Itaú Unibanco Holding S.A. 1 November 15th 2009 FELABAN Itaú Unibanco Holding S.A. CEO Round Table

Itaú Unibanco Holding S.A.

1November 15th 2009

FELABAN


CEO Round Table


2

• Perspectives for Latin American EconomiesPerspectives for Latin American Economies

• Banking Markets in Latin America

• Itaú Unibanco's Merger Case

• Itaú Unibanco’s Highlights

Agenda


3

Correlation(LatAm x World) 10% 89%

1980 to 1999 2000 - 2008

Source: IMF

Historical GDP Growth (%yoy)

CAGR LatAM 2,5% 3,8%

World Advanced Economies Latin America

In recent years, LatAm has been more integrated to the global economy and has shown higher GDP growth rate than world´s average

-4

-2

0

2

4

6

8

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

%

2nd oil crisis

Brazilian default

Subprime crisis

Argentinean default

Mexican crisis

Asian crisis

LatAm’s volatility mostly related to debt crises

Higher integration to global economy and elevated international reserves

*GDP Growth for 2009/2010 is an IMF estimative


4

100

110

120

130

140

150

160

Q1-99 Q1-01 Q1-03 Q1-05 Q1-07 Q1-09 Q1-11

China

Brazil

Latin America

WORLD

USA

Euro Area

Japan

World Growth Forecast - Selected Countries

GDP (with seasonal adjustment; 1Q/99=100)

200

260

320

Q1-99 Q1-01 Q1-03 Q1-05 Q1-07 Q1-09 Q1-11


5

Latin American countries have

shown important regulatory

advances during the last 20

years…

Latin American Capital Markets have presented good levels of transparency and disclosure

...providing more confidence in the local banking system

0

33

92

56

88

3115

100

62

27

91

64

25

94

63

Supervisory Agency Creation

Establishment of Insider

Trading Laws

Custody Arrangements

Trading Systems Clearing and

Settlement Processes

Percentage of LatAm Countries Implementing Reforms

before 1990 by 1995 by 2002


6

• Perspectives for Latin American Economies

• Banking Markets in Latin AmericaBanking Markets in Latin America



Agenda


7

Latin American Banks were well poised to navigate the storm

… and with low leverage ratios

6.2

5.7

4.8

21.1

0.4

0.6

0.7

2.9

23.52.5

7.50.3

25.72.7

3.06.017.0

2.5

Mortgage penetration

% of GDP, 2006

The system is well capitalized … … and enjoys high returns

… with low exposure to low quality mortgage securities

ROE1

ROA1

50.0

73.0

15.5 15.316.0

13.3 12.8 12.6 12.5

Source: Bloomberg - in red, selected Latin American banks

-100%

-80%

-60%

-40%

-20%

0%

- 10 20 30 40 50 60 70

Total Assets / Common Equity

Lo

ss

in

Ma

rke

t V

alu

e i

n

las

t 1

2 m

on

ths

Basel index: Regulatory capital to risk-weighted assets, %, 20081

1 As of 1T 2008, except Brazil (Nov 2008), UK (Dec 2007) and Germany (Dec 2006)Source: IMF – Financial Stability Report Oct. 2008; Bacen; McKinsey Global Banking Pools

MEX BRA RUS COL USA UK GER

MEX

BRA

RUS

COL

USA

UK

GER

BRA COLUSA INDCHISPA


8

Structural trend towards increasing household income

• in the last 10 years, almost 90 million people had overcome poverty line in Latin America, which means a greater potential market

Increase access to banking services in Latin America

• on average only 36% of the families have access to banking services

• main barrier: costs of banking services

Increase domestic credit to private sector (% of GDP)

• LatAm average = 38,4% vs Advanced Economies average = 175%

• Focus on loans with “real” collaterals linked to the nature of each productive chain

Latin America presents some structural opportunities for banking


9

The positive results experienced in the past few years offer great opportunities: More than 90 million people had overcome poverty line in Latin America

Number of people that had overcome the poverty line in Latin America from 1999 to 2007 (million)

-5 5 15 25 35 45 55 65 75 85 95

Argentina

Bolivia

Brazil

Chile

Colombia

Ecuador

Mexico

Peru

Uruguay

Venezuela

Total

Opportunities for Banking in Latin America

Source: Wold Bank - Finance for All? Policies and Pitfalls in Expanding Access


10


Source: Wold Bank - Finance for All? Policies and Pitfalls in Expanding Access

Access to banking services - families with a bank account

% of families

Average Potential

Chile 60Panama 46Brazil 43Uruguay 42Colombia 41Ecuador 35Bolívia 30 36Paraguay 30Costa Rica 29Argentina 28Venezuela 28Peru 26Mexico 25

Germany 97France 96

96

USA 91

Finland 99

60

Number Average Potential

Brazil 14,59Panama 12,87Argentina 10,01Costa Rica 9,59Chile 9,39Ecuador 9,30Colombia 8,74

8,22

Mexico 7,63Uruguay 6,39Venezuela 4,41Peru 4,17Bolivia 1,53

Germany 49,41France 43,23USA 30,86

35,64

Finland 19,06

Number of Branches per 100.000 in habitants

27,42


11

Domestic credit to private sector (% of GDP)

Source: Domestic credit to private sector (% of GDP). World Development Indicators 2008, World Bank, except Brasil* - source: Brazilian Central Bank aug/08.

