | | - | | | | 5 | | | | 5 | | | | 5 | | | | - | | | | - | | | | 6 | | | | 5 | | | | 5 | | | Fundação Banorte Manuel Baptista da Silva de Seguridade Social | | | | | - | | | | (93 | ) | | | - | | | | - | | | | - | | | | Other | | | | | - | | | | (3 | ) | | | 2 | | | | (32 | ) | | | 2 | | | | - | | | | - | | | | - | | | | 2 | | | | (32 | ) | | Rental revenues (expenses) | | | | | - | | | | - | | | | (56 | ) | | | (51 | ) | | | (48 | ) | | | | - | | | | - | | | | (59 | ) | | | (56 | ) | | | (51 | ) | | Itaúsa Investimentos Itaú S.A. | | | | | - | | | | - | | | | (2 | ) | | | - | | | | (1 | ) | | | - | | | | - | | | | (2 | ) | | | (2 | ) | | | - | | | Fundação Itaú Unibanco - Previdência Complementar | | | | | - | | | | - | | | | (42 | ) | | | (38 | ) | | | (37 | ) | | | - | | | | - | | | | (44 | ) | | | (42 | ) | | | (38 | ) | | FUNBEP - Fundo de Pensão Multipatrocinado | | | | | - | | | | - | | | | (12 | ) | | | (13 | ) | | | (10 | ) | | | - | | | | - | | | | (13 | ) | | | (12 | ) | | | (13 | ) | | Other | | | | | - | | | | - | | | | - | | | | - | | | | - | | | | Donation expenses | | | | | - | | | | - | | | | (84 | ) | | | (78 | ) | | | (73 | ) | | | | - | | | | - | | | | (88 | ) | | | (84 | ) | | | (78 | ) | | Instituto Itaú Cultural | | | | - | | | | - | | | | (87 | ) | | | (83 | ) | | | (77 | ) | | Associação Itaú Viver Mais | | | | | - | | | | - | | | | (1 | ) | | | (1 | ) | | | (1 | ) | | | - | | | | - | | | | (1 | ) | | | (1 | ) | | | (1 | ) | | Instituto Itaú Cultural | | | | | - | | | | - | | | | (83 | ) | | | (77 | ) | | | (72 | ) | | | Data processing expenses | | | | | - | | | | - | | | | - | | | | (285 | ) | | | (267 | ) | | | Itautec S.A. | | | | | - | | | | - | | | | - | | | | (285 | ) | | | (267 | ) | |
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$ (4) (R$ (5) from 01/01 to 12/31/2014 and (5) from 01/01 to 12/31/2013) due to the use of the common structure.
Pursuant to the current rules, financial institutions cannot grant loans or 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
| b) | any entity controlled by the institution; or |
c) any entity in which the bank directly or indirectly holds more than 10% of the capital stock.
| c) | any entity in which the bank directly or indirectly holds more than 10% of the capital stock. |
Therefore, no loans or advances were granted to any subsidiary, executive officer, director or family members. | 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 | | | 01/01 to | | | 01/01 to | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | Compensation | | | 459 | | | | 343 | | | | 278 | | | Board of directors | | | 27 | | | | 14 | | | | 13 | | | Executives | | | 432 | | | | 329 | | | | 265 | | | Profit sharing | | | 239 | | | | 261 | | | | 259 | | | Board of directors | | | 1 | | | | 12 | | | | 8 | | | Executives | | | 238 | | | | 249 | | | | 251 | | | Contributions to pension plans - executives | | | 9 | | | | 7 | | | | 3 | | | Stock option plan – executives | | | 200 | | | | 234 | | | | 166 | | | Total | | | 907 | | | | 845 | | | | 706 | |
| | | 01/01 to | | | 01/01 to | | | 01/01 to | | | | | 12/31/2016 | | | 12/31/2015 | | | 12/31/2014 | | | Compensation | | | 360 | | | | 459 | | | | 343 | | | Board of directors | | | 32 | | | | 27 | | | | 14 | | | Executives | | | 328 | | | | 432 | | | | 329 | | | Profit sharing | | | 251 | | | | 239 | | | | 261 | | | Board of directors | | | 2 | | | | 1 | | | | 12 | | | Executives | | | 249 | | | | 238 | | | | 249 | | | Contributions to pension plans - executives | | | 12 | | | | 9 | | | | 7 | | | Stock option plan – executives | | | 263 | | | | 200 | | | | 234 | | | Total | | | 885 | | | | 907 | | | | 845 | |
Note 36 – Management of financial risks Credit risk | 1. | Credit risk measurement |
1. Credit risk measurement CreditITAÚ UNIBANCO HOLDING understands credit risk is the possibility of losses arising from the breach by the borrower, issuer or counterparty of the respective agreed-upon financial obligations, the devaluation of loan agreement due to downgrading of the borrower’s, the issuer’s, the counterparty’s risk rating, the reduction in gains or compensation, the advantages given upon posterior renegotiation and the recovery costs.
The credit risk management of ITAÚ UNIBANCO HOLDING’s is the primary responsibility of all business units and aims to keep the quality of loan portfolios in levels consistent with the institution’s risk appetite for each market segment in which it operates. ITAÚ UNIBANCO HOLDING establishes its credit policiespolicy based on internal factors, such as the client rating criteria, performance of and changes in portfolio, default levels, return rates, and the allocated economic capital; among others, and external factors, related to the economic environment,such as interest rates, market default indicators, inflation, changes in consumption.consumption, among others. The assessment process of policies and products enables ITAÚ UNIBANCO HOLDING to identify potential risks, so as to make sure that credit decisions make sense from an economic and risk perspective. ITAÚ UNIBANCO HOLDING has a structured process to keep a diversified portfolio deemed as adequate by the institution. 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 beare breached. The process for analyzing the policy and products enables ITAÚ UNIBANCO HOLDING to identify potential risks, so as to make sure that credit decisions make sense from an economic and risk perspective.
The centralized process for approval of credit policies and validation of models of ITAÚ UNIBANCO HOLDING assures the synchrony of credit actions.
The table below shows the correspondence between risk levels attributed by all segments of ITAÚ UNIBANCO HOLDING internal models (lower risk, satisfactory, higher risk and impaired) and the probability of default associated with each of these levels, and the risk levels assigned by the respective market models. | | | | External rating | | | Internal rating | | PD | | Moody's | | S&P | | Fitch | | | Lower risk | | Lower or equal than 4.44% | | Aaa to B2 | | AAA to B | | AAA to B- | | | Satisfactory | | From 4.44% up to 25.95% | | B3 to Caa3 | | B- to CCC- | | CCC+ to CCC- | | | Higher risk | | Higher than 25.95% | | Ca1 to D | | CC+ to D | | CC+ to D | | ImpairedImpairment | | Corporate operations with a PD higher than 31.84% | | | | | | | | | Operations past due for over 90 days Renegotiated operations past due for over 60 days | | Ca1 to D | | CC+ to D | | CC+ to D | | | Renegotiated operations past due for over 60 days | | | | | | |
TheFor individual, small and middle-market companies, credit rating is attributed based on application statistical models (in the early phases of ITAÚ UNIBANCO HOLDING’s relationship with the client) and behavior score (used for clients with which ITAÚ UNIBANCO HOLDING already has a relationship). Decisions are made based on these models, which are continuously monitored by an independent framework. Exceptionally, there can be an individual analysis of specific cases, in corporate transactionswhich credit approval is submitted to proper levels.
For large companies, the rating is based on information such as economic and financial condition of the counterparty, itstheir cash-generating capabilities,capability, the economic group to which it belongs,they belong, and the current and prospective situation of the economic sector in which it operates.they operate. The credit proposals are analyzed on a case by case basis, through an approval-level mechanism subordinated to the Superior Credit Committee. Regarding retail (individuals, small and middle-market companies), the rating is assigned based on application and behavior score statistical models. Decisions are made based on scoring models that are continuously followed up by an independent structure. Exceptionally, there may also be individualized analysis of specific cases where approval is subject to competent credit approval levels.mechanism.
Government securities and other debt instruments are classified by ITAÚ UNIBANCO HOLDING according to their credit quality aiming at managing their exposures. In line with the principles of CMN Resolution N° 3,721, of April 30, 2009, ITAÚ UNIBANCO HOLDING has structure and corporate guidelines on credit risk management, approved by its Board of Directors, applicable to companies and subsidiaries in Brazil and abroad.
The centralized control over credit risk is carried out by the independent executive area responsible for controlling risks and segregated from the business units, as required by regulation in force.
ITAÚ 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 thatthis purpose, contractually provided actions can be taken, such as early paymentsettlement or requirement of additional collateral. | 3. | Collateral and policies for mitigating credit risk |
ITAÚ UNIBANCO HOLDING uses guarantees to increase its recovery capacity in transactions involving credit risk. The guarantees used may be personal guarantees, collateral, legal structures with mitigation power and offset agreements. For management purposes, for collaterals to be considered instruments that mitigate credit risk, they must comply with the requirements and standards of the rules that regulate them be them domestic or not, and they must be legally valid (effective), enforceable and assessed on a regular basis. ITAÚ UNIBANCO HOLDING also uses credit derivatives, such as single name CDS, to mitigate credit 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. The credit 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 provision |
The policies on the provision 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 when there are indications of the impairment of the portfolio and takes 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 loans 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. | | | 12/31/2015 | | | 12/31/2014 | | | | | Brazil | | | Abroad | | | Total | | | Brazil | | | Abroad | | | Total | | | Interbank deposits | | | 7,502 | | | | 23,023 | | | | 30,525 | | | | 7,875 | | | | 15,206 | | | | 23,081 | | | Securities purchased under agreements to resell | | | 252,295 | | | | 2,109 | | | | 254,404 | | | | 208,751 | | | | 167 | | | | 208,918 | | | Financial assets held for trading | | | 157,206 | | | | 7,105 | | | | 164,311 | | | | 124,391 | | | | 8,553 | | | | 132,944 | | | Financial assets designated at fair value through profit or loss | | | - | | | | 642 | | | | 642 | | | | - | | | | 733 | | | | 733 | | | Derivatives | | | 15,858 | | | | 10,897 | | | | 26,755 | | | | 7,385 | | | | 6,771 | | | | 14,156 | | | Available-for-sale financial assets | | | 52,221 | | | | 33,824 | | | | 86,045 | | | | 55,686 | | | | 22,674 | | | | 78,360 | | | Held-to-maturity financial assets | | | 27,378 | | | | 14,807 | | | | 42,185 | | | | 24,102 | | | | 10,332 | | | | 34,434 | | | Loan operations and lease operations | | | 326,241 | | | | 121,163 | | | | 447,404 | | | | 324,021 | | | | 106,018 | | | | 430,039 | | | Other financial assets | | | 47,665 | | | | 5,841 | | | | 53,506 | | | | 44,072 | | | | 9,577 | | | | 53,649 | | | Off balance sheet | | | 272,274 | | | | 30,246 | | | | 302,520 | | | | 280,640 | | | | 25,708 | | | | 306,348 | | | Endorsements and sureties | | | 68,897 | | | | 5,347 | | | | 74,244 | | | | 68,416 | | | | 5,343 | | | | 73,759 | | | Letters of credit to be released | | | 6,936 | | | | - | | | | 6,936 | | | | 11,091 | | | | - | | | | 11,091 | | | Commitments to be released | | | 196,441 | | | | 24,899 | | | | 221,340 | | | | 201,133 | | | | 20,365 | | | | 221,498 | | | Mortgage loans | | | 6,812 | | | | - | | | | 6,812 | | | | 9,087 | | | | - | | | | 9,087 | | | Overdraft accounts | | | 81,151 | | | | - | | | | 81,151 | | | | 78,461 | | | | - | | | | 78,461 | | | Credit cards | | | 102,721 | | | | 1,211 | | | | 103,932 | | | | 103,092 | | | | 873 | | | | 103,965 | | | Other pre-approved limits | | | 5,757 | | | | 23,688 | | | | 29,445 | | | | 10,493 | | | | 19,492 | | | | 29,985 | | | Total | | | 1,158,640 | | | | 249,657 | | | | 1,408,297 | | | | 1,076,923 | | | | 205,739 | | | | 1,282,662 | |
| | | 12/31/2016 | | | 12/31/2015 | | | | | Brazil | | | Abroad | | | Total | | | Brazil | | | Abroad | | | Total | | | Interbank deposits | | | 6,044 | | | | 16,648 | | | | 22,692 | | | | 7,502 | | | | 23,023 | | | | 30,525 | | | Securities purchased under agreements to resell | | | 264,080 | | | | 971 | | | | 265,051 | | | | 252,295 | | | | 2,109 | | | | 254,404 | | | Financial assets held for trading | | | 193,903 | | | | 10,745 | | | | 204,648 | | | | 157,206 | | | | 7,105 | | | | 164,311 | | | Financial assets designated at fair value through profit or loss | | | - | | | | 1,191 | | | | 1,191 | | | | - | | | | 642 | | | | 642 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivatives | | | 13,593 | | | | 10,638 | | | | 24,231 | | | | 15,858 | | | | 10,897 | | | | 26,755 | | | Available-for-sale financial assets | | | 53,529 | | | | 34,748 | | | | 88,277 | | | | 52,221 | | | | 33,824 | | | | 86,045 | | | Held-to-maturity financial assets | | | 27,436 | | | | 13,059 | | | | 40,495 | | | | 27,378 | | | | 14,807 | | | | 42,185 | | | Loan operations and lease operations | | | 305,394 | | | | 158,000 | | | | 463,394 | | | | 326,241 | | | | 121,163 | | | | 447,404 | | | Other financial assets | | | 47,914 | | | | 6,003 | | | | 53,917 | | | | 47,665 | | | | 5,841 | | | | 53,506 | | | Off balance sheet | | | 259,854 | | | | 39,973 | | | | 299,827 | | | | 272,274 | | | | 30,246 | | | | 302,520 | | | Endorsements and sureties | | | 62,172 | | | | 8,621 | | | | 70,793 | | | | 68,897 | | | | 5,347 | | | | 74,244 | | | Letters of credit to be released | | | 6,660 | | | | - | | | | 6,660 | | | | 6,936 | | | | - | | | | 6,936 | | | Commitments to be released | | | 191,022 | | | | 31,352 | | | | 222,374 | | | | 196,441 | | | | 24,899 | | | | 221,340 | | | Mortgage loans | | | 4,389 | | | | - | | | | 4,389 | | | | 6,812 | | | | - | | | | 6,812 | | | Overdraft accounts | | | 87,239 | | | | - | | | | 87,239 | | | | 81,151 | | | | - | | | | 81,151 | | | Credit cards | | | 96,497 | | | | 1,273 | | | | 97,770 | | | | 102,721 | | | | 1,211 | | | | 103,932 | | | Other pre-approved limits | | | 2,897 | | | | 30,079 | | | | 32,976 | | | | 5,757 | | | | 23,688 | | | | 29,445 | | | Total | | | 1,171,747 | | | | 291,976 | | | | 1,463,723 | | | | 1,158,640 | | | | 249,657 | | | | 1,408,297 | |
The table above presents the maximum exposure at December 31, 20152016 and December 31, 2014,2015, without considering any collateral received or other additional credit improvements. For assets recognized in the balance sheet, the exposures presented are based on net carrying amounts. This analysis includes only financial assets subject to credit risk and 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. The vast majority of commitments (real estate loans, overdraft accounts and other pre-approved limits) mature without being drawn, since they are renewed monthly and we have the power to cancel them at any time. 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. The maximum exposure to the quality of the financial assets presented highlights that: | · | 87.7%88.8% of loan operations and other financial assets exposure (Table 6.1 and 6.1.2) are categorized as low probability of default in accordance with our internal rating; |
| · | only 3.6%4.0% of the total loans exposure (Table 6.1) is represented by overdue credits not impaired; |
| · | 5.7%6.2% of the total loans exposure (Table 6.1) corresponds to overdue loans impaired. |
5.1 Maximum exposure of financial assets segregated by business sector
| 5.1 | Maximum exposure of financial assets segregated by business sector |
| a) | Loan operations and lease operations portfolio |
| | | 12/31/2015 | | | % | | | 12/31/2014 | | | % | | | Public sector | | | 3,182 | | | | 0.7 | | | | 4,389 | | | | 1.0 | | | Industry and commerce | | | 125,386 | | | | 26.5 | | | | 116,506 | | | | 25.7 | | | Services | | | 104,226 | | | | 22.0 | | | | 99,855 | | | | 22.1 | | | Natural resources | | | 25,306 | | | | 5.3 | | | | 23,345 | | | | 5.2 | | | Other sectors | | | 2,526 | | | | 0.5 | | | | 2,242 | | | | 0.5 | | | Individuals | | | 213,622 | | | | 45.0 | | | | 206,094 | | | | 45.5 | | | Total | | | 474,248 | | | | 100.0 | | | | 452,431 | | | | 100.0 | |
| | | 12/31/2016 | | | % | | | 12/31/2015 | | | % | | | Public sector | | | 3,051 | | | | 0.6 | | | | 3,182 | | | | 0.7 | | | Industry and commerce | | | 112,067 | | | | 22.8 | | | | 125,386 | | | | 26.5 | | | Services | | | 118,102 | | | | 24.1 | | | | 104,226 | | | | 22.0 | | | Natural resources | | | 24,362 | | | | 5.0 | | | | 25,306 | | | | 5.3 | | | Other sectors | | | 2,839 | | | | 0.6 | | | | 2,526 | | | | 0.5 | | | Individuals | | | 229,945 | | | | 46.9 | | | | 213,622 | | | | 45.0 | | | Total | | | 490,366 | | | | 100.0 | | | | 474,248 | | | | 100.0 | |
| b) | Other financial assets(*) |
| | | 12/31/2015 | | | % | | | 12/31/2014 | | | % | | | Natural resources | | | 4,313 | | | | 0.7 | | | | 2,444 | | | | 0.5 | | | Public sector | | | 197,871 | | | | 32.7 | | | | 152,770 | | | | 31.0 | | | Industry and commerce | | | 11,856 | | | | 2.0 | | | | 12,722 | | | | 2.6 | | | Services | | | 89,932 | | | | 14.9 | | | | 90,630 | | | | 18.4 | | | Other sectors | | | 15,420 | | | | 2.5 | | | | 1,665 | | | | 0.3 | | | Individuals | | | 546 | | | | 0.1 | | | | 396 | | | | 0.1 | | | Financial | | | 284,929 | | | | 47.1 | | | | 231,999 | | | | 47.1 | | | Total | | | 604,867 | | | | 100.0 | | | | 492,626 | | | | 100.0 | |
| | | 12/31/2016 | | | % | | | 12/31/2015 | | | % | | | Natural resources | | | 2,466 | | | | 0.4 | | | | 4,313 | | | | 0.7 | | | Public sector | | | 249,745 | | | | 38.7 | | | | 197,871 | | | | 32.7 | | | Industry and commerce | | | 10,435 | | | | 1.6 | | | | 11,856 | | | | 2.0 | | | Services | | | 2,741 | | | | 0.4 | | | | 89,932 | | | | 14.9 | | | Other sectors | | | 93,165 | | | | 14.4 | | | | 15,420 | | | | 2.5 | | | Individuals | | | 290 | | | | 0.0 | | | | 546 | | | | 0.1 | | | Financial | | | 287,743 | | | | 44.5 | | | | 284,929 | | | | 47.1 | | | Total | | | 646,585 | | | | 100.0 | | | | 604,867 | | | | 100.0 | |
(*) Includes financial assets held for trading, derivatives, assets designated at fair value through profit or loss, available-for- saleavailable-for-sale financial assets, held-to-maturity financial assets, interbank deposits and securities purchased under agreements to resell. | c) | The credit risks of off balance sheet items (endorsements and sureties, letters of credit and commitments to be released) are not categorized or managed by business sector. |
| 6. | Credit quality of financial assets |
6.1 The following table shows the breakdown of loans operations and lease operations portfolio considering: loans not overdue and loans overdue either impaired or not impaired:
| 6.1 | The following table shows the breakdown of loans operations and lease operations portfolio considering: loans not overdue and loans overdue either impaired or not impaired: |
| | | 12/31/2015 | | | 12/31/2014 | | | | | | | | | Loans | | | | | | | | | | | | Loans | | | | | | | | | Loans not | | overdue | | Loans | | | | | | Loans not | | Loans | | overdue | | | | | | | | | overdue and | | not | | overdue and | | | | overdue and | | overdue and | | and | | | | | 12/31/2016 | | 12/31/2015 | | | Internal rating | | not impaired | | | impaired | | | impaired | | | Total loans | | | not impaired | | | not impaired | | | impaired | | | Total loans | | | 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 | | | 340,368 | | | | 3,838 | | | | - | | | | 344,206 | | | | 324,908 | | | | 4,042 | | | | - | | | | 328,950 | | | | 363,954 | | | | 5,543 | | | | - | | | | 369,497 | | | | 340,368 | | | | 3,838 | | | | - | | | | 344,206 | | | Satisfactory | | | 76,940 | | | | 6,489 | | | | - | | | | 83,429 | | | | 81,994 | | | | 6,989 | | | | - | | | | 88,983 | | | | 62,883 | | | | 6,904 | | | | - | | | | 69,787 | | | | 76,940 | | | | 6,489 | | | | - | | | | 83,429 | | | Higher risk | | | 12,609 | | | | 6,847 | | | | - | | | | 19,456 | | | | 11,439 | | | | 5,853 | | | | - | | | | 17,292 | | | | 13,767 | | | | 6,998 | | | | - | | | | 20,765 | | | | 12,609 | | | | 6,847 | | | | - | | | | 19,456 | | | Impaired | | | - | | | | - | | | | 27,157 | | | | 27,157 | | | | - | | | | - | | | | 17,206 | | | | 17,206 | | | | Impairment | | | | - | | | | - | | | | 30,317 | | | | 30,317 | | | | - | | | | - | | | | 27,157 | | | | 27,157 | | | Total | | | 429,917 | | | | 17,174 | | | | 27,157 | | | | 474,248 | | | | 418,341 | | | | 16,884 | | | | 17,206 | | | | 452,431 | | | | 440,604 | | | | 19,445 | | | | 30,317 | | | | 490,366 | | | | 429,917 | | | | 17,174 | | | | 27,157 | | | | 474,248 | | | % | | | 90.7 | % | | | 3.6 | % | | | 5.7 | % | | | 100.0 | % | | | 92.5 | % | | | 3.7 | % | | | 3.8 | % | | | 100.0 | % | | | 89.8 | % | | | 4.0 | % | | | 6.2 | % | | | 100.0 | % | | | 90.7 | % | | | 3.6 | % | | | 5.7 | % | | | 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: | | | 12/31/2015 | | | 12/31/2014 | | | | | Lower risk | | | Satisfactory | | | Higher risk | | | Impaired | | | Total | | | Lower risk | | | Satisfactory | | | Higher risk | | | Impaired | | | Total | | | Individuals | | | 102,479 | | | | 60,132 | | | | 13,030 | | | | 11,579 | | | | 187,220 | | | | 102,184 | | | | 62,020 | | | | 12,022 | | | | 9,727 | | | | 185,953 | | | Credit cards | | | 40,297 | | | | 11,887 | | | | 2,286 | | | | 4,072 | | | | 58,542 | | | | 39,417 | | | | 14,234 | | | | 2,338 | | | | 3,332 | | | | 59,321 | | | Personal | | | 6,234 | | | | 8,014 | | | | 9,099 | | | | 5,049 | | | | 28,396 | | | | 7,253 | | | | 8,932 | | | | 7,882 | | | | 3,886 | | | | 27,953 | | | Payroll loans | | | 9,582 | | | | 33,766 | | | | 844 | | | | 1,242 | | | | 45,434 | | | | 8,113 | | | | 31,090 | | | | 696 | | | | 626 | | | | 40,525 | | | Vehicles | | | 14,149 | | | | 4,292 | | | | 737 | | | | 880 | | | | 20,058 | | | | 20,570 | | | | 5,791 | | | | 1,053 | | | | 1,633 | | | | 29,047 | | | Mortgage loans | | | 32,217 | | | | 2,173 | | | | 64 | | | | 336 | | | | 34,790 | | | | 26,831 | | | | 1,973 | | | | 53 | | | | 250 | | | | 29,107 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate | | | 122,518 | | | | 6,132 | | | | - | | | | 11,339 | | | | 139,989 | | | | 123,988 | | | | 8,191 | | | | - | | | | 3,749 | | | | 135,928 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Small and medium businesses | | | 56,463 | | | | 13,350 | | | | 5,199 | | | | 3,564 | | | | 78,576 | | | | 56,917 | | | | 15,171 | | | | 4,599 | | | | 3,225 | | | | 79,912 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Foreign loans - Latin America | | | 62,746 | | | | 3,815 | | | | 1,227 | | | | 675 | | | | 68,463 | | | | 45,861 | | | | 3,601 | | | | 671 | | | | 505 | | | | 50,638 | | | Total | | | 344,206 | | | | 83,429 | | | | 19,456 | | | | 27,157 | | | | 474,248 | | | | 328,950 | | | | 88,983 | | | | 17,292 | | | | 17,206 | | | | 452,431 | | | % | | | 72.6 | % | | | 17.6 | % | | | 4.1 | % | | | 5.7 | % | | | 100.0 | % | | | 72.7 | % | | | 19.7 | % | | | 3.8 | % | | | 3.8 | % | | | 100.0 | % |
