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Banco Itaú Holding Financeira S.A. Alfredo Setubal Investor Relations Director October 4-6, 2004 Presentation to: 9 th Annual JPMorgan Asia Pacific / GEM.

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Presentation on theme: "Banco Itaú Holding Financeira S.A. Alfredo Setubal Investor Relations Director October 4-6, 2004 Presentation to: 9 th Annual JPMorgan Asia Pacific / GEM."— Presentation transcript:

1 Banco Itaú Holding Financeira S.A. Alfredo Setubal Investor Relations Director October 4-6, 2004 Presentation to: 9 th Annual JPMorgan Asia Pacific / GEM Conference

2 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 1 Results – 2 nd Q./04 2. Growth of Credit Portfolio in the Quarter: Corporate 8.9%, small and medium sized companies 12.6% and individuals 8.1%; 5. Technical Provisions of Insurance, Capitalization and Pension Plans: R$ 7.0 billion – Growth of 326% over past 24 months against 153% for market as a whole; 8. Preferred Shares Buyback: total of 929,740 thousand, average price R$ per thousand shares, representing 1.7% of total preferred shares. 6. Efficiency Ratio below 50% for the 7 th quarter in a row: 47.3% in the quarter (Strong Cost Control); 7. Solvency Ratio above minimum required: 19.5% at 06/30/04; 3. Net Interest Margin Maintained at 12.7% in 2 nd Q./04, same as 1 st Q./04; 4. Conservative Accounting Practices:  Additional provision of R$ 600 million for securities, with an increase of R$ 55 million in the quarter;  Excess provision for loan losses: R$ 1,000 million; 1. Results: Net income of R$ 949 million, 8.3% above previous quarter; ROE 33.1%; net income of R$ 8.38 per thousand shares;

3 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 2 Strategy  Focus on credit  Itaú is ready to grow  Focus on specific segments:  New Initiatives in Consumer Credit  Small and Medium sized companies  Credit Cards  Vehicle Financing  Non banking segments: pension plans and insurance businesses  Conservative Practices  Strong cost control  Shareholder Value

4 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 3 Strategy  Focus on credit

5 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 4 Credit Operations R$ million CAGR: 21.2% CAGR: 22.2% (*) On June 30, 2004.

6 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 5 R$ 44.6 R$ 42.7 R$ 44.6R$ 44.8 R$ 48.7 (US$ 4.7) (US$ 4.3) (US$ 4.2) (US$ 4.1) (US$ 4.4) (*) Endorsements and Sureties included. Banco Itaú Holding Financeira S.A. Credit Portfolio by Currency (*) R$ billion

7 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 6 Corporate Small and Medium Sized Companies Individuals Subtotal Mortgages Total Debentures** 22,357 7,074 *12,563 19,637 2,067 *44,061 1, % 12.6% 8.0% 9.8% -2.0% 8.8% 2.7% 23,597 9,226 13,934 23,159 1,957 48,713 1,092 21,660 8,195 12,904 21,099 1,997 44,756 1, % 30.4% 10.9% 17.9% -5.3% 10.6% 6.4% Var Jun 30, 04 X Mar 31, 04 Jun 30, 04Dec 31, 03Mar 31, 04 Var Jun 30, 04 X Dec 31, 03 (1) Endorsements and Sureties included. (*) The amounts outstanding at Dec/2003 were adjusted to exclude loans granted on 12/18/03 to Rio de Janeiro state civil servants and totally settled on 01/05/04. (**) The portfolio of Debentures are 68.4% classsified as AA and A level. Banco Itaú Holding Financeira S.A. Credit Operations 1 R$ million

8 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 7 Provision for Loan Losses Total ProvisionExcess ProvisionMinimum Provision Banco Itaú Holding Financeira S.A. R$ million

9 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 8 (2) Provision for Loan and Lease Losses/ Total Non-performing Loans Non-performing Loans and Coverage Ratios (%) Banco Itaú Holding Financeira S.A. (1) Loans overdue for more than 60 days/ Credit Portfolio

