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Itaú Unibanco Holding S.A. 1 November 15th 2009 FELABAN Itaú Unibanco Holding S.A. CEO Round Table.

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Presentation on theme: "Itaú Unibanco Holding S.A. 1 November 15th 2009 FELABAN Itaú Unibanco Holding S.A. CEO Round Table."— Presentation transcript:

1 Itaú Unibanco Holding S.A. 1 November 15th 2009 FELABAN Itaú Unibanco Holding S.A. CEO Round Table

2 Itaú Unibanco Holding S.A. 2 Perspectives for Latin American Economies Banking Markets in Latin America Itaú Unibanco's Merger Case Itaú Unibanco’s Highlights Agenda

3 Itaú Unibanco Holding S.A. 3 Correlation (LatAm x World) 10% 89% 1980 to Source: IMF Historical GDP Growth (%yoy) CAGR LatAM 2,5%3,8% WorldAdvanced EconomiesLatin America In recent years, LatAm has been more integrated to the global economy and has shown higher GDP growth rate than world´s average 2nd oil crisis Brazilian default Subprime crisis Argentinean default Mexican crisis Asian crisis LatAm’s volatility mostly related to debt crises Higher integration to global economy and elevated international reserves *GDP Growth for 2009/2010 is an IMF estimative

4 Itaú Unibanco Holding S.A. 4 World Growth Forecast - Selected Countries GDP (with seasonal adjustment; 1Q/99=100)

5 Itaú Unibanco Holding S.A. 5 Latin American countries have shown important regulatory advances during the last 20 years… Latin American Capital Markets have presented good levels of transparency and disclosure...providing more confidence in the local banking system Supervisory Agency Creation Establishment of Insider Trading Laws Custody Arrangements Trading SystemsClearing and Settlement Processes Percentage of LatAm Countries Implementing Reforms before 1990by 1995by 2002

6 Itaú Unibanco Holding S.A. 6 Perspectives for Latin American Economies Banking Markets in Latin America Itaú Unibanco's Merger Case Itaú Unibanco’s Highlights Agenda

7 Itaú Unibanco Holding S.A. 7 Latin American Banks were well poised to navigate the storm … and with low leverage ratios Mortgage penetration % of GDP, 2006 The system is well capitalized … … and enjoys high returns … with low exposure to low quality mortgage securities ROE 1 ROA Source: Bloomberg - in red, selected Latin American banks -100% -80% -60% -40% -20% 0% Total Assets / Common Equity Loss in Market Value in last 12 months Basel index: Regulatory capital to risk-weighted assets, %, As of 1T 2008, except Brazil (Nov 2008), UK (Dec 2007) and Germany (Dec 2006) Source:IMF – Financial Stability Report Oct. 2008; Bacen; McKinsey Global Banking Pools MEX BRA RUS COL USA UK GER MEX BRA RUS COL USA UK GER BRA COL USA INDCHI SPA

8 Itaú Unibanco Holding S.A. 8 Structural trend towards increasing household income in the last 10 years, almost 90 million people had overcome poverty line in Latin America, which means a greater potential market Increase access to banking services in Latin America on average only 36% of the families have access to banking services main barrier: costs of banking services Increase domestic credit to private sector (% of GDP) LatAm average = 38,4% vs Advanced Economies average = 175% Focus on loans with “real” collaterals linked to the nature of each productive chain Latin America presents some structural opportunities for banking

9 Itaú Unibanco Holding S.A. 9 The positive results experienced in the past few years offer great opportunities: More than 90 million people had overcome poverty line in Latin America Number of people that had overcome the poverty line in Latin America from 1999 to 2007 (million) Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Uruguay Venezuela Total Opportunities for Banking in Latin America Source: Wold Bank - Finance for All? Policies and Pitfalls in Expanding Access

10 Itaú Unibanco Holding S.A. 10 Opportunities for Banking in Latin America Source: Wold Bank - Finance for All? Policies and Pitfalls in Expanding Access Access to banking services - families with a bank account % of families AveragePotential Chile60 Panama46 Brazil43 Uruguay42 Colombia41 Ecuador35 Bolívia30 36 Paraguay30 Costa Rica29 Argentina28 Venezuela28 Peru26 Mexico25 Germany97 France96 USA91 Finland99 60 Number Average Potential Brazil14,59 Panama12,87 Argentina10,01 Costa Rica9,59 Chile9,39 Ecuador9,30 Colombia8,74 8,22 Mexico7,63 Uruguay6,39 Venezuela4,41 Peru4,17 Bolivia1,53 Germany49,41 France43,23 USA30,86 35,64 Finland19,06 Number of Branches per in habitants 27,42