| | | 12/31/2016 | | 12/31/2015 | | | | Lower risk | | | Satisfactory | | | Higher risk | | | Impaired | | | Total | | | Lower risk | | | Satisfactory | | | Higher risk | | | Impaired | | | Total | | | Individuals | | | 122,112 | | | | 38,910 | | | | 11,362 | | | | 10,763 | | | | 183,147 | | | | 102,479 | | | | 60,132 | | | | 13,030 | | | | 11,579 | | | | 187,220 | | | Credit cards | | | 42,432 | | | | 11,212 | | | | 1,866 | | | | 3,512 | | | | 59,022 | | | | 40,297 | | | | 11,887 | | | | 2,286 | | | | 4,072 | | | | 58,542 | | | Personal | | | 6,414 | | | | 6,298 | | | | 8,264 | | | | 4,837 | | | | 25,813 | | | | 6,234 | | | | 8,014 | | | | 9,099 | | | | 5,049 | | | | 28,396 | | | Payroll loans | | | 26,624 | | | | 15,972 | | | | 609 | | | | 1,431 | | | | 44,636 | | | | 9,582 | | | | 33,766 | | | | 844 | | | | 1,242 | | | | 45,434 | | | Vehicles | | | 11,378 | | | | 2,911 | | | | 554 | | | | 591 | | | | 15,434 | | | | 14,149 | | | | 4,292 | | | | 737 | | | | 880 | | | | 20,058 | | | Mortgage loans | | | 35,264 | | | | 2,517 | | | | 69 | | | | 392 | | | | 38,242 | | | | 32,217 | | | | 2,173 | | | | 64 | | | | 336 | | | | 34,790 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate | | | 102,162 | | | | 5,447 | | | | 7 | | | | 14,138 | | | | 121,754 | | | | 133,779 | | | | 6,915 | | | | 206 | | | | 11,627 | | | | 152,527 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Small and medium businesses | | | 40,534 | | | | 10,084 | | | | 4,671 | | | | 3,646 | | | | 58,935 | | | | 45,202 | | | | 12,567 | | | | 4,993 | | | | 3,276 | | | | 66,038 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Foreign loans - Latin America | | | 104,689 | | | | 15,346 | | | | 4,725 | | | | 1,770 | | | | 126,530 | | | | 62,746 | | | | 3,815 | | | | 1,227 | | | | 675 | | | | 68,463 | | | Total | | | 369,497 | | | | 69,787 | | | | 20,765 | | | | 30,317 | | | | 490,366 | | | | 344,206 | | | | 83,429 | | | | 19,456 | | | | 27,157 | | | | 474,248 | | | % | | | 75.4 | % | | | 14.2 | % | | | 4.2 | % | | | 6.2 | % | | | 100.0 | % | | | 72.6 | % | | | 17.6 | % | | | 4.1 | % | | | 5.7 | % | | | 100.0 | % |
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. | | | 12/31/2015 | | | 12/31/2014 | | | | | Lower risk | | | Satisfactory | | | Higher risk | | | Total | | | Lower risk | | | Satisfactory | | | Higher risk | | | Total | | | I – Individually evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Large companies | | | 122,097 | | | | 5,998 | | | | - | | | | 128,095 | | | | 123,249 | | | | 8,093 | | | | - | | | | 131,342 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | II- Collectively-evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Individuals | | | 100,819 | | | | 55,625 | | | | 8,269 | | | | 164,713 | | | | 100,252 | | | | 56,890 | | | | 7,746 | | | | 164,888 | | | Credit card | | | 39,945 | | | | 11,086 | | | | 1,492 | | | | 52,523 | | | | 39,097 | | | | 13,385 | | | | 1,632 | | | | 54,114 | | | Personal | | | 6,166 | | | | 7,527 | | | | 6,030 | | | | 19,723 | | | | 7,186 | | | | 8,447 | | | | 5,469 | | | | 21,102 | | | Payroll loans | | | 9,501 | | | | 33,116 | | | | 642 | | | | 43,259 | | | | 8,000 | | | | 30,445 | | | | 523 | | | | 38,968 | | | Vehicles | | | 13,584 | | | | 2,918 | | | | 84 | | | | 16,586 | | | | 19,616 | | | | 3,509 | | | | 104 | | | | 23,229 | | | Mortgage loans | | | 31,623 | | | | 978 | | | | 21 | | | | 32,622 | | | | 26,353 | | | | 1,104 | | | | 18 | | | | 27,475 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Small and medium businesses | | | 55,736 | | | | 11,904 | | | | 3,570 | | | | 71,210 | | | | 56,221 | | | | 13,885 | | | | 3,277 | | | | 73,383 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Foreign loans and Latin America | | | 61,716 | | | | 3,413 | | | | 770 | | | | 65,899 | | | | 45,186 | | | | 3,126 | | | | 416 | | | | 48,728 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 340,368 | | | | 76,940 | | | | 12,609 | | | | 429,917 | | | | 324,908 | | | | 81,994 | | | | 11,439 | | | | 418,341 | |
| | | 12/31/2016 | | | 12/31/2015 | | | | | Lower risk | | | Satisfactory | | | Higher risk | | | Total | | | Lower risk | | | Satisfactory | | | Higher risk | | | Total | | | I – Individually evaluated Corporate | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Large companies | | | 101,612 | | | | 5,076 | | | | 7 | | | | 106,695 | | | | 133,251 | | | | 6,721 | | | | 114 | | | | 140,086 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | II- Collectively-evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Individuals | | | 120,221 | | | | 34,851 | | | | 7,155 | | | | 162,227 | | | | 100,819 | | | | 55,625 | | | | 8,269 | | | | 164,713 | | | Credit card | | | 42,158 | | | | 10,445 | | | | 1,083 | | | | 53,686 | | | | 39,945 | | | | 11,086 | | | | 1,492 | | | | 52,523 | | | Personal | | | 6,317 | | | | 5,864 | | | | 5,538 | | | | 17,719 | | | | 6,166 | | | | 7,527 | | | | 6,030 | | | | 19,723 | | | Payroll loans | | | 26,383 | | | | 15,606 | | | | 447 | | | | 42,436 | | | | 9,501 | | | | 33,116 | | | | 642 | | | | 43,259 | | | Vehicles | | | 10,821 | | | | 1,947 | | | | 68 | | | | 12,836 | | | | 13,584 | | | | 2,918 | | | | 84 | | | | 16,586 | | | Mortgage loans | | | 34,542 | | | | 989 | | | | 19 | | | | 35,550 | | | | 31,623 | | | | 978 | | | | 21 | | | | 32,622 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Small and medium businesses | | | 39,983 | | | | 9,011 | | | | 3,235 | | | | 52,229 | | | | 44,582 | | | | 11,181 | | | | 3,456 | | | | 59,219 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Foreign loans and Latin America | | | 102,138 | | | | 13,945 | | | | 3,370 | | | | 119,453 | | | | 61,716 | | | | 3,413 | | | | 770 | | | | 65,899 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 363,954 | | | | 62,883 | | | | 13,767 | | | | 440,604 | | | | 340,368 | | | | 76,940 | | | | 12,609 | | | | 429,917 | |
6.1.1 Loan operations and lease operations by portfolios of areas and classes, are classified by maturity as follows (loans overdue not impaired): | | | 12/31/2015 | | | 12/31/2014 | | | | | Overdue by | | | Overdue from | | | Overdue from | | | | | | Overdue by | | | Overdue from | | | Overdue from | | | | | | | | up to 30 days | | | 31 to 60 days | | | 61 to 90 days | | | Total | | | up to 30 days | | | 31 to 60 days | | | 61 to 90 days | | | Total | | | Individuals | | | 6,306 | | | | 2,973 | | | | 1,650 | | | | 10,929 | | | | 7,105 | | | | 2,818 | | | | 1,414 | | | | 11,337 | | | Credit card | | | 978 | | | | 417 | | | | 551 | | | | 1,946 | | | | 990 | | | | 461 | | | | 423 | | | | 1,874 | | | Personal | | | 1,992 | | | | 1,127 | | | | 505 | | | | 3,624 | | | | 1,837 | | | | 756 | | | | 371 | | | | 2,964 | | | Payroll loans | | | 532 | | | | 248 | | | | 153 | | | | 933 | | | | 631 | | | | 176 | | | | 126 | | | | 933 | | | Vehicles | | | 1,706 | | | | 642 | | | | 245 | | | | 2,593 | | | | 2,781 | | | | 1,051 | | | | 353 | | | | 4,185 | | | Mortgage loans | | | 1,098 | | | | 539 | | | | 196 | | | | 1,833 | | | | 866 | | | | 374 | | | | 141 | | | | 1,381 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate | | | 411 | | | | 120 | | | | 23 | | | | 554 | | | | 748 | | | | 89 | | | | 1 | | | | 838 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Small and medium businesses | | | 2,288 | | | | 1,035 | | | | 479 | | | | 3,802 | | | | 2,137 | | | | 767 | | | | 400 | | | | 3,304 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Foreign loans - Latin America | | | 1,506 | | | | 274 | | | | 109 | | | | 1,889 | | | | 984 | | | | 325 | | | | 96 | | | | 1,405 | | | Total | | | 10,511 | | | | 4,402 | | | | 2,261 | | | | 17,174 | | | | 10,974 | | | | 3,999 | | | | 1,911 | | | | 16,884 | |
| | | 12/31/2016 | | | 12/31/2015 | | | | | 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 | | | 5,976 | | | | 2,772 | | | | 1,410 | | | | 10,158 | | | | 6,306 | | | | 2,973 | | | | 1,650 | | | | 10,929 | | | Credit card | | | 937 | | | | 442 | | | | 446 | | | | 1,825 | | | | 978 | | | | 417 | | | | 551 | | | | 1,946 | | | Personal | | | 1,850 | | | | 993 | | | | 414 | | | | 3,257 | | | | 1,992 | | | | 1,127 | | | | 505 | | | | 3,624 | | | Payroll loans | | | 439 | | | | 168 | | | | 161 | | | | 768 | | | | 532 | | | | 248 | | | | 153 | | | | 933 | | | Vehicles | | | 1,382 | | | | 448 | | | | 177 | | | | 2,007 | | | | 1,706 | | | | 642 | | | | 245 | | | | 2,593 | | | Mortgage loans | | | 1,368 | | | | 721 | | | | 212 | | | | 2,301 | | | | 1,098 | | | | 539 | | | | 196 | | | | 1,833 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate | | | 790 | | | | 72 | | | | 58 | | | | 920 | | | | 571 | | | | 168 | | | | 73 | | | | 812 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Small and medium businesses | | | 1,928 | | | | 816 | | | | 316 | | | | 3,060 | | | | 2,128 | | | | 987 | | | | 429 | | | | 3,544 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Foreign loans - Latin America | | | 3,965 | | | | 899 | | | | 443 | | | | 5,307 | | | | 1,506 | | | | 274 | | | | 109 | | | | 1,889 | | | Total | | | 12,659 | | | | 4,559 | | | | 2,227 | | | | 19,445 | | | | 10,511 | | | | 4,402 | | | | 2,261 | | | | 17,174 | |
6.1.2 The table below shows other financial assets, individually evaluated, classified by rating: | 12/31/2015 | | | | | Interbank deposits | | | | | | Financial assets | | | | | | | | Held-to- | | | | | | | | | and securities | | | | designated at fair | | | | Available-for- | | maturity | | | | | | | | | purchased under | | Held-for-trading | | value through profit | | Derivatives | | sale financial | | financial | | | | | | | 12/31/2016 | | 12/31/2016 | | Internal rating | | agreements to resell | | | financial assets | | | or loss | | | assets | | | assets | | | assets | | | Total | | | 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 | | | 284,929 | | | | 164,283 | | | | 642 | | | | 26,251 | | | | 84,284 | | | | 41,843 | | | | 602,232 | | | | 287,743 | | | | 204,621 | | | | 1,191 | | | | 23,943 | | | | 83,974 | | | | 39,008 | | | | 640,480 | | | Satisfactory | | | - | | | | 26 | | | | - | | | | 130 | | | | 889 | | | | 342 | | | | 1,387 | | | | - | | | | 19 | | | | - | | | | 87 | | | | 980 | | | | 294 | | | | 1,380 | | | Higher risk | | | - | | | | 2 | | | | - | | | | 374 | | | | 308 | | | | - | | | | 684 | | | | - | | | | 8 | | | | - | | | | 201 | | | | 1,227 | | | | - | | | | 1,436 | | | Impairment | | | - | | | | - | | | | - | | | | - | | | | 564 | | | | - | | | | 564 | | | | - | | | | - | | | | - | | | | - | | | | 2,096 | | | | 1,193 | | | | 3,289 | | | Total | | | 284,929 | | | | 164,311 | | | | 642 | | | | 26,755 | | | | 86,045 | | | | 42,185 | | | | 604,867 | | | | 287,743 | | | | 204,648 | | | | 1,191 | | | | 24,231 | | | | 88,277 | | | | 40,495 | | | | 646,585 | | | % | | | 47.1 | | | | 27.2 | | | | 0.1 | | | | 4.4 | | | | 14.2 | | | | 7.0 | | | | 100.0 | | | | 44.4 | | | | 31.7 | | | | 0.2 | | | | 3.7 | | | | 13.7 | | | | 6.3 | | | | 100.0 | |
| 12/31/2014 | | | | | Interbank deposits | | | | | | Financial assets | | | | | | | | Held-to- | | | | | | | | | and securities | | | | designated at fair | | | | Available-for- | | maturity | | | | | | | | | purchased under | | Held-for-trading | | value through profit | | Derivatives | | sale financial | | financial | | | | | | | 12/31/2015 | | 12/31/2015 | | Internal rating | | agreements to resell | | | financial assets | | | or loss | | | assets | | | assets | | | assets | | | Total | | | 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 | | | 231,999 | | | | 132,934 | | | | 733 | | | | 14,106 | | | | 78,213 | | | | 34,434 | | | | 492,419 | | | | 284,929 | | | | 164,283 | | | | 642 | | | | 26,251 | | | | 84,284 | | | | 41,843 | | | | 602,232 | | | Satisfactory | | | - | | | | 7 | | | | - | | | | 46 | | | | 68 | | | | - | | | | 121 | | | | - | | | | 26 | | | | - | | | | 130 | | | | 889 | | | | 342 | | | | 1,387 | | | Higher Risk | | | - | | | | 3 | | | | - | | | | 4 | | | | 65 | | | | - | | | | 72 | | | | - | | | | 2 | | | | - | | | | 374 | | | | 308 | | | | - | | | | 684 | | | Impairment | | | - | | | | - | | | | - | | | | - | | | | 14 | | | | - | | | | 14 | | | | - | | | | - | | | | - | | | | - | | | | 564 | | | | - | | | | 564 | | | Total | | | 231,999 | | | | 132,944 | | | | 733 | | | | 14,156 | | | | 78,360 | | | | 34,434 | | | | 492,626 | | | | 284,929 | | | | 164,311 | | | | 642 | | | | 26,755 | | | | 86,045 | | | | 42,185 | | | | 604,867 | | | % | | | 47.1 | | | | 27.0 | | | | 0.1 | | | | 2.9 | | | | 15.9 | | | | 7.0 | | | | 100.0 | | | | 47.1 | | | | 27.2 | | | | 0.1 | | | | 4.4 | | | | 14.2 | | | | 7.0 | | | | 100.0 | |
6.1.3 Collateral held for loan and lease operations portfolio | | | 12/31/2015 | | | 12/31/2014 | | | | | | | | | | | (II) Under-collateralized | | | | | | | | | | | | | | | (I) Over-collateralized assets | | | assets | | | (I) Over-collateralized assets | | | (II) Under-collateralized assets | | | | | | Carrying | | | | | | Carrying | | | | | | Carrying | | | | | | Carrying | | | | | | 12/31/2016 | | 12/31/2015 | | | | | value of the | | Fair value of | | value of the | | Fair value of | | value of the | | Fair value of | | value of the | | Fair value of | | | (l) Over-collateralized assets | | | (II) Under-collateralized
assets | | | (l) Over-collateralized assets | | | (II) Under-collateralized assets | | | Financial effect of collateral | | assets | | | collateral | | | assets | | | collateral | | | assets | | | collateral | | | assets | | | 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 | | | 54,640 | | | | 135,202 | | | | 639 | | | | 572 | | | | 57,340 | | | | 137,641 | | | | 720 | | | | 627 | | | | 51,587 | | | | 128,555 | | | | 790 | | | | 743 | | | | 54,640 | | | | 135,202 | | | | 639 | | | | 572 | | | Personal | | | 495 | | | | 1,204 | | | | 448 | | | | 419 | | | | 561 | | | | 1,160 | | | | 214 | | | | 182 | | | | 443 | | | | 1,297 | | | | 682 | | | | 652 | | | | 495 | | | | 1,204 | | | | 448 | | | | 419 | | | Vehicles | | | 19,390 | | | | 50,662 | | | | 189 | | | | 152 | | | | 27,869 | | | | 66,366 | | | | 458 | | | | 403 | | | | 13,039 | | | | 35,995 | | | | 107 | | | | 90 | | | | 19,390 | | | | 50,662 | | | | 189 | | | | 152 | | | Mortgage loans | | | 34,755 | | | | 83,336 | | | | 2 | | | | 1 | | | | 28,910 | | | | 70,115 | | | | 48 | | | | 42 | | | | 38,105 | | | | 91,263 | | | | 1 | | | | 1 | | | | 34,755 | | | | 83,336 | | | | 2 | | | | 1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Small, medium businesses and corporate | | | 169,560 | | | | 481,916 | | | | 7,968 | | | | 2,932 | | | | 166,376 | | | | 447,109 | | | | 6,416 | | | | 3,035 | | | | 122,353 | | | | 368,937 | | | | 12,324 | | | | 6,729 | | | | 169,560 | | | | 481,916 | | | | 7,968 | | | | 2,932 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Foreign loans - Latin America | | | 57,680 | | | | 89,531 | | | | 7,715 | | | | 6,042 | | | | 42,089 | | | | 61,349 | | | | 4,165 | | | | 3,311 | | | | 97,374 | | | | 155,923 | | | | 9,420 | | | | 4,803 | | | | 57,680 | | | | 89,531 | | | | 7,715 | | | | 6,042 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 281,880 | | | | 706,649 | | | | 16,322 | | | | 9,546 | | | | 265,805 | | | | 646,099 | | | | 11,301 | | | | 6,973 | | | | 271,314 | | | | 653,415 | | | | 22,534 | | | | 12,275 | | | | 281,880 | | | | 706,649 | | | | 16,322 | | | | 9,546 | |
The difference between the total loan portfolio and collateralized loan portfolio is generated by non-collateralized loans amounting to R$ 176,046196,518 (R$ 175,325176,046 at 12/31/2014)2015). 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 recoverability potential of impaired loans and not to reduce the exposure value of customers and counterparties. Individuals Personal– This category of credit products usually requires collateral, focusing on endorsements and sureties. Vehicles– For this type of operation, clients' assets serve as collateral, which are also the leased assets in leasing operations. Mortgage loans– Regards buildings themselves given in guarantee. Small, Medium Businesses and Corporate –For these operations, any collateral can be used within the credit policy of ITAÚ UNIBANCO HOLDING (chattel mortgage, assignment trust,assignmenttrust, surety / joint debtor, Mortgage and others). Foreign loans – Latin America–For these operations, any collateral can be used within the credit policy of ITAÚ UNIBANCO HOLDING (chattel mortgage, assignment trust, surety/joint debtor,jointdebtor, Mortgage and others). 7.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, or (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. 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 period: | | | 01/01 to | | 01/01 to | | 01/01 to | | | 01/01 to | | 01/01 to | | | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2013 | | | 12/31/2016 | | 12/31/2015 | | | Real estate not for own use | | | 133 | | | | 52 | | | | 2 | | | | 13 | | | | 133 | | | Residential properties - mortgage loans | | | 256 | | | | 86 | | | | 93 | | | | 411 | | | | 256 | | | Vehicles - linked to loan operations | | | 18 | | | | 6 | | | | 1 | | | | 14 | | | | 18 | | | Other (Vehicles / Furniture / Equipments) - Dation | | | 37 | | | | 22 | | | | 12 | | | | Other (vehicles / furniture / equipments) - dation | | | | 172 | | | | 37 | | | Total | | | 444 | | | | 166 | | | | 108 | | | | 610 | | | | 444 | |
Market risk Market risk is the possibility of incurring financial losses arising from the changes in the market value of positions held by a financial institution, including the risks of transactions subject to foreign exchange variation, interest rates, share prices, price indexes and commodity prices, among other indices related to risk factors. Market risk management is the process through which the ITAÚ UNIBANCO HOLDING monitors and controls the risks of variations in financial instruments market values due market changes, aimed at optimizing the risk-return ratio, by using an appropriate structure of limits, alerts, models and adequate management tools. The policy of risk management the ITAÚ UNIBANCO HOLDING 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, that is not part of the financial statements, may be viewed on the websitewww.itau.com.br/relacoes-com-investidores, in the section Corporate Governance / Rules and Policies/Policies / Public Access Report - Market Risk. The risk management strategy of ITAÚ UNIBANCO HOLDING tries to achieve a balance between business objectives, considering among others: | · | Political, economic and market context; |
| · | Portfolio profile of ITAÚ UNIBANCO HOLDING; |
| · | Capacity to operate in specific markets. |
The process for managing the market risk of ITAÚ UNIBANCO HOLDING is conducted within the governance and hierarchy of committees and a framework of limits and warnings approved specifically for this purpose, covering different levels and classes of market risk (such as interest rate, and exchange variation risk, among others). This framework of limits and warnings covers from the monitoring of risk aggregate indicators (portfolio level) to granular limits (individual desk level). The framework of market risk ranges from the risk factor level, with specific limits aiming at improving the risk monitoring and understanding process, and at avoiding risk concentration. These limits are quantified by assessing the forecasted results of the balance sheet, size of stockholders’ equity, liquidity, markets complexity and volatility and the institution’s appetite for risk. Limits are monitored daily and excesses and potential violations are reported and discussed for each established limit: | · | Within one business day, for management of business units in charge and executives of the risk control area and business areas; and |
| · | Within one month, for proper committees. |
Daily risk reports, used by the business and control areas,departments, are issued to the topfor senior management. Additionally, the risk control and management process is submitted to periodic reviews.reviews for the purpose of keeping it in line with the best market practices and adherent to the ongoing improvement processes at ITAÚ UNIBANCO HOLDING. The structure of limits and alerts follows the Board of Directors' guidelines and is approved by panels. The process to definite limit levels and violation reports follow the governance to approve the internal policies of ITAÚ UNIBANCO HOLDING. The information flow established aims at disseminating information to the several levels of executives of the institution, including the members of the Executive Board, by means of the Committees in charge of risk management. This limit and warning framework increases effectiveness and the control coverage is reviewed at least on an annual basis. The purpose of market risk of ITAÚ UNIBANCO HOLDING structure is: | · | Providing visibility and assurance to all executive levels that the assumption of market risks is in line with ITAÚ UNIBANCO HOLDING and the risk-return objective; |
| · | Promoting disciplined and educated discussion on the global risk profile and its evolution over time; |
| · | Increasing transparency on the way the business seeks to optimize results; |
| · | Providing early warning mechanisms in order to make the effective risk management easier, without jeopardizing the business purposes; and |
| · | Monitoring and avoiding risk concentration. |
The market risk control and management process is periodically reviewed with the purpose of keeping the process aligned with best market practices and complies with continuous improvement processes at ITAÚ UNIBANCO HOLDING.
