Conference Call Results of the 1st Quarter/2006 May 10, 2006
Banco Itaú Holding Financeira S.A. 1 Highlights 3. Additional provisions: R$ 130 million increase in the excess provision for loan losses in the quarter, reaching the balance of R$ 1.5 billion; R$ 90 million reversal of additional provision for securities in the quarter, remaining the balance of R$ 280 million. 1.Results: Net Income of R$ 1,460 million in the 1st Qtr/06, a 2.5% increase in comparison to the previous quarter and a 27.9% increase in comparison to the 1st Qtr/05; annualized ROE of 36.3%. Earnings per Share reached R$ 1.32 in 1st Qtr/06, growing 32.0% in comparison to 1st Qtr/ Nonperforming Loans Ratio: Nonperforming loans ratio of 4.0% % growth in the loan portfolio in the quarter: Personal Loans:11.0% in the quarter and 35.3% in the last 12 months; Vehicles:13.9% in the quarter and 71.3% in the last 12 months; 5. BIS Ratio: Maintenance of the high level of 16.9%.
Banco Itaú Holding Financeira S.A. 2 R$ Million (except where indicated) Highlights 1st Qtr/064th Qtr/05Variation1st Qtr/05 Net Income 1,460 1,4252.5% 1,141 Earnings per share (R$) % 1.00 Stockholders' Equity 16,619 15,5606.8% 14,629 Annualized ROE (%) (Linear)36.3%37.0%-70 b.p.31.9% Market Capitalization 70,895 62, % 49,449 BIS Ratio (%)16.9%17.0%-10 b.p.18.3% Efficiency Ratio (%)45.4%50.1%-470 b.p.49.8% Nonperforming Loans Ratio (%)4.0%3.5%50 b.p.2.9%
Banco Itaú Holding Financeira S.A. 3 Evolution of the Net Interest Margin (%) (*) (*) After adjustments for extraordinary items in the amount of R$ 612 million described in the Management Discussion and Analysis report for the 4th Qtr/04.
Banco Itaú Holding Financeira S.A. 4 R$ Million Itaú Holding Pro Forma 1st Qtr/064th Qtr/05Variation1st Qtr/05 Managerial Financial Margin 4,073 3, % 2,986 Banking Operations 3,628 3,3518.3% 2,607 Treasury % 233 Management of FX Risk from Investments Abroad % 146 Result of Loan Losses (1,287) (971)32.5% (594) Banking Service Fees 2, % 1,794 Non-Interest Expenses (2,782) (2,909)-4.4% (2,371) Net Income 1,460 1,4252.5% 1,141 Average Stockholders' Equity 16,089 15,3944.5% 14,300 Annualized ROE (%)36.3%37.0%-0.7 p.p.31.9%
Banco Itaú Holding Financeira S.A. 5 Loans by Type of Customer R$ Million (*) Farming and agribusiness Credit and Mortgage Loans – Linked to available funds from Demand and Savings Deposits. Mar 31, 06Dec 31, 05Mar 31, 05 Var. Mar/06 - Dec/05 Var. Mar/06 - Mar/05 Individuals 30,813 28,471 20,7708.2%48.4% Credit Cards 6,904 7,216 5, %37.2% Personal Loans 11,457 10,320 8, %35.3% Vehicles 12,451 10,936 7, %71.3% Businesses 36,703 34,744 31,9055.6%15.0% Small and Medium Sized Companies 13,741 12,784 10,4967.5%30.9% Corporate 22,962 21,960 21,4084.6%7.3% Mandatory Loans (*) 4,529 4,541 4, %4.4% Total Loans 72,046 67,756 57,0126.3%26.4%
Banco Itaú Holding Financeira S.A. 6 Composition of the Loan Portfolio
Banco Itaú Holding Financeira S.A. 7 Contribution from the Change in the Mix of the Loan Portfolio R$ Million (*) Average balance of the loan portfolio, net of loans overdue for more than 60 days, which do not generate revenue. 1st Qtr/064th Qtr/051st Qtr/05 Managerial Financial Margin – Banking Operations (A) 3,628 3,351 2,607 Service Fees with Loans and Credit Cards (B) Tax Expenses for PIS and COFINS (C) (208) (197) (153) Banking Product (D = A + B + C) 4,267 4,042 3,138 Adjustment 1 – Result of Loan Losses (E) (1,287) (971) (594) Adjustment 2 – Excess Provision (F) Adjusted Result of Loan Losses (G = E + F) (1,157) (801) (444) Adjusted Banking Product (H = D + G) 3,111 3,240 2,694 Average Loans (*) (I) 59,942 56,124 47,754 Annualized Adjusted Banking Product / Average Loans (H/I) 20.8%23.1%22.6%
Banco Itaú Holding Financeira S.A. 8 Nonperforming Loans and Coverage Ratios (*) Balance of Provision for Loans Losses / Balance of Loans overdue for more than 60 days and that do not generate income.
