Itau Unibanco Holding S.a. · BMFBOVESPA:ITUB3
Itau Unibanco — Investor Presentation (July 2018)
112 slides from Itau Unibanco's investor presentation, Jul 31, 2018
Slide 1: 2Q18 Institutional Information
2Q18 Institutional Information
Slide 2: Forward-looking statements
2Q18 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 consolidation
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 July 30, 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$67.6 billion market cap (1) § 99,914 employees in Brazil and abroad § 4,904 branches and CSBs in Brazil and abroad § 47,650 ATMs in Brazil and abroad § Around 48 million clients in the Retail Bank § Brazilian multinational bank § Major provid
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 1924 Acquisition of the remaining 50% of: Uruguay Retail - Brazil NACIONAL Acquisition of the minority interest of: Banco Itaú BMG Consignado Acquisition of the 2 minority interest of: Unibanco 1995 - 1998 2000 - 2003 2004 - 2007 Merger 2
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 (52.74% 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 Directors of Co-Chairman Co- Chairman Pedro Moreira Salles Roberto Egydio Setubal Directors Board Alfredo Egydio Setubal Amos Genish 1 Ana Lúcia de Mattos Barretto Villela Fábio Colletti Barbosa 1 Gustavo Jorge Laboissière Loyola 1 João Morei
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 Digital Committee Committee Parties and Corporate Management Committee Committee Advisory Advisory Committee Governanc
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 ofpolicies,strategiesand definition ofminimumexpected return on capital; § Improvement of Risk Culture. Executive Committee General Office and Risk Dept. § Def
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 Cultur
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 Middle Companies
Retail Management – Individuals and Small and Middle Companies thatrisk POLICYVariablesdistinguishes STATISTICAL MODELS Lowest risk Risk Level Highest Risk 88 153 88 99 124 94 81 167 79 77 130 91 67 179 65 73 155 65 Fictitious figures (Basis 100 = lowest risk cell). Higher risk Default Rate 116 92 R
Slide 22: Credit Offer Based on Future Scenario
Credit Offer Based on Future Scenario 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 Available Highest risk Negative f
Slide 23: Business Overview
3 Business Overview
Slide 24: Universal Bank
Universal Bank 1 RETAIL BANKING WHOLESALE BANKING RETAIL AND REAL ESTATE CREDIT ITAÚ BBA 4,388 branches and client service branches and 46,463 ATMs in Brazil; Premier banking brand in Brazil; Strategically positioned for growth in mortgage market (partnerships with Lopes). CREDIT CARD AND CONSUMER F
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$4
Slide 26: Retail in Brazil
Retail in Brazil Presence in Brazil 1 (As of June 30, 2018) North 116 Northeast 335 Midwest 313 Southeast 2,937 South 670 Brazil: 4,371 Automated Teller Machines (ATMs) 2 44,293 44,631 44,947 45,182 45,353 45,502 45,769 45,891 46,463 75 69 26 21 15 8 7 7 7 686 668 648 635 626 617 613 608 610 18,935
Slide 27: Retail - Credit Cards, Joint Ventures and Partnerships
Retail - Credit Cards, Joint Ventures and Partnerships with Retailers in Brazil Highlights • Brazilian market leader in credit card transactions. • Qualification of the client base: proprietary channel x partnerships. • Credit card business comprises: • Issuance of cards • Acquiring: REDE • JVs and
Slide 28: Retail - Cards in Brazil
Retail - Cards in Brazil | Growing Penetration in Household Consumption Expenditure Credit and Debit Cards Billed Volume% at Household Consumption Expenditure 30.3% 31.4% 28.4% 28.8% 28.0% 28.4% 28.8% 29.4% 29.6% 11.9% 12.4% 11.0% 10.9% 10.7% 11.1% 11.2% 11.4% 11.6% 17.4% 17.9% 17.4% 18.3% 17.2% 17.