The market risk is controlled by an area independent from the business areas, which is responsible for the daily activities of: (i) risk measurement and assessment, (ii) monitoring of stress scenarios, limits and warnings, (iii) application, analysis and tests of stress scenarios, (iv) risk reporting for individuals responsible within the business areas, in compliance with governance of ITAÚ UNIBANCO HOLDING, (v) monitoring of actions required for adjustment of positions and/or risk levels to make them feasible, and (vi) support to the launch of new financial products with security. For that purpose, ITAÚ UNIBANCO HOLDING has a structured reporting and information process and an information flow that provides input for the follow-up by committees and complies with the requirements of Brazilian and foreign regulatory agencies. ITAÚ UNIBANCO HOLDING hedges transactions with clients and proprietary positions, including foreign investments, aiming at mitigating risks arising from fluctuations in market factors and maintaining the classification the transactions into the current exposure limits. Derivatives are the most frequently used instruments for these hedges. When these transactions are designed for as hedge accounting, specific supporting documentation is prepared, including continuous review of the hedge effectiveness (retrospective and prospective) and other changes in the accounting process. Accounting and managerial hedge are governed by corporate guidelines of ITAÚ UNIBANCO HOLDING. For a detailed vision of the accounting hedge topic, see Note 9 – Hedge accounting is treated in detail in the financial statement notes.accounting. The market risk structure categorizes transactions as part of either the banking portfolio or the trading portfolio, in accordance with general criteria established by the National Monetary Council Resolution No. 3,464 and BACEN Circular No. 3,354.3,354 of July 27, 2007. The trading portfolio consists of all transactions involving financial instruments and goods, including derivatives, which are carried out with the intention of trading. The banking portfolio is basically characterized by transactions from the banking business and transactions related to the management of the balance sheet of the institution. It has the no-intention of resale and medium and longtermlong term time horizons as general guidelines. Exposures to market risks inherent in the many different financial instruments, including derivatives, are broken down into a number of risk factors, primary market components for pricing. The main risk factors measured by ITAÚ UNIBANCO HOLDING are: | · | Interest rates risk:rates: the risk of financial losses on operationsfrom transactions subject to interest rates variations;rate variations, foreign-currency coupons and price-index coupons; |
| · | Foreign exchange-linked:Currencies: the risk of losses arising from positions in transactions which are subject to a foreign exchange-linked interest rate;exchange rate variation; |
| · | Foreign exchange rates:Shares: the risk of losses in operationsfrom transactions subject to foreign exchange variation;share price variations; |
| · | Price index-linked: risk of financial losses on operations subject to changes in price index coupon rates; |
| · | Variable income:Commodities: the risk of losses in operationsfrom transactions subject to variation in goods prices and commodities.commodity price variations. |
The CMN has regulations that establish the segregation of exposure to market risk at least in the following categories: interest rate, exchange rate, shares and commodities. Inflation rates are addressed as a group of risk factors and received the same treatment as the other risk factors, such as interest rates, exchange rates, etc., and follow the structure of risk and limits governance adopted by ITAÚ UNIBANCO HOLDING to manage market risk. Market risk is analyzed based on the following metrics: | · | Value at risk (VaR): statistical metric that estimates the expected maximum potential economic loss under normal market conditions, taking into consideration a certain time horizon and confidence level; |
| · | Losses in stress scenarios (Stress test): simulation technique to assess the behavior of assets, liabilities and derivatives of a portfolio when several risk factors are taken to extreme market situations (based on prospective and historical scenarios) in the portfolio; |
| · | Stop loss: metrics which purpose is to review positions, should losses accumulated in a certain period reach a certain amount; |
| · | Concentration: cumulative exposure of a certain financial instruments or risk factor calculated at market value (“MtM – Mark to Market”); and |
| · | Stressed VaR: statistical metric resulting from the VaR calculation, with the purpose of capturing the highest risk in simulations for the current portfolio, considering the returns that can be observed in historic scenarios of extreme volatility. |
In addition to the risk measures, sensitivity and loss control measures are also analyzed. They comprise: | · | Gap analysis: accumulated exposure, by risk factor, of cash flows expressed at market value, allocated at the maturity dates; |
| · | Sensitivity (DV01 – Delta Variation): the impact on the cash flows market value when submitted to an one annual basis point increase in the current interest rates or index rate; |
| · | Sensitivity to the Several Risk Factors (Greeks): partial derivatives of an options portfolio in relation to the underlying assets price, implicit volatility, interest rate and timing. |
ITAÚ UNIBANCO HOLDING uses proprietary systems to measure the consolidated market risk. The processing of these systems principally takes place in São Paulo,occur, in an access-controlled environment, being highly available, which has data safekeeping and recovery processes, and counts on such an infrastructure to ensure the continuity of business in contingency (disaster recovery) situations. VaR - Consolidated ITAÚ UNIBANCO HOLDING The Consolidated VaR of ITAÚ UNIBANCO HOLDING is calculated bythrough the Historical Simulation method. This methodology, performs a full revaluationwhich fully reflects all its positions based on the historical series of all positions throughasset prices. In the actual historical distributionfirst quarter of assets.2016, o ITAÚ UNIBANCO HOLDING opted for including the exposures of each foreign unit in the calculation of ITAÚ UNIBANCO HOLDING’s Consolidated VaR, so as to take into account the risk factors of these units, thus improving the methodology used.
The Consolidated Total VaR table provides an analysis of the exposure to market risk of ITAÚ UNIBANCO HOLDING portfolios, and to its foreign subsidiaries by showing where the largest concentrations of market risk are found. (foreign subsidiaries: Itau BBA International plc, Banco Itaú Argentina S.A., Banco Itaú Chile S.A., Banco Itaú Uruguai S.A., Banco Itaú Paraguai S.A. and Itaú BBA Colombia S.A. – Corporación Financiera).portfolios. 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 the period. In this quarter, the Total Average VaR remained lower than 1% of ITAÚ UNIBANCO HOLDING`s stockholders` equity, in line with that recorded in the previous quarter. From January 1st to December 31, 2015,2016, the average total VaR in Historical Simulation was R$ 207.0 million,236.6, or 0.18% of total stockholders’ equity (throughout 20142015 it was R$ 131.9 million207.0 or 0.13%0.18% of total stockholders’ equity). | | | (in R$ million) | | | | | VaR Total - Historical Simulation | | | | | 12/31/2015 | | | 12/31/2014 | | | | | Average | | | Minimum | | | Maximum | | | Var Total | | | Average | | | Minimum | | | Maximum | | | Var Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Risk factor group | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Brazilian interest rate | | | 131.9 | | | | 78.2 | | | | 236.4 | | | | 121.2 | | | | 92.4 | | | | 37.0 | | | | 161.8 | | | | 124.8 | | | Other interest rate | | | 93.6 | | | | 75.1 | | | | 139.2 | | | | 108.6 | | | | 60.4 | | | | 21.1 | | | | 93.2 | | | | 83.6 | | | FX rate | | | 47.2 | | | | 11.3 | | | | 118.6 | | | | 13.1 | | | | 36.1 | | | | 3.6 | | | | 141.2 | | | | 26.5 | | | Brazilian inflation indexes | | | 134.1 | | | | 103.9 | | | | 294.9 | | | | 108.9 | | | | 99.1 | | | | 45.9 | | | | 162.9 | | | | 115.7 | | | Equities and commodities | | | 28.5 | | | | 17.2 | | | | 70.4 | | | | 59.3 | | | | 22.8 | | | | 10.4 | | | | 60.7 | | | | 22.5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Foreign units(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Itaú BBA International(4) | | | 3.2 | | | | 1.0 | | | | 10.1 | | | | 3.0 | | | | 1.1 | | | | 0.4 | | | | 2.3 | | | | 1.6 | | | Itaú Argentina(2) | | | 8.5 | | | | 1.9 | | | | 118.1 | | | | 7.8 | | | | 4.0 | | | | 0.9 | | | | 18.8 | | | | 1.9 | | | Itaú Chile(2) | | | 7.5 | | | | 4.5 | | | | 14.0 | | | | 4.7 | | | | 3.3 | | | | 1.3 | | | | 5.5 | | | | 5.3 | | | Itaú Uruguai(3) | | | 2.0 | | | | 0.9 | | | | 4.1 | | | | 2.6 | | | | 1.6 | | | | 0.8 | | | | 2.6 | | | | 2.1 | | | Itaú Paraguai(4) | | | 3.8 | | | | 1.3 | | | | 7.8 | | | | 7.6 | | | | 1.3 | | | | 0.6 | | | | 3.6 | | | | 3.5 | | | Itaú BBA Colombia(2) | | | 1.2 | | | | 0.3 | | | | 1.7 | | | | 0.4 | | | | 0.4 | | | | 0.1 | | | | 1.2 | | | | 0.5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Effect of diversification | | | | | | | | | | | | | | | (233.3 | ) | | | | | | | | | | | | | | | (194.9 | ) | | Total risk | | | 207.0 | | | | 152.3 | | | | 340.7 | | | | 204.0 | | | | 131.9 | | | | 59.0 | | | | 227.7 | | | | 193.1 | |
(1) Determined in local currency and converted into Reais at the daily quotation
(2) VaR calculated using historical simulation as from the 1st quarter of 2015.
(3) VaR calculated using historical simulation as from the third quarter of 2015.
(4) VaR calculated using historical simulation as from this quarter.
| | | (in R$ million) | | | | | VaR Total - Historical Simulation | | | | | 12/31/2016(1) | | | 12/31/2015(2) | | | | | Average | | | Minimum | | | Maximum | | | Var Total | | | Average | | | Minimum | | | Maximum | | | Var Total | | | Risk factor group | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rates | | | 482.5 | | | | 323.7 | | | | 607.4 | | | | 607.4 | | | | 363.5 | | | | 314.2 | | | | 606.4 | | | | 347.1 | | | Currencies | | | 18.4 | | | | 6.8 | | | | 33.2 | | | | 17.0 | | | | 47.1 | | | | 11.3 | | | | 118.6 | | | | 12.3 | | | Shares | | | 45.2 | | | | 34.0 | | | | 63.3 | | | | 44.3 | | | | 16.9 | | | | 6.9 | | | | 57.2 | | | | 46.9 | | | Commodities | | | 1.7 | | | | 0.7 | | | | 4.0 | | | | 0.8 | | | | 1.8 | | | | 0.8 | | | | 8.5 | | | | 2.1 | | | Effect of diversification | | | | | | | | | | | | | | | (339.7 | ) | | | | | | | | | | | | | | | (204.4 | ) | | Total risk | | | 236.6 | | | | 155.1 | | | | 341.5 | | | | 329.8 | | | | 207.0 | | | | 152.3 | | | | 340.7 | | | | 204.0 | |
| (1) | VaR by Risk factor group includes information from foreign units. |
| (2) | VaR by Risk factor group does not include information from foreign units. |
Interest rate The table on the position of accounts subject to interest rate risk group 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 mismatching 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 period. Position of accounts subject to interest rate risk(1) | | | 12/31/2015 | | | 12/31/2014 | | | | | 0-30 | | | 31-180 | | | 181-365 | | | 1-5 | | | Over 5 | | | | | | 0-30 | | | 31-180 | | | 181-365 | | | 1-5 | | | Over 5 | | | | | | | | days | | | days | | | days | | | years | | | years | | | Total | | | days | | | days | | | days | | | years | | | years | | | Total | | | Interest-bearing assets | | | 376,617 | | | | 203,639 | | | | 97,021 | | | | 277,995 | | | | 186,609 | | | | 1,141,881 | | | | 305,708 | | | | 226,073 | | | | 97,686 | | | | 257,420 | | | | 117,884 | | | | 1,004,771 | | | Interbank deposits | | | 23,454 | | | | 3,436 | | | | 2,879 | | | | 753 | | | | 3 | | | | 30,525 | | | | 15,879 | | | | 2,259 | | | | 3,997 | | | | 946 | | | | - | | | | 23,081 | | | Securities purchased under agreements to resell | | | 196,402 | | | | 57,997 | | | | 5 | | | | - | | | | - | | | | 254,404 | | | | 146,898 | | | | 62,020 | | | | - | | | | - | | | | - | | | | 208,918 | | | Central Bank compulsory deposits | | | 62,766 | | | | - | | | | - | | | | - | | | | - | | | | 62,766 | | | | 59,714 | | | | - | | | | - | | | | - | | | | - | | | | 59,714 | | | Held-for-trading financial assets | | | 12,872 | | | | 9,413 | | | | 13,649 | | | | 57,700 | | | | 70,677 | | | | 164,311 | | | | 10,142 | | | | 25,770 | | | | 17,539 | | | | 57,074 | | | | 22,419 | | | | 132,944 | | | Financial assets held for trading and designated at fair value through profit or loss | | | - | | | | - | | | | - | | | | 642 | | | | - | | | | 642 | | | | - | | | | 322 | | | | 171 | | | | 240 | | | | - | | | | 733 | | | Available-for-sale financial assets | | | 3,903 | | | | 7,106 | | | | 11,914 | | | | 35,098 | | | | 28,024 | | | | 86,045 | | | | 5,251 | | | | 9,679 | | | | 7,290 | | | | 29,743 | | | | 26,397 | | | | 78,360 | | | Held-to-maturity financial assets | | | 342 | | | | - | | | | 319 | | | | 14,500 | | | | 27,024 | | | | 42,185 | | | | 44 | | | | 264 | | | | 672 | | | | 13,609 | | | | 19,845 | | | | 34,434 | | | Derivatives | | | 6,040 | | | | 7,152 | | | | 2,653 | | | | 8,116 | | | | 2,794 | | | | 26,755 | | | | 2,408 | | | | 4,073 | | | | 2,238 | | | | 3,682 | | | | 1,755 | | | | 14,156 | | | Loan and lease operations portfolio | | | 70,838 | | | | 118,535 | | | | 65,602 | | | | 161,186 | | | | 58,087 | | | | 474,248 | | | | 65,372 | | | | 121,686 | | | | 65,779 | | | | 152,126 | | | | 47,468 | | | | 452,431 | | | Interest-bearing liabilities | | | 290,908 | | | | 98,129 | | | | 74,635 | | | | 316,852 | | | | 72,968 | | | | 853,492 | | | | 270,976 | | | | 85,050 | | | | 60,179 | | | | 277,952 | | | | 57,274 | | | | 751,431 | | | Savings deposits | | | 111,319 | | | | - | | | | - | | | | - | | | | - | | | | 111,319 | | | | 118,449 | | | | - | | | | - | | | | - | | | | - | | | | 118,449 | | | Time deposits | | | 13,465 | | | | 19,252 | | | | 13,277 | | | | 57,694 | | | | 1,562 | | | | 105,250 | | | | 11,705 | | | | 23,656 | | | | 7,775 | | | | 61,794 | | | | 3,536 | | | | 108,466 | | | Interbank deposits | | | 4,475 | | | | 8,727 | | | | 1,012 | | | | 735 | | | | - | | | | 14,949 | | | | 4,687 | | | | 13,173 | | | | 762 | | | | 503 | | | | - | | | | 19,125 | | | Deposits received under repurchase agreements | | | 144,750 | | | | 15,186 | | | | 21,262 | | | | 134,708 | | | | 20,737 | | | | 336,643 | | | | 125,663 | | | | 11,280 | | | | 15,150 | | | | 120,639 | | | | 15,951 | | | | 288,683 | | | Interbank market | | | 8,056 | | | | 42,525 | | | | 29,966 | | | | 62,654 | | | | 13,685 | | | | 156,886 | | | | 8,043 | | | | 31,076 | | | | 29,699 | | | | 44,367 | | | | 9,401 | | | | 122,586 | | | Institutional market | | | 4,988 | | | | 5,123 | | | | 5,748 | | | | 42,938 | | | | 35,121 | | | | 93,918 | | | | 624 | | | | 2,520 | | | | 3,910 | | | | 39,516 | | | | 26,672 | | | | 73,242 | | | Derivatives | | | 3,850 | | | | 7,309 | | | | 3,348 | | | | 14,715 | | | | 1,849 | | | | 31,071 | | | | 1,728 | | | | 3,205 | | | | 2,880 | | | | 8,001 | | | | 1,536 | | | | 17,350 | | | Financial liabilities held for trading | | | 5 | | | | 7 | | | | 22 | | | | 364 | | | | 14 | | | | 412 | | | | 77 | | | | 140 | | | | 3 | | | | 122 | | | | 178 | | | | 520 | | | Liabilities for capitalization plans | | | - | | | | - | | | | - | | | | 3,044 | | | | - | | | | 3,044 | | | | - | | | | - | | | | - | | | | 3,010 | | | | - | | | | 3,010 | | | Difference asset / liability(2) | | | 85,709 | | | | 105,510 | | | | 22,386 | | | | (38,857 | ) | | | 113,641 | | | | 288,389 | | | | 34,732 | | | | 141,023 | | | | 37,507 | | | | (20,532 | ) | | | 60,610 | | | | 253,340 | | | Cumulative difference | | | 85,709 | | | | 191,219 | | | | 213,605 | | | | 174,748 | | | | 288,389 | | | | | | | | 34,732 | | | | 175,755 | | | | 213,262 | | | | 192,730 | | | | 253,340 | | | | | | | Ratio of cumulative difference to total interest-bearing assets | | | 7.5 | % | | | 16.7 | % | | | 18.7 | % | | | 15.3 | % | | | 25.3 | % | | | | | | | 3.5 | % | | | 17.5 | % | | | 21.2 | % | | | 19.2 | % | | | 25.2 | % | | | | |
(1) Remaining contractual terms.
(2) The difference arises from the mismatch between the maturities of all remunerated assets and liabilities, at the respective period-end date, considering the contractually agreed terms.
