r 3Q15 - Banco do BrasilBanco do Brasil S.A. - MD&A 3Q15 This report makes references and statements, planned synergies, growth estimates, earnings and strategies projections regarding

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MD&A 3Q15

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Banco do Brasil S.A. - MD&A 3Q15

This report makes references and statements, planned synergies, growth estimates, earnings and strategies projections regarding Banco do Brasil’s Conglomerate. Such statements are based on current expectations, estimates and projections of management about future events and financial trends that may affect the business of the Group.

These forward looking statements are not guarantees of future performance and involve risks and uncertainties that could extrapolate the control of management, and thus can result in balances and values different from those anticipated and discussed in this report. The expectations and projections depend of the market conditions (technological changes, competitive pressures on products, prices, etc.), the macroeconomic performance of the country (interest and exchange rates, political and economic changes, inflation, changes in tax legislation, etc.) and international markets.

Future expectations based in this report should consider the risks and uncertainties about the business of the Group. Banco do Brasil has no responsibility to update any estimate contained in reports published in previous periods.

The tables and charts in this report show, in addition to the accounting balances and values, financial and managerial numbers. The changes of relative rates are calculated before rounding procedure in million of R$. Rounding used follows the rules established by Resolution 886/66 of IBGE’s Foundation: if the decimal number is equal or greater than 0.5, it increases by one unit, if the decimal number is less than 0.5, there is no increase.


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Table of Contents

Presentation ........................................................................................................................................... 9 On-line Access ................................................................................................................................... 9

Glossary ............................................................................................................................................... 10 Earnings Summary .............................................................................................................................. 12

Earnings ........................................................................................................................................... 12 Guidance .......................................................................................................................................... 12 Return to Shareholders .................................................................................................................... 13 Income Statement with Reallocations .............................................................................................. 14 Net Interest Income .......................................................................................................................... 15 Spread by Portfolio ........................................................................................................................... 15 Assets and Main Balance Sheet Items............................................................................................. 16 BIS Ratio .......................................................................................................................................... 17 Loan Portfolio ................................................................................................................................... 17 Fee Income ....................................................................................................................................... 24 Administrative Expenses and Cost-to-Income Ratio ........................................................................ 26

1 – Key Statistics ................................................................................................................................. 27 Corporate Governance ..................................................................................................................... 31

2 - Summary Financial Statements .................................................................................................... 33 2.1. Summary Balance Sheet ....................................................................................................... 33 2.2. Summary Corporate Law Income Statement ......................................................................... 35 2.3. Income Statement with Reallocations .................................................................................... 36

2.3.1. Reallocations Details ..................................................................................................... 37 2.3.2. Glossary of Reallocations .............................................................................................. 39

3 - Loans ............................................................................................................................................... 41 Banco do Brasil Lending Process .................................................................................................... 41 3.1. Loan Portfolio ......................................................................................................................... 41

3.1.1. Individuals Loan Portfolio ............................................................................................... 43 3.1.2. Companies Loan Portfolio .............................................................................................. 47 3.1.3. Agribusiness Loan Portfolio ........................................................................................... 50 3.1.4. Concentration ................................................................................................................. 56

3.2. Credit Risk .............................................................................................................................. 58 3.2.1. Individuals Loan Portfolio ............................................................................................... 62 3.2.2. Loans to Companies ...................................................................................................... 64 3.2.3. Agribusiness Loan Portfolio ........................................................................................... 66 3.2.4. Foreign Loan Portfolio and BV Loan Portfolio ............................................................... 69

3.3. Credit Collection and Recovery .............................................................................................. 71 3.3.1. Management of Past Due Credits .................................................................................. 71 3.3.2. Credit Collection and Recovery Process ....................................................................... 71 3.3.3. Credit Collection and Recovery Operating Flow ............................................................ 71 3.3.4. Process Efficiency .......................................................................................................... 72 3.3.5. Renegotiated Loan Portfolio .......................................................................................... 74

4 - Funding ........................................................................................................................................... 75 5 – Financial Earnings ......................................................................................................................... 78

5.1. Net Interest Income ................................................................................................................ 78 5.2. Loan Operations ..................................................................................................................... 78 5.3. Funding Expenses ................................................................................................................. 78 5.4. Institutional Funding Expenses .............................................................................................. 79 5.5. Credit Recovery...................................................................................................................... 80 5.6. Treasury ................................................................................................................................. 80 5.7. Assets and Liabilities Analysis ............................................................................................... 83

5.7.1. Assets Analysis .............................................................................................................. 83 5.7.2. Liabilities Analysis .......................................................................................................... 84 5.7.3. Volume and Rate Analysis ............................................................................................. 85

5.8. Credit Spread by Portfolio ...................................................................................................... 87 6 – Fee Income ..................................................................................................................................... 88

6.1. Acount Fees ........................................................................................................................... 88 6.2. Payment Methods .................................................................................................................. 88

6.2.1. Cards Base and Turnover .............................................................................................. 89 6.2.2. Cards Service Income .................................................................................................... 90

Table of Contents

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6.3. Asset Management ................................................................................................................ 91 6.4. Capital Market ........................................................................................................................ 93

6.4.1. BB-BI Products and Services......................................................................................... 93 6.4.2. Performance in the Capital Market ................................................................................ 94

6.5. Fiduciary Services .................................................................................................................. 95 6.5.1. Fiduciary Management .................................................................................................. 96 6.5.2 Custody .............................................................................................................................. 96

6.6. Insurance ................................................................................................................................ 97 6.7. Consortium ............................................................................................................................. 98

7 – Productivity and Efficiency ........................................................................................................ 100 7.1. Key Productivity Ratios ........................................................................................................ 100 7.2. Personnel Expenses ............................................................................................................ 102 7.3. Other Administrative Expenses ............................................................................................ 102

7.3.1. Service Network ........................................................................................................... 103 7.3.2. Automated Service Channels ...................................................................................... 105

7.4. Other Operating Income and Expenses ............................................................................... 110 7.5. Operational Loss .................................................................................................................. 110

7.5.1. Customers’ Complaint Public Indicators ...................................................................... 112 8 – Other Components of the Balance Sheet ................................................................................. 116

8.1. Actuarial Assets.................................................................................................................... 116 8.2. Previ Surplus – Allocation Funds ............................................................................................ 117 8.3. Actuarial Liabilities ............................................................................................................... 118 8.4. Deferred Taxes..................................................................................................................... 119

9 - Risk Management ......................................................................................................................... 121 9.1. Risk Management ................................................................................................................ 121

9.1.1. Credit Risk.................................................................................................................... 121 9.1.2. Market Risks ................................................................................................................ 121 9.1.3. Liquidity Risk ................................................................................................................ 124 9.1.4. Operating Risk ............................................................................................................. 126

9.2. Capital Structure .................................................................................................................. 127 10 - Strategic Investments ................................................................................................................ 131

10.1. Information on Subsidiaries and Affiliates ............................................................................ 131 10.2. Banco Votorantim ................................................................................................................. 133 10.3. International Businesses ...................................................................................................... 140

10.3.1. Banco Patagonia ........................................................................................................... 141 11 – Financial Statements ................................................................................................................. 143

11.1. Summary Balance Sheet ..................................................................................................... 143 11.2. Summary Corporate Law Income Statement ....................................................................... 147 11.3. Income Statement with Reallocations .................................................................................. 149


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List of Tables

Table 1. Guidance ................................................................................................................................. 13 Table 2. Adjusted Shareholders’ Equity ................................................................................................ 13 Table 3. Income Statement with Reallocations - Main Lines ................................................................ 14 Table 4. One-off Items .......................................................................................................................... 15 Table 5. NII Breakdown ......................................................................................................................... 15 Table 6. Annualized Managerial NIM (organic loan portfolio) ............................................................... 16 Table 7. Annualized Managerial NIM ................................................................................................... 16 Table 8. Main Balance Sheet Items ...................................................................................................... 16 Table 9. Sources and Uses ................................................................................................................... 17 Table 10. Loan Portfolio – Classified and Broad Definitions ................................................................. 18 Table 11. Companies Loan Portfolio in the Broad Definition ................................................................ 20 Table 12. ALLL Expenses over Classified Loan Portfolio – BB and BB ex-BV .................................... 23 Table 13. Classified Loan Portfolio Quality Indicators .......................................................................... 23 Table 14. Fee Income ........................................................................................................................... 24 Table 15. Adjusted Administrative Expenses ........................................................................................ 26 Table 16. Main Macroeconomic Indicators¹ .......................................................................................... 27 Table 17. Ownership Structure – % ...................................................................................................... 28 Table 18. Distribution of Dividends and Interest on Own Capital ......................................................... 28 Table 19. Market Ratios ........................................................................................................................ 28 Table 20. Participation of BB’s Shares in Brazilian Stock Market Indexes – % .................................... 28 Table 21. Participation in the International Market - % ......................................................................... 28 Table 22. Banco do Brasil Key Statistics .............................................................................................. 29 Table 23. Ratings .................................................................................................................................. 30 Table 24. Compulsory/Reserve Requirement (%) ................................................................................ 30 Table 25. Summary Balance Sheet - Assets ........................................................................................ 33 Table 26. Summary Balance Sheet - Liabilities .................................................................................... 34 Table 27. Summary Corporate Law Income Statement ........................................................................ 35 Table 28. Income Statement with Reallocations ................................................................................... 36 Table 29. Statement of Reallocations and One-Off Items .................................................................... 38 Table 30. Tax Effect and Statutory Profit Sharing on One-Off Items .................................................... 40 Table 31. Loan Portfolio – Classified and Broad Definition .................................................................. 42 Table 32. Loans in the Brazilian Banking Industry ................................................................................ 42 Table 33. Individuals Loan Portfolio ...................................................................................................... 43 Table 34. Individuals Loan Portfolio – Market Share ............................................................................ 43 Table 35. Total Acquired Loan Portfolio¹ .............................................................................................. 44 Table 36. Organic Classified Loan Portfolio - Individuals ..................................................................... 44 Table 37. Account Time – Customers with Credit Transactions ........................................................... 45 Table 38. BB’s Organic Auto Loans Portfolio - Customers Characteristics .......................................... 46 Table 39. Average Rates and Maturity ................................................................................................. 47 Table 40. Companies Loan Portfolio ..................................................................................................... 48 Table 41. Distribution of the Companies Portfolio................................................................................. 48 Table 42. Foreign Exchange for Export and Import Operations ........................................................... 48 Table 43. Forward Exchange Contracts (FEC) and Advance against Draft Presentation (ACE) ......... 48 Table 44. Account Time – Percentage of the Very Small and Small Companies Portfolio Balance .... 49 Table 45. Loans to Very Small and Small Companies by Sector ......................................................... 49 Table 46. Very Small and Small Companies Credit Products .............................................................. 50 Table 47. Credit Guarantees Funds – FGO and FAMPE ..................................................................... 50 Table 48. Brazil’s Share in World Agribusiness in Sep/15 .................................................................... 50 Table 49. Classified Agribusiness Loan Portfolio by Region ................................................................ 51 Table 50. Agribusiness Loan Portfolio by Purpose ............................................................................... 52 Table 51. Agribusiness Loan Portfolio by Credit Line/Program ............................................................ 52 Table 52. Agribusiness Loan Portfolio by Financed Item ..................................................................... 53 Table 53. Agribusiness Loan Portfolio by Customer Size ..................................................................... 53 Table 54. Agribusiness Loan Portfolio by Customer Type .................................................................... 53 Table 55. Agribusiness Loan Portfolio Broad Definition by Funding Sources ...................................... 54 Table 56. Equalization Revenues and Weighting Factor ...................................................................... 54 Table 57. Equalizable Funds in the Agribusiness Portfolio ................................................................... 54 Table 58. Disbursements by Purpose – Rural Credit ........................................................................... 55

List of Tables

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Table 59. Insurance in the Working Capital for Input Purchase ........................................................... 55 Table 60. 100 Largest Borrowers in Relation to the Classified Loan Portfolio ..................................... 56 Table 61. 100 Largest Borrowers in Relation to RE ¹ ........................................................................... 56 Table 62. Concentration of Companies and Agro Companies Loan Portfolio by Macro-Sector .......... 57 Table 63. Classified Loan Portfolio by Risk Level ................................................................................. 60 Table 64. ALLL Expenses over Classified Loan Portfolio – BB and BB ex-BV .................................... 61 Table 65. Classified Loan Portfolio Delinquency Indicators .................................................................. 62 Table 66. BB Individuals Classified Loan Portfolio by Risk Level ......................................................... 62 Table 67. Changes in Allowance for Loan Losses – BB Individuals Classified Loan Portfolio ............. 63 Table 68. NPL +90d BB Individuals Portfolio ........................................................................................ 63 Table 69. BB Classified Loans to Companies by Risk Level ................................................................ 65 Table 70. Changes in Allowance for Loan Losses – BB Classified Loans to Companies .................... 65 Table 71. NPL +90d BB Companies Portfolio ....................................................................................... 65 Table 72. Classified Agribusiness Loan Portfolio by Risk Level ........................................................... 66 Table 73. NPL +90d BB Agribusiness Portfolio .................................................................................... 66 Table 74. Classified Agribusiness Loan Portfolio by Risk Level – Individuals ...................................... 67 Table 75. Changes in Allowance for Loan Losses – Agribusiness Individuals ..................................... 67 Table 76. Classified Agribusiness Loan Portfolio by Risk Level – Companies ..................................... 67 Table 77. Changes in the Allowance for Loan Losses – Agribusiness Companies .............................. 68 Table 78. Agribusiness Transactions with Rollover and Without it ....................................................... 68 Table 79. Classified Agribusiness Loan Portfolio Delinquency Indicators ............................................ 69 Table 80. Classified Abroad Loan Portfolio by Risk Level .................................................................... 69 Table 81. Classified BV Loan Portfolio by Risk Level ........................................................................... 70 Table 82. Renegotiated Loan Portfolio¹ ................................................................................................ 74 Table 83. Commercial Funding ............................................................................................................. 75 Table 84. Institutional Funding .............................................................................................................. 76 Table 85. Foreign Borrowing - Modality ................................................................................................ 76 Table 86. Foreign Borrowing - Product ................................................................................................. 76 Table 87. Current Debt Issues Abroad ................................................................................................. 76 Table 88. Sources and Uses ................................................................................................................. 77 Table 89. Net Interest Income Breakdown ............................................................................................ 78 Table 90. Loan Operations .................................................................................................................... 78 Table 91. Funding Expenses¹ ............................................................................................................... 79 Table 92. Institutional Funding Expenses ............................................................................................ 79 Table 93. Funding vs. Selic Rate .......................................................................................................... 79 Table 94. Credit Recovery .................................................................................................................... 80 Table 95. Treasury Results ................................................................................................................... 80 Table 96. Securities Income .................................................................................................................. 80 Table 97. Securities Portfolio by Category – Market Value .................................................................. 81 Table 98. Securities Portfolio by Maturity – Market Value .................................................................... 81 Table 99. Financial Derivatives ............................................................................................................. 81 Table 100. Liquidity Balance ................................................................................................................. 82 Table 101. Open Market Funding Expenses ........................................................................................ 82 Table 102. Other Treasury Components .............................................................................................. 82 Table 103. Average Balances and Interest Rates – Earning Assets (Quarterly) .................................. 83 Table 104. Average Balances and Interest Rates – Earning Assets (9 Months) .................................. 83 Table 105. Average Balances and Interest Rates - Interest Bearing Liabilities (Quarterly) ................. 84 Table 106. Average Balances and Interest Rates - Interest Bearing Liabilities (9 Months) ................. 84 Table 107. Volume Analysis (Earning Assets) – Quarterly Rate .......................................................... 85 Table 108. Volume Analysis (Earning Assets) – 9M Rate .................................................................... 85 Table 109. NIM ...................................................................................................................................... 85 Table 110. Adjusted NIM and Net Interest Income ............................................................................... 85 Table 111. Change in Revenues and Expenses and Change Volume / Rate (Quarterly).................... 86 Table 112. Change in Revenues and Expenses and Change Volume / Rate (9M) ............................. 86 Table 113. Managerial Margin .............................................................................................................. 87 Table 114. Spread by Portfolio.............................................................................................................. 87 Table 115. Fee Income ......................................................................................................................... 88 Table 116. Customers and Checking Accounts .................................................................................... 88 Table 117. Cards Base ......................................................................................................................... 89 Table 118. Number of Transactions ...................................................................................................... 90 Table 119. Cards Service Income and Expenses – Quarterly Flow ..................................................... 91 Table 120. Cards Service Income and Expenses – 9 Months Flow ..................................................... 91 Table 121. Investment Funds and Managed Portfolio by Customer..................................................... 92


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Table 122. Investment Funds and Managed Portfolio by Type ............................................................ 92 Table 123. Management of Investment Funds With Socio-Environmental Characteristics .................. 93 Table 124. Private Equity – Indirect Interest ......................................................................................... 95 Table 125. Fiduciary Services Income .................................................................................................. 96 Table 126. BB Seguridade – Performance Ratios ................................................................................ 98 Table 127. Consortium – Active Quotas per Type ................................................................................ 98 Table 128. Consortium – Average Ticket .............................................................................................. 99 Table 129. Consortium – Average Term and Average Management Rate .......................................... 99 Table 130. Total Operating Income and Expenses ............................................................................ 100 Table 131. Cost Income an Coverage Ratio – Adjusted¹ ................................................................... 100 Table 132. Other Productivity Ratios .................................................................................................. 101 Table 133. Personnel Expenses ......................................................................................................... 102 Table 134. BB’s Staff Members Profile ............................................................................................... 102 Table 135. Other Administrative Expenses ......................................................................................... 103 Table 136. Service Network ................................................................................................................ 103 Table 137. Branch Network by Region ............................................................................................... 103 Table 138. MaisBB Network – Operating Data ................................................................................... 104 Table 139. Banco Postal – Customer Profile ...................................................................................... 104 Table 140. Foreign Service Network ................................................................................................... 105 Table 141. Other Operating Income/Expenses ................................................................................... 110 Table 142. Breakdown of Operational Loss - % ................................................................................. 110 Table 143. Composition of Assets ...................................................................................................... 117 Table 144. Actuarial Assumptions ...................................................................................................... 117 Table 145. Previ (Plano 1) – Effects of Accounting – CVM 695/2012 ................................................ 117 Table 146. Previ (Plano1) – Fundo Paridade ...................................................................................... 117 Table 147. Previ (Plano1) – Fundo de Utilização ............................................................................... 118 Table 148. Cassi – Effects of Accounting – CVM 695/2012 ............................................................... 119 Table 149. Impact on Shareholders' Equity – CVM 695/2012 ............................................................ 119 Table 150. Breakdown of Tax Credit .................................................................................................. 120 Table 151. Breakdown of Deferred Tax Liabilities .............................................................................. 120 Table 152. Balance in Foreign Currencies .......................................................................................... 122 Table 153. Repricing Profile of Interest Rates .................................................................................... 124 Table 154. Factor “F” applied to the amount of Risk-Weighted Assets (RWA) .................................. 127 Table 155. BIS Ratio ........................................................................................................................... 128 Table 156. Minimum Required Reference Equity referring to the RWACPAD portion ........................... 129 Table 157. Minimum Required Reference Equity referring to the portion of RWAMPAD ...................... 129 Table 158. Minimum Required Reference Equity referring to the RWAOPAD Portion .......................... 129 Table 159. RWACPAD segregated by the Risk-Weighting Factor (RWF) ............................................. 130 Table 160. Interest in the Capital of Subsidiaries and Affiliates by BB Banco Múltiplo ...................... 131 Table 161. Interest in the Capital of Subsidiaries and Affiliates by BB Banco de Investimentos ....... 131 Table 162. Interest in the Capital of Subsidiaries and Affiliates by BB Seguridade Participações ..... 132 Table 163. Interest in the Capital of Subsidiaries and Affiliates by BB Elo Cartões Participações .... 132 Table 164. Non-Consolidated Interest in the Capital of Subsidiaries and Affiliates ............................ 132 Table 165. Balance Sheet Main Items ................................................................................................ 133 Table 166. Income Statement with Reallocations¹ - Quarterly ........................................................... 134 Table 167 . Net Interest Income and Profit Margin ............................................................................. 135 Table 168. Loan Portfolio .................................................................................................................... 135 Table 169. Auto Loan Portfolio............................................................................................................ 136 Table 170. Managed Portfolio Quality ................................................................................................. 138 Table 171. Funding ............................................................................................................................. 138 Table 172. BIS Ratio ........................................................................................................................... 139 Table 173. Balance Sheets – Consolidated Abroad ........................................................................... 141 Table 174. Results – Consolidated Abroad ........................................................................................ 141 Table 175. Banco Patagonia – Balance Sheet Highlights .................................................................. 141 Table 176. Banco Patagonia – Balances of Funding .......................................................................... 142 Table 177. Banco Patagonia – Main Lines of the Results .................................................................. 142 Table 178. Banco Patagonia – Indicators on Returns, Capital and Credit ......................................... 142 Table 179. Banco Patagonia – Operating and Structural Highlights .................................................. 142 Table 180. Balance Sheet Assets – Quarterly Series ......................................................................... 143 Table 181. Balance Sheet Assets – Annual Series ............................................................................ 144 Table 182. Balance Sheet Liabilities - Quarterly Series ..................................................................... 145 Table 183. Balance Sheet Liabilities - Annual Series ......................................................................... 146 Table 184. Summary Corporate Law Income Statement – Quarterly Flow Series ............................. 147

List of Tables

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Table 185. Summary Corporate Law Income Statement – Annual Flow Series ................................ 148 Table 186. Income Statement with Reallocations – Quarterly Flow Series ........................................ 149 Table 187. Income Statement with Reallocations – Annual Flow Series ........................................... 150


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List of Figures

Figure 1. Earnings and ROE................................................................................................................. 12 Figure 2. Earnings per Share, Dividends and Interest on Shareholder Equity ..................................... 13 Figure 3. Classified Loan Portfolio (Ex BV) by contracted period - % and R$ billion ........................... 19 Figure 4. Mortgage Loan Portfolio (R$ billion) ...................................................................................... 20 Figure 5. Agribusiness Loan Portfolio – Broad Definition (R$ billion) .................................................. 21 Figure 6. Classified Loan Portfolio Average Risk ................................................................................. 22 Figure 7. NPL +90d – Percentage on the Classified Loan Portfolio ..................................................... 22 Figure 8. Cards – Turnover ................................................................................................................... 25 Figure 9. Asset Management................................................................................................................ 25 Figura 10. Structure of Senior Management ........................................................................................ 32 Figura 11. Strategic Committees .......................................................................................................... 32 Figure 12. Banco do Brasil Lending Process ....................................................................................... 41 Figure 13. Classified Loan Portfolio BB by contracted period - % and R$ billion ................................. 43 Figure 14. Organic Individuals Loan Portfolio – Direct Consumer Credit and Auto Loans - % ............ 44 Figure 15. Organic Payroll Loans Breakdown - %................................................................................ 45 Figure 16. Maturity of Transactions Contracted in 3Q15 – Payroll Loans ............................................ 45 Figure 17. Maturity of Transactions Contracted in 3Q15 – Auto Loans ............................................... 46 Figure 18. Loan to Value - Organic Auto Loans Portfolio - % .............................................................. 46 Figure 19. Loan to Value - Mortgage Portfolio - % ............................................................................... 47 Figure 20. Disbursements by Onlending Fund in 9M - % ..................................................................... 49 Figure 21. BB’s Market Share in Brazilian Rural Financing Portfolio – % ............................................ 51 Figure 22. Working Capital for Input Purchase Breakdown Risks - % ................................................. 56 Figure 23. Classified Loan Portfolio Average Risk ............................................................................... 58 Figure 24. Classified Loan Portfolio Coverage Index ........................................................................... 58 Figure 25. ALLL – Classified Loan Portfolio ......................................................................................... 59 Figure 26. NPL +90d – Percentage on the Classified Loan Portfolio ................................................... 59 Figure 27. New NPL and Write-Off – Percentage on the Classified Loan Portfolio ............................. 60 Figure 28. Individuals Loan Portfolio – Annual Vintage ........................................................................ 64 Figure 29. Own Auto Loans Portfolio – Annual Vintage ....................................................................... 64 Figure 30. Very Small and Small Companies Loans Portfolio – Annual Vintage ................................. 66 Figure 31. Collection and Recovery Network ....................................................................................... 72 Figure 32. Credit Regularization Rate Over Collection Period - % ....................................................... 72 Figure 33. Collection and Recovery before Written Off¹ - % ................................................................ 73 Figure 34. Accumulated Recovery (R$ billions) and Cash Recovery Index¹ - % ................................. 73 Figure 35. Write-Off – Percentage on the Classified Loan Portfolio..................................................... 73 Figure 36. Recovery of Write-Off/Write-Off – % ................................................................................... 74 Figure 37. Market Share of BB Funding ............................................................................................... 75 Figure 38. Securities Portfolio by Index (BB Multiple Bank) ................................................................. 81 Figure 39. Payment Methods Organizational Chart – Main Companies¹ ............................................. 89 Figure 40. Total Turnover – R$ billion .................................................................................................. 90 Figure 41. Traditional and New Business Total Turnover – R$ billion ................................................. 90 Figure 42. Asset Management.............................................................................................................. 92 Figure 43. Fixed Income Securities Origination – Domestic and International Markets....................... 94 Figure 44. Individuals Equity – Secondary Market ............................................................................... 94 Figure 45. Gold – Custody Balance and Revenues ............................................................................. 95 Figure 46. Fiduciary Management and Market Share – R$ billion ....................................................... 96 Figure 47. Domestic Custody Total Assets and Market Share – R$ billion .......................................... 97 Figure 48. Consortium – Fee Income and Active Quotas .................................................................... 99 Figure 49. Individuals Loan Portfolio and Branches ........................................................................... 101 Figure 50. Bank Product and Branches .............................................................................................. 101 Figure 51. Evolution of BB’s Staff ....................................................................................................... 102 Figure 52. Transactions by Service Channels - % ............................................................................. 106 Figure 53. Number of Registered Users and Individuals Transactions (million) – Internet Banking .. 106 Figure 54. Number of Registered Users and Transactions (million) – Mobile Banking ...................... 107 Figure 55. Number Transactions New Loans + Borrowing – Mobile Banking .................................... 107 Figure 56. Automated Teller Machines ............................................................................................... 108 Figure 57. ATMs’ Share in Basic Banking Transactions (average) .................................................... 108 Figure 58. Tecnology Investments ..................................................................................................... 109

List of Figures

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Figure 59. Storage Capacity and Availability Index ............................................................................ 109 Figure 60. Operational Loss for Value Range - % .............................................................................. 111 Figure 61. Ratio between Fraudulent Transactions and Total Transactions ...................................... 111 Figure 62. Ratio between Recovery Potential and Performed Recovery – Service Channels .......... 112 Figure 63. Prevented Number of Attacks versus Number of Attacks ................................................. 112 Figure 64. Number of Valid Complaints – Central Bank of Brazil ...................................................... 113 Figure 65. Complaint Index – Central Bank of Brazil ......................................................................... 113 Figure 66. Recorded Complaints in Procon: Banco do Brasil vs. Main Peers ................................... 114 Figure 67. Recorded Complaints in Procon: Banco do Brasil vs. Most Complained-About Bank ..... 114 Figure 68. New Complaints Recorded at Procon: BB vs. Main Peers ............................................... 115 Figure 69. Changes in Foreign Exchange Exposure in % of the Referential Equity Amount (RE) .... 123 Figure 70. Composition of Banco do Brasil's Assets and Liabilities ................................................... 123 Figure 71. Net Position of BB Consolidated ....................................................................................... 124 Figure 72. Liquidity Reserve in Local Currency .................................................................................. 125 Figure 73. Liquidity Reserve – Foreign Currency ............................................................................... 126 Figure 74. DRL Indicator ..................................................................................................................... 126 Figure 75. Disbursements – Auto Loans – R$ billion ......................................................................... 136 Figure 76. Expenses with ALLL - Corp. Law Vs. Expenses with ALLL - Adjusted ............................. 137 Figure 77. Banco Patagonia – Historical Series Net Income – R$ million ......................................... 142


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Presentation

The Management Discussion and Analysis Report presents the economic/financial situation of Banco do Brasil (BB). Addressed to market analysts, stockholders and investors, with quarterly periodicity, this report releases content with data on main economic indicators, BB's shares performance and risk management. The reader will also find tables with historical series, from up to eight periods, of the Summarized Balance Sheet, the Summarized Corporate Law Income Statement, the Income Statement with Reallocations, besides information about profitability, productivity, quality of the loan portfolio, capital structure, capital market, and structural data.

At the end of this report, the quarter Financial Statements and the Notes to the Financial Statements will be presented.

On-line Access

The Management Discussion and Analysis report can also be read through Banco do Brasil’s Investor Relations website. Further information about BB is also available there, such as: Corporate Governance, news, frequently asked questions and a Download center.

Banco do Brasil bb.com.br Investor Relations bb.com.br/ir

http://www.bb.com.br/

http://www.bb.com.br/ri

Glossary

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Glossary

Leverage: financial indicator that measures the ratio between the total assets and shareholders' equity of the company.

Earnings Assets: reflects the sum of all assets that produce a financial return to the institution. The total return of these assets is included in the gross income from financial intermediation.

Commercial Funding: Includes Total Deposits, Agribusiness Letters of Credit - LCA, Mortgage Bonds - LCI and repurchase agreements operations with private securities.

Institutional Funding: Includes funding directed to institutional investors, with the use of instruments such Senior Debt, Letters Financial and Instrument Hybrid Capital and Debt (IHCD).

Classified Loan Portfolio: sum of the credit operations, financing, leasing, other credit with loan characteristics and acquired loan portfolio.

Loan Portfolio - Broad concept: it corresponds to the Classified Loan Portfolio added of the Private Securities and Guarantees operations.

Domestic Loan Portfolio - Broad concept: classified loan portfolio plus guarantees provided and private securities, considering the operations in the country.

Managed Loan Portfolio: concept adopted by Banco Votorantim, loan portfolio accounted as established by the CMN Resolution 2,862/99, added to private securities and guarantees, which includes assets assigned with recourse to other financial institutions and the assets assigned to Credit Receivables Investment Funds – FIDCs.

Managed Loan Portfolio - Broad Concept: concept adopted by Banco Votorantim, managed loan portfolio, plus private securities and guarantees.

Organic Loan Portfolio: Loan Portfolio excluding 50% of the Banco Votorantim transactions and the acquired portfolios.

Overdue Renegotiated Loan Portfolio: It comprises the renegotiated loans for debts composition due to delay in payments by customers. Furthermore, it does not comprise the rollover operations of agribusiness loan portfolio.

Correspondent Services: are companies, whether or not members of the National Financial System, made by financial institutions and other institutions authorized by the Central Bank of Brazil for the provision of service to customers and users of these institutions.

Opportunity Cost: managerial assessment tool used to compare the effective result of active operations and the hypothetical result of use in a replacement alternative. The Average Selic Rate (TMS) is generally considered.

Fairness opinion: economic, financial and corporate analysis that provides those who will decide on a certain merger and acquisition transaction or to provide the shareholders an independent and unbiased opinion stating that, under the market conditions to which the company was subjected at the time the aforementioned transaction was negotiated, its terms were fair to the company and all its shareholders.

Guarantees: operations where the BB ensures the settlement of the contracts for import and export.

Structural Hedge: hired operations to cancel the changes in foreign currency effects on assets abroad.

Tax Hedge: hired operations to reduce the foreign exchange variation effects on the result, considering the impact on taxes.

Coverage Ratio Adjusted: indicates the magnitude of the coverage of tariff revenues on expenses.

Cost to Income Ratio: productivity indicator that measures the relation between administrative expenses and operating revenues. When the ratio is lower, more efficient is the company.

Adjusted Net Income: net income excluding one-off items.

ADB: Average Daily Balance

Net Interest Income (NII): It is calculated as the difference between income and expenses from financial intermediation considering the reallocations.


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Extraordinary items: Revenues or expenses incurred relevant identified in results for the period and which do not refer to the normal business of the Bank and/or refer to values recorded in previous years.

Adjusted NIM: net interest margin divided by the average balance of earning assets.

Net Interest Rate: difference between average rate of earning assets and average rate of interest bearing liabilities.

Net Interest Management: Is calculated on the basis of the financial revenues received, less any opportunity costs, is defined according to each type of product.

Net Interest Gain: defined as interest income from earning assets less interest expenses from interest bearing liabilities.

Interest Bearing Liabilities: includes the sum of all liabilities that carry an expense for the institution. The total financial cost of these liabilities reflects the expense of financial intermediation.

Reallocations: adjustments made in the Corporate Law Income Statement in order to provide a better understanding of the business and the company's performance.

Annualized Return on Equity: ratio between the net income and the arithmetic average of shareholders’ equity of the reporting period on the previous period, excluding non-controlling interest. The value was annualized for capitalization.

Managerial Spread: spread is the result of the managerial financial margin divided by the respective average balances. For managerial financial margin calculation, financial revenues classified by portfolio are calculated first. Subsequently, the opportunity costs defined for each of the portfolio lines are deducted. Considering the individuals and companies loan portfolios, with free resources, the opportunity cost is the average Selic rate. For the agribusiness portfolio and other directed resources, the opportunity cost is calculated according to the funding source and the necessity or not of compulsory investing part of this funding.

Net Interest Margin: Applying the concept of spread to the banking industry, which is calculated by dividing net interest income by average earning assets.

Private Securities: operations characterized by the acquisition of securities (commercial paper and debentures) mainly issued by private companies..

Earnings Summary

12

Earnings Summary

Earnings

Net Income of R$11.9 billion in the 9M15

Banco do Brasil totaled a Net Income of R$11,888 million in 9M15, an increase of 43.5% compared to the 9M14. This performance corresponds to 18.2% ROE.

Adjusted Net Income, excluding one-off items, was R$8,947 million in 9M15. The outcome was 7.5% above 9M14. The adjusted ROE in the period was 13.7% p.a.

The earnings obtained in 9M15 were impacted by the income generated by the Cateno operation which resulted in R$ 3,212 million net income impact.

Figure 1. Earnings and ROE

Guidance

The following table shows information about the 9M15 Guidance Performed and 2015 Guidance. The balance sheet items were calculated by comparing balances from the end of period. The income statement figures were calculated by comparing the amounts accumulated during the year. The projections are made considering the year as a whole, so that the monitoring over time may reflect specific events in the period. The premises utilized were presented in the 4Q14 Result Summary.

In the 9M15, the following indicators showed differences from the expected to the year:

a) Return on Equity: represent the mixed effect of an increase on the loan portfolio and a higher level of provisions on the period;

b) Companies Loan Portfolio: outcome of a lower demand;

c) Agribusiness Loan Portfolio: result impacted by a lower disbursement for the crop trading credit line;

d) Fee income: shows the rise on the Asset Management and Account fees.

2,780 3,0083,062

8,287

11,888

2,885 3,040 2,881

8,3238,947

15.514.1

14.1

15.1

18.2

16.1 14.2

13.3

15.2

13.7

3Q14 2Q15 3Q15 9M14 9M15

Net Income (R$ million) Adjusted Net Income (R$ million) ROE - % Adjusted ROE - %


13

Table 1. Guidance

Items 2015 Guidance - % 2015 Performance - % 2015 Guidance - %

Adjusted Return on Avarege Equity¹ 14 - 17 13.7 13 - 16

Net Interest Income 11 - 15 13.6 Unchanged

Commercial Funding² 5 - 9 6.4 Unchanged

Domestic Loan Portfolio - Broad Definition³ 7 - 11 7.1 Unchanged

Individuals 6 - 10 8.1 Unchanged

Companies 7 - 11 5.9 5 - 9

Agribusiness 10 - 14 8.5 Unchanged

ALLL Expenses⁴ 3.1 - 3.5 3.3 Unchanged

Fee Income 3 - 6 9.5 7 - 10

Administrative Expenses 5 - 8 6.9 Unchanged

1 - Adjusted ROE estimated for 2015 uses estimated adjusted shareholders’ equity, free from the effects of: (i) the restatement of assets and actuarial, liabilities arising from the Deliberation CVM/695; and (ii) minority interests in controlled companies. 2 - Includes total deposits, Agribusiness Letters of Credit - LCA, Mortgage Bonds - LCI and Repurchase Agreement Operations with Private Securities. 3 - Includes Private Securities and Guarantees. 4 - ALLL expenses from the last 12 months / average classified loan portfolio for the same period.

The Adjusted ROE used in the Guidance is calculated based on the Adjusted Shareholders’ Equity, as indicated in the following table. As from 2015, the amount of R$8.1 billion related to the debt instruments eligible as core capital has been considered in adjusted shareholders’ equity, for purposes of calculating the Adjusted ROE.

Table 2. Adjusted Shareholders’ Equity

R$ million Dec/14 Sep/15

Shareholders' Equity (a) 80,613 83,814

Benefit Plans (b) (8,680) (11,145)

Corporate Profit Sharing (c) 3,093 3,617

Adjusted Shareholders' Equity (a-b-c) 86,200 91,342

Adjusted Shareholders' Equity - Average 88,771

Return to Shareholders

Return to shareholders was R$4.7 billion in 9M15

Banco do Brasil’s earnings per share were R$4.20 in the 9M15. BB maintained a 40% payout distribution to its shareholders with R$4,733 million paid during the period, as shown in the following figure.

Figure 2. Earnings per Share, Dividends and Interest on Shareholder Equity

156 39600

1,3019411,158 1,220

2,723

3,432

1,097 1,197 1,220

3,323

4,733

0.97 1.05 1.08

2.96

4.20

3Q14 2Q15 3Q15 9M14 9M15

Dividends (R$ million) Interest on Shareholder Equity (R$ million) Earnings per Share (R$)

Earnings Summary

14

The difference in the ratio of dividend payments, which was superior than 9M14, was driven by the result of Cateno business. That´s because the Interest on Shareholder Equity is limited to the incidence of Long-term interest rate (TJLP) on own capital that increased in 2015, while the net income of the 9M15 exceeded this parameter, resulting in 9M15 dividend payment greater than 9M14.

Income Statement with Reallocations

Earnings reflects business diversification and cost control

The following table, which is derived from the income statement with reallocations, presents the main highlights from the period. The breakdown of the income statement with reallocations can be found in Section 2.3.1 of the MD&A report.

The Net Interest Income (NII), which is the difference between the Financial Intermediation Income and the Financial Intermediation Expenses, was R$41,870 million on the 9M15, an increase of 13.6 % from 9M14, in line with the 2015 Guidance

Fee Income increased 9.5% in the 9M15, exceeding the expected for the period.

Income from Insurance, Pension Plans and Capitalization increased 10.2% in the 9M15/9M14 comparison.

Administrative Expenses increased 6.9% in the 9M15/9M14 comparison, also within the 2015 Guidance.

Table 3. Income Statement with Reallocations - Main Lines

Quarterly Flow 9 Months Flow Chg. %

R$ million 3Q14 2Q15 3Q15 on/ 3Q14 on/ 2Q15 9M14 9M15 on/ 9M14

Financial Intermediation Income 40,746 37,475 67,643 66.0 80.5 103,914 157,489 51.6

Loan Operations + Leasing 24,838 23,654 35,570 43.2 50.4 66,259 88,698 33.9

Securities 12,353 12,653 20,694 67.5 63.6 31,037 50,340 62.2

Financial Intermediation Expenses (28,145) (23,791) (53,279) 89.3 123.9 (67,052) (115,619) 72.4

Net Interest Income 12,602 13,684 14,364 14.0 5.0 36,862 41,870 13.6

Allow ance for Loan Losses (4,571) (5,530) (6,407) 40.2 15.9 (13,328) (17,936) 34.6

Net Financial Margin 8,031 8,154 7,957 (0.9) (2.4) 23,535 23,934 1.7

Fee income 6,273 6,459 6,907 10.1 6.9 17,976 19,675 9.5

Income f/ Insur., Pension P. and Premium Bonds 1,107 1,261 1,285 16.1 1.9 3,357 3,700 10.2

Contribution Margin 14,187 14,539 14,835 4.6 2.0 41,259 43,388 5.2

Administrative Expenses (8,048) (8,439) (8,551) 6.3 1.3 (23,596) (25,216) 6.9

Personnel Expenses (4,630) (5,131) (5,028) 8.6 (2.0) (13,571) (15,029) 10.7

Other Administrative Expenses (3,417) (3,308) (3,523) 3.1 6.5 (10,025) (10,187) 1.6

Commercial Income 6,038 5,983 6,123 1.4 2.3 17,384 17,772 2.2

Legal Claims (263) (46) (399) 51.8 774.8 (741) (722) (2.5)

Labor Law suits (266) (173) (327) 22.9 88.7 (756) (664) (12.2)

Other Operating Income (1,038) (856) (881) (15.1) 3.0 (2,326) (2,332) 0.3

Income Before Taxes 4,511 4,907 4,534 0.5 (7.6) 13,735 14,068 2.4

Income and Social Contribution Taxes (845) (1,026) (651) (22.9) (36.6) (3,200) (2,306) (27.9)

Corporate Profit Sharing (403) (437) (553) 37.1 26.5 (1,186) (1,559) 31.5

Adjusted Net Income 2,885 3,040 2,881 (0.1) (5.2) 8,323 8,947 7.5

Chg. %

The following table shows the result of one-off items net of tax and statutory profit sharing.


15

Table 4. One-off Items

R$ million 3Q14 2Q15 3Q15 9M14 9M15

Adjusted Net Income 2.885 3.040 2.881 8.323 8.947

(+) One-Off Items during the Period (104) (32) 181 (36) 2.941

Economic Plans (248) 33 (247) (920) (402)

Tax Efficiency - - - 260 -

Provision Legal Law suits - Adjust. Parameters and Policies Agreements - - - 385 -

Deferred Tax - - - - 2.326

BrasilPrev - Susep Circular 457/12 e 462/13 - 385 - - 385

Effect BrasilPrev in Minority Shares - (74) - - (74)

Extraordinary Provision for Law suits 63 (208) (1.794) 359 (2.560)

Cateno - Gestão de Contas de Pagamentos S/A - - - - 11.572

Cateno - Unrealized Income - - - - (5.800)

Social Integration Program/Public servant fund program (PIS/Pasep) - Cateno - - - - (1.070)

Funds and Programs Adjustment - (127) - - (127)

Additional ALLL - - (2.370) (143) (2.370)

Employees Retirement Plan (PAI) - - (372) - (372)

Prov. Commitment to Partners to Buy Points of Relations - - (765) - (765)

Deferred Tax on CSLL - - 3.405 - 3.405

Tax Eff. and Stat. Profit Sharing on One-Off Items 81 (42) 2.325 23 (1.205)

Net Income 2.780 3.008 3.062 8.287 11.888

Net Interest Income

Net Interest Income increased 13.6% in the year

The breakdown of net interest income is presented in the following table.

Table 5. NII Breakdown

Quarterly Flow Chg. % Chg. %



Loan Operations income 21,455 23,750 25,599 19.3 7.8 62,202 72,126 16.0

Funding Expenses (8,993) (10,378) (11,700) 30.1 12.7 (25,340) (31,460) 24.2

Financial Expense for Institutional Funding¹ (3,191) (3,665) (4,130) 29.4 12.7 (9,688) (11,420) 17.9

Recovery of Write-offs 903 987 804 (11.0) (18.5) 2,583 2,713 5.0

Treasury Income² 2,429 2,991 3,792 56.1 26.8 7,106 9,911 39.5

9 Months Flow

1 - Includes senior debt, subordinated debt and hybrid capital instrument in Brazil and abroad (IHCD). 2 - Includes interest income, profitable compulsory deposits income, tax hedges, derivatives and other financial instruments that offset the exchange rate variation in the result.

Comparing to the 9M14, the Net Interest Income increased 13.6%. The following items standout:

I. Loans Operations income were R$72,126 million in the period, an increase of 16%, due mainly to the increase in the volume of loans and portfolio profitability;

II. Funding Expenses and Financial Expenses for Institutional Funding increased 24.2% and 17.9%, respectively, driven by the increase in the volume of funds raised and a 22.0% increase in the rate of CDI (Interbank Deposit Certificate). The strategy of portfolio diversification minimized the increase in Funding Expenses;

III. Treasury results were R$9,911 million in the period, evolution of 39.5%, mainly due to an increase in the daily average balance of securities, a 21.2% increase in the TMS (effective Average Selic Rate).

Additional information about net interest income can be founded in chapter 5 of the MD&A.

Spread by Portfolio

The following table shows the managerial spread segmented by transactions. Spread is the result of the managerial financial margin divided by the respective average balances. For the managerial financial margin calculation, financial revenues classified by portfolio are calculated first. Subsequently, the opportunity costs defined for each portfolio lines are deducted. Since the 1Q15, the managerial spread is being calculated based in the organic loan portfolio and the historical data has been recalculated using the same methodology.

Earnings Summary

16

Table 6. Annualized Managerial NIM (organic loan portfolio)

% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Loan Operations 7.0 6.8 7.1 7.0 7.0 6.9 7.0 7.1

Individuals 14.6 13.9 13.9 14.0 13.8 13.5 14.0 14.9

Companies¹ 5.2 5.3 5.5 5.5 5.7 5.5 5.6 5.7

Agribusiness 4.7 4.8 4.9 5.1 5.1 4.9 4.8 4.5

1 - Revised data on 1Q15 due to methodology adjustments. 2 - It does not include loans with government sector.

The following table shows the Net Interest Margin and "Risk-Adjusted NIM".

Table 7. Annualized Managerial NIM

% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Net Interest Margin (NIM)¹ 4.3 4.1 4.1 4.2 4.4 4.3 4.2 4.3

Risk Adjusted NIM² 2.8 2.7 2.6 2.6 2.7 2.4 2.5 2.4

1 – Net Interest Income / average Earning Assets, annualized. 2 - Net Interest Margin (NII less Provision for Loan Losses) / average Earning Assets, annualized.

Assets and Main Balance Sheet Items

Total assets increased 10% in 12 months

BB’s total assets was R$1.6 trillion in September/15, an increase of 10% in twelve months, as shown in the following table. The main lines of assets are loan operations and leasing, securities and short-term interbank investments, which accounted for 79.3% of BB’s total assets in September/15. Commercial funding accounted 42.1% of total liabilities.

Table 8. Main Balance Sheet Items

Chg. %

R$ million Sep/14 Jun/15 Sep/15 on/ Sep/14 on/ Jun/15

Total Assets 1,431,629 1,533,864 1,574,961 10.0 2.7

Loan Portfolio - Broad Definition¹ 732,997 776,799 804,633 9.8 3.6

Domestic Loan Portfolio - Broad Definition¹ 675,818 708,482 723,566 7.1 2.1

Securities 210,435 239,571 250,714 19.1 4.7

Short-Term Interbank Operations 317,820 357,325 349,196 9.9 (2.3)

Commercial Funding 623,524 642,224 663,140 6.4 3.3

Total Deposits 468,825 445,631 463,838 (1.1) 4.1

Demand Deposits 69,521 64,761 66,026 (5.0) 2.0

Savings Deposits 148,996 147,306 149,764 0.5 1.7

Interbank Deposits 28,531 34,223 42,404 48.6 23.9

Time Deposits 221,777 199,341 205,644 (7.3) 3.2

Judicial Deposits 110,095 116,805 116,107 5.5 (0.6)

Agribusiness Let. of Credit + Mortgage Bonds 113,515 152,638 154,630 36.2 1.3

Repurchase Agreem. Oper. w ith Priv. Securities 41,184 43,955 44,671 8.5 1.6

Money Market Borrow ing 319,723 352,872 331,364 3.6 (6.1)

Shareholder’s Equity 81,246 82,643 83,814 3.2 1.4

1 – Includes private securities and guarantees provided.

Information about Other Components of the Balance Sheet such as Actuarial Assets and Liabilities, Previ Surplus - Allocation Funds and Resumption of Contributions can be found in chapter 8 of the MD&A.

Diversified funding sources ensures business expansion

Commercial funding was R$663 billion in September/15, an increase of 6.4% in twelve months. BB maintains its strategy of funding composition to reduce costs. The main increases over September/14 were originated by LCI (Mortgage Bonds), which increased 134.3 %, and LCA (Agribusiness Letters of Credit), which has increased of 28.8%, as shown in the following table.


17

The balance of external funding, including fixed income securities, certificates of deposit, deposits and repurchase agreements, was US$50 billion at the end of September/15.

The fixed income securities issued by BB on the international capital market totaled US$16.6 billion at the end of September/15, as presented in Chapter 4 of MD&A.