Slide 29: Retail - Payroll Loan in Brazil
Retail - Payroll Loan in Brazil Evolution of Payroll Loan Portfolio R$billion 46.5 45.6 44.6 44.9 44.8 44.6 44.4 44.7 45.4 4.7 4.6 4.4 4.3 4.3 4.4 4.7 4.8 4.9 10.4 9.8 9.2 8.8 8.2 7.6 7.0 6.4 5.9 31.4 31.2 31.0 31.7 32.2 32.6 32.8 33.5 34.6 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun
Slide 30: Retail - Mortgage Market in Brazil
Retail - Mortgage Market in Brazil Mortgage Loans Evolution 1 Distribution Channels for Individuals Balance R$million As of June 2018 -0.4% 47,797 47,754 47,591 Partnerships 20.0% 16.3% 14.9% 10% Regular Real Estate Branches Brokers 14% 31% 80.0% 83.7% 85.1% Developers 16% High Income Branches Jun-1
Slide 31: Retail - Vehicle Financing in Brazil
Retail - Vehicle Financing in Brazil Highlights: • Growth of 54% in production (QoQ); • Offers finance through over 10 thousand dealers; • Average ticket size of the new vehicle concessions to individuals of R$31.8 thousand with LTV of 57% in the 2Q18; • 79% of the financing is guaranteed up to 4 ye
Slide 32: Retail - Insurance Ranking in Brazil
Retail - Insurance Ranking in Brazil 1,2 Jan-May/18 Jan-May/17 Model Total Insurance 3 4th 4th Bancassurance 4 5th 3rd Life & Personal Accidents 2nd 3rd Bancassurance Credit Insurance 6th 5th Bancassurance Pension Plan 3rd 3rd Bancassurance Premium Bonds 3rd 3rd Bancassurance Porto Seguro 2nd 2nd Ve
Slide 33: Retail - Association with Porto Seguro
Retail - Association with Porto Seguro Association’s Structure Controlling stockholders of Itaú Unibanco Porto Seguro 57.07% 42.93% PSIUPAR Market 69.88% 30.12% Porto Seguro S.A. (PSSA) 99.99% 100.0% Itaú Seguros de Auto e Subsidiaries Porto Seguro S.A. Residência S.A (ISAR) Highlights • Unification
Slide 34: Very Small, Small and Middle Market in Brazil
Very Small, Small and Middle Market in Brazil SMEs Loan Portfolio 1 R$million 79,649 75,433 72,002 68,974 65,617 61,869 63,050 61,547 2012 2013 2014 2015 2016 2017 1Q18 2Q18 Highlights Full range of financial products and services, including deposits accounts, investment options, insurance, cash man
Slide 35: Wholesale - Corporate Companies in Brazil
Wholesale - Corporate Companies in Brazil Corporate Loans 1 R$million 213,815 219,418 194,472 181,541 163,437 165,052 161,990 162,513 2012 2013 2014 2015 2016 2017 1Q18 2Q18 Highlights • Corporate clients with annual sales above R$200 million. • We offer a broad portfolio of banking products and ser
Slide 36: Wholesale - Corporate and Investment Banking
Wholesale - Corporate and Investment Banking | Leadership Position in Brazil Wholesale Banking Investment Banking Middle Annual revenues from R$30 MM up to R$200 MM Corporate Banking Annual revenues over R$200 MM Investment Banking Leadership position and client recognition LatAm Presence in all ban
Slide 37: Wholesale - Wealth Management Services
Wholesale - Wealth Management Services | Brazil Evolution of Assets Under Administration Investment Product management for the conglomerate and a full range of investment options to Retail Banking. R$billion 1,002 1,025 883 922 946 849 802 801 752 Asset Management Asset Management In June 2018, we r
Slide 38: Retail Footprint in Latin America
Retail Footprint in Latin America | June 2018 Mexico | CIB Employees: 8 Colombia1 Employees: 3,536 Branches + CSBs: 163 ATMs: 174 Peru Representative Office Chile Employees: 5,988 Branches + CSBs: 199 ATMs: 466 CIB Argentina Employees: 1,720 Retail and Wholesale Branches + CSBs: 87 ATMs: 178 (1) Con
Slide 39: Segments – Income Statement Pro Forma 2Q18
Segments – Income Statement Pro Forma 2Q18 Retail Banking Wholesale Banking Activities with the Itaú Unibanco In R$millions Market + Corporation Operating Revenues 18,112 7,454 2,454 28,021 Managerial Financial Margin 10,072 4,821 2,402 17,295 Financial Margin with Clients 10,072 4,821 1,060 15,953
Slide 40: Financial Highlights
4 Financial Highlights
Slide 41: Highlights
