BANCO ITAÚ BBA S.A.
MANAGEMENT REPORT
To our Stockholders:
We present the Management Report and the financial statements of Banco Itaú BBA S.A. (ITAÚ BBA) for the
periods from January 1 to June 30, 2014, in accordance with the regulations established by the Central Bank of
Brazil (BACEN) and the National Monetary Council (CMN).
.
São Paulo, August 20, 2014.
Executive Board
MANAGEMENT REPORT
Chairman
ROBERTO EGYDIO SETUBAL
Vice-Chairmen
ALFREDO EGYDIO SETUBAL
CANDIDO BOTELHO BRACHER
Members
ANTONIO CARLOS BARBOSA DE OLIVEIRA
CAIO IBRAHIM DAVID
EDUARDO MAZZILLI DE VASSIMON
HENRI PENCHAS
JOÃO DIONÍSIO FILGUEIRA BARRETO AMOÊDO
Directors
ALEXSANDRO BROEDEL LOPES (*)
ANDRÉ CARVALHO WHYTE GAILEY
CAIO IBRAHIM DAVID
CRISTIANO ROGÉRIO CAGNE
FLÁVIO DELFINO JÚNIOR
GILBERTO FRUSSA
JOÃO CARLOS DE GÊNOVA
MARCELLO PECCININI DE CHIARO
MARCELO ARIEL ROSENHEK
MARCO ANTÔNIO SUDANO
MÁRIO LUÍS BRUGNETTI
VANESSA LOPES REISNER
EXECUTIVE BOARD
Chief Executive Officer
CANDIDO BOTELHO BRACHER
Executive Vice-Presidents
ALBERTO FERNANDES
DANIEL LUIZ GLEIZER
JEAN-MARC ROBERT NOGUEIRA BAPTISTA ETLIN
Executive Directors
ÁLVARO DE ALVARENGA FREIRE PIMENTEL
CHRISTIAN GEORGE EGAN
FERNANDO FONTES IUNES
JOSÉ AUGUSTO DURAND
(*) Elected RCA 06/09/2014, approved by the Central Bank on 07/14/2014.
Accountant
REGINALDO JOSÉ CAMILO
CRC - 1SP - 114.497/O-9
Head Office: Av. Brigadeiro Faria Lima, 3,400 - 3° to 8°, 11° and 12° floors - Itaim Bibi - São Paulo - SP
BANCO ITAÚ BBA S.A.
Balance Sheet
(In thousands of Reais)
ASSETS
NOTES
CURRENT ASSETS
CASH AND CASH EQUIVALENTS
INTERBANK INVESTMENTS
Money market
Interbank deposits
SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS
Own portfolio
INTERBANK ACCOUNTS
Pending settlement
Central Bank deposits
INTERBRANCH ACCOUNTS - Internal transfers of funds
OTHER RECEIVABLES
Income receivable
Sundry
OTHER ASSETS
Prepaid expenses
LONG-TERM RECEIVABLES
OTHER RECEIVABLES
Sundry
PERMANENT ASSETS
INVESTMENTS
Investments in subsidiaries and affiliates
Domestic
Foreign
Other investments
(Allowance for loan losses)
FIXED ASSETS
Real estate in use
(Accumulated depreciation)
TOTAL ASSETS
The accompanying notes are an integral part of these financial statements.
3a and 4
3a, 3b,4 and 5
3c, 3d and 6
8a
3h
8a
3i
10
3j
06/30/2014
1,640,686
6,561
38,316
38,310
6
642,646
642,646
2,760
24
2,736
12,596
932,329
145,736
786,593
5,478
5,478
109,196
109,196
109,196
4,218,793
4,217,177
4,206,818
4,183,970
22,848
13,513
(3,154)
1,616
1,946
(330)
5,968,675
-
BANCO ITAÚ BBA S.A.
Balance Sheet
(In thousands of Reais)
LIABILITIES
NOTES
CURRENT LIABILITIES
DEPOSITS
Interbank deposits
OTHER LIABILITIES
Social and statutory
Tax and social security contributions
Sundry
LONG-TERM LIABILITIES
OTHER LIABILITIES
Social and statutory
Tax and social security contributions
Sundry
STOCKHOLDERS’ EQUITY
Capital
Capital reserves
Revenue reserves
Asset valuation adjustment
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
The accompanying notes are an integral part of these financial statements.
3b
3l, 3m and 9c
8b
3l, 3m and 9c
8b
11
3c and 6a
06/30/2014
603,758
295,653
295,653
308,105
139,801
83,621
84,683
62,163
62,163
18,514
28,952
14,697
5,302,754
3,574,844
13,009
1,738,927
(24,026)
5,968,675
BANCO ITAÚ BBA S.A.
Statement of income
(In thousands of Reais)
NOTES
INCOME FROM FINANCIAL OPERATIONS
Loans
Lease operations
Securities
Compulsory deposits
EXPENSES ON FINANCIAL OPERATIONS
Money market
Borrowings and onlending
Foreign exchange operations
Derivative financial instruments
Allowance for loan losses
GROSS INCOME FROM FINANCIAL OPERATIONS
OTHER OPERATING REVENUES (EXPENSES)
Banking service fees
Personnel expenses
Other administrative expenses
Tax expenses
Equity in earnings of subsidiaries and affiliates
Other operating revenues
Other operating expenses
OPERATING INCOME
NON-OPERATING INCOME
INCOME BEFORE TAXES ON INCOME AND PROFIT SHARING
INCOME TAX AND SOCIAL CONTRIBUTION
Due on operations for the period
Related to temporary differences
PROFIT SHARING
NET INCOME
NUMBER OF SHARES
NET INCOME PER SHARE - R$
BOOK VALUE PER SHARE - R$
The accompanying notes are an integral part of these financial statements.
