Itau Unibanco Holding S.a. · BMFBOVESPA:ITUB3
Itau Unibanco — Investor Presentation (February 2018)
109 slides from Itau Unibanco's investor presentation, Feb 7, 2018
Slide 1: 4Q17 Institutional Information
4Q17 Institutional Information Itaú Unibanco Holding S.A.
Slide 2: Forward-looking statements
4Q17 This presentation contains forward-looking statements regarding Itaú Unibanco Holding, its subsidiaries and affiliates - anticipated synergies, growth plans, projected results and future strategies. Although these forward-looking statements reflect management’s good faith beliefs, they involve
Slide 3: Disclaimer: Corpbanca Pro Forma Information and Citibank
Disclaimer Corpbanca Pro Forma Information The merger between Itaú Chile and CorpBanca was concluded on April, 1st 2016. As from the second quarter of 2016, Itaú CorpBanca, the company resulting from this merger, was consolidated in our financial statements, as we are the controlling shareholder of
Slide 4: Agenda
Agenda 1. Our Profile 2. Corporate Governance 3. Business Overview 4. Financial Highlights 5. Information Technology 6. Itaú Unibanco in Capital Markets 7. Sustainability As of February 05, 2018
Slide 5: Our Profile
1 Our Profile
Slide 6: Itaú Unibanco at a Glance
Itaú Unibanco at a Glance Leading position in Brazil US$83.3 billion market cap (1) 96,435 employees in Brazil and abroad 4,910 branches and CSBs in Brazil and abroad 46,965 ATMs in Brazil and abroad Brazilian multinational bank Major provider of finance for the expansion of Brazilian companies In 2
Slide 7: Our Vision
Our Vision Vision: To be the leading bank in sustainable performance and customer satisfaction • Implement a customer satisfaction-oriented culture, that is business-driven, through a simplified operational structure • Maximize shareholder returns, aiming at firm-wide growth • We aspire to be the pr
Slide 8: Our Way
Our Way 1. It’s only good for us if it’s good for the client We are people providing service to people, with passion and excellence. We work with the client and for the client – because they are the main reason behind why we do what we do. 2. We’re passionate about performance Generating sustainable
Slide 9: Medium and Long-Term Strategic Agenda
Medium and Long-Term Strategic Agenda CORPORATE GOVERNANCE AND SUSTAINABILITY PERMEATE ALL EFFORTS ON KEY STRATEGIC OBJECTIVES Commitment to permanently improve corporate governance plays a vital role in protecting stakeholders’ interests. We incorporate sustainability into our strategy through a co
Slide 10: Itaú Unibanco Global Footprint
Itaú Unibanco Global Footprint Itaú Unibanco has an important presence in key financial centers supported by a unique recognition and reputation. We want to be recognized as: The Latin American Bank CIB NY, Cayman, Bahamas Institutional Clients / Asset NY, Cayman Private Banking Cayman, Bahamas, Mia
Slide 11: A History of Successful Strategic Deals
A History of Successful Strategic Deals 1 Casa Moreira Salles Merger 2008 Unibanco Uruguay Retail – Brazil Acquisition of the Acquisition of the remaining 50% of: minority interest of: Banco Itaú BMG Consignado Acquisition of the minority interest of: 2 1924 1944 1995 - 1998 2000 - 2003 2004 - 2007
Slide 12: Corporate Governance
2 Corporate Governance
Slide 13: Corporate Governance at Itaú Unibanco
Corporate Governance at Itaú Unibanco Strengths of our structure • Family ownership ensuring a long-term view • Professional management team • Strong corporate governance • Broad shareholder base (52.67% of our shares in free float) Egydio de Souza Free Float* Moreira Salles Family Non Voting Shares
Slide 14: IUPAR and Itaú Unibanco Governance
IUPAR (Itaú Unibanco Participações) and Itaú Unibanco Governance IUPAR (Itaú Unibanco Participações) Itaú Unibanco Board of Directors Alignment and union among shareholders; Group´s vision, mission and values; Significant mergers & acquisitions; Nominations to the Board of Directors and CEO; Perform
Slide 15: Board of Directors and Executive Committees
Itaú Unibanco Board of Directors and Executive Committees Board of Directors Co-Chairman Co- Chairman Pedro Moreira Salles Roberto Egydio Setubal Directors Alfredo Egydio Setubal Gustavo Jorge Laboissière Loyola 1 Amos Genish 1 João Moreira Salles Fábio Colletti Barbosa 1 José Galló 1 Geraldo Carbon
Slide 16: Risk Management Structure