The Net Loan Portfolio remains as the main destination of funding, representing 81.6% of the total sources as of September/15.

Considering the significant amount of credit originated by domestic onlending, the Adjusted Net Loan Portfolio index over commercial funding excludes the credit originated by domestic onlending. At the end of September/15 the ratio (Adjusted Net Loan Portfolio index / Commercial Funding) was 91.8%, demonstrating that BB’s loan portfolio is appropriated to its level of commercial funding.

Table 9. Sources and Uses

Balance Chg. %

R$ million Sep/14 Share % Jun/15 Share % Sep/15 Share % on/ Sep/14 on/ Jun/15

Sources 788,146 100.0 855,161 100.0 903,440 100.0 14.6 5.6

Commercial Funding 623,524 79.1 642,224 75.1 663,140 73.4 6.4 3.3

Total Deposits 468,825 59.5 445,631 52.1 463,838 51.3 (1.1) 4.1

Agribusiness Let. of Credit + Mortgage Bonds 113,515 14.4 152,638 17.8 154,630 17.1 36.2 1.3

Repurchase Agreem. Op. w ith Priv. Securities¹ 41,184 5.2 43,955 5.1 44,671 4.9 8.5 1.6

Domestic Onlending 88,036 11.2 91,877 10.7 92,303 10.2 4.8 0.5

Foreign Borrow ing ² 65,622 8.3 80,724 9.4 104,209 11.5 58.8 29.1

Subordinated Debt 42,417 5.4 42,628 5.0 43,856 4.9 3.4 2.9

Capital Eligible Debt ³ ⁴ 27,990 3.6 32,775 3.8 38,350 4.2 37.0 17.0

Others Commercial Papers ⁵ 9,637 1.2 9,719 1.1 7,283 0.8 (24.4) (25.1)

Domestic Hybrid Debt Capital Instruments 90 0.0 - - - - - -

Financial and Development Funds 9,569 1.2 12,404 1.5 14,675 1.6 53.4 18.3

Compulsory Deposits (78,739) (10.0) (57,190) (6.7) (60,376) (6.7) (23.3) 5.6

Uses 788,146 100.0 855,161 100.0 903,440 100.0 14.6 5.6

Net Loan Portfolio (a) = (b) + (c) +(d) 683,982 86.8 720,029 84.2 737,528 81.6 7.8 2.4

Loan Portfolio (b) 662,670 84.1 704,438 82.4 726,860 80.5 9.7 3.2

Private Securities (c) 47,082 6.0 45,078 5.3 44,695 4.9 (5.1) (0.8)

Allow ance for Loan Losses (d) (25,770) (3.3) (29,487) (3.4) (34,026) (3.8) 32.0 15.4

Adjusted Net Loan Portfolio (a) - (e) 566,296 71.9 594,121 69.5 608,503 67.4 7.5 2.4

Domestic Onlending Loans (e) 117,686 14.9 125,907 14.7 129,026 14.3 9.6 2.5

Available Funds 104,164 13.2 135,132 15.8 165,912 18.4 59.3 22.8

Indicators - %

Net Loan Portfolio / Total Deposits 145.9 161.6 159.0

Net Loan Portfolio / Funding 109.7 112.1 111.2

Adjusted Net Loan Port. / Commercial Funding 90.8 92.5 91.8


1 - Includes part of the balances of the Private Securities Note 17c. 2 - Includes Foreign Borrowing, Foreign Securities Obligations, Subordinated Debt Abroad and Hybrid Capital Instruments Abroad. 3 – From 3Q14 on, includes debt instruments eligible as core capital, as authorized by the Central Bank through its letter 15006/2014-BCB/DEORF/DIFIN. 4 - Includes Letters of Credit and Debentures.

BIS Ratio

BIS Ratio was 16.20% in September/15

Banco do Brasil’s BIS III ratio reached 16.20% in September/15, higher than the minimum required. The Tier I ratio was 11.61%, with 8.07% Core Capital Ratio. Both ratios are adequate and above the minimum required. BB’s Referential Equity was R$136.6 billion during the period, as detailed in Chapter 9 of the MD&A report.

Loan Portfolio

Loan Portfolio in the Broad Definition reaches R$805 billion in September/15

BB’s Loan Portfolio in the Broad Definition was R$804.6 billion in September/15, an increase of 9.8% in twelve months, as shown in the following table. The Domestic Loan Portfolio in the Broad Definition increased 7.1% in the same period.

Earnings Summary

18

The Classified Loan Portfolio was R$726.9 billion in September/15. The Domestic Classified Loan Portfolio had an increase of 7.5% in 12 months, with 20.8% market share.

Table 10. Loan Portfolio – Classified and Broad Definitions

Balance Chg. %


Classified Loan Portfolio 662,670 100.0 704,438 100.0 726,860 100.0 9.7 3.2

Brazil 612,048 92.4 645,818 91.7 657,741 90.5 7.5 1.8

Individuals 174,941 26.4 186,297 26.4 188,834 26.0 7.9 1.4

Payroll Loan 63,065 9.5 65,469 9.3 65,780 9.0 4.3 0.5

Mortgage 25,717 3.9 32,833 4.7 35,188 4.8 36.8 7.2

Auto Loans 32,964 5.0 31,931 4.5 30,400 4.2 (7.8) (4.8)

Credit Card 20,382 3.1 22,072 3.1 22,056 3.0 8.2 (0.1)

Salary Loans 17,911 2.7 18,784 2.7 19,425 2.7 8.4 3.4

Consumer Finance 5,927 0.9 6,797 1.0 6,921 1.0 16.8 1.8

Overdraft Accounts 2,735 0.4 2,525 0.4 2,564 0.4 (6.3) 1.5

Other 6,238 0.9 5,886 0.8 6,500 0.9 4.2 10.4

Companies 280,288 42.3 292,270 41.5 297,988 41.0 6.3 2.0

Middle Market and Corporate 152,145 23.0 161,866 23.0 163,145 22.4 7.2 0.8

Very Small and Small 101,486 15.3 97,827 13.9 95,191 13.1 (6.2) (2.7)

Government 26,657 4.0 32,576 4.6 39,652 5.5 48.8 21.7

Agribusiness 156,819 23.7 167,251 23.7 170,919 23.5 9.0 2.2

Individuals 109,939 16.6 119,673 17.0 119,682 16.5 8.9 0.0

Companies 46,881 7.1 47,578 6.8 51,237 7.0 9.3 7.7

Abroad 50,622 7.6 58,620 8.3 69,118 9.5 36.5 17.9

Private Securities and Guarantees 70,327 72,360 77,773 10.6 7.5

Loan Portfolio - Broad Definition 732,997 100.0 776,799 100.0 804,633 100.0 9.8 3.6

Brazil 675,818 92.2 708,482 91.2 723,566 89.9 7.1 2.1

Individuals 175,390 23.9 186,885 24.1 189,560 23.6 8.1 1.4

Companies 342,023 46.7 353,298 45.5 362,158 45.0 5.9 2.5

Agribusiness 158,405 21.6 168,298 21.7 171,848 21.4 8.5 2.1

Abroad 57,179 7.8 68,317 8.8 81,067 10.1 41.8 18.7

1 - Sum of the credit operations, financing, leasing, other credit with loan characteristics and acquired loan portfolio. 2 - It corresponds to the Classified Loan Portfolio added of the Private Securities and Guarantees.

The following figure shows the Classified Loan Portfolio (Ex BV) for the contracted period. Loan disbursements could continue in subsequent quarters in certain cases. Considering the portfolio for September/15, 25.7% of the assets were contracted in the 9M15. For the years 2013 and 2014, relating the portfolio in 3Q15, the percentage was 21.2% and 24.7%.


19

Figure 3. Classified Loan Portfolio (Ex BV) by contracted period - % and R$ billion

Individuals Loan Portfolio in the broad definition exceeds R$189 billion

The Individuals Loan Portfolio in the Broad Definition ended September/15 at R$189.6 billion, an increase of 8.1% over September/14, accounting for 23.6% of BB loan portfolio. Mortgage loans stand out.

Considering only the Individual Organic Classified Loan Portfolio (i.e., excluding the acquired portfolios and the operations of Banco Votorantim), there was a growth of 11.7% in twelve months and 2.4% over June/15. Within the total, 77% is concentrated in lower risk loans, such as Payroll Loan, Salary Loans, Auto Loans and Mortgages, over 76.1% in September/14.

In the Individual Organic Classified Loan Portfolio, most operations of Direct Consumer Credit and Auto Loans are with civil servants and pensioners, totaling 86.6% in September/15, demonstrating stability and protection of the organic portfolio.

Most payroll loans contracted at BB in the 3Q15 have a maturity of over 60 months (62.9% of the total contracted). The client profile of the portfolio allows customers to extend the term and generates loyalty and opportunity to offer other products during this time. BB’s market share in the segment was 24.2% in September/15.

BB’s Organic Auto Loans Portfolio was R$8.8 billion in September/15, a decrease of 6.8% from June/15 in line with the market trend. In this portfolio, 66.7% of account holders have been customers for more than 10 years and 67.5% receive their salary through BB. In relation to the maturity of auto loans transactions contracted at BB (3Q15), 71.2% of the disbursement matures in up to 48 months. Auto loans LTV, in the organic portfolio, was 67.2% in September/15.

Mortgage loan portfolio increases 34% in twelve months

The total Mortgage Loan Portfolio was R$46.9 billion in September/15, an increase of 34.0% in twelve months, as shown in the following figure.

The Individual Mortgage Loan Portfolio was R$35.2 billion in September/15, an increase of 36.8% in twelve months. The increase observed during the period was due to the expansion of products offered to customers and the consolidation of the product portfolio at Banco do Brasil. BB’s market share in mortgages to individuals was 7.2% in September/15, an increase of 90 bps from the same period of 2014.

The mortgages LTV was 62.9%, in line with the Banking Industry, which was 63.0% according to data from Abecip (Brazilian Association of Real Estate and Savings Credit Entities) as of August 2015. Using the Association’s definition, the number includes the portfolio’s inventory.

Earnings Summary

20

In the companies segment, the mortgage portfolio balance was R$11.7 billion in September/15, an increase of 26.2% in 12 months.

Figure 4. Mortgage Loan Portfolio (R$ billion)

25.728.5 30.4

32.835.2

9.3

10.310.6

11.211.7

35.0

38.841.0

44.1

46.9

Sep/14 Dec/14 Mar/15 Jun/15 Sep/15

Mortgage - Individuals Mortgage - Companies

Companies Loan Portfolio was R$362 billion

Loans to companies in the broad definition was R$362.2 billion, an increase of 5.9% from September/14. This portfolio represents 45% of the total loan portfolio.

At the end of September/15, the Middle Market and Corporates (with private securities and guarantee), in addition to the Government portfolio, was 73.7 % of the loan portfolio, while the Very Small and Small portfolio was 26.3% during the same period.

In twelve months, working capital and investment transactions increased 1.0% and 7.0%, respectively, as shown in the following table. These operations were positively influenced by the large amount of loans with medium and large companies.

The balance of operations with private securities and guarantees was R$64.2 billion at the end of September/15, a growth of 5.1% in twelve months. These operations are performed with large companies and have a history of low risk.

Table 11. Companies Loan Portfolio in the Broad Definition

R$ billion Sep/14 Share % Jun/15 Share % Sep/15 Share % on/ Sep/14 on/ Jun/15

Working Capital¹ 182.6 53.4 182.5 51.7 184.4 50.9 1.0 1.0

Investiments 63.8 18.7 67.0 19.0 68.3 18.9 7.0 2.0

Corporate Bonds & Notes 42.6 12.4 38.3 10.8 38.1 10.5 (10.6) (0.7)

Guarantees 19.2 5.6 22.7 6.4 26.1 7.2 36.1 15.0

Trade Finance² 15.9 4.6 18.6 5.3 18.4 5.1 15.9 (0.9)

Mortgage 9.3 2.7 11.2 3.2 11.7 3.2 26.2 4.2

Other 8.7 2.5 13.0 3.7 15.2 4.2 74.7 17.1

Companies Loan Portfolio 342.0 100.0 353.3 100.0 362.2 100.0 5.9 2.5

Chg. %

1 – Includes working capital lines, receivables, credit card, pre-approved-credit and overdraft account. 2 - Includes ACC (forward exchange contracts), ACE (advance against draft presentation) and BNDES Exim.

Banco do Brasil’s disbursements for investment loans were R$32.7 billion in the 9M15. The Transport Infrastructure Financing stand out.

Credit operations for very small and small companies were R$95.2 billion in September/15, a decrease of 6.2% in twelve months. Working capital, investment and foreign trade lines were R$59.9 billion, R$33.4 billion and R$1.9 billion, respectively. At the end of September/15, BB had 2.3 million


21

clients in this sector. In this segment, 95.9% of the portfolio was applied to account holders with over two years of relationship with the Bank.

BB has been using instruments that has allowed greater access to credit and cost reduction for the borrower, such as FGO (Operations Guarantee Fund) and the Fampe (Endorsement for Micro and Small Enterprises Fund). In this quarter, 25.2% were covered by these funds.

Credit transactions with the public sector were R$39.6 billion in September/15, an increase of 48.8% in 12 months. These provide resources to states and municipalities for investments, especially in infrastructure.

BB’s Foreign Loan Portfolio in the broad definition were R$81.1 billion in September/15. BB is the main partner in Brazilian foreign trade and ended the 3Q15 with a market share of 25.3% and 17.8% in foreign exchange for export and import operations, respectively. With leadership in the operations of ACC (Forward Exchange Contracts) and ACE (Advance against Draft Presentation), BB closed the 3Q15 with 27.0% of market share in these segments.

Agribusiness Loan Portfolio closes the quarter with R$171.8 billion balance

Banco do Brasil is the absolute leader in agribusiness loans, with a 60.1% market share. One of the main sectors of the economy, this segment is of crucial importance for Brazil’s growth and development.

Agribusiness loan portfolio in the broad definition, including agricultural loan and agro-industrial operations, increased 8.5% in 12 months, to R$171.8 billion in September/15, as shown in the following graph. This segment was 21.4% of the total loan portfolio during the period. The delinquency ratio of the agribusiness portfolio remains at low levels, with the NPL+90 days ratio of 0.84% in September/15, from 0.59% in September/14 and 0.73% in June/15.

Figure 5. Agribusiness Loan Portfolio – Broad Definition (R$ billion)

110.7 117.7 118.7 120.7 120.6

47.747.2 44.7 47.6 51.2

158.4164.9 163.4 168.3 171.8

0.590.69 0.82 0.73 0.84

(3.000)

(2.5000)

(2.000)

(1.5000)

(1.000)

(.5000)

-

.5000

1.000

(30.00)

20.00

70.00

120.00

170.00

220.00


Individuals Companies NPL + 90 days/Agrobusiness Loan Portfolio - %¹

1 – The indicator NPL + 90 days/agribusiness (% ) is based on the classified agribusiness loan portfolio.

Banco do Brasil operations extend from small producers to large agribusiness companies. In the broad definition, the individual loan portfolio increased 9.0% in twelve months, and company agribusiness loan portfolios increased 7.4% in the same comparison.

The Agribusiness loan portfolio breakdown for the last twelve months comparative highlights these operations: (i) investment, an increase of 14.1% (+R$9.7 billion); (ii) Agro-industrial Credit, an increase of 18.6% (+R$5.8 billion); and (iii) Working Capital for Input Purchase, an increase of 1.6% (+R$781 million).

Agribusiness Loan Portfolio by Credit Line/Program in the same comparison highlights these operations: (i) Pronaf, an increase of 13.5% (+R$4.5 billion); (ii) Pronamp (National Program for Support the Medium Rural Producer), an increase of 9% (+R$1.8 billion); and (iii) ABC Program, an increase of 29.9% (+R$2.1 billion).

Earnings Summary

22

In the first three months of 2015/2016 crop, BB disbursed R$21.7 billion in agribusiness loans.

For Family Agriculture the disbursement amounted R$4.1 billion, while in Corporate Agriculture, disbursement accounted for R$13.2 billion. Operations through Pronamp were R$4.4 billion, an increase of 25.8%.

Delinquency Ratios remain below Banking Industry

The historical evolution of the Bank’s average risk (ratio between required provision and total classified loan portfolio) remains lower than the Banking Industry, as shown in the following graph.

Figure 6. Classified Loan Portfolio Average Risk

4.16 4.10

3.57 3.66

4.15

5.66 5.70

5.104.80

5.20

Sep/11 Sep/12 Sep/13 Sep/14 Sep/15

Average Risk - BB Consolidated Average Risk - BI

The coverage ratio (ALLL/NPL +90d) states the ratio between the total provision (required plus additional) and the balance of the transactions due over 90 days. The current provision enables the BB to record a 212.9% coverage ratio, a percentage higher than BI.

Historically, BB has a delinquency ratio lower than BI, as shown in the next figure. The delinquency ratio NPL +90d (which states the ratio between the operations due over 90 days and the classified loan portfolio balance) was 2.20% in September/15.

Figure 7. NPL +90d – Percentage on the Classified Loan Portfolio

1.921.65 1.77

1.912.07

2.19 2.03 1.97 2.092.20

3.51

3.80

3.30

2.903.10

Sep/11 Sep/12 Sep/13 Sep/14 Sep/15

NPL +90d - BB ex-BV NPL +90d - BB Consolidated NPL +90d - BI

The New NPL/Loan Portfolio ratio, which indicates the future delinquency trend, is analyzed in the Chapter 3.2 of the MD&A.


23

In the next table are shown the movements of the ALLL in the annual and quarterly view, the average Classified Loan Portfolio, and expenditure indicators with ALLL on the portfolio. The indicator Allowance for Loan Losses Expenses over Classified Loan Portfolio in the last 12 months was of 3.33% in September/15. The indicator was within the range of 2015 Guidance.

Table 12. ALLL Expenses over Classified Loan Portfolio – BB and BB ex-BV

Chg. %

R$ million 3Q14 4Q14 1Q15 2Q15 3Q15 on/ 3Q14 on/ 2Q15

12 months ALLL Expenses

(A) BB (17,510) (18,531) (20,343) (21,303) (23,139) 32.1 8.6

(B) BB ex-BV (15,703) (17,105) (18,974) (20,061) (21,665) 38.0 8.0

Quarterly ALLL Expenses

(C) BB (4,571) (5,203) (5,999) (5,530) (6,407) 40.2 15.9

(D) BB ex-BV (4,266) (4,867) (5,655) (5,273) (5,870) 37.6 11.3

Average Loan Portfolio

(E) BB - 12 months 628,665 648,265 663,951 678,950 693,941 10.4 2.2

(F) BB - 3 months 653,417 673,270 691,089 701,664 712,580 9.1 1.6

(F) BB ex-BV - 3 months 633,897 654,488 672,539 683,637 695,366 9.7 1.7

Partial Recovery of Write-off

(H) Quarterly 360 328 207 390 284 (21.1) (27.0)

(I) 12 months 1,140 1,214 1,171 1,285 1,209 6.1 (5.9)

Net ALLL Expenses

(C+H) Quarterly (4,210) (4,875) (5,792) (5,140) (6,122) 45.4 19.1

(A+I) 12 months (16,370) (17,317) (19,172) (20,018) (21,930) 34.0 9.6

ALLL Index (A/B) - %

(A/E) ALLL Expenses/Loan Porfolio 12M - BB 2.79 2.86 3.06 3.14 3.33

(C/F) ALLL Expenses/Loan Porfolio 3M - BB 0.70 0.77 0.87 0.79 0.90

(D/G) ALLL Exp./Loan Porfolio 3M - BB ex-BV 0.67 0.74 0.84 0.77 0.84

Banco do Brasil monitors loans with evidence of compromised quality. The item 3.3 of MD&A details the process of Credit Collection and Recovery. Of the volume of credit that entered the collection process in the last 12 months, 94.8% were resolved within 360 days in the 3Q15.

The following table shows the main loan portfolio quality indices.

Table 13. Classified Loan Portfolio Quality Indicators

% Sep/14 Jun/15 Sep/15

Average Risk BB 3.66 3.97 4.15

NPL + 15 days/Loan Portfolio 3.46 3.64 4.23

NPL 15-59 days/Loan Portfolio 0.99 1.16 1.44

NPL + 60 days/Loan Portfolio 2.47 2.49 2.79

NPL 15-89 days/Loan Portfolio 1.37 1.60 2.03

NPL + 90 days/ Loan Portfolio 2.09 2.04 2.20

AA - C Loans/Loan Portfolio 94.81 94.22 94.07

ALLL/Loan Portfolio 3.89 4.19 4.68

Individuals Allow ance/Loan Portfolio 5.21 4.79 4.79

Companies Allow ance/Loan Portfolio 3.65 4.38 4.81

ALLL/NPL + 15 days 112.29 114.85 110.66

ALLL/NPL + 60 days 157.32 168.33 167.89

ALLL/NPL + 90 days 185.93 205.21 212.88

Average Risk – Banking Industry 4.80 5.00 5.20

NPL + 90 days/Total Portfolio – BI 2.90 2.90 3.10

ALLL/NPL + 90 days - BI 165.52 172.41 167.74

Earnings Summary

24

Fee Income

Business growth diversifies Fee Income

The expansion of the credit supply and stronger BB performance in the Insurance, Credit and Debit Cards, and Asset Management segments have favored the expansion of businesses volume, contributing to the diversification of fee income.

In the 9M15, fee income amounted R$19,675, an increase of 9.5% compared to the 9M14, with stand out: (i) Account Fees, increase of R$495.8 million; (ii) Asset Management, rise of R$483.3 million; and (iii) Collections, an increase of R$190.8 million, as shown in the following table.

Table 14. Fee Income

Quarterly Flow Chg. % 9 Months Flow Chg. %


Fee Income 6,273 6,459 6,907 10.1 6.9 17,976 19,675 9.5

Credit / Debit Cards 1,585 1,474 1,635 3.2 10.9 4,654 4,751 2.1

Account Fees 1,193 1,252 1,374 15.1 9.7 3,399 3,768 10.9

Asset Management 1,116 1,171 1,254 12.4 7.1 3,023 3,506 16.0

Loans Fees 440 452 503 14.4 11.4 1,333 1,362 2.2

Collections 376 426 435 15.9 2.2 1,090 1,281 17.5

Insurance, P. Plans and Premium Bonds 243 276 231 (4.9) (16.2) 721 758 5.2

Billings 235 273 250 6.6 (8.3) 691 783 13.3

Interbank 188 193 196 4.2 1.4 552 575 4.2

Fiduciary Services 119 124 130 8.9 5.1 329 367 11.4

National Treasury and Manag. of Official Funds 95 117 130 36.6 11.7 260 333 27.8

Consortium 97 110 109 11.9 (1.5) 242 314 29.6

Capital Market 125 104 90 (27.5) (13.3) 352 368 4.5

Other 462 488 569 23.3 16.6 1,329 1,509 13.5

Diversification of business strengthens performance of Banco do Brasil

Banco do Brasil, following its strategy of business diversification, has expanded its activities in electronic methods of payment, especially in the credit and debit cards market.

The following graph shows the results achieved in terms of revenues in the card segment of R$66.3 billion, an increase of 12.3% in the 3Q15/3Q14 comparison. The quantity of transactions with BB’s cards increased 9.5% from the previous year, demonstrating its potential for generating revenue for Banco do Brasil, as highlighted in the fee income item.

Income from card services after taxes in the 3Q15 was R$608 million, an increase of 18.8% compared to the previous year. In the 9M15 cards service income was R$1,592 million after tax, up 6.9% compared to the same period last year.


25

Figure 8. Cards – Turnover

BB Cards -Total Turnover (R$ billion)

35.6 38.3 35.1 36.6 37.7

101.7 109.523.5

27.522.9 24.4 28.5

70.875.9

59.065.8

58.1 61.066.3

172.5

185.4

3Q14 4Q14 1Q15 2Q15 3Q15 9M14 9M15

Credit Card Debit Card

In the asset management segment, BB DTVM has been the Brazilian leader in assets under management since 1994. At the end of 3Q15, the amount was R$602.4 billion in assets under management and a market share of 21.7%, an increase of 8.4% over to the previous year.

Figure 9. Asset Management

493.7 516.9 536.2 555.8 554.7594.8 604.8 602.4

20.9 21.6 21.9 22.0 21.7 22.5 22.2 21.7

Dec/13 Mar/14 Jun/14 Sep/14 Dec/14 Mar/15 Jun/15 Sep/15

Asset Management - R$ billion Market Share - %

Banco do Brasil is present in the capital market through its subsidiaries in Brazil and abroad. Together, the companies in BB’s holding promote the connection between domestic issuers and investors in domestic and foreign markets.

In the insurance segment, BB operates through the holding BB Seguridade Participações. BB Seguridade is the leader in the markets in which it operates, according to the data provided by the Susep (Superintendency of Private Insurance).

Information about credit and debit cards, asset management, capital markets, fiduciary services, insurance and consortiums can be found in chapter 6 of BB’s MD&A. BB Seguridade’s MD&A can also be consulted about its performance. It is available at www.bancodobrasilseguridade.com.br.

The consortium market had R$57.3 billion in terms of business volume in the period of January to August 2015, according to ABAC (Brazilian Association of Consortium Administrators). Management fee revenue from consortium in the 3Q15 was R$108.5 million, an increase of 11.8% over the 3Q14.

http://www.bancodobrasilseguridade.com.br/

Earnings Summary

26

In 2014, Banco Votorantim completed its restructuring process and consolidated the return to profitability. In the 3Q15, net income was R$137 million. Information about strategic investments can be found in Chapter 10 of the MD&A report.

Administrative Expenses and Cost-to-Income Ratio

Administrative Expenses under control

Banco do Brasil has been constantly seeking to improve its operational efficiency and productivity, maintaining tight control of its administrative expenses. In the 9M15/9M14 comparison, these expenses increased 6.9%, within the 2015 Guidance range (5% - 8%). The change of administrative expenses was driven, mainly, by the readjustment related to the collective bargaining agreement for the 2014/2015 period.

Table 15. Adjusted Administrative Expenses

Quarterly Flow Chg. % 9 Months Flow Chg. %


Administrative Expenses (8,048) (8,439) (8,551) 6.3 1.3 (23,596) (25,216) 6.9



In the last twelve months, the ratio that measures the cover of administrative expenses increased to 77.7% in the 3Q15, from 75.2% in the 3Q14, reflecting the performance of fee income and control of administrative expenses in the period.

The Cost-to-Income Ratio in 12 months ended 3Q15 at 41.6%, from 44.5% in the 3Q14, mainly due to the growth in net interest income in relation to administrative expenses.

The Chapter 7 of the MD&A provides information about Administrative Expenses, Service Network, Automated Service Channels, Other Operating Income and Expenses, Efficiency Indicators and Operational Loss.


27

1 – Key Statistics

Table 16. Main Macroeconomic Indicators¹

2011 2012 2013 2014 3Q15

Economic Activity

GDP (% YTD in 12 months) 3.9 1.8 2.7 0.1 NA

Family Consumption 4.8 3.9 2.9 0.9 NA

Government Consumption 2.2 3.2 2.2 1.3 NA

Gross Fixed Capital Formation 6.6 (0.6) 6.1 (4.4) NA

Exports 4.8 0.5 2.1 (1.1) NA

Imports 9.4 0.7 7.5 (1.0) NA

Use of Installed Capacity (%) 82.8 82.8 82.3 81.1 NA

Agent Population (% YTD in 12 months) 1.1 2.7 (0.8) (0.1) 1.3

Unemployment Rate (% YTD in 12 months) 6.0 5.5 5.4 4.8 6.1

Formal employment – net creation in 12 m (thousand jobs) 1,566.0 868.2 730.7 152.7 NA

Industrial Production (% YTD in 12 months) 0.4 (2.3) 2.1 (3.1) NA

External Sector

Current Transactions (% GDP in 12 months) (2.1) (2.4) (3.6) (4.5) NA

Direct Foreign Investment (US$ billion - year accumulated) 66.7 65.3 64.0 96.9 NA

International Reserves (US$ billion – end of period) 352.0 378.6 375.8 374.1 370.6

Sovereign Risk (basis points – EOP) 223.0 142.0 224.0 259.0 442.0

Trade Balance (US$ billion – year accumulated) 29.8 19.4 2.3 (4.0) 10.2

Exports (US$ billion – year accumulated) 256.0 242.6 242.0 225.1 144.5

Imports (US$ billion – year accumulated) 226.2 223.2 239.7 229.1 134.3

Ptax Dollar Sale (EOP) 1.88 2.04 2.34 2.66 3.97

Ptax Dollar Sale (% YTD in 12 months) 12.6 8.9 14.6 13.4 62.1

Monetary Ratios

IGP-DI FGV (% YTD in 12 months) 5.0 8.1 5.5 3.8 9.3

IGP-M FGV (% YTD in 12 months) 5.1 7.8 5.5 3.7 8.4

IPCA – IBGE (% YTD in 12 months) 6.5 5.8 5.9 6.4 9.5

Selic (EOP %) 11.00 7.25 10.00 11.75 14.25

Accumulated Selic (% YTD in 12 months) 11.6 8.5 8.2 10.9 12.6

Accumulated TR (exBTN) (% YTD in 12 months) 1.40 0.28 0.27 0.97 1.66

TJLP - IBGE (EOP %) 6.0 5.5 5.0 5.0 6.5

Libor (EOP %) 0.4 0.4 0.2 0.2 NA

Public Finance

Primary Surplus (% GDP 12 months accumulated) 2.9 2.2 1.8 (0.6) NA

PSGD (% GDP) 51.3 54.8 53.3 58.9 NA

PSND (% GDP) - Without Petrobras 34.5 32.9 31.5 34.1 NA

Credit Ratios

Banking Industry Loan Portfolio (R$ billion)² 2,034.0 2,368.3 2,711.4 3,017.5 3,160.2

Individuals (R$ billion)² 921.1 1,075.8 1,245.8 1,412.1 1,484.7

Companies (R$ billion)² 1,112.9 1,292.6 1,465.5 1,605.4 1,675.5

Credit/GDP (% YTD in 12 months) - (%)² 46.5 50.3 52.6 54.7 55.0

Household Debt (%) 41.6 43.6 45.1 46.0 NA

Total Default (% past due loans over 90 days)³ 3.6 3.7 2.8 2.7 3.1

Total Spread (p.y %) 14.3 11.5 13.8 14.9 18.5

Individuals 21.0 17.7 20.0 21.5 26.3

Companies 9.2 7.0 7.6 8.0 9.9

Average Term (%) 40.3 44.3 41.3 45.2 48.2

Individuals 55.9 63.5 52.2 58.1 62.0

Companies 29.2 30.4 33.2 35.3 37.4

1 - All indicators were obtained from official sources such as Central Bank of Brazil, FGV (Getúlio Vargas Foundation), IBGE, etc. 2 - Reviewed Series due to change of Notimp’s Central Bank of Brazil methodology. NA - Not Avaiable.

Chapter 1 – Key Statistics

28

Table 17. Ownership Structure – %

Shareholders Sep/14 Dec/14 Mar/15 Jun/15 Sep/15

Federal Government 57.9 57.9 57.9 57.9 57.7

Previ 10.4 10.4 10.4 10.4 10.4

BNDESPar 0.1 - - - -

Treasury Shares 2.4 2.4 2.4 2.4 2.5

Free Float 29.2 29.3 29.3 29.3 29.4

Individuals 5.0 5.3 5.1 5.2 5.8

Companies 3.9 3.5 3.7 2.6 2.0

Foreign Capital 20.4 20.4 20.4 21.6 21.6

Total 100.0 100.0 100.0 100.0 100.0

Number of Shares 2,865,417,020 2,865,417,020 2,865,417,020 2,865,417,020 2,865,417,020

Table 18. Distribution of Dividends and Interest on Own Capital

R$ million 3Q14 4Q14 1Q15 2Q15 3Q15

Federal Government 651.2 713.0 1,373.9 710.2 722.3

Previ 117.0 127.8 246.2 127.3 129.9

BNDES 0.9 - - - -

Individuals 55.7 65.7 121.9 63.4 72.2

Companies 43.4 43.5 88.8 31.6 24.8

Foreign Capital 229.0 251.8 484.6 264.5 270.7

Total 1,097.1 1,201.9 2,315.6 1,197.0 1,220.0

Table 19. Market Ratios

3Q14 4Q14 1Q15 2Q15 3Q15

Earnings per Share - R$ 0.97 1.08 2.07 1.05 1.08

Price / Earnings (12 months)¹ 6.26 5.91 4.45 4.66 2.86

Price / Book Value 0.87 0.82 0.77 0.82 0.51

Market Capitalization - R$ million 70,765 66,471 64,055 67,887 42,445

Book Value - BBAS3 - R$² 29.05 28.83 29.90 29.56 30.02

BBAS3 Closing Price - R$ 25.30 23.77 22.91 24.28 15.20

Change - % - BBAS3 1.8 (6.0) (3.6) 6.0 (37.4)

Dividend Yield - %³ 6.4 6.8 8.9 8.6 14.0

1 – Includes Treasury Shares; 2 - Dividends and Interest on Capital – 12 months / Market Capitalization; 3 – Refers to the average of the last 4 quarters.

Table 20. Participation of BB’s Shares in Brazilian Stock Market Indexes – %

May/14 -

Aug/14

Sep/14 -

Dec/14

Jan/15 -

Apr/15

May/15 -

Aug/15

Sep/15 -

Dec/15

Bovespa Index - Ibovespa 2.277 2.676 2.324 2.381 1.871

Brazil 50 Index - IBrX - 50 2.325 2.772 2.312 2.365 1.809

Carbon Efficient Index - ICO2 3.881 4.614 3.663 3.742 2.986

Financial Index - IFNC 8.535 10.080 8.405 8.349 6.738

Corporate Governance Trade Index - IGCT 2.453 3.005 2.374 2.562 1.970

Special Corporate Governance Stock Index - IGCX 3.123 3.789 2.950 3.193 2.383

Corporate Sustainability Index - ISE 1.247 1.447 1.173 1.214 1.068

Special Tag Along Stock Index - ITAG 2.855 3.431 2.633 2.840 2.147

Mid-Large Cap Index - MLCX 2.158 2.614 2.156 2.258 1.714

Table 21. Participation in the International Market - %


MSCI Brazil Index 2.186 2.275 2.158 2.230 1.635


29

Table 22. Banco do Brasil Key Statistics

1 - Includes private securities, guarantees provided and the individual portfolio acquired with recourse, under CMN Resolution 3,533/08. 2 - From 1Q15 the BIS ratio was calculated with reference to prudential conglomerate. 3 – Series Reviewed due to change of Notimp’s Central Bank of Brazil methodology. 4 - Does not include Banco Votorantim’s asset management. NA - Not Available.

3Q14 4Q14 1Q15 2Q15 3Q15

Balance Sheet Items – R$ billion

Assets 1.431,6 1.437,5 1.523,7 1.533,9 1.575,0

Shareholders’ Equity 81,2 80,6 83,6 82,6 83,8

Loan Portfolio 662,7 687,9 700,8 704,4 726,9

Loan Portfolio - Broad Definition¹ 733,0 760,9 776,9 776,8 804,6

Deposits 468,8 468,4 468,0 445,6 463,8

Demand Deposits 69,5 74,2 73,7 64,8 66,0

Saving Deposits 149,0 148,7 144,1 147,3 149,8

Time Deposits 221,8 214,5 212,7 199,3 205,6

Profitability

Adjusted ROE - Annual Basis - % 16,1 16,6 14,5 14,2 13,3

ROE - Annual Basis - % 15,5 16,2 29,3 14,1 14,1

Adjusted ROA - Annual Basis - Quarterly % 0,8 0,8 0,8 0,8 0,7

NIM % - Annual Basis 4,2 4,4 4,3 4,2 4,3

Productivity

Cost/Income Ratio - % 43,4 43,5 40,9 42,0 39,9

Cost/Income Ratio 12 months Accumulated - % 44,5 43,6 42,6 42,4 41,6

Fee Income / Personnel Expenses - % 135,5 136,9 129,6 125,9 137,4

Fee Income / Adm. Expenses - % 77,9 76,7 76,7 76,5 80,8

Personnel Expenses per Employee - R$ thousand 41,4 43,6 43,6 45,8 41,8

Employees in Branches / Branches Netw ork 12 12 12 12 12

Checking Accounts per Employee in branches 449 440 441 436 437

Assets per Employee – R$ thousand 12.793 12.877 13.651 13.656 14.403

Loan Portfolio Broad Definition/ Points of Service – R$ million 38,7 40,1 41,1 41,6 44,1

Loan Portfolio Quality

Allow ance for Loan Losses / Loan Portfolio - % 3,9 4,0 4,1 4,2 4,7

Coverage Ratio + 90 days - % 185,9 195,4 201,6 205,2 212,9

Portfolio Net of Allow ance / Total Portfolio - % 96,1 96,0 95,9 95,8 95,3

Capital Structure

Leverage (times) 17,6 17,8 18,2 18,6 18,8

BIS Ratio - %² 16,0 16,1 16,0 16,2 16,2

Tier I 11,5 11,4 11,4 11,4 11,6

Core Capital 9,3 9,0 8,7 8,7 8,1

Total Quantity of Shares - thousand 2.865,4 2.865,4 2.865,4 2.865,4 2.865,4

Structural Information

Branches 5.493 5.524 5.544 5.544 5.424

Ow n Service Netw ork 18.924 18.956 18.892 18.690 18.260

Total Customers - thousand 61.887 61.758 62.083 62.247 62.432

Total Checking Accounts - thousand 39.039 38.085 38.212 38.157 38.058

Individuals - thousand 36.552 35.655 35.781 35.725 35.628

Companies - thousand 2.487 2.430 2.431 2.432 2.430

Total Savings Accounts - thousand 38.440 39.390 38.927 38.736 38.999

Staff 117.922 116.931 117.352 117.956 114.942

Employees 111.904 111.628 111.613 112.325 109.352

Interns 6.018 5.303 5.739 5.631 5.590

Market Share

Assets 21,7 20,8 20,9 20,9 NA

Deposits 24,3 23,1 23,8 23,7 NA

Loan 21,1 21,0 20,8 20,8 20,8

Agribusiness³ 60,0 60,4 59,7 60,6 60,1

Asset Management⁴ 22,0 21,7 22,5 22,2 21,7

Cards Revenues 24,3 24,0 23,2 23,4 NA

Insurance Premium

Vehicle 15,2 15,1 14,5 16,2 14,6

Persons 19,2 26,4 19,2 20,2 16,7

Housing 6,6 7,0 6,3 6,3 6,2

Rural 67,0 63,4 77,2 74,8 71,4

Collection

Pension (PGBL, VGBL, other) 37,9 35,1 40,2 40,4 36,3

Capitalization 25,9 34,9 27,3 35,3 26,1

Import Exchange 22,3 24,1 19,1 18,0 17,8

Export Exchange 26,3 27,2 26,4 24,9 25,3


30

Table 23. Ratings

3Q14 4Q14 1Q15 2Q15 3Q15

Global Ratings

Fitch Ratings

Availability bb+ bb+ bb+ bb+ bb+

Short-Term - Local Currency F2 F2 F2 F2 F3

Long-Term - Local Currency BBB BBB BBB BBB BBB-

Outlook - Local Currency Stable Stable Stable Negative Stable

Short-Term - Foreign Currency F2 F2 F2 F2 F3

Long-Term - Foreign Currency BBB BBB BBB BBB BBB-

Outlook - Foreign Currency Stable Stable Stable Negative Negative

Moody's¹

Short-Term - Local Currency P-2 P-2 P-2 P-3 P-3

Short-Term - Foreign Currency P-2 P-2 P-2 P-3 P-3

Long-Term Debt - Foreign Currency Baa2 Baa2 Baa2 Baa3 Baa3

Long-Term Deposits - Local Currency Baa2 Baa2 Baa2 Baa3 Baa3

Long-Term Deposits - Foreign Currency Baa2 Baa2 Baa2 Baa3 Baa3

Outlook Negative Negative Negative Stable Stable

Standard & Poor's

Long-Term - Local Currency BBB- BBB- BBB- BBB- BB+

Outlook - Local Currency² Stable Stable Stable Negative Negative

Short-Term - Foreign Currency A-3 A-3 A-3 A-3 B

Long-Term - Foreign Currency BBB- BBB- BBB- BBB- BB+

Outlook - Foreign Currency² Stable Stable Stable Negative Negative

National Ratings

Fitch Ratings

Short-Term F1+(bra) F1+(bra) F1+(bra) F1+(bra) F2

Long-Term AAA (bra) AAA (bra) AAA (bra) AAA (bra) BBB

Outlook Stable Stable Stable Stable Negative

Moody's¹

Short-Term BR-1 BR-1 BR-1 BR-1 BR-2

Long-Term Aaa.br Aaa.br Aaa.br Aaa.br Baa2.cr

Outlook Negative Negative Negative Negative Stable

1 – Rating revised on 08/12/2015. 2 – Outlook revised on 07/28/2015.

Table 24. Compulsory/Reserve Requirement (%)

3Q14 4Q14 1Q15 2Q15 3Q15

Compulsory/Reserve Requirements (%)

Demand Deposits

Rate 45 45 45 45 45

Additional 0 0 0 0 0

Reserve Requirements (rural loan) 34 34 34 34 34

Reserve Requirements (micro f inance) 2 2 2 2 2

Unmarked 19 19 19 19 19

Savings Deposits

Rural

Rate 18 13 13 15.5 15.5

Additional 10 10 10 5.5 5.5

Reserve Requirements 67 72 72 72.0 74.0

Unmarked 5 5 5 7.0 5.0

Mortgage

Rate 20 20 20 24.5 24.5

Additional 10 10 10 5.5 5.5

Reserve Requirements 65 65 65 65.0 65.0

Unmarked 5 5 5 5.0 5.0

Time Deposits

Rate 20 20 20 20 25

Additional 11 11 11 11 11

Unmarked 69 69 69 69 64


31

Corporate Governance

Governance at Banco do Brasil (BB) defines a broad view of principles and practices to strengthen management transparency and increase its institutional value. These guidelines are constantly updated as a result of legal or statutory changes.

BB adopts the best practices in corporate governance, ensuring the balance of rights between shareholders, accountability to investors and society, ethics in dealing with the various stakeholders and business sustainability tools aligning the behavior of executives with the interests of its stakeholders and shareholders, society in general.

Since 2006, Banco do Brasil has been part of the Novo Mercado BM&F Bovespa listing segment that brings together companies subject to stricter corporate governance practices. BB is also, listed in the Corporate Sustainability Index (ISE), of Shares With Differentiated Tag Along (ITAG) and Corporate Governance (IGC) . In 2012, BB was listed for the first time in the Dow Jones Sustainability Index (DJSI), the New York Stock Exchange, where it remained in 2014. This boosts its international position.

Banco do Brasil’s governance structure consists of the Board of Directors, composed of 8 members, assisted by the Audit and Remuneration Committees and Internal Audit , and the Executive Board, composed of the Board of Officers (CEO and 9 Chief Officers) and 27 Bylaws Officers. The Bank also has a permanent Board of Auditors composed of five full members and five alternates.

The Bank has introduced tools to evaluate the performance of the Board of Directors, the Audit Committee and the Executive Board, which enables the mapping and identification of improvement opportunities in their respective performance. In addition to the Bylaws, the Code of Corporate Governance and Code of Ethics are documents that support the best practices of corporate governance at Banco do Brasil.

In 2012, BB created the model for Statutory Performance Evaluation and Remuneration Committee, body responsible for proposing variable remuneration policies for management to the Board of Directors.

BB's Bylaws separate management duties in order to avoid conflicts of interest. The Bylaws also prevent members of the Board of Directors or Executive Board from making decisions on matters in which they have a potential conflict of interest.

At all levels of the Bank, decisions are made collectively in order to engage executives in defining strategies and approval of proposals regarding BB’s various businesses. To that end the Management uses committees, subcommittees and commissions at a strategic level, ensuring speed and security for the decision-making process.

BB’s Bylaws also provide, in Article 24, Section (III) (2) that the members of the Executive Board must be career employees of Banco do Brasil.

The chart below shows BB’s management structure.


32

Figura 10. Structure of Senior Management

Press

Agribusiness Brand Strategy Employee Relations and Sponsored Entities Private Bank

Individuals Costumers Finance Institutional Security Partners Channels

Accounting Human Resources Wholesale Solutions Executive Secretary

Controlling Risk Management Supplies and Shared Services Investor Relations

Internal Controls Government Affairs Technology Governance of Related Companies

Corporate Bank Legal Operational Risk

Credit Means of Payment Social Business and Sustainable Development

Mortgage Capital Markets and Infraestructure Pension Plan Management

Distribution Micro and Small Business IT Architecture and Governance

Distribution São Paulo Digital Business Engineering and Construction I

Consumer Lending and Finance Restructuring of Operational Assets Engineering and Construction II

Operating Solutions

Operations

Shareholders General Meeting

Board of Directors

Remuneration Committee

Ex

ecu

tive

B

oard

Bo

ard

o

f O

ffic

ers

Government

Affairs

Agribusiness and Small

Ventures

WholesaleInternal Controls and

Risk Management

Retail Distribution and

Human Resources

Dire

cto

rsh

ips

Retail Services

Board of

Auditors

Internal Audit

Chief Executive Officer

Un

its

Audit Committee

Vic

e P

re

sid

en

cie

s

TechnologyServices, Infrastructure and

Operations

Financial Management and Investor

Relations

Figura 11. Strategic Committees

Know the Code of Governance in the BB’s Investor Relations website: www.bb.com.br/ir.


