performance analysis and financial · pdf file5 – summarized financial statements ......

Banco do Brasil

Performance Analysis andFinancial Statements

1st Quarter 2005

Summary

Índice de Tables.........................................................................................................................................4Índice de Figures .......................................................................................................................................7Presentation...............................................................................................................................................9Executive Summary ................................................................................................................................101 – Economic Environment ....................................................................................................................132 – BB Securities .....................................................................................................................................14

2.1 Shares.........................................................................................................................................142.1.1 Equity Held by Foreign Investors ....................................................................................16

2.2 Warrants .....................................................................................................................................172.3 Performance of the Shares.......................................................................................................19

3 – Corporate Governance......................................................................................................................224 – Other Information ..............................................................................................................................245 – Summarized Financial Statements ..................................................................................................26

5.1 Summarized Balance Sheet......................................................................................................265.2 Summarized Corporate Law Income Statement.....................................................................285.3 Income Statement with Realocations ......................................................................................29

5.3.1 Details of Reallocations ....................................................................................................306 – Balance Sheet Analysis ....................................................................................................................32

6.1 Breakdown .................................................................................................................................326.2 Analysis of Assets.....................................................................................................................336.3 Analysis of Liquidity..................................................................................................................346.4 Securities Portfolio....................................................................................................................356.5 Loan Portfolio ............................................................................................................................37

6.5.1 Retail Loan Portfolio .........................................................................................................396.5.2 Commercial Loan Portfolio...............................................................................................436.5.3 Agribusiness Loan Portfolio ............................................................................................456.5.4 Foreign Trade Portfolio.....................................................................................................516.5.5 Concentration of the Portfolio..........................................................................................52

6.6 Tax Credits .................................................................................................................................536.7 Analysis of Liabilities ................................................................................................................546.9 Deposits and Money Market Funding......................................................................................56

6.9.1 Foreing Borrowing ............................................................................................................586.10 Shareholders’ Equity...............................................................................................................596.11 Basel Ratio ...............................................................................................................................606.12 Fixed Asset Ratio.....................................................................................................................626.13 Risk Management ....................................................................................................................63

6.13.1 Market Risk Management ...............................................................................................636.13.2 Liquidity Risk Management ............................................................................................69

7 – Analysis of Results ...........................................................................................................................707.1 Gross Financial Margin .............................................................................................................70

7.1.1 Analysis of Uses................................................................................................................727.1.2 Analysis of Funding ..........................................................................................................757.1.3 Analysis of Spread ............................................................................................................777.1.4 Analytical Spread...............................................................................................................787.1.5 Management Analysis of Spread .....................................................................................81

7.2 Net Financial Margin..................................................................................................................847.2.1 Retail Loan Portfolio .........................................................................................................887.2.2 Commercial Loan Portfolio...............................................................................................897.2.3 Agribusiness Loan Portfolio ............................................................................................907.2.4 Foreign Trade Loan Portfolio ...........................................................................................917.2.5 Foreign Loan Portfolio ......................................................................................................92

7.3 Contribution Margin ..................................................................................................................937.3.1 Revenues from Customer Relationship Fees.................................................................957.3.2 Asset Management............................................................................................................967.3.3 Credit Cards .......................................................................................................................987.3.4 Collections .........................................................................................................................99

7.4 Commercial Income.................................................................................................................1007.4.1 Personnel Expenses .......................................................................................................1017.4.2 Other Administrative Expenses .....................................................................................1037.4.3 Distribution Network .......................................................................................................1047.4.4 Automated Channels.......................................................................................................1077.4.5 Productivity – Coverage Ratios .....................................................................................109

7.5 Operating Income ....................................................................................................................1117.6 Net Income................................................................................................................................1137.7 Net Value Added ......................................................................................................................1167.8 Gross Value Added..................................................................................................................1177.9 Insurance, Pension Plans and Capitalization .......................................................................119

7.9.1 Income Statement by Line of Business ........................................................................1197.9.2 Combined Ratio ...............................................................................................................1207.9.3 Brasilseg...........................................................................................................................1227.9.4 Brasilsaúde ......................................................................................................................1227.9.5 Aliança do Brasil..............................................................................................................1227.9.6 Brasilcap...........................................................................................................................1237.9.7 Brasilprev .........................................................................................................................1237.9.8 BB Previdência ................................................................................................................123

8 – Financial Statements.......................................................................................................................1258.1 Summarized Balance Sheet....................................................................................................1258.2 Summarized Corporate Law Income Statement...................................................................1278.3 Income Statement with Reallocations ...................................................................................1288.4 Analytical Spread.....................................................................................................................129

Complete Financial Statements ...........................................................................................................131

Índice de TablesTable 1. Main Macroeconomic Indicators..................................................................................................13Table 2. Shareholding Breakdown ............................................................................................................14Table 3. Shareholders by Range of Shares Owned..................................................................................14Table 4. Free Float by Range of Shares Owned.......................................................................................14Table 5. Tax Residence of the Investors...................................................................................................15Table 6. Breakdown of the Warrant Holders .............................................................................................17Table 7. B and C Series Warrants.............................................................................................................17Table 8. Expected Dilution of Capital ........................................................................................................17Table 9. Warrant Holders by Range of B Warrants Owned ......................................................................18Table 10. Warrant Holders by Range of C Warrants Owned....................................................................18Table 11. Other Information.......................................................................................................................24Table 12. Summarized Balance Sheet - Assets........................................................................................26Table 13. Summarized Balance Sheet - Liabilities....................................................................................27Table 14. Summarized Corporate Law Income Statement .......................................................................28Table 15. Income Statement with Reallocations .......................................................................................29Table 16. Reallocations – Other Operating Income / Expenses ...............................................................30Table 17. Breakdown of Assets.................................................................................................................33Table 18. Liquidity Balance .......................................................................................................................34Table 19. Securities Portfolio by Category................................................................................................35Table 20. Securities Portfolio by Maturities ...............................................................................................35Table 21. Loan Portfolio ............................................................................................................................37Table 22. Individuals and Business Customers Loan Portfolio .................................................................37Table 23. Loan Portfolio by Segment ........................................................................................................38Table 24. Retail Loan Portfolio ..................................................................................................................39Table 25. MSB Credit Products.................................................................................................................41Table 26. BPB Highlights...........................................................................................................................42Table 27. Commercial Loan Portfolio ........................................................................................................43Table 28. Exports ......................................................................................................................................45Table 29. Agribusiness Loan Portfolio by Purpose ...................................................................................46Table 30. Agribusiness Loan Portfolio by Product ....................................................................................47Table 31. Agribusiness Loan Portfolio by Product ....................................................................................48Table 32. Funds Released for the 04/05 Crop by Segment......................................................................48Table 33. Variables Associates to Technical Risk System for Agribusiness – RTA .................................50Table 34. Foreign Trade Loan Portfolio.....................................................................................................51Table 35. ACC/ACE Average Volume per Contract..................................................................................51Table 36. Concentration of the Loan Portfolio on the 100 Largest Borrowers ..........................................52Table 37. Concentration of the Loan Portfolio by Macro-sector................................................................52Table 38. Liabilities....................................................................................................................................54Table 39. Foreign Borrowing .....................................................................................................................58Table 40. Shareholders’ Equity .................................................................................................................59Table 41. BIS Ratio ...................................................................................................................................60Table 42. Changes in Composition of BIS Ratio.......................................................................................61Table 43. Fixed Asset Ratio ......................................................................................................................62Table 44. Balance Sheet of Foreign Exchange Assets and Liabilities......................................................64Table 45. Balance Sheet by Currencies - Assets......................................................................................65Table 46. Balance Sheet by Currencies – Liabilities.................................................................................65Table 47. Portfolios Indexed to Fixed Interest Rates ................................................................................67Table 48. Domestic Trading Portfolio ........................................................................................................67Table 49. International Trading Portfolio ...................................................................................................67Table 50. Average V@R, Minimum and Maximum ...................................................................................68Table 51. Gross Financial Margin .............................................................................................................70Table 52. Analysis of Volume and Quartely Spread – 1Q04 and 1Q05....................................................70

Table 53. Analysis of Volume and Quartely Spread – 4Q04 e 1Q05........................................................71Table 54. Investment Rate ........................................................................................................................72Table 55. Investment Rate on Available Funds in Foreign Currency........................................................72Table 56. Investment Rate on Securities and Interbank Investments.......................................................72Table 57. Securities Income......................................................................................................................73Table 58. Investment Rate on Loans and Leasing....................................................................................73Table 59. FX Gain (Loss) and Other FX Operations.................................................................................74Table 60. Funding Cost .............................................................................................................................75Table 61. Cost of Foreign Borrowing.........................................................................................................75Table 62. Market Funding Cost .................................................................................................................76Table 63. Investment Rate, Funding Cost, and Spread ............................................................................77Table 64. Analytical Spread – Investment Rates ......................................................................................78Table 65. Analytical Spread – Funding Costs ...........................................................................................79Table 66. Reconciliation with the Gross Financial Margin ........................................................................79Table 67. Main Components of the Spread...............................................................................................80Table 68. Investment Rates and Funding Costs .......................................................................................80Table 69. Nominal Spread by Transaction ................................................................................................81Table 70. Compositions of the Transactions.............................................................................................82Table 71. Weighted Spread per Transaction.............................................................................................82Table 72. Analysis of Volume and Management Spread (12 months)......................................................82Table 73. Net Financial Margin .................................................................................................................84Table 74. Expenses with Allowance for Loan Losses over Portfolio.........................................................84Table 75. Loan Portfolio by Level of Risk..................................................................................................85Table 76. Delinquency Ratio .....................................................................................................................86Table 77. Retail Loan Portfolio by Level Risk ...........................................................................................88Table 78. Changes in the Allowance - Retail ............................................................................................88Table 79. Commercial Loan Portfolio by Level Risk .................................................................................89Table 80. Changes in the Allowance – Commercial .................................................................................89Table 81. Agribusiness Loan Portfolio by Level Risk ................................................................................90Table 82. Changes in the Allowance – Agribusiness ................................................................................90Table 83. Foreign Trade Loan Portfolio by Level Risk ..............................................................................91Table 84. Changes in the Allowance – Foreign Trade ..............................................................................91Table 85. Foreign Loan Portfolio by Risk ..................................................................................................92Table 86. Contribution Margin ...................................................................................................................93Table 87. Service Revenues .....................................................................................................................93Table 88. Investment Funds and Managed Portfolios by Customer .........................................................96Table 89. Commercial Income ................................................................................................................100Table 90. Despesas de Pessoal..............................................................................................................101Table 91. Other Administrative Expenses ...............................................................................................103Table 92. Distribution Network ................................................................................................................104Table 93. Wholesale Pillar Branches ......................................................................................................105Table 94. Distribution Network Abroad....................................................................................................106Table 95. Coverage Ratios......................................................................................................................109Table 96. Operating Income....................................................................................................................111Table 97. Efficiency Ratio........................................................................................................................111Table 98. Efficiency Ratio Statement ......................................................................................................112Table 99. Net Income ..............................................................................................................................113Table 100. Return on Shareholders’ Equity ............................................................................................115Table 101. Net Value Added ...................................................................................................................116Table 102. Gross Value Added ...............................................................................................................117Table 103. Insurance, Pension Plans and Capitalization........................................................................119Table 104. Income Statement by Line Business.....................................................................................119Table 105. Brasilseg Data .......................................................................................................................122Table 106. Brasilsaúde Data ...................................................................................................................122Table 107. Aliança do Brasil Data ...........................................................................................................123

Table 108. Brasilcap Data .......................................................................................................................123Table 109. Brasilprev Data......................................................................................................................123Table 110. BB Previdência Data .............................................................................................................124Table 111. Balance Sheet – Assets ........................................................................................................125Table 112. Balance Sheet – Liabilities ....................................................................................................126Table 113. Summarized Corporate Law Income Statement ...................................................................127Table 114. Income Statement with Reallocations ...................................................................................128Table 115. Analytical Spread...................................................................................................................129

Índice de FiguresFigure 1. Total distribution of the Free Float .............................................................................................15Figure 2. Free Float Distribution at the CBLC ...........................................................................................15Figure 3. BB Shares vs. Ibovespa.............................................................................................................19Figure 4. BBAS3 Share in Ibovespa..........................................................................................................20Figure 5. Financial Volume and Quantity Traded of BBAS3.....................................................................20Figure 6. Market Ratios .............................................................................................................................21Figure 7. Earning Assets vs. Interest Bearing Liabilities ...........................................................................32Figure 8. Breakdown fo Assets .................................................................................................................33Figure 9. Liquidity ......................................................................................................................................34Figure 10. Securities Portfolio with Maturities between 0 and 5 years .....................................................36Figure 11. Breakdown of the Loan Portfolio ..............................................................................................38Figure 12. Main Retail Loan Portfolio Products.........................................................................................40Figure 13. Main Products for Micro and Small Businesses.......................................................................41Figure 14. Main Commercial Portfolio Products........................................................................................44Figure 15. Trade Balance (FOB) ...............................................................................................................45Figure 16. Production vs. Planted Area.....................................................................................................46Figure 17. Main Products of the Agribusiness Loan Portfolio ...................................................................47Figure 18. Agribusiness Loan Portfolio by Funding Sources ....................................................................49Figure 19. Equalization Revenues ............................................................................................................49Figure 20. Main Products of the Foreign Loan Portfolio............................................................................51Figure 21. Breakdown of Tax Credit..........................................................................................................53Figure 22. Changes in the Liabilities .........................................................................................................55Figure 23. Deposits and Market Funding ..................................................................................................56Figure 24. Market Share of BB Funding....................................................................................................57Figure 25. Brazilian Sovereign Risk vs. Mark to Market ...........................................................................59Figure 26. BIS Ratio ..................................................................................................................................60Figure 27. Changes in FX Exposures .......................................................................................................64Figure 28. Balance Sheet by Index ...........................................................................................................66Figure 29. Mismatch Gaps by Index..........................................................................................................66Figure 30. Availability of Free Funds.........................................................................................................69Figure 31. Analysis of Volume and Quartely Spread – 1Q04 e 1Q05 ......................................................71Figure 32. Analysis of Volume and Quartely Spread – 4Q04 e 1Q05 ......................................................71Figure 33. Securities Portfolio by Index.....................................................................................................73Figure 34. Spread by Loan Portfolio..........................................................................................................74Figure 35. FX Gain (Loss) and Other FX Operations................................................................................74Figure 36. Changes in Spread ..................................................................................................................77Figure 37. Analysis of Volume and Spread of Uses and Funding.............................................................83Figure 38. Expenses with Allowance for Loan Losses over Portfolio .......................................................84Figure 39. Breakdown of Allowance..........................................................................................................85Figure 40. CLP/CT BB vs. Banking Industry .............................................................................................86Figure 41. Delinquency Ratio ....................................................................................................................87Figure 42. Grownth in Service Revenues..................................................................................................93Figure 43. Changes in the Composition of Service Revenues..................................................................94Figure 44. Revenues from Relationship Fees and Customer Base..........................................................95Figure 45. Customer Base.........................................................................................................................95Figure 46. Asset Management ..................................................................................................................96Figure 47. Investment Funds and Managed Portfolios .............................................................................97Figure 48. Investment Funds.....................................................................................................................97Figure 49. Managed Portfolios and Investment Clubs ..............................................................................97Figure 50. Credit Cards .............................................................................................................................98Figure 51. Credit Cards Sales by Brand....................................................................................................98Figure 52. BB Collection Volume ..............................................................................................................99

Figure 53. Changes in Commercial Income............................................................................................100Figure 54. Changes in the Workforce......................................................................................................101Figure 55. Tenure ....................................................................................................................................102Figure 56. Productivity Ratios .................................................................................................................102Figure 57. Total Distribution Network ......................................................................................................104Figure 58. Distribution Network - Wholesale ...........................................................................................105Figure 59. Distribution Network - Government ........................................................................................105Figure 60. Automated Teller Machines ...................................................................................................107Figure 61. Share of Automated Transactions / Total Transactions.........................................................107Figure 62. Customer Access Options......................................................................................................108Figure 63. Coverage Ratios.....................................................................................................................109Figure 64. Productivity Ratios .................................................................................................................110Figure 65. Business vs. Expenses ..........................................................................................................110Figure 66. Efficiency Ratio.......................................................................................................................112Figure 67. Earning before Taxes.............................................................................................................114Figure 68. Change in Net Income ...........................................................................................................115Figure 69. Change in ROE ......................................................................................................................115Figure 70. Valor Agregado Líquido .........................................................................................................118Figure 71. Valor Agregado Bruto.............................................................................................................118Figure 72. Combined Ratio......................................................................................................................121

9 - Banco do Brasil - MD&A - 1st Quarter/2005

PresentationThe Performance Analysis is a report published quarterly and intended for market analysts, investorsand others who need a deeper understanding of the economic and financial situation of Banco do Brasil(BB). The report starts with an overview of the economic environment, which is followed by an analysisof the performance of BB paper and of the main practices of corporate governance adopted by theinstitution. Continuing the report, there are separate analyses of the capital structure and the results.

The reader will also find tables with historical series, from 8 periods, of the summarized balance sheet,the summarized corporate law income statement, the income statement with reallocations, the analyticspread, and Other Information about profitability, productivity, quality of the loan portfolio, capitalstructure, capital market, and structural data.

The Balance Sheet Analysis brings a more detailed study of the main components of the balance sheet,such as the securities portfolio, the loan portfolio, tax credits, market borrowings, and shareholders’equity, amongst others.

The analysis of results shows, step by step, the items of the reallocated statement of income. Thecorporation’s income statement is submitted to these reallocations with the intention of favoring a betterunderstanding of the results, making the historical series more concise and facilitating accurateforecasts from this data.

Finally, the financial statements and explanatory notes for the quarter under analysis are presented.

In 1Q05, some changes were incorporated into the Report, with the objective of improving the quality ofthe information provided and of increasing the Bank’s transparency. Amongst the novelties, the mainones are : Executive Summary, Chapter 6 – A new view of the Loan Portfolio (Individuals, Businesses,Agribusiness, Others, Foreign Trade), Chapter 7.5 – Statement of the change in the Efficiency Ratio.

ON-LINE ACCESS

The Performance Analysis report can also be read through Banco do Brasil’s Investor Relations website.Further information is also made available about the Bank, such as: corporate governance, to tools likeinteractive balance sheets and fundamentalist indicators, news items, frequently asked questions, andthe Download Center, containing versions of this report for the Adobe® Reader® software, available inthe complete version or split into three: general information, balance sheet analysis, and completefinancial statements; the historical series in Excel, presentations to the market, Annual Report andReport on Socioenvironmental Responsibility, the Social Balance Sheet, audio of the teleconferences onresults, and others.

LINKS OF INTEREST

Banco do Brasil www.bb.com.br/Investor Relations www.bb.com.br/appbb/portal/ri/index.jspDownload Center (RI) www.bb.com.br/appbb/portal/ri/dce/MenuCenter.jspShareholder’s Room (also attends to shareholders www.bb.com.br/appbb/portal/ri/sla/index.jspof other companies with custody in BB)

Banco do Brasil - MD&A - 1st Quarter/2005 - 10

Executive Summary• Net Income increased 56.7% in relation to 1Q04

Banco do Brasil ended 1Q05 with a Net Income of R$ 965 million, 25,2% higher than 4Q04 and 56,7%higher than 1Q04. This result corresponds to an annualized ROE of 29.3% and earnings per share of R$1.21. The Efficiency Ratio ended 1Q05 in 56.1%, an improvement of 660 basis points better in relationto 4Q04, while personnel expenses coverage ratio reached 97.9%, higher than the 92.5% in 4Q04.

• Loan Portfolio increased 5.3% in 1Q05, against 4.3% of the Banking Industry

Total Loan Portfolio rose 5.3% in 1Q05 from 4Q04, higher than the market performance, whichincreased 4.3% in the same period. Individuals operations, not included the agribusiness, rose 6.1% in1Q05 and 21.3% in the past 12 months, while Businesses operations rose 7.6% in 1Q05 and 21.4% inrelation to same period 2004. Agribusiness operations rose 2.5% in 1Q05 and 18.8% in relation to1Q04.

Loan PortfolioR$ million

Chg. %

Mar/04 Dec/04 Mar/05 on Mar/04 on Dec/04

País 69,610 79,537 83,805 20.4 5.4 . Pessoa Física 14,076 16,090 17,069 21.3 6.1 . Pessoa Jurídica 29,626 33,410 35,962 21.4 7.6 . Agronegócios 25,907 30,036 30,774 18.8 2.5 Exterior 10,037 9,017 9,457 (5.8) 4.9

Total 79,647 88,554 93,263 17.1 5.3

• Financial Intermediation spread reduction

Gross Financial Margin ended 1Q04 in R$ 4,090 million, 0.1% higher than 4Q04. Net Interest Margin onearning assets, fell from 1Q04 and from 4Q04, ending 1Q05 in 8.4% p.a , against 8.7% in 4Q04.Strongest competition in the industry is been forcing the reduction of final interest rates, even when theSelic interest rate is rising, which makes the expansion of gross financial margin harder. Its stability isdue to the loan portfolio growth

*-GFM/Earning Assets (% year)

Net Interest Margin*

8.48.78.89.2

8.5

1Q04 2Q04 3Q04 4Q04 1Q05


• Credit Risk Growth

It can be observed n 1Q05 we observe a credit risk growth, especially in retail and agribusinessoperations. The portfolio’s global risk rose, measured by the ratio between required provisions (CMNResolution 2,682/99) and the total credit portfolio, rose from 5.1% in 4Q04 to 5.2% in 1Q05 and theexpenses with Provisions for Non-Performing Loans totaled R$ 1,061 million, 22.3% higher than 4Q04.Past Due Loans over 60 days showed a slight reduction tendency: 3.1%, 20 basis points less than the3.3% from 4T04. We expect that the risk growth does not rise delinquency, specially in agribusiness, asegment for which segment was launched an action plan aiming at the reduction of eventual negativeeffects to the banking industry, due to the expected Income decrease and dryness in some Brazilianregions.

• 3.8% Service Revenues Growth in the quarter

Service Revenues rose 3.8% in the quarter, especially due to the growth on Customers RelationshipFees, Investment Fund Management Fees and services to affiliate and subsidiaries companies, as aresult of a better performance of insurance and pension plans companies in the quarter.

Investment Fund Management Fees volume rose 11.5% in 1Q05, reaching R$ 138.2 billion, increasingBB’s market share from 19.7% in December 2004 to 20.8% in March 2005.

• 7.4% Fall in Administrative Expenses

Personnel Expenses reduced 2.0% in relation to 4Q04, while other administrative expenses fell 13.8%,as a consequence of the decrease in expenses with marketing, third party services and otheradministrative expenses.

The following table shows the behavior of the Efficiency Ratio, positively affected by the growth inrevenues and expenses fall, this one more relevant to the improvement of this ratio.

4Q04 1Q05 Abs. Chg. Chg. % Effect in theRatio

Administrative Expenses (3,509) (3,250) 259 (7.4) (4.6)Personnel Expenses (1,840) (1,804) 36 (2.0) (0.6)Other Administrative Expenses (1,633) (1,407) 226 (13.8) (4.0)Other Taxable Expenses (36) (39) (3) 7.0 0.0Operating Revenues 5,597 5,797 201 3.6 (2.2)Gross Financial Margin 4,086 4,090 5 0.1 (0.1)Service Revenues 1,702 1,767 64 3.8 (0.7)Other Operating Revenues 621 596 (25) (4.0) 0.3Other Operating Expenses (812) (656) 156 (19.2) (1.7)Adm Exp and Oper Rev (Combined Ratio) 0.2

Efficiency Ratio 62.7% 56.1% (6.6)

• Growth in the result of Affiliated and Subsidiaries Companies

The result of Affiliated and Subsidiaries Companies rose 172.4% from 4Q04 and 46.2% from 1Q04, dueto a better performance in the Bank’s insurance and pension plans Companies.


• Other results

The non-operating income was positively impacted – approximately R$ 70 million before taxes – by thesale of two buildings to BB’s Real Estate Investment Fund, following the target of reducing the Bank’spermanent assets.

Additionally, BB recovered tax indebt from PASEP/COFINS in a total sum of R$ 226 million, with non-recurring positive effect, tax-free of R$ 148 million.

The growth in the quarterly results brought an increase of 157.8% in the expenses with Income andSocial Contribution taxes, which totaled R$ 483 million. The Earnings Before Taxes rose 17.3% from4Q04 to 31.7 % in 1Q05.

Chg. % 1Q04 4Q04 1Q05 on 1Q04 on 4Q04

Net Income 616 771 965 56.7 25.2EPS - R$ 0.84 0.96 1.21 43.7 25.7Gross Financial Margin 3,829 4,086 4,090 6.8 0.1Service Revenues 1,553 1,702 1,767 13.8 3.8Other Income ¹ 530 674 740 39.5 9.9Total Revenues 5,912 6,462 6,597 11.6 2.1Expenses with Provisions for NPL (901) (868) (1,061) 17.8 22.3Personnel Expenses (1,574) (1,840) (1,804) 14.6 (2.0)Other Administrative Expenses (1,126) (1,633) (1,407) 25.0 (13.8)Other Expenses ² (1,084) (1,218) (1,046) (3.6) (14.2)Total Expenses (4,685) (5,559) (5,318) 13.5 (4.3)Non-operating Income 15 (4) 98 532.6 -Income Tax/Social Contrib. and Profit Sharing (412) (313) (560) 36.2 79.3Recurring Income 831 586 817 (1.7) 39.3Non-recurring Items (215) 184 148 - (20.0)Assets 231,107 239,014 245,685 6.3 2.8Credit Portfolio 79,647 88,554 93,263 17.1 5.3Provisionf for NPL 4,693 5,365 5,655 20.5 5.4Securities Portfolio 67,875 73,485 74,089 9.2 0.8Deposits 110,219 115,532 120,096 9.0 4.0Asset Management 115,979 124,021 138,197 19.2 11.4Shareholders’ Equity 12,686 14,106 14,933 17.7 5.9ROE ¹ - % 21.3 24.0 29.3 - -ROE Recurring ¹ - % 29.5 17.9 24.5 - -ROA ¹ - % 1.1 1.3 1.6 - -Capital Adequacy Ratio - % 14.3 15.2 15.6 - -

771

259

131 102 91 64 48 24 5

(37)

(194)

(295)

965

Adm. Expens..

Others Operational

Inc./Exp.

NonOperac.Result.

Subs. And Affil. Equity Inc.

Result

ServiceRevenues

Statut.Profit

Sharing

Others GFM

NonRecurringIncome

Prov. NonPerform.Loans

Social Contr./Income Tax

Net Income4Q04

Net Income1Q05


1 – Economic EnvironmentIn the first quarter of 2005, the worldwide situation was marked by greater dynamism in importanteconomies, with special mention of the USA and China, compared to what was expected at the end oflast year. This behavior influenced the rise of the quotations of the main international commodities andin world trade. Inflationary pressures in the USA and the upward trend for oil prices resulted in anincrease in the rates of return of American long-term securities, reflected negatively in the risk premiumfor the emerging countries.

The combination of worldwide growth and structural changes in Brazilian foreign trade more thancompensated for the effects of the nominal and real appreciation of the local currency, bringing about arecord balance of US$ 8.3 billion in the balance of trade for the period (exports of US$ 24.5 billion andimports of US$ 16.1 billion).

In spite of the vigor of the external sector, the level of activity of the Brazilian economy has beenshowing signs of the pace of growth settling down, probably already reflecting the effects of the tightermonetary policy in force since September last year. However, this behavior in economic activity was notsufficient to cool down the expectations for inflation, nor to mitigate the current inflation, the cause ofwhich was predominantly bound up with shocks in supply or with seasonal pressure. As a consequence,the Central Bank proceeded with its adjustments to the basic interest rate, raising it 150 basis points inthe quarter.

However, the expectations for inflation are tending to converge with the trajectory of targets on abroader horizon, suggesting that the process of raising the basic interest rate could be close to an end.Furthermore, the Government’s commitment to the pillars of the current macroeconomic architecture,apart from not renewing the agreement with the IMF, reveals the importance of fiscal austerity andmonetary stability as a basis for a sustained growth of the economy.

Table 1. Main Macroeconomic Indicators

1Q04 4Q04 1Q05 12 monthsPtax Dollar Sale 0.7 (7.1) 0.4 (8.3)Accumulated IGP-DI FGV 2.8 1.9 1.7 10.9Accumulated IGP-M FGV 2.7 2.0 1.5 11.1Acumulated IPCA –IBGE 1.9 2.0 1.8 7.5Accumulated Selic 3.8 4.0 4.2 16.7Accumulated TR (formerly BTN) 0.4 0.5 0.6 2.3Ptax Dollar Sale * 2.9086 2.6544 2.6662 -* Closing RateSource: Economática

Selic proved to be slightly on the rise in 1Q05, by virtue of the rises in the basic interest rate made bythe Monetary Policy Committee – COPOM in the period. This movement brought about an increase inthe results from security, when comparing them with1Q04 and with 4Q04.

In 1Q05, an appreciation of the local currency can be seen, in relation to 1Q04, and a depreciation inrelation to 4Q04. The dollar closed the quarter quoted at R$ 2.6662, against R$ 2.9086 in 1Q04 and R$2.6544 in 4Q04. Considering that the Bank keeps its foreign exchange exposure low, this movementbrought about only tax effects, given the composition of the Bank’s assets and liabilities in foreigncurrency (please see the Net Income chapter).


2 – BB Securities2.1 Shares

In March 2005, Banco do Brasil’s capital stock was R$ 9,864,153,395.17, made up of 810,617,415ordinary shares, represented in dematerialized form and without any nominal value. The largestshareholder is the National Treasury, with 72.1% of the capital, followed by Caixa de Previdência dosFuncionários do Banco do Brasil (Previ) with 13.9%, and BNDESPar – the equity investment companyof National Bank for Economic and Social Development – which has 5.8% of the capital. Without takinginto consideration the shares that are held in treasury, the other shares – 6.8% - are well spread in themarket.

Table 2. Shareholding Breakdown

Shareholders %National Treasury 72.1Previ 13.9BNDESPar 5.8Free Float 6.8 Individuals 3.1 Companies 1.2 Foreign Capital 2.5Subtotal 98.6Shares in Treasury 1.4Total 100.0

BB’s shareholder base is characterized by the great number of shareholders with a small share in thecapital. As can be seen from the table below, 269,714 shareholders (98.7%) account for 1.0% of thecapital, while 3,865 shareholders (1.3%) hold 99.0% of the total of shares.

Table 3. Shareholders by Range of Shares Owned

Range of shares owned N. Shareholders % Shareholders Qty. Shares % Qty. Shares1 to 10 shares 180,808 66.1 648,565 0.111 to 50 shares 60,080 22.0 1,361,138 0.251 to 100 shares 11,998 4.4 869,254 0.1101 to 1000 shares 16,828 6.2 5,137,637 0.6Over 1000 shares 3,865 1.3 802,600,821 99.0

Total 273,579 100.0 810,617,415 100.0

Table 4. Free Float by Range of Shares Owned

Range of shares owned N. Shareholders % Shareholders Qty. Shares % Qty. Shares1 to 10 shares 180,808 66.1 648,565 1.211 a 50 ações 60,080 22.0 1,361,138 2.551 to 100 shares 11,998 4.4 869,254 1.6101 to 1000 shares 16,828 6.2 5,137,637 9.3Over 1000 shares 3,862 1.3 47,185,746 85.5

Total 273,576 100.0 55,202,340 100.0

With regard to the tax residence of the investors, it is to be noted that that quantity of shareholdersresident in Brazil is 273,425, who hold 97.5% of the total of the shares, while the quantity of foreignshareholders is 154, who hold 2.5% of the shares.


Table 5. Tax Residence of the Investors

N. Shareholders % Shareholders Qty. Shares % Qty. Shares

Brazil 273,425 99.94 790,237,331 97.5Abroad 154 0.06 20,380,084 2.5

Total 273,579 100.0 810,617,415 100.0

Total Distribution of the Free Float

Figure 1. Total distribution of the Free Float

With regard to the total of the Bank’s shares that are well spread out in the market (6.8%), that is, thefree float, the predominance of individuals can be seen, as they hold 45.3% (25.0 million shares) of thetotal.

The major part of the free float, 69.5% (38.3 million shares), is in the custody of the Brazilian Clearingand Depository Corporation (CBLC), distribute as shown in the following figure. It is to be noted that, ofthe total of the shares available for trading at the CBLC, 53.1% is to be found in the possession offoreign investors.

Free Float Distribution at the CBLC

Figure 2. Free Float Distribution at the CBLC

45.3%

17.7%

36.9%

Private Individuals Corporate Bodies Foreign Capital

26.2%

20.7%

53.1%

Private Individuals Corporate Bodies Foreign Capital


2.1.1 Equity Held by Foreign Investors

The participating interests of foreigners in the Bank’s capital are limited to 5.6% at the most. Thislimitation derives from a legal directive, expressed in Article 52 of the Transitory ConstitutionalProvisions Act, re the Federal Constitution of the Federal Republic of Brazil, and represents theparticipating interest of these investors at the time of the promulgation of the Constitution, in 1988.

According to the provisions of the article of the Constitution referred to, an increase in the percentage ofparticipating interests of private individuals or corporate bodies, resident or domiciled abroad, in thecapital of financial institutions with their registered office in Brazil, is forbidden. Accordingly, anyalteration will depend on the publication of an instruction, on the initiative of the President of the FederalRepublic of Brazil.

From 2002 onwards, a remarkable increase has been noted in the participating interest of foreigners inthe Bank’s capital. However, in 1Q05 there was a slight decrease of 30 basis points in relation to 2004.This is due mainly to the greater movement of selling shares on the part of the foreigners noted inBovespa in March.

Equity Held by Foreign Investors

Figure 3. Equity Held by Foreign Investors

1.0% 0.9%

1.6%

2.8% 2.5%

2001 2002 2003 2004 1Q05


2.2 WarrantsIn 1996, on the occasion of BB’s capital increase, three series of warrants were issued: A, B, and C,maturing in 2001, 2006, and 2011, respectively. The exercise price for these warrants was establishedat R$8.50, with readjustment by the IGP-DI. On 03.31.2005, the updated price corresponds to R$ 21.65.

The breakdown of the warrant holders is made up as shown in the following table:

Table 6. Breakdown of the Warrant Holders

% BNB %BNC

Private Individuals 36.1 40.1Corporate Bodies 39.0 37.9Foreign Capital 24.9 22.0

Total 100.0 100.0

The warrants in circulation, “B” e “C”, showed the following characteristics in March 2005:

Table 7. B and C Series Warrants

Series Code Exercise Date Quantity Exercise Price R$ Quotation in R$B Warrants BBAS 12 03.31 to 06.30.2006 15,993,142 21.65 6.28C Warrants BBAS 13 03.31 to 06.30.2011 27,028,746 21.65 6.08

In a simulation, based on the premiss that before 2011 there will be no additional capital increases andthat the total amount of "B" and "C" warrants will be exercised on maturity, the expected dilution of BB’scapital, as per the table below, is 5.4%, of which 2.0% arising from the exercise of B warrants and 3.4%from the exercise of the C warrants.

Conversion:1 Warrant = 1.043933 sharesTotal of the Capital = 810,617,415

Table 8. Expected Dilution of Capital

Warrants Qty. Warrants Qty. Shares Dilution of Capital - %

B Series 15,993,142 16,695,769 2.0C Series 27,028,746 28,216,200 3.4

Total 43,021,888 44,911,969 5.4

The bases of the Series "B" and "C" Subscription Warrants are characterized by the concentration ofwarrant holders with little participation in the total of the warrants. As can be observed, in relation to the"B" warrants, 164,106 warrant holders (99.7%) own 14.0% of the warrants, and 503 (0.3%) warrantholders own 86.0% of the total. In relation to the "C" warrants, 214,090 warrant holders (99.6%) own12.9% of the warrants, and 835 warrant holders (0.4%) hold 87.1% of the total.


Table 9. Warrant Holders by Range of B Warrants Owned

Range of B Warrants Owned N. Warrant Holders % Warrant Holders Qty. B Warrants % Qty. B Warrants1 to 10 warrants 132,470 80.5 414,284 2.611 to 50 warrants 23,824 14.5 515,803 3.251 to 100 warrants 3,925 2.4 274,791 1.7101 to 1000 warrants 3,887 2.4 1,040,151 6.5Over 1000 warrants 504 0.3 13,748,113 86.0Total 164,610 100.0 15,993,142 100.0

Table 10. Warrant Holders by Range of C Warrants Owned

Range of C Warrants Owned N. Warrant Holders % Warrant Holders Qty. C Warrants % Qty. C Warrants1 to 10 warrants 164,656 76.6 528,752 2.011 to 50 warrants 36,885 17.2 809,295 3.051 to 100 warrants 6,167 2.9 438,916 1.6101 to 1000 warrants 6,382 3.0 1,717,948 6.4Over 1000 warrants 835 0.4 23,533,835 87.1Total 214,925 100.0 27,028,746 100.0


2.3 Performance of the SharesMarket

In March 2005 the Bovespa Index (Ibovespa) closed with 26,610 points, higher than 22,142 points inMarch 2004 end 2,196 points in December 2004, a profitability of 20.2% in the last 12 months and 1.6%in th 1Q05.

The performance of the Bovespa in the 1Q05 was influenced by external and internal factors. TheAmerican central bank – FED rased the interest rates due its concern with inflationary risks, which has anegative effect on investments in the stock exchange in the emerging countries. However, in the internalscenario there were positive factors, as the publication of the minutes of the Copom pointing to apossible stability and subsequent fall in interest rates, the publication of good results achieved by somecompanies in their annual balance sheets and, finally, announcement of the surplus in the balance oftrade, which reached US$ 4.2 billion in the year to date.

BB Shares

Comparing the appreciation in the year of BB’s shares with Ibovespa, it was to be seen that the Bank’sshares enjoyed an appreciation of 27.1%, while Ibovespa grew 20.2%.

Ações BB vs. Ibovespa

Source: EconomáticaFigure 3. BB Shares vs. Ibovespa

Participation in Ibovespa

The Bovespa Index (Ibovespa) is an index that represents the Brazilian stock market, made up ofpapers that were traded in at least 80% of the trading sessions carried out. Following this, the TradabilityIndex is worked out, made up by the financial volume and by the quantity traded of each papertransacted, which determines the ranking of the paper’s share in the market. Out of the total of papers,the 80% with the highest Tradability index are determined, to represent the Ibovespa index.

In the last two years, a gradual reduction has been seen in the participation of shares from the bankingsector in the composition of Ibovespa’s theoretical portfolio. However, for the current four-month period(May/05 – Aug/05), a recovery is to be seen in the share of the sector. In the case of Banco do Brasil,its share in the index has shown an improvement in the first two four-month periods of 2005, as can beobserved in the following figure:

Mar/04 May/04 Jun/04 Jul/04 Aug/04 Sep/04 Oct/04 Nov/04 Dec/04 Jan/05 Feb/05 Mar/05

Daily Volume BBAS3 - R$ million BBAS3 Ibovespa

27.1%

20.2%


BBAS3 Share in Ibovespa - %

Source: BovespaFigure 4. BBAS3 Share in Ibovespa

The growth of the Bank’s share in Ibovespa for the two four-month periods of 2005 can be explained bythe following graphs. The monthly average of the Bank’s financial volume and of the quantity of tradesenjoyed a higher appreciation than Ibovespa (Mar/04 – Mar/05). As previously described, theseindicators go into the Tradability Index, which determines the participation of the Bank’s shares inIbovespa’s theoretical portfolio.

Change in the Financial Volume and in the Quantity Traded-BBAS3 and Ibovespa

Source: EconomáticaFigure 5. Financial Volume and Quantity Traded of BBAS3

Change in Quantity Traded

117.9%

28.7%

Mar/04 Mai/04 Jul/04 Sep/04 Nov/04 Jan/05 Mar/05

BB Ibovespa

Change in Finance Volume Traded

183.1%

52.7%

Mar/04 Mai/04 Jul/04 Sep/04 Nov/04 Jan/05 Mar/05

BB Ibovespa

0.9500.8320.8260.9671.111

1.3531.672

1.957

11.573 11.66610.460

8.7737.773

6.639 6.3827.636

Jan/03 -Apr/03

May/03 -Aug/03

Sep/03 -Dec/03

Jan/04 -Apr/04

May/04 -Aug/04

Sep/04 -Dec/04

Jan/05 -Apr/05

Mai/05 -Aug/05

BBAS3 Banking Industry


Market capitalization reached R$ 23,661 million at the end of March 2005, against R$ 17,568 million inthe same period of the previous year, an increase of 34.7%. The Price/Book Value ratio arrived at 1.58x,against 1.34x in 1Q04, and the Net Income per share reached R$ 1.21 in 1Q05, against R$ 0.84 in1Q04.

Market Ratios

Figure 6. Market Ratios

Price / Earnings 12 months

4,205,00

7,38 6,77 6,05 6,38

8,597,01

Jun/03 Sep/03 Dec/03 Mar/04 Jun/04 Sep/04 Dec/04 Mar/05

Price / Book Value

0,88 1,00

1,44 1,34 1,28 1,34

1,841,58


Market Capitalization - R$ million

9.582 11.71217.568 17.041 16.470 18.447

25.979 23.661


Net Income per Share - R$

0,82 0,91 0,87 0,841,10 1,14

0,961,21

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Book Value - R$

14,85 15,97 16,63 17,33 17,57 18,81 17,65 18,68


Dividends or Interest on Own Capital

322424 450

504

1H03 2H03 1H04 2H04

Free Float Capitalization - R$ million

694848

1.272 1.234 1.192 1.339

1.794 1.634


Payout Index - %

29,8

32,531,7 31,4

1H03 2H03 1H04 2H04

Net Income - R$ million

600 665 637 616805 833 771

965

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Dividend Yield - %

3,4

2,42,7

1,9

1H03 2H03 1H04 2H04


3 – Corporate GovernanceAs part of its corporate strategy, Banco do Brasil has as a target of adopting the standards of CorporateGovernance that are benchmark for the market. Its Bylaws include practices that guarantee equality ofrights among shareholders, as well as transparency and accountability of the business.

The Board of Directors of Banco do Brasil has seven members, with a unified mandate of one year,allowing re-election. From its seven members, three are indicated by minority shareholders e the othersby the majority shareholder. The Bank has a permanent Audit Board composed of five members, ofwhich two are indicated by the minority shareholders and the others by the majority shareholders. Thecurrent members of both Boards were elected by the Ordinary Shareholders Meeting (AGO) of April,26th of 2005. In this meeting were elected:

Board of Directors:

Ministry of FinancePresident: Bernard AppyVice-President: Rossano Maranhão PintoBoard Member: Tarcísio José Massote de Godoy

Ministry of Planning, Budget and Management:Board Member: José Carlos da Rocha Miranda

MinorityBoard Member: João Carlos FerrazBoard Member: Francisco Augusto da Costa e SilvaBoard Member: Carlos Augusto Vidotto

Audit Board:

Ministry of FinanceAlon FeuerwerkerRodrigo Pirajá Wienskoski

Ministry of Finance - Representative of the National TreasuryOtávio Ladeira de Medeiros

MinorityVicente de Paulo Barros PegoraroArtemio Bertholini

In the AGO, shareholders also approved:- the Capital Budget;- the accounts of the Management Report of 2004;- the profit destination proposal;- the remuneration of members of the Audit Board;- the annual global amount of remuneration of the members of the management bodies.

In the same date, in Extraordinary Shareholders Meeting (AGE), the shareholders approved:- the proposal of capitalization of part of the balance of the reserve for expansion;- proposal of changes in the Bylaws.


In the 1Q05, the Bank held 20 meetings: 14 meetings with capital markets analysts, two conferencesabroad, one road show abroad, e three conference calls, two of the results (one in English and one inPortuguese).


4 – Other InformationTable 11. Other Information

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05ProfitabilityNet Income per Share - R$ 0.82 0.91 0.87 0.84 1.1 1.14 0.96 1.21ROE – Annualized % 24.8 25.7 23.1 21.3 27.7 27.5 24.0 29.3ROE – Accumulated and Annualized % 22.7 22.9 22.3 21.3 23.9 23.8 23.0 29.3ROA - Annualized % 1.2 1.3 1.1 1.1 1.4 1.4 1.3 1.6GFM / (Assets - Permanent) – Annualized 7.3 7.6 7.4 6.9 7.4 7.1 7.1 6.9GFM / Remunerated Assets – Annualized 9.2 9.5 9.0 8.5 9.2 8.8 8.7 8.4ProductivityEfficiency - % 54.0 57.6 56.5 54.2 59.0 55.9 62.7 56.1Service Revenues / Personnel Expenses - % 90.7 84.0 77.5 98.6 98.1 98.4 92.5 97.9Service Revenues / Administrative Expenses - % 54.5 48.2 48.0 56.8 53.1 54.9 48.5 54.4Personnel Expenses per Collaborator - R$ 16,408 18,571 21,456 17,049 18,085 18,734 19,781 19,070Collaborators / (Branches + PAA + PAB) 17 17 17 17 17 17 17 18Customers per Collaborator 185 188 206 209 217 221 227 224Assets per Collaborator – R$ thousand 2,280 2,376 2,534 2,503 2,455 2,531 2,570 2,597Loan Portfolio / Points of Service – R$ million 5.4 5.6 5.9 5.9 6.0 5.9 6.1 6.4Quality of the Loan PortfolioAllowance / Loan Portfolio - % 5.6 5.6 5.4 5.9 6.1 6.4 6.1 6.1Allowance / (E + F + G + H) - % 111.3 113.1 118.4 126.6 128.9 127.8 119.1 149.8Portfolio Net of Allowance / Total Portfolio - % 95.1 95.1 95.3 95.1 95.0 94.8 94.9 94.8Capital StructureLeverage (times) 18.9 18.4 18.9 18.2 17.7 17.1 16.9 16.5BIS Ratio- % 13.8 14.3 13.7 14.3 14.5 15.7 15.2 15.6Total Quantity of Shares – thousand 732,018 732,018 732,018 732,018 732,018 732,018 810,617 810,617Quantity of Shares in Treasury – thousand 11,258 11,258 11,258 11,258 11,258 11,258 11,258 11,258Capital MarketPrice / Earnings 12 months 4.20 5.00 7.38 6.77 6.05 6.38 8.59 7.01Price / Book Value 0.88 1.00 1.44 1.34 1.28 1.34 1.84 1.58Market Capitalization - R$ million 9,582 11,712 17,568 17,041 16,470 18,447 25,979 23,661Book Value per Share - R$ 14.85 15.97 16.63 17.33 17.57 18.81 17.65 18.68Price of Share - R$ 13.09 16.00 24.00 23.28 22.50 25.20 32.50 29.60Structural InformationTotal of Points of Service 12,755 12,930 13,220 13,549 13,908 14,230 14,450 14,564 Branches 3,209 3,218 3,241 3,564 3,618 3,662 3,722 3,786 PAA 421 424 438 181 187 188 188 185 PAB 1,598 1,576 1,562 1,541 1,520 1,495 1,455 1,400 PAE 4,484 4,609 4,821 5,054 5,280 5,461 5,614 5,665 SAA 3,023 3,084 3,140 3,191 3,285 3,406 3,455 3,519 PAP 20 19 18 18 18 18 16 9Total of Customers – thousand 16,718 17,049 18,751 19,275 20,055 20,677 21,089 21,219 Individuals – thousand 15,645 15,937 17,534 18,046 18,779 19,234 19,720 19,858 Businesses – thousand 1,073 1,112 1,217 1,228 1,274 1,373 1,369 1,361Total of Savings Accounts – thousand 10,433 10,911 11,463 11,704 12,023 12,506 13,016 13,090 Individuals – thousand 10,352 10,823 11,366 11,605 11,914 12,392 12,896 12,980 Businesses – thousand 80 88 96 99 109 114 120 110Collaborators 90,255 90,531 90,821 92,347 92,606 93,091 93,010 94,592 Employees 79,474 79,710 80,640 81,795 81,936 82,565 82,671 83,940 Interns 10,781 10,821 10,181 10,552 10,670 10,526 10,339 10,652


2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05Global Ratings Fitch Ratings Individual D D D D C/D C/D C/D C/D Short-Term - Local Currency B B B B B B B B Long-Term - Local Currency B B B+ B+ BB- BB- BB BB Short-Term - Foreign Currency B B B B B B B B Long-Term - Foreign Currency B B B+ B+ B+ B+ BB- BB- Moody's Financial Strength E+ E+ E+ E+ E+ E+ E+ E+ Short-Term - Local Currency P-2 P-2 P-2 P-2 P-2 P-2 P-2 P-2 Short-Term - Foreign Currency NP NP NP NP NP NP NP NP Long-Term Debt- Foreign Currency Ba3 Ba3 Ba3 Ba3 Ba3 Ba2 Ba2 Ba2 Long-Term Deposits - Local Currency A3 A3 A3 A3 A3 A3 A3 A3 Long-Term Deposits - Foreign Currency B3 B3 B3 B3 B3 B2 B2 B2 Standard & Poor's Long-Term - Local Currency BB BB BB BB BB BB BB BB Long-Term - Foreign Currency B+ B+ B+ B+ B+ B+ BB- BB-National Ratings Fitch Atlantic Ratings Short-Term F1+(bra) F1+(bra) F1+(bra) F1+(bra) F1+(bra) F1+(bra) F1+(bra) F1+(bra) Long-Term AA(bra) AA(bra) AA(bra) AA(bra) AA(bra) AA(bra) AA(bra) AA(bra) Moody's Short-Term BR-1 BR-1 BR-1 BR-1 BR-1 BR-1 BR-1 BR-1 Long-Term Aaa.Br Aaa.Br Aaa.Br Aaa.Br Aaa.Br Aaa.Br Aaa.Br Aaa.BrCompulsory Investments Demand Deposits Rate(1) 60% 45% 45% 45% 45% 45% 45% 45% Additional(2) 8% 8% 8% 8% 8% 8% 8% 8% Compulsory Investments* 25% 25% 25% 25% 25% 25% 25% 25% Free 7% 22% 22% 22% 22% 22% 22% 22% Savings Deposits Rate(3) 20% 20% 20% 20% 20% 20% 20% 20% Additional(2) 10% 10% 10% 10% 10% 10% 10% 10% Compulsory Investments* 30% 40% 40% 40% 40% 50% 50% 50% Free 40% 30% 30% 30% 30% 20% 20% 20% Time Deposits Rate(4) 15% 15% 15% 15% 15% 15% 15% 15% Additional(2) 8% 8% 8% 8% 8% 8% 8% 8% Free 77% 77% 77% 77% 77% 77% 77% 77% Judicial Deposits Rate 60% 60% 60% 15% 0% 0% 0% 0% Free 40% 40% 40% 85% 100% 100% 100% 100%* In BB, the compulsory investments are applied in Rural Credit.(1) Paid over in cash without remuneration(2) Paid over in cash at Selic rate.(3) Paid over in cash at TR + interest of 6.17% p.a.(4) Linked to securities


5 – Summarized Financial Statements5.1 Summarized Balance Sheet

Table 12. Summarized Balance Sheet - Assets

R$ millionBalances Chg.%

Mar/04 Dec/04 Mar/05 on Mar/04 on Dec/04ASSETS 231,107 239,014 245,685 6.3 2.8Current and Long-term Assets 226,668 233,955 240,739 6.2 2.9Available Funds 15,279 15,494 14,408 (5.7) (7.0)Short-term Interbank Investments 28,333 16,453 17,681 (37.6) 7.5Securities 67,875 73,485 74,089 9.2 0.8 Securities Available for Trading 12,338 13,163 11,309 (8.3) (14.1) Securities Available for Sale 30,266 32,790 35,092 15.9 7.0 Securities Held to Maturity 24,959 26,951 27,039 8.3 0.3 Financial Derivatives 331 581 649 96.0 11.6Interbank Accounts 19,409 22,106 23,348 20.3 5.6 Deposits with the Central Bank 17,099 21,931 20,787 21.6 (5.2) Compulsory Deposits on Demand Deposits and Float 5,950 9,087 7,866 32.2 (13.4) Compulsory Deposits on Savings Deposits 11,148 12,844 12,921 15.9 0.6 Other 2,311 175 2,561 10.8 -Intrabank Accounts 39 147 140 258.4 (4.7)Loans 66,451 74,823 77,896 17.2 4.1 Public Sector 4,461 4,161 4,528 1.5 8.8 Private Sector 66,475 75,773 78,765 18.5 3.9 ( Allowance for Loan Losses) (4,485) (5,110) (5,397) 20.3 5.6Leasing 10 20 4 (65.6) (82.7) Leasing and Subleasing Receivables 358 532 580 62.2 8.9 (Unearned Lease Income) (327) (483) (547) 67.3 13.2 (Allowance for Lease Losses) (20) (29) (29) 44.0 1.5Other Receivables 28,983 31,198 32,985 13.8 5.7 Receivable on Guarantees Honored 28 71 83 199.3 16.7 Foreign Exchange Portfolio 10,196 8,530 10,444 2.4 22.4 Income Receivable 292 180 211 (27.5) 17.4 Trading and Brokerage of Securities 40 235 62 54.1 (73.8) Specific Credits 506 544 559 10.4 2.8 Specific Operations 1 1 1 - - Tax Credits 9,116 8,396 7,956 (12.7) (5.2) Atuarial Assets 357 2,128 2,709 658.2 27.3 Warrants Deposits Receivable 6,704 8,789 9,199 37.2 4.7 Other Credits 3,168 4,268 4,959 56.5 16.2 (Provision or Doubtful Receivables) (1,425) (1,944) (2,146) 50.6 10.4 (With Loan Characteristics) (187) (226) (229) 22.3 1.1 (Without Loan Characteristics) (1,238) (1,718) (1,917) 54.9 11.6Other Assets 289 228 188 (34.8) (17.3) Interest in Companies - - - - - Other Assets 421 335 317 (24.6) (5.3) (Provision for Possible Losses) (202) (186) (177) (12.2) (4.7) Prepaid Expenses 70 79 48 (31.3) (38.8)Permanent Assets 4,439 5,059 4,946 11.4 (2.2) Investments 785 900 896 14.1 (0.4) Property and Equipment 2,844 3,052 2,886 1.5 (5.4) Leasing Assets 413 553 619 49.9 12.1 Deferred Charges 396 554 544 37.4 (1.8)