Risk Management Structure Capital and Risk Board of Directors Audit Committee Management Committee Pedro Moreira Salles Gustavo Loyola 1 Pedro Bodin 1 Roberto Egydio Setubal Internal Audit Paulo Miron Itaú Unibanco Holding President and CEO Candido Bracher 3rd line of defense Independent review of t
Slide 17: Governance Structure at Itaú Unibanco
Governance Structure at Itaú Unibanco Shareholder’s Meeting Fiscal Council Board of Directors Audit Personnel Related Nomination Risk and Capital Strategy Compensation International Committee Committee Parties and Corporate Management Committee Committee Advisory Committee Governance Committee Board
Slide 18: Credit Risk Policies Hierarchy
Credit Risk Policies Hierarchy Defines and monitors Risk Appetite; Board of Directors and Capital and Risk Management Committee Approval of policies, strategies and definition of minimum expected return on capital; Improvement of Risk Culture. Executive Committee General Office and Risk Dept. Define
Slide 19: Risk Appetite Defined by the Board of Directors
Risk Appetite Defined by the Board of Directors Principles Statement Sustainability and customer Optimization of capital satisfaction; allocation; Risk pricing; Low volatility in results; Operational excellence; Regional focus; Diversification; Alignment with “Our Way”; Risk Culture; Diversification
Slide 20: Risk Appetite (as approved by the Board of Directors)
Risk Appetite (as approved by the Board of Directors) The Risk Appetite... establishes the types and levels of risk acceptable to the bank, within which management seeks to maximize value creation. It is based on Board of Directors Statement “We are a universal bank, operating predominantly in Latin
Slide 21: Retail Management – Individuals and Small and Medium Companies
Retail Management – Individuals and Small and Medium Companies POLICY Variables that distinguishes risk STATISTICAL MODELS Lowest risk Risk Level Highest Risk 100 100 102 98 114 94 123 89 128 88 148 88 153 88 100 100 104 101 102 95 101 89 106 90 112 99 124 94 115 91 115 91 116 92 130 93 148 88 157 8
Slide 22: Credit Offer Based on Future Scenario
Credit Offer Based on Future Scenario Risk level STATISTICAL MODELS Lowest risk Base POLICY Scenario Highest risk Positive future expectation Risk Level Credit Available Credit Not Available Easing of credit, maintaining the same appetite STATISTICAL MODELS Risk Level Credit Available Credit Not Ava
Slide 23: Business Overview
3 Business Overview
Slide 24: Universal Bank
Universal Bank 1 • Approximately 29.2 million credit card accounts and 26.2 million debit card accounts; • Leader in Brazilian credit card market, extensive number of joint ventures and partnerships with retailers. • Total portfolio for individuals of R$14.1 billion; • Lease and finance through over
Slide 25: Client Segmentation
Client Segmentation Individuals Segmentation by monthly income Private Bank >R$5 Million in total investment Personnalité >R$10 Thousand or >R$100 Thousand in total investments Uniclass >R$4 Thousand up to R$10 Thousand Retail up to R$4 Thousand Companies Segmentation by annual sales Ultra over R$4
Slide 26: Retail in Brazil
Retail in Brazil Presence in Brazil 1 (As of December 31, 2017) North 117 Northeast 332 Midwest 313 Southeast 2,933 South 672 Brazil: 4,367 Automated Teller Machines (ATMs) 2 44,352 44,037 44,293 44,631 44,947 45,182 45,353 45,502 45,769 209 110 75 69 26 21 15 8 7 715 694 686 668 648 635 626 617 613
Slide 27: Retail - Credit Cards, Joint Ventures and Partnerships with Retailers
Retail - Credit Cards, Joint Ventures and Partnerships with Retailers in Brazil Highlights • Brazilian market leader in credit card transactions. • Qualification of the client base: proprietary channel x partnerships. • Credit card business comprises: • Issuance of cards • Acquiring: REDE • JVs and
Slide 28: Retail - Cards in Brazil
Retail - Cards in Brazil | Growing Penetration in Household Consumption Expenditure Credit and Debit Cards Billed Volume% at Household Consumption Expenditure 28.2% 29.9% 28.4% 28.8% 28.0% 30.3% 28.4% 28.8% 29.4% 10.6% 11.6% 11.0% 10.9% 10.7% 11.9% 11.1% 11.2% 11.4% 17.6% 18.3% 17.4% 17.9% 17.4% 18.
Slide 29: Retail - Payroll Loan in Brazil
Retail - Payroll Loan in Brazil Evolution of Payroll Loan Portfolio 1 Composition of Payroll Loans Portfolio by Sector R$billion 45.4 46.7 46.5 45.6 44.6 44.9 44.8 44.6 44.4 4.8 4.7 5.0 4.6 4.4 4.3 4.3 4.4 4.7 11.6 11.0 10.4 9.8 9.2 8.8 8.2 7.6 7.0 10% 16% 28.8 30.9 31.4 31.2 31.0 31.7 32.2 32.6 32.