Banco Itaú Holding Financeira S.A. 9 R$ Million Banking Service Fees (1) Investment Funds and Consortiums. 1st Qtr/064th Qtr/05Variation1st Qtr/05 Asset Management (1) % 398 Current Account Services % 349 Credit Cards % 437 Loans and Guarantees Issued % 271 Collection Services % 209 Other % 131 Total 2, % 1,794
Banco Itaú Holding Financeira S.A. 10 Non-Interest Expenses (1) Not including PIS, Cofins and ISS. 1st Qtr/064th Qtr/05Variation1st Qtr/05 Personnel Expenses 1,132 1,0468.2% 955 Other Administrative Expenses 1,230 1, % 1,101 Other Operating Expenses % 239 Tax Expenses (CPMF / Others) (1) % 76 Total 2,782 2, % 2,371 R$ Million
Banco Itaú Holding Financeira S.A. 11 Efficiency Ratio (*) For further details about the Managerial Financial Margin, please consult Itaú Holding’s Management Discussion and Analysis report. Non-Interest Expenses (Personnel Expenses + Other Administrative Expenses + Other Operating Expenses + Tax Expenses for CPMF and Other Taxes) (Managerial Financial Margin (*) + Banking Service Fees + Results from Insurance, Pension Plans and Capitalization Operations + Other Operating Income + Tax Expenses for PIS/COFINS/ISS) Efficiency Ratio 53.9% 50.3%
Banco Itaú Holding Financeira S.A. 12 (1) Does not take into consideration the corresponding tax effects. Financial Instruments – Market Value R$ Million Unrealized Profits/(Losses) (1) In Stockholders' Equity 3/31/0612/31/05 3/31/05 Interbank Deposits Securities and Derivatives Loans Investment in BPI 1, Securitization of Foreign Payment Orders 3 (3) 91 Subordinated Debt (41) (57) 74 Other Liabilities Total Unrealized 2,465 1,774 2,147
Banco Itaú Holding Financeira S.A. 13 Itaú ItaucredItaú BBAItaubanco Banking Cards – Current Account Holders Insurance, Pension Plans and Capitalization Investment Funds and Managed Portfolio Corporation Corporate Operations & Investment Banking Vehicles Cards – Non Current Account Holders Taií, FIC (CBD) and FAI (LASA) Segmentation (Pro Forma) NB: The organization chart of the Itaucred segment basically reflects the transactions carried out in channels intended for non current account holders.
Banco Itaú Holding Financeira S.A. 14 R$ Million Highlights of the Pro Forma Segments (1) Does not represent the sum of the parts, because there are transactions between the segments that were eliminated only in the consolidated figures. (2) Includes endorsements and sureties. ItaubancoItaú BBAItaucredCorporation Itaú (1) March 31, 2006 Net Income of the Quarter ,460 Tier I Allocated Capital 9,371 4,354 2, ,619 RAROC in the Quarter (% p.a.)38.9%36.0%28.0%32.9%36.3% Loan Portfolio (2) 28,479 24,921 18, ,046 Total Assets 127,221 43,163 17,653 3, ,204 December 31, 2005 Net Income of the Quarter ,425 Tier I Allocated Capital 7,603 4,328 1,688 1,941 15,560 RAROC in the Quarter (% p.a.)47.2%37.0%22.9%12.2%37.0% Loan Portfolio (2) 26,878 24,067 16, ,756 Total Assets 115,808 43,256 15,955 4, ,241
Itaubanco 15 R$ Million Itaubanco Pro Forma 1st Qtr/064th Qtr/05Variation1st Qtr/05 Managerial Financial Margin 2,529 2, % 1,994 Banking Operations 2,414 2, % 1,736 Treasury 11 (67)-116.3% 156 Management of FX Risk from Investments Abroad % 103 Result of Loan Losses (928) (671)38.4% (434) Banking Service Fees 1,721 1, % 1,544 Non-Interest Expenses (2,097) (2,120)-1.1% (1,933) Net Income % 801 Tier I Allocated Capital 9,371 7, % 7,588 Annualized RAROC (%)38.9%47.2%-840 b.p.44.3%
Itaubanco 16 Diversified profit sources Pro Forma Net Income by Subsegment R$ Million 1st Qtr/064th Qtr/05Variation1st Qtr/05 Itaubanco - Banking % 469 Banking Operations % 263 Treasury 7 (44)-116.3% 103 Management of FX Risk from Investments Abroad % 103 Credit Cards – Current Account Holders % 135 Insurance, Pension Plans and Capitalization % 132 Investment Funds and Managed Portfolio % 65 Net Income % 801