| | | 12/31/2016 | | | 12/31/2015 | | | | | 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 | | | 389,843 | | | | 219,332 | | | | 95,331 | | | | 347,743 | | | | 167,400 | | | | 1,219,649 | | | | 376,617 | | | | 203,639 | | | | 97,021 | | | | 277,995 | | | | 186,609 | | | | 1,141,881 | | | Interbank deposits | | | 13,286 | | | | 4,676 | | | | 3,541 | | | | 1,189 | | | | - | | | | 22,692 | | | | 23,454 | | | | 3,436 | | | | 2,879 | | | | 753 | | | | 3 | | | | 30,525 | | | Securities purchased under agreements to resell | | | 201,525 | | | | 63,180 | | | | 35 | | | | 281 | | | | 30 | | | | 265,051 | | | | 196,402 | | | | 57,997 | | | | 5 | | | | - | | | | - | | | | 254,404 | | | Central Bank compulsory deposits | | | 82,698 | | | | - | | | | - | | | | - | | | | - | | | | 82,698 | | | | 62,766 | | | | - | | | | - | | | | - | | | | - | | | | 62,766 | | | Held-for-trading financial assets | | | 6,971 | | | | 14,194 | | | | 13,041 | | | | 118,050 | | | | 52,392 | | | | 204,648 | | | | 12,872 | | | | 9,413 | | | | 13,649 | | | | 57,700 | | | | 70,677 | | | | 164,311 | | | Financial assets held for trading and designated at fair value through profit or loss | | | - | | | | - | | | | 1,191 | | | | - | | | | - | | | | 1,191 | | | | - | | | | - | | | | - | | | | 642 | | | | - | | | | 642 | | | Available-for-sale financial assets | | | 5,994 | | | | 10,539 | | | | 7,103 | | | | 38,969 | | | | 25,672 | | | | 88,277 | | | | 3,903 | | | | 7,106 | | | | 11,914 | | | | 35,098 | | | | 28,024 | | | | 86,045 | | | Held-to-maturity financial assets | | | 1,370 | | | | 528 | | | | 600 | | | | 19,376 | | | | 18,621 | | | | 40,495 | | | | 342 | | | | - | | | | 319 | | | | 14,500 | | | | 27,024 | | | | 42,185 | | | Derivatives | | | 5,815 | | | | 5,470 | | | | 2,826 | | | | 6,940 | | | | 3,180 | | | | 24,231 | | | | 6,040 | | | | 7,152 | | | | 2,653 | | | | 8,116 | | | | 2,794 | | | | 26,755 | | | Loan and lease operations portfolio | | | 72,184 | | | | 120,745 | | | | 66,994 | | | | 162,938 | | | | 67,505 | | | | 490,366 | | | | 70,838 | | | | 118,535 | | | | 65,602 | | | | 161,186 | | | | 58,087 | | | | 474,248 | | | Interest-bearing liabilities | | | 325,241 | | | | 90,652 | | | | 111,907 | | | | 287,433 | | | | 62,298 | | | | 877,531 | | | | 290,908 | | | | 98,129 | | | | 74,635 | | | | 316,852 | | | | 72,968 | | | | 853,492 | | | Savings deposits | | | 108,250 | | | | - | | | | - | | | | - | | | | - | | | | 108,250 | | | | 111,319 | | | | - | | | | - | | | | - | | | | - | | | | 111,319 | | | Time deposits | | | 30,555 | | | | 28,248 | | | | 17,110 | | | | 78,032 | | | | 2,329 | | | | 156,274 | | | | 13,465 | | | | 19,252 | | | | 13,277 | | | | 57,694 | | | | 1,562 | | | | 105,250 | | | Interbank deposits | | | 1,176 | | | | 1,918 | | | | 625 | | | | 36 | | | | 2 | | | | 3,757 | | | | 4,475 | | | | 8,727 | | | | 1,012 | | | | 735 | | | | - | | | | 14,949 | | | Deposits received under repurchase agreements | | | 172,411 | | | | 6,844 | | | | 55,314 | | | | 97,056 | | | | 17,539 | | | | 349,164 | | | | 144,750 | | | | 15,186 | | | | 21,262 | | | | 134,708 | | | | 20,737 | | | | 336,643 | | | Interbank market | | | 6,535 | | | | 38,590 | | | | 30,227 | | | | 50,590 | | | | 9,541 | | | | 135,483 | | | | 8,056 | | | | 42,525 | | | | 29,966 | | | | 62,654 | | | | 13,685 | | | | 156,886 | | | Institutional market | | | 951 | | | | 11,490 | | | | 6,612 | | | | 46,883 | | | | 30,303 | | | | 96,239 | | | | 4,988 | | | | 5,123 | | | | 5,748 | | | | 42,938 | | | | 35,121 | | | | 93,918 | | | Derivatives | | | 5,294 | | | | 3,555 | | | | 1,961 | | | | 11,394 | | | | 2,494 | | | | 24,698 | | | | 3,850 | | | | 7,309 | | | | 3,348 | | | | 14,715 | | | | 1,849 | | | | 31,071 | | | Financial liabilities held for trading | | | 69 | | | | 7 | | | | 58 | | | | 295 | | | | 90 | | | | 519 | | | | 5 | | | | 7 | | | | 22 | | | | 364 | | | | 14 | | | | 412 | | | Liabilities for capitalization plans | | | - | | | | - | | | | - | | | | 3,147 | | | | - | | | | 3,147 | | | | - | | | | - | | | | - | | | | 3,044 | | | | - | | | | 3,044 | | | Difference asset / liability(2) | | | 64,602 | | | | 128,680 | | | | (16,576 | ) | | | 60,310 | | | | 105,102 | | | | 342,118 | | | | 85,709 | | | | 105,510 | | | | 22,386 | | | | (38,857 | ) | | | 113,641 | | | | 288,389 | | | Cumulative difference | | | 64,602 | | | | 193,282 | | | | 176,706 | | | | 237,016 | | | | 342,118 | | | | | | | | 85,709 | | | | 191,219 | | | | 213,605 | | | | 174,748 | | | | 288,389 | | | | | | | Ratio of cumulative difference to total interest-bearing assets | | | 5.3 | % | | | 15.8 | % | | | 14.5 | % | | | 19.4 | % | | | 28.1 | % | | | | | | | 7.5 | % | | | 16.7 | % | | | 18.7 | % | | | 15.3 | % | | | 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 period-end date, considering the contractually agreed terms. |
Position of accounts subject to currency risk | | | 12/31/2015 | | | | | | | | Chilean | | | | | | | 12/31/2016 | | | Assets | | Dollar | | | Peso | | | Other | | | Total | | | Dollar | | | Chilean
Peso | | | Other | | | Total | | | Cash and deposits on demand | | | 6,060 | | | | 779 | | | | 4,611 | | | | 11,450 | | | | 6,719 | | | | 1,581 | | | | 3,164 | | | | 11,464 | | | Central Bank compulsory deposits | | | 234 | | | | 503 | | | | 6,435 | | | | 7,172 | | | | 81 | | | | - | | | | 5,288 | | | | 5,369 | | | Interbank deposits | | | 16,281 | | | | 2,093 | | | | 4,649 | | | | 23,023 | | | | 8,860 | | | | 1,007 | | | | 6,781 | | | | 16,648 | | | Securities purchased under agreements to resell | | | 1,966 | | | | 56 | | | | 87 | | | | 2,109 | | | | 199 | | | | 112 | | | | 660 | | | | 971 | | | Financial assets held for trading | | | 6,125 | | | | 73 | | | | 907 | | | | 7,105 | | | | 6,833 | | | | 305 | | | | 3,607 | | | | 10,745 | | | Financial assets designated at fair value through profit or loss | | | 642 | | | | - | | | | - | | | | 642 | | | | 1,191 | | | | - | | | | - | | | | 1,191 | | | Derivatives | | | 9,581 | | | | 1,279 | | | | 37 | | | | 10,897 | | | | 5,313 | | | | 4,873 | | | | 452 | | | | 10,638 | | | Available-for-sale financial assets | | | 28,833 | | | | 3,063 | | | | 1,928 | | | | 33,824 | | | | 22,513 | | | | 8,337 | | | | 3,898 | | | | 34,748 | | | Held-to-maturity financial assets | | | 14,807 | | | | - | | | | - | | | | 14,807 | | | | 12,519 | | | | - | | | | 540 | | | | 13,059 | | | Loan operations and lease operations portfolio, net | | | 63,456 | | | | 36,776 | | | | 20,931 | | | | 121,163 | | | | 43,641 | | | | 73,325 | | | | 41,034 | | | | 158,000 | | | Total assets | | | 147,985 | | | | 44,622 | | | | 39,585 | | | | 232,192 | | | | 107,869 | | | | 89,540 | | | | 65,424 | | | | 262,833 | |
| | | 12/31/2015 | | | 12/31/2016 | | | Liabilities | | Dollar | | | Chilean Peso | | | Other | | | Total | | | Dollar | | | Chilean
Peso | | | Other | | | Total | | | Deposits | | | 55,539 | | | | 25,811 | | | | 30,657 | | | | 112,007 | | | | 37,824 | | | | 51,330 | | | | 47,331 | | | | 136,485 | | | Securities sold under repurchase agreements | | | 23,405 | | | | 240 | | | | 142 | | | | 23,787 | | | | 18,353 | | | | 27 | | | | 2,558 | | | | 20,938 | | | Financial liabilities held for trading | | | 412 | | | | - | | | | - | | | | 412 | | | | 519 | | | | - | | | | - | | | | 519 | | | Derivatives | | | 9,179 | | | | 1,396 | | | | 429 | | | | 11,004 | | | | 4,783 | | | | 4,105 | | | | 282 | | | | 9,170 | | | Interbank market debt | | | 59,203 | | | | 3,796 | | | | 821 | | | | 63,820 | | | | 34,659 | | | | 5,932 | | | | 2,451 | | | | 43,042 | | | Institutional market debt | | | 44,901 | | | | 8,112 | | | | 334 | | | | 53,347 | | | | 37,077 | | | | 23,643 | | | | 3,284 | | | | 64,004 | | | Total liabilities | | | 192,639 | | | | 39,355 | | | | 32,383 | | | | 264,377 | | | | 133,215 | | | | 85,037 | | | | 55,906 | | | | 274,158 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net position | | | (44,654 | ) | | | 5,267 | | | | 7,202 | | | | (32,185 | ) | | | (25,346 | ) | | | 4,503 | | | | 9,518 | | | | (11,325 | ) |
| | | 12/31/2014 | | | 12/31/2015 | | | Assets | | Dollar | | | Chilean Peso | | | Other | | | Total | | | Dollar | | | Chilean
Peso | | | Other | | | Total | | | Cash and deposits on demand | | | 6,607 | | | | 656 | | | | 2,872 | | | | 10,135 | | | | 6,060 | | | | 779 | | | | 4,611 | | | | 11,450 | | | Central Bank compulsory deposits | | | 292 | | | | 303 | | | | 4,035 | | | | 4,630 | | | | 234 | | | | 503 | | | | 6,435 | | | | 7,172 | | | Interbank deposits | | | 12,274 | | | | 1,055 | | | | 1,877 | | | | 15,206 | | | | 16,281 | | | | 2,093 | | | | 4,649 | | | | 23,023 | | | Securities purchased under agreements to resell | | | 166 | | | | 1 | | | | - | | | | 167 | | | | 1,966 | | | | 56 | | | | 87 | | | | 2,109 | | | Financial assets held for trading | | | 7,469 | | | | 144 | | | | 940 | | | | 8,553 | | | | 6,125 | | | | 73 | | | | 907 | | | | 7,105 | | | Financial assets designated at fair value through profit or loss | | | 733 | | | | - | | | | - | | | | 733 | | | | 642 | | | | - | | | | - | | | | 642 | | | Derivatives | | | 5,632 | | | | 1,030 | | | | 109 | | | | 6,771 | | | | 9,581 | | | | 1,279 | | | | 37 | | | | 10,897 | | | Available-for-sale financial assets | | | 18,897 | | | | 2,435 | | | | 1,342 | | | | 22,674 | | | | 28,833 | | | | 3,063 | | | | 1,928 | | | | 33,824 | | | Held-to-maturity financial assets | | | 10,332 | | | | - | | | | - | | | | 10,332 | | | | 14,807 | | | | - | | | | - | | | | 14,807 | | | Loan operations and lease operations portfolio, net | | | 63,371 | | | | 26,490 | | | | 16,157 | | | | 106,018 | | | | 63,456 | | | | 36,776 | | | | 20,931 | | | | 121,163 | | | Total assets | | | 125,773 | | | | 32,114 | | | | 27,332 | | | | 185,219 | | | | 147,985 | | | | 44,622 | | | | 39,585 | | | | 232,192 | |
| | | 12/31/2014 | | | 12/31/2015 | | | Liabilities | | Dollar | | | Chilean Peso | | | Other | | | Total | | | Dollar | | | Chilean
Peso | | | Other | | | Total | | | Deposits | | | 57,875 | | | | 19,929 | | | | 28,813 | | | | 106,617 | | | | 55,539 | | | | 25,811 | | | | 30,657 | | | | 112,007 | | | Securities sold under securities repurchase agreements | | | 14,913 | | | | 181 | | | | 250 | | | | 15,344 | | | | 23,405 | | | | 240 | | | | 142 | | | | 23,787 | | | Financial liabilities held for trading | | | 520 | | | | - | | | | - | | | | 520 | | | | 412 | | | | - | | | | - | | | | 412 | | | Derivatives | | | 5,402 | | | | 1,088 | | | | 28 | | | | 6,518 | | | | 9,179 | | | | 1,396 | | | | 429 | | | | 11,004 | | | Interbank market debt | | | 39,935 | | | | 2,823 | | | | 540 | | | | 43,298 | | | | 59,203 | | | | 3,796 | | | | 821 | | | | 63,820 | | | Institutional market debt | | | 31,519 | | | | 4,425 | | | | 286 | | | | 36,230 | | | | 44,901 | | | | 8,112 | | | | 334 | | | | 53,347 | | | Total liabilities | | | 150,164 | | | | 28,446 | | | | 29,917 | | | | 208,527 | | | | 192,639 | | | | 39,355 | | | | 32,383 | | | | 264,377 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net position | | | (24,391 | ) | | | 3,668 | | | | (2,585 | ) | | | (23,308 | ) | | | (44,654 | ) | | | 5,267 | | | | 7,202 | | | | (32,185 | ) |
The exposure to share price risk is disclosed in Note 7 related to financial assets held for trading and Note 10, 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 between payments and receipts - which may affect payment capacity of ITAÚ UNIBANCO HOLDING, taking into consideration the different currencies and payment terms and their respective rights and obligations. Policies and procedures The management of liquidity risks seeks to guarantee liquidity sufficient to support possible outflows in market stress situations, as well as the compatibility between funding and 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 document that details the guidelines established by the internal policy on liquidity risk management, that is not part of the financial statements, may be viewed on the websitewww.itau.com.br/relacoes-com-investidores,, in the section Corporate Governance/Rules and Policies / Public Access Report – Liquidity Risk. 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 in view of cash requirements resulting from atypical market situations or arising from strategic decisions of ITAÚ UNIBANCO HOLDING. In compliance with the requirements of CMN Resolution No. 4,090 of May 24, 2012 and BACEN Circular N° 3,749 of March 5, 2015 , the Statement of Liquidity Risk (DRL) is sent to BACEN on a monthly basis, and the following items for monitoring and supporting decisions are periodically prepared and submitted to 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; |
In compliance with Circular nº 3.724 of BACEN, banks holding total assets over R$ 100 billion are required, since October 2015, to report a standardized Liquidity Coverage Ratio (LCR) ratio to the Central Bank of Brazil. This ratio is calculated based on a methodology defined by the Central Bank of Brazil itself, and is in line with international of Basileia. The summarized calculation of the indicator is as follows. In 2016, the minimum indicator requirement is 70%. For more detail on the short-term liquidity indicator, that is not part of the financial statements, visitinvestor- relations,sectionCorporate Governance / Risk and Capital Management – Pillar 3. | Information on the Liquidity Coverage Ratio (LCR) | | 4th quarter 2016 | | | | Total Adjusted Amount(1) | | | Total high-quality liquid assets (2) | | | 180,957 | | | Total potential cash outflows (3) | | | 85,018 | | | Liquidity Coverage Ratio (%) | | | 212.8 | % |
(1) Corresponds to the amount calculated after the application of weighting factors and limits established by BACEN Circular No. 3,749. (2) HQLA - High quality liquid assets: balance in the stock, which in certain cases weighted by a discount factor, of assets that remain liquid in the markets during a stress period, which can be easily converted into cash and that pose low risk. (3) Potential cash outflows calculated in standardized stress, determined by Circular No. 3.749 (outflows), subtracted from (i) potential cash inflows calculated under standardized stress, set forth by Circular No. 3,749 and (ii) 75% x Outflows, whichever is lower. 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$ 586.2612.7 billion (R$ 538.1586.2 billion at 12/31/2014)2015), particularly funding from time deposits. A considerable portion of these funds – 34.5%34.0% of total, or R$ 202.1207.4 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. | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | 12/31/2015 | | | Funding from clients | | 0-30 days | | | Total | | | % | | | 0-30 days | | | Total | | | % | | | 0-30 days | | | Total | | | % | | | 0-30 days | | | Total | | | % | | | Deposits | | | 190,352 | | | | 292,610 | | | | | | | | 183,574 | | | | 294,773 | | | | | | | | 201,113 | | | | 329,414 | | | | | | | | 190,352 | | | | 292,610 | | | | | | | Demand deposits | | | 61,092 | | | | 61,092 | | | | 10.4 | | | | 48,733 | | | | 48,733 | | | | 9.1 | | | | 61,133 | | | | 61,133 | | | | 10.0 | | | | 61,092 | | | | 61,092 | | | | 10.4 | | | Savings deposits | | | 111,319 | | | | 111,319 | | | | 19.0 | | | | 118,449 | | | | 118,449 | | | | 22.0 | | | | 108,250 | | | | 108,250 | | | | 17.7 | | | | 111,319 | | | | 111,319 | | | | 19.0 | | | Time deposits | | | 13,465 | | | | 105,250 | | | | 18.0 | | | | 11,705 | | | | 108,466 | | | | 20.2 | | | | 30,554 | | | | 156,274 | | | | 25.5 | | | | 13,465 | | | | 105,250 | | | | 18.0 | | | Other | | | 4,476 | | | | 14,949 | | | | 2.6 | | | | 4,687 | | | | 19,125 | | | | 3.5 | | | | 1,176 | | | | 3,757 | | | | 0.6 | | | | 4,476 | | | | 14,949 | | | | 2.6 | | | Funds from acceptances and issuance of securities(1) | | | 4,128 | | | | 75,590 | | | | 12.9 | | | | 3,959 | | | | 47,750 | | | | 8.9 | | | | 3,091 | | | | 93,711 | | | | 15.3 | | | | 4,128 | | | | 75,590 | | | | 12.9 | | | Funds from own issue(2) | | | 2,863 | | | | 152,215 | | | | 25.9 | | | | 2,840 | | | | 139,910 | | | | 26.0 | | | | 2,561 | | | | 132,149 | | | | 21.6 | | | | 2,863 | | | | 152,215 | | | | 25.9 | | | Subordinated debt | | | 4,722 | | | | 65,785 | | | | 11.2 | | | | 174 | | | | 55,617 | | | | 10.3 | | | | 628 | | | | 57,420 | | | | 9.4 | | | | 4,722 | | | | 65,785 | | | | 11.2 | | | Total | | | 202,065 | | | | 586,200 | | | | 100.0 | | | | 190,547 | | | | 538,050 | | | | | | | | 207,393 | | | | 612,694 | | | | 100.0 | | | | 202,065 | | | | 586,200 | | | | 100 | |
(1) Includes mortgage notes, real estate credit bills, agribusiness, financial and structured operations certificates recorded in interbank market and debts and liabilities for issuance of debentures and foreign borrowing 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 the period of 2015,2016, ITAÚ UNIBANCO HOLDING maintained appropriate levels of liquidity in Brazil and abroad. Liquid 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) totaled R$ 156.6177.5 billion and accounted for 77.5%84.2% of the short term redeemable obligations, 26.7%28.5% of total funding, and 18.1%19.0% of total assets. The table below shows the indicators used by ITAÚ UNIBANCO HOLDING in the management of liquidity risk: | Liquidity indicators | | 12/31/2016
% | | | 12/31/2015
% | | | Net assets (1) / funds within 30 days (2) | | | 84.2 | | | | 77.5 | | | Net assets (1) / total funds (3) | | | 28.5 | | | | 26.7 | | | Net assets (1) / total assets (4) | | | 19.0 | | | | 18.1 | |
| | | 12/31/2015 | | | 12/31/2014 | | | Liquidity indicators | | % | | | % | | | Net assets(1) / funds within 30 days(2) | | | 77.5 | | | | 72.1 | | | Net assets(1) / total funds(3) | | | 26.7 | | | | 25.5 | | | Net assets(1) / total assets(4) | | | 18.1 | | | | 17.0 | |
(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$ 863,180918,080 (R$ 809,448863,180 at 12/31/2014)2015). The following table presents assets and liabilities according to their remaining contractual maturities, considering their undiscounted flows. | Undiscounted future flows except for derivatives | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | 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 | | | 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 | | | 18,544 | | | | - | | | | - | | | | - | | | | 18,544 | | | | 17,527 | | | | - | | | | - | | | | - | | | | 17,527 | | | | 18,542 | | | | - | | | | - | | | | - | | | | 18,542 | | | | 18,544 | | | | - | | | | - | | | | - | | | | 18,544 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interbank investments | | | 229,295 | | | | 40,016 | | | | 696 | | | | 239 | | | | 270,246 | | | | 170,482 | | | | 51,967 | | | | 1,097 | | | | 32 | | | | 223,578 | | | | 219,066 | | | | 58,275 | | | | 1,171 | | | | 292 | | | | 278,804 | | | | 229,295 | | | | 40,016 | | | | 696 | | | | 239 | | | | 270,246 | | | Securities purchased under agreements to resell – Funded position(2) | | | 72,091 | | | | - | | | | - | | | | - | | | | 72,091 | | | | 74,275 | | | | - | | | | - | | | | - | | | | 74,275 | | | | 77,452 | | | | - | | | | - | | | | - | | | | 77,452 | | | | 72,091 | | | | - | | | | - | | | | - | | | | 72,091 | | | Securities purchased under agreements to resell – Financed position | | | 133,315 | | | | 33,742 | | | | - | | | | - | | | | 167,057 | | | | 80,085 | | | | 45,512 | | | | - | | | | - | | | | 125,597 | | | | 128,303 | | | | 49,749 | | | | - | | | | - | | | | 178,052 | | | | 133,315 | | | | 33,742 | | | | - | | | | - | | | | 167,057 | | | Interbank deposits | | | 23,889 | | | | 6,274 | | | | 696 | | | | 239 | | | | 31,098 | | | | 16,122 | | | | 6,455 | | | | 1,097 | | | | 32 | | | | 23,706 | | | | 13,311 | | | | 8,526 | | | | 1,171 | | | | 292 | | | | 23,300 | | | | 23,889 | | | | 6,274 | | | | 696 | | | | 239 | | | | 31,098 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Securities | | | 71,124 | | | | 15,485 | | | | 11,017 | | | | 78,774 | | | | 176,400 | | | | 55,315 | | | | 19,009 | | | | 15,470 | | | | 106,023 | | | | 195,817 | | | | 82,163 | | | | 16,757 | | | | 12,415 | | | | 74,479 | | | | 185,814 | | | | 71,124 | | | | 15,485 | | | | 11,017 | | | | 78,774 | | | | 176,400 | | | Government securities - available | | | 65,965 | | | | - | | | | - | | | | - | | | | 65,965 | | | | 45,587 | | | | - | | | | - | | | | - | | | | 45,587 | | | | 75,310 | | | | 20 | | | | 40 | | | | 6,088 | | | | 81,458 | | | | 65,965 | | | | - | | | | - | | | | - | | | | 65,965 | | | Government securities – subject to repurchase commitments | | | 68 | | | | 2,675 | | | | 712 | | | | 6,866 | | | | 10,321 | | | | 3,440 | | | | 5,491 | | | | 5,473 | | | | 41,548 | | | | 55,952 | | | | 556 | | | | 4,732 | | | | 5,990 | | | | 14,808 | | | | 26,086 | | | | 68 | | | | 2,675 | | | | 712 | | | | 6,866 | | | | 10,321 | | | Private securities - available | | | 5,091 | | | | 12,681 | | | | 10,305 | | | | 71,908 | | | | 99,985 | | | | 6,102 | | | | 10,520 | | | | 8,750 | | | | 57,179 | | | | 82,551 | | | | 6,297 | | | | 11,728 | | | | 5,424 | | | | 47,866 | | | | 71,315 | | | | 5,091 | | | | 12,681 | | | | 10,305 | | | | 71,908 | | | | 99,985 | | | Private securities – subject to repurchase commitments | | | - | | | | 129 | | | | - | | | | - | | | | 129 | | | | 186 | | | | 2,998 | | | | 1,247 | | | | 7,296 | | | | 11,727 | | | | - | | | | 277 | | | | 961 | | | | 5,717 | | | | 6,955 | | | | - | | | | 129 | | | | - | | | | - | | | | 129 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative financial instruments | | | 5,955 | | | | 7,685 | | | | 3,430 | | | | 6,289 | | | | 23,359 | | | | 2,408 | | | | 5,342 | | | | 1,167 | | | | 3,719 | | | | 12,636 | | | | 5,815 | | | | 8,296 | | | | 3,159 | | | | 6,961 | | | | 24,231 | | | | 5,955 | | | | 7,685 | | | | 3,430 | | | | 6,289 | | | | 23,359 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross position | | | - | | | | 1 | | | | - | | | | 20 | | | | 21 | | | | - | | | | - | | | | - | | | | 19 | | | | 19 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1 | | | | - | | | | 20 | | | | 21 | | | Cross Currency Swap Deliverable - Asset position | | | - | | | | 852 | | | | - | | | | 975 | | | | 1,827 | | | | - | | | | - | | | | - | | | | 560 | | | | 560 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 852 | | | | - | | | | 975 | | | | 1,827 | | | Cross Currency Swap Deliverable - Liability position | | | - | | | | (851 | ) | | | - | | | | (955 | ) | | | (1,806 | ) | | | - | | | | - | | | | - | | | | (541 | ) | | | (541 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (851 | ) | | | - | | | | (955 | ) | | | (1,806 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net position | | | 5,955 | | | | 7,684 | | | | 3,430 | | | | 6,269 | | | | 23,338 | | | | 2,408 | | | | 5,342 | | | | 1,167 | | | | 3,700 | | | | 12,617 | | | | 5,815 | | | | 8,296 | | | | 3,159 | | | | 6,961 | | | | 24,231 | | | | 5,955 | | | | 7,684 | | | | 3,430 | | | | 6,269 | | | | 23,338 | | | Swaps | | | 666 | | | | 2,140 | | | | 1,935 | | | | 4,406 | | | | 9,147 | | | | 448 | | | | 812 | | | | 643 | | | | 2,913 | | | | 4,816 | | | | 828 | | | | 1,967 | | | | 1,497 | | | | 6,250 | | | | 10,542 | | | | 666 | | | | 2,140 | | | | 1,935 | | | | 4,406 | | | | 9,147 | | | Option | | | 2,413 | | | | 2,000 | | | | 692 | | | | 478 | | | | 5,583 | | | | 481 | | | | 1,720 | | | | 308 | | | | 363 | | | | 2,872 | | | | 354 | | | | 2,881 | | | | 1,397 | | | | 160 | | | | 4,792 | | | | 2,413 | | | | 2,000 | | | | 692 | | | | 478 | | | | 5,583 | | | Forward (onshore) | | | 1,204 | | | | 1,961 | | | | 1 | | | | - | | | | 3,166 | | | | 846 | | | | 1,548 | | | | - | | | | - | | | | 2,394 | | | | 3,947 | | | | 1,024 | | | | - | | | | - | | | | 4,971 | | | | 1,204 | | | | 1,961 | | | | 1 | | | | - | | | | 3,166 | | | Other derivative financial instruments | | | 1,672 | | | | 1,583 | | | | 802 | | | | 1,385 | | | | 5,442 | | | | 633 | | | | 1,262 | | | | 216 | | | | 424 | | | | 2,535 | | | | 686 | | | | 2,424 | | | | 265 | | | | 551 | | | | 3,926 | | | | 1,672 | | | | 1,583 | | | | 802 | | | | 1,385 | | | | 5,442 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loan and lease operations portfolio(3) | | | 63,263 | | | | 171,813 | | | | 86,118 | | | | 187,619 | | | | 508,813 | | | | 56,652 | | | | 169,230 | | | | 90,854 | | | | 180,050 | | | | 496,786 | | | | 61,602 | | | | 176,002 | | | | 81,224 | | | | 211,908 | | | | 530,736 | | | | 63,263 | | | | 171,813 | | | | 86,118 | | | | 187,619 | | | | 508,813 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total financial assets | | | 388,181 | | | | 234,999 | | | | 101,261 | | | | 272,921 | | | | 997,362 | | | | 302,384 | | | | 245,548 | | | | 108,588 | | | | 289,824 | | | | 946,344 | | | | 387,188 | | | | 259,330 | | | | 97,969 | | | | 293,640 | | | | 1,038,127 | | | | 388,181 | | | | 234,999 | | | | 101,261 | | | | 272,921 | | | | 997,362 | |