Slide 30: Retail - Mortgage Market in Brazil
Retail - Mortgage Market in Brazil Mortgage Loans Evolution Distribution Channels for Individuals Balance R$million As of December 2017 -3.5% 48,589 47,241 46,895 Partnerships 21.6% 18.9% 17.6% 10% Regular Real Estate Branches 12% Brokers 35% 78.4% 81.1% 82.4% Developers 17% High Income Dec-16 Sep-1
Slide 31: Retail - Vehicle Financing in Brazil
Retail - Vehicle Financing in Brazil Highlights: • Offers finance through over 10 thousand dealers. • Average ticket size of approximately R$30.1 thousand. • 85% of the financing is guaranteed up to 4 years. • 89% of the financing are made up to 48 months. • LTV of the new vehicle concessions to ind
Slide 32: Retail - Insurance Ranking in Brazil
Retail - Insurance Ranking in Brazil 1,2 Jan-Nov/17 Jan-Nov/16 Model Total Insurance 3 4th 4th Bancassurance 4 4th 3th Life & Personal Accidents 3rd 3rd Bancassurance Credit Insurance 5th 5th Bancassurance Pension Plan 3rd 3rd Bancassurance Premium Bonds 3rd 3rd Bancassurance Porto Seguro 2nd 2nd Ve
Slide 33: Retail - Association with Porto Seguro
Retail - Association with Porto Seguro Association’s Structure Controlling stockholders of Itaú Unibanco Porto Seguro 57.07% 42.93% PSIUPAR Market 69.88% 30.12% Porto Seguro S.A. (PSSA) 99.99% 100.0% Itaú Seguros de Auto e Subsidiaries Porto Seguro S.A. Residência S.A (ISAR) Highlights • Unification
Slide 34: Very Small, Small and Middle Market in Brazil
Very Small, Small and Middle Market in Brazil SMEs Loan Portfolio 1 R$million 79,649 75,433 72,002 68,974 61,547 61,768 2012 2013 2014 2015 2016 2017 Highlights Full range of financial products and services, including deposits accounts, investment options, insurance, cash management, credit products
Slide 35: Wholesale - Corporate Companies in Brazil
Wholesale - Corporate Companies in Brazil Corporate Loans 1 R$million 213,815 219,418 194,472 181,541 163,437 165,052 2012 2013 2014 2015 2016 2017 Highlights • Corporate clients with annual sales above R$200 million. • We offer a broad portfolio of banking products and services, from cash managemen
Slide 36: Wholesale - Corporate and Investment Banking
Wholesale - Corporate and Investment Banking | Leadership Position in Brazil Wholesale Banking Middle Annual revenues from R$30 MM up to R$200 MM Corporate Banking Annual revenues over R$200 MM Investment Banking Leadership position and client recognition Investment Banking Fixed Income We took part
Slide 37: Wholesale - Wealth Management Services
Wholesale - Wealth Management Services | Brazil Evolution of Assets Under Administration Investment Product management for the conglomerate and a full range of investment options to Retail Banking. 922 946 R$billion 849 883 802 801 721 752 683 Asset Management Asset Management In December 2017, we r
Slide 38: Retail Footprint in Latin America
Retail Footprint in Latin America | December 2017 Mexico | CIB Employees: 9 Colombia1 Employees: 3,650 Branches + CSBs: 174 ATMs: 176 Peru Representative Office Chile Employees: 5,922 Branches + CSBs: 201 ATMs: 469 CIB Argentina Employees: 1,700 Retail and Wholesale Branches + CSBs: 87 ATMs: 178 (1)
Slide 39: Segments – Income Statement Pro Forma 4Q17
Segments – Income Statement Pro Forma 4Q17 Retail Banking Wholesale Banking Activities with the Itaú Unibanco In R$millions Market + Corporation Operating Revenues 17,707 7,150 2,658 27,514 Managerial Financial Margin 9,433 4,682 2,631 16,745 Financial Margin with Clients 9,433 4,682 1,200 15,314 Fi
Slide 40: Financial Highlights
4 Financial Highlights
Slide 41: Highlights
Highlights Recurring Net Income 1 Consolidated R$6.3 bn + 0.4% (4Q17/3Q17) R$24.9 bn +12.3% (2017/2016) Brazil R$6.1 bn + 2.4% (4Q17/3Q17) R$24.1 bn + 13.5% (2017/2016) Recurring ROE (p.a.) 1 Consolidated 21.9% + 30 bps (4Q17/3Q17) 21.8% + 160 bps (2017/2016) Brazil 23.5% + 80 bps (4Q17/3Q17) 23.2%
Slide 42: Recurring Net Income and ROE
Recurring Net Income and ROE In R$billions 19.6% 20.6% 19.9% 20.7% 22.0% 21.5% 21.6% 21.9% 5.2 5.6 5.6 5.8 6.2 6.2 6.3 6.3 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Recurring Net Income Annualized Recurring Return on Average Equity (quarterly) Itaú Unibanco Holding S.A. page 42
Slide 43: Non-Recurring Events
Non-Recurring Events In R$millions 4Q17 3Q17 4Q16 2017 2016 Recurring Net Income 6,280 6,254 5,817 24,879 22,150 Non-Recurring Events (459) (177) (275) (914) (583) IRB - 155 - 155 - ∟ Disposal of IRB shares Integration of Citibank (277) - - (277) - ∟ Provisions Expenses for Citibank integration Liab
Slide 44: Income Statement | Citibank’s Operation
Income Statement | Citibank’s Operation For comparison purposes, we deconsolidated the effects from Citibank’s retail operations in Brazil (Citibank) and we recorded in a specific line in our income statement. Therefore, the information presented in this presentation does not include Citibank’s bala