3e
3f
3d
3g
3e, 3f and 8c
8d
3m and 9a II
3i and 10
8e
3m and 9a I
12b
11a
01/01 to
06/30/2014
2,054,337
805,177
5,796
1,200,468
42,896
(2,021,981)
(1,286,764)
(182,570)
(57,716)
(396,045)
(98,886)
32,356
117,458
306,053
(180,805)
(159,765)
(28,195)
261,126
11,720
(92,676)
149,814
(11)
149,803
181,043
(60,490)
241,533
(25,482)
305,364
8,948,873
34.12
592.56
BANCO ITAÚ BBA S.A.
Statement of Changes in Stockholders’ Equity (Note 11)
(In thousands of Reais)
Capital
BALANCES AT 01/01/2014
split (Note 11d)
Remeasurements in Post Employment Benefit Obligation-Subsidiaries and Affiliates
Change in adjustment to market value
Net Income
Appropriations:
Legal reserve
Statutory reserve
BALANCES AT 06/30/2014
CHANGES IN THE PERIOD
Capital reserves
Revenue reserves
Asset valuation
adjustment
Retained earnings
Total
4,224,086
(649,242)
-
15,372
(2,363)
-
1,693,919
(260,356)
-
(3,386)
2,924
151
(23,715)
-
305,364
5,929,991
(909,037)
151
(23,715)
305,364
3,574,844
(649,242)
13,009
(2,363)
15,268
290,096
1,738,927
45,008
(24,026)
(20,640)
(15,268)
(290,096)
-
5,302,754
(627,237)
BANCO ITAÚ BBA S.A.
Statement of Cash Flows
(In thousands of Reais)
01/01 a
06/30/2014
ADJUSTED NET INCOME
(598,006)
Net Income
305,364
Adjustments to net income:
(903,370)
Adjustment to market value of securities and derivative financial instruments (assets/liabilities)
(557,840)
Allowance for loan losses
98,886
Depreciation and amortization
63,454
Deferred taxes
(241,533)
Equity in earnings of subsidiaries and affiliates
(261,126)
Others
(5,211)
CHANGE IN ASSETS AND LIABILITIES
(19,192,293)
(Increase) decrease in interbank investments
(17,825,221)
(Increase) decrease in securities and derivative financial instruments (assets/liabilities)
(7,672,999)
(Increase) decrease in compulsory deposits with the Central Bank of Brazil
(2,736)
(Increase) decrease in interbank and interbranch accounts (assets/liabilities)
(12,620)
(Increase) decrease in loan and lease operations
(4,396,787)
(Increase) decrease in other receivables and other assets
(1,072,262)
(Increase) decrease in foreign exchange portfolio and negotiation and intermediation of securities (assets/liabilities)(1,863,743)
(Decrease) increase in deposits
75,351
(Decrease) increase in funds from issuance of securities
(139,590)
(Decrease) increase in borrowings and onlending
10,644,037
(Decrease) increase in other liabilities
3,075,319
Changes in deferred income
(1,042)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
(19,790,299)
Dividends and interest on capital received
601,988
Reduction in the capital of subsidiaries
1,456,092
Cash and cash equivalents of assets and liabilities split
(551,402)
(Purchase) disposal of intangible assets
181,250
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
1,758,570
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (Notes 3a and 4)
(18,031,729)
At the beginning of the exercise
18,076,600
At the end of the exercise
44,871
The accompanying notes are an integral part of these financial statements.
BANCO ITAÚ BBA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FROM JANUARY 1 TO JUNE 30, 2014
(In thousands of Reais)
NOTE 1 - OPERATIONS
The purpose of Banco Itaú BBA S.A. (ITAÚ BBA) is to explore banking activities, including the foreign exchange
operations that are authorized for full service banks, with commercial, investment, leasing, real estate loan,
financing and investment portfolios.
ITAÚ BBA’s operations are conducted in the context of a set of institutions operating in the financial market, led
by Itaú Unibanco Holding S.A. The benefits of services between these institutions and the corresponding costs
are absorbed according to the practicality and reasonableness of the allocation.
The Financial Statements prepared for the period from January 1 to June 30, 2014, were approved by the
Executive Board on August 20, 2014.
NOTE 2 - PRESENTATION OF THE FINANCIAL STATEMENTS
The financial statements of ITAÚ BBA have been prepared in accordance with accounting principles established
by the Brazilian Corporate Law, in conformity, when applicable, with instructions issued by the Central Bank of
Brazil (BACEN) and the National Monetary Council (CMN), which include the use of estimates necessary to
calculate accounting provisions.
As a result of the Reorganization (Note 11d) the assets and liabilities of 06/30/2014 already reflect the relative
values of the balances arising from the split. Banco Itaú BBA SA - Nassau Branch ceased to be consolidated at
Itaú BBA after 01/31/2014.