10 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A %5.9%7.9%7.7%6.4% Evolution of Market Share (%) 6.9% Market Share of Credit Operations Evolution of the portfolio (Base 100 = Dec/98) 7.1% Source: Brazilian Central Bank Itaú Market

11 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 10 Strategy  Focus on credit  Itaú is ready to grow

12 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 11 Basel Ratio (%) - Economic Financial Consolidated 14.4% 16.9% 18.4% 19.8%19.5%

13 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 12 Strategy  Focus on credit  Itaú is ready to grow  Focus on specific segments:  New Initiatives in Consumer Credit

14 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 13 Consumer Credit (*) Evolution of the Portfolio R$ Million (**) – In December 2003 the figures were adjusted excluding the loan granted on 12/18/03 to the Rio de Janeiro State employees amounting 520 million, which has been totally paid on 1/5/2004. (*) Includes personal loans and overdraft.

15 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 14 Consumer Credit

16 9 th Annual JPMorgan Asia Pacific / GEM Conference 15 Picture of a Point of Sale Three different points of sale models: Independent, Annex and Corner.

17 9 th Annual JPMorgan Asia Pacific / GEM Conference 16  New Brand Name (related to Itaú)  Focus on low income consumers (not Itaú current account holders)  Own platform  Operation started in June with three stores in São Paulo  Revenue diversification in the specific financing segment  Credit using magnetic card and electronic banking facilities  Operating agility Highlights

18 Partnership Itaú-CBD 9 th Annual JPMorgan Asia Pacific / GEM Conference COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO Banco Itaú Holding Financeira S.A. 32

19 Partnership Itaú-CBD 9 th Annual JPMorgan Asia Pacific / GEM Conference 18 “New Company ” 50% Main Purpose Initial Capital Base: R$ 150 million. The “ New Company” (Financial Institution) will be responsible for structuring, improving, expanding and selling products, financial services and the like, exclusively to CBD customers.

20 Partnership Itaú-CBD 9 th Annual JPMorgan Asia Pacific / GEM Conference 19 Estimated Expansion “New Company” Consumer Credit Contracts Own Credit Cards (Private Label) Credit Cards 3 Personal Loan Contracts 580 thousand 3.3 million 480 thousand - Quantities CAGR 2 Year 10 Quantities Current 1 3,519 thousand 9.3 million 2,646 thousand 1,600 thousand 22.2% 12.2% 20.9% (1)As of March 31, 2004 (2)Compound Annual Growth Rate (3)Widely accepted credit card brands Internal Rate of Return = 20% Operation expected to be accretive in the 3 rd year

21 Partnership Itaú-CBD 9 th Annual JPMorgan Asia Pacific / GEM Conference 20 Strategy of the Operation  Expansion of Focus on direct consumer credit  Long term partnership: 20 years, and renewal option  Exclusivity in exploitation of financial products and services to CBD customers  Executive Board made up of market professionals, with broad experience in the area  Operating Management under the responsibility of Itaú  Own structure and personnel  Strong partnership = greater commercial relationship

22 Partnership Itaú-CBD 9 th Annual JPMorgan Asia Pacific / GEM Conference 21  Investment of R$ 455 million, which include goodwill in the amount of R$ 380 million, determined on the basis of forecast future profitability of the New Company  Strengthening of position in the retail financial market  Development of new relationships with the CBD store customers as well as prospecting of new current account customers  Results without any major impact during the first three years of operations. Main implications on Itaú

23 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 22 Strategy  Focus on credit  Itaú is ready to grow  Focus on specific segments:  New Initiatives in Consumer Credit  Small and Medium sized companies

24 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 23 Small and Medium-sized Companies Evolution of the Portfolio R$ Million +12.6% +30.4%

25 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 24 Strategy  Focus on credit  Itaú is ready to grow  Focus on specific segments:  New Initiatives in Consumer Credit  Small and Medium sized companies  Credit Cards