Slide 45: Income Statement | Operating Revenues Perspective
Income Statement | Operating Revenues Perspective In R$millions 4Q17 3Q17 4Q16 2017 2016 26,981 2.0% 28,903 111,422 -2.2% Operating Revenues 27,514 -4.8% 108,967 Managerial Financial Margin 16,745 16,769 -0.1% 18,855 -11.2% 68,315 72,121 -5.3% Financial Margin with Clients 15,314 15,410 -0.6% 16,862
Slide 46: Income Statement | Managerial Financial Margin Perspective
Income Statement | Managerial Financial Margin Perspective In R$millions 4Q17 3Q17 4Q16 2017 2016 16,769 -0.1% 18,855 72,121 -5.3% Managerial Financial Margin 16,745 -11.2% 68,315 Financial Margin with Clients 15,314 15,410 -0.6% 16,862 -9.2% 62,034 65,122 -4.7% Financial Margin with the Market 1,43
Slide 47: Results – Brazil and Latin America
Results – Brazil and Latin America 2017 2017 2016 In R$billions Consolidated Brazil 1 Latin America (ex-Brazil) 2 Consolidated Brazil 1 Latin America (ex-Brazil) 2 Consolidated Brazil 1 Latin America (ex-Brazil) 2 Operating Revenues 1 09.0 100.0 9 .0 111.4 102.2 9 .3 -2.2% -2.1% -2.9% Managerial Fin
Slide 48: Business Model
Business Model In R$billions 2017 2016 Insurance Excess Insurance Excess Insurance Excess Consolidated Credit Trading and Consolidated Credit Trading and Consolidated Credit Trading and Capital Capital Capital Services Services Services Operating Revenues 109.0 55.9 1.6 48.7 2.7 111.4 58.2 2.2 48.3
Slide 49: Credit Portfolio with Financial Guarantees Provided and Corporate Securities
Credit Portfolio with Financial Guarantees Provided and Corporate Securities Consolidated In R$billions, end of period 4Q17 3Q17 4Q16 179.9 3.0% 183.4 1.0% Individuals 185.3 Credit Card Loans 63.0 57.2 10.3% 59.0 6.8% Personal Loans 25.3 26.0 -2.7% 26.3 -3.8% Payroll Loans ¹ 44.2 44.6 -0.8% 44.6 -1.
Slide 50: Credit Portfolio by Currency
Credit Portfolio by Currency R$billion Dec-17 192.4 365.4 557.7 Sep-17 180.7 358.4 539.1 Jun-17 184.9 367.4 552.3 Mar-17 176.5 373.9 550.3 Dec-16 183.3 378.7 562.0 Sep-16 193.8 374.0 567.7 Jun-16 194.9 378.1 573.0 Mar-16 216.0 384.7 600.7 Dec-15 234.3 400.9 635.2 Foreign Currency Local Currency Itaú
Slide 51: Credit Portfolio by Product
Credit Portfolio by Product In R$billions, end of period 4Q17 3Q17 4Q16 3.0% 183.2 0.6% Individuals - Brazil ( 1) 184.4 179.0 Credit Card 63.0 57.2 10.3% 59.0 6.8% Personal Loans 24.3 25.0 -2.9% 25.8 -6.1% Payroll Loans (2) 44.2 44.6 -0.8% 44.6 -1.0% Vehicles 14.1 13.9 1.4% 15.4 -8.4% Mortgage Loans
Slide 52: Credit Portfolio Growth in Brazil
Credit Portfolio Growth in Brazil 1 (in R$Billions) Nominal GDP (Nov-13 to Nov-17): 23.5% Accumulated Inflation (IPCA) (Dec-13 to Dec-17): 30.0% Accumulated Interbank Rate: (Dec-13 to Dec-17): 58.5% Credit Card Loans Personal Loans Payroll Loans Vehicle Loans Considers the acquisition of the “Credic
Slide 53: Credit Portfolio Breakdown
Credit Portfolio Breakdown 1 Companies Credit Portfolio by Business Sector 2,3 In R$billions, end of period 4Q17 3Q17 26.0% Public Sector 4.9 3.9 Private Sector | Companies 314.0 305.5 2.8% Real Estate 21.9 21.6 1.4% Food and beverage 17.3 16.4 5.5% Vehicles and auto parts 16.0 17.2 -6.6% Agribusine
Slide 54: Credit Portfolio by Vintage
Credit Portfolio by Vintage1,2 Profile of credit portfolio by origination period: Older vintages with higher spreads are losing relevance compared to the most recent ones. 54.7% of total origination was created in the past 12 months. 491 468 494 43.7% 42.6% 40.9% 5.4% 4.8% 4.3% 5.7% 5.0% 6.1% 7.9% 6
Slide 55: Evolution of the Credit Portfolio Mix
Evolution of the Credit Portfolio Mix Corporate and Individuals1 | Brazil Individuals 13.4% 17.4% 21.8% 24.4% 24.3% 25.5% 24.4% 25.0% 24.0% 14.4% 15.3% 15.6% 17.0% 18.5% 19.9% 20.8% 21.4% 21.0% 24.0% 19.8% 15.6% 12.7% 10.7% 9.2% 8.4% 7.9% 7.6% 16.0% 16.4% 15.1% 15.8% 15.2% 15.5% 14.1% 14.2% 13.2% 32
Slide 56: Managerial Financial Margin With Clients
Managerial Financial Margin With Clients1 4Q17 3Q17 Average Financial Average Rate Average Financial Average Rate In R$millions, end of period Balance Margin (p.a.) Balance Margin (p.a.) 635,714 15,314 624,503 15,410 10.1% Financial Margin with Clients 9.9% Spread-Sensitive Operations 529,901 13,274
Slide 57: Financial Margin with Clients | Annualized Average Rate
Financial Margin with Clients | Annualized Average Rate Annualized Average Rate | Consolidated With Citibank 10.1% 10.3% 10.5% 10.8% 10.3% 10.3% 10.1% 9.9% 9.9% 6.8% 6.6% 6.7% 7.3% 7.4% 7.1% 6.1% 7.1% 5.4% With Citibank 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Annualized Average Rate | Brazil 14.1% 1
Slide 58: Loan Portfolio Mix Change
Loan Portfolio Mix Change 1 (%) Itaú Unibanco’s share in Latin America businesses Consolidated Dec-17 20.4 12.1 2.9 12.9 5.0 9.6 9.1 27.9 13.6 Dec-17 28.4 16.8 4.0 18.0 6.9 13.4 12.6 Brazil 2 Dec-16 30.7 16.1 4.2 16.2 7.1 13.4 12.3 Dec-15 35.0 16.1 4.9 14.4 7.0 11.2 11.2 Dec-14 34.1 17.0 7.2 14.8 7.