Table 13. Summarized Balance Sheet - Liabilities

R$ millionBalances Chg.%

Mar/04 Dec/04 Mar/05 on Mar/04 on Dec/04LIABILITIES AND SHAREHOLDER’S EQUITY 231,107 239,014 245,685 6.3 2.8Current and Long-term Liabilities 218,294 224,775 230,624 5.6 2.6Deposits 110,219 115,532 120,096 9.0 4.0 Demand Deposits 30,306 28,991 29,340 (3.2) 1.2 Savings Deposits 27,590 31,069 31,418 13.9 1.1 Interbank Deposits 6,219 5,768 6,489 4.3 12.5 Time Deposits 46,104 49,665 52,769 14.5 6.2 Investment Deposits - 38 81 - 113.3Money Market Borrowing 40,343 44,527 43,086 6.8 (3.2)Funds from Acceptances and Securities Placed 1,340 776 852 (36.4) 9.8 Foreign Securities 1,340 776 852 (36.4) 9.8Interbank Accounts 1,445 6 1,521 5.2 -Intrabank Accounts 1,172 1,725 1,385 18.2 (19.7)Borrowing 10,707 16,565 17,201 60.7 3.8Foreign Borrowing 10,707 16,565 17,201 60.7 3.8Domestic Onlending – Official Institutions 8,003 10,611 10,629 32.8 0.2 National Treasury 1,878 3,361 3,596 91.5 7.0 BNDES 3,081 3,559 3,663 18.9 2.9 Finame 2,510 3,026 2,927 16.6 (3.3) Other Institutions 534 665 443 (16.9) (33.3)Foreign Onlending 2 2 1 (35.9) (57.4)Financial Derivatives 473 523 674 42.3 28.8Other Accounts Payable 44,590 34,508 35,180 (21.1) 1.9 Collection of Taxes and Contributions 2,221 255 1,967 (11.4) 670.7 Foreign Exchange Portfolio 19,406 7,870 7,969 (58.9) 1.3 Shareholder and Statutory Distributions 60 423 84 41.1 (80.0) Taxes and Social Security 924 980 954 3.2 (2.7) Trading and Brokerage of Securities 4,009 3,627 3,343 (16.6) (7.8) Financial and Development Funds 1,768 1,867 1,954 10.5 4.6 Special Operations 2 2 2 (1.0) (0.2) FCO (Subordinated Debt) 5,380 6,833 7,093 31.8 3.8 Actuarial Liabilities 2,908 3,051 3,070 5.5 0.6 Other Liabilities 7,911 9,600 8,744 10.5 (8.9)Unearned Income 127 134 128 1.3 (4.0)Shareholders’ Equity 12,686 14,106 14,933 17.7 5.9 Capital 8,366 9,864 9,864 17.9 - (Unpaid Capital) - - - - - Capital Reserves 5 5 5 - - Revaluation Reserves 24 26 26 5.5 - Revenue Reserves 3,674 4,294 4,294 16.9 - Mark-to-Market – Securities and Derivatives 127 43 (95) (174.9) (322.6) Retained Earnings (Accumulated losses) - - - - - (Treasury Shares) (126) (126) (126) - - Income Accounts 616 - 965 56.7 -


5.2 Summarized Corporate Law Income StatementTable 14. Summarized Corporate Law Income Statement

R$ millionChg.%

1Q04 4Q04 1Q05 on 1Q04 on 4Q04Financial Intermediation Income 7.565 8.003 8.046 6,4 0,5 Loans 4.198 4.461 4.546 8,3 1,9 Leasing 19 26 29 50,2 12,9 Securities 2.826 2.922 3.166 12,0 8,3 Financial Derivatives (37) (89) (31) (15,1) (64,9) Foreign Exchange Portfolio 252 329 (50) (119,9) (115,2) Compulsory Investments 307 353 386 25,7 9,4Financial Intermediation Expenses (5.152) (4.657) (5.361) 4,1 15,1 Money Market Funds (3.047) (3.412) (3.729) 22,4 9,3 Borrowing, Assignments and Onlending (745) (357) (371) (50,2) 4,0 Allowance for Loan Losses (1.359) (887) (1.261) (7,2) 42,1Gross Income from Financial Intermediation 2.414 3.346 2.685 11,2 (19,8)Other Operating Income (Expenses) (1.402) (2.259) (1.182) (15,7) (47,7) Service Revenues 1.553 1.702 1.767 13,8 3,8 Personnel Expenses (1.574) (1.840) (1.804) 14,6 (2,0) Other Administrative Expenses (1.126) (1.633) (1.407) 25,0 (13,8) Taxes (319) (406) (395) 24,0 (2,7) Equity Int. in the Results of Subs. and Affil. 116 (149) 104 (10,9) (169,5) Other Operating Revenues 518 1.700 1.056 104,0 (37,9) Other Operating Expenses (570) (1.633) (503) (11,8) (69,2)Operating Income 1.012 1.087 1.503 48,6 38,2Non-operating Income 15 (4) 98 - -Income Before Taxes 1.027 1.083 1.601 55,9 47,8 Income and Social Contribution Taxes (370) (187) (559) 50,8 198,4 Statutory Profit Sharing (41) (125) (78) 89,6 (38,0)Net Income 616 771 965 56,7 25,2


5.3 Income Statement with RealocationsTable 15. Income Statement with Reallocations

R$ millionChg.%

1Q04 4Q04 1Q05 on 1Q04 on 4Q04Financial Intermediation Income 7,622 7,855 8,191 7.5 4.3 Loans 4,198 4,461 4,546 8.3 1.9 Leasing 19 26 29 50.2 12.9 Securities 2,826 2,922 3,166 12.0 8.3 Financial Derivatives (37) (89) (31) (15.1) (64.9) Foreign Exchange Portfolio 252 329 (50) (119.9) (115.2) Compulsory Investments 307 353 386 25.7 9.4 FX Gain (Loss) on Foreign Investments (1) 18 (202) (40) (321.3) (80.2) Other Op. Inc. of a Fin. Intermed. Nature (2) 38 54 184 379.2 239.6Financial Intermediation Expenses (3,793) (3,769) (4,100) 8.1 8.8 Money Market Funds (3,047) (3,412) (3,729) 22.4 9.3 Borrowing, Assignments and Onlending (745) (357) (371) (50.2) 4.0Gross Financial Margin 3,829 4,086 4,090 6.8 0.1 Allowance for Loan Losses (3) (8) (13) (901) (868) (1,061) 17.8 22.3Net Financial Margin 2,929 3,218 3,029 3.4 (5.9) Service Revenues 1,553 1,702 1,767 13.8 3.8 Taxes on Revenues (4) (284) (369) (351) 23.4 (5.1)Contribution Margin 4,197 4,551 4,446 5.9 (2.3)Administrative Expenses (2,735) (3,509) (3,250) 18.8 (7.4) Personnel Expenses (5) (10) (1,574) (1,840) (1,804) 14.6 (2.0) Other Administrative Expenses (1,126) (1,633) (1,407) 25.0 (13.8) Other Tax Expenses (4) (34) (36) (39) 13.1 7.0Commercial Income 1,462 1,042 1,196 (18.2) 14.8Other Operating Income (Expenses) (235) (139) 84 (135.7) (160.6) Eq. Interest in Resul. Subs. and Affil. (1) (6) (7) 98 53 144 46.2 172.4 Other Operating Income (2) (9) (11) 432 621 596 38.0 (4.0) Other Operating Expenses (2) (766) (812) (656) (14.3) (19.2)Operating Income 1,227 903 1,280 4.3 41.7Non-operating Income 15 (4) 98 - -Income Before Taxes 1,242 899 1,378 10.9 53.2 Income and Social Contribution Taxes (370) (187) (483) 30.3 157.8 Interest on Own Capital Tax Benefit - 171 - - - Statutory Profit Sharing (41) (125) (78) 89.6 (38.0)Recurring Income 831 586 817 (1.7) 39.3Non-Recurring Items (215) 184 148 (168.5) (20.0) Non-Recurring Rever. Prov. for Credit Risks (7) - 184 - - - Non-Recurring Provision for Credit Risks (5) (262) - - - - Provision for Losses - - - - - Provision for Voluntary Retirement Plan (6) 47 - - - - Write off of MaxBlue Holding goodwill - - - - - Recovery of Undue Taxes (8) - - 229 - - Prov. for Retirement Incentive Plan - - - - - Provision for Non-recurring IR and CS (9) - - (76) - - Non-recurring Pasep/Cofins (10) - - (6) - -Net Income 616 771 965 56.7 25.2


5.3.1 Details of Reallocations

The adjustments made in the statement of income to arrive at the Reallocated Statement of Income aredetailed below. These adjustments did not change the final result, since they were only intended toarrange more coherently revenue and expense items, considering the performance dynamics of afinancial institution. Basically, these adjustments were intended to:

a) Allow the financial margin recorded in the period to reflect, effectively, the gain from all theremunerated assets, seeking to inform the market what was the spread achieved from the division ofthis margin by the assets, except the permanent assets. For this, it was necessary to

• Include in the Financial Margin Income recorded in other operating income that had intermediationcharacteristics and which was derived from remunerated assets recorded in the Balance Sheetunder other assets;

• Identify the foreign exchange gain/(loss) on Financial Assets and Liabilities abroad in the quarter ina specific Financial Margin item (financial equity);

• Retain as financial margin amounts related to negative foreign exchange adjustments that wererecorded in other operating income and expenses to avoid inverting the balance of accounts of afinancial intermediation nature;

b) segregate the impacts of extraordinary events in order to demonstrate recurring income of the Bank inthe period.

Reallocations in the Gross Financial Margin

(1) The Foreign Exchange Gain (Loss) on Foreign Financial Equity is reallocated from Equity Interestin the Results of Subsidiaries and Affiliates for inclusion in the financial margin. This adjustment isrequired to maintain the equilibrium and coherence of analyses of the spread, since assets andliabilities previously included in permanent assets are included in other balance sheet items afterconsolidation. The spread would be improperly reduced without reallocation.

(2) The reallocations of other operating income / expenses to other operating income of a financialintermediation nature are detailed below:

Table 16. Reallocations – Other Operating Income / Expenses

R$ millionChg. %

1Q04 4Q04 1Q05 on 1Q04 on 4Q04Income from Special Operations 25 23 22 (10,6) (2,8)Income from Specific Credits 12 14 15 29,1 4,8FX Readjustment 2 17 147 - - FX Readjustment Income 2 1.042 193 * * FX Readjustment Expense - (1.025) (46) - -Total 38 54 184 - ** Change >│10.000│%

Reallocations in the Net Financial Margin

(3) The expense with the allowance for loan losses includes credits without characteristics of financialintermediation, so that this part of the allowance is reallocated to other operating expenses.


Reallocations in the Contribution Margin

(4) Considering the model used for the income statement, tax expenses on revenues were reallocatedand included in the contribution margin .

Itens Extraordinários

(5) The change in criteria for the risk classification of loans with value below R$ 50 thousand generatedan increase in provisions for doubtful loans of R$ 262 million in the period. This is due to a new,more conservative, metodology employed in the risk classification of these operations.

(6) The lower adhesion to the Incentive Plan for Voluntary Retirement (PAI 50) generated the reversalof provisions in the amount of R$ 47.1 million in the 1Q04. The PAI 50 was developed in order topromote renewal of the Bank’s staff, aligning business results with socially responsible terminationof employees over 50 years of age. In the 4Q03, when it was set up R$ 152 million was provisioned.The amount was regarded as non-recurrent in the period.

(7) In the 4Q04 there was a reversal of R$ 184 million in the Provision for Non-performing Loans set in1H04, the result of risk reclassification. At the time, the increase was also regarded as non-recurrent. In 2004, the Bank carried out a series of adjustments in the methodology for calculatingcredit risk, also aiming at complying with the changes set out in the Basle Accord 2. These changesresulted in provisions for non-performing loans being more volatile in the period.

(8) The recurrents items in the 1Q05 recorded the amount of R$ 148 million relating the recognition ofthe right of offset the tax credits (undue taxes) of PASEP/COFINS from 1988. The gross value is R$229 million before IR/CS and Pasep/Cofins arising from this event, which effects are set in 9 and 10items.


6 – Balance Sheet Analysis6.1 BreakdownBanco do Brasil is the largest financial institution in Brazil, with total assets of R$ 245,685 million. In thelast 12 months, BB increased its assets by 6.3%.

The figure below shows an increase in the relative share of remunerated assets in the Bank’s TotalAssets (Mar/05 – Mar/04). This is due mainly to the increase of the available funds in foreign currencyand of loans, in spite of the reduction in short-term interbank investments in the period, arising from thesettlement of foreign exchange sale transactions carried out by customers in 2003 (please see 6.3Analysis of Liquidity).

On the liabilities side, a increase was to be seen in the relative share of remunerated liabilities, from63.8% to 69.5% (Mar/04 – Mar/05). This movement is explained by the increase in the volume ofsavings and time deposits, money market borrowing and borrowing abroad.

Earning Assets vs. Interest Bearing Liabilities - %

Figure 7. Earning Assets vs. Interest Bearing Liabilities

78.2 81.8 82.2 80.3 78.8 81.079.8 81.3

18.221.8 18.719.020.221.219.717.8


Remunerated Assets Other Assets

69.2

30.8

68.0

32.0

70.2

29.8

64.6

35.4

63.8

36.2

68.3

31.7

69.8

30.2

69.5

30.5

Interest Bearing Liabilities Other Liabilities


6.2 Analysis of AssetsSecurities showed a slight increase of 0.8% in the share of total assets, going up from 29.4% to 30.2%(Mar/04 – Mar/05). The growth of the retail loan portfolio is noteworthy, as it increased from 28.8% to31.7% (Mar/04 – Mar/05) of Total Assets. In absolute terms, there was an increase of 9.2% and 17.2%in securities and in loans, respectively.

Tax credits showed a balance of R$ 7,956 million in March 2005, a reduction of 12.7% (Mar/04 –Mar/05), going down from 3.9% to 3.2% of total assets. In relation to the end of 2004, a fall of 30 basispoints is to be seen in the share of Total Assets, showing the policy of gradual reduction of tax creditsadopted by the Bank.

Breakdown of Assets - %

Figure 8. Breakdown fo Assets

Table 17. Breakdown of Assets

R$ millionJun/03 Sep/03 Dec/03 Mar/04 Jun/04 Sep/04 Dec/04 Mar/05

Total Assets 205,762 215,134 230,144 231,107 227,374 235,599 239,014 245,685 Liquidity Assets except Securities 18,648 29,340 44,197 43,612 30,316 35,228 31,868 32,089 Securities 72,746 74,055 69,590 67,875 69,855 71,120 73,485 74,089 Loans and Leasing 56,686 60,442 65,604 66,461 69,247 69,961 74,844 77,899 Tax Credits 10,433 9,897 9,406 9,116 8,971 8,505 8,396 7,956 Other Assets 47,249 41,400 41,347 44,044 48,986 50,785 50,421 53,652

23.0 19.2 18.0 19.1 21.5 21.6 21.1 21.8

27.528.1 28.5 28.8 30.5 29.7 31.3 31.7

35.434.4 30.2 29.4

30.7 30.2 30.7 30.2

9.113.6 19.2 18.9 13.3 15.0 13.3 13.1

5.14.6 4.1 3.9 3.9 3.6 3.5 3.2


Other Assets Tax Credit Loans and Leasing Liquidity Assets except Securities Securities


6.3 Analysis of LiquidityOne way of measuring the liquidity of a financial institution consists of determining the differencebetween liquidity assets and liquid liabilities. An analysis of the graph below shows a comfortablesituation with this indicator.

Liquidity Assets (-) Liquidity LiabilitiesR$ million

Figure 9. Liquidity

In 2003, Banco do Brasil carried out advances to major customers on their sales of foreign exchange.As highlighted in Figure 9, to annul the exposure in dollar liabilities generated by these transactions, theBank increased its short-term interbank deposits. These transactions, however, were settled in April2004. Accordingly, comparing the liquidity balance of March 2005 with that of the same period of theprevious year, a reduction of 6.5% is to be seen, due mainly to the movement of an increase ininterbank investments described above.

The Bank’s liquidity balance closed March 2005 at R$ 54,419 million, a slight increase in relation toDecember 2004.

Table 18. Liquidity BalanceR$ million

Jun/03 Sep/03 Dec/03 Mar/04 Jun/04 Sep/04 Dec/04 Mar/05Liquidity Assets (A) 79,381 91,627 102,439 104,795 97,779 103,297 103,393 103,993 Available Funds 6,300 6,083 10,789 15,279 15,841 16,669 15,415 14,408 Interbank Investments 12,348 23,257 33,407 28,333 14,475 18,559 16,453 17,681 Securities (except linked to Bacen) 60,733 62,287 58,242 61,182 67,463 68,069 71,525 71,904Liquidity Liabilities (B) 46,904 52,915 47,339 46,562 44,816 47,533 50,295 49,574 Interbank Deposits 5,437 6,438 7,275 6,219 7,684 5,530 5,768 6,489 Money Market Borrowing 41,468 46,478 40,063 40,343 37,132 42,003 44,527 43,086

Liquidity Balance (A - B) 32,477 38,712 55,100 58,233 52,963 55,765 53,098 54,419

54,

419

53,

177

55,

765

52,

963

46,

233

38,

100

38,

712

33,

477

12,

000

17,

000



6.4 Securities PortfolioIn March 2005, the securities portfolio showed growth of 9.2 in relation to the same period of theprevious year. This increase was due, in great measure, to the increase in the volume of money marketborrowing (6.8%).

It is worth pointing out that there has been an alteration in the profile of the portfolio, which came to have15.3% of securities available for trading and 47.4% of securities available for sale, against 18.2% and44.6%, in the same period of the previous year, respectively.

Table 19. Securities Portfolio by Category

R$ millionBalances Share %

Jun/03 Sep/03 Dec/03 Mar/04 Jun/04 Sep/04 Dec/04 Mar/05 Mar/04 Mar/05Securities 72,746 74,055 69,590 67,875 69,855 71,120 73,485 74,089 100.0 100.0 Available for Trading 2,104 5,393 16,095 12,338 11,998 12,690 13,163 11,309 18.2 15.3 Available for Sale 42,515 43,158 28,307 30,266 31,008 31,997 32,790 35,092 44.6 47.4 Held to Maturity 27,640 25,109 24,821 24,959 25,146 25,945 26,951 27,039 36.8 36.5 Financial Derivatives 487 396 368 331 1,702 488 581 649 0.5 0.9

In the following table, it can be seen that there has a maintenance of the concentration in securities witha maturity of between 1 and 5 years. In relation to March 2004, there was a fall in the share of thesesecurities in the total of the portfolio, going down from 69.3% to 61.2%, in March 2005. The differencebetween the periods is the result, mainly, of the migration to the securities portfolio with maturities of upto 1 year.

Table 20. Securities Portfolio by MaturitiesR$ million

Up to 1 year 1 to 5 years 5 to 10 years Over 10 yearsBalance Share % Balance Share % Balance Share % Balance Share %

Total

Jun/03 15,243 21.6 45,280 64.1 8,869 12.6 1,202 1.7 70,594Sep/03 13,684 18.9 51,036 70.5 6,332 8.7 1,336 1.8 72,387Dec/03 11,462 16.7 49,377 72.0 6,354 9.3 1,424 2.1 68,616Mar/04 13,044 19.5 46,439 69.3 7,100 10.6 457 0.7 67,040Jun/04 14,416 21.4 45,341 67.3 7,179 10.7 416 0.6 67,353Sep/04 15,910 22.8 46,062 65.9 7,491 10.7 446 0.6 69,910Dec/04 21,348 29.6 44,187 61.2 6,233 8.6 441 0.6 72,208Mar/05 19,661 27.9 43,099 61.2 6,714 9.5 971 1.4 70,445


The portfolio of securities with maturities between 1 and 5 years accounted for 61.2% of the total of theportfolio in March 2005, compared to 69.3% in the same period of the previous year. With the objectiveof demonstrating better this distribution, this share was opened up into from 1 to 3 years and from 3 to 5years in the securities portfolio of the multiple bank, which accounts for a major part of the consolidatedsecurities portfolio 98.6%.

There was a 840 basis point increase in the share of securities with a maturity of from 1 to 3 years, inrelation to March 2004.

Securities Portfolio with Maturities between 0 and 5 yearsMultiple Bank

Figure 10. Securities Portfolio with Maturities between 0 and 5 years

Mar/04

69.5%

30.5%

Dec/04

82.1%

17.9%

0 to 3 years 3 to 5 years

Mar/05

80.1%

19.9%


6.5 Loan PortfolioBanco do Brasil has maintained its unchallenged leadership in lending in Brazil, with an 18.4% share inthe financial system4, a slight increase in relation to the previous position. The growth of credit in theNational Financial System in 1Q05 was 4.3%, while the Bank increased 5.4%.

The total Loan portfolio increased 5.4% in the 1Q05 and 17.2% in 1Q04 2004. The major increase waswith Business Customers (7.6%). In relation to the previous year, there was a similar increase inIndividual and Business Customers, above 21%. The Agribusiness and Foreign increased 2.5% and4.9% in the 1Q05, respectively.

Table 21. Loan PortfolioR$ million

Chg. %

Mar/04 Dec/04 Mar/05 s/ Mar/04 s/ Dec/04

Brazil 69,610 79,537 83,805 20.4 5.4 Individuals 14,076 16,090 17,069 21.3 6.1 Business Customers 29,626 33,410 35,962 21.4 7.6 Agribusiness 25,907 30,036 30,774 18.8 2.5Foreign 10,037 9,017 9,457 (5.8) 4.9

Total 79,647 88,554 93,263 17.1 5.3

Table 22. Individuals and Business Customers Loan PortfolioR$ million

Retail Wholesale Agribusiness Other TotalBrazil 30,433 21,068 30,774 1,531 83,805 Individuals 16,727 30 26,464 311 43,533 Business Customers 13,705 21,037 4,310 1,220 40,272Foreign - - - 9,457 9,457

Total 30,433 21,068 30,774 10,988 93,263

From the total volume of loans transactions, 32.6% are from the loan portfolio segment, 22.6% from thewholesale segment and 33.0% from the agribusiness segment. The other operations, which the foreignportfolio is the most relevant, hold 11.8% of the total.

Before presenting the figures for the loan portfolio, it should be pointed out that a conceptual alterationhas occurred, involving the retail and commercial portfolios. Some transactions, in their majoritytransactions based on receivables with micro and small businesses, were transferred from thecommercial portfolio to the retail portfolio. The volume of these transactions transferred is roughly R$ 7billion. With a view to ensuring the comparability of the information, a retroactive processing of theportfolios was carried out in all the parts where these transactions are dealt with in this report.

In 1Q05, the largest growth occurred in the foreign trade portfolio, with growth of 14.9%, followed by thecommercial and retail portfolios, which grew 7.1% and 4.9%, respectively. The share of the retail andcommercial transactions in the total portfolio went down respectively from 31.1% to 30.9% and from13.8% to 14.0% in the year.

Agribusiness transactions grew 2.5% in 1Q05, but showed a slight reduction in their share of theportfolio, which went down from 33.9% to 33.0% (Dec/04 – Mar/05).


Breakdown of the Loan Portfolio

Figure 11. Breakdown of the Loan Portfolio

Table 23. Loan Portfolio by SegmentR$ million


Total Portfolio 68,662 72,601 77,636 79,647 83,131 84,148 88,554 93,312 Retail 19,594 20,485 21,621 23,653 25,345 26,586 27,501 28,835 Commercial 9,646 9,314 10,432 10,254 10,696 11,687 12,221 13,090 Agribusiness 21,519 24,766 26,766 25,907 25,573 25,666 30,036 30,774 Foreign Trade 7,563 7,543 7,315 8,217 8,810 8,507 7,992 9,179 Abroad 8,432 8,952 9,481 10,037 11,088 10,016 9,017 9,457 Other 1,909 1,540 2,022 1,579 1,619 1,686 1,786 1,977

29.7%

12.9%32.5%

10.3%

12.6%2.0%

31.1%

13.8%33.9%

9.0%

10.2% 2.0%

Retail Commercial Agribusiness Foreign Trade Foreign Others

Mar/04 Dec/04 Mar/05

30.9%

14.0%33.0%

9.8%

10.1% 2.1%


6.5.1 Retail Loan Portfolio

The retail loan portfolio encompasses mainly the products intended for individuals and micro and smallbusinesses (companies with annual sales of up to R$ 10 million). In March 2005, the portfolio reached abalance of R$ 28,835 million, which represents an increase of 19.0% in relation to the same period ofthe previous year and 4.9% in relation to December 2004.

Table 24. Retail Loan Portfolio


Direct Consumer Credit (CDC) 7,165 7,302 7,666 8,534 9,251 9,590 9,688 10,153Receivables 4,981 5,229 5,658 5,547 6,012 6,145 6,755 6,720Overdraft accounts 2,503 2,598 2,177 2,694 2,740 2,813 2,347 2,709BB Giro Rápido (WCL) 2,076 2,410 2,701 2,984 3,173 3,373 3,433 3,705Credit Cards 1,541 1,451 1,620 1,650 1,742 1,842 1,994 2,074Demais 1,327 1,495 1,799 2,244 2,428 2,823 3,285 3,474

Total 19,594 20,485 21,621 23,653 25,345 26,586 27,501 28,835

Loans to Individuals - Banco do Brasil meets the credit needs of individuals through mass distributedproducts. BB´s credit scoring system calculates pre-approved limits for direct consumer credit (CDC),overdraft banking, and credit cards based on a series of customer information.

CDC transactions showed 19.0% growth in relation to March 2004, and 4.8% in relation to December2004, to reach a balance of R$ 10.153 million, with an average value per transaction of R$ 1,406.29 atthe end of March 2005.

The increase to be seen was basically due to the growth of the CDC Crédito em Consignação, that wentfrom R$ 823,7 million in March 2004 to R$ 1,763 million in March 2005 and CDC Crédito Material deConstrução, that began transactions in the 4Q03. The CDC can be contracted via the Internet,automated teller machines, and in the branch network. Furthermore, it combines a low operational costwith credit well spread out, with an annualized investment rate of 47.9% in 1Q05, against 50,7% in4Q04.

In March 2005, 64.7% of the individual customers had accounts with a credit limit. Transactions inoverdraft accounts ended March with R$ 2,709 million ( 9.4% share in retail transactions), an increaseof 15.4% (dec/04 – mar/05). The annualized investment rate for overdraft accounts was 111.2% in1Q05, compared with 110.9% in 4Q04.

The balance of credit card transactions showed an increase of 4.0% (dec/04 – mar/05), with a balanceof R$ 2,074 million at the end of March 2005, while the quantity of cards created rose 3.7%, going upfrom 6,918 thousand to 7,173 thousand. The annualized investment rate for credit card transactions was33.9% in 1Q05, compared with 33.5% in 4Q04.


Main Retail Loan Portfolio ProductsR$ million

Figure 12. Main Retail Loan Portfolio Products

CDC

7,165 7,302 7,6668,534

9,251 9,590 9,688 10,153


Credit Card

1.541 1.4511.620 1.650 1.742 1.842

1.994 2.074



Credit for Micro and Small Businesses - In May 2004, Banco do Brasil created the Micro and SmallBusiness Directorate, with a view to increasing the market share by means of customer loyaltystrategies, and to improving the relationship with the segment. In conjunction with the far-reachingservice network and the specific training of the workforce, its products and services give BB uniqueconditions for attending to the needs of these customers.

Starting with this report, the Retail Portfolio now incorporates about R$ 7.0 billion in transactions basedon micro and small business receivables, formerly recorded in the Commercial Portfolio. The informationon these portfolios was processes retroactively in all the parts of this Report, so as to ensure itscomparability.

Transactions intended for micro and small businesses accounted for 44.6% of the Retail Portfolio inMarch 2005, against 42.4% in the same period of the previous year and 45.3% in December 2004. Thebalance of these transactions was R$ 12,874 million, a 3.3% increase in relation to December 2004.

Table 25. MSB Credit Products


Receivables 4,981 5,229 5,658 5,547 6,012 6,145 6,755 6,720BB Giro Rápido 2,076 2,410 2,701 2,984 3,173 3,373 3,433 3,705Proger Urbano Emp. 614 722 866 1,009 1,201 1,426 1,649 1,821Others 184 138 241 496 458 453 626 628

Total 7,856 8,499 9,466 10,036 10,844 11,396 12,462 12,874

Transactions intended for micro and small businesses accounted R$ 6,720 million in March 2005,changed 3.3% in December 2004 and 28.3% relation to the previous year. Of this total, 25% is MSBtransactions. The main credit products based on receivables are checks discounted and trade billsdiscounted, which are 90% of the total.

The main credit product intended for this segment, BB Giro Rápido, offers financing for working capitalwithout red tape and without requiring tangible collateral. The transaction is divided into a part with anoverdraft account and another for working capital, paid in installments over 12 months. At the end ofMarch 2005, this line of credit reached a balance of R$ 3,705 million, a 24.2% increase (mar/04 –mar/05) and 7.9% from December 2004.The investment rate for this product remained at 47.8% in1Q05, compared with 4Q04.

The Proger Urbano Empresarial transactions use funding from the Worker’s Support Fund (FAT) tofinance projects or investment with the respective working capital, which provides for the generation ofemployment and income in urban areas. These transactions showed an increase of 80.5% (mar/04 –mar/05), ending 1Q05 with a balance of R$ 1,821 million.

Main Products for Micro and Small BusinessesR$ million

Figure 13. Main Products for Micro and Small Businesses

BB Giro Rápido

2,0762,410

2,701 2,984 3,173 3,373 3,433 3,705


Receivables

4,981 5,229 5,658 5,547 6,012 6,1456,755 6,720



Loans for the Lower Income Population - With the Federal Government’s decision to expand thefinancial services industry to the population with a lower income and to micro entrepreneurs, Law10735/03 was passed, which makes provisions about the channeling of resources equivalent to 2% ofdemand deposits taken by financial institutions towards micro credit transactions, at an interest rate ofup to 2% a month.

To maintain coherence with its corporate strategy, Banco do Brasil adopted as an institutional solutionthe creation of a separate structure from the multiple bank, so as to guarantee the transparency of theprocess, besides adapting the products, processes, credit policy and operational costs, aiming at thecurrent business practice of attending to the these specific customer groups in a differentiated andpersonalized manner.

Banco Popular do Brasil was created as a full subsidiary of Banco do Brasil through Law 10738/03, inthe form of a multiple bank with commercial, credit, financing and investment portfolios. The businessplan was designed for the bank to work with high efficiency and low costs.

Banco Popular do Brasil has constructed an innovative and unprecedented technological model. Thesolution was designed to work with any communication technology, through data capture applications,which work with portable POS (point of sale) and PC equipment, with a low configuration requirement.

In March 2005, Banco Popular had 1,387,776 current account holders and 6,021 points of service. In1Q05, 389,859 microcredit transactions were carried out, totaling a volume of R$ 25.9 million.

Table 26. BPB Highlights

Jun/04 Sep/04 Dec/04 Mar/05Assets - R$ thousand 125,974 129,713 147,850 155,851Deposits - R$ thousand 123 1,377 22,568 47,569Credit Portfolio* - R$ thousand 76 1,494 19,314 34,190Current Acount 2,255 145,913 1,050,887 1,387,776Points of Service 30 1,720 5,530 6,021* Liquid of Provisions


6.5.2 Commercial Loan Portfolio

The Commercial Loan Portfolio encompasses the products intended mainly for medium and large sizedcompanies and for the corporate customers. Banco do Brasil has adopted a segmentation model thathas the objective of perfecting the management of this customer base, dividing them into the sectors ofIndustry, Commerce, and Services, and into the medium, large, and corporate segments. The modelfavors a better knowledge of the specific needs of each company and seeks to develop, diversify andachieve a return from the business. In March 2005, the portfolio reached a balance of R$ 13,090 million,an increase of 27.7% (Mar/04 – Mar/05) and of 7.1% in relation to December 2004.

Table 27. Commercial Loan PortfolioR$ million

Jun/03 Sep/03 Dec/03 Mar/04 Jun/04 Sep/04 Dec/04 Mar/05Working Capital – Others 2,606 2,191 2,666 2,648 3,292 3,684 3,589 4,638Investment Finance 2,711 2,695 2,721 2,798 2,833 2,958 3,128 3,156Receivables 2,047 2,269 2,628 2,769 2,347 2,884 3,386 2,976Overdraft Accounts 2,072 1,946 1,908 1,791 1,919 1,805 1,721 1,863Others 210 214 508 249 306 356 397 456

Total 9,646 9,314 10,432 10,254 10,696 11,687 12,221 13,090

The line that stands out most in this portfolio is Working Capital – Others, with a 35.4% share in March2005. The balance of this line was R$ 4,638 million in March 2005, which represents an increase of75.2% (Mar/04 – Mar/05). From this line, BB Giro was the product that showed the greatest growth inthis period, with an increase of 183.7% in relation to the same period of the previous year and 67.0% inrelation to December 2004.

Transactions with receivables ended March 2005 with a balance of R$ 2,976 million, growth if 7.5% inrelation to the same period of the previous year and a reduction of 12.1% over December 2004. Thesetransactions are short term and show a low credit risk for the Bank. For the companies, they mean anexcellent alternative to working capital financing, and an opportunity for boosting their sales, offeringlonger terms for their customers. The main credit products based on receivables showed an annualizedinvestment rate of 29,4% in 1Q05, compared to 28,8% in 4Q04.


Main Products for Wholesale CustomersR$ million

Figure 14. Main Commercial Portfolio Products

The investment transactions comprise, in the main, lines of credit intended for the expansion ormodernization of production, via the acquisition of machines and equipment, including freight vehicles.The balance of these transactions increased 12.8% (Mar/04 – Mar/05) and 0.9% in relation toDecember 2004, to reach R$ 3,156 million in March 2005.

The BB overdraft account offers a revolving credit line with a term for repayment of up to 12 months. Atthe end of March 2005, the balance of these transactions amounted to R$ 1,863 million, an increase of8.3% in relation to December 2004.

Capital de Giro - Others

2,6062,191

2,666 2,6483,292

3,684 3,589

4,638


Investment

2,711 2,695 2,7212,798 2,833

2,958

3,128 3,156



6.5.3 Agribusiness Loan Portfolio

Agribusiness is one of the main sectors of the Brazilian economy, of fundamental importance to thegrowth of the country. In its role as an agent of public policies, Banco do Brasil represents a linkbetween the government and the rural producer, and knows better than anyone the needs of those whodedicate themselves to farming, in all the stages of the productive chain.

The Brazilian Trade Balance has increased due to the positive contribution from agribusiness. The tradebalance of this sector generated a US$ 7.6 billion surplus up until March 2005, growth of 15.2% inrelation to March 2004, accounting for 31.0% of the exports in the period.

Trade Balance (FOB)US$ billion

Source: MAPA – Ministry of Agriculture, Animal Husbandry and SupplyFigure 15. Trade Balance (FOB)

The table below shows exports broken down into the main products.

Table 28. ExportsUS$ million

2001 2002 2003 2004 1T05

Soybeans and Related Products 5,297 6,009 8,125 10,048 1,420Meat 2,553 2,751 3,641 6,144 1,407Timber and Wood Products 1,878 2,214 2,620 3,781 917Sugar and Alcohol 2,371 2,263 2,298 3,138 898Pulp and Paper 2,190 2,056 2,831 2,909 805Leather, Hides and Shoes 2,339 2,341 2,465 2,897 751Coffee, Mate and Spices 1,340 1,331 1,424 1,892 643Fruit Juice 926 1,134 1,292 1,194 321Tobacco 944 1,008 1,090 1,426 190Other Products 4,025 3,732 4,852 5,587 1,437

Total 23,863 24,839 30,639 39,016 8,789Source: MAPA – Ministry of Agriculture, Animal Husbandry and Supply

The sector’s extremely positive performance is due to the permanent quest for new technologies and forvaluing the services provided by the professionals from the area, always aiming at profitability andcontinuity in the enterprises. In the figure that follows, the increased productivity per area planted, aresult of the gain in productivity, can be visualized.

14.4 14.819.0 20.3

25.834.1

7.6

(1.2) (0.7)

13.1

24.8

33.7

8.32.6

1999 2000 2001 2002 2003 2004 1Q05

Agribusiness Brazil


Production vs. Planted Area

* ForecastFigure 16. Production vs. Planted Area

Rural credit finances the costs of production and marketing of agricultural products, stimulates ruralinvestments, including warehousing, processing and industrial transformation of agricultural products.Furthermore, it encourages the introduction of rational methods into the system of production.

The growth in the volume of BB’s Agribusiness Loan Portfolio was 18.8% (Mar/04 – Mar/05) and 2.5% inrelation to December 2004, closing the period with a balance of R$ 30,774 million. Investmenttransactions, intended for the modernization of the productive process, accounted for 44.9% of thisportfolio and have an average term of 4 years. Lending to cover costs and marketing, intended tofinance the goods and services needed for the production of crops and livestock, accounted for 51.4% ofthe agribusiness portfolio and showed an average term of about 1 year.

Table 29. Agribusiness Loan Portfolio by Purpose


Costs 9,295 10,525 12,468 12,286 11,827 11,674 14,734 14,979Investment 9,379 9,807 10,642 11,386 12,016 12,389 13,231 13,807Marketing 1,079 1,306 1,257 717 1,000 958 1,054 831Other 1,766 3,128 2,400 1,518 730 644 1,017 1,157

Total 21,519 24,766 26,766 25,907 25,573 25,666 30,036 30,774

The funds made available by the Bank are obtained from savings deposits (MCR 6-4), demand deposits(MCR 6-2), the Program for Generating Employment and Income in the Rural Area (Proger Rural), theNational Program for Strengthening Family Farming, of the Ministry of Agrarian Development (Pronaf),the Constitutional Fund for Developing the Center-West (FCO) and the National Bank for Economic andSocial Development (BNDES), amongst others.

0

20

40

60

80

100

120

140

160

90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05*0

50

100

150

200

250

300

Production (million ton.) Area (million ha) Productivity (ton./ha) - %


Table 30. Agribusiness Loan Portfolio by Product

R$ milhõesJun/03 Sep/03 Dec/03 Mar/04 Jun/04 Sep/04 Dec/04 Mar/05

Agricultural and Livestock Costs 6,803 8,166 9,053 8,934 8,329 8,409 10,773 11,020Pronaf/Proger Rural 4,110 4,044 5,283 5,665 6,099 5,937 7,079 7,351FCO Rural 2,608 2,711 2,740 2,862 2,908 2,912 2,986 3,093BNDES/Finame Rural 1,848 2,001 2,145 2,486 2,774 3,064 3,362 3,618Others 6,150 7,844 7,546 5,960 5,463 5,345 5,836 5,692

Total 21,519 24,766 26,766 25,907 25,573 25,666 30,036 30,774

Proger Rural is a product that offers fixed credit for crop and livestock costs, as well as financial supportfor fixed and semi-fixed investments, and the National Program for Strengthening Family Farming –Pronaf aims at financing the costs of the farming business. These two products added up to R$ 7.351million at the end of March 2005, growing 29.8% in relation to the same period of the previous year and3.8% in relation to December 2004.

FCO Rural offers a financial supplement for working capital and costs for the rural producer of theCenter-West region. Transactions in the product grew 8.1% in the last 12 months and 3.6% in the firstthree months of the year, totaling R$ 3.093 million in March 2005.

The BNDES / Finame Rural products have the objective of financing investments in the modernization ofmachines and equipment intended for rural production. Transactions with these totaled R$ 3.618 millionat the end of March 2004, growing 45.5% in relation to March 2004 and 7.6% in relation to December2004.

Main Products of the Agribusiness Loan PortfolioR$ million

Figure 17. Main Products of the Agribusiness Loan Portfolio

The following table shows the balance of the loan transactions intended for agribusiness by itemfinanced.

Pronaf/Proger Rural

4,110 4,0445,283 5,665 6,099 5,937

7,079 7,351


BNDES/Finame Rural

1,848 2,001 2,1452,486

2,7743,064

3,3623,618



Table 31. Agribusiness Loan Portfolio by Product

R$ millionChg. %

Items Financed Mar/04 Share % Dec/04 Share % Mar/05 Share % on Dec/04Soybeans 3,821 14.7 4,942 16.5 5,011 16.3 1.4Bovinocultura 2,931 11.3 3,187 10.6 3,392 11.0 6.4Machinery and Equipment 2,276 8.8 2,849 9.5 2,964 9.6 4.0Corn 2,456 9.5 2,621 8.7 2,709 8.8 3.4Improvement of Prod. for Livestock Produc. 1,401 5.4 1,545 5.1 1,614 5.2 4.5Improvement of Prod. for Farm Produc. 1,213 4.7 1,395 4.6 1,486 4.8 6.5Cotton 758 2.9 1,039 3.5 966 3.1 (7.0)Rice 875 3.4 1,028 3.4 1,075 3.5 4.6Fertilizers 656 2.5 879 2.9 1,028 3.3 17.0Coffee 604 2.3 746 2.5 579 1.9 (22.4)Wheat 296 1.1 728 2.4 482 1.6 (33.8)Sugar Cane 282 1.1 357 1.2 382 1.2 7.0Manioc 248 1.0 352 1.2 382 1.2 8.5Orange 127 0.5 205 0.7 197 0.6 (3.9)Poultry 173 0.7 199 0.7 215 0.7 8.0Tabbaco 397 1.5 182 0.6 185 0.6 1.6Cocoa 166 0.6 163 0.5 171 0.6 4.9Beans 143 0.6 148 0.5 139 0.5 (6.1)Pork 117 0.5 106 0.4 117 0.4 10.4Others 6,967 26.9 7,365 24.5 7,680 25.0 4.3Total 25,907 100.0 30,036 100.0 30,774 100.0 2.5

In its work of financing Brazilian agribusiness, Banco do Brasil reaches all the segments, from the smallproducer to the large agro industrial companies. The table below reveals this work, showing that whilefinancing mini and small producers accounts for 83.7% of the total of contracts, the transactions with theother agents show a 70.1% share of the amount financed.

Table 32. Funds Released for the 04/05 Crop by Segment

R$ millionQty. Contracts Qty. Contracts - % Amount Contracted Amount Contracted - %

Mini 1,786,574 71.7 6,344,783 20.2Small 299,281 12.0 3,027,404 9.7Cooperatives 404,535 16.2 20,528,354 65.5Others 1,621 0.1 1,443,690 4.6

Total 2,492,011 100.0 31,344,231 100.0

Next, the Agribusiness Loan Portfolio by Source of Funds.


Agribusiness Loan Portfolio by Funding Sources

Figure 18. Agribusiness Loan Portfolio by Funding Sources

The investments made with savings deposits, the main funding line of the portfolio, grew 4.0% in the last12 months, reaching a balance of R$9.307 million in March 2005.

Between March 2004 and March 2005, the funds available through MCR 6.2, demand deposits, grewfrom R$ 4,462 million to R$ 5,653 million, a balanced 26.7 higher.

The Bank also uses funds from Ouro savings accounts and the FAT (Worker’s Support Fund) in ruralfinancings at reduced interest rates. To make this kind of intermediation viable, the National Treasurypays the Bank, in the form of equalization, the difference between the funding, administrative and taxcosts and the amount charged to the taker of the loans.

The figure that follows shows a history of the receipt of revenues by way of interest rate equalization.

Equalization RevenuesR$ million

Figure 19. Equalization Revenues

An increase can be seen in the installments paid to the Bank by way of equalization, in relation to 1Q04,and a decrease in relation to 4Q04. The movement observed between 4Q04 and 1Q05 is due mainly toseasonal effect of investment operations, which are received in the second and fourth quarter of eachyear.

172 169137

67

132

60

144

71

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

0,00

4

2,6

94

3,3

97

2,4

27

8,9

50

4,4

62

4,1

92

3,1

42

3,4

56

2,3

21

8,8

27

3,6

36

4,0

10

3,3

90

3,5

05

2,7

22

9,1

39

2,9

00

5,0

49 3,6

73

3,7

29

2,6

45

9,3

53

5,5

88

5,2

89 3,

904

3,8

94

2,7

27

9,3

07

5,6

53

Demand Deposits Savings Deposits FAT FCO BNDES/Finame Other

Mar/04 Jun/04 Sep/04 Dec/04 Mar/05


Besides the mechanisms for risk management applicable to all the Bank’s loan portfolios, the Bankapplies, in the management of the agribusiness portfolio, specific methods for identifying risks andminimizing losses.To define the maximum level of exposure with each customer, the Bank has developed a credit limitsystem specific for the rural producer - ANC Rural Producer – that takes into account behavioral dataand the technical risk of the business.

Table 33. Variables Associates to Technical Risk System for Agribusiness – RTA

Productivity Cost PriceSoil • •Climate • • •Roads • •Warehouse •Technology • •Distance • •Market •

For measuring the technical risk of the business of each customer, BB’s system is unique, made up of amicro regional database including historical series of product prices, productivities observed in thecrops, and modal production costs. There are 85 thousand production spreadsheets that represent thevarious kinds of productive systems that there are in the country.

Besides improving the quality of the assets, this database makes it viable to automate the creditprocess. A system like this, associated with the observance of the parameters of the FederalGovernment’s Agricultural Zoning, has also created the conditions for implementing a new system forrural insurance, the Farm Gold Insurance. Launched in September 2000, this instrument protects thefarmer against losses from climatic hazards.


6.5.4 Foreign Trade Portfolio

The balance of Banco do Brasil’s Foreign Trade Loan Portfolio ended March 2005 with R$ 9,179 million,an increase of 11.7% in relation to March 2004 and 14.9% in relation to December 2004. Banco doBrasil offers several tools to support foreign trade, such as training, consultancies that accompany, stepby step, all the stages of an international transaction, the Foreign Trade Counter, a virtual environmentfor trade between Brazilian companies and the global market, amongst others.

This portfolio’s main product is ACC/ACE, which reached a balance of R$ 7,756 million at the end ofMarch 2005, showing growth of 11.8% in relation to March 2004 and 21.3% over December 2004. Thisamount corresponds to 84.5% of the balance of the Foreign Trade Loan Portfolio.

Table 34. Foreign Trade Loan Portfolio


ACC/ACE 6,800 6,729 6,464 6,937 7,117 7,056 6,393 7,756Import Finance 646 695 735 650 947 909 896 970BNDES Exim - - - 625 740 537 699 450Others 117 119 116 4 6 6 5 3

Total 7,563 7,543 7,315 8,217 8,810 8,507 7,992 9,179

Main Products of the Foreign Loan PortfolioR$ million

Figure 20. Main Products of the Foreign Loan Portfolio

The table below shows details of the ACC/ACE transactions:

Table 35. ACC/ACE Average Volume per Contract

ACC/ACE 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05Volume Contractad (US$ million) 1,857 2,062 2,038 2,381 2,284 1,990 2,359 3,057Quantity of Contracts 6,785 7,538 7,427 7,263 7,809 7,511 7,772 8,085Average Volume per Contract (US$ thousandl) 274 273 274 328 292 265 303 378Market share - % 31.8 35.8 32.4 36.2 33.1 30.7 33.5 39.4** Market share calculated in base of prelimirary information from Central Bank.

ACC/ACE

6,800 6,729 6,4646,937 7,117 7,056

6,393

7,756


Import Finance

646 695 735 650947 909 896 970



6.5.5 Concentration of the Portfolio

BB’s business loan portfolio in Brazil showed a concentration of 31.8% in the transactions with the 100largest borrowers at March 2005, compared to 33.0% in March 2004.

Table 36. Concentration of the Loan Portfolio on the 100 Largest Borrowers

%Period 1st Customer 2nd to 20th 21st to 100th 100th LargestDec/03 1.2 12.4 19.0 32.6Mar/04 1.8 13.3 18.0 33.0Jun/04 2.1 14.1 17.7 33.9Sep/04 1.5 14.2 17.9 33.5Dec/04 1.3 12.4 16.7 30.4Mar/05 1.2 12.7 17.9 31.8

The table below shows the distribution of the business loan portfolio in Brazil by macro-sector of theeconomy.

Table 37. Concentration of the Loan Portfolio by Macro-sector

R$ millionChg. %

Macro-sector Mar/04 Share % Dec/04 Share % Mar/05 Share % on Mar/04 on Dec/04Services 6,552 15.3 7,597 15.7 7,782 14.7 18.8 2.4Foodstuffs of Vegetable Origin 4,259 10.0 4,753 9.8 5,225 9.9 22.7 9.9Metalworking and Steel 4,006 9.4 4,003 8.3 4,408 8.3 10.0 10.1Automotive 2,700 6.3 3,417 7.1 3,936 7.4 45.8 15.2Oil 2,730 6.4 3,351 6.9 3,427 6.5 25.5 2.3Foodstuffs of Animal Origin 1,786 4.2 2,188 4.5 2,579 4.9 44.4 17.9Electrical and Electronic Goods 1,655 3.9 2,336 4.8 2,578 4.9 55.8 10.4Agricultural Consumables 2,589 6.1 2,535 5.2 2,572 4.9 (0.6) 1.5Retail Trade 1,910 4.5 2,025 4.2 2,233 4.2 16.9 10.3Textiles and Garments 1,800 4.2 2,024 4.2 2,029 3.8 12.7 0.3Pulp and Paper 2,010 4.7 1,576 3.3 1,926 3.6 (4.2) 22.2Building 1,512 3.5 1,698 3.5 1,831 3.5 21.1 7.8Chemicals 1,404 3.3 1,641 3.4 1,696 3.2 20.8 3.3Electricity 1,192 2.8 1,384 2.9 1,324 2.5 11.1 (4.3)Telecommunications 1,425 3.3 1,310 2.7 1,254 2.4 (12.0) (4.3)Timber and Furniture 972 2.3 1,166 2.4 1,203 2.3 23.7 3.2Transport 802 1.9 1,154 2.4 1,117 2.1 39.2 (3.2)Leather and Shoes 682 1.6 842 1.7 874 1.7 28.2 3.8Wholesale Trade / Sundry Industries 779 1.8 824 1.7 871 1.6 11.9 5.7Beverages 413 1.0 683 1.4 805 1.5 94.9 17.9Other Activities 1,612 3.8 1,852 3.8 3,187 6.0 97.8 72.1

Total 42,792 100.0 48,358 100.0 52,859 100.0 23.5 9.3


6.6 Tax CreditsIn 1Q05, there was a consumption of R$ 440 million of the stock of Tax Credits, representing a 5.2%reduction in relation to 4Q04. In relation to the same period of the previous year, this consumption wasR$ 1,160 million, representing a reduction of 12.7%.

It is worth pointing out that 57.7% of the active tax credits derive from temporary differences, arisingfrom the tax legislation not permitting the inclusion of given revenues and expenses in the basis forcalculation at the moment they occur (accrual basis), but at the moment they are settled financially (cashbasis). If we disregard these tax credits, the consumption in the period came to 25.7% in relation toMarch 2004, and 11.6% in relation to December 2004. The tax credits arising from tax losses and CSLLto be offset reduced their share in the total of tax credits, going down from 49.4% in 1Q04 to 41.9% in1Q05.

Considering that tax credit require an allocation of capital three times higher than the majority of assets– a risk weighting factor of 300% - for the purposes of determining the Basel ratio, the reduction to beseen in 1Q05 released capital that allows the leverage of up to R$ 1,320 million in 100% risk weightedassets. In the last 12 months this effect would be of R$ 3,480 million.

Breakdown of Tax CreditR$ million

Figure 21. Breakdown of Tax Credit

According to the latest technical study on the consumption of tax credits, the timetable for usage for thenext few periods provides for a consumption of R$ 2,430,0 million in 2005, R$ 2,106,0 million in 2006,R$ 1,959,0 million in 2007, R$ 646,0 million in 2008, R$ 700,0 million in 2009, and a remaining balanceof R$ 403,0 million after 2009. The balance remaining after 5 years is subject to the allocation of capitalrequired by CMN Resolution 3059/02, a subject addressed in the chapter dedicated to an analysis of theBasel Ratio.

4,571 4,573 4,573 4,567 4,571 4,571 4,574 4,578

2,543 2,196 1,903 1,696

3,145 3,014 2,884 2,810 2,765 2,638 2,601 2,484

114 47 43 58 65

1,577 1,231 1,172 851

4943

1747,956

8,3968,5058,9719,1169,4069,897 10,927

38.7 41.936.4 36.1

20.2

37.7

17.3

31.7


Non-Tem poral Dif ferences Fiscal Loss and Negat ive BaseSocial Cont r ibu t ion t o be Market t o m ark and Tax Cred it AbroadCom pensat ed Tax Cred it Incom e t ax/ Incom e Before Taxes


6.7 Analysis of LiabilitiesBanco do Brasil has succeeded in maintaining its position of leadership in the Brazilian banking industryby means of a strategy for organic growth, without carrying out mergers or acquisitions.

The Bank continues working on the expansion of the customer base, improving relationships,strengthening ties with the customers, and expanding business. The funding obtained by the Bank bymeans of deposits (demand deposits, savings and time deposits) has grown 9.2% over the balance ofMarch 2004. Demand deposits showed a decrease of 3.2%, to reach R$ 29,340 million, savingsdeposits grew 13.9%, to a total of R$ 31,418 million, and time deposits showed an increase of 14.5%, toreach R$ 52,769 million in March 2005.

In relation to March 2004, other liabilities showed a decrease of 16,0%, which was due, in the main, tothe reduction in customers’ foreign currency sale transactions for future delivery, as explained in theAnalysis of Liquidity, directly affecting the foreign exchange portfolio.