33

2 - Summary Financial Statements

2.1. Summary Balance Sheet

Table 25. Summary Balance Sheet - Assets

R$ million Sep/14 Jun/15 Sep/15 Sep/14 Jun/15

ASSETS 1,431,629 1,533,864 1,574,961 10.0 2.7

Current and Long-Term Assets 1,410,394 1,512,672 1,553,947 10.2 2.7

Available Funds 13,961 17,056 19,773 41.6 15.9

Short-Term Interbank Investments 317,820 357,325 349,196 9.9 (2.3)

Securities and Financial Derivatives 210,435 239,571 250,714 19.1 4.7

Securities Available for Trading 93,817 112,253 118,139 25.9 5.2

Securities Available for Sale 100,356 107,459 108,855 8.5 1.3

Securities Held to Maturity 14,539 17,324 17,231 18.5 (0.5)

Financial Derivative Instruments 1,723 2,535 6,488 - 156.0

Interbank Accounts 86,925 65,594 68,616 (21.1) 4.6

Deposits with the Central Bank 78,739 57,190 60,376 (23.3) 5.6

Compulsory Dep. on Demand Dep. and Float 15,404 10,710 9,594 (37.7) (10.4)

Compulsory Dep. on Savings Deposits 63,335 46,480 50,782 (19.8) 9.3

Other 8,186 8,404 8,240 0.7 (2.0)

Intrabank Accounts 273 205 175 (35.9) (14.6)

Loans 598,022 630,788 647,898 8.3 2.7

(Allowance for Loan Losses) (24,674) (28,241) (32,667) 32.4 15.7

Leasing 1,017 1,046 1,090 7.2 4.3

Leasing and Subleasing Receivables 1,066 1,088 1,154 8.3 6.1

(Allowance for Lease Losses) (49) (42) (64) 30.6 52.0

Other Receivables 177,489 196,970 211,987 19.4 7.6

Receivable on Guarantees Honored 460 207 401 (12.9) 93.2

Foreign Exchange Portfolio 16,372 20,384 25,112 53.4 23.2

Income Receivable 2,689 2,972 3,069 14.1 3.3

Trading and Brokerage of Securities 1,852 1,453 2,324 25.5 60.0

Specific Credits 1,509 1,634 1,686 11.7 3.2

Credits from Insur., Pension Plans and Saving Bonds 4,713 5,492 5,812 23.3 5.8

Tax Credits 29,384 36,400 45,368 54.4 24.6

Actuarial Assets 10,083 3,032 3,193 (68.3) 5.3

Fundo Paridade 118 113 116 (1.9) 2.6

Warrants Deposits Receivable 36,918 42,734 44,803 21.4 4.8

Surplus Destination Fund - Previ 8,092 8,667 8,768 8.4 1.2

Other Credits 67,427 76,183 73,874 9.6 (3.0)

(Provision for Other Credits) (2,127) (2,301) (2,539) 19.3 10.3

(With Loan Characteristics) (1,048) (1,198) (1,288) 22.9 7.5

(Without Loan Characteristics) (1,080) (1,102) (1,251) 15.8 13.5

Other Assets 4,452 4,118 4,499 1.1 9.2

Assets Not in Use and Materials in Stock 686 634 698 1.8 10.2

(Provision for Impairment) (146) (144) (142) (2.6) (1.2)

Prepaid Expenses 3,912 3,628 3,943 0.8 8.7

Permanent Assets 21,235 21,192 21,014 (1.0) (0.8)

Investments 3,398 3,377 3,541 4.2 4.9

Property and Equipment 7,098 7,507 7,537 6.2 0.4

Intangible 10,694 10,275 9,906 (7.4) (3.6)

Deferred Charges 45 33 30 (32.1) (8.7)

Chg. (%) on

Chapter 2 - Summary Financial Statements

34

Table 26. Summary Balance Sheet - Liabilities


LIABILITIES AND SHAREHOLDER’S EQUITY 1,431,629 1,533,864 1,574,961 10.0 2.7

Current and Long-Term Liabilities 1,349,956 1,450,793 1,490,687 10.4 2.7

Deposits 468,825 445,631 463,838 (1.1) 4.1

Demand Deposits 69,521 64,761 66,026 (5.0) 2.0

Savings Deposits 148,996 147,306 149,764 0.5 1.7


Time Deposits 221,777 199,341 205,644 (7.3) 3.2

Money Market Borrowing 319,723 352,872 331,364 3.6 (6.1)

Repurchase Agreements with Private Securities 41,184 43,955 44,671 8.5 1.6

Funds from Acceptances and Securities Placed 155,071 200,714 210,141 35.5 4.7

Agribusiness Letter of Credit 105,520 133,897 135,896 28.8 1.5

Mortgage Bonds 7,995 18,741 18,734 134.3 (0.0)

Commercial Papers 9,637 9,719 7,301 (24.2) (24.9)

Foreign Securities 31,920 38,357 48,210 51.0 25.7

Interbank Accounts 3,238 3,343 3,329 2.8 (0.4)

Intrabank Accounts 2,340 3,277 3,611 54.3 10.2

Borrowing 20,661 26,537 35,853 73.5 35.1

Domestic Borrowing 346 1,040 1,106 - 6.4

Foreign Borrowing 20,315 25,497 34,747 71.0 36.3

Domestic Onlending – Official Institutions 88,036 91,877 92,303 4.8 0.5

National Treasury 557 317 239 (57.0) (24.6)

BNDES 44,181 41,701 39,740 (10.1) (4.7)

CEF 9,992 16,324 18,220 82.4 11.6

Finame 32,065 33,058 31,882 (0.6) (3.6)

Other Institutions 1,243 475 2,222 78.8 -

Foreign Onlending 0 0 9 - -

Financial Derivatives 2,918 3,638 6,629 127.2 82.2

Other Accounts Payable 289,143 322,905 343,609 18.8 6.4

Collection of Taxes and Contributions 5,385 4,801 4,494 (16.5) (6.4)

Foreign Exchange Portfolio 20,100 15,164 11,020 (45.2) (27.3)

Shareholder and Statutory Distributions 1,407 2,374 2,348 66.9 (1.1)

Taxes and Social Security 24,239 25,649 26,751 10.4 4.3

Trading and Brokerage of Securities 1,974 966 1,466 (25.7) 51.8

Tech. Prov. Insur. Pension Plans & Saving Bonds 94,766 117,246 123,259 30.1 5.1

Financial and Development Funds 9,569 12,404 14,675 53.4 18.3

Hybrid Debt Capital Istruments 4,807 5,660 7,851 63.3 38.7

FCO (Subordinated Debt) 51,087 53,839 57,230 12.0 6.3

Actuarial Liabilities 5,873 6,319 6,389 8.8 1.1

Other Liabilities 50,048 53,808 57,875 15.6 7.6

Debt Instruments Elegible to Capital 19,890 24,675 30,250 52.1 22.6

Unearned Income 427 428 459 7.6 7.2

Shareholders’ Equity 81,246 82,643 83,814 3.2 1.4

Capital 54,000 60,000 60,000 11.1 -

Instruments Elegible to Principal Capital 8,100 8,100 8,100 - (0.0)

Capital Reserves 11 14 14 33.1 -

Revaluation Reserves 3 3 3 (3.0) (0.6)

Reserve for Retained Earnings 23,142 25,768 25,809 11.5 0.2

Other Comprehensive Income (6,944) (12,567) (13,830) 99.2 10.0

Benefit Plans (6,240) (11,145) (11,145) 78.6 -

Retained Earnings (Accumulated Losses) 1,784 - 1,798 0.8 -

(Treasury Shares) (1,604) (1,629) (1,697) 5.8 4.2

Corporate Profit Sharing 2,755 2,955 3,617 31.3 22.4

Chg. (%) on


35

2.2. Summary Corporate Law Income Statement

Table 27. Summary Corporate Law Income Statement

Chg. (%) on

R$ million 3Q14 2Q15 3Q15 3Q14 2Q15 9M14 9M15 9M14

Financial Intermediation Income 39,527 37,894 62,211 57.4 64.2 103,315 149,539 44.7

Loans 24,677 23,509 35,375 43.4 50.5 65,799 88,206 34.1

Leasing 34 38 49 44.0 30.6 108 131 21.3

Securities 12,349 12,648 20,646 67.2 63.2 31,015 50,267 62.1

Financial Derivatives 622 (401) 1,687 171.4 - (103) 2,190 -

Foreign Exchange Portfolio (32) 364 2,618 - - 830 3,406 -

Compulsory Investments 1,503 1,195 1,322 (12.1) 10.6 4,390 3,707 (15.6)

Sale or Transference of Financial Assets 127 107 123 (3.9) 14.3 467 338 (27.6)

Financ. Inc. Insur. Pension and S.Bonds Operations 248 434 392 58.2 (9.7) 809 1,294 60.1

Financial Intermediation Expenses (32,944) (29,502) (62,171) 88.7 110.7 (81,147) (136,254) 67.9

Money Market Funds (21,428) (24,804) (28,912) 34.9 16.6 (58,545) (77,272) 32.0

Borrowing, Assignments and Onlending (6,788) 915 (24,339) - - (8,707) (38,500) -

Allowance for Loan Losses (4,728) (5,614) (8,919) 88.6 58.9 (13,895) (20,482) 47.4

Gross Income from Financial Intermediation 6,583 8,392 40 (99.4) (99.5) 22,168 13,285 (40.1)

Other Operating Income (Expenses) (2,696) (3,231) (3,511) 30.2 8.7 (8,791) (9,393) 6.9

Fee Income¹ 4,555 4,668 4,959 8.9 6.2 13,090 14,281 9.1

Banking Fees Income 1,718 1,791 1,948 13.4 8.8 4,886 5,394 10.4

Personnel Expenses (4,949) (5,516) (5,987) 21.0 8.5 (14,325) (16,693) 16.5

Other Administrative Expenses (4,139) (4,068) (4,325) 4.5 6.3 (12,646) (12,515) (1.0)

Other Taxes Expenses (1,277) (1,482) (1,319) 3.3 (11.0) (3,613) (4,647) 28.6

Eqty. Int. in the Res. of Subs., and Affiliates 677 (228) 3,059 - - (29) 4,539 -

Inc. for Ins., Pens. Plans and Sav.Bonds Op.¹ 1,175 1,646 1,285 9.3 (21.9) 3,485 4,085 17.2

Other Operating Income 2,525 2,603 3,000 18.8 15.2 9,735 8,743 (10.2)

Other Operating Expenses (2,982) (2,644) (6,131) 105.6 131.9 (9,373) (12,580) 34.2

Operating Income 3,887 5,160 (3,471) - - 13,377 3,892 (70.9)

Non-operating Income 40 (2) 18 (55.0) - 173 5,786 -

Income Before Taxes 3,927 5,158 (3,453) - - 13,551 9,678 (28.6)

Income and Social Contribution Taxes (377) (1,245) 7,383 - - (3,051) 5,154 -

Statutory Profit Sharing (392) (428) (419) 7.1 (2.0) (1,187) (1,613) 35.9

Minority Interest Earnings (378) (478) (448) 18.6 (6.2) (1,026) (1,331) 29.7

Net Income 2,780 3,008 3,062 10.1 1.8 8,287 11,888 43.5

Quarterly Flow Chg. (%) on 9 Months Flow

1 – Series revised from 1Q13 to 4Q14.


36

2.3. Income Statement with Reallocations

Table 28. Income Statement with Reallocations

Chg. (%) on


Financial Intermediation Income 40.746 37.475 67.643 66,0 80,5 103.914 157.489 51,6

Loan Operations (1) (2) (17) (20) 24.804 23.616 35.521 43,2 50,4 66.151 88.567 33,9

Sale or Transference of Financial Assets (1) 127 107 123 (3,9) 14,3 467 338 (27,6)

Lease Operations 34 38 49 44,0 30,6 108 131 21,3

Securities (3) (4) (21) ¹ 12.353 12.653 20.694 67,5 63,6 31.037 50.340 62,2

Financial Derivatives (5) (6) 622 (401) 1.687 171,5 - (103) 2.190 -

Foreign Exchange Portfolio (32) 364 2.618 - - 830 3.406 -

Compulsory Investments 1.503 1.195 1.322 (12,1) 10,6 4.390 3.707 (15,6)

Financ. Inc. Insur., Pension and S.Bonds Op. (7) ² 316 434 392 24,1 (9,7) 936 1.294 38,3

FX Gain (Loss) on Foreign Equity (8) (9) (10) 674 (261) 3.246 - - (7) 4.807 -

Other Op. Inc. w ith Char. of Financial Int. (11) (12) 26 37 (480) - - 432 (577) -

Tax Hedge (13) (14) 447 (198) 2.593 - - 140 3.623 -

Financial Intermediation Expenses (28.145) (23.791) (53.279) 89,3 123,9 (67.052) (115.619) 72,4

Money Market Funds (15) (35) (21.273) (24.530) (28.724) 35,0 17,1 (58.092) (76.639) 31,9

Borrow ing, Assignments and Onlending (15) (16) (46) (6.871) 739 (24.554) - - (8.959) (38.980) -

Net Interest Income 12.602 13.684 14.364 14,0 5,0 36.862 41.870 13,6

Allow ance for Loan Losses (17) (22) (34) (4.571) (5.530) (6.407) 40,2 15,9 (13.328) (17.936) 34,6

Net Financial Margin 8.031 8.154 7.957 (0,9) (2,4) 23.535 23.934 1,7

Fee Income 6.273 6.459 6.907 10,1 6,9 17.976 19.675 9,5

Service Fee Income ³ 4.555 4.668 4.959 8,9 6,2 13.090 14.281 9,1

Banking Fee Income 1.718 1.791 1.948 13,4 8,8 4.886 5.394 10,4

Inc. for Ins., Pens. Plans and Sav.Bonds Op. (7) (41) ³ 1.107 1.261 1.285 16,1 1,9 3.357 3.700 10,2

Taxes on Revenues (13) (26) (31) (32) (43) (50) (1.224) (1.335) (1.314) 7,4 (1,6) (3.609) (3.921) 8,6

Contribution Margin 14.187 14.539 14.835 4,6 2,0 41.259 43.388 5,2

Administrative Expenses (8.048) (8.439) (8.551) 6,3 1,3 (23.596) (25.216) 6,9

Personnel Expenses (30) (47) (4.630) (5.131) (5.028) 8,6 (2,0) (13.571) (15.029) 10,7

Other Administrative Expenses (23) (24) (25) (3.417) (3.308) (3.523) 3,1 6,5 (10.025) (10.187) 1,6

Other Tax Expenses (26) (102) (116) (161) 57,9 38,4 (279) (399) 43,0

Commercial Income 6.038 5.983 6.123 1,4 2,3 17.384 17.772 2,2

Legal Risk (529) (219) (726) 37,2 - (1.497) (1.386) (7,4)

Legal Claims (27) (28) (36) (37) (39) (263) (46) (399) 51,8 - (741) (722) (2,5)

Labor Law suits (29) (30) (38) (40) (266) (173) (327) 22,9 88,7 (756) (664) (12,2)

Other Operating Income (1.038) (856) (881) (15,1) 3,0 (2.326) (2.332) 0,3

Eq. Int. in Results of Subsidiaries and Aff iliates (8) 3 6 (3) - - (22) 4 -

Other Operating Income / Expenses Result (1.041) (862) (879) (15,6) 1,9 (2.305) (2.336) 1,4

Other Operating Income (2) (3) (4) (5) (9) (11) (18) (19) (27) (29) ¹ 1.972 2.046 2.468 25,2 20,6 5.419 6.762 24,8

Previ - Plano de Benefícios 1 (18) 228 139 40 (82,5) (71,2) 1.120 318 (71,6)

Previ - Atualização de Fundo Utilização (19) 163 316 223 37,0 (29,3) 651 983 51,0

Other Operating Expenses (6) (10) (12) (16) (20) (21) (22) (23) (24) (25) (28) (48) (3.403) (3.363) (3.610) 6,1 7,3 (9.495) (10.399) 9,5

Operating Income 4.471 4.909 4.516 1,0 (8,0) 13.561 14.053 3,6

Non-Operating Income (44) 40 (2) 18 (55,0) - 173 15 (91,4)

Income Before Taxes 4.511 4.907 4.534 0,5 (7,6) 13.735 14.068 2,4

Income and Social Contrib. Taxes (14) (33) (49) (51) (52) (845) (1.026) (651) (22,9) (36,6) (3.200) (2.306) (27,9)

Interest on Ow n Capital Tax Benefit 377 463 488 29,6 5,4 1.089 1.373 26,0

Statutory Profit Sharing (53) (403) (437) (553) 37,1 26,5 (1.186) (1.559) 31,5

Minority Interest Earnings (42) (378) (403) (448) 18,6 11,1 (1.026) (1.256) 22,5

Adjusted Net Income 2.885 3.040 2.881 (0,1) (5,2) 8.323 8.947 7,5

One-Off Items (104) (32) 181 - - (36) 2.941 -

Economic Plans (35) (36) (248) 33 (247) (0,2) - (920) (402) (56,2)

Tax Eff iciency (31) - - - - - 260 - -

Additional Provision for Loan Losses (34) - - (2.370) - - (143) (2.370) -

Extraordinary Provision for Law suits (37) (38) 63 (208) (1.794) - - 359 (2.560) -

Prov. Legal Law suits - Adj. Param. and Pol. Agreements (39) (40) - - - - - 385 - -

BrasilPrev, Susep Circular-letter 457/12 and 462/13 (41) - 385 - - - - 385 -

Effect BrasilPrev in Minority Shares (42) - (74) - - - - (74) -

Cateno - Gestão de Contas de Pagamentos S.A (44) (45) - - - - - - 11.572 -

Tax Credit (32) (33) - - - - - - 2.326 -

Unrealized Earnings - Cateno (45) - - - - - - (5.800) -

Position adjustment w ith Allocators Resources (46) - (127) - - - - (127) -

Incentivated Retirement Program (47) - - (372) - - - (372) -

Prov. for Commitment to Buy Loyalty Program Points from Partners (48) - - (765) - - - (765) -

Tax Credit on CSLL (49) - - 3.405 - - - 3.405 -

Tax Eff. and Stat. Prof. on One-Off Items (43) (50) (51) (52) (53) 81 (42) 2.325 - - 23 (2.275) -

Net Income 2.780 3.008 3.062 10,1 1,8 8.287 11.888 43,5


(n) - Represents the event item in the next table " Statement of Reallocations and One-Off Items". 1 - Series revised from 1Q14 to 1Q15. 2 - Series revised from 1Q14 to 4Q14. 3 - Series revised from 1Q13 to 4Q14.


37

2.3.1. Reallocations Details

In this chapter, the adjustments made in the Corporate Law Income Statement to obtain the Income Statement with Reallocations are detailed. Adjustments aim to:

a) Separate the one-off items and show the adjusted net income for the period;

b) Change the manner that income and expenses are shown, in order to provide a better understanding of the business and the company's performance;

c) Allow the Net Interest Income (NII) recorded during the period to reflect, effectively, the gain from all the earning assets, seeking to inform the market regarding the spread achieved from the division of this margin by average balance of earning assets. For this, it was necessary to:

I - Include in the NII the income recorded in other operating income that had financial intermediation characteristics and that was derived from earning assets recorded in the other receivables in the Balance Sheet;

II - Identify the foreign exchange gain/(loss) on assets and liabilities abroad during the period in a specific NII item;

III - Keep amounts related to negative foreign exchange adjustments and expenses reversal that were recorded in other operating income/expenses in NII to avoid inverting the balance of accounts which have a financial intermediation nature;

IV - Include, in the NII, all of the expenses related to Subordinated Debt and Perpetual Securities

The next table it shows the statement of the reallocations performed during the period:


38

Table 29. Statement of Reallocations and One-Off Items

R$ million

Item From To Event 3Q14 2Q15 3Q15 9M14 9M15

1 Sale or Transference of Financial Assets Loan Operations Loan Operations 127.4 107.1 122.5 467.4 338.5

2 Other Operating Income Loan Operations Recovery Adjustments - - - 65.0 -

3 Other Operating Income Securities Revenues Repo Funding - - 5.6 - 5.6

4 Other Operating Income Securities Financial Investment Income 4.1 4.3 11.0 22.3 35.2

5 Other Operating Income Financial Derivatives Financial Derivatives - 1.4 (1.4) - -

6 Other Operating Expenses Financial Derivatives Financial Derivatives - (2.0) 2.0 - -

7 Inc. for Ins., Pens. Plans and Sav.Bonds Op. Financ. Inc. Insur., Pension and S.Bonds Op. Exchange Variation Adjustment IRB 68.1 - - 127.4 -

8 Eq. Int. in Results of Subsidiaries and Aff iliates FX Gain (Loss) on Foreign Equity FX Gain (Loss) on Foreign Equity 674.4 (234.8) 3,061.6 (7.2) 4,534.3

9 Other Operating Income FX Gain (Loss) on Foreign Equity FX Gain (Loss) on Foreign Equity - (21.2) 184.2 - 277.1

10 Other Operating Expenses FX Gain (Loss) on Foreign Equity FX Gain (Loss) on Foreign Equity - (4.6) 0.0 - (4.6)

11 Other Operating Income Other Op. Inc. w ith Char. of Financial Int. FX Readjustment 53.6 0.9 1.3 1,794.5 5.7

12 Other Operating Expenses Other Op. Inc. w ith Char. of Financial Int. FX Readjustment (28.1) 36.1 (480.8) (1,362.5) (582.5)

13 Taxes on Revenues Tax Hedge Tax Hedge 48.6 (12.5) 156.1 15.2 226.8

14 Income and Social Contrib. Taxes Tax Hedge Tax Hedge 398.4 (186.0) 2,437.2 124.6 3,396.5

15 Money Market Funds Borrow ing, Assignments and Onlending Restatement Expenses - Funds and Programs - (163.9) (97.8) - (349.3)

16 Other Operating Expenses Borrow ing, Assignments and Onlending Borrow ing, Assignments and Onlending - (139.3) (117.3) - (256.6)

17 Loan Operations Allow ance for Loan Losses Recovery Adjustment/Provision - - - 180.0 -

18 Other Operating Income Previ - Plano de Benefícios 1 Revision of Actuarial Assets and Liabilities of Previ 228.3 138.9 40.1 1,119.7 317.9

19 Other Operating Income Previ - Atualização de Fundo Utilização Revision of Actuarial Assets and Liabilities of Previ 162.9 315.5 223.0 651.1 983.0

20 Loan Operations Other Operating Expenses Non credit related expense recovery - - (23.3) - (23.3)

21 Securities Other Operating Expenses Provision for Impairment - - (31.9) - (31.9)

22 Allow ance for Loan Losses Other Operating Expenses Allow ance for Loan Losses (Cred. w /o Char. of Fin. Int.) (157.5) (83.7) (141.9) (244.1) (175.6)

23 Other Administrative Expenses Other Operating Expenses Goodw ill Amorization (237.1) (271.2) (274.4) (705.4) (816.6)

24 Other Administrative Expenses Other Operating Expenses Banco Postal Amortization Expenses - - - (480.8) -

25 Other Administrative Expenses Other Operating Expenses Premiums Paid to Costumers (484.4) (489.1) (527.4) (1,435.0) (1,511.3)

26 Other Tax Expenses Taxes on Revenues Taxes on Revenues (1,175.0) (1,366.0) (1,157.8) (3,333.7) (4,247.7)

27 Other Operating Income Legal Claims Reversal of Contingent Liabilities 52.1 15.6 18.1 72.1 49.7

28 Other Operating Expenses Legal Claims Expenses w ith Legal Claims (429.1) (15.5) (2,159.1) (1,381.5) (3,130.6)

29 Other Operating Income Labor Law suits Reversal of Labor Liabilities 52.2 101.4 50.0 591.2 306.9

30 Personnel Expenses Labor Law suits Provision for Labor Law suits (318.4) (385.2) (586.5) (754.6) (1,290.9)

31 Taxes on Revenues Tax Eff iciency Tax Eff iciency - - - 260.0 -

32 Taxes on Revenues Unrealized Earnings - Cateno Tax Credit on Unrealized Earnings - Cateno - - - - 535.0

33 Income and Social Contrib. Taxes Unrealized Earnings - Cateno Tax Credit on Unrealized Earnings - Cateno - - - - 1,791.2

34 Allow ance for Loan Losses Additional Provision for Loan Losses Additional Provision for Loan Losses - - (2,370.4) (143.1) (2,370.4)

35 Money Market Funds Economic Plans Economic Plans (71.5) (109.8) (90.1) (200.0) (283.8)

36 Legal Claims Economic Plans Economic Plans (176.4) 142.7 (157.4) (719.6) (118.6)

37 Legal Claims Extraordinary Provision for Law suits Extraordinary Provision for Law suits 62.5 (97.0) (1,584.5) 358.5 (2,239.9)

38 Labor Law suits Extraordinary Provision for Law suits Extraordinary Provision for Law suits - (110.5) (209.5) - (320.0)

39 Legal Claims Prov. Legal Law suits - Adj. Param. and Pol. Agreements Prov. Legal Law suits - Adj. Param. and Pol. Agreements - - - (207.7) -

40 Labor Law suits Prov. Legal Law suits - Adj. Param. and Pol. Agreements Prov. Legal Law suits - Adj. Param. and Pol. Agreements - - - 592.6 -

41 Inc. for Ins., Pens. Plans and Sav.Bonds Op. BrasilPrev, Susep Circular-letter 457/12 and 462/13 BrasilPrev, Susep Circular-letter 457/12 and 462/13 - 385.0 - - 385.0

42 Minority Interest Earnings Effect BrasilPrev in Minority Shares Effect BrasilPrev in Minority Shares - (74.5) - - (74.5)

43 Taxes on Revenues Tax Eff. and Stat. Prof. on One-Off Items Pasep/Cofins - Cateno - - - - (1,070.4)

44 Non-Operating Income Cateno - Gestão de Contas de Pagamentos S.A Cateno Operation - - - - 5,771.5

45 Unrealized Earnings - Cateno Cateno - Gestão de Contas de Pagamentos S.A Cateno Operation - - - - 5,800.5

46 Borrow ing, Assignments and Onlending Position adjustment w ith Allocators Resources Position adjustment w ith Allocators Resources - (126.6) - - (126.6)

47 Personnel Expenses Incentivated Retirement Program Incentivated Retirement Program - - (372.5) - (372.5)

48 Other Operating Expenses Prov. for Commitment to Buy Loyalty Program Points from Partners Provision - Loyalty Program - - (765.0) - (765.0)

49 Loan Operations Tax Credit on CSLL Tax Credit on CSLL - - 3,404.9 - 3,404.9

50 Taxes on Revenues Tax Eff. and Stat. Prof. on One-Off Items Tax Eff. and Stat. Prof. on One-Off Items - (18.1) - - (18.1)

51 Income and Social Contrib. Taxes Tax Eff. and Stat. Prof. on One-Off Items Tax Eff. and Stat. Prof. on One-Off Items 69.5 (32.9) 2,191.6 24.2 2,437.6

52 Income and Social Contrib. Taxes Tax Eff. and Stat. Prof. on One-Off Items Cateno Operation - - - - (3,570.5)

53 Statutory Profit Sharing Tax Eff. and Stat. Prof. on One-Off Items Tax Eff. and Stat. Prof. on One-Off Items 11.8 9.1 133.6 (1.1) (53.6)

Quarterly Flow 9 Months Flow


39

2.3.2. Glossary of Reallocations

(1) Sale or transfer of financial assets.

(2) Recovery of operations with credit characteristics.

(3) Revenues from operations in repo funding.

(4) Revenues from financial applications of the companies from payment methods segment.

(5) and (6) Derivative instruments adjustment from payment methods segment.

(7) Result of foreign exchange operations of the IRB company.

(8) Corresponds to the results of exchange rate changes on investments in subsidiaries and branches abroad.

(9) and (10) Corresponds to the results of exchange rate changes on investments in subsidiaries and branches abroad.

(11) and (12) Includes foreign exchange financial income and expenses.

(13) and (14) Rreduction the effects of exchange variation on the result.

(15) Funding expenses on funds and programs.

(16) Operating expenses classified as transfer operations.

(17) Recovery adjustment/provision of operation with corporate group.

(18) Financial revenues arising from the review of the actuarial assets and liabilities of Previ.

(19) Financial income from upgrade of Fundo Utilização da Previ.

(20) Non credit expense recovery.

(21) Impairment of securities issued by private companies.

(22) Allowance for loan loss expenses for credits without characteristics of financial intermediation.

(23) Expense from amortization of goodwill on investments.

(24) Banco Postal intangible asset amortization expenses.

(25) Amortization payroll acquisition.

(26) Tax expenses reallocated to form the contribution margin.

(27) Reversal of balances that, due to the Chart of Accounts of the Central Bank of Brazil (Cosif), could not be accounted for in other administrative expenses in the corporate law income statement.

(28) Expenses arising from legal claims.

(29) Reversal of balances that, due to the Chart of Accounts of the Central Bank of Brazil (Cosif), could not be accounted for in personnel expenses in the corporate law income statement.

(30) Expenses arising from labor lawsuits.

(31) Revenue related to tax efficiency generated by Banco do Brasil during the periodic review of the fiscal base.

(32) and (33) Tax credit for unrealized earnings in the Cateno operation.

(34) Partial reversal of additional allowance for loan losses recognized in previous fiscal years.

(35) and (36) Expense with provision arising from lawsuits relating to economic plans.

(37) and (38) Constitution of extraordinary allowance for loan losses.

(39) and (40) Provision Legal Lawsuits – Adjustment of Parameters and Policies Agreements.

(41) BrasilPrev liabilities adequacy in compliance with Susep Circular-letter 457/12 and 462/13.

(42) Subisidiaries minority sharing on the financial results of BB Seguridade, referring to the financial results of the suitability of BrasilPrev liabilities adequacy.

(43) Pasep/Cofins ocurred in the Cateno operation.

(44) Non-operating income occurred in the Cateno operation.


40

(45) Unrealized earnings occurred in the Cateno operation.

(46) Extraordinary expense arising from funds and programs adjustments.

(47) Expenses incentivated retirement program.

(48) Provision for compromise with partners to buy points of loyalty programs.

(49) Provision extraordinary on credit operations of Banco Votorantim.

(50), (51) and (53) One-off items effects on the payment of statutory profit sharing and unification of these effects on income and social contribution taxes.

(52) Income and social contribution taxes ocurred in the Cateno operation.

The next table shows the effects of taxes and statutory profit sharing on each one-off item.

Table 30. Tax Effect and Statutory Profit Sharing on One-Off Items

Chg. (%) on


Economic Plans 109 (14) 108 (0.5) - 404 176 (56.4)

Tax Efficiency¹ - - - - - (116) - -

Additional Provision for Loan Losses - - 1,075 - - 63 1,075 -

Extraordinary Provision for Lawsuits (27) 72 850 - - (157) 1,167 -

Prov. Legal Lawsuits - Adj. Param. and Pol. Agreements - - - - - (170) - -

BrasilPrev, Susep Circular-letter 457/12 and 462/13 - (155) - - - - (155) -

Position adjustment with Allocators Resources - 55 - - - - 55 -

Incentivated Retirement Program - - 163 - - - 163 -

Prov. Commitment to Partners to Buy Points of Relations - - 342 - - - 342 -

Tax Credit on CSLL ¹ - - (212) - - - (212) -

Unrealized Earnings - Cateno - - - - - - (4,886) -

Total 81 (42) 2,325 - - 23 (2,275) -


1 - Only PLR effect (does not have tax effect).


41

3 - Loans

Banco do Brasil Lending Process

The granting of credit at Banco do Brasil is preceded by a thorough analysis, based on advanced methodologies for credit risk calculation. These methodologies were developed by BB and follow the best risk management practices.

Customer risk reflects the likelihood that a borrower will default in a period of 1 year after the risk analysis. In this way Banco do Brasil determines the volume of resources it is willing to expose to that borrower. The risk is calculated by using internal and external information, in addition to the history of the relationship with that customer:

I. Customer File Information: the analysis of customer information from internal and external sources, including restrictive information;

II. Information on Behavior within BB: indebtedness evaluation, use of credit products, payment punctuality and data on relationships with the Bank;

III. Information on Behavior within the Banking Industry: analysis of indebtedness at other banks, use of competitors’ products and payment punctuality within the National Financial System;

IV. Personalized Methodologies – evaluation of financial statements, customer’s segment outlook and other information from the market.

Risk is calculated on a mass basis for individual customers, microbusinesses and rural producers, and on a customized basis for companies and public sector entities, among others. In the mass analysis, the customer’s credit risk is calculated automatically by the Bank’s System, with immediate results being used to contract the operation.

Customized analyses are carried out by Banco do Brasil’s technicians and by corporate systems’ calculations. Committees are responsible for the approval of these customers’ risk.

Customer risk is an important piece of information to establish credit limit, to define proper classification of loans risk, and to guide business with the customer.

Figure 12. Banco do Brasil Lending Process

1 - SCR: Central Bank of Brazil Credit Information System

3.1. Loan Portfolio

For a better understanding of BB’s loan operations, we present the following definitions related to the loan portfolio. The information presented in this chapter is segmented into individuals, companies and agribusinesses.

a) Classified Loan Portfolio: sum of the credit operations, financing, leasing, other credit with loan characteristics and acquired loan portfolio.

b) Classified Loan Portfolio BB: sum of the credit operations, financing, leasing, other credit with loan characteristics and acquired loan portfolio, without Banco Votorantim, Patagonia and BB Americas.

Chapter 3 - Loans

42

c) Loan Portfolio – Broad Definition: Classified Loan Portfolio added of the Private Securities and Guarantees operations, where:

c.1) Private Securities: operations characterized by the acquisition of securities (commercial paper and debentures) mainly issued by private companies and underwritten by BB.

c.2) Guarantees: operations where BB ensures the settlement of the contracts.

Table 31. Loan Portfolio – Classified and Broad Definition

R$ million Sep/14 Share % Jun/15 Share % Sep/15 Share % Sep/14 Jun/15 Dec/14

Classified Loan Portfolio (a) 662,670 100.0 704,438 100.0 726,860 100.0 9.7 3.2 5.7

Brazil 612,048 92.4 645,818 91.7 657,741 90.5 7.5 1.8 3.8

Individuals 174,941 26.4 186,297 26.4 188,834 26.0 7.9 1.4 5.4

Payroll Loan 63,065 9.5 65,469 9.3 65,780 9.0 4.3 0.5 2.4

Mortgage 25,717 3.9 32,833 4.7 35,188 4.8 36.8 7.2 23.5

Auto Loans 32,964 5.0 31,931 4.5 30,400 4.2 (7.8) (4.8) (7.2)

Credit Card 20,382 3.1 22,072 3.1 22,056 3.0 8.2 (0.1) (2.7)

Salary Loans 17,911 2.7 18,784 2.7 19,425 2.7 8.4 3.4 15.4

Consumer Finance 5,927 0.9 6,797 1.0 6,921 1.0 16.8 1.8 18.8

Overdraft Account 2,735 0.4 2,525 0.4 2,564 0.4 (6.3) 1.5 11.6

Other 6,238 0.9 5,886 0.8 6,500 0.9 4.2 10.4 6.6

Companies 280,288 42.3 292,270 41.5 297,988 41.0 6.3 2.0 2.4

Middle Market and Corporates 152,145 23.0 161,866 23.0 163,145 22.4 7.2 0.8 2.3

Very Small and Small Companies 101,486 15.3 97,827 13.9 95,191 13.1 (6.2) (2.7) (6.9)

Government 26,657 4.0 32,576 4.6 39,652 5.5 48.8 21.7 36.2

Agribusiness 156,819 23.7 167,251 23.7 170,919 23.5 9.0 2.2 4.4

Individuals 109,939 16.6 119,673 17.0 119,682 16.5 8.9 0.0 2.4

Companies 46,881 7.1 47,578 6.8 51,237 7.0 9.3 7.7 9.5

Abroad 50,622 7.6 58,620 8.3 69,118 9.5 36.5 17.9 27.6

Private Securities and Guarantees (b) 70,327 72,360 77,773 10.6 7.5 6.6

Loan Portfolio - Broad Definition (a + b) 732,997 100.0 776,799 100.0 804,633 100.0 9.8 3.6 5.8

Brazil 675,818 92.2 708,482 91.2 723,566 89.9 7.1 2.1 3.6

Individuals 175,390 23.9 186,885 24.1 189,560 23.6 8.1 1.4 5.5

Companies 342,023 46.7 353,298 45.5 362,158 45.0 5.9 2.5 2.3

Agribusiness 158,405 21.6 168,298 21.7 171,848 21.4 8.5 2.1 4.2

Abroad 57,179 7.8 68,317 8.8 81,067 10.1 41.8 18.7 30.4

Balance Chg. % on

The table below shows BB’s market share in the classified loan portfolio of the Brazilian Banking Industry (BI).

Table 32. Loans in the Brazilian Banking Industry

R$ billion Sep/14 Dec/14 Mar/15 Jun/15 Sep/15 Sep/14 Jun/15

BI 2,897 3,017 3,061 3,100 3,160 9.1 1.9

Individuals 1,357 1,412 1,439 1,463 1,485 9.4 1.5

Companies 1,539 1,605 1,622 1,637 1,676 8.9 2.4

BB Market Share - % 21.1 21.0 20.8 20.8 20.8

Balance Chg. % on

The next figure shows the Classified Loan Portfolio BB in Brazil for the contracted period. In certain cases, loan disbursement might continue to occur during quarters after the loan is taken out, in which case it is included here.


43

Figure 13. Classified Loan Portfolio BB by contracted period - % and R$ billion

3.1.1. Individuals Loan Portfolio

The following tables show the main credit lines to individuals. The payroll loan and auto loans lines include the balance of the total acquired loan portfolio with recourse.

Table 33. Individuals Loan Portfolio

R$ million Sep/14 Share % Jun/15 Share % Sep/15 Share % Sep/14 Jun/15


Direct Consumer Credit 86,903 49.5 91,050 48.7 92,125 48.6 6.0 1.2

Payroll Loan 63,065 36.0 65,469 35.0 65,780 34.7 4.3 0.5

Salary Loans 17,911 10.2 18,784 10.1 19,425 10.2 8.4 3.4


Mortgage 25,717 14.7 32,833 17.6 35,188 18.6 36.8 7.2

Auto Loans 32,964 18.8 31,931 17.1 30,400 16.0 (7.8) (4.8)

Credit Card 20,382 11.6 22,072 11.8 22,056 11.6 8.2 (0.1)

Overdraft Account 2,735 1.6 2,525 1.4 2,564 1.4 (6.3) 1.5

Microcredit 1,387 0.8 810 0.4 839 0.4 (39.5) 3.6

Other 4,851 2.8 5,076 2.7 5,661 3.0 16.7 11.5

Private Securities and Guarantees 449 0.3 589 0.3 726 0.4 61.8 23.4


Balance Chg. % on

BB remains among the market leaders in loan operations with lower risk. The following table shows BB's participation in these lines of credit.

Table 34. Individuals Loan Portfolio – Market Share

R$ million BB¹ BI Share % BB¹ BI Share % BB¹ BI Share %

Payroll Loan 63,065 244,589 25.8 65,469 266,518 24.6 65,780 271,920 24.2

Auto Loans² 32,081 187,775 17.1 30,932 175,210 17.7 29,385 168,726 17.4

Mortgage 25,717 405,282 6.3 32,833 470,936 7.0 35,188 485,524 7.2

Sep/14 Jun/15 Sep/15

1 – Includes the balance of acquired loan portfolios with recourse, in compliance with CMN Resolution 3,533/08. 2 – Includes only lines of free resources.

BB’s total acquired loan portfolio is composed of payroll and auto loans operations The decrease on the annual basis is mainly due the reorganization and consolidation of the sector, specially the Payroll Loan segment. The operations with recourse are 99.0% of this total.

Chapter 3 - Loans

44

Table 35. Total Acquired Loan Portfolio¹

R$ million Sep/14 Dec/14 Mar/15 Jun/15 Sep/15 Sep/14 Jun/15

Auto Loans 12,999 13,014 13,842 14,901 14,252 9.6 (4.4)

Payroll Loan 4,705 3,514 2,864 2,376 2,044 (56.6) (14.0)

Total 17,703 16,528 16,706 17,278 16,296 (7.9) (5.7)

Balance Chg. % on

1 – Includes the balance of acquired loan portfolios with recourse, in compliance with CMN Resolution 3,533/08.

The organic individuals classified loan portfolio, i.e., excluding the acquired portfolios and 50% of the Banco Votorantim transactions, are shown below.

Table 36. Organic Classified Loan Portfolio - Individuals


Organic Classified Loan Portf. 145,621 100.0 158,894 100.0 162,648 100.0 11.7 2.4

Direct Consumer Credit 80,472 55.3 86,634 54.5 88,070 54.1 9.4 1.7

Payroll Loan 56,659 38.9 61,087 38.4 61,758 38.0 9.0 1.1

Salary Loans 17,911 12.3 18,784 11.8 19,425 11.9 8.4 3.4


Mortgage 25,717 17.7 32,833 20.7 35,188 21.6 36.8 7.2

Credit Card 19,918 13.7 21,529 13.5 21,483 13.2 7.9 (0.2)

Auto Loans 10,540 7.2 9,487 6.0 8,842 5.4 (16.1) (6.8)

Overdraft Account 2,735 1.9 2,525 1.6 2,564 1.6 (6.3) 1.5

Microcredit 1,387 1.0 810 0.5 839 0.5 (39.5) 3.6

Other 4,851 3.3 5,076 3.2 5,661 3.5 16.7 11.5

Balance Chg. % on

Considering the portfolio of Direct Consumer Credit and Auto Loans, that was R$96.8 billion in Sep/15, its majority was contracted with public servants and pensioners, indicating the stability and protection of the organic portfolio.

Figure 14. Organic Individuals Loan Portfolio – Direct Consumer Credit and Auto Loans - %

78.4 79.1 79.4

14.4 13.6 13.4

7.2 7.3 7.3


Civil Servants Private Sector Employees INSS Retirees and Pensioners

One of the important components of credit methodology is Banco do Brasil’s knowledge of its customers. Of those with credit transactions at BB, 87.8% have an account for at least five years.


45

Table 37. Account Time – Customers with Credit Transactions


Account Time

Up to 1 year 2.0 1.6 1.3

From 1 to 2 years 2.8 3.0 3.0

From 2 to 5 years 13.3 7.9 7.9

From 5 to 10 years 15.9 20.9 21.0

Over 10 years 66.0 66.6 66.8

Payroll Loans

The payroll loan portfolio was R$61.8 billion in Sep/15. It’s mainly composed by civil servants and INSS pensioners, who have lower risk. The table below shows the portfolio breakdown.

Figure 15. Organic Payroll Loans Breakdown - %

88.6 88.8 88.9

7.4 7.4 7.54.0 3.7 3.6


Civil Servants INSS´s Retirees and Pensioners Private Sector Employees

Most payroll loans contracted at Banco do Brasil in 3Q15 have a maturity of over 60 months. The characteristic of this portfolio allows customers to lengthen the term and generates loyalty and an opportunity to offer other products during this time.

Figure 16. Maturity of Transactions Contracted in 3Q15 – Payroll Loans

0 to 12 months

1,9%

13 to 24 months

5,9% 25 to 36 months

7,1%

37 to 48 months

8.5%

49 to 60 months

13,7%

61 to 72 months

16,8%73 to 84 months

4,2%

85 to 96 months

41,9%

Auto Loans

The balance of BB’s organic auto loans portfolio was R$8.8 billion in Sep/15.

Chapter 3 - Loans

46

The following table shows the main characteristics of the customers of BB’s organic auto loans portfolio. Most customers have been account holders for over 10 years and receive their salary through the Bank.

Table 38. BB’s Organic Auto Loans Portfolio - Customers Characteristics


Account Time

Up to 5 years 17.1 13.5 13.1

From 5 to 10 years 17.7 20.2 20.2

Over 10 years 65.2 66.4 66.7

Salary

Paid through Banco do Brasil 62.8 66.0 67.5

Paid through other banks 37.2 34.0 32.5

The next figure shows maturity of auto loans transactions contracted at Banco do Brasil (3Q15). Approximately 71.2% of the disbursement matures in up to 48 months.

Figure 17. Maturity of Transactions Contracted in 3Q15 – Auto Loans

0 to 12 months

3.4%

13 to 24 months

16.7%

25 to 36 months

30.8%37 to 48 months

20.4%

49 to 60 months

28.8%

Loan-to-Value (LTV) is shown in the figure below. This metric is calculated by dividing financed value by asset value. In this case, customers commit to 32.8% of the asset’s value, which further reduces the likelihood of default.

Figure 18. Loan to Value - Organic Auto Loans Portfolio - %

68.3 69.0 67.9 68.6 68.4 68.8 67.4 67.6 67.2

31.7 31.0 32.1 31.4 31.6 31.2 32.6 32.4 32.8

Sep/13 Dec/13 Mar/14 Jun/14 Sep/14 Dec/14 Mar/15 Jun/15 Sep/15

LTV Down Payment

Mortgage

The mortgage portfolio for individuals was R$35.2 billion in Sep/15. During the last 12 months this amount increased almost R$9.5 billion or 36.8% Y/Y and 7.2% Q/Q, confirming the trend of increasing importance of the portfolio seen in recent quarters. This portfolio already represents 18.6% of the


47

Individuals Classified Loan Portfolio, from 14.7% in the same period of last year. The increase observed during the period was due to the expansion of products offered to customers and process’ efficiency gain.

BB had a 7.2% of market share in Sep/15, an increase of 90bps from the same period last year.

For mortgages, the LTV is aligned with the Financial System, according to data from Abecip¹. According to this Association’s definition, this number is based on the portfolio’s inventory.

Figure 19. Loan to Value - Mortgage Portfolio - %

59.059.7

60.6 60.461.1

61.762.2

62.662.9

65.1 64.9 64.7 65.0 65.3 65.364.9

64.5

63.0


LTV BB LTV BI

1- Source: Abecip (Brazilian Association of Real Estate and Savings Account Entities). – Considers only loan operations under the savings account funding. For Banco do Brasil it is based on the entire portfolio. BI Date as of August/15

The table below shows the average maturity and the rates of the operations with lower risk. The average maturity was calculated by weighting the remaining term with the closing balance.

Table 39. Average Rates and Maturity


Banco do Brasil

Direct Consumer Credit - Auto

Average Rate - % p.m. 1.26 1.28 1.31 1.35 1.38 1.42 1.47 1.54 1.58

Average Maturity - months 34 33 33 32 32 32 31 31 30

Mortgage

Average Contract Amount - R$ thousand127.7 136.5 112.5 115.4 105.6 113.4 108.9 120.3 115.0

Average Rate - % p.y. 8.18 7.99 7.81 7.64 7.51 7.34 7.24 7.16 7.11


Payroll Loan

Average Rate - % p.m. 1.82 1.79 1.77 1.76 1.76 1.76 1.77 1.78 1.81


Direct Consumer Credit

Average Rate - % p.m. 2.88 2.92 3.02 3.11 3.20 3.23 3.38 3.59 3.73


BV - Auto Loans

Average Rate - % p.m. 1.87 1.90 1.99 1.97 1.96 1.97 2.05 2.05 2.08


3.1.2. Companies Loan Portfolio

The following table shows the Companies Loan Portfolio. The growth, in the quarterly and in the annual comparison, is due to investment operations, FEC/ACE and mortgage. These operations were positively influenced by the large amount of loans to corporate and large corporate companies.

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48

Table 40. Companies Loan Portfolio



Working Capital 147,077 43.0 149,675 42.4 152,728 42.2 3.8 2.0

Investiments 63,833 18.7 66,985 19.0 68,329 18.9 7.0 2.0

FEC/ACE 11,822 3.5 15,282 4.3 16,196 4.5 37.0 6.0

Credit Card 14,528 4.2 15,236 4.3 15,203 4.2 4.7 (0.2)

Receivables 16,658 4.9 13,466 3.8 12,881 3.6 (22.7) (4.3)

Mortgage 9,274 2.7 11,230 3.2 11,706 3.2 26.2 4.2

Pre-Aproved-Credit 4,025 1.2 3,707 1.0 3,080 0.9 (23.5) (16.9)

BNDES Exim 4,051 1.2 3,282 0.9 2,208 0.6 (45.5) (32.7)

Overdraft Account 327 0.1 430 0.1 466 0.1 42.4 8.2

Other 8,693 2.5 12,976 3.7 15,191 4.2 74.7 17.1

Private Sec. and Guarantees 61,735 18.0 61,028 17.3 64,170 17.7 3.9 5.1


Balance Chg. % on

The distribution of the Companies Portfolio, considering the Broad Definition, is shown below.

Table 41. Distribution of the Companies Portfolio


Middle Market and Corporates 213,880 62.5 222,894 63.1 227,315 62.8 6.3 2.0

Very Small and Small Companies 101,486 29.7 97,827 27.7 95,191 26.3 (6.2) (2.7)

Government 26,657 7.8 32,576 9.2 39,652 10.9 48.8 21.7


Balance Chg. % on

Foreign Trade Finance

BB is the main partner in Brazilian foreign trade, closing 3Q15 with a market share of 25.3% and 17.8% in foreign exchange for export and import operations, respectively. With leadership in the operations of Forward Exchange Contracts (FEC) and Advance against Draft Presentation (ACE), BB closed 3Q15 with a 27.0% market share in these segments.

Table 42. Foreign Exchange for Export and Import Operations

3Q14 4Q14 1Q15 2Q15 3Q15 3Q14 2Q15

Export Exchange

Contracted Amount (US$ million) 15,043 14,258 11,432 13,049 11,503 (23.5) (11.8)

Market Share - % 26.3 27.2 26.4 24.9 25.3 (3.5) 1.6

Import Exchange


Market Share - % 22.3 24.1 19.1 18.0 17.8 (20.2) (1.2)

Balance Chg. % on

Table 43. Forward Exchange Contracts (FEC) and Advance against Draft Presentation (ACE)

3Q14 4Q14 1Q15 2Q15 3Q15 3Q14 2Q15


Quantity of Contracts 3,249 3,121 2,253 3,057 3,004 (7.5) (1.7)

Average Vol. per Contract (US$ thousand) 804 795 906 997 728 (9.5) (27.0)

Balance Chg. % on

Investment Loans

Banco do Brasil’s disbursements for investment loans were R$32.7 billion in 9M15. Highlight to the Finance Transport Infrastructure, which grew in relevance.

The next chart shows the onlending funds share in disbursements.


49

Figure 20. Disbursements by Onlending Fund in 9M - %

Loans to Government

Banco do Brasil has been working to meet the states, the Federal District and the municipalities in their demands, seeking to provide solutions to public entities, that allow public policies through investments in sectors such as urban mobility, health, education and public safety in order to contribute to the development of the country and generate real benefits for the population of the locations served. This quarter were disbursed R$616.6 million to states.

Under Central Bank of Brazil Circular 3,644/2013, Article 37, a Weighting Factor Risk (FPR) of 0% must be applied to the portion of exposure covered by credit guarantees provided by the National Treasury transactions, without thereby compromising capital.

Loans to Very Small and Small Companies

Banco do Brasil remains the main partner of the segment of Very Small and Small Companies, reinforcing its positioning with this segment. At the end of 3Q15, BB had 2.3 million Very Small and Small Companies customers.

Companies with annual revenues of up to R$25 million are categorized as Very Small and Small Companies customers.

The following table shows that customers who have had their accounts for over two years are responsible for 95.9% of Very Small and Small Companies portfolio balance.