Slide 59: Financial Margin with the Market
Financial Margin with the Market R$billion 1.7 1.7 1.7 1.7 1.8 1.8 1.7 1.6 1.6 1.7 1.7 2.0 1.9 1.6 1.3 1.5 1.4 1.4 1.6 1.5 1.8 1.7 1.2 1.2 1.3 1.1 1.2 0.3 0.3 0.3 0.2 0.1 0.1 0.2 0.2 0.2 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Financial Margin with the Market - Brazil1 Financial Margin with the
Slide 60: Provision for Loan Losses and Cost of Credit
Provision for Loan Losses and Cost of Credit Provision for Loan Losses by Segment R$million 4.4% 4.6% 5.8% 5.0% 5.0% 4.7% 4.5% 4.0% 4.0% 3.9% 4.3% 4.3% 4.1% 3.6% 3.7% 5,714 5,768 5,997 6,366 7,824 6,337 6,169 5,823 5,392 4,630 4,865 4,828 772 4,948 4,282 4,442 1 358 392 399 383 396 412 757 432 208 3
Slide 61: Allowance for Loan Losses by Risk – Consolidated
Allowance for Loan Losses by Risk– Consolidated Allocation of Total Allowance(*) by Type of Risk - Consolidated R$billion Regulatory Breakdown 36.7** 37.4 36.6 36.7 ** 16.9 17.0 16.7 Expected and/or Potential Loss Related to expected loss in Retail segment and potential loss in Wholesale segment Ret
Slide 62: Non Performing Loans Ratios
Non Performing Loans Ratios 90-day NPL Ratio| Consolidated (%) 4.8 4.0 3.6 3.4 3.8 3.9 4.2 4.2 3.9 3.8 3.7* 3.9 3.3 3.4 3.4 3.0 2.9 3.0 3.2 3.2 3.2 3.0* 0.7 0.9 1.1 1.2 1.1 1.2 1.2 1.3 1.2 1.4 1.5 Dec-13 Sep-14 Dec-14 Sep-15 Dec-15 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Total Brazil1 Latin Americ
Slide 63: NPL Ratio Evolution – Individuals (Brazil)
NPL Ratio Evolution – Individuals (Brazil) NPL Ratio (Over 90 days) -% Mix jun-12 5.6 5.2 5.7 4.8* Dec-16 Jun-17 Dec-17 (*) Considering the Citibank´s operations, the Individuals 90-day NPL ratio would have been 4.9%. Itaú Unibanco Holding S.A. page 63
Slide 64: NPL Creation
NPL Creation R$billion 6.8 5.7 6.0 5.3 5.3 With Citibank 4.9 4.4 4.4 4.4 4.3 4.5 4.3 4.2 4.1 With Citibank 3.8 3.8 3.6 2.3 3.5 3.3 1.5 3.2 1.0 1.1 1.0 0.8 0.5 0.4 0.5 0.8 0.3 0.4 0.5 0.2 0.2 0.5 0.2 0.1 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Total Retail Banking - Brazil Wholesale Banking - Br
Slide 65: Provision for Loan Losses and NPL Creation by Segment
Provision for Loan Losses and NPL Creation by Segment Retail Banking - Brazil 89% 3.8 3.2 3.6 3Q17 Wholesale Banking - Brazil 230% 0.2 0.5 0.2 3Q17 Latin America ex–Brazil 97% 0.4 0.5 0.5 3Q17 Total 98% 4.4 4.3 4.4 3Q17 Provision for Loan Losses NPL Creation Provision for Loan Losses / NPL Creation
Slide 66: Coverage Ratio
Coverage Ratio Total 90-day Coverage Ratio 715% 932% 908% 494% 562% 553% 462% 458% 345% 208% 232% 228% 231% 231% 245% 247% 251%1 215% 185% 221% 231% 243% 241% 209% 213% 219% 202% 164% 160% 159% 159% 162% 165% 166% 164% 166% Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Total - Brazi
Slide 67: Coverage Ratio (90-day NPL)
Coverage Ratio (90-day NPL) Coverage Ratio and Expanded Coverage Ratio Coverage Ratio 932% 908% 562% 245% With Citibank 231% 241% 219% Without CorpBanca With Itaú CorpBanca 100% 162% 164% 166% 166% With Citibank (1) Expanded Coverage Ratio is calculated from the division of the total allowance balan
Slide 68: Loan Portfolio Evolution by Risk Level
Loan Portfolio Evolution by Risk Level Brazil 1 Consolidated Total Allowance for Loan Losses (R$million) 33,921 32,369 32,275 * 37,431 36,630 36,666 * Loan Portfolio by Risk Level 46.0% 43.1% 43.5% 46.3% 42.2% 43.3% 34.0% 36.4% 37.0% 31.4% 34.3% 35.0% 4.8% 5.3% 5.1% 8.8% 9.8% 8.8% 4.2% 4.1% 3.8% 4.3
Slide 69: Renegotiated Loan Operations
Renegotiated Loan Operations Total Renegotiated Portfolio | Breakdown by Days Overdue (Data previous to June/16 do not include CorpBanca) Brazil 1 R$billion Days overdue: 22.7 22.3 22.7 23.8 22.9 23.1 24.6 24.5 24.1 measured at the moment of 23.0 22.7 24.1 25.3 24.3 24.7 26.4 26.4 26.0 renegotiation
Slide 70: Credit Quality | Individuals
Credit Quality | Individuals Credit Cards Portfolio Loan-to-Value in Dec-17 Vehicles and Mortgage | Vintages 8.9% 19.9% 55.1% 55.2% 54.8% 55.6% 54.7% 6.3% 54.6% 9.0% 84.8% 71.1% Itaú Unibanco Brazilian Financial System Dec-16 Sep-17 Dec-17 excluding Itaú Unibanco Transactor² Installment with Interes
Slide 71: Banking Fee Revenues and Result from Insurance, Pension Plans and Premium Bonds