Table 38. Liabilities


Deposits 99,881 103,071 110,014 110,219 115,795 115,079 115,532 120,096 Demand Deposits 21,170 20,498 27,140 30,306 29,425 30,191 28,991 29,340 Savings Deposits 26,427 26,578 27,425 27,590 28,939 29,915 31,069 31,418 Interbank Deposits 5,437 6,438 7,275 6,219 7,684 5,530 5,768 6,489 Time Deposits 46,847 49,558 48,173 46,104 49,747 49,444 49,665 52,769 Investment Deposits * - - - - - - 38 81Money Market Funding 41,468 46,478 40,063 40,343 37,132 42,003 44,527 43,086Foreign Borrowing 9,787 9,126 11,620 12,048 15,270 16,793 17,343 18,054Domestic Onlending 6,134 6,311 7,458 8,003 8,448 8,778 10,611 10,629Other Liabilities 37,620 38,461 48,817 47,807 37,866 39,175 36,895 38,888Shareholders’ Equity 10,872 11,687 12,172 12,686 12,864 13,771 14,106 14,933

Total Liabilities 205,762 215,134 230,144 231,107 227,374 235,599 239,014 245,685* Investment Account Deposits.

The figure that follows shows the changes in the percentage share of the main liabilities in such a wayas to facilitate an understanding of the composition of the sources of financing.


Changes in the Share of the Main Liabilities - %

Figure 22. Changes in the Liabilities

10.3 9.5 11.8 13.1 12.9 12,8 12,1 11,9


Demand Deposits

12.8 12.4 11.9 11.912.7 12.7 13.0 12.8


Saving Deposits

22.8 23.0 20.9 19.9 21.9 21.0 20.8 21.5


Time Deposits

20.2 21.6 17.4 17.5 16.3 17.8 18.6 17.5


Money MarketFunding

4.8 4.2 5.0 5.2 6.7 7.1 7.3 7.3


ForeignBorrowing

3.0 2.9 3.2 3.5 3.7 3.7 4.4 4.3


DomesticOnlending

20.9 20.9 24.4 23.4 20.0 19.0 17.9 18.5


Other Liabilities

5.3 5.4 5.3 5.5 5.7 5.8 5.9 6.1


Shareholders’ Equity


6.9 Deposits and Money Market FundingBanco do Brasil’s Deposits and Money Market Borrowing amounted to R$ 163,182 million in March2005, an 8.4% increase in relation to March 2004. In absolute numbers, the main items of funding weretime deposits, totaling R$ 52,769 million, and money market borrowing, amounting to R$ 43,086 million.

Deposits and Market FundingR$ bilhões

Figure 23. Deposits and Market Funding

BB’s position of leadership in deposits and money market borrowing shows the trust that Brazilians havein the institution, which, in December 2004, accounted for 20.9% of the funding of the Brazilian bankingindustry.

At the end of December 2004, the Bank was the leader in demand deposits, with a market share of33.1%, and in time deposits, with 18.9%, besides a prominent position in savings, with a 19.5% share.

6.2

27.

6

30.

3

150

.6

40.

3

46.

1

5.8

31.

1

29.

0

160

.1

44.

5

49.

7

6.5

31.

4

29.

3

163

.2

43.

1

52.

8

Demand Deposits Savings Deposits Interbank Deposits Time Deposits Money MarketBorrow ing

Total

Mar/04 Dec/04 Mar/05


Market Share1 of BB FundingR$ million

Figure 24. Market Share of BB Funding

1 Information about the market share within the banking industry if from Central Bank. The latest available position at the time ofpublishing this report was in dec/04.

29,

340

28,

991

30,

191

29,

425

30,

306

27,

140

20,

498

21,

170

33.1 36.5 36.3 36.7 32.9 32.3 32.4


Demand Deposits Market Share - %

31,

418

31,

069

29,

915

28,

939

27,

590

27,

425

26,

578

26,

427

19.5 19.7 19.4 19.2 19.1 19.3 19.3


Savings Deposits Market Share - %

52,

769

49,

665

49,

444

49,

747

46,

104

48,

173

49,

558

46,

847

18.9 20.2 20.4

17.0 19.7 20.0 19.9


Time Deposits Market Share - %

163

,182

160

,059

157

,082

152

,927

150

,562

141

,348

150

,077

149

,549

20.920.9 21.1 21.6 21.7 23.1 23.0


Money Market Borrow ing Market Share - %


6.9.1 Foreing Borrowing

Its foreign borrowing demonstrates that Banco do Brasil’s credibility goes beyond the national frontiers,making BB a very attractive investment option for international investors.

Using innovative forms of funding, such as the securitization of the flow of financial remittances fromBrazilian workers in Japan (dekasseguis) and the securitization of the flow of receivables on Visanetcredit cards, BB has sought to reduce costs and lengthen the terms of funding in the capital market,besides expanding the base of purchasers of its paper, attracting foreign institutional investors.

In September 2004, BB issued US$ 300 million in subordinated debt, at a term of 10 years and a half-yearly coupon at a rate of 8.5% a year. The operation also enjoys protection against politicalconvertibility and transfer risks, in the form of a letter of credit.

The amount borrowed will be used to finance medium and long-term loans, and has been classified astier II capital, which has been reflected positively in the Basel Ratio and in the Bank’s capacity forleverage, as explained in the Basel Ratio chapter.

In December 2004, in its GMTN Program, BB borrowed R$ 200.0 million (equivalent to US$ 72.7million), by means of zero coupon bonds with a three year term. This borrowing was the first carried outby BB in Reais in the international capital market. The interest rate paid by BB in the operation was, upto that moment, the lowest offered by a Brazilian bank in this currency.

Table 39. Foreign Borrowing

IssueDate

Volume inUS$ million

Term inyears Cupom (%) Interest

Interval Issue priceReturn for

theInvestor

(%)

Premiumover

TreasuryRating Program

06.09.97 200 10 9.375 Half-yearly 99.2190 9.500 287 Ba3 GMTN08.10.01 300 5 7.875 Quarterly 99.6850 7.990 375 BBB Dekasseguis12.27.01 450 7 7.890 Quarterly 100.0000 7.890 325 BBB/Baa1 MT 10007.03.02 300 7 L3M+0.60 Quarterly 100.0000 5.013 *266 AAA/Aaa MT 10009.11.02 40 7 7.890 Quarterly 100.0000 7.890 489 BBB/Baa1 MT 10003.17.03 120 7 7.260 Quarterly 100.0000 7.260 450 BBB/Baa1 MT 10004.25.03 75 2 6.375 Half-yearly 99.9537 6.400 475 B+ GMTN07.10.03 178 8 5.911 Quarterly 100.0000 5.955 350 BBB+/Baa1 Visanet07.10.03 45 8 4.777 Quarterly 95.0000 5.955 350 BBB+/Baa1 Visanet12.19.03 250 10 6.550 Quarterly 100.0000 6.550 292 BBB/Baa1 MT 10009.20.04 300 10 8.500 Half-yearly 99.1740 8.625 447 Baa1 Subor. Debt12.17.04 **73 3 zero-cupom - 62.0385 17.250 ***180 - GMTN* 492 basis points over Libor** amount in US$ equivalent to R$ 200 million, PTAX 2,75080*** preliminary calculation in Reais with swap into US$


6.10 Shareholders’ EquityBanco do Brasil closed 1Q05 with R$ 14,933 million in shareholders’ equity, an amount 17.7% higherthan in the same period of the previous year and 5.9% higher than the amount closed in December2004. The growth of Shareholders’ Equity in the year was mainly due to the incorporation of results.

An analysis of the graph below shows the inversely perfect relation between Brazilian sovereign risk andthe impact of marking to market on shareholders’ equity, indicating that the discount on the securitieshas been reducing because of the greater confidence of the investors in the Brazilian market.

Brazilian Sovereign Risk (points) vs. Marking to Market (R$ million)

Figure 25. Brazilian Sovereign Risk vs. Mark to Market

Table 40. Shareholders’ EquityR$ million

Jun/03 Sep/03 Dec/03 Mar/04 Jun/04 Sep/04 Dec/04 Mar/05Shareholders’ Equity 10,872 11,687 12,172 12,686 12,864 13,771 14,106 14,933 Capital 8,366 8,366 8,366 8,366 8,366 9,857 9,864 9,864 Reserves 2,826 2,826 3,704 3,704 4,674 3,226 4,325 4,325 MtM - Securities and Derivatives (194) (43) 228 127 (51) (17) 43 (95) (Treasury shares) (126) (126) (126) (126) (126) (126) (126) (126) Income accounts - 665 - 616 - 833 - 965

(43)

228127

(51) (17) 43(95)

788695

463557

646

466383

456

(194)


Mark to Market Brazilian Sovereign Risk


6.11 Basel RatioBanco do Brasil closed 1Q05 with total regulatory capital 5.1% lower than that seen in 4Q04 and 18.8%higher than in the same period of the previous year, to reach R$ 21.070 million.

Shareholders’ Equity increased 17.7% in relation to March 2004, because of the generation andincorporation of results. This led to an increase in the capital adequacy ratio from 14.3% to 15.6% in thelast 12 months.

In the quarter, the capital adequacy ratio went up from 15.2% in 4Q04 to 15.6% in 1Q05. This ratio ishigher than the 11% required by the Central Bank and allows BB leverage of R$ 56,645 million in loanassets (60.7% of the loan portfolio).

Table 41. BIS Ratio


APR – Risk Weight Assets 105,974 109,121 120,973 119,691 119,966 121,391 127,179 129,986Required Shareholders’ Equity 12,350 12,705 13,772 13,646 13,929 14,201 14,513 14,839 APR Requirement 11,657 12,003 13,307 13,166 13,196 13,353 13,990 14,298 Swap Requirement 166 173 152 150 152 223 196 190 FX Exposure Requirement - - - - - - - - Interest Rate Exposure Requirement 528 529 313 331 581 625 326 351Referential Shareholders’ Equity 15,479 16,520 17,162 17,740 18,299 20,272 20,050 21,070 Tier I 10,847 11,663 12,147 12,336 12,702 13,609 14,000 14,746 Capital 8,366 8,366 8,366 8,366 8,366 9,857 9,864 9,864 Retained Earnings (Accumulated Losses) - 0 - 0 - 0 - - Capital Reserves 5 5 5 5 5 5 5 5 Revenue Reserves 2,796 2,796 3,674 3,674 4,645 3,195 4,294 4,294 Mark-to-Market – Securities and Derivatives (194) (43) 228 127 (51) (17) 43 (95) Treasury Shares (126) (126) (126) (126) (126) (126) (126) (126) Income Accounts - 665 - 616 - 833 - 965 20% Tax Credits Realized After 5 years - - - (326) (137) (137) (80) (161) Tier II 4,632 4,858 5,015 5,405 5,597 6,663 6,051 6,324 Subordinated Debt 4,607 4,833 4,991 5,380 5,573 6,637 6,025 6,298 Revaluation Reserves 25 25 24 24 24 26 26 26Shareholders’ Equity Surplus / Deficit 3,128 3,815 3,391 4,094 4,371 6,070 5,538 6,231Leverage Surplus / Deficit 28,439 34,680 30,825 37,220 39,733 55,185 50,344 56,645

K Coefficient % 13.8 14.3 13.7 14.3 14.5 15.7 15.2 15.6

BIS Ratio - %

Figure 26. BIS Ratio

9.7 10.1 9.7 9.9 10.1 10.5 10.6 10.9

4.1 4.2 4.0 4.4 4.4 5.2 4.6 4.714.3 14.3 14.5 15.7 15.615.2

13.8 13.7


Tier I Tier II

11%


CMN Resolution 3059 of 2002 determined, as from 01.01.2004, an additional allocation of capital for thestock of tax credits that exceed a 5 year consumption period from the date of the Balance Sheet.According to the instruction, 40% of the remaining balance will be deducted from Tier I in 2005, 60% in2006, and so on, until it arrives at 100% in 2008.

In accordance with technical studies of tax credit consumption, as mentioned in the notes to the financialstatements (note 18), at 03.31.2005, the amount that exceeds 5 years was R$ 403.0 million.Accordingly, the effect on tier I capital at that date was a reduction of R$ 161 million.

Table 42. Changes in Composition of BIS Ratio

R$ millionReferential

Shareholders’Equity

RequiredShareholders’

EquityEfect in

Basel RatioEfect in

Laverage

Net Income deducted of Interest on Own Capital 2,420 - 1.8 21,997Increase of Subordinated Debt 918 - 0.7 8,346Increase in Capital /Reserves 214 - 0.2 1,942Other Changes in Referential Shareholders’ Equity (221) - (0.2) (2,013)Increase of Refer. Shareholders’ Eq. Requir.on Risk Weight Assets - 1,132 (1.1) (10,295)Increase of Refer. Shareholders’ Equity Requir. on Swap - 40 (0.0) (366)Increase of Refer. Shareholders’ Eq. Requir. on Int. Rate Exp. - 20 (0.0) (186)

Changes 3,330 1,193 1.3 19,426

Balance at Mar/04 17,740 13,646 14.3 37,220Balance at Mar/05 21,070 14,839 15.6 56,645

Net Annual Changes 3,330 1,193 1.3 19,426

From the above table, it is possible to see that the determinant factors for an increase in 130 basispoints in the capital adequacy ratio, which increased surplus leverage by R$ 19,426 million in the yearwere: the result of the period (which generated an excess leverage of R$ 21,997 million – 180 basispoints) and the increase in the Bank’s subordinated debt (which generated excess leverage of R$ 8,346million – 70 basis points).

These factors were more than sufficient to support the leverage of R$ 1,132 million in the referentialshareholders’ equity requirement on risk weighted assets and the allocation of capital to other risks(swaps and interest rate exposure).


6.12 Fixed Asset RatioBB’s fixed asset ratio has been showing a reduction due to the increase in the Referential Shareholders’Equity, via retained earnings and an increase in subordinated debt. In March 2005, there was areduction in 220 basis points in the fixed asset ratio, in relation to the same period of last year.Compared with December 2004, there was a reduction in 200 base points. The reduction in PermanentAssets brought about a decrease in the Fixed Asset Ratio.

With the current level of fixed assets, BB can increase these assets by R$ 6,211 million, without causingany lack of observance of the maximum limit of 50% of the Referential Shareholders’ Equity.

Table 43. Fixed Asset RatioR$ million


Shareholder’s Equity 10,872 11,687 12,172 12,686 12,864 13,771 14,106 14,933 Stock Exchange and Cetip Clearing (2) (2) (2) (2) (2) (2) (2) (2) Subordinated Debt Qualifying as Capital 4,607 4,833 4,991 5,380 5,573 6,637 6,025 6,298 20% Tax Credits Realized After 5 years - - - (326) (137) (137) (80) (161)Referential Shareholders’ Equity (A) 15,476 16,518 17,160 17,738 18,297 20,269 20,048 21,070 Permanent Assets 4,048 4,047 4,513 4,439 4,517 4,585 5,059 4,946 Stock Exchange and Cetip Clearing (2) (2) (2) (2) (2) (2) (2) (2) Leasing Assets (438) (406) (385) (405) (456) (507) (537) (598) Losses with Leasing to be Amortized (5) (5) (7) (8) (10) (12) (15) (9)Total Fixed Assets (B) 3,603 3,634 4,118 4,023 4,049 4,063 4,504 4,324Fixed Asset Ratio (B/A) - % 23.3 22.0 24.0 22.7 22.1 20.0 22.5 20.5Margin (Surplus) - % 4,135 4,625 4,462 4,846 5,100 6,071 5,520 6,211


6.13 Risk ManagementWith the integration of the structure for managing the conglomerate’s market, liquidity, operational andcredit risks, the Risk Management Unit became responsible for the global management of risks. Thisintegration is bringing about, amongst other aspects, greater precision in the measurement of risks anda better allocation of capital, observing the New Basel Accord, by generating an increase in the synergyof processes and of the degree of specialization.

The Global Risk Committee (CGR) is responsible for the integrated management of the Bank’s risk,defining exposure limits, contingency plans and risks measurement models.

The management of market and liquidity risks in Banco do Brasil is orientated by analyses of scenarios,including stress situations.

6.13.1 Market Risk Management

The Value at Risk (V@R) is a measure of maximum expected loss in monetary values, under normalmarket conditions, in a determined time, with a chosen level of probability. At BB, the V@R is measuredby historical simulation methodology, with probability of 95%, for a period of 1 (one) day.

The methodology of historical simulation uses the changes observed in interest rates, market indices,foreign exchange rates, shares and commodities. For the Brazilian market, this model for measuring therisk of instruments and portfolios is the most appropriate, and it undergoes a process of backtesting,which consists of comparing the distribution of the values calculated with the financial results actuallyoccurred.

With a view to determining the sensitiveness of the Bank’s capital to the impacts of extreme marketmovements, stress scenario tests are carried out. These scenarios are based on significant historicalmoments or forecast economic-financial scenarios.

Banco do Brasil adopts a policy of not generating foreign currency exposure that calls for capital tocover it, and it remains within the limit of exposure of 5% in relation to the Referential Shareholders’Equity, as defined in CMN Resolution 2891, of 09.26.2001.

The Central Bank made optional the use of a methodology that takes into consideration exposures inEuro, Dollar, Swiss Franc, Yen, Pound Sterling and Gold as a single currency, incorporating thediversification effect in the calculation of foreign exchange exposure. With the objective of improving themanagement of foreign exchange risk, Banco do Brasil has adopted this methodology.

A management information balance sheet of foreign currency assets and liabilities referenced to theAmerican dollar, with the position at 03.31.05, is shown below; it shows an exposed liability of US$ 177million:


Table 44. Balance Sheet of Foreign Exchange Assets and LiabilitiesMultiple Bank - US$ million

03.31.05ASSETS LIABILITIES

Trade Bills 426 Currency Swap 383U.S. Dollar Spot 44U.S. Dollar Future 16DDI 229Futures 78Foreign Investiment 1,252 Res. 2770 1,678Other Foreign Exchange Assets 53 Debt Assumption 214Total 2,098 Total 2,275FX Exposure 177

The figure that follows shows the behavior of Banco do Brasil’s foreign exchange exposure since March2004, in relation to the Referential Shareholders’ Equity:

Changes in FX Exposure - %

Figure 27. Changes in FX Exposures

The balance sheet by currencies has the objective of showing the volume of foreign currency assets andliabilities in Brazil and abroad.

0.7

2.01.2 1.5

2.1

0.5

1.7

3.2 3.20.5

0.4

1.21.0 1.0

2.4

1.4

2.5

1.71.9

2.5

0.9

2.2

3.7 3.5

0.91.8

0.40.4

0.4

0.4

0.4

0.5

0.5

0.6

0.60.60.5

0.4

0.4

Mar/04 Apr/04 May/04 Jun/04 Jul/04 Aug/04 Sep/04 Oct/04 Nov/04 Dec/04 Jan/05 Feb/05 Mar/05

Exposure % - Currency Basket Exposure % - Other Currencies Exposure % - Total


Table 45. Balance Sheet by Currencies - AssetsR$ million

03.31.05Brazil

DomesticCurrency

ForeignCurrency Total

Abroad Consolidated

Assets 193,752 24,345 218,097 27,588 245,685Current and Long-term Assets 189,035 24,316 213,351 27,389 240,739Available Funds 2,314 11,487 13,801 606 14,408Short-term Interbank Investments 3,920 171 4,091 13,590 17,681Securities 69,195 1,142 70,336 3,753 74,089Interbank Accounts 23,345 1 23,345 3 23,348Intrabank Accounts 140 - 140 - 140Loans and Leasing 67,725 984 68,710 9,189 77,899Other Assets 22,396 10,531 32,927 247 33,174Permanent Assets 4,717 30 4,746 200 4,946 Investments 835 30 864 32 896 Property and Equipment 2,718 - 2,718 168 2,886 Leasing Assets 598 - 598 - 598 Deferred Charges 565 - 565 - 565

Table 46. Balance Sheet by Currencies – LiabilitiesR$ million

03.31.05Brazil

DomesticCurrency

ForeignCurrency Total

Abroad Consolidated

Liabilities and Shareholder’s Equity 194,417 22,552 216,969 28,717 245,685Current and Long-term Liabilities 179,356 22,552 201,907 28,717 230,624Deposits 103,059 1,188 146,132 15,849 120,096 Demand Deposits 27,073 1,187 28,260 1,080 29,340 Savings Deposits 31,418 - 31,418 - 31,418 Interbank Deposits 794 - 794 5,775 6,570 Time Deposits 43,774 1 43,775 8,994 52,769Money Market Borrowing 41,884 - 41,884 1,201 43,086Funds from Acceptances and Securities Placed - - - 852 852Interbank Accounts 1,512 - 1,512 9 1,521Intrabank Accounts 153 1,232 1,385 - 1,385Onlending 10,629 12,189 22,817 5,013 27,831Financial Derivatives 674 - 674 - 674Other Liabilities 21,445 7,943 29,388 5,792 35,180Unearned Income 128 - 128 - 128Shareholders’s Equity 14,933 - 14,933 - 14,933

With the intention of managing exposures and analyzing the possible impacts in various scenarios,Banco do Brasil accompanies a breakdown of assets and liabilities detailed by index.


Balance Sheet by Index2

R$ billion –03.31.05

Figure 28. Balance Sheet by Index

The figure below shows Banco do Brasil’s net mismatch by index (multiple bank view). It can be seenthat BB’s main asset exposure is in fixed interest, R$ 20.4 billion, while the main liability exposure is inIRP/TBF/TR, R$ 21.4 billion.

Mismatch Gaps by Index5

R$ billion – 03.31.05

Figure 29. Mismatch Gaps by Index

For the purposes of managing market risk, BB segregates its commercial and treasury transactions fromits trading transactions, with their own limits and strategies. The segregation aims at affording the Banka conservative stance in market risk management.

2 Multiple Bank

20.418.4

0.3

(7.4)

(13.8)

(21.4)

3.10.4

Fixed CDI/TMS/FACP IGP TJLP US$/Ouro w/o Index Others IRP/TBF/TR

Assets: Tax Credit;Permanent

Assets Liabilities

w/o Index

US$/GoldTJLPIGP

IRP/TBF/TR

CDI/TMS/FACP

Fixed

w/o IndexUS$/Gold

TJLPIGP

IRP/TBF/TR

CDI/TMS/FACP

Fixed

Liabilities: Shareholders.Equity, Adm Prov; Float20.0 33.8

10.718.126.4

26.08.7

8.36.2

3.129.9

51.3

78.0

59.7

60.239.8


Fixed Interest Rate Portfolio

The strategy for risk management of the set of transactions denominated in Reais and remunerated atfixed interest rates, defined by the Global Risk Committee, established a V@R limit for the market tomarket (MtM) portfolio and adjusted cost portfolio.

The MtM portfolio is made up of products registered on the books by market value, except for positionsof the Dealer and Trading portfolios, which have their own strategy. The adjusted cost portfolio, in turn,is made up of products registered on the books by the value of their adjusted cost.

The V@R methodology used in managing and accompanying the limits of these portfolios is the sameas defined by the Brazilian Central Bank, through Circular 2972 of 03.23.2000, that is, a 99% confidencelevel for the period of 10 days and the allocation of the marked-to-market values by standard vertices.

Table 47. Portfolios Indexed to Fixed Interest Rates

R$ thousandFixed Interest Rate Σ VP Vertices V@RMarked-to-Market – MtM Portfolio 3,049,895 12,769Cost Adjusted Portfolio 19,833,940 115,155

Trading Portfolio

For the purposes of management, Banco do Brasil segregates the trading transactions from the others,establishing specific strategies and limits. The diversification effect shows the risk reduction of theportfolio arising from the correlations between the assets that it comprises.

The table below shows the V@R for the domestic trading portfolio by risk factor:

Table 48. Domestic Trading Portfolio

R$ thousandDomestic Trading

Risk Factor MtM Amount V@RFixed Rate 81,654 11Floating Rate 2,329 61Diversification effect - (14)Total 83,983 58

The table below shows the V@R for the International Trading Portfolio by Risk Factor:

Table 49. International Trading Portfolio

US$ thousandInternational Trading

Risk Factor MtM Amount V@RUS Dollar 36,482 137Euro 1,714 20Sterling Pound 325 4Real 162 2Other Currencies 277 1Diversification effect (23)Total 38,960 141

The table below sets out the average, minimum and maximum V@R of the trading portfolios for 2004:

mailto:V@R

mailto:V@R

mailto:V@R


Table 50. Average V@R, Minimum and Maximum

thousandTrading Minimum Average MaximumDomestic (R$) 5 27 134International (US$) 68 108 157


6.13.2 Liquidity Risk Management

Banco do Brasil maintains comfortable liquidity levels, as a result of its broad and diversified depositbase, the quality of its assets, and the rigorous control over the management of liquidity risk.

Liquidity risk management is carried out mainly by the monitoring of the minimum liquidity reserve, witha focus on the short-term liquidity risk, and of the availability of free funds indicator (DRL), associatedwith the medium and long-term liquidity risk, advised monthly to the Global Risk Committee.

The minimum liquidity reserve is the minimum level of cash to be held by the Bank, compatible with thedegree of exposure to risk arising from the characteristics of maturities, indexes and counterparties ofthe assets and liabilities and from the market conditions.

The DRL is an indicator that aims at guaranteeing the equilibrium between the funding and application offunds in the commercial portfolio, used in planning and carrying out the Bank’s budget.

Throughout 1Q05, the liquidity reserve and DRL limits were fully observed, ensuring the propermanagement of the institution’s liquidity risk, as shown in the following figure.

Availability of Free Funds – DRL %

Figure 30. Availability of Free Funds

The liquidity contingency plan is another important instrument in liquidity risk management in Banco doBrasil, in which actions and measures are established, to be adopted should the cash flow forecastindicate liquidity levels lower than the minimum limit defined.

Mar/04 May/04 Jul/04 Sep/04 Nov/04 Jan/05 Mar/05

20%


7 – Analysis of Results7.1 Gross Financial MarginTable 51. Gross Financial Margin

R$ millionVar.%

1Q04 4Q04 1Q05 on 1Q04 on 4Q04Financial Intermediation Income 7,622 7,855 8,191 7.5 4.3 Loans 4,198 4,461 4,546 8.3 1.9 Leasing 19 26 29 50.2 12.9 Securities 2,826 2,922 3,166 12.0 8.3 Financial Derivatives (37) (89) (31) (15.1) (64.9) Foreign Exchange Portfolio 252 329 (50) (119.9) (115.2) Compulsory Investments 307 353 386 25.7 9.4 FX Gain (Loss) on Foreign Investments 18 (202) (40) (321.3) (80.2) Other Op. Inc. of a Fin. Intermed. Nature 38 54 184 379.2 239.6Financial Intermediation Expenses (3,793) (3,769) (4,100) 8.1 8.8 Money Market Funds (3,047) (3,412) (3,729) 22.4 9.3 Borrowing, Assignments and Onlending (745) (357) (371) (50.2) 4.0Gross Financial Margin 3,829 4,086 4,090 6.8 0.1

The Gross Financial Margin represents the result from financial intermediation business, beforeprovisions for credit risks. In 1Q05, the margin remained stable in relation to 4Q04, reaching R$ 4,090million in the period, against R$ 4,086 million in the previous period.

The expansion in the volume of business, with special mention of loans, as well as the increases inSelic, fully annulled the shrinking in the margin caused by the reduction in the spread from financialintermediation in 1Q05. Even with the increase in interest rates, a tightening can be seen in the finalspreads, because of the intense market competition.

In 1Q05, the Gross Financial Margin grew R$ 261 million in relation to the same period of the previousyear, because of the growth of the volume and the spread, which went up from 1.6726% in 1Q04 to1.6938% in 1Q05. This movement was driven mainly by the rise in the average Selic rate. AlthoughVariations can be seen between the items, by virtue of the appreciation of the currency that occurred inthe period, the effect of this appreciation was practically null, because of BB’s low foreign currencyexposure.

The table below demonstrates the formation of the gross financial margin from the changes in thespread and from the growth in the volume of investments (Assets – Permanent Assets)

Table 52. Analysis of Volume and Quartely Spread – 1Q04 and 1Q05R$ million

1Q04 1Q05 Abs. Chg.

Volume: Assets – Permanent Assets * 228,946 241,493 12,546Gross Financial Margin 3,829 4,090 261Spread - % ** 1.67261 1.69384 0.0212Gain/(loss) with volume 4,039 210Gain/(loss) with spread 3,878 49Gain/(loss) with volume and spread 3

* Average Balances** Gross Financial Margin / (Assets – Permanent Assets)


Analysis of Volume and Quarterly Spread – 1Q04 e 1Q05

Figure 31. Analysis of Volume and Quartely Spread – 1Q04 e 1Q05

Table 53. Analysis of Volume and Quartely Spread – 4Q04 e 1Q05R$ million

4Q04 1Q05 Abs. Chg.

Volume: Assets – Permanent Assets * 234,802 241,493 6,691Gross Financial Margin 4,086 4,090 5Spread - % ** 1.74006 1.69384 (0.0462)Gain/(loss) with volume 4,202 116Gain/(loss) with spread 3,977 (109)

Gain/(loss) with volume and spread (3)

* Average Balances** Gross Financial Margin / (Assets – Permanent Assets)

Analysis of Volume and Quarterly Spread – 4Q04 e 1Q05

Figure 32. Analysis of Volume and Quartely Spread – 4Q04 e 1Q05

116

(109) (3)

4,086

Gain/(Loss) in VolumeGain/(Loss) in SpreadGain/(Loss) in Volume and Spread

4Q04 – 1.74006

1Q05 – 1.69384

1Q05 – 241,4934Q04 – 234,802

Volume - R$ million

Spread - %

210

49 3

3,829

1Q05 – 1.69384

1Q04 – 1.67261

1Q05 – 241,4931Q04 – 228,946

Volume - R$ million

Spread - %



7.1.1 Analysis of Uses

Financial Intermediation Income in 1Q05 grew 4.3% in relation to 4Q04 and 7.5% in relation to the sameperiod of the previous year. This behavior led to the increase of the investment rate of FinancialIntermediation Income over Remunerated Assets from 14.0% in 1Q04 to 14.3% in 1Q05. The increasein the rate was caused mainly by the higher Selic rate to be seen in the period.

Table 54. Investment Rate

Average Balances in R$ million 1Q04 4Q04 1Q05

Assets – Permanent Assets 228,946 234,802 241,493Fin. Interm. Income (Reallocated Income Statement) 7,622 7,855 8,191Fin. Interm. Income / (Assets – Permanent Assets) 3.3 3.3 3.4Fin. Interm. Income / (Assets – Permanent Assets) – Ann. 14.0 14.1 14.3

The balance of available funds in foreign currency increased between 1Q04 and 1Q05, due to theincrease in the foreign exchange transactions. However, the effect of this movement was not reflected inincome from available funds in foreign currency, because of the appreciation of the currency thatoccurred in the period. The investment rate in 1Q05 came to 0.70%, against 0.22% in the previous year.

Table 55. Investment Rate on Available Funds in Foreign Currency


Available Funds in Foreign Currency 6,103 10,648 11,664Income from Available Funds in Foreign Currency 11 13 6Annualized Rate - % 0.70 0.48 0.22

The result from securities in 1Q05 totaled R$ 3.166 million, an amount 8.4% higher than that recorded in4Q04 and 12% higher than the same period of the previous year, reflecting the increases in Selic in thelast few months.

Table 56. Investment Rate on Securities and Interbank Investments


Securities + Interbank Investments 98,569 91,346 92,440Securities Income excluding Hedges 2,826 2,922 3,166Annualized Rate - % 12.0 13.4 14.4

The table below shows the sources of revenues from securities. In 1Q05, the accrual of revenues fromthe portfolio showed growth of 12.0% (R$ 3,166 million) in relation to the previous year, basicallybecause of the increase in the average Selic rate (TMS). The result of marking-to-market – MTMproduced a negative effect of R$ 6 million in 1Q05, against a negative effect of R$ 27 million in 1Q04and a negative effect of R$ 4 million in 4Q04.

It is worth pointing out that besides the effect of the fall in the TMS, the result with securities was alsoimpacted with appreciation of the currency in the period, which had a direct impact on the profitability ofthose securities linked to the American Dollar, about 3% of BB’s securities portfolio.


Table 57. Securities Income

R$ millionChg. %

1Q04 4Q04 1Q05 on 1Q04 on 4Q04Securities Income 2,826 2,922 3,166 12.0 8.3 Fixed Income Securities 2,492 2,641 2,866 15.0 8.5 Revaluation – Curve 2,491 2,583 2,873 15.3 11.2 Income from Trading 28 62 (1) - - Marking to Market (27) (4) (6) (78.9) 58.4 Others 334 281 300 (10.2) 6.7

The graph below shows the main indices in BB´s securities portfolio

Securities Portfolio by IndexMultiple Bank –03.31.05

Figure 33. Securities Portfolio by Index

In 1Q05, revenues from loans and leasing reached R$ 4,322 million, an increase of 8.2% in relation tothe previous year and growth of 0.9% in relation to 4Q04. The annualized rates observed went downfrom 24.7% in 1Q04 to 22.8% in 1Q05. The decrease in profitability was due to the gradual movement ofreduction in the final interest rates of loans, because of greater market competition. The growth in thevolume of transactions by 16.5% in the period offset the effect of the fall of profitability on revenues.

Table 58. Investment Rate on Loans and Leasing


Loans + Leasing 70,443 78,293 82,095Loans + Leasing Income 3,994 4,282 4,322Annualized Rate - % 24.7 23.7 22.8

The figure below shows the changes in the spread on credit by portfolio. A greater reduction is to beseen in the spread on the retail portfolio in 1Q05.

80.2%

7.6%

4.1%1.7%

6.5%

TMS Fixed TR Dollar IGP/Others


Spread by Loan Portfolio - %

Source: Management data. Includes: financial revenues, oportunity cost and taxes.Figure 34. Spread by Loan Portfolio

The behavior of the dollar explains the changes in the items below. The relationship of these accountswith exchange rate variation is shown in the following graph.

Table 59. FX Gain (Loss) and Other FX Operations


FX Gain (Loss) on Foreign Investments 18 (202) (40)Other FX Operations 241 317 (56)

FX Gain (Loss) and Other FX Operations

Figure 35. FX Gain (Loss) and Other FX Operations

7.8 7.5 6.7 6.2 5.8

9.4 9.9 9.7 9.5 9.1 8.7 8.3 8.0

5.4 7.05.8

47.0 44.4 45.2 44.5 43.0 40.4 38.1 35.9

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Agribusiness Commercial Retail

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

FX Gain on Foreign Financial Equity

Dollar Variation - %

Other FX Operation


7.1.2 Analysis of Funding

The increase in the Selic rate and the referential rate (TR) rate brought an increase in financialintermediation expenses. The Bank’s total cost of borrowing (intermediation expenses / assets –permanent assets) increased 6.8% in 1Q04 to 7.0% in 1Q05.

Table 60. Funding Cost


Assets – Permanent Assets 228,946 234,802 241,493Financial Intermediation Expenses (3,793) (3,769) (4,100)Finan. Interm. Expenses / (Assets – Permanent Assets) 1.7 1.6 1.7Finan. Interm. Expenses / (Assets – Permanent Assets) – Ann. 6.8 6.6 7.0

In the table below, it is possible to see the effect of the fall in the foreign exchange rate on the expensesof borrowing abroad. The appreciation of the currency observed in the last twelve months caused a fallin these expenses in the period, when compared with the previous period.

Table 61. Cost of Foreign Borrowing


Foreign Borrowing 10,403 16,100 16,877Expenses with Borrowing, Onlending, and Foreign Banks (358) (71) (66)Annualized Rate - % 14.5 1.8 1.6

In 1Q05, we can observe a slight increase in expenses with deposits and money market borrowing, therate for which went up from 8.7% in 4Q04 to 9.4% in the period. This movement is explained basicallyby the growth in interest rates in the last quarter. Analyzing the last 12 months, similar movement is tobe seen. In addition, the referential rate (TR), which indexes a significant part of Banco do Brasil’sfunding, went up from 0.5% to 0.6% a quarter in the same period being compared.


Table 62. Market Funding CostAverage Balances in R$ million

1Q04 4Q04 1Q05

Money Market Borrowing 149.873 159.045 162.228Expenses withd Money Market Borrowing 3 (2,996) (3,365) (3,680)Annualized Rate - % 8.2 8.7 9.4 Savings Deposits 27,618 30,452 31,458 Expenses with Savings Deposits (525) (622) (665) Annualized Rate - % 7.8 8.4 8.7 Interbank Deposits 6,730 5,502 6,621 Expenses with Interbank Deposits (50) (80) (101) Annualized Rate - % 3.0 6.0 6.3 Time Deposits 48,117 50,078 51,596 Expenses with Time Deposits (1,049) (1,113) (1,269) Annualized Rate - % 9.0 9.2 10.2 Money Market Borrowing 39,571 43,694 43,787 Expenses with Money Market Borrowing (1,373) (1,551) (1,645) Annualized Rate - % 14.6 15.0 15.9 Demand Deposits 27,838 29,319 28,764

3 Expenses with Deposits and Money Market Borrowing except Expenses with Foreign Securities, Expenses with FGC on DemandDeposits, and Expenses with Debt Assumption Contracts.


7.1.3 Analysis of Spread

The heating up of the competition in the sector has caused a reduction in the overall spread of BB’sfinancial intermediation, even with the constant improvements in mix, where the share of transactionswith a better risk vs. return ratio have grown. This movement has been occurring, even at moments ofan increase in the basic interest rate of the economy, since the increase in the competition leads to thedevelopment of new lines of credit, cheaper for the end borrower, such as CDC Consignação em Folha.

Changes in Spread- %

Figure 36. Changes in Spread

Table 63. Investment Rate, Funding Cost, and Spread


Assets – Permanent Assets 228,946 234,802 241,493Finan. Interm. Income / (Assets – Permanent Assets) 3.3 3.3 3.4Finan. Interm. Income / (Assets – Permanent Assets) – Ann. 14.0 14.1 14.3Finan. Interm. Expenses / (Assets – Permanent Assets) 1.7 1.6 1.7Finan. Interm. Expenses / (Assets - Permanent Assets) – Ann. 6.8 6.6 7.0GFM / (Assets – Permanent Assets) 1.7 1.7 1.7GFM / (Assets – Permanent Assets) – Annualized 6.9 7.1 6.9

7.3 7.6 7.46.9

7.4 7.1 7.1 6.9

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05


7.1.4 Analytical Spread

Table 64. Analytical Spread – Investment Rates


Remunerated Assets 186,354 193,649 199,964Available Funds in Foreign Currency 6,103 10,648 11,664Income from Available Funds in Foreign Currency 11 13 6Annualized Rate - % 0.7 0.5 0.2Securities + Interbank Investments 98,569 91,346 92,440Securities Income excluding Hedges 2,826 2,922 3,166Annualized Rate - % 12.0 13.4 14.4Loans + Leasing 70,443 78,293 82,095Loans + Leasing Income 3,994 4,282 4,322Annualized Rate - % 24.7 23.7 22.8Remunerated Compulsory Deposit 10,708 12,760 13,129Income from Compulsory Deposits 307 353 386Annualized Rate - % 12.0 11.5 12.3Other Remunerated Assets 532 601 637Other Income with Financial Intermediation Characteristics 37 37 37Annualized Rate - % 30.5 26.9 25.6Tax Credits 9,223 8,333 8,127Other Assets 33,369 32,820 33,401Permanent Assets 4,423 4,776 4,945

TOTAL ASSETS 233,370 239,577 246,437


Table 65. Analytical Spread – Funding Costs


Interest Bearing Liabilities 148,649 164,690 169,839Savings Deposits 27,618 30,452 31,458Expenses with Savings Deposits (525) (622) (665)Annualized Rate - % 7.8 8.4 8.7Interbank Deposits 6,730 5,502 6,621Expenses with Interbank Deposits (50) (80) (101)Annualized Rate - % 3.0 6.0 6.3Time Deposits 48,117 50,078 51,596Expenses with Time Deposits (1,049) (1,113) (1,269)Annualized Rate - % 9.0 9.2 10.2Money Market Borrowing 39,571 43,694 43,787Expenses with Money Market Borrowing (1,373) (1,551) (1,645)Annualized Rate - % 14.6 15.0 15.9Foreign Borrowing 10,403 16,100 16,877Expenses with Foreign Borrowing, Onlending and Banks (358) (71) (66)Annualized Rate - % 14.50 1.78 1.58Onlending 7,840 9,762 10,544Expenses with Onlending (146) (151) (175)Annualized Rate - % 7.64 6.35 6.80Financial and Development Funds + Subordinated Debt 7,022 8,343 8,123Expenses with Financial and Development Funds (241) (134) (130)Annualized Rate - % 14.48 6.60 6.57Foreign Securities 1,348 759 832Expenses with Foreign Securities (26) (15) (21)Annualized Rate - % 7.78 7.88 10.65Other Liabilities 72,238 60,795 62,038 Demand Deposits 27,838 29,319 28,764 Other Liabilities 44,400 31,476 33,273Shareholders’ Equity + Income Accounts 12,483 14,093 14,561

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 233,370 239,577 246,437

Table 66. Reconciliation with the Gross Financial Margin


Financial Intermediation Income 7,622 7,855 8,191Income from Remunerated Assets 7,174 7,607 7,918Income from Financial Derivatives (37) (89) (31)FX Gain (Loss) on Foreign Investments 18 (202) (40)Other FX Operations 241 317 (56)Other Operating Income 2 17 147Recovery of Write-offs 224 206 253Financial Intermediation Expenses (3,793) (3,769) (4,100)Expenses with Remunerated Liabilities (3,767) (3,737) (4,073)Expenses with FGC on Demand Deposits (16) (17) (15)Expenses with Debt Assumption Contracts (10) (15) (12)


Table 67. Main Components of the Spread


Gross Financial Margin 3,829 4,086 4,090Assets – Permanent Assets 228,946 234,802 241,493Remunerated Assets 186,354 193,649 199,964

Table 68. Investment Rates and Funding Costs


Finan. Interm. Income / (Assets – Permanent Assets) 3.3 3.3 3.4Finan. Interm. Income / (Assets – Permanent Assets) – Ann. 14.0 14.1 14.3Finan. Interm. Expenses / (Assets – Permanent Assets) 1.7 1.6 1.7Finan. Interm.. Expenses / (Assets – Permanent Assets) – Ann. 6.8 6.6 7.0GFM / (Assets – Permanent Assets) 1.7 1.7 1.7GFM / (Assets – Permanent Assets) – Annualized 6.9 7.1 6.9Finan. Interm. Income / (Remunerated Assets) 4.1 4.1 4.1Finan. Interm. Income / (Remunerated Assets) – Annualized 17.4 17.2 17.4Finan. Interm. Expenses / (Remunerated Assets) 2.0 1.9 2.1Finan. Interm. Expenses / (Remunerated Assets) – Annualized 8.4 8.0 8.5GFM / (Remunerated Assets) 2.1 2.1 2.0GFM / (Remunerated Assets) – Annualized 8.5 8.7 8.4


7.1.5 Management Analysis of Spread

We carried out a management assessment of the spread in financial intermediation, by means of areconciliation of the management information on the loan portfolio and on deposits and money marketborrowing with the accounting information

The spread was assessed by comparing the gross financial margin of each investment and borrowingproduct with their respective volume. The gross financial margin is determined by taking intoconsideration the opportunity cost of each product. In the case of an investment in credit, for example,the gross financial margin is made up of the financial revenues from the product after deduction of theopportunity costs. In the case of a borrowing, the margin is determined by comparing the financialexpenses with the respective opportunity revenue.

The opportunity costs and revenues of each product are determined in accordance with theircharacteristics. As a general rule, the average Selic rate (TMS) is adopted as a point of reference for theopportunity cost for the greater part of the products of financial intermediation. There are, however,exceptions like, for example, funding with savings, where the opportunity revenue is hybrid, that is, it isremunerated by the TMS on the free portion, by the rural CDI in the case of the portion invested in ruralcredit, and by TR+6% a year, in the case of the portion intended for the compulsory deposit.Accordingly, the gross spread of each product is determined by assessing its actual contribution to theformation of the result.

The table below shows the composition of the average quarterly and annual spread, while it should beobserved that the spread on transactions with individuals – where the risk vs. return ratio is better – hasbeen showing a systematic reduction, because of the downturn in the interest rates, which has beenaccompanied by the growth of agro industrial transactions. In addition, borrowings have also beenshowing a constant downturn, because of the decrease in the TMS, the basic index for calculating theopportunity revenues on funding.

Table 69. Nominal Spread by Transaction

% 1Q04 4Q04 1Q05

Nominal Spread 1.67 1.74 1.69 Loans 3.13 3.05 3.00 Individuals 9.62 8.25 8.23 Businesses 2.09 2.20 2.08 Agribusiness 1.41 1.52 1.67 Other Transactions 0.23 0.36 0.38 Funding 1.07 1.04 1.04 Other 0.94 1.19 0.95

The reduction in average spreads, in the case of the loan portfolio, has been partially offset by theimprovement in the mix, in which transactions with individuals have been increasing their share. Thismovement can be perceived from the behavior of the weighted average spread, which demonstrates thealterations in the mix and in the nominal spreads, as shown in the following tables.

The increase in the spread between TR and TMS has kept the weighted spread on funding more stable.This movement is natural at times of increasing interest rates. The same occurs when there is a fall inthe basic interest rate of the economy, as the TR does not usually accompany this movement, basicallyfor indexing a significant portion of rural and property finance.


Table 70. Compositions of the Transactions

% 1Q04 4Q04 1Q05

Composition (mix) Loans 31.12 32.89 34.43 Individuals 17.89 19.21 18.32 Businesses 43.02 40.94 40.30 Agribusiness 35.50 36.48 38.15 Other Transactions 3.59 3.37 3.23 Funding 38.25 41.90 41.90 Other 30.63 25.21 23.66

In the quarter, the increase in the share of Agribusiness in the mix, combined with the reduction of thefinal interest rates in transactions with individuals and businesses, ended up accentuating the fall of theaverage spreads over the weighted spread of loans.

Table 71. Weighted Spread per Transaction

% 1Q04 4Q04 1Q05

Weighted Spread 1.67 1.74 1.69 Loans 0.97 1.00 1.03 Individuals 0.54 0.52 0.52 Businesses 0.28 0.30 0.29 Agribusiness 0.16 0.18 0.22 Other Transactions 0.00 0.00 0.00 Funding 0.41 0.44 0.44 Other 0.29 0.30 0.23

Table 72. Analysis of Volume and Management Spread (12 months)

Gain/(Loss)

Volume Spread Volume and SpreadTotal

Investments 158 (12) (1) 146Funding 51 61 3 116

Total 210 49 3 261


Analysis of Volume and Spread of Uses and Funding

Figure 37. Analysis of Volume and Spread of Uses and Funding

158

(12) (1)

2,890

1Q05 – 2.16361Q04 – 2.0443

1Q04 – 141,3771Q05 – 140,304

Volume - R$ million

Spread - %Uses

51

61) 3

939

1Q04 – 1.07221Q05 – 1.0425

1Q05 – 101,1881Q04 – 87,569

Volume - R$ million

Spread - %Funding



7.2 Net Financial MarginTable 73. Net Financial Margin

R$ millionChg.%

1Q04 4Q04 1Q05 on 1Q04 on 4Q04Gross Financial Margin 3,829 4,086 4,090 6.8 0.1 Allowance for Loan Losses (901) (868) (1,061) 17.8 22.3Net Financial Margin 2,929 3,218 3,029 3.4 (5.9)

The Net Financial Margin is arrived by deducting expenses with allowances for loan losses from theGross Financial Margin. The 17.8% increase in the allowance for loan losses in March 2005, in relationto the same period of the previous year, has been compatible with the growth of the loan portfolio, whichincreased 17.2% in a 12 month period. And the 22.3% increase in the allowance for loan losses ofMarch 2005, in relation to December 2004, can be explained by the growth of the loan portfolio (5.4%),as well as by increase in risk to be seen in the period.

The expenses with the allowance have represented around 1.1% of the average loan portfolio in eachquarter. When we use the accumulated expense with the allowance in 12 months over the average loanportfolio in the same period, we arrive at a figure of 4.3% in 1Q05, compared to 4.6% in 1Q04, whichreflects stability in the setting up of provisions in relation to the total of the portfolio.

Table 74. Expenses with Allowance for Loan Losses over PortfolioR$ million

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05(A) Allowance for Loan Losses - Quarterly (863) (747) (827) (901) (903) (856) (868) (1,061)(B) Allowance for Loan Losses - 12 Months (3,188) (3,101) (3,072) (3,337) (3,378) (3,487) (3,528) (3,688)(C) Allowance for Loan Losses - 12 Months* (3,188) (3,101) (3,072) (3,600) (3,786) (3,975) (3,831) (3,729)(D) Loan Potfolio 68,662 72,601 77,636 79,647 83,131 84,148 88,554 93,312(E) Average Portfolio – 3 Months 67,125 70,484 76,550 78,823 82,283 82,942 86,839 91,731(F) Average Portfolio – 12 Months 63,572 66,163 69,702 73,245 77,035 80,149 82,722 85,949Expenses over Portfolio (A/E) - % 1.3 1.1 1.1 1.1 1.1 1.0 1.0 1.2Expenses over Portfolio (B/F) - % 5.0 4.7 4.4 4.6 4.4 4.4 4.3 4.3Expenses over Portfolio (C/F) - % 5.0 4.7 4.4 4.9 4.9 5.0 4.0 4.3* With Extraordinary Items

Expenses with Allowance for Loan Losses over Portfolio

Figure 38. Expenses with Allowance for Loan Losses over Portfolio

863747 827 901 903 856 868

1,061

5.0 4.7 4.4

5.0 4.7 4.4 4.9 4.9 5.0 4.3

1.3 1.1 1.1 1.1 1.1 1.0 1.0 1.24.3

4.3

4.44.44.6 4.0

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

(A) Allowance for Loan Losses - Quarterly Expenses over Portfolio (A/E) - %

Expenses over Portfolio (B/F) - % Expenses over Portfolio (C/F) - %


The graph below details the allowance for loan losses, segregating the minimum provisions required byCMN Resolution 2682 from the total booked.

Breakdown of AllowancesR$ million

Figure 39. Breakdown of Allowance

The increase of R$ 10,918 million in BB’s loan portfolio seen over last year, ending up bringing theprofile of this portfolio closer to the risk curve observed in the market. In short, the main variationsoccurred because of the growth of Retail, which has greater risk, and of the alteration in the criterion forassessing certain transactions in the business profile. At the end of December 2004, the credits rankedas AA to C maintained their share at 92.1% of the total of the portfolio, in relation to December 2003.

Table 75. Loan Portfolio by Level of Risk

R$ millionMar/04 Dec/04 Mar/05

Balance Allowance Comp. % Balance Allowance Comp. % Balance Allowance Comp. %BI*

AA 16,771 - 21.1 17,100 - 19.3 17,820 - 19.1 24.1A 22,172 111 27.8 25,153 126 28.4 25,660 128 27.5 36.0B 23,841 238 29.9 27,962 280 31.6 30,446 304 32.6 19.2C 10,762 323 13.5 11,338 340 12.8 11,844 355 12.7 10.5D 2,396 240 3.0 2,494 249 2.8 2,788 279 3.0 4.3E 561 168 0.7 831 249 0.9 834 250 0.9 1.3F 394 197 0.5 499 249 0.6 532 266 0.6 0.8G 375 263 0.5 412 288 0.5 425 297 0.5 0.8H 2,376 2,376 3.0 2,764 2,764 3.1 2,963 2,963 3.2 3.0Total 79,647 3,915 100.0 88,554 4,546 100.0 93,312 4,843 100.0 100.0AA-C 73,545 672 92.3 81,554 746 92.1 85,770 788 91.9 89.8D-H 6,102 3,243 7.7 7,000 3,800 7.9 7,541 4,055 8.1 10.2* Banking Industry - Preliminary data for March/2005

The ratio of the portfolio net of allowances (CLP) over the total portfolio (CT) - (CLP/CT) demonstratesthe overall assessment of the weighted portfolio, in accordance with CMN Resolution 2682. Thefollowing graph shows that Banco do Brasil has maintained a better quality in its loan portfolio than theBrazilian banking industry (BI).

3,549 3,637 3,915 4,128 4,375 4,546

495 558778

973 999 819

4,843

3,374

812

449

4,044 4,1954,693

5,102 5,374 5,365 5,655

3,823


Provision Required Additional Provision Total Provision


CLP/CT BB vs. Banking Industry - %

Figure 40. CLP/CT BB vs. Banking Industry

In March 2005, past due loans accounted for 5.1% of the total of the loan portfolio, while the allowancefor loan losses amounted to 6.1% of the portfolio. This shows that the allowance for loan losses coversthe total balance of the past due loans. Should only the loans past due over 60 days be taken intoconsideration, the allowance would cover 193.1% of these transactions, compared to 183.6% in March2004.

Table 76. Delinquency RatioR$ million

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Loan Portfolio 68,662 72,601 77,636 79,647 83,131 84,148 88,554 93,312Past Due Loans 3,610 3,596 3,656 4,144 4,256 4,703 4,296 4,792Past Due Loans/Loan Portfolio - % 5.3 5.0 4.7 5.2 5.1 5.6 4.9 5.1

Past Due Loans + 15 days 3,497 3,494 3,591 4,026 4,128 4,585 4,178 4,731Past Due Loans + 15 days/Loan Portfolio - % 5.1 4.8 4.6 5.1 5.0 5.4 4.7 5.1

Past Due Loans + 60 days 2,228 2,333 2,347 2,557 2,639 2,726 2,885 2,929Past Due Loans + 60 days/Loan Portfolio - % 3.2 3.2 3.0 3.2 3.2 3.2 3.3 3.1

Write-off 559 534 673 668 660 641 672 771Recovery of Write-offs (207) (287) (371) (224) (315) (278) (206) (253)Net Loss 352 246 302 444 345 364 467 517Net Loss/Loan Portfolio - % annualized 2.1 1.4 1.6 2.2 1.7 1.7 2.1 2.2

Allowance 3,823 4,044 4,195 4,693 5,102 5,374 5,365 5,655Allowance/Loan Portfolio - % 5.6 5.6 5.4 5.9 6.1 6.4 6.1 6.1Allowance/Past Due Loans + 15 dias - % 109.3 115.8 116.8 116.6 123.6 117.2 128.4 119.5Allowance/Past Due Loans + 60 dias - % 171.6 173.4 178.8 183.6 193.3 197.1 186.0 193.1

The figure below shows stability in the levels of delinquency in the loan portfolio.