As a consequence of the process of convergence with international accounting standards, some standards and
interpretations were issued by the Accounting Pronouncements Committee (CPC), which will be applicable to
financial institutions only when approved by the Central Bank, assuming that these standards do not contradict
with the standards already issued previously by the Central Bank. The accounting standards already approved
by the Resolution of the CMN, have been fully applied in the preparation of these Financial Statements.
As set forth in the sole paragraph of article 7 of BACEN Circular No. 3,068, of November 8, 2001, securities
classified as trading securities (Note 6a) are presented in the Balance Sheet under Current Assets regardless of
their maturity dates.
As a result of the Corporate Reorganization (Note 11d) and in accordance with section I of article 9 of Circular
No. 3017 of 06/12/2000 of the Central Bank, the Financial Statements are not presented in comparison with the
balances of 06/30/2013. The income statement includes revenues and expenses relating to the transactions
relating to asset values split up the date of the corporate action (Note 11d).
NOTE 3 - SUMMARY OF THE MAIN ACCOUNTING PRACTICES
a) Cash and Cash Equivalents – ITAÚ BBA defines as cash and cash equivalents cash and current accounts
in banks (considered in the heading cash and cash equivalents), Interbank Deposits and Securities
Purchased under Agreements to Resell – Funded Position that have original maturities of up to 90 days or
less.
b) Interbank Investments, Remunerated Restricted Credits – Brazilian Central Bank, Remunerated
Deposits and Other Receivables and Payables – Transactions subject to monetary / currency adjustment
clause and operations with fixed charges are recorded at present value, net of incurred transaction costs,
calculated pro rata based on the effective rate of transactions
c) Securities – Recorded at cost of acquisition restated by the index and/or effective interest rate and
presented in the Balance Sheet, according to BACEN Circular No. 3,068, of November 8, 2001. Securities
are classified into the following categories:
Trading Securities – Acquired to be actively and frequently traded, adjusted to market value, with a
contra-entry to the results for the period;
Available-for-Sale Financial assets – Securities that can be negotiated, but are not acquired to be
actively and frequently traded. They are adjusted to their market value with a contra-entry to an account
disclosed in Stockholders’ Equity;
Gains and losses on Available-for-Sale Financial assets, when realized, are recognized at the trading date in
the Statement of Income, with a contra-entry to a specific Stockholders’ Equity account.
Decreases in the market value of available-for-sale and held-to-maturity securities below their related cost,
resulting from non-temporary reasons, are recorded in results as realized losses.
The effects of the application of the procedures described above in the affiliated and subsidiary companies of
ITAÚ BBA, reflected in their respective Stockholders’ Equity or income and expense accounts, were likewise
recorded in Stockholders’ Equity or in the Equity in Earnings of the parent company in proportion to ITAÚ
BBA’s ownership percentage.
d) Derivative Financial Instruments - Classified on the date of their acquisition, according to management's
intention of using them either as a hedge or not, according to BACEN Circular No. 3,082, of January 30,
2002. Transactions involving financial instruments, carried out upon the client's request, for their own
account, or which do not comply with the hedging criteria (mainly derivatives used to manage the overall risk
exposure), are stated at market value, including realized and unrealized gains and losses, which are
recorded directly in the Statement of Income.
e) Loan, Lease and Other Credit Operations (Operations with Credit Granting Characteristics) Recorded at present value and calculated pro rata die based on the variation of the contracted index and
interest rate and are recorded on the accrual basis until the 60 th day overdue. After the 60th day, income is
recognized upon the effective receipt of installments. The income arising from the recovery of operations that
had been previously written off is classified in Income From Financial Operations – Loans and fees earned in
these operations are classified in Banking Service Fees.
f) Lease Receivable and Guaranteed Residual Value (VRG) - Recorded at the contractual amount with a
contra-entry to Unearned lease income and residual value, both contracted conditions. The VRG received in
advance is recorded in Other Liabilities - Anticipation of residual value until the maturity date of the contract.
The present value of the payments and VRG receivable from leases is recognized as excess / insufficient
depreciation in property leasing.
The practice adopted above differs from accounting practices established by Brazilian legislation, especially
with regard to the accrual basis in recording revenues and expenses related to lease agreements.
As a result, according to Central Bank Circular No. 1.429/89, the present value of the payments outstanding
is calculated using the internal rate of return of each contract, recording revenue or expense and the
corresponding excess or insufficiency of depreciation, respectively, recorded within the Fixed Assets.
The leases are updated for accrued interest up to 60 days overdue. After the 60th day, the recognition in
interest income occurs when the effective receipt of installments and the income from the recovery of
transactions initiated prior to delays (write-offs) is classified in Income from Financial Operations – Leasing
Operations, tariffs on contracting these operations are classified as income from bank charges and
appropriated to income from operating lease transactions on the date of receipt of payment.
g) Allowance for Loan Losses – Recorded based on a credit risk analysis, at an amount considered sufficient
to cover loan losses according to the rules determined by CMN Resolution No. 2,682 of December 21, 1999,
amended by article 2 of Resolution No. 2,697 of February 24, 2000, among which are:
Provisions are recorded from the date loans are granted, based on the client’s risk rating and on the
periodic quality evaluation of clients and industries, and not only in the event of default;
Based exclusively on delinquency, write-offs may be carried out 360 days after the due date of the loan
operation or 540 days for operations that mature after a period of 36 months.
h) Other Assets – Comprised prepaid expenses, corresponding to disbursements of which the benefit will
occur in future periods, and commissions paid to dealers upon the granting of vehicle financing or leasing.
i) Investments - In subsidiaries and affiliates are valued by the equity method, and the financial statements of
overseas subsidiaries adapted to the prevailing accounting standards in Brazil and converted into Reais.