11 Itaú Unibanco Holding S.A. 11 Domestic credit to private sector (% of GDP) Source: Domestic credit to private sector (% of GDP). World Development Indicators 2008, World Bank, except Brasil* - source: Brazilian Central Bank aug/08. Despite the high growth in recent years, LatAm countries still have a low credit GDP ratio. % LatAm Countries Opportunities for Banking in Latin America USAIrelandJapanNetherlandsUKSpain South Africa ChinaAustralia South Korea FranceBelgiumChileBrazil*ColombiaTurkeyRussiaIndonesiaMexicoPeru

12 Itaú Unibanco Holding S.A. 12 Banking Markets Market Consolidation in Latin America Top 5 Banks - % of Financial System Assets (jun/09) Source: Total Assets: Monthly Financial Report – Felaban (jun/09); Top 5 Banks: Américaeconomía Intelligence

13 Itaú Unibanco Holding S.A. 13 Perspectives for Latin American Economies Banking Markets in Latin America Itaú Unibanco's Merger Case Itaú Unibanco’s Highlights Agenda

14 Itaú Unibanco Holding S.A. 14 Itaú Unibanco's Merger Case The most important issue on the integration of two big banks is not operational, it is cultural. A good cultural fit is crucial for success,not only among the business leaders of the two companies, but also among employees.

15 Itaú Unibanco Holding S.A. 15 Employees: Optimism and commitment to the merger Source: OHI 2009 Survey, (n = 3.854), interview, focus groups; team’s analysis Employees believe that the merger will be positive and are committed to the process % which agree entirely/ agree 87% The merger will create opportunities for my professional development 92% 86% 76% Employees are committed to implement the merger 88% Employees are receptive in accepting the best ideas of the two banks 89% 92% 93% 84% People are receptive in building a new culture 94% Employees feel they are part of the same team

16 Itaú Unibanco Holding S.A. 16 Employees: A better bank for all Will the merger result in a better bank for all? Employees believe that the integration will be positive for them and for the bank... % which agrees entirely / agrees Will the merger create better opportunities for my development?... and show their confidence in this future merger % which agrees entirely / agrees Do I believe that management will only cut staff as a last resort? Do I intend to work here for a long time to come? Source: OHI 2009 Survey, (n = 4,985), GPTW survey, interviews, mini-sessions, focus groups team’s analysis

17 Itaú Unibanco Holding S.A. 17 Benefits Compensation Structure Evaluation We have reviewed all HR’s macro processes ▪ Minimize signs of hierarchy ▪ Strengthen meritocracy ▪ Simplify processes ▪ Provide an environment for performance ▪ Focus on development of people Principles 2 ▪ Evaluation of the officers for the 2008 cycle and for 2009, ensuring homogeneous treatment 3 ▪ Adjustments made to the organizational structure, adapting the reality the of the two banks and making the structure a more responsive one 4 ▪ Definition of compensation models focused on meritocracy, performance and transparency of the process 5 ▪ Equalization of the benefits, minimizing exaggerated signs of hierarchy and unifying policy ▪ Process of establishing bold goals for 2009 aligned to the entire organization Goals 1 Concepts

18 Itaú Unibanco Holding S.A. 18 Our Culture has focus on… Reward linked to performance, not to hierarchy Ethics and transparency People with attention to the development of the leaderships Performance (results and growth) Meritocracy

19 Itaú Unibanco Holding S.A. 19 Highlights: Merger of Itaú Unibanco Focus on increased penetration in most profitable products and channels Enhancing the importance and integration of the teams Risk Control and Governance Cost Reduction / Efficiencies Simplicity: rationalization of processes and products Since the beginning of the integration process, the bank has always been aware of the importance of organizational environment and the talent retention issues.