95.1 95.1 95.3 95.1 95.0 94.8 94.9 94.8

92.5 92.7 93.094.0 94.2 94.3 94.4 94.5


BB Banking Industry


Delinquency Ratio - %

Figure 41. Delinquency Ratio

5.35.0

4.75.2 5.1

5.6

4.95.1

5.14.8 4.6

5.1 5.05.4

4.75.1

3.2 3.2 3.0 3.2 3.2 3.2 3.3 3.1


Past-Due Loans/Loan Portfolio

Past-Due Loans + 15 days/Loan Portfolio

Past-Due Loans + 60 days/Loan Portfolio


7.2.1 Retail Loan Portfolio

The retail loan portfolio, which has grown 21.9% in the last 12 months, has shown an increase in risk.The transactions ranked at risk levels AA to C went down from 88.8% to 87.0% (Mar/04 – Mar/05), whilethe transactions ranked between D and H went up from 11.2% in March 2004 to 13.0% in March 2005.

Table 77. Retail Loan Portfolio by Level RiskR$ million

Mar/04 Dec/04 Mar/05Balance Allowance Comp. % Balance Allowance Comp. % Balance Allowance Comp. %

AA 2,057 - 8.7 2,580 - 9.4 2,573 - 8.9A 3,610 18 15.3 4,624 23 16.8 4,126 21 14.3B 10,075 101 42.6 11,164 112 40.6 12,635 126 43.8C 5,252 158 22.2 5,557 167 20.2 5,745 172 19.9D 503 50 2.1 825 83 3.0 977 98 3.4E 331 99 1.4 485 146 1.8 465 140 1.6F 260 130 1.1 344 172 1.3 316 158 1.1G 227 159 1.0 277 194 1.0 279 195 1.0H 1,336 1,336 5.6 1,644 1,644 6.0 1,719 1,719 6.0

Total 23,653 2,051 100.0 27,501 2,540 100.0 28,835 2,629 100.0

AA-C 20,995 276 88.8 23,925 301 87.0 25,079 319 87.0D-H 2,658 1,775 11.2 3,576 2,238 13.0 3,756 2,310 13.0

The following table details the movement in allowances for loan losses in the retail portfolio. Retailallowance for loan losses increased mainly because of the worsening of risk, reinforced by theimplementation of the methodology mentioned above.

Table 78. Changes in the Allowance - RetailR$ million

1Q04 2Q04 3Q04 4Q04 1Q05**

Retail Loan Portfolio 17,798 19,086 20,227 20,416 28,835

Initial Allowance 1,615 1,858 2,015 2,209 2,319

1 - Risk Migration 501 514 451 422 520a) Risk Deterioration 743 713 750 806 878b) Risk Improvement (242) (199) (300) (385) (358)2 – New Transactions 139 180 216 208 2743 – Write-offs (363) (414) (407) (433) (593)

Total (1 + 2 + 3): 277 279 259 196 201

Other Impacts* (34) (123) (65) (86) 109

Final Allowance 1,858 2,015 2,209 2,319 2,629

Allowance Required by CMN Resolution 2682 1,858 2,014 2,209 2,319 2,629*Amortization, settlement, installments, and charges.


7.2.2 Commercial Loan Portfolio

The 27.6% growth of the commercial portfolio was accompanied by an improvement in risk (Mar04 –Mar/05)). At the end of March 2005, the levels of risk AA to C now comprised 94.8% of the total of theportfolio, compared to 91.7% at the end of March 2004. Credits rated D to H decreased from 8.3% to5.2% in the same period.

Table 79. Commercial Loan Portfolio by Level RiskR$ million


AA 2,564 - 25.0 2,989 - 24.5 2,741 - 20.9A 3,133 16 30.6 4,181 21 34.2 4,874 24 37.2B 3,201 32 31.2 3,736 37 30.6 4,137 41 31.6C 506 15 4.9 571 17 4.7 661 20 5.1D 638 64 6.2 512 51 4.2 484 48 3.7E 63 19 0.6 59 18 0.5 67 20 0.5F 19 9 0.2 59 30 0.5 55 28 0.4G 13 9 0.1 12 8 0.1 8 6 0.1H 118 118 1.1 102 102 0.8 62 62 0.5

Total 10,254 282 100.0 12,221 284 100.0 13,090 250 100.0

AA-C 9,405 63 91.7 11,477 75 93.9 12,413 86 94.8D-H 850 219 8.3 744 209 6.1 677 164 5.2

The table of changes in the allowance shows an improvement in risk. The increase in the allowance atthe end of March 2005 is explained by the contracting of new transactions

Table 80. Changes in the Allowance – CommercialR$ million

1Q04 2Q04 3Q04 4Q04 1Q05**

Commercial Loan Portfolio 16,110 16,957 18,046 19,306 13,090

Initial Allowance 458 475 498 514 505

1 - Risk Migration (31) 20 58 (12) (10)a) Risk Deterioration 160 126 186 142 56b) Risk Improvement (191) (106) (128) (154) (66)2 – New Transactions 157 133 119 120 543 – Write-offs (82) (85) (120) (81) (62)

Total (1 + 2 + 3): 44 68 56 27 (17)

Other Impacts* (28) (45) (41) (36) (239)

Final Allowance 475 498 514 505 250

Allowance Required by CMN Resolution 2682 475 498 514 505 250*Amortization, settlement, installments, and charges.


7.2.3 Agribusiness Loan Portfolio

The quality of the agribusiness loan portfolio shows the efficiency of BB’s specialized mechanisms forgranting credit to this segment. The 18.8% growth (Mar/04 – Mar/05) in this portfolio was accompaniedby a slight deterioration in the ranking of the transactions at levels of risk AA to C, made up 95.6% of thetotal of the portfolio in March 2005, compared with 96.4% in March 2004.

In spite of the increase in the level of risk in the agribusiness portfolio, negative impacts on BB’s resultsare not expected, nor any increase in nonperformance in this portfolio, since measures authorized bythe Federal Government have been implemented, with a view to alleviate the effects of the drought inthe states of São Paulo and Mato Grosso do Sul.

Table 81. Agribusiness Loan Portfolio by Level RiskR$ million


AA 5,279 - 20.4 5,128 - 17.1 5,267 - 17.1A 9,750 49 37.6 10,180 51 33.9 10,251 51 33.3B 6,712 67 25.9 10,131 101 33.7 10,264 103 33.4C 3,237 97 12.5 3,500 105 11.7 3,642 109 11.8D 511 51 2.0 597 60 2.0 737 74 2.4E 61 18 0.2 108 32 0.4 111 33 0.4F 56 28 0.2 52 26 0.2 93 46 0.3G 63 44 0.2 85 59 0.3 101 71 0.3H 238 238 0.9 256 256 0.9 308 308 1.0

Total 25,907 593 100.0 30,036 691 100.0 30,774 795 100.0

AA-C 24,978 213 96.4 28,939 257 96.3 29,425 263 95.6D-H 929 380 3.6 1,098 433 3.7 1,350 532 4.4

An analysis of the following table shows that, despite the reinforcement in the allowance for the portfolio,arising from the new methodology for rating transactions below R$50 thousand, there has been asignificant improvement in the risks on rural loans. The net financial effect of this movement is reflectedpositively in the portfolio’s risk migration.

Table 82. Changes in the Allowance – AgribusinessR$ million

1Q04 2Q04 3Q04 4Q04 1Q05

Agribusiness Loan Portfolio 25,907 25,573 25,666 30,036 30,774


1 - Risk Migration 68 (19) (100) (52) 74a) Risk Deterioration 233 246 203 241 278b) Risk Improvement (166) (265) (303) (293) (204)2 – New Transactions 110 121 183 194 843 – Write-offs (34) (46) (60) (52) (53)

Total (1 + 2 + 3): 143 56 23 91 104

Other Impacts* (43) (23) (34) (15) 0


Allowance Required by CMN Resolution 2682 593 625 615 691 795* Amortization, settlement, installments, and charges.


7.2.4 Foreign Trade Loan Portfolio

The foreign trade finance portfolio recorded an increase of 11.7% (Mar/04 – Mar/05) accompanied bystability in the quality of these transactions. Transactions rated at levels of risk AA to C went down from97.5% in March 2004 to 97.3% in March 2005. Transactions rated between D and H went up from 2.5%to 2.7% (Mar/04 – Mar/05).

Table 83. Foreign Trade Loan Portfolio by Level RiskR$ million


AA 1,123 - 13.7 1,243 - 15.6 1,621 - 17.7A 3,164 16 38.5 3,244 16 40.6 3,460 17 37.7B 2,356 24 28.7 2,016 20 25.2 2,464 25 26.8C 1,368 41 16.6 1,305 39 16.3 1,383 41 15.1D 160 16 1.9 138 14 1.7 186 19 2.0E 2 1 0.0 5 2 0.1 10 3 0.1F 14 7 0.2 14 7 0.2 31 15 0.3G 3 2 0.0 3 2 0.0 1 0 0.0H 27 27 0.3 26 26 0.3 22 22 0.2

Total 8,217 133 100.0 7,992 125 100.0 9,179 143 100.0

AA-C 8,011 80 97.5 7,807 76 97.7 8,928 83 97.3D-H 205 52 2.5 185 50 2.3 250 59 2.7

The table below shows that the risk improvement of the already contracted loans of the foreign tradefinance portfolio was sufficient to cover the movement of risk deterioration recorded in the portfolio andeven to partly offset the new allowances for credit risk

Table 84. Changes in the Allowance – Foreign TradeR$ million

1Q04 2Q04 3Q04 4Q04 1Q05

Foreign Trade Loan Portfolio 8,217 8,810 8,507 7,992 9,179


1 - Risk Migration (50) (46) (53) (55) (40)a) Risk Deterioration 16 21 17 18 21b) Risk Improvement (66) (66) (70) (73) (61)2 – New Transactions 87 79 70 68 753 – Write-offs (43) (10) (3) (16) (7)

Total (1 + 2 + 3): (7) 23 14 (3) 28

Other Impacts* (2) (23) (15) (13) (10)


Allowance Required by CMN Resolution 2682 133 143 142 125 143* Amortization, settlement, installments, and charges.


7.2.5 Foreign Loan Portfolio

The table below shows the risk profile of BB’s foreign loan portfolio. In March 2004, loans ranked atlevels of risk between AA and C had a 95.0% share of the total, while in March 2005, these levels of riskshowed an even greater concentration, amounting to 97.7% of this portfolio.

Table 85. Foreign Loan Portfolio by RiskR$ million


AA 5,658 - 56.4 5,063 - 56.2 5,522 - 58.4A 2,364 12 23.6 2,795 14 31.0 2,772 14 29.3B 1,275 13 12.7 678 7 7.5 718 7 7.6C 238 7 2.4 243 7 2.7 230 7 2.4D 256 26 2.5 36 4 0.4 38 4 0.4E 6 2 0.1 17 5 0.2 2 1 0.0F 1 1 0.0 - - 0.0 0 0 0.0G 29 20 0.3 11 8 0.1 5 3 0.1H 210 210 2.1 172 172 1.9 171 171 1.8

Total 10,037 290 100.0 9,017 217 100.0 9,457 207 100.0

AA-C 9,535 32 95.0 8,780 28 97.4 9,241 28 97.7D-H 502 258 5.0 237 189 2.6 216 179 2.3


7.3 Contribution MarginTable 86. Contribution Margin

R$ millionChg.%

1Q04 4Q04 1Q05 on 1Q04 on 4Q04Net Financial Margin 2,929 3,218 3,029 3.4 (5.9) Service Revenues 1,553 1,702 1,767 13.8 3.8 Taxes on Revenues (284) (369) (351) 23.4 (5.1)Contribution Margin 4,197 4,551 4,446 5.9 (2.3)

The contribution margin is obtained, starting with the net financial margin, which expresses the Bank’sfinancial performance, adding on the service revenues and deducting the taxes on revenues (Pasep,Cofins and ISSQN).

The contribution margin totaled R$ 4.446 million in 1Q05, growth of 5.9% in relation to the same periodof the previous year. The figure below shows the percentage growth of service revenues of one quarterin relation to the same period of the previous year.

Growth in Service Revenues - Xt/Xt-4 %

Figure 42. Grownth in Service Revenues

The table below shows a detailing of service revenues. Growth of 13.8% is to be seen, in relation to1Q04. The largest revenues in this group are the customer relationship fees and those coming fromasset management, which account for 33.3% and 16.0% of the total of Service Revenues, respectively.

Table 87. Service Revenues

R$ millionChg.%

1Q04 4Q04 1Q05 on 1Q04 on 4Q04Service Revenues 1,553 1,702 1,767 13.8 3.8 Customer Relationship Fees 481 539 589 22.4 9.4 Investment Fund Management Fees 234 248 283 21.0 13.9 Loan Fees 147 153 149 1.9 (2.2) Collections 150 173 168 12.4 (3.1) Funds Transfers 106 116 118 11.3 1.0 Credit Cards 129 156 163 26.7 4.5 Others 307 317 297 (3.4) (6.3)

18.0

26.430.3

27.5

22.3 21.5

12.7 13.8

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05


Breakdown and Performance of Services Revenues - %

Figure 43. Changes in the Composition of Service Revenues

30.0 28.8 29.8 31.0 31.0 30.0 31.6 33.4

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

CustomerRelationship Fees

13.615.1 14.6 15.1 14.7 15.7 14.6 16.0

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Investment FundsManagement Fees

10.2 10.1 9.8 9.4 9.8 9.4 9.0 8.5

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Loans

8.9 9.2 9.5 9.6 9.6 9.2 10.2 9.5

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Collection

7.1 7.3 7.0 6.8 6.3 6.5 6.8 6.7

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

FundsTransfer

8.6 7.7 8.6 8.3 8.6 8.0 9.2 9.2

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

CreditCards

21.7 21.7 20.6 19.8 19.9 21.2 18.6 16.8

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Others


7.3.1 Revenues from Customer Relationship Fees

In 1Q05, revenues from customer relationship fees totaled R$ 589 million, an expansion of 22.4% inrelation to 1Q04 and of 9.4% in relation to 4Q04. The figure below shows that the revenues fromcustomer relationship fees have shown larger growth than the customer base, revealing that the Bankhas managed to tighten its business links with its clientele.

Revenues from Relationship Fees and Customer Base

Figure 44. Revenues from Relationship Fees and Customer Base

BB’s customer base has been growing every year at an accumulated rate of 12.7% and in March 2005boasted 21.2 million customers, a figure 10.1% higher than that of the same period of the previous year,without taking into consideration the more than 1 million customers of Banco Popular do Brasil.

Customer Basein thousands

Figure 45. Customer Base

15,645 15,93717,534 18,046 18,779 19,234 19,720 19,858

1,073 1,112 1,217 1,228 1,274 1,373 1,369 1,361


Individuals Companies

46.4%

26.9%

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Revenues from Customer relationship Fees Customer


7.3.2 Asset Management

In 1Q05, the Bank received R$ 283 million in asset management fees, an amount 21.0% higher thanthat recorded in 1Q04, and 13.9% more than in 4Q04.

BB Administração de Ativos – Distribuidora de Títulos e Valores Mobiliários (BB DTVM), a wholly-ownedsubsidiary of Banco do Brasil, showed growth of 19.2% in the volume of assets under management inthe last 12 months, which totaled R$ 138.2 billion. This volume confirms BB’s leadership as the largestasset manager in the country, with a 20.8% market share, according to Anbid’s ranking.

BB’s strong work in this market led BB DTVM to open, on 11/25/04, an office in the city of São Paulo,transferring there the consultancy and funds management services aimed at the wholesale, offshore andprivate segments.

Asset ManagementR$ billion

Figure 46. Asset Management

The assets managed by BB DTVM have funds for different kinds of customer.

Table 88. Investment Funds and Managed Portfolios by CustomerR$ million

Chg. %Mar/04 Share % Sep/04 Share % Dec/04 Share % Mar/05 Share % on Mar/04 on Dez/04

Individuals 32,229 27.8 34,032 27.8 35,730 28.8 38,607 27.9 19.8 8.1Businesses 15,588 13.4 12,787 10.4 13,316 10.7 13,665 9.9 (12.3) 2.6Government 10,844 9.3 12,670 10.3 9,923 8.0 19,072 13.8 75.9 92.2Institutional Investors 50,572 43.6 54,083 44.2 55,863 45.0 57,447 41.6 13.6 2.8Foreign Investors 6,575 5.7 8,746 7.1 9,031 7.3 8,545 6.2 30.0 (5.4)Others 171 0.1 153 0.1 159 0.1 861 0.6 404.0 442.3Total 115,979 100.0 122,471 100.0 124,021 100.0 138,197 100.0 19.2 11.4

83.2 91.8 102.7116.0 116.9 122.5 124.0

138.2

18.7 18.9 19.020.2 19.9 20.0 19.7

20.8


Asset Management Market Share - %


Investment Funds and Managed PortfoliosR$ billion

Figure 47. Investment Funds and Managed Portfolios

Investment FundsR$ billion

Figure 48. Investment Funds

Managed Portfolios and Investment ClubsR$ billion

Figure 49. Managed Portfolios and Investment Clubs

5.0

8.8 9.3 8.2

7.45.3 5.8 6.0

5.2

6.8 6.75.8

7.6

3.4 3.3 3.74.5

5.74.8 4.6 4.6 4.8 5.1 4.9 5.4

9.3 9.1 9.0 8.8

5.1

5.4 5.4


BB Bradesco Itaú Unibanco

78.487.2

98.1111.1 111.9 117.4 119.1

132.8

78.1 80.9 84.7 88.9

69.0 74.6 74.1 77.1 80.5 85.1

19.8 22.2 24.2 27.1 28.3 29.7 30.0 32.7

60.9 67.6 72.5 75.2

62.357.2


BB Bradesco Itaú CEF

83.291.8

102.7116.0 116.9 122.5 124.0

138.2

86.8 90.2 93.0 96.3

62.5 68.075.1 79.8 80.9 83.8 86.2 92.7

22.3 24.5 26.4 29.0 30.2 31.8 32.3 35.0

84.081.576.670.2


BB Bradesco Itaú CEF


7.3.3 Credit Cards

The share of revenues from credit cards in the total of service revenues reached 9.2% in March 2005.These revenues totaled R$163 million in the 1Q05, growing 26.7% in relation to the same period of theprevious year. Banco do Brasil expanded its credit card base by 27.4%% in the last 12 months, closingthe quarter with 7.2 million cards.

Credit Cardsin millions

Figure 50. Credit Cards

Credit Cards Sales by BrandR$ million

Figure 51. Credit Cards Sales by Brand

937865 912 920 965 980 971 923

1,0431,160

1,064965

1,118

190 173 183 185 194 203 196 188 216 242 215 212 224

Mar/04 Apr/04 May/04 Jun/04 Jul/04 Aug/04 Sep/04 Oct/04 Nov/04 Dec/04 Jan/05 Feb/05 Mar/05

Visa Mastercard

4.9 5.1 5.3 5.66.1

6.66.9 7.2



7.3.4 Collections

Revenues from collections increased 12.4% in 1Q05, in relation to the same period of the previous year,reaching R$ 168 million at the end of period. In March 2005, BB had over 365 thousand active collectionagreements, against 307 thousand in the same period of the previous year.

BB Collection VolumeR$ million

Figure 52. BB Collection Volume

77,

745

80,

136

76,

526

71,

949

66,

107

66,

385

59,

106

55,

831

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05


7.4 Commercial IncomeTable 89. Commercial Income

R$ millionChg.%

1Q04 4Q04 1Q05 on 1Q04 on 4Q04Contribution Margin 4,197 4,551 4,446 5.9 (2.3)Administrative Expenses (2,735) (3,509) (3,250) 18.8 (7.4) Personnel Expenses (1,574) (1,840) (1,804) 14.6 (2.0) Other Administrative Expenses (1,126) (1,633) (1,407) 25.0 (13.8) Other Tax Expenses (34) (36) (39) 13.1 7.0Commercial Income 1,462 1,042 1,196 (18.2) 14.8

Commercial income represents the Bank’s business earnings after the deduction of the expensesnecessary for carrying on the business. In 1Q05, BB earned R$ 1,196 million under this heading, areduction of 18.2% in relation to 1Q04 and an increase of 14.8% in relation to 4Q04

This reduction was brought about by the lower growth of the service revenues, associated with a largergrowth of other administrative expenses, as commented on in item 7.4.2.

Changes in Commercial Income

Figure 53. Changes in Commercial Income

13.8%

18.1%

-7.8%

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Net Financial Margin Contribution Margin

Commercial Income


7.4.1 Personnel Expenses

Personnel expenses went up from R$ 1,574 million in 1Q04 to R$ 1,804 million in 1Q05, an increase of14.6%.

Table 90. Despesas de PessoalR$ million

Chg. %1Q04 4Q04 1Q05 on 1Q04 on 4Q04

Personnel Expenses (1,574) (1,840) (1,804) 14.6 (2.0) Salaries (721) (902) (759) 5.2 (15.8) Benefits (182) (203) (205) 12.3 0.8 Social Charges (269) (361) (300) 11.3 (16.9) Training (6) (25) (6) 0.1 (75.3) Remuneration for Counselors and Directors (1) (3) (3) 118.9 (2.6) Administrative Personnel Provisions (273) (177) (365) 33.8 106.1 Labor Lawsuits (121) (169) (166) 37.2 (1.8) Provisions for Labor Lawsuits (60) (54) (102) 71.2 89.6 Losses in Labor Lawsuits (61) (115) (63) 3.8 (44.8)

Banco do Brasil closed the quarter with 94,592 collaborators, a workforce 2.4% higher than thatrecorded in March 2004 and 1.7% higher than at the end of 2004.

Changes in the Workforce

Figure 54. Changes in the Workforce

The natural renewal of the Bank’s workforce has allowed a relative stability in expenses with personnel,even with the salary increases awarded – 12.6% in 2003 and 8.5% in 2004.

90,

255

90,

531

90,

821

92,

347

92,

606

93,

091

93,

010

94,

592

79,

474

79,

710

80,

640

81,

795

81,

936

82,

565

82,

671

83,

940

10,

781

10,

821

10,

181

10,

552

10,

670

10,

526

10,

339

10,

652


Total Employees Interns


Tenure

Figure 55. Tenure

The systematic expansion of the customer base and the growth of business, allied to the strategy forrenewing the workforce, by contracting new employees, has made it possible for BB to improve theproductivity ratios, as per the graphs below:

Productivity Ratios

Figure 56. Productivity Ratios

Assets per Employee - R$ thousand

2,2802,376

2,534 2,5032,455

2,531 2,570 2,597


Clients per Employee

185 188 206 209 217 221 227 224


Employee / (Branch + PAA + PAB)

17.3 17.3 17.317.5 17.4 17.4 17.3

18.0


1Q04

35.3%

4.2%

22.2%

38.4%

4Q04

38.5%

3.0%23.1%

35.4%

Up to 5 years 6 to 10 years 11 to 20 years Over to 20 years

1Q05

39.4%

3.1%22.2%

35.2%


7.4.2 Other Administrative Expenses

Other administrative expenses in 1Q05 totaled R$ 1,407 million, an increase of 25.0% in relation to1Q04 and a reduction of 13.8% in relation to 4Q04

Table 91. Other Administrative ExpensesR$ million

Chg. %1Q04 4Q04 1Q05 on 1Q04 on 4Q04

Other Administrative Expenses (1,126) (1,633) (1,407) 25.0 (13.8) Telecommunications and Data Processing (302) (319) (341) 12.9 6.9 Amortization and Depreciation (115) (132) (174) 51.2 31.5 Security, Guard and Transport Services (170) (210) (187) 9.8 (11.0) Expenses with Premises and Equipment (151) (174) (175) 16.1 0.6 Marketing and Public Relations (55) (265) (84) 52.8 (68.5) Expenses with Outsourced Services (103) (169) (138) 33.0 (18.7) Legal Claims (27) (89) (92) 237.7 3.5 Other Administrative Expenses (202) (274) (217) 7.2 (20.9)

The items most directly related to the running of the business (telecommunications and data processing,surveillance, security and transport services, property and equipment) added up to R$ 703 million in1Q05, showing stability in relation to 4Q04 and growth of 12.8%, explained mainly by the followingfactors:

- 10.9% increase in the IGP-DI in the last 12 months – inflation affects such items as telephony,postage, outsourced services, rents and others;

- 7.3% expansion in the service network – opening new points of service has a direct implication foran increase in the greater part of the items making up administrative expenses; and

- 10.1% increase in the customer base – the increase in the quantity of customers, besides theincrease in the points of service, has an influence on the quantity of correspondence sent, dataprocessing, use of the self-service channels, etc.

The Outsourced Services item showed growth of 33.0% because of the consolidation of the operation ofthe BB Call Center, a service channel that makes it possible to carry out up to 170 transactions availableelectronically or personally and that answers an average of 580 thousand calls a day

Marketing and public relations decreased 68.5% in 1Q05 and increased 52.8% in relation to 1Q05. Withregard to marketing and public relations, there was a strong heating up of the competition in the period.Seeking a better positioning, the Bank launches new companies, new forms of service and newproducts, besides reinforcing its institutional marketing.

However, the growth of 52.8% in the marketing and public relations compared to the previous year isdue, maily, to the fact that the 1Q04 is above of the historical average of the Bank, being the lowergrowth of the last 3 years. The quarter average of the marketing expenses per customer from 1Q02 to2Q04 is R$ 4.7, higher than R$ 2.8 in 1Q04 and R$ 4.0 in 1Q05. Accordingly, the marketing expenses ofthe Bank keep in line with the historical data.

Similar movement occurred to expense for civil and labor claims, that were lower that historical averagein 1Q04. In relation to 4Q04 these expenses increased 3.6%.


7.4.3 Distribution Network

Banco do Brasil is present in 3,010 municipalities all over the Brazilian territory. At the end of March 205,the Bank’s distribution network comprised 14,564 points of service (growing 7.5% in relation to March2005. This represents an average of 4.8 points per municipality in Brazil. The distribution network isclassified as follows:Table 92. Distribution Network

Jun/03 Sep/03 Dec/03 Mar/04 Jun/04 Sep/04 Dec/04 Mar/05Branches 3,209 3,218 3,241 3,564 3,618 3,662 3,722 3,786PAA 421 424 438 181 187 188 188 185PAB 1,598 1,576 1,562 1,541 1,520 1,495 1,455 1,400PAE 4,484 4,609 4,821 5,054 5,280 5,461 5,614 5,665SAA 3,023 3,084 3,140 3,191 3,285 3,406 3,455 3,519PAP 20 19 18 18 18 18 16 9

Total 12,755 12,930 13,220 13,549 13,908 14,230 14,450 14,564

The Bank’s distribution network is divided into 5 types of points of service, besides the branches:PAA – Advanced Service Post: these are points of service intended for towns without a bank. They havea small staff and automated teller machines;PAB – Banking Service Post: this type of unit is located inside the premises of companies orgovernment offices. This service requires one employee and automated teller machines;PAE – Electronic Service Post: the structure of services is exclusively automatic;SAA – Self-Service Room: exclusively electronic installed in the main areas of the branches andPAP – Payment and collection post: located mainly in government offices (town halls) for carrying outreceipts and payments. Employees and automated teller machines provide the service:

Total Distribution Network

Figure 57. Total Distribution Network

To handle services to the Wholesale segment, Banco do Brasil has a specific distribution network. Thestaff of this network undergoes highly specialized training and works in harmony with the various needsof this segment.

NorthBranchesOthersTotal

BB 7.2%

BB 24.9%

BB 11.5%

BB 37.1%

BB 19.3%

222 824

1,046

MidwestBranchesOthersTotal

3821,2931,675

SouthBranchesOthersTotal

7822,0352,817

SoutheastBranchesOthers

Total

1,4423,9585,400

NortheastBranchesOthersTotal

9582,6683,626


The locations of the Wholesale pillar include 17 Corporate branches and 68 Business branches, whichTable 93. Wholesale Pillar Branches

Industry Commerce ServicesCorporate Over R$90 million Over R$150 million Over R$150 millionBusiness From R$10 to R$90 million From R$10 to R$150 million From R$10 to R$150 million

Distribution Network - Wholesale

Figure 58. Distribution Network - Wholesale

The Government market keeps its focus on managing the relationship with the federal, state andmunicipal government, in the spheres of the executive, legislative and judiciary branches. TheGovernment market’s strategy of work has ensured appropriate solutions for the specific aspects ofeach one of the niches of its segment, acting to generate value through solutions with new products andfreeing processes from red tape.

The locations of the Government pillar include 37 branches with 938 specialized members of staff.

Distribution Network - Government

Figure 59. Distribution Network - Government

Besides its own network, BB has a network of banking correspondents (Aqui tem BB), which at the endof the March 2005 included 1,998 points of service and 14,495 cashiers for receiving payment books,taxes and bank bills. This network was responsible for over 14,9 million transactions that totaled R$2,669 million paid over in 1Q05, 10.3% more than paid over in 1Q04.

NorthBranchesOthers

Total

729

MidwestBranchesOthersTotal

628

SouthBranchesOthersTotal

549

SoutheastBranchesOthers

Total

86

14

NortheastBranchesOthers Total

116

17

NorthBusinessCorporate Total

202

MidwestBusinessCorporate Total

415

SouthBusinessCorporate Total

184

22

SoutheastBusinessCorporate

Total

371148

NortheastBusinessCorporate Total

718


Banco do Brasil’s network abroad comprises 38 points of service (17 branches, 7 sub-branches, 9business units and offices and 5 subsidiaries) in 21 countries To supplement its own network abroad, atthe end of 2004 BB maintained a relationship with 1,728 financial institutions, present in 152 countries.This network is of great importance for complementing BB ‘s own network of branches abroad and formaking it possible to carry out transactions and business, for itself and for customers.

Table 94. Distribution Network Abroad

Branches Sub-Branches Business Units SubsidiariesAmsterdam Cascais Caracas BAMBAssunção Gifu Cidade do México BB AG VienaBuenos Aires Gunma* Hong Kong BB Leasing CompanyCidade do Leste Hamamatsu Lima BB SecuritiesFrankfurt Ibaraki Luanda Banco do Brasil Securities - LLCGrand Cayman Nagano RomaLa Paz Nagoya Santa Cruz de La SierraLisboa WashingtonLondres XangaiMadriMiamiMilãoNova IorquePanamáParisSantiagoTóquio* Sub-Branche being transformed in Branch.


7.4.4 Automated Channels

Banco do Brasil’s self-service network represents a strategic differential. BB’s customers have at theirdisposal the largest network of automated teller machines (ATMs) in Latin America, with terminals inBrazil and abroad. At the end of March, BB customers had at their disposal 39,180 ATMs, compared to37,018 in March 2003, growth of 5.8%.

Automated Teller Machines

Figure 60. Automated Teller Machines

This technological infrastructure has provided support for BB in its strategy for controlling costs. InMarch 2005, over 499 million transactions were carried out over the ATM network, an increase of 8.3%,compared to the same period of the previous year.

The importance of this channel in BB’s transactions can be seen from the figures below, which show thepercentage of banking transactions carried out through the ATMs:

- 92.8% of cash withdrawals;

- 82.9% of the checkbooks issued;

- 66.6% of deposits; and

- 34.7% of the receipts of bills and contractual payments

The share of automated transactions in the total of transactions carried out by BB’s customersamounted to 87.9% in March 2005, against 86.3% in the same period of the previous year.

Share of Automated Transactions / Total Transactions - %

Figure 61. Share of Automated Transactions / Total Transactions

85.0 85.2

86.4 86.386.9

89.6

87.988.4


39,

180

39,

015

38,

242

38,

153

37,

018

37,

018

34,

679

34,

164



Besides the cashiers at the branches and the ATMs, Banco do Brasil offers several other options foraccess to banking services, such as the Internet, its Financial Manager (an Internet banking tool forbusinesses), POS equipment (credit and debit card machines at the commercial establishments),telephone, fax, and WAP.

The graph below shows that the other service channels have been gaining ground in the customers’preference.

Customer Access Options - %

Figure 62. Customer Access Options

Banco do Brasil continues to be the leader on the Internet. At the end of March 2005, the number ofcustomers enabled reached 7.0 million, an increase of 14.1% in relation to the same period of theprevious year. The above graph shows that the share of transactions carried out via the Internet hasgrown, gaining ground from such important channels as cashiers and ATMs. The percentage oftransactions carried out via the Internet went up from 28.4% in March 2004 to 29.8% in March 2005, ofwhich 13.0% individuals and 16.8% businesses, using the Financial Manager.

52.5 51.2 51.5 50.6 51.2 50.6 50.7 50.1

15.0 16.0 16.3 16.2 16.6 16.8 16.7 16.815.0 14.8 13.6 13.7 13.1

2.3 2.3 2.6 2.0 1.9 2.2 2.0

13.011.915.011.911.1 11.6 10.7 12.2

10.4 11.6 12.14.3 4.1 5.6 4.7 5.2 5.3 6.9 6.02.0


ATM Internet Individuals Internet Corporate Cashier POS COBAN and Others


7.4.5 Productivity – Coverage Ratios

The coverage ratios show the capacity for covering fixed costs using only service revenues (servicerevenues).

As the graph below shows, coverage ratio of service revenues over personnel expenses went up from98.6% in 1Q04 to 97.9% in 1Q05. The fall in this ratio in 1Q05 is explained by the lower growth inservice revenues, compared with increase in Personnel Expenses. However, compared to 4Q04, animprovement in the indicator can be seen, from 92.5% to 97.9%.

Coverage Ratios - %

Figure 63. Coverage Ratios

Broadening the concept to the capacity for coverage of all the administrative expenses, a reduction from56.8% in 1Q04 to 54.4% in 1Q05 is to be seen.

Table 95. Coverage Ratios

R$ million2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Service Revenues 1,343 1,412 1,511 1,553 1,643 1,717 1,702 1,767Administrative Expenses (2,466) (2,931) (3,149) (2,735) (3,093) (3,129) (3,509) 3,250Personnel Expenses (1,481) (1,681) (1,949) (1,574) (1,675) (1,744) (1,840) 1,804Service Revenues/Personnel Expenses - % 90.7 84.0 77.5 98.6 98.1 98.4 92.5 97.9Service Revenues/Administ. Expenses - % 54.5 48.2 48.0 56.8 53.1 54.9 48.5 54.4

Service Revenues/Personnel Expenses

90.7 84.0 77.5

98.6 98.1 98.4 92.5 97.9

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Service Revenues/Administrative Expenses

54.548.2 48.0

56.8 53.1 54.948.5

54.4

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05


In spite of the expansion of the service network, necessary to meet the constant increase in thecustomer base, BB has kept its cost structure compatible with its generation of business, as seen in thegraphs below:

Productivity Ratios

Figure 64. Productivity Ratios

Business vs Expenses

* Quater value annualized.Figure 65. Business vs. Expenses

15.3%

17.3 %

CAGR

8.9%

3,189 3,760 4,4545,491

6,607 7,0678,04510,109

13,57515,327 15,718 16,362

8,505 9,161 9,64511,298

12,432 12,999

2000 2001 2002 2003 2004 Mar/05*

Services Revenues Gross Financial Margin Administrative Expenses

Loan Portfolio / Points of Service

12.8 12.9 13.213.5

13.914.2 14.5 14.6

5.4 5.6 5.9 5.9 6.0 5.9 6.1 6.4


Points of Service – in thousands

Loan Portfolio / Points of Service - R$ million

Customers / (Branch + PAA + PAB)

3,198 3,2673,578 3,646 3,766 3,855 3,931 3,951


Services Revenues / Points of Service

12.8 12.9 13.213.5

13.9 14.2 14.5 14.6

105.3 109.2 114.3 118.1 120.6 117.8 121.3114.6


Points of Service – in thousands

Services Revenues / Points of Service - R$ million


7.5 Operating IncomeTable 96. Operating Income

R$ millionChg.%

1Q04 4Q04 1Q05 on 1Q04 on 4Q04Commercial Income 1,462 1,042 1,196 (18.2) 14.8Other Operating Income (Expenses) (235) (139) 84 (135.7) (160.6) Equity Interest in Results of Subs. and Affil. 98 53 144 46.2 172.4 Other Operating Income 432 621 596 38.0 (4.0) Other Operating Expenses (766) (812) (656) (14.3) (19.2)Operating Income 1,227 903 1,280 4.3 41.7

An increase is to be seen in other operating revenues, which went up from R$ 432 in 1Q04 to R$ 596million in 1Q05, due mainly to the growth of revenues from the recovery of charges and expenses and ofrevenues arising from deposits in guarantee.

Other operating expenses showed a decrease of 14.3% between 1Q04 and 1Q05, explained, in goodmeasure, by the reduction of the expenses for updating the pension fund liabilities.

The following table and figure show the efficiency attained by Banco do Brasil. The percentage ofadministrative expenses over operating revenues reached 56.1% in 1Q05, an increase of 190 basispoints in relation to the same period of the previous year. The deterioration of the efficiency ratio in1Q05 was caused mainly by the increase in other administrative expenses.

In relation to 4Q04, a reduction of 660 basis points is to be seen in the ratio, because of the reduction inadministrative expenses and the growth of operating revenues, as shown in Table statement in themovement in efficiency.

Table 97. Efficiency RatioR$ million

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05A) Administrative Expenses (2,466) (2,931) (3,149) (2,735) (3,093) (3,129) (3,509) (3,250) Personnel Expenses (1,481) (1,681) (1,949) (1,574) (1,675) (1,744) (1,840) (1,804) Other Administrative Expenses (955) (1,221) (1,165) (1,126) (1,381) (1,344) (1,633) (1,407) Other Tax Expenses (30) (29) (35) (34) (37) (41) (36) (39)B) Operating Income 4,567 5,091 5,569 5,048 5,244 5,592 5,597 5,797 Gross Financial Margin 3,524 3,888 3,977 3,829 3,925 3,919 4,086 4,090 Service Revenues 1,343 1,412 1,511 1,553 1,643 1,717 1,702 1,767 Other Operating Income 508 323 1,206 432 383 457 621 596 Other Operating Expenses (808) (532) (1,124) (766) (707) (588) (812) (656)

Efficiency Ratio (A:B) - % 54.0 57.6 56.5 54.2 59.0 55.9 62.7 56.1


Table 98. Efficiency Ratio Statement

4Q04 1Q05 Abs. Chg Chg. % Effect in theratio

Administrative Expenses (3,509) (3,250) 259 (7.4) (4.6)Personnel Expenses (1,840) (1,804) 36 (2.0) (0.6)Other Administrative Expenses (1,633) (1,407) 226 (13.8) (4.0)Other Tax Expenses (36) (39) (3) 7.0 0.0Operating Income 5,597 5,797 201 3.6 (2.2)Gross Financial Margin 4,086 4,090 5 0.1 (0.1)Service Revenues 1,702 1,767 64 3.8 (0.7)Other Operating Income 621 596 (25) (4.0) 0.3Other Operating Expenses (812) (656) 156 (19.2) (1.7)Adm. Exp. and Oper. Inc. (consolidated effect) 0.2

Índice de Eficiência 62.7% 56.1% (6.6)

Efficiency Ratio - %

Figure 66. Efficiency Ratio

54.0 54.262.756.5 55.9 56.159.057.6

56.6 56.5 56.2 55.656.8 56.4

58.0 58.4

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Efficiency Ratio Efficiency Ratio - 12 months average


7.6 Net IncomeTable 99. Net Income

R$ millionChg.%

1Q04 4Q04 1Q05 on 1Q04 on 4Q04Operating Income 1,227 903 1,280 4.3 41.7Non-operating Income 15 (4) 98 - -Income Before Taxes 1,242 899 1,378 10.9 53.2 Income and Social Contribution Taxes (370) (187) (483) 30.3 157.8 Interest on Own Capital Tax Benefit - 171 - - - Statutory Profit Sharing (41) (125) (78) 89.6 (38.0)Recurring Income 831 586 817 (1.7) 39.3Non-recurring Items (215) 184 148 (168.5) (20.0) Non-recurring Rever. Prov. for Credit Risks (3) - 184 - - - Non-recurring Provision for Credit Risks (1) (262) - - - - Provision for Voluntary Retirement Plan (2) 47 - - - - Recovery of Undue Taxes (4) - - 229 - - Provision for Non-recurring IR and CS (5) - - (76) - - Non-recurring Pasep/Cofins (6) - - (6) - -Net Income 616 771 965 56.7 25.2

In 1Q05, the Bank achieved a net income of R$ 965 million, an amount 56.7% higher than the R$ 616million recorded in the same period of 2004, and 25.2% higher than that recorded in 4Q04. The averageannualized return on shareholder’s equity was 29.3% in the period.

Recurring expenses with income and social contribution taxes in 1Q05 were higher than previousquarters due to the growth of results and basis of calculation. In 1Q05 these expenses were 35% ofRecurrent income before taxes and social contribution.

Recurring income in the quarter reached R$ 817 million, 1.7% lower than seen in 1Q04 and 39.3%higher than observed in 4Q04, bringing about a recurring return on equity – ROE of 24.5% in 1Q05,against 17.9% in the previous quarter. This movement in the last quarter was due to the improvement inoperating income, basically reflecting the growth of service revenues, and interests in equity, as well asa reduction in administrative expenses, as commented in previous chapters.

Non-recurring items showed a positive effect of R$ 148 million because of the recognition of unduePasep/Cofins taxes of 1988, with final judgment now given. The amount of the lawsuit is R$ 229 millionbefore taxes.


Changes in Earning before TaxesR$ million

Figure 67. Earning before Taxes

Some extraordinary events influenced the results of the period, namely:

(1) Change in the risk rating criteria for loans below R$ 50,000, which generated a reinforcement inallowance for loan losses of R$ 262 million in the period, because of the adoption of a moreconservative methodology in the risk rating of these transactions.

(2) The lower adhesion to the Voluntary Retirement Plan – PAI 50 – generated the reversal of R$ 47.1million in provisions in 1Q04. PAI 50 was developed with the intention of making viable the renewalof the Bank’s staff, coupling the economic results with the socially responsible departure ofemployees over the age of 50. When setting it up, provisions of R$ 152 million in 4Q03, an amountregarded as non-recurring.

(3) In 4Q04, there was a reversal of R$ 184 million from Allowances for Loan Losses set up in 1H04,the fruit of a reclassification of risk. At the time, the reinforcement was also regarded as non-recurring. In 2004, the Bank carried out a series of adjustments in the methodologies for calculatingcredit risk, which also aimed at the changes provided for in the Basel Accord 2. These changesbrought a greater volatility to the provision for credit in the period.

(4) Extraordinary items showed a positive effect of R$ 148 million because of the recognition of unduePasep/Cofins taxes of 1988, with final judgment now given. The amount of the lawsuit is R$ 229million before taxes and Pasep/Cofins, 5 and 6 items.

1,058 1,231 1,2451,027 1,184

1,4451,083

1,525

38.7 41.9 36.4 36.120.2

37.717.3

31.7

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

EBT Income Tax/EBT - %


The graphs that follow show the changes both in net income and recurring income, and in thecorresponding returns on shareholders’ equity.

Change in Net IncomeR$ million

Figure 68. Change in Net Income

Change in ROE - %

Figure 69. Change in ROE

Table 100. Return on Shareholders’ Equity


Recurring Income 490 665 621 831 703 724 586 817Net Income 600 665 637 616 805 833 771 965Average Shareholders’ Equity 10,518 11,280 11,930 12,429 12,775 13,318 13,939 14,519Recurring ROE - % 20.0 25.7 22.5 29.5 23.9 23.6 17.9 24.5ROE - % 24.8 25.7 23.1 21.3 27.7 27.5 24.0 29.3

23.6

29.5

25.720.0

23.9 24.517.9

22.5

24.8 27.5

21.3

25.7 27.7 29.324.023.1

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Recurring ROE ROE

724490

703

831665

817586621

833600

805

616665

965771637

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Recurring Net Income Net Income


7.7 Net Value AddedThe table Net Value Added shows the result of Banco do Brasil is made up of the of the generation ofvalue from each of the Bank’s businesses, and subsequently shows a breakdown of the distribution ofthese funds. This point of view is used for the gross financial margin, which includes financialintermediation revenues and expenses, without provisions for non-performing loans.

Table 101. Net Value Added

R$ millionChg. %

1Q04 4Q04 1Q05 on 1Q04 on 4Q04

Gross Financial Margin 3,829 4,086 4,090 6.8 0.1Income from Non-Financial Products 1,260 1,401 1,486 18.0 6.1 Customer Relationship Fees 481 539 589 22.6 9.4 Investment Fund Management Fees 234 248 283 21.2 13.9 Revenues from Investment Funds Management 220 233 267 21.4 14.7 Insurance – Funds 14 16 16 17.6 1.6 Loans 147 153 149 1.6 (2.2) Collections 150 173 168 12.1 (3.1) Services Provided to Related Companies 106 116 118 10.8 1.0 Credit Cards 129 156 163 26.2 4.5 Insurance 14 16 16 17.6 1.6Others 839 971 1,119 33.4 15.3 Insurance – Brokerage 81 77 89 9.8 15.7 Insurance – Results 48 54 65 35.4 20.3 Outros Services Revenues 212 224 192 (9.6) (14.4) Equity Interest in Results of Subs,and Affil, 51 (1) 79 56.3 - Other Operational Revenues 432 621 596 38.0 (4.0) Non Operation Income 15 (4) 98 532.6 -Value Added 5,928 6,458 6,695 12.9 3.7Distribution of Value Added* (5,312) (5,687) (5,731) 7.9 0.8Operational Revenues (1,666) (1,680) (1,717) 3.0 2.2 Provision for Credit Risk (901) (868) (1,061) 17.8 22.3 Other Operational Income (766) (812) (656) (14.3) (19.2)Personnel Expenses (1,615) (1,965) (1,882) 16.5 (4.3) Personnel Expenses (1,574) (1,840) (1,804) 14.6 (2.0) Statutory Profits Sharing (41) (125) (78) 89.6 (38.0) Administrative Expenses (1,126) (1,633) (1,407) 25.0 (13.8)Tax Expenses (689) (593) (872) 26.6 47.1 Taxes on Sale (284) (369) (351) 23.4 (5.1) Other Tax Expenses (34) (36) (39) 13.1 7.0 Income and Social Contribution Taxes (370) (187) (483) 30.3 157.8Extraordinary Items (215) 184 148 - (20.0)

Value Added to Shareholders 616 771 965 56.7 25.2* - except shareholders


7.8 Gross Value AddedAnother way of analysing the distribution of the value added among the Bank’s various stakeholders isshowed in the table below. Financial intermediation revenuesare included in the value added, whileintermediation expenses are included in the distribution of the value added to the Bank’s differentcreditors.

Table 102. Gross Value Added

R$ millionChg. %

1Q04 4Q04 1Q05 on 1Q04 on 4Q04Gross Financial Margin 7,622 7,855 8,191 7.5 4.3Income from Non-Financial Products 1,260 1,401 1,486 18.0 6.1 Customer Relationship Fees 481 539 589 22.6 9.4 Investment Fund Management Fees 234 248 283 21.2 13.9 Loan Fees 147 153 149 1.6 (2.2) Collections 150 173 168 12.1 (3.1) Services Provided to Related Companies 106 116 118 10.8 1.0 Credit Cards 129 156 163 26.2 4.5 Insurance 14 16 16 17.6 1.6Other 839 971 1,119 33.4 15.3 Insurance - Brokerage 81 77 89 9.8 15.7 Insurance – Results 48 54 65 35.4 20.3 Other Service Revenues 212 224 192 (9.6) (14.4) Equity Interest in Results of Subs. and Affil 51 (1) 79 56.3 - Other Operational Revenues 432 621 596 38.0 (4.0) Non Operation Income 15 (4) 98 532.6 -Value added 9,720 10,227 10,795 11.1 5.6Distribution of Value Added* (9,105) (9,456) (9,831) 8.0 4.0Financial Intermediation Expenses (3,793) (3,769) (4,100) 8.1 8.8Operational Expenses (1,666) (1,680) (1,717) 3.0 2.2 Provision for Credit Risk (901) (868) (1,061) 17.8 22.3 Other Operational Expenses (766) (812) (656) (14.3) (19.2)Personnel Expenses (1,615) (1,965) (1,882) 16.5 (4.3) Personnel Expenses (1,574) (1,840) (1,804) 14.6 (2.0) Statutory Profits Sharing (41) (125) (78) 89.6 (38.0)Administrative Expenses (1,126) (1,633) (1,407) 25.0 (13.8)Tax Expenses (689) (593) (872) 26.6 47.1 Taxes on Sale (284) (369) (351) 23.4 (5.1) Other Tax expenses (34) (36) (39) 13.1 7.0 Income and Social Contribution Taxes (370) (187) (483) 30.3 157.8Extraordinary Items (215) 184 148 (168.5) (20.0)

Value Added for the Shareholders 616 771 965 56.7 25.2*except shareholders


Net Value Added

Figure 70. Valor Agregado Líquido

Gross Value Added

Figure 71. Valor Agregado Bruto

1Q04

64.6

21.2

14.1Others

Income from NonFinancial Products

Gross FinancialMargin

27,3

19.0

11.6

10.4

31.7 Others

Value Added toShareholdersTax Expenses

Administrative Expenses

Personnel Expenses

61.1

22.2

16.7Others


Gross FinancialMargin

28.1

21.0

13.0

14.4

23.4 Others

Value Added toShareholders

Tax Expenses


Personnel Expenses

1Q05

78.4

13.0

8.6

1Q04

OthersIncome from NonFinancial Products

Financial In termed.Income

39.0

16.6

19.4

11.6

7.16.3 Value Added to Shareho lders

Tax Expenses


Others

PersonnelExpenses

Financial IntermediationExpenses

75.9

13.8

10.4

1Q05

Others


Financial In termed.Income

38.0

17.4

14.5

13.0

8.18.9 Value Added to Shareho lders

Tax Expenses


Others

PersonnelExpenses

Financial IntermediationExpenses


7.9 Insurance, Pension Plans and CapitalizationBanco do Brasil, through BB Banco de Investimentos, a full subsidiary, has a participating interest inseveral companies in the areas of insurance, pension plans, capitalization, offering a broad range ofnon-banking products. The table below details BB’s holdings in these companies, together with the lineof business in which they work:

Table 103. Insurance, Pension Plans and Capitalization

Empresa Part.% Ramo ParceriasBrasilseg Participações S.A. 70,00 Auto Sul América SegurosCia. De Seguros Aliança do Brasil S.A. 70,00 Vida e Ramos Elem. Aliança da BahiaBrasilprev 49,99 Previdência Privada Principal Financial Group e SebraeBrasilcap 49,99 Capitalização Icatu Hartford, Sul América e Aliança da BahiaBrasilsaúde 49,92 Saúde Sul América Seguros

The income statement by line of business for the 1Q05 is shown below to help to understand theprocess and to show greater transparency in the insurance, pension plan and capitalization business.

7.9.1 Income Statement by Line of Business

Table 104. Income Statement by Line BusinessR$ thousand

Insurance1Q05

Auto Health Life &other Total

PensionPlans

Capitali-zation

Consoli-dated

Rev. From Insurance, Pension Plans andCapitalization 170,779 35,750 245,536 452,065 478,874 401,381 1,332,320 Retained Insurance Premiums 170,779 35,750 245,536 452,065 - - 452,065 Revenues from Pension Plans - - - - 478,874 - 478,874 Revenues from Capitalization - - - - - 401,381 401,381Changes in Technical Provisions (17,192) (73) 7,536 (9,728) (209,976) (359,838) (579,543) Insurance (17,192) (73) 7,536 (9,728) - - (9,728) Pension Plans - - - - (209,976) - (209,976) Capitalization - - - - - (359,838) (359,838)Benefits and Redemption Expenses - - - - (255,002) - (255,002)Earned Premiums 153,587 35,678 253,072 442,337 - - 442,337Gross Income from Pension Plans andCapitalization - - - - 13,895 41,544 55,439Retained Claims (106,469) (30,723) (78,194) (215,387) - - (215,387)Marketing Expenses (18,251) (1,999) (55,971) (76,221) (10,984) (19,573) (106,778) Insurances (18,251) (1,999) (55,971) (76,221) - - (76,221) Pension Plans - - - - (10,984) - (10,984) Capitalization - - - - - (19,573) (19,573)Administrative Expenses (14,365) (3,433) (29,067) (46,865) (33,443) (14,043) (94,351)Commercial Income 14,502 (478) 89,840 103,864 (30,532) 7,927 81,260Other Operating Income (Expenses) (16,411) (2,266) (48,708) (67,385) 13,755 (3,565) (57,195)Financial Income 14,228 1,755 28,215 44,198 54,931 38,179 137,308 Financial Revenues 16,484 2,167 36,323 54,974 288,282 92,438 435,694 Financial Expenses (2,256) (412) (8,108) (10,776) (233,351) (54,259) (298,387)Operating Income 12,319 (990) 69,348 80,678 38,154 42,541 161,372Non-operating Income 406 (89) 622 939 (18) 175 1,097


Income before Taxes 12,725 (1,079) 69,970 81,617 38,136 42,716 162,469

Income and Social Contribution Taxes (3,974) 387 (19,750) (23,337) (11,534) (13,314) (48,185)

Profit sharing (1,820) (139) (2,068) (4,027) (876) (2,144) (7,047)

Net Income/ (Loss) 6,931 (831) 48,153 54,253 25,726 27,258 107,237

Interests of Other Shareholders (2,079) 416 (14,446) (16,109) (12,865) (13,632) (42,606)

Other Investment Changes 490 - - 490 605 1,401 2,496

Net Income Equivalent 5,342 (415) 33,707 38,634 13,465 15,027 67,127

Service Revenues – Comission 19,103 1,733 60,622 81,457 3,193 4,181 88,832

Service Revenues – Assets Management - - 2,987 2,987 7,387 17,921 28,295

Service Revenues – Others 607 106 1,665 2,378 11,406 5,654 19,439

Insurance Value Added 25,052 1,424 98,980 125,457 35,452 42,784 203,692

7.9.2 Combined Ratio

The combined ratio shows the percentage of earned premiums used up by operating expenses in theinsurance business (retained claims, expenses with marketing and administrative expenses). In thisedition, it started being included other operational revenues and expenses in the calculation of thecomercializatio expenses of the Life and Others segment. The graph below indicates an improvement inthe consolidated combined ratio, which went from 91.6% in 4Q04, to 87.5% in 1Q05. Both the reductionin expenses with marketing and the reduction in retained claims contributed towards the reduction in theconsolidated combined ratio.