Other investments are recorded at cost and are adjusted to fair value through the recognition of a provision,
in accordance with current standards.
j) Fixed Assets – Are stated at cost of acquisition or construction, less accumulated depreciation. They
correspond to rights related to tangible assets intended for maintenance of the company's operations or
exercised for such purposes, including assets arising from transactions that transfer to the company their
benefits, risks and control. Depreciation is calculated using the straight-line method, based on monetarily
restated cost, at the following annual rates:
Leasehold Improvements
EDP Systems
From 10%
20% to 50%
k) Impairment of Assets – ITAÚ BBA evaluates assets in order to determine if their carrying values are fully
recoverable. This procedure, conducted every six months, submits assets to qualitative and quantitative
analysis, and all assets are evaluated, at least, once a year.
The losses due to reduction of recoverable value are recognized by the amount of carrying values of assets
(or asset groups) that exceeds its recoverable amount. The asset recoverable amount is calculated as the
highest value between the value in use (cash flows sum before estimated taxes) and the fair value (market
price less sales costs). In order to evaluate the recoverable amount reduction, assets are grouped at the
minimum level for which independent cash flows (cash generating units) could be identified. The rating can
be made at an individual asset level when the fair value, less sales cost, could be reliably determined.
There was no indication of impairment of assets during the exercises ended June 30, 2014.
l) Contingent Assets and Liabilities and Legal Liabilities – Tax and Social Security - Assessed, recognized
and disclosed according to the CMN and BACEN Circular Letter No. 3,429 of February 11, 2010.
I - Contingent Assets and Liabilities
Refer to potential rights and obligations arising from past events, the occurrence of which is dependent
upon future events.
Contingent Assets - Not recognized, except upon evidence ensuring a high reliability level of
realization, usually represented by claims awarded a final and unappealable judgment and
confirmation of the recoverability of the claim through receipt of amounts or offset against another
liability;
Contingent Liabilities - Basically arise from administrative proceedings and lawsuits, inherent in the
normal course of business, filed by third parties, former employees and governmental bodies, in
connection with civil, labor, tax and social security lawsuits and other risks. These contingencies are
calculated based on conservative practices, being usually recorded based on the opinion of legal
advisors and considering the probability that financial resources shall be required for settling the
obligation, the amount of which may be estimated with sufficient certainty. Contingencies are
classified either as probable, for which provisions are recognized; possible, which are disclosed but
not recognized; and remote, for which recognition and disclosure are not required. Any contingent
amounts are measured through the use of models and criteria which allow their adequate
measurement, in spite of the uncertainty of their term and amounts.
Escrow deposits are restated in accordance with the current legislation.
Contingencies guaranteed by indemnity clauses in privatization processes supported by valid assets are
only recognized upon judicial notification by the creditor with simultaneous recognition of the receivable,
without any effect on results.
II - Legal Liabilities - Tax and Social Security - Represented by amounts payable related to tax liabilities,
the legality or constitutionality of which are subject to judicial defense, recognized at the full amount under
discussion.
Liabilities and related escrow deposits are adjusted in accordance with the current legislation.
m) Taxes - Calculated according to current legislation at the rates shown below, using the related calculation
bases.
Income Tax
Additional Income Tax
Social Contribution
PIS
COFINS
ISS
15.00%
10.00%
15.00%
0.65%
4.00%
up to 5.00%
NOTE 4 - CASH AND CASH EQUIVALENTS
06/31/2014
6,561
38,310
44,871
Cash and Cash Equivalents
Securities Purchased under Agreements to Resell – Funded Position
TOTAL
NOTE 5 - INTERBANK INVESTMENTS
06/30/2014
0 - 30
Money Market
Funded Position(*)
Interbank Deposits
TOTAL
% per maturity term
%
38,310
38,310
6
38,316
100.0
99.98
99.98
0.02
100.0
(*) There were no securities pledged to guarantee transactions in securities, Commodities and Futures Exchange - BM&F Bovespa and Bank on 06/30/2014 relating to
money market with free movement
NOTE 6 - SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (ASSETS AND LIABILITIES)
See below the composition by Securities and Derivatives type and maturity, already adjusted to their respective market values.
a) Summary per Maturity
Cost
CORPORATE SECURITIES
Shares
Debentures
Funds Quotas
Fixed Income
SUBTOTAL - SECURITIES
Trading Securities
Available-for-Sale Securities
TOTAL SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS
(ASSETS)
% BY MATURITY
Deferred Taxes (Note 9b)
Adjustment of Subsidiaries and Affiliates
Beneficial Post-Employment
ADJUSTMENT TO MARKET VALUE - SECURITIES
686,553
54,171
06/30/2014
Provision for adjustments to
market value reflected in:
Market Value
Stockholders’
Results
equity
68
(43,975)
642,646
(43,975)
10,196
Over 720
days
0 - 30
100,0
1,6
640,763
10,196
1,883
-
1,883
0,3
-
1,883
1,815
68
630,567
630,567
686,553
632,382
54,171
68
68
-
(43,975)
(43,975)
630,567
630,567
642,646
632,450
10,196
98,1
98,1
100,0
98,4
1,6
630,567
630,567
640,763
630,567
10,196
1,883
1,883
-
686,553
68
(43,975)
642,646
100,0
640,763
1,883
99,7
0,3
b) Derivative Financial Instruments - On 06/30/2014 there were no open positions in the derivatives market.
