banco itaú holding financeira s.a. new york march 2005 presentation to: 13 th annual latin america...
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Banco Itaú Holding Financeira S.A.
New York
March 2005
Presentation to:13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
Alfredo SetubalInvestor Relations Director
2Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
Agenda
Results - Banco Itaú Holding Financeira
Pro Forma Results - Banco Itaú and Banco Itaú BBA
Important Facts - Banco Itaú Holding Financeira
3
Banco Itaú Holding Financeira S.A.
Smith Barney-Citigroup 13th Annual Latin America Conference
Highlights
Growth of Credit Portfolio by Client Type (highlights):
4th Quarter/04 -Individuals 19.7% and Small and Medium Sized Companies 15.7%.
2004 -Individuals 43.1% and Small and Medium Sized Companies 70.8%Net Interest Margin*
4th Quarter/04 = 13.6% p.a. 3rd Quarter/04 = 12.4% p.a.
2004 = 13.2% p.a. 2003 = 13.9% p.a.
Results:
4th Quarter/04 – Net Income of R$ 1,030 million with ROE 32.9% p.a.;
2004 - Net Income of R$ 3,776 million with ROE 27.0% p.a.;
* Excluding the nonrecurring items of 4th Quarter of 2004
Growth of Credit Portfolio (including endorsements and sureties):
Total: 4th Quarter/04 = 4.3% Excluding Corporate Clients: 4th Quarter/04 = 14.8%
2004 = 19.5% 2004 = 43.8%
4
Banco Itaú Holding Financeira S.A.
Smith Barney-Citigroup 13th Annual Latin America Conference
Technical Provisions of Pension Plans:
Balance at Dec/04 of R$ 8.6 billion – Growth of 56.4% in 2004.
Full Amortization of Goodwill: (R$ Million)
Without Tax Effects With Tax Effects
CBD (3rd Q./04) 381 347
Credicard (4th Q./04) 721 656
Orbitall (4th Q./04) 233 212Intercap - Sales promoter (4th Q./04) 65 59
TOTAL 1,400 1,274
Solvency - Nonperforming Loans Ratio:
4th Quarter/04 = 2.9% 3rd Quarter/04 = 3.2%
2004 = 2.9% 2003 = 4.1%
Highlights
5Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
R$ Million (Except where indicated)
Net Income
Stockholders’ Equity
ROE (%)
Total Assets
BIS Ratio (%)
Efficiency Ratio (%)
3rd Q/044th Q/04 2004 2003
1,030 920 3,776 3,152
13,971 13,471 13,971 11,879
32.9% 30.3% 27.0% 26.5%
130,339 138,520 130,339 118,738
20.6% 19.4% 20.6% 19.8%
45.9% 52.5% 52.4% 54.5%
Highlights
6Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
2.6 2.9 2.1 2.7 2.9
31.5
26.3 26.5 27.0
14.416.9
19.8 20.6
27.7
18.4
0
5
10
15
20
25
30
35
Dec-00 Dec-01 Dec-02 Dec-03 Dec-04
Net Income / Assets (ROA) Net Income / Stockholders' Equity (ROE) Basel Ratio
Financial Ratios (%)
7Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
Efficiency Ratio (%)
47.5%54.6% 56.3% 59.9%
52.5%45.9%
55.8%58.0%
1Q/03 2Q/03 3Q/03 4Q/03 1Q/04 2Q/04 3Q/04 4Q/04
54.5%
52.4%
Annual Efficiency Ratio.
(Personnel Expenses + Other Administrative Expenses + Other Operating Expenses + Tax Expenses except PIS/COFINS/ISS )
(Net Interest Income + Banking Service Fees + Partial Result of Insurance, Capitalization and Pension Plans + Other Operating Income - Tax Expenses of PIS/COFINS/ISS)
Efficiency Ratio =
8Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
Exposure – Loans and Securities
Loans
Public Securities
Private Securities
Total
Sep 30, 04Dec 31, 04Var Dec04/
Sep04Dec 31, 03
R$ Million
Var Dec04 /Dec03
(*) Rural Loans and Mortgage – Loans linked to the availability of Demand deposits and Savings deposits.