Combined Ratio - %

Figure 73. Combined Ratio

Consolidated

48.1 55.7 56.6 53.8 48.1 51.8 48.7

28.826.2 22.4 22.1 28.8 28.2 28.2

11.610.611.5

12.2 12.712.3 11.5

88.494.0 91.8 88.1 88.4 91.6

87.5

3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Auto

66.3 67.576.7

70.1 66.3 62.9 69.3

14.3 11.611.3

11.214.3 11.5

11.912.8 9.412.5 12.6

13.413.3 12.5

93.2 91.6101.4

94.7 93.287.2 90.6

3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Health

72.882.2 74.6 77.0 72.8 77.7 86.1

11.814.5

12.4 12.6 5.65.4

5.25.25.2

5.15.2

9.610.611.8

89.8101.7

92.3 94.789.8 93.7

101.3

3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Life and Others

34.446.0 42.8 41.9 34.4 41.5 30.9

29.7

36.6 44.130.1

29.741.3

41.4

11.011.5

10.9

11.712.4

11.710.9

74.9

94.499.2

83.674.9

93.883.7

3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05Administrative Expenses / Earned premiums - %

Expenses for Marketing / Earned Premiums - %

Retained Claims / Earned Premiums - %


Figure 72. Combined Ratio


7.9.3 Brasilseg

Brasilseg Participações is a company with the object of participating in companies in the insurancemarket, and it holds 100% of the voting capital of Brasilveículos, which occupies 6th place in the rankingof vehicle insurers. Its main product is the BB Auto Insurance, which is marketed through Banco doBrasil’s points of service, spread all over the Brazilian territory.

In relation to 4Q04, the insured fleet increased 1.2%, going up from 578 thousand vehicles to 585thousand in March 2005. The combined ratio worsened slightly, because of the increase in retainedclaims, rising from 87.2% to 90.6% (1Q04 – 1Q05).

Table 105. Brasilseg DataR$ thousand

Chg. %Mar/04 Dec/04 Mar/05 on Mar/04 on Dec/04

Fleet – thousand 520 578 585 12.5 1.2Volume of the Managed Portfolio 172,832 238,734 256,059 48.2 7.3

7.9.4 Brasilsaúde

Created in December 1995, Brasilsaúde Companhia de Seguros is the fruit of a partnership betweenBanco do Brasil and Sul América Seguros.

Brasilsaúde uses BB branches and brokers to market health insurance in the following modalities:company, professional, individual, and dental.

The number of lives insured decreased 1.9% in relation to the December 2004. This fact, combined withthe increase of retained claims, caused the decrease of the combined ratio, which went down from93.7% to 101.3%

Table 106. Brasilsaúde DataR$ thousand


Lives Insured – thousand 80 104 102 27.5 (1.9)Volume of the Managed Portfolio 38,474 45,393 44,583 15.9 (1.8)

7.9.5 Aliança do Brasil

Founded in June 1997, Companhia de Seguros Aliança do Brasil resulted from the association betweenBanco do Brasil and Aliança da Bahia. The company is ranked second in the market and operatesthroughout Brazil, offering its products through Banco do Brasil branches and brokers.

Aliança do Brasil has a diversified portfolio of products, made up of 20 types of insurance from the lifeand basic lines, and offers solutions that meet the needs of individuals and businesses.

The number of policies increased 0.4% in relation do December/2004.The increase in earned premiums,combined with the lower increase of retained claims improved the Combined Ration from 74.9% to64.5%.


Table 107. Aliança do Brasil DataR$ thousand


Life Insurance Policies – thousand 1,366 1,351 1,356 (0.7) 0.4Volume of the Managed Portfolio 559,562 680,627 685,264 22.5 0.7

7.9.6 Brasilcap

Brasilcap was formed in 1995, following a partnership between Banco do Brasil and Icatu Hartford, SulAmérica and Aliança da Bahia. The company’s main product is Ourocap, which can only be acquired byBB current account holders. This product is based on two forms of payment: a single installment, or inmonthly installments, with the customer competing for several prizes.

The quantity of bonds increased 4.9% in the quarter and the managed portfolio increased 9.9% in thesame period, totaling R$ 2,339 million.

Table 108. Brasilcap DataR$ thousand

Chg. %


Quantity of Bonds – thousand 2,659 2,792 2,824 6.2 1.1Volume of the Managed Portfolio 2,034,349 2,264,310 2,339,324 15.0 3.3

7.9.7 Brasilprev

Brasilprev is a supplementary pension plan company of Banco do Brasil, in association with thePrincipal Financial Group and Sebrae. Founded in 1993, it actually started marketing its products in1995. These include the traditional, PGBL and VGBL plans, and the company is currently ranked third inthe pension plan market. The number of active participants increased 3.3% in relation to December2004.

Table 109. Brasilprev DataR$ thousand

Chg. %


Active participants – thousand 1,285 1,365 1,410 9.7 3.3Volume of the Managed Portfolio 6,228,056 7,781,798 8,149,813 30.9 4.7

7.9.8 BB Previdência

BB Previdência is a multisponsored pension fund created in 1994, with the objective of instituting andmanaging private pension plans (annuity or income) offering benefits to public and private sectorcompanies, trade associations, associations and trade unions operating in Brazilian territory.

Its main competitive advantages are:

- Lower management fees, as the institution has its own workforce which is shared with various plans;and- Better investment rates for the assets under management, given the volumes that are invested.


The institution showed a 1.0% increase in the number of active participants in relation toDecember/2004, totaling 39 thousand at the end of March/2005 and the Managed Portfolio totaled R$658 million.

Table 110. BB Previdência DataR$ thousand

Chg. %


Active Participants - thousands 34 39 39 15.2 1.0Sponsors 45 43 54 20.0 25.6Volume of the Managed Portfolio 479,686 607,174 658,727 37.3 8.5


8 – Financial Statements8.1 Summarized Balance SheetTable 111. Balance Sheet – Assets


ASSETS 205,762 215,134 230,144 231,107 227,374 235,599 239,014 245,685Current and long-term assets 201,714 211,087 225,632 226,668 222,858 231,014 233,955 240,739Available funds 6,683 6,083 10,789 15,279 15,841 16,669 15,494 14,408Short-term interbank investments 12,348 23,257 33,407 28,333 14,475 18,559 16,453 17,681 Open market investments 1,051 7,644 5,092 5,349 4,662 6,160 2,732 3,953 Interbank deposits 11,297 15,613 28,316 22,984 9,813 12,400 13,722 13,729Marketable securities 72,746 74,055 69,590 67,875 69,855 71,120 73,485 74,089 Securities for trading 2,104 5,393 16,095 12,338 11,998 12,690 13,163 11,309 Securities available for sale 42,515 43,158 28,307 30,266 31,008 31,997 32,790 35,092 Securities held to maturity 27,640 25,109 24,821 24,959 25,146 25,945 26,951 27,039 Financial derivatives 487 396 368 331 1,702 488 581 649Interbank accounts 22,110 18,279 18,666 19,409 20,959 21,152 22,106 23,348 Central Bank deposits 18,911 16,127 18,477 17,099 18,781 18,919 21,931 20,787 Compulsory dep. on demand. Dep & float 8,327 5,324 7,129 5,950 7,118 6,527 9,087 7,866 Compulsórios dep. on savings dep. 10,584 10,803 11,348 11,148 11,662 12,392 12,844 12,921 Others 3,199 2,152 189 2,311 2,178 2,232 175 2,561Interdepartmental accounts 308 413 34 39 13 108 147 140Loans 56,654 60,418 65,591 66,451 69,241 69,954 74,823 77,896 Public sector 4,437 4,693 4,364 4,461 4,647 4,552 4,161 4,528 Private sector 55,715 59,475 65,207 66,475 69,472 70,520 75,773 78,765 (Allowance for loan losses) (3,498) (3,750) (3,980) (4,485) (4,877) (5,118) (5,110) (5,397)Leasing 32 24 13 10 6 6 20 4 Leasing and sub-leasing receivables 349 335 328 358 411 472 532 580 Public sector 11 9 - 12 20 40 54 60 Private sector 338 326 328 346 390 432 479 520 (Unearned lease income) (303) (296) (299) (327) (385) (443) (483) (547) (Allowance for lease losses) (14) (15) (17) (20) (20) (22) (29) (29)Other receivables 30,600 28,330 27,309 28,983 32,196 33,194 31,198 32,985 Receivable on guarantees honored 49 75 30 28 29 41 71 83 Foreign exchange portfolio 12,075 9,971 8,859 10,196 11,508 11,455 8,530 10,444 Income receivable 280 342 401 292 309 354 180 211 Trading and brokerage of securities 27 48 88 40 45 41 235 62 Specific credits 464 480 494 506 516 530 544 559 Special operations 1 1 1 1 1 1 1 1 Tax credits 10,433 9,897 9,406 9,116 8,971 8,505 8,396 7,956 Other credits - - - 357 909 1,450 2,128 2,709 (Provision or doubtful receivables) 5,520 5,698 6,244 6,704 7,750 8,127 8,789 9,199 (With loan characteristics) 3,075 3,134 3,030 3,168 3,746 4,437 4,268 4,959 (Without loan characteristics) (1,323) (1,317) (1,246) (1,425) (1,587) (1,749) (1,944) (2,146)Other assets (311) (279) (199) (187) (205) (234) (226) (229) Statutory profit sharing (1,012) (1,038) (1,047) (1,238) (1,383) (1,515) (1,718) (1,917) Others 234 228 233 289 272 252 228 188 (Provision for possible losses) - - - - - - - - Prepaid expenses 402 403 412 421 398 391 335 317Permanent assets (198) (204) (204) (202) (201) (201) (186) (177) Investments 30 28 24 70 76 62 79 48 Investm. in associated and subsidiary co. 4,048 4,047 4,513 4,439 4,517 4,585 5,059 4,946Local 903 916 878 785 823 843 900 896Foreign 1,022 1,077 881 767 803 819 880 851 Other investments 231 232 232 232 234 231 229 230 (Provision for losses) (350) (392) (235) (214) (215) (208) (210) (185) Property and equipment 2,404 2,403 2,886 2,844 2,730 2,723 3,052 2,886 Land and buildings in use 2,222 2,237 2,211 2,231 2,275 2,270 2,284 2,195 Other property and equipment in use 3,070 3,110 3,681 3,494 3,446 3,534 3,936 3,873 (Accumulated depreciation) (2,887) (2,945) (3,005) (2,881) (2,991) (3,082) (3,168) (3,182) Leased assets 443 411 393 413 466 519 553 619 Leases assets 568 533 510 530 579 636 676 749 (Accumulated depreciation) (125) (122) (117) (117) (114) (117) (123) (129) Deferred charges 298 317 356 396 498 500 554 544 Organization and expansion costs 594 628 677 747 882 907 970 991 (Accumulated amortization) (296) (311) (321) (351) (384) (407) (415) (447)


Table 112. Balance Sheet – LiabilitiesR$ million

Jun/03 Sep/03 Dec/03 Mar/04 Jun/04 Sep/04 Dec/04 Mar/05LIABILITIES AND SHAREHOLDERS' EQUITY 205,762 215,134 230,144 231,107 227,374 235,599 239,014 245,685Current and long-term assets 194,793 203,341 217,846 218,294 214,373 221,689 224,775 230,624Deposits 99,881 103,071 110,014 110,219 115,795 115,079 115,532 120,096 Demand deposits 21,170 20,498 27,140 30,306 29,425 30,191 28,991 29,340 Savings deposits 26,427 26,578 27,425 27,590 28,939 29,915 31,069 31,418 Interbank deposits 5,437 6,438 7,275 6,219 7,684 5,530 5,768 6,489 Time deposits 46,847 49,558 48,173 46,104 49,747 49,444 49,665 52,769 Investment deposits - - - - - - 38 81Money market borrowing 41,468 46,478 40,063 40,343 37,132 42,003 44,527 43,086 Own portfolio 40,041 38,320 37,531 34,911 32,371 36,679 41,600 39,603 Third-party portfolio 1,427 8,158 2,532 5,433 4,761 5,324 2,927 3,483Funds from acceptances and securities placed 1,071 1,615 1,637 1,340 1,397 768 776 852 Foreign securities 1,071 1,615 1,637 1,340 1,397 768 776 852Interbank accounts 2,676 1,816 17 1,445 1,945 2,034 6 1,521 Receipts and payments pending settlement 2,676 1,816 17 1,445 1,945 2,034 6 1,520 Correspondent banks - - - - - - - -Interdepartmental accounts 813 989 1,834 1,172 1,189 1,852 1,725 1,385 Thrid-party funds in transit 797 968 1,816 1,149 1,063 1,743 1,725 1,332 Internal transfers of funds 15 21 19 23 126 109 - 53Borrowing 8,714 7,509 9,982 10,707 13,872 16,017 16,565 17,201 Foreign borrowing 8,714 7,509 9,982 10,707 13,872 16,017 16,565 17,201Domestic onlending – official institutions 6,134 6,311 7,458 8,003 8,448 8,778 10,611 10,629 Federal Treasury 1,184 1,222 1,829 1,878 1,940 2,059 3,361 3,596 National Development Bank (BNDES) 2,737 2,821 2,932 3,081 3,322 3,484 3,559 3,663 Fed,l Program for Capital Equip, Finan, (FINAME) 1,699 1,747 2,140 2,510 2,720 2,662 3,026 2,927 Other institutions 515 521 557 534 466 574 665 443Foreign onlending 2 2 2 2 1 9 2 1Financial derivatives 702 530 533 473 1,996 370 523 674Other accounts payable 33,333 35,021 46,306 44,590 32,599 34,780 34,508 35,180 Collection of taxes and contributions 1,613 2,185 272 2,221 2,168 2,328 255 1,967 Foreign exchange portfolio 9,771 10,120 22,407 19,406 5,480 7,509 7,870 7,969 Stockholders and statutory distributions 397 125 585 60 644 262 423 84 Taxes and social security 792 902 908 924 984 1,013 980 954 Trading and brokerage of securities 3,369 3,407 4,054 4,009 4,217 3,759 3,627 3,343 Financial and development funds 1,777 1,707 1,744 1,768 1,825 1,814 1,867 1,954 Special operations 2 2 2 2 2 2 2 2 Subordineted Debt 4,607 4,833 4,991 5,380 5,573 6,637 6,833 7,093 Other liabilities 4,141 3,759 3,175 2,908 2,894 2,885 3,051 3,070 Actuarial liabilities 6,864 7,980 8,170 7,911 8,812 8,571 9,600 8,744Deferred income 97 105 126 127 138 139 134 128Shareholders’ equity 10,872 11,687 12,172 12,686 12,864 13,771 14,106 14,933 Capital 8,366 8,366 8,366 8,366 8,366 10,302 9,864 9,864 (Unpaid Capital) - - - - - (445) - - Capital reserves 5 5 5 5 5 5 5 5 Revaluation reserves 25 25 24 24 24 26 26 26 Revenue reserves 2,796 2,796 3,674 3,674 4,645 3,195 4,294 4,294 Mark-to-market – securities and derivatives (194) (43) 228 127 (51) (17) 43 (95) Retained earnings (accumulated losses) - - - - - - - - (Treasury shares) (126) (126) (126) (126) (126) (126) (126) (126) Income accounts - 665 - 616 - 833 - 965


8.2 Summarized Corporate Law Income StatementTable 113. Summarized Corporate Law Income Statement


Financial Intermediation Income 7,437 10,032 8,122 7,565 8,159 6,941 8,003 8,046 Loans 3,894 4,239 4,244 4,198 4,361 4,120 4,461 4,546 Leasing 21 20 19 19 21 23 26 29 Securities 3,508 4,444 3,197 2,826 2,930 2,660 2,922 3,166 Financial Derivatives 73 (201) (134) (37) (194) 22 (89) (31) Foreign Exchange Portfolio (514) 1,093 448 252 729 (224) 329 (50) Compulsory Investments 455 438 348 307 312 340 353 386Financial Intermediation Expenses (5,831) (7,070) (5,067) (5,152) (5,739) (4,607) (4,657) (5,361) Money Market Funds (4,554) (4,598) (3,731) (3,047) (3,070) (3,222) (3,412) (3,729) Borrowing, Assignments and Onlending (329) (1,695) (503) (745) (1,467) (315) (357) (371) Allowance for Loan Losses (948) (777) (833) (1,359) (1,201) (1,071) (887) (1,261)Gross Income from Financial Intermediation 1,606 2,962 3,056 2,414 2,421 2,334 3,346 2,685Other Operating Income (Expenses) (590) (1,749) (1,849) (1,402) (1,276) (969) (2,259) (1,182) Service Revenues 1,343 1,412 1,511 1,553 1,643 1,717 1,702 1,767 Personnel Expenses (1,481) (1,681) (2,101) (1,574) (1,952) (1,744) (1,840) (1,804) Other Administrative Expenses (955) (1,221) (1,165) (1,126) (1,381) (1,344) (1,633) (1,407) Taxes (272) (271) (325) (319) (360) (385) (406) (395) Equity Int. in the Results of Subs. and Affil. (710) 147 250 116 347 (275) (149) 104 Other Operating Revenues 3,383 366 1,249 518 983 2,637 1,700 1,056 Other Operating Expenses (1,898) (501) (1,269) (570) (555) (1,576) (1,633) (503)Operating Income 1,016 1,213 1,206 1,012 1,144 1,365 1,087 1,503Non-operating Income 41 17 39 15 39 80 (4) 98Income Before Taxes 1,058 1,231 1,245 1,027 1,184 1,445 1,083 1,601 Income and Social Contribution Taxes (409) (516) (453) (370) (239) (545) (187) (559) Statutory Profit Sharing (49) (50) (155) (41) (140) (67) (125) (78)Net Income 600 665 637 616 805 833 771 965


8.3 Income Statement with ReallocationsTable 114. Income Statement with Reallocations


Financial Intermediation Income 8,407 10,181 8,210 7,622 8,462 7,456 7,855 8,191 Loans 3,894 4,239 4,244 4,198 4,361 4,120 4,461 4,546 Leasing 21 20 19 19 21 23 26 29 Securities 3,508 4,444 3,197 2,826 2,930 2,660 2,922 3,166 Financial Derivatives 73 (201) (134) (37) (194) 22 (89) (31) Foreign Exchange Portfolio (514) 1,093 448 252 729 (224) 329 (50) Compulsory Investments 455 438 348 307 312 340 353 386 FX Gain (Loss) on Foreign Investments (729) 106 45 18 268 (354) (202) (40) Other Op. Inc. of a Fin. Intermed. Nature 1,699 43 43 38 35 869 54 184Financial Intermediation Expenses (4,883) (6,293) (4,233) (3,793) (4,537) (3,536) (3,769) (4,100) Money Market Funds (4,554) (4,598) (3,731) (3,047) (3,070) (3,222) (3,412) (3,729) Borrowing, Assignments and Onlending (329) (1,695) (503) (745) (1,467) (315) (357) (371)Gross Financial Margin 3,524 3,888 3,977 3,829 3,925 3,919 4,086 4,090 Allowance for Loan Losses (863) (747) (827) (901) (903) (856) (868) (1,061)Net Financial Margin 2,661 3,141 3,150 2,929 3,022 3,063 3,218 3,029 Service Revenues 1,343 1,412 1,511 1,553 1,643 1,717 1,702 1,767 Taxes on Revenues (241) (242) (289) (284) (323) (345) (369) (351)Contribution Margin 3,763 4,312 4,372 4,197 4,341 4,435 4,551 4,446Administrative Expenses (2,466) (2,931) (3,149) (2,735) (3,093) (3,129) (3,509) (3,250) Personnel Expenses (1,481) (1,681) (1,949) (1,574) (1,675) (1,744) (1,840) (1,804) Other Administrative Expenses (955) (1,221) (1,165) (1,126) (1,381) (1,344) (1,633) (1,407) Other Tax Expenses (30) (29) (35) (34) (37) (41) (36) (39)Commercial Income 1,297 1,381 1,223 1,462 1,248 1,307 1,042 1,196Other Operating Income (Expenses) (280) (167) 112 (235) (245) (51) (139) 84 Eq. Interest in Resul. Subs. and Affil. 19 42 30 98 79 79 53 144 Other Operating Income 508 323 1,206 432 383 457 621 596 Other Operating Expenses (808) (532) (1,124) (766) (707) (588) (812) (656)Operating Income 1,016 1,213 1,335 1,227 1,003 1,256 903 1,280Non-operating Income 41 17 39 15 39 80 (4) 98Income Before Taxes 1,058 1,231 1,374 1,242 1,043 1,336 899 1,378 Income and Social Contribution Taxes (409) (516) (453) (370) (47) (545) (187) (483) Interest on Own Capital Tax Benefit 109 - 144 - 153 - 171 - Statutory Profit Sharing (49) (50) (155) (41) (140) (67) (125) (78)Recurring Income 600 665 765 831 856 724 586 817Non-Recurring Items - - (128) (215) (51) 109 184 148 Non Recurring Prov. for Credit Risks - - - - - - 184 - Non Recurring Rever. Prov. for Credit Risks - - - (262) (146) (80) - - Non Recurring Provision for Credit Risks - - 175 - - - - - Provision for Losses - - (152) 47 - - - - Provision for Voluntary Retirement Plan - - (151) - - - - - Write off of MaxBlue Holding goodwill - - - - 565 - - 229 Recovery of Undue Taxes - - - - (277) 189 - - Prov. for Retirement Incentive Plan - - - - (192) - - (76) Provision for Non-recurring IR and CS - - - - - - - (6)Net Income 600 665 637 616 805 833 771 965


8.4 Analytical SpreadTable 115. Analytical Spread

Average Balances in R$ million2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Remunerated Assets 158,940 169,158 182,819 186,354 176,216 183,393 193,649 199,964Available Funds in Foreign Currency 4,124 2,774 4,333 6,103 7,813 9,266 10,648 11,664Income from Avail. Funds in Foreign Currency (7) 199 52 11 430 18 13 6Annualized Rate - % (0.71) 31.91 4.9 0.7 23.9 0.8 0.5 0.2Securities + Interbank Investments 85,449 93,427 98,205 98,569 83,162 87,637 91,346 92,440Securities Income excluding Hedges 3,508 4,444 3,197 2,826 2,930 2,660 2,922 3,166Annualized Rate - % 17.46 20.43 13.7 12.0 14.9 12.7 13.4 14.4Loans + Leasing 58,368 62,085 68,632 70,443 73,086 73,984 78,293 82,095Loans + Leasing Income 3,708 3,971 3,892 3,994 4,067 3,865 4,282 4,322Annualized Rate - % 27.94 28.15 24.7 24.7 24.2 22.6 23.7 22.8Remunerated Compulsory Deposit 10,503 10,336 11,098 10,708 11,614 11,946 12,760 13,129Income from Compulsory Deposits 455 438 348 307 312 340 353 386Annualized Rate - % 18.48 18.04 13.2 12.0 11.2 11.9 11.5 12.3Other Remunerated Assets 496 536 551 532 542 561 601 637Other Income with Fin. Intermed. Charact. 46 43 43 37 37 40 37 37Annualized Rate - % 42.60 36.36 35.1 30.5 30.3 31.9 26.9 25.6Tax Credits 10,404 10,104 9,543 9,223 8,913 8,651 8,333 8,127Other Assets 28,923 29,810 29,015 33,369 34,189 35,055 32,820 33,401Permanent Assets 4,058 4,058 4,234 4,423 4,471 4,538 4,776 4,945TOTAL ASSETS 202,326 213,130 225,611 233,370 223,789 231,636 239,577 246,437

Remunerated Liabilities 143,954 149,598 152,150 148,649 151,362 157,351 164,690 169,839Savings Deposits 26,534 26,544 26,940 27,618 28,392 29,718 30,452 31,458Expenses with Savings Deposits (761) (740) (595) (525) (561) (707) (622) (665)Annualized Rate - % 12.0 11.6 9.1 7.8 8.1 9.9 8.4 8.7Interbank Deposits 5,116 6,102 6,299 6,730 7,580 6,279 5,502 6,621Expenses with Interbank Deposits (60) (70) (68) (50) (52) (69) (80) (101)Annualized Rate - % 4.8 4.7 4.4 3.0 2.8 4.4 6.0 6.3Time Deposits 46,931 48,785 50,650 48,117 48,928 49,164 50,078 51,596Expenses with Time Deposits (1,440) (1,512) (1,246) (1,049) (1,124) (1,059) (1,113) (1,269)Annualized Rate - % 12.9 13.0 10.2 9.0 9.5 8.9 9.2 10.2Money Market Borrowing 42,795 45,851 43,938 39,571 36,973 39,855 43,694 43,787Expenses with Money Market Borrowing (2,264) (2,199) (1,782) (1,373) (1,235) (1,351) (1,551) (1,645)Annualized Rate - % 22.9 20.6 17.2 14.6 14.0 14.3 15.0 15.9Foreign Borrowing 9,164 7,943 9,044 10,403 12,531 14,963 16,100 16,877Exp. with Foreign Borr., Onlending and Banks (55) (1,445) (262) (358) (1,200) (60) (71) (66)Annualized Rate - % 2.42 95.13 12.11 14.50 44.16 1.61 1.78 1.58Onlending 6,068 6,243 7,020 7,840 8,266 8,731 9,762 10,544Expenses with Onlending (123) (132) (146) (146) (159) (139) (151) (175)Annualized Rate - % 8.38 8.71 8.60 7.64 7.91 6.52 6.35 6.80Fin. and Develop. Funds + Subord.Debt 6,291 6,522 6,641 7,022 7,306 7,845 8,343 8,123Expenses with Fin. and Develop. Funds (151) (110) (103) (241) (108) (116) (134) (130)Annualized Rate - % 9.93 6.92 6.33 14.48 6.07 6.03 6.60 6.57Foreign Securities 1,055 1,610 1,618 1,348 1,388 795 759 832Expenses with Foreign Securities (17) (25) (34) (26) (24) (16) (15) (21)Annualized Rate - % 6.73 6.40 8.55 7.78 7.15 8.55 7.88 10.65Other Liabilities 47,637 52,049 61,302 72,238 59,376 60,744 60,795 62,038 Demand Deposits 20,296 19,937 23,258 27,838 30,037 29,938 29,319 28,764 Other Liabilities 27,341 32,112 38,044 44,400 29,339 30,806 31,476 33,273Shareholders’ Equity + Income Accounts 10,734 11,483 12,159 12,483 13,050 13,541 14,093 14,561TOTAL LIAB. AND SHAREHOLDERS’ EQ. 202,326 213,130 225,611 233,370 223,789 231,636 239,577 246,437


Average Balances in R$ million2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Financial Intermediation Income 8,407 10,181 8,210 7,622 8,462 7,456 7,855 8,191Income from Remunerated Assets 7,709 9,095 7,532 7,174 7,776 6,924 7,607 7,918Income from Financial Derivatives 73 (201) (134) (37) (194) 22 (89) (31)FX Gain (Loss) on Foreign Investments (729) 106 45 18 268 (354) (202) (40)Other FX Operations (506) 894 396 241 300 (242) 317 (56)Other Operating Income 1,653 (0) (0) 2 (2) 828 17 147Recovery of Write-offs 207 287 371 224 315 278 206 253Financial Intermediation Expenses (4,883) (6,293) (4,233) (3,793) (4,537) (3,536) (3,769) (4,100)Expenses with Remunerated Liabilities (4,871) (6,233) (4,237) (3,767) (4,463) (3,517) (3,737) (4,073)Expenses with FGC on Demand Deposits (12) (12) (13) (16) (17) (17) (17) (15)Expenses with Debt Assumption Contracts - (47) 17 (10) (58) (2) (15) (12)

Gross Financial Margin 3,524 3,888 3,977 3,829 3,925 3,919 4,086 4,090Assets – Permanent Assets 198,267 209,072 221,377 228,946 219,318 227,099 234,802 241,493Remunerated Assets 158,940 169,158 182,819 186,354 176,216 183,393 193,649 199,964

Finan. Interm. Inc. / (Assets – Perman. Assets) 4.2 4.9 3.7 3.3 3.9 3.3 3.3 3.4Finan. Intermed. Inc. / (Assets – Perman. Assets)– Ann. 18.1 20.9 15.7 14.0 16.4 13.8 14.1 14.3

Finan. Intermed. Expenses / (Assets –Permanent Assets) 2.5 3.0 1.9 1.7 2.1 1.6 1.6 1.7

Finan. Intermed. Expenses / (Assets –Permanent Assets) – Ann. 10.2 12.6 7.9 6.8 8.5 6.4 6.6 7.0

GFM / (Assets – Permanent Assets) 1.8 1.9 1.8 1.7 1.8 1.7 1.7 1.7GFM / (Assets – Permanent Assets) – Ann. 7.3 7.6 7.4 6.9 7.4 7.1 7.1 6.9Finan. Intermed. Income / (Remunerated Assets) 5.3 6.0 4.5 4.1 4.8 4.1 4.1 4.1Finan. Intermed. Inc. / (Remun. Assets) – Ann. 22.9 26.3 19.2 17.4 20.6 17.3 17.2 17.4Finan. Intermed. Expenses / (Remun. Assets) 3.1 3.7 2.3 2.0 2.6 1.9 1.9 2.1Finan. Interm. Expen.s / (Remun. Assets) – Ann. 12.9 15.7 9.6 8.4 10.7 7.9 8.0 8.5GFM / (Remunerated Assets) 2.2 2.3 2.2 2.1 2.2 2.1 2.1 2.0GFM / (Remunerated Assets) – Ann. 9.2 9.5 9.0 8.5 9.2 8.8 8.7 8.4


Complete Financial Statements

1st Quarter 2005

(A free translation of the original in Portuguese)

Banco do Brasil S.A.Report of Independent Accountants on theLimited Review of Quarterly Information (ITR)March 31, 2005 and 2004


Banco do Brasil S.A.Quarterly InformationBalance SheetIn thousands of reais

1

March 31, March 31, March 31, March 31,2005 2004 2005 2004

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Current assets 134,535,509 142,558,913 Current liabilities 200,121,472 202,660,632

Available funds 14,404,154 15,244,825 Deposits (Note 10) 120,827,880 121,763,530 Demand deposits 29,296,550 30,180,333

Short-term interbank investments (Note 4) 20,561,969 47,941,216 Savings deposits 31,417,670 27,590,328 Open market investments 3,952,762 5,344,881 Interbank deposits 7,969,037 22,622,775 Interbank deposits 16,609,207 42,596,335 Time deposits 52,063,561 41,370,094

Other deposits 81,062 0

Marketable securities andDerivative financial instruments (Note 5) 21,547,099 12,456,364

Funds obtained in the open market39,151,967 36,112,230

Own portfolio 12,533,271 7,719,924 Own portfolio 36,250,222 31,389,288 Subject to repurchase commitments 7,793,892 3,908,419 Third-party portfolio 2,901,745 4,722,942 Restricted deposits – Central Bank 524,402 468,808 Restricted to guarantees provided 0 0 Derivative financial instruments 695,534 359,213 Notes and securities 136,460 565,035

Foreign marketable securities 136,460 565,035

Interbank accounts 23,332,461 19,379,249 Interbank accounts 1,517,538 1,422,028 Payments and receipts pending settlement 2,442,369 2,208,167 Receipts and payments pending settlement 1,517,346 1,422,028 Restricted deposits Correspondent banks 192 0 Central Bank deposits 20,786,644 17,098,773 National Treasury – rural credit receivable 8,409 4,117 National Housing Financing System (SFH) 2,633 1,347 Interdepartmental accounts 1,385,209 1,171,918 Interbank onlendings 5,031 5,735 Third-party funds in transit 1,331,791 1,149,283 Correspondent banks 87,375 61,110 Internal transfers of funds 53,418 22,635

Interdepartmental accounts 140,229 39,129 Borrowings (Note 11) 15,124,124 9,924,479 Internal transfers of funds do 140,229 39,129 Foreign borrowings 15,124,124 9,924,479

Lending operations 39,566,100 33,932,623 Local onlendings – official institutions (Note 12) 3,314,108 1,550,605 Lending operations National Treasury 3,312,941 1,549,457

Banco do Brasil S.A.

Quarterly InformationBalance SheetIn thousands of reais (continued)

2



Public sector (Note 6b) 1,117,791 553,017 National Economic Development Bank (BNDES) 0 0 Private sector (Note 6b) 41,302,073 35,536,392 National Industrial Financing Authority (FINAME) 0 0 (Allowance for loan losses) (Notes 6e and 6f) (2,853,764) 2,156,786 Other institutions 1,167 1,148

Leasing operations 3,340 3,162 Leases and subleases receivable Foreign onlendings 546,962 547,296 Public sector 22,864 4,314 Foreign onlendings 546,962 547,296 Private sector 2,100 2,139 (Unearned income from leasing operations) (21,512) (3,263) (Allowance for leasing losses) (Note 6e) (112) (26)

Other receivables 14,796,490 13,277,381 Derivative financial instruments (Note 5b) 646.303 473,563 Receivables on guarantees honored 82,809 27,651 Derivative financial instruments Foreign exchange portfolio (Note 8a) 10,444,104 10,341,046 Income receivable 110,156 215,957 Other liabilities 17,470,921 29,129,948 Negotiation and intermediation of securities 1,969 8,875 Collection of taxes and social contributions 1,966,211 2,220,888 Specific credits (Note 8b) 279,411 253,008 Foreign exchange portfolio (Note 14a) 7,969,384 19,550,483 Special operations 1,355 1,355 Social and statutory 84,392 59,800 Sundry (Note 8c) 5,885,642 3,738,025 Taxes and social security charges 771,663 660,625 (Allowance for other losses) (Notes 6e and 6f) (2,008,956) (1,308,536) Negotiation and intermediation of securities 5,668 428,956

Financial and development funds (Note 14b) 165,524 34,681Other assets 183,667 284,964 Special operations 2,382 2,405 Shareholdings 4 4 Subordinated Debts (Note 14e) 237 0 Other assets (Note 9) 309,588 412,901 Sundry (Note 14d) 6,505,460 6,172,110 (Allowance for losses) (170,473) (194,513) Prepaid expenses 44,548 66,572



3



Long-term receivables 109,413,716 102,258,429 Long-term liabilities 36,446,640 36,508,482

Interbank investments (Note 4) 2,374,067 1,432,449 Deposits (Note 10) 1,391,089 5,670,136 Open market investments 54,452 58,458 Interbank deposits 767,601 1,014,739 Interbank deposits 2,319,615 1,373,991 Time deposits 623,488 4,655,397

Funds obtained in the open market 4,798,557 4,577,366Marketable securities andDerivative financial instruments (Note 5) 51,535,476 53,724,847

Own portfolio4,173,151 3,867,656

Own portfolio 15,606,513 15,094,258 Third-party portfolio 625,406 709,710 Subject to repurchase commitments 33,832,296 32,083,929 Restricted deposits - Central Bank 1,660,608 6,223,402 Restricted for guarantees provided 364,014 322,860 Notes and securities 747,934 799,645 Derivative financial instruments 72,045 398 Foreign marketable securities 747,934 799,645

Lending operations 37,524,564 31,419,782 Borrowings (Note 11) 4,786,239 3,728,716 Lending operations Foreign borrowings 4,786,239 3,728,716 Public sector (Note 6b) 3,385,163 3,891,767 Private sector (Note 6b) 36,499,040 29,599,112 (Allowance for loan losses) (Notes 6e and 6f) (2,359,639) (2,071,097)

Leasing operations 5,454 5,672 Local onlendings - official institutions (Note 12) 7,306,127 6,443,835 Leases and subleases receivable National Treasury 282,995 328,733 Public sector 37,305 7,670 National Economic Development Bank (BNDES) 3,662,796 3,081,217 Private sector 2,873 666 National Industrial Financing Authority (FINAME) 2,918,381 2,501,513 (Unearned income from leasing operations) (34,546) (2,664) Other institutions 441,955 532,372 (Allowance for leasing losses) (Note 6e) (178) 0

Foreign onlendings 235,957 548,951 Foreign onlendings 235,957 548,951



4



Derivative financial instruments (Note 5b) 103.212 440 Derivative financial instruments 103.212 440

Other receivables 17,974,155 15,675,679 Receivables on guarantees honored 0 19 Income receivable 43,835 52,443 Other liabilities 17,077,525 14,739,393 Specific credits (Note 8b) 279,411 253,008 Taxes and social security charges 0 82 Sundry (Note 8c) 17,776,137 15,474,413 Negotiation and intermediation of securities 3,268,485 3,527,474 (Allowance for other losses) (Notes 6e and 6f) (125,228) (104,204/ Financial and development funds 1,788,178 1,733,540

Subordinated debts (Note 14e) 7,092,958 5,380,281 Sundry (Note 14d) 4,927,904 4,098,016

Deferred income 128,240 126,320Permanent assets 7,680,026 7,164,269 Deferred income 128,240 126,320

Investments 4,202,520 3,954,925 Stockholders' equity (Note 16) 14,932,899 12,686,177 Investments in subsidiaries and in associate companies (Note 19) Domestic 4,161,513 2,357,788 Capital 9,864,153 8,366,189 Abroad 0 0 Local residents 9,841,636 8,343,671 Other investments 194,883 195,532 (Allowance for losses) (153,876) (154,691/ Foreign residents 22,517 22,518

Property and equipment in use 2,884,767 2,838,406 Land and buildings in use 2,195,240 2,231,433 Capital reserves 4,763 4,754 Other property and equipment in use 3,864,781 3,478,558 (Accumulated depreciation) (3,175,254) (2,871,585) Revaluation reserves 25,701 24,362

Leased assets 55,356 6,419 Leased assets Revenue reserves 4,294,251 3,674,443 (Accumulated depreciation)



5



Adjustments to market value –Securities and derivatives(Note 16e) (94,799) 126,617

Deferred charges 537,383 364,519 Organization and expansion costs 974,103 692,367 Retained earnings 964,609 615,591 (Accumulated amortization) (436,720) (327,848/

(Treasury stocks) (125,779) (125,779)

Total 251,629,251 251,981,611 Total 251,629,251 251,981,611

The accompanying notes are an integral part of these financial statements.

(A free translation of the original in Portuguese)Banco do Brasil S.A.

Quarterly InformationStatement of Income (Unaudited)In thousands of reais

12

1.01.2005 to 3.31.2005 1.01.2005 to 3.31.2005 1.01.2004 to 3.31.2004 1.01.2004 to 3.31.2004

Revenue from financial intermediation 8,052,707 8,052,707 7,535,236 7,535,236Lending operations 4,508,028 4,508,028 4,178,931 4,178,931

Leasing operations 6,321 6,321 289 289Marketable securities 3,179,783 3,179,783 2,834,450 2,834,450

Derivative financial instruments (27,591) (27,591) (31,472) (31,472)Foreign exchange 0 0 245,844 245,844Compulsory investments 386,166 386,166 307,194 307,194

Expenses from financial intermediation (5,472,658) (5,472,658) (5,224,042) (5,224,042)Deposits and funds obtained in the open market (3,787,954) (3,787,954) (3,114,201) (3,114,201)Borrowings and onlendings (371,163) (371,163) (753,429) (753,429)

Leasing operations (2,788) (2,788) 0 0Net loss on exchange transaction (49,195) (49,195) 0 0Provision for credit losses (Note 6e) (1,261,558) (1,261,558) (1,356,412) (1,356,412)

Gross profit from financial transaction 2,580,049 2,580,049 2,311,194 2,311,194

Other operating income / expenses (1,116,410) (1,116,410) (1,348,174) (1,348,174)Services rendered (Note 14a) 1,631,835 1,631,835 1,437,782 1,437,782Personnel expenses (Note 14b) (1,785,970) (1,785,970) (1,555,929) (1,555,929)Other administrative expenses (Note 14c) (1,384,325) (1,384,325) (1,110,038) (1,110,038)Taxes (365,964) (365,964) (297,859) (297,859)

Equity in the earnings of associated and subsidiaries (Note 18) 221,157 221,157 190,515 190,515Other operating income (Note 14d) 1,050,218 1,050,218 517,532 517,532



13

1.01.2005 to 3.31.2005 1.01.2005 to 3.31.2005 1.01.2004 to 3.31.2004 1.01.2004 to 3.31.2004Other operating expenses (Note 14e) (483,361) (483,361) (530,177) (530,177)

Operating profit 1,463,639 1,463,639 963,020 963,020

Non-operating income (Note 14f) 96,430 96,430 14,295 14,295Income 111,767 111,767 28,047 28,047Expenses (15,337) (15,337) (13,752) (13,752)

Income before taxes and profit sharing 1,560,069 1,560,069 977,315 977,315

Income tax and social contribution (Note 16) (517,814) (517,814) (320,719) (320,719) Income tax (377,545) (377,545) (240,081) (240,081) Social contribution (137,217) (137,217) (84,923) (84,923) Deferred tax credits (3,052) (3,052) 4,285 4,285

Profit sharing (Note 21) (77,675) (77,675) (41,011) (41,011)

Net income 964,580 964,580 615,585 615,585

Number of shares 799,359,738 799,359,738 732,017,829 732,017,829Treasury sharesTotal shares used in the calculation of net income per shareNet income per share 1.20669 1.20669 0.84094 0.84094



Notes to the Quarterly Informationat March 31, 2005 and 2004All amounts in thousands of reais unless

Notes to the Financial Statements

1 - The Bank and its Operations2 - Presentation of the Financial Statem3 - Significant Accounting Practices4 - Interbank Investments5 - Securities and Derivative Financial I6 - Loan and Lease Operations7 - Provisions for Vacation Pay, Paid Le8 - Other Receivables9 - Other Assets10 - Deposits11 - Borrowings - Foreign Borrowings12 - Local Onlendings - Official Institutio13 - Funds Obtained in Foreign Capital 14 - Other liabilities15 - Analysis of Income Statement Item16 - Stockholders' Equity17 - Income Tax and Social Contributio18 - Tax Credits19 - Equity in the Earnings (Loss) of Su20 - Related-party Transactions21 - Operating Limits - Basel Agreemen22 - Assets and Liabilities in Foreign Cu23 - Retirement and Pension and Healt24 - Compensation Paid to Employees 25 - Assignment of Employees to Exter26 - Commitments, Responsibilities and


otherwise indicated

13

ents

nstruments

ave and Litigation

nsMarkets

s

n on Net Income

bsidiary and Associated Companies

trrencies

h Plans - Post-Employment Benefitsand Managementnal Organizations Contingencies


Notes to the Quarterly Informationat March 31, 2005 and 2004All amounts in thousands of reais unless otherwise indicated

14

1 The Bank and its Operations

Banco do Brasil S.A. is a publicly listed company established under private law and subject tothe requirements of Brazilian corporate legislation. Its corporate purpose is to carry out all theasset, liability and accessory banking operations, to provide banking services, intermediate andoriginate financial transactions in various forms and perform any activity permitted to theinstitutions that are part of the National Finance System. It is also the main financial agent of theBrazilian Federal Government and is therefore required to carry out the functions attributed to itby law, specifically those of Art. 19 of Law 4595/1964.

2 Presentation of the Financial Statements

(a) The financial statements of Banco do Brasil S.A. have been prepared in accordance with therequirements of Law 6404/1976 and the rules and instructions issued by the Brazilian CentralBank (BACEN) and the Brazilian Securities Commission (CVM).

The financial statements labeled "BB - Domestic and Overseas branches" include the Bank'soperations in Brazil and its branches abroad. The consolidated amounts ("BB - Consolidated")also include the financial subsidiaries. The balances of foreign branches and subsidiariesincluded in the financial statements of "BB - Domestic and Overseas branches" and "BB -Consolidated", respectively, are as follows:

Foreign branchesForeign branches and

subsidiaries

03.31.2005 03.31.2004 03.31.2005 03.31.2004

Current assets 30,531,297 48,507,551 30,244,351 48,219,092Long-term receivables 10,114,213 9,133,488 10,539,935 9,481,097Permanent assets 181,969 201,906 210,368 224,563

Total assets 40,827,479 57,842,945 40,994,654 57,924,752

Current liabilities 27,280,165 43,868,159 25,892,768 42,460,678Long-term liabilities 10,881,009 11,095,243 10,844,069 11,027,915Deferred income 2,669 3,121 2,669 3,441Stockholders' equity 2,663,636 2,876,422 4,255,148 4,432,718

Total liabilities and stockholders' equity 40,827,479 57,842,945 40,994,654 57,924,752

Net income for the quarter 57,397 43,578 99,333 60,650



15

(b) The consolidated financial statements (BB - Consolidated) comprise the domestic and foreignbranches and the foreign subsidiaries: Banco do Brasil - A.G. Vienna - Austria, BB - LeasingCompany Ltd., Brazilian American Merchant Bank - BAMB and the domestic subsidiaries: BB -Administração de Ativos - Distribuidora de Títulos e Valores Mobiliários S.A., BB - Banco deInvestimento S.A., BB - Leasing S.A. - Arrendamento Mercantil and BB - Banco Popular do BrasilS.A.

The asset and liability and the income and expense accounts recording transactions between theforeign branches and subsidiaries and Banco do Brasil S.A. were eliminated on consolidation. Thetranslation into Brazilian reais of the financial statements prepared in a foreign currency is carriedout using current exchange rates, in conformity with CVM Decision 28/1986.

BB - Corretora de Seguros e Administradora de Bens S.A., BB - Administradora de Cartões deCrédito S.A., BBTUR Viagens e Turismo Ltda., COBRA Tecnologia S.A., Ativos S.A., BB -Administradora de Consórcios S.A. and Brasil Aconselhamento Financeiro e DTVM S.A. were notincluded in the consolidation, in accordance with article 23 of CVM Instruction 247/1996, as theydo not materially affect the consolidated financial statements. The investments in these companieswere recorded on the equity method of accounting and the information required by article 20 ofCVM Instruction 247/1996 and CVM Deliberation 26/1986 is presented in Notes 19 and 20,respectively.

3 Significant Accounting Practices

(a) Net income is determined on the accrual basis of accounting.

(b) The assets and liabilities in foreign currencies and those subject to indexation are adjusted inaccordance with the exchange rates or official indices as of the balance sheet date and arepresented at realizable values. The assets and liabilities with floating financial charges arerecorded at present value, calculated pro rata based on the variations in the contractual indices.Those with fixed financial charges are recorded at future value, adjusted to reflect unearnedincome or unexpired expenses.

(c) The allowance for loan losses is recorded based on the parameters of CMN Resolution2682/1999, for domestic branches and subsidiaries, as well as those abroad, taking intoconsideration the risks of the transactions based on consistent and verifiable criteria, supported byinternal and external information, and covering all aspects established in the resolution.



16

(d) Securities

The securities purchased for the Bank's portfolio are recorded at the actual amount paid, includingbrokerage charges and fees, and are classified based on the intention of management, in threedifferent categories:

(d.1) Trading securities: these are securities purchased to be actively and frequently traded. They areadjusted to market value on a monthly basis and increases and decreases in value are recordedin income and expense accounts for the period.

(d.2) Securities available for sale: these are securities which, although not actively and frequentlytraded, can be traded at any time. They are adjusted to market value on a monthly basis andincreases and decreases in value are recorded, net of tax effects, in a separate stockholders'equity account.

(d.3) Securities held to maturity: these are securities that the Bank intends and has the financialcapacity to hold to maturity. The financial capacity is supported by a cash flow projection thatdoes not consider the possibility of sale of these securities. They are not adjusted to marketvalue.

The mark-to-market methodology used for securities was established following consistent andverifiable criteria, which consider the average price of trading on the day of calculation or, if notavailable, pricing models that estimate the probable net realizable value.

Income accrued on the securities, irrespective of the category in which they are classified, isappropriated on a pro rata basis on the accrual basis of accounting up to the date of maturity orof final sale, on an exponential or straight-line method, based on the contractual remunerationand purchase price, and recorded directly in income for the period.

Losses with securities classified as available for sale and held to maturity, if judged not to betemporary, are recorded directly in expense for the period and a new cost basis for the asset isdetermined.

Upon sale, the difference between the sale amount and the cost of purchase plus accruedincome is considered as a result of the transaction and is recorded on the date of the transactionas a gain or loss on securities.



17

(e) Derivative financial instruments

Derivative financial instruments are recorded at market value at each monthly trial balance andbalance sheet date. Increases or decreases in value are recorded in income or expenseaccounts of the respective financial instruments.

Derivative financial instruments used to offset, in whole or in part, the risks arising from exposureto variations in financial asset or liability market values are considered hedge instruments andare classified according to their nature:

(e.1) Market risk hedge - increases or decreases in value of the financial instruments classified in thiscategory, as well as of the item hedged, are recorded in income and expense accounts for theperiod.

(e.2) Cash flow hedge - the effective amount of the increases or decreases in value of the financialinstruments classified in this category is recorded, net of tax effects, in a separate stockholders'equity account. The effective amount is that in which the variation of the item hedged, directlyrelated to the corresponding risk, is offset by the variation in the financial instrument used forhedge, considering the accumulated effect of the transaction. Other variations in theseinstruments are recorded directly in income or expense accounts for the period.

The mark-to-market methodology used for derivative financial instruments was establishedfollowing consistent and verifiable criteria, which consider the average price of trading on thedate of calculation or, if not available, pricing models that estimate the probable net realizablevalue, according to the characteristics of the derivative.

(f) Permanent assets

(f.1) Investments are stated at cost and, when material, are recorded on the equity method ofaccounting.

(f.2) Property and equipment is stated at cost less depreciation calculated on the straight-line methodat the following annual rates: buildings and improvements - 4%; vehicles, installations andequipment - 20%; others - 10%;

(f.3) Organization and expansion expenses recorded in deferred charges relate to: leaseholdimprovements in properties owned by third parties for the installation of facilities, amortized atrates based on the rental terms; cost of purchase and development of systems, amortized at theannual rate of 20%.



18

(g) Vacations, paid leave and thirteenth month salaries are accrued monthly, in accordance with theperiod of acquisition of the right.

(h) Current benefits for existing employees are recognized on the accrual basis as the services areprovided. Post-employment benefits, comprising supplementary retirement benefits, medicalassistance and other benefits for which the Bank is responsible, were calculated at December 31,2004 in accordance with criteria established by CVM Deliberation 371/2000, considering a 6.7%annual interest rate, and are being allocated monthly in accordance with this calculation, as shownin Note 23. The retirement benefit liability relating to the assumption of the obligation to employeesadmitted before April 14, 1967 was provided on the basis of an actuarial calculation consideringthe 6.0% annual interest rate established in the contract between PREVI - Caixa de Previdênciados Funcionários do Banco do Brasil and the Bank.

(i) Corporate income tax is calculated at the basic rate of 15% plus a surcharge of 10% on taxableincome above a specific limit, and the social contribution on net income is calculated at the basicrate of 9% on taxable income (Note 17(a)). Income tax and social contribution on net income taxcredits are recorded in accordance with the criteria mentioned in Note 18 and are supported by astudy of future realization prepared by management.

4 Interbank Investments

Current and long-term

BB - Domesticand foreign branches BB - Consolidated

03.31.2005 03.31.2004 03.31.2005 03.31.2004

Repurchase agreements 4,007,214 5,403,338 3,952,762 5,349,360Sales pending settlement - own operations 1,499,865 779,142 1,499,864 784,291Sales pending settlement - financed operations 2,507,349 4,624,196 2,452,898 4,565,069

Interbank deposits 18,757,788 29,133,869 13,557,549 22,739,713Foreign currency deposits 171,034 14,836,458 171,034 243,841

Total 22,936,036 49,373,665 17,681,345 28,332,914



19

5 Securities and Derivative Financial Instruments

Securities are classified in three categories: trading securities, securities available for sale andsecurities held to maturity, and derivative financial instruments in derivates for trading andderivatives for hedging purposes. Trading securities are adjusted to market value and theadjustments recorded as income or expense for the period while similar adjustments forsecurities available for sale are recorded in a separate stockholders' equity account. Securitiesheld to maturity are stated at cost plus income accrued in the period.

The derivative financial instruments for trading, used at the request of clients or for own account,do not comply with hedging criteria and are recorded at market value and the adjustmentsrecorded as income or expense. Derivatives for hedging purposes are used to protect exposuresto risk or to modify the characteristics of financial assets and liabilities. They are directly relatedto a specific transaction and are also adjusted to market value with contra-entry to income orexpense when a market risk hedge, and to a separate stockholders' equity account when a cashflow hedge.

The parameters for the calculation of market values of marketable securities and derivativefinancial instruments are:

. the average of the representative trading price on the day of the calculation and the dailyadjustment of future market transactions reported by ANDIMA, BM&F, BOVESPA and theBrazilian Central Bank; or

. the net probable realizable value obtained through the use of curves of future interest rates,foreign exchange rates, price and currency indices, all consistent with prices in effect duringthe year.