-
%
17,590
2,208
151
(24,026)
NOTE 7 - CONTINGENT ASSETS AND LIABILITIES AND LEGAL LIABILITIES – TAX AND SOCIAL
SECURITY
In the ordinary course of its businesses, ITAÚ BBA is involved in contingencies that may be classified as
follows:
a) Contingent Assets: There are no contingent assets recorded.
b) Contingent Liabilities: Are calculated and classified as follows:
Calculation criteria:
- Civil Lawsuits, Labor Claims and Tax and Social Security: Are analyzed and calculated individually,
case by case, at the claimed indemnity amount, adjusted monthly, based on the evidence presented and
on the evaluation of legal advisors which considers case law, legal opinions raised, evidence produced in
the records and the judicial decisions to be issued. This dataset is used to indicate the financial value at
risk of lawsuits and also to define the chance of loss of lawsuits by ITAÚ BBA, which can be: Probable,
Possible and Remote.
I - Contingencies classified as probable: Are recognized in the accounting books and mainly comprise
Civil Lawsuits, Labor Claims and Tax and Social Security lawsuits.
The table below shows the changes in the respective provisions for contingent liabilities and the
respective escrow deposits balances:
01/01 to 06/30/2014
Provisions for Contingent Liabilities
Civil
Opening Balance
Changes in the Period Reflected in Results
Increase
Write-offs through Reversal
Payments
Spin-Off Balance in Socitária Reorganization (Note 11d)
Closing Balance (Note 8b)
Escrow Deposits at 06/30/2014
4,192
250
298
(48)
(266)
(4,176)
-
Labor
77,954
(132)
(132)
(21)
(76,862)
939
40
Total
82,146
118
166
(48)
(287)
(81,038)
939
40
II - Contingencies
There are no contingencies
with
possibleThere
loss. are accounted for and represented by Labor Claims in the
classified as
possible:
amount of R $ 44,128.
Legal Liabilities-Tax and Social Security and Escrow Deposits for Filing Legal Processes: Recognized
at the full amount being questioned and respective escrow deposits, as follows:
01/01 to 06/30/2014
Provisions
Opening Balance
Restatement/Charges
Subtotal
Spin-Off Balance in Corporate Reorganization (Note 11d)
Closing Balance
Legal
Liabilities
(Note 9c)
33,319
491
33,810
33,810
Escrow deposits and Contingencies Legal Obligation and Provision
Opening Balance
Appropriation of Income
Subtotal
Spin-Off Balance in Corporate Reorganization (Note 11d)
Closing Balance (Note 8a)
Provision
179,449
2,165
181,614
(181,614)
-
Total
212,768
2,656
215,424
(181,614)
33,810
01/01 to
06/30/2014
483,272
3,301
486,573
(447,580)
38,993
The main legal liabilities are described below:
- PIS – Principles of anteriority over 90 days and Non-Retroactivity - R$ 28,952 - We request the
rejection of constitutional Amendments No. 10/96 and No. 17/97 in view of the principles of
anteriority and nonretroactivity,seeking authorization to make payment based on Supplementary
Law No. 07/70. The corresponding escrow deposit balance totals R$ 20,974.
In the opinion of the legal advisors, ITAÚ BBA is not party to any other administrative proceedings or
legal lawsuits that could significantly impact the results of its operations.
NOTE 8 – BREAKDOWN OF ACCOUNTS
a) Other sundry receivables
Advance for Future Capital Increase
Deferred tax assets (Note 9b I)
Taxes and contributions for offset
Debtors abroad
Escrow deposits (Note 7b)
Others
TOTAL
b) Other sundry liabilities
Provision for Personnel Expenses
Provision for payments
Provision for Labour Action (Note 7b)
Others
TOTAL
06/30/2014
354,317
289,708
132,144
48,010
38,993
32,617
895,789
(2,201,736)
4%
06/30/2014
79,892
12,470
939
6,079
99,380
c) Banking service fees
Income from economic and financial advisory
Guarantees provided
Collection fees
Brokerage commission
Others
TOTAL
01/01 to
06/30/2014
142,519
72,702
56,254
30,680
3,898
306,053
d) Other administrative expenses
Third-party services
Installations
Data processing and telecommunications
Cost sharing (Note 12a)
Travel expenses
Financial system services
Depreciation and amortization
Others
TOTAL
01/01 to
06/30/2014
(44,342)
(42,293)
(27,790)
(12,792)
(6,315)
(4,364)
(3,799)
(18,070)
(159,765)
e) Other operating expenses
Amortization of goodwill on merger
Expenses Operations Vendor
Provision for Civil Lawsuits tax and social security
Others
TOTAL
01/01 to
06/30/2014
(47,134)
(6,930)
(5,073)
(14,611)
(92,676)
541,340
NOTE 9 - TAXES
a) Composition of expenses for taxes and contributions
I - Statement of calculation with income tax and social contribution
01/01 to
06/30/2014
Due on operations for the period
Income before income tax and social contribution
Charges (Income tax and social contribution) at the rates in effect (Note 3m)
Increase/decrease to income tax and social contribution charges arising from:
Participation in Subsidiaries and Affiliates
Participation in Subsidiaries and Affiliates Abroad
Dividends and Tax Incentives
Other
Total income tax and social contribution
149,803
(59,921)
107,662
106,555
11,849
14,898
181,043
II - Tax expenses are represented mainly by PIS, COFINS and ISS.