Table 44. Account Time – Percentage of the Very Small and Small Companies Portfolio Balance


Account Time

Up to 1 year 1.4 0.7 0.6

From 1 to 2 years 4.7 4.3 3.5

From 2 to 5 years 23.8 21.2 21.1

From 5 to 10 years 30.5 33.1 33.3

Over 10 years 39.6 40.7 41.6

The following tables show the main lines of loans to Very Small and Small Companies.

Table 45. Loans to Very Small and Small Companies by Sector


Trade 41,929 41.3 40,858 41.8 39,750 41.8 (5.2) (2.7)

Service Segment 29,957 29.5 30,415 31.1 29,900 31.4 (0.2) (1.7)

Industry 29,600 29.2 26,554 27.1 25,540 26.8 (13.7) (3.8)

Total 101,486 100.0 97,827 100.0 95,191 100.0 (6.2) (2.7)

Balance Chg. % on

Chapter 3 - Loans

50

Table 46. Very Small and Small Companies Credit Products


Working Capital 65,073 64.1 61,782 63.2 59,952 63.0 (7.9) (3.0)

Investment 34,334 33.8 34,147 34.9 33,373 35.1 (2.8) (2.3)

Foreign Trade 2,079 2.0 1,899 1.9 1,865 2.0 (10.3) (1.8)

Total 101,486 100.0 97,827 100.0 95,191 100.0 (6.2) (2.7)

Balance Chg. % on

In working capital and investments finance to Very Small and Small Companies, Banco do Brasil widely uses the FGO (Operations Guarantee Fund), a credit guarantee fund, in order to mitigate transactions credit risk and to expand portfolio volume.

BB is the administrator and a shareholder of the FGO, a private fund that consists of the payment of shares by the Treasury and other financial agents.

The guarantees provided by FGO in loan and financing operations complement up to 80% the required guarantees from legal entities for loans and financing, especially very small and small companies. From July 2015, FGO began to serve companies with annual gross revenues of up to R$90 million.

At the end of Sep/15, there were 424.0 thousand operations with FGO coverage, totaling a balance of R$20.9 billion, which is an increase of 5.5% from the same period of the previous year. At the end of the period, the operations guaranteed by this Fund represented approximately 44.3% of the disbursements observed in the lines such as working capital and investment that permit the use of collateral.

Another important mechanism to enable the contracting of investment financing operations is the Fundo de Aval às Micro e Pequenas Empresas (Fampe), a guarantee fund for Very Small and Small Companies. Fampe supplements by up to 80% of the value of guarantees necessary for the concession of credit to Very Small and Small Companies.

At the end of 3Q15, the debit balance of operations guaranteed the guarantees funds was R$23.9 billion, representing 25.2% of the Very Small and Small Companies portfolio.

The participation of the funds, in Very Small and Small Companies portfolio, is shown below:

Table 47. Credit Guarantees Funds – FGO and FAMPE


Total 23,498 23.2 24,147 24.7 23,950 25.2 1.9 (0.8)

FGO 19,854 19.6 20,949 21.4 20,774 21.8 4.6 (0.8)

FAMPE 3,644 3.6 3,198 3.3 3,176 3.3 (12.8) (0.7)

Small and Very Small Companies 101,486 100.0 97,827 100.0 95,191 100.0 (6.2) (2.7)

Chg. % on Balance

3.1.3. Agribusiness Loan Portfolio

Agribusiness is one of the main sectors of the Brazilian economy, with fundamental importance to the country’s growth and development.

Brazil is one of the world’s leading agribusiness exporters, with emphasis on the production, export and trade of major agricultural supply chains.

Table 48. Brazil’s Share in World Agribusiness in Sep/15

Item Production Export % World Trade

Orange Juice 1st 1st 77.4%

Sugarcane 1st 1st 43.6%

Soybean and Related Products 2nd 1st 44.5%

Poultry 2nd 1st 36.3%

Coffee 1st 1st 26.7%

Corn 3rd 2nd 24.3%

Cattle 2nd 2nd 17.9%

Cotton 5th 3rd 11.0%

Source: USDA – PSD online.


51

The leading role of agribusiness in Brazil arises from the combination of factors related to natural resources, cutting-edge technology, credit supply and farmers’ competence. This set of attributes gives Brazil a privileged position in the world agribusiness context, as well as compliance of farms with environmental legislation. Thus, BB supports the Brazilian agribusiness in all stages of the production chain.

Agricultural and livestock activity follows the agricultural calendar, known as the crop-year, which begins in July of each year and ends in June of the following year. The data presented in this report includes information from the first quarter of the 2015/2016 crop.

Agribusiness at BB

Banco do Brasil is one of the main agents encouraging agribusiness development in Brazil, in line with the criteria established for the maintenance of environmental sustainability.

Operating from the small producer to large agribusiness companies, BB finances the costs of producing and trading agricultural products, stimulates rural investment, including warehousing, seed improvement, industrialization and the modernization of agricultural machinery and farm implements.

Supporting Brazilian agribusiness in all stages of the production chain, Banco do Brasil continues to be the main financial agent of this segment. The Bank contributes significantly to supply the credit demand. According to data from the Central Bank of Brazil, BB had a 60.1% market share of the Brazilian rural financing portfolio in Sep/15.

Figure 21. BB’s Market Share in Brazilian Agribusiness – %

39.9

60.1

Sep/15

Banco do Brasil Other Financial Institutions

The distribution of agribusiness operations by Brazilian region shows the share of each in the loan portfolio.

Table 49. Classified Agribusiness Loan Portfolio by Region

Region Rural Credit - % Agroindustry - % Total - %

Southeast 32.9 97.5 46.9

South 34.2 1.7 27.2

Midw est 22.0 0.4 17.3

Northeast 6.2 0.2 4.9

North 4.7 0.1 3.7

The following table shows a breakdown of BB’s agribusiness portfolio, divided into working capital for input purchase, investments, agroindustry, crop trading and others.

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52

Table 50. Agribusiness Loan Portfolio by Purpose



Investment 68,983 43.5 78,350 46.6 78,695 45.8 14.1 0.4

Working Capital for Input Purchase 47,845 30.2 48,680 28.9 48,626 28.3 1.6 (0.1)

Agroindustry 31,285 19.8 33,192 19.7 37,118 21.6 18.6 11.8

Crop Trading 6,444 4.1 4,946 2.9 4,631 2.7 (28.1) (6.4)

Other 2,262 1.4 2,084 1.2 1,850 1.1 (18.2) (11.2)

Rural Product Bills and Guarantees 1,586 1.0 1,047 0.6 929 0.5 (41.4) (11.3)


Balance Chg. % on

The following table shows the breakdown of the agribusiness loan portfolio by credit line/program.

Pronaf (National Program for Support for the Family Producer) was R$37.9 billion in Sep/15, an increase of 13.5% on an annual basis. Pronamp (National Program for Support the Medium Rural Producer) was R$22.2 billion in Sep/15, an increase of 9.0% in 12 months. Also important is the ABC Program (Low Carbon Agriculture), with R$9.1 billion in Sep/15, an increase of 29.9% in 12 months.

Table 51. Agribusiness Loan Portfolio by Credit Line/Program



Rural Loans 125,534 79.2 134,059 79.7 133,801 77.9 6.6 (0.2)

Pronaf 33,409 21.1 37,681 22.4 37,910 22.1 13.5 0.6

Work. Capital for Input Purchase 29,186 18.4 28,969 17.2 28,542 16.6 (2.2) (1.5)

Pronamp 20,395 12.9 21,867 13.0 22,230 12.9 9.0 1.7

BNDES/Finame Rural 9,516 6.0 10,467 6.2 10,213 5.9 7.3 (2.4)

Agricultural Investment 7,753 4.9 9,089 5.4 9,299 5.4 19.9 2.3

Low Carbon Agriculture Program 7,008 4.4 8,940 5.3 9,103 5.3 29.9 1.8

FCO Rural 8,547 5.4 8,835 5.2 8,791 5.1 2.9 (0.5)

Agricultural Selling 6,010 3.8 4,501 2.7 4,236 2.5 (29.5) (5.9)

Other 3,709 2.3 3,710 2.2 3,477 2.0 (6.2) (6.3)

Loans to Companies 31,285 19.8 33,192 19.7 37,118 21.6 18.6 11.8



Balance Chg. % on

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


53

Table 52. Agribusiness Loan Portfolio by Financed Item



Livestock 29,909 18.9 33,616 20.0 33,454 19.5 11.9 (0.5)

Meat 19,944 12.6 22,401 13.3 22,095 12.9 10.8 (1.4)

Milk 9,965 6.3 11,215 6.7 11,359 6.6 14.0 1.3

Machinery and Equipment 20,560 13.0 22,691 13.5 22,599 13.2 9.9 (0.4)

Soybean 12,178 7.7 10,959 6.5 11,754 6.8 (3.5) 7.3

Corn 5,929 3.7 5,521 3.3 4,721 2.7 (20.4) (14.5)

Coffee 3,947 2.5 3,771 2.2 3,957 2.3 0.3 5.0

Aviculture 3,531 2.2 3,799 2.3 3,832 2.2 8.5 0.9

Sugarcane 7,045 4.4 3,490 2.1 3,673 2.1 (47.9) 5.3

Rice 2,076 1.3 1,979 1.2 2,070 1.2 (0.3) 4.6

Sw ine Production 2,207 1.4 2,026 1.2 1,978 1.2 (10.4) (2.4)

Cotton 1,298 0.8 691 0.4 699 0.4 (46.1) 1.2

Other 36,854 23.3 45,519 27.0 45,064 26.2 22.3 (1.0)

Loans to Companies 31,285 19.8 33,192 19.7 37,118 21.6 18.6 11.8



Balance Chg. % on

The following table shows customer size in relation to the total balance of the agribusiness loan portfolio.

Table 53. Agribusiness Loan Portfolio by Customer Size



Medium and Large Sized 73,566 46.4 79,024 47.0 78,946 45.9 7.3 (0.1)

Companies 39,660 25.0 40,390 24.0 43,588 25.4 9.9 7.9

Small 36,373 23.0 40,649 24.2 40,736 23.7 12.0 0.2

Agroindustrial Cooperatives 7,220 4.6 7,189 4.3 7,649 4.5 5.9 6.4



Balance Chg. % on

The next table shows the distribution of the balance of the Agribusiness Loan Portfolio by customer type.

Table 54. Agribusiness Loan Portfolio by Customer Type



Individuals 109,939 69.4 119,673 71.1 119,682 69.6 8.9 0.0

Companies 46,881 29.6 47,578 28.3 51,237 29.8 9.3 7.7



Balance Chg. % on

In rural and agro industrial financing, BB uses 80.8% own funds (mainly demand deposits, rural savings accounts and Agribusiness Letters of Credit). In addition to those, BB also does onlending of funds from the Brazilian Development Bank (BNDES), the Workers Protection Fund (FAT), and institutional funds such as the Constitutional Fund for Financing of the Midwest (FCO) and the Coffee Production Economy Defense Fund (Funcafé).

The following table shows the agribusiness loan portfolio – broad definition by funding sources.

Chapter 3 - Loans

54

Table 55. Agribusiness Loan Portfolio Broad Definition by Funding Sources

R$ million Sep/14 Share % Jun/15 Share % Sep/15 Share %

Agricultural Savings 77,838 49.1 83,200 49.4 84,639 49.3

Agribusiness Letters of Credit 27,348 17.3 33,317 19.8 38,260 22.3

Demand Deposits 21,824 13.8 18,218 10.8 15,922 9.3

FCO 11,488 7.3 12,583 7.5 12,602 7.3

BNDES/FINAME 10,000 6.3 11,384 6.8 11,199 6.5

FAT 372 0.2 194 0.1 157 0.1

Other¹ 9,535 6.0 9,402 5.6 9,070 5.3

Loan Portfolio - Broad Definition 158,405 100.0 168,298 100.0 171,848 100.0

Balance

1 – National Treasury, Funcafé, Rural Product Bills and Guarantees.

Banco do Brasil acts as a financial agent in rural credit operations encouraged by the Government and intended to finance actions in the public interest. These operations are carried out with reduced interest rates and BB uses resources from savings accounts, demand deposits, FAT, National Treasury, Funcafé and FCO as funding.

To make this intermediation feasible and cover the funding costs, credit risks, tax and administrative costs and BB’s profitability, National Treasury and Brazilian Central Bank may authorize following subsides:

a) Equalization Revenues: amount paid by the National Treasury that represents revenues for the banks to cover the administrative and tax costs, besides the guarantee of a profitability rate on the applied resources;

b) Weighting factor: is a multiplier adopted by the Federal Government to the application of resources from demand deposits and rural savings. Through this mechanism the banks are authorized to meet lower rates of rural credit, allowing the released amount to be invested in operation with market rates, in order to compensate the profitability difference from operations encouraged by the Government.

The mechanism of a weighting factor reduces the equalization revenues, allows an increase in interest income since the results from the financial institution with the application of the resources in market rates reduces the amount of resources to be equalized by the Government and makes a proportional compensation in the profitability. At BB, the release of funds for cash is done with TMS remuneration.

The next table shows a history of the revenues received from interest rate equalization and the weighting factor.

Table 56. Equalization Revenues and Weighting Factor

R$ million 3Q14 4Q14 1Q15 2Q15 3Q15

Equalization Revenues 1,406 1,565 1,801 1,802 2,004

Weighting Factor 466 403 270 249 101

Total 1,872 1,968 2,070 2,051 2,105

Balance

The following table shows the distribution of funds eligible for equalization from BB’s Agribusiness Portfolio.

Table 57. Equalizable Funds in the Agribusiness Portfolio

R$ million Sep/14 Jun/15 Sep/15

Classified Loan Portfolio 156,819 167,251 170,919

Equalizable Resources 74,829 85,768 88,861

Investments 38,735 47,206 48,108

Working Capital for Input Purchase 33,873 36,013 38,745

Crop Trading 2,221 2,549 2,008

Non-Equalizable Resources 81,990 81,483 82,059

Rural Product Bills and Guarantees 1,586 1,047 929

Loan Portfolio - Broad Definition 158,405 168,298 171,848

Balance


55

In the first quarter of the 2015/16 crop, BB disbursed R$21.7 billion in agricultural loans, 1.1% higher than the first quarter of the previous crop. To the working capital for input purchase, purpose that was most demanded in the quarter, the disbursements were R$16.8 billion, growth of 36.6% than the first quarter of the previous crop.

The Family Agriculture disbursement was R$4.1 billion. Operations through the National Program Support for Medium Farmers (Pronamp) were R$4.4 billion, growth of 25.8% from the first quarter of the previous crop.

The next table shows changes in disbursements in the first quarter of the 2015/16 crop from the 2014/15 one, detailing the credit purpose, destination and customer type.

Table 58. Disbursements by Purpose – Rural Credit

R$ million Crop 14/15 (A) Crop 15/16 (B) Change (%) (B/A)

Family - Pronaf 5,117 4,087 (20.1)

Working Capital for Input Purchase 2,655 2,714 2.2

Investment 2,461 1,373 (44.2)

Medium - Pronamp 3,525 4,433 25.8

Working Capital for Input Purchase 2,621 4,202 60.3

Investment 904 230 (74.5)

Other Producers 12,817 13,178 2.8

Working Cap. for Input Purch./Crop Trading 10,128 11,728 15.8

Investment 2,688 1,450 (46.1)

Total 21,458 21,698 1.1

Risk Mitigators

Since 2006/07 crop, Banco do Brasil has been encouraging the contracting of protection against bad weather (Agricultural Insurance or Proagro) in operations of working capital for input purchase. The strategy has been maintained and improved with each new crop, including the mass offering of options, such as Seguro Faturamento. This insurance combines the mitigation of climate risks to price risks, thereby ensuring the billing and covered income to the producer.

The risk mitigation strategy takes into account several types of information on the customers’ requested transactions, such as activity risk, type of crop to be financed and financing location. Those types of information allow the use of the protective devices (agricultural insurance/Proagro or options) that best fit the risk profile of each transaction.

The following table shows the recent historic use of risk mitigators in the working capital for input purchases.

Table 59. Insurance in the Working Capital for Input Purchase

R$ million Crop 13/14 Share % Crop 14/15 Share % Crop 15/16 Share %

Working Capital for Input Purchase 7,235 100.0 6,824 100.0 12,701 100.0

Total Insured 4,721 65.2 4,367 64.0 9,668 76.1

Proagro 2,149 29.7 2,217 32.5 2,152 16.9

Crop Insurance 2,475 34.2 2,064 30.3 6,198 48.8

Hedge Price 96 1.3 86 1.3 1,318 10.4

Without Insurance 2,515 34.8 2,457 36.0 3,033 23.9

Operation Contracted

Risks assumed as a result of agricultural insurance in the 2014/2015 crop were distributed as detailed below.

Chapter 3 - Loans

56

Figure 22. Working Capital for Input Purchase Breakdown Risks - %

IRB Re 60.0

BB Mapfre

20.0

Mapfre Re20.0

3.1.4. Concentration

The following tables show the concentration level of the portfolio with customers and business groups with which Banco do Brasil has operations. The first table shows the 100 largest borrowers over the classified loan portfolio. The second, over the Reference Equity (RE).

Table 60. 100 Largest Borrowers in Relation to the Classified Loan Portfolio

Period

1st.

Customer

(%)

Balance2nd. to

20th. (%)Balance

21st. to

100th (%)Balance

Top 100

Largest

(%)

Balance

Dec/13 3.2 19,647 11.6 72,295 9.0 56,383 23.8 148,325

Mar/14 3.2 20,485 11.5 72,384 9.1 57,669 23.8 150,538

Jun/14 3.1 20,114 10.8 70,172 9.3 60,185 23.2 150,471

Sep/14 3.1 20,757 11.7 77,275 9.5 62,729 24.3 160,761

Dec/14 2.9 20,039 11.6 79,759 9.7 66,969 24.2 166,767

Mar/15 3.0 21,322 12.7 89,175 10.0 69,856 25.7 180,352

Jun/15 3.6 25,101 12.4 87,530 9.8 69,123 25.8 181,753

Sep/15 3.5 25,780 13.2 95,844 9.9 71,822 26.6 193,446

Table 61. 100 Largest Borrowers in Relation to RE ¹

Period

1st.

Customer

(%)

Balance2nd. to

20th. (%)Balance

21st. to

100th (%)Balance

Top 100

Largest

(%)

Balance

Dec/13 16.6 19,647 61.1 72,295 47.7 56,383 125.4 148,325

Mar/14 18.2 20,485 64.5 72,384 51.4 57,669 134.1 150,538

Jun/14 17.0 20,114 59.4 70,172 51.0 60,185 127.5 150,471

Sep/14 16.8 20,757 62.5 77,275 50.7 62,729 129.9 160,761

Dec/14 15.8 20,039 63.0 79,759 52.9 66,969 131.7 166,767

Mar/15 16.6 21,322 69.3 89,175 54.3 69,856 140.1 180,352

Jun/15 19.6 25,101 68.4 87,530 54.0 69,123 142.0 181,753

Sep/15 18.9 25,780 70.1 95,844 52.6 71,822 141.6 193,446

1 – RE for Sep/15 was R$136,634 million, according to the prudential conglomerate.

The next table shows the concentration of the companies and agro companies’ considering Multiple Bank, Guarantees & Securities and Abroad portfolio. Each macro-sector is divided into various economic sectors related with each other. The portfolio is in accordance with the main business of each customer.


57

Table 62. Concentration of Companies and Agro Companies Loan Portfolio by Macro-Sector

Macro-Sector Sep/14 Share % Jun/15 Share % Sep/15 Share % Sep/14 Jun/15

Oil and Gas 41,014 9.5 45,997 10.2 49,270 10.4 20.1 7.1

Metalw orking and Steel 40,837 9.5 41,917 9.3 43,723 9.3 7.1 4.3

Government 26,898 6.2 33,017 7.3 40,526 8.6 50.7 22.7

Eletricity 34,996 8.1 40,182 8.9 40,122 8.5 14.6 (0.1)

Foodstuffs of Vegetable Origin 37,079 8.6 35,732 7.9 37,302 7.9 0.6 4.4

Transport 26,321 6.1 30,945 6.9 34,225 7.2 30.0 10.6

Automotive 25,631 5.9 27,633 6.1 28,408 6.0 10.8 2.8

Services 25,714 6.0 24,371 5.4 25,226 5.3 (1.9) 3.5

Housing 19,024 4.4 20,587 4.6 21,122 4.5 11.0 2.6

Retail Trade 19,356 4.5 19,217 4.3 19,384 4.1 0.1 0.9

Specif ic Bulding Activities 14,835 3.4 14,840 3.3 15,271 3.2 2.9 2.9

Foodstuffs of Animal Origin 14,154 3.3 14,824 3.3 14,519 3.1 2.6 (2.1)

Financials Institutions 11,703 2.7 12,268 2.7 13,328 2.8 13.9 8.6

Textile and Garments 13,080 3.0 12,475 2.8 12,378 2.6 (5.4) (0.8)

Agricultural Consumables 9,767 2.3 10,856 2.4 11,076 2.3 13.4 2.0

Pulp and Paper 10,856 2.5 10,779 2.4 10,945 2.3 0.8 1.5

Electrical and Electronic Goods 10,893 2.5 9,648 2.1 10,074 2.1 (7.5) 4.4

Chemicals 9,498 2.2 9,291 2.1 9,686 2.1 2.0 4.3

Heavy Construction 8,285 1.9 8,978 2.0 8,817 1.9 6.4 (1.8)

Telecommunication 9,703 2.3 8,342 1.8 7,844 1.7 (19.2) (6.0)

Wholesale Trade and Industries 7,582 1.8 6,851 1.5 6,930 1.5 (8.6) 1.2

Timber and Furniture 6,813 1.6 6,836 1.5 6,685 1.4 (1.9) (2.2)

Leather and Shoes 3,050 0.7 3,054 0.7 3,102 0.7 1.7 1.6

Beverages 1,722 0.4 1,741 0.4 1,812 0.4 5.3 4.1

Other Activities 2,330 0.5 1,119 0.2 414 0.1 (82.2) (63.0)

Total 431,141 100.0 451,502 100.0 472,189 100.0 9.5 4.6

Domestic Loan Portfolio 320,171 333,041 342,242

Abroad Loan Portfolio 42,044 48,134 54,275

Guarantees 21,143 25,527 31,260

Securities 47,783 44,800 44,412

Total 431,141 451,502 472,189

Balance Chg. % on

Chapter 3 - Loans

58

3.2. Credit Risk

All risk segmentations of the loan portfolio in this section are based on the Classified Portfolio, in compliance with CMN Resolution 2,682/99, unless otherwise indicated.

Banco do Brasil maintains a consistent process for risk credit evaluation and monitoring in loan transactions with customers. The main quality loan portfolio indicator is Average Risk, which shows the ratio between the required provision and the classified loan portfolio.

The figure below shows BB’s classified loan portfolio average risk historical evolution and its comparison with the Brazilian Banking Industry (BI) This index at BB remains much lower than BI.

Figure 23. Classified Loan Portfolio Average Risk

4.16 4.10

3.57 3.66

3.974.15

5.66 5.70

5.10

4.805.00

5.20

Sep/11 Sep/12 Sep/13 Sep/14 Jun/15Sep/15

Average Risk - BB Consolidated Average Risk - BI¹

1 – Ratio created through Average Risk Index available at SGS (Sistema Gerenciador de Séries Temporais) of the Central Bank of Brazil.

The following chart shows the coverage index (ALLL/NPL +90d), which states the ratio between the total provision (required plus additional) and the balance of transactions due over 90 days. The current provision enables BB to record a percentage higher than BI. It is worth mentioning that BB has sufficient provisions to support potential scenarios changes, such as higher delinquency.

Figure 24. Classified Loan Portfolio Coverage Index

243.37255.97

203.32

194.04

212.34217.92

211.16218.40

191.88 185.93

205.21212.88

161.33

150.00154.55

165.52172.41

167.74


ALLL/NPL + 90d % - BB ex-BV ALLL/NPL + 90d % - BB Consolidated ALLL/NPL + 90d % - BI¹

1 – Ratio created through Average Risk Index available at SGS (Sistema Gerenciador de Séries Temporais) of the Central Bank of Brazil.

The next figure shows the Allowance for Loan and Lease Losses – ALLL, segregating the required and the additional provision. In BR GAAP accounting standards, Banco do Brasil conducts credit provision for its portfolio following the statistical model risk provision according to CMN Resolution 2,682/99 for the required provision. The additional provision is recorded from the management's experience by stress testing application on the portfolio, considering the operations default history and aligned with the good banking practice.


59

Figure 25. ALLL – Classified Loan Portfolio

R$ million

24,251 25,804 27,444 27,96430,133

1,5191,508

1,490 1,524

3,893

25,77027,312

28,935 29,487

34,026


Required Provision Additional Provision

Historically, BB has a delinquency ratio lower than BI, as shown in the next figure. The delinquency ratio (NPL +90d) states the ratio between the operations due over 90 days and the classified loan portfolio balance. The next Figure presents the NPL +90d with and without BV.

Figure 26. NPL +90d – Percentage on the Classified Loan Portfolio

1.92

1.651.77

1.91 1.892.07

2.192.03 1.97

2.09 2.042.20

3.51

3.80

3.30

2.90 2.903.10


NPL +90d - BB ex-BV NPL +90d - BB Consolidated NPL +90d - BI

The following chart shows the New NPL/Loan Portfolio index, which indicates the future delinquency trend. The index is calculated by the ratio between: (i) the quarterly change of the transactions due over 90 days balance, plus the quarterly write-off; and (ii) the previous quarter classified loan portfolio balance.

The write-off process strictly follows the CMN Resolution 2,682/99. Operations classified as risk H are accounted as write-off only after six months in delinquency at this risk level, and with over 180 days of NPL, with recording not being allowed on a shorter period.

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Figure 27. New NPL and Write-Off – Percentage on the Classified Loan Portfolio

3.89 3.80

4.62 4.59

3.81

4.83 4.96

6.04

3.06

3.704.16

3.63 3.69

4.45

4.95

4.43

0.66 0.61 0.73 0.71 0.58 0.70 0.71 0.86


New NPL (R$ billion)Write Off (R$ billion)New NPL(t)/Loan Portfolio(t-1)

The results achieved with loan portfolio management risk, combined with a low delinquency ratio and historical coverage ratio, has enabled the continuous improvement of BB’s risk classification methodology.

Table 63. Classified Loan Portfolio by Risk Level

R$ million Balance Provision Share % Balance Provision Share % Balance Provision Share %

AA 377,220 - 56.9 389,415 - 55.3 396,589 - 54.6

A 105,009 525 15.8 120,627 603 17.1 126,895 634 17.5

B 120,179 1,202 18.1 121,298 1,213 17.2 126,209 1,262 17.4

C 25,857 776 3.9 32,349 970 4.6 34,029 1,021 4.7

D 4,172 417 0.6 5,713 571 0.8 6,042 604 0.8

E 8,950 2,685 1.4 10,431 3,129 1.5 10,519 3,156 1.4

F 3,265 1,632 0.5 3,757 1,878 0.5 3,966 1,983 0.5

G 3,349 2,344 0.5 4,166 2,916 0.6 3,791 2,654 0.5

H 14,670 14,670 2.2 16,682 16,682 2.4 18,819 18,819 2.6

Total 662,670 24,251 100.0 704,438 27,964 100.0 726,860 30,133 100.0

AA-C 628,265 2,503 94.8 663,690 2,787 94.2 683,722 2,917 94.1

D-H 34,406 21,749 5.2 40,749 25,177 5.8 43,137 27,216 5.9

Jun/15Sep/14 Sep/15

The next table presents the ALLL expenses over the Classified Loan Portfolio, as well the average Classified Loan Portfolio, the recovery of credit and its impact at the ALLL and the ALLL indexes. It’s important to highlight that only the recovered credit in installments impacts expenses in the ALLL.


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Table 64. ALLL Expenses over Classified Loan Portfolio – BB and BB ex-BV

R$ million, unless other indicated 3Q14 4Q14 1Q15 2Q15 3Q15 on 3Q14 on 2Q15

ALLL Expenses - 12 months

(A) BB (17,510) (18,531) (20,343) (21,303) (23,139) 32.1 8.6

(B) BB ex-BV (15,703) (17,105) (18,974) (20,061) (21,665) 38.0 8.0

ALLL Expenses - Quarterly

(C) BB (4,571) (5,203) (5,999) (5,530) (6,407) 40.2 15.9

(D) BB ex-BV (4,266) (4,867) (5,655) (5,273) (5,870) 37.6 11.3

Average Loan Portfolio

(E) BB - 12 months 628,665 648,265 663,951 678,950 693,941 10.4 2.2

(F) BB - 3 months 653,417 673,270 691,089 701,664 712,580 9.1 1.6

(F) BB ex-BV - 3 months¹ 633,897 654,488 672,539 683,637 695,366 9.7 1.7

Partial Recovery of Write-off

(H) Quarterly 360 328 207 390 284 (21.1) (27.0)

(I) 12 months 1,140 1,214 1,171 1,285 1,209 6.1 (5.9)

Net ALLL Expenses

(C+H) Quarterly (4,210) (4,875) (5,792) (5,140) (6,122) 45.4 19.1

(A+I) 12 months (16,370) (17,317) (19,172) (20,018) (21,930) 34.0 9.6

ALLL Indexes (A/B) - %

(A/E) ALLL Expenses/Loan Porfolio 12M - BB 2.79 2.86 3.06 3.14 3.33 - -

(C/F) ALLL Expenses/Loan Porfolio 3M - BB 0.70 0.77 0.87 0.79 0.90 - -

(D/G) ALLL Exp./Loan Porfolio 3M - BB ex-BV 0.67 0.74 0.84 0.77 0.84 - -

Balance Chg. %

1 – Data Revised

The following table shows the key credit risk management indicators. Some of these were mentioned above.

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Table 65. Classified Loan Portfolio Delinquency Indicators

R$ million, unless other indicated 3Q14 4Q14 1Q15 2Q15 3Q15

Classified Loan Portfolio 662,670 687,911 700,825 704,438 726,860

NPL + 15 days 22,949 23,486 30,149 25,674 30,748

NPL + 15 days/Loan Portfolio - % 3.46 3.41 4.30 3.64 4.23

NPL + 60 days 16,381 16,274 17,475 17,518 20,266


NPL 15-59 days/Loan Portfolio - % 0.99 1.05 1.81 1.16 1.44

NPL + 90 days 13,860 13,979 14,354 14,369 15,984


NPL 15-89 days/Loan Portfolio - % 1.37 1.38 2.25 1.60 2.03

NPL + 90 days/Loan Portfolio - BI - % 2.90 2.70 2.80 2.90 3.10

Write-off 3,632 3,695 4,451 4,946 4,427

Recovery of Write-off (903) (1,065) (923) (987) (804)

Recovery of Write-off/Write-off - % 24.86 28.82 20.73 19.95 18.16

Net Loss 2,730 2,630 3,528 3,959 3,623

Net Loss/Loan Portfolio - % annualized 1.66 1.54 2.03 2.27 2.01

Provision (Required + Additional) 25,770 27,312 28,935 29,487 34,026

Allow ance for Loan losses/Loan Portfolio - % 3.89 3.97 4.13 4.19 4.68

Allow ance for Loan losses/NPL + 15 days % 112.29 116.29 95.97 114.85 110.66



3.2.1. Individuals Loan Portfolio

The following table shows the individuals classified loan portfolio and the respective changes in the allowance for loan losses and the NPL over 90 days. These figures do not include the transactions from the partnership with Banco Votorantim. It corresponds to the Organic Portfolio with the acquired one.

Table 66. BB Individuals Classified Loan Portfolio by Risk Level


AA 50,513 - 30.9 50,463 - 28.6 49,802 - 27.8

A 29,602 148 18.1 47,576 238 27.0 49,411 247 27.6

B 55,477 555 34.0 53,256 532 30.2 56,263 563 31.4

C 15,913 477 9.7 13,402 402 7.6 12,471 374 7.0

D 1,736 174 1.1 2,259 226 1.3 1,739 174 1.0

E 2,888 866 1.8 1,852 556 1.1 1,713 514 1.0

F 1,294 647 0.8 1,115 557 0.6 1,082 541 0.6

G 890 623 0.5 1,096 767 0.6 1,010 707 0.6

H 5,011 5,011 3.1 5,152 5,152 2.9 5,453 5,453 3.0

Total 163,324 8,501 100.0 176,171 8,430 100.0 178,944 8,572 100.0

AA-C 151,505 1,180 92.8 164,698 1,172 93.5 167,948 1,184 93.9

D-H 11,819 7,321 7.2 11,473 7,258 6.5 10,996 7,388 6.1

Sep/15Jun/15Sep/14


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Table 67. Changes in Allowance for Loan Losses – BB Individuals Classified Loan Portfolio


Classified Individuals Loan Portfolio 163,324 167,615 170,349 176,171 178,944

Initial Allowance 8,255 8,501 8,601 8,801 8,430

1- Risk Migration 1,486 1,440 1,495 669 1,276

a) Risk Deterioration 2,545 2,391 2,335 2,323 2,053

b) Risk Improvement (1,059) (950) (840) (1,654) (776)

2 - New Transactions 217 230 211 283 290

3 - Write-offs (1,136) (1,190) (1,205) (1,051) (1,080)

Total (1+2+3) 567 480 501 (98) 487

Other Impacts¹ (321) (380) (302) (273) (345)

Final Allowance 8,501 8,601 8,801 8,430 8,572

Allow ance Required (CMN Res. 2,682) 8,501 8,601 8,801 8,430 8,572

Provision Flow 1,382 1,291 1,405 680 1,221

a) Additional Provision - - - - -

b) Provision Expenses 1,382 1,291 1,405 680 1,221

Provision / Loan Portfolio - % 5.21 5.13 5.17 4.79 4.79

Provision Flow / Loan Portfolio - % 0.85 0.77 0.82 0.39 0.68

NPL + 15 days/Loan Portfolio 4.32 4.26 4.60 4.47 4.79


1 - Amortization, settlement, release of installments and charge debt.

In the following table is shown the NPL of the main lines regarding individuals credit portfolio and share of each line in relation to the total loan portfolio. Thus, it is possible to analyze the delinquency of each product in relation to the relevance of this line in the portfolio. Highlight to the decrease in the delinquency ratio in payroll loans and salary loans in the annually and quarterly comparison.

Table 68. NPL +90d BB Individuals Portfolio

NPL Share % NPL Share % NPL Share %

Individuals 2.39 100.0 2.16 100.0 2.17 100.0

Payroll Loan 1.51 37.6 1.32 36.0 1.31 35.7

Salary Loans 2.79 11.0 2.61 10.7 2.28 10.9

Mortgage 0.53 15.7 1.22 18.6 1.17 19.7

Auto Loans 0.89 14.4 0.79 13.8 0.82 12.9


Vintage

The following graphs show the vintage of the individual’s loan portfolio delinquency. This methodology affords greater detailing and is closer to the portfolio than traditional indicators, in order to evaluate how the delinquency of a set of operations contracted for in a particular period behaves over the time.

Loans that have been nonperforming for over 90 days are considered delinquent. Overdraft and credit card operations are not included in the individuals loan portfolio.

The Vintage shows how the most recently operations contracted with individuals present a more favorable delinquency curve than those contracted at the beginning of the monitoring.

This result shows constant improvement in credit analysis, concession and monitoring models. The inflections presented in the curves refer to loan assignments. The following graph shows the vintage by year, facilitating the viewing and interpretation of the data. It is worth to note that the 2014 vintage presents better performance than the previous ones.

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Figure 28. Individuals Loan Portfolio – Annual Vintage

The following graph shows the details of the own auto loans portfolio on a yearly basis.

Figure 29. Own Auto Loans Portfolio – Annual Vintage

3.2.2. Loans to Companies

The following tables show the classified loan portfolio for companies and the respective changes in allowance for loan losses. These figures do not include the transactions from the partnership with Banco Votorantim.


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Table 69. BB Classified Loans to Companies by Risk Level


AA 199,194 - 72.9 195,715 - 68.6 198,675 - 68.3

A 31,088 155 11.4 35,161 176 12.3 31,810 159 10.9

B 25,905 259 9.5 29,965 300 10.5 32,352 324 11.1

C 3,677 110 1.3 5,971 179 2.1 6,958 209 2.4

D 1,237 124 0.5 2,182 218 0.8 2,926 293 1.0

E 2,434 730 0.9 4,478 1,343 1.6 5,163 1,549 1.8

F 1,268 634 0.5 1,976 988 0.7 2,116 1,058 0.7

G 1,479 1,035 0.5 1,983 1,388 0.7 1,889 1,322 0.6

H 6,914 6,914 2.5 7,906 7,906 2.8 9,083 9,083 3.1

Total 273,198 9,962 100.0 285,338 12,499 100.0 290,972 13,996 100.0

AA-C 259,865 525 95.1 266,812 655 93.5 269,794 691 92.7

D-H 13,333 9,438 4.9 18,526 11,844 6.5 21,178 13,305 7.3

Sep/15Jun/15Sep/14

Table 70. Changes in Allowance for Loan Losses – BB Classified Loans to Companies


Classified Loan Portfolio to Companies 273,198 283,827 286,679 285,338 290,972


1- Risk Migration 2,753 2,855 3,015 3,559 3,469


b) Risk Improvement (484) (341) (322) (657) (645)


3 - Write-offs (1,739) (1,870) (2,528) (2,848) (2,335)

Total (1+2+3) 1,193 1,541 753 1,319 1,734

Other Impacts¹ (388) (579) (139) (359) (237)

Final Allowance 9,962 10,924 11,538 12,499 13,996


Provision Flow 2,543 2,832 3,142 3,809 3,833


b) Provision Expenses 2,543 2,832 3,142 3,809 3,833






In the table below is shown the NPL of the main lines regarding Companies credit portfolio and the share of each line in relation to the total loan portfolio. Thus it is possible to analyze the delinquency of each product in relation to the relevance of this line in the portfolio.

Table 71. NPL +90d BB Companies Portfolio


Companies 2.68 100.0 2.72 100.0 3.10 100.0

Working Capital 2.54 53.0 2.44 51.8 2.58 51.9

Investments 0.91 22.6 0.91 22.8 1.23 22.9

Receivables 3.65 6.1 4.60 4.7 4.60 4.4

FEC/ACE 0.25 4.2 0.44 5.2 0.28 5.5


The chart below shows Very Small and Small Companies credit on an annual basis, making it easier to interpret the data.

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Figure 30. Very Small and Small Companies Loans Portfolio – Annual Vintage

3.2.3. Agribusiness Loan Portfolio

The Classified Agribusiness Loan Portfolio by risk level table is shown on the following table.

Table 72. Classified Agribusiness Loan Portfolio by Risk Level


AA 89,957 - 57.4 103,053 - 61.6 106,613 - 62.4

A 27,097 135 17.3 20,891 104 12.5 20,974 105 12.3

B 30,961 310 19.7 32,176 322 19.2 31,662 317 18.5

C 2,970 89 1.9 3,731 112 2.2 4,293 129 2.5

D 530 53 0.3 581 58 0.3 759 76 0.4

E 3,041 912 1.9 3,684 1,105 2.2 3,257 977 1.9

F 386 193 0.2 459 229 0.3 554 277 0.3

G 241 168 0.2 366 256 0.2 426 298 0.2

H 1,637 1,637 1.0 2,310 2,310 1.4 2,381 2,381 1.4

Total 156,819 3,498 100.0 167,251 4,497 100.0 170,919 4,560 100.0

AA-C 150,984 534 96.3 159,851 538 95.6 163,542 550 95.7

D-H 5,835 2,964 3.7 7,400 3,959 4.4 7,377 4,009 4.3


In the table below is shown the NPL of the main lines regarding Agribusiness credit portfolio and the share of each line in relation to the total loan portfolio. Thus, it is possible to analyze the delinquency of each product in relation to the relevance of this line in the portfolio.

Table 73. NPL +90d BB Agribusiness Portfolio


Agribusiness 0.59 100.0 0.73 100.0 0.84 100.0

Pronaf 1.05 21.3 0.97 22.5 1.10 22.2

Working Capital for Input Purchase 0.66 18.6 1.02 17.3 1.25 16.7

Pronamp 0.60 13.0 1.08 13.1 1.23 13.0

BNDES/Finame Rural 0.28 6.1 0.24 6.3 0.33 6.0


The following tables show the individuals agribusiness loan portfolio by risk level and the respective changes in the allowance for loan losses.


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Table 74. Classified Agribusiness Loan Portfolio by Risk Level – Individuals


AA 53,384 - 48.6 63,077 - 52.7 62,192 - 52.0

A 20,633 103 18.8 17,637 88 14.7 17,753 89 14.8

B 27,866 279 25.3 28,789 288 24.1 28,883 289 24.1

C 2,472 74 2.2 3,180 95 2.7 3,754 113 3.1

D 456 46 0.4 498 50 0.4 749 75 0.6

E 2,930 879 2.7 3,520 1,056 2.9 3,136 941 2.6

F 376 188 0.3 416 208 0.3 535 267 0.4

G 235 165 0.2 341 238 0.3 396 277 0.3

H 1,586 1,586 1.4 2,215 2,215 1.9 2,284 2,284 1.9

Total 109,939 3,320 100.0 119,673 4,239 100.0 119,682 4,335 100.0

AA-C 104,355 456 94.9 112,683 471 94.2 112,581 490 94.1

D-H 5,583 2,864 5.1 6,990 3,767 5.8 7,100 3,845 5.9


Table 75. Changes in Allowance for Loan Losses – Agribusiness Individuals


Classified Agrib. Loan Portfolio - Individuals 109,939 116,851 117,806 119,673 119,682


1- Risk Migration 444 684 866 593 645




3 - Write-offs (367) (282) (340) (498) (432)

Total (1+2+3) 144 470 568 155 277

Other Impacts¹ (125) (88) (69) (117) (180)

Final Allowance 3,320 3,701 4,200 4,239 4,335


Provision Flow 386 664 839 536 528


b) Provision Expenses 386 664 839 536 528




The following tables show the agribusiness loan portfolio for companies by risk level and the respective changes in the allowance for loan losses.

Table 76. Classified Agribusiness Loan Portfolio by Risk Level – Companies


AA 36,572 - 78.0 39,977 - 84.0 44,422 - 86.7

A 6,463 32 13.8 3,254 16 6.8 3,221 16 6.3

B 3,096 31 6.6 3,387 34 7.1 2,779 28 5.4

C 498 15 1.1 551 17 1.2 539 16 1.1

D 75 7 0.2 82 8 0.2 10 1 0.0

E 111 33 0.2 165 49 0.3 121 36 0.2

F 10 5 0.0 43 22 0.1 19 9 0.0

G 5 4 0.0 25 18 0.1 30 21 0.1

H 51 51 0.1 95 95 0.2 97 97 0.2

Total 46,881 179 100.0 47,578 258 100.0 51,237 225 100.0

AA-C 46,629 78 99.5 47,168 67 99.1 50,961 60 99.5

D-H 252 100 0.5 410 192 0.9 277 165 0.5


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Table 77. Changes in the Allowance for Loan Losses – Agribusiness Companies


Classified Agrib. Loan Portfolio - Companies 46,881 46,789 44,713 47,578 51,237

Initial Allowance 145 179 220 254 258

1- Risk Migration 40 56 52 44 11

a) Risk Deterioration 53 72 60 92 44



3 - Write-offs (12) (7) (28) (16) (42)

Total (1+2+3) 38 60 48 51 (26)

Other Impacts¹ (5) (19) (14) (47) (8)

Final Allowance 179 220 254 258 225

Allow ance Required (CMN Res. 2,682) 179 220 254 258 225

Provision Flow - R$ million 45 48 63 21 8


b) Provision Expenses 45 48 63 21 8




Portfolio With Rollover and Without it

The average portfolio risk is influenced by the operations of the harvests from 2005 to 2007 with rollover in a total balance of R$5,092 million in Sep/15. The CMN Resolution 2,682/99, which provides for the classification of risk and constitution of allowances for loan losses, requires the maintenance of risk of the renegotiated loans at the risk level locked at the time of renegotiation. Due to this regulation, renegotiated transactions increase the loan portfolio’s average risk.

In the following table, the classified agribusiness loan portfolio is segregated in operations with rollover and without it. Operations past-due for over 90 days (BB risk + third parties) accounted for 0.71% of the total portfolio without rollover in Sep/15, while the same indicator for the transactions with rollover was 4.55%.

Table 78. Agribusiness Transactions with Rollover and Without it

Portfolio without Rollover¹ Portfolio with Rollover¹

R$ million Balance Provision Past Due 90 Balance Provision Past Due 90

AA 105,819 - 34 795 - -

A 20,295 101 - 679 3 -

B 30,139 301 - 1,523 15 -

C 3,795 114 9 498 15 4

D 545 54 13 215 21 8

E 2,674 802 186 583 175 41

F 411 205 117 143 71 29

G 317 222 99 110 77 17

H 1,833 1,833 758 548 548 132

Total 165,827 3,634 1,183 5,092 926 232

A-C 54,229 517 9 2,700 34 4

D-H 5,780 3,117 1,174 1,598 892 227

1 - Non-performing loans at level AA refers to credit with third party risk.

The following table shows the balance, the NPL +90days and the average risk of the classified agribusiness loan portfolio segmented in the total portfolio, with rollover and without it.


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Table 79. Classified Agribusiness Loan Portfolio Delinquency Indicators

R$ million Sep/14 Dec/14 Mar/15 Jun/15 Sep/15

Classified Loan Portfolio 156,819 163,640 162,519 167,251 170,919

ALLL 3,498 3,921 4,455 4,497 4,560

NPL + 15 days 1,691 1,955 2,091 2,156 2,895


NPL + 90 days 925 1,130 1,330 1,213 1,442

NPL + 90 days/Loan Portfolio¹ 0.59 0.69 0.82 0.73 0.84

ALLL/Loan Portfolio - % 2.23 2.40 2.74 2.69 2.67

Write-off 380 292 368 462 474

Transactions without Rollover - BB Risk + Third Parties 151,563 158,409 157,243 162,043 165,827

ALLL 2,588 2,996 3,502 3,560 3,634

NPL + 90 days 707 905 1,105 1,045 1,217

NPL + 90 days/ Transactions w ithout Rollover - % 0.47 0.57 0.70 0.64 0.73

ALLL / Transactions w ithout Rollover - % 1.71 1.89 2.23 2.20 2.19

Write-off 272 204 279 336 398

Transactions with Rollover - BB Risk + Third Parties 5,256 5,231 5,276 5,208 5,092

ALLL 910 925 952 937 926

NPL + 90 days 220 214 231 191 232

NPL + 90 days/ Transactions w ith Rollover - % 4.19 4.10 4.37 3.66 4.55

ALLL / Transactions w ith Rollover - % 17.32 17.69 18.05 17.99 18.18

Write-off 108 88 89 126 75

Simulation: Trans. w /o Rollover ex-drag effect of Trans. w / Rollover

a - BB Risk + Third Parties 151,563 158,409 157,243 162,043 165,827

b - ALLL 671 874 1,073 1,011 1,183

Average Risk (b/a) 0.44 0.55 0.68 0.62 0.71

1 - The past due resulting from non-performing operations with third party risk was included in the calculation of the rate.

3.2.4. Foreign Loan Portfolio and BV Loan Portfolio

The following tables show the Abroad Portfolio and the BV Portfolio by risk level, respectively.

