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UBS Global Financial Services Conference May 10-12, 2004 Presentation to: UBS Global Financial Services Conference Banco Itaú Holding Financeira S.A. Alfredo.

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Presentation on theme: "UBS Global Financial Services Conference May 10-12, 2004 Presentation to: UBS Global Financial Services Conference Banco Itaú Holding Financeira S.A. Alfredo."— Presentation transcript:

1 UBS Global Financial Services Conference May 10-12, 2004 Presentation to: UBS Global Financial Services Conference Banco Itaú Holding Financeira S.A. Alfredo Setubal Investor Relations Director Silvio de Carvalho Executive Director

2 UBS Global Financial Services Conference 1 Stockholders’ Equity, Net Income and Market Capitalization Banco Itaú Holding Financeira S.A. R$ Million March 2004 Net Income: R$ 876 million Stockholders´ Equity: R$ 12,478 million Market Capitalization: R$ 31,227 million

3 UBS Global Financial Services Conference 2 Points of Sale BFB ATMs Branches+CSBs Banco Itaú Holding Financeira S.A. mar/04

4 UBS Global Financial Services Conference 3 Internet Banking Banco Itaú Holding Financeira S.A. 1 st Quarter 2004 Transactions: 128 million Customers: 3.3 million

5 UBS Global Financial Services Conference 4 BFB Growth in number of Customers With acquisitions Banco Itaú Holding Financeira S.A. In Million

6 UBS Global Financial Services Conference 5 Agenda  Results - Banco Itaú Holding Financeira  Results - Banco Itaú  Results - Banco Itaú BBA  Important Facts - Banco Itaú Holding Financeira

7 UBS Global Financial Services Conference 6 Sustained Stability  Control of inflation through monetary policy  Adjustment in the external accounts  Fiscal Austerity Measures taken for Generating Growth  Gradual decline in interest rates (SELIC)  Continuing trade balance surplus  Primary Surplus  Change in the public debt profile: reduction in foreign currency exposure  Enhanced government payment capacity  Other initiatives: Social Security Reform, Reform of the Judiciary System and Tax Reform, the Bankruptcy Law, new rules for home mortgage finance, new regulatory framework for the electricity sector Banco Itaú Holding Financeira S.A. Brazilian Scenario

8 UBS Global Financial Services Conference 7 Business Concentration on businesses with a greater spread Credit  Personal credit: consortium, credit cards and vehicle financing  Small Business: Retail - UPJ and Middle Market Dilution of Business Risk and Diversification Treasury  Equilibrium between Private and Public Securities High level of capitalization New opportunities  Acquisitions of New Businesses  Share Buyback Program  Dividends Focus on Profitability Insurance, Capitalization and Private Pension Plans  Emphasis on Life and Pension Plans  Market leader in home insurance International Presence (US$ 2.4 bi)  New London Branch  Financing of Brazilian companies overseas Support for Trade Finance operations Banco Itaú Holding Financeira S.A.

9 UBS Global Financial Services Conference 8 Controls Cost Reduction/ Administrative Expenses  Zero Base Budget  Internal Campaign: “How much does it Cost?”  Rational use of available resources Risk Management Allocated Capital Corporate Governance  Monitoring  Preparation of database for Basel II  Sophisticated Management Models  Fixing Return on Allocated Capital adjusted to the risk of each company  Best Market Practices  Control: Audit, Disclosure, Negotiation Committees and Advisory Boards  Increased independence (new outside board members) Banco Itaú Holding Financeira S.A.

10 UBS Global Financial Services Conference 9 Banco Itaú Holding Financeira S.A. 1. Sustainable result in the quarter (diversification of income sources), with little influence of non-recurrent items: – Efficiency Ratio below 50% for the 6 th consecutive quarter (strict cost control); – Consistent growth of banking service fee revenue above IGP-M. 2. Conservative Account Procedures: –Exceeding Provision for Loan Losses: R$ 1 billion (Mar. 31, 04); –Market x Book Value: R$ 2.9 billion (Mar. 31, 04), mainly Securities (R$ 1.5 billion) and BPI (R$ 700 million); –Unrecognized tax credits amounted to the limit (R$ 234 million). 3. Growth in credit portfolio: companies (micro, small and medium-sized companies) and retail: 4. Reduction in credit portfolio non-performing loan ratio (4%) 5. Solvency Ratio (BIS Ratio) above minimum required (19.8% - March ) 6. Largest Market Capitalization among Latin American banks (R$ 31.2 billion) 7. Growth in Monthly Dividends: R$ 0.13 to R$ 0.17 per one thousand shares Results