Highlights Performance Indicators Capital Ratios – BIS III 1 Credit Quality Net Income Tier I Capital NPL90 R$6.4 billion - 0.6% (2Q18/1Q18) 14.2% - 30 bps (Jun-18 / Mar-18) 2.8% - 30 bps (Jun-18 / Mar-18) R$12.8 billion + 3.7% (1H18/1H17) + 70 bps (Jun-18 / Jun-17) - 40 bps (Jun-18 / Jun-17) ROE (p
Slide 42: Recurring Net Income and ROE
Recurring Net Income and ROE 20.7% R$billion 22.0% 21.5% 21.6% 21.9% 22.2% 21.6% 16.0% 15.5% 14.5% 14.0% 14.0% 13.5% 13.5% 5.8 6.2 6.2 6.3 6.3 6.4 6.4 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Recurring Net Income Annualized Recurring Return on Average Equity (quarterly) Cost of Equity Note: Includes the c
Slide 43: Non-Recurring Events
Non-Recurring Events In R$millions 2Q18 1Q18 2Q17 1H18 1H17 Recurring Net Income 6,382 6,419 6,169 12,801 12,345 Non-Recurring Events (138) (139) (155) (277) (278) Impairment (10) (92) (7) (101) (7) ∟ Adjustment to reflect the realization value of certain assets mainly related to technology Goodwill
Slide 44: Income Statement | Operating Revenues Perspective
Income Statement | Operating Revenues Perspective In R$millions 2Q18 1Q18 2Q17 1H18 1H17 27,426 2.2% 27,205 54,471 1.8% Operating Revenues 28,021 3.0% 55,446 Managerial Financial Margin 17,295 16,999 1.7% 17,385 -0.5% 34,294 34,800 -1.5% Financial Margin with Clients 15,953 15,261 4.5% 15,762 1.2% 3
Slide 45: Income Statement | Managerial Financial Margin Perspective
Income Statement | Managerial Financial Margin Perspective In R$millions 2Q18 1Q18 2Q17 1H18 1H17 1.7% 17,385 -1.5% Managerial Financial Margin 17,295 16,999 -0.5% 34,294 34,800 Financial Margin with Clients 15,953 15,261 4.5% 15,762 1.2% 31,214 31,309 -0.3% Financial Margin with the Market 1,342 1,
Slide 46: Results – Brazil and Latin America
Results – Brazil and Latin America 2Q18 Latin In R$billions Consolidated Brazil 1 America (ex-Brazil) 2 Operating Revenues 28.0 25.1 3.0 Managerial Financial Margin 17.3 15.1 2.2 Financial Margin with Clients 16.0 14.2 1.7 Financial Margin with the Market 1.3 0.9 0.5 Commissions and Fees 8.7 8.0 0.7
Slide 47: Business Model
Business Model In R$billions 1H18 1H17 Insurance Excess Insurance Excess Insurance Excess Consolidated Credit Trading and Consolidated Credit Trading and Consolidated Credit Trading and Capital Capital Capital Services Services Services Operating Revenues 55.4 28.4 0.9 25.2 1.0 54.5 28.3 1.0 23.7 1.
Slide 48: Credit Portfolio with Financial Guarantees Provided and Corporate Securities
Credit Portfolio with Financial Guarantees Provided and Corporate Securities Consolidated In R$billions, end of period Individuals Credit Card Loans Personal Loans Payroll Loans ¹ Vehicle Loans Mortgage Loans Companies Corporate Loans Very Small, Small and Middle Market Loans ² Latin America ³ Total
Slide 49: Credit Portfolio by Product
Credit Portfolio by Product In R$billions, end of period 2Q18 1Q18 2Q17 1.9% 179.1 8.4% Individuals - Brazil ( 1) 194.1 190.5 Credit Card 66.1 65.0 1.7% 56.4 17.2% Personal Loans 27.3 26.4 3.5% 25.4 7.6% Payroll Loans (2) 45.4 44.7 1.6% 44.8 1.4% Vehicles 14.7 14.3 2.4% 14.1 3.9% Mortgage Loans 40.5
Slide 50: Credit Portfolio by Currency
Credit Portfolio by Currency 1 R$billion Jun-18 223.5 365.1 588.6 Mar-18 197.9 368.4 566.4 Dec-17 192.4 371.7 564.1 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 Foreign Currency Local Currency (1
Slide 51: Credit Origination and Private Securities Issuance | Brazil
Credit1 Origination and Private Securities Issuance | Brazil Base 100 = 2Q14 Total Credit2 – Brazil Credit2 - Individuals YoY (%) YoY (%) -4% -24% 21% 24% -9% -22% 13% 14% 100 91 80 91 111 71 100 96 89 73 2Q14 2Q15 2Q16 2Q17 2Q18 2Q14 2Q15 2Q16 2Q17 2Q18 Credit2 – Very Small, Small Credit2 – Corpora
Slide 52: Credit Portfolio Growth in Brazil
Credit Portfolio Growth in Brazil 1 (in R$Billions) Nominal GDP (Jun-14 to Jun-18): 20.0% Accumulated Inflation (IPCA) (Jun-14 to Jun-18): 27.9% Accumulated Interbank Rate: (Jun-14 to Jun-18): 55.9% Credit Card Loans Personal Loans Payroll Loans Vehicle Loans 23.5% -3.0% 51.9% -57.0% 21.4% -3.3% -2.