Table 80. Classified Abroad Loan Portfolio by Risk Level


AA 36,099 - 71.3 39,333 - 67.1 41,205 - 59.6

A 8,446 42 16.7 8,893 44 15.2 15,509 78 22.4

B 5,164 52 10.2 5,087 51 8.7 5,712 57 8.3

C 354 11 0.7 4,596 138 7.8 5,730 172 8.3

D 63 6 0.1 83 8 0.1 72 7 0.1

E 265 80 0.5 45 13 0.1 123 37 0.2

F 25 13 0.0 11 6 0.0 7 3 0.0

G 7 5 0.0 254 178 0.4 15 11 0.0

H 199 199 0.4 318 318 0.5 746 746 1.1

Total 50,622 407 100.0 58,620 757 100.0 69,118 1,110 100.0

AA-C 50,063 104 98.9 57,909 233 98.8 68,156 307 98.6

D-H 559 302 1.1 712 524 1.2 962 804 1.4


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Table 81. Classified BV Loan Portfolio by Risk Level


AA 1,457 - 6.4 851 - 5.0 294 - 1.7

A 8,776 44 47.6 8,106 41 47.5 9,191 46 54.4

B 2,672 27 14.5 813 8 4.8 220 2 1.3

C 2,943 88 16.0 4,649 139 27.3 4,578 137 27.1

D 606 61 3.3 608 61 3.6 545 55 3.2

E 322 97 1.7 372 112 2.2 263 79 1.6

F 291 145 1.6 196 98 1.1 208 104 1.2

G 733 513 4.0 467 327 2.7 451 316 2.7

H 908 908 4.9 996 996 5.8 1,157 1,157 6.8

Total 18,707 1,883 100.0 17,058 1,781 100.0 16,906 1,895 100.0

AA-C 15,848 159 84.7 14,419 188 84.5 14,282 185 84.5

D-H 2,860 1,724 15.3 2,638 1,593 15.5 2,624 1,710 15.5


1 – It does not include the balance of credit assignment operations (CMN Resolution 3,533/2008). It represents 50% of BB participation in BV,


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3.3. Credit Collection and Recovery

3.3.1. Management of Past Due Credits

Banco do Brasil monitors credits presenting signs of default. Treatment of past due transactions is carried out in three stages: conduction, collection and recovery.

I. Conduction seeks to avoid the default, in a preventive manner;

II. Collection is to regularize past due operations; this reduces process costs and maintains the good relationship with the customer;

III. Recovery is to minimize losses and recover the highest possible amount.

3.3.2. Credit Collection and Recovery Process

Banco do Brasil uses its own quantitative models, which, together with automated collection and recovery platforms, track and manage non-performing customers’ behavior.

These customers’ profiles are statistically identified based on previous behavior in relation to collection proceedings, which results in determining likelihood of the collection and recovery.

I. Customers with a high probability of recovery;

II. Customers with an intermediate probability of recovery;

III. Customers with a low probability of recovery.

Based on information and variables analysis, proceedings, service network, renegotiation and discount policies, as well as credit cession to other companies, are established actions that support BB’s collection and recovery model.

The conceptual model that supports the process is based on the following assumptions:

I. Customer Profile: actions are defined based on customer’s profile, taking into consideration variables such as segmentation, relationship level, products contracted, indebtedness with BB, among others;

II. Service Network: recovery process occurs in several framework on a sequential basis. Simultaneous approach to the customer is avoided;

III. Sequential Actions: Credit collection actions are pre-determined according to each customer profile and their intensity increases along the time;

IV. Value Relations: variable approach that respects the relationship level of each customer with BB;

V. Information Systems: advanced analytical and operating platforms, which automate credit collection process and improve business efficiency, are used.

Historic performance of credit collection actions determines the likelihood of credits in default to be recovered. The main consequence of statistical follow-up is the possibility of continuously improve the process with feedback from strategies with best results during the period.

The possibility of segregating non-performing customers is an important aspect of the credit collection and recovery strategy, of discount policy and credit cession.

Banco do Brasil uses credit cession as part of the recovery strategy, with the purpose of reducing losses and unpaid portfolio management costs, through transactions with autonomous companies.

3.3.3. Credit Collection and Recovery Operating Flow

Sequential use of credit collection and recovery channels is closely related to BB’s strategy success.

Chapter 3 - Loans

72

Figure 31. Collection and Recovery Network

1 - Gecor Network: refers to a group of business units specialized in dealing with past due credits of customers with indebtedness higher than R$400 thousand.

3.3.4. Process Efficiency

The following figures show results obtained in credit collection and recovery flow. Of the volume of credit that entered to the collection process in the last 12 months, 94.8% were resolved within 360 days in the 3Q15.

Figure 32. Credit Regularization Rate Over Collection Period - %

62.3

79.8

87.890.0 90.9 91.7 92.2 93.1

66.3

81.3

88.890.9 92.1 93.0 93.7 94.8

Until 15 16 to 30 31 to 60 61 to 90 91 to 120 121 to 150 151 to 180 181 to 360

Credit Regularization 2Q15 Credit Regularization 3Q15

BB gives priority to receive Non Performing Loans over 90 days before the write off, following the charge flow above. BB collected and recovered R$12.3 billion in the last four quarters. Past due loans classified at risk H represented 20.1% of this amount. The other 79.9% were recovered while in other levels of risk. Both the amount received as the percent recovery in other risk levels are the largest of the series, reflecting the success of BB collection strategy.


73

Figure 33. Collection and Recovery before Written Off¹ - %

75.9

24.1

Sep/14

79.9

20.1

Sep/15

Other Risks

Risk H

1 – 12 months accumulated

The recovery strategy of written off credit is geared towards receiving the defaulting operations in cash, which does not generate new credit provisions (ALLL). In the last 12 months R$3.8 billion were recovered, considering the Conglomerate consolidation. From this volume, R$2.6 billion were received in cash and R$1.2 billion received in installments.

Figure 34. Accumulated Recovery (R$ billions) and Cash Recovery Index¹ - %

3.79

3.433.55

3.24 3.30

3.653.76

3.883.78

66.8 67.1 65.9

71.0

65.5 66.768.9

66.8 68.0

2.500

3.00

3.500

4.00

4.500

35.00

40.00

45.00

50.00

55.00

60.00

65.00

70.00

75.00


1 – Revised series

In addition, the following chart demonstrates the behavior of write-offs accumulated in 12 months in relation to average balance of the classified credit portfolio during the same period. BB has better historic indexes than the main market peers.

Figure 35. Write-Off – Percentage on the Classified Loan Portfolio

2.47 2.33 2.35 2.31 2.27 2.31 2.36 2.43 2.48

5.635.36 5.21

4.964.65

4.444.21 4.05 4.03


Banco do Brasil Peer Average¹

1 – Corresponds to the three Brazilian largest private banks.

Additionally, the next chart demonstrates the ration between the amount of credits recovered and total amount of write-offs, both accumulated in 12 months.

Chapter 3 - Loans

74

Figure 36. Recovery of Write-Off/Write-Off – %

27.625.3 25.0

22.5 22.7 24.0 23.6 23.2 21.620.9

22.8 23.8

24.8 25.8 26.1 26.2 26.625.4


Banco do Brasil Peer Average¹

1 – Corresponds to the three Brazilian largest private banks.

3.3.5. Renegotiated Loan Portfolio

The following table shows the renegotiated loan portfolio. The balance of this portfolio includes the participation in BV but does not include agribusiness loan portfolio rollover operations, which are discussed in the section 3.2.3 of this report. These are the main lines of the following table:

a) Credits Renegotiated: loan operations renegotiated during the period, falling due or past due;

a.1) Renegotiated When Past Due: loan operations renegotiated during the period due to payment delay by customers;

a.2) Renovated: loan operations not past due renegotiated during the period to settle in whole or in part previous operations or any other kind of agreement that changes the maturity or payment terms originally agreed to.

Table 82. Renegotiated Loan Portfolio¹

R$ million 3Q14 4Q14 1Q15 2Q15 3Q15

Credits Renegotiated 9,254 14,564 10,875 13,024 11,612

Renegotiated When Past Due 1,081 2,052 1,947 3,689 3,921

Renovated not Past Due 8,173 12,512 8,928 9,335 7,691

Credits Renegotiated When Past Due - Changes

Initial Balance 8,659 8,952 10,089 11,306 13,681

Contracts 1,081 2,052 1,947 3,689 3,921

Interest Received and Appopriated (414) (362) (135) (438) (436)

Write-Off (374) (554) (595) (876) (572)

Past due Renegotiated Loan Portfolio (A) 8,952 10,089 11,306 13,681 16,595

ALLL Balance (B) 5,362 5,931 6,302 6,823 7,718

NPL + 90 days (C) 1,629 1,446 1,602 1,746 2,490

Indicators - %

ALLL / Loan Portfolio (A/B) 59.9 58.8 55.7 49.9 46.5

NPL + 90 days / Loan Portfolio (C/A) 18.2 14.3 14.2 12.8 15.0

ALLL Balance/NPL + 90 days (B/C) 329.1 410.1 393.4 390.8 310.0

1 – Table according Explanatory Notes 10.k Renegotiated Loan Portfolio


75

4 - Funding

Banco do Brasil maintained its strategy of mixed funding aimed at cost reduction. Emphasis on the evolution in the twelve months of the lines: Mortgage Bonds, Repurchase Agreement with Private Securities, Agribusiness Letters of Credits. In the quarter, highlight were the lines of Time Deposits and Saving Deposits, which increased 7.0 and 2.5 billion in the period.

Table 83. Commercial Funding

Balance Chg. (%) on

R$ million Sep/14 Share % Jun/15 Share % Sep/15 Share %Sep/14 Jun/15

Saving Deposits 148,996 23.9 147,306 22.9 149,764 22.6 0.5 1.7

Agribusiness Letters of Credits 105,520 16.9 133,897 20.8 135,896 20.5 28.8 1.5

Judicial Deposits 110,095 17.7 116,805 18.2 116,107 17.5 5.5 (0.6)

Time Deposits 111,682 17.9 82,535 12.9 89,537 13.5 (19.8) 8.5

Demand Deposits 69,521 11.1 64,761 10.1 66,026 10.0 (5.0) 2.0

Rep. Agreement w ith Private Securities¹ 41,184 6.6 43,955 6.8 44,671 6.7 8.5 1.6

Interbank Deposits 28,531 4.6 34,223 5.3 42,404 6.4 48.6 23.9

Mortgage Bonds² 7,995 1.3 18,741 2.9 18,734 2.8 134.3 (0.0)

TOTAL 623,524 100.0 642,224 100.0 663,140 100.0 6.4 3.3

1 – Includes part of the balances of the Private Securities (Note 17c). 2 – Includes the balance of CRI (Certificates of Real Estate Receivables).

The following figure shows BB’s market share in deposits and money market funding in the Brazilian Banking Industry (BI).

Figure 37. Market Share of BB Funding

R$ billion

75.8 72.1 69.4 69.574.2 73.7

64.8 66.0

31.9 30.7 30.0 30.2 30.2 31.3

27.0


Demand Deposits Market Share¹ - %

140.7144.1 146.5 149.0 148.7

144.1147.3 149.8

23.4 23.4 23.2 23.0 22.3 21.9 22.5


Savings Deposits Market Share¹ - %

247.3238.6 235.2

221.8214.5 212.7

199.3205.6

28.8

25.727.3

25.9 25.4 25.324.3


Time Deposits³ Market Share¹ - %

730.5764.8 769.0 788.5 774.4

806.9 798.5 795.2

24.3 24.9 24.6 24.3 23.1 23.8 23.7


Money Market Borrowing² Market Share¹ - %

1 - Information about share in the BI from the top 50 banks of the Central Bank of Brazil website. Position: Jun/15. 2 – Includes Total Deposits and Money Market Borrowing. 3 – Includes Judicial Deposits.

Chapter 4 - Funding

76

The following table shows the balance of Institutional Funding, consisting in the issuance of securities acquired by institutional investors.

Table 84. Institutional Funding


Borrow ing, Assignments and Onlending 117,596 58.8 125,907 57.8 129,026 55.2 9.7 2.5

Securities Issued Abroad 31,920 16.0 38,357 17.6 48,228 20.6 51.1 25.7

Financial Letters 32,443 16.2 34,978 16.1 33,396 14.3 2.9 (4.5)

Subordinated Debt Overseas 8,670 4.3 11,210 5.1 13,374 5.7 54.3 19.3

Hybrid Capital Instuments 4,807 2.4 5,660 2.6 7,851 3.4 63.3 38.7

Subordinated CDB 4,637 2.3 1,752 0.8 1,815 0.8 (60.9) 3.6

TOTAL 200,071 100.0 217,864 100.0 233,690 100.0 16.8 7.3

Chg. (%) onBalance

The Banco do Brasil was US$50.0 billion balance in foreign funding in the end of 3Q15.

Table 85. Foreign Borrowing - Modality

US$ million Balance Chg. (%) on

Modality Sep/14 Share % Jun/15 Share % Sep/15 Share % Sep/14 Jun/15

Issues and Certif icates of Deposit 22,370 43.5 21,400 42.5 21,541 43.1 (3.7) 0.7

Interbanking 16,670 32.4 17,488 34.7 16,991 34.0 1.9 (2.8)

Businesses 8,373 16.3 7,236 14.4 7,177 14.4 (14.3) (0.8)

Individuals 3,229 6.3 3,532 7.0 3,549 7.1 9.9 0.5

Repo 499 1.0 588 1.2 600 1.2 20.2 2.1

Others 266 0.5 153 0.3 148 0.3 (44.5) (3.6)

TOTAL 51,407 100.0 50,397 100.0 50,006 100.0 (2.7) (0.8)

Table 86. Foreign Borrowing - Product

US$ million Balance Chg. (%) on

Product Sep/14 Share % Jun/15 Share % Sep/15 Share % Sep/14 Jun/15

Time Deposits 20,123 39.1 20,713 41.1 20,510 41.0 1.9 (1.0)

Issues and Certif icates of Deposit 22,370 43.5 21,400 42.5 21,541 43.1 (3.7) 0.7

Demand Deposits 3,039 5.9 3,037 6.0 2,803 5.6 (7.8) (7.7)

Over 2,613 5.1 1,830 3.6 1,688 3.4 (35.4) (7.8)

Saving Deposits 1,301 2.5 1,320 2.6 1,291 2.6 (0.8) (2.2)

Call Account 735 1.4 889 1.8 909 1.8 23.7 2.2

Repo 499 1.0 588 1.2 600 1.2 20.2 2.1

Pledge 461 0.9 468 0.9 517 1.0 12.1 10.4

Special Account 266 0.5 153 0.3 148 0.3 (44.5) (3.6)

TOTAL 51,407 100.0 50,397 100.0 50,006 100.0 (2.7) (0.8)

The following table shows BB’s debt issues in the international capital market. The volume of current foreign operations is US$16.6 billion at face value.

Table 87. Current Debt Issues Abroad

Issue

Date

Volume in

US$ millionCurrency

Term in

yearsCupon (%) Interest Interval

Issue

price

Return for

Investor (%)

Premium over

Treasury

Rating¹

S&P/Moody's/FitchStructure

7/18/2007 187 BRL 10.0 9.750 Semi-Annual 100.000 9.750 - SR / Baa3 / SR Senior

4/29/2008 150 USD 7.2 5.250 Quarterly 100.000 5.250 - BBB+ / Baa2 / SR Securitization

10/20/2009 1,500 USD Perpetual 8.500 Semi-Annual 100.000 8.500 - SR / Ba2 / SR Perpetual

1/22/2010 500 USD 10.0 6.000 Semi-Annual 99.451 6.074 237.5 BB+ / Baa3 / BBB Senior

10/5/2010 660 USD 10.0 5.375 Semi-Annual 99.361 5.464 300.0 SR / Ba1 / SR Tier II Subordinated

1/20/2011 1,009 EUR 5.0 4.500 Annual 99.453 4.625 mid-sw ap+200 BB+ / Baa3 / SR Senior

5/26/2011 1,500 USD 10.0 5.875 Semi-Annual 98.695 6.044 287.5 SR / Ba1 / SR Tier II Subordinated

11/23/2011 500 USD 5.0 3.875 Semi-Annual 99.413 4.000 312.3 SR / Baa3 / SR Senior

1/20/2012 1,000 USD Perpetual 9.250 Semi-Annual 100.000 9.250 732.7 B / SR / SR Perpetual

3/5/2012 750 USD Perpetual 9.250 Semi-Annual 108.500 8.488 - B / SR / SR Perpetual

6/19/2012 750 USD 10.0 5.875 Semi-Annual 99.023 6.000 434.1 B+ / Ba1 / SR Tier II Subordinated

10/10/2012 1,925 USD 10.0 3.875 Semi-Annual 98.978 4.000 237.5 BB+ / Baa3 / BBB Senior

1/31/2013 2,000 USD Perpetual 6.250 Semi-Annual 100.000 6.250 439.8 B / SR / SR Perpetual

7/25/2013 930 EUR 5.0 3.750 Annual 99.442 3.875 mid-sw ap+337.2 BB+ N / Baa3 /BBB Senior

12/20/2013 307 CHF 5.5 2.500 Annual 99.729 2.555 CHF mid-sw ap+190 BB+ / Baa3 / BBB Senior

3/26/2014 417 EUR 4.4 3.750 Annual 102.304 3.169 230.0 BB+ N / Baa3 /BBB Senior

6/18/2014 2,500 USD Perpetual 9.000 Semi-Annual 100.000 9.000 636.2 B / Ba3 / SR Perpetual

1- The ratings were revised in 10/20/2015.


77

Sources and Uses

The indicators in the following table show the relation between funding sources and investments at BB.

The loan portfolio remains the main use of funding, increasing 7.8% in twelve months and a share of 81.6% of total uses.

Given the significant amount of credit originated by domestic onlending, the following table shows the adjusted net loan portfolio indicator over commercial funding, which disregards the credit originated by domestic onlending. At the end of Sept/15, the index was 91.8%, showing that the credit portfolio of BB is appropriate to its level of commercial funding.

Table 88. Sources and Uses

Balance Chg. (%) on


Sources 788,146 100.0 855,161 100.0 903,440 100.0 14.6 5.6

Commercial Funding 623,524 79.1 642,224 75.1 663,140 73.4 6.4 3.3

Total Deposits 468,825 59.5 445,631 52.1 463,838 51.3 (1.1) 4.1

Agribusiness Letters of Credit and Mortgage Bonds 113,515 14.4 152,638 17.8 154,630 17.1 36.2 1.3

Repurchase Agreement w ith Private Securities¹ 41,184 5.2 43,955 5.1 44,671 4.9 8.5 1.6

Domestic Onlending 88,036 11.2 91,877 10.7 92,303 10.2 4.8 0.5

Foreign Borrow ing² 65,622 8.3 80,724 9.4 104,209 11.5 58.8 29.1

Subordinated Debt 42,417 5.4 42,628 5.0 43,856 4.9 3.4 2.9

Capital Eligible Debt³ 27,990 3.6 32,775 3.8 38,350 4.2 37.0 17.0

Commercial Paper ⁴ 9,637 1.2 9,719 1.1 7,283 0.8 (24.4) (25.1)

Domestic Hybrid Capital Instuments 90 0.0 - - - - - -

Financial and Development Funds 9,569 1.2 12,404 1.5 14,675 1.6 53.4 18.3

Compulsory Deposits (78,739) (10.0) (57,190) (6.7) (60,376) (6.7) (23.3) 5.6

Uses 788,146 100.0 855,161 100.0 903,440 100.0 14.6 5.6

Net Loan Portfolio (a) = (b) + (c) + (d) 683,982 86.8 720,029 84.2 737,528 81.6 7.8 2.4

Classif ied Loan Portfolio (b) 662,670 84.1 704,438 82.4 726,860 80.5 9.7 3.2

Private Securities (c) 47,082 6.0 45,078 5.3 44,695 4.9 (5.1) (0.8)

Allow ance for Loan Losses (d) (25,770) (3.3) (29,487) (3.4) (34,026) (3.8) 32.0 15.4

Adjusted Net Loan Portfolio (a) - (e) 566,296 71.9 594,121 69.5 608,503 67.4 7.5 2.4

Domestic Onlending Loans (e) 117,686 14.9 125,907 14.7 129,026 14.3 9.6 2.5

Available Funds 104,164 13.2 135,132 15.8 165,912 18.4 59.3 22.8

Indicators - %


Net Loan Portfolio / Commercial Funding 109.7 112.1 111.2

Adjusted Net Loan Portfolio / Commercial Funding 90.8 92.5 91.8

Net Loan Portfolio / Sources 86.8 84.2 81.6

1 – Includes part of the balances of Private Securities (Note 17c). 2 – Includes Foreign Borrowings, Foreign Securities, foreign Onlending, Subordinated debt abroad, Hybrid Capital Instruments Abroad and judicial deposits. 3 – From 3Q14 on, includes Capital Eligible Debt reallocated to Core Capital, as authorized by the Central Bank by Official Letter 15006/2014-BCB/DEORF/DIFIN. 4 – Includes Letters of Credit and Debentures.

Chapter 5 – Financial Earnings

78

5 – Financial Earnings

In this chapter the main components of Banco do Brasil’s financial results are analyzed.

Since 1Q15 it was presented a new organization of the financial information, starting with the composition of the Net Interest Income, and then, the constitution of each of NII’s components.

In reviewing the chapter, NII’s concepts were reassessed; therefore, the series was adjusted as of 1Q14.

The balances presented in the line items Income from Loan Operations, Funding Expenses and Financial Expenses for Institutional Funding do not consider exchange rates variation, relocated to treasury.

5.1. Net Interest Income

Table 89. Net Interest Income Breakdown

Chg. (%) on



Loan Operations 21,455 23,750 25,599 19.3 7.8 62,202 72,126 16.0

Funding Expenses (8,993) (10,378) (11,700) 30.1 12.7 (25,340) (31,460) 24.2

Financial Expense for Institutional Funding¹ (3,191) (3,665) (4,130) 29.4 12.7 (9,688) (11,420) 17.9

Recovery of Write-offs 903 987 804 (11.0) (18.5) 2,583 2,713 5.0

Treasury² 2,429 2,991 3,792 56.1 26.8 7,106 9,911 39.5


1 - Includes senior debt, subordinated debt and hybrid capital instrument (IHCD) domestic and abroad. 2 - Includes interest income, tax hedges, derivatives and other financial instruments that offset the exchange rate variation in the result.

By the end of 9M15, the Net Interest Income (NII) grew due to the performance of the following items:

I. Income from Loan Operations, whose growth was mainly due to the portfolio turnover;

II. Funding Expenses and Financial Expenses for Institutional Funding increased mainly affected by the increase in funding volume and higher CDI rate (22.0%). The strategy of portfolio diversification minimized the increase in Funding Expenses;

III. Treasury results grew mainly due to increase of Securities trading volume, as well as the 21.2% higher TMS (Selic Average Rate).

5.2. Loan Operations

Table 90. Loan Operations

Chg. (%) on


Revenue from Loans 21,455 23,750 25,599 19.3 7.8 62,202 72,126 16.0

Individuals 8,114 8,917 9,347 15.2 4.8 23,665 26,580 12.3

Companies 8,562 9,246 9,824 14.7 6.2 23,947 28,029 17.0

Agribusiness 3,865 4,578 5,052 30.7 10.4 10,958 13,988 27.7

Equalization 1,406 1,802 2,004 42.5 11.2 3,889 5,606 44.1

Abroad 744 815 1,120 50.5 37.5 2,977 2,871 (3.5)

Sale or Transference of Financial Assets 127 107 123 (3.9) 14.3 467 338 (27.6)

Other 7 48 84 - 73.3 80 187 133.9

Leasing 34 38 49 44.0 30.6 108 131 21.3

Chg. (%) onQuarterly Flow 9 Months Flow

In the 9M comparison, the increase was mostly from loans to companies mainly due to the portfolio turnover.

5.3. Funding Expenses

Funding expenses cover operations with clients, excluding repo transactions with private securities. It is also part of funding expenses compulsory and FGC expenses.


79

Table 91. Funding Expenses¹

Chg. (%) on


Funding Expenses² (8,993) (10,378) (11,700) 30.1 12.7 (25,340) (31,460) 24.2

Commercial Funding (7,674) (7,537) (8,272) 7.8 9.7 (22,414) (23,034) 2.8

Time Deposits (2,611) (1,962) (2,135) (18.3) 8.8 (8,113) (6,145) (24.3)

Savings Deposits (2,542) (2,645) (2,944) 15.8 11.3 (7,218) (8,084) 12.0

Judicial Deposits (2,521) (2,931) (3,193) 26.7 9.0 (7,083) (8,805) 24.3

Bonds (2,662) (3,871) (4,582) 72.1 18.4 (6,842) (11,636) 70.1

Agribusiness Letters of Credit (2,486) (3,417) (4,075) 63.9 19.2 (6,383) (10,290) 61.2

Mortgage Bonds (176) (454) (507) 187.9 11.8 (458) (1,346) 193.6

Compulsory Deposits 1,503 1,195 1,322 (12.1) 10.6 4,390 3,707 (15.6)

FGC (160) (165) (168) 4.9 1.9 (474) (498) 5.0


1 – Repurchase Agreements with Private Securities not included; 2 – Series revised from 1Q15 on for composition adjustments.

In the 9M comparison, nearly 77% of the funding expenses growth was due to Agribusiness Letter of Credit (LCA) and Mortgage Bonds.

In LCA, although the CDI rate variation (9M14: 7.8%; 9M15: 9.6%), the main reason for the expenses growth was the 32.7% rise in the average daily balance (ADB).

The Mortgage Bonds had a similar trend, with nearly 90% of the expenses growth due to the ADB rise.

In the quarterly analysis Mortgage Bonds played an important role in the expenses growth due to the rise in CDI rate (2Q15: 3.0%; 3Q15: 3.4%).

5.4. Institutional Funding Expenses

The following table shows the breakdown of institutional funding expenses. From now on it considers Subordinated CDB, Securities Abroad, Financial Letters and Borrowing, Assignments and Onlending operations, as a way to present a broader expense concept, excluding exchange rates variation.

Table 92. Institutional Funding Expenses

Chg. (%) on


Institutional Funding¹ (3,191) (3,665) (4,130) 29.4 12.7 (9,688) (11,420) 17.9

Borrow ing, Assignments and Onlending (1,345) (1,535) (1,810) 34.5 17.9 (4,651) (4,866) 4.6

Financial Letters (837) (1,228) (1,137) 35.8 (7.5) (2,337) (3,419) 46.3

Hybrid Capital Instruments (468) (482) (640) 36.7 32.6 (1,168) (1,638) 40.3

Securities Issued Abroad (258) (238) (311) 20.5 30.7 (747) (828) 10.9

Subordinated Debt Abroad (119) (128) (170) 43.0 32.6 (335) (435) 29.8

Subordinated CDB (165) (54) (63) (61.7) 17.0 (451) (234) (48.2)


1 – Series revised from 1Q15 on for composition adjustments.

In 9M15/9M14 comparison, expenses rose mainly in Financial Letters due to the rise in CDI rate.

In the quarterly comparison, Borrowing, Assignments and Onlending grew due to the TJLP rate raise (2Q15: 6.0%; 3Q15: 6.5%).

The table below shows BB’s deposits funding cost compared to the average Selic rate for the period.

Table 93. Funding vs. Selic Rate

R$ million

Average

BalanceCost

as % of

Selic

Average

BalanceCost

as % of

Selic

Average

BalanceCost

as % of

Selic

Total Funding 580,703 (10,515) 65.9 598,609 (11,620) 64.0 612,690 (13,110) 62.3

Time Deposits 115,584 (2,611) 82.3 86,490 (1,962) 74.8 87,056 (2,135) 71.4

Time Deposits - Judicial Deposits 109,194 (2,521) 84.0 117,077 (2,931) 82.5 117,661 (3,193) 79.0

Savings Deposits 148,674 (2,542) 62.2 145,381 (2,645) 60.0 148,972 (2,944) 57.5

Agribusiness Letters of Credits 104,038 (2,486) 87.0 130,189 (3,417) 86.5 135,354 (4,075) 87.6

Mortgage Bonds 8,168 (176) 78.5 18,953 (454) 78.9 18,782 (507) 78.6

Interbank Deposits 27,477 (179) 23.7 34,331 (212) 20.4 39,393 (256) 18.9

Demand Deposits 67,569 - - 66,188 - - 65,471 - -

Open Market¹ 303,422 (8,231) 98.8 348,865 (10,652) 100.6 333,139 (11,787) 103.0

Total 884,125 (18,746) 77.2 947,474 (22,272) 77.5 945,828 (24,897) 76.6

3Q14 2Q15 3Q15

1 – Interbank Deposits not included


80

5.5. Credit Recovery

The credit recovery revenue rose 5.0% in the end of 9M15. The lower growth, considered the 1H14/1H15 comparison (13.6% increase) was influenced by the 18.5% decrease in the 3Q15.

More information on the credit recovery process and balances can be found in chapters 3.2 and 3.3 of this report.

Table 94. Credit Recovery

Quarterly Flow Chg. (%) on


Credit Recovery 903 987 804 (11.0) (18.5) 2,583 2,713 5.0

Chg. (%) on 9 Months Flow

5.6. Treasury

The treasury result covers the outcome with interest and exchange variation of typical treasury activities and contains the result of the incident exchange variation on financial income from loans and borrowing and institutional funding expenses.

Table 95. Treasury Results

Chg. (%) on


Treasury 2,429 2,991 3,792 56.1 26.8 7,106 9,911 39.5

Securities 10,645 13,527 14,791 38.9 9.3 29,405 40,648 38.2

Open Market (8,409) (10,864) (12,043) 43.2 10.9 (22,861) (32,609) 42.6

Financ. Inc. Insur., Pension & S.Bonds Op. 316 434 392 24.1 (9.7) 936 1,294 38.3

Financial Derivatives (170) (244) 404 - - (788) 305 -

Other Treasury Components¹ 47 138 248 427.3 80.1 414 273 (34.1)


1 – Contains itens not showed in the Treasury breakdown, including Exchange variation.

Treasury Results rose in 9M15/9M14 comparison influenced by Securities income, partially offset by the growth in open market expenses. Similar trend can be observed in quarterly analysis.

Following next, the analysis of treasury components.

Securities Income

Securities Income was influenced by interbank accounts (Repo operations) growth both in quarterly and 9M analysis.

Comparing with 9M14, the 21.5% growth in repo’s ADB is responsible for 56.2% in the interbank result variation. The remaining variation was due to the 21.2% higher TMS rate.

The 2Q15/3Q15 comparison presented a different trend, as the TMS rate raise (2Q15: 3.0%; 3Q15: 3.4%) was the main influence in the income growth.

The following table shows the results of all conglomerate operations (including non-financial companies, BB Banco de Investimento, Banco Votorantim, subsidiaries and branches abroad), including only the operations classified by the Central Bank of Brazil (Bacen) as Securities / Short-term Interbank Investments.

Table 96. Securities Income

Chg. (%) on


Securities Income 10,645 13,527 14,791 38.9 9.3 29,405 40,648 38.2

Fixed Income Securities 10,546 13,401 14,706 39.4 9.7 29,113 40,331 38.5

Interbank Accounts 7,608 10,117 11,129 46.3 10.0 20,533 30,047 46.3

Revaluation – Curve 2,871 3,290 3,580 24.7 8.8 8,267 10,263 24.1

Income/Loss from Negotiation 120 (11) (418) - - 155 (465) -

Mark to Market (69) 14 374 - - 65 415 -

Foreign Income 16 (9) 42 152.7 - 92 70 (23.7)

Other 99 126 85 (14.3) (32.8) 293 317 8.3



81

The figure below shows the classification of the BB Multiple Bank portfolio of securities by type of index.

Figure 38. Securities Portfolio by Index (BB Multiple Bank)

87.2%

9.8%

3.0%

2Q15

CDI / AverageSelic Rate

Fixed

Other

88.2%

8.9%

2.9%

3Q15

As can be seen from the graph above, there was an increase in the asset position of the Multiple Bank in post-fixed rate bonds indexed to Interbank Deposit Rate(CDI)/TMS, a move that is in line with the growth of passive positions in post fixed rates.

Because the graph shows the position only of Multiple Bank securities, it does not necessarily represent the exposure of the entire group.

The tables below show the breakdown of the securities portfolio.

Table 97. Securities Portfolio by Category – Market Value


Securities 209,908 100.0 238,086 100.0 244,383 100.0 16.4 2.6

Available for Trading 93,817 44.7 112,253 47.1 118,139 48.3 25.9 5.2

Available for Sale 100,356 47.8 107,459 45.1 108,855 44.5 8.5 1.3

Held to Maturity 15,735 7.5 18,374 7.7 17,389 7.1 10.5 (5.4)

Balance Chg. (%) on

Table 98. Securities Portfolio by Maturity – Market Value

R$ million Balance Share % Balance Share % Balance Share % Balance Share %

Dec/13 63,913 31.7% 95,361 47.4% 27,623 13.7% 14,409 7.2% 201,306

Mar/14 72,194 36.9% 84,521 43.2% 26,145 13.4% 12,758 6.5% 195,618

Jun/14 76,774 36.9% 89,802 43.2% 29,098 14.0% 12,439 6.0% 208,113

Sep/14 101,193 48.2% 75,255 35.9% 21,117 10.1% 12,342 5.9% 209,908

Dec/14 77,543 34.6% 94,768 42.3% 37,456 16.7% 14,387 6.4% 224,153

Mar/15 76,717 32.9% 96,419 41.4% 45,123 19.4% 14,845 6.4% 233,105

Jun/15 73,091 30.7% 113,362 47.6% 40,130 16.9% 11,503 4.8% 238,086

Sep/15 68,320 28.0% 96,382 39.4% 68,267 27.9% 11,415 4.7% 244,383

TotalOver 10 years5 to 10 years1 to 5 yearsUp to 1 year

Table 99. Financial Derivatives


Financial Derivatives 1,723 2,535 6,488 276.7 156.0

Chg. (%) onBalance

The table below shows the liquidity balance, difference between the liquidity Assets and Liabilities.


82

Table 100. Liquidity Balance


Liquidity Assets (A) 542,217 100.0 613,952 100.0 619,682 100.0 14.3 0.9

Available Funds 13,961 2.6 17,056 2.8 19,773 3.2 41.6 15.9

Interbank Investments 317,820 58.6 357,325 58.2 349,196 56.4 9.9 (2.3)

Securities (except linked to Bacen) 210,435 38.8 239,571 39.0 250,714 40.5 19.1 4.7

Liquidity Liabilities (B) 348,254 100.0 387,095 100.0 373,769 100.0 7.3 (3.4)

Interbank Deposits 28,531 8.2 34,223 8.8 42,404 11.3 48.6 23.9

Money Market Borrow ing 319,723 91.8 352,872 91.2 331,364 88.7 3.6 (6.1)

Liquidity Balance (A - B) 193,963 226,857 245,914 26.8 8.4

Balance Chg. (%) on

Open Market Operations

Open market expenses are mainly expenses incurred in repurchase agreements securities in its own portfolio and third parties. They also include expenses for interbank deposits.

Table 101. Open Market Funding Expenses

Chg. (%) on


Open Market (8,409) (10,864) (12,043) 43.2 10.9 (22,861) (32,609) 42.6

Third Party Portfolio (6,842) (9,017) (9,640) 40.9 6.9 (18,138) (26,546) 46.4

Ow n Portfolio (1,377) (1,625) (2,124) 54.2 30.7 (4,082) (5,321) 30.4

Interbank Deposits (179) (212) (256) 43.4 20.6 (606) (680) 12.2

Free Movement Portfolio (11) (10) (20) 87.0 101.5 (34) (34) (0.8)

Other Open Market Op. (1) 0 (3) - - (1) (28) -


By the end of 9M, nearly half of the growth in open market expenses is due to the 19.7% ADB raise in Third Party Portfolio.

In 2Q15/3Q15, the raise in CDI rate was the main influence in the expenses growth.

Other Treasury Components

The other treasury components group contains, in addition to gains/losses results over equity abroad and tax hedge, the foreign exchange variance in loan operations, funding and institutional funding among others, recorded in the "other".

Table 102. Other Treasury Components

Chg. (%) on


Other Treasury Components 47 138 248 427.3 80.1 414 273 (34.1)

Gain (Loss) over Equity Abroad 674 (261) 3,246 - - (7) 4,807 -

Tax Hedge 447 (198) 2,593 - - 140 3,623 -

Foreign Exchange Portfolio 130 80 297 - - 251 600 139.6

Other Op. Income of Financial Nature 26 37 (480) - - 432 (577) -

Other (1,230) 480 (5,408) - - (401) (8,181) -


In the 9M comparison, the fall in other components was influenced by exchange rate variation (62.0% rise – 3Q14: R$2.45/ 3Q15: R$3.97). The main impact was in borrowing, assignments and onlending.


83

5.7. Assets and Liabilities Analysis

5.7.1. Assets Analysis

Table 103. Average Balances and Interest Rates – Earning Assets (Quarterly)

R$ million

Average

Balance¹Revenues³

Annualized

Rate (%)²

Average

Balance¹

Revenues

³

Annualized

Rate (%)²

Earning Assets 1,336,337 38,506 12.0 1,355,867 41,801 12.9

Secur. + Interbank Invest. w /o Hedge 591,010 13,527 9.5 596,037 14,791 10.3

Loans and Leasing⁴ 687,879 23,750 14.5 700,176 25,599 15.4

Remunerated Compulsory Deposits 47,772 1,195 10.4 48,319 1,322 11.4

Other 9,676 34 1.4 11,335 90 3.2

Non Earning Assets 198,183 199,521

Tax Credits 35,885 40,344

Other Assets 140,951 138,150

Permanent Assets 21,347 21,027

TOTAL ASSETS 1,534,519 1,555,388

2Q15 3Q15

1 - Arithmetic average of the closing balances of months that comprise the period. 2 –Annualized rate. 3 - Calculated partially net effect of different currencies. 4 - Included:Loans Operations, Leasing and acquired loan portfolio.

Table 104. Average Balances and Interest Rates – Earning Assets (9 Months)

R$ million

Average

Balance¹Revenues³

Annualized

Rate (%)²

Average

Balance¹Revenues³

Annualized

Rate (%)²

Earning Assets 1,204,003 96,197 10.8 1,332,352 116,680 11.8

Secur. + Interbank Invest. w /o Hedge 497,028 29,405 8.0 585,459 40,648 9.4

Loans and Leasing⁴ 629,985 62,202 13.4 689,039 72,126 14.2

Remunerated Compulsory Deposits 72,301 4,390 8.2 47,932 3,707 10.4

Other 4,689 199 5.7 9,921 200 2.7

Non Earning Assets 180,687 196,282

Tax Credits 28,343 36,488

Other Assets 130,032 138,372

Permanent Assets 22,311 21,421

Total Assets 1,384,689 1,528,634

9M14 9M15

1 - Arithmetic average of the closing balances of months that comprise the period. 2 - Annualized rate. 3 - Calculated partially net effect of different currencies. 4 - Included:Loans Operations, Leasing and acquired loan portfolio.


84

5.7.2. Liabilities Analysis

Table 105. Average Balances and Interest Rates - Interest Bearing Liabilities (Quarterly)

R$ million

Average

Balance¹Expenses⁴

Annualized

Rate (%)²

Average


Annualized

Rate (%)²

Interest Bearing Liabilities 1,152,386 (26,081) 9.4 1,171,670 (29,165) 10.3

Saving Deposits 145,381 (2,645) 7.5 148,972 (2,944) 8.1

Interbank Deposits 34,331 (212) 2.5 39,393 (256) 2.6

Time Deposits 203,566 (4,892) 10.0 204,717 (5,328) 10.8

Money Market Borrow ing 348,865 (10,652) 12.8 333,139 (11,787) 14.9

Foreign Borrow ing and Onlending 25,391 (311) 5.0 30,512 (427) 5.7

Domestic Borrow ing and Onlending 93,522 (1,224) 5.3 92,961 (1,382) 6.1

Financial and Development Funds 11,953 (135) 4.6 13,783 (166) 4.9

Subordinated Debt 91,571 (1,901) 8.6 99,737 (1,981) 8.2

Foreign Securities Borrow ing 38,766 (238) 2.5 45,925 (311) 2.7

Agribusiness Letters of Credit 130,189 (3,417) 10.9 135,354 (4,075) 12.6

Others Commercial Papers³ 28,849 (454) 6.4 27,176 (507) 7.7

Other Liabilities 382,134 383,718

Demand Deposits 66,188 65,471


Shareholder’s Equity 71,916 74,897

TOTAL LIABILITIES 1,534,519 1,555,388

2Q15 3Q15

1 - Arithmetic average of the closing balances of months that comprise the period. 2 –Annualized rate. 3 - Included: Letters of Credit, Debentures, Mortgage Bonds and Mortgage Receivables Certificates. 4 - Calculated partially net effect of different currencies.

Table 106. Average Balances and Interest Rates - Interest Bearing Liabilities (9 Months)

R$ million

Average


Annualized

Rate (%)²

Average


Annualized

Rate (%)²

Interest Bearing Liabilities 1,038,862 (61,782) 8.0 1,147,363 (79,115) 9.3

Saving Deposits 145,768 (7,218) 6.7 146,854 (8,084) 7.4

Interbank Deposits 27,805 (606) 2.9 35,942 (680) 2.5

Time Deposits 233,806 (15,196) 8.8 206,422 (14,950) 9.8

Money Market Borrow ing 289,425 (22,255) 10.4 337,540 (31,929) 12.8

Foreign Borrow ing and Onlending 18,556 (1,867) 13.6 27,026 (1,088) 5.4

Domestic Borrow ing and Onlending 90,747 (2,784) 4.1 93,398 (3,778) 5.4

Financial and Development Funds 8,324 (345) 5.6 12,477 (440) 4.7

Subordinated Debt 77,277 (3,860) 6.7 93,747 (5,702) 8.2

Foreign Securities Borrow ing 34,089 (747) 2.9 39,203 (828) 2.8

Agribusiness Letters of Credit 95,565 (6,383) 9.0 126,899 (10,290) 11.0

Others Commercial Papers³ 17,499 (520) 4.0 27,855 (1,346) 6.5


Demand Deposits 69,151 67,937


Shareholder’s Equity 73,002 73,893

TOTAL LIABILITIES 1,384,689 1,528,634

9M14 9M15

1 - Arithmetic average of the closing balances of months that comprise the period. 2 –Annualized rate. 3 - Included: Letters of Credit, Debentures, Mortgage Bonds and Mortgage Receivables Certificates. 4 - Calculated partially net effect of different currencies.


85

5.7.3. Volume and Rate Analysis

Table 107. Volume Analysis (Earning Assets) – Quarterly Rate

R$ million 2Q15 3Q15 Abs. Chg.

Assets – Earning Assets (a)¹ 1,336,337 1,355,867 19,530

Net Interest Income (b) 13,684 14,364 680

Spread - % (b/a) 1.024 1.059 0.035

Gain/(loss) w ith Volume² 200

Gain/(loss) w ith Spread³ 473

Gain/(loss) w ith Volume and Spread⁴ 7

1 - Arithmetic average of the closing balances of months that comprise the period. 2 - Gain/(Loss) resulting from multiplying the earning assets volume of the current period for the spread of the previous period net previous NII; 3 - Gain/(Loss) resulting from multiplying the earning assets volume of the previous period for the spread of the current period net previous NII; 4 - Combined Gain/(Loss) of the effects above.

Table 108. Volume Analysis (Earning Assets) – 9M Rate

R$ million 9M14 9M15 Abs. Chg.

Assets – Earning Assets (a)¹ 1,204,003 1,332,352 128,350

Net Interest Income (b) 36,862 41,870 5,007

Spread - % (a/b) 3.062 3.143 0.081

Gain/(loss) w ith Volume² 3,930

Gain/(loss) w ith Spread³ 974

Gain/(loss) w ith Volume and Spread⁴ 104

1 - Arithmetic average of the closing balances of months that comprise the period. 2 - Gain/(Loss) resulting from multiplying the earning assets volume of the current period for the spread of the previous period net previous NII; 3 - Gain/(Loss) resulting from multiplying the earning assets volume of the previous period for the spread of the current period net previous NII; 4 - Combined Gain/(Loss) of the effects above.

See the Net Interest Margin evolution below.

Table 109. NIM

% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Net Interest Margin (NIM)¹ 4.3 4.1 4.1 4.2 4.4 4.3 4.2 4.3

Risk Adjusted NIM² 2.8 2.7 2.6 2.6 2.7 2.4 2.5 2.4

1 - NII/Earning Assets average, annualized; 2 - Risk adjusted Net Interest Margin (NII less Provision for Loan Losses)/Earning Assets average, annualized.

Table 110. Adjusted NIM and Net Interest Income

R$ million 3Q14 2Q15 3Q15 9M14 9M15

Average Interest Earning Assets (AIEA) (a) 1,225,690 1,336,337 1,355,867 1,204,003 1,332,352

Average Interest Bearing Liabilities (AIBL) (b) 1,059,868 1,152,386 1,171,670 1,038,862 1,147,363

NII (c) 12,602 13,684 14,364 36,862 41,870

Net Interest Gain (d) 11,718 12,425 12,636 34,415 37,565

Interest Income (1.d) 33,657 38,506 41,801 96,197 116,680

Interest Expense(2.d) (21,939) (26,081) (29,165) (61,782) (79,115)

Net Interest Income Other Items¹ (e) 884 1,259 1,728 2,448 4,305

AIBL / AIEA – % (b/a) 86.5 86.2 86.4 86.3 86.1

Yield Average Assets² ⁴ - % (1.d/a) 11.4 12.0 12.9 10.8 11.8

Liabilitises Avarege Cost ² ⁴ - % (2.d/b) 8.5 9.4 10.3 8.0 9.3

Net Interest Rate² ³ - % 2.9 2.7 2.6 2.8 2.5

Adjusted NIM² - % (d/a) 3.9 3.8 3.8 3.8 3.8

NIM² – % (c/a) 4.2 4.2 4.3 4.1 4.2

1 - Includes derivatives, debt assumption contracts, foreign exchange portfolio, recovery of write-offs, gold loans, credit guarantor fund, foreign exchange gain/loss abroad and other income of a financial intermediation nature. 2 - Annualized Rates. 3 - Difference between average rate of earning assets and average rate of interest bearing liabilities. 4 - Calculated net effect of different currencies.

The table below shows the allocation of changes in interest income and expenses due to the variation in the average volume of interest earning assets and interest bearing liabilities and by the change in the average interest rate on these assets and liabilities, during the periods under analysis.


86

Table 111. Change in Revenues and Expenses and Change Volume / Rate (Quarterly)

R$ million

Average

Volume¹

Average

Rate ²

Net

Change³

Average

Volume¹

Average

Rate ²

Net

Change³

Earning Assets ⁴ 602 2,694 3,296 4,013 4,131 8,145

Secur. + Interbank Invest. w /o Hedge 125 1,139 1,263 2,116 2,029 4,146

Loans and Leasing 450 1,400 1,849 2,110 2,033 4,144

Remunerated Compulsory Deposits 15 112 127 (527) 346 (181)

Other 13 43 56 51 (15) 36

Interest Bearing Liabilities ⁴ (480) (2,605) (3,085) (2,783) (4,443) (7,226)

Saving Deposits (71) (228) (299) (6) (396) (402)

Interbank Deposits (33) (11) (44) (77) (0) (78)

Time Deposits (30) (406) (436) 522 (718) (196)

Money Market Borrow ing 556 (1,692) (1,135) (1,051) (2,505) (3,556)

Foreign Borrow ing and Onlending (72) (45) (117) (159) 62 (98)

Domestic Borrow ing and Onlending 8 (167) (158) (45) (322) (367)

Financial and Development Funds (22) (9) (31) (55) 11 (44)

Subordinated Debt (162) 82 (81) (342) (196) (537)

Foreign Securities Borrow ing (49) (25) (73) (88) 35 (53)

Agribusiness Letters of Credit (155) (502) (658) (943) (646) (1,588)

Others Commercial Papers⁵ 31 (85) (53) (177) (131) (307)

3Q15 / 2Q15 3Q15 / 3Q14

1 - Net Change - Average Rate. 2 - (Current Period Interest / Current Period Balance) x (Previous Period Balance) - (Previous Period Interest). 3 - Current Period Interest - Previous Period Interest. 4 - Calculated according to the same methodology presented in footnotes 1, 2 and 3; 5 - Included: Letters of Credit, Debentures, Mortgage Bonds and Mortgage Receivables Certificates.

Table 112. Change in Revenues and Expenses and Change Volume / Rate (9M)

R$ million

Average

Volume¹

Average

Rate²

Net

Change³

Earning Assets ⁴ 11,240 9,243 20,483

Secur. + Interbank Invest. w /o Hedge 6,140 5,102 11,242

Loans and Leasing 6,182 3,742 9,923

Remunerated Compulsory Deposits (1,885) 1,202 (683)

Other 105 (104) 1

Interest Bearing Liabilities ⁴ (7,482) (9,851) (17,333)

Saving Deposits (60) (806) (866)

Interbank Deposits (154) 80 (74)

Time Deposits 1,983 (1,737) 247

Money Market Borrow ing (4,551) (5,122) (9,674)

Foreign Borrow ing and Onlending (341) 1,120 779

Domestic Borrow ing and Onlending (107) (886) (994)

Financial and Development Funds (146) 51 (95)

Subordinated Debt (1,002) (840) (1,842)

Foreign Securities Borrow ing (108) 27 (81)

Agribusiness Letters of Credit (2,541) (1,366) (3,907)

Others Commercial Papers⁵ (500) (326) (826)

9M15 / 9M14

1 - Net Change - Average Rate. 2 - (Current Period Interest / Current Period Balance) x (Previous Period Balance) - (Previous Period Interest). 3 - Current Period Interest - Previous Period Interest. 4 - Calculated according to the same methodology presented in footnotes 1, 2 and 3; 5 - Included: Letters of Credit, Debentures, Mortgage Bonds and Mortgage Receivables Certificates.