53,275 51,059 44,581 4.3% 19.5%
7,486 9,369 14,306 -20.1% -47.7%
12,145 11,216 8,564 8.3% 41.8%
72,906 71,644 67,451 1.8% 8.1%
9Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
Credit Operations
16,890
47,407
19,596
27,253
34,282
44,581
53,275
14,058
23,674
29,615
38,65938,419
45,414
16,916
0
10000
20000
30000
40000
50000
60000
1998 1999 2000 2001 2002 2003 2004
Credit Operations Credit Operations+Guarantees
R$ Million
CAGR: 21.1%
CAGR: 22.5%
10Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
9%9%
34%29%
16%
11%
41%51%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003 2004
Restricted Loans Individuals Small and Medium Sized Companies Corporate Loans
Change in the mix of the Credit Portfolio
11Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
Nonperforming Loans Ratio (%)
2.93.23.5
4.04.1
7.37.3
5.66.5
6.0
2.2 1.9 1.81.5
0.9
0.00
2.00
4.00
6.00
8.00
10.00
12.00
Dec-03 Mar-04 Jun-04 Sep-04 Dec-04
Nonperforming Loans Ratio – GlobalNonperforming Loans Ratio – IndividualsNonperforming Loans Ratio – Businesses
Coverage Ratio (*)
198% 202% 204%210% 220%
0%
50%
100%
150%
200%
250%
Dec-03 Mar-04 Jun-04 Sep-04 Dec-04
(*) Provision for Loan Losses / Total Nonperforming Loans
Nonperforming Loans Ratio and Coverage Ratio
We are not expecting an ongoing improvement in these indicators, because of the focus on credit products with higher margins, but, at the same time, with a higher credit risk.
12Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
R$ MillionService Fees
4th Q/04 3rd Q/04
Asset Management (*)
Current Account Services
Credit Cards
Sureties and Credits
Granted
Collection Services
Other
Total
2004
(*) Mutual Funds and Consortium.
2003Var 4Q04
-3Q04Variation
04-03
376
327
371
266
302
158
1,799
358
303
282
234
180
151
1,508
17
24
89
32
122
7
291
1,411
1,230
1,162
916
866
580
6,165
1,320
1,002
965
653
699
482
5,121
91
228
197
263
167
98
1,044
13Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
Total Unrealized
Interbank Deposits
Securities and Derivatives
Additional provision
Adjustment – Securities Held to Maturity
Credit Operations
Investment on BPI
Time and Interbank Deposits and Funds from acceptance and issuance of securities abroad
Securitization of Payment Orders Abroad
Subordinated Debt and Treasury Shares
Unrealized Income/(Loss) (1) (2) Stockholders’ Equity
12/31/04 09/30/04
(1) Tax effects not considered.(2) Includes unrealized minority interest gains in Equity of R$ 271 million at December/04, R$ 284 million at September/04 and R$
257 million at December/03.
Financial Instruments – Market ValueR$ Million
12/31/03
Stockholders’ Equity
Stockholders’ Equity
10
782
600
182
309
691
39
133
354
10
688
545
143
319
627
33
74
297
2,319 2,048
14
620
400
220
248
660
(41)
93
480
2,074
14Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
154
441
525
344
11179514142
222
1,998
3,157
3,624
1,427
1,121813
477284141
2,598
0
50
100
150
200
250
300
350
400
450
500
550
600
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
0
400
800
1,200
1,600
2,000
2,400
2,800
3,200
3,600
4,000Transactions (milllion)
Registered customers(thousand)
Internet Banking
CAGR: 32.4%
CAGR: 43.4%
15Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
Agenda
Results - Banco Itaú Holding Financeira
Pro Forma Results - Banco Itaú and Banco Itaú BBA
Important Facts - Banco Itaú Holding Financeira
16Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
Diversification of the income sourcesNot dependent only from interest rates
Banco Itaú S.A.
829
(555)
3,502
2004
3,776
Banco Itaú BBA S.A.
Corporation
Total
Net IncomeR$ Million
22.0%
(14.7%)
92.7%
%
100%
750
(335)
2,737
2003
3,152
23.8%
(10.6%)
86.8%
%
100%
17Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
Banco
Itaú
Net Income
Tier I Allocated Capital
ROE (%)
Credit Portfolio (*)
Total Assets
2004 2003
(*) Including endorsements and sureties.
R$ Million
Pro Forma
Corpo-
ration
Corpo-
ration
Note: The Consolidated figures do not represent the sum of the parts because certain intercompany transactions were eliminated only at the Consolidated level.
Conso-
lidated
Conso-
lidated
Banco
Itaú BBA
Banco
Itaú
Banco
Itaú BBA
2,737
7,550
36.2%
20,739
94,641
3,502
7,843
44.7%
29,736
109,983
829
3,194
25.9%
17,671
34,488
(555)
2,934
-18.9%
-
6,597
3,776
13.971
27.0%
47,407
130,339
750
3,213
23.4%
17,919
30,490
(335)
1,117
-30.0%
-
5,438
3,152
11,879
26.5%
38,659
118,738
Banco Itaú S.A.