11 UBS Global Financial Services Conference 10 R$ Million (Except where indicated) , % 126, % 2,426 31, % 48.8% 4.0% Net Income Net Income per 1,000 shares Stockholders’ Equity ROE (%) Total Assets ROA (%) Net Interest Margin Market Capitalization BIS Ratio (%) Efficiency Ratio (%) NPL Ratio (%) 4 th Q./ , % 118, % 2,754 30, % 49.5% 4.1% , % 113, % 2,965 19, % 40.8% 4.2% 1 st Q./04 1 st Q./03 Banco Itaú Holding Financeira S.A. Highlights

12 UBS Global Financial Services Conference 11 Financial Ratios Banco Itaú Holding Financeira S.A.

13 UBS Global Financial Services Conference 12 R$ Million Asset Evolution Banco Itaú Holding Financeira S.A. CAGR: 23.3%

14 UBS Global Financial Services Conference 13 (*) March 31, 2004 Banco Itaú Holding Financeira S.A. Credit Operations Loan Operations Lease Operations Credit Cards AEC Other Sub-total Guarantees Total 32,418 1,294 3,171 1, ,689 5,923 44,581 Dec.03 32,698 1,571 2,959 1, ,871 5,885 44,756 Mar.04 R$ Million CAGR: 20.4% CAGR: 21.4%

15 UBS Global Financial Services Conference 14 Corporate Small and Medium- Sized Companies Individuals Subtotal Real Estate Financing Total 24,442 7,312 12,369 19,681 2,267 46, % 11.7% 4.2% 6.9% -3.4% 1.6% 21,771 7,900 13,089 20,989 1,997 44,756 22,357 7,074 (**) 12,563 19,637 2,066 (**) 44, % 8.0% 5.8% 6.6% -11.9% -3.5% Var Mar/04 x Dec/03 Mar 31, 04 Mar 31, 03 Dec 31, 03 Var Mar/04 x Mar/03 (*) Endorsements and Sureties included. (**) The values of Dec. 31, 03 were adjusted excluding R$ 520 million in loans made on 12/18/2003 to Rio de Janeiro’s public employees, which were totally settled on 01/05/2004. Banco Itaú Holding Financeira S.A. R$ Million Credit Operations (*)

16 UBS Global Financial Services Conference 15 R$ 46.4 R$ 44.6 R$ 42.7 R$ 44.6 R$ 44.8 (US$ 4.6)(US$ 4.5) (US$ 4.7) (US$ 4.3)(US$ 4.1) (*) Endorsements and Sureties included. Banco Itaú Holding Financeira S.A. In Billion Credit Operations by Currency (*)

17 UBS Global Financial Services Conference 16 Provision for Loan Losses Total ProvisionExceeding ProvisionMinimum Provision Banco Itaú Holding Financeira S.A. R$ Million

18 UBS Global Financial Services Conference 17 (*) Provision Balance / Total Nonperforming Loans Nonperforming Loans and Coverage Ratio Banco Itaú Holding Financeira S.A.

19 UBS Global Financial Services Conference 18 1 st Q./ ,405 4 th Q./ ,343 Mutual Fund Management Fees Administration of Consortium Collection Current Account Services Tax Collection Interbank Fees Credit Operations Credit Cards Income from Guarantees Provided Other Services Total 1 st Q./ ,212 Banco Itaú Holding Financeira S.A. R$ Million Banking Service Fees

20 UBS Global Financial Services Conference 19 Personnel Expenses Other Administrative Expenses Reorganization Total 694 1, , , ,107 Banco Itaú Holding Financeira S.A. R$ Million Administrative Expenses 1 st Q./044 th Q./03 Administrative Expenses under Strict Control

21 UBS Global Financial Services Conference % 55.0% 48.2% 54.1% Not considering the 4th Q./02 and 1st Q./03, since we consider this criteria indicates better the recurrent efficiency. Efficiency Ratio (%) Banco Itaú Holding Financeira S.A.

22 UBS Global Financial Services Conference 21 Total Unrealized Interbank Deposits Securities and Derivatives Exceeding Provision Adjust. of Securities Available for Sale Adjust. of Securities Held to Maturity Credit Operations Investments (basically in BPI) Time and interbank dep. and funds from accept. and Issuance of securities abroad Securitization of payment orders abroad Subordinated Debt and Treasury shares Unrealized Income / (Loss) (1) (2) ResultEquity March ,9192, , ResultEquity December ,6772, , (1) Tax effects not considered. (2) Includes unrealized gains to minority interest amounting to R$ 336 million in March and R$ 307 million in December and R$ 286 million in March and R$ 257 million in December on Stockholders’ Equity. Financial Instruments - Market Value R$ Million Banco Itaú Holding Financeira S.A.