b) Deferred taxes
I-
The deferred tax asset balance and its changes, segregated based on its origin and disbursements incurred, are represented as follows:
12/31/2013
Spin-Off Balance in
Corporate Reorganization
(Note 11d)
Realization
Increase
06/30/2014
2,088,829
8,342
1,001,432
(2,077,019)
(10,492)
(1,036,384)
(334,783)
(12,163)
Adjustment to market value of securities and derivative financial instruments
429,947
(217,715)
(212,232)
-
-
Legal liabilities - tax and social security and contingent liabilities
Adjust from operations in futures settlement market
Profit Sharing
Other non-deductible provisions
48,099
331,219
156,120
113,670
(42,738)
(562,795)
(101,439)
(105,456)
(4,985)
(42,508)
(54,681)
(8,214)
4,997
274,084
56,504
-
5,373
56,504
-
7,883
2,096,712
(26,613)
(2,103,632)
(821)
(335,604)
67,141
662,232
47,590
319,708
Reflected in Results
Income tax and social contribution loss carryforwards
Allowance for loan losses
Reflected in stockholders equity accounts - adjustment to market value
of available-for-sale securities (Note 6a)
TOTAL
595,091
212,391
47,115
272,118
210,241
-
II - Provision for deferred income tax and Social Contribuition balance and its changes are shown as follows:
Spin-Off Balance in
Corporate Reorganization Realization
(Note 11d)
955,206
(938,171)
(18,001)
359,019
(341,018)
(18,001)
368,519
(368,519)
-
12/31/2013
Reflected in Results
Depreciation in excess - leasing
Adjustments of operations carried ou in future settlemente market
Adjustment to market value of securities and derivative financial instruments
Restatemente of escrow deposits and contingent liabilities
Reflected in stockholders equity accounts - adjustment to market value
of available-for-sale securities (Note 6a)
TOTAL
Total Net (Assets - Liabilities)
Increase
06/30/2014
4,767
-
3,801
-
147,980
79,688
(147,980)
(80,654)
-
4,767
3,801
4,566
959,772
1,136,940
(4,566)
(942,737)
(1,160,895)
(18,001)
(317,603)
4,767
657,465
3,801
315,907
III- The estimate of realization and present value of deferred tax assets existing at June 30, 2014, in accordance with the expected generation of
future taxable income, based on historical profitability and a technical feasibility study, are:
Realization year
2014
2015
2016
2017
2018
After 2018
TOTAL
Present value (1)
Temporary
differences
53,414
5,299
610
9,957
527
9,660
79,467
73,938
Income tax and loss
%
carryforwards
66%
6,698
3%
7%
28,565
14%
1%
21,968
10%
13%
22,396
11%
1%
22,871
11%
12%
107,743
51%
210,241 100%
100%
170,977
%
TOTAL
%
60,112
33,864
22,578
32,353
23,398
117,403
289,708
244,915
21%
12%
8%
11%
8%
40%
100%
(1) The average funding rate was used to determine the present value.
The projections of future taxable income include estimates related to macroeconomic variables, exchange rates, interest rates,
volume of financial operations and services fees and others, which can vary in relation to actual data and amounts.
Net income in the financial statements is not directly related to taxable income for income tax and social
contribution, due to differences between accounting criteria and tax legislation, besides corporate
aspects. Accordingly, we recommend that the trend of the realization of deferred tax assets arising from
temporary differences, income tax and social contribution loss carryforwards not to be used as an
indication of future net income.
IV- At June 30, 2014, there are no unrecorded deferred taxes.
c) Tax and social security contributions
The balance of taxes and social security contributions is composed as follows:
06/302014
Provision for deferred income tax and social contribution
Taxes and contributions on income payable
Taxes and contributions payable
Legal Liabilities - tax and social security (Nota 7b)
TOTAL
3,801
46,877
28,085
33,810
112,573
NOTE 10 - INVESTMENTS AND INTANGIBLE ASSETS
Investments in subsidiaries and affiliates
Equity in earnings of subsidiaries and affiliates
Companies
Domestic
Intrag - Part Administração e Participações Ltda.
Itauseg Participações S.A.
Itaú-BBA Trading S.A. (2)
Foreign
Itaú-BBA SAS.
Banco Itaú Argentina S.A.
