Itau Unibanco Holding S.a. · BMFBOVESPA:ITUB3
Itau Unibanco — Q1 2018 Earnings Presentation
111 slides from Itau Unibanco's earnings presentation, May 7, 2018
Slide 1: 1Q18 Institutional Presentation
1Q18 Institutional Presentation Institutional Information Itaú Unibanco Holding S.A.
Slide 2: Forward-looking statements
1Q18 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 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 May 01, 2018
Slide 5: Our Profile
1 Our Profile
Slide 6: Itaú Unibanco at a Glance
Itaú Unibanco at a Glance US$100.4 billion market cap (1) 99,618 employees in Brazil and abroad 4,976 branches and CSBs in Brazil and abroad 47,086 ATMs in Brazil and abroad Brazilian multinational bank Major provider of finance for the expansion of Brazilian companies In 2017 Itaú Unibanco was elec
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 preferre
Slide 8: Our Way
OurWay 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 London, Lisbon, Madrid, Paris, Frankfurt Institutional Clients / Asset London Private Banking Zur
Slide 11: A History of Successful Strategic Deals
A History of Successful Strategic Deals 1 Foundation of Banco Itaú Casa Moreira Salles Banco del Buen Ayre BEG Alliance with: Unibanco Itaú Acquisition of the remaining 50% of: Uruguay 1924 1944 1995 - 1998 2000 - 2003 2004 - 2007 Merger 2008 Acquisition of the minority interest of: Banco Itaú BMG C
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 Broad shareholder base (52.82% of our shares in free float) • Strong corporate governance Itaú Unibanco Holding S.A. 63.26% ON 16.97% PN 34.45% Total 36.74% ON 8
Slide 14: IUPAR and Itaú Unibanco Governance
IUPAR (Itaú Unibanco Participações) and Itaú Unibanco Governance Executive Committee Família Salles Itaú Unibanco Board of Directors IUPAR Itaú Unibanco Participações) Implementation of Board of Directors’ guidelines and goals; Operation of the businesses and strategy for products and segments; Ensu
Slide 15: Board of Directors and Executive Committees
Itaú Unibanco Board of Directors and Executive Committees Executive Committees Board of Directors Co-Chairman Co- Chairman Pedro Moreira Salles Roberto Egydio Setubal Directors Alfredo Egydio Setubal Amos Genish 1 Ana Lúcia de Mattos Barretto Villela Fábio Colletti Barbosa 1 Gustavo Jorge Laboissièr
Slide 16: Risk Management Structure
Risk Management Structure Audit Committee Gustavo Loyola 1 Capital and Risk Management Committee Pedro Bodin 1 3rd line of defense Independent review of the activities developed by the institution. Board of Directors Pedro Moreira Salles Roberto Egydio Setubal Internal Audit Paulo Miron Itaú Unibanc
Slide 17: Governance Structure at Itaú Unibanco
Governance Structure at Itaú Unibanco Shareholder’s Meeting Board of Directors Fiscal Council Personnel Committee Related Parties Committee Nomination and Corporate Governance Committee Risk and Capital Management Committee Strategy Committee Compensation Committee International Advisory Board Audit
Slide 18: Credit Risk Policies Hierarchy
Credit Risk Policies Hierarchy Board of Directors and Capital and Risk Management Committee Executive Committee General Office and Risk Dept. Defines and monitors Risk Appetite; Approval of policies, strategies and definition of minimum expected return on capital; Improvement of Risk Culture. Define
Slide 19: Risk Appetite Defined by the Board of Directors
Risk Appetite Defined by the Board of Directors Principles Statement Dimensions Sustainability and customer satisfaction; Risk pricing; Operational excellence; Diversification; Risk Culture; Ethics and regulatory compliance. Optimization of capital allocation; Low volatility in results; Regional foc