20 Itaú Unibanco Holding S.A. 20 Definition of organizational structure up to middle management ; Integration of Corporate, Investment Bank, Broker, Asset Management, Vehicles, Private Bank and Treasury segments; New contracts of Insurance, Pension Plans, Vehicle Financing and Mortgage – in an unique Itaú Unibanco platform; ATMs integration after only 3 months; Employees’ external s Convergence of communication and visual identity for both banks customers; Physical change to the final site location (average of 500 employees per week); Pilot project of branches integration – started in August 2009; Integration – Concluded Steps Expectation of 90% integrated by Dec/10

21 Itaú Unibanco Holding S.A. 21 Perspectives for Latin American Economies Banking Markets in Latin America Itaú Unibanco's Merger Case Itaú Unibanco’s Highlights Agenda

22 Itaú Unibanco Holding S.A. 22 Highlights Total Assets Individual Loans 344,4 55,3 3 rd Q/09 Businesses Loans Directed Loans Total Deposits Asset Under Management Credit Card Revenue (accumulated) Stockholders Equity Market Share* Ranking Brazil Net Income (accumulated) ROE – annualized (%) Efficiency Ratio (%) Solvency Ratio (BIS Ratio %) Values in US$ Billion 82,7 7,2 157,2 174,5 27,5 3,9 18,9% 41,1% 16,3% 33,4 27,0% 21,4% 36,3% 335,4 54,3 2 nd Q/09 82,1 6,6 155,1 171,3 26,6 2,6 22,3% 42,7% 16,5% 18,2 23,2% *Refers to the 2nd Q/09 because some banks had not presented their 3rdQ/09 balance sheet and income statement at the moment this report was finished. BRL/USD: 1,7781 (Sep/09) 22,1% # 1

23 Itaú Unibanco Holding S.A. 23 Employees (individuals) Branches* (units) 102,754 4,911 3 rd Q/09 * Including CBSs (Customer Site Branches) ** June 2009 *** August 2009 ATMs (units) 30,374 Daily served clients and non-clients (million) 2.5** Credit cards: daily approved transactions (million) 2.9*** Highlights

24 Itaú Unibanco Holding S.A. 24 Itaú Unibanco´s Presence in Latin America Uruguay (*) Argentina Chile Paraguay 14,1% 3º 1,2% 16º 3,1% 9º 13,7% 2º jun/09 mar/09 jun/09 Branches: 206 Employees: Clients: 1,019 million Assets: US$ 9,7 billions Net Income: US$ 189 millions Market Share Assets Ranking June/09: ARP$/R$ 1.95 | CLP$/R$ 272 | PYG$/R$ | UYP$/R$ | R$/US$ (*) Bank Pro Forma Assets as of June 30,2009 and Net Income as of 1H09 multiplied by 2.

25 Itaú Unibanco Holding S.A. 25 Evolution of Activities Abroad - Latin America Pro Forma Total Assets (US$ million) Total Revenue (US$ million) * June/2009: ARP$/R$ 1.95 | CLP$/R$ 272 | PYG$/R$ | UYP$/R$ | R$/US$ * (*) For comparison purposes, the value of 1H09 was multiplied by 2. 8,515 6,592 5,663 3,619 9, * Stockholders’ Equity (US$ million) Net Income (US$ million) * * All historical values converted into US$ of June (1.0 US$ - R$ )

26 Itaú Unibanco Holding S.A. 26 Ranking - Market Capitalization Highlights Top 20 Banks – Market Cap US$ Million (*) Market Capitalization based on the total number of Itau Unibanco’s shares multiplied by the value of ITUB4 Source: Bloomberg Ranking Company 11/09/2009 rk 11/02/2009 rk 12/31/2008 % Week % Year 1IND & COMM BK -A ,5%52,5% 2CHINA CONST BA-H ,0%63,9% 3HSBC HLDGS PLC ,5%72,5% 4JPMORGAN CHASE ,2%48,2% 5BANK OF CHINA-H ,0%58,0% 6BANCO SANTANDER ,2%86,0% 7BANK OF AMERICA ,8%93,1% 8WELLS FARGO & CO ,9%18,6% 9ITAU UNIBANCO ,4%113,1% 10BNP PARIBAS ,4%161,9% 11CITIGROUP INC ,0%162,0% 12GOLDMAN SACHS GP* ,0%132,6% 13COMMONW BK AUSTR ,7%162,3% 14ROYAL BANK OF CA ,2%82,7% 15WESTPAC BANKING ,1%108,7% 16BBVA ,2%52,5% 17CREDIT SUISS-REG ,6%125,3% 18BARCLAYS PLC ,1%249,4% 19BRADESCO ,5%116,7% 20MITSUBISHI UFJ F ,6%-9,8%


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