23 UBS Global Financial Services Conference 22 The following slides show the pro forma information about Banco Itaú and Banco Itaú BBA operations, using internal data for a better disclosure of the managerial performance of the business units. In 2003, it was considered as if the integration process between Banco Itaú BBA and the corporate segment of Banco Itaú occurred in the beginning of the year. Pro Forma Banco Itaú Holding Financeira S.A.

24 UBS Global Financial Services Conference 23 Banco Itaú 601 7, % 22, ,881 Banco Itaú-BBA 215 3, % 22,030 31,130 Net Income Allocated Capital Tier I ROE (%) Credit Operations (*) Total Assets Banco Itaú 651 6, % 22,224 95,079 Banco Itaú-BBA 48 2, % 22,468 30,233 March 2004December 2003 (*) Endorsements and Sureties included. Banco Itaú Holding Financeira S.A. R$ Million Pro Forma Corpo- ration 155 2, % - 5,680 Corpo- ration 60 2, % - 4,620 Note: The Consolidated doesn’t represent the sum of the parts since there are operations among related parties, eliminated only in the Consolidated.

25 UBS Global Financial Services Conference 24 Agenda  Results - Banco Itaú Holding Financeira  Results - Banco Itaú  Results - Banco Itaú BBA  Important Facts - Banco Itaú Holding Financeira

26 UBS Global Financial Services Conference 25 Variation -9.6% 30.9% 5.2% -4.3% 30.8% -39.0% -7.7% 11.3% - Net Interest Margin Result from Loan Losses Banking Service Fees Administrative Expenses Income Tax and Social Contribution Other Net Income Allocated Capital Tier I ROE (%) 1 st Q./04 2,047 (352) 1,356 (1,928) (272) (250) 601 7, % 4 th Q./03 2,264 (269) 1,289 (2,015) (208) (410) 651 6, % Banco Itaú S.A. R$ Million Pro Forma

27 UBS Global Financial Services Conference 26 Banco Itaú S.A. Diversification of income sources Not only restricted to interest rates Consolidated Net Income

28 UBS Global Financial Services Conference 27 4,403 4,804 5,388 6,086 7,689 Banco Itaú S.A. Growth of 96% in Technical Provisions of Pension Plans from March 2003 to March 2004 R$ Million Technical Provisions of Insurance, Capitalization and Pension Plans 8,320

29 UBS Global Financial Services Conference 28 1 st Q./03 4 th Q./03 1 st Q./ Result of Insurance, Capitalization and Pension Plans %Combined Ratio97.8%94.8% 52.8%Claim Ratio56.8%55.0% 893 (345) (78) (336) 11 Insurance Premiums, Pension Plan Contributions and Premium Bonds Revenues Changes in Technical Provisions Selling Expenses Insurance Claims, Pension Plan Benefits and Premium Bonds Redemption Other Operating Income/(Expenses) 1,622 (968) (93) (412) 34 1,373 (593) (96) (529) Operating Margin (125) (71) 3 Financial Income Administrative Expenses Income Tax and Social Contribution Other 176 (201) (56) (1) 165 (165) (64) 2 Banco Itaú S.A. R$ Million Insurance, Capitalization and Pension Plans

30 UBS Global Financial Services Conference 29 Mutual Funds and Managed Portfolios Growth of 37% in volume of Mutual Funds and Managed Portfolios in relation to March 2003 Banco Itaú S.A. Assets under Management R$ Billion

31 UBS Global Financial Services Conference 30 Agenda  Results - Banco Itaú Holding Financeira  Results - Banco Itaú  Results - Banco Itaú BBA  Important Facts - Banco Itaú Holding Financeira

32 UBS Global Financial Services Conference 31 1 st Q./ (79) (88) (72) 215 3, % 4 th Q./ (172) 54 (92) (15) (67) 48 2, % Net Interest Margin Result from Loan Losses (*) Banking Service Fees Administrative Expenses Income Tax and Social Contribution Other Net Income Allocated Capital Tier I ROE (%) Variation -24.7% % -9.3% -14.1% 486.7% 7.5% 347.9% 6.2% - Banco Itaú BBA R$ Million Pro Forma Normalized Net Income Net Income (*) Provisions constituted in the 4 th Q/03 and reverted in 1 st Q/ 04, net of taxes. Normalized Net Income ROE (%) 215 (46) % ,5% 347.9% %