20

(a) Securities

The cost plus accrued income and market value of the securities at March 31, 2005 are as follows:

BB - domestic and foreign branches

March 31, 2005 March 31, 2004

Market value Total Total

Maturity in daysWith nomaturity 0-30 31-180 181-360 Over 360 Cost

Marketvalue

Unrealizedgain (loss) Cost

Marketvalue

Unrealizedgain (loss)

I - Trading securities 2,597 800,825 7,190,219 2,764,644 452,450 11,241,512 11,210,735 -- 12,222,254 12,254,663 --

Domestic 2,597 800,825 7,190,219 2,764,644 452,450 11,241,512 11,210,735 -- 12,222,254 12,254,663 --Financial Treasury Bills -- 770,846 5,696,987 1,774,405 200,985 8,444,072 8,443,223 -- 10,349,651 10,359,590 --Federal Treasury Bills -- 29,979 1,493,232 990,239 113,813 2,652,306 2,627,263 -- 1,555,073 1,556,943 --Federal Treasury Notes -- -- -- -- 137,652 142,671 137,652 -- 314,545 335,172 --Shares in listed companies 2,597 -- -- -- -- 2,463 2,597 -- 2,985 2,958 --

II - Securities available for sale 150,635 71,515 960,594 4,204,162 28,680,903 34,085,620 34,067,809 (20,322) 28,271,230 28,610,364 304,606

Domestic 141,008 62,205 426,720 4,089,872 27,214,930 31,895,794 31,934,735 36,430 25,740,481 26,152,173 377,164Financial Treasury Bills -- -- -- 1,401,234 20,112,244 21,502,995 21,513,478 10,483 14,124,663 14,137,568 12,905Brazilian Central Bank Notes -- -- -- 254,530 221,271 477,393 475,801 (4,102) 858,628 890,197 8,478Federal Treasury Notes -- -- -- 1,735,996 3,241,053 4,944,300 4,977,049 32,749 6,310,257 6,595,722 274,028Federal Government securities – other -- -- -- 405,752 3,599,975 3,992,003 4,005,727 13,724 4,380,852 4,462,540 81,688Debentures -- -- -- 900 26,723 27,283 27,623 339 24,179 24,774 595Agricultural debt securities -- 747 1,548 4,819 11,012 21,208 18,126 (3,083) 27,158 24,323 (2,835)Shares in investment funds 129,401 -- -- -- -- 129,401 129,401 -- 5,834 5,834 --Shares in social development funds 1,461 -- -- -- -- 1,545 1,461 (84) 1,545 1,815 270Shares in listed companies 10,146 -- -- -- -- 7,365 10,146 2,781 7,365 9,400 2,035



21

March 31, 2005 March 31, 2004



Marketvalue


Marketvalue


Commodities -- 61,458 425,172 286,641 2,652 792,301 775,923 (16,377) -- -- --

Foreign 9,627 9,310 533,874 114,290 1,465,973 2,189,826 2,133,074 (56,752) 2,530,749 2,458,191 (72,558)Eurobonds -- -- 26,888 13,496 32,794 73,601 73,178 (423) 215,667 216,162 495Brazilian foreign debt securities -- -- 374,034 100,794 1,299,735 1,830,818 1,774,563 (56,255) 1,640,889 1,563,999 (76,890)Foreign debt securities – other countries -- 9,310 132,952 -- 133,444 276,745 275,706 (1,039) 4,255 3,720 (535)Shares in equity funds 9,626 -- -- -- -- 8,662 9,626 964 8,947 9,728 781Shares in listed companies 1 -- -- -- -- -- 1 1 -- 1 1Other -- -- -- -- -- -- -- -- 660,991 664,581 3,590

III - Securities held to maturity -- 262,443 2,184,476 2,432,098 21,476,019 27,036,452 26,355,036 -- 24,956,573 24,452,905 --

Domestic -- -- 2,177,570 1,963,576 20,593,142 25,779,909 24,996,563 -- 23,744,979 23,080,793Debentures -- -- -- -- 47,984 50,982 47,984 -- 49,255 49,202Financial Treasury Bills -- -- 1,175,662 1,175,011 17,287,191 19,885,342 19,637,864 -- 19,056,017 18,931,151Federal Treasury Notes -- -- -- -- 1,801,768 2,271,842 1,801,768 -- 2,100,958 1,595,130Federal Government securities – other -- -- -- 516,664 1,453,883 1,989,090 1,970,547 -- 2,538,749 2,505,310Commodities -- 262,275 1,001,908 264,722 2,316 1,574,981 1,531,221 -- -- --

Other -- -- -- 7,179 -- 7,672 7,179 -- -- --Foreign -- 168 6,906 468,522 882,877 1,256,543 1,358,473 -- 1,211,594 1,372,112 --

Brazilian foreign debt securities -- -- -- 468,276 881,621 1,247,984 1,349,897 -- 1,144,706 1,305,229 --Certificates of Deposit -- 23 6,906 -- -- 6,929 6,929 -- 62,696 62,691 --Foreign debt securities – other countries -- 145 -- 246 1,256 1,630 1,647 -- 1,217 1,217 --Other -- -- -- -- -- -- -- -- 2,975 2,975 --

-- --

Total 153,232 1,134,783 10,335,289 9,400,904 50,609,372 72,363,584 71,633,580 (20.322) 65,450,057 65,317,932 304,606



22


March 31, 2005 March 31, 2004



Marketvalue


Marketvalue


Total by portfolio 153,232 1,134,783 10,335,289 9,400,904 50,609,372 72,363,584 71,633,580 (20,322) 65,450,057 65,317,932 304,606

(a) Own portfolio 153,232 470,476 6,885,088 5,253,980 14,927,379 28,165,996 27,690,155 1,808 22,504,320 22,420,884 250,064(b) Subject to repurchase agreements -- 664,307 3,450,201 3,625,720 33,662,005 41,648,603 41,402,233 (22,169) 35,925,654 35,884,599 59,389(c) Deposits with the Brazilian Central Bank -- -- -- 520,079 1,659,182 2,185,010 2,179,261 -- 6,697,252 6,690,998 (4,876)(d) Pledged in guarantee -- -- -- 1,125 360,806 363,975 361,931 39 322,831 321,451 29


March 31, 2005 March 31, 2004


Maturity in yearsWith nomaturity

Due in upto one year

Due from1 to 5 years


Due after10 years Cost Market value Cost Market value

Total by category 153,232 20,870,976 43,022,731 6,713,767 872,874 72,363,584 71,633,580 65,450,057 65,317,932

I - Trading securities 2,597 10,755,688 452,450 -- -- 11,241,512 11,210,735 12,222,254 12,254,663II - Securities available for sale 150,635 5,236,271 27,731,099 76,931 872,874 34,085,620 34,067,810 28,271,230 28,610,364III - Securities held to maturity -- 4,879,017 14,839,182 6,636,836 -- 27,036,452 26,355,035 24,956,573 24,452,905



23

The portfolio after marking-to-market is as follows:

March 31, 2005 March 31, 2004

% %of the total of the total

portfolio portfolio

Total by category 72,314,996 100% 65,821,600 100%

I - Trading securities 11,210,735 16% 12,254,663 19%II - Securities available for sale 34,067,809 47% 28,610,364 43%III - Securities held to maturity 27,036,452 37% 24,956,573 38%



24

BB - Consolidated

March 31, 2005 March 31, 2004


Maturity in daysWith nomaturity 0 - 30 31 - 180 181 - 360 Over 360 Cost

Marketvalue


Marketvalue


I - Trading securities 2,597 804,999 7,201,925 2,846,863 452,450 11,341,162 11,308,834 -- 12,306,362 12,338,273 --

Domestic 2,597 800,825 7,190,219 2,775,899 452,450 11,252,763 11,221,990 -- 12,222,254 12,254,663 --Financial Treasury Bills -- 770,846 5,696,987 1,785,660 200,985 8,455,323 8,454,478 -- 10,349,651 10,359,590 --Federal Treasury Bills -- 29,979 1,493,232 990,239 113,813 2,652,306 2,627,263 -- 1,555,073 1,556,943 --Federal Treasury Notes -- -- -- -- 137,652 142,671 137,652 -- 314,545 335,172 --Shares in listed companies 2,597 -- -- -- -- 2,463 2,597 -- 2,985 2,958 --

Foreign -- 4,174 11,706 70,964 -- 88,399 86,844 -- 84,108 83,610 --Eurobonds -- 864 11,706 43,313 -- 57,022 55,883 -- 55,982 55,682 --Brazilian foreign debt securities -- 576 -- 23,876 -- 24,739 24,452 -- 22,239 22,084 --Foreign debt securities - other countries -- 2,734 -- 3,775 -- 6,638 6,509 -- 5,887 5,844 --

II – Securities available for sale 767,752 122,394 1,111,256 4,233,460 28,857,276 35,131,526 35,092,138 (41,897) 29,941,682 30,245,926 311,589

Domestic 720,775 106,473 573,787 4,113,218 27,293,324 32,786,673 32,807,577 18,395 27,189,289 27,572,685 390,741Financial Treasury Bills -- -- -- 1,421,034 20,112,244 21,522,788 21,533,278 10,491 14,152,441 14,165,554 54,986Brazilian Central Bank Notes -- -- -- 254,530 221,271 477,393 475,801 (4,103) 858,628 890,197 8,478Federal Treasury Notes -- -- -- 1,735,996 3,241,053 4,944,300 4,977,049 32,749 6,310,257 6,595,722 274,028Federal Government securities – other -- -- -- 405,752 3,599,975 3,992,003 4,005,727 13,724 4,396,801 4,478,413 81,612Debentures -- -- -- 900 105,098 105,837 105,998 161 194,906 196,114 1,208Agricultural debt securities -- 747 1,548 4,819 11,012 21,208 18,126 (3,082) 27,158 24,323 (2,835)

Shares in fixed income mutual funds -- -- -- -- -- -- -- -- 1,018 1,018 --Shares in investment funds 129,406 -- -- -- -- 129,406 129,406 -- 5,834 5,834 --Shares in social development funds 1,461 -- -- -- -- 10,321 1,461 (8,860) 10,321 1,815 (8,506)Shares in listed companies 420,601 -- -- -- -- 403,724 420,601 16,877 435,335 436,625 1,290

Commodities -- 105,726 560,409 289,505 2,671 974,288 958,311 (15,976) 606,683 620,232 13,549Shares in equity funds 169,307 -- -- -- -- 192,077 169,307 (22,770) 189,099 156,838 (32,261)



25

March 31, 2005 March 31, 2004


Maturity in daysWith nomaturity 0 - 30 31 - 180 181 - 360 Over 360 Cost

Marketvalue


Marketvalue


Securities in special status company -- -- -- -- -- 808 -- (808) 808 -- (808) Other -- -- 11,830 682 -- 12,520 12,512 (8) -- -- --

Foreign 46,977 15,921 537,469 120,242 1,563,952 2,344,853 2,284,561 (60,292) 2,752,393 2,673,241 (79,152)Eurobonds -- -- 26,888 13,496 32,794 73,601 73,178 (423) 215,667 216,162 495Brazilian foreign debt securities -- -- 377,629 100,794 1,397,688 1,923,618 1,876,111 (47,507) 1,741,928 1,670,406 (71,522)Foreign debt securities - other countries -- 9,310 132,952 -- 133,444 276,745 275,706 (1,039) 4,255 3,720 (535)Shares in equity funds 45,384 -- -- -- -- 40,129 45,384 5,255 43,276 48,661 5,385Shares in listed companies 1,593 -- -- -- -- 1,199 1,593 394 1,308 1,485 177Other -- 6,611 -- 5,952 26 29,561 12,589 (16,972) 745,959 732,807 (13,152)

III - Securities held to maturity -- 262,448 2,184,476 2,432,098 21,478,930 27,039,356 26,357,952 -- 24,959,279 24,455,622 --

Domestic -- 262,275 2,177,570 1,963,576 20,593,142 25,779,909 24,996,563 -- 23,744,979 23,080,793 --Debentures -- -- -- -- 47,984 50,982 47,984 -- 49,255 49,202 --Financial Treasury Bills -- -- 1,175,662 1,175,011 17,287,191 19,885,342 19,637,864 -- 19,056,017 18,931,151 --Federal Treasury Notes -- -- -- -- 1,801,768 2,271,842 1,801,768 -- 2,100,958 1,595,130 --Federal Government securities – other -- -- -- 516,664 1,453,883 1,989,090 1,970,547 -- 2,538,749 2,505,310 --Commodities -- 262,275 1,001,908 264,722 2,316 1,574,981 1,531,221 -- -- -- --

Other -- -- -- 7,179 -- 7,672 7,179 -- -- -- --Foreign -- 173 6,906 468,522 885,788 1,259,447 1,361,389 -- 1,214,300 1,374,829 --

Brazilian foreign debt securities -- -- -- 468,276 884,332 1,250,694 1,352,608 -- 1,147,212 1,307,735 --Certificates of deposit -- 23 6,906 -- -- 6,929 6,929 -- 62,695 62,691 --Foreign debt securities - other countries -- 148 -- 246 1,322 1,696 1,716 -- 1,285 1,290 --Other -- 2 -- -- 134 128 136 -- 3,108 3,113 --

Total 770,349 1,189,841 10,497,657 9,512,421 50,788,656 73,512,044 72,758,924 (41,897) 67,207,323 67,039,821 311,589



26

BB - Consolidated

March 31, 2005 March 31, 2004


Maturity in daysWith nomaturity 0 - 30 31 - 180 181 - 360 Over 360 Cost Market value

Unrealizedgain (loss) Cost Market value


Total by portfolio 770,349 1,189,841 10,497,657 9,512,421 50,788,656 73,512,044 72,758,924 (41,897) 67,207,323 67,039,821 311,589(a) Own portfolio 770,349 525,534 7,043,861 5,361,951 14,930,316 29,143,082 28,632,011 (28,514) 24,140,364 24,016,217 251,714(b) Subject to repurchase agreements -- 664,307 3,453,796 3,629,266 33,838,352 41,819,977 41,585,721 (13,422) 36,046,875 36,011,155 64,722(c) Deposits with the Brazilian Central Bank -- -- -- 520,079 1,659,182 2,185,010 2,179,261 -- 6,697,253 6,690,998 (4,876)(d) Pledged in guarantee -- -- -- 1,125 360,806 363,975 361,931 39 322,831 321,451 29

BB - Consolidated

March 31, 2005 March 31, 2004


Maturity in yearsWith nomaturity

Due in up toone year



Due after10 years Cost Market value Cost Market value

Total by category 770,349 21,199,919 43,103,957 6,713,872 970,827 73,512,044 72,758,924 67,207,323 67,039,821

I - Trading securities 2,597 10,853,787 452,450 -- -- 11,341,162 11,308,834 12,306,362 12,338,273II - Securities available for sale 767,752 5,467,110 27,809,520 76,930 970,827 35,131,527 35,092,139 29,941,682 30,245,926III - Securities held to maturity - 4,879,022 14,841,987 6,636,942 -- 27,039,355 26,357,951 24,959,279 24,455,622



27

The portfolio after marking-to-market is as follows:

March 31, 2005 March 31, 2004% of total % of totalportfolio portfolio

Total by portfolio 73,440,328 100% 67,543,478 100%

I - Trading securities 11,308,834 15% 12,338,273 18%II - Securities available for sale 35,092,138 48% 30,245,926 45%III - Securities held to maturity 27,039,356 37% 24,959,279 37%

No reclassifications of marketable securities were made between the above categories duringthe period.

(b) Derivative financial instruments

The Bank uses derivative financial instruments to manage, in a consolidated manner, itspositions and to meet clients' needs, classifying own positions into Hedging (market risk) andTrading, both with limits of approval. This information is made available to the areas of pricing,trading, controls and calculation of results, which are segregated within the Bank.

The models used to manage risks with derivatives are reviewed periodically and the decisionsmade follow the best risk/return relationship, estimating possible losses based on the analysis ofmacroeconomic scenarios

The Bank uses appropriate tools and systems to manage the derivatives. Trading in newderivatives, standardized or not, is subject to a previous risk analysis.

The hedge strategy of the equity positions is in line with the macroeconomic analyses and isapproved by management.

Risk analysis of the subsidiaries is individual and its control consolidated.

The Bank uses statistical methods and simulations to measure the risks of its positions,including derivatives, using models of values at risk sensibility and stress analysis.



28

Risks

The main risks inherent to derivative financial instruments resulting from the Bank's and itssubsidiaries' business are credit, market and operating risks, all similar to those related to othertypes of financial instruments.

Credit risk is the exposure to loss in the event of default by a counterparty to a transaction. Thecredit exposure in futures contracts is minimized due to daily settlement in cash. Swap contractsregistered at CETIP and at BM&F are subject to credit risk if the counterparty is unable orunwilling to comply with his contractual liabilities. Total credit exposure in swaps at March 31,2005 is R$ 949,642 (R$ 741,206 at March 31, 2004). The credit risk associated with optionscontracts is limited to the premiums paid on purchased options.

Market risk is the exposure created by a potential fluctuation in interest rates, exchange rates,quotations of goods, prices quoted on stock markets and other values, and is a function of thetype of product, the volume of operations, the term and conditions of the contract and theunderlying volatility.

Operating risk is the probability of financial losses resulting from failures or inadequacy ofpeople, processes and systems, or factors such as catastrophes or criminal activities.

The tables below show the notional amounts restated to market value and the respective netexposures in the balance sheet at March 31, 2005 for the derivative financial instrumentsclassified in conformity with their classification as Trading or Hedge instruments.



29

(b.1) Trading derivatives

BB - Domestic and Foreign branches

March 31, 2005 March 31, 2004Counterparty Notional Market Notional Market

By index (*) Amount Cost value amount Cost valueExchange tradingFutures contractsPurchase commitments 1,380,977 (25,479) (25,453) 1,488,080 (26,761) (26,300)

DI E -- 731 731 4,651 (1,302) (1,302)U.S. dollar E 38,485 1,764 1,764 859,515 (12,330) (11,869)Index E -- 127 127 2,653 (2,360) (2,360)

Foreign exchange couponE 740,112 (28,101)

(28,101)621,261 (10,779) (10,779)

Commodities E -- -- -- -- 10 10Libor FI 602,380 -- 26 -- -- --

Sales commitments 2,607,631 14,236 16,074 2,893,463 (991) (1,172)DI E 668,607 7,166 7,166 1,214,427 909 909U.S. dollar E 20,130 622 622 20,461 998 817Index E -- 416 416 -- 1,673 1,673Foreign exchange coupon E 290,086 15,259 15,259 992,506 15,010 15,010Commodities E -- -- -- -- 47 47SCC E 298,773 (9,227) (9,227) 666,069 (19,628) (19,628)Libor FI 1,330,035 -- 1,838 -- -- --

Fixed-term optionsAsset position 410,451 228,702 222,463 -- -- -- Securities E 209,513 209,513 209,513 -- -- -- Currencies E 200,938 19,189 12,950 -- -- --

Liability position (473,012) (229,094) (213,549) -- -- -- Securities E (209,513) (209,513) (209,513) -- -- -- Currencies E (263,499) (19,581) (4,036) -- -- --

Options marketPurchase options 200 65 31 -- -- --

Shares E 200 65 31 -- -- --

Sales options (200) (44) (19) -- -- --Shares E (200) (44) (19) -- -- --

Over-the-counter tradingSwap contracts

Asset position 5,876,479 504,927 523,506 6,853,376 277,378 293,318DI C 2,294,266 374,304 390,515 2,249,067 162,076 160,022

FI 291,038 58,851 61,029 519,046 37,208 32,080Foreign currency C 20,050 262 116 4,701 110 146

FI 1,857,749 56,645 63,402 2,659,139 73,036 93,303Prefixed C 334,646 9,368 3,803 994,468 4,743 7,407

FI -- -- -- 5,700 (15) 3Referential Rate (TR) C -- -- -- 32,400 98 235

IGPM C 24,564 1,249 393 -- -- --



30


March 31, 2005 March 31, 2004Counterparty Notional Market Notional Market

By index (*) Amount Cost value amount Cost valueOther -- 1,054,166 4,248 4,248 388,855 122 122

Liability position12,091,531 (512,106) (535,356) 13,471,63

1(457,760) (471,330)

DI C 9,751,619 (316,180)

(316,629)6,779,652 (273,565) (273,488)

FI 250,595 (76,349)

(76,817)719,515 (63,110) (55,513)

Foreign currency C 120,924 (793) (399) 228,942 (3,265) (2,817)FI 687,615 (24,102) (46,671) 2,795,143 (45,064) (66,346)

Prefixed C 14,571 (235) (393) 43,631 (697) (969)

SELIC rate C 585,394 (60,820)

(60,820)1,343,211 (41,807) (41,807)

Referential Rate (TR) C 680,813 (33,627) (33,627) 751,686 (30,087) (30,225)Other -- -- -- -- 809,851 (165) (165)

(*) Counterparty: (E) Exchange, (FI) Financial Institution, (C) Customer.


March 31, 2005 March 31, 2004

Notional Market Notional MarketBy maturity amount Cost value amount Cost value

Futures contractsPurchase commitments 1,380,977 -- -- 1,488,080 -- --

Up to 30 days 135,881 -- -- 700,717 -- --31 to 60 days 38,485 -- -- 146,341 -- --61 to 90 days 181,247 -- -- -- -- --91 to 180 days 229,933 -- -- 15,110 -- --181 to 360 days 236,361 -- -- 308,761 -- --1 to 5 years 559,070 -- -- 317,151 -- --

Sales commitments 2,607,631 -- -- 2,893,463 -- --Up to 30 days 50,109 -- -- 677,246 -- --31 to 60 days 13,706 -- -- 1,345 -- --61 to 90 days 175,916 -- -- 210 -- --91 to 180 days 634,063 -- -- 1,062,164 -- --181 to 360 days 794,337 -- -- 343,297 -- --1 to 5 years 811,561 -- -- 809,201 -- --

Over 5 years 127,939 -- -- -- -- --



31


March 31, 2005 March 31, 2004


Fixed-term currency optionsAsset position 410,451 228,702 222,463 -- -- --

Up to 30 days 242,240 211,048 211,083 -- -- --31 to 60 days 70,646 1,614 1,901 -- -- --61 to 90 days 16,263 2,249 1,853 -- -- --91 to 180 days 44,823 6,958 4,662 -- -- --181 to 360 days 22,014 2,988 1,162 -- -- --1 to 5 years 14,465 3,845 1,802 -- -- --

Liability position (473,012) (229,094) (213,549) -- -- --Up to 30 days (231,753) (209,865) (209,893) -- -- --31 to 60 days (17,470) (419) (246) -- -- --61 to 90 days (23,437) (646) (123) -- -- --91 to 180 days (89,267) (6,638) (2,615) -- -- --181 to 360 days (107,082) (10,513) (721) -- -- --

1 to 5 years (4,003) (1,013) 49 -- -- --

Options marketPurchase optionsShares 200 65 31 -- -- --

Up to 30 days 200 65 31 -- -- --

Sales optionsShares (200) (44) (19) -- -- --

Up to 30 days (200) (44) (19) -- -- --

Swap contractsAsset 5,876,479 504,927 523,506 6,853,376 277,378 293,318

Up to 30 days 2,163,452 207,705 198,173 1,701,115 22,066 28,71531 to 60 days 504,849 39,040 41,464 381,950 20,745 28,47061 to 90 days 513,861 17,802 17,184 720,550 44,079 48,94591 to 180 days 772,388 66,899 71,547 1,607,325 83,123 89,088181 to 360 days 1,308,062 116,849 133,781 1,099,715 46,396 39,0791 to 5 years 613,867 56,632 61,357 1,342,721 60,969 59,021

Liability 12,091,531 (512,106) (535,356) 13,471,631 (457,760) (471,330)Up to 30 days 440,715 (69,772) (71,933) 2,838,012 (35,258) (54,850)31 to 60 days 161,488 (8,181) (9,308) 388,214 (19,193) (19,951)61 to 90 days 570,878 (74,752) (75,548) 501,348 (21,197) (24,376)91 to 180 days 4,888,346 (199,010) (200,481) 4,350,097 (201,802) (200,936)181 to 360 days 1,975,035 (71,640) (89,422) 2,082,930 (68,249) (65,597)1 to 5 years 4,055,069 (88,751) (88,664) 3,311,030 (112,061) (105,620)



32

BB - Consolidated

March 31, 2005 March 31, 2004

Counterparty Notional Market Notional MarketBy Index (*) amount Cost value amount Cost value

Exchange tradingFutures contractsPurchase commitments 1,380,977 (25,479) (25,453) 1,488,080 (26,761) (26,300) DI E -- 731 731 4,651 (1,302) (1,302) U.S. dollar E 38,485 1,764 1,764 859,515 (12,330) (11,869) Index E -- 127 127 2,653 (2,360) (2,360) Foreign exchange coupon E 740,112 (28,101) (28,101) 621,261 (10,779) (10,779) Commodities E -- -- -- -- 10 10 Libor FI 602,380 -- 26 -- -- --

Sales commitments 2,607,631 14,236 16,074 2,893,463 (991) (1,172) DI E 668,607 7,166 7,166 1,214,427 909 909 U.S. dollar E 20,130 622 622 20,461 998 817 Index E -- 416 416 -- 1,673 1,673 Foreign exchange coupon E 290,086 15,259 15,259 992,506 15,010 15,010 Commodities E -- -- -- -- 47 47 SCC E 298,773 (9,227) (9,227) 666,069 (19,628) (19,628) Libor FI 1,330,035 -- 1,838 -- -- --

Fixed-term optionsAsset position 410,451 228,702 222,463 -- -- -- Securities E 209,513 209,513 209,513 -- -- -- Currencies E 200,938 19,189 12,950 -- -- --

Liability position (473,012) (229,094) (213,549) -- -- -- Securities E (209,513) (209,513) (209,513) -- -- -- Currencies E (263,499) (19,581) (4,036) -- -- --

Options marketPurchase options 5,842 315 76 65,732 3,421 93 Shares E 200 65 31 -- -- -- Financial assets and goods C 5,642 250 45 65,732 3,421 93

Sales options 5,442 (294) (64) 65,732 (3,421) (93) Shares E (200) (44) (19) -- -- -- Financial assets and goods FI 5,642 (250) (45) 65,732 (3,421) (93)

Over-the-counter tradingSwap contractsAsset position 5,615,171 402,921 404,923 5,825,921 255,176 263,283 DI C 2,294,266 374,304 390,515 2,249,067 162,076 160,022

FI 271,448 50,890 51,916 499,456 31,711 24,588 Foreign currency C 20,050 262 116 -- -- --

FI 1,704,725 (36,642) (45,358) 2,308,495 59,477 75,553 Prefixed C 245,953 8,610 3,121 347,648 1,692 2,763 Referential Rate (TR) C -- -- -- 32,400 98 235

IGPM C 24,564 1,249 393 -- -- -- Other -- 1,054,165 4,248 4,220 388,855 122 122



33

Liability position 11,943,517 (437,732) (459,621) 13,385,682 (456,713) (469,467) DI C 9,604,970 (316,054) (316,054) 6,779,652 (273,565) (273,488)

FI 250,595 (76,349) (76,817) 719,515 (63,110) (55,513) Foreign currency C 120,924 (793) (399) 228,942 (3,265) (2,817)

FI 686,250 50,146 27,541 2,709,194 (44,017) (64,483) Prefixed C 14,571 (235) (394) 43,631 (697) (969) SELIC rate C 585,394 (60,820) (60,820) 1,343,211 (41,807) (41,807) Referential Rate (TR) C 680,813 (33,627) (32,678) 751,686 (30,087) (30,225) Other -- -- -- -- 809,851 (165) (165)


BB - Consolidated

March 31, 2005 March 31, 2004


Futures contractsPurchase commitments 1,380,977 -- -- 1,488,080 -- --

Up to 30 days 135,881 -- -- 700,717 -- --31 to 60 days 38,485 -- -- 146,341 -- --61 to 90 days 181,247 -- -- -- -- --91 to 180 days 229,933 -- -- 15,110 -- --181 to 360 days 236,361 -- -- 308,761 -- --1 to 5 years 559,070 -- -- 317,151 -- --

Sales commitments 2,607,631 -- -- 2,893,463 -- --Up to 30 days 50,109 -- -- 677,246 -- --31 to 60 days 13,706 -- -- 1,345 -- --61 to 90 days 175,916 -- -- 210 -- --91 to 180 days 634,063 -- -- 1,062,164 -- --181 to 360 days 794,337 -- -- 343,297 -- --1 to 5 years 811,561 -- -- 809,201 -- --

Over 5 years 127,939 -- -- -- -- --



34

BB - Consolidated

March 31, 2005 March 31, 2004


Fixed-term optionsAsset position 410,451 228,702 222,463 -- -- --

Up to 30 days 242,240 211,048 211,083 -- -- --31 to 60 days 70,646 1,614 1,901 -- -- --61 to 90 days 16,263 2,249 1,853 -- -- --91 to 180 days 44,823 6,958 4,662 -- -- --181 to 360 days 22,014 2,988 1,162 -- -- --1 to 5 years 14,465 3,845 1,802 -- -- --

Liability position (473,012) (229,094) (213,549) -- -- --Up to 30 days (231,753) (209,865) (209,893) -- -- --31 to 60 days (17,470) (419) (246) -- -- --61 to 90 days (23,437) (646) (123) -- -- --91 to 180 days (89,267) (6,638) (2,615) -- -- --181 to 360 days (107,082) (10,513) (721) -- -- --

(4,003) (1,013) 49Options marketPurchase optionsShares 5,842 315 76 65,732 3,421 93

Up to 30 days 2,366 195 39 56,159 2,920 2431 to 60 days 983 77 14 9,288 481 5691 to 180 days 2,109 28 12 285 20 13181 to 360 days 384 15 11 -- -- --

Sales optionsShares 5,442 (294) (64) 65,732 (3,421) (93)

Up to 30 days 1,966 (174) (27) 56,159 (2,920) (24)31 to 60 days 983 (77) (14) 9,288 (481) (56)91 to 180 days 2,109 (28) (12) 285 (20) (13)181 to 360 days 384 (15) (11) -- -- --

Swap contractsAsset 5,615,171 402,921 404,923 5,825,921 255,176 263,283

Up to 30 days 2,136,341 192,436 182,913 1,473,488 19,786 24,66931 to 60 days 453,102 24,395 26,865 209,129 10,240 17,40461 to 90 days 503,991 12,777 12,132 576,300 40,920 44,63291 to 180 days 772,215 61,873 66,532 1,299,870 82,403 86,332181 to 360 days 1,136,022 64,804 65,157 944,585 46,407 38,7821 to 5 years 613,500 46,636 51,324 1,322,549 55,420 51,464

Liability 11,943,517 (437,732) (459,621) 13,385,682 (456,713) (469,467)Up to 30 days 398,714 (49,309) (51,392) 2,838,012 (35,258) (54,850)31 to 60 days 130,009 (8,186) (9,243) 302,265 (18,146) (18,088)61 to 90 days 541,107 (65,752) (66,469) 501,348 (21,197) (24,376)



35

BB - Consolidated

March 31, 2005 March 31, 2004


91 to 180 days 4,844,781 (189,166) (190,411) 4,350,097 (201,802) (200,936)181 to 360 days 1,975,035 (46,640) (64,415) 2,082,930 (68,249) (65,597)1 to 5 years 4,053,871 (78,679) (77,691) 3,311,030 (112,061) (105,620)

(b.2) Hedge derivatives


March 31, 2005 March 31, 2004

Counterparty Notional Market Notional MarketBy index (*) amount Cost value amount Cost value

Exchange tradingFutures contractsPurchase commitments -- -- -- 121,891 1,750 1,750

Foreign exchange coupon E -- -- -- 121,891 1,750 1,750

Sales commitments -- -- -- 195,655 7,124 7,124Foreign exchange coupon E -- -- -- 195,655 7,124 7,124


Asset position 125,450 21,184 21,579 745,997 65,126 66,242DI C 66,647 6,653 6,957 242,273 21,667 23,177

FI 58,803 14,531 14,622 494,117 43,464 42,984 Foreign currency C -- -- -- 828 10 3

Prefixed C -- -- -- 8,779 (15) 78

Liability position (33,039) (417) (305) 63,390 (6,431) (2,254)Foreign currency C (33,039) (417) (305) 60,000 (6,272) (2,064)Prefixed C -- -- -- 3,390 (159) (190)



March 31, 2005 March 31, 2004


Futures contractsPurchase commitments -- -- -- 121,891 -- --

181 to 360 days -- -- -- 121,891 -- --



36


March 31, 2005 March 31, 2004


Sales commitments -- -- -- 195,655 -- --Up to 30 days -- -- -- 15,407 -- -- 1 to 5 years -- -- -- 180,248 -- --

Swap contractsAsset 125,450 21,184 21,579 745,997 65,126 66,242

Up to 30 days 23,587 3,735 3,825 53,350 (48) 50231 to 60 days 26,009 1,106 1,214 15,636 (56) 16461 to 90 days 14,600 1,631 1,709 61,560 5,571 6,21291 to 180 days 1,350 33 43 560,688 57,954 57,921181 to 360 days 59,904 14,679 14,788 23,266 573 5441 to 5 years -- -- -- 31,497 1,132 899

Liability (33,039) (417) (305) 63,390 (6,431) (2,254)Up to 30 days (14,653) (278) (226) 3,390 (159) (190)

31 to 60 days (7,972) (50) (45) -- -- -- 91 to 180 days (7,810) (68) (32) -- -- --

181 to 360 days (2,604) (21) (2) 60,000 (6,272) (2,064)

BB – Consolidated

March 31, 2005 March 31, 2004

Counterparty Notional Market Notional MarketBy index (*) amount Cost value amount Cost value

Exchange tradingFutures contractsPurchase commitments -- -- -- 121,891 1,750 1,750

Foreign exchange coupon E -- -- -- 121,891 1,750 1,750

Sales commitments -- -- -- 195,655 7,124 7,124Foreign exchange coupon E -- -- -- 195,655 7,124 7,124


Asset position 125,450 21,184 21,579 745,997 65,126 66,242DI C 66,647 6,653 6,957 242,273 21,667 23,177

FI 58,803 14,531 14,622 494,117 43,464 42,984C -- -- -- 828 10 3

Prefixed C -- -- -- 8,779 (15) 78

Liability position (33,039) (417) (305) 63,390 (6,431) (2,254)Foreign currency C (33,039) (417) (305) 60,000 (6,272) (2,064)Prefixed C -- -- -- 3,390 (159) (190)



37


BB - Consolidated

March 31, 2005 March 31, 2004


Futures contractsPurchase commitments -- -- -- 121,891 -- --

181 to 360 days -- -- -- 121,891 -- --

Sales commitments -- -- -- 195,655 -- --Up to 30 days -- -- -- 15,407 -- --1 to 5 years -- -- -- 180,248 -- --

Asset 125,450 21,184 21,579 745,997 65,126 66,242Up to 30 days 23,587 3,735 3,825 53,350 (48) 50231 to 60 days 26,009 1,106 1,214 15,636 (56) 16461 to 90 days 14,600 1,631 1,709 61,560 5,571 6,21291 to 180 days 1,350 33 43 560,688 57,954 57,921181 to 360 days 59,904 14,679 14,788 23,266 573 5441 to 5 years -- -- -- 31,497 1,132 899

Liability (33,039) (417) (305) 63,390 (6,431) (2,254)Up to 30 days (14,653) (278) (226) 3,390 (159) (190) 31 to 60 days (7,972) (50) (45) -- -- --61 to 90 days (7,810) (68) (32) -- -- --91 to 180 days (2,604) (21) (2) 60,000 (6,272) (2,064)

The margin given as guarantee for transactions with derivative financial instruments iscomprised of Financial Treasury Bills (LFT) amounting to R$ 361,931 (R$ 322,860 at March 31,2004).

Banco do Brasil uses derivative financial instruments to minimize the risks arising from commercialand financial operations, as well as providing for the need of its customers.



38

The portfolio of derivative financial instruments for hedging market risks and the items hedged areas follows:

I - Hedged item:

Market value

March 31, March 31,2005 2004

AssetForeign exchange securities 58,592 896,839

Federal Treasury Notes - D -- 606,051Brazilian Central Bank Notes - E 58,592 290,788

II - Derivatives for market risk hedge:

Notionalamount

March 31, March 31,2005 2004

LiabilityDerivative financial instruments 151,615 1,066,593

DI contracts -- 158,856Swap contracts 151,615 907,737

The effectiveness calculated for the hedge portfolio at March 31, 2005 was 91.58% (91.50% atMarch 31, 2004). This percentage complies with that established by BACEN Circular Letter3082/02, which determines that hedge effectiveness should range from 80% to 125%.

(c) Adjustment to market value - securities and derivatives

The mark-to-market accounting requirement established by Circulars Letters 3068 and 3082 andlater regulations resulted in the following income and expense being recognized in the six-monthperiod/year:\



39

BB-Consolidated1st quarter 2005 1st quarter 2004

Securities (4,359) (11,737)Derivatives 24,262 30,790

Total 19,903 19,053

6 Loan and Lease Operations

(a) Details of the loan portfolio and loan operations classified as "Other receivables"

BB - Domestic andForeign branches BB - Consolidated


Loan operations 77,090,664 65,352,405 77,895,547 66,450,573Loans and bills discounted 36,181,640 31,675,133 36,677,234 32,334,538Financing 15,039,290 11,780,874 15,532,699 12,484,810Rural and agribusiness financing 31,082,770 26,116,602 31,082,770 26,116,602Financing of securities 367 7,679 -- --Allowance for loan losses (5,213,403) (4,227,883) (5,397,156) (4,485,377)

Other receivables with loan characteristics 9,243,675 8,177,978 9,708,155 8,478,687Receivables from guarantees honored 82,809 27,670 82,809 27,670Advances on foreign exchange contracts 7,742,951 6,928,857 7,742,951 6,928,857Sundry 1,645,254 1,407,038 2,111,195 1,709,309Provision for other losses (227,339) (185,587) (228,800) (187,149)

Lease operations 8,794 8,834 3,520 10,241Lease operations 9,084 8,862 32,852 30,608Allowance for lease losses (290) (28) (29,332) (20,367)

Total 86,343,133 73,539,217 87,607,223 74,939,501



40

(b) Details of the loan portfolio by sector, including operations with loan characteristicsclassified as "Other receivables"

BB - Domestic and Foreign branches BB – Consolidated

March March March March31, 2005 % 31, 2004 % 31, 2005 % 31, 2004 %

Public sector 4,554,078 5,0 4,468,002 5,8 4,578,988 5,0 4,484,663 5,7

Domestic 559,509 0,6 298,706 0,4 559,509 0,6 298,706 0,4Government 411,561 0,4 184,066 0,2 411,561 0,4 184,066 0,2

Direct administration 220,165 0,2 161,588 0,2 220,165 0,2 161,588 0,2Indirect administration 191,396 0,2 22,478 -- 191,396 0,2 22,478 --

Business entities 147,948 0,2 114,640 0,2 147,948 0,2 114,640 0,2Industry 49,885 0,1 150 -- 49,885 0,1 150 --

Commerce 110 -- -- -- 110 -- -- --Financial services 68,376 0,1 67,525 0,1 68,376 0,1 67,525 0,1Other services 29,577 -- 46,965 0,1 29,577 -- 46,965 0,1

Foreign 3,994,569 4,4 4,169,296 5,4 4,019,479 4,4 4,185,957 5,3Business entities 3,994,569 4,4 4,169,296 5,4 4,019,479 4,4 4,185,957 5,3

Public services 3,994,569 4,4 4,169,296 5,4 4,019,479 4,4 4,185,957 5,3Private sector 87,230,087 95,0 73,499,393 94,2 88,683,523 95,0 75,162,397 94,3Domestic 82,801,839 90,2 69,082,126 88,6 83,245,636 89,2 69,311,238 87,0

Rural 29,398,415 32,0 24,213,849 31,1 29,398,415 31,5 24,213,849 30,3Industry 19,267,596 21,0 16,629,314 21,3 19,413,264 20,8 16,720,553 21,0Commerce 9,856,408 10,7 7,607,864 9,8 9,988,406 10,7 7,670,731 9,6Financial services 361 -- 88 -- 361 -- 88 --Other services 8,846,754 9,7 7,648,360 9,7 9,020,381 9,7 7,683,934 9,7Individuals 15,432,305 16,8 12,982,651 16,7 15,424,809 16,5 13,022,083 16,4

Foreign 4,428,248 4,8 4,417,267 5,6 5,437,887 5,8 5,851,159 7,3BB Group 7,038 -- 83,202 0,1 23,600 -- 77,738 0,1Commerce 325,593 0,4 253,532 0,3 333,033 0,4 287,767 0,4Industry 3,316,395 3,6 3,610,896 4,6 3,947,806 4,2 4,599,833 5,7Other companies 157,607 0,2 4,251 -- 331,456 0,4 87,908 0,1Other banks -- -- 394,329 0,5 408,622 0,4 474,026 0,6Individuals 13,515 -- 22,241 -- 13,836 -- 22,326 --Other services 608,100 0,6 48,816 0,1 379,534 0,4 301,561 0,4

Total 91,784,165 100,0 77,967,395 100,0 93,262,511 100,0 79,647,060 100,0

(c) Details of the loan portfolio by risk level and maturity, including operations with loancharacteristics classified as "Other receivables"

BB - Domestic and Foreign branches - loans falling due

Total Totalportfolio portfolio

March MarchRisk level 0-15 16-30 31-60 61-90 91-180 181-360 Over 360 31, 2005 % 31, 2004 %

AA 974,382 676,214 1,686,890 1,474,670 1,794,490 1,464,323 9,484,269 17,555,238 20 16,604,922 22A 948,189 602,446 1,644,934 1,621,185 5,048,447 7,200,390 8,115,446 25,181,037 29 21,745,719 30B 936,759 795,376 1,361,810 1,427,329 4,407,024 8,899,390 11,743,756 29,571,444 34 22,852,456 31C 424,783 232,360 445,497 666,637 1,660,989 2,698,375 4,895,123 11,023,764 13 9,985,011 14D 112,903 55,125 38,094 69,921 245,350 417,737 1,304,286 2,243,416 3 1,673,515 2E 17,313 7,254 4,859 8,709 27,073 66,494 229,616 361,318 -- 232,702 --F 8,841 1,893 5,620 3,551 20,134 38,452 123,418 201,909 -- 98,914 --G 3,107 571 1,504 2,612 7,603 13,418 91,679 120,494 -- 80,390 --H 9,888 17,161 16,483 11,582 25,734 59,153 621,014 761,015 1 582,017 1

Total 3,436,165 2,388,400 5,205,691 5,286,196 13,236,844 20,857,732 36,608,607 87,019,635 100 73,855,646 100



41

BB - Domestic and Foreign branches - loans overdue



B 27,858 363,456 33,851 467 73 --

3 425,708 9 395,510 10

C 16,100 278,701 419,133 9,369 5,269 64 19 728,655 15 736,956 18D 6,230 91,783 124,317 234,892 34,318 4,389 251 496,180 10 502,745 12E 2,332 33,809 122,899 66,554 219,459 18,992 7 464,052 10 326,085 8F 1,526 19,821 22,873 22,751 247,749 12,063 -

- 326,783 7 293,845 7

G 1,032 13,877 14,662 13,840247,800

9,760 --

300,971 6 274,740 7

H 6,210 177,025 77,671 60,271 283,009 1,239,851 178,144 2,022,181 43 1,581,868 38

Total 61,288 978,472 815,406 408,144 1,037,677

1,285,119 178,424 4,764,530 100 4,111,749 100

BB - Consolidated - loans falling due



AA 1,012,604 676,990 1,694,276 1,479,615 1,809,866 1,620,097 9,477,568 17,771,016 20 16,770,580 22A 954,659 604,260 1,656,756 1,624,899 5,060,067 7,235,811 8,523,740 25,660,192 29 22,171,715 30B 947,048 804,210 1,421,314 1,439,458 4,443,140 9,004,371 11,960,669 30,020,210 34 23,438,553 31C 425,980 244,028 448,513 671,729 1,677,496 2,706,924 4,934,610 11,109,280 13 10,021,704 13D 113,999 55,812 39,450 71,051 248,823 433,686 1,325,923 2,288,744 3 1,888,902 3E 17,547 7,403 5,168 8,996 27,870 67,819 231,368 366,171 -- 233,494 --F 8,930 1,931 5,717 3,642 20,387 38,836 124,001 203,444 -- 99,106 --G 3,168 606 1,568 2,672 7,761 13,678 92,061 121,514 -- 99,163 --H 13,517 17,482 17,110 12,136 27,250 61,326 781,437 930,258 1 779,549 1

Total 3,497,452 2,412,722 5,289,872 5,314,198 13,322,660 21,182,548 37,451,377 88,470,829 100 75,502,766 100

BB - Consolidated - loans overdue



B 27,864 363,545 33,857 467 73 -- 3 425,809 9 402,120 10C 6,206 280,904 422,805 9,370 5,269 64 19 734,637 15 740,755 18D 5,644 91,913 124,415 238,482 34,318 4,389 251 499,412 11 507,009 12E 2,334 33,886 122,988

66,614 222,800 18,992 7 467,621 10 327,617 8

F 1,526 19,877 22,951 22,821 248,942 12,063 --

328,180 7 294,971 7

G 1,034 13,902 14,71713,883

249,807 9,760 --

303,103 6 275,845 7

H 6,228 177,334 78,312 60,838 284,908 1,243,027 182,273 2,032,920 42 1,595,977 38

Total 60,836 981,361 820,045 412,475 1,046,117 1,288,295 182,553 4,791,682 100 4,144,294 100



42

(d) Details of the allowance for loan losses by risk level, including operations with loancharacteristics classified as "Other receivables"


March 31, 2005 March 31, 2004%

Risk level Allowance Balance Allowance Balance Allowance

AA 0 17,555,238 -- 16,604,922 --A 0,5 25,181,037 125,905 21,745,719 108,729B 1 29,997,152 299,972 23,247,966 232,480C 3 11,752,419 352,573 10,721,967 321,659D 10 2,739,596 273,960 2,176,260 217,626E 30 825,370 247,611 558,787 167,636F 50 528,692 264,345 392,759 196,379G 70 421,465 295,025 355,130 248,590H 100 2,783,196 2,783,196 2,163,885 2,163,885Subtotal 91,784,165 4,642,587 77,967,395 3,656,984Additional allowance foreign (i) -- 46,221 -- 46,104Additional allowance domestic (ii) -- 752,224 -- 710,410

Total 91,784,165 5,441,032 77,967,395 4,413,498

BB - Consolidated

March 31, 2005 March 31, 2004%

Risk level Allowance Balance Allowance Balance Allowance

AA 0 17,771,016 -- 16,770,580 --A 0,5 25,660,192 128,301 22,171,715 110,859B 1 30,446,019 304,460 23,840,673 238,407C 3 11,843,917 355,318 10,762,459 322,874D 10 2,788,156 278,816 2,395,911 239,591E 30 833,792 250,138 561,111 168,333F 50 531,624 265,812 394,077 197,038G 70 424,617 297,232 375,008 262,506H 100 2,963,178 2,963,178 2,375,526 2,375,526Subtotal 93,262,511 4,843,255 79,647,060 3,915,134Additional allowance foreign (i) -- 59,616 -- 67,248Additional allowance domestic (ii) -- 752,417 -- 710,511

93,262,511 5,655,288 79,647,060 4,692,893Total

(i) Additional allowance required by local legislation.

(ii) Includes R$ 517,192 at March 31, 2005 (R$ 443,278 at March 31, 2004) of adjustment to present value of the Bank's PESA riskoperations, in compliance with the recommendation of the Brazilian Central Bank; R$ 151,991 relating to interest on PROAGROoperations pending reimbursement by the Brazilian Central Bank; and R$ 41,000 relating to the estimated loss of the smallbusiness segment, due to the adoption of the new model of risk analysis to conform with the new Basel Agreement.



43

(e) Changes in the allowance for loan and lease losses and for operations with loancharacteristics classified as "Other receivables"

BB-Domestic and Foreign branches BB-Consolidated

1st quarter 2005 1st quarter 2004 1st quarter 2005 1st quarter 2004Opening balance 5,147,493 3,834,970 5,365,196 4,195,447

Additional allowances 1,061,817 1,160,043 1,061,071 1,162,466Exchange variation onallowances - foreign

(395) (342) (193) 2,480

Loans written off (767,883) (581,173) (770,786) (667,500)Closing balance 5,441,032 4,413,498 5,655,288 4,692,893

(f) Changes in the provision for loss on other receivables without loan characteristics


1st quarter 2005 1st quarter 2004 1st quarter 2005 1st quarter 2004Opening balance 1,706,591 1,035,846 1,717,785 1,046,961

Additional allowances 199,759 196,369 199,752 196,483Reclassification (i) -- (5,051) -- (5,051)Exchange variation onallowances - foreign

495 (10) 495 --

Loans written off -- -- (588) (235)Closing balance 1,906,845 1,227,154 1,917,444 1,238,158

(i) Reclassification of provisions for loss on transactions with sundry debtors which are notencompassed by the rules of CMN Resolution 2682/99.

(g) Supplementary information


1st quarter 2005 1st quarter 2004 1st quarter 2005 1st quarter 2004

Renegotiated loans 683,409 729,833 683,409 729,833Recoveries of loans written offas losses (*)

251,768 223,010 253,316 223,594

(*) Includes R$ 1,878 (R$ 12,513 at March 31, 2004) of recoveries of assignments of loans to individuals andcorporate entities which are recorded in the statement at income in the account Income from loan operations, aspermitted by CMN Resolution 2836/2001.



44

7 Provision for Vacation Pay, Paid Leave and Litigation

The changes in the provisions are as follows:

(a) Vacation pay (other liabilities - sundry)

Bank1st quarter 2005 1st quarter 2004

Opening balance 667,739 617,320Provision/(reversal) 152,160 129,701Provision used (237,587) (203,023)

Closing balance 582,312 543,998

(b) Paid leave (other liabilities - sundry)


Opening balance 585,864 591,669Provision/(reversal) 50,279 50,458Provision used (73,455) (67,085)


(c) Labor claims (other liabilities - sundry)


Opening balance 2,000,685 1,782,375Provision/(reversal) 102,413 59,808

Closing balance 2,103,098 1,842,183



45

(d) Tax claims (other liabilities - taxes and social security charges)


Opening balance 127,345 121,130Provision/(reversal) 3,144 2,450


(e) Other legal claims (other liabilities - sundry)


Opening balance 741,051 470,246Provision/(reversal) 20,574 39,592


8 Other Receivables

(a) Foreign exchange portfolio



March March March March31, 2005 31, 2004 31, 2005 31, 2004

Forward foreign exchange purchases pendingsettlement 9,010,139 8,525,222 9,010,139 8,452,777

Bills of exchange and time drafts in foreigncurrency 113,232 119,070 113,232 119,070

Receivables from sales of foreign exchange 6,673,973 17,942,069 6,673,973 17,869,623

Advances received (5,443,447) (16,331,097) (5,443,447) (16,331,097)

Foreign currency receivables 14,221 14,927 14,221 14,927

Income receivable on advances granted 75,978 70,853 75,978 70,853

Income receivable on financed imports 8 2 8 2

Total 10,444,104 10,341,046 10,444,104 10,196,155



46

(b) Specific credits

These are credits from the Federal Treasury of R$ 558,822 for the extension of terms of ruralfinancing (R$ 506,016 in March 2004), as determined by Law 9138/1995.

(c) SundryCurrent and long-term



Salary and other advances 180,200 187,657 180,212 187,806Accounts receivable - Federal Treasury 391,867 263,157 391,867 263,157Accounts receivable - credit card operations 1,073,068 851,038 1,073,068 851,038Accounts receivable - other 288,596 241,728 298,319 254,880Tax credits (Note 18) 7,833,086 8,993,145 7,955,833 9,115,794Sundry debtors - foreign 39,905 64,885 40,426 65,494Sundry debtors – domestic (i) 3,361,250 1,061,739 3,363,484 1,066,845Receivables from guarantee deposits (ii) 9,183,041 6,703,855 9,199,093 6,704,060Income tax and social contribution on net 279,153 49,580 296,366 72,149

income to offsetReceivables from sale of assets and rights 514,312 545,094 530,502 564,236Other 517,301 250,560 442,313 199,860

Total 23,661,779 19,212,438 23,771,483 19,345,319

(i) Includes the net amount of R$ 2,709,399 of the PREVI actuarial liability relating to the 1997 contract, less theadjustment account of this liability (Note 23(e)).

(ii) Includes R$ 7,528,483 relating to filing appeals of tax claims (Note 17(d)), R$ 1,282,786 relating to filing appealsof labor claims and R$ 357,686 relating to other appeals, in the Banco Múltiplo.

9 Other Assets




Non-operating assets 289,011 383,260 296,840 391,070Supply materials 20,577 29,641 20,577 29,641

Total 309,588 412,901 317,417 420,711



47

10 DepositsCurrent and long-term



Demand deposits 29,296,550 30,180,333 29,340,311 30,306,496Related companies 1,605,946 1,211,755 1,605,947 1,211,755Individuals 9,810,039 8,693,165 9,815,974 8,696,300Corporate entities 10,025,944 14,000,729 10,063,521 14,125,025Financial institutions 180,606 130,852 180,001 129,669Government 2,368,052 1,662,024 2,368,052 1,662,024Federal Treasury 204,295 182,590 204,295 182,590Domiciled abroad 31,867 19,190 31,804 19,103Restricted 3,864,926 3,418,512 3,865,842 3,418,513In foreign currency 1,187,848 849,366 1,187,848 849,366Other 17,027 12,150 17,027 12,151

Savings deposits 31,417,670 27,590,328 31,417,670 27,590,328Individuals 29,835,702 26,374,288 29,835,702 26,374,288Corporate entities 1,209,365 948,466 1,209,365 948,466Related companies 370,253 264,874 370,253 264,874Financial institutions 2,350 2,700 2,350 2,700

Interbank deposits 8,736,638 23,637,514 6,488,592 6,218,572

Time deposits 52,687,049 46,025,491 52,768,858 46,103,621Time deposits 25,025,282 23,757,212 25,107,091 23,835,342Time deposits in foreign currency 851 936 851 936Time deposits with automatic renewal 187,333 186,274 187,333 186,274Remunerated judicial deposits 17,581,458 14,624,629 17,581,458 14,624,629Special deposits relating to funds

and programs (Note 14(c)) 9,892,125 7,456,440 9,892,125 7,456,440

Deposits for investments 81,062 -- 81,062 --

Total 122,218,969 127,433,666 120,096,493 110,219,017



48

11 Borrowings - Foreign Borrowings


Total

Nomaturity

Up to90 days

From 91 to360 days

From 1 to3 years

From 3 to5 years

From 5 to15 years

March 31,2005

March 31,2004

Exports -- 32,773 121,195 -- -- -- 153,968 182,158Imports -- 99,607 157,444 124,885 21,231 60 403,227 361,510Foreign exchange 11,900,051 -- -- -- -- -- 11,900,051 6,274,221Specific credit lines -- 58,144 1,554 224,002 3,216,855 -- 3,500,555 3,764,202Other -- 1,582,560 1,170,796 1,199,206 -- -- 3,952,562 3,071,104

Total 11,900,051 1,773,084 1,450,989 1,548,093 3,238,086 60 19,910,363 13,653,195

BB - Consolidated

Total

Nomaturity

Up to90 days

From 91 to360 days

From 1 to3 years

From 3 to5 years

From 5 to15 years

March 31,2005

March 31,2004

Exports -- 3,530 -- -- -- -- 3,530 25,103Imports -- 49,051 89,290 124,534 21,231 60 284,166 285,674Foreign exchange 11,900,051 -- -- -- -- -- 11,900,051 6,274,221Specific credit lines -- 58,144 1,554 224,003 3,216,855 -- 3,500,556 3,764,202Other -- 630,155 882,553 -- -- -- 1,512,708 357,734

Total 11,900,051 740,880 973,397 348,537 3,238,086 60 17,201,011 10,706,934

Banco do Brasil S.A. policy in respect of its foreign borrowings is to seek the lowest possiblecost for the maturity, type of instrument, and its balance sheet profile. The Bank uses the Liborand US Treasury rates, respectively, as references for its financial and capital transactions,constantly monitoring rates in the various markets.