87

5.8. Credit Spread by Portfolio

Determining the managerial financial margin begins as follows:

a) Accrued interest income, classified by type of portfolio;

b) The opportunity costs defined for each of the lines that make up the portfolios are deducted.

For credit intended for individuals and companies, with free resources, the opportunity cost is the Selic Rate. For the agricultural portfolio and other targeted resources, the opportunity cost is calculated according to the source of funding and the need to implement a mandatory part of this funding source.

From 1Q15 on, the spread calculation methodology was reassessed, considering from now on, to calculation purposes, the organic portfolio. In order to keep comparability, the historical data was reviewed.

Table 113. Managerial Margin

Chg. (%) on


Loan Operations¹ 9,528 9,998 10,233 7.4 2.4 27,521 29,901 8.6

Individuals 4,239 4,635 5,049 19.1 8.9 12,344 14,029 13.6

Companies² 3,303 3,421 3,329 0.8 (2.7) 9,535 10,124 6.2

Agribusiness 1,986 1,941 1,856 (6.6) (4.4) 5,642 5,747 1.9


1 – Series revised from 1Q15 due to methodology adjustments; 2 – Government operations not included.

Spread

The following table presents the managerial spread by portfolio. The rate results from the margin balance ratio.

Table 114. Spread by Portfolio

% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Loan Operations¹ 7.0 6.8 7.1 7.0 7.0 6.9 7.0 7.1

Individuals 14.6 13.9 13.9 14.0 13.8 13.5 14.0 14.9

Companies² 5.2 5.3 5.5 5.5 5.7 5.5 5.6 5.7

Agribusiness 4.7 4.8 4.9 5.1 5.1 4.9 4.8 4.5

1 – Series revised from 1Q15 due to methodology adjustments; 2 – Government operations not included.

Chapter 6 – Fee Income

88

6 – Fee Income

The Bank’s activity aims for excellence in the relationship with customers and it has favored the expansion of business volume, contributing to the diversification of fee income. In the following table it is presented the breakdown of the BB’s fee income.

In the 9M15/9M14 comparision, highlight for asset management and account fees.

Table 115. Fee Income

Chg. (%)


Fee Income 6,273 6,459 6,907 10.1 6.9 17,976 19,675 9.5

Credit / Debit Cards 1,585 1,474 1,635 3.2 10.9 4,654 4,751 2.1

Account Fees 1,193 1,252 1,374 15.1 9.7 3,399 3,768 10.9

Asset Management Fees 1,116 1,171 1,254 12.4 7.1 3,023 3,506 16.0

Loan Fees 440 452 503 14.4 11.4 1,333 1,362 2.2

Collections 376 426 435 15.9 2.2 1,090 1,281 17.5

Billings 235 273 250 6.6 (8.3) 691 783 13.3

Insur., Pension and Premium Bonds¹ 243 276 231 (4.9) (16.2) 721 758 5.2

Interbank 188 193 196 4.2 1.4 552 575 4.2

Capital Market 125 104 90 (27.5) (13.3) 352 368 4.5

Fiduciary Services 119 124 130 8.9 5.1 329 367 11.4

National Treasury and Manag. of Official Funds 95 117 130 36.6 11.7 260 333 27.8

Consortium 97 110 109 11.9 (1.5) 242 314 29.6

Other 462 488 569 23.3 16.6 1,329 1,509 13.5

Quarterly Flow Chg. (%) 9 Months Flow


In the following sections it is presented the main fee generator bussiness in Banco do Brasil.

6.1. Acount Fees

BB maintained the growth in its customer base in the last quarters. BB’s customers and checking accounts basis in the last 12 months are shown below.

Table 116. Customers and Checking Accounts

thousands Sep/14 Dec/14 Mar/15 Jun/15 Sep/15 Sep/14 Jun/15

Customers 61,887 61,758 62,083 62,247 62,432 0.9 0.3

Checking Accounts 39,039 38,085 38,212 38,157 38,058 (2.5) (0.3)

Individuals 36,552 35,655 35,781 35,725 35,628 (2.5) (0.3)

Companies 2,487 2,430 2,431 2,432 2,430 (2.3) (0.1)

Position Chg. (%)

6.2. Payment Methods

BB maintains its strategy of expansion of card business earnings, diversifying its activities by launching new products and solutions for both traditional segments as for new business segments.

The search for synergies and expansion of business in partnership with the related companies complement the strategy.

The organizational chart of the main business of electronic payment methods, in which Banco do Brasil has direct or indirect equity interest, is presented below. Only Livelo remains in preoperational phase, a company that will explore the business related to loyalty programs.


89

Figure 39. Payment Methods Organizational Chart – Main Companies¹

BB Adm.

Cartões

100.0 %

PARTICIPAÇÕES

SERVIÇOSCBSS

49.99%

66.64%

28.65%

100.0%

CARTÕES

100.0 %

BB

Banco do Brasil

BB Banco

de Investimentos

100.0 %

40.95%

50.1%

100.0%

100.0%70.0%

PROMOTORA

100.0% 100.0% 100.0%

70.0%

30.0%

30.0%

1 – It considers September 30, 2015 position.

6.2.1. Cards Base and Turnover

BB is one of the leading issuers of Visa, Mastercard, Amex and Elo credit card brands, position achieved due to a wide customer base and diversified operational strategy, in addition to a platform for issuing cards with multiple functions (credit, debit, banking and sales).

Table 117. Cards Base

thousands Sep/14 Jun/15 Sep/15 Sep/14 Jun/15

Total of Cards 82,212 79,658 76,553 (6.9) (3.9)

Credit Cards 23,021 22,582 22,468 (2.4) (0.5)

Debit Cards/Prepaid 59,191 57,076 54,085 (8.6) (5.2)

ELO 7,153 7,126 7,460 4.3 4.7

Chg. (%)

BB’s cards base with recurring use – i.e., with at least one purchase in the last thirty days - was 9.1 million in Sep/15 for the credit function and 11.3 million in debit card function. These figures reinforce the high growth potential of the card businesses vis-à-vis the significant existing base of card-holding customers in the BB Holding.

The investment in innovation, focusing on the improvement of digital relationships through the Ourocard-e has already accumulated awards such as the E-Finance, awarded by CIAB/Febraban in June of this year, and already have been considered the best solution in the category Cybersecurity Initiative during the 15th edition of the Banking Technology Awards, held in London in Nov/14.

The following table shows the amount of transactions with BB cards. The evolution demonstrates the potential to generate revenues for the bank.


90

Table 118. Number of Transactions

Chg. (%)

million 3Q14 2Q15 3Q15 3Q14 2Q15 9M14 9M15 9M14

Number of Transactions 530 566 586 10,6 3,6 1.549 1.691 9,2

Credit Cards 227 241 247 8,8 2,5 659 713 8,2

Debit Cards/Prepaid 303 325 340 12,0 4,5 890 978 9,9

Quarterly Flow Chg. (%) 9 Months Flow

The financial volume transacted through cards – total turnover – was R$185.4 billion in 9M15, growth of 7.5% over the same period of the previous year. Considering only traditional transactions, there was a 11.3% increase in the same period comparison.

Figure 40. Total Turnover – R$ billion

35.6 38.3 35.1 36.6 37.7

101.7 109.523.5 27.5

22.9 24.4 28.5

70.875.9

59.065.8

58.1 61.066.3

172.5185.4

3Q14 4Q14 1Q15 2Q15 3Q15 9M14 9M15

Debit Cards Credit Cards

Figure 41. Traditional and New Business Total Turnover – R$ billion

44.1 51.2 45.9 47.6 49.7

128.8143.3

14.914.6

12.1 13.4 16.6

43.7

42.1

59.065.8

58.1 61.066.3

172.5

185.4

3Q14 4Q14 1Q15 2Q15 3Q15 9M14 9M15

Especific Business¹ Traditional Segment

1 – It is included the transactions with Ourocard Agribusiness, Ourocard Crediário, BNDES Card, cards billing payament, Ourocard Prepaid and Alelo and B2B companies cards purchases.

6.2.2. Cards Service Income

Cards service operating income derives from the issuance and use of cards in credit, debit and installment credit by customers. It also includes credentialing and acquiring services, prepaid cards and card brands, which are provided by affiliates of the Bank.

Cards service operating income does not include revenues and expenses arising from minimum or partial invoice payment (revolving credit). However, it includes the administrative and operating costs directly related to the card business.


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The following tables show the breakdown of the card services operational income and the income after taxes.

Table 119. Cards Service Income and Expenses – Quarterly Flow

R$ million 3Q14 3Q15 Chg. (%)

Total Operating Income 2,031 2,251 10.8

Issuance 1,048 921 (12.1)

Acquiring 570 612 7.4

Other Revenues 413 718 73.8

Other Expenses (1,221) (1,303) 6.7

Issuance (763) (633) (17.0)

Acquiring (370) (614) 65.9

Other Expenses (88) (56) (36.4)

Cards Services Income 810 948 17.0

Tax Effect (298) (340) 14.1

Cards Services Income After Tax 512 608 18.8

In the 9M15 cards service income was R$1,592 million after tax, up 6.9% compared to the same period last year.

This result brings the impact of the reorganization of the payment methods business. Since February 27, 2015 the exchange income began to be recorded by Cateno, company that manages the transactions of postpaid bill payment and purchases via debt card.

Table 120. Cards Service Income and Expenses – 9 Months Flow

R$ million 9M14 9M15 Chg. (%)

Total Operating Income 5,764 6,385 10.8

Issuance 3,049 2,661 (12.7)

Acquiring 1,661 1,815 9.3

Other Revenues 1,054 1,909 81.1

Other Expenses (3,412) (3,917) 14.8

Issuance (2,153) (1,984) (7.8)

Acquiring (1,029) (1,731) 68.2

Other Expenses (230) (202) (12.2)

Cards Services Income 2,352 2,468 4.9

Tax Effect (863) (876) 1.5

Cards Services Income After Tax 1,489 1,592 6.9

6.3. Asset Management

BB Gestão de Recursos DTVM SA, based in Rio de Janeiro and with an office in São Paulo, is primarily engaged in the structuring, establishment, administration and management of funds, portfolios and investment clubs.

The following chart shows the balance in managed third party funds and the market share of BB Asset Management DTVM in the ANBIMA (Brazilian Association of Financial and Capital Markets) ranking.


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Figure 42. Asset Management

493.7516.9

536.2555.8 554.7

594.8 604.8 602.4

20.9 21.6 21.9 22.0 21.7 22.5 22.2 21.7


Asset Management - R$ billion Market Share - %

In addition to the resources counted for ranking purposes between market participants institutions, BB DTVM holds R$49.9 billion of equity in extramarket funds.

According to ANBIMA’s Asset Management Ranking, BB DTVM is a leader in the following segments: institutional investors, government and retail. The following tables show the distribution of the managed assets by customer and by type of product.

Table 121. Investment Funds and Managed Portfolio by Customer


Institutional Investors 236,900 42.6 269,701 44.6 280,328 46.5 18.3 3.9

Government 118,442 21.3 124,542 20.6 106,753 17.7 (9.9) (14.3)

Retail 64,515 11.6 76,120 12.6 77,465 12.9 20.1 1.8

High income 34,956 6.3 41,399 6.8 42,898 7.1 22.7 3.6

RPPS 32,309 5.8 38,183 6.3 38,480 6.4 19.1 0.8

Private 18,132 3.3 20,907 3.5 20,378 3.4 12.4 (2.5)

Middle Market 13,030 2.3 14,919 2.5 14,905 2.5 14.4 (0.1)

Corporate 17,004 3.1 11,539 1.9 12,376 2.1 (27.2) 7.3

Foreign Investors 20,467 3.7 7,483 1.2 8,814 1.5 (56.9) 17.8

Total 555,755 100.0 604,792 100.0 602,395 100.0 8.4 (0.4)

Balance Chg. (%)

Table 122. Investment Funds and Managed Portfolio by Type


Investment Fund 543,877 97.9 592,204 97.9 589,031 97.8 8.3 (0.5)

Fixed 222,856 40.1 245,621 40.6 242,204 40.2 8.7 (1.4)

Short-Term 85,312 15.4 93,952 15.5 87,112 14.5 2.1 (7.3)

Referenced in DI Index 46,012 8.3 54,234 9.0 55,429 9.2 20.5 2.2

Equity 58,085 10.5 51,377 8.5 49,733 8.3 (14.4) (3.2)

Multimarket 12,215 2.2 12,080 2.0 11,119 1.8 (9.0) (8.0)

Others 119,397 21.5 134,940 22.3 143,433 23.8 20.1 6.3

Managed Portfolios 11,878 2.1 12,587 2.1 13,364 2.2 12.5 6.2

Fixed 11,878 2.1 12,587 2.1 13,205 2.2 11.2 4.9

Equity - - - - 159 0.0 - -

Total 555,755 100.0 604,792 100.0 602,395 100.0 8.4 (0.4)

Balance Chg. (%)


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Sustainability

Currently, BB DTVM manages five investment funds with social-environmental characteristics. The following table shows the balance of assets under management in these funds.

Table 123. Management of Investment Funds With Socio-Environmental Characteristics

Chg. (%)

R$ million Sep/14 Sep/15 Sep/14

BB Multi Global Acqua LP Private FI 492.2 511.7 4.0

BB Previdenciário Ações Governança 204.6 138.9 (32.1)

BB Referenciado DI Social 50 83.7 104.2 24.5

BB Ações ISE Jovem FIC 14.8 10.6 (28.4)

BB Ações Carbono Sustent. FIA 4.3 6.0 39.5

BB Ações Carbono Sustent. Op. Venda FIA¹ 3.9 - (100.0)

BB Multi Mercado LP Jovem FIC² 1.1 - (100.0)

Total 804.6 771.4 (4.1)

Balance

Source: Anbima. 1 – Fund incorporated by BB Multimercado Macro LP 200 FIC on 3/20/2015. 2 – Fund incorporated by BB Ações Carbono Sustentabilidade FIA on 3/13/2015.

6.4. Capital Market

The capital market is one of the main financing sources for manufacturing activity in worldwide economies. Funding instruments, in addition to allowing the growth of companies, also contribute to the generation and dilution of the risk of new investments.

Banco do Brasil operates in the capital market through its wholly-owned subsidiary BB-Banco de Investimento S.A.- BB-BI.

In the international capital markets, BB operates through its wholly-owned subsidiaries: BB Securites Ltd. (London), Banco do Brasil Securities LLC. (New York) and BB Securities Asia Pte Ltd. (Singapore).

BB-BI’s portfolio includes services that involve market research, structuring and distribution of transactions, settlement and custody of assets, as well as products and services for individuals and companies.

6.4.1. BB-BI Products and Services

I. Mergers and acquisitions: BB-BI provides financial advice on acquisitions, corporate restructuring (business combinations, split-offs and mergers), private placements, and issues appraisal and fairness opinion reports for companies.

II. Gold: The Bank provides gold purchase and sale services for its customers, in the form of gold certificates or ingots, as well as services related to the custody of these assets.

III. Private Equity: BB-BI holds shares in 16 funds and acts as an advisor for 7 of them, with 54 indirect investments in companies located in various regions in Brazil, from a number of sectors (energy, infrastructure, logistics, ports, railways, agribusiness, etc.) and in different stages of development (consolidated companies, emerging companies and companies with innovative technology).

IV. Fixed Income: (i) Domestic market: services for coordination, structuring and placement of debentures, commercial notes and financial bills are offered through BB Investimentos. (ii) International market: coordination, structuring and placement of securities issued by companies, banks and the Brazilian Government through brokerage houses based in London, New York and Singapore, which makes BB a global player in the capital market.

V. Equity: BB-BI provides advisory services for all stages of public share offerings, tender offers for acquisition of shares (OPAs) and offerings of Cepacs (instruments used to raise resources to fund public construction projects). It also provides services related to the structuring and placement of Real Estate Investment Funds (FII). For individual investors, the equity portfolio includes share purchase and sale services, and, for private banking investors, it also includes share lease services.

VI. Securitization: The contracting companies rely on BB-BI’s experience to structure, coordinate and distribute receivables transactions. The securities negotiable in Capital Markets, arising from


94

the securitization transactions, are Receivables Investment Funds (FIDCs), Real Estate Receivables Certificates (CRIs) and Agribusiness Receivables Certificates (CRAs).

6.4.2. Performance in the Capital Market

In the 9M15, BB-BI was the coordinator in 29 issuances of fixed income bonds, including promissory notes and debentures, with a volume of R$5.9 billion. In terms of origination, BB was the 3rd place in the Anbima Ranking, with a market share of 12.9%. Regarding the distribution, BB-BI was the 5th place, with a 7.2% market share.

Considering the uncertainties in the international and domestic scenarios, in the third quarter there was no issuance of bonds by Brazilian companies in the international capital market. Nonetheless, BB continued with the geographical diversification and expansion strategy of its activities, participating as co-manager on 5 foreign issuers operations totaling US$7.3 billion in the period.

The following graph demonstrates BB-BI performance in the domestic and international market for fixed income securities.

Figure 43. Fixed Income Securities Origination – Domestic and International Markets

12,601

34,394

29,968

12,068

6,842

1,473

10,675

943

40.2 46.2

88.2

54.6 46.624.0 31.7

14.5

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Volume (R$ million) Revenues (R$ million)

For retail investors, BB-BI offers the service of sale and purchase of shares through BB’s service network, internet (home broker) and mobile. In 3Q15, the trading volume was R$6 billion. The following graph shows the quarterly series.

Figure 44. Individuals Equity – Secondary Market

5,3094,340

4,874

6,0287,040 6,816

8,048

6,057

4.6 3.7 4.0 4.9 5.7 5.0 5.7 4.6

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Volume (R$ million) Revenues (R$ million)


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In the private equity industry, BB-BI holds quotas in 16 funds. The total capital allocated by BB-BI to the private equity sector is R$1,774.1 million, as shown in following table.

Table 124. Private Equity – Indirect Interest

R$ million

Commited

Capital of BB-BI

Share in

Committed

Capital of the

Fund (%)

Commited

Capital of BB-BI

Share in

Committed

Capital of the

Fund (%)

Commited

Capital of BB-BI

Share in

Committed

Capital of the

Fund (%)

FIP Angra Infraestrutura 59.9 8.1 60.0 8.1 60.0 8.1

FIP Logística Brasil 60.0 13.0 60.0 13.0 60.0 13.0

FIP Brasil Energia 60.4 5.8 60.4 5.8 60.4 5.8

FIP Infra Brasil 60.0 7.3 60.0 7.3 60.0 7.3

FIP Coliseu 200.0 15.0 266.7 20.1 266.7 20.1

FIP Redentor 400.3 28.6 400.3 28.6 400.3 28.6

FMIEE Rio Bravo Nordeste II 20.0 15.2 20.0 15.2 20.0 15.2

FMIEE Jardim Botanico VC I 20.0 20.0 20.0 20.0 20.0 20.0

FMIEE Fundotec II 12.0 15.5 12.0 15.5 12.0 15.5

FIP Fundo Brasil de Governança Corporativa 82.5 13.8 82.5 13.8 82.5 13.8

FIP Brasil Agronegócio 160.0 19.0 160.0 19.1 160.0 19.1

FIP Brasil Sustentabilidade 40.0 9.5 40.0 9.5 40.0 9.5

FIP Fundo Brasil de Internacionalização de Empresas 88.0 24.4 88.0 24.4 88.0 24.4

FIP Brasil Portos e Ativos Logísticos 169.3 18.8 169.3 18.8 169.3 18.8

FIP Brasil Óleo e Gás 125.0 25.0 125.0 25.0 125.0 25.0

FIP Fundo Brasil de Internacionalização de Empresas II 112.5 30.0 150.0 21.4 150.0 21.4

Total 1,669.9 1,774.1 1,774.1


The figure below shows the balance held by BB-BI in the gold market and revenues from custody.

Figure 45. Gold – Custody Balance and Revenues

6,6525,477 5,207 5,129 5,053 4,796 4,701 4,226

1,330

1,481

1,191 1,1681,267 1,243

1,314

1,442

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Custody Balance (kg) Custody Revenues (R$ thousands)

6.5. Fiduciary Services

Fiduciary services are complementary activities of capital markets, funds industry and loans operations. These services consist primarily of fiduciary management, custody and trustee. Custody services include services such as controllership, accounting, assets bookkeeping, settlement bank and agent bank.

The following table presents the fiduciary services income.


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Table 125. Fiduciary Services Income

R$ million 3Q14 2Q15 3Q15 3Q14 2Q15

Operating Revenues 119 123 130 9.2 5.7

Fiduciary Service Fee 119 123 130 9.2 5.7

Operating Expenses (15) (15) (14) (6.7) (6.7)

Personnel Expenses (10) (10) (9) (10.0) (10.0)

Other Administrative Expenses (5) (5) (5) - -

Fiduciary Service Income 104 108 116 11.5 7.4

Income and Social Contrib. Taxes (42) (43) (47) 11.9 9.3

Income After Taxes 62 65 69 11.3 6.2

Quarterly Flow Chg. (%)

6.5.1. Fiduciary Management

BB provides fiduciary management service through its wholly-owned subsidiary, BB Gestão de Recursos - DTVM S.A. In this context, BB conglomerate stands out as an industry leader in the country. This position reflects the confidence and strength with which the conglomerate is viewed by the investment fund investors.

The graph below shows the Brazilian asset management industry evolution in the last six years.

Figure 46. Fiduciary Management and Market Share – R$ billion

1,339 1,5091,778 1,868 2,002 2,172

360416

444494

555602

1,6991,925

2,2222,362

2,5572,774

21.2 21.620.0 20.9 21.7 21.7

2010 2011 2012 2013 2014 9M15

BB Market (ex-BB) Market Share - %

Source: Anbima.

6.5.2 Custody

Banco do Brasil stands out as one of the main leaders of the custody, controllership, accounting and bookkeeping assets industry. In 3Q15, BB reached the milestone of R$689 billion under custody, 9.4% up over the same period of the previous year. The custody volume expansion in is mainly due to:

i) increase in the BB DTVM assets under management;

ii) advance in Credit Receivables Investment Funds, and

iii) growth of social security sector net resources.

The next graph shows the evolution of the custody resources in Banco do Brasil.


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Figure 47. Domestic Custody Total Assets and Market Share – R$ billion

523 547 523 542 538 576 603 592

8587 92 87 89

8691 97608

633615 630 626

662694 689

20.9 21.620.5 20.3 20.0 20.4 20.7 21.3


Third-Party Own Resources Market Share - %

Source: Anbima.

6.6. Insurance

BB Seguridade is the Banco do Brasil insurance group. Established in 2012 as a wholly owned subsidiary of BB, the company resulted from the corporate restructuring undertaken since 2008. Among its activities are the sale of insurance products, pension plans, premium bonds and brokerage services.

The Financial and Operational Results for each segment is shown below, according to the accounting information available in the explanatory note related to the insurance, pension plans and premium bonds presented in the Financial Statements.

Additional information on BB Seguridade and insurance businesses can be found in that company’s MD&A, available at www.bancodobrasilseguridade.com.br.


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The following table shows the main BB Seguridade performance ratios.

Table 126. BB Seguridade – Performance Ratios

R$ million 3Q14 2Q15 3Q15 on/ 3Q14 on/ 2Q15

Performance Ratios - %

Insurance - Life, Mortgage Life and Rural

Loss Ratio¹ 31.7 31.2 25.6 (19.2) (17.9)

Comission Ratio² 26.1 26.4 27.0 3.1 2.0

Technical Margin 42.3 42.6 47.8 13.1 12.4

Combined Ratio³ 71.0 69.8 65.1 (8.2) (6.6)

Expanded Combined Ratio⁴ 66.1 63.6 59.3 (10.3) (6.7)

Adjusted ROAE 56.0 53.4 68.0 21.5 27.3

Insurance - Property and Casualty

Loss Ratio¹ 56.2 56.9 57.2 1.7 0.5

Comission Ratio² 22.3 21.9 22.6 1.1 3.2

Technical Margin 21.5 21.3 20.9 (3.1) (2.3)

Combined Ratio³ 97.8 97.7 100.3 2.5 2.7

Expanded Combined Ratio⁴ 93.0 91.2 91.3 (1.9) 0.1

Adjusted ROAE 9.8 12.9 12.7 29.7 (1.8)

Pension Plans

Comission Ratio² 1.1 0.9 1.3 19.2 43.9

Adjusted ROAE 58.7 43.4 43.7 (25.5) 0.8

Premium Bonds

Comission Ratio² 45.1 47.2 47.3 4.8 0.3

Premium Bonds Margin 21.1 14.0 20.5 (2.7) 46.2

Adjusted ROAE 116.4 123.1 83.3 (28.5) (32.3)

Brokerage

Adjusted Operating Margin 81.8 81.3 83.7 2.3 3.0

Adjusted Net Margin 56.7 57.8 59.1 4.3 2.2

Quarterly Flow Chg. (p.p)

1 – Loss Ratio = Expenses with Claims / Earned Premiums. 2 – Comission Ratio = Acquisition Costs / Earned Premiums. 3 – Combined Ratio = (General Expenses + Administrative expenses + Acquisition Costs + Expenses with Claims + Revenue of Policy Issuance + Result with Reinsurance) / Earned Premiums. 4 – Expanded Combined Ratio = (General Expenses + Administrative Expenses + Acquisition Costs + Expenses with Claims + Revenue of Policy Issuance + Result with Reinsurance) / (Earned Premiums + Net Investment Income).

6.7. Consortium

The consortium market had R$57.3 billion in turnover, in the first eight months of 2015, according to recent data from the Brazilian Association of Administrators of Consortium Administrators - ABAC. On August, the number of active participants was 7.2 million, up 3.5% in 12 months.

Banco do Brasil operates in the consortium market through its subsidiary, BB Administradora de Consórcios S.A. On July 2015, according to the latest data available in Central Bank of Brazil, BB Consórcios had a 8.7% market share.

Table 127. Consortium – Active Quotas per Type

units Sep/14 Share % Jun/15 Share % Sep/15 Share % Sep/14 Jun/15

Auto 522,307 93.7 574,711 93.5 581,236 93.3 11.3 1.1

Mortgage 16,679 3.0 17,815 2.9 18,348 2.9 10.0 3.0

Motorcycle 7,552 1.4 9,797 1.6 10,277 1.6 36.1 4.9

Tractor/Truck 6,766 1.2 7,160 1.2 7,220 1.2 6.7 0.8

Services 2,155 0.4 3,023 0.5 3,267 0.5 51.6 8.1

Electric and Electronic Devices 1,803 0.3 2,275 0.4 2,680 0.4 48.6 17.8

Total 557,262 100.0 614,781 100.0 623,028 100.0 11.8 1.3

Balance Chg. (%)


99

Figure 48. Consortium – Fee Income and Active Quotas

557,262 565,051586,544

614,781 623,028

97.0 94.2 95.2

110.1 108.5

3Q14 4Q14 1Q15 2Q15 3Q15

Active Quotas (units) Management Fees - R$ million

The tables below show a comparison of the average ticket, average term and average management fee of the quotas sold in the last periods.

Table 128. Consortium – Average Ticket

R$ 3Q14 4Q14 1Q15 2Q15 3Q15

Mortgage 114,861 115,233 121,765 191,267 180,205

Tractor/Truck 134,159 132,404 126,799 132,655 139,218

Auto 24,319 29,555 26,174 27,238 25,629

Motorcycle 8,433 8,849 8,438 8,712 8,696

Services 4,839 5,940 5,162 5,254 4,429

Electric and Electronic Devices 2,433 2,457 2,455 2,684 3,126

Balance

Table 129. Consortium – Average Term and Average Management Rate

Average

Term

(months)

Average

Rate (%)

Average

Term

(months)

Average

Rate (%)

Average

Term

(months)

Average

Rate (%)

Mortgage 138 16.1 155 19.2 139 19.2

Tractor/Truck 75 11.2 96 14.9 93 15.1

Auto 66 12.6 66 13.7 67 13.9

Motorcycle 56 16.9 51 20.0 48 20.2

Services 28 16.1 26 20.3 23 23.1

Electric and Electronic Devices 32 15.6 28 17.5 31 20.2

3Q14 2Q15 3Q15

Chapter 7 – Productivity and Efficiency

100

7 – Productivity and Efficiency

Banco do Brasil has improved its operational efficiency and productivity due to strict control of administrative expenses, personnel expenses and operating expenses.

7.1. Key Productivity Ratios

This section presents the productivity ratios usually adopted in the analysis of financial institutions. The following table shows the rearrangement of income and expenses of the Income Statement with Reallocations in order to show the percentage of consumption by total operating expenses in relation to the total operating income.

Table 130. Total Operating Income and Expenses

R$ million 3Q14 (%) 2Q15 (%) 3Q15 (%) 9M14 (%) 9M15 (%)

Total Operating Income (Banking Product)¹ 22,348 100.0 23,911 100.0 25,285 100.0 65,364 100.0 73,312 100.0

Operating Income 21,956 98.2 23,457 98.1 25,022 99.0 63,593 97.3 72,011 98.2

Net Interest Income 12,602 56.4 13,684 57.2 14,364 56.8 36,862 56.4 41,870 57.1

Fee Income 6,273 28.1 6,459 27.0 6,907 27.3 17,976 27.5 19,675 26.8

Inc. from Ins., Pens. Plans and Sav.Bonds Op. 1,107 5.0 1,261 5.3 1,285 5.1 3,357 5.1 3,700 5.0

Eq. Interest of Subsidiaries and Affiliates 3 0.0 6 0.0 (3) (0.0) (22) (0.0) 4 0.0

Other Operating Income 1,972 8.8 2,046 8.6 2,468 9.8 5,419 8.3 6,762 9.2

Previ - Plano de Benefícios 1 228 1.0 139 0.6 40 0.2 1,120 1.7 318 0.4

Previ - Fundo de Utilização Restatement 163 0.7 316 1.3 223 0.9 651 1.0 983 1.3

Total Operating Expenses¹ (17,877) (80.0) (19,003) (79.5) (20,769) (82.1) (51,803) (79.3) (59,258) (80.8)

Broad Administrative Expenses (8,577) (38.4) (8,658) (36.2) (9,277) (36.7) (25,092) (38.4) (26,603) (36.3)

Administrative Expenses (8,048) (36.0) (8,439) (35.3) (8,551) (33.8) (23,596) (36.1) (25,216) (34.4)

Personnel Expenses (4,630) (20.7) (5,131) (21.5) (5,028) (19.9) (13,571) (20.8) (15,029) (20.5)

Other Administrative Expenses (3,417) (15.3) (3,308) (13.8) (3,523) (13.9) (10,025) (15.3) (10,187) (13.9)

Legal Risk (529) (2.4) (219) (0.9) (726) (2.9) (1,497) (2.3) (1,386) (1.9)

Other Tax Expenses (102) (0.5) (116) (0.5) (161) (0.6) (279) (0.4) (399) (0.5)

Taxes on Revenues (1,224) (5.5) (1,335) (5.6) (1,314) (5.2) (3,609) (5.5) (3,921) (5.3)

Allow ance for Loan Losses (4,571) (20.5) (5,530) (23.1) (6,407) (25.3) (13,328) (20.4) (17,936) (24.5)

Other Operating Expenses¹ (3,403) (15.2) (3,363) (14.1) (3,610) (14.3) (9,495) (14.5) (10,399) (14.2)

Operating Income 4,471 20.0 4,909 20.5 4,516 17.9 13,561 20.7 14,053 19.2

Non-Operating Income 40 0.2 (2) (0.0) 18 0.1 173 0.3 15 0.0

Income Before Taxes 4,511 20.2 4,907 20.5 4,534 17.9 13,735 21.0 14,068 19.2

Income Taxes and Statutory Profit Sharing (1,248) (5.6) (1,463) (6.1) (1,204) (4.8) (4,386) (6.7) (3,865) (5.3)

Minority Interest Earnings (378) (1.7) (403) (1.7) (448) (1.8) (1,026) (1.6) (1,256) (1.7)

Adjusted Net Income 2,885 12.9 3,040 12.7 2,881 11.4 8,323 12.7 8,947 12.2

One-Off Items (104) (0.5) (32) (0.1) 181 0.7 (36) (0.1) 2,941 4.0

Net Income 2,780 12.4 3,008 12.6 3,062 12.1 8,287 12.7 11,888 16.2

1 – Series revised. "Other Operating Expenses" was relocated from "Total Operating Income" to "Total Operating Expenses".

In the following table it can be seen that the personnel expenses coverage ratio (fee income/ personne expenses), administrative expenses coverage ratio (fee income/administrative expenses) and cost income ratio (administrative expenses/operation income) improved due to the positive performance of net interest income and fee income.

Table 131. Cost Income an Coverage Ratio – Adjusted¹

R$ million 3Q14 4Q14 1Q15 2Q15 3Q15 9M14 9M15

Fee Income / Personnel Exp. - Quarterly 135.5 136.9 129.6 125.9 137.4 132.5 130.9

Fee Income / Personnel Exp. - 12 month 132.1 133.6 134.3 131.8 132.4 - -

Fee Income / Administ. Exp. - Quarterly 77.9 76.7 76.7 76.5 80.8 76.2 78.0

Fee Income / Administ. Exp. - 12 month 75.2 76.3 77.1 77.0 77.7 - -

Cost Income Ratio (B/A) - % ² 43.4 43.5 40.9 42.0 39.9 43.6 40.9

Cost Income Ratio 12 month- % ² 44.5 43.6 42.6 42.4 41.6 - -

Quarterly Flow 9 Months Flow

1 - Data from Income Statement with Reallocations. 2 - Operating income, net of other operating expenses.


101

The following table shows other productivity ratios.

Table 132. Other Productivity Ratios


Assets per Employee - R$ thousand 12,793 12,877 13,651 13,656 14,403

Checking Accounts/Ow n Service Netw ork 2,063 2,009 2,023 2,042 2,084

Checking Accounts/Employees in Branches 449 440 441 436 437

Fee Income/Ow n Service Netw ork - R$ thousand 331 352 334 346 378

Personnel Expenses per Employee - R$ thousand 41 44 44 46 42

Credit Portf. (Broad Definition)/Ow n Service Netw ork - R$ million 39 40 41 42 44

Employees in Branches/(Branches+Services Posts) 12 12 12 12 12

The following charts show the evolution of BB’s productivity over the last 5 years.

The first graph shows the growth of individuals loan portfolio and the number of branches over the previous period.

Figure 49. Individuals Loan Portfolio and Branches

The next chart shows the evolution of bank product and the number of branches.

Figure 50. Bank Product and Branches


102

7.2. Personnel Expenses

In 9M15 personnel expenses grew 10.7% over the same period last year, mainly influenced by expenses related to the annual negotiation with banking industry workers.

Table 133. Personnel Expenses

Chg. (%) on



Salaries (2,186) (2,752) (2,393) 9.5 (13.1) (6,745) (7,451) 10.5

Social Charges (802) (892) (844) 5.2 (5.4) (2,398) (2,579) 7.6

Administrative Personnel Provisions (880) (664) (950) 7.9 43.0 (2,184) (2,527) 15.7

Benefits (615) (670) (679) 10.4 1.3 (1,832) (2,008) 9.6

Pension Fund (102) (110) (115) 12.9 4.7 (294) (335) 13.7

Remunerat. for Directors and Officers (24) (24) (26) 9.8 10.2 (67) (76) 12.3

Training (21) (19) (21) 1.9 12.7 (49) (54) 9.4

Quarterly Flow 9 Months FlowChg. (%) on

The following figures show the changes in BB’s staff and the staff members’ profile.

Figure 51. Evolution of BB’s Staff

11

7,9

22

11

6,9

31

11

7,3

52

11

7,9

56

11

4,9

42

11

1,9

04

11

1,6

28

11

1,6

13

11

2,3

25

10

9,3

52

6,0

18

5,3

03

5,7

39

5,6

31

5,5

90


Employees (Employees+Interns) Employees Interns

Table 134. BB’s Staff Members Profile


Employees 111,904 111,628 111,613 112,325 109,352

Female 46,498 46,364 46,387 46,681 45,451

Male 65,406 65,264 65,226 65,644 63,901

Educational Level

High School 25,443 24,956 24,607 24,617 23,894

College 50,864 49,772 49,679 49,756 48,211

Specialization, Master's and Doctorate 35,208 36,515 36,949 37,580 36,930

Others 389 385 378 372 317

Turnover - Quarterly Index (%) 1.0 0.7 0.7 0.5 4.8

7.3. Other Administrative Expenses

In 9M15 Other Administrative Expenses increase 1.6% from the same period of the previous year, mainly due to:

I - Expenses with Premises and Equipment – 16.0% increase resulting from new contracts and contractual adjustments of rents and water, electricity and gas price increase;

II - Amortization and Depreciation – 14.1% increase mainly by furniture, equipment and software purchase.


103

Table 135. Other Administrative Expenses

Chg. (%) on



Expenses w ith Premises and Equipment (618) (683) (705) 14.2 3.3 (1,782) (2,068) 16.0

Expenses w ith Outsourced Services (646) (605) (626) (3.1) 3.5 (1,948) (1,827) (6.2)

Security. Guard and Transport Services (588) (548) (583) (1.0) 6.3 (1,673) (1,697) 1.4

Telecommunications and Data Processing (590) (523) (537) (9.0) 2.6 (1,792) (1,634) (8.9)

Amortization and Depreciation (339) (359) (378) 11.7 5.2 (953) (1,087) 14.1

Advertising and Public Affairs (178) (128) (186) 4.3 45.9 (550) (441) (19.9)

Other Administrative Expenses (459) (462) (508) 10.7 10.0 (1,327) (1,434) 8.1


The Bank’s structure, part of other administrative expenses, is presented as follows.

7.3.1. Service Network

Banco do Brasil closed 3Q15 with 67.7 thousand points of service, including its own service network, shared network channels and MaisBB network. It has a presence in 99.7% of the Brazilian municipalities.

BB has partnerships for ATM sharing and to use the chain of lottery kiosks for withdrawals, deposits, payments and other services. These partnerships consolidate the dispersed and national customer service of Banco do Brasil.

The table below shows the breakdown of BB’s Own Service Network, which includes the following categories: branches, points of service and ATMs (including self-service lobbies).

Table 136. Service Network

Sep/14 Jun/15 Sep/15 Sep/14 Jun/15

Own Service Network 18,924 18,690 18,260 (3.5) (2.3)

Branches 5,493 5,544 5,424 (1.3) (2.2)

Service Posts 1,700 1,683 1,807 6.3 7.4

Automated Service Posts 11,731 11,463 11,029 (6.0) (3.8)

MaisBB Network 15,148 14,574 14,399 (4.9) (1.2)

Agents in the Country¹ 8,959 8,408 8,235 (8.1) (2.1)

Banco Postal 6,189 6,166 6,164 (0.4) (0.0)

Shared Network Channels 34,964 34,898 35,066 0.3 0.5

CEF - Lottery Stores 13,482 13,239 13,216 (2.0) (0.2)

Banco 24h 16,143 17,539 17,912 11.0 2.1

ATM: BRB + CEF 5,339 4,120 3,938 (26.2) (4.4)

Total 69,036 68,162 67,725 (1.9) (0.6)

Chg. (%) onQuantity

1- Review of agreements with agents in the country.

BB has the largest branch network in Brazil. The following table shows the distribution of branches by region of the country.

Table 137. Branch Network by Region

BB Banking Industry Share %

Southeast 2,424 12,033 20.1

Northeast 1,134 3,622 31.3

South 1,064 4,338 24.5

Middle West 482 1,834 26.3

North 320 1,148 27.9

Total 5,424 22,975 23.6

MaisBB Network

MaisBB network, which includes agents in the country and Banco Postal, is present in 14.4 thousand points around Brazil. The network offers services with extended opening hours.


104

The following table shows the MaisBB Network operating data, segregated by agents in the country and Banco Postal.

Table 138. MaisBB Network – Operating Data

MaisBB Network

thousand 3Q14 3Q15 3Q14 3Q15

Operating Data

Individual Cheking Accounts Opening¹ (units) 160,705 70,604 218,504 154,805

Payments, Collections and Checkings²

Collections² 45,235 42,045 18,778 20,112

Deposits 1,725 1,905 6,240 6,974

Withdraw s 1,329 1,483 7,575 8,124

Balance Checking 528 686 3,797 4,222

Account Statement 90 69 3,041 2,982

Loans³

Quantity of Operations (units) 269,022 249,611 87,998 159,476

Disbursement Amount (R$ million) 1,722 1,549 128 223

Banco PostalAgents in the Country

1 - Number of proposals. 2 - Bills and taxes collection. 3 - Banco Postal data: operations performed in Banco Postal network and by Banco Postal clients in other BB channels.

Banco Postal

Banco Postal is present in 94% of Brazilian municipalities with over 6.1 thousand branches. The following table shows the characteristics of its customers.

Table 139. Banco Postal – Customer Profile

thousand 2T15 3Q15

Individuals Checking Accounts 2,130.1 2,102.2

Checking Account Holders' Loans 148.6 159.5

Checking Account Holders w ith Products - % 71.9 72.5

Checking Account Holders w ith More Than 2 Products - % 23.1 24.4

Educational Level - %

Basic Education 35.4 35.3

High School 52.5 52.0

Higher Education 10.3 11.0

Other 1.7 1.6

Banco Postal

Foreign Service Network

BB’s foreign service network includes 41 facilities located in 23 countries. In addition to this structure, Banco do Brasil has an agreement with other financial institutions to serve its customers. At the end of the 3

rd quarter 2015 there were 853 banks acting as BB’s agents in 107 countries.


105

Table 140. Foreign Service Network

Branches Sub-branchesRepresentative

OfficesSubsidiaries and affiliates

Shared Services

Units

Assunción Ciudad del Este Caracas Banco do Brasil AG Madri BB USA Serv. Center

Buenos Aires Hamamatsu Mexico City Banco do Brasil AG Milan BB Europa Serv. Center

Frankfurt Nagoya Dubai Banco do Brasil AG Paris

Grand Cayman Sta. Cruz de La Sierra Lima Banco do Brasil AG Viena

La Paz Luanda Banco do Brasil Securities LLC

London Montevideo BB Leasing Company Ltd.

Miami Panama BAMB Brazilian Americ. Merch. Bank

New York BB Securities Ltd. Londres

Santiago BB USA Holding Company

Tokyo BB Money Transfers, Inc.

Shanghai BB Securities Asia PTE, Ltd

BB AG - Branches Offices Portugal

Cascais

Costa da Caparica

Marques de Pombal

Lisbon

Parque das Nações

Porto

Shared Network Channels - Banco 24 Horas

TecBan (Tecnologia Bancária S.A.) is a company specialized in banking ATM network management, acting as an extension of the banks in their relationship with their customers.

Banco do Brasil holds 12.5% of company’s equity. With over 30 years in the market, TecBan is a reference in ATM network in public areas, and the main multiple bank network. The company is recognized for its high levels of availability, quality and safety and currently has over 17.9 thousand ATMs, strategically located in all Brazilian states.

In Jul/14, a new shareholders’ agreement was approved. The agreement is expected to expand the banking services avaible to Brazilians, reaching 30,000 ATMs in 2020.

7.3.2. Automated Service Channels

BB’s automated service channels are a strategic advantage, providing a wide range of services and products to customers, contributing to cost control. At the end of 3Q15, these channels accounted for 95.6% of transactions in the bank.

Mobile and Internet Banking

BB Mobile and Internet Banking seek to make the customers’ experience increasingly simple, fast, secure and convenient, with the availability of a broad product and service portfolio in order to provide service where the customer is at any time.

The transactions made through these channels are responsible for a significant portion of total banking transactions at Banco do Brasil. The next figure shows the evolution of the percentage of transactions performed by service channel.


106

Figure 52. Transactions by Service Channels - %

41.7

43.9

48.9

59.3

18.717.3

15.313.1

39.6

38.835.8

27.6

Sep/12 Sep/13 Sep/14 Sep/15

Internet + Mobile

POS + Agents in the Country

Other Service Channels (ATM + CABB + Branch Cashier)

The next two charts show the recent evolution of the number of registered users and transactions in mobile and internet banking channels, respectively.

Figure 53. Number of Registered Users and Individuals Transactions (million) – Internet Banking

444.7505.5

562.5

463.5

9.2

10.411.5

12.5

3Q12 3Q13 3Q14 3Q15

Transactions Registered Users


107

Figure 54. Number of Registered Users and Transactions (million) – Mobile Banking

41.1136.1

342.8

1,033.1

2.5

3.4

4.4

6.4

3Q12 3Q13 3Q14 3Q15

Transactions Registered Users

The chart below shows the growth in the number of transactions new loans and funding, made through mobile banking.

Figure 55. Number Transactions New Loans + Borrowing – Mobile Banking

190.7

510.1

902.3

1Q15 1H15 9M15

New Loans + Borrowing

Automated Teller Machines

Banco do Brasil has the largest automated teller machine (ATM) network in the country. The following figure shows the number of ATMs owned by BB, ATMs from the partnership with Caixa Econômica Federal (CEF), Banco Regional de Brasília (BRB) and the Banco 24h network.


108

Figure 56. Automated Teller Machines

44,004 44,182 44,272 44,112 43,781

16,143 16,779 17,044 17,539 17,912

5,339 4,612 4,518 4,120 3,938

65,486 65,573 65,834 65,771 65,631


Automated Teller Machines ATM: Banco 24h ATM: BRB + CEF

The next chart shows that the ATMs, compared with the branches and service posts, account for absolute most of the basic banking transactions such as multiple checks, withdrawals, deposits and payments.

Figure 57. ATMs’ Share in Basic Banking Transactions (average)

99.7 99.0 98.9 98.9

96.2 96.3 96.2 96.7

73.775.6 74.8 75.4

69.6 69.767.5

70.1

3Q12 3Q13 3Q14 3Q15

Check Withdrawals Deposits Payments

Technology Investiments

Banco do Brasil continually invests in technology to improve operational efficiency, reduce operating losses, expand business and improve customer service. Between 2009 and Sep/15 were invested R$19.7 billion. The next figure shows the distribution of the total amount invested throughout the period.


109

Figure 58. Tecnology Investments

0.0

2.5

5.5

8.2

11.4

14.2

17.6

2.5

3.1

2.7

3.2

2.8

3.4

2.1

2009 2010 2011 2012 2013 2014 9M15

Technology Investments (R$ billion)

An important result of technology investments is related to the significant increase in the storage data capacity and the availability index, as shown in the next figure.

Figure 59. Storage Capacity and Availability Index

19,873 21,743

36,000

60,190

78,476

102,711

99.2 99.3 99.2 99.3 99.3 99.3

2010 2011 2012 2013 2014 3Q15

Storage Capacity (Terabytes) Availbility Index (%)


110

7.4. Other Operating Income and Expenses

The following table shows the main lines in other operating income/expenses. The line "Other" is the sum of unimportant and minor subaccounts.

Table 141. Other Operating Income/Expenses

Chg. (%) on


Other Operating Income 1,972 2,046 2,468 25.2 20.6 5,419 6,762 24.8

Income from Guarantee Deposits 496 639 745 50.3 16.7 1,429 1,940 35.7

Card Transactions 404 383 533 31.8 39.1 1,052 1,430 35.9

Recovery of Charges and Expenses 203 260 304 49.9 16.7 574 824 43.7

Receivables Income 241 226 223 (7.5) (1.6) 540 638 18.0

Income from non-financial Associated Companies 258 108 157 (38.9) 45.6 506 447 (11.8)

Other Operating Expenses (3,403) (3,363) (3,610) 6.1 7.3 (9,495) (10,399) 9.5

Card Transactions (728) (898) (933) 28.2 3.9 (2,025) (2,751) 35.9

Negotiation Relationship Allow ance (484) (489) (527) 8.9 7.8 (1,435) (1,511) 5.3

Remuneration for Transactions of Banco Postal (284) (288) (297) 4.8 0,0 (378) (868) 129.6

Goodw ill Amotization (237) (271) (274) 15.7 1.2 (705) (817) 15.8

Other Oper. Exp. from Non-Financ. Comp. (297) (201) (298) 0.4 48.1 (921) (748) (18.7)

Actuarial Liabilities (237) (245) (248) 4.6 1.1 (781) (740) (5.3)

Discounts Granted on Renegotiations (146) (213) (220) 50.9 3.6 (518) (596) 15.0

Amortiz. of Intangible Assets - Banco Postal - - - - - (481) - -

Other (620) (328) (305) (50.8) (7.0) (933) (884) (5.2)


7.5. Operational Loss

Banco do Brasil classifies its operating losses in categories of operational risk events according to CMN Resolution 3,380/2006. BB considers constitutions/reversals of provisions - notably for contingent liabilities – in the total operating losses calculated for the Labor Issues, Business Failures and Process Failures categories.