18Smith Barney-Citigroup 13th Annual Latin America Conference
2004
68.0%
3.6%
12.9%
15.5%
Banco Itaú - BankingCredit CardsInsurance, Pension Plans and CapitalizationMutual Funds and Managed Portfolio
Diversification of income sourcesNot dependent only on interest rates
Consolidated Net Income4th Q/04 3rd Q/04
Variation4Q/04 – 3Q/04
Banco Itaú - Banking 1,123 573 550
Credit Cards 175 122 53
Ins., Pension Pl. and Cap. 101 113 (12)
Funds and Managed Port. 38 30 8
Total 1,437 837 600
2004 2003Variation
2004 - 2003
Banco Itaú - Banking 2,384 1,604 780
Credit Cards 543 540 3
Ins., Pension Pl. and Cap. 451 465 (14)
Funds and Managed Port. 125 128 (3)
Total 3,502 2,737 765
Banco Itaú S.A.
19Smith Barney-Citigroup 13th Annual Latin America Conference
Credit Cards R$ Million (Except where indicated)
Participation in the Net Income of Orbitall and Redecard
Nº of Cards - Itaucard (thousands)
Nº of Cards - Credicard (thousands) (*)
Nº of Cards - Total (thousands)
2004 2003 Variation
7,085
3,595
10,680
12,956
6,519
19,475
390
90
480
5,780
2,246
8,026
10,603
4,787
15,390
400
99
499
1,305
1,349
2,654
2,353
1,732
4,085
(10)
(9)
(19)
22.6%
60.0%
33.1%
22.2%
36.2%
26.5%
-2.5%
-9.1%
-3.8%
(*) Corresponds to the share of Credicard owed by Itaú – 50% at 2004 and 33% at 2003.
63 41 22 53.7%
Turnover - Itaucard
Turnover - Credicard (*)
Turnover - Total
Net Income - Itaucard
Net Income - Credicard (*)
Net Income - Total
Banco Itaú S.A.
20Smith Barney-Citigroup 13th Annual Latin America Conference
4.05.5 6.1
7.0 7.78.6
0.90.9
1.01.0
1.01.0
1.0
1.11.2
1.21.2
1.31.4
1.4
3.4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04
Technical Provisions - Pension Plans Technical Provisions - Capitalization
Technical Provisions - Insurance
5.46.1
7.7 8.3
9.3
Technical Provisions – Pension Plans: growth of 43% from Dec. 03 to Dec. 04
R$ Billion
10.011.0
Insurance, Pension Plans and Capitalization
Banco Itaú S.A.
21Smith Barney-Citigroup 13th Annual Latin America Conference
Var 4ºT04-3ºT04
3º Tri/04 4º Tri/04
Result of Ins., Pension Plans and Cap.
Combined Ratio
Claim Ratio
•Insurance Premiums, Pension Plans
Contributions and Premium Bonds
Revenues• Changes in Technical Provisions• Selling Expenses • Insurance Claims, Pension Plans Benefits
and Premium Bonds Redemption• Other Operating Income/(Expenses)Operating Margin
Financial Income
Administrative and Tax Expenses*
Income Tax and Social Contribution
Other
R$ Million
Insurance, Pension Plans and Capitalization
1,475
(636)
(100)
(591)
54
1,686
(843)
(103)
(579)
41
115
(169)
(23)
(24)
115
(146)
(39)
(20)
113
201 202
101
92.3% 93.5%
51% 55%
14%
33%
3%
-2%
-24%
0%
0%
16%
-41%
21%
-10%
*Except for ISS, PIS and COFINS
2004 2003 Var.2004 - 2003
5,008
(2,578)
(358)
(1,508)
136
6,233
(2,957)
(395)
(2,251)
177
485
(616)
(141)
(84)
623
(623)
(166)
(70)
465
807 701
451
94.1% 97.2%
53% 54%
24%
15%
11%
49%
30%
15%
-22%
-1%
-15%
19%
-3%
Banco Itaú S.A.