(1) The assets portfolio does not take into consideration the balance of compulsory deposits in Central Bank, amounting to R$ 66,55685,700 (R$ 63,10666,556 at 12/31/2014)2015), 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 30. (2) Net of R$ 9,4614,329 (R$ 5,9459,461 at 12/31/2014)2015) which securities are restricted to guarantee transactions at BM&FBOVESPA S.A. and the Central Bank of Brazil. (3) Net of payment to merchants of R$ 38,97843,837 (R$ 39,38638,978 at 12/31/2014)2015) and the amount of liabilities from transactions related to credit assignments R$ 5,4955,711 (R$ 4,3365,495 at 12/31/2014)2015) . | Undiscounted future flows except for derivatives | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | | 12/31/2015 | | | Financial liabilities | | 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 | | | 0 – 30
days | | | 31 – 365
days | | | 366 – 720
days | | | Over 720
days | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | Deposits | | | 190,890 | | | | 45,133 | | | | 8,331 | | | | 64,843 | | | | 309,197 | | | | 182,849 | | | | 47,531 | | | | 14,851 | | | | 58,881 | | | | 304,112 | | | | 201,167 | | | | 44,545 | | | | 13,106 | | | | 107,055 | | | | 365,873 | | | | 190,890 | | | | 45,133 | | | | 8,331 | | | | 64,843 | | | | 309,197 | | | Demand deposits | | | 61,092 | | | | - | | | | - | | | | - | | | | 61,092 | | | | 48,733 | | | | - | | | | - | | | | - | | | | 48,733 | | | | 61,133 | | | | - | | | | - | | | | - | | | | 61,133 | | | | 61,092 | | | | - | | | | - | | | | - | | | | 61,092 | | | Savings deposits | | | 111,319 | | | | - | | | | - | | | | - | | | | 111,319 | | | | 118,449 | | | | - | | | | - | | | | - | | | | 118,449 | | | | 108,250 | | | | - | | | | - | | | | - | | | | 108,250 | | | | 111,319 | | | | - | | | | - | | | | - | | | | 111,319 | | | Time deposit | | | 13,873 | | | | 34,660 | | | | 8,326 | | | | 64,819 | | | | 121,678 | | | | 10,867 | | | | 33,601 | | | | 14,521 | | | | 58,564 | | | | 117,553 | | | | 30,295 | | | | 41,971 | | | | 13,088 | | | | 107,033 | | | | 192,387 | | | | 13,873 | | | | 34,660 | | | | 8,326 | | | | 64,819 | | | | 121,678 | | | Interbank deposits | | | 4,606 | | | | 10,473 | | | | 5 | | | | 24 | | | | 15,108 | | | | 4,800 | | | | 13,930 | | | | 330 | | | | 317 | | | | 19,376 | | | | 1,489 | | | | 2,574 | | | | 18 | | | | 22 | | | | 4,103 | | | | 4,606 | | | | 10,473 | | | | 5 | | | | 24 | | | | 15,108 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Compulsory deposits | | | (40,807 | ) | | | (9,021 | ) | | | (2,043 | ) | | | (14,685 | ) | | | (66,556 | ) | | | (42,811 | ) | | | (6,455 | ) | | | (2,190 | ) | | | (11,650 | ) | | | (63,106 | ) | | | (42,314 | ) | | | (13,885 | ) | | | (3,985 | ) | | | (25,516 | ) | | | (85,700 | ) | | | (40,807 | ) | | | (9,021 | ) | | | (2,043 | ) | | | (14,685 | ) | | | (66,556 | ) | | Demand deposits | | | (10,224 | ) | | | - | | | | - | | | | - | | | | (10,224 | ) | | | (7,404 | ) | | | - | | | | - | | | | - | | | | (7,404 | ) | | | (8,092 | ) | | | - | | | | - | | | | - | | | | (8,092 | ) | | | (10,224 | ) | | | - | | | | - | | | | - | | | | (10,224 | ) | | Savings deposits | | | (26,838 | ) | | | - | | | | - | | | | - | | | | (26,838 | ) | | | (33,084 | ) | | | - | | | | - | | | | - | | | | (33,084 | ) | | | (24,791 | ) | | | - | | | | - | | | | - | | | | (24,791 | ) | | | (26,838 | ) | | | - | | | | - | | | | - | | | | (26,838 | ) | | Time deposit | | | (3,745 | ) | | | (9,021 | ) | | | (2,043 | ) | | | (14,685 | ) | | | (29,494 | ) | | | (2,323 | ) | | | (6,455 | ) | | | (2,190 | ) | | | (11,650 | ) | | | (22,618 | ) | | | (9,431 | ) | | | (13,885 | ) | | | (3,985 | ) | | | (25,516 | ) | | | (52,817 | ) | | | (3,745 | ) | | | (9,021 | ) | | | (2,043 | ) | | | (14,685 | ) | | | (29,494 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Securities sold under repurchase agreements(1) | | | 167,363 | | | | 39,464 | | | | 63,773 | | | | 111,189 | | | | 381,789 | | | | 164,309 | | | | 28,544 | | | | 57,449 | | | | 108,099 | | | | 358,402 | | | | 209,521 | | | | 59,771 | | | | 42,410 | | | | 87,069 | | | | 398,771 | | | | 167,363 | | | | 39,464 | | | | 63,773 | | | | 111,189 | | | | 381,789 | | | Government securities | | | 139,530 | | | | 5,315 | | | | 2,588 | | | | 29,937 | | | | 177,370 | | | | 143,717 | | | | 2,161 | | | | 3,888 | | | | 20,227 | | | | 169,992 | | | | 168,301 | | | | 5,600 | | | | 5,764 | | | | 33,812 | | | | 213,477 | | | | 139,530 | | | | 5,315 | | | | 2,588 | | | | 29,937 | | | | 177,370 | | | Private securities | | | 8,043 | | | | 30,146 | | | | 61,185 | | | | 81,252 | | | | 180,626 | | | | 6,383 | | | | 25,924 | | | | 53,561 | | | | 87,324 | | | | 173,192 | | | | 13,753 | | | | 54,171 | | | | 36,646 | | | | 53,257 | | | | 157,827 | | | | 8,043 | | | | 30,146 | | | | 61,185 | | | | 81,252 | | | | 180,626 | | | Foreign | | | 19,790 | | | | 4,003 | | | | - | | | | - | | | | 23,793 | | | | 14,210 | | | | 460 | | | | - | | | | 548 | | | | 15,218 | | | | 27,467 | | | | - | | | | - | | | | - | | | | 27,467 | | | | 19,790 | | | | 4,003 | | | | - | | | | - | | | | 23,793 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Funds from acceptances and issuance of securities (2) | | | 4,188 | | | | 24,186 | | | | 19,178 | | | | 40,612 | | | | 88,164 | | | | 4,054 | | | | 24,017 | | | | 10,777 | | | | 14,319 | | | | 53,167 | | | | 3,003 | | | | 35,659 | | | | 28,974 | | | | 36,858 | | | | 104,494 | | | | 4,188 | | | | 24,186 | | | | 19,178 | | | | 40,612 | | | | 88,164 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Borrowing and onlending(3) | | | 5,902 | | | | 58,159 | | | | 24,116 | | | | 25,672 | | | | 113,849 | | | | 4,290 | | | | 37,668 | | | | 19,414 | | | | 31,890 | | | | 93,262 | | | | 5,077 | | | | 46,527 | | | | 11,000 | | | | 20,943 | | | | 83,547 | | | | 5,902 | | | | 58,159 | | | | 24,116 | | | | 25,672 | | | | 113,849 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Subordinated debt(4) | | | 4,775 | | | | 10,115 | | | | 13,764 | | | | 56,006 | | | | 84,660 | | | | 191 | | | | 6,537 | | | | 12,979 | | | | 56,349 | | | | 76,056 | | | | 271 | | | | 13,501 | | | | 16,621 | | | | 41,043 | | | | 71,436 | | | | 4,775 | | | | 10,115 | | | | 13,764 | | | | 56,006 | | | | 84,660 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative financial instruments | | | 3,765 | | | | 8,537 | | | | 4,104 | | | | 11,269 | | | | 27,675 | | | | 1,728 | | | | 5,116 | | | | 1,318 | | | | 7,668 | | | | 15,830 | | | | 5,294 | | | | 5,516 | | | | 3,726 | | | | 10,162 | | | | 24,698 | | | | 3,765 | | | | 8,537 | | | | 4,104 | | | | 11,269 | | | | 27,675 | | | Gross position | | | 1 | | | | 11 | | | | - | | | | 4 | | | | 16 | | | | - | | | | 31 | | | | - | | | | - | | | | 31 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1 | | | | 11 | | | | - | | | | 4 | | | | 16 | | | Cross Currency Swap Deliverable - Asset position | | | (85 | ) | | | (1,269 | ) | | | - | | | | (236 | ) | | | (1,590 | ) | | | - | | | | (969 | ) | | | (10 | ) | | | - | | | | (979 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (85 | ) | | | (1,269 | ) | | | - | | | | (236 | ) | | | (1,590 | ) | | Cross Currency Swap Deliverable - Liability position | | | 86 | | | | 1,280 | | | | - | | | | 240 | | | | 1,606 | | | | - | | | | 1,000 | | | | 10 | | | | - | | | | 1,010 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 86 | | | | 1,280 | | | | - | | | | 240 | | | | 1,606 | | | Net position | | | 3,764 | | | | 8,526 | | | | 4,104 | | | | 11,265 | | | | 27,659 | | | | 1,728 | | | | 5,085 | | | | 1,318 | | | | 7,668 | | | | 15,799 | | | | 5,294 | | | | 5,516 | | | | 3,726 | | | | 10,162 | | | | 24,698 | | | | 3,764 | | | | 8,526 | | | | 4,104 | | | | 11,265 | | | | 27,659 | | | Swaps | | | 783 | | | | 3,368 | | | | 2,618 | | | | 9,562 | | | | 16,331 | | | | 241 | | | | 1,761 | | | | 778 | | | | 6,754 | | | | 9,534 | | | | 461 | | | | 1,702 | | | | 2,352 | | | | 8,706 | | | | 13,221 | | | | 783 | | | | 3,368 | | | | 2,618 | | | | 9,562 | | | | 16,331 | | | Option | | | 1,460 | | | | 3,025 | | | | 805 | | | | 493 | | | | 5,783 | | | | 431 | | | | 1,853 | | | | 353 | | | | 420 | | | | 3,057 | | | | 837 | | | | 1,888 | | | | 1,116 | | | | 711 | | | | 4,552 | | | | 1,460 | | | | 3,025 | | | | 805 | | | | 493 | | | | 5,783 | | | Forward (onshore) | | | 828 | | | | 5 | | | | - | | | | - | | | | 833 | | | | 681 | | | | 1 | | | | - | | | | - | | | | 682 | | | | 3,530 | | | | - | | | | - | | | | - | | | | 3,530 | | | | 828 | | | | 5 | | | | - | | | | - | | | | 833 | | | Other derivative financial instruments | | | 693 | | | | 2,128 | | | | 681 | | | | 1,210 | | | | 4,712 | | | | 375 | | | | 1,470 | | | | 187 | | | | 494 | | | | 2,526 | | | | 466 | | | | 1,926 | | | | 258 | | | | 745 | | | | 3,395 | | | | 693 | | | | 2,128 | | | | 681 | | | | 1,210 | | | | 4,712 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total financial liabilities | | | 336,076 | | | | 176,573 | | | | 131,223 | | | | 294,906 | | | | 938,778 | | | | 314,610 | | | | 142,958 | | | | 114,599 | | | | 265,556 | | | | 837,723 | | | | 382,019 | | | | 191,634 | | | | 111,852 | | | | 277,614 | | | | 963,119 | | | | 336,076 | | | | 176,573 | | | | 131,223 | | | | 294,906 | | | | 938,778 | |
(1) Includes own and third parties’ portfolios. (2) Includes mortgage notes, real estate credit bills, agribusiness, financial bills and structured operations certificates recorded in interbank market funds and liabilities for issuance of debentures and foreign securities recorded in funds from institutional markets. (3) Recorded in funds from interbank markets. (4) Recorded in funds from institutional markets. | | | 12/31/2015 | | | 12/31/2014 | | | 12/31/2016 | | 12/31/2015 | | | Off balance sheet | | 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 | | | 0 – 30
days | | | 31 – 365
days | | | 366 – 720
days | | | Over 720
days | | | Total | | | Endorsements and sureties | | | 2,018 | | | | 13,819 | | | | 5,477 | | | | 52,930 | | | | 74,244 | | | | 2,003 | | | | 14,721 | | | | 4,207 | | | | 52,828 | | | | 73,759 | | | | 1,645 | | | | 16,203 | | | | 5,603 | | | | 47,342 | | | | 70,793 | | | | 2,018 | | | | 13,819 | | | | 5,477 | | | | 52,930 | | | | 74,244 | | | Commitments to be released | | | 84,641 | | | | 28,808 | | | | 28,404 | | | | 79,487 | | | | 221,340 | | | | 73,356 | | | | 60,785 | | | | 17,980 | | | | 69,377 | | | | 221,498 | | | | 90,279 | | | | 42,522 | | | | 11,657 | | | | 77,916 | | | | 222,374 | | | | 84,641 | | | | 28,808 | | | | 28,404 | | | | 79,487 | | | | 221,340 | | | Letters of credit to be released | | | 6,936 | | | | - | | | | - | | | | - | | | | 6,936 | | | | 11,091 | | | | - | | | | - | | | | - | | | | 11,091 | | | | 6,660 | | | | - | | | | - | | | | - | | | | 6,660 | | | | 6,936 | | | | - | | | | - | | | | - | | | | 6,936 | | | Contractual commitments - Fixed assets and Intangible (Notes 15 and 16) | | | - | | | | 340 | | | | - | | | | - | | | | 340 | | | | - | | | | 267 | | | | 308 | | | | - | | | | 575 | | | | - | | | | 310 | | | | - | | | | - | | | | 310 | | | | - | | | | 340 | | | | - | | | | - | | | | 340 | | | Total | | | 93,595 | | | | 42,967 | | | | 33,881 | | | | 132,417 | | | | 302,860 | | | | 86,450 | | | | 75,773 | | | | 22,495 | | | | 122,205 | | | | 306,923 | | | | 98,584 | | | | 59,035 | | | | 17,260 | | | | 125,258 | | | | 300,137 | | | | 93,595 | | | | 42,967 | | | | 33,881 | | | | 132,417 | | | | 302,860 | |
Note 37 – Supplementary Informationinformation Itaú Chile Holdings -On July 17, 2015, after approval of proper regulatory authorities, the subsidiary Itaú ChileHoldings (ICH) was dissolved. Therefore, the investments held by ICH were transferred to ITAÚ UNIBANCO HOLDING. The transaction had an accounting effect of R$ (251) million.Citibank’s retail operations
Nota 38 - Subsequents events
CIB- In January 21,On October 8, 2016, the ITAÚ UNIBANCO HOLDING throughS.A. entered, by means of its subsidiary Itaú Unibanco S.A., sidnedda Memorandum of Understandingsubsidiaries, into a share purchase and sale agreement with Banco Bradesco S.A. Banco do Brasil S.A., Banco SantanderCitibank S.A. and Caixa Econômica Federalwith other companies of its conglomerate (Citibank) for the acquisition of the retail activities carried out by Citibank in order to create aBrazil, including loans, deposits, credit intelligence bureau (“CIB”) wich will enable greater efficiency in thecards, branches, assets under management and granting of credit lines at long and medium terms.
CIB will be structured as a corporation and the Parties, each of them holding a 20% equity ownership, will share its control.
CIB’s incorporation is subject to the execution of definitive documents among the Parties,insurance brokerage, as well as the satisfactionequity investments held by Citibank in TECBAN – Tecnologia Bancária S.A. (representing 5.64% of certain conditions precedent, including the approval by applicable regulatory authorities.
Acquisition of CorpBanca- On January 29, 2014, ITAÚ UNIBANCO HOLDING, through its subsidiary BancoItaú Chile S.A. (BIC), entered into a Transaction Agreement with CorpBanca and its controlling stockholders (Corp Group), establishing the terms and conditions of the merger of operations of BIC and CorpBanca in Chilecapital) and in the other jurisdictions in which CorpBanca operates.
CorpBanca is a commercial bank headquartered in Chile, which also operates in Colombia and Panama. Focused on individuals and large and middle-market companies, it offers global banking products. In 2015, an accordance with the Chilean SuperintendenceCibrasec – Companhia Brasileira de Securitização (representing 3.60% of Banks, it was one of the largest private banks in Chile, in terms of overall size of loan portfolio, with a market share of 7.1%.its capital), for R$ 710 million.
This agreement represents an important step in ITAÚ UNIBANCO HOLDING’s internationalization process and in its aim to become a leading bank in Latin America. As a resultoperation will involve the corporate restructuring of some companies of the merger, ITAÚ UNIBANCO HOLDING rose fromCitibank conglomerate so that the seventh (7th)retail business in Brazil is spun off and transferred to the fourth (4th) place incompanies that will be the rankingsubject matter of the largest banks in Chile.acquisition. The merger was approved byeffective acquisitions and financial settlements will take place after compliance with some contractual conditions and the stockholdersobtainments of CorpBanca and BIC and by all properthe necessary regulatory authorities in Chile, Brazil, Colombia and Panama. As set forth in the amendment to the Transaction Agreement, entered into on June 2, 2015, the parties closed the operation on April 1, 2016, when they had full conditions for the corporate reorganization process.authorizations. The operation was consummated by means of:
i. Increase in BIC’ capital in the amount of R$ 2,309 million concluded on March 22, 2016;
ii. Merger of BIC into CorpBanca, with the cancellation of BIC’s shares and issue of new shares by CorpBanca, at the rate of 80,240 shares of CorpBanca for one share of BIC, so that interests resulting from the merger, named Itaú CorpBanca, are 33.58% for ITAÚ UNIBANCO HOLDING CONSOLIDATED and 33.13% for Corp Group.
iii. The following corporate structure resulted from the transaction:
Ownership interest | | ITAÚ UNIBANCO HOLDING | 33.58% | Corp Group | 33.13% | Other non-controlling stockholders | 33.29% |
Itaú CorpBanca will be controlled from April 1, 2016 by ITAÚ UNIBANCO HOLDING, which entered into a Shareholders’ Agreement with Corp Group upon the closing of the operation. This Shareholders’ Agreement entitled ITAÚ UNIBANCO HOLDING to appoint members for the Board of Directors of Itaú CorpBanca.
The amounts of Itaú CorpBanca’s assets, liabilities, income and expenses were not included in the Consolidated Financial Statements of ITAÚ UNIBANCO HOLDING for the period ended December 31, 2015. The management of Itaú Unibanco Holding is assessing possible impacts in the allocation of goodwill of said operation and will disclose further details in the next financial statements. Said operationacquisition will not have significant accounting effectimpacts on the results of ITAÚ UNIBANCO HOLDING.HOLDING's results.
Attachments 
Attachments
Selected Statistical Information
The following information is included for analytical purposes and should be read in together with our section Performance, item Financial Performance, Significant Accounting Policies, Assets and Liabilities and Item Consolidated Financial Statements (IFRS). The data included or referenced in this section are presented in accordance with IFRS, unless otherwise indicated. Average Balance Sheetbalance sheet and Interest Rate Datainterest 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 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 comprised by operations with individuals and corporates, which have grown organically and without significant fluctuations over short periods. Non-accrual loans and leases are disclosed as a non-interest earning asset for the periods indicated in the table below:following table: | | | (In millions of R$, except percentages) | | | | | | | | | | | | | | | | 2015 | | | 2014 | | | 2013 | | | | | Average | | | | | | Average | | | Average | | | | | | Average | | | Average | | | | | | Average | | | Assets | | balance | | | Interest | | | yield/rate | | | balance | | | Interest | | | yield/rate | | | balance | | | Interest | | | yield/rate | | | Interest-earning assets(1) | | | 1,070,450 | | | | 147,789 | | | | 13.8 | | | | 955,416 | | | | 120,115 | | | | 12.6 | | | | 882,472 | | | | 94,127 | | | | 10.7 | | | Interbank deposits | | | 29,489 | | | | 1,628 | | | | 5.5 | | | | 24,019 | | | | 1,286 | | | | 5.4 | | | | 19,880 | | | | 583 | | | | 2.9 | | | Securities purchased under agreements to resell | | | 204,362 | | | | 27,572 | | | | 13.5 | | | | 170,327 | | | | 17,929 | | | | 10.5 | | | | 162,865 | | | | 12,630 | | | | 7.8 | | | Central Bank compulsory deposits | | | 63,418 | | | | 5,748 | | | | 9.1 | | | | 69,882 | | | | 5,904 | | | | 8.4 | | | | 62,492 | | | | 4,314 | | | | 6.9 | | | Financial assets held for trading | | | 152,687 | | | | 19,826 | | | | 13.0 | | | | 134,695 | | | | 15,128 | | | | 11.2 | | | | 138,667 | | | | 10,860 | | | | 7.8 | | | Available-for-sale financial assets | | | 82,744 | | | | 8,979 | | | | 10.9 | | | | 78,559 | | | | 7,272 | | | | 9.3 | | | | 86,571 | | | | 5,067 | | | | 5.9 | | | Held-to-maturity financial assets | | | 38,295 | | | | 3,758 | | | | 9.8 | | | | 24,317 | | | | 2,347 | | | | 9.7 | | | | 4,473 | | | | 486 | | | | 10.9 | | | Loan operations and lease operations (accrual) | | | 445,583 | | | | 79,392 | | | | 17.8 | | | | 403,447 | | | | 69,248 | | | | 17.2 | | | | 362,330 | | | | 59,546 | | | | 16.4 | | | Other financial assets | | | 53,871 | | | | 886 | | | | 1.6 | | | | 50,170 | | | | 1,001 | | | | 2.0 | | | | 45,193 | | | | 641 | | | | 1.4 | | | Non-interest-earning assets | | | 115,596 | | | | | | | | | | | | 97,526 | | | | | | | | | | | | 83,025 | | | | | | | | | | | Cash and deposits on demand | | | 19,159 | | | | | | | | | | | | 17,038 | | | | | | | | | | | | 13,806 | | | | | | | | | | | Central Bank compulsory deposits | | | 3,797 | | | | | | | | | | | | 4,025 | | | | | | | | | | | | 3,850 | | | | | | | | | | | Derivatives | | | 24,276 | | | | | | | | | | | | 12,647 | | | | | | | | | | | | 11,224 | | | | | | | | | | | Non-accrual loans | | | 18,559 | | | | | | | | | | | | 17,040 | | | | | | | | | | | | 19,216 | | | | | | | | | | | Allowance for loan and lease losses | | | (24,526 | ) | | | | | | | | | | | (21,655 | ) | | | | | | | | | | | (24,103 | ) | | | | | | | | | | Fixed assets, net | | | 8,618 | | | | | | | | | | | | 7,145 | | | | | | | | | | | | 5,958 | | | | | | | | | | | Investments in unconsolidated companies | | | 4,219 | | | | | | | | | | | | 3,964 | | | | | | | | | | | | 3,233 | | | | | | | | | | | Goodwill | | | 2,011 | | | | | | | | | | | | 1,798 | | | | | | | | | | | | 147 | | | | | | | | | | | Intangible assets, net | | | 6,225 | | | | | | | | | | | | 6,019 | | | | | | | | | | | | 5,110 | | | | | | | | | | | Tax assets | | | 43,212 | | | | | | | | | | | | 35,000 | | | | | | | | | | | | 33,155 | | | | | | | | | | | Assets held for sale | | | 341 | | | | | | | | | | | | 137 | | | | | | | | | | | | 119 | | | | | | | | | | | Other assets | | | 9,706 | | | | | | | | | | | | 14,369 | | | | | | | | | | | | 11,311 | | | | | | | | | | | Total | | | 1,186,046 | | | | | | | | | | | | 1,052,942 | | | | | | | | | | | | 965,497 | | | | | | | | | |