Slide 53: Credit Portfolio Breakdown
Credit Portfolio Breakdown 1 Companies Credit Portfolio by Business Sector 2,3 In R$billions, end of period 2Q18 1Q18 3.7% Public Sector 5.4 5.2 Private Sector | Companies 326.6 313.8 4.1% Real Estate 21.5 21.1 2.2% Food and beverage 18.3 17.8 2.8% Vehicles and auto parts 17.2 17.1 1.1% Agribusiness
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. § 55.9% of total origination was created in the past 12 months. 480 495 519 43.1% 40.1% 38.9% 4.3% 4.2% 5.2% 6.9% 6.0% 6.3% 7.
Slide 55: Evolution of the Credit Portfolio Mix
Evolution of the Credit Portfolio Mix Corporate and Individuals1 | Brazil Individuals 17.4% 21.8% 24.4% 24.3% 25.5% 24.4% 25.0% 23.3% 23.4% 15.3% 15.6% 17.0% 18.5% 19.9% 20.8% 21.4% 20.9% 20.9% 19.8% 15.6% 12.7% 10.7% 9.2% 8.4% 7.9% 7.4% 7.6% 16.4% 15.1% 15.8% 15.2% 15.5% 14.1% 14.2% 13.3% 14.1% 31.
Slide 56: Managerial Financial Margin With Clients
Managerial Financial Margin With Clients 2Q18 1Q18 Average Financial Average Rate Average Financial Average Rate In R$millions, end of period Balance Margin (p.a.) Balance Margin (p.a.) 665,879 15,953 646,949 15,261 9.9% Financial Margin with Clients 9.9% Spread-Sensitive Operations 572,345 14,192 1
Slide 57: Financial Margin with Clients | Annualized Average Rate
Financial Margin with Clients | Annualized Average Rate Annualized Average Rate | Consolidated 10.5% 10.8% 10.3% 10.3% 6.8% 6.6% 6.7% 7.3% 3Q16 4Q16 1Q17 2Q17 Annualized Average Rate | Brazil 13.0% 13.3% 12.6% 12.6% 8.4% 8.2% 8.2% 8.9% 3Q16 4Q16 1Q17 2Q17 Annualized average rate of financial margin
Slide 58: Loan Portfolio Mix Change
Loan Portfolio Mix Change 1 (%) Consolidated Jun-18 19.3 12.1 2.8 12.7 5.3 9.2 8.8 29.8 Jun-18 27.5 17.2 4.0 18.2 7.5 13.1 12.5 Brazil 2 Jun-17 30.1 16.2 4.0 16.1 7.2 13.6 12.8 Jun-16 31.3 16.1 4.6 14.9 7.7 12.8 12.7 Jun-15 34.2 16.6 5.9 14.0 7.4 10.6 11.3 Jun-14 33.1 18.2 9.1 14.4 7.6 9.7 8.0 Corpo
Slide 59: Financial Margin with the Market
Financial Margin with the Market 1.7 1.7 1.7 1.8 1.8 1.7 1.6 1.6 1.5 R$billion 1.4 1.7 1.5 1.7 2.0 1.9 1.6 1.7 1.4 1.4 0.1 1.3 1.5 1.8 1.7 1.6 1.2 1.3 1.1 1.2 1.3 0.9 0.3 0.3 0.3 0.2 0.3 0.5 0.1 0.2 0.2 0.2 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Sale of B3 Shares 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$million 4.4% 4.6% 5.8% 5.0% 5.0% 4.7% 4.5% 3.9% 4.3% 4.3% 7,824 4.1% 3.6% 3.7% 3.3% 3.4% 5,714 5,768 5,997 6,366 6,337 6,169 5,823 5,392 4,828 772 4,948 4,282 4,483 4,111 4,271 358 392 399 383 396 412 757 432 338 1,8
Slide 61: Allowance for Loan Losses by Risk – Consolidated