Banking Fee Revenues and Result from Insurance, Pension Plans and Premium Bonds In R$millions 4Q17 3Q17 2017 2016 3,103 12,150 1.8% Credit Cards 3,298 6.3% 12,367 Current Account Services 1,733 1,699 2.0% 6,761 6,395 5.7% Asset Management ¹ 929 940 -1.2% 3,546 3,007 17.9% Credit Operations and Guara
Slide 72: Merchant Acquiring - REDE
Merchant Acquiring - REDE Credit Card Transaction Volume R$million 67,110 68,259 69,425 59,982 61,328 62,370 60,938 61,937 63,558 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Numbers Dec-17 % growth 4Q17 x 4Q16 POS number 1.2 million -21.3% Transactions 1.07 billion 2.0% Purchase volume R$108.1 bill
Slide 73: Insurance Operations | Pro Forma Income Statement
Insurance Operations | Pro Forma Income Statement 4Q17 Core Other Total Core Activities In R$millions Activities Activities 3Q17 4Q16 948 902 5.1% 1,002 -5.4% Earned Premiums 1,012 65 Revenues from Pension Plan and Premium Bonds 491 491 - 242 103.3% 259 89.4% Retained Claims (373) (246) (127) (266)
Slide 74: Insurance Operations | Insurance Core Activities
Insurance Operations | Insurance Core Activities Net Income and Underwriting Margin R$million Combined Ratio 1 79.1% 74.8% 53.7% 69.4% 71.3% 69.5% 69.8% 72.2% 71.4% 51.3% 52.9% 51.5% 67.0% 48.1% 49.0% 48.4% 45.8% 43.1% 697 721 706 696 699 706 737 644 709 58.0% 55.3% 56.4% 59.8% 59.2% 51.8% 57.9% 52.
Slide 75: Pension Plan Segment
Pension Plan Segment Focus on Client Experience 7 Reasons to Invest 1 Plan your retirement 2 Pay your future health expenses 3 Invest in your kids’ education 4 Plan your taxes expenses 5 Improve your investment return Recurring Net Income R$million 340.8 225.5 211.5 217.9 205.1 217.3 209.4 189.6 161
Slide 76: Non-interest Expenses
Non-interest Expenses In R$millions 4Q17 3Q17 2017 2016 2.3% Personnel Expenses (5,389) (5,020) 7.3% (20,179) (19,721) Administrative Expenses (4,208) (3,961) 6.3% (15,925) (15,841) 0.5% Operating Expenses (1,156) (1,382) -16.4% (4,859) (4,995) -2.7% Other Tax Expenses (1) (86) (94) -8.9% (344) (373
Slide 77: Efficiency Ratio and Risk-Adjusted Efficiency Ratio
Efficiency Ratio and Risk-Adjusted Efficiency Ratio 65.5 72.4 69.8 69.6 68.6 64.5 63.4 63.3 65.0 45.8 43.6 44.9 48.0 44.8 43.6 45.7 47.3 48.6 63.7 65.9 67.7 69.3 70.1 68.2 66.6 65.0 64.0 44.0 44.1 44.6 45.6 45.3 45.3 45.5 45.3 46.3 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Trailing 12-month Effic
Slide 78: Balance Sheet – Assets and Liabilities
Balance Sheet – Assets and Liabilities 1 R$million Assets 4Q17 3Q17 4Q16 2.5% 1,400,097 5.4% Current and Long-term Assets 1,475,217 1,439,523 Cash and Cash Equivalents 18,749 19,089 -1.8% 18,542 1.1% Short-term Interbank Investments 271,254 287,701 -5.7% 286,038 -5.2% Securities and Derivative Finan
Slide 79: Total Assets | Evolution and Breakdown
Total Assets 1 | Evolution and Breakdown 1,475.2 1,503.5 1,427.1 458.2 30.5% 29.6% 445.8 28.1% 422.8 148.5 9.9% 28.3 1.9% 2015 2016 2017 Securities and Derivatives Breakdown Loans Breakdown 2.9% 5.1% Pension Plans Fund Quotas 5.0% 6.5% 9.1% 27.9% Domestic Government Bonds 13.8% 38.0% 9.6% Corporate
Slide 80: Total Liabilities | Evolution and Breakdown
Total Liabilities 1 | Evolution and Breakdown R$billion 1,475.2 1,427.1 2015 2016 1,503.5 527.5 306.9 183.7 176.7 129.0 126.9 52.7 2017 35.1% Deposits, Debentures and Funds from Bills and Structured Operations Certificates 20.4% Deposits Received under Securities, Repurchase Agreements and Fund from
Slide 81: Funding
Funding • • Loan Portfolio mainly funded by domestic client funding Diversified funding base In R$millions, end of period 4Q17 3Q17 4Q16 17.0% 61,133 12.2% Demand Deposits 68,589 58,609 Savings Deposits 119,075 112,249 6.1% 108,250 10.0% Time Deposits 208,086 186,912 11.3% 156,274 33.2% Debentures (
Slide 82: Funding from Clients
Funding Funding from Clients 1 Without CorpBanca With CorpBanca 1,741 1,543 1,556 1,595 1,648 1,682 1,479 1,390 1,396 831 872 909 966 971 1,028 1,070 1,116 1,154 308 292 336 342 348 329 332 328 332 172 166 163 165 169 168 174 171 188 In R$billions Demand and savings Deposits Time Deposits + Debentur
Slide 83: Capital Ratios (BIS) | Prudential Conglomerate