Itau BBA Colombia S.A. Corporación Financiera
Total
Balances at
12/31/2013
5,844,978
4,470,646
1,284,472
89,860
399,368
19,095
4,869
375,404
6,244,346
Dividends paid (1)
(476,892)
(349,009)
(127,895)
12
(476,892)
Net income (loss) Exchange Variation
269,154
164,540
106,481
(1,867)
(2,099)
(85)
925
(2,939)
267,055
(5,929)
(628)
(1,326)
(3,975)
(5,929)
Adjustments to market
value of securities
Total
269,154
164,540
106,481
(1,867)
(8,028)
(713)
(401)
(6,914)
261,126
2,822
2,821
1
(2)
(2)
2,820
Corporate Events (3)
(1,456,092)
(984,619)
(471,473)
(368,490)
(368,490)
(1,824,582)
Balances at 06/30/2014
4,183,970
3,301,558
794,406
88,006
22,848
18,382
4,466
4,206,818
(1) The deliberate and unpaid dividends are recorded in Dividends
Receivable;
(2) Includes adjustment of Profit / (Loss) Accumulated in the amount of R
$
(3)(1,281);
Corporate Events arising from capital reductions.
Companies
Domestic
Intrag - Part Administração e Participações Ltda.
Itauseg Participações S.A.
Itaú-BBA Trading S.A. (2)
Foreign
Itaú-BBA SAS.
Banco Itaú Argentina S.A.
Capital
Stockholders’
equity
Number of common shares owned by ITAÚ BBA
Net income (loss)
for the period
Ordinary
4,448,863
5,874,116
46,442
4,522,114
7,260,082
88,006
225,369
973,128
(587)
554,902,067
3,938,518,832
22,056
201,402
18,382
444,762
(55)
92,123
1,880,288
7,469,046
Equity share in
voting capital (%)
Quotas
60,816,478
-
73.01%
10.94%
100.00%
100.00%
1.00%
NOTE 11 - STOCKHOLDERS' EQUITY
a) Capital - Comprises 8,948,873 book-entry shares with no par value, of which 4,474,436 are common
class A shares, 1 is common class B share and 4,474,436 are preferred shares.
In the Extraordinary General Meeting of 01/31/2014, and approved by the Central Bank on 05/02/2014 it
was decided to reduce the capital in the amount of R$ 649,242, resulting from the split between Itaú
BBA SA and Itaú Unibanco upon cancellation of 1,620,180 shares, of which 810,090 are common and
are preferred.
b) Dividends and interest on capital - Stockholders are entitled to a mandatory dividend of not less than
25% of annual net income, which is adjusted according to the rules set forth in Brazilian Corporate Law.
c) Reserves
Capital Reserves - Restatement of Equity Securities
Revenue Reserves
Legal
Statutory(*)
(*) Recognized to ensure to the company the proper operating margin, as provided in its By-laws.
06/30/2014
13,009
1,738,927
682,282
1,056,645
d) Corporate Reorganization
In General Meeting of 01/31/2014, approved by the Central Bank on 06/02/14, based on the balance sheet of
12/31/2013, approved the partial spin-off of Banco Itaú BBA SA (Itaú BBA) for Itaú Unibanco SA (Itaú Unibanco) in
the amount of R $ 909,037, as shown below:
ASSETS
Current Assets and Long-term Receivables
Cash and Cash Equivalents
Interbank Investments
Securities
Derivative Financial Instruments
Interbank and Interbranch Accounts
Loan Operations
Lease Operations
Foreign Exchange Portfolio
Other Receivables
Permanent
Investments
Fixed Assets
Leased
Intangible
Total
LIABILITIES
ITAÚ BBA
174,124,240
551,402
8,939,405
81,083,215
5,818,661
5,288,443
61,141,869
(30,383)
8,094,964
3,236,664
10,119,848
8,351,660
278,983
1,409,963
79,242
184,244,088
Current and Long-Term Liabilities
Interbank Deposits
Deposits Received Under Securities Repurchase Agreements
Funds from Acceptances and Issuance of Securities
Interbank and Interbranch Accounts
Borrowings and Onlending
Derivative Financial Instruments
Foreign Exchange Portfolio
Other Liabilities
Deferred Income
183,196,066
72,792,229
54,503,579
7,598,284
1,191,028
33,581,098
5,598,688
5,280,610
2,650,550
138,985
Total
NET ASSETS SPLIT
183,335,051
909,037
It does not include any variations of assets and liabilities incorporated between the date of the General Meeting and
the base date of the event, which were recognized by Itaú BBA, and transferred to Itaú Unibanco SA will proportionally
spun.
NOTE 12 - RELATED PARTIES
a) Transactions between related parties are done at amounts, terms and average rates in accordance with normal
market practices during the period, and under reciprocal conditions. These operations include:
Annual Rates
Interbank Investments
- Itaú Unibanco S.A.
- Others
Securities
- Dibens Leasing S.A. Arrendamento Mercantil
10.90% fixed rate
Assets/(Liabilities)
Revenue/(Expenses)
06/30/2014
01/01 to
06/30/2014
38,310
38,310
-
26,298
26,001
297
288,363
287,930
- Others
-
433
Derivative financial instruments – Asset Position
- Itaú Unibanco S.A.
-
686,359
573,139
- Itau Bank Ltd.