33 UBS Global Financial Services Conference 32 Mar 31, , % Nonperforming Loans (NPL) Credit Operations NPL Ratio (%) Dec 31, , % Variation 34 (503) Itaú BBA has a high quality credit portfolio with 95.3% of volume classified as “AA”, “A” and “B”. Banco Itaú BBA R$ Million Nonperforming Loans

34 UBS Global Financial Services Conference 33 Agenda  Results - Banco Itaú Holding Financeira  Results - Banco Itaú  Results - Banco Itaú BBA  Important Facts - Banco Itaú Holding Financeira

35 UBS Global Financial Services Conference 34  Creation of the Audit Committee (approved in the General Ordinary Shareholders Meeting);  Election of Mrs. Tereza Grossi to the Board of Directors as the Financial Expert of the Audit Committee (approved in the General Ordinary Shareholders Meeting);  Stock Grouping approved by the Administrative Council: -BOVESPA: 1,000 shares to 1 share -NYSE: 2 ADRs to 1 Preferred Share Banco Itaú Holding Financeira S.A. Important Facts

36 UBS Global Financial Services Conference 35 Evolution of Net Income per 1,000 shares Banco Itaú Holding Financeira S.A. CAGR = 30.4% R$

37 UBS Global Financial Services Conference 36 Preferred Shares Appreciation Evolution of US$ 100 Invested from April 1994 to April 2004 Banco Itaú Holding Financeira S.A. Real Plan Russian Crisis Real Devaluation US$ Mexican Crisis Asian Crisis Argentine Crisis Attack to WTC Itaú (1) Itaú (2) Ibov. 10 years 23.63%19.22%6.35% 5 years 16.80%12.50%-0.52% %-18.34%-13.49% Annual Average Appreciation in US$ (1)With reinvestment of dividends (2)Without reinvestment of dividends

38 UBS Global Financial Services Conference 37 Variables Inflation Interest Rate (SELIC) Compulsory over Current Deposits Compulsory over Saving Dep. (TR (***) + 6% p.a.) Reduction of Spreads Growth in Volumes Controlled Expenses Scenario (*) 6.1% p.a. (**) 16.3% p.a. 45.0% 20.0% Current 5.0% p.a. 12.0% p.a. 25.0% 20.0% (**) Future expectations derived from this sensitivity analysis must consider the risks and uncertainties that involve any activities and are away from the control of the companies of the conglomerate (politic and economic changes, volatility in interest rates and exchange, technology changes, inflation, financial disintermediation, competitive pressures over the products and prices and changes in the applicable regulations). (***) Interest Reference Rate. Banco Itaú Holding Financeira S.A. Sensitivity Analysis (*) Estimated.

39 UBS Global Financial Services Conference 38 Retail Funds Branches Personnalité Small and Middle Companies Credit Cards Vehicles Financing Insurance, Pension Plans and Capitalization Banco Itaú Holding Financeira S.A. Sensitivity Analysis

40 UBS Global Financial Services Conference 39 R$ Million Resources Current SituationScenario (*) Average Balance Financial Margin SpreadAverage Balance Financial Margin Spread Loans - Individuals Loans - Businesses Real Estate Credit Banking Service Fees Total Revenues Insurance Products Provisions Expenses Net Income before tax (*) Future expectations derived from this sensitivity analysis must consider the risks and uncertainties that involve any activities and are away from the control of the companies of the conglomerate (politic and economic changes, volatility in interest rates and exchange, technology changes, inflation, financial disintermediation, competitive pressures over the products and prices and changes in the applicable regulations). Banco Itaú Holding Financeira S.A.

41 UBS Global Financial Services Conference 40 (*) Future expectations derived from this sensitivity analysis must consider the risks and uncertainties that involve any activities and are away from the control of the companies of the conglomerate (politic and economic changes, volatility in interest rates and exchange, technology changes, inflation, financial disintermediation, competitive pressures over the products and prices and changes in the applicable regulations). R$ Million Resources Current SituationScenario (*) Average Balance Financial Margin SpreadAverage Balance Financial Margin Spread Loans - Individuals Loans - Businesses Real Estate Credit Banking Service Fees Total Revenues Insurance Products Provisions Expenses Net Income before tax Banco Itaú Holding Financeira S.A. Return on Capital maintained over 20%

42 UBS Global Financial Services Conference May 10-12, 2004 Presentation to: UBS Global Financial Services Conference Banco Itaú Holding Financeira S.A. Alfredo Setubal Investor Relations Director Silvio de Carvalho Executive Director


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