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. Board of Directors Statement It is based on “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 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 81 167 79 110 91 112 102 114 97 113 92 118
Slide 22: Credit Offer Based on Future Scenario
Credit Offer Based on Future Scenario Credit Not Available STATISTICAL MODELS POLICY Highest risk Lowest risk Highest risk Base Scenario Risk Level Credit Available POLICY Credit Not Available Positive future expectation Easing of credit, maintaining the same appetite Credit Available Credit Not Ava
Slide 23: Business Overview
3 Business Overview
Slide 24: Universal Bank
Universal Bank 1 • Approximately 30.7 million credit card accounts and 26.7 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$14.3 billion; • Lease and finance through over
Slide 25: Client Segmentation
Client Segmentation Individuals Segmentation by monthly income Companies Segmentation by annual sales 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$4 Thousand Retail Banking
Slide 26: Retail in Brazil
Retail in Brazil Presence in Brazil 1 (As of March 31, 2018) North Northeast Midwest Southeast South 316 116 337 681 2,984 813 794 780 766 757 736 718 703 704 3,755 3,707 3,664 3,653 3,553 3,523 3,523 3,591 3,587 108 115 130 135 144 154 156 160 160 4,676 4,616 4,574 4,554 4,454 4,413 4,397 4,454 4,4
Slide 27: Retail - Credit Cards, Joint Ventures and Partnerships
Retail - Credit Cards, Joint Ventures and Partnerships with Retailers in Brazil • Brazilian market leader in credit card transactions. • Qualification of the client base: proprietary channel x partnerships. • Credit card business comprises: • Issuance of cards • Acquiring: REDE • JVs and partnership
Slide 28: Retail - Cards in Brazil
Retail - Cards in Brazil | Growing Penetration in Household Consumption Expenditure Credit and Debit Cards Billed Volume % at Household Consumption Expenditure 18.3% 17.4% 17.9% 17.4% 18.3% 17.2% 17.6% 18.0% 19.0% 11.6% 11.0% 10.9% 10.7% 11.9% 11.1% 11.2% 11.4% 12.4% 29.9% 28.4% 28.8% 28.0% 30.3% 28
Slide 29: Retail - Payroll Loan in Brazil
Retail - Payroll Loan in Brazil 46.7 46.5 45.6 44.6 44.9 44.8 44.6 44.4 44.7 35% 36% 37% 38% 38% 39% 39% 40% 41% 65% 64% 63% 62% 62% 61% 61% 60% 59% Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Branches Itaú Consignado S.A. 30.9 31.4 31.2 31.0 31.7 32.2 32.6 32.8 33.5 11.0 10.4 9.8
Slide 30: Retail - Mortgage Market in Brazil
Retail -Mortgage Market in Brazil 79.1% 82.6% 83.7% 20.9% 17.4% 16.3% 48,488 48,074 47,754 Mar-17 Dec-17 Mar-18 Individuals Companies Mortgage Loans Evolution 1 R$ million -1.5% Real Estate Brokers 30% High Income Branches 29% Developers 17% Regular Branches 14% Partnerships 11% Distribution Channel
Slide 31: Retail - Vehicle Financing in Brazil
Retail - Vehicle Financing in Brazil Offers finance through over 10 thousand dealers. Average ticket size of approximately R$30.8 thousand. 79% of the financing is guaranteed up to 4 years. 90% of the financing are made up to 48 months. LTV of the new vehicle concessions to individuals of 56.8% in t
Slide 32: Retail - Insurance Ranking in Brazil
Retail - Insurance Ranking in Brazil 1,2 Jan-Feb/18 Jan-Feb/17 Model Total Insurance 3 4th 4th Bancassurance 4 5th 3rd Life & Personal Accidents 3rd 2nd Bancassurance Credit Insurance 6th 5th Bancassurance Pension Plan 3rd 3rd Bancassurance Premium Bonds 3rd 3rd Bancassurance Porto Seguro 2nd 2nd Ve
Slide 33: Retail - Association with Porto Seguro