Itaubanco 17 Credit Cards – Current Account Holders - Pro Forma R$ Million (except where indicated) 1st Qtr/064th Qtr/05Variation1st Qtr/05 Managerial Financial Margin % 209 Result of Loan Losses (95) (88)8.3% (10) Banking Service Fees % 339 Non-Interest Expenses (261) (344)-24.1% (318) Net Income % 135 Tier I Allocated Capital % 457 Annualized RAROC (%)108.9%94.7%1420 b.p.122.9% Number of Cards (thousands) 8,603 8,5101.1% 7,518 Billing 4,310 4, % 3,636
Itaubanco 18 R$ Million Insurance, Pension Plans and Capitalization - Pro Forma 1st Qtr/064th Qtr/05Variation1st Qtr/05 Earned Premiums % 529 Results from Pension Plans and Capitalization % 55 Retained Claims (360) (323)11.3% (295) Marketing Expenses (148) (132)12.6% (108) Managerial Financial Margin % 123 Non-Interest Expenses (174) -0.1% (145) Net Income % 132 Combined Ratio (%)91.2%92.2%-100 b.p.90.9% Claim Level (%)57.9%53.2%460 b.p.51.2% Tier I Allocated Capital 1,379 1,2936.6% 1,291 Annualized RAROC (%)47.2%51.8%-460 b.p.42.5%
Itaú BBA 19 R$ Million Itaú BBA - Pro Forma 1st Qtr/064th Qtr/05Variation1st Qtr/05 Managerial Financial Margin % 345 Banking Operations % 219 Treasury % 82 Management of FX Risk from Investments Abroad % 43 Result of Loan Losses % 56 Banking Service Fees % 79 Non-Interest Expenses (168) (234)-28.4% (130) Net Income % 247 Tier I Allocated Capital 4,354 4,3280.6% 3,235 Annualized RAROC (%)36.0%37.0%-100 b.p.30.7%
Itaucred 20 R$ Million Itaucred - Pro Forma Transactions carried out in channels intended for non current account holders customers. 1st Qtr/064th Qtr/05Variation1st Qtr/05 Financial Margin % 445 Result of Loan Losses (371) (308)20.6% (155) Banking Service Fees % 172 Non-Interest Expenses (496) (517)-4.0% (296) Net Income % 96 Vehicles % 9 Credit Cards – Non Current Account Holders % 98 Taií (35) (59)-40.2% (11) Tier I Allocated Capital 2,028 1, % 1,106 Annualized RAROC (%)28.0%22.9%510 b.p.37.0%
Banco Itaú Holding Financeira S.A. 21 R$ Net Income and Earnings per Share Earnings per Share Net Income R$ Million 27.9% NB: The earnings per share was adjusted to reflect the 900% stock split carried out in Oct/ %
Banco Itaú Holding Financeira S.A. 22 Acquisition of the Operations of BankBoston in Latin America Itaú and Itaúsa announced the signature on 05/01/2006 of an agreement with Bank of America involving the acquisition of BankBoston in Brazil and the exclusive rights to acquire other operations in Latin America. Payment through the issuance of 68,518 thousand new non-voting Itaú shares, equal to an approximate 5.8% share of Itaú’s total capital. Based on the non-voting shares average price on 04/28/2006, these newly-issued shares would be valued at R$ 4.5 billion, and a goodwill of R$ 2.2 billion (net of tax effects). The goodwill write-offs should not impact dividends/interest on own capital distributions to the shareholders base. The key drivers for the acquisition agreement were: Leadership in assets under management, custody and in the high net worth individual and large corporate sectors; Economies of scale in the large corporate and middle market segment; Acquisition of a premium credit card client base; Opportunity to expand into foreign markets in which Itaú does not currently have a presence.
Banco Itaú Holding Financeira S.A. 23 Reinforcement in Corporate Governance Expansion of the Compensation Committee through the creation of the Appointments and Compensation Committee, which will, in addition to provide guidance on the policy of compensation for the directors of the subsidiaries, analyze and propose names for appointment to the Executive Board, make known situations of potential conflict of interests and propose criteria for evaluating the activities of the Board of Directors; Election of the fifth independent member of the Board: Dr. Gustavo Loyola, former chairman of the Brazilian Central Bank; Approval of an age limit (75 years) to members of the Board; Approved the Internal Charter of the Board of Directors, which establishes rules of functioning, functions, self-evaluation and others.
Conference Call Results of the 1st Quarter/2006 May 10, 2006