Statements of Income - 1999 1st 2nd 3rd 4th Year R$ Million Net Interest Margin 1,213 1,202 1,094 1,120 4,629 Provision for Loan Losses (299) (235) (146) (134) (814) Banking Service Fees 697 740 744 978 3,159 Administrative Expenses (1,050) (1,172) (1,161) (1,228) (4,611) Others (335) (202) (94) (214) (845) Extraordinary Result 535 - (77) (107) 351 Net Income 761 333 360 415 1,869
R$ 154 million R$ 535 million Extraordinary Result - 1999 Total for 1999: R$ 351 million Investment in acquisitions since 95: US$ 2 billion Full amortization of premiums (Itaú Consolidated): US$ 811 million Full amortization of premiums on the purchase of shares of BPI and IBT. Due to permanent assets abroad (US$ 1,483 million).
Consistent Evolution R$ Million
Risk Management Policy Credit Market Compliance • Evolution in the Techniques for the control of market risks (interest rates, foreign currency, shares) • Implementation of a new and detailed systematic of internal controls and compliance • Risk Quality : 65% Good, Very Good and Excellent • Default Ratio : Lowest in 5 Years • For the 10th consecutive year : 100% provisioning of the credits fallen due and unpaid over 60 days. Significant Results To Limit and Reduce the Operational Risks in the Whole Structure Low Level of Risk Quality of credit concession + Stable Scenario Expansion of the Credit Portfolio with Liquidity
Credit Operations +25% Ratio Default (%) Credit Operations R$ Billion Provisions Outstanding(*) R$ Billion Provisions Expenses R$ Billion -20% 1.3 1.3 1.1 1.1 1.0 0.3 (*) Overdue CreditsandGeneral Provision
Million Credit Cards 2.2 Insurance Contracts 1.1 Private Pension Plans 0.3 Individuals 6.5 million active customers 3.7 million with pre-approved credit, and 65.5% of these indeed using it. The pulverization of credit, combined with the approval models, has insured a good liquidity to the portfolios. • Outstanding Personal / Overdraft / Vehicles Loans: R$ 2.5 billion 110.2% increase over 1998; • 70% of the transactions performed by our customers are through self-service.
Small and Middle Market Business Itaú has retaken with priority the growth of the credit offer for this segment: Outstanding working capital loan portfolio: R$ 1.1 billion in Dec.99 Growth of 48% in the 2nd semester of 1999 200 thousand client companies In 2000 the continued growth of the portfolio is expected, although probably at a lower pace.
Structuring of Solutions Foreign currency Project finance Investment banking Corporate Incorporation of the operational structures of BFB and IBT Reinforcement in products and team management area Agility of the the new business board • Positive Perspectives due to: • Privatization • Economic Growth Business and Operations Expansion Record Result
Internet (Home Banking) Huge Opportunity: Increase of Clients, Offer other Services and Reduce Costs 1 million of clients in 99 (+34% over 98) 10.9 million transactions in Dec. 99 (+39% over 98) Strong Development to offer all the services: Home Broker, Credit Cards, Bankline for Middle Market, etc. Evaluation of partnerships to offer other financial services: B2B, B2C, Portals, E-Commerce, etc. P F S ersonal inancial ervices Adoption of Web interface between branches and back office.
The Consolidation of the Brazilian Financial Sector Hasn’t Finished Yet 1. The consolidation should become faster. 2. Besides Banespa and Banestado, 10 more banks should be privatized. 3. Banco do Brasil and Caixa Econômica Federal, together, represent 35% of assets, 45% of deposits and 50% of Loans of the whole Financial System. 4. After Banco do Brasil and Caixa Econômica Federal, approximately 90% of the whole banking sector should be concentrated with a few institutions. 5. There will be many opportunities to acquire state and small banks.
Preferred Shares - Appreciation Evolution of US$ 100 Invested in December of 1994 US$ Annual Appreciation . 10 years (average) 40.83% . 5 years (average) 31.18% . 1999 88.66% Create Value to the Shareholders US$ 9,969 million The Largest Market Capitalization among the Latin American Banks Stock Price 12.31.1999 . P/E 9.43 . P/BV 315.04% . Cash Yield 1.94% ITAU4 : US$ 86.6 per thousand shares Russian Crisis Real Devaluation Mexican Crisis Asian Crisis
Highlights 1999 Consolidated Balance Sheet Amounts in R$ Million Statements of Income Total Assets 51,911 Loan and Leasing Portfolio + ACC 16,890 Net Income Recurring 1,518 Sureties, Endorsements and Guarantees 2,706 Net Income Extraordinary 351 Net Income 1,869 Securities + Interbank Accounts 18,070 Financial Margin 4,629 Stockholders’ Equity 5,907 Net Income from Financial Operations 3,814 Performance Ratios (%) Banking Service Fees 3,159 ROE Recurring 25.7% Relevant Data ROE Extraordinary 5.9% Assets under Management 31,994 ROE 31.6% Employees 39,011 ROA 3.6% Active Customers (million) 6.9 BIS Ratio 21.0% Branches 1,765 Eficiency Ratio 58.0% CSBs 780 ATMs 11,715