Retail - Association with Porto Seguro Association’s Structure Controlling stockholders of Porto Seguro Itaú Unibanco PSIUPAR Market Porto Seguro S.A. (PSSA) Subsidiaries Porto Seguro S.A. Itaú Seguros de Auto e Residência S.A (ISAR) 57.07% 42.93% 69.88% 30.12% 99.99% 100.0% Unification of residenti
Slide 34: Very Small, Small and Middle Market in Brazil
Very Small, Small and Middle Market in Brazil SMEs Loan Portfolio 1 R$ million 79,649 75,433 72,002 68,974 61,547 61,869 63,050 2012 2013 2014 2015 2016 2017 1Q18 Highlights Full range of financial products and services, including deposits accounts, investment options, insurance, cash management, cr
Slide 35: Wholesale - Corporate Companies in Brazil
Wholesale - Corporate Companies in Brazil Corporate Loans 1 R$ million 163,437 194,472 213,815 219,418 181,541 165,052 161,990 2012 2013 2014 2015 2016 2017 1Q18 Highlights • Corporate clients with annual sales above R$200 million. • We offer a broad portfolio of banking products and services, from
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$200 MM Investment Banking Leadership position and client recognition LatAm Presence in all banking segments in La
Slide 37: Wholesale - Wealth Management Services
Wholesale -Wealth Management Services | Brazil Evolution of Assets Under Administration Investment Product management for the conglomerate and a full range of investment options to Retail Banking. R$ billion 721 752 802 801 849 883 922 946 1,002 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-1
Slide 38: Retail Footprint in Latin America
Retail Footprint in Latin America | March 2018 Employees: 1,702 Branches + CSBs: 87 ATMs: 178 Argentina Employees: 5,984 Branches + CSBs: 202 ATMs: 470 Chile Employees: 85,843 Branches + CSBs: 4,451 ATMs: 45,891 Brazil Colombia1 Employees: 3,567 Branches + CSBs: 169 ATMs: 174 Employees: 1,119 Branch
Slide 39: Segments – Income Statement Pro Forma 1Q18
Segments – Income Statement Pro Forma 1Q18 In R$ millions Retail Banking Wholesale Banking Activities with the Market + Corporation Itaú Unibanco Operating Revenues 17,692 6 ,821 2,913 27,426 Managerial Financial Margin 9,715 4,432 2,852 16,999 Financial Margin with Clients 9,715 4,432 1,114 15,261
Slide 40: Financial Highlights
4 Financial Highlights
Slide 41: Recurring Net Income, ROE and Credit Quality
R$6.4 billion RECURRING NET INCOME RECURRING ROE (p.a.) CREDIT QUALITY (Mar-18) 22.2% + 2.2% (1Q18/4Q17) + 3.9% (1Q18/1Q17) NPL 90 3.1% + 30 bps (1Q18/4Q17) + 20 bps (1Q18/1Q17) stable (Mar-18/Dec-17) - 30 bps (Mar-18/Mar-17) R$6.2 billion + 1.5% (1Q18/4Q17) + 3.5% (1Q18/1Q17) 23.7% + 20 bps (1Q18/4
Slide 42: Recurring Net Income and ROE
Recurring Net Income and ROE R$ billion 19.9% 20.7% 22.0% 21.5% 21.6% 21.9% 22.2% 16.0% 16.0% 15.5% 14.5% 14.0% 14.0% 13.5% 5.6 5.8 6.2 6.2 6.3 6.3 6.4 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Recurring Net Income Annualized Recurring Return on Average Equity (quarterly) Cost of Equity Note: Includes the
Slide 43: Non-Recurring Events
Non-Recurring Events In R$ millions 1Q18 4Q17 1Q17 Recurring Net Income 6 ,419 6 ,280 6 ,176 Non-Recurring Events ( 139) ( 459) ( 123) Impairment ( 92) (7) - ∟ Adjustment to reflect the realization value of certain assets related to technology Goodwill Amortization ( 146) ( 135) ( 125) ∟ Effect from
Slide 44: Income Statement | Operating Revenues Perspective
Income Statement | Operating Revenues Perspective In R$ millions 1Q18 4Q17 1Q17 Operating Revenues 27,426 27,839 -1.5% 27,266 0.6% Managerial Financial Margin 16,999 16,941 0.3% 1 7,415 -2.4% Financial Margin with Clients 1 5,261 15,503 -1.6% 15,547 -1.8% Financial Margin with the Market 1,738 1,437