BB registers in "Business Failures" category operating losses related to reimbursements or indemnities to account and non-account holders due to lawsuit and administrative proceedings, excluding those arising from fraud, and from questions related to service practices and products and services sold by the Bank and its business partners.

The category "Labor Issues" registers losses arising from disagreements in the employee-employer relationship involving contracts or laws, health, safety and discrimination in the workplace, including losses due to joint liability relating to outsourced employers.

Losses resulting from "External Fraud and Theft" are characterized by third party acts with intent to misappropriate BB’s or customers’ valuables and assets. Operational losses originated from electronic fraud and external theft standout in this category.

The "Process Failures" is characterized by the possibility of losses on payments to other banks, business partners, suppliers, regulators, supervisory and controlling agencies, resulting from failures or inadequacies in the implementation, conduct and management of the activities associated with the respective internal processes.

The following table shows the percentage share for each category.

Table 142. Breakdown of Operational Loss - %

3Q14 4Q14 1Q15 2Q15 3Q15

Business Failures 52.3 68.3 81.9 24.2 69.7

External Fraud and Theft 11.8 13.1 8.7 25.4 5.1

Process Failures 5.1 8.2 5.4 2.9 5.9

Labor Issues 29.9 8.8 3.5 46.3 19.1

Internal Fraud 0.6 0.8 0.3 0.6 0.2

Physical Assets Damage 0.2 0.4 0.2 0.5 0,0

System Failures 0.0 0.5 0,0 0,0 0,0

Total 100.0 100.0 100.0 100.0 100.0


111

BB’s operational losses are concentrated (92%) in amounts below R$5,000.00, with 77% in amounts up to R$1,000.00.

Figure 60. Operational Loss for Value Range - %

77.2%

14.5%

4.1%

2.4%

1.8%

Up to R$1,000.00

from R$1,000.00 to R$4,999.99

From R$5,000.00 to R$9,999.99

From R$10,000.00 to R$24,999.99

More than R$25,000.00

Below, the behavior of the “External Fraud and Theft” category is presented by describing the main variations of amounts and quantities, among other information. This category includes operating losses arising from electronic fraud, external theft, cards losses and document fraud.

Electronic Fraud – Automated Service Channels

The percentage of transactions in 3Q15 shows the trend of decreased of the ratio at lower levels since 3Q14. This reduction is a result of mitigation actions implemented by BB in automated service channels. Among these, we highlight: expansion of biometrics in BB ATMs; mass migration from targe cards to chip cards; and improvements in monitoring transaction rules in automated service channels.

The next graph shows the ratio between the number of fraudulent transactions and the number of transactions in these channels.

Figure 61. Ratio between Fraudulent Transactions and Total Transactions

0.0038% 0.0040% 0.0044%

0.0029%

0.0015% 0.0017% 0.0016%0.0012%

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

BB acts to mitigate operational losses in customer automated service channels, as recover amounts taken. The next figure shows the recovered percentage compared to the total losses recorded.


112

Figure 62. Ratio between Recovery Potential and Performed Recovery – Service Channels

59% 59%

52%49%

55%52%

17% 16%

21% 20%17%

12%

2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Recovery Potential Performed Recovery

External Theft

BB continues to implement actions to reduce incidents with external theft, promoting the complete substitution of the alarm systems, improvement and modernization of the business network, installation of modern safe boxes with shared opening, outdated ATM substitution for new ones with dye cash technology. All these actions have a purpose to mitigate the operational losses from third party acts against the bank. Besides that, all improvement actions regarding cash management were expanded. In 3Q15 the volume of avoided losses is in line with the same period 2014.

Figure 63. Prevented Number of Attacks versus Number of Attacks

22.8%

29.1%

3Q14 3Q15

7.5.1. Customers’ Complaint Public Indicators

The regulatory and supervisory bodies, in addition to performing its functions, also track the performance of financial institutions through public complaint indicators, such as the demands considered valid by the Central Bank of Brazil and Senacon (National Department of Consumer).

The BB has achieved positive results in these indicators in recent years, a result of investments in the improvement of service, transparency and optimization and opening new channels of communication to customers.

Along 3Q15 BB has been maintining a downward trend in the number of valid claims in central customer service at the Central Bank of Brazil with an average of 269 claims per month. These amount was 8.08% lower than 3Q14 when it was recorded 293 claims.

Highlight the positive change in Banco do Brasil baseline since Sep/2013, with an absolute reduction in the valid calims of 42.98% (3Q15 x 3Q13).


113

The following figure shows that since 3Q13, BB has consistently and systematicly, reduced the number of valid claims in central customer service at the Central Bank of Brazil.

Figure 64. Number of Valid Complaints – Central Bank of Brazil

1.4171.370

1.069

937879

775 747 774 808

3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Source: Central Bank of Brazil.

With this significant reduction in the number of valid claims, Banco do Brasil index remained bellow the market average and, in the Sep/15, it stood out of the Central Bank most complaint Banks rank, figuring in the 6

TH position in this ranking, the best position among the banks with more than 10 million

clients.

The next figure shows the evolution of the complaint index calculated by the Central Bank of Brazil. BB continues to have rates below the market average.

Figure 65. Complaint Index – Central Bank of Brazil

4,54 4,566,02

4,97 4,71


Also in the public index of the National Department of Consumer – Senacom/MJ, BB has presented a constant and significant evolution.

Regarding claims recorded at Procon included in the Sindec (National Information System of Consumer Protection), the amount of BB’s claims was 68,4% lower than the average recorded for its main peers, (Jan to Aug/15 x Jan to Aug/14) as shown in the next figure.

Furthermore, the amount recorded for BB represents only 6.22% of the total complaints of the Banking Industry evaluated in the public indicators of the Senacon/MJ that was 201,752 at Jan to Aug/15.


114

Figure 66. Recorded Complaints in Procon: Banco do Brasil vs. Main Peers

12,541

39,626

BB Main Brazilian Banks - Average

For the same comparative period (Jan to Aug/15 vs. Jan to Aug/14), the next figure shows that BB has complaints 79.7% lower than the bank with the largest number of events.

Figure 67. Recorded Complaints in Procon: Banco do Brasil vs. Most Complained-About Bank

20.3%

100.0%

BB Most Complained-About Bank

In relation to total complaints recorded at Procon in the Jan to Aug/15 vs. Jan to Aug/14 comparision, BB’s shown a decrease of 11.42%, even though one of the smallest volumes of Procon occurrences between financial institutions with more than 2 million customers, BB got a decrease of 4.93% compared to that presented by the segment of banks that fell by 6.49%.


115

Figure 68. New Complaints Recorded at Procon: BB vs. Main Peers

-11.4%

-6.5%

8.8%

BB Banks Other Industries

With the improvements made by BB, there was verified an 79.84% resolution rate of claims filed at Procon and included in Sindec Jan to Aug/15. This is an higher resolution index than other financial institutions, using the indicator that evaluates the resolution of claims from consumers through CIP (Letters of Preliminary Information).

At administrative hearings with Consumer Protection Entities, BB improved 4.42 p.p. from Jan/15 to Aug/15, compared to the same period last year.

Among the actions that have helped BB's customer complaint indicators improve since 2013, are the simplification of the fee portfolios and the availability of services statements.

BB also offers the complaints service in self-service on the Internet and mobile, making faster the treatment of demands by the Customer Service Center (SAC) which became even more resolute with competence for immediate solution, also available for the BB branch network.

The service provided by BB on social networks is an efficient strategy to improve customers' perception of the brand and provide positive experiences in the relationship through convenient service channels. BB has been interacting with consumers through Facebook and Twitter since 2013.

In an additional effort to improve the communication and customer service, BB was the first financial institution to join the "consumidor.gov.br" solution, under the management of Senacon/MJ (Ministry of Justice). This tool facilitates alternative dispute resolution over the Internet, encouraring market competitiveness by improving quality and customer service.

Chapter 8 – Other Components of the Balance Sheet

116

8 – Other Components of the Balance Sheet

From 3Q15 the information that was provided on chapters 8.5 - Goodwill on Equity and 8.6 – Intangible Assets will be presented in investor relations section of Banco do Brasil website (www.bb.com.br/ir), on historical series spreadsheet.

8.1. Actuarial Assets

History

BB’s actuarial assets represent the sponsors’ portion in the surplus obtained by Benefit Plan 1 (Plano 1), administered by Caixa de Previdência dos Funcionários do Banco do Brasil (Previ). Its amount is periodically determined based on actuarial appraisal reports and its availability depends on compliance with requirements established by law and regulatory authorities.

Plano 1, a Defined Benefit plan, was funded by contributions from members, beneficiaries (retirees and pensioners) and the sponsor (Banco do Brasil) until December 2000, at the ratio of 2/3 by BB and 1/3 by members. It was closed to new members on December 23, 1997.

From January 2001, equal contributions (50%) by BB and by members and beneficiaries were implemented, in accordance to Constitutional Amendment No 20.

Due to contribution parity, BB’s participation in the surplus is 50% of the Plano 1 actuarial assets and obligations at present value.

In November, 2010, BB signed a Memorandum of Understanding in order to define the allocation and use of the Plan surplus, as determined in the Complementary Law 109/2001 and in the Resolution CGPC 26/2008.

The actuarial balance of Plano 1 is measured on a semiannual basis (June and December) and contemplates: (i) the plan’s surplus amount at the end of current six-month period and (ii) estimated financial results of the plan at the end of subsequent six-month period, considering current service cost projections, contributions, liabilities interest costs and return on assets.

Based on estimated Plano 1 financial results at the end of subsequent six-month period, BB makes an anticipated monthly recognition of this amount at the ratio of 1/6 of projected gains or losses throughout the six-month period to which it refers.

Plano 1 Participants

Employees who were Previ members on December 24, 1997 and those who were terminated or fired before then but opted to remain in the plan as members of Plano 1. Participants are divided into three groups:

I. Contrato 97: participants employed before April 14, 1967, who were not retired and who were not in a position on that date to request their retirement. They were included pursuant to an agreement executed on December 24, 1997 between BB and Previ, in which the sponsor commits to bear retirement payments for the period when the mathematical reserve was not formed. Beginning in April 1967, mathematical reserves that guaranteed benefits of these members’ group were paid-in to Plano 1;

II. Employees admitted from April 15, 1967 to December 23, 1997;

III. Grupo Especial: includes participants from Plano de Benefícios 1 - Previ, who received additional supplemental retirement arising from administrative decisions and/or judicial decisions.

Since Plano 1 has a surplus, contributions from members and the sponsor were suspended from January, 2007 to November, 2010, when an agreement was entered into to review the Plan. From December, 2010, to December, 2013, contributions were offset by the residual balance of Fundo de Contribuição.

The calculation of the fair value of Plano 1 assets takes into account the evaluation of the portfolio (composition of assets), as shown in the following table.

http://www.bb.com.br/ir


117

Table 143. Composition of Assets


Fixed Income 31.6 35.8 35.8

Variable Income 58.6 53.8 53.8

Real Estate Investments 5.7 6.1 6.1

Loans and Financing 3.5 3.6 3.6

Others 0.7 0.7 0.7

Amounts Listed in Fair Value of Plan Asset

In the Entity's Ow n Financial Instruments 7.8 7.9 7.9

In Properties or Other Assets Used by Entity 0.1 0.1 0.1

Table 144. Actuarial Assumptions

% 1H14 2014 1H15

Real discount rate (p.y.) 6.1 6.3 6.2

Nominal rate of return on investments (p.y.) 12.3 12.8 12.5

Plano 1 actuarial liabilities correspond to the net present value of benefits owed to participants, calculated considering survival statistics provided in actuarial table AT 2000 and a nominal discount rate calculated based on the future interest rate curve in transactions with government securities (NTN-B). The rate used by BB is different from the Previ rate, which is based on assumptions established by CGPC 26/2008.

Plano 1 actuarial assets are equivalent to 50% (parity) of the positive difference between assets at fair value and liabilities at present value.

Because measurements of Plano 1’s surplus occur on a semiannual basis, BB recognizes the growth projected for the following six-month period in advance, aiming to reduce actuarial assets volatility.

Table 145. Previ (Plano 1) – Effects of Accounting – CVM 695/2012

R$ million 3Q14 4Q14 1Q15 2Q15 3Q15

(a) Fair Value of the Plan's Assets 141,679 135,146 135,146 136,105 136,105

(b) Present Value of Actuarial Liabilities (122,205) (122,885) (122,885) (130,042) (130,042)

(c) Surplus BB = [(a) + (b)] x 50% 9,737 6,130 6,130 3,032 3,032

(d) Actuarial Assets (Initial Period) 9,737 10,083 6,130 6,395 3,032

(e) Anticipated Financial Results 228 228 139 139 40

(f) Contributions of Funds 117 163 126 139 122

(h) Amount Recognized in Semi-Annual Adjustment - Shareholders' Equity - (4,343) - (3,641) -

(i) Actuarial Assets (End Period) = (d) + (e) + (f) + (g) 10,083 6,130 6,395 3,032 3,193

8.2. Previ Surplus – Allocation Funds

Banco do Brasil has the following amounts recognized in its assets:

I. Parity contribution between sponsor and participants, booked in May, 2006 and based on the remaining reserve balance, with an initial amount of R$2.2 billion;

II. Allocation of the partial surplus agreed in 2010, recognized as Fundo de Destinação, subsequently segregated into Fundo de Contribuição and Fundo de Utilização, which are used to face BB’s contributions to Plano 1.

Fundo Paridade

The Fund is adjusted monthly according to the actuarial target National Consumer Price Index (INPC+5% per year) and, since January/2007, has been used to offset any financial imbalance of Contrato 97.

Table 146. Previ (Plano1) – Fundo Paridade

R$ million 3Q14 4Q14 1Q15 2Q15 3Q15

Initial Balance 117 118 119 125 113

Contribuitions to Plano 1 - Contrato 97 - - - (12) -

Restatement 2 3 7 4 3

Contribution - Grupo Especial (1) (3) (1) (4) -

Closing Balance 118 119 125 113 116


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Fundo de Utilização

Originally composed in 2Q11, through the transfer of resources from Fundo de Destinação and reinforced quarterly through transfer of resources from the Fundo de Destinação. This Fund reflects the amount subject to use by BB and reflects Previ’s accounting distribution of surplus. This reserve is corrected by the actuarial target (INPC+5% per year) and the use of its resources depends of the existence of full coverage of plan obligations (art. 25, CGPC Resolution 26/2008).

The resumption of periodic contributions since 1Q14 by the participants and the sponsor shall be held by that Fund.

Table 147. Previ (Plano1) – Fundo de Utilização

R$ million 3Q14 4Q14 1Q15 2Q15 3Q15

Initial Balance 8,046 8,092 8,155 8,474 8,667

Restatement 163 223 444 316 223

Contribuitions to Plano 1 (117) (160) (125) (123) (122)

Closing Balance 8,092 8,155 8,474 8,667 8,768

8.3. Actuarial Liabilities

BB’s actuarial liabilities are comprised by its obligations to the Informal Plan (Previ), the Associates Plan (Cassi) and other plans. Cassi is responsible for 77.4% of total BB’s actuarial liabilities. It is a defined benefit plan.

Cassi

BB is the sponsor of a health plan managed by Cassi. This health plan’s main purpose is to provide coverage for expenses with a member's health and that of his/her enrolled beneficiaries.

Participants in the Plano de Associados (Plan Members) are divided into:

I. Partners: active employees, former employees (self-sponsored), retirees and BB’s pensioners;

II. Dependents: spouse, domestic partner, children and stepchildren who are younger than 24 years old;

III. Indirect Dependents: any relative of the associate admitted before the bylaws amendment of 1996.

Cassi had successive mismatches between revenue and expenses. In 1995, coverage of the operating deficit was apportioned between sponsors and associates. To assure the financial stability of the plan, Cassi and BB amended the bylaws in 1996. The main changes included the restriction of access by new Indirect Dependents and the increase of the contributions from the participants and sponsors.

BB signed a new agreement with Cassi in 2007 to amend its bylaws, which is still in effect. The main changes were:

I. employer's contribution of 4.5% of payroll or the total value of the retirement benefit or pension for all groups;

II. monthly contributions from members and beneficiaries of pension was increased to 3% of the payroll or the total value of the retirement benefit or pension;

III. contribution from BB of R$315 million to invest in the improvement of Cassi’s operational model for the own services;

IV. assumption by BB of the deficit of indirect dependents until the extinction of this group.

The table below shows the evolution of Cassi’s actuarial liabilities since CVM Resolution 695/2012, which came into effect in 2013.


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Table 148. Cassi – Effects of Accounting – CVM 695/2012

R$ million 3Q14 4Q14 1Q15 2Q15 3Q15

(a) Fair Value of the Plan's Assets - - - - -

(b) Present Value of Actuarial Liabilities (5,790) (5,830) (5,830) (6,319) (6,319)

(c) Deficit BB = [(a) + (b)] (5,790) (5,830) (5,830) (6,319) (6,319)

(d) Actuarial Liabilities (Initial Period) (5,790) (5,873) (5,830) (5,907) (6,319)

(e) Amounts recognized in statement of income (195) (195) (201) (201) (212)

(f) BB - Amount paid 113 157 125 124 142

(g) Amount Recognized in Semi-Annual Adjust - Shareholders' Equity - 81 - (334) -

(h) Actuarial Liabilities (Period End) = [(d) + (e) + (f) + (g)] (5,873) (5,830) (5,907) (6,319) (6,389)

Effects in Shareholders’ Equity – CVM 695/2012

The table below shows the effects of accounting of actuarial asset and the actuarial liability on BB’s Equity due to CVM 695/2012.

The effects on BB’s Equity occur every six months, bearing in mind the performance of actuarial studies.

Table 149. Impact on Shareholders' Equity – CVM 695/2012

R$ million

Previ -

Plano 1Cassi

Other

PlansTotal

Jun/14

Valuation Adjustments (6,905) 786 (153) (6,271)

Tax Effects 2,955 (315) 61 2,701

Effect in Shareholders' Equity (3,950) 472 (91) (3,570)

Dec/14

Valuation Adjustments (4,343) 81 (6) (4,268)

Tax Effects 1,858 (33) 2 1,828

Effect in Shareholders' Equity (2,485) 49 (4) (2,440)

Jun/15

Valuation Adjustments (3,641) (334) 92 (3,884)

Tax Effects 1,558 134 (273) 1,419

Effect in Shareholders' Equity (2,083) (201) (181) (2,465)

8.4. Deferred Taxes

Tax Credits (Deferred tax assets)

Tax credits derive mainly from Income Tax, Social Contribution and tax loss temporary differences.

Temporary differences arise from the divergence in treatment given by the accounting and tax rules for certain expenses that compose the profit from the period. For instance, since the provision expenses are constituted on the basis of probable losses, they can only be deducted when the losses effectively occur. Beginning on January 1, 2013, the sum of benefit plans’ valuation adjustments to equity began to be taken into account under Resolution CVM 695/2012.

Tax credits originated from tax losses in the Income Tax and from the negative basis of the Social Contribution represent a tax benefit since it may be offset against the generation of taxable income in the future.


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Table 150. Breakdown of Tax Credit


Temporary Differences 27,264 92.8 34,469 94.7 43,334 95.5 58.9 25.7

Allow ance for Loan Losses ¹ 16,735 57.0 19,296 53.0 24,057 53.0 43.8 24.7

Passive Reserves 7,699 26.2 8,112 22.3 10,439 23.0 35.6 28.7

Equity Negative Adjustments - Benefit Plans 193 0.7 166 0.5 274 0.6 41.7 64.8

Mark to Market 1,033 3.5 1,420 3.9 2,798 6.2 170.9 97.0

Other Provisions 1,605 5.5 5,474 15.0 5,766 12.7 259.4 5.3

Social contrib. on Net Income 1,255 4.3 1,159 3.2 1,256 2.8 0.1 8.4

Tax Loss / Negative Base 393 1.3 352 1.0 371 0.8 (5.6) 5.4

Excess Depreciation 472 1.6 420 1.2 408 0.9 (13.6) (2.8)

Total Tax Credit 29,384 100.0 36,400 100.0 45,368 100.0 54.4 24.6

Chg. (%) onBalance

1 – Includes amounts from Allowance for Loan Losses and Loan Operations – Law No 9,430/96.

Deferred tax liabilities

The deferred tax liability is the amount of income tax payable in a future period that is related to income and chargeable gains classified as temporary differences. Like the tax credit for temporary differences, deferred tax liabilities come from accounting and tax regulations on income arising from equity adjustments, the realization of which is conditional in the future.

The table below shows the breakdown of deferred tax liabilities:

Table 151. Breakdown of Deferred Tax Liabilities


Equity Positive Adjustments Benefit Plans 2,033 56.1 50 3.1 67 2.8 (96.7) 34.6

Restatement of Judicial Deposits 443 12.2 474 29.6 486 20.5 9.8 2.6

Mark to Market 388 10.7 648 40.5 1,247 52.6 221.1 92.4

Leasing Portfolio Adjustment 186 5.1 100 6.2 93 3.9 (50.1) (6.9)

Credit Recovered Instalments 170 4.7 183 11.4 216 9.1 26.7 17.9

Other 404 11.2 144 9.0 264 11.1 (34.7) 82.8

Total Deferred Tax Liabilities 3,625 100.0 1,599 100.0 2,373 100.0 (34.5) 48.4

Balance Chg. (%) on


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9 - Risk Management

9.1. Risk Management

Risk management in the Financial Group of Banco do Brasil covers credit, market, liquidity and operational risks in a comprehensive manner. Management activities are performed by specialized structures, according to objectives, policies, strategies, processes, procedures and systems described in each one of these risks. Although activities are focused on credit, market, liquidity and operational risks, BB adopts mechanisms to ensure sufficient capital to cover other risks incurred.

Collegial risk management is performed completely apart from the business units. Risks policies are approved by BB’s Board of Directors and formulated by the Global Risk Superior Committee (CSRG), a discussion group composed of the President and vice-presidents. Actions for implementing and monitoring guidelines issued by the CSRG are conducted at specific committees (Credit, Market, Liquidity and Operations), which are groups formed by Bylaws Directors.

To find out more about the risk management process at Banco do Brasil, access the website bb.com.br/ir.

The tables and graphs in this chapter do not include the financial information from Banco Votorantim (BV), unless there is an explicit reference to the contrary. Accordingly, the term BB Consolidated is defined as Banco do Brasil in Brazil and abroad, excluding BV.

9.1.1. Credit Risk

Credit Risk is defined as the possibility of losses associated with non-performance by the borrower or counterparty of their respective financial obligations under the agreed terms, with loan agreement devaluation arising from the deterioration in the borrower's risk rating, with reduced earnings or remuneration, with benefits granted in the renegotiation and recovery costs. The definition of credit risk involves, among other things:

I – counterparty risk: the possibility of non-performance, by a particular counterparty, of obligations relating to the settlement of transactions involving the trading of financial assets, including those related to the settlement of derivative financial instruments;

II – country risk: the possibility of losses associated with the non-performance of financial obligations under the terms agreed by a borrower or counterparty located outside the country, as a result of actions taken by the government of the country where the borrower or counterparty is located, and transfer risk, defined as the possibility of obstacles in the currency conversion of amounts received;

III – commitment risk: the possibility of outlays to honor sureties, guarantees, co-obligations, loan commitments or other operations of a similar nature;

IV – intervening party risk: the possibility of losses associated with the non-performance of financial obligations under the terms agreed by the intermediary or contracting party of loan operations; and

V – concentration risk: the possibility of credit losses arising from significant exposure to a counterparty, a risk factor or groups of counterparties related by common characteristics.

At Banco do Brasil, the credit risk management structure is composed of a Risk Management Directorship, a Credit Directorship, and an Operating Assets Restructuring Directorship. The Risk Management Director, appointed by the Board of Directors, is in charge of BB’s credit risk management. This structure is in accordance with CMN Resolution 3,721 of April 30, 2009.

9.1.2. Market Risks

Market Risk reflects the possibility of losses resulting from fluctuations in the market values of positions held by a financial institution. It includes the risks of operations subject to foreign exchange variation, of interest rates, including the non-trading portfolio (RBAN parcel), of stock prices and of commodity prices.

The Risk Management Directorship (Diris), in compliance with the CMN Resolution 3,464, of June 26, 2007, is in charge of market risk management at Banco do Brasil, with a structure for managing market risk consistent with the nature of operations, the complexity of products and the dimension of

http://www.bb.com.br/portalbb/home2,136,136,0,0,2,8.bb

Chapter 9 - Risk Management

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the institution's risk exposure, segregated from the business units and from the unit that performs internal audit activity.

Banco do Brasil uses statistical methodologies to measure the market risks of its positions. Among the metrics resulting from the use of these methodologies, these stand out:

I - Sensitivity;

II - Value at Risk (VaR); and

III – Stress Test.

Banco do Brasil adopts the policy of managing its exchange risk so as to reduce its effects on the consolidated economic-financial result.

The table below shows the statement of assets, liabilities and derivatives of BB Consolidated, referenced in foreign currencies. Net foreign exchange exposure for September 30, 2015, was negative in the amount of US$ 3,122 million.

Table 152. Balance in Foreign Currencies

R$ million

BALANCE SHEET

CURRENCY ASSETS LIABILITIES

U.S. Dollar 219,364 230,165

Euro 16,220 18,292

Pound Sterling 774 1,744

Yen 3,468 3,960

Sw iss Franc 19 1,299

Canadian Dollar 13 50

Gold 7 -

Other 20,010 19,873

Total 259,875 275,384

Net Position - Balance Sheet Items (15,509)

DERIVATIVES

CURRENCY LONG SHORT

U.S. Dollar 52,378 53,726

Euro 4,317 2,595

Pound Sterling 467 327

Yen 929 707

Sw iss Franc 1,445 -

Canadian Dollar 45 0

Other 886 6

Total 60,467 57,361

Net Position - Derivatives 3,106

TOTAL OF DERIVATIVES AND BALANCE SHEET 320,343 332,745

Total Net Position (12,403)

Total Net Position (3,122)

We highlight that on September/15, changes in volumes of exchange mismatch’s map, in the regulatory vision, are due to mark-to-market effects and quoting of foreign currencies to Brazilian real.

BB Consolidated´s regulatory foreign exchange exposure, calculated according to Bacen Circular 3,641, of March 04, 2013, considering the fiscal hedging strategy adopted, was R$ 4,948.3 million at September 30, 2015. The purpose of the tax hedge is to reduce the volatility of the result, after the tax effects, since exchange gains on investments abroad are not subject to taxation and likewise losses do not generate deduction in the tax basis.

The chart below shows the quarterly behavior of BB Consolidated´s foreign exchange exposure in relation to the Referential Equity amount (RE) since September 2013.


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Figure 69. Changes in Foreign Exchange Exposure in % of the Referential Equity Amount (RE)

1.511.84

0.46

1.97

1.280.63

1.71

1.00

3.02

1.10

1.37

0.39

0.63

0.67

0.72

0.93

0.87

0.78


Other Currencies Currency Basket

Balance Sheet by Index

The following figure shows BB Consolidated’s composition of assets and liabilities, including derivatives, detailed by index on September 30, 2015:

Figure 70. Composition of Banco do Brasil's Assets and Liabilities

R$ billion

99.6177.8

369.0

382.4

29.2

29.214.6

3.4160.7

266.0

295.7

391.4

703.2

421.8

1,672.0 1,672.0

Assets Liabilities

FIXED

CDI / TMS / FACP

IRP/TBF/TR

PRICE INDEX

TJLP

US$ / GOLD

W/O INDEX

The following graph shows BB Consolidated’s net mismatches, by index:


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Figure 71. Net Position of BB Consolidated

R$ billion

281.4

11.20.0

-13.40 -78.2-95.7 -105.3

16.8%

0.7%

0.0%

-0.8%

-4.7%-5.7% -6.3%

FIXED PRICE INDEX TJLP US$ / GOLD W/O INDEX CDI / TMS / FACP IRP/TBF/TR

Statement of Repricing Profile of Interest Rates

The following table shows the inventory operations that are sensitive to interest rate changes, allocated by risk factor and by the indexation period of BB’s consolidated interest rate:

Table 153. Repricing Profile of Interest Rates

R$ million

Assets < 1 Mo 1 > 3 Mo 3 > 6 Mo 6 > 12 Mo 1 > 3 Yrs > 3 Yrs Total

Fixed 373,440 45,576 34,446 51,078 110,427 88,293 703,261

CDI/TMS 295,766 - - - - - 295,766

TR/TBF/IRP - - 160,727 - - - 160,727

Price Index - - 14,665 - - - 14,665

TJLP 2,163 27,112 - - - - 29,274

US$/ME 109,233 26,379 22,175 24,698 48,703 137,853 369,041

Total - Assets 780,602 99,066 232,014 75,776 159,130 226,146 1,572,734

Liabilities

Fixed¹ 252,141 18,544 21,941 27,727 44,024 57,506 421,882

CDI/TMS 391,476 - - - - - 391,476

TR/TBF/IRP - - 266,098 - - - 266,098

Price Index - - 3,459 - - - 3,459

TJLP 1,617 27,639 - - - - 29,256

US$/ME 95,817 33,122 25,071 30,891 35,227 162,271 382,399

Total - Liabilities 741,050 79,305 316,568 58,618 79,251 219,777 1,494,570

Gap 39,552 19,761 (84,554) 17,158 79,879 6,369 78,165

Cumulative Gap 39,552 59,313 (25,241) (8,084) 71,796 78,165 -

Cumulative Gap as % Assets 5.1% 19.9% -36.4% 22.6% 50.2% 2.8% 5.0%

1 - The total deposits of checking accounts in pre-indexed liabilities (R$43.5 billion) are included.

9.1.3. Liquidity Risk

Liquidity risk is defined as the imbalance between marketable assets and enforceable liabilities - "mismatches" between payments and receipts - that could affect the BB’s payment capacity, taking into account the different currencies and settlement terms of rights and obligations.


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BB maintains appropriate levels of liquidity for its commitments assumed in Brazil and abroad, resulting from its broad and diversified depositor base and the quality of its assets, the penetration of its overseas branches network and its ability to access the international capital market. Strict control over liquidity risk is in accordance with the Liquidity Risk Policy established by the Board of Directors, complying with the requirements of Brazilian banking supervision and that of the other countries where BB operates.

BB’s liquidity risk management separates liquidity in Reais from liquidity in foreign currencies. The instruments used in management are:

I – Liquidity Projections;

II – Liquidity Risk Limits;

III – Liquidity Contingency Plan;

IV – Prospective Monitoring; and

V – Liquidity Stress Tests.

BB’s liquidity risk limits are currently used as follows:

- Liquidity Reserve, which is the volume of highly-liquid assets that must be held to cover short-term liquidity risk, used as a parameter for the identification of liquidity stress situations, provided for in the Liquidity Contingency Plan and in Prospective Liquidity Monitoring;

- Free Fund Availability Indicator (Indicator DRL), used to manage the medium- and long-term liquidity risks; and

- The Liquidity Cushion, which is the level of prudential liquidity for risk management in stress scenarios.

The following figure shows BB’s monthly monitoring of the Liquidity Reserve in Local Currency.

Figure 72. Liquidity Reserve in Local Currency

Sep/14 Oct/14 Nov/14 Dec/14 Jan/15 Feb/15 Mar/15 Apr/15 May/15 Jun/15 Jul/15 Aug/15 Sep/15

Average Liquidity Liquidity Reserve

The following figure shows BB’s monitoring of the Liquidity Reserve in Foreign Currency.


126

Figure 73. Liquidity Reserve – Foreign Currency


Average Liquidity Liquidity Reserve

The Availability of Free Funds (DRL) indicator aims to ensure a balance between funding and investment of resources from the commercial portfolio of the internal area and to ensure the (liquidity financing) in local currency with commercial and structural resources.

The limit of DRL Indicator, defined annually by the Global Risk Committee (CRG) according to funding and commercial investment goals, is the parameter used in the planning and execution of the BB’s budget and is monitored on a monthly basis.

Figure 74. DRL Indicator


DRL Monthly DRL Limit

In keeping with the commercial operations financing strategy, the DRL indicator in the first quarter was above the annual limit.

This allows BB to conduct its business strategy without hindering its liquidity risk management, in accordance with the monitoring of the Domestic Currency Liquidity Reserve limit presented in this chapter.

The maintenance of liquidity in domestic and foreign currencies above their Liquidity Reserve limits allows the implementation of BB’s strategic planning at a comfortable level of exposure to liquidity risk.

9.1.4. Operating Risk

Operating Risk is defined as the possibility of loss resulting from failures, deficiencies, or the inadequacy of internal processes, personnel and systems, or derived from external events. This


127

definition includes the possibility of losses arising from legal risks associated with the inadequacy or deficiency of contracts BB enters into, as well as penalties due to non-compliance with legal provisions and indemnities for third party damages arising from BB’s activities.

The operational risk management process adopted allows to identify, assess, mitigate, control and monitor operational risks, providing effective management, contributing to the continuity and solidity of the Organization.

The management of operational risk in the Bank is conducted in a corporate way, through methodologies and tools, with the participation of management process areas, products and services directly involved in identifying and implementing mitigating actions. The steps of evaluation, control and monitoring are performed independently, being conducted periodic reports to the strategic boards.

Detailed information about operational risk can be found in Chapter 7.5 of this Report and the Report of the Risk Management - Pillar 3 at Banco do Brasil website - Investor Relations - Risk Management.

9.2. Capital Structure

The Basel Index was calculated under the criteria established by CMN Resolutions 4,192/2013 and 4,193/2013, which establish the rules for calculating the Referential Equity (RE) and the Minimum Required Reference Equity (MRRE) in relation to Risk-Weighted Assets (RWA), respectively, considering Banco Votorantim under the equity method (EM) of accounting as established by the Central Bank of Brazil.

We emphasize that on October 1, 2013, a new set of rules came into effect in Brazil, implementing the recommendations of the Basel Banking Supervision Committee regarding capital structure of financial institutions, known as Basel III. The new regulations deal with the following matters:

I. The new methodology for computing the regulatory capital, which continues to be split into Tiers I and II, with the Tier I comprising the Common Equity (less prudential adjustments) and the Additional Tier I Capital;

II. The new methodology for computing the requirement of capital maintenance, by adopting minimum requirements of Reference Equity, of Tier I and Common Equity, and the introduction of the Additional Amount of Common Equity.

The consolidation scope used as a base for checking the operating limits was also changed, so that it took into account only the Financial Conglomerate, from October 1, 2013, through December 31, 2014, and the Prudential Conglomerate, as defined in CMN resolution 4,280/2013, from January 1, 2015.

Under the Accounting Plan of Financial Institutions (Cosif), the Prudential conglomerate not only include financial institutions as well as consortium managers, payment institutions, companies that perform acquisition transactions or take direct or indirect credit risk and investment in which retains substantially conglomerate risks and benefits.

All mentions to the Referential Equity and Required Reference Equity on dates prior to October 1, 2013 refers to the Basel II methodology and were computed under the criteria established by CMN resolutions 3,444/2007 and 3,490/2007, respectively.

Performance

BB ended the 3rd

quarter of 2015 with a Basel Index of 16.20%, remaining above the regulatory minimum, which corresponds to the factor "F" provided by CMN Resolution 4,193/2013:

Table 154. Factor “F” applied to the amount of Risk-Weighted Assets (RWA)

Period Factor "F" (%)

10/01/2013 to 12/31/2015 11.0

01/01/2016 to 12/31/2016 9.875

01/01/2017 to 12/31/2017 9.25

01/01/2018 to 12/31/2018 8.625

From 01/01/2019 on 8.0

The RE, which is based on the new requirements for calculating regulatory capital under Basel III, was R$136,634 million, while MRRE was R$92,795 million.


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The Tier I Capital Index and the Common Equity Index held in September 2015 were 11.61% and 8.07% of Principal Capital Index (PCI). Both indicators are classified within the minimum regulatory limits, which require PCI of 4.5% and 5.5% for Tier I Capital Index until December 31, 2014, and 6%, from January 1, 2015.

The following table shows the calculation of the RE and RWA for the Financial Conglomerate until Dec/14. Since Mar/15, the calculation refers to the Prudential Conglomerate.

Table 155. BIS Ratio

R$ million Sep/14 Dec/14 Mar/15 Jun/15 Sep/15

Reference Equity (RE) 123,713 126,588 128,705 127,991 136,634

Tier I 88,810 89,538 91,298 89,853 97,962

Common Equity Tier I 71,554 71,036 69,739 68,936 68,071

Shareholders Equity 71,489 70,675 73,316 72,534 73,368

Instruments Eligible to Capital 8,100 8,100 8,100 8,100 8,100

Prudential Adjustments (8,035) (7,740) (11,677) (11,699) (13,397)

Funding instruments issued by f inancial institutions (3,776) (3,714) (3,805) (3,900) (3,874)

Intangible Assets composed as of 10/01/2013 (758) (1,066) (2,048) (2,095) (2,148)

Tax credits from temporary differences dependent on generation of profits (10% excess) - - (620) (1,990) (3,187)

Goodw ill paid on acquisition of investment on the basis of expected future profitability (758) (715) (1,343) (1,246) (1,155)

Actuarial Assets related to Defined Benefit Pension Funds net of deferred tax liability associated (1,628) (1,192) (2,470) (1,243) (1,302)

Tax credits arising from tax losses and negative basis of Social Contribution (251) (255) (499) (464) (502)

Non-controlling interest (149) (171) (434) (379) (508)

Sup. Investments, Tax credits of temporary differences dependent on profit generation (15% excess) (641) (556) (359) (291) (635)

Tax credits arising from tax loss of excess depreciation (39) (38) (72) (69) (65)

Deferred Assets (35) (32) (26) (23) (19)

Additional Tier I Capital 17,256 18,503 21,558 20,918 29,891

HCDI authorized by CMN n.º 4,192/2013 resolution 14,886 16,133 19,485 18,844 24,131

HCDI authorized by previous rules to the CMN n.º 4,192/2013 resolution¹ 2,370 2,370 2,074 2,074 5,760

Tier II 34,903 37,050 37,407 38,138 38,672

Eligible to Capital Subordinated Debts 34,937 37,065 37,425 38,144 38,675

Subordinated Debts authorized by CMN n.º 4,192/2013 resolution 2,308 3,960 5,291 5,459 5,569

Subordinated Debts authorized by previous rules to the CMN n.º 4,192/2013 resolution 32,629 33,105 32,134 32,685 33,106

FCO Funding² 19,991 20,467 21,076 21,627 22,048

Financial Letters and Certif icates of Deposits³ 12,638 12,638 11,058 11,058 11,058

Tier II deductions (34) (15) (18) (7) (3)

Funding instruments issued by f inancial institutions (34) (15) (18) (7) (3)

Risk-Weighted Assets (RWA) 771,394 785,974 803,430 791,057 843,590

Credit Risk (RWACPAD) 720,364 734,716 753,728 749,291 782,970

Market Risk (RWAMPAD) 11,318 11,545 19,585 11,649 24,231

Operational Risk (RWAOPAD) 39,712 39,712 30,117 30,117 36,389

Minimum Required Referential Equity (MRRE)⁴ 84,853 86,457 88,377 87,016 92,795

MRRE Margin (RE-MRRE) 38,860 40,131 40,328 40,975 43,839

Tier I Capital Ratio (Tier I/RWA) - % 11.51% 11.39% 11.36% 11.36% 11.61%

Core Capital Ratio (CC/RWA) - % 9.28% 9.04% 8.68% 8.71% 8.07%

BIS Ratio (RE/RWA) - % 16.04% 16.11% 16.02% 16.18% 16.20%

1 – In 09/30/2015, Banco do Brasil considered the total amount of instruments eligible to capital Tier I, authorized by the Central Bank to compose the Reference Equity (RE) according to CMN Resolution 3,444/2007, and that do not meet the standards required by the CMN Resolution 4,192/2013, based on the Central Bank orientation related to the limit established on article 28 sections I to X of CMN Resolution 4,192/2013. 2 - According to CMN Resolution 4,192/2013, the balance of FCO is eligible for inclusion in the RE. 3 – In 09/30/2015 was considered the balance of subordinated debt instruments that composed the RE at 12.31.2012, applying a decay of 30 %, as determined by CMN Resolution 4,192/2013. 4 - Under CMN Resolution 4,193/2013, it corresponds to the Factor “F” applied to the amount of RWA.

In 2Q15, the perpetual bond issued at Oct/2009, with 8.50% p.y. coupon, in the amount of US$1.5 billion, composed Banco do Brasil´s Tier I with the value equivalent to R$ 2,073 million. In 3Q15, after reassessment of article 28 from Bacen Resolution 4,192/13, and Central Bank ratification, this instrument composed the value of R$ 5,760 million in Banco do Brasil’s Tier I.

BB’s Minimum Required Referential Equity was R$92,795 million in September 2015, an increase of R$ 5,779 million over June 2015. The higher change in the quarter was due to Required Reference Equity related to credit risk (R$3,705 million), reflecting mainly the increase in expositions from credit operations, securities and DTAs.

The following table shows the composition of RWACPAD, taking the main exposures into account.


129

Table 156. Minimum Required Reference Equity referring to the RWACPAD portion

R$ million RWACPAD MRRE (%)

Loan Operations 465,501 51,205 59.5

Other Credits 108,811 11,969 13.9

Securities and Derivatives 54,836 6,032 7.0

Loans to release 27,750 3,053 3.5

Guarantees Provided 12,099 1,331 1.5

Permanent Assets 26,851 2,954 3.4

Tax Credits 45,266 4,979 5.8

Other 41,856 4,604 5.3

TOTAL 782,970 86,127 100.0

Sep/15

Regarding the market risk portion (RWAMPAD), the following table shows the Minimum Required Reference Equity as of September 2015, per risk factor:

Table 157. Minimum Required Reference Equity referring to the portion of RWAMPAD

R$ million RWAMPAD MRRE (%)

FX 19,576 2,153 80.8

Interest Rate 4,655 512 19.2

Commodities 1 0 0.0

TOTAL 24,231 2,665 100.0

Sep/15

To calculate the Minimum Required Reference Equity for the portion of RWA related to the required equity for operational risk (RWAOPAD), BB uses the Alternative Standardized Approach (ASA), as established by the Central Bank Circular 3,640/2013, and its amendments. The current capital portion for operational risk, is related to the Prudential Conglomerate (BB multiple bank, financial companies and means of payment) as regulatory determination, and it will be met with the respective capital allocation on a monthly basis during the period from July to December 2015.

Table 158. Minimum Required Reference Equity referring to the RWAOPAD Portion

R$ million RWAOPAD MRRE (%)

Asset Management 1,335 147 3.7

Commercial 21,337 2,347 58.6

Retail Brokerage 48 5 0.1

Corporate Finance (11,847) (1,303) (32.6)

Trading and Sales 6,320 695 17.4

Payments and Settlements 5,038 554 13.8

Financial Agent Services 1,526 168 4.2

Retail 12,633 1,390 34.7

TOTAL 36,389 4,003 100.0

Sep/15


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Table 159. RWACPAD segregated by the Risk-Weighting Factor (RWF)

R$ million RWF RWACPAD1

MRRE²

Available Founds 20% 1,608 177

100% 2,019 222

Short-term Interbank Investments 20% 1,957 215

50% 745 82

75% 1 0

85% 3,765 414

100% 12,063 1,327

Securities and Financial Derivatives 2% 17 2

20% 103 11

50% 243 27

85% 21,313 2,344

100% 25,533 2,809

1250% 7,627 839

Interbank Accounts 20% 489 54

50% 165 18

100% 1,221 134

Loans 20% 162 18

35% 10,320 1,135

50% 3,166 348

75% 180,469 19,852

85% 122,646 13,491

100% 148,738 16,361

Leasing 75% 422 46

85% 28 3

100% 396 44

Other Receivables 50% 8,674 954

75% 13,827 1,521

85% 3,561 392

100% 82,749 9,102

Other Assets 100% 491 54

Permanent Assets 100% 16,878 1,857

250% 9,973 1,097

Credit Commitment non-cancellable unconditionally and unilaterally by the Institution 20% - -

50% 692 76

75% 9,581 1,054

85% 725 80

100% 2,469 272

Loans to Concede 20% - -

50% 1,706 188

75% 651 72

85% 5,193 571

100% 6,733 741

Advance payment granted by the Institution 75% 153 17

85% 10,106 1,112

100% 3,593 395

Guarantees provided 20% 11 1

50% 612 67

75% 183 20

85% 6,420 706

100% 4,873 536

Tax Credits 100% 27,159 2,987

250% 15,554 1,711

300% 2,554 281

2% 0 0

50% 0 0

100% 5 1

2% 0 0

50% 0 0

100% 5 1

Derivatives adjustment due to variation of credit quality from counterparty 2,627 289

Total 782,970 86,127

Operações a liquidar de venda de moeda estrangeira, de ouro ou de títulos e

valores mobiliários no mercado a vista

Sep/15

Operations to settle of foreign currency, gold or securities purchase on the

cash market

1 - Sum of products of the respective Risk Weighted Assets exposures, adjusted by the Conversion Factor. 2 - Risk Weighted Assets Exposure multiplied by 0.11.


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10 - Strategic Investments

10.1. Information on Subsidiaries and Affiliates

Table 160. Interest in the Capital of Subsidiaries and Affiliates by BB Banco Múltiplo

Consolidated Equity Interests Share (%)

Equity

Inco me

R$ thousand Activity Sep/15 Sep/14 Sep/15 3Q15

Banking Segment

Banco do Brasil - AG. Viena Banking (I) 100.00 685,467 1,201,578 (5,324)

BB USA Holding Company, Inc. Holding (I) 100.00 3,835 861 -

BB Leasing S.A. – Arrendamento Mercantil Leasing (I) 100.00 3,860,509 4,131,896 72,623

BB Leasing Company Ltd. Leasing (I) 100.00 112,399 601 16

BB Securities LLC. Brokerage (I) 100.00 126,913 219,200 685

Brasilian American Merchant Bank Banking (I) 100.00 1,108,520 1,756,830 (23,600)

BB Securities Asia Pte. Ltd. Brokerage (I) 100.00 14,730 18,728 (1,416)

BB Securities Ltd. Brokerage (I) 100.00 140,908 179,643 (24,483)

Besc DTVM S.A. Asset Management (I) 99.62 7,195 7,230 105

Banco Patagonia S.A. Multiple Bank (I) 58.96 1,067,772 1,825,570 144,843

Banco Votorantim S.A. Multiple Bank (II) 50.00 3,775,618 3,874,027 77,183

BB Americas Multiple Bank (I) 100.00 88,464 177,427 5,162

Investment Segment

BB Banco de Investimento S.A. Investment Bank (I) 100.00 3,106,318 3,103,624 244,938

Segment of Fund Management

BB DTVM S.A. Asset Management (I) 100.00 344,348 339,619 207,977

Insurance, Private Pension Fund, and Capitalization

BB Seguridade Participações S.A. Holding (I) 66.25 3,949,332 4,606,714 681,693

Segment of Payment Methods

BB Adm. de Cartões de Crédito S.A. Service Rendering (I) 100.00 31,729 34,188 4,678

BB Elo Cartões Participações S.A. Holding (I) 100.00 577,525 4,565,154 215,959

Other Segments

BB Administradora de Consórcios S.A. Consortiums (I) 100.00 209,975 220,033 52,511

BB Turismo Tourism (I) 100.00 14,792 12,743 (1,174)

BB Money Transfers Inc.¹ Service Rendering (I) - 4,281 - -

BB Tecnologia e Serviços S.A. IT (I) 99.97 200,487 232,369 4,629

Book Value

(I) Subsidiaries fully included in the accounting consolidation. (II) Joint ventures proportionately included in the accounting consolidation. (1) BB Money Transfers Inc. - In december/2014 was completed the process of closing to service company.

The following table shows the majority equity interests held directly by BB Banco de Investimentos S.A. (BB-BI) that are consolidated for accounting purposes for the formation of BB Consolidated.

