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Statements of Income - 1999 R$ Million 1st 2nd 3rd 4th Year Net Interest Margin 1,213 1,202 1,094 1,120 4,629 Provision for Loan Losses (299) (235) (146) (134) (814) 697 740 744 978 3,159 (1,050) (1,172) (1,161) (1,228) (4,611) (335) (202) (94) (214) (845) 535 761 333 (77) 360 (107) 415 351 1,869 Banking Service Fees Administrative Expenses Others Extraordinary Result Net Income Extraordinary Result - 1999 Total for 1999: R$ 351 million R$ 154 million R$ 535 million Full amortization of premiums on the purchase of shares of BPI and IBT. Investment in acquisitions since 95: US$ 2 billion Full amortization of premiums (Itaú Consolidated): US$ 811 million Due to permanent assets abroad (US$ 1,483 million). Consistent Evolution R$ Million Stockholders' Equity Net Income 4,651 4,198 3,842 5,907 1,869 592 1996 721 1997 880 1998 1999 Risk Management Policy Credit Market Compliance •Risk Quality : 65% Good, Very Good and Excellent •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 •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 Low Level of Risk To Limit and Reduce the Operational Risks in the Whole Structure Quality of credit concession + Stable Scenario Expansion of the Credit Portfolio with Liquidity Credit Operations +25% Credit Operations R$ Billion 9 94 12 14 95 96 17 16 0.2 0.1 5.7% 4.5% 3.2% 2.0% 3.2% 97 1.0 1.1 1.1 0.6 0.4 15.2% 20 98 99 Provisions Outstanding(*) R$ Billion 0.3 Ratio Default (%) 0.6 0.5 1.3 1.3 0.3 0.3 94 95 96 97 Provisions Expenses R$ Billion 1.2 1.0 1.0 99 -20% 1.0 0.7 0.6 0.5 98 0.8 1.0 94 95 96 97 98 99 (*) Overdue Credits and General Provision 0.2 94 95 96 97 98 99 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 Credit Cards 110.2% increase over 1998; •70% of the transactions performed by our customers are through self-service. Million 2.2 Insurance Contracts 1.1 Private Pension Plans 0.3 Small and Middle Market Business Itaú has retaken with priority the growth of the credit offer for this segment: Growth of 48% in the 2nd semester of 1999 Outstanding working capital loan portfolio: R$ 1.1 billion in Dec.99 200 thousand client companies In 2000 the continued growth of the portfolio is expected, although probably at a lower pace. Corporate Incorporation of the operational structures of BFB and IBT Reinforcement in products and team management area Agility of the the new business board Structuring of Solutions Business and Operations Expansion Record Result Foreign currency Project finance Investment banking Positive Perspectives due to: •Privatization •Economic Growth Internet (Home Banking) Huge Opportunity: Increase of Clients, Offer other Services and Reduce Costs 1 million of clients in 99 (+34% over 98) P F S e r s o n a l i n a n c i a l e r v i c e s Strong Development to offer all the services: Home Broker, Credit Cards, Bankline for Middle Market, etc. 10.9 million transactions in Dec. 99 (+39% over 98) Evaluation of partnerships to offer other financial services: B2B, B2C, Portals, E-Commerce, etc. 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 500 Annual Appreciation Create Value to the . 10 years (average) 40.83% . 5 years (average) 31.18% . 1999 88.66% 400 US$ 9,969 million The Largest Market Capitalization among the Latin American Banks ITAU4 : US$ 86.6 per thousand shares 200 472 - Itaú Shareholders Stock Price 12.31.1999 . P/E 9.43 . P/BV 315.04% . Cash Yield 1.94% 300 US$ 186-Bovespa 100 Mexican Crisis Asian Crisis Russian Crisis Real Devaluation 0 94 95 96 97 98 99 Highlights 1999 Amounts in R$ Million Consolidated Balance Sheet Total Assets Loan and Leasing Portfolio + ACC Sureties, Endorsements and Guarantees Securities + Interbank Accounts Stockholders’ Equity 51,911 16,890 2,706 18,070 5,907 Performance Ratios (%) BIS Ratio 25.7% 5.9% 31.6% 3.6% 21.0% Eficiency Ratio 58.0% ROE Recurring ROE Extraordinary ROE ROA Statements of Income Financial Margin 1,518 351 1,869 4,629 Net Income from Financial Operations 3,814 Banking Service Fees 3,159 Net Income Recurring Net Income Extraordinary Net Income Relevant Data Assets under Management Employees Active Customers (million) Branches CSBs ATMs 31,994 39,011 6.9 1,765 780 11,715