Allowance for Loan Losses by Risk– Consolidated Allocation of Total Allowance(*) by Type of Risk - Consolidated R$billion Regulatory Breakdown 36.1 37.4 36.7 36.1 Expected and/or Complementary Allowance Potential Loss Related to expected Retail - Brazil1 6.0 7.6 9.4 17.2 16.1 16.1 loss in Retail seg
Slide 62: Non Performing Loans Ratios
Non Performing Loans Ratios 90-day NPL Ratio| Consolidated (%) 15 to 90-day NPL Ratio | Consolidated -% 3.7 4.4 4.5 4.2 3.9 3.8 3.7 3.7 3.3 3.6 3.6 3.3 3.4 3.3 3.5 3.6 3.4 3.2 3.2 3.1 3.1 2.9 3.0 3.1 3.2 3.2 2.9 3.0 2.9 3.1 2.8 3.1 2.8 3.0 2.8 2.7 2.9 3.0 3.1 2.7 2.8 2.8 2.7 2.7 1.6 2.7 0.7 1.1 1.1
Slide 63: NPL Ratio Evolution – Individuals (Brazil)
NPL Ratio Evolution – Individuals (Brazil) NPL Ratio (Over 90 days) -% 5.2 Mix jun-12 5.0 4.9 4.5 Jun-17 Dec-17 Jun-18 Note: Includes the consolidation of Citibank as of 4Q17. page 63
Slide 64: NPL Creation
NPL Creation 6.8 R$billion 5.3 5.3 4.9 4.4 5.0* 4.4 4.4 3.8 4.2 4.1 3.8 3.8 3.6 3.5 2.3 3.5 3.3 3.2 1.1 0.8 1.0 0.5 0.5 1.1* 0.4 0.8 0.7 0.5 0.1 0.4 0.5 0.2 0.2 0.5 -0.3 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Total Retail Banking - Brazil Wholesale Banking - Brazil Latin America ex-Brazil * Ex
Slide 65: Provision for Loan Losses and NPL Creation by Segment
Provision for Loan Losses and NPL Creation by Segment Retail Banking - Brazil 99% 3.3 3.2 3.2 1Q18 Wholesale Banking - Brazil 34% 0.5 0.4 1.1 1Q18 Latin America ex–Brazil 79% 0.5 0.6 0.7 1Q18 Total 82% 4.4 4.1 5.0 1Q18 Provision for Loan Losses NPL Creation Provision for Loan Losses / NPL Creation N
Slide 66: Coverage Ratio
Coverage Ratio Total 90-day Coverage Ratio 715% 932% 908% 494% 562% 553% 345% 232% 228% 231% 231% 245% 247% 249% 213% 221% 231% 243% 241% 219% 202% 159% 159% 162% 165% 166% 164% 166% Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Total - Brazil Retail - Brazil Latin America ex-Brazil (*) Excluding
Slide 67: Coverage Ratio (90-day NPL)
Coverage Ratio (90-day NPL) Coverage Ratio and Expanded Coverage Ratio (1) Expanded Coverage Ratio is calculated from the division of the total allowance balance* by the sum of 90 days overdue operations and of renegotiated loan portfolio excluding the double counting of 90 days overdue renegotiated
Slide 68: Loan Portfolio Evolution by Risk Level
Loan Portfolio Evolution by Risk Level Brazil 1 Consolidated Total Allowance for Loan Losses (R$million) 33,469 31,976 31,026 37,417 36,661 36,118 Loan Portfolio by Risk Level 43.7% 43.2% 44.2% 42.7% 43.2% 43.6% 35.6% 37.2% 36.6% 33.8% 34.9% 33.5% 5.3% 5.0% 5.0% 9.7% 8.8% 9.5% 4.0% 4.1% 4.2% 4.3% 4.