| | | 2016 | | | 2015 | | | 2014 | | | Assets | | Average
balance | | | Interest | | | Average
yield/rate | | | Average
balance | | | Interest | | | Average
yield/rate | | | Average
balance | | | Interest | | | Average
yield/rate | | | | | (In millions of R$, except percentages) | | | Interest-earning assets(1) | | | 1,151,430 | | | | 161,495 | | | | 14.0 | | | | 1,070,450 | | | | 147,789 | | | | 13.8 | | | | 955,416 | | | | 120,115 | | | | 12.6 | | | Interbank deposits | | | 26,914 | | | | 678 | | | | 2.5 | | | | 29,489 | | | | 1,628 | | | | 5.5 | | | | 24,019 | | | | 1,286 | | | | 5.4 | | | Securities purchased under agreements to resell | | | 252,737 | | | | 34,162 | | | | 13.5 | | | | 204,362 | | | | 27,572 | | | | 13.5 | | | | 170,327 | | | | 17,929 | | | | 10.5 | | | Central Bank compulsory deposits | | | 72,031 | | | | 6,920 | | | | 9.6 | | | | 63,418 | | | | 5,748 | | | | 9.1 | | | | 69,882 | | | | 5,904 | | | | 8.4 | | | Financial assets held for trading | | | 179,035 | | | | 23,669 | | | | 13.2 | | | | 152,687 | | | | 19,826 | | | | 13.0 | | | | 134,695 | | | | 15,128 | | | | 11.2 | | | Available-for-sale financial assets | | | 87,678 | | | | 11,160 | | | | 12.7 | | | | 82,744 | | | | 8,979 | | | | 10.9 | | | | 78,559 | | | | 7,272 | | | | 9.3 | | | Held-to-maturity financial assets | | | 41,384 | | | | 3,788 | | | | 9.2 | | | | 38,295 | | | | 3,758 | | | | 9.8 | | | | 24,317 | | | | 2,347 | | | | 9.7 | | | Loan operations and lease operations (accrual) | | | 438,081 | | | | 80,118 | | | | 18.3 | | | | 445,583 | | | | 79,392 | | | | 17.8 | | | | 403,447 | | | | 69,248 | | | | 17.2 | | | Other Financial Assets | | | 53,570 | | | | 1,000 | | | | 1.9 | | | | 53,871 | | | | 886 | | | | 1.6 | | | | 50,170 | | | | 1,001 | | | | 2.0 | | | Non-interest-earning assets | | | 159,779 | | | | | | | | | | | | 115,596 | | | | | | | | | | | | 97,526 | | | | | | | | | | | Cash and deposits on demand | | | 21,204 | | | | | | | | | | | | 19,159 | | | | | | | | | | | | 17,038 | | | | | | | | | | | Central Bank compulsory deposits | | | 3,782 | | | | | | | | | | | | 3,797 | | | | | | | | | | | | 4,025 | | | | | | | | | | | Derivatives | | | 28,904 | | | | | | | | | | | | 24,276 | | | | | | | | | | | | 12,647 | | | | | | | | | | | Non-accrual loans | | | 21,487 | | | | | | | | | | | | 18,559 | | | | | | | | | | | | 17,040 | | | | | | | | | | | Allowance for loan and lease losses | | | (28,902 | ) | | | | | | | | | | | (24,526 | ) | | | | | | | | | | | (21,655 | ) | | | | | | | | | | Fixed assets, net | | | 8,176 | | | | | | | | | | | | 8,618 | | | | | | | | | | | | 7,145 | | | | | | | | | | | Investments in unconsolidated companies | | | 4,790 | | | | | | | | | | | | 4,219 | | | | | | | | | | | | 3,964 | | | | | | | | | | | Goodwill | | | 6,286 | | | | | | | | | | | | 2,011 | | | | | | | | | | | | 1,798 | | | | | | | | | | | Intangible assets, net | | | 8,336 | | | | | | | | | | | | 6,225 | | | | | | | | | | | | 6,019 | | | | | | | | | | | Tax assets | | | 47,265 | | | | | | | | | | | | 43,212 | | | | | | | | | | | | 35,000 | | | | | | | | | | | Assets held for sale | | | 570 | | | | | | | | | | | | 341 | | | | | | | | | | | | 137 | | | | | | | | | | | Other assets | | | 37,881 | | | | | | | | | | | | 9,706 | | | | | | | | | | | | 14,369 | | | | | | | | | | | Total | | | 1,311,209 | | | | | | | | | | | | 1,186,046 | | | | | | | | | | | | 1,052,942 | | | | | | | | | |
(1) For the net yield on total average interest-earning assets, see "Net Interest Margin and Spread". | | | (In millions of R$, except percentages) | | | | | | | | | | | | | | | | 2015 | | 2014 | | 2013 | | | | | | Average | | | | | | Average | | Average | | | | | | Average | | Average | | | | | | Average | | | 2016 | | | 2015 | | | 2014 | | | Liabilities | | balance | | | Interest | | | yield/rate | | | balance | | | Interest | | | yield/rate | | | balance | | | Interest | | | yield/rate | | | Average
balance | | | Interest | | | Average
yield/rate | | | Average
balance | | | Interest | | | Average
yield/rate | | | Average
balance | | | Interest | | | Average
yield/rate | | | | | | (In millions of R$, except percentages) | | | Interest-bearing liabilities | | | 875,904 | | | | 75,064 | | | | 8.6 | | | | 793,069 | | | | 72,977 | | | | 9.2 | | | | 738,535 | | | | 46,361 | | | | 6.3 | | | | 969,461 | | | | 95,125 | | | | 9.8 | | | | 875,904 | | | | 75,064 | | | | 8.6 | | | | 793,069 | | | | 72,977 | | | | 9.2 | | | Interest-bearing deposits | | | 236,315 | | | | 13,587 | | | | 5.7 | | | | 233,999 | | | | 12,064 | | | | 5.2 | | | | 209,347 | | | | 9,802 | | | | 4.7 | | | | 244,121 | | | | 14,701 | | | | 6.0 | | | | 236,315 | | | | 13,587 | | | | 5.7 | | | | 233,999 | | | | 12,064 | | | | 5.2 | | | Savings deposits | | | 114,500 | | | | 7,720 | | | | 6.7 | | | | 111,473 | | | | 6,905 | | | | 6.2 | | | | 92,964 | | | | 5,014 | | | | 5.4 | | | | 106,838 | | | | 7,501 | | | | 7.0 | | | | 114,500 | | | | 7,720 | | | | 6.7 | | | | 111,473 | | | | 6,905 | | | | 6.2 | | | Interbank deposits | | | 19,633 | | | | 1,062 | | | | 5.4 | | | | 6,131 | | | | 692 | | | | 11.3 | | | | 7,446 | | | | 300 | | | | 4.0 | | | | Time deposits | | | 102,182 | | | | 4,804 | | | | 4.7 | | | | 116,395 | | | | 4,467 | | | | 3.8 | | | | 108,937 | | | | 4,488 | | | | 4.1 | | | | Deposits from banks and time deposits | | | | 137,283 | | | | 7,200 | | | | 5.2 | | | | 121,815 | | | | 5,867 | | | | 4.8 | | | | 122,527 | | | | 5,159 | | | | 4.2 | | | Securities sold under repurchase agreements | | | 297,509 | | | | 32,879 | | | | 11.1 | | | | 266,527 | | | | 26,771 | | | | 10.0 | | | | 256,025 | | | | 16,865 | | | | 6.6 | | | | 339,416 | | | | 45,932 | | | | 13.5 | | | | 297,509 | | | | 32,879 | | | | 11.1 | | | | 266,527 | | | | 26,771 | | | | 10.0 | | | Interbank market debt and Institutional market debt | | | 219,463 | | | | 15,999 | | | | 7.3 | | | | 183,981 | | | | 25,099 | | | | 13.6 | | | | 174,834 | | | | 16,216 | | | | 9.3 | | | | 240,563 | | | | 16,596 | | | | 6.9 | | | | 219,463 | | | | 15,999 | | | | 7.3 | | | | 183,981 | | | | 25,099 | | | | 13.6 | | | Interbank market debt | | | 134,637 | | | | 7,970 | | | | 5.9 | | | | 113,522 | | | | 14,404 | | | | 12.7 | | | | 104,002 | | | | 6,245 | | | | 6.0 | | | | 144,968 | | | | 8,347 | | | | 5.8 | | | | 134,637 | | | | 7,970 | | | | 5.9 | | | | 113,522 | | | | 14,404 | | | | 12.7 | | | Institutional market debt | | | 84,826 | | | | 8,030 | | | | 9.5 | | | | 70,459 | | | | 10,695 | | | | 15.2 | | | | 70,832 | | | | 9,971 | | | | 14.1 | | | | 95,595 | | | | 8,249 | | | | 8.6 | | | | 84,826 | | | | 8,030 | | | | 9.5 | | | | 70,459 | | | | 10,695 | | | | 15.2 | | | Reserves for insurance and private pension and liabilities for capitalization plans | | | 121,856 | | | | 12,557 | | | | 10.3 | | | | 107,880 | | | | 8,987 | | | | 8.3 | | | | 97,818 | | | | 3,436 | | | | 3.5 | | | | Reserves for insurance and private pension and Liabilities for capitalization plans | | | | 144,387 | | | | 17,790 | | | | 12.3 | | | | 121,856 | | | | 12,557 | | | | 10.3 | | | | 107,880 | | | | 8,987 | | | | 8.3 | | | Other interest-bearing liabilities | | | 761 | | | | 42 | | | | 5.5 | | | | 682 | | | | 56 | | | | 8.2 | | | | 511 | | | | 42 | | | | 8.2 | | | | 974 | | | | 106 | | | | 10.9 | | | | 761 | | | | 42 | | | | 5.5 | | | | 682 | | | | 56 | | | | 8.2 | | | Non-interest bearing liabilities | | | 203,376 | | | | | | | | | | | | 169,247 | | | | | | | | | | | | 148,215 | | | | | | | | | | | | 214,024 | | | | | | | | | | | | 203,376 | | | | | | | | | | | | 169,247 | | | | | | | | | | | Non-interest bearing deposits | | | 54,148 | | | | | | | | | | | | 43,840 | | | | | | | | | | | | 36,726 | | | | | | | | | | | | 61,895 | | | | | | | | | | | | 54,148 | | | | | | | | | | | | 43,840 | | | | | | | | | | | Derivatives | | | 29,488 | | | | | | | | | | | | 13,107 | | | | | | | | | | | | 10,355 | | | | | | | | | | | | 29,752 | | | | | | | | | | | | 29,488 | | | | | | | | | | | | 13,107 | | | | | | | | | | | Other non-interest-bearing liabilities | | | 119,740 | | | | | | | | | | | | 112,300 | | | | | | | | | | | | 101,134 | | | | | | | | | | | | 122,377 | | | | | | | | | | | | 119,740 | | | | | | | | | | | | 112,300 | | | | | | | | | | | Total stockholders’ equity attributed to the owners of the parent company | | | 105,034 | | | | | | | | | | | | 89,458 | | | | | | | | | | | | 78,747 | | | | | | | | | | | | 117,844 | | | | | | | | | | | | 105,034 | | | | | | | | | | | | 89,458 | | | | | | | | | | | Non-controlling interests | | | 1,732 | | | | | | | | | | | | 1,168 | | | | | | | | | | | | 878 | | | | | | | | | | | | 9,880 | | | | | | | | | | | | 1,732 | | | | | | | | | | | | 1,168 | | | | | | | | | | | Total | | | 1,186,046 | | | | | | | | | | | | 1,052,942 | | | | | | | | | | | | 965,497 | | | | | | | | | | | | 1,311,209 | | | | | | | | | | | | 1,186,046 | | | | | | | | | | | | 1,052,942 | | | | | | | | | |
Changes in Interest Incomeinterest income and Expensesexpenses – Volumevolume and Rate Analysisrate 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 periods indicated below. 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. | | | (In millions of R$, except percentages) | | | | | | | | | | | | Increase/(decrease) due to changes in: | | | Increase/(decrease) due to changes in: | | | | | 2015-2014 | | 2014-2013 | | 2013-2012 | | | 2016-2015 | | | 2015-2014 | | | 2014-2013 | | | | | | | | Yield | | Net | | | | | | Yield | | Net | | | | | | Yield | | Net | | | Volume(1) | | | Yield/rate(2) | | | Net change
(3) | | | Volume(1) | | | Yield/rate(2) | | | Net change
(3) | | | Volume(1) | | | Yield/rate(2) | | | Net change
(3) | | | | | Volume(1) | | | rate(2) | | | change(3) | | | Volume(1) | | | rate(2) | | | change(3) | | | Volume(1) | | | rate(2) | | | change(3) | | | (In millions of R$, except percentages) | | | Interest-earning assets | | | 15,027 | | | | 12,647 | | | | 27,674 | | | | 9,533 | | | | 16,455 | | | | 25,988 | | | | 12,673 | | | | (14,910 | ) | | | (2,237 | ) | | | 10,158 | | | | 3,547 | | | | 13,706 | | | | 15,027 | | | | 12,647 | | | | 27,674 | | | | 9,533 | | | | 16,455 | | | | 25,988 | | | Interbank deposits | | | 301 | | | | 41 | | | | 342 | | | | 142 | | | | 561 | | | | 703 | | | | (184 | ) | | | (275 | ) | | | (459 | ) | | | (131 | ) | | | (819 | ) | | | (950 | ) | | | 301 | | | | 41 | | | | 342 | | | | 142 | | | | 561 | | | | 703 | | | Securities purchased under agreements to resell | | | 4,001 | | | | 5,641 | | | | 9,642 | | | | 602 | | | | 4,697 | | | | 5,299 | | | | 3,084 | | | | (550 | ) | | | 2,534 | | | | 6,539 | | | | 52 | | | | 6,591 | | | | 4,001 | | | | 5,641 | | | | 9,642 | | | | 602 | | | | 4,697 | | | | 5,299 | | | Central Bank compulsory deposits | | | (733 | ) | | | 578 | | | | (156 | ) | | | 550 | | | | 1,041 | | | | 1,590 | | | | (570 | ) | | | (449 | ) | | | (1,020 | ) | | | 813 | | | | 358 | | | | 1,171 | | | | (733 | ) | | | 578 | | | | (156 | ) | | | 550 | | | | 1,041 | | | | 1,590 | | | Financial assets held for trading | | | 2,166 | | | | 2,532 | | | | 4,698 | | | | (302 | ) | | | 4,570 | | | | 4,268 | | | | 1,533 | | | | (3,997 | ) | | | (2,464 | ) | | | 3,477 | | | | 366 | | | | 3,843 | | | | 2,166 | | | | 2,532 | | | | 4,698 | | | | (302 | ) | | | 4,570 | | | | 4,268 | | | Available-for-sale financial assets | | | 403 | | | | 1,303 | | | | 1,707 | | | | (417 | ) | | | 2,623 | | | | 2,206 | | | | 1,404 | | | | (108 | ) | | | 1,296 | | | | 559 | | | | 1,622 | | | | 2,181 | | | | 403 | | | | 1,303 | | | | 1,707 | | | | (417 | ) | | | 2,623 | | | | 2,206 | | | Held-to-maturity financial assets | | | 1,371 | | | | 40 | | | | 1,411 | | | | 1,909 | | | | (48 | ) | | | 1,861 | | | | 41 | | | | (26 | ) | | | 15 | | | | 181 | | | | (151 | ) | | | 30 | | | | 1,371 | | | | 40 | | | | 1,411 | | | | 1,909 | | | | (48 | ) | | | 1,861 | | | Loan and lease operations (accrual) | | | 7,434 | | | | 2,710 | | | | 10,144 | | | | 6,973 | | | | 2,729 | | | | 9,702 | | | | 7,182 | | | | (8,775 | ) | | | (1,593 | ) | | | (1,275 | ) | | | 2,000 | | | | 726 | | | | 7,434 | | | | 2,710 | | | | 10,144 | | | | 6,973 | | | | 2,729 | | | | 9,702 | | | Other financial assets | | | 83 | | | | (198 | ) | | | (115 | ) | | | 77 | | | | 282 | | | | 359 | | | | 183 | | | | (729 | ) | | | (545 | ) | | | Other Financial Assets | | | | (5 | ) | | | 119 | | | | 114 | | | | 83 | | | | (198 | ) | | | (115 | ) | | | 77 | | | | 282 | | | | 359 | | | Interest-bearing liabilities | | | 11,420 | | | | (9,333 | ) | | | 2,087 | | | | 2,717 | | | | 23,898 | | | | 26,615 | | | | (4,577 | ) | | | 2,872 | | | | (1,706 | ) | | | 9,342 | | | | 10,719 | | | | 20,060 | | | | 11,420 | | | | (9,333 | ) | | | 2,087 | | | | 2,717 | | | | 23,898 | | | | 26,615 | | | Interest-bearing deposits | | | 276 | | | | 1,247 | | | | 1,523 | | | | 1,030 | | | | 1,231 | | | | 2,261 | | | | 306 | | | | (1,047 | ) | | | (741 | ) | | | 446 | | | | 669 | | | | 1,114 | | | | 276 | | | | 1,247 | | | | 1,523 | | | | 1,030 | | | | 1,231 | | | | 2,261 | | | Saving deposits | | | 191 | | | | 624 | | | | 815 | | | | 1,083 | | | | 807 | | | | 1,890 | | | | 1,052 | | | | (107 | ) | | | 945 | | | | (572 | ) | | | 354 | | | | (219 | ) | | | 191 | | | | 624 | | | | 815 | | | | 1,083 | | | | 807 | | | | 1,890 | | | Interbank deposits | | | 485 | | | | (115 | ) | | | 370 | | | | (43 | ) | | | 435 | | | | 392 | | | | (25 | ) | | | 39 | | | | 14 | | | | (138 | ) | | | 659 | | | | 521 | | | | 485 | | | | (115 | ) | | | 370 | | | | (43 | ) | | | 435 | | | | 392 | | | Time deposits | | | (400 | ) | | | 738 | | | | 338 | | | | (11 | ) | | | (11 | ) | | | (21 | ) | | | (721 | ) | | | (979 | ) | | | (1,700 | ) | | | 1,156 | | | | (344 | ) | | | 812 | | | | (400 | ) | | | 738 | | | | 338 | | | | (11 | ) | | | (11 | ) | | | (21 | ) | | Securities sold under repurchase agreements | | | 3,279 | | | | 2,829 | | | | 6,109 | | | | 718 | | | | 9,188 | | | | 9,906 | | | | (8,392 | ) | | | 7,717 | | | | (675 | ) | | | 5,032 | | | | 8,020 | | | | 13,053 | | | | 3,279 | | | | 2,829 | | | | 6,109 | | | | 718 | | | | 9,188 | | | | 9,906 | | | Interbank market debt and Institutional market debt | | | 6,595 | | | | (15,695 | ) | | | (9,100 | ) | | | 568 | | | | 8,315 | | | | 8,883 | | | | 1,998 | | | | 778 | | | | 2,776 | | | | 1,308 | | | | (711 | ) | | | 596 | | | | 6,595 | | | | (15,695 | ) | | | (9,100 | ) | | | 568 | | | | 8,315 | | | | 8,883 | | | Interbank market debt | | | 3,444 | | | | (9,878 | ) | | | (6,434 | ) | | | 620 | | | | 7,539 | | | | 8,159 | | | | 566 | | | | (68 | ) | | | 498 | | | | 586 | | | | (208 | ) | | | 377 | | | | 3,444 | | | | (9,878 | ) | | | (6,434 | ) | | | 620 | | | | 7,539 | | | | 8,159 | | | Institutional market debt | | | 3,151 | | | | (5,816 | ) | | | (2,666 | ) | | | (52 | ) | | | 777 | | | | 724 | | | | 1,431 | | | | 846 | | | | 2,277 | | | | 722 | | | | (503 | ) | | | 219 | | | | 3,151 | | | | (5,816 | ) | | | (2,666 | ) | | | (52 | ) | | | 777 | | | | 724 | | | Reserves for insurance and private pension and Liabilities for capitalization | | | 1,262 | | | | 2,307 | | | | 3,569 | | | | 387 | | | | 5,163 | | | | 5,551 | | | | 1,497 | | | | (4,574 | ) | | | (3,077 | ) | | | 2,542 | | | | 2,691 | | | | 5,233 | | | | 1,262 | | | | 2,307 | | | | 3,569 | | | | 387 | | | | 5,163 | | | | 5,551 | | | Other Interest-bearing liabilities | | | 8 | | | | (22 | ) | | | (14 | ) | | | 14 | | | | - | | | | 14 | | | | 13 | | | | (2 | ) | | | 11 | | | | 14 | | | | 50 | | | | 64 | | | | 8 | | | | (22 | ) | | | (14 | ) | | | 14 | | | | - | | | | 14 | |
(1) 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. (2) 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. (3) 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 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 periods indicated below. | | | (In millions of R$, except percentages) | | | | | 2015 | | | 2014 | | | 2013 | | | Total average interest-earning assets | | | 1,070,450 | | | | 955,416 | | | | 882,472 | | | Total average interest-bearing liabilities | | | 875,904 | | | | 793,069 | | | | 738,535 | | | Net interest income(1) | | | 72,725 | | | | 47,139 | | | | 47,766 | | | Average yield on average interest-earning assets (%)(2) | | | 13.8 | | | | 12.6 | | | | 10.7 | | | Average rate on average interest-bearing liabilities (%)(3) | | | 8.6 | | | | 9.2 | | | | 6.3 | | | Net interest spread (%)(4) | | | 5.2 | | | | 3.4 | | | | 4.4 | | | Net interest margin (%)(5) | | | 6.8 | | | | 4.9 | | | | 5.4 | |
| | | 2016 | | | 2015 | | | 2014 | | | | | (In millions of R$, except percentages) | | | Total average interest-earning assets | | | 1,151,430 | | | | 1,070,450 | | | | 955,416 | | | Total average interest-bearing liabilities | | | 969,461 | | | | 875,904 | | | | 793,069 | | | Net interest income (1) | | | 66,370 | | | | 72,725 | | | | 47,139 | | | Average yield on average interest-earning assets (2) | | | 14.0 | % | | | 13.8 | % | | | 12.6 | % | | Average rate on average interest-bearing liabilities (3) | | | 9.8 | % | | | 8.6 | % | | | 9.2 | % | | Net interest spread (4) | | | 4.2 | % | | | 5.2 | % | | | 3.4 | % | | Net interest margin (5) | | | 5.8 | % | | | 6.8 | % | | | 4.9 | % |
(1) Is the sum of total interest income less total interest expense. | (1) | Is the sum of total interest income less total interest expense. |
| (2) | Total interest income 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) | Net interest income divided by total average interest-earning assets. |
(2) Total interest income 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) Net interest income divided by total average interest-earning assets. Return on Equityequity and Assetsassets The following table sets forth certain data with respect to return on equity and assets for the periods indicated below. | | | (In millions of R$, except percentages) | | | | | 2015 | | | 2014 | | | 2013 | | | Net income attributable to owners of the parent company | | | 25,740 | | | | 21,555 | | | | 16,424 | | | Average total assets | | | 1,186,046 | | | | 1,052,942 | | | | 965,497 | | | Average stockholders’ equity | | | 105,034 | | | | 89,458 | | | | 78,747 | | | Net income as a percentage of average total assets (%)(1) | | | 2.2 | | | | 2.0 | | | | 1.7 | | | Net income as a percentage of average stockholder’s equity (%)(1) | | | 24.8 | | | | 24.3 | | | | 21.1 | | | Average stockholder’s equity as a percentage of average total assets (%) | | | 8.9 | | | | 8.5 | | | | 8.2 | | | Dividend payout ratio per share (%)(2) | | | 28.9 | | | | 31.1 | | | | 34.5 | |
| | | 2016 | | | 2015 | | | 2014 | | | | | (In millions of R$, except percentages) | | | Net income attributable to owners of the parent company | | | 23,263 | | | | 25,740 | | | | 21,555 | | | Average total assets | | | 1,311,210 | | | | 1,186,046 | | | | 1,052,942 | | | Average stockholders' equity | | | 117,844 | | | | 105,034 | | | | 89,458 | | | Net income as a percentage of average total assets (1) | | | 1.8 | % | | | 2.2 | % | | | 2.0 | % | | Net income as a percentage of average stockholder's equity (1) | | | 20.1 | % | | | 24.8 | % | | | 24.3 | % | | Average stockholder's equity as a percentage of average total assets | | | 9.0 | % | | | 8.9 | % | | | 8.5 | % | | Dividend payout ratio per share (2) | | | 44.6 | % | | | 28.9 | % | | | 31.1 | % |
(1) Attributable to owners of the parent company. | (1) | Attributable to owners of the parent company. |
| (2) | Dividend and interest on stockholders’ equity per share divided by basic earnings per share. Please refer to section Our profile, item In numbers, Selected Financial Data for additional information on the computation of both dividend and interest on shareholders’ equity and basic earnings per share. |
(2) Dividend and interest on stockholders’ equity per share divided by basic earnings per share. Please refer to section Our profile, item In numbers, Selected Financial Data for additional information on the computation of both dividend and interest on shareholders’ equity and basic earnings per share. Exchange Ratesrates 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. Please refer to section Our Risk Management,risk management, item Risk Factors,factors, Macroeconomic Risks,risks, item Instability of foreign exchange rates may negatively affect us, for further details. As of April 27, 2016,18, 2017, the U.S. dollar-real exchange rate (PTAX) was R$3.52953.0958 to U$1.00. The following table sets forth information on the selling rate for U.S. dollars and euro as reported by the Central Bank for the periods and dates indicated. | | | Exchange Rate of Brazilian Currency per US$1.00 | | | Exchange Rate of Brazilian Currency per €1.00 | | | Year | | Low | | | High | | | Average(1) | | | Year-End | | | Low | | | High | | | Average(1) | | | Year-End | | | 2011 | | | 1.5345 | | | | 1.9016 | | | | 1.6709 | | | | 1.8758 | | | | 2.1801 | | | | 2.5565 | | | | 2.3354 | | | | 2.4342 | | | 2012 | | | 1.7024 | | | | 2.1121 | | | | 1.9588 | | | | 2.0435 | | | | 2.2465 | | | | 2.7633 | | | | 2.5277 | | | | 2.6954 | | | 2013 | | | 1.9528 | | | | 2.4457 | | | | 2.1741 | | | | 2.3426 | | | | 2.5347 | | | | 3.2682 | | | | 2.8947 | | | | 3.2265 | | | 2014 | | | 2.1974 | | | | 2.7403 | | | | 2.3599 | | | | 2.6562 | | | | 2.8900 | | | | 3.4320 | | | | 3.1113 | | | | 3.2270 | | | 2015 | | | 2.5754 | | | | 4.1949 | | | | 3.3876 | | | | 3.9048 | | | | 2.9080 | | | | 4.7209 | | | | 3.7358 | | | | 4.2504 | | | 2016 (through April 27, 2016) | | | 3.5126 | | | | 4.1558 | | | | 3.8279 | | | | 3.5295 | | | | 3.9566 | | | | 4.5032 | | | | 4.2453 | | | | 3.9965 | |
| | | Exchange Rate of Brazilian Currency per US$1.00 | | | Exchange Rate of Brazilian Currency per €1.00 | | | Year | | Low | | | High | | | Average(1) | | | Year-End | | | Low | | | High | | | Average(1) | | | Year-End | | | 2012 | | | 1.7024 | | | | 2.1121 | | | | 1.9588 | | | | 2.0435 | | | | 2.2465 | | | | 2.7633 | | | | 2.5277 | | | | 2.6954 | | | 2013 | | | 1.9528 | | | | 2.4457 | | | | 2.1741 | | | | 2.3426 | | | | 2.5347 | | | | 3.2682 | | | | 2.8947 | | | | 3.2265 | | | 2014 | | | 2.1974 | | | | 2.7403 | | | | 2.3599 | | | | 2.6562 | | | | 2.8900 | | | | 3.4320 | | | | 3.1113 | | | | 3.2270 | | | 2015 | | | 2.5754 | | | | 4.1949 | | | | 3.3876 | | | | 3.9048 | | | | 2.9080 | | | | 4.7209 | | | | 3.7358 | | | | 4.2504 | | | 2016 | | | 3.1193 | | | | 4.1558 | | | | 3.4500 | | | | 3.2591 | | | | 3.3879 | | | | 4.5032 | | | | 3.8043 | | | | 3.4384 | | | 2017 (through April 18, 2017) | | | 3.0510 | | | | 3.2729 | | | | 3.1226 | | | | 3.0958 | | | | 3.2455 | | | | 3.4424 | | | | 3.3388 | | | | 3.3144 | |
Source: Economatica System. (1) Represents the average of the exchange rates on the last day of each month during the relevant period.