12 Local Onlendings - Official Institution


March March March MarchPrograms Financial charges 31, 2005 31, 2004 31, 2005 31, 2004

Federal treasury 3,595,936 1,878,190 3,595,936 1,878,192

Rural credit 3,595,936 1,834,187 3,595,936 1,834,187Farming and livestock

breeding TR or 9% p.a. 37,616 36,862 37,616 36,862PNDR (C) TJLP + 9.95% p.a. -- 2,573 -- 2,573PROFIR TJLP + 5% p.a. -- 5,259 -- 5,259Cocoa TJLP + 0.6% p.a. or 6.35% p.a. 37,744 30,625 37,744 30,625PRONAF TMS (available) or 1.0%p.a. to



49


March March March MarchPrograms Financial charges 31, 2005 31, 2004 31, 2005 31, 2004

4.0% p.a. (Invested) 3,237,581 1,441,292 3,237,581 1,441,292RECOOP 5.75% to 7.25% p.a. 282,995 317,576 282,995 317,576

Other funds and programs -- 44,003 -- 44,005PNDA Foreign exchange variation +

9.15% p.a. or TJLP + 9.95% p.a. -- 3,325 -- 3,327Alcohol storage TMS -- 40,678 -- 40,678

BNDES (i) 3,662,796 3,081,217 3,662,796 3,081,217

FINAME (ii) 2,918,381 2,501,513 2,926,644 2,510,132

Other institutions 443,122 533,520 443,245 533,627PROHEMP -- 1,177 1,350 1,177 1,350FBB - Fundec II -- 12,729 15,532 12,729 15,532FUNCAFÉ TR or TMS (available) or TJLP +

3% p.a. or 4% p.a. or 5% p.a.(invested) 429,039 516,350 429,039 516,350

Other -- 177 288 300 395

Total 10,620,235 7,994,440 10,628,621 8,003,168

(i) BNDES. Programs with fixed interest rates: interest paid to the BNDES varies from 3% p.a. to 7.75% p.a.. Programs with Long-Term Interest Rate (TJLP) or foreign exchange variation: interest paid to the BNDES varies from 1%

p.a. to 4% p.a.

(ii) FINAME. Programs with fixed interest rates: interest paid to BNDES/FINAME varies from 5.75% p.a. to 11% p.a.. Programs with TJLP or foreign exchange variation: interest paid to BNDES/FINAME varies from 1% p.a. to 5% p.a.



50

13 Funds Obtained in Foreign Capital Markets (in millions)

Transactions Coupon AmountDate offunding Maturity

a) DIRECT FUND RAISING"Global medium-term notes" program (a.1) 9.375% p.a. US$ 200 Jun/97 Jun/07"Global medium-term notes" program (a.1) 6.375% p.a. US$ 75 Apr/03 Apr/05"Global medium-term notes" program (a.1) Zero-coupon R$ 200 Dec/04 Dec/07Subordinated debt 8.5% p.a. US$ 300 Sep/04 Sep/14

b) FUND RAISING THROUGH SPCSecuritization of the flow of remittance of funds -dekasseguis (b.1) 7.875% p.a. US$ 300 Aug/01 Aug/06Securitization of the flow of electronic remittances (MT - 100) (b.2) 7.890% p.a. US$ 450 Dec/01 Dec/08Securitization of the flow of electronic remittances (MT - 100) (b.2) LIBOR 3m+0.60% p.a. US$ 300 Jul/02 Jun/09Securitization of the flow of electronic remittances (MT - 100) (b.2) 7.890% p.a. US$ 40 Sep/02 Sep/09Securitization of the flow of electronic remittances (MT - 100) (b.2) 7.26% p.a. US$ 120 Mar/03 Mar/10Securitization of the flow of electronic remittances (MT - 100) (b.2) 6.55% p.a. US$ 250 Dec/03 Dec/13Securitization of credit card receivables - Visanet (b.3) 5.911% p.a. US$ 178 Jul/03 Jun/11Securitization of credit card receivables - Visanet (b.3) 4.777% p.a. US$ 45 Jul/03 Jun/11

Total issued per program:

Foreigncurrency -

US$ Reais (i)

"Global medium-term notes" program -- 200"Global medium-term notes" program – GMTN 275 733Securitization of the flow of electronic remittances (MT - 100) 1,160 3,092Securitization of credit card receivables – Visanet 223 594Securitization of the flow of remittance of funds – dekasseguis 300 800Subordinated debt 300 800

Total 6,219

(i) Converted at R$ 2.6654 per US$ 1.00.

a.1) Recorded under Other liabilities – Negotiation and intermediation of securities.



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b.1) Recorded under Foreign securities. The transaction was carried out through the Special-Purpose Company (SPC) “Nikkei Remittance Rights Finance Company”, incorporated under thelaws of the Cayman Islands, on July 16, 2001. The Head Office of this SPC is located at BNPParibas Private Bank & Trust Cayman Limited, P.O. Box 10632 APO 4th floor, Piccadilly Centre,Elgin Avenue, George Town, Grand Cayman, Cayman Islands, British West Indies. The capitalof the SPC is US$1,000.00, divided into 1,000 shares of US$1.00 each. Banco do Brasil S.A.(“BB”) does not hold the control, is not a shareholder, the owner, or is a beneficiary of any of theresults of operations of the SPC. On August 2, 2001, this SPC entered into an AdministrationServices Agreement with BNP Paribas Private Bank & Trust Cayman Limited. The SPC hasdeclared that it does not have any subsidiaries, employees or debt, except for the securitiesdescribed below.

The SPC was incorporated for the sole purpose of carrying out the following transactions: (a)issue and sell securities in the international market; (b) use funds raised with the issue ofsecurities to pay for the purchase of the remittance rights from BB, arising from the foreigncurrency payment orders made by people in Japan (“dekasseguis”) at BB’s branches in Japanwhose beneficiaries are individuals in Brazil; (c) pay the principal and interest on the securitiesand make other payments established in the related security issue agreements.

According to the agreements entered into, the SPC has no material assets other than the fundsobtained from the issue of its capital, the Remittance Rights, and the duties arising from theissue agreements. The SPC’s liabilities consist of the issue of the securities described in thetable below (Series 2001-1), which have the following features:

Serie Issue date Maturity date Amount (US$)Term(years)

Coupon(%) Issue price

Return tothe investor

Currentrating

2001-1 08/10/01 08/05/06 300,000,000 5 7.875 99.6850 7.99% BBBTotal 300,000,000

The Series 2001-1 pay to the international investors, every quarter, interest during the first yearand, interest and principal as from the second year. The liabilities are paid by the SPC usingfunds accumulated in its account and generated by the Remittance Rights. When the amountcorresponding to the next interest and/or amortization installment is reached in the SPC’saccount, the entire excess amount is automatically released to BB.

This structure resulted in the reduction of the Brazil risk and helped obtain an investment graderating for the transaction which, in the final analysis, reduced BB’s fund raising cost. For thebeneficiaries of the dekasseguis’ remittances in Brazil, nothing changed because even after thesale of the Remittance Rights to the SPC, BB regularly and punctually fulfills all payment orderswithin the same deadlines as previously.



52

Under this structure, after five years, the SPC will have repaid all interest and principal of thetransaction thus returning the full ownership of the flow of remittances to BB. Based on itsanalysis of the transaction, BB is not exposed to any potential loss.

b.2) Recorded under Foreign securities. The transaction was carried out through the SpecialPurpose Company (SPC) “Dollar Diversified Payment Rights Finance Company”, incorporatedunder the laws of the Cayman Islands on November 6, 2001. The Head Office of the SPC is atBNP Paribas Private Bank & Trust Cayman Limited, P.O. Box 10632 APO 4th floor PiccadillyCentre, Elgin Avenue, George Town, Grand Cayman, Cayman Islands, British West Indies. Thecapital of the SPC is US$1,000.00, divided into 1,000 shares of US$1.00 each. Banco do BrasilS.A. (“BB”) does not hold the control, is not a shareholder, the owner, or is a beneficiary of anyof the results of operations of the SPC. On August 2, 2001, this SPC entered into anAdministration Services Agreement with BNP Paribas Private Bank & Trust Cayman Limited.The SPC has declared it does not have any subsidiaries, employees or debt, except for thesecurities described below.

The SPC was incorporated for the sole purpose of carrying out the following transactions: (a)issue and sell securities in the international market; (b) use funds raised with the issue ofsecurities to pay for the purchase from BB of BB’s rights on payment orders issued bycorrespondent banks in the USA and by BB’s New York branch, in US dollars, to any BB branchin Brazil. (Remittance Rights); (c) pay the principal and interest on the securities and makeother payments established in the related security issue agreements.

The SPC has no material assets other than the funds obtained from the issue of its capital, theRemittance Rights, and the duties arising from the issue agreements. The SPC’s liabilitiesconsist of the five issues of securities made in the international capital market, as follows:

Serie Issue date Maturity date Amount (US$)Term

(years)Coupon

(%) Issue priceReturn to the

investorCurrentrating

2001-1 12/27/01 12/15/08 450,000,000 7 7.890 100.0000 7.89% BBB/Baa12002-1 07/03/02 06/15/09 300,000,000 7 L3M+0.60 100.0000 L3M+0.60 AAA/Aaa2002-2 09/11/02 09/15/09 40,000,000 7 7.890 100.0000 7.89% BBB/Baa12003-1 03/17/03 03/15/10 120,000,000 7 7.260 100.0000 7.26% BBB/Baa12003-2 12/19/03 12/16/13 250,000,000 10 6.550 100.0000 6.55% BBB/Baa1

Total 1,160,000,000

The liabilities arising from the securities are paid by the SPC using the funds accumulated in itsaccount. When the amount corresponding to the next interest and/or amortization installment isreached in SPC’s account, the entire excess amount is automatically released to BB.



53

This structure resulted in the reduction of the Brazil risk and helped obtain an investment graderating for the transaction which, in the final analysis, reduced BB’s fund raising cost. For thebeneficiaries of the dekasseguis’ remittances in Brazil, nothing changed because even after thesale of the Remittance Rights to the SPC, BB regularly and punctually fulfills all payment orderswithin the same deadlines as previously.

Under this structure, after the final maturity of each transaction, the SPC will have repaid allinterest and principal of the transaction thus returning the full ownership of the flow ofremittances to BB. Based on its analysis of the transaction, BB is not exposed to any potentialloss.

b.3) Recorded under Foreign securities. The transaction was carried out through the SpecialPurpose Company (SPC) “Brazilian Merchant Voucher Receivables”, incorporated under thelaws of the Cayman Islands on May 16, 2003. The Head Office of the SPC is at Walkers SPVlimited, P.O. Box 908 GT, Mary Street, George Town, Grand Cayman, Cayman Islands.

The capital of the SPC is US$1,000.00, divided into 1,000 shares of US$1.00 each. Banco doBrasil S.A. (“BB”) does not hold the control, is not a shareholder, the owner, or is a beneficiary ofany of the results of operations of the SPC. On July, 10, 2003, the SPC entered into anAdministration Services Agreement with Walkers SPV Limited.

The SPC was incorporated for the sole purpose of carrying out the following transactions: (a)issue and sell securities in the international market; (b) use funds raised with the issue ofsecurities to pay for the purchase of the current and future rights of Companhia Brasileira deMeios de Pagamento (“Visanet”) against Visa International Service Association on receivables(“Receivables”) arising from (i) credit or debit purchases made in Brazil, in any currencyprocessed by Visanet, using Visa cards issued by financial institutions located outside Brazil, or(ii) credit or debit purchases, processed by Visanet in foreign currency, made using Visa cardsissued by financial institutions located in Brazil; (c) pay the principal and interest on securities andmake other payments established in the related security issue agreements.

The SPC has declared that it does not have any material assets other than the funds obtainedfrom the issue of its capital and the Receivables. It also declared that it does not have anymaterial liabilities other than those established in the security issue agreements.

The SPC’s liabilities consist of two issues of securities carried out in the international capitalmarket, as follows:



54

Series Issue date Maturity date Amount (US$)Term

(years)Coupon

(%)Issueprice

Return tothe investor

Currentrating

2003-1 07/10/03 06/15/11 400,000,000* 8 5.911 100.00 5.955% BBB+/Baa12003-2 07/10/03 06/15/11 100,000,000** 8 4.777 95.00 5.955% BBB+/Baa1

Total 500,000,000

* Pursuant to the Series 2003 Visanet Support Agreement, BB received the amount ofUS$ 178,473,952, as described in the text below.

** Pursuant to the Series 2003 Visanet Support Agreement, BB received the amount ofUS$ 44,618,488, as described in the text below.

The liabilities arising from the securities are paid by the SPC using the funds accumulated in itsaccount. When the amount corresponding to the next interest and/or amortization installment isreached in the SPC’s account, the entire excess amount is automatically released to Visanet.

Under the structure, which included, among other agreements, the agreement called Series 2003Visanet Support Agreement, entered into on July 10, 2003 by Visanet, BB and Bradesco, Visanetagreed to transfer to BB the funds arising from the sale of the Receivables, at the ratio of44.618488%, calculated based on the shareholding interest of BB in Visanet on the transactionclosing date, resulting in US$ 223,092,440.00 of funds being raised by BB.

Also under the same agreement, BB agreed to periodically transfer to Visanet amounts equivalentto the Receivables held by Visanet for the account of the SPC, pursuant to the Receivablespurchase and sale agreement, at the ratio of 44.618488%.

This structure resulted in the reduction of the Brazil risk and helped obtain an investment graderating for the transaction which, in the final analysis, reduced BB’s fund raising cost.

Under this structure, after the final maturity of each transaction, the SPC will have repaid allinterest and principal of the transaction thus returning the full ownership of the Receivables toVisanet. Based on its analysis of the transaction, BB is not exposed to any potential loss.



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14 Other Liabilities

(a) Foreign exchange portfolio

Current and long-termBB-Domestic and Foreign

Branches BB-Consolidated03.31.2005 03.31.2004 03.31.2005 03.31.2004

Forward foreign exchange sales pending settlement 6,501,015 17,875,742 6,501,015 17,803,296Advances in foreign currencies (6,664) (28,496) (6,664) (28,496)Import financing (3,011) (1,715) (3,011) (1,715)Foreign exchange purchase liabilities 9,184,861 8,538,174 9,184,861 8,465,729Liabilities for sales – floating rates -- 72,840 -- 72,840Advances on foreign exchange contracts (7,742,951) (6,948,067) (7,742,951) (6,948,067)Foreign currency payables 32,005 39,487 32,005 39,487Unearned income on advances granted 4,129 2,518 4,129 2,518Total 7,969,384 19,550,483 7,969,384 19,405,592

(b) Financial and development funds

Current and long-termBB-Domestic and Foreign Branches

and BB-Consolidated03.31.2005 03.31.2004

PIS/PASEP 1,395,414 1,221,296Merchant Navy 15,655 12,040Land and Agrarian Reform - BB Banco da Terra 60,916 168,922Special Lending Program for Agrarian Reform - Procera 320,592 346,445Consolidation of Family Farming (CAF) 80,245 --Fight against Poverty/Our First Land (CPR/NPT) 60,242 --Other 20,638 19,518Total 1,953,702 1,768,221

(c) Fund for Worker Assistance (FAT) and Fund to Guarantee the Increase in Employment andEarnings (FUNPROGER)

FAT is a special accounting and financial fund, established by Law 7998/90, attached to theMinistry of Labor and Employment (MTE) and managed by the Executive Council of the WorkerAssistance Fund (CODEFAT). CODEFAT is a collective, tripartite and equal level organization,composed of representatives of workers, employees and government, which acts as the managerof FAT.



56

The main sources of funding of FAT are contributions payable to the Social Integration Program(PIS) and to the Public Service Employees Savings Program (PASEP).

FAT's objective is to fund the Unemployment Insurance Program (with specific responsibilities forpayment of unemployment insurance benefits, professional qualification and requalification, andorientation and intermediation of employment), the Salary Bonus, and finance programs foreconomic development as well as to promote employment.

The main actions to promote employment using FAT funds are centralized in the Programs for theIncrease in Earnings (PROGER), whose resources are allocated by special deposits, establishedby Law 8352/91, in official federal financial institutions (including, among others, PROGER in theUrban and Rural categories, and the National Program to Strengthen Family Farming - PRONAF).

The Bank acts as a partner of FAT in carrying out programs for the increase in employment andearnings, through special deposits to be invested in PROGER, Urban and Rural, and inPRONAF, offering credit lines to micro and small companies, cooperatives, workers in theinformal economic sector, and rural workers.

Special deposits held by Banco do Brasil, while available, are remunerated on a pro rata basis bythe TMS (Average SELIC Rate). When they are invested in financing to support PRONAF andPROGER, they are remunerated by the TJLP (Long-term Interest Rate) during the period in whichthe financing is in effect.

The remuneration of the funds held by the Bank are paid to FAT in the month subsequent to thatof deposit. Remuneration of funds applied to finance final borrowers are paid as stipulated in eachspecific resolution.

The Fund to Guarantee the Increase in Employment and Earning (FUNPROGER) is a specialaccounting fund, established on November 23, 1999 through Law 9872, changed by Law10360/01, and regulated by CODEFAT Resolution 409/04 and is managed by the Bank with thesupervision of CODEFAT/MTE, with a balance of R$ 202,104 at March 31, 2005 (R$ 144,692 atMarch 31, 2004).



57

The objective of FUNPROGER is provide guarantees to entrepreneurs who do not have thenecessary guarantees of their own to contract PROGER Urbano financing, through the payment ofa commission.

The net assets of FUNPROGER are accumulated through funds arising from the differencebetween the average SELIC Rate and the Long-Term Interest Rate (TJLP) in respect of theremuneration of the special deposit balances available in the Fund for Worker Assistance (FAT).Other sources of funds are the earnings from its operations and the income on its cash resourcespaid to Banco do Brasil, the Fund manager.



58

Program Resolution TMS TJLP Total Return of FAT fundsAvailable (1) Invested (2) Type (*) Initial date Final date

PROGER (Rural) andPRONAF

783,681 2,618,431 3,402,112

Rural 3 129/1996133/1996

10,021 45,430 55,451 03 PAS Nov/2004 Nov/2006

Rural 4 140/1997 552,463 176,641 729,104 PU - Jun/2005Rural 5 and Pronaf 3 239/2000 48,892 18,003 66,895 03 PAS Oct/2004 Oct/2008Rural 6 271/2001 25,882 39,065 64,947 04 PAS May/2004 May/2007Rural 7 300/2002 14,179 106,162 120,341 07 PAS Jul/2005 Jul/2011Rural 8 366/2003 3,572 486,186 489,758 07 PAS Jul/2006 Jul/2012Rural 9 398/2004 915 102,174 103,089 07 PAS Jul/2007 Jul/2013Pronaf 1 173/1998 36,414 263,579 299,993 PU - Sep/2006Pronaf 2 217/1999 38,940 244,190 283,130 06 PAS Jul/2004 Jul/2010Pronaf 4 283/2002 26,921 227,546 254,467 06 PAS Jul/2005 Jul/2010Pronaf 5 303/2002 21,549 201,472 223,021 07 PAS Jul/2005 Jul/2011Pronaf 6 367/2003 3,668 546,223 549,891 07 PAS Jul/2006 Jul/2012Pronaf 7 399/2004 265 161,760 162,025 07 PAS Jul/2007 Jul/2013Proger Urbano 550,814 4,177,453 4,728,267Urban 5 228/1999 6,228 85,560 91,788 06 PSS Feb/2002 Feb/2008Urban 6 243/2000 10,119 87,640 97,759 08 PSS Jun/2003 Dec/2008Urban 7 260/2001 14,610 141,026 155,636 09 PSS Dec/2003 Jun/2009Urban 8 280/2002 10,406 224,003 234,409 11 PSS Feb/2005 Aug/2010Urban 9 307/2002 21,194 164,131 185,325 12 PSS Jun/2005 Dec/2010Urban 10 312/2003 10,494 110,608 121,102 12 PSS Sep/2005 Mar/2011Urban 11 322/2003 9,148 224,029 233,177 12 PSS Jan/2006 Jul/2011Urban 12 357/2003 4,423 334,098 338,521 12 PSS May/2006 Nov/2011Urban 13 375/2003 3,559 316,996 320,555 12 PSS Oct/2006 Apr/2012Urban 14 397/2004 28,257 380,939 409,196 12 PSS Apr/2007 Oct/2012Popular company 1 - 1sttranche

294/2002 51,498 58,174 109,672 08 PSS Nov/2004 Nov/2008

Popular company 1 - 2ndtranche

294/2002 48,736 69,692 118,428 09 PSS Apr/2005 Apr/2009

Popular company 2 338/2003 45,156 172,846 218,002 09 PSS Oct/2005 Oct/2009Small/medium sizecompany 1

297/2002 46,010 458,674 504,684 07 PSS Jan/2005 Jan/2008

Small/medium sizecompany 2

331/2003 69,512 718,206 787,718 08 PSS Nov/2004 Nov/2008


396/2004 12,322 297,250 309,572 09 PSS Nov/2005 Nov/2009


412/2004 100,016 302,296 402,312 09 PSS Nov/2005 Fev/2010

Tourism 1 323/2003 20,393 31,268 51,661 16 PSS Feb/2006 Aug/2013Tourism 2 324/2003 38,733 17 38,750 08 PSS Aug/2004 Aug/2008Other 378,514 919,992 1,298,506Electric appliances 1 360/2003 7,365 1,677 9,042 05 PSS Mar/2004 Mar/2007Export 1 347/2003 49,334 685 50,019 09 PSS Jun/2005 Jun/2009Integrate 1 372/2003 145,422 55,363 200,785 20 PSS Oct/2007 Apr/2017Residence 1 349/2003 18,891 178,901 197,792 08 PSS Nov/2004 Nov/2008Residence 2 378/2003 36,833 287,225 324,058 09 PSS Apr/2005 Apr/2009Residence 3 387/2004 16,336 299,095 315,431 09 PSS Jul/2005 Jul/2009Residence 4 405/2004 104,333 97,046 201,379 09 PSS Jan/2006 Jan/2010Total 1,713,009 7,715,876 9,428,885



59

(1) Funds remunerated by the TMS: average SELIC rate.(2) Funds remunerated by the TJLP: long-term Interest rate.(3) Type: PU (single payment at the end of the period), PAS (annual and successive

installments) and PSS (semiannual and successive installments).

(d) Sundry

Current and long-termBB-Domestic and Foreign

Branches BB-Consolidated03.31.2005 03.31.2004 03.31.2005 03.31.2004

Provisions for payments (*) 4,934,307 4,593,189 4,944,217 4,602,966Contracts of assumption of liabilities 1,160,339 1,242,161 592,124 650,449Provisions for contingent liabilities (Note 7) 2,876,397 2,356,142 2,911,126 2,382,291Accounts payable for payment servicesprovided

386,307 287,326 386,307 287,326

Sundry creditors – overseas 67,788 71,650 50,068 73,058

Sundry creditors – domestic 532,.614 597,941 536,659 600,212

Credit card operations 1,016,271 810,776 1,016,271 810,776

Liabilities for official agreements 73,840 80,621 73,840 80,621

Liabilities for purchase of goods and rights 220,210 -- 220,210 100,514

Funds restricted to credit operations 156,950 119,578 965,204 1,095,673

Other 8,341 110,742 117,561 135,049Total 11,433,364 10,270,126 11,813,587 10,818,935

(*) Includes R$ 3,069,836 relating to "PREVI Actuarial Liability of the Informal Plan" (exclusive responsibility of theBank) and the "CASSI Actuarial Liability" at March 31, 2005 (Note 23(e)).

(e) Subordinated debt

Current and long-termBB-Domestic and Foreign Branches

and BB-Consolidated03.31.2005 03.31.2004

Subordinated debt – FCO (i) 6,298,368 5,380,282Other subordinated debt (ii) 794,827 --Total 7,093,195 5,380,282



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(i) As from June 30, 2001, as determined by CMN Vote No. 67 of June 28, 2001 and Bacen-Diret Official Letter 2001/1602 of June 29, 2001, Banco do Brasil has considered the funds fromthe Central-Western Constitutional Fund (FCO) as subordinated debt and as Level II ReferenceEquity, due to the low repayment requirement and extended period held in the Bank.(ii) On September 13, 2004, Banco do Brasil carried out its first international issue in thesubordinated debt market. The funding amounts to US$ 300 million (R$ 850,921) with a ten-yearmaturity. The issue of the securities was underwritten by Credit Suisse First Boston and BBSecurities.

15 Analysis of Income Statement Items

(a) Banking services fees

BB-Domestic and Foreign Branches BB-Consolidated1st quarter 2005 1st quarter 2004 1st quarter 2005 1st quarter 2004

Investment fund management -- -- 282,957 233,882Collection 167,875 149,148 168,120 149,521Collection services 7,879 6,302 9,266 7,635Services rendered to related companies 206,792 167,674 49,497 38,836Fund transfers 32,482 32,209 32,545 32,274Guarantees granted 22,193 26,622 22,198 26,622Check clearing services and other 136,633 129,639 136,633 129,639Examination of requests for exclusion from CCF 18,604 16,261 18,604 16,261PASEP administration 6,813 7,053 6,813 7,053Loans contracted 141,205 142,840 141,205 142,840Deposit account fees 48,310 45,330 48,310 45,330Checking account fees 22,669 28,938 22,669 28,938Fees for issuing documents 29,101 26,243 29,101 26,243Fees on register information 24,281 29,684 32,600 29,684Ouro plan 367,936 257,440 367,936 257,440Fees for official services 59,905 56,028 59,905 56,028International trade services 3,820 4,034 3,820 4,034Third party collection services 48,851 44,686 48,851 44,686Commissions for administration of

public sector debt11,929 14,357 11,929 14,357

Payments on account of third parties 31,294 31,670 31,294 31,670Credit Cards – annual fees 70,831 51,845 70,831 51,845Credit cards – fees on withdrawls and purchases 2,270 2,131 2,270 2,131Credit card – commissions of issuing bank 63,959 50,372 63,959 50,372Other 106,203 117,276 105,436 125,216Total 1,631,835 1,437,782 1,766,749 1,552,537



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(b) Personnel expenses

BB-Domestic and ForeignBranches

BB-Consolidated

1st quarter 2005 1st quarter 2004 1st quarter 2005 1st quarter 2004Salaries (747,101) (708,371) (759,041) (721,381)

Benefits (203,742) (181,418) (204,874) (182,462)

Social charges (295,586) (264,993) (299,860) (269,314)

Training (6,045) (6,037) (6,094) (6,087)

Directors’ fees (2,557) (1,286) (3,058) (1,397)

Personnel provisions (365,191) (272,989) (365,191) (272,989)

Provisions for labor claims (102,413) (59,808) (102,413) (59,809)

Labor claim losses (63,335) (61,027) (63,335) (61,027)

Total (1,785,970) (1,555,929) (1,803,866) (1,574,466)

(c) Other administrative expenses


BB-Consolidated

1st quarter 2005 1st quarter 2004 1st quarter 2005 1st quarter 2004Water, electricity and gas (58,619) (49,595) (58,633) (49,636)Rent (63,331) (54,919) (64,653) (56,871)Leasing costs (36,597) (51,253) (36,597) (51,253)Communications (206,295) (171,167) (208,762) (172,591)Maintenance and upkeep (49,543) (42,313) (49,734) (43,026)Materials (37,516) (32,380) (38,119) (32,490)Data processing (129,272) (125,386) (132,256) (129,337)Promotion and public relations (45,927) (27,635) (47,888) (27,701)Advertising and publicity (35,444) (26,927) (35,665) (26,975)Financial system services (77,495) (66,404) (76,143) (66,949)Third party services (107,160) (81,969) (114,074) (82,256)Security services (96,021) (83,327) (96,118) (83,395)Specialized technical services (21,660) (19,226) (23,585) (21,217)Transportation (90,478) (86,660) (90,914) (86,918)Domestic travel (22,393) (13,451) (22,981) (13,734)Amortization (33,582) (16,955) (33,887) (18,877)Depreciation (139,754) (95,675) (139,850) (96,058)Expenses with tax and civil lawsuits (91,845) (27,201) (91,845) (27,201)Other (41,393) (37,595) (45,415) (39,351)Total (1,384,325) (1,110,038) (1,407,119) (1,125,836)



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(d) Other operating income


BB-Consolidated

1st quarter 2005 1st quarter 2004 1st quarter 2005 1st quarter 2004Recovery of charges and expenses 149,100 100,430 149,492 100,512Income from special operations 22,343 24,764 22,343 24,764Income from specific credits 14,980 11,834 14,980 11,834Income from other credit operations 7,916 6,387 7,916 6,387Income from payments of INSS benefits 58,348 11,270 58,348 11,270Income from guarantee deposits 261,895 238,262 261,895 238,262Income from securities and creditsreceivable from the Federal Treasury

24,350 14,694 24,350 14,694

Dividends received 14,276 5,022 14,276 5,022Equalization of rates – Law 8427 2,141 716 2,141 716Exchange adjustments of credit cardtransactions

8,668 8,761 8,668 8,761

Overdue advances on exchange contracts 1,676 1,689 1,676 1,689Contingent liabilities 20,932 -- 20,932 --Reversal of provisions 4,644 47,138 4,644 47,138Foreign exchange gains 193,352 2,091 193,352 2,090Taxes paid in error 229,127 -- 229,127 --Other 36,470 44,474 32,217 44,654Total 1,050,218 517,532 1,046,357 517,793



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(e) Other operating expenses

BB-Domestic and Foreign Branches BB-Consolidated1st quarter 2005 1st quarter 2004 1st quarter 2005 1st quarter 2004

Fees for the use of Sisbacen (2,027) (1,590) (2,027) (1,590)Expenses on Pasep funds (130) (855) (130) (855)Collection of contributions and federaltaxes (9) (24) (9) (24)Exchange loss on profits from overseasbranches at the disposal of the Head Office (112) (61) (112) (61)Discounts granted on renegotiations -credit operations (19,903) (35,216) (19,903) (35,216)Expenses from discounts granted onrenegotiations – other credits (19) (704) (19) (704)Updating of the pension liability (45,835) (142,938) (45,835) (142,938)Interest on funds allocated for payment ofbenefits (61,770) (5,195) (61,770) (5,195)CASSI – Interest on actuarial liabilities (94,187) (69,930) (94,187) (69,930)Losses from robberies and theft (44) -- (44) --Errors and fraud (11,855) (4,496) (11,855) (4,496)Insurance premiums – BB-CPR (2,154) -- (2,154) --Expenses with savings deposits prizes BB (2,380) (5,823) (2,380) (5,823)Expenses with updates - JCP (5,895) (10,026) (5,895) (10,026)BB Personal Banking expenses (26,053) (22,586) (26,053) (22,586)Expenses with credit card operations (42,898) (71,088) (42,898) (71,088)Expenses on the Proagro funds (1,161) (598) (1,161) (598)Provision for loss of securitized credits -- (24,131) (3,685) (24,131)Provision for guarantees offered (1,216) (21,666) (1,216) (21,666)Foreign exchange losses (46,307) (215) (46,307) (215)Law 9138/95 - Restatement of funds to bereturned to the Federal Treasury (12,400) (29,545) (12,400) (29,545)Securitization dekasseguis - liabilities withthe SPC

(6,900) (11,874) (6,900) (11,874)

Securitization SWIFT MT100 - liabilitieswith the SPC

(53,267) (60,656) (53,267) (60,656)

Other (46,840) (10,960) (62,516) (50,982)Total (483,361) (530,177) (502,723) (570,199)



64

(f) Non-operating income


BB-Consolidated

1st quarter 2005 1st quarter 2004 1st quarter 2005 1st quarter 2004Non-operating income 111,767 28,047 114,104 29,994

Profit on the sale of assets 76,760 79 76,985 146 Capital gains 825 874 825 880

Rental income 2,252 2,150 2,252 2,150 Profit on the sale of other assets 12,111 2,028 12,113 2,154

Gains on shares and quotas 1,664 245 2,962 1,055Valuation of other assets 16,947 20,094 16,947 20,094Other non-operating income 1,208 2,577 2,020 3,515

Non-operating expenses (15,337) (13,752) (16,285) (14,531)Loss on sale of investments (7) -- (7) --Loss on sale of assets (1,812) (93) (1,812) (199)Capital losses (3,723) (3,022) (3,767) (3,055)Loss in value of other assets (8,663) (10,126) (8,680) (10,162)Losses with shares and quotas -- -- (774) (477)Other non-operating expenses (1,132) (511) (1,245) (638)

Total 96,430 14,295 97,819 15,463

16 Stockholders' Equity

(a) Stockholders' equity of R$ 14,932,899 (R$ 12,686,177 at March 31, 2004) includes net income forthe period, and the book value per share is R$ 18.68 (R$ 17.33 per share at March 31, 2004)considering the total of 799,359,738 common shares (disregarding treasury stock).

(b) The balance of 15,993,142 "B" bonds and 27,028,746 "C" bonds remains from the purchase ofsubscription bonds made by the Bank in 2004, which have their right of exercise assured up to thedates originally established – 3.31.2006 to 6.30.2006 and 3.31.2011 to 6.30.2011, respectively.The market value of each common share at 3.31.2005 was R$ 29.60 (R$ 23.28 at 3.31.2004).

(c) Capital

Capital amounts to R$ 9,864,153,395.17 and comprises 810,617,415 common shares with no parvalue. The Federal Treasury is the controlling stockholder.



65

(d) Treasury stock

The Bank purchased 10,234,252,464 preferred shares, equivalent to 1.44% of the total capital, asreimbursement to dissident stockholders not in agreement with the conversion of preferred sharesinto common shares, approved at the Special Preferred Stockholders' Meeting held on June 7,2002. These shares were converted into 11,257,677 common shares and remain in treasury inaccordance with article 45 of Law 6404/76.

(e) Revaluation reserves

These refer to a revaluation of assets carried out by the associated companies Visanet and KeplerWeber and by the subsidiary Cobra Tecnologia S.A.. The realizations of the reserves in the periodthrough depreciation, totaling R$ 29 (R$ 7 at March 31, 2004), were transferred to the "Retainedearnings" account.

(f) Adjustment to market value - securities and derivative financial instruments

In accordance with BACEN Circular Letters 3068/01 and 3082/02, this account records themark-to-market adjustment of securities available for sale, totaling R$ 94,799 (R$ 126,617 atMarch 31, 2004), net of tax effects. The changes in this stockholders' equity account are asfollows:

Net Changes inDecember 31, 2004 the period March 31, 2005

Securities available for sale Balance BalanceBank 74,362 (37,932) 36,430

Subsidiary and associated companies 11,118 (133,813) (122,695)Tax effects (42,895) 34,361 (8,534)

Total 42,585 137,384 (94,799)

Net Changes inDecember 31, 2003 the period March 31, 2004

Securities available for sale Balance BalanceBank 358,095 19,069 377,164

Subsidiary and associated companies 8,044 (114,085) (106,041)Tax effects (138,315) (6,191) (144,506)

Total 227,824 (101,207) 126,617



66

(g) Shareholding positions

As prescribed in paragraphs IV, V, VI and VII of Article 40 of the Bank's by-laws, theshareholding positions are as follows:

Paragraph IV: shareholdings of all those who hold, directly or indirectly, more than 5% of capital:

Stockholders Total shares Total - %

Federal Treasury 584,778,036 72,1Banco do Brasil Employees Retirement Fund (PREVI) 112,415,335 13,9BNDES Participações S.A. - BNDESPAR 46,964,027 5,8

Paragraph V: number and characteristics of the securities issued by the Bank and directly orindirectly held by the controlling stockholder, management and members of the Fiscal Council;and

Paragraph VI: changes in ownership of the parties referred to in the previous paragraph of thesesecurities during the preceding twelve months:

Controlling stockholder - Federal Treasury 2005 2004

Common shares (ON) 584,778,036 584,778,036

ON Shares B Bonds C Bonds

March March March March March MarchBoard of Directors Position 31, 2005 31, 2004 31, 2005 31, 2004 31, 2005 31, 2004

Bernard Appy President 1 1 -- -- -- --Rossano Maranhão Pinto Vice-president 1 1 -- -- -- --Carlos Augusto Vidotto Counselor 2 2 -- -- -- --Francisco Augusto da Costa

e Silva Counselor 2 2 -- -- -- --João Carlos Ferraz Counselor 2 2 -- -- -- --José Carlos Rocha Miranda Counselor 1 1 -- -- -- --Tarcísio José Massote de Godoy Counselor 1 1 -- -- -- --



67


March March March March March MarchFiscal Council Position 31, 2005 31, 2004 31, 2005 31, 2004 31, 2005 31, 2004

Marcus Pereira Aucélio President -- -- -- -- -- --Alon Feuerwerker Member -- -- -- -- -- --Rodrigo Pirajá Wienskoski Member -- -- -- -- -- --Artemio Bertholini Member -- -- -- -- -- --Vicente de Paulo Barros Pegoraro Member 1 1 -- - -- --Amaury Patrick Gremaud Deputy -- -- -- -- -- --Ernesto Rubens Gelbcke Deputy -- -- -- -- -- --Marcos de Andrade Reis Villela Deputy -- -- -- -- -- --Otávio Ladeira de Medeiros Deputy -- -- -- -- -- --Pedro Paulo Bernardes Lobato Deputy -- -- -- -- -- --

ON Shares B Bonus C Bonus

March March March March March MarchExecutive Board of Directors Position 31, 2005 31, 2004 31, 2005 31, 2004 31, 2005 31, 2004

Rossano Maranhão PintoTemporaryPresident 1 1 -- -- -- --

Adézio de Almeida Lima Vice-president 2 2 -- -- 1 1Edson Machado Monteiro Vice-president 57 57 17 17 28 28José Luiz de Cerqueira César Vice-president -- -- -- -- -- --Luiz Eduardo Franco de Abreu Vice-president 1 1 -- -- -- --Luiz Oswaldo Sant'Iago

Moreira de Souza Vice-president 2 2 -- -- 1 1Ricardo Alves da Conceição Vice-president 371 371 111 111 185 185

Antônio Francisco de Lima NetoTemporaryVice-president -- -- -- -- -- --


March March March March March MarchDirectors Position 31, 2005 31, 2004 31, 2005 31, 2004 31, 2005 31, 2004

Aldo Luiz Mendes Director -- -- -- -- -- --Augusto Braúna Pinheiro Director -- -- -- -- -- --Derci Alcântara Director 33 33 9 9 16 16Henrique Pizzolato Director 26 26 7 7 12 12Izabela Campos Alcântara Lemos Director -- -- -- -- -- --João Carlos de Mattos Director -- -- -- -- -- --José Carlos Soares Director 219 219 6 6 10 10José Gilberto Jaloretto Director -- -- -- -- -- --José Maria Rabelo Director 20 20 6 6 10 10Juraci Masiero Director -- -- -- -- -- --

Luiz Carlos Silva de AzevedoTemporaryDirector

-- -- -- -- -- --

Luiz Gustavo Braz Lage Director -- -- -- -- -- --Manoel Gimenes Ruy Director 14 14 4 4 6 6Miguel Oscar Viana Peixoto Director -- -- -- -- -- --Murilo Castellano Director 3 3 -- -- 1 1Paulo César Simplício da Silva Director 29 29 8 8 14 14Paulo Euclides Bonzanini Director -- -- -- -- -- --Paulo Rogério Caffarelli Director -- -- -- -- -- --Ricardo José da Costa Flores Director 19 19 5 5 9 9William Bezerra Cavalcanti Filho Director -- -- -- -- -- --Staturory Auditor

José Luís SalinasGeneralAuditor

-- -- -- -- -- --



68



69

Paragraph VII - number of shares in the market and percentage in relation to the total issued:

BB shares Number %

Market 55,202,340 6,8Total issued 810,617,415 100,0

17 Income Tax and Social Contribution on Net Income

(a) Details of calculation basis BB – Consolidated1st quarter 2005 1st quarter 2004

Income taxSocial

contribution Income taxSocial

contributiona) Profit before taxation and after employee

profit sharing 1,782,464 1,782,464 1,129,352 1,129,352Profit before taxation 1,601,141 1,601,141 1,027,093 1,027,093

Net income of foreign entities (110,119) (110,119) (68,058) (68,058)

Intercompany eliminations 291,525 291,525 170,317 170,317

Employee profit sharing (83) (83) -- --

b) Permanent additions/(deductions) (448,183) (441,541) (443,660) (454,640)

Equity in the (earnings)/loss of subsidiaryand associated companies (391,654) (391,654) (275,785) (275,785)

Non-deductible expenses and provisions 63,672 66,787 79,453 65,518

Other additions/(deductions) (120,201) (116,674) (247,328) (244,373)

c) Temporary additions/(deductions) 738,546 742,127 721,617 720,834

Allowance for loan losses 1,263,668 1,263,668 1,347,629 1,347,629

Provision for loss on securities and investments 6,829 6,829 (126) (126)

Provision for pension liabilities (469,026) (469,026) (538,763) (537,270)Provision for labor claims, tax

contingencies and contingent liabilities102,948 102,948 63,563 63,563

Amortization of goodwill on investments 398 -- 2,416 --

Other additions/(deductions) (166,271) (162,292) (153,102) (152,962)

d) Other additions/(deductions) (666,276) (667,325) (445,448) (441,334)

Foreign profits -- -- 41,863 41,863

Adjustment - BACEN Resolution 2682/99and Law 9430/99 (664,652) (664,652) (452,674) (452,674)

Other (1,624) (2,673) (34,637) (30,523)e) Taxable income 1,406,551 1,415,725 961,861 954,212f) Income tax/social contribution: 346,069 128,127 232,453 85,170

Rate of 15%/9% 212,168 128,127 145,650 86,702

Additional 10% 141,421 -- 97,071 --

Tax incentives (7,520) -- (3,415) --

Income tax on profits of foreign entities -- -- (6,853) (1,532)



70

(b) Details of income tax and social contribution expense:BB – Consolidated

1st quarter 2005 1st quarter 2004

Income taxSocial


contributiona) Income tax and social contribution expense per the statement of income (353,272) (128,127) (242,628) (85,170)

Provision for income tax and social contribution - present values (346,069) (128,127) (232,453) (85,170)

Foreign income tax (7,203) -- (10,175) --

b) Deferred tax liabilities (60,239) (21,831) (27,087) (10,437)

(Provision)/reversal of deferred income tax onthe adjustment of the portfolio anddepreciation (leasing operations) (1,366) -- 3,423 --

(Provision)/reversal of provision for deferredtaxes - positive MTM (13,390) (4,525) 7,036 3,079

(Provision)/reversal of the provision fordeferred income tax - sale of investmentsin installments (BB - BI) 160 58 160 58

(Provision)/reversal of provision for deferredtaxes-restatement of judicial deposits (34,683) (12,486) (37,706) (13,574)

(Provision)/reversal of provision for deferredtaxes – foreign profits (10,960) (4,878) -- --

c) Provision (a+b) (413,511) (149,958) (269,715) (95,607)

d) Deferred tax credits 2,932 1,735 (3,195) (1,980)

Recording/(reversal) of tax credits on temporaryDifferences 2,917 1,022 (4,149) (2,026)

Recording/(reversal) of tax credits on income taxand social contribution losses 2,772 711 (3,458) --

Recording/(reversal) of tax credits - negativeMTM (2,757) 2 4,412 46

e) Total income tax and social contributionexpense (c+d)

(410,579) (148,223) (272,910) (97,587)



71

(c) Reconciliation of income tax and social contribution expense:

BB-Consolidateda) Income tax 1st quarter 2005 1st quarter 2004

Profit before taxation and profit sharing 1,601,141 1,027,093Total income tax charge (rate of 25%) (400,285) (256,773)Effects of non-taxable income 305,804 310,291Effects of non-deductible expenses (440,933) (458,787)Effects of foreign profits (10,786) (11,021)Employee profit sharing 21 --Deferred charges on mark-to-market adjustments (523) (29)Other 128,603 139,976Fiscal incentives (workers meal program, culture andothers)

7,520 3,433

Income tax expense (410,579) (272,910)

b) Social contributionProfit before taxation and profit sharing 1,601,141 1,027,093Total social contribution charge (rate of 9%) (144,103) (92,438)Effects of non-taxable income 109,940 111,546Effects of non-deductible expenses (158,730) (165,163)Effects of foreign profits -- (2,236)Employee profit sharing 7 --Deferred charges on mark-to-market adjustments (187) (11)Other 44,850 50,715Social contribution expense (148,223) (97,587)

(d) Litigation: income tax and social contribution on net income

In February 1998, the Bank filed a legal request for full offset of prior year income tax and socialcontribution on net income losses against taxable income. Since then, the Bank has offset thesetax losses in full against income tax and social contribution taxable income and has madejudicial deposits of the taxes otherwise due (on 70% of the amount offset). These depositsprompted the Federal District 16th Court to issue a dispatch recognizing the suspension ofpayment of these taxes until final judgment of the Bank's request, based on article 151, II, of theTax Code.



72

The amounts relating to this matter are as follows:

March 31,2005

March 31,2004

(a) Receivables from guarantee deposits 5,609,243 4,179,048Original amounts 4,175,403 3,350,468Restatement 1,433,840 828,580

(b) 70% thereof 4,198,619 3,411,193Income tax losses incurred up to December 31, 1994 739,067 739,067Income tax losses incurred after December 31, 1994 1,626,674 1,060,510Social contribution losses incurred up to December 31, 1994 356,007 356,007Social contribution losses incurred after December 31, 1994 560,880 560,880Social contribution to offset (temporary differences up to 1998) 915,991 694,729

(c) The offset of income tax and social contribution losses results in the reduction of the deferred taxcredits.

(d) The provision relating to the judicial deposit, recorded in Provision for losses on assets withoutloan characteristics, amounts to R$ 1,433,840. Management considers this provision sufficientbased on the status of the lawsuit at March 31, 2005.

(e) In the event of an unfavorable decision, the extraordinary appeal of which was accepted by thePresident of the Federal Regional Court - First Region on November 26, 2001 and submitted tothe Federal Supreme Court for judgment, the deposits equivalent to the amount of taxesdetermined to be payable will be transferred to the Federal Revenue Secretariat; the amount ofthese deposits, net of the provision recorded, will be expensed. The resulting deferred tax asset tobe recorded in this event, arising from the reinstatement of the tax losses previously offset, will besubject to analysis in respect of its possible future realization at the time of the decision.



73

18 Tax credits

(a) Tax credits recorded as assets

BB - Consolidated

March 31, 2005 March 31, 2004

Income taxSocial


contribution

Nature and origin(a) Income tax and social contribution losses 3,386,403 45,985 6,785,861 --(a.1) Rate (%) 25 9 25 9(a.2) Tax credit recorded 846,601 4,139 1,696,465 --(b) Timing differences 14,161,231 11,526,428 14,127,849 11,497,218(b.1) Rate (%) 25 9 25 9(b.2) Tax credit recorded 3,540,308 1,037,379 3,531,962 1,034,750(c) Negative mark-to-market adjustments 88,705 79,221 51,914 42,135(c.1) Rate (%) 25 9 25 9(c.2) Tax credit recorded 22,176 7,130 12,979 3,792(d) Social contribution to offset -- 2,483,994 -- 2,809,573(e) Tax credits abroad 8,182 -- 23,380 --(f) Total income tax and social contribution tax

credits recorded (a.2 + b.2 + c.2 + d + e) 4,417,267 3,532,642 5,264,786 3,848,115

Pasep Cofins Pasep Cofins

(g) Negative mark-to-market adjustments 128,124 127,268 62,223 62,223(g.1) Rate (%) 0.65 4 0.65 4(g.2) Tax credit recorded 833 5,091 404 2,489(h) Total PASEP and COFINS credits

recorded (g.2) 833 5,091 404 2,489(i) Total tax credits recorded (f + h) 4,418,100 3,537,733 5,265,190 3,850,604



74

(b) Tax credits not recorded as assets

BB - Consolidated

March 31, 2005 March 31, 2004

Social SocialIncome tax contribution Income tax contribution

Nature and origin(a) Income tax and social contribution losses 638,940 35,623 637,905 40,040(a.1) Rate (%) 25 9 25 9(a.2) Tax credits not recorded 159,735 3,206 159,476 3,604(b) Timing differences 2,785,085 5,165,455 2,818,492 5,196,382(b.1) Rate (%) 25 9 25 9(b.2) Tax credits not recorded 696,271 464,891 704,623 467,674(c) Negative mark-to-market adjustments 36,894 36,894 13,949 13,949(c.1) Rate (%) 25 9 25 9(c.2) Tax credits not recorded 9,223 3,320 3,487 1,255(d) Accounting losses of foreign entities in countries with

favorable taxation 508,680 508,680 467,613 467,613(d.1) Rate (%) 25 9 25 9(d.2) Tax credits not recorded 127,170 45,781 116,903 42,085(e) Tax credits abroad 96,695 -- 114,009 --(f) Total income tax and social contribution credits not

recorded (a.2 + b.2 + c.2 + d.2 + e) 1,089,094 517,198 1,098,498 514,618


(g) Negative mark to market adjustments -- 856 3,108 3,108(g.1) Rate (%) 0,65 4 0,65 4(g.2) Tax credits not recorded -- 34 20 124(h) Total PASEP and COFINS tax credits not recorded (g.2) -- 34 20 124(i) Total tax credits not recorded (f + h) 1,089,094 517,232 1,098,518 514,742



75

(c) Changes during the period

(i) Tax credits recorded during the period

BB - Consolidated



(a)On income tax and social contributionlosses 2,772 711 -- --

(b) On timing differences 2,917 1,022 24 --(c) On negative mark-to-market adjustments 207 82 435 110(d) Tax credits abroad -- -- 5,727 --(e) Total income tax and social

contribution credits recorded (a + b + c+d) 5,896 1,815 6,186 110

PASEP COFINS PASEP COFINS

(e) On negative mark-to-market adjustments 7 12 8 51(f) Total tax credits recorded (e + f) 5,903 1,827 6,194 161

(ii) Tax credits reversed during the period

BB - Consolidated



(a) Relating to income tax and social contribution losses 325,098 -- 206,122 --

(b) Relating to timing differences -- -- 4.173 2,026(c) Relating to social contribution to offset

(MP 1858/99)--

117,301 -- 74,421(d) Relating to negative mark-to-market

adjustments 1,508 547 5,402 2,008(e) Tax credits abroad 2,521 -- -- --(f) Total reversals of income tax and

social contribution tax credits(a + b + c + d + e) 329,127 117,848 215,697 78,455



76


(g) Relating to negative mark-to-marketadjustments 128 789 388 2,209

(h) Total tax credits reversed (f + g) 329,255 118,637 216,085 80,664

(d) Deferred tax liabilities

BB - Consolidated

March 31, 2005 March 31, 2004


(a) Arising from sale of investments 816 294 1,458 525(b) Arising from mark-to-market adjustments 43,985 15,880 115,282 41,514(c) Arising from portfolio adjustment 30,949 -- 33,597 --(d) Arising from tax incentive depreciation 2 -- 4 --(e) Entities abroad 2,034 -- 6,669 --(f) Arising from restatement of judicial deposits 159,037 57,253 39,038 14,054(g) Arising from foreign profits 10,959 4,878 -- --(h) Total deferred income tax and social

contribution liabilities (a + b + c + d + e + f + g) 247,782 78,305 196,048 56,093


(i) Arising from mark-to-market adjustments 1,199 7,381 3,320 19,372(j) Arising from restatement of judicial deposits 4,337 26,687 1,064 6,551(k) Total deferred tax liabilities (h + i + j) 253,318 112,373 200,432 82,016



77

(e) Estimates of the realization of tax credits recorded (tax losses, timing differences andsocial contribution available for offset)

Banco do Brasil

Nominal value Present value

In 2005 2,430,000 2,258,000In 2006 2,106,000 1,850,000In 2007 1,959,000 1,636,000In 2008 646,000 514,000In 2009 700,000 533,000In 2010 403,000 297,000

Total tax credits 8,244,000 7,088,000

During the first quarter of 2005, R$ 439,154 thousand of tax credits were realized by the Bank,equivalent to 18.07% of the estimated total realization for the year of R$ 2,430 million.

The above estimates of realization of tax credits were based on a technical study carried out asof December 31, 2004.

(f) Other information

(f.1) The tax credits were recorded at the current rates calculated on their respective bases. Therules established by CMN Resolution 3059/2002 for the recording, maintenance andreversal/use of the credits are being followed.

(f.2) The tax credits recorded include Social Contribution to Offset relating to tax credits calculated atthe rate of 18% on tax losses and temporary differences existing on December 31, 1998.Provisional Measure (MP) 1.858/99 (current MP 2158-35/2001) reduced the rate of socialcontribution from 18% to 8% and authorized the maintenance of this credit classified in OtherReceivables - Sundry. At March 31, 2005, the balance of this account amounted toR$ 2,483,994.

Since January 1, 2003, the rate for social contribution on net income is 9%, in conformity withLaw 10637/2002.



78

(f.3) Projections of taxable income for the Bank indicate that the tax credits will be realized in up tosix years in the following proportions, according to the technical study prepared as of December31, 2004: 2005, 29%; 2006, 26%; 2007, 24%; 2008, 8%; 2009,8% and 2010, 5%. This studyalso considers the tax credits at their present value, based on the average rate of funding of theBank.