Slide 69: Renegotiated Loan Operations
Renegotiated Loan Operations Total Renegotiated Portfolio | Breakdown by Days Overdue Brazil 1 R$billion Days overdue: 22.7 23.8 22.9 23.1 24.6 24.5 24.4 25.5 25.2 measured at the moment of 24.1 25.3 24.3 24.7 26.4 26.4 26.4 27.6 27.5 renegotiation 1.4 1.5 1.5 1.6 1.8 1.9 2.0 2.0 2.3 Latin America 2
Slide 70: Credit Quality | Individuals
Credit Quality | Individuals Credit Cards Portfolio Loan-to-Value in Jun-18 Vehicles and Mortgage | Vintages 9.7% 21.4% 55.7% 54.5% 56.8% 57.4% 56.9% 57.3% 7.6% 9.3% 82.7% 69.4% Itaú Unibanco Brazilian Financial System Jun-17 Mar-18 Jun-18 excluding Itaú Unibanco Transactor² Installment with Interes
Slide 71: Banking Fee Revenues and Result from Insurance, Pension Plans and Premium Bonds
Banking Fee Revenues and Result from Insurance, Pension Plans and Premium Bonds In R$millions 2Q18 1Q18 1H18 1H17 3,139 5,965 3.7% Credit Cards 3,050 -2.8% 6,189 Current Account Services 1,819 1,818 0.1% 3,637 3,330 9.2% Asset Management ¹ 1,106 1,014 9.1% 2,119 1,677 26.4% Credit Operations and Gua
Slide 72: Merchant Acquiring - REDE
Merchant Acquiring - REDE Credit Card Transaction Volume R$million 68,259 60,938 61,937 63,558 69,425 65,915 61,328 62,370 63,345 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Numbers Jun-18 % growth 2Q18 x 2Q17 POS number 1,1 million -15.2% Purchase volume R$101,7 billion 8.3% Debit Card Transaction
Slide 73: Insurance Operations | Pro Forma Income Statement
Insurance Operations | Pro Forma Income Statement 2Q18 Recurring Other Total Recurring Activities In R$millions Activities Activities 1Q18 2Q17 917 893 2.7% 899 2.0% Earned Premiums 1,002 85 Revenues from Pension Plan and Premium Bonds 308 308 - 203 51.5% 230 34.3% Retained Claims (335) (241) (94) (
Slide 74: Insurance Operations | Insurance Core Activities
Insurance Operations | Insurance Core Activities Net Income and Underwriting Margin R$million Combined Ratio 1 82.8% 78.0% 78.5% 49.8% 52.3% 74.2% 74.9% 48.1% 47.2% 745 39.8% 57.5% 648 717 701 687 54.9% 52.0% 53.3% 43.9% 0.4% 0.3% 0.2% 0.1% 402 374 398 0.5% 29.1% 30.0% 31.9% 32.4% 348 344 26.7% 16.7
Slide 75: Pension Plan Segment
Pension Plan Segment Focus on Client Experience 7 Reasons to Invest 1 Plan your retirement 2 Pay your future health expenses 3 Invest in your kids’ education 4 Plan your taxes expenses 5 Improve your investment return Recurring Net Income R$million 341 251 211 218 205 217 209 195 161 2Q16 3Q16 4Q16
Slide 76: Non-interest Expenses
Non-interest Expenses In R$billions 2Q18 1Q18 1H18 1H17 (4.9) (9.8) 2.5% Personnel Expenses (5.1) 3.3% (10.0) Administrative Expenses (4.0) (3.7) 6.7% (7.7) (7.8) -1.3% Personnel Expenses and Administrative Expenses (9.0) (8.6) 4.8% (17.7) (17.5) 0.8% Operating Expenses (1.2) (1.1) 6.0% (2.3) (2.3)
Slide 77: Efficiency Ratio and Risk-Adjusted Efficiency Ratio
Efficiency Ratio and Risk-Adjusted Efficiency Ratio 69.8 69.6 68.6 64.5 63.4 63.3 65.7 60.8 61.0 44.9 48.0 44.8 43.6 45.7 47.3 49.2 45.9 47.1 67.7 69.3 70.1 68.2 66.6 65.0 64.2 63.3 62.7 44.6 45.6 45.3 45.3 45.5 45.3 46.4 47.0 47.4 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Trailing 12-month Effic
Slide 78: Balance Sheet – Assets and Liabilities
Balance Sheet – Assets and Liabilities 1 R$million Assets 2Q18 1Q18 2Q17 1.2% 1,422,005 6.5% Current and Long-term Assets 1,514,685 1,496,519 Cash and Cash Equivalents 25,402 25,444 -0.2% 22,700 11.9% Short-term Interbank Investments 277,465 264,524 4.9% 288,333 -3.8% Securities and Derivative Finan
Slide 79: Total Assets | Evolution and Breakdown
Total Assets 1 | Evolution and Breakdown 1,503.5 1,427.1 2016 2017 Securities and Derivatives Breakdown 6.2% Pension Plans Fund Quotas 6.8% Domestic Government Bonds 13.2% 39.4% Corporate Securities International Government Bonds Derivatives 34.4% (1) Includes the consolidation of Citibank as of 4Q1
Slide 80: Total Liabilities | Evolution and Breakdown