| (1) | Represents the average of the exchange rates on the last day of each month during the relevant period. |
| | | Exchange Rate of Brazilian Currency per US$1.00 | | | Exchange Rate of Brazilian Currency per €1.00 | | | Month | | Low | | | High | | | Average(1) | | | Month-End | | | Low | | | High | | | Average(1) | | | Month-End | | | October 2015 | | | 3.7386 | | | | 4.0010 | | | | 3.8801 | | | | 3.8589 | | | | 4.2485 | | | | 4.5115 | | | | 4.3571 | | | | 4.2660 | | | November 2015 | | | 3.7010 | | | | 3.8506 | | | | 3.7765 | | | | 3.8506 | | | | 3.9454 | | | | 4.1714 | | | | 4.0449 | | | | 4.0735 | | | December 2015 | | | 3.7476 | | | | 3.9831 | | | | 3.8711 | | | | 3.9048 | | | | 4.0553 | | | | 4.3624 | | | | 4.2158 | | | | 4.2504 | | | January 2016 | | | 3.9863 | | | | 4.1558 | | | | 4.0524 | | | | 4.0428 | | | | 4.3082 | | | | 4.5032 | | | | 4.4010 | | | | 4.3824 | | | February 2016 | | | 3.8653 | | | | 4.0492 | | | | 3.9737 | | | | 3.9796 | | | | 4.3234 | | | | 4.4962 | | | | 4.4034 | | | | 4.3234 | | | March 2016 | | | 3.5589 | | | | 3.9913 | | | | 3.7039 | | | | 3.5589 | | | | 4.0254 | | | | 4.3350 | | | | 4.1213 | | | | 4.0539 | | | April 2016 (through April 27, 2016) | | | 3.5126 | | | | 3.6921 | | | | 3.5759 | | | | 3.5295 | | | | 3.9566 | | | | 4.2046 | | | | 4.0572 | | | | 3.9965 | |
| | | Exchange Rate of Brazilian Currency per US$1.00 | | | Exchange Rate of Brazilian Currency per €1.00 | | | Month | | Low | | | High | | | Average(1) | | | Month-End | | | Low | | | High | | | Average(1) | | | Month-End | | | October 2016 | | | 3.1193 | | | | 3.2359 | | | | 3.1858 | | | | 3.1811 | | | | 3.3879 | | | | 3.6251 | | | | 3.5106 | | | | 3.4811 | | | November 2016 | | | 3.2024 | | | | 3.4446 | | | | 3.3420 | | | | 3.3967 | | | | 3.5326 | | | | 3.7392 | | | | 3.6000 | | | | 3.6002 | | | December 2016 | | | 3.2591 | | | | 3.4650 | | | | 3.3523 | | | | 3.2591 | | | | 3.4042 | | | | 3.7127 | | | | 3.5333 | | | | 3.4384 | | | January 2017 | | | 3.1270 | | | | 3.2729 | | | | 3.1966 | | | | 3.1270 | | | | 3.3383 | | | | 3.4424 | | | | 3.3944 | | | | 3.3759 | | | February 2017 | | | 3.0510 | | | | 3.1479 | | | | 3.1042 | | | | 3.0993 | | | | 3.2455 | | | | 3.3846 | | | | 3.3060 | | | | 3.2753 | | | March 2017 | | | 3.0765 | | | | 3.1735 | | | | 3.1279 | | | | 3.1684 | | | | 3.2723 | | | | 3.4013 | | | | 3.3447 | | | | 3.3896 | | | April 2017 (through April 18, 2017) | | | 3.0923 | | | | 3.1463 | | | | 3.1213 | | | | 3.0958 | | | | 3.2967 | | | | 3.3392 | | | | 3.3222 | | | | 3.3144 | |
Source: Economatica System. (1)
| (1) | Represents the average of the closing exchange rates of each day during the relevant period. |
Considerations for ADS holders Risks related to our ADSs Before investing in our shares and ADSs, it is important for the investor to know that, in addition to the risks related to our business, which may impact the value of our securities and our ability to perform certain obligations, including the payment of dividends and interest on capital,in equity, the investor will be exposed to additional risks, as described below. Additional risks and uncertainties that we are unaware of, or that we currently deem to be immaterial, may also become important factors that affect us and/or ADS holders. The relative price volatility and limited liquidity of the Brazilian capital markets may significantly limit the ability of our investors to sell the preferred shares underlying our ADSs, at the price and time they desire The investment in securities traded in emerging markets frequently involves a risk higher than an investment in securities of issuers from the U.S.United States or other developed countries, and these investments are generally considered more speculative. The Brazilian securities market is smaller, less liquid, more concentrated and can be more volatile than markets in the U.S.United States and other countries. Thus, an investor’s ability to sell preferred shares underlying ADSs at the price and time the investor desires may be substantially limited. The preferred shares underlying our ADSs do not have voting rights, except in specific circumstances. Pursuant to our Bylaws, the holders of preferred shares and therefore of our ADSs are not entitled to vote in our general stockholders’ meetings, except in specific circumstances. Even in such circumstances, ADS holders may be subject to practical restrictions on their ability to exercise their voting rights due to additional operational steps involved in communicating with these stockholders, as mentioned below. According to the provisions of the ADSs deposit agreement, in the event of a general stockholders’ meeting, we will provide notice to the depositary bank, which will, to the extent practicable, send such notice to ADS holders and instructions on how such holders can participate in such general stockholders’ meeting, and ADS holders should instruct the depositary bank on how to vote in order to exercise their voting rights. This additional step of instructing the ADS depositary bank may make the process for exercising voting rights longer for ADS holders. Holders of ADSs may be unable to exercise preemptive rights with respect to our preferred shares We may not be able to offer the U.S. holders of our ADSs preemptive rights granted to holders of our preferred shares in the event of an increase of our share capital by issuing preferred shares unless a registration statement relating to such preemptive rights and our preferred shares is effective or an exemption from such registration requirements of the Securities Act is available. As we are not obligated to file a registration statement relating to preemptive rights with respect to our preferred shares, we cannot assure that preemptive rights will be offered to you. In the event such registration statement is not filed or if the exemption from registration is not available, The Bank of New York Mellon, as depositary bank, will attempt to sell such preemptive rights within the exercise period, and, in case such a sale is effective, our ADS holders will be entitled to receive the proceeds from such sale. However, the U.S. holders of our ADSs willmay not receive any value from the granting of such preemptive rights if the depositary bank is unable to sell the preemptive rights during the exercise period.rights. The surrender of ADSs may cause the loss of the ability to remit foreign currency abroad and of certain Brazilian tax advantages While ADS holders benefit from the electronic certificate of foreign capital registration obtained in Brazil by the custodian for our preferred shares underlying the ADSs, which permits the depositary bank to convert dividends and other distributions with respect to the preferred shares underlying the ADSs into foreign currency and remit the proceeds abroad, the availability and requirements of such electronic certificate may be adversely affected by future legislative changes. If an ADS holder surrenders the ADSs and, consequently, receives preferred shares underlying the ADSs, such holder will have to register its investment in the preferred shares with the Central Bank of Brazil either as (i) a Foreign Direct Investment, subject to Law No. 4131/62, which will require an electronic certificate of foreign capital registration, the Electronic Declaratory Registration of Foreign Direct Investment (RDE-IED), or (ii) as a Foreign Investment in Portfolio, subject to Resolution CMN No. 4373/14, which among other requirements, requires the appointment of a financial institution in Brazil as the custodian of the preferred shares and legal representative of the foreign investor in the Electronic Declaratory Registration of Portfolio (RDE – Portfolio). The failure to register the investment in the preferred shares as foreign investment under one of the regimes mentioned above (Eg. RDE – IED or RDE – Portfolio) will impact the ability of the holder to dispose of the preferred shares and to receive dividends. Moreover, upon receipt of the preferred shares underlying the ADSs, Brazilian regulations require the investor to enter into corresponding exchange rate transactions and pay taxes on these exchange rate transactions, as applicable. The tax treatment for the remittance of dividends and distributions on, and the proceeds from any sale of, our preferred shares is less favorable in case a holder of preferred shares obtains the RDE-IED instead of the RDE-Portfolio. In addition, if a holder of preferred shares attempts to obtain an electronic certificate of foreign capital registration, such holder may incur expenses or suffer delays in the application process, which could impact the investor’s ability to receive dividends or distributions relating to our preferred shares or the return of capital on a timely manner. The holders of ADSs have rights that differ from those of stockholders of companies organized under the laws of the U.S.United States or other countries Our corporate affairs are governed by our Bylaws and Brazilian Corporate Law, which may have legal principles that differ from those that would apply if we were incorporated in the U.S.United States or in another country. Under Brazilian Corporate Law, the holders of ADSs and the holders of our preferred shares may have different rights with respect to the protection of investor interests, including remedies available to investors in relation to any actions taken by our Board of Directors or the holders of our common shares, which may be different from what is provided in U.S. law or the law of another country. Taxation for the ADS holders This summary is based upon tax laws of Brazil and the United States in effect as of the date hereof, and contains a description of the main Brazilian and U.S. federal income tax considerations regarding 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, considering that laws are subject to change and to differing interpretations (possibly with retroactive effect). Although there is no income tax treaty between Brazil and the United States in place, the tax authorities of the two countries have agreed in applicable provisions of reciprocal tax treatment as to compensation of tax withheld at the source country in the residence country. 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 Considerationstax considerations The following discussion summarizes the main Brazilian tax consequences related to the acquisition, ownership and disposition by Non-Resident Holders of our ADSs. Non-Resident Holders ResidentNon-resident holders resident or Domicileddomiciled in Tax Haven Jurisdictionstax haven jurisdictions
In accordance with Brazilian law, as regulated by Article 1 of Normative InstructionRulling No. 1,037 of June 4th, 2010, as amended, a “tax haven” is defined as a country or locationlocation: (a) that does not impose any income tax or where the maximum income tax rate is 20% , or below17% as further detailed below; or (b) where the local legislation imposes restrictions on disclosure regarding shareholder composition or investment ownership. A list of current tax haven jurisdictions has been published per such Normative Instruction.Rulling. Non-Resident Holders resident or domiciled in tax haven jurisdictions may be subject to withholding tax in Brazil at higher rates than Non-Resident Holders not resident or domiciled in tax havens, as described below. Additionally, on June 24, 2008, Law No. 11,727 introduced the concept of “privileged tax regime,” which is defined as a tax regime that (i) does not tax income or taxes it at a maximum rate lower than 20%; (ii) grants tax benefits to non-resident entities or individuals (a) without the requirement to carry out substantial economic activity in the country or dependency or (b) contingent to the non-exercise of substantial economic activity in the country or dependency; (iii) does not tax or that taxes income generated abroad at a maximum rate of lower than 20%; or (iv) does not provide access to information related to shareholding composition, ownership of assets and rights or economic transactions carried out. On November 28, 2014, the Brazilian tax authorities issued Ordinance No. 488, which decreased these minimum thresholds from 20% to 17% in certain cases. Under Ordinance No. 488, the 17% threshold applies only to countries and regimes aligned with international standards of fiscal transparency, in accordance with rules to be established by the Brazilian tax authorities. Notwithstanding the above, we recommend that you consult your own tax advisors regarding the consequences of the implementation of Law No. 11,727, Normative Ruling No. 1,037 and of any related Brazilian tax law or regulation concerning tax havens and privileged tax regimes. Taxation of Dividendsdividends Payment of dividends derived from profits generated after January 1,st, 1996, including dividends paid in kind, are not subject to withholding tax in Brazil. Payment of dividends derived from profits generated before January 1st, 1996 may be subject to Brazilian withholding tax at varying rates, according to the year when the profits have been generated. Taxation of Interestinterest on Net Equitynet equity Law No. 9,249, dated December 26, 1995, as amended, allows a Brazilian corporation, such as ourselves, to also make payments of interest on net equity in addition to dividend distributions. Please refer tosection Our Risk Management,risk management, itemRegulatory Environment,environment, Taxationfor further information. Currently, payments of interest on net equity are subject towithholding tax at a general rate of 15%, or 25% in the case of a Non-Resident Holder that is resident or domiciled in a tax haven jurisdiction. Taxation of Gainsgains | (a) | Sales or Other Dispositions of ADSs |
Gains(a) Sales or other dispositions of ADSs
Arguably, 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, dated December 29, 2003, as amended, the disposition of assets located in Brazil by a Non-Resident Holder may be subject to Brazilian withholding tax at a general15% flat rate or progressive rate may vary from 15% to 22.5% depending on the kind of 15% (ainvestment made into Brazil and the location where the Non-Resident Holder is resident or domiciled (also, 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 the referred Law 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 that even if ADSs were considered to be assets located in Brazil, Non-Resident Holders not resident or domiciled in tax haven jurisdictions may still apply for exemption from capital gains tax according to Article 81 of Law No. 8,981, dated January 20, 1995, as amended. | (b) | Conversion of Our Preferred Shares(b) Conversion of our 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 jurisdiction or if such preferred shares have not been registered under the Central Bank according to CMN Resolution No. 4.373, dated September 29, 2014, effective as of March 30, 2015 (former CMN Resolution No. 2,689, dated January 26, 2000, and CMN Resolution No. 1,927, dated May 18, 1992), as amended. In those cases, the difference between the acquisition cost of such preferred shares or the amount otherwise previously registered under the Central Bank and the average price of such preferred shares, according to the mentioned CMN Resolution No. 4.373/14), may be considered taxable capital gain, and may be subject to income tax at a general rate of 15%. Please refer to section Our Risk Management, item Regulatory Environment, Funds of foreign investors, for further details.
|
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 jurisdiction or if such preferred shares have not been registered under the Central Bank according to CMN Resolution No. 4.373, dated September 29, 2014, effective as of March 30, 2015 (former CMN Resolution No. 2,689, dated January 26, 2000, and CMN Resolution No. 1,927, dated May 18, 1992), as amended. In those cases, the difference between the acquisition cost of such preferred shares or the amount otherwise previously registered under the Central Bank and the average price of such preferred shares, according to the mentioned CMN Resolution No. 4,373/14), may be considered taxable capital gain, and may be subject to income tax. Please refer to section Our risk management, item Regulatory environment, Funds of foreign investors, for further details. Non-Resident Holders that are resident or domiciled in tax haven jurisdictions may be subject to capital gain tax at a 25% rate on 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 haven jurisdictions deposit preferred shares registered according to CMN Resolution No. 4.373/4,373/14 in exchange for ADSs, such deposit should not be subject to capital gain tax. (c) Sales or other dispositions of our preferred shares | A-169 | (c) | Sales or Other Dispositions of Our Preferred Shares
Non-Resident Holders not resident or domiciled in tax haven jurisdictions that register their portfolio according to CMN Resolution No. 4.373/14 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. 4.373/
|
Non-Resident Holders not resident or domiciled in tax haven jurisdictions that register their portfolio according to CMN Resolution No. 4,373/14 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. 4,373/14 or made outside of Brazilian stock exchanges is generally subject to 15% capital gain tax. |
Such special treatment is not applicable to Non-Resident Holders resident or domiciled in tax haven jurisdictions, who are subject to general taxation rules applicable to Brazilian residents on the sale of their investments in the financial markets, including stock exchanges and over-the-counter markets. The taxation rate is then generally of 15%. If such Non-Resident Holders sell shares outside of the financial markets, the income taxation rate will instead be of 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 the Brazilian income tax according to rates that vary depending on the locationsame rules applicable to disposition of the Non-Resident Holder and the market in which such rights have been sold. If the Non-Resident Holder is not residentshares or domiciled in a tax haven jurisdiction, 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 outside such stock exchange markets. 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 have been sold outside such markets.ADSs. Tax on Financial Transactions financial transactions IOF/Exchange (IOF/FX) and IOF/Securities According to the Decree No. 6,306/2007, and further amendments, Tax on Financial Transactions may levy some foreign exchange transactions. Please refer tosection Our Risk Management,risk management, item Regulatory Environment,environment, Taxation, for further details about Tax on Financial Transactions.financial transactions. The acquisition of ADSs is not subject to IOF tax. As of December 24, 2013, pursuant to Decree No. 8,165, the IOF/Securities tax levied 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 has been reduced to 0% rate. Other Brazilian Taxestaxes 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 are no Brazilian stamp, issue, registration, or similar taxes or duties payable to Non-Resident Holders of our preferred shares or ADSs. INVESTORS ARE STRONGLY ADVISED TO CONSULT THEIR OWN TAX ADVISORS AS TO BRAZILIAN. FEDERAL, STATE AND LOCAL 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 NON-BRAZILIAN TAX LAWS. U.S. Federal Income Tax Considerationsfederal 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 U.S. Internal Revenue Code of 1986, as amended (the “Code”). This discussion does not address all of the U.S. federal income tax considerations that may be relevant to specific U.S. Holders in light of their particular circumstances or to U.S. Holders subject to special treatment under U.S. federal income tax law, 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 that hold our preferred shares or ADSs as part of a “straddle,” “hedging,” “conversion” or other integrated transaction, U.S. Holders that mark their securities to market for U.S. federal income tax purposes, U.S. Holders that have a functional currency other than the U.S. dollar, U.S. Holders that own (or are deemed to own) 10% or more (by voting power) of our shares or U.S. Holders that receive our preferred shares or ADSs as compensation. In addition, this discussion does not address the effect of any U.S. state, local or non-U.S. tax considerations or any U.S. estate, gift or alternative minimum tax considerations. This discussion is based on the Code, U.S. Treasury regulations promulgated or proposed thereunder and administrative and judicial interpretations thereof, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect, or subject to differing interpretations. This discussion also assumes that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms. 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 who is a citizen or resident of the United States, (ii) a corporation created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source, or (iv) a trust (x) 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 (y) that has in effect a valid election under applicable U.S. Treasury regulations to be treated as a U.S. person. 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 will depend in part upon the status and activities of such entity and the particular partner. Any such entity should consult its own tax advisor regarding the U.S. federal income tax considerations applicable to it and its partners relating to the purchase, ownership and disposition of such preferred shares or ADSs. INVESTORS ARE STRONGLY ADVISED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE U.S. FEDERAL, STATE AND LOCAL 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 NON-U.S. TAX LAWS. Except where specifically described below, this discussion assumes that we are not and will not be a passive foreign investment company (a “PFIC”)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 (or its custodian) 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 realization 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 payments of interest on net 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 generally will be treated first as a non-taxable return of capital to the extent of such 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 (which will be treated in the same manner described below under “Sale, Exchange or Other Disposition of 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 Brazilianreal 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 thereais so received are in fact converted into U.S. dollars. Such U.S. Holder generally will have a basis in suchreais equal to the U.S. dollar value of suchreais 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. Distributions treated as dividends that are received by certain non-corporate U.S. persons (including individuals) in respect of shares 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 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, Exchangeexchange or Otherother 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 recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount realized on such sale, exchange or other disposition and such U.S. Holder’s adjusted tax basis in such preferred shares or ADSs. Any gain or loss so recognized generally will be long-term capital gain or loss if such U.S. Holder has held such preferred shares or ADSs for more than one year at the time of such sale, exchange or other 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 realize an amount equal to the U.S. dollar value of suchreais on 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. Such U.S. Holder generally will have a basis in suchreais equal to the U.S. dollar value of suchreaison the settlement date. Any gain or loss on a subsequent conversion orotheror 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. 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 Considerationstax credit considerations Distributions on our preferred shares (whether held through ADSs or directly), including payments of interest on net 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 categorized 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. 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 paid or accrued by such U.S. Holder in such taxable year. Foreign currency exchange gain or loss generally will constitute income from sources within the United States. The rules relating to foreign tax credits are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules. Passive Foreign Investment Company Considerationsforeign 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. 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”)( 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 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 realized 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 realized ratably over the U.S. Holder’s holding period for such preferred shares or ADSs, (ii) the amount deemed realized 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 (“Subsidiary 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 shares in a PFIC (but possibly not a Subsidiary PFIC, as discussed below) may make a “mark-to-market” election, provided the PFIC shares are “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 (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 ADSs are traded on the NYSE and the preferred shares are traded on the BM&FBovespa. 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 shares traded on a qualified exchange or other market are regularly traded on such exchange or other market for any calendar year during which such shares are traded, other than inde 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. The tax consequences that would apply if we were a PFIC would be different from those described above if a “mark-to-market” election is available and a U.S. Holder validly makes such an 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 shares of any Subsidiary PFIC that such U.S. Holder is treated as owning, because such Subsidiary PFIC shares might not be marketable stock. The mark-to-market election is made with respect to marketable stock in a PFIC on a shareholder-by-shareholder 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 Taxtax 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 their income arising from a distribution with respect to a preferred share or ADS and net gain from the sale, exchange or other disposition of a preferred share or ADS. Backup Withholdingwithholding and Information Reportinginformation 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. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally 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 by the U.S. Holder to the IRS. Disclosure Requirementsrequirements for Specified Foreign Financial Assetsspecified foreign financial assets Individual U.S. Holders (and certain U.S. entities specified in U.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 certain information on IRS Form 8938 if the aggregate value of all such assets exceeds 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 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 Requirementsrequirements for Certaincertain U.S. Holders Recognizing Significant Lossesholders recognizing 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) US$10 million or more in a taxable year or US$20 million or more in any combination of taxable years for corporations or partnerships all of whose partners are corporations, (ii) US$2 million or more in a taxable year or US$4 million or more in any combination of taxable years for all other taxpayers, or (iii) US$50,000 or more in a taxable year for individuals or trusts with respect to a foreign currency transaction) may be required to file Form 8886 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. U.S.US Foreign Account Tax Compliance Act (FATCA)
Please refer to section our risk management,Our Risk Management, item Regulatory Environment, Taxation, U.S. Foreign Account Tax Compliance Act (FATCA) for more clarification on FATCA. Controls and Procedures | (a) | Disclosure 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 (“CEO”), and our chief financial officer (“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, 2015.2016. 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, 2015,2016, our disclosure controls and procedures were effective to provide reasonable assurance that material information relating to us and our consolidated subsidiaries is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive officers and principal financial officers, to allow timely decisions regarding required disclosure. | (b) | Management’s Annual Report on Internal Control Over Financial Reporting |
(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 consolidated financial statements for external purposes, in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (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 a decline in the level of compliance with policies or procedures may occur. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015.2016. In making this assessment, our management used the criteria set forth in “Internal Control – Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (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, 2015. 2016. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2015,2016, has been audited by PricewaterhouseCoopers Auditores Independentes, an independent registered public accounting firm. | (c) | Attestation Report of the Independent Registered Public Accounting FirmA-174 |
(c) Attestation Report of the Independent Registered Public Accounting Firm The report of PricewaterhouseCoopers Auditores Independentes, our independent registered public accounting firm, dated March xx, 2016,April 20, 2017, on the effectiveness of our internal controls related to the consolidatedcontrol over financial statementsreporting as of December 31, 20152016 is presented with our consolidated financial statements. Please refer to Performance, item Consolidated Financial Statements (IFRS) for further details about our independent auditor’s report.registered public accounting firm. | (d) | Changes in Internal Control Over Financial Reporting |
(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 ocurredoccurred during the year ended December 31, 20152016 have not materially affected, orand are not reasonably likely to materially affect, our internal control over financial reporting. Sustainability Sustainability is incorporated into our corporate strategy by means ofthrough a consolidated governance structure that is integrated into our business, which allows us to incorporate social and environmental issues into daily activities and processes throughout the Itaú Unibanco Group. Long-term strategic decisions on sustainability are discussed on an annual basis atby our Board of Directors’Directors, at an annual meeting of the Strategy Committee (composed of Board of Directors members) and twice a year at meetings of our Executive Committee. Since 2011, our sustainability activities have been based on three strategic focuses: (i) social and environmental risks and opportunities, (ii) financial education and (iii) dialogue and transparency. Our management of social and environmental risk is based on the identification, measurement, mitigation and monitoring of risks. We know that the increasing societal consciousness of the environmental and social challenges we face makes these issues more material to our operations, products and services. By integrating E&Ssocial and environmental risks and opportunities into our strategy, governance, processes, management policies, products and services, we are creating a virtuous circle that can help society to prosper. In the last 15 years, we developed and participated in various initiatives to reduce environmental and social risks and seize opportunities to address those risks. Over that period, we have created strategies, routines, processes and products, adopted specific policies and adhered to voluntary commitments such as PRI (Principles for Responsible Investments), EP (Equator Principles), CDP (Carbon Disclosure Project), Principles for Sustainable Insurance (PSI) and Global Compact that guide our business and institutional practices. We have developed specific social and environmental guidelines applicable to our lending processes (lending and financing), insurance, investments and suppliers. Our main social and environmental guidelines include: (i) a list of restricted activities (firearms, ammunition and explosives; extraction and production of wood and the production of firewood and charcoal extracted from native forests; fishing activities; extraction and industrialization of asbestos; and abattoirs and beef packaging plants), (ii) a list of prohibited activities (prostitution; illegal use of child labor; and work under conditions similar to slavery), (iii) compliance with environmental licensing, (iv) the inclusion of social and environmental contractual clauses, and (v) specific rules for providing real estate collateral. In 2015, we published a paper withon our Social and Environmental Risks and Opportunities strategy that discusses our practices and the challenges we see for enhancing sustainability. This is part ofWe regularly monitor the work that we performed in 2014 to review our Sustainability Policy and specific policies to our business, such as insurance, investments and credit, in accordance with the criteria established in National Monetary Council Resolution No. 4.327. In accordance with our policy, social and environmental risks are analyzed based on the characteristics, needs, exposure to risks and other relevant criteria specific to eachdevelopment of our lines of business.goals for 2020, published in this document. You can access it at <https://www.itau.com.br/_arquivosestaticos/Itau/PDF/Sustentabilidade/Posicionamento-Itau-ROSA_english.pdf> InFurther, in 2016, we carried out a study on financial education, we highlightregulatory risks associated with climate change issues and improved our program for employees. We provided onlineperformance on human rights by structuring a multidisciplinary working group and live courses,governance on diversity, sponsored by the People Area, which promote reflection aboutreports to the relation between consumption, personal goalsPeople Committee and how people manage their finances. This project offers confidential expert advice free of charge [to our employees]. In 2015, expanded the project to reach more than one thousand employees. At the beginning of the project, our analysis showed that many of our employees embraced this opportunity to improve their financial education. As a result of this initiative, a number of participants displayed an increased knowledge of financial planning (40%) and a stronger commitment to save and invest money (57%), as well as to seek to reduce personal indebtedness (50%).Sustainability Committee.