26 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 25 Credit Cards Evolution of the Portfolio R$ Million CAGR = 16.9%

27 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A In thousands Credit Cards In Quantity (*) ,374 4,562 5,579 6,261 Credicard (***) (*) Does not include the 33% share in Credicard (**) On June 30, 2004 (***) Itaú credit cards in Credicard 325 5, % of these accounts are active (billed) 75.8% of these have performed transactions Credit card operations represented 18.5% of net income for the 1 st semester of 2004

28 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 27 % Credit Cards Market Share by Sales (%) (*) On June 30, 2004 Average monthly turnover: R$ 1,010 per account (June 2004)

29 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 28 Strategy  Focus on credit  Itaú is ready to grow  Focus on specific segments:  New Initiatives in Consumer Credit  Small and Medium sized companies  Credit Cards  Vehicle Financing

30 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 29 Vehicles Evolution of Total Portfolio* R$ Million (*) Includes Fináustria and Banco Fiat

31 9 th Annual JPMorgan Asia Pacific / GEM Conference 30 * CDC: Consumer Credit (1) Acquisition of Fináustria CFI (2) Acquisition of Banco Fiat In June 2003, the Fináustria Portfolio was incorporated by Itaú. Source :Banco Itaú estimate based on Central Bank, Abel, Itaú, Fiat and Fináustria. 5.3 Market Share (%) New CDC* and Vehicle Leasing Fináustria and Fiat

32 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 31 Strategy  Focus on credit  Itaú is ready to grow  Focus on specific segments:  New Initiatives in Consumer Credit  Small and Medium sized companies  Credit Cards  Vehicle Financing  Non banking segments: pension plans and insurance businesses

33 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 32 4,804 5,388 6,086 7,689 8,320 Technical Provisions for Pension Plans – growth of 108% from Jun/2003 to Jun/2004 R$ million Technical Provisions of Insurance, Capitalization and Pension Plans 9,267

34 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A %6.5%8.4% Evolution of Market Share (%) 12.3% Market Share - Technical Provisions of Pension Plans Evolution (Base 100 = Dec/00) 13.5% Source: Brazilian Central Bank Itaú Market Jun-04

35 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 34 R$ million (except where indicated) 2nd Q./2004 1st Q./2004 4th Q./2003 3rd Q./2003 2nd Q./2003 1st Q./2003 Insurance, Private Pension and Capitalization Premiums 1,700 1,373 1,622 1,253 1, Change in Technical Reserves, Benefits and Redemptions (1,173) (847) (1,137) (788) (764) (457) Selling Expenses and Other Operating Income (70) (66) (59) (65) (87) (67) Retained Claims(264)(274)(243)(244)(229)(224) OPERATING MARGIN Financial Income Administrative Expenses and Other(148)(162)(202)(154)(138)(143) Income Tax and Social Contribution(67)(62)(56)(71)(51)(64) NET INCOME Combined Ratio94.0%94.8%94.7%97.6%99.3%97.8% Claim Ratio51.1%55.0%52.8%54.6%53.9%56.8% Insurance, Capitalization and Pension Plans

36 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 35 CAGR = 18.3% R$ million Evolution of Net Income of Insurance, Capitalization and Pension Plans (*) Annualized (result of the 1st semester multiplied by 2).

37 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 36 Mutual Fund and Managed Portfolio Volume Growth of 31.6% in the volume of Mutual Funds and Managed Portfolios in relation to June/2003 R$ billion

38 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A %13.4%15.8%17.4% Jun % Evolution of the Market Share (%) 100 Source: ANBID - National Association of Investment Banks Itaú Market Market Share of Managed Portfolio Evolution of Equity (Base 100 = Dec/00)

39 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 38 Strategy  Focus on credit  Itaú is ready to grow  Focus on specific segments:  New Initiatives in Consumer Credit  Small and Medium sized companies  Credit Cards  Vehicle Financing  Non banking segments: pension plans and insurance businesses  Conservative Practices