The tax credits on temporary differences are recorded based on the amounts of thenon-deductible provisions; most of these amounts are only expected to be realized in thelong-term.

(f.4) The Bank has recorded IRPJ, CSLL, PASEP and COFINS tax credits on the negativemark-to-market adjustments of securities and derivative financial instruments recorded in aseparate account in Stockholders' equity. The Bank has only recognized PASEP and COFINS taxcredits on negative mark-to-market adjustments recorded in income for the period, in compliancewith the rules included in CMN Resolution 3059/2002 and BACEN Circular 3171/2002 (Note 3,items "d" and "e").

IRPJ, CSLL, PASEP and COFINS deferred tax liabilities have been recorded on the positivemark-to-market adjustments of securities and derivative financial instruments recorded in incomeand in a separate account in Stockholders' equity (Note 3, items "d" and "e").

19 Equity in the Earnings (Loss) of Subsidiary and Associated Companies

Significant investments in Brazil and abroad are stated on the equity method of accounting, inconformity with BACEN and CVM instructions, and are classified in an investment account inpermanent assets.

The equity accounting adjustments were recorded in the account "Equity in the earnings (loss) ofsubsidiary and associated companies" as follows:



79

(a) BB - Domestic and Foreign branches

Investments of Banco do Brasil S,A,

Equity in theearnings (loss) Book value

DESCRIPTION Paid incapital

Adjustedstockholder’s

equity

Ourownership

%

Dividends/ Intereston owncapital Operational

Foreignexchangevariations 3.31.2005 3.31.2004

SUBSIDIARIESBAMB – Brazilian AmericanMerchant Bank

1,132,795 1,408,768 100.00 -- 41,377 6,069 1,408,768 1,372,730

Banco do Brasil A.G. Vienna(Austria)

64,975 98,258 100.00 -- 719 (4,490) 98,258 98,136

BB – Leasing Company Ltd. -- 84,486 100.00 -- (159) 375 84,486 85,430BB – Administração de Cartõesde Crédito S.A.

9,300 26,675 100.00 9,981 1,612 -- 26,675 61,919

BB – Administradora deConsórcios S.A.

14,100 10,283 100.00 -- (1,113) -- 10,283 14,141

BB – Corretora de Seguros eAdmin. de Bens S.A.

26,918 47,292 100.00 -- 12,396 -- 47,292 44,539

BB – Administradora de Ativos –Distribuidora de Títulos eValores Mobiliários S.A.

99,628 177,988 100.00 -- 58,096 -- 177,988 169,254

BB – Banco de InvestimentoS.A.

1,589,399 2,118,804 100.00 -- 139,897 -- 2,118,804 1,915,531

BB – Leasing S.A. –Arrendamento Mercantil

61,860 23,142 100.00 -- 1,968 -- 23,142 24,534

Banco Popular do Brasil S.A. 116,550 83,199 100.00 -- (7,770) -- 83,199 24,511Cobra Tecnologia S.A. (1) 17,183 -- 99.35 545 14,350 -- -- 23,983ASSOCIATED COMPANIESCADAM – Caulim da AmazôniaS.A.

183,904 381,784 21.64 -- 1,900 -- 82,618 79,376

SUBTOTAL -- -- 10,526 263,273 1,954 4,161,513 3,914,084AbroadForeign exchange gain/losses inbranches

-- -- -- -- (43,847) -- --

Increase/decrease instockholders’ equity arising fromother changes -- -- -- -- (223) -- --TOTAL -- -- -- 10,526 263,050 (41,893) 4,161,513 3,914,084

(1) Information from the December 2004 trial balance.

(b) BB – Consolidated

Equity in theearnings (loss)

Book value

DESCRIPTION Paid incapital

Adjustedstockholder’s

equity

Ourownership

%

Dividends/Interest onown capital Operational

Foreignexchangevariations Provision 03.31.2005 03.31.2004

1) Banco do Brasil S.A.

SUBSIDIARIESBB – Administradora de Cartõesde Crédito S.A.

9,300 26,675 100,00 9,981 1,612 -- -- 26,675 61,919

BB – Administradora deConsórcios S.A.

14,100 10,283 100,00 -- (1,113) -- -- 10,283 14,141



80

BB – Corretora de Seguros eAdmin. de Bens S.A.

26,918 47,292 100,00 -- 12,396 -- -- 47,292 44,539

Cobra Tecnologia S.A. (1) 17,183 -- 99,35 545 14,350 -- -- -- 23,983ASSOCIATED COMPANIESCADAM – Caulim da AmazôniaS.A.

183,904 381,784 21,64 -- 1,900 -- -- 82,618 79,376

SUBTOTAL (1) - -- 10,526 29,145 -- -- 166,868 223,9582) BB-BI Banco de InvestimentoASSOCIATED COMPANIESBrasilseg Participações S.A. (3) 84,290 190,530 70,00 8,400 5,342 -- -- 133,371 121,949Cia. De Seguros Aliança do BrasilS.A. (3)

129,861 255,424 70,00 28,771 33,706 -- -- 178,797 135,117

Brasilprev (3) (B) 77,687 168,982 49,99 32,307 13,465 -- -- 88,766 79,075Brasilcap (3) 53,872 145,053 49,99 25,912 15,028 -- -- 72,512 65,646Brasilsaúde (3) (C) 39,726 39,660 49,92 569 (414) -- -- 19,688 19,838Cia. Brasileira de Meios dePagamento (3)

74,534 191,770 32,00 25,032 46,639 -- -- 61,423 23,103

Seguradora Brasileira de Créditoà Exportação (3)

9,165 14,945 12,088 100 (4) -- -- 1,806 1,516

Cibrasec (3) 68,475 53,119 10,00 465 188 -- -- 5,313 4,929Itapebi (3) 150,000 174,925 19,00 10,900 2,731 -- -- 33,693 29,665Kepler Weber (3) 51,228 117,591 24,38 232 805 -- -- 28,669 24,430Cia Bras. Soluções e Serviços (1) 8,718 14,528 37,467 -- 10 -- -- 10 216Ativos S.A. (3) 4,577 17,691 74,50 6,809 5,373 -- -- 16,223 11,737Maxblue DTVM (A) -- -- -- -- -- -- -- -- 2,781BAF Aconselhamento FinanceiroS.A. (2)

203,498 4,150 100,00 -- (23,939) -- 23,939 4,150 --

SUBTOTAL (2) -- -- -- 139,497 98,930 -- 23,939 644,421 520,0023) BAMB – Brazilian American Merchant Bank --SUBSIDIARIESBBTUR - Viagens e Turismo Ltda.(3)

12,634 13,592 99,00 -- 1,914 (71) -- 13,456 12,111

Ativos S.A. (3) 4,577 21,776 25,50 -- 1,827 (42) -- 5,553 4,018

Other -- -- -- -- -- -- -- 16 17

SUBTOTAL (3) -- -- -- -- 3,741 (113) -- 19,025 16,146

4) BB – Leasing Company Ltd.BBTUR - Viagens e Turismo Ltda. 12,634 13,592 1,00 -- 19 -- -- 136 123SUBTOTAL (4) -- -- -- -- 19 -- -- 136 123



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5) BB-DTVM Distribuidora de Títulos e Valores Mobiliários

ASSOCIATED COMPANIES- (not valued on the equity method)PRONOR -- -- 12,02 -- -- -- -- 20,722 20,722 SUBTOTAL (5) -- -- -- -- -- -- -- 20,722 20,722

AbroadForeign exchange gain/losses inbranches

-- -- -- -- -- (43,847) -- -- --

Foreign exchange gain/losses insubsidiaries

-- -- -- -- -- 1,954 -- -- --

Increase/decrease instockholders’ equity arising fromother movements,TOTAL -- -- -- -- (223) -- -- -- --

-- -- -- 150,023 131,612 (42,006) 23,939 851,172 780,951

(A) On December 19, 2003, the contracts for the corporate dissolution of Maxblue Americas Holdings S,A were signed through which BB BI exchangedits 49,9% investment in this company for 100% of Maxblue DTVM. The Extraordinary General Meeting of stockholders held on May 12, 2004changed the Company's name from Maxblue DTVM S,A to "Brasil Aconselhamento Financeiro e DTVM S,A," and the Extraordinary GeneralMeeting of July 26, 2004 to "Brasil Aconselhamento Financeiro S,A,", The provision for loss on investment of R$ 3,701 has been maintained,

(B) Goodwill of R$ 4,292;(C) Negative goodwill of R$ 111;(1) Information from the December 2004 trial balance.(2) Information from the January 2005 trial balance.(3) Information from the February 2005 trial balance.

Note: The goodwill recorded on the acquisition of investments was based on the expectation of future profits and the negative goodwill on other economicreasons.



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20 Related-party Transactions

The transactions carried out between companies of the group are:

March 31, 2005 March 31, 2004

Assets Income Assets Income(liabilities ) (expenses ) (liabilities ) (expenses )

Cash and cash equivalents 620 -- 917 --Foreign subsidiaries 620 -- 917 --

Short-term interbank deposits 337,920 57,850 14,800,817 90,195Foreign subsidiaries -- 44,427 14,592,617 82,388BB - Banco de Investimento S.A. -- -- 86,800 2,586BB - Leasing S.A. - Arrendamento Mercantil 297,920 13,423 121,400 5,531BB – Administração de Ativos - DTVM S.A. -- -- -- (310)BB - Banco Popular do Brasil S.A. 40,000 -- -- --

Securities 9,794 347 12,285 290Foreign subsidiaries -- 740 -- 290BB - Banco de Investimento S.A. -- -- 520 --BB - Leasing S.A. – Arrendamento Mercantil 9,794 -- 11,765 --BB - Administração de Ativos - DTVM S.A. -- (16) -- --BB - Administradora de Cartões de Crédito S.A. -- (165) -- --

Brasil Aconselhamento Financeiro S.A. -- (151) -- -- BB – Administradora de Consórcios S.A. -- (61) -- --Loan operations 93,166 173,662 75,205 1,271

Foreign subsidiaries -- 371 -- 751BB - Leasing S.A. - Arrendamento Mercantil 68,376 4,069 67,525 --BB – Administração de Ativos - DTVM S.A. 367 169,222 7,680 520Cobra Tecnologia S.A. 24,423 -- -- --

Other receivables 141,581 -- 241,350 --Foreign subsidiaries -- -- 144,891 --BB - Banco de Investimento S.A. 3,027 -- 969 --BB - Leasing S.A. - Arrendamento Mercantil 4,512 -- 2,708 --BB - Administração de Ativos - DTVM S.A. 66,853 -- 56,589 --BB – Administradora de Cartões de Crédito S.A. 10,336 -- 469 --BB - Corretora de Seguros e Adm de Bens S.A. 22,109 -- 18,670 --

Cobra Tecnologia S.A. 675 -- 2,795 --BB - Banco Popular do Brasil S.A. 15,405 -- 4,704 --BB – Administradora de Consórcios S.A. 1,377 -- 385 --Brasil Aconselhamento Financeiro S.A. 159 -- 323 --BB - Tur Viagens e Turismo Ltda. 7,532 -- 3,143 --Ativos S.A. 9,596 -- 5,704 --

Demand deposits (26,666) -- (218,094) --Foreign subsidiaries (63) -- (87) --BB - Banco de Investimento S.A. (83) -- (649) --BB - Leasing S.A. - Arrendamento Mercantil (96) -- (14) --BB – Administração de Ativos - DTVM S.A. (425) -- (446) --



83

March 31, 2005 March 31, 2004


BB – Administradora de Cartões de Crédito S.A. (101) -- (25,248) --BB - Corretora de Seguros e Adm de Bens S.A. (485) -- (474) --BB - Tur Viagens e Turismo Ltda. (1,734) -- (3,934) --Cobra Tecnologia S.A. (23,601) -- (187,195) --Brasil Aconselhamento Financeiro S.A. (17) -- (27) --Ativos S.A. (57) -- (20) --BB-Administradora de Consórcios S.A. (4) -- (47) --

Interbank deposits (7,328,666) -- (23,964,658) 41,232Foreign subsidiaries (7,328,666) -- (23,964,658) 41,232

Deposits received under security repurchaseagreements

(1,232,271) (44,847) (690,636) (17,447)

Foreign subsidiaries (54,452) -- (59,127) --BB - Banco de Investimento S.A. (549,837) (22,808) (1,033) (57)BB - Leasing S.A. - Arrendamento Mercantil -- (60) (580) (28)BB – Administração de Ativos - DTVM S.A. (266,278) (13,182) (346,334) (9,880)BB - Administradora de Cartões de Crédito S.A. (183,313) (1,201) (153,995) (3,078)BB - Corretora de Seguros e Adm de Bens S.A. (117,100) (5,289) (100,900) (4,345)Cobra Tecnologia S.A. (650) -- (34) --BB - Banco Popular do Brasil S.A. (48,573) (1,948) (5,262) --BB - Administradora de Consórcios S.A. (6,747) (295) (14,315) (59)

Brasil Aconselhamento Financeiro S.A. (5,321) -- -- --BB - Tur Viagens e Turismo Ltda. -- (64) (9,056) --

Funds from acceptance and issue of securities (32,629) -- (24,925) --Foreign subsidiaries (32,629) -- (24,925) --

Foreign borrowings (2,749,725) (6,066) (3,030,984) (6,511)Foreign subsidiaries (2,749,725) (6,066) (3,030,984) (6,511)

Foreign onlendings (781,873) -- (1,094,615) (8,601)Foreign subsidiaries (781,873) -- (1,094,615) (8,601)

Derivative financial instruments (110,536) (924) (20,043) 1,066Foreign subsidiaries (108,790) -- (19,618) --BB - Banco de Investimento S.A. (1,494) (1,341) -- 520BB - Leasing S.A. - Arrendamento Mercantil -- 417 -- 546BB - Administradora de Cartões de Crédito S.A. (192) -- (243) --BB - Administradora de Consórcios S.A. (60) -- (182) --

Other liabilities (761,833) -- (850,401) --Foreign subsidiaries (586,865) -- (736,637) --BB-Banco de Investimento S.A. -- -- (69) --BB - Leasing S.A. - Arrendamento Mercantil (46) -- (12) --BB - Administradora de Cartões de Crédito S.A. (11,721) -- -- --BB - Administração de Ativos - DTVM S.A. (7,146) -- (4,113) --Cobra Tecnologia S.A. (150,705) -- (107,486) --BB - Tur Viagens e Turismo Ltda. (3,367) -- (2,084) --BB-Banco Popular do Brasil S.A. (1,983) -- -- --



84

March 31, 2005 March 31, 2004


Reimbursement of costs -- -- -- 410 BB – Administração de Ativos – DTVM S.A. -- -- -- 410Other operating income -- 16,001 -- 4,297

Foreign subsidiaries -- 51 -- 34BB - Banco de Investimento S.A. -- 6,054 -- 1,428BB - Administração de Ativos - DTVM S.A. -- 3,572 -- --

BB – Administradora de Cartões de Crédito S.A. -- 401 -- 1,601BB - Corretora de Seguros e Adm de Bens S.A. -- 1,357 -- 1,234BB - Tur Viagens e Turismo Ltda. -- 1 -- --BB - Administradora de Consórcios S.A. -- 4,329 -- --Ativos S.A. -- 236 127

Other administrative/operating expenses -- (64,889) -- (389,262)BB – Administração de Ativos - DTVM S.A. -- (2,398) -- --

Brasil Aconselhamento Financeiro S.A. -- (3,980) -- --BB-Banco Popular do Brasil S.A. -- (1,949) -- --Cobra Tecnologia S.A. -- (56,562) -- (389,262)

Other receivables include accounts receivable from related parties, dividends and interest onown capital receivable.

Transactions carried out between the companies included in the consolidation are eliminated onconsolidation (Note 2.b).



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21 Operating Limits - Basel Agreement

At March 31, 2005, the referential stockholders' equity exceeded the minimum required by theBrazilian Central Bank by R$ 6,231,001 and the coefficient of capital adequacy was 15,62%(14,30% as of March 31, 2004), while the minimum required is 11%.

The risk-weighted assets are as follows:

March March31, 2005 31, 2004

Cash and cash equivalents 2,443,035 2,321,041Credits and securities issued or guaranteed by the

Brazilian Government73,133,091 70,290,700

Deposits with the Brazilian Central Bank 20,787,070 17,098,775Receivables from related companies 5,970 33,160Specific credits - rescheduling of rural credits 558,821 506,017Foreign exchange portfolio 788,419 885,603Other 1,038,285 776,638

Total subject to zero-risk 98,754,691 91,911,934

Foreign currency funds 11,376,696 6,288,845Clearing services for checks and other papers 2,442,455 2,238,354Foreign exchange portfolio 1,156,957 1,044,115Deposits with other banks 585,023 6,656,365Investments in gold 3,038 13,267

Total subject to 20% risk 15,564,169 16,240,946

Weighted amount 3,112,833 3,248,189

Funds applied in interbank deposits 13,551,578 22,706,553Foreign exchange portfolio 8,198,843 7,864,128Foreign securities 283,911 10,849Other 710,975 659,988


Weighted amount 11,372,653 15,620,759

Loan operations 77,750,911 66,319,418Property and equipment in use 2,886,027 2,844,177Leased assets 598,313 405,271


Quarterly InformationBalance SheetIn thousands of reais

86

March March31, 2005 31, 2004

Investments 885,369 803,831Securities 4,069,246 2,586,006Foreign exchange portfolio 299,885 402,310Memorandum accounts (8,866,709) (8,639,382)Other 14,492,713 9,731,156


Weighted amount 92,115,755 74,452,787

Deferred tax credits - income tax and social contributionon net income

7,794,993 8,789,709


Weighted amount 23,384,979 26,369,127

Total assets subject to risk weighting 236,974,915 222,636,895

Total weighted amount 129,986,220 119,690,864

The calculations of the required stockholders' equity and the adequacy coefficient are as follows:

March31, 2005

March31, 2004

(a) Assets subject to risk weighting 236,974,915 222,636,895(b) AWR (assets weighted by risk) 129,986,220 119,690,864(c) SWAP credit risk 949,642 748,448(d) Requirement of stockholders' equity on AWR (11% of b) 14,298,484 13,165,995(e) Requirement of stockholders' equity on SWAP (20% of c) 189,928 149,690(f) Requirement of stockholders' equity on interest rate exposure

351,012 330,543

(g) Required stockholders' equity (RSE): d + e + f 14,839,425 13,646,227(h) Referential equity amount (RE) 21,070,426 17,740,374

Level I 14,746,358 12,335,730Capital 9,864,153 8,366,189Capital reserves 4,763 4,754Revenue reserves 4,294,251 3,674,443Adjustment to market value - securities and derivatives (94,798) 126,617

Retained earnings 29 7



87

March31, 2005

March31, 2004

Income accounts 13,990,066 12,650,900 Expense accounts (13,025,487) (12,035,316) Treasury stock (125,779) (125,779)

Tax credits excluded from Level I of RE (160,840) (326,085)Level II 6,324,068 5,404,644

Subordinated debts eligible as capital (FCO) 6,298,367 5,380,282 Revaluation reserves 25,701 24,362(i) Ratio between Referential equity amount to required

stockholders' equity: RE and RSE (h/g)1.42 1.30

(j) Surplus/(insufficiency) of stockholders' equity: RE - RSE (h-g) 6,231,001 4,094,146(l) Margin/(surplus) of leverage: (j x 100)/11 56,645,464 37,219,511(m) Basel Ratio: RE x 100/(RSE/0,11) 15.62 14.30

22 Assets and Liabilities in Foreign Currencies

The balance sheet amounts in foreign currencies are as follows:

BB - Domestic and Foreignbranches BB - Consolidated


Assets in foreign currencies recorded in Brazil(except investments) 22,422,273 35,140,750 22,421,652 20,402,325

Investments in foreign currencies recorded inBrazil 11,639 12,187

----

Assets in foreign currencies recorded abroad 31,306,903 48,316,451 25,846,123 42,082,180Total 53,740,815 83,469,388 46,267,775 62,484,505

Liabilities in foreign currencies recorded inBrazil

25,001,871 30,751,563 20,878,386 25,841,879

Liabilities in foreign currencies recordedabroad

30,159,812 51,751,857 28,810,258 35,683,747

Total 55,161,683 82,503,420 49,688,644 61,525,626



88

23 Retirement and Pension and Health Plans - Post-Employment Benefits

(a) Caixa de Previdência dos Funcionários do Banco do Brasil - PREVI

Banco do Brasil is the sponsor of Caixa de Previdência dos Funcionários do Banco do Brasil(PREVI) which provides participants and their dependents with benefits which are complementaryor similar to those of the Basic Government Retirement Plan. The plans offered through PREVIare of defined contribution (Plano Previ Futuro) or defined benefit (Plan 1), the latter havingadopted the capitalization method for actuarial calculations. At March 31, 2005, the number ofparticipants was 131,617, of which 76,251 are active and 55,366 retired employees.

(a.1) The funding of the vested and unvested benefits are summarized as follows:

(i) Participants employed before April 14, 1967, contemplated in the contract signed on December24, 1997 between the Bank and PREVI (Plan 1): The sponsor assumes the commitment for thepayment of benefits for this group; the mathematical reserves which guarantee the benefits arenot yet fully funded. The amount remaining from the commitments assumed for this group ofparticipants totals R$ 471,013 thousand at March 31, 2005, and relates entirely to unrecognizedactuarial losses. R$ 60,782 thousand of this amount has already been transferred by Banco doBrasil in March 2005. The pension rights of this group of participants are characterized as adefined benefit.

(ii) Participants employed between April 15, 1967 and December 23, 1997 (Plan 1): activeparticipants contribute 3% of their contribution salary plus 2% of the amount of such salary thatexceeds six-month of the PREVI contribution (R$ 2,057.53 at March 31, 2005), plus 8% of theamount of such salary that exceeds the PREVI contribution. Participants receiving benefitscontribute 8% of the amount of the pension complement and the sponsor an amount equal to thecontributions of the participants. The retirement benefit of this group is characterized as a definedbenefit.

(iii) Participants employed as from December 24, 1997 (Plano Previ Futuro): active participantscontribute to PREVI an amount between 7% and 17% of their contribution salary, varying basedon length of service and the amount of the contribution salary. There is no contribution for retiredparticipants. The sponsor contributes an amount equal to the contributions of the participants,limited to 14% of the total contribution payroll of these participants. The retirement benefit of thisgroup is characterized as a defined contribution.

(a.2) Effects of Benefit Plan 1, based on actuarial valuations as of December 31, 2003 and 2004carried out by an independent actuary, and of the Plano Previ Futuro as required by CVMResolution 371/00:



89

(i) Equity effect (reconciliation of assets and liabilities):

Plan 1March March

31, 2005 31, 2004

(1) Present value of actuarial liabilities with coverage 52,354,343 46,567,548(2) Present value of actuarial liabilities not covered -- --(3) Present value of actuarial liabilities (1 + 2) 52,354,343 46,567,548(4) Fair value of the plan assets (68,880,031) (55,714,690)(5) Present value of liabilities in excess of (less than) the

fair value of the assets (3 + 4) (16,525,688) (9,147,142)

(6) Actuarial (gains) or losses not recognized (13,877,071) (6,798,636)(7) Net actuarial liability (asset) to be provided (5 - 6) (2,648,617) (2,348,506)

The Previ Futuro Plan, being a defined contribution plan, is not required to record actuarialassets or liabilities.

(ii) Amounts paid to PREVI:

March 31, 2005 March 31, 2004

Plan 1

PlanoPrevi

Futuro Total Plan 1

PlanoPrevi

Futuro Total

Sponsor contributions 107,893 12,905 120,798 118,632 8,309 126,941Amounts paid to PREVI referringto the 1997 Contract 511,191 -- 511,191 623,929 -- 623,929

Total paid to PREVI 619,084 12,905 631,989 742,561 8,309 750,870



90

(iii) Effect on net income:

March 31, 2005 March 31, 2004

Plan 1

PlanoPrevi

Futuro Total Plan 1

PlanoPrevi

Futuro Total

(1) Cost of current service(with interest) 70,468 25,178 95,646 75,378 15,788 91,166

(2) Interest on actuarial liabilities 1,337,838 -- 1,337,838 1,190,066 -- 1,190,066(3) Expected earnings on the

plan assets 1,786,102 -- 1,786,102 1,441,119 -- 1,441,119

(4) Deferment of the net earningsfrom assets and liabilities asfrom June/2003 (2-3)

(448,264) -- (448,264) (251,053) -- (251,053)

(5) Total gross expense/(income)(1 + 2 - 3 - 4) 70,468 25,178 95,646 75,378 15,788 91,166

(6) Expected contributions fromparticipants 46,493 12,918 59,411 41,068 7,894 48,962

(7) Previ liability expense relatedto the 1997 contract 8,408 -- 8,408 106,317 -- 106,317

(8) Subtotal net expense /(income)(5 - 6 + 7) 32,383 12,260 44,643 140,627 7,894 148,521

(9) Previ management fee (5% ofthe employers’ union dues) 5,395 645 6,040 5,931 415 6,346

(10) Effect of the netexpense/(income) (8 + 9) 37,778 12,905 50,683 146,558 8,309 154,867

(a.3) The principal economic assumptions adopted for the actuarial calculations were the following:

. Real interest rate used for discounting actuarial liabilities to present value: 6.7% p.a.

. Real expected yield on plan assets: 6.7% p.a.

. Estimated salary increases: 1.4712% p.a. for Plan 1 and 3.5320% p.a. for Plano Previ Futuro

(b) Benefits of sole responsibility of the Bank

Banco do Brasil is also responsible for assistance and pension benefits for employees employedbefore April 14, 1967, not covered by the PREVI Benefits Plan, with characteristics of a definedbenefit plan, and the regime adopted for the actuarial calculations is that of capitalization. Therewere 7,866 participants on March 31, 2005.



91

The main benefits are: (a) retirement pensions to founder participants and pension payments tosurvivors of participants deceased prior to April 14, 1967; (b) payment of retirement supplementsto the other participants employed by Banco do Brasil who retired up to April 14, 1967 or who, onthat date, would have the right through length of service to retire and who had at least 20 years ofeffective service with the Bank; and (c) increase in retirement benefits and pension payments inexcess of those provided by the PREVI Benefit Plans, as a result of judicial and administrativedecisions due to the restructuring of job and salary plans and incentives created by the Bank.

(b.1) The cost of these benefits is totally funded by Banco do Brasil.

(b.2) Effects on the financial statements based on actuarial valuations as of December 31, 2003 and2004 carried out by an independent actuary, as required by CVM Resolution 371/00:


March MarchDescription 31, 2005 31, 2004

(1) Present value of actuarial liabilities with coverage -- --(2) Present value of actuarial liabilities not covered

(Plans without financial assets) 1,532,148 1,492,491

(3) Present value of actuarial liabilities (1 + 2) 1,532,148 1,492,491(4) Fair value of the plan assets -- --(5) Present value of liabilities in excess of the

fair value of the assets (3 + 4) 1,532,148 1,492,491

(6) Actuarial (gains) or losses not recognized 180,239 192,065(7) Net actuarial liability/(asset) to be provided (5 - 6) 1,351,909 1,300,426

(ii) Amounts paid to PREVI:

March31, 2005

March31, 2004

Sponsor contributions 64,451 79,438


March31, 2005

March31, 2004

(1) Cost of current service -- --(2) Expected contributions from participants -- --(3) Interest on actuarial liabilities 37,427 36,622(4) Actuarial (gains) or losses -- --(5) Expected earnings on assets -- --(6) Effect of the expense recorded (1 - 2 + 3 + 4 - 5) 37,427 36,622



92

(b.3) The economic assumptions adopted for the actuarial calculations are the same as thoseadopted for the PREVI Plan 1 (item 23 (a.3)).

(c) CASSI - Caixa de Assistência dos Funcionários do Banco do Brasil

The Bank is the sponsor of a Health Plan managed by CASSI - Caixa de Assistência dosFuncionários do Banco do Brasil. The main objective is to provide coverage for expenses withthe promotion, protection, recovery and rehabilitation of a member's health and of his/herinscribed beneficiaries. At March 31, 2005, there were 153,976 participants, of which 83,654active and 70,322 retired participants and pensioners.

The Bank contributes monthly an amount equivalent to 150% of the total contributions frommembers (active and retired) and from pension beneficiaries of employees employed beforeDecember 23, 1997 and 100% of the total contributions from participants employed after thatdate. Monthly contributions from members and pension beneficiaries amount to 3% of the totalpayroll or the total retirement or pension plan benefits.

(c.1) Effects of the CASSI Plan on the financial statements, based on actuarial appraisals as ofDecember 31, 2003 and 2004 carried out by an independent actuary, as required by CVMResolution 371/00:


March31, 2005

March31, 2004

(1) Present value of actuarial liabilities with coverage -- --(2) Present value of actuarial liabilities not covered

(Plans without financial assets) 3,078,155 2,389,460

(3) Present value of actuarial liabilities (1 + 2) 3,078,155 2,389,460(4) Fair value of the plan assets -- --(5) Present value of liabilities in excess of the

fair value of the assets (3 + 4) 3,078,155 2,389,460

(6) Actuarial (gains) or losses not recognized 1,360,228 781,467(7) Net actuarial liability (asset) to be provided (5 - 6) 1,717,927 1,607,993

(ii) Amounts paid to CASSI:

March31, 2005

March31, 2004

Sponsor contributions 92,389 93,789



93


March31, 2005

March31, 2004

(1) Cost of current service (with interest) 7,808 5,943(2) Expected contributions from participants -- --(3) Interest on actuarial liabilities 78,670 60,940(4) Actuarial (gains) or losses 15,517 8,990(5) Expected earnings on assets -- --(6) Effect of the expense recorded (1 - 2 + 3 + 4 - 5) 101,995 75,873

(c.2) The economic assumptions adopted for the actuarial calculations were the same as those appliedto the PREVI Plan 1 (item 23(a.3)).

(d) Policy for the recognition of actuarial gains and losses

In accordance with CVM Deliberation 371, the actuarial gains or losses to be recognized asincome or expense in a defined benefit plan are the amount of unrecognized gains and lossesthat exceed, in each period, the higher of the following limits:

. 10% of the present value of the total actuarial liability of the defined benefit; and

. 10% of the fair value of plan assets.

(d.1) Benefits of Sole Responsibility of the Bank (Plan 1): Actuarial losses relating to these benefitsare being recorded in the same year the actuarial calculation is made because the personsinvolved are all former employees, and thus there is no remaining length of service to amortize.

(d.2) Benefit Plan 1: Previ Plan 1 has assets at fair value in excess of the liabilities, thus permittingthe recording of actuarial gains. However, because of (i) the remaining pension commitments ofthe plan; (ii) the fluctuations that can affect the fair value of plan assets, and (iii) the possibility torealize actuarial gains, the Bank, conservatively, is not recording the actuarial gains arising inPlan 1 because they represent an increase in the existing actuarial assets.

(d.3) Cassi Actuarial Liabilities: Actuarial losses related to these liabilities are recognized in the yearfollowing that in which the actuarial calculation is made.



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(e) Summary of the Provisions for the PREVI and CASSI Liabilities

3.31.2005

Net actuarialliability/(asset)

on January1, 2005

Expense(income)

recorded inthe incomestatement

consideringactuarial

adjustments

Sponsorcontributions

in the year

Net actuarialliability(asset)

on March31, 2005

PREVI actuarial liability in respect of the 1997contract 442,001 8,408 (511,191) (60,782)

Adjustment account of the PREVI actuarial liability (2,570,095) 23,975 (102,497) (2,648,617)PREVI actuarial liability in respect of the Informal

Plan (sole responsibility of the Bank) 1,378,933 37,427 (64,451) 1,351,909

CASSI actuarial liability 1,671,721 101,995 (55,789) 1,717,927Total 922,560 171,805 (733,928) 360,437

3.312004

Net actuarialliability/(asset)

on January1, 2004

Expense(income)

recorded inthe incomestatement

consideringactuarial

adjustments

Sponsorcontributions

in the year

Net actuarialliability(asset)

on March31, 2004

PREVI actuarial liability in respect of the 1997contract 2,508,808 106,317 (623,929) 1,991,196

Adjustment account of the PREVI actuarial liability (2,270,115) 34,310 (112,701) (2,348,506)PREVI actuarial liability in respect of the Informal

Plan (sole responsibility of the Bank) 1,343,242 36,622 (79,438) 1,300,426

CASSI actuarial liability 1,593,117 75,873 (60,997) 1,607,993Total 3,175,052 253,122 (877,065) 2,551,109

(f) PREVI contributions parity

In order to comply with the Federal Constitution, a parity was established as from April 6, 2001between the contributions from the Bank and from participants.

On April 12, 2001, the Judge of the Thirteenth Federal Court of the Federal District granted apartial injunction for a claim filed by the São Paulo Bank Employees Union against theSecretariat of Complementary Retirement Benefits and against the Fiscal Director appointed bythe Secretariat for PREVI.

The injunction suspends the decision issued by the Fiscal Director on April 6, 2001 whichauthorizes the use of R$ 2.2 billion attributable to Banco do Brasil's share in PREVI's remainingreserve balances, after the implementation of the parity, to amortize the pension liability with theentity that is the Bank's responsibility, retroactive to December 15, 2000.

While the injunction is in effect, the decision of the Fiscal Director cannot be carried out.The readjusted amount of the initial R$ 2.2 billion totals R$ 4.7 billion at March 31, 2005.



95

24 Compensation Paid to Employees and Management

The monthly compensation of employees and management of the Bank in Brazil is presentedbelow (in reais) in the format required by item 4, Section C of Ministry of Finance Statement ofJustification 139/88:

1st quarter2005

1st quarter2004

Lowest salaryStandard amount 780.30 719.10Semiannual bonus 195.07 179.77

Fixed amount – Trade Union Agreement 2004 30.00 --Total 1,005.37 898.87

Highest salaryStandard amount 1,079.68 995.10Amount per individual/supplement for length of service - I 374.81 345.45Amount per individual - standard amount 1,144.36 1,054.71Variable temporary supplement – commissioned position 10,426.63 9,609.83Additional per function 2,597.40 2,393.70Additional for temporary work updated 1,612.20 1,485.90Semiannual bonus 1,702.12 1,568.71

Total 18,937.20 17,453.40

Average salary 3,069.88 2,871.90

ManagementPresident 24,679.20 22,745.70Vice-president 22,235.70 20,493.60Director 18,937.20 17,453.40



96

25 Assignment of Employees to External Organizations

(a) With costs for the Bank

(a.1) Federal government

Assignments are regulated by article 93 of Law 8112/90 (amended by Law 9257/97), byDecree 925/93, and by PGFN/CJN Note 088/96 issued by the General Counsel of the FederalTreasury.


Number of employees assigned 12 12Cost for the period 503 494

(a.2) Labor unions

Assignments occur in cases prescribed in the Collective Labor Agreement or by commitmentsassumed as a result of salary negotiations:

1st quarter2005 1st quarter 2004

Number of employees assigned 124 101Cost for the period 2,235 1,846

(a.3) Other organizations/entities

Assignments occur as a result of agreements of strategic business interest of the Bank:


Number of employees assigned 3 3Cost for the period 210 217

(b) Without cost to the Bank


(a) Federal, state and municipal governments 319 323(b) External organizations 564 659(c) Employee entities 30 --(d) Subsidiary and associated companies 314 276

Total employees assigned 1,366 1,374



97

26 Commitments, Responsibilities and Contingencies

(a) Contingent liabilities

The Bank and its subsidiaries are parties in lawsuits involving labor, civil, tax and social securitycontingencies.

The Bank classifies contingencies as remote, possible and probable, based on the possibilitiesof loss determined after a legal update of each claim. This procedure complies with StatementXXII - Contingencies issued by the Institute of Independent Auditors of Brazil - IBRACON, whichrequires a provision for the total amount of the contingencies classified as probable, and doesnot require a provision to be recorded for those classified as possible and remote.

The provisions for claims are recorded taking into consideration the possibility of success by theplaintiff in the lawsuit against the Bank/subsidiary.

The provisions for labor claims are recorded considering, also, the jurisprudence applicable toeach claim.

The consolidated position of the contingent liabilities at March 31, 2005, segregated by nature ofclaim and classification of loss, as well as the provisions recorded, whose changes in the Bankare shown in Note 7, are the following:

BB - domestic andforeign branches BB - consolidated

Amount Provision Amount Provision

Labor claims 2,499,472 2,105,501 2,499,472 2,105,501Probable loss 2,105,501 2,105,501 2,105,501 2,105,501Possible loss 393,971 -- 393,971 --

Tax claims 626,475 130,489 672,172 167,183Probable loss 130,489 130,489 167,183 167,183Possible loss 495,986 - 504,989 -

Civil claims 2,056,736 770,888 2,105,158 805,471Probable loss 770,888 770,888 805,471 805,471Possible loss 1,285,848 -- 1,299,687 --

Social security claims 484 8 631 155Probable loss 8 8 155 155Possible loss 476 -- 476 --



98

(b) Contingent tax assets

(b.1) The Bank has filed lawsuits for reimbursement of taxes paid in error, the most important being:

. Unconstitutionality of Income Tax on Net Income paid in 1989 and in the 1st six months of1992, in the amount of R$ 10,397;

. Tax on Financial Transactions (IOF) - Law 8033/90 (Price-level restatement), in the amount ofR$ 162,353;

(b.2) The Bank recorded R$ 229,127 thousand in Other operating income relating to the recognition ofthe right to offset tax credits (CSLL) of the year 1988 in a judicial decision that has been finallyruled.

(c) Other commitments

(c.1) The Bank is the sponsor of Fundação Banco do Brasil whose purpose is the promotion, support,advancement and sponsorship of educational, cultural, social, philanthropic, andrecreational/sporting activities, as well as the promotion of research activities of a technologicaland scientific nature, and rural and urban community assistance services.

(c.2) Guarantees to third parties, for a fee and with counter-guarantees from the beneficiaries -guarantees, sureties and bonds - amounted to R$ 3,645,287 at March 31, 2005 (R$ 3,781,915 atMarch 31, 2004). A provision of R$ 19,590, recorded in "Other Liabilities", is considered sufficientto cover any potential loss arising on these guarantees.

(c.3) Available credit lines for loan and lease operations amount to R$ 22,802,078 at March 31, 2005(R$ 19,276,137 at March 31, 2004).

(c.4) The confirmed import and export letters of credit total R$ 884,745 at March 31, 2005 (R$1,212,032 at March 31, 2004).

(c.5) The Bank is the operator of the Fund for Sectorial Investments (FISET), with net assets ofR$ 2,280 (R$ 2,304 at March 31, 2004), and is the manager of the Public Service EmployeeSavings Program (PASEP), with net assets of R$ 1,395,414 at March 31, 2005 (R$ 1,221,296 atMarch 31, 2004). The Bank guarantees the latter a minimum remuneration equivalent to the Long-Term Interest Rate (TJLP).

(c.6) Despite the reduced level of risk to which its assets are subject, the Bank contracts insurancecover for its assets in amounts considered sufficient to cover any losses.



99

Statement of Added Value

BB-Domestic and Foreign Branches1st quarter 2005 1st quarter 2004

DESCRIPTION BALANCE % BALANCE %

Added value calculation

Net income from financial intermediation 2,580,049 2,311,194Banking service fees 1,631,835 1.437,782Other operating income (expenses), net (644,132) (1,010,051)Non-operating income, net 96,430 14,295

Added value 3,664,182 2,753,220

Equity in the earnings (loss) of subsidiary andassociated companies 221,157 190,515

Gross added value 3,885,339 2,943,735

Depreciation and amortization (173,336) (112,632)

Added value to be distributed 3,712,003 100.00 2,831,103 100.00

Distribution of added value

Employees 1,661,785 44.77 1,424,872 50.33Salaries and fees 1,165,379 1,013,856Benefits, social charges and training 418,731 370,005Employee profit sharing 77,675 41,011

Governments 1.085,638 29.25 790,646 27.93 Brazil 1,073,129 28.91 781,989 27.62

Social security contributions (INSS) on salaries 201,860 172,069Tax expenses (except income tax and social

contribution on net income) 364,307 296,221Income tax/social contribution on net income 506,962 313,699

Foreign 12,509 0.34 8,657 0.31Tax expenses (except income tax and social


Stockholders 964,580 25.98 615,585 21.74Retained earnings 964,580 615,585

Added value distributed 3,712,003 100.00 2,831,103 100.00



100

BB-Consolidated1st quarter 2005 1st quarter 2004

DESCRIPTION BALANCE % BALANCE %

Added value calculation

Net income from financial intermediation 2,685,301 2,413,878Banking service fees 1,766,749 1,552,537Other operating income (expenses), net (689,748) (1,063,307)Non-operating income, net 97,819 15,463

Added value 3,860,121 2,918,571

Equity in the earnings (loss) of subsidiary andassociated companies 113,545 116,423

Gross added value 3,973,666 3,034,994

Depreciation and amortization (173,737) (114,935)

Added value to be distributed 3,799,929 100.00 2,920,059 100.00

Distribution of added value

Employees 1,677,958 44.16 1,441,640 49.37Salaries and fees 1,177,821 1,026,977Benefits, social charges and training 422,378 373,652Employee profit sharing 77,759 41,011

Governments 1,157,391 30.46 862,834 29.55 Brazil 1,144,909 30.13 853,653 29.24

Social security contributions (INSS) on salaries 203,667 173,837Tax expenses (except income tax and social


Foreign 12,482 0.33 9,181 0.31Tax expenses (except income tax and social


Stockholders 964,580 25.38 615,585 21.08Retained earnings 964,580 615,585

Added value distributed 3,799,929 100.00 2,920,059 100.00



101



Current assets 129,480,301 122,404,249 Current liabilities 193,144,802 180,580,598

Available funds 14,407,563 15,279,486 Deposits (Note 10) 116,555,464 103,190,122 Demand deposits 29,340,311 30,306,496

Short-term interbank investments (Note 4) 15,092,120 26,599,043 Savings deposits 31,417,670 27,590,328 Open market investments 3,898,310 5,290,902 Interbank deposits 3,571,051 3,845,074 Interbank deposits 11,193,810 21,308,141 Time deposits 52,145,370 41,448,224

Other deposits 81,062 0

Marketable securities andDerivative financial instruments (Note 5) 22,023,390 13,532,725

Funds obtained in the open market38,287,279 35,695,882

Own portfolio 13,125,443 8,820,880 Own portfolio 35,430,133 30,972,940 Subject to repurchase commitments 7,797,487 3,912,340 Third-party portfolio 2,857,146 4,722,942 Restricted deposits – Central Bank 524,402 468,808 Restricted to guarantees provided Derivative financial instruments 576,058 330,697 Notes and securities 103,831 540,111

Foreign marketable securities 103,831 540,111

Interbank accounts 23,347,967 19,409,440 Interbank accounts 1,520,579 1,445,181 Payments and receipts pending settlement 2,442,455 2,238,354 Receipts and payments pending settlement 1,520,387 1,445,181 Restricted deposits Correspondent banks 192 0 Central Bank deposits 20,787,070 17,098,774 National Treasury – rural credit receivable 8,409 4,117 National Housing Financing System (SFH) 2,633 1,347 Interdepartmental accounts 1,385,209 1,171,918 Interbank onlendings 5,031 5,735 Third-party funds in transit 1,331,791 1,149,283 Correspondent banks 102,369 61,113 Internal transfers of funds 53,418 22,635

Interdepartmental accounts 140,229 39,129 Borrowings (Note 11) 13,614,328 6,993,630 Internal transfers of funds do 140,229 39,129 Foreign borrowings 13,614,328 6,993,630

Lending operations 39,367,587 34,044,199 Local onlendings – official institutions (Note 12) 3,318,155 1,554,394 Lending operations National Treasury 3,312,941 1,549,457 Public sector (Note 6b) 1,125,732 561,520 National Economic Development Bank (BNDES) 0 0 Private sector (Note 6b) 41,279,354 35,682,189 National Industrial Financing Authority (FINAME) 3,924 3,682



102



(Allowance for loan losses) (Notes 6e and 6f) (3,037,499) (2,199,510) Other institutions 1,290 1,255

Leasing operations (3,624) (282/ Leases and subleases receivable Foreign onlendings 209 0 Public sector 22,864 4,314 Foreign onlendings 209 0 Private sector 247,314 171,264 (Unearned income from leasing operations) (250,747) (161,686/ (Allowance for leasing losses) (Note 6e) (23,055) (14,174)

Other receivables 14,916,745 13,211,680 Derivative financial instruments (Note 5b) 570,613 464,119 Receivables on guarantees honored 82,809 27,651 Derivative financial instruments 570,613 464,119 Foreign exchange portfolio (Note 8a) 10,444,104 10,196,155 Income receivable 167,535 239,332 Other liabilities 17,789,135 29,525,241 Negotiation and intermediation of securities 61,629 40,001 Collection of taxes and social contributions 1,966,723 2,221,019 Specific credits (Note 8b) 279,411 253,008 Foreign exchange portfolio (Note 14a) 7,969,384 19,405,592 Special operations 1,355 1,355 Social and statutory 84,392 59,818 Sundry (Note 8c) 5,892,982 3,766,436 Taxes and social security charges 923,702 894,091 (Allowance for other losses) (Notes 6e and 6f) (2,013,080) (1,312,258) Negotiation and intermediation of securities 71,639 479,057

Financial and development funds (Note 14b) 165,524 34,681Other assets 188,324 288,829 Special operations 2,382 2,405 Shareholdings 4 4 Subordinated Debts (Note 14e) 237 0 Other assets (Note 9) 317,417 420,711 Sundry (Note 14d) 6,605,152 6,428,578 (Allowance for losses) (177,267) (201,980) Prepaid expenses 48,170 70,094

Long-term receivables 111,259,000 104,264,030 Long-term liabilities 37,479,420 37,713,730



103



Interbank investments (Note 4) 2,589,225 1,733,871 Deposits (Note 10) 3,541,029 7,028,895 Open market investments 54,452 58,458 Interbank deposits 2,917,541 2,373,498 Interbank deposits 2,534,773 1,675,413 Time deposits 623,488 4,655,397

Funds obtained in the open market 4,798,557 4,647,378Marketable securities andDerivative financial instruments (Note 5) 52,065,979 54,341,849

Own portfolio4,173,151 3,937,668

Own portfolio 16,038,125 15,588,625 Third-party portfolio 625,406 709,710 Subject to repurchase commitments 33,930,249 32,206,564 Restricted deposits - Central Bank 1,660,608 6,223,402 Restricted for guarantees provided 364,014 322,860 Notes and securities 747,934 799,645 Derivative financial instruments 72,983 398 Foreign marketable securities 747,934 799,645

Lending operations 38,527,960 32,406,374 Borrowings (Note 11) 3,586,683 3,713,304 Lending operations Foreign borrowings 3,586,683 3,713,304 Public sector (Note 6b) 3,402,131 3,899,925 Private sector (Note 6b) 37,485,486 30,792,316 (Allowance for loan losses) (Notes 6e and 6f) (2,359,657) (2,285,867)

Leasing operations 7,144 10,523 Local onlendings - official institutions (Note 12) 7,310,466 6,448,774 Leases and subleases receivable National Treasury 282,995 328,735 Public sector 37,305 7,670 National Economic Development Bank (BNDES) 3,662,796 3,081,217 Private sector 272,542 174,383 National Industrial Financing Authority (FINAME) 2,922,720 2,506,450 (Unearned income from leasing operations) (296,426) (165,337) Other institutions 441,955 532,372 (Allowance for leasing losses) (Note 6e) (6,277) (6,193)

Foreign onlendings 837 1,632 Foreign onlendings 837 1,632



104



Derivative financial instruments (Note 5b) 103,212 9,357 Derivative financial instruments 103,212 9,357

Other receivables 18,068,692 15,771,413 Income receivable 43,944 52,552 Other liabilities 17,390,702 15,064,745 Specific credits (Note 8b) 279,411 253,008 Taxes and social security charges 29,904 30,350 Sundry (Note 8c) 17,878,501 15,578,902 Negotiation and intermediation of securities 3,271,227 3,530,216 (Allowance for other losses) (Notes 6e and 6f) (133,164) (113,049) Financial and development funds 1,788,178 1,733,540

Subordinated debts (Note 14e) 7,092,958 5,380,282 Sundry (Note 14d) 5,208,435 4,390,357

Deferred income 128,240 126,640Permanent assets 4,946,060 4,438,866 Deferred income 128,240 126,640

Investments 896,352 785,268 Stockholders' equity (Note 16) 14,932,899 12,686,177 Investments in subsidiaries and in associate companies (Note 19) Domestic 851,172 766,810 Capital 9,864,153 8,366,189 Abroad 0 0 Local residents 9,841,636 8,343,671 Other investments 229,713 232,332 Foreign residents 22,517 22,518 (Allowance for losses) (184,533) (213,874)

Property and equipment in use 2,886,026 2,844,178



105



Land and buildings in use 2,195,240 2,231,433 Capital reserves 4,763 4,754 Other property and equipment in use 3,872,778 3,493,869 (Accumulated depreciation) (3,181,992) (2,881,124) Revaluation reserves 25,701 24,362

Leased assets 619,437 413,239 Leased assets 748,923 530,294 Revenue reserves 4,294,251 3,674,443 (Accumulated depreciation) (129,486) (117,055)

Adjustments to market value –Securities and derivatives(Note 16e) (94,799) 126,617

Deferred charges 544,245 396,181 Organization and expansion costs 991,443 747,335 Retained earnings 964,609 615,591 (Accumulated amortization) (447,198) (351,154)

(Treasury stocks) (125,779) (125,779)

Total 245,685,361 231,107,145 Total 245,685,361 231,107,145




12

1.01.2005 to 3.31.2005 1.01.2005 to 3.31.2005 1.01.2004 to 3.31.2004 1.01.2004 to 3.31.2004

Revenue from financial intermediation 8,154,760 8,154,760 7,615,347 7,615,347Lending operations 4,546,158 4,546,158 4,198,229 4,198,229

Leasing operations 87,514 87,514 69,334 69,334Marketable securities 3,166,117 3,166,117 2,825,780 2,825,780

Derivative financial instruments (31,195) (31,195) (36,727) (36,727)Foreign exchange 0 0 251,537 251,537Compulsory investments 386,166 386,166 307,194 307,194

Expenses from financial intermediation (5,469,459) (5,469,459) (5,201,469) (5,201,469)Deposits and funds obtained in the open market (3,728,912) (3,728,912) (3,047,306) (3,047,306)Borrowings and onlendings (371,397) (371,397) (745,342) (745,342)

Leasing operations (58,288) (58,288) (49,871) (49,871)Net loss on exchange transaction (50,039) (50,039) 0 0Provision for credit losses (Note 6e) (1,260,823) (1,260,823) (1,358,950) (1,358,950)

Gross profit from financial transaction 2,685,301 2,685,301 2,413,878 2,413,878

Other operating income / expenses (1,181,979) (1,181,979) (1,402,248) (1,402,248)Services rendered (Note 14a) 1,766,749 1,766,749 1,552,537 1,522,537Personnel expenses (Note 14b) (1,803,866) (1,803,866) (1,574,466) (1,574,466)Other administrative expenses (Note 14c) (1,407,119) (1,407,119) (1,125,836) (1,125,836)Taxes (394,922) (394,922) (318,500) (318,500)

Equity in the earnings of associated and subsidiaries (Note 18) 113,545 113,545 116,423 116,423Other operating income (Note 14d) 1,046,357 1,046,357 517,793 517,793



13

1.01.2005 to 3.31.2005 1.01.2005 to 3.31.2005 1.01.2004 to 3.31.2004 1.01.2004 to 3.31.2004Other operating expenses (Note 14e) (502,723) (502,723) (570,199) (570,199)

Operating profit 1,503,322 1,503,322 1,011,630 1,011,630

Non-operating income (Note 14f) 97,819 97,819 15,463 15,463Income 114,103 114,103 29,994 29,994Expenses (16,284) (16,284) (14,531) (14,531)

Income before taxes and profit sharing 1,601,141 1,601,141 1,027,093 1,027,093

Income tax and social contribution (Note 16) (558,802) (558,802) (370,497) (370,497) Income tax (413,511) (413,511) (269,715) (269,715) Social contribution (149,958) (149,958) (95,607) (95,607) Deferred tax credits 4,667 4,667 (5,175) (5,175)

Profit sharing (Note 21) (77,759) (77,759) (41,011) (41,011)

Net income 964,580 964,580 615,585 615,585

Number of shares 799,359,738 799,359,738 732,017,829 732,017,829Treasury sharesTotal shares used in the calculation of net income per shareNet income per share 1.20669 1.20669 0.84094 0.84094




14

Executive Board

PRESIDENTRossano Maranhão Pinto

VICE-PRESIDENTSAdézio de Almeida LimaAntônio Francisco de Lima NetoEdson Machado MonteiroJosé Luiz de Cerqueira CésarLuiz Eduardo Franco de AbreuLuiz Oswaldo Sant’Iago Moreira de SouzaRicardo Alves da Conceição

OfficersAldo Luiz MendesAugusto Braúna PinheiroDerci AlcântaraHenrique PizzolatoIzabela Campos Alcântara LemosJoão Carlos de MattosJosé Carlos SoaresJosé Gilberto JalorettoJosé Maria RabeloJuraci MasieroLuiz Carlos Silva de AzevedoLuiz Gustavo Braz LageManoel Gimenes RuyMiguel Oscar Viana PeixotoMurilo CastellanoPaulo César Simplício da SilvaPaulo Euclides BonzaniniPaulo Rogério CaffarelliRicardo José da Costa FloresWilliam Bezerra Cavalcanti Filho

Board of DirectorsBernard Appy (President)Rossano Maranhão Pinto (Vice-President)Carlos Augusto VidottoFrancisco Augusto da Costa e SilvaJoão Carlos FerrazJosé Carlos Rocha MirandaTarcísio José Massote de Godoy

Board of AuditorsMarcus Pereira Aucélio (President)Alon FeuerwerkerArtemio BertholiniRodrigo Pirajá WienskoskiVicente de Paulo Barros Pegoraro

Accounting

Gil Aurélio Garcia General AccountingContador CRC-DF 5.027/O-6 CPF 047.999.766-72

performance analysis and financial · pdf file5 – summarized financial statements ......

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