As part of thisFinancial Education initiative, in 2015, we issued a study called “Choices and Money” to answer the questions “How to help people make better use of their money? How to help people accomplish their goal”. The study traces the influences of economic and social past on our financial behavior and discusses how they shape the choices we make when it comes to money. To access the study in Portuguese click on <http://itau.com.br/_arquivosestaticos/Itau/PDF/Sustentabilidade/Escolhas_e_Dinheiro_Educacao_Financeira.pdf> Based on the outcomes of this study, we have decided to adopt an approach to generate a broader identification and, in 2016, we launched the “Real Life” campaign, a webseries telling real histories and sharing financial knowledge applied to day-to-day life. The four episodes show people and families in different moments of life, exploring their dilemmas and how they deal with money, providing financial guidance to help them achieve their goals. This series had over 42 million views. In 2015, our2016, we signed up to a partnership with the Family School program of the State of São Paulo, which opens the state schools during the weekends for activities guided by four pillars: culture, work, sports and health. Through the end of 2016, we trained the vice-principals of 751 schools in Greater São Paulo, who trained 73 volunteers, impacting 12,468 people. Our dialogue and transparency efforts focused on developing our reporting processes with the goal of consolidating the integration of communications. In order to makeSince 2004, sustainability information has been disclosed based on the Global Reporting Initiative criteria, and is integrated into our reporting simplerannual report, which includes both financial and more efficient,sustainability information. Additionally, in 2013, we entered into a partnership with the International Integrated Reporting Council (IIRC) in 2013. Through a working group drawn from our Sustainability, Finance, Corporate Communications and Investor Relations departments, we are reviewing our reporting and aligning our processes with IIRC guidelines. Defining materiality, meaning the relevant subjects for an institution, is a crucial means for guiding management and stakeholder decision making. Over the course of 2015, our working group performed an assessment of the matrix of material topics, refining the names of the topics and the issues related ,to each of them.
The study provided by our reporting task force was validated internally by the Reporting Committee, a sustainability governance forum tasked with introducing better reporting and transparency practices. PwC assisted our efforts by providing guidance based on AA1000 principles for the process of defining materiality.
This effort culminated in the publication of our Integrated Report,prepare a concise piece of communication focused on our ability to create value for stakeholders over time. Our 2015Visit our 2016 Integrated Report may be accessed at www.itau.com.br/relatorio-anual.annual-report.
The management of sustainability issues has contributed to our access to funding through development agencies, and to our presence in sustainability indexes. We are the only Latin American bank to be included in the Dow Jones Sustainability Index since the inception of the index in 1999, and we also integrate the Business Sustainability Index and the Carbon Efficient Index, both of the São Paulo stock exchange. Also noteworthy are our partnerships with the Inter-American Development Bank (IDB), the Inter-American Investment Corporation (IIC), and the Brazilian Development Bank (BNDES) , which participate with us in lending or joint performance on specific projects. Glossary A | ·• | ABEL –Associação Brasileira de Empresas de Leasing (Brazilian Association of Leasing Companies) |
| ·• | Aberje –Associação Brasileira de Comunicação Empresarial (Brazilian Association of Corporate Communication) |
| ·• | ABRASCA –Associação Brasileira de Companhias Abertas (Brazilian Association of Public Companies) |
| ·• | ADS –American Depositary Shares |
| ·• | ANBIMA –Associação Brasileira das Entidades dos Mercados Financeirose de Capitais(Brazilian (Brazilian Association of Stock and Financial MarketsEntities)Markets Entities) |
| ·• | APIMEC –Associação dos Analistas e Profissionais de Investimento doMercado de Capitais(Association (Association of Capital Markets Analysts andInvestmentand Investment Professionals) |
| ·• | ATM – Automatic Teller Machine |
B Banco Itaú Argentina – Banco Itaú Argentina S.A | · | Banco Itaú Argentina – Banco Itaú Argentina S.A |
| ·• | Banco Itaú Chile – Banco Itaú Chile S.A. |
| ·• | Banco Itaú Paraguay – Banco Itaú Paraguay S.A |
| ·• | Banco Itaú Uruguay – Banco Itaú Uruguay S.A |
| ·• | BCBA – Buenos Aires Stock Exchange |
| ·• | BCBS – Basel Committee on Banking Supervision |
| ·• | BIS – Bank for International Settlements |
| ·• | BM&FBovespa –Bolsa de Valores, Mercadorias e Futuros S.A. (Securities, Commodities and Futures Exchange) |
| ·• | BNDES –Banco Nacional de Desenvolvimento Econômico e Social (Brazilian Social and Economic Development Bank) |
| ·• | BNY Mellon – The Bank of New York Mellon |
| ·• | Brazilian Corporate Law – Law No. 6,404, of December 15, 1976, as amended (including by Law No. 11,638) |
| ·• | Brazilian Payment System – encompasses the institutions, the systems and the procedures related to the transfer of funds and of other financial assets, among the diverse economic agents of the Brazilian market, or that involve the processing, the clearing and settlement of payments in any of its forms. |
C | ·• | CADE –Conselho Administrativo de Defesa Econômica (Administrative Council for Economic Defense) |
| ·• | CCR – Counterparty Credit Risk |
| ·• | CDC –Código de Defesa do Consumidor (Consumer Protection Code) |
| ·• | CDI –Certificado de Depósito Interbancário(Interbank (Interbank Deposit Certificate) |
| ·• | CEDEAR – Argentine Certificates of Deposits |
| ·• | Central Bank –Banco Central do Brasil(Brazilian (Brazilian Central Bank) |
| ·• | CFC –Conselho Federal de Contabilidade(Federal (Federal Accounting Council) |
| ·• | CGRC – Risk and Capital Management Committee |
| ·• | Cia E. Johnston – Companhia E. Johnston de Participações |
| ·• | CMN –Conselho Monetário Nacional (National Monetary Council) |
| ·• | CNRFNRF – Risk and Financial Policies Committee |
| ·• | CNSP –Conselho Nacional de Seguros Privados (National Council of Private Insurance) |
| ·• | COAF –Conselho de Controle de AtividadesFinanceiras(Financial (Financial Activities Control Council) |
| ·• | COSO –Committee of Sponsoring Organizations of the Treadway Commission | | • | COFINS –Contribuição Para o Financiamentoda Seguridade Social(Social SecurityFinancing (Social Security Financing Contribution) |
| ·• | CONSIF –Confederação Nacional do SistemaFinanceiro(National (National Association of theFinancialthe Financial System) |
| ·• | CSB – Corporate Site Branch |
| ·• | CSC – Superior Credit Committee |
| ·• | CSCCA – Superior Wholesale Credit and Collection Committee |
| ·• | CSCCV – Superior Retail Credit and Collection Committee |
| ·• | CSLL –Contribuição Social Sobre o LucroLíquido(Social (Social Contribution on Profits) |
| ·• | CSP – Superior Products Committee |
| ·• | CSRML – Superior Market Risk and Liquidity Committee |
| ·• | CSRO – Superior Operational Risk Management Committee |
| ·• | CTAM – Model Assessment Technical Committee |
| ·• | CVM –Comissão de Valores Mobiliários (Brazilian Securities and Exchange Comission) |
D | · | DJSI – Dow Jones Sustainability Index |
DJSI – Dow Jones Sustainability Index F FATF – Financial Action Task Force | ·• | FATF – Financial Action Task Force |
| · | FEBRABAN –Federação Brasileira de Bancos (Brazilian Federation of Banks) |
| ·• | Fed – U.S. Federal Reserve System |
| ·• | FGC –Fundo Garantidor de Crédito (Credit Insurance Fund) |
I IASB – International Accounting Standards Board | ·• | IASB – International Accounting Standards Board |
| · | IBEF –Instituto Brasileiro de Executivos de Finanças (Brazilian Institute of FinancialFinance Executives) |
| ·• | IBRACON –Instituto de Auditores Independentes do Brasil (Institute od Independent Auditors of Brazil) |
| ·• | IBRI –Instituto Brasileiro de Relações com Investidores (Brazilian Investor Relations Institute) |
| ·• | ICAAP – Internal Capital Adequacy Assessment Process |
| ·• | IFRS – International Financial Reporting Standards |
| ·• | IOF –Imposto Sobre Operações Financeiras (Tax on Financial Transactions) |
| ·• | IRPJ –Imposto de Renda da Pessoa Jurídica (Corporate Income Tax) |
| ·• | IRS – U.S. Internal Revenue Service |
| ·• | ISE –Índice de Sustentabilidade Empresarial (Corporate Sustainability Index) |
| ·• | ISSQN –Imposto sobre Serviços de Qualquer Natureza (Service Tax) |
| ·• | Itaú BBA Colombia – Itaú BBA Colombia S.A. Corporación Financiera |
| ·• | Itau BBA International – Itau BBA International plc |
| ·• | Itaucard – Banco Itaucard S.A. |
| ·• | Itaú Holding Financeira – Itaú Holding Financeira S.A. |
| ·• | Itaú Unibanco Group – Itaú Unibanco Holding S.A. and all its subsidiaries and affiliates |
| ·• | Itaúsa – Itaú Investimentos S.A. |
| ·• | IUPAR – Itaú Unibanco Participações S.A. |
L | · | LCR – Liquidity Coverage Ratio |
LCR – Liquidity Coverage Ratio N | · | NSFR – Net Stable Funding Ratio |
| · | NYSE – New York Stock Exchange |
NSFR – Net Stable Funding Ratio NYSE – New York Stock Exchange P | ·• | PEP – Politically Exposed Person |
| ·• | PFIC – Passive Foreign Investment Company |
| ·• | PIS –Programa de Integração Social (Social Integration Program) |
R | ·• | RAET –Regime Especial de Administração Temporária (Temporary Special Administration Regime) |
| ·• | RMCCI –Regulamento de Mercado de Câmbio e Capitais Internacionais (Regulation of Exchange and Capital Markets) |
S | ·• | SEC – U.S. Securities and Exchange Commission |
| ·• | SELIC –Sistema Especial de Liquidação e de Custódia (Special Clearing and Settlement System) |
| ·• | SISBACEN –Sistema do Banco Central do Brasil (the Brazilian Central Bank System): a database that collects information provided by financial institutions to the Central Bank |
| ·• | SOX – The Sarbanes-Oxley Act of 2002 |
| ·• | STF –Superior Tribunal Federal (Brazilian Federal Supreme Court) |
| ·• | STJ –Superior Tribunal de Justiça (Brazilian Superior Court of Justice) |
| ·• | SUSEP –Superintendência de Seguros Privados (Superintendency of Private Insurance) |
T | ·• | TR –Taxa Referencial (Brazilian Reference Interest Rate)benchmark interest rate) |
U | · | Unibanco – União de Bancos Brasileiros S.A. |
Unibanco – União de Bancos Brasileiros S.A. V VaR – Value at Risk List of Foreign Subsidiaries (as (as of December 31, 2015)2016)
| Company | | Country | | Banco Itaú Argentina S.A. | | Argentina | | FC Recovery S.A.U. | | Argentina | | Itaú Asset Management S.A. Sociedad Gerente de FondosComunes de Inversión | | Argentina | Itaú Valores S.A. | | Argentina | | Itrust Servicios Inmobiliarios S.A.C.I. | | Argentina | | Itaú Bahamas Directors Ltd | | Bahamas | | Itaú Bahamas Nominees Ltd | | Bahamas | | Itaú Bank & Trust Bahamas Ltd | | Bahamas | | Itaú Unibanco S.A. Nassau Branch | | Bahamas | | Karen International Limited | | Bahamas | Banco Itaú Chile S.A. | | Chile | Itaú BBA Corredor de Bolsa Limitada | | Chile | Itaú Chile Administradora General de Fondos S.A. | | Chile | Itaú Chile Compañia de Seguros de Vida S.A. | | Chile | Itaú Chile Corredora de Seguros Limitada | | Chile | Itaú Chile Inversiones, Servicios y Administracion S.A. | | Chile | MCC Asesorías Ltda. | | Chile | MCC S.A. Corredores de Bolsa | | Chile | Recuperadora de Creditos Ltda | | Chile | Itaú Singapore Securities Pte. Ltd | | Singapore | Itau BBA Colombia S.A. Corporación Financiera | | Colombia | Itaú Middle East Limited | | United Arab Emirates | Banco Itau International | | U.S.A. | Itaú BBA USA Securities, Inc. | | U.S.A. | Itaú Chile Holdings, Inc. | | U.S.A. | Itau International Investiment Llc | | U.S.A. | Itaú International Securities Inc | | U.S.A. | Itaú Unibanco S.A. New York Branch | | U.S.A. | Itau USA Asset Management Inc. | | U.S.A. | Itaú USA Inc. | | U.S.A. | Jasper International Investiment Llc | | U.S.A. | Itaú Asia Securities Ltd | | Hong Kong | | Bicsa Holdings Ltd | | Cayman Islands | | Bie Cayman, Ltd. | | Cayman Islands | Garnet Corporation | | Cayman Islands |
Company | | Country | | Itaú Bank & Trust Cayman Ltd. | | Cayman Islands | | Itau Bank, Ltd. | | Cayman Islands | | Itaú BBA International (Cayman) Ltd | | Cayman Islands | | Itau Cayman Directors Ltd. | | Cayman Islands | | Itau Cayman Nominees Ltd. | | Cayman Islands | | Itau Global Asset Management | | Cayman Islands | | Itaú Unibanco Holding Cayman Branch | | Cayman Islands | | Itaú Unibanco S.A. Cayman Branch | | Cayman Islands | ItbITB Holding Ltd | | Cayman Islands | | MCC Securities Inc. | | Cayman Islands | | Topaz Holding Ltd. | | Cayman Islands | | Uni-Investiment International Corp. | | Cayman Islands | Itaú BBA International Plc.CGB II SpA | | EnglandChile | | Corpbanca Administradora General de Fondos | | Chile | | Corpbanca Corredora de Seguros S.A. | | Chile | | Corpbanca Corredores de Bolsa S.A. | | Chile | | Corplegal S.A. | | Chile | | Itaú Asesorías Financieras S.A. | | Chile | Itaú BBA Uk Securities Ltd.Corredor de Bolsa Limitada | | EnglandChile | Itaú UK Asset ManagementChile Administradora General de Fondos S.A. | | Chile | | Itaú Chile Compañia de Seguros de Vida S.A. | | Chile | | Itaú Chile Corredora de Seguros Limitada | | Chile | | Itaú Chile Inversiones, Servicios y Administracion S.A. | | Chile | | Itaú Corpbanca S.A. | | Chile | | MCC Asesorías Ltda. | | Chile | | MCC S.A. Corredores de Bolsa | | Chile | | Recaudaciones y Cobranzas S.A. | | Chile | | Recuperadora de Creditos Ltda | | Chile | | SMU Corp S.A. | | Chile | | Banco Corpbanca Colombia | | Colombia | | Corpbanca Investment Trust | | Colombia | | Helm Comisionista | | Colombia | | Helm Corredor de Seguros | | Colombia |
| Helm Fiduciaria S.A. | | Colombia | | Itau BBA Colombia S.A. Corporación Financiera | | Colombia | | Itaú Asia Securities Ltd | | EnglandHong Kong | | Itaú Japan Asset Management Limited | | Japan | | Itaú Unibanco S.A. Tokyo Branch | | Japan | | Itaú Europa Luxembourg S.A. | | Luxembourg | | Itaú BBA México, S.A. de C.V. | | Mexico | | Proserv – Promociones y Servicios S.A. de C.V. | | Mexico | Itaú BBA MéxicoCIFI* | | Panamá | | Helm Bank | | Panamá | Helm Casa de Bolsa, S.A. de C.V.Valores | | MexicoPanamá | | Albarus S.A. | | Paraguay | | Bancard Sociedad Anonima | | Paraguay | | Banco del Paraná S.A. | | Paraguay | | Banco Itaú Paraguay S.A. | | Paraguay | | Afinco Americas Madeira, Sgps, Soc. Unipessoal Ltda | | Portugal | | IPI – Itaúsa Portugal Investimentos, SGPS Ltda. | | Portugal | | Itaúsa Europa – Investimentos, SGPS, Ltda. | | Portugal | Itaúsa Portugal – Soc.gestora De Part. Socias, S.A. | | Portugal | | Banco Itau (Suisse) S.A. | | Swiss | | Banco Itau International | | U.S.A. | | Corpbanca New York Branch | | U.S.A. | | Corpbanca Securities Inc. | | U.S.A. | | Itaú BBA USA Securities, Inc. | | U.S.A. | | Itau International Investiment Llc | | U.S.A. | | Itaú International Securities Inc | | U.S.A. | | Itaú Unibanco S.A. New York Branch | | U.S.A. | | Itau USA Asset Management Inc. | | U.S.A. | | Jasper International Investiment Llc | | U.S.A. | | Itaú BBA International Plc. | | UK | | Itaú UK Asset Management Ltd | | UK | | Itaú Middle East Limited | | United Arab Emirates | | Aco Ltda | | Uruguay | | Banco Itau Uruguay S.A. | | Uruguay | | C.U.M.P.S.A.* | | Uruguay | | Mundostar S.A. | | Uruguay | | Nevada Woods S.A. | | Uruguay | | Oca Casa Financiera S.A. | | Uruguay | | Oca S.A. | | Uruguay | | Rias Redbanc* | | Uruguay | | Unión Capital AFAP S.A. | | Uruguay |
* Minority shareholder.  
ITEM 19. EXHIBITS | Number | | Description | | | | | 1 | | Bylaws of Itaú Unibanco Holding S.A. (unofficial English translation)(1). | | 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(2). | 4.(a)12.(b)(i) | | Share PurchaseThe total amount of long-term debt securities of Itaú Unibanco Holding S.A. and Sale Agreement, dated November 4, 2002, among Fernão Carlos Botelho Bracher, Antonio Beltran Martinezour subsidiaries under any one instrument does not exceed 10.0% of our total assets on a consolidated basis. We agree to furnish copies of instruments defining the rights of certain holders of long-term debt to the Securities and Banco Itaú S.A.(3).Exchange Commission upon request. | 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)(4)(3). | 4.(c)(v) | | Plan for GratingGranting Stock Options(5)(4) | | 6 | | Statement explaining calculation of earnings per share(5). | | 7 | | Statement explaining calculation of dividend and interest on capital per share(6). | | 8.1 | | List of subsidiaries(7). | | 11.1 | | Code of Ethics (unofficial English translation)(8). | | 12.1 | | Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(9). | | 12.2 | | Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(9). | | 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(9). | | 15 | | Transaction Agreement, dated as of January 29, 2014, and amended on June 2, 2015 and on January 20, 2017, between Banco Itaú Chile and CorpBanca(10). |
| (1) | Incorporated herein by reference to our Report on Form 6-K filed with the Commission on May 1, 2014September 23, 2016 (Commission File No. 001-15276). |
| (2) | Incorporated herein by reference to the Registration Statement on Form F-6 filed with the Commission on October 16, 2013 (Commission File No. 333-191758). |
| (3) | Incorporated herein by reference to our Annual Report on Form 20-F filed with the Commission on June 30, 2003 (Commission File No. 001-15276). |
| (4) | Incorporated herein by reference to our Annual Report on Form 20-F/A filed with the Commission on May 17, 2010 (Commission File No. 001-15276). |
| (5)(4) | Incorporated by reference herein to our Report on Form 6-K filed with the Commission on May 12, 2015 (Commission File No. File No.: 001-15276). |
| (6)(5) | Incorporated by reference herein to “Note 2.4 – Summary of main accounting policies, item x)u) Earnings per share” to ConsolidatedComplete Financial Statements included in this Annual Report on Form 20-F. |
| (6) | Incorporated by reference herein to “Note 21 – Stockholders’ equity, item b) Dividends” to Complete Financial Statements included in this Annual Report on Form 20-F. |
| (7) | Incorporated by reference herein to “Note 2.4 – Summary of main accounting policies, item a) Consolidation, 1.I. Subsidiaries” to ConsolidatedComplete Financial Statements included in this Annual Report on Form 20-F. |
| (8) | Incorporated herein by reference herein to our Annual Report on Form 20-F6-K filed with the Commission on AprilAugust 29, 20132016 (Commission File No.: 001-15276). |
| (10) | Incorporated by reference here in to our Report on Form SC 13D filed with the Commission on July 07, 2014 and its amendments filed with the Commission on June 26, 2015 and on January 27, 2017 (Commission File No. 001-15276). |
Pursuant to Instruction 2(b)(i) of Instructions as to Exhibits to Form 20-F, copies of instruments defining the rights of certain holders of long-term debt are not filed. We agree to furnish copies of such instruments to the Securities and Exchange Commission upon request.
SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf. | | ITAÚ UNIBANCO HOLDING S.A. | | | |
| | By: | /s/ Roberto Egydio Setubal | | | | Name: Roberto Egydio Setubal | | | | Title: Chief Executive Officer | | | |
| | By: | /s/ Eduardo Mazzilli de VassimonCaio Ibrahim David | | | | Name: Eduardo Mazzilli de VassimonName: Caio Ibrahim David | | | | Title:Title: Chief Financial Officer | | | | Dated: April 29, 2016 | | |
Dated: April 20, 2017 |