40 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 39 Excess Provision for Loan Losses Additional Securities Provision Market Value (1) Total Unrealized Results R$ Million (1) Value differs from the notes to the financial statements because it does not include addittional provision for securities. Itaú Holding , ,824 1, , , ,034 2, ,503 2, , ,665 3,265 Jun/04

41 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 40 Total Unrealized Interbank Deposits Securities and Derivatives Additional provision Adjustment – Securities Held to Maturity Credit Operations Investment on BPI Time and Interbank Deposits and Funds from Acceptance and Issuance of Securities Abroad Securitization of Payment Orders Abroad Subordinated Debt and Treasury Shares 2, , (1) Corresponding tax impact not considered. (2) Includes unrealized minority interest in gains on Equity of R$ 276 million in Jun/04, R$ 286 million in Mar/04 and R$ 159 million in Jun/03. Financial Instruments – Market Value Banco Itaú Holding Financeira S.A. 1, (14) Unrealized Income/ (Loss) (1) (2) Stockholders’ Equity R$ million Jun 30, 04Jun 30, 03Mar 31, 04

42 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 41 Evolution of Securities and Credit / Total Assets (%) (*) On June 30, 2004.

43 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 42 Strategy  Focus on credit  Itaú is ready to grow  Focus on specific segments:  New Initiatives in Consumer Credit  Small and Medium sized companies  Credit Cards  Vehicle Financing  Non banking segments: pension plans and insurance businesses  Conservative Practices  Strong cost control

44 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 43 Personnel Expenses Other Administrative Expenses Reorganization Total 725 1, , , ,009 Banco Itaú Holding Financeira S.A. Administrative Expenses 2 nd Q/041 st Q/04 Strong Cost Control 646 1, ,869 2 nd Q/03 Personnel Expenses 36% Other Admin. 60% Reorganization 4% R$ million

45 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 44 Total Expenses (Personnel + Administrative) R$ Million (*) Annualized (result of the 1S04 multiplied by 2).

46 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 45 Efficiency Ratio (%) (*) Annualized

47 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 46 Strategy  Focus on credit  Itaú is ready to grow  Focus on specific segments:  New Initiatives in Consumer Credit  Small and Medium sized companies  Credit Cards  Vehicle Financing  Non banking segments: pension plans and insurance businesses  Conservative Practices  Strong cost control  Shareholder Value

48 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 47 Consistently the Largest Market Capitalization in the Brazilian Banking Sector R$ million Source: Economática(*) – Until September 20, 2004 Banco do Brasil Itaú Bradesco Unibanco Banco Itaú Holding Financeira S.A. CAGR Queterly = 7.46% CAGR Quarterly = 5.49% CAGR Querterly = 6.21% CAGR Quarterly = 5.49%

49 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 48 Source: Published Financial Statements For the sake of comparation, first half net income has been doubled Market Comparison – EPS Basis: 1998 =

50 9 th Annual JPMorgan Asia Pacific / GEM Conference Banco Itaú Holding Financeira S.A. 49 US$ Russian Crisis Real Devaluation Mexican Crisis Crisis in Asia 100 Crisis in Argentina Attack to WTC 10 years 5 years 2004 Itaú (1) 16.69% 20.72% 15.67% Itaú (2) 12.56% 16.36% 11.81% Ibov. 2.38% 7.07% 5.66% Annual Average Appreciation in Dollar Banco Itaú Holding Financeira S.A. (1)With reinvestment of dividends (2) Without reinvestment of dividends Appreciation of the Preferred Shares Evolution of US$ 100 invested on Sep. 30,1994 until Sep. 30, 2004 Brazilian Election

51 Banco Itaú Holding Financeira S.A. Alfredo Setubal Investor Relations Director October 4-6, 2004 Presentation to: 9 th Annual JPMorgan Asia Pacific / GEM Conference


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