Total Liabilities 1 | Evolution and Breakdown R$billion 1,503.5 1,542.7 1,427.1 533.5 323.6 191.8 181.7 136.4 121.8 53.9 2016 2017 2Q18 34.6% Deposits, Debentures and Funds from Bills and Structured Operations Certificates 21.0% Deposits Received under Securities, Repurchase Agreements and Fund from
Slide 81: Funding
Funding • • Loan Portfolio mainly funded by domestic client funding Diversified funding base In R$millions, end of period 2Q18 1Q18 2Q17 6.3% 63,989 10.4% Demand Deposits 70,646 66,430 Savings Deposits 127,342 122,412 4.0% 109,517 16.3% Time Deposits 225,762 215,743 4.6% 176,133 28.2% Debentures (Li
Slide 82: Funding from Clients
Funding Funding from Clients 1 1,648 1,682 1,747 1,805 1,839 1,556 1,595 1,479 1,543 1,028 1,070 1,116 1,154 1,215 1,242 909 966 971 336 342 348 329 332 328 336 335 333 163 165 169 168 174 171 189 189 198 In R$billions Demand and savings Deposits Time Deposits + Debentures + Funds From Bills Assets
Slide 83: Capital Ratios (BIS) | Prudential Conglomerate
Capital Ratios (BIS) | Prudential Conglomerate 1 In R$millions, end of period 2Q18 1Q18 131,812 Consolidated stockholders’ equity (BACEN) 135,734 Deductions from Core Capital (25,277) (21,477) Core Capital 110,457 110,336 Additional Capital 7,746 75 Tier I 118,203 110,410 Tier II 15,869 15,868 Refer
Slide 84: Capital Ratios: Full application of Basel III rules
Capital Ratios Full application of Basel III rules │June 30, 2018 16.1% 0.6% (1) - 0.8% - 1.8% 13.5% 0.3% 13.8% 0.4% 14.2% 0.6% 0.6% 1.0% 15.5% 13.2% 13.2% 12.9% Tier I Capital Investment in XP (3) Additional dividends Tier I Capital Net Income, RWA, Tier I Capital AT1 issued Tier I Capital Dec-17 (
Slide 85: 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 86: 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 excl
Slide 87: Distribution of Added Value in the 2Q18
Distribution of Added Value in the 2Q18 RENTAL PAYMENTS R$0.4 billion 2% 18% TAXES, 33% R$18.3 FEES AND CONTRIBUTIONS billion R$6.0 billion 29% EMPLOYEES R$5.2 billion REINVESTMENTS R$3.3 billion SHAREHOLDERS R$3.4 billion 18% 3% 14% Controllers Free Float 1% approximately Non- 130 thousand Controll
Slide 88: Basel III – Brazilian Phase-in Requirements
Basel III – Brazilian Phase-in Requirements1 2013 2014 2015 2016 2017 2018 ² 2019 ² Common Equity Capital Ratio 4.50% 4.50% 4.50% 5.13% 8.00% to 10.50% 6.00% 6.88% to 8.75% (Minimum + Additional) Tier I Capital Ratio 5.50% 5.50% 6.00% 6.63% 7.50% 8.38% to 10.25% 9.50% to 12.00% (Minimum + Additional
Slide 89: Ratings
Ratings FitchRatings International National Viability Support Local Currency Foreign Currency Long Term Short Term Long Term Short Term Long Term Short Term bb+ 4 BB B BB B AAA (bra) F1+ (bra) Moody’s International National Subordinated Debt Senior Unsecured Debt Issuer Issuer Foreign Currency Forei
Slide 90: 2018 Forecast
2018 Forecast We kept unchanged the ranges of our 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
Slide 91: Basis for 2018 Forecast
Basis for 2018 Forecast We kept unchanged the ranges of our 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 Incom
Slide 92: Information Technology
5 Information Technology
Slide 93: Digital Transformation
Digital Transformation Use of Digital Channels Share of Transactions Individuals 10.3 number of current account holders (in millions) 9.1 8.1 jun-16 jun-17 jun-18 Companies number of current account holders (in millions) 0.9 1.0 jun-16 jun-17 through digital channels Jun-16 Jun-18 1.1 Credit 16% 18%
Slide 94: 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 81 72 79 43 2015 2016 2017 7:00am-12:00pm 8:00am-10:00pm 2015 2016 2017 p
Slide 95: Itaú Unibanco in Capital Markets
6 Itaú Unibanco in Capital Markets
Slide 96: 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 June 30, 2018 Annual Average Appreciation Itaú Unibanco (1) Itaú Unibanco (2) Ibovespa (3) CDI (4) Since Itaú and Unibanco merger 15.9% 11.2% 7.2% 10.4% 5 years 1
Slide 97: Sustainability
7 Sustainability
Slide 98: 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 99: Sustainable Performance