22Smith Barney-Citigroup 13th Annual Latin America Conference
7.710.0
11.0
Dec-03 Sep-04 Dec-04
81.193.8
99.8
Dec-03 Sep-04 Dec-04
Resources Managed
Growth of 23.0% in the volume of Funds and Portfolios under Management and 43.4% in the volume of Technical Provisions in relation to Dec/2003
R$ Billion
Technical Provisions of Insurance, Pension Plans and Capitalization
Volume of Mutual Funds and Portfolios under Management
Banco Itaú BBA
23Smith Barney-Citigroup 13th Annual Latin America Conference
4th Q/04 3rd Q/04
Net Interest MarginResult from Loan LossesService FeesAdministrative and Tax Expenses*Tax Income and Social ContributionOtherNet IncomeTier I Allocated CapitalROE (%)
2003
R$ MillionPro Forma
2004Variation
04-03
3912783
(133)(147)
(25)196
3,24526.4%
4643184
(159)(151)
(27)242
3,19433.9%
1,403213306
(622)(416)
(55)829
3,19425.9%
1,989(513)
270(613)(410)
27750
3,21323.4%
(586)726
36(9)(6)
(82)79
(19)
*Except for ISS, PIS and COFINS
Banco Itaú BBA
24Smith Barney-Citigroup 13th Annual Latin America Conference
Strategy Itaú BBA: wholesale bank integrated into a financial conglomerate; Credit perspective for the corporate segment in Brazil: declining spreads, increase in
the competition, limited client base. Currently 51% of all our revenues are non-credit related;
Challenge: to maintain current profitability levels in the next years considering lower margins in credit;
Our strategy: compensate lower gains in credit with an increase in the distribution of non-credit related products and services to our clients through:
Cross-selling – continue to take advantage of the synergy with Itaú, by increasing the selling of structured treasury operations such as hedging and also simpler products such as payroll and collection;
Investment banking – segment likely to expand in the next 5 years (we expect that by the end of this period Brazil becomes an investment grade country).
Itaú BBA is well-positioned in investment banking – leader in fixed income issuances and reinforcing our variable income team in order to build a strong investment banking.
Investment banking currently stands for 5% of Itaú BBA´s revenues. In the next 5 to 6 years our goal is to increase this participation to 20%.
25Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
Agenda
Results - Banco Itaú Holding Financeira
Pro Forma Results - Banco Itaú and Banco Itaú BBA
Important Facts - Banco Itaú Holding Financeira
26
Banco Itaú Holding Financeira S.A.
Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding in 2005
1. Focus in increasing the credit portfolio to Individuals and to Small and Medium Sized Companies;
2. Consolidation of initiatives related to consumer loans:
(Taií, CBD, Lojas Americanas, Credicard…);
3. Costs constant in real terms, which will lead to an improvement in the efficiency ratio (at the same basis);
4. New Segment – Disclosure, starting in next quarter, of a new segment to reflect the performance of business areas related to consumer loans.
27Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
Taií
New Brand Name (Itaú-based).
Focus on lower income consumers.
Proprietary platform.
Operation launched in June/04 with 3 branches in São Paulo (currently 29).
Uses the Itaú ATM network.
Diversifies credit-related revenues.
Responsive and efficient.
Forecast: 150 stores by YE 2005.
28Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
Retail partnerships
170 stores
250 stores
Forecast for 2005:
February 28, 2005October 27, 2004
Expansion of Focus on direct consumer credit
Long term partnership: 20 years, and renewal option
Operating Management under the responsibility of Itaú
Exclusivity in exploitation of financial products and services to
retailers’ customers
29Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
5,780 5,951 6,261 6,639 7,085
2,245 2,308 2,413 2,4383,596
Dec-03 Mar-04 Jun-04 Sep-04 Dec-04
Itaucard Credicard
8,026 8,2598,674 9,077
10,680
In Thousand
Market Share:
20.3%
Increase in Participation on CredicardCredit Card Base
30Smith Barney-Citigroup 13th Annual Latin America Conference
Banco Itaú Holding Financeira S.A.
1.00 1.243.03 2.90
5.11 5.467.24 7.45
9.7212.11
4.956.04
7.46
15.85
21.41 21.36
27.66
33.33
0.983.26 2.88
15.99
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
22.00
24.00
26.00
28.00
30.00
32.00
34.00
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Evolution of Earnings per Share and Dividends per Share (*)
CAGR = 28.6%
R$
(*) In the previous years per lot of thousand shares, as in 2004 a reverse split of shares was carried out.
CAGR = 26.2%
Dividends per Share (*)Earnings per Share (*)
31
Banco Itaú Holding Financeira S.A.
Smith Barney-Citigroup 13th Annual Latin America Conference
0
200
400
600
800
1,000
1,200
94 95 96 97 98 99 00 01 02 03 04
Itaú (1)Itaú (2)
Bovespa
US$
100
800
192
1,145
Russian Crisis
Real Devaluation
Mexican Crisis
Asian Crisis
Argentine Crisis
Attack to WTC
Itaú(1) Itaú(2) Ibov.
10 years 27.60% 23.12% 6.75%
5 years 20.05% 15.75% 0.65%
2004 64.36% 58.79% 28.23%
Annual Average Appreciation in US$
(1) With dividends reinvestment.(2) Without dividends reinvestment.
Election Period
Preferred Shares Appreciation – in US$Evolution of US$ 100 Invested from Dec. 94 to Dec. 04
Banco Itaú Holding Financeira S.A.Banco Itaú Holding Financeira S.A.
Presentation to:13th Annual Latin America Conference
Alfredo SetubalInvestor Relations Director
New York
March 2005
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