Slide 45: Income Statement | Managerial Financial Margin Perspective
Income Statement | Managerial Financial Margin Perspective In R$ millions 1Q18 4Q17 1Q17 Managerial Financial Margin 16,999 16,941 0.3% 17,415 -2.4% Financial Margin with Clients 15,261 15,503 -1.6% 1 5,547 -1.8% Financial Margin with the Market 1,738 1,437 20.9% 1,868 -7.0% Cost of Credit (3,788) (
Slide 46: Results – Brazil and Latin America
Results – Brazil and Latin America 1Q18 4Q17 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 In R$ billions Consolidated Brazil 1 Latin America (ex-Brazil) 2 Consolidated Brazil 1 Lat
Slide 47: Business Model
Business Model In R$ billions 1Q18 1Q17 Excess Capital Consolidated Credit Trading Insurance and Services Excess Capital Consolidated Credit Trading Insurance and Services Excess Capital Consolidated Credit Trading Insurance and Services Operating Revenues 27.4 13.9 0.6 12.3 0.6 27.3 14.0 0.6 12.0 0
Slide 48: Credit Portfolio with Financial Guarantees Provided
Credit Portfolio with Financial Guarantees Provided and Corporate Securities In R$ billions, end of period 1Q18 4Q17 1Q17 Individuals 1 91.4 191.5 -0.1% 1 80.5 6.0% Credit Card Loans 6 5.0 66.9 -2.9% 56.2 15.6% Personal Loans 2 7.4 26.4 3.9% 26.3 4.2% Payroll Loans ¹ 4 4.7 44.4 0.6% 44.9 -0.4% Vehic
Slide 49: Credit Portfolio by Product
Credit Portfolio by Product In R$ billions, end of period 1Q18 4Q17 4Q17 Individuals - Brazil ( 1 ) 190.5 190.6 -0.1% 180.2 5.7% Credit Card 65.0 66.9 -2.9% 56.2 15.6% Personal Loans 26.4 25.3 4.2% 25.8 2.3% Payroll Loans (2) 4 4.7 44.4 0.6% 44.9 -0.4% Vehicles 14.3 14.1 1.7% 14.8 -3.1% Mortgage Loa
Slide 50: Credit Portfolio by Currency
Credit Portfolio by Currency R$ billion 216.0 194.9 193.8 183.3 176.5 184.9 180.7 192.4 197.9 384.7 378.1 374.0 378.7 373.9 367.4 358.4 371.7 368.4 600.7 573.0 567.7 562.0 550.3 552.3 539.1 564.1 566.4 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Foreign Currency Local Currency (1)
Slide 51: Credit Origination and Private Securities Issuance | Brazil
Credit1 Origination and Private Securities Issuance | Brazil Base 100 = 1Q14 Total Credit2 – Brazil 0% Δ YoY (%) -35% 7% 17% 11% Δ YoY (%) -32% 1% 31% Credit2 - Individuals 100 100 65 69 81 1Q14 1Q15 1Q16 1Q17 1Q18 100 111 76 76 99 1Q14 1Q15 1Q16 1Q17 1Q18 100 53 34 66 193 1Q14 1Q15 1Q16 1Q17 1Q18 1
Slide 52: Credit Portfolio Growth in Brazil
Credit Portfolio Growth in Brazil 1 (in R$ Billions) Nominal GDP (Mar-14 to Mar-18): 20.9% Accumulated Inflation (IPCA) (Mar-14 to Mar-18): 28.2% Accumulated Interbank Rate: (Mar-14 to Mar-18): 57.2% 368 409 380 353 355 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 71 70 62 57 61 Mar-14 Mar-15 Mar-16 Mar-17 Ma
Slide 53: Credit Portfolio Breakdown
Credit Portfolio Breakdown 1 Companies Credit Portfolio by Business Sector 2,3 In R$ billions, end of period 1Q18 4Q17 Public Sector 5.2 4.9 7.7% Private Sector | Companies 313.8 3 14.0 -0.1% Real Estate 21.1 2 1.9 -4.0% Food and beverage 1 7.8 1 7.3 3.1% Vehicles and auto parts 1 5.1 1 6.0 -5.6% Ag
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. ▪ 55.7%of total origination was created in the past 12 months. R$ billion 28.3% 32.1% 31.0% 9.8% 9.0% 10.6% 735...669%%% 745..
Slide 55: Evolution of the Credit Portfolio Mix
Evolution of the Credit Portfolio Mix Corporate and Individuals1 | Brazil 31.6% 30.5% 30.2% 29.7% 29.9% 30.6% 31.2% 32.0% 34.1% 16.6% 15.8% 15.7% 16.0% 15.6% 15.1% 14.3% 14.0% 13.9% 22.1% 17.6% 14.1% 11.7% 9.9% 8.7% 8.2% 7.8% 7.5% 15.0% 15.5% 16.2% 18.0% 19.2% 20.5% 21.3% 21.4% 21.0% 14.7% 20.5% 23.