Despite the high growth in recent years, LatAm countries still have a low credit GDP ratio.%

LatAm Countries


0

50

100

150

200

USA Ireland Japan Netherlands UK Spain South Africa

China Australia SouthKorea

France Belgium Chile Brazil* Colombia Turkey Russia Indonesia Mexico Peru


12

Banking MarketsMarket Consolidation in Latin America

Top 5 Banks - % of Financial System Assets Top 5 Banks - % of Financial System Assets (jun/09)(jun/09)

Source: Total Assets: Monthly Financial Report – Felaban (jun/09); Top 5 Banks: Américaeconomía Intelligence

50,4%

77,40%73,0%

63,7%

78,0%

90,8%

50,7%

ARG BRA CHI COL MEX PER VEN


13



• Itaú Unibanco's Merger CaseItaú Unibanco's Merger Case


Agenda


14

Itaú Unibanco's Merger Case

The most important issue on the integration of two big The most important issue on the integration of two big banks is not operational, it is cultural.banks is not operational, it is cultural.

A good cultural fit is crucial for success ,not only A good cultural fit is crucial for success ,not only among the business leaders of the two companies, but among the business leaders of the two companies, but also among employees.also among employees.


15

Employees: Optimism and commitment to the merger

Source: OHI 2009 Survey, (n = 3.854), interview, focus groups; team’s analysis

Employees believe that the merger will be positive and are committed to the process

% which agree entirely/ agree

87%

The merger will create opportunities for my professional development 92%

86%

76%

Employees are committed to implement the merger

88%Employees are receptive in accepting the best ideas of the two banks

89%

92%

93%

84%

People are receptive in building a new culture94%

Employees feel they are part of the same team


16

Employees: A better bank for all

Will the merger result in a better bank for all?

Employees believe that the integration will be positive for them and for the bank...

% which agrees entirely / agrees

Will the merger create better opportunities for my development?

... and show their confidence in this future merger

% which agrees entirely / agrees

Do I believe that management will only cut staff as a last resort?

Do I intend to work here for a long time to come?

90

84

80

89

Source: OHI 2009 Survey, (n = 4,985), GPTW survey, interviews, mini-sessions, focus groups team’s analysis


17

Benefits

Compensation

Structure

Evaluation

We have reviewed all HR’s macro processes

▪ Minimize signs of

hierarchy

▪ Strengthen

meritocracy

▪ Simplify

processes

▪ Provide an

environment for

performance

▪ Focus on

development of

people

▪ Minimize signs of

hierarchy

▪ Strengthen

meritocracy

▪ Simplify

processes

▪ Provide an

environment for

performance

▪ Focus on

development of

people

Principles

2▪ Evaluation of the officers for the 2008 cycle and

for 2009, ensuring homogeneous treatment

3▪ Adjustments made to the organizational

structure, adapting the reality the of the two banks and making the structure a more responsive one

4▪ Definition of compensation models focused on

meritocracy, performance and transparency of the process

5▪ Equalization of the benefits, minimizing

exaggerated signs of hierarchy and unifying policy

▪ Process of establishing bold goals for 2009 aligned to the entire organizationGoals

1

Concepts


18

Our Culture has focus on…

Reward linked to performance, not to hierarchy

Ethics and transparency

People with attention to the development of the leaderships

Performance (results and growth)

Meritocracy


19

Highlights: Merger of Itaú Unibanco

Focus on increased penetration in most profitable products and channels

Enhancing the importance and integration of the teams

Risk Control and Governance

Cost Reduction / Efficiencies

Simplicity: rationalization of processes and products

Since the beginning of the integration process, the bank has

always been aware of the importance of organizational

environment and the talent retention issues.


20

• Definition of organizational structure up to middle management ;

• Integration of Corporate, Investment Bank, Broker, Asset Management,

Vehicles, Private Bank and Treasury segments;

• New contracts of Insurance, Pension Plans, Vehicle Financing and Mortgage

– in an unique Itaú Unibanco platform;

• ATMs integration after only 3 months;

• Employees’ external e-mails addresses: @itau-unibanco.com.br;

• Convergence of communication and visual identity for both banks customers;

• Physical change to the final site location (average of 500 employees per week);

• Pilot project of branches integration – started in August 2009;

Integration – Concluded Steps

Expectation of 90% integrated by Dec/10


21




• Itaú Unibanco’s HighlightsItaú Unibanco’s Highlights

Agenda


22

Highlights

Total Assets

Individual Loans

344,4

55,3

3rd Q/09

Businesses Loans

Directed Loans

Total Deposits

Asset Under Management

Credit Card Revenue (accumulated)

Stockholders Equity

Market Share*

RankingBrazil

Net Income (accumulated)