Capital Ratios (BIS) | Prudential Conglomerate 1 In R$millions, end of period 4Q17 3Q17 136,894 Consolidated stockholders’ equity (BACEN) 140,348 Deductions from Core Capital (17,952) (16,634) Core Capital 122,396 120,260 Additional Capital 57 52 Tier I 122,453 120,311 Tier II 19,799 19,791 Referent
Slide 84: Capital Ratios
Capital Ratios Changes in the Core Capital Ratio 16.7% 0.8% -0.4% 0.1% -0.1% -0.1% -0.8% 16.2% Common Equity Dividends, Interest on Minority Interests Intangible Tax Credits and Tax Loss Risk-Weighted AssetsCommon Equity Tier I Sep-17 Net Income Own Capital and Shares Carryforwards Tier I Dec-17 Buy
Slide 85: Uses of Capital
Uses of Capital Changes in Capital Requirements Amounts in R$Billion 45 25 44 9.5% 16 13.5% 29 Additional 20 Required 24 Stockholders’ BIS III Increase in Equity Effects RWA in Dec/2008 *Main investments: CorpBanca and REDE. Slide presented at APIMEC – SP meeting on 09/26/2017 Intended 118 15 9 12 1
Slide 86: Capital Requirement under the Basel Committee, BACEN and ITUB Target
Capital Requirement under the Basel Committee, BACEN and ITUB Target Minimum Capital Required ITUB Target Basel II Basel III 15.0% 1.5% 11.0% 11.5% 1.5% 2.0% Subordinated 8.0% 5.5% 1.5% If total capital falls below 11.5%, debt (TII) restrictions will T1= 13.5% Stockholders`equity 4.0% 12.0% start to
Slide 87: Payout Practice
Payout Practice In order to manage capital efficiently, aiming at creating value to our shareholders, we announced through a Material Fact disclosed on September 26, 2017, that we intend to: Maintain the practice of paying dividends and interest on own capital at 35% of net income, however we exclud
Slide 88: Payout and Share Buyback
Payout and Share Buyback 32.2% 30.6% 45.0% 0.2% 70.6% 13.9% 4.3% 12.4% 0.0% 20 .0% 40 .0% 60 .0% 80 .0% 10 0.0% 2014 2015 2016 2017 Payout Share Buyback 83.0% 49.3% 44.6% 32.3% Payout * Dividend yield considers payout of 83% and the daily closing price average in 2017. 83.0% 12.4% 49.3% 4.3% 70.6% 4
Slide 89: Basel III – Brazilian Phase-in Requirements
Basel III – Brazilian Phase-in Requirements1 2013 2014 2015 2016 2017 5 2018 5 2019 5 Common Equity Capital Ratio 4.50% 4.50% 4.50% 6.88% to 8.75% 8.00% to 10.50% 5.13% 6.00% to 7.25% (Minimum + Additional) Tier I Capital Ratio 5.50% 5.50% 6.00% 6.63% 7.50% to 8.75% 8.38% to 10.25% 9.50% to 12.00% (
Slide 90: Ratings
Ratings FitchRatings International National Viability Support Local Currency Foreign Currency Long Term Short Term Long Term Short Term Long Term Short Term bb+ 3 BB+ B BB+ B AAA (bra) F1+ (bra) Moody’s International National Subordinated Debt Senior Unsecured Debt Issuer Issuer Foreign Currency For
Slide 91: 2017 Forecast
2017 Forecast Consolidated Forecast 1 Actual Total Credit Portfolio 3 From 0.0% to 4.0% -0.8% Financial Margin with Clients 4 From -4.2% to -0.8% -4.7% (ex-Impairment and Discounts Granted) Cost of Credit 5 Between R$15.5 bn R$17.9 bn and R$18.0 bn Commissions and Fees and Result from From 0.5% to 4
Slide 92: 2018 Forecast
2018 Forecast 2018 forecast considers Citibank’s retail operations. Therefore, 2017 income statement basis for 2018 forecast must consider Citibank’s figures in all lines of the income statement and also in the credit portfolio.* Consolidated Brazil 1 Total Credit Portfolio 2 From 4.0% to 7.0% From
Slide 93: Basis for 2018 Forecast
Basis for 2018 Forecast We present below the income statement that includes the result from Citibank’s operation in each of its accounts and its corresponding loan portfolio. This income statement is the basis for the 2018 forecast. Managerial Income Statement - with Citibank In R$millions Manageria
Slide 94: Information Technology
5 Information Technology
Slide 95: Digital Transformation
Digital Transformation Digital Evolution Technology represents the backbone of our evolution. The development of more than 1500 APIs (application programming interface), which allow for the creation of an application with 96% reuse; taking part in 100% of the blockchain applications being developed
Slide 96: Digital Transformation | Evolution of Digital Branches