Slide 56: Managerial Financial Margin With Clients
Managerial Financial Margin With Clients 15,503 96 81 (36) (223) (63) (17) (220) 81 58 15,261 4Q17 Mix of products Average Asset Portfolio Asset Spreads Lower Number of calendar days Liabilities Margin Structured operations from the wholesale segment Working Capital and other Citibank's operation La
Slide 57: Financial Margin with Clients | Annualized Average Rate
Financial Margin with Clients | Annualized Average Rate Annualized Average Rate | Consolidated 12.5% 13.0% 13.3% 12.6% 12.6% 12.3% 12.0% 12.0% 7.2% 8.4% 8.2% 8.2% 8.9% 9.2% 8.9% 9.0% 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 10.3% 10.5% 10.8% 10.3% 10.3% 10.1% 9.9% 9.9% 6.1% 6.8% 6.6% 6.7% 7.3% 7.4% 7
Slide 58: Loan Portfolio Mix Change
Loan Portfolio Mix Change 1 (%) 33.0 35.0 32.6 30.0 27.2 18.7 16.8 16.2 16.1 17.0 10.1 6.4 4.8 4.2 4.0 14.4 13.8 14.4 15.9 18.3 7.5 7.2 7.5 7.3 7.4 9.6 9.9 12.2 13.7 13.5 6.7 10.9 12.3 12.7 12.6 mar/14 mar/15 Mar-16 Mar-17 Mar-18 Mar-18 19.5 12.2 2.9 13.1 5.3 9.6 9.0 28.4 Brazil 2 Consolidated Mar-1
Slide 59: Financial Margin with the Market
Financial Margin with the Market R$ billion 0.1 0.1 0.3 0.3 0.2 0.2 0.3 0.2 0.2 0.3 1.2 1.6 1.2 1.5 1.8 1.7 1.3 1.1 1.2 1.3 1.3 0.1 1.7 1.5 1.7 2.0 1.9 1.6 1.4 1.4 1.7 1.7 1.7 1.7 1.6 1.7 1.8 1.8 1.7 1.6 1.5 - 0 .5 1 .0 1 .5 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Sale of B3 Shares Financi
Slide 60: Provision for Loan Losses and Cost of Credit
Provision for Loan Losses and Cost of Credit 3,628 3,378 3,464 3,747 4,302 4,621 4,323 4,395 3,932 3,996 3,550 3,732 3,236 3,534 3,165 915 1,112 1,892 1,629 1,295 1,362 2,728 1,546 1,825 1,070 1,410 619 532 248 393 323 338 358 392 399 383 772 396 412 757 432 598 514 701 554 4,865 4,828 5,714 5,768 5
Slide 61: Allowance for Loan Losses by Risk
Allowance for Loan Losses by Risk– Consolidated 0.4 0.5 0.9 0.9 3.1 4.1 1.3 3.5 5.1 Latin America2 Wholesale -Brazil1 Retail - Brazil1 Renegotiations (non-overdue / aggravated) Allocation of Total Allowance(*) by Type of Risk - Consolidated Overdue Aggravated Potential³ Expected and/or Potential Los
Slide 62: Non Performing Loans Ratios
Non Performing Loans Ratios 5.1 3.8 4.2 3.9 4.2 3.6 4.0 3.7 3.5 3.3 3.5 0.6 0.8 1.2 0.9 1.5 0.7 2.0 1.0 1.0 1.8 0.8 2.9 3.1 3.6 3.9 4.2 3.5 3.7 2.8 3.0 2.5 2.4 Mar-14 Dec-14 Mar-15 Dec-15 Mar-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Individuals Corporate Very Small, Small and Middle Market Compa
Slide 63: NPL Ratio Evolution – Individuals (Brazil)
NPL Ratio Evolution – Individuals (Brazil) NPL Ratio (Over 90 days) -% 7.9 7.1 6.4 5.8 5.2 4.8 5.4 6.0 5.7 5.3 5.1 4.6 Mix jun-12 5.2 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Note: Includes the consolidation of Citibank as of 4Q17. Itaú Unibanco Holding S.A
Slide 64: NPL Creation
NPL Creation R$ billion 6.0 5.3 6.8 5.3 4.9 4.4 4.4 4.4 5.0 4.3 4.2 4.1 3.8 3.5 3.8 3.6 3.3 3.2 1.5 1.1 2.3 0.8 1.0 0.2 0.2 0.5 1.1 0.3 0.1 0.4 0.8 0.5 0.4 0.5 0.5 0.7 4.5 0.6 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Total Retail Banking - Brazil Wholesale Banking - Brazil Latin America ex-Brazi
Slide 65: Provision for Loan Losses and NPL Creation by Segment
Provision for Loan Losses and NPL Creation by Segment 0.8 0.4 0.3 0.1 0.4 0.4 0.8 0.8 0.4 0.5 0.6 0.4 0.5 0.5 0.7 0.5 0.6 0.7 262% 499% 105% 100% 86% 154% 97% 128% 79% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2.7 1.5 1.5 1.1 1.8 2.3 1.1 0.8 1.4 1.0 0.6 0.2 0.5 0.2 0.2 0.5 0.4 1.1 186% 146% 79% 1
Slide 66: Coverage Ratio
Coverage Ratio 209% 213% 202% 221% 231% 243% 247% 249% 241% 160% 159% 159% 162% 165% 166% 164% 166% 169% 215% 232% 228% 231% 231% 245% 241% 219% 204% 458% 494% 345% 562% 553% 715% 932% 908% 618% Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Total - Brazil Retail - Brazil Latin Ameri
Slide 67: Coverage Ratio (90-day NPL)
Coverage Ratio (90-day NPL) 210% 215% 204% 222% 231% 243% 246% 245% 236% 102% 104% 104% 104% 104% 101% 100% 100% 96% 244% Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Total Total (Expanded¹) 2 231% 219% 204% 165% 166% 169% 553% 908% 618% 845% Mar-17 Dec-17 Mar-18 Latin America ex-B