-
93,911
- Jasper Internacional Investmente LLC
-
14,124
- Others
-
5,185
Foreign exchange portfolio – Asset Position
- Itaú Unibanco S.A.
- Itaú Unibanco S.A. - Grand Cayman Branch
-
27,277
167
-
22,747
- Itau Bank Ltd.
-
Amounts receivable from related companies
- Itaúseg Part
- Itaú Unibanco S.A.
- Itaú Grand Cayman - Agência
- Itaú Unibanco S.A. - New York Branch
- Others
(*)
Interbank deposits
- Itaú Unibanco S.A.
4,363
384,988
354,317
21,427
30,671
-
9,289
-
12,124
(295,653)
(295,653)
-
14
(557,476)
(421,516)
- Dibens Leasing S.A. Arrendamento Mercantil
-
- Others
-
(886)
Time deposits
- Itaú BBA Participações S.A.
-
(8,922)
(1,264)
- Itau Bank Ltd.
-
(7,255)
- Others
-
(403)
Derivative financial instruments – (Liability Position)
- Itaú Unibanco S.A.
-
(1,065,529)
(1,038,721)
- Itau Bank Ltd.
-
(10,084)
- Banco Itaú BBA Internacional PLC.
-
(16,673)
- Others
-
(51)
Foreign exchange portfolio – (Liability Position)
- Itaú Unibanco S.A.
- Itaú Unibanco S.A. - Grand Cayman Branch
-
(6,134)
(548)
-
(4,828)
-
(181,947)
(109,799)
-
(72,148)
- Itau Bank Ltd.
Securities sold under repurchase agreements – Own and third parties
- Dibens Leasing S.A. Arrendamento Mercantil
- Itaú Unibanco S.A.
Amounts payable to related companies
- Itaú Unibanco S.A.
(135,074)
(758)
(6,047)
(6,047)
(2,201)
-
- Itaú BBA USA SEC
-
(912)
- Mundostar S.A.
- Others
-
(884)
(405)
In addition to the aforementioned transactions, ITAÚ BBA, as an integral part of the Agreement for Apportionment of
Common Costs of the Itaú Unibanco Group, was reimbursed by the other group Companies in the amount of R$ 20,861
and recorded, in Other Administrative Expenses, the amount of R$ (12,792) from 01/01 to 06/30/2014) in view of the use of
the common structure.
b) Compensation of the Management Key Personnel
The fees attributed in the period to ITAÚ BBA officers are as follows:
Compensation – Board of Directors
Profit sharing
Total
01/01 to
30/06/2014
(74,459)
(25,482)
(99,941)
NOTE 13 – ADDITIONAL INFORMATION
a) Risk management – ITAÚ BBA by means of the leading institution, Itaú Unibanco Holding S.A. (ITAÚ
UNIBANCO,) adopted the operational and market risk management structure in compliance with CMN
Resolutions No. 3,380/06 - Operational Risk; No. 3,464/07 - Market Risk; No. 3,721/09 - Credit Risk and No.
4,090/12 - Solvency Risk. The descriptions of these risk management structures and other business risks are
available on the website of the leading institution (www.itau-unibanco.com.br/ri) in the path: Corporate
Governance/Risk Management, which is not part of the financial statements
b) Arrangements for clearing and settlement of obligations under the National Financial System Certain agreements were signed for clearing and settlement of obligations under CMN Resolution No. 3,263
of February 24, 2005, through public instruments aimed at allowing compensation of credits and debits held
with a single counterparty, where the maturity of the receivables and obligations can be anticipated to the
date of the event of default by either party or in case of bankruptcy of the debtor.
c) Single Audit Committee – In accordance with CMN Resolution No. 3,198, ITAÚ BBA adopted the Single
Audit Committee established by the Itaú Unibanco Financial Conglomerate by means of the leading
institution Itaú Unibanco Holding S.A. The summary of the report of this Committee was disclosed together
with the financial statements of the leading institution Itaú Unibanco Holding S.A..
Independent Auditor’s Report
To the Management and Stockholders
Banco Itaú BBA S.A.
We have audited the accompanying financial statements of Banco Itaú BBA S.A. ("Bank"), which comprise the
balance sheet as at June 30, 2014 and the statements of income, changes in equity and cash flows for the year
then ended, and a summary of significant accounting policies and other explanatory information.
Management's responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting practices adopted in Brazil, applicable to institutions authorized to operate by the Brazilian
Central Bank (BACEN), and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with Brazilian and International Standards on Auditing. Those standards require that we
comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and
fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of Banco Itaú BBA S.A. as at June 30, 2014, and its financial performance and cash flows for the year
then ended, in accordance with accounting practices adopted in Brazil.
Emphasis of matter
Because of the partial split off of the equity of Banco Itaú BBA S.A. at December 31, 2013 for its merger into
Itaú Unibanco S.A., as approved by stockholders at the Extraordinary General Meeting held on January 31,
2014 (described in Notes 2 and 11 to the financial statements), the financial statements are not being presented
on a comparable basis to the balances as at June 30, 2013, based on Item I of Article 9 of the BACEN Circular
Letter 3,017, dated December 6, 2000. Our opinion is not qualified in respect of this matter.
São Paulo, August 20, 2014
PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5
Washington Luiz Pereira Cavalcanti
Contador CRC 1SP172940/O-6
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