ROE – annualized (%)

Efficiency Ratio (%)

Solvency Ratio (BIS Ratio %)

Values in US$ Billion

82,7

7,2

157,2

174,5

27,5

3,9

18,9%

41,1%

16,3%

33,4

27,0%

21,4%

36,3%

335,4

54,3

2nd Q/09

82,1

6,6

155,1

171,3

26,6

2,6

22,3%

42,7%

16,5%

18,2

23,2%

*Refers to the 2nd Q/09 because some banks had not presented their 3rdQ/09 balance sheet and income statement at the moment this report was finished. BRL/USD: 1,7781 (Sep/09)

22,1% # 1

# 1

# 1

# 1

# 1


23

Employees (individuals)

Branches* (units)

102,754

4,911

3rd Q/09

* Including CBSs (Customer Site Branches)

** June 2009

*** August 2009

ATMs (units) 30,374

Daily served clients and non-clients (million) 2.5**

Credit cards: daily approved transactions (million) 2.9***

Highlights


24

Itaú Unibanco´s Presence in Latin America

Uruguay (*)

Argentina

Chile

Paraguay

14,1% 3º

1,2%16º

3,1%9º

13,7% 2º

jun/09

mar/09

jun/09

jun/09

• Branches: 206

• Employees: 4.851

• Clients: 1,019 million

• Assets: US$ 9,7 billions

• Net Income: US$ 189 millions

Market ShareAssets

Ranking

June/09: ARP$/R$ 1.95 | CLP$/R$ 272 | PYG$/R$ 2.572 | UYP$/R$ 12.05 | R$/US$ 1.9516(*) Bank

Pro Forma Assets as of June 30,2009 and Net Income as of 1H09 multiplied by 2.


25

Evolution of Activities Abroad - Latin AmericaPro Forma

Total Assets (US$ million)

Total Revenue (US$ million)

*

June/2009: ARP$/R$ 1.95 | CLP$/R$ 272 | PYG$/R$ 2.572 | UYP$/R$ 12.05 | R$/US$ 1.9516

*

(*) For comparison purposes, the value of 1H09 was multiplied by 2.

8,515

6,592

5,663

3,619

9,7182009

2008

2007

2006

2005

615

443

367

301

680*2009

2008

2007

2006

2005

Stockholders’ Equity (US$ million)

Net Income (US$ million)

*

921

750

672

945

559

2009

2008

2007

2006

2005

152

117

83

189

45

2009

2008

2007

2006

2005

*

All historical values converted into US$ of June 2009. (1.0 US$ - R$ 1.9516)


26

Ranking - Market CapitalizationHighlights

Top 20 Banks – Market CapUS$ MillionUS$ Million

(*) Market Capitalization based on the total number of Itau Unibanco’s shares multiplied by the value of ITUB4

Source: Bloomberg

Ranking Company 11/09/2009 rk 11/02/2009 rk 12/31/2008 % Week % Year

1 IND & COMM BK -A 265.095 1 258.643 1 173.873 2,5% 52,5%

2 CHINA CONST BA-H 210.247 2 204.129 2 128.266 3,0% 63,9%

3 HSBC HLDGS PLC 201.429 3 196.528 4 116.799 2,5% 72,5%

4 JPMORGAN CHASE 174.410 4 167.449 3 117.681 4,2% 48,2%

5 BANK OF CHINA-H 155.170 5 152.155 6 98.190 2,0% 58,0%

6 BANCO SANTANDER 141.693 6 134.664 7 76.159 5,2% 86,0%

7 BANK OF AMERICA 136.436 8 126.573 8 70.648 7,8% 93,1%

8 WELLS FARGO & CO 132.674 7 128.983 5 111.840 2,9% 18,6%

9 ITAU UNIBANCO 102.343 12 89.453 10 48.036 14,4% 113,1%

10 BNP PARIBAS 100.769 9 92.934 17 38.482 8,4% 161,9%

11 CITIGROUP INC 95.800 10 91.227 18 36.566 5,0% 162,0%

12 GOLDMAN SACHS GP* 93.287 11 89.675 16 40.111 4,0% 132,6%

13 COMMONW BK AUSTR 78.571 14 70.321 27 29.960 11,7% 162,3%

14 ROYAL BANK OF CA 75.759 13 71.988 14 41.460 5,2% 82,7%

15 WESTPAC BANKING 71.868 15 67.758 20 34.442 6,1% 108,7%

16 BBVA 69.852 16 67.671 11 45.810 3,2% 52,5%

17 CREDIT SUISS-REG 68.921 17 64.668 24 30.592 6,6% 125,3%

18 BARCLAYS PLC 65.405 19 61.618 40 18.718 6,1% 249,4%

19 BRADESCO 65.388 21 60.814 26 30.177 7,5% 116,7%

20 MITSUBISHI UFJ F 63.413 18 63.058 9 70.308 0,6% -9,8%

Documents

Itaú Unibanco Holding S.A. 1 November 15th 2009 FELABAN Itaú Unibanco Holding S.A. CEO Round Table