Slide 68: Loan Portfolio Evolution by Risk Level
Loan Portfolio Evolution by Risk Level Brazil 1 Consolidated 11.6% 10.7% 10.5% 9.8% 9.2% 9.1% 4.0% 4.1% 4.1% 4.2% 4.0% 4.0% 5.0% 5.0% 5.0% 9.5% 8.7% 8.8% 35.9% 37.2% 37.2% 33.4% 35.2% 34.9% 43.5% 43.1% 43.2% 43.1% 43.0% 43.2% 33,853 32,919 31,976 37,640 37,309 36,661 Mar-17 Dec-17 Mar-18 Mar-17 Dec-
Slide 69: Renegotiated Loan Operations
Renegotiated Loan Operations 4.6 5.0 6.7 5.1 4.9 4.6 4.6 4.4 4.9 20.4% 20.7% 26.4% 20.8% 19.7% 17.6% 17.2% 16.5% 17.9% Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Total Renegotiated Loans Portfolio 90-day NPL Total of Renegotiated Loans Portfolio 90-day NPL Ratio 8.5 10.4 11.2 9.9
Slide 70: Credit Quality | Individuals
Credit Quality | Individuals 82.9% 69.7% 7.5% 9.1% 9.7% 21.2% Itaú Unibanco Brazilian Financial System excluding Itaú Unibanco Transactor² Installment with Interest Revolving Credit + Overdue Loans ¹ 11% 14% 75% Private Sector Public Sector INSS 27.1% 34.1% 17.9% 13.9% 31.8% 7.5% 12.6% 21.0% 10.7% 2
Slide 71: Banking Fee Revenues and Result from Insurance
Banking Fee Revenues and Result from Insurance, Pension Plans and Premium Bonds In R$ millions 1Q18 4Q17 1Q17 Credit Cards 3,139 3,346 -6.2% 2,947 6.5% Current Account Services 1,818 1,763 3.1% 1,651 10.1% Asset Management ¹ 1,014 952 6.5% 8 53 18.8% Credit Operations and Guarantees Provided 8 45 88
Slide 72: Merchant Acquiring - REDE
Merchant Acquiring - REDE 59,982 61,328 62,370 68,259 60,938 61,937 63,558 69,425 63,345 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 32,916 32,070 32,851 37,548 32,867 32,014 32,234 38,711 35,595 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 1,426 1,447 1,501 1,535 1,433 1,401 1,399 1,444 1,283 1Q16
Slide 73: Insurance Operations | Pro Forma Income Statement
Insurance Operations | Pro Forma Income Statement Recurring Other In R$ millions Activities Activities Earned Premiums 983 8 93 90 Revenues from Pension Plan and Premium Bonds 203 2 03 - Retained Claims (279) (200) (79) Selling Expenses ( 17) (3) ( 14) Result from Insurance, Pension Plan and Premium
Slide 74: Insurance Operations | Insurance Core Activities
Insurance Operations | Insurance Core Activities 460 403 348 374 398 710 745 648 717 701 81.9% 82.8% 74.2% 78.0% 78.5% 1Q17 2Q17 3Q17 4Q17 1Q18 Net Income Underwriting Margin Underwriting Margin / Earned Premiums Net Income and Underwriting Margin Combined Ratio 1 R$ million 17.7% 16.7% 25.5% 21.7%
Slide 75: Pension Plan Segment
Pension Plan Segment Recurring Net Income 1 Plan your retirement 2 Pay your future health expenses 3 Invest in your kids’ education 7 Succession planning 4 Plan your taxes expenses 5 Improve your investment return Concept 1,3,6,9: How much do the client have to save to enjoy a peaceful retirement? 7
Slide 76: Non-interest Expenses
Non-interest Expenses (1) Includes IPTU, IPVA, IOF and other. Does not include PIS, Cofins and ISS; (2) Does not consider overhead allocation; In R$ millions 1Q18 4Q17 1Q17 Personnel Expenses (4,926) ( 5,395) -8.7% (4,781) 3.1% Administrative Expenses ( 3,704) ( 4,124) -10.2% (3,787) -2.2% Personnel
Slide 77: Efficiency Ratio and Risk-Adjusted Efficiency Ratio
Efficiency Ratio and Risk-Adjusted Efficiency Ratio 44.1 44.6 45.6 45.3 45.3 45.5 45.3 46.4 47.0 65.9 67.7 69.3 70.1 68.2 66.6 65.0 64.2 63.3 43.6 44.9 48.0 44.8 43.6 45.7 47.3 49.2 45.9 72.4 69.8 69.6 68.6 64.5 63.4 63.3 65.7 60.8 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Trailing 12-month Effic
Slide 78: Balance Sheet – Assets and Liabilities
Balance Sheet – Assets and Liabilities 1 R$ million Assets 1Q18 4Q17 1Q17 Current and Long-term Assets 1,496,519 1,475,217 1.4% 1,386,959 7.9% Cash and Cash Equivalents 25,444 18,749 35.7% 20,224 25.8% Short-term Interbank Investments 264,524 271,254 -2.5% 274,435 -3.6% Securities and Derivative Fin
Slide 79: Total Assets | Evolution and Breakdown
27.8 163.1 421.6 451.2 460.7 1,427.1 1,503.5 1,524.4 2016 2017 1Q18 Total Assets 1 | Evolution and Breakdown R$ billion Cash and Cash Equivalents, Interbank Investments and Interbank and Interbranch Accounts Securities and Derivatives Financial Instruments Loans 2 Other Permanent Assets 27.7% 30.2%