Digital Transformation | Evolution of Digital Branches Personnalité Clients (in thousands) 338 432 527 2015 2016 2017 Personnalité Branches Uniclass Clients (in thousands) 1,300 1,500 800 2015 2016 2017 Uniclass Branches 51 63 79 72 79 43 2015 2016 2017 7:00am-12:00pm 8:00am-10:00pm 2015 2016 2017 I
Slide 97: Itaú Unibanco in Capital Markets
6 Itaú Unibanco in Capital Markets
Slide 98: Non-voting Shares (ITUB4) Appreciation
Non-voting Shares (ITUB4) Appreciation Evolution of R$100 invested on the day before the announcement of the merger (October 31, 2008) to December 31, 2017 Annual Average Appreciation Itaú Uniabnco (1) Itaú Unibanco (2) Ibovespa (3) CDI (4) Since Itaú and Unibanco merger 16.9% 12.5% 8.1% 39.4% 5 yea
Slide 99: Sustainability
7 Sustainability
Slide 100: Sustainability Timeline
Sustainability Timeline Sustainability Sustainability at the board of directors’ Committee Strategy (officers level) Committee Sustainability Creation of Superior Ethics and Governance operating Sustainability (executive level) committees Committee Itaú Unibanco Merger 2000 2005 2007 2008 2010 2013
Slide 101: Sustainable Performance
Sustainable Performance Sustainable Performance Society Shareholders Generating shared value Clients Customer Satisfaction Employees Pride of belonging Our Vision Is to be the leading bank in sustainable performance and customer satisfaction Sustainable Performance means creating shared values for e
Slide 102: Corporate Sustainability Governance
Corporate Sustainability Governance Board level Definition and monitoring of Board of Directors the sustainability strategy Members of the Board of Directors Strategy Committee Members of the Board of Directors Executive level Integration of challenges and trends into businesses Superior Ethics and
Slide 103: Sustainability Strategy
Sustainability Strategy The sustainability strategy was defined from workshops, interviews and panels with internal and external stakeholders Be the leading bank in sustainable performance and customer satisfaction Financial Education Understand people´s needs to offer knowledge and appropriate fina
Slide 104: Dialogue and Transparency | Engagement
Dialogue and Transparency | Engagement Organizations and commitments that are sources of knowledge and trends Integrity and Ethics Responsible Bank Sustainable Development Climate Change Reporting and Transparency Diversity Itaú Unibanco Holding S.A. page 104
Slide 105: Transparency with the Market | Reporting
Transparency with the Market | Reporting Consolidated Annual Report Form 20-F Sustainability Report SEC + GRI MTN Program Medium-Term Note Recognitions Integrated Report First Brazilian financial institution to publish it voluntarily. Presentation of the results from 6 capitals: financial, social an
Slide 106: Employees | Profile
Employees | Profile 87,711 Employees1 60% 40% 50.7% of management 20.6% of employees are positions are held by blacks women 3.1% are apprentices 4.5% of employees are disabled persons (1) Employees who were active in December 2016, in Brazil and abroad from companies managed by the human resources d
Slide 107: Employees | Management Cycle
Employees | Management Cycle Attraction and Selection Special Talent Programs Internship: 3,982 people recruited in 2016. Retention rate: 53%.* Trainees: 123 trainees recruited in 2016. Retention rate: 97%* of the 2015 group Turnover General Turnover 2014 2015 2016 10.9% 10.6% 10.4% Since 2009 among
Slide 108: Financial Education | Initiatives
Financial Education | Initiatives Enable a real achievement Preventive Work Financial guidance with clients prone to delinquency by means of the offer of credit that is more appropriate to their needs. Training programs Expansion of financial guidance in all training programs of the commercial area.
Slide 109: Integration of ESG into businesses
Integration of ESG into businesses 1 Governance Policies Sustainability and environmental and social responsibility policy Environmental and social risk policy Committees Sustainability committee Environmental and social risk committee Operational committees (Internal Management, Investment, Reporti
Itau Unibanco Holding — Investor Presentation (February 2018) on 6ix