Sustainable Performance Our Vision Is to be the leading bank in sustainable performance and customer satisfaction Sustainable Performance means creating shared values for employees, clients, shareholders and society, so as to ensure the longevity of our business
Slide 100: Corporate Sustainability Governance
Corporate Sustainability Governance Board level Definition and monitoring of the sustainability strategy Strategy Committee Members of the Board of Directors Executive level Integration of challenges and trends into businesses Officers level Decision on and prioritization of projects Operating level
Slide 101: Sustainability Strategy
Sustainability Strategy The sustainability strategy was defined from workshops, interviews and panels with internal and external stakeholders SOCIAL-ENVIRONMENTAL RISKS FINANCIAL EDUCATION DIALOG AND TRANSPARENCY AND OPPORTUNITIES Understand people´s needs to offer knowledge and appropriate financia
Slide 102: 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 page 102
Slide 103: 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, socia
Slide 104: The Sustainable Development Goals (SDGs)
The Sustainable Development Goals (SDGs) In 2015, the United Nations (UN) and world leaders formally adopted a new sustainable development agenda, the Sustainable Development Goals (SDGs). The private sector has an essential role in this challenge. We are committed to the SDGs and since 2015 we take
Slide 105: Employees | Profile
Employees | Profile 99,332 Employees1 60% 40% 51.4% of management 22% of employees are positions are held by blacks women 2.75% are apprentices 4.7% of employees are disabled persons (1) Employees who were active in December 2017, in Brazil and abroad from companies managed by the human resources de
Slide 106: Employees | Management Cycle
Employees | Management Cycle Attraction and Selection Special Talent Programs Internship: 2,094 people recruited in 2017 (Retention rate: 48%). Trainees: 139 trainees recruited in 2017 (Retention Training and Development Itaú Unibanco Business School Amounts invested in training programs (millions o
Slide 107: 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
Slide 108: ESG Integration on Business Credit Analysis
ESG Integration on Business Credit Analysis The Environmental and Social Risk Policy contains the criteria for the analysis of clients and projects and the establishment of real estate guarantees and the inclusion of covenants. To this end, we must consider: List of prohibited activities We do not c
Slide 109: Our operations | Buildings, Branches and Data center
Our operations | Buildings, Branches and Data center GOVERNANCE AND TARGETS RENEWABLE ENERGY PILOTS EMISSIONS MANAGEMENT Committee reviews eco-efficiency projects and studies, and tracks environmental targets In administrative buildings, using solar panels and Distributed Generation Develop inventor
Slide 110: Task Force on Climate-related Financial Disclosures (TCFD)
Task Force on Climate-related Financial Disclosures (TCFD) The initiative was conceived under the Financial Stability Board (FSB). It proposes climate disclosure recommendations for the financial and non-financial sectors in the pillars of Governance, Strategy, Management Risks, Goals and Metrics. W
Slide 111: Initiatives | Itaú Women Entrepreneurs and Financial Education
Initiatives| Itaú Women Entrepreneurs e Financial Education Itaú Women Entrepreneurs The Itaú Women Entrepreneurs Program (local acronym IME) was created in 2013 as a result of a partnership with the IFC, World Bank, and the IDB to offer financial and non-financial solutions to women entrepreneurs.
Slide 112: Ethics and Information Security
Ethics and Information Security Our business is based on ethical principles, which reflects the transparency, respect and honesty present in our relationship with stakeholders. Code of ethics Established to guide, prevent and resolve ethical dilemmas and conflicts of interests related to our activit
Itau Unibanco Holding — Investor Presentation (July 2018) on 6ix