Slide 80: Total Liabilities | Evolution and Breakdown
Total Liabilities 1 | Evolution and Breakdown R$ billion 52.2 118.5 140.1 188.8 190.9 307.0 526.8 1,427.1 1,503.5 1,524.4 2016 2017 1Q18 Deposits Received under Securities, Repurchase Agreements and Fund from Acceptances and Issue of Securities 2 Subordinated Debt 4 Deposits, Debentures and Funds fr
Slide 81: Funding
Funding • Loan Portfolio mainly funded by domestic client funding • Diversified funding base In R$ millions, end of period 1Q18 4Q17 1Q17 Demand Deposits 66,430 68,973 -3.7% 61,108 8.7% Savings Deposits 122,412 119,980 2.0% 107,046 14.4% Time Deposits 215,743 211,800 1.9% 152,354 41.6% Debentures (L
Slide 82: Funding
Funding 166 163 165 169 168 174 171 189 189 292 336 342 348 329 332 328 336 335 872 909 966 971 1,028 1,070 1,116 1,154 1,215 1,396 1,479 1,543 1,556 1,595 1,648 1,682 1,747 1,805 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Demand and savings Deposits Time Deposits + Debentures +
Slide 83: Capital Ratios (BIS) | Prudential Conglomerate
Capital Ratios (BIS) | Prudential Conglomerate 1 In R$ millions, end of period 1Q18 4Q17 Consolidated stockholders’ equity (BACEN) 1 31,812 1 40,348 Deductions from Core Capital ( 21,477) ( 17,952) Core Capital 110,336 122,396 Additional Capital 7 5 5 7 Tier I 110,410 122,453 Tier II 1 5,868 1 9,799
Slide 84: Capital Ratios
Capital Ratios 15.5% 12.9% 13.6% 13.6% 0.6% -0.8% -1.8% 0.6% 0.7% 0.6% 0.3% 0.9% 16.1% 13.5% 14.2% 14.5% Tier I Capital Dec-17 with fully loaded Basel III Impact of the investment in XP Additional dividends and interest on own capital reserved in stockholders' equity in 2017 Tier I Capital Dec-17 wi
Slide 85: Capital Requirement under Basel Committee, BACEN and ITUB Target
Capital Requirement under the Basel Committee, BACEN and ITUB Target 4.0% 4.0% 8.0% 5.5% 5.5% 11.0% If total capital falls below 11.5%, restrictions will start to be applied to the distribution of dividends and bonus 2.0% 8.0% 11.5% 1.5% T1= 9.5% Minimum Capital Required 15.0% 12.0% 1.5% 1.5% T1= 13
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 1Q18
Distribution of Added Value in the 1Q18 24% 14% 28% 32% 2% TAXES, FEES AND CONTRIBUTIONS R$5.6 billion RENTAL PAYMENTS R$0.4 billion REINVESTMENTS R$4.2 billion EMPLOYEES R$4.9 billion 10% Free Float 1% Non- Controllers 3% Controllers SHAREHOLDERS R$17.4 R$2.4 billion billion approximately 120 thous
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 (Minimum + Additional) 4.50% 4.50% 4.50% 5.13% 6.00% 6.88% to 8.75% 8.00% to 10.50% Tier I Capital Ratio (Minimum + Additional) 5.50% 5.50% 6.00% 6.63% 7.50% 8.38% to 10.25% 9.50% to 12.00
Slide 89: Ratings
Ratings FitchRatings Moody’s Standard &Poor’s 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) International National Subordinated Debt Foreign Currency Senior Unsecured Debt Foreign Currency Long Ter
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 Total C
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 Digital Evolution Techies are being added up to the traditional professionals. This evolution has been exponential in the organization: in the last two years only, the presence of techies in Itaú Unibanco has increased 13 times. People Our digital transformation takes place th
Slide 94: Digital Transformation | Evolution of Digital Branches
Digital Transformation | Evolution of Digital Branches 338 432 527 2015 2016 2017 800 1,300 1,500 2015 2016 2017 51 63 81 2015 2016 2017 43 72 79 2015 2016 2017 Personnalité Branches Uniclass Branches 7:00am-12:00pm 8:00am-10:00pm Uniclass Clients (in thousands) Personnalité Clients (in thousands) #
Slide 95: Itaú Unibanco in Capital Markets
Itaú Unibanco in Capital 6 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 March 31, 2018 Annual Average Appreciation 527 355 229 257 2008 2009 2010 2011 2012 2013 2014 2015 2016 20171T18 Annual Average Appreciation (1) With dividends re
Slide 97: Sustainability
7 Sustainability
Slide 98: Sustainability Timeline
Sustainability Timeline Sustainability Committee (officers level) 2007 2010 2013 2014 2016 Central Bank Regulation Sustainability at the board of directors’ Strategy Committee Sustainable performance in corporate vision 2000 First cell for analysis of environmental and social risks Sustainability Go
Slide 99: Sustainable Performance
Sustainable Performance Is to be the leading bank in sustainable performance and customer satisfaction Our Vision means creating shared values for employees, clients, shareholders and society, so as to ensure the longevity of our business Sustainable Performance Society Shareholders Generating share
Slide 100: Corporate Sustainability Governance
Corporate Sustainability Governance Officers level Board level Operating level Executive level Integration of challenges and trends into businesses Definition and monitoring of the sustainability strategy Decision on and prioritization of projects Management of projects by specific topics Working Gr
Slide 101: Sustainability Strategy
Sustainability Strategy The sustainability strategy was defined from workshops, interviews and panels with internal and external stakeholders Understand people´s needs to offer knowledge and appropriate financial solutions, contributing for individuals and companies to have a healthy relationship wi
Slide 102: Dialogue and Transparency | Engagement
Dialogue and Transparency | Engagement Diversity Climate Change Sustainable Development Reporting and Transparency Integrity and Ethics Responsible Bank Organizations and commitments that are sources of knowledge and trends Itaú Unibanco Holding S.A. page 102
Slide 103: Transparency with the Market | Reporting
Transparency with the Market | Reporting • Presentation of the results from 6 capitals: financial, social and relationship, human, intellectual, manufactured and natural. Form 20-F SEC Sustainability Report + GRI MTN Program Medium-Term Note Consolidated Annual Report Leader in Transparency since 20
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 22% of employees are blacks (1) Employees who were active in December 2017, in Brazil and abroad from companies managed by the human resources department 60% 40% 51.4% of management positions are held by women 2.75% are apprentices 4.7% of employees are disabled
Slide 106: Employees | Management Cycle
Employees | Management Cycle Attraction and Selection Training and Development Performance Assessment Compensation and Benefits Internship: 2,094 people recruited in 2017 (Retention rate: 48%). Trainees: 139 trainees recruited in 2017 (Retention rate: 97%). 10.6% 10.4% 9.1% 2015 2016 2017 General Tu
Slide 107: Integration of ESG into businesses
Integration of ESG into businesses 1 Governance 2 Processes 3 Compliance Sustainability and environmental and social responsibility policy Environmental and social risk policy Committees Analysis methodologies Based on the principles of relevance and proportionality Engagement of institutions that a
Slide 108: ESG Integration on Business
ESG Integration on Business Credit Analysis Responsable Investments 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 prohibite
Slide 109: Our operations | Buildings, Branches and Data center
Our operations | Buildings, Branches and Data center Committee reviews eco-efficiency projects and studies, and tracks environmental targets GOVERNANCE AND TARGETS Develop inventory, reduce and offset greenhouse gas emissions EMISSIONS MANAGEMENT In administrative buildings, using solar panels and D
Slide 110: Initiatives | Itaú Women Entrepreneurs and Financial Education
Initiatives| Itaú Women Entrepreneurs e Financial Education Objective of the program Empower female entrepreneurs in Brazil through in-person and online solutions; train, inspire and connect female entrepreneurs In-person Actions • Networking events • Business rounds • Workshops Online Platform • Co
Slide 111: Ethics and Information Security
Ethics and Information Security pg. 111 Code of ethics Established to guide, prevent and resolve ethical dilemmas and conflicts of interests related to our activities and internal relations and foresees our commitment to the themes in the ILO´s fundamental conventions and other international agreeme
Itau Unibanco Holding — Q1 2018 Earnings Presentation on 6ix