Table 161. Interest in the Capital of Subsidiaries and Affiliates by BB Banco de Investimentos


Equity

Inco me


Investment Segment

Kepler Weber S.A. Industry (II) 17.46 82,097 83,662 1,268

Companhia Brasileira de Securit. – Cibrasec Credit Acquisition (III) 12.12 9,060 9,155 158

Neoenergia S.A. Energy (II) 11.99 1,109,683 1,156,323 (12,363)


Seg. Brasileira de Créd. à Exportação – SBCE Insurance Company (II) 12.09 3,149 3,038 311


Cielo S.A.¹ Service Rendering (II) 28.72 1,831,047 2,325,552 225,874

Tecnologia Bancária S.A. – Tecban Service Rendering (III) 12.52 45,951 47,347 (408)

Other Segments

Ativos S.A. Securitizadora de Créd. Financ. Credit Acquisition (I) 100.00 913,758 1,088,797 42,816

Book Value

(I) Subsidiaries fully included in the accounting consolidation. (II) Joint ventures proportionately included in the accounting consolidation. (III) Affiliates companies proportionately included in the accounting consolidation as defined by Central Bank of Brazil. 1 - Includes goodwill on increasing equity.

BB has additional interests through other subsidiaries in the following companies:

Chapter 10 - Strategic Investments

132

I. Ativos SA: 75.71% by BB-BI and 24.29% by Brazilian American Merchant Bank (BAMB) totaling 100%;

II. Cibrasec: 9.09% by BB-BI and 3.03 by Multiple Bank, totaling 12.12%;

III. Tecban: 8.01% by BB-BI and 4.51% by Multiple Bank, totaling 12.52%.

The following table shows the majority equity interests held directly by BB Seguridade Participações S.A.

Table 162. Interest in the Capital of Subsidiaries and Affiliates by BB Seguridade Participações


Equity

Inco me



BB Seguros Participações S.A. Holding (I) 66.25 5,525,081 6,388,318 672,966

BB Mapfre SH1 Participações S.A. Holding (II) 49.68 1,452,241 1,667,055 368,719

Mapfre BB SH2 Participações S.A. Holding (II) 33.13 1,416,419 1,598,404 66,180

Brasilprev Seguros e Previdência S.A. Insurance Company /Pension (II) 49.68 1,105,444 1,634,151 167,480

Brasilcap Capitalização S.A. Capitalization (II) 44.16 220,694 234,207 45,562

BB Capitalização S.A. (Nossa Caixa Capitalização S.A.)¹ Capitalization (I) - 5,554 - -

IRB - Brasil Resseguros Reinsurance (II) 13.53 578,493 634,585 16,195

Brasildental Operadora de Planos Odontológicos S.A. Service Rendering(II) 49.68 2,585 1,513 (441)

BB Cor. Participações S.A. Holding (I) 66.25 362,400 427,832 366,063

BB Corretora de Seg. e Adm. de Bens S.A. Brokerage (I) 66.25 353,872 401,073 366,070

Book Value

(I) Subsidiaries fully included in the accounting consolidation. (II) Joint ventures proportionately included in the accounting consolidation. (1) BB Capitalização S.A.- Incorporated BB Seguros in 11.28.2014.

The following table shows the majority equity interests held directly by BB Elo Cartões Participações S.A.

Table 163. Interest in the Capital of Subsidiaries and Affiliates by BB Elo Cartões Participações


Equity

Inco me


Services Segment

Elo Participações S.A. Holding (II) 49.99 574,764 769,122 65,019

CBSS - Alelo Service Rendering (II) 49.99 501,013 705,626 72,327

Elo Serviços Service Rendering (II) 33.33 12,448 18,351 (390)

Cateno Gestão de Contas de Pagamento S.A. Service Rendering (II) 50.11 - 4,032,802 65,833

Book Value

(II) Affiliated companies, proportionately included in the accounting consolidation.

The following table shows the shareholdings non-consolidated.

Table 164. Non-Consolidated Interest in the Capital of Subsidiaries and Affiliates

Equity Interest Share (%)

Equity

Inco me


Cadam S.A. Mining (IV) 21.64 25,201 15,861 (1,601)

Cia. Hidromineral Piratuba Sanitation (IV) 14.26 2,514 2,715 49

Estruturadora Brasileira de Projetos - EBP Service Rendering (IV) 11.11 8,181 6,496 (70)

Book Value

(IV) Affiliates companies accounted for by equity method.


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10.2. Banco Votorantim

The strategic partnership with Votorantim Finanças at Banco Votorantim (BV) which began in 2009 is intended to facilitate:

I) expansion of service channels;

II) joint action for the development and distribution of investment products;

III) expansion of business of the Wholesale segment; and,

IV) increase loan assets origination, with a focus on auto loans.

The consolidation of BV’s financial information in BB’s financial statements is proportional to equity and takes into account possible balance offsets from transactions between banks.

All numbers presented below reflect 100% of BV’s balances, balance sheet accounts and income accounts. More detailed information about Banco Votorantim can be obtained from the Management Report Earnings 3Q15 available on www.bancovotorantim.com.br/ir.

Table 165. Balance Sheet Main Items


Total Assets 98,016 103,335 110,313 12.5 6.8

Securities and Financial Derivatives 26,473 25,753 33,290 25.8 29.3

Loans 53,289 51,761 51,114 (4.1) (1.2)

Deposits 5,312 5,034 4,826 (9.1) (4.1)

Money Market Borrow ing 24,415 27,937 30,087 23.2 7.7

Shareholders' Equity 7,683 7,847 7,778 1.2 (0.9)

Chg. (%) on

Summary of the Results

In 3Q15 Banco Votorantim continues to implement the sustainable growth agenda, highlighting the following results:

I. Net income was R$137 million, equivalent ROE of 7.2% per year. In 9M15 net income was R$405 million;

II. Our broad definition loan portfolio decreased 3.0% in the last twelve months and 0.7% in the last quarter. This conservative stance on loans and the higher Selic rate, has been contributing to the NII’s decrease. Compared to the 2Q15, the NII’s decrease is also explained by the decrease of income from wholesale business, specially structured finance. Income of services and insurance increased both in 3Q15/2Q15 as in 9M15/9M14 comparison;

III. Delinquency above 90 days (NPL+90days) of the managed loan portfolio decreased 60 bps in twelve months, to 5.3%. In business loans, the NPL+90days decreased to 5.0% in Sep/15, from 5.4% in Sep/14. In retail, the better quality of auto loans origination and procedures improvement drove the NPL+90days decrease from 6.1% in 3Q14 to 5.4% in 3Q15.

IV. Prudential ALLL (Allowance for Loan and Lease Losses) were done, resulting in higher coverage ratio (from 140.9% in Jun/15 to 155.3% in Sep/15). Additionally, despite the slowdown in economic activity, ALLL from retail portfolio decreased 23.3% in 9M15/9M14 comparison, result of the quality of the auto portfolio originated in recent years.

V. Administrative and personnel expenses decreased 3.4% compared to 9M14. Due to strict cost control the cost income ratio remained below 40% (39.6% in Sep/15).

http://www.bancovotorantim.com.br/ir.


134

Table 166. Income Statement with Reallocations¹ - Quarterly

Chg. (%) on

R$ million Corp. Law Adjustm.¹ Adjusted Corp. Law Adjustm.¹ Adjusted 2Q15

Financial Intermediation Income 3,735 (220) 3,515 6,487 408 6,894 96.1

Loans 1,605 (136) 1,469 2,631 (170) 2,461 67.6

Leasing 13 - 13 12 - 12 (11.4)

Securities 1,151 - 1,151 1,305 - 1,305 13.4

Financial Derivatives (35) (84) (119) 1,157 577 1,734 -

Foreign Exchange Portfolio 2 - 2 292 - 292 -

Sale or Transference of Financial Assets 1,000 - 1,000 1,091 - 1,091 9.1

Financial Intermediation Expenses (2,268) - (2,268) (5,760) - (5,760) 154.0

Money Market Funds (1,568) - (1,568) (3,890) - (3,890) 148.1

Borrow ing, Assignments and Onlending 28 - 28 (1,077) - (1,077) -

Sale or Transference of Financial Assets (728) - (728) (793) - (793) 9.0

Net Interest Income 1,467 (220) 1,247 727 408 1,134 (9.0)

Allow ance for Loan Losses (514) 66 (448) (1,214) 139 (1,075) 139.8

Net Interest Margin 953 (154) 799 (487) 546 59 (92.6)

Other Operating Income (Expenses) (701) 108 (593) (254) (301) (555) (6.4)

Fee Income 220 - 220 232 - 232 5.7

Personnel Expenses (314) - (314) (275) - (275) (12.4)

Other Administrative Expenses (282) - (282) (288) - (288) 2.1

Taxes (97) 2 (94) (99) (3) (102) 7.9

Equity Interest in Subsidiaries and Affiliates 39 - 39 39 - 39 (0.6)

Other Operating Revenues (1) 35 35 584 (368) 216 525.3

Other Operating Expenses (267) 70 (197) (448) 71 (378) 91.9

Operating Income 252 (47) 205 (742) 246 (496) -

Non-operating Income (15) - (15) (9) - (9) (35.8)

Income Before Taxes 237 (47) 191 (751) 246 (505) -

Income and Social Contribution Taxes (36) 47 10 921 (246) 675 -

Profit (Loss) Sharing (55) - (55) (33) - (33) (40.0)

Net Income 146 (0) 146 137 0 137 (6.2)

Quarterly Flow

2Q15 3Q15

1 - Adjustments refer to: (i) income from recovery of credits that were written-off to losses and credit expenses referring to the portfolio granted with co-obligation, classified under line “Loans”, and reallocated to “Allowance for Loan Losses” and (ii) foreign investments exchange variations, which were accounted for under Other Operating Income (Expenses) and reallocated to Income from Derivative Financial Instruments, as well as these investments’ hedging strategy tax effects.

Net Interest Income - NII

The NII decrease in 3Q15 is a result of the conservative stance on lending and the increase of the Selic rate, which raised the funding cost.

Financial intermediation income increased in 3Q15/2Q15 comparison, mainly due to the growth in revenues from loans due to foreign exchange impact in the credit export notes (NCE). In the 9M15/9M14 comparison the growth was driven, mainly, by gains with financial instruments derivatives and by the increase in revenues from loans and securities.

Financial intermediation expenses increased compared to 2Q15 as well as in 9M15/9M14 comparison, driven mainly by exchange rates and by increased Selic rate.

The NIM (Net Interest Margin) decrease in comparison to 2Q15 was due to the combination between the decrease of the NII and growth of average interest earning assets balance due to the dollar appreciation against real in 3Q15.


135

Table 167 . Net Interest Income and Profit Margin

R$ million 3Q14 2Q15 3Q15 3Q14 2Q15

Average Interest Earning Assets 89,222 95,337 95,883 7.5 0.6

Average Interest Bearing Liabilities 82,026 88,341 89,281 8.8 1.1

NII 1,303 1,247 1,134 (12.9) (9.0)

Net Interest Gain ¹ 848 1,351 (889) (204.9) (165.8)

Interest Income 3,804 3,618 4,868 28.0 34.6

Interest Expense (2,956) (2,267) (5,757) 94.7 154.0

Net Interest Income Other Items² 455 (104) 2,023 344.6 -

AIBL / AEA – % 91.9 92.7 93.1 1.3 0.5

Yield Average Assets - % ³ 18.2 16.3 21.9 20.5 34.8

Liabilities Avarege Cost - % ⁴ 15.2 10.7 28.4 86.6 166.3

Net Interest Rate - % ⁵ 3.0 5.6 (6.5) (319.2) (216.1)

Adjusted NIM - % ⁶ 3.9 6.0 (3.7) (194.9) (161.3)

NIM – % 6.0 5.5 4.8 (19.3) (12.6)

Chg. (%) on

1 - Defined as interest income less interest expenses. 2 - Includes derivatives, debt assumption contracts, foreign exchange portfolio, gold loans, credit guarantor fund, foreign exchange gain/loss abroad and other income from financial intermediation nature. 3 - Total interest income divided by average interest earning assets. 4 - Total interest expenses divided by average interest bearing liabilities. 5 - Difference between average rate of earning assets and average rate of interest bearing liabilities. 6 - Net Interest Income divided by average interest earning assets.

Loan Portfolio

The decrease of the classified loan portfolio in the last 12 months was due to a more conservative lending strategy and focus on ensuring the quality and profitability of the new vintages, besides a slowdown in demand. The managed retail loan portfolio had a more significant decrease mainly due to the drop in the assigned assets with recourse until Dec/11 (before the implement of Circular Bacen 3,533/11).

The broad wholesale loan portfolio, which includes guarantees and private securities, increased in the QoQ comparison, mainly due to exchange rate.

Table 168. Loan Portfolio


Business Loans (a) ¹ 17,332 16,675 16,959 (2.2) 1.7

Individuals (Retail) (b) 35,957 35,086 34,155 (5.0) (2.7)

Auto (Leasing and Consumer) 29,345 28,794 28,221 (3.8) (2.0)

Payroll Loans 5,533 5,051 4,713 (14.8) (6.7)

Others² 1,079 1,241 1,222 13.2 (1.5)

Classified Loan Portfolio (c=a+b) 53,289 51,761 51,114 (4.1) (1.2)

Garantees Provided (d) 9,837 9,344 9,561 (2.8) 2.3

Securities and others (e) 5,084 5,558 5,499 8.2 (1.1)

Credit Portfolio Broad Concept (f=c+d+e) 68,210 66,663 66,174 (3.0) (0.7)

Assigned Assets - w ith recourse (g) 2,135 744 461 (78.4) (38.0)

Auto (Leasing and Consumer) 1,459 464 272 (81.4) (41.4)

Payroll Loans 677 281 190 (72.0) (32.4)

FIDCs (h) 287 0 - (100.0) (100.0)

Managed Loan Portfolio Broad Definition (i=f+g+h) 70,633 67,407 66,635 (5.7) (1.1)

Retail (b+g+h) 38,379 35,830 34,617 (9.8) (3.4)

Wholesale (a+d+e) 32,253 31,577 32,019 (0.7) 1.4

Chg. (%) on

1 – It includes BV Nassau operations (exchange branches); 2 – Personal loan, CDC without warrants and credit card.

BV has also taken a more conservative approach to the granting of auto finance loans using lower terms and higher down payment amount in comparison to 2010 and 2011. In Dec/10 the average term was 52 months and the down payment percentage was 26%. In 3Q15, the average term was 44 months and the down payment percentage was 42%, as the table below. Additionally, BV continues to


136

privilege the used cars financing that is historically more profitable and in which the institution have known competence.

Table 169. Auto Loan Portfolio

3Q14 2Q15 3Q15

Production

Average Rate per Crop - % p.a. 26.2 27.6 28.0

Average Term per Crop - months 44 44 44

Loan-to-Value - % 60.4 58.6 58.3

Used Auto / Light Auto - % 86.6 90.9 91.7

3Q14 2Q15 3Q15

Auto Portfolio

Portfolio Average Rate - % p.a. 25.4 26.1 26.4

Portfolio Maturity - months 47 46 46

Loan-to-Value - % 55.8 53.6 52.7

Used Auto / Auto Portfolio - % 79.2 83.1 84.4

Average Auto Age (years) 5 5 5

The combination of improvements in processes and credit models and prudence in granting loans has produced tangible results. BV, since 2011, has been originating auto loans with quality equal to or greater than the historical average, expanding the focus in the used light cars - segment which BV have leadership and known competence - increasing its share in the total new loans from 80% to 84% in 12 months.

Figure 75. Disbursements – Auto Loans – R$ billion

3.7

3.4

3.2

3.6

3.9

3.3

3.0 3.0

2.8 2.72.6

2.93.2 3.1

2.5 2.5

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Auto (Total) Auto (Used Light)


137

Delinquency and Allowance for Loan and Lease Losses

Figure 76. Expenses with ALLL - Corp. Law Vs. Expenses with ALLL - Adjusted

609672 689

514

1,214

451505

417 448

1,075

5.98 5.80

6.64

5.24

5.29

5.885.71

6.55

5.19

5.26

3Q14 4Q14 1Q15 2Q15 3Q15

Expenses with Allowance for Loan Losses - Corp. Law - R$ millionExpenses with Allowance for Loan Losses - Adjusted - R$ millionNPL + 90 Days - Classified Loan Portfolio (%)NPL + 90 Days - Managed Loan Portfolio (%)

Retail managed portfolio delinquency ended 3Q15 flat from 2Q15 and 70 basis points lower from Sep/14. As a result of the quality of the loans originated in the last years the light cars portfolio presented the same trend.

In the Business segment, 5.0% of loans were delayed by more than 90 days at the end of Sep/15, compared to 4.8% at Jun/15 and 5.4% in Sep/14. Despite of the relative stability of delinquency rates, considering the macroeconomic scenario, BV has made prudential provisions. A meaningful part of these prudential provisions were for loan losses, resulting in an increase of the coverage ratio to 155.3% at the end of Sep/15.

The Allowance for loan losses, net from recovery of written off loans, increased R$ 627 million over 2Q15 – reflecting the prudential provisions – and R$ 253 million in the 9M15/9M14 comparison.

Considering the loan portfolio quality presented in the next table, worth mentioning that the strengthening of allowances contributed to increase to 8.2% the allowance/loan portfolio ratio and to 79.0% the allowance/rating D-H loans ratio (according to Bacen Resolution 2,682/99).


138

Table 170. Managed Portfolio Quality

R$ million 3Q14 2Q15 3Q15

Managed Loan Portfolio¹ 55,712 52,505 51,576

NPL + 90 days 3,273 2,727 2,712

NPL + 90 days/Managed Loan Portfolio - % 5.9% 5.2% 5.3%

Write-off (771) (834) (838)

Recovery of Write-offs 148 151 169

Net Loss (623) (683) (669)

Net Loss/Managed Loan Portfolio - annualized - % 4.6% 5.3% 5.3%

New NPL 383 (67) 823

New NPL/Managed Loan Portfolio² 0.7% -0.1% 1.6%

Provision¹ 4,114 3,843 4,212

Allow ance/NPL + 90 days - % 125.7% 140.9% 155.3%

Balance AA-C 49,703 47,142 46,248

Balance AA-C/Managed Loan Portfolio 89.2% 89.8% 89.7%

1 - Includes ALLL of assets with recourse. 2 - (Difference from the NPL amount from the last quarter and this quarter + write-off)/ Loan portfolio of the previous quarter.

Funding

In the recent quarters BV has been keeping its conservative stance regarding loan granting. Considering the lower demand of funding, BV is aiming on get a better profile of its funding mix. In the last two years BV increased the amount of more stable funding instruments, such as financial letters, agribusiness letters of credit and mortgage bonds, and assigned assets obligations. Together, these kind of funding instruments are 44.2% of the total funding.

As part of the strategy of lengthening the funding average term and to reduce its cost, in the 3Q15, BV captured R$ 1.5 billion (R$ 3.5 billion in the 2Q15) through assignment to Banco do Brasil (retaining substantially risks and benefits) of R$ 1.4 billion in assets of retail business, that contributes to keep free cash level prudentially high.

Additionally, time deposits were decreased. The replacement of time deposits by letters is a trend in the whole industry, considering that neither reserve requirements nor contribution to FGC (Fundo Garantidor de Crédito) are required to letters.

Table 171. Funding

Chg. (%) on


Debenture (Linked to Repurchase) 15,968 14,252 13,395 (16.1) (6.0)

Deposits (Time Deposits and Others) 5,312 5,034 4,826 (9.1) (4.1)

Letters 16,013 16,495 16,623 3.8 0.8

Financial Letters 12,718 13,018 13,423 5.5 3.1

Agribusiness Letters of Credit 2,852 3,050 2,681 (6.0) (12.1)

Mortgage Bonds 443 427 519 17.0 21.6

Loans and Onlendings 6,452 6,820 8,111 25.7 18.9

Subordinated Debt 7,047 7,168 6,797 (3.5) (5.2)

Foreign Securities 6,101 7,197 8,288 35.9 15.2

Assigned Assets Obligations 15,470 17,015 16,163 4.5 (5.0)

Ohter Funding¹ 1,593 - - - -

Total Funding 72,401 73,980 74,203 2.5 0.3

Classified Loan Portfolio / Total Funding % 73.9 70.0 68.9 (6.8) (1.5)

1 - Including Box Option.


139

BIS Ratio

Since October 2013 a set of laws came into effect in Brazil that implemented the recommendations of the Basel Committee on Banking Supervision regarding the capital structure of financial institutions, known as Basel III. The Central Bank of Brazil, through Resolutions 4,192 and 4,193 provided the new methodology for calculating the minimum requirements for Reference Equity (RE), Tier I and Core Capital. The minimum requirement of RE remains at 11%, and the Tier I ratio is 6.0%.

The scope of consolidation used as a basis for establishing the operational limits was also amended in Oct/13, considering:

I) the Financial Conglomerate, from Oct/13 to Dec/14;

II) the Prudential Conglomerate, defined in Resolution No. 4,280/13, from Jan/15 onward.

The difference in the comparison between the scopes reflects the consolidation of investment funds in which Banco Votorantim retains substantially risks and benefits.

Table 172. BIS Ratio

R$ million Sep/14 Jun/15 Sep/15

RE - Referential Equity 11,190 10,967 10,866

RE Tier I 7,344 7,105 6,828

RE Tier II 3,847 3,862 4,038

RWA 73,223 73,786 75,457

Credit Risk 66,967 66,293 67,384

Market Risk 2,067 3,087 3,294

Operational 4,188 4,407 4,780

RRE - Required Referential Equity 8,055 8,116 8,300

BIS Ratio 15.3% 14.9% 14.4%

RE Tier I 10.0% 9.6% 9.0%

RE Tier II 5.3% 5.2% 5.4%


140

10.3. International Businesses

BB’s presence abroad has as the main objective to maintain its position as a reference for Brazilian and South American individuals and companies in the international markets. The highlights of BB lines abroad are presented below.

Banco Patagonia

Banco Patagonia net income was R$246 million in the 3Q15. The result is 48.7% higher than 2Q15.

North America

BB Americas

BB Americas presented net income of R$5.2 million in the 3Q15. Total assets was R$1,245 million, with highlight to credit operations that amounted R$813 million, growth of 42.3% and 46.5% over June/15. Total deposits was R$859 million, an increase of 51.5 % in relation to 2Q15. The shareholder equity in 3Q15 was R$177 million, growth of 32.1% over June/15.

New York

Banco do Brasil Securities was established in 2005 to complement the services offered by conglomerate's units abroad through the offering of fixed-income securities to US investors, increasing BB ability to issue securities in that market. The brokerage also provides services companies and individual customers abroad, and also for BB Miami and BB New York clientes. Recently the broker was authorized underwrite in the US market, allowing its operations in the main activities related to the capital market issuance and brokerage in the US.

Europa

In Europe, remains ongoing restructuring of technological and business platforms. In the first quarter 2015, the branch of Milan was integrated to BB AG Aktiengesellschaft (BB AG), a fully owned subsidiary of Banco do Brasil S.A, in Austria, following the example of branches in Madrid, Paris, Lisbon and the BB Europe Servicing Center, which had already gone through the same process in previous periods. The integration of the branch of Frankfurt to BB AG is expected to occur in 2016.

London

Founded in 1992, BB Securities has as main objective to provide international capital market access and funds rising through the structuring and distribution of debt issues of companies, banks and government to Banco do Brasil. The brokerage also provides custody services and financial settlement in the purchase and sale transactions of assets. It’s also responsible for the settlement of Euro in Brazil (transaction settlement and custody of the National Treasury buyback program).

BB in Asia

Japan

The main operation of Banco do Brasil is in Japan, where BB is focused on meeting the banking needs of Brazilians resident and foreigners, the corporate segment interested in Reais investment. The structure of the BB in Tokyo consists of a retail branch, next to the Brazilian Consulate, and a corporate branch. In addition to these, the BB has sub-branches in cities with significant presence of Brazilians, plus a mobile branch that moves between localities where there is no physical presence of the Bank, seeking to fulfill the institutional commitment of being close to customers.

China

In China, through its branch in Shanghai, the BB is focused on business opportunities in the wholesale segment, serving mainly the demands for products and services of Brazilian companies that have business with China and Chinese companies that have business with Brazil, in addition to the local banks, that are major trading partners of Banco do Brasil.

Singapore

Securities Asia was established in 2011 and started operations in January 2012. The new BB brokerage, based in Singapore, reinforces the brokerage firms established in London and New York and has as objective to increase the base of institutional investors in Asia (Pacific) and the offer of Brazilian assets such as bonds, equities and investment funds managed by BB DTVM.

The following table presents the main balance sheet accounts of branches, subsidiaries and subsidiaries abroad, including Banco Patagonia. The values relating to transactions between the


141

overseas dependencies have been eliminated. The BB group line represents the balance of transactions between overseas dependencies and the rest of the BB group in the country.

Table 173. Balance Sheets – Consolidated Abroad


ASSETS 152,232 192,858 240,319 57.9 24.6

Short -Term Interbank Investments 34,788 38,819 52,028 49.6 34.0

Marketable Securities 12,893 15,864 15,290 18.6 (3.6)

Securities for Trading 2,423 5,115 4,947 104.2 (3.3)

Securities Available for Sale 10,470 10,749 10,343 (1.2) (3.8)

Loans 49,125 57,299 67,664 37.7 18.1

Public Sector 4,685 5,181 1,692 (63.9) (67.3)

Private Sector 44,440 52,118 65,972 48.5 26.6

Other Assets 5,354 8,165 10,190 90.3 24.8

BB Group 50,072 72,711 95,147 90.0 30.9

LIABILITIES 152,232 192,858 240,319 57.9 24.6

Deposits 50,458 63,264 79,697 57.9 26.0

Demand Deposits 7,495 9,468 11,163 48.9 17.9

Time Deposits 20,877 23,571 30,523 46.2 29.5


Funds From Acceptances and Securities Placed 28,944 34,863 44,085 52.3 26.5

Borrow ing 18,228 23,262 28,626 57.0 23.1

Subordinated Debt and Perpetual Bonuses 26,765 33,510 43,372 62.0 29.4

Other Liabilities 5,712 6,087 8,479 48.4 39.3

BB Group 12,867 20,678 22,658 76.1 9.6

Shareholders’ Equity 9,258 11,194 13,402 44.8 19.7

Attributable to Parent Company 8,515 10,248 12,132 42.5 18.4

Participation of Non-Controlling 743 946 1,270 70.9 34.2


Table 174. Results – Consolidated Abroad

R$ million 3Q14 2Q15 3Q15 3Q14 2Q15

Participation of Non-Controlling 101 68 101 - 48.5

Attributable to Parent Company 286 159 (7) - -

Net Income 387 227 94 (75.7) (58.6)

Chg. (%) onQuarterly Flow

10.3.1. Banco Patagonia

All figures presented in this chapter reflect 100% of balances, balance sheet and results of Banco Patagonia.

The tables below show highlights of balance sheets, results and structural data for Banco Patagonia.

Table 175. Banco Patagonia – Balance Sheet Highlights


Assets 11,590 17,714 22,236 91.9 (99.5)

Loans 6,370 7,906 11,697 83.6 48.0

Deposits 7,860 11,831 14,673 86.7 24.0

Shareholders' Equity 1,811 2,306 3,096 71.0 34.3



142

Table 176. Banco Patagonia – Balances of Funding


Interbanking 93 179 245 164.5 37.3

Repo 22 314 65 199.4 (79.4)

Companies 2,101 2,382 2,208 5.1 (7.3)

Individuals 1,017 1,311 1,370 34.7 4.5

Issues 172 69 122 (29.1) 76.2

Total 3,404 4,255 4,010 17.8 (5.8)


Table 177. Banco Patagonia – Main Lines of the Results

R$ million 3Q14 2Q15 3Q15 3Q14 2Q15

Income from Financial Intermediation 279 345 591 112 71

Allow ance for Loan and Lease Losses 148 (13) (85) - 545

Gross Income from Financial Intermediation 426 332 505 18 52

Fee income 128 160 234 82 46

Administrative Expenses (182) (273) (376) 107 38

Other 19 42 40 112 (5)

Income Before Taxes 391 261 402 3 54

Income tax and social contribution (145) (96) (157) 8 64

Net Income 246 165 246 (0.2) 48.7


Figure 77. Banco Patagonia – Historical Series Net Income – R$ million

255

382

476

739

617

2011 2012 2013 2014 9M15

Table 178. Banco Patagonia – Indicators on Returns, Capital and Credit

(%) 3Q14 2Q15 3Q15

Return on Equity 42.2 31.9 32.9

BIS Ratio (Basel) 24.7 22.9 23.2

Provisions / Past Due Loans (+90 days) 224.5 236.8 275.4

Npl +90 days 1.8 1.7 1.3

Table 179. Banco Patagonia – Operating and Structural Highlights

Sep/14 Jun/15 Sep/15 Sep/14 Jun/15

Customers 940,286 948,452 978,125 4.0 3.1

Branches 174 175 175 0.6 -

Branches in Buenos Aires 91 91 91 - -

Service Points 195 197 197 1.0 -

Employees 3,254 3,307 3,352 3.0 1.4



143

11 – Financial Statements

11.1. Summary Balance Sheet

Table 180. Balance Sheet Assets – Quarterly Series

Quarterly Flow - (R$ million) Dec/13 Mar/14 Jun/14 Sep/14 Dec/14 Mar/15 Jun/15 Sep/15

ASSETS 1,303,915 1,369,965 1,401,128 1,431,629 1,437,486 1,523,666 1,533,864 1,574,961

Current and Long-Term Assets 1,280,937 1,345,770 1,379,093 1,410,394 1,415,218 1,501,811 1,512,672 1,553,947

Available Funds 11,834 10,993 11,812 13,961 13,787 16,537 17,056 19,773

Short-Term Interbank Investments 231,132 292,331 297,619 317,820 304,237 351,658 357,325 349,196

Securities and Financial Derivatives 201,939 196,451 208,265 210,435 222,643 235,999 239,571 250,714

Securities Available for Trading 84,520 82,654 88,773 93,817 101,939 105,417 112,253 118,139

Securities Available for Sale 101,112 97,312 103,049 100,356 104,367 109,158 107,459 108,855

Securities Held to Maturity 14,786 14,873 15,144 14,539 14,136 17,669 17,324 17,231

Financial Derivative Instruments 1,521 1,611 1,299 1,723 2,201 3,754 2,535 6,488

Interbank Accounts 94,150 97,630 97,146 86,925 67,249 64,486 65,594 68,616

Deposits with the Central Bank 90,746 87,796 86,599 78,739 63,252 56,634 57,190 60,376

Comp. Dep. on Demand Dep. and Float 16,339 13,888 11,309 15,404 14,115 10,153 10,710 9,594

Comp. Dep. on Savings Deposits 74,407 73,908 75,290 63,335 49,136 46,480 46,480 50,782

Other 3,404 9,834 10,547 8,186 3,997 7,852 8,404 8,240

Intrabank Accounts 671 236 229 273 594 197 205 175

Loans 560,203 568,565 585,824 598,022 618,499 630,530 630,788 647,898

(Allowance for Loan Losses) (22,652) (23,073) (23,711) (24,674) (26,105) (27,725) (28,241) (32,667)

Leasing 1,291 1,123 1,074 1,017 1,024 1,012 1,046 1,090

Leasing and Subleasing Receivables 1,358 1,180 1,128 1,066 1,071 1,054 1,088 1,154

(Allowance for Lease Losses) (67) (56) (54) (49) (47) (42) (42) (64)

Other Receivables 175,887 174,578 173,108 177,489 183,107 197,642 196,970 211,987

Receivable on Guarantees Honored 442 425 458 460 540 522 207 401

Foreign Exchange Portfolio 17,525 18,093 16,111 16,372 18,368 21,196 20,384 25,112

Income Receivable 2,094 2,104 2,157 2,689 3,865 3,008 2,972 3,069

Trading and Brokerage of Securities 1,263 1,286 1,359 1,852 1,293 1,416 1,453 2,324

Specific Credits 1,390 1,433 1,469 1,509 1,550 1,592 1,634 1,686

Credits Insur., Pension Plans and Sav. Bonds 3,757 3,840 4,068 4,713 5,010 5,390 5,492 5,812

Tax Credits 27,462 27,581 28,260 29,384 29,501 35,122 36,400 45,368

Actuarial Assets 15,449 16,024 9,737 10,083 6,130 6,395 3,032 3,193

Fundo Paridade 172 168 117 118 119 125 113 116

Warrants Deposits Receivable 33,267 34,644 35,679 36,918 38,854 40,956 42,734 44,803

Surplus Destination Fund - Previ 7,794 7,935 8,046 8,092 8,155 8,474 8,667 8,768

Other Credits 67,070 62,877 67,626 67,427 72,026 75,651 76,183 73,874

(Provision for Other Credits) (1,798) (1,830) (1,979) (2,127) (2,304) (2,205) (2,301) (2,539)

(With Loan Characteristics) (943) (945) (1,032) (1,048) (1,160) (1,167) (1,198) (1,288)

(Without Loan Characteristics) (855) (885) (947) (1,080) (1,143) (1,038) (1,102) (1,251)

Other Assets 3,830 3,863 4,016 4,452 4,078 3,751 4,118 4,499

Assets Not in Use and Materials in Stock 554 657 688 686 618 663 634 698

(Provision for Impairment) (165) (161) (159) (146) (147) (147) (144) (142)

Prepaid Expenses 3,441 3,366 3,487 3,912 3,608 3,235 3,628 3,943

Permanent Assets 22,979 24,195 22,035 21,235 22,267 21,855 21,192 21,014

Investments 3,536 3,382 3,327 3,398 3,420 3,585 3,377 3,541

Property and Equipment 7,258 7,290 7,671 7,098 7,557 7,504 7,507 7,537

Intangible 12,128 13,471 10,988 10,694 11,249 10,729 10,275 9,906

Deferred Charges 56 52 48 45 42 37 33 30

Chapter 11 – Financial Statements

144

Table 181. Balance Sheet Assets – Annual Series

Annual Flow - (R$ million) 2010 2011 2012 2013 2014 CAGR - %

ASSETS 811,172 981,230 1,149,308 1,303,915 1,437,486 15.4

Current and Long-Term Assets 791,403 957,800 1,125,652 1,280,937 1,415,218 15.6

Available Funds 9,745 10,034 12,311 11,834 13,787 9.1

Short-Term Interbank Investments 107,579 166,288 219,323 231,132 304,237 29.7

Securities and Financial Derivatives 143,867 168,230 184,357 201,939 222,643 11.5

Securities Available for Trading 50,445 63,257 74,711 84,520 101,939 19.2

Securities Available for Sale 75,142 88,385 95,321 101,112 104,367 8.6

Securities Held to Maturity 16,656 15,191 12,910 14,786 14,136 (4.0)

Financial Derivative Instruments 1,624 1,397 1,415 1,521 2,201 7.9

Interbank Accounts 89,526 96,342 83,401 94,150 67,249 (6.9)

Deposits with the Central Bank 87,035 93,660 80,098 90,746 63,252 (7.7)

Comp. Dep. on Demand Dep. and Float 18,487 14,307 15,741 16,339 14,115 (6.5)

Comp. Dep. on Savings Deposits 68,548 79,353 64,357 74,407 49,136 (8.0)

Other 2,491 2,682 3,303 3,404 3,997 12.6

Intrabank Accounts 258 335 468 671 594 23.1

Loans 317,726 379,045 469,713 560,203 618,499 18.1

(Allowance for Loan Losses) (16,433) (18,222) (20,522) (22,652) (26,105) 12.3

Leasing 3,857 2,851 1,883 1,291 1,024 (28.2)

Leasing and Subleasing Receivables 4,048 3,064 2,011 1,358 1,071 (28.3)

(Allowance for Lease Losses) (191) (213) (128) (67) (47) (29.7)

Other Receivables 114,962 129,555 150,288 175,887 183,107 12.3

Receivable on Guarantees Honored 75 77 108 442 540 63.6

Foreign Exchange Portfolio 11,878 17,615 17,276 17,525 18,368 11.5

Income Receivable 944 1,410 1,818 2,094 3,865 42.3

Trading and Brokerage of Securities 383 317 601 1,263 1,293 35.5

Specific Credits 1,030 1,146 1,264 1,390 1,550 10.8

Credits Insur., Pension Plans and Sav. Bonds 1,109 1,742 2,194 3,757 5,010 45.8

Tax Credits 21,970 22,754 28,244 27,462 29,501 7.6

Actuarial Assets 8,116 13,372 11,808 15,449 6,130 (6.8)

Fundo Paridade 1,778 1,608 741 172 119 (49.2)

Warrants Deposits Receivable 23,388 25,584 28,082 33,267 38,854 13.5

Surplus Destination Fund - Previ 7,595 8,030 8,458 7,794 8,155 1.8

Fundo de Destinação 7,595 3,684 2,374 - - -

Fundo de Contribuição - 1,096 727 - - -

Fundo de Utilização - 3,249 5,358 7,794 8,155 -

Other Credits 38,269 37,565 51,171 67,070 72,026 17.1

(Provision for Other Credits) (1,572) (1,665) (1,476) (1,798) (2,304) 10.0

(With Loan Characteristics) (690) (580) (560) (943) (1,160) 13.9

(Without Loan Characteristics) (882) (1,085) (916) (855) (1,143) 6.7

Other Assets 3,884 5,120 3,909 3,830 4,078 1.2

Assets Not in Use and Materials in Stock 388 468 557 554 618 12.3

(Provision for Impairment) (177) (188) (195) (165) (147) (4.5)

Prepaid Expenses 3,673 4,840 3,547 3,441 3,608 (0.4)

Permanent Assets 19,770 23,430 23,656 22,979 22,267 3.0

Investments 8,128 7,973 7,640 3,536 3,420 (19.5)

Property and Equipment 4,904 5,589 6,637 7,258 7,557 11.4

Intangible 6,452 9,736 9,309 12,128 11,249 14.9

Deferred Charges 286 132 70 56 42 (38.3)


145

Table 182. Balance Sheet Liabilities - Quarterly Series

Quarterly Flow - (R$ million) Dec/13 Mar/14 Jun/14 Sep/14 Dec/14 Mar/15 Jun/15 Sep/15

LIABILITIES AND SHAREHOLDER’S EQUITY 1,303,915 1,369,965 1,401,128 1,431,629 1,437,486 1,523,666 1,533,864 1,574,961

Current and Long-Term Liabilities 1,231,256 1,296,027 1,328,921 1,349,956 1,356,432 1,439,634 1,450,793 1,490,687

Deposits 491,013 482,237 479,883 468,825 468,362 468,006 445,631 463,838

Demand Deposits 75,818 72,054 69,377 69,521 74,210 73,712 64,761 66,026

Savings Deposits 140,728 144,111 146,461 148,996 148,699 144,089 147,306 149,764

Interbank Deposits 27,155 27,447 28,842 28,531 30,969 37,554 34,223 42,404

Time Deposits 247,311 238,625 235,203 221,777 214,484 212,651 199,341 205,644

Money Market Borrowing 239,465 282,553 289,099 319,723 306,046 338,907 352,872 331,364

Repurchase Agreement with Private Securities 33,562 28,801 30,914 41,184 48,155 37,842 43,955 44,671

Funds from Accept. and Sec. Placed 123,053 140,893 149,692 155,071 159,035 183,329 200,714 210,141

Agribusiness Letter of Credit 79,154 89,034 99,647 105,520 103,752 119,690 133,897 135,896

Mortgage Bonds 3,487 8,159 8,482 7,995 14,358 19,285 18,741 18,734

Commercial Papers 9,528 9,706 9,587 9,637 9,071 9,580 9,719 7,301

Foreign Securities 30,885 33,994 31,976 31,920 31,853 34,773 38,357 48,210

Interbank Accounts 35 4,792 5,184 3,238 31 2,775 3,343 3,329

Interdepartmental Accounts 4,826 2,664 3,929 2,340 5,291 4,206 3,277 3,611

Borrowing 17,315 18,962 18,646 20,661 23,996 29,157 26,537 35,853

Domestic Borrowing 299 293 293 346 1,754 1,872 1,040 1,106

Foreign Borrowing 17,016 18,669 18,353 20,315 22,243 27,284 25,497 34,747

Domestic Onlending – Official Institutions 87,105 91,332 93,020 88,036 91,050 92,615 91,877 92,303

National Treasury 537 461 436 557 340 345 317 239

BNDES 43,968 43,813 43,785 44,181 44,282 43,247 41,701 39,740

CEF 4,220 6,026 8,046 9,992 12,360 14,233 16,324 18,220

Finame 28,477 30,363 30,958 32,065 33,205 34,073 33,058 31,882

Other Institutions 9,903 10,669 9,794 1,243 864 717 475 2,222

Foreign Onlending 24 20 0 0 0 0 0 9

Financial Derivatives 3,694 3,924 3,771 2,918 3,443 5,632 3,638 6,629

Other Accounts Payable 264,726 268,650 285,698 289,143 299,178 315,008 322,905 343,609

Collection of Taxes and Contributions 358 6,037 5,993 5,385 438 4,509 4,801 4,494

Foreign Exchange Portfolio 21,495 19,577 18,663 20,100 21,707 17,786 15,164 11,020

Shareholder and Statutory Distributions 1,413 718 1,088 1,407 2,357 2,160 2,374 2,348

Taxes and Social Security 28,877 24,162 22,782 24,239 22,784 24,820 25,649 26,751

Trading and Brokerage of Securities 2,069 1,322 1,456 1,974 830 941 966 1,466

Tech. Prov. Insur., Pens. Plans and Sav. Bonds 77,729 81,620 89,553 94,766 102,220 108,982 117,246 123,259

Financial and Development Funds 7,661 7,731 8,405 9,569 10,840 12,265 12,404 14,675

Hybrid Debt Capital Istruments 12,385 12,367 12,224 4,807 4,866 6,269 5,660 7,851

FCO (Subordinated Debt) 51,048 52,876 52,187 51,087 52,316 52,809 53,839 57,230

Actuarial Liabilities 6,334 6,457 5,790 5,873 5,830 5,907 6,319 6,389

Other Liabilities 46,866 47,552 51,230 50,048 53,522 53,560 53,808 57,875

Debt Instruments Eligible to Capital 8,490 8,230 16,327 19,890 21,468 25,001 24,675 30,250

Unearned Income 434 422 416 427 440 434 428 459

Shareholders’ Equity 72,225 73,517 71,791 81,246 80,613 83,598 82,643 83,814

Capital 54,000 54,000 54,000 54,000 54,000 54,000 60,000 60,000

Instrument Elegible to Principal Capital - - - 8,100 8,100 8,100 8,100 8,100

Capital Reserves 6 10 11 11 11 14 14 14

Revaluation Reserves 5 5 5 3 3 3 3 3

Reserve for Retained Earnings 19,972 19,647 23,260 23,142 26,626 25,393 25,768 25,809

Other Comprehensive Income (3,132) (3,088) (6,667) (6,944) (9,598) (10,175) (12,567) (13,830)

Benefit Plans (2,671) (2,671) (6,240) (6,240) (8,680) (8,680) (11,145) (11,145)

Retained Earnings (Accumulated Losses) - 1,898 - 1,784 - 4,624 - 1,798

(Treasury Shares) (1,324) (1,439) (1,558) (1,604) (1,622) (1,630) (1,629) (1,697)

Corporate Profit Sharing 2,698 2,483 2,741 2,755 3,093 3,269 2,955 3,617


146

Table 183. Balance Sheet Liabilities - Annual Series


LIABILITIES AND SHAREHOLDER’S EQUITY 811,172 981,230 1,149,308 1,303,915 1,437,486 15.4

Current and Long-Term Liabilities 760,432 922,467 1,087,421 1,231,256 1,356,432 15.6

Deposits 376,851 442,386 472,085 491,013 468,362 5.6

Demand Deposits 63,503 62,016 74,760 75,818 74,210 4.0

Savings Deposits 89,288 100,110 117,744 140,728 148,699 13.6

Interbank Deposits 18,998 14,450 16,569 27,155 30,969 13.0

Time Deposits 204,652 265,809 263,013 247,311 214,484 1.2

Investment Deposits 410 - - - - -

Money Market Borrowing 142,175 195,175 225,787 239,465 306,046 21.1

Repurchase Agreement with Private Securities - 664 9,554 33,562 48,155 -

Funds from Accept. and Sec. Placed 13,486 32,323 70,670 123,053 159,035 85.3

Agribusiness Letter of Credit 1,170 7,422 34,005 79,154 103,752 206.9

Mortgage Bonds 10 9 70 3,487 14,358 522.7

Commercial Papers 3,135 8,708 9,853 9,528 9,071 30.4

Foreign Securities 9,172 16,185 26,743 30,885 31,853 36.5

Interbank Accounts 18 24 24 35 31 14.8

Interdepartmental Accounts 3,688 3,819 5,180 4,826 5,291 9.4

Borrowing 8,598 12,257 14,081 17,315 23,996 29.3

Domestic Borrowing - 121 409 299 1,754 -

Foreign Borrowing 8,598 12,136 13,672 17,016 22,243 26.8

Domestic Onlending – Official Institutions 50,764 50,991 63,519 87,105 91,050 15.7

National Treasury 1,549 1,722 713 537 340 (31.6)

BNDES 26,978 28,978 41,763 43,968 44,282 13.2

CEF 147 338 895 4,220 12,360 202.8

Finame 14,046 17,506 19,494 28,477 33,205 24.0

Other Institutions 8,043 2,446 653 9,903 864 (42.8)

Foreign Onlending 97 102 87 24 0 (73.5)

Financial Derivatives 5,297 3,621 3,439 3,694 3,443 (10.2)

Other Accounts Payable 159,459 181,768 232,548 264,726 299,178 17.0

Collection of Taxes and Contributions 297 360 419 358 438 10.2

Foreign Exchange Portfolio 29,506 28,416 26,404 21,495 21,707 (7.4)

Shareholder and Statutory Distributions 1,992 2,122 1,818 1,413 2,357 4.3

Taxes and Social Security 27,613 28,057 30,924 28,877 22,784 (4.7)

Trading and Brokerage of Securities 1,676 836 1,231 2,069 830 (16.1)

Tech. Prov. Insur., Pens. Plans and Sav. Bonds 32,369 45,023 60,234 77,729 102,220 33.3

Financial and Development Funds 3,568 4,002 5,089 7,661 10,840 32.0

Hybrid Debt Capital Istruments 3,361 2,846 15,061 12,385 4,866 9.7

FCO (Subordinated Debt) 23,412 30,885 40,676 51,048 52,316 22.3

Actuarial Liabilities 6,907 7,142 10,092 6,334 5,830 (4.1)

Other Liabilities 28,757 32,079 40,602 46,866 53,522 16.8

Debt Instruments Eligible to Capital - - - 8,490 21,468 -

Unearned Income 300 347 387 434 440 10.1

Shareholders’ Equity 50,441 58,416 61,499 72,225 80,613 12.4

Capital 33,078 33,123 48,400 54,000 54,000 13.0

Instrument Elegible to Principal Capital - - - - 8,100 -

Capital Reserves - - - 6 11 -

Revaluation Reserves 6 5 5 5 3 (18.1)

Reserve for Retained Earnings 16,889 24,121 16,132 19,972 26,626 12.1

Other Comprehensive Income 467 724 (3,150) (3,132) (9,598) -

Benefit Plans - - (4,571) (2,671) (8,680) -

Retained Earnings (Accumulated Losses) - - - - - -

(Treasury Shares) (0) (0) (461) (1,324) (1,622) 673.9

Corporate Profit Sharing 0 444 574 2,698 3,093 1,495.7


147

11.2. Summary Corporate Law Income Statement

Table 184. Summary Corporate Law Income Statement – Quarterly Flow Series

Quarterly Flow - (R$ million) 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Financial Intermediation Income 31,340 31,112 32,676 39,527 40,486 49,435 37,894 62,211

Loans 20,113 20,087 21,035 24,677 25,281 29,322 23,509 35,375

Leasing 44 38 36 34 37 44 38 49

Securities 8,954 8,827 9,839 12,349 12,995 16,973 12,648 20,646

Financial Derivatives 389 (93) (632) 622 403 903 (401) 1,687

Foreign Exchange Portfolio (17) 426 437 (32) (197) 424 364 2,618

Compulsory Investments 1,389 1,420 1,467 1,503 1,279 1,190 1,195 1,322

Sale or Transference of Financial Assets 200 173 167 127 110 109 107 123

Financ. Inc. Insur., Pension and S.Bonds Ope. 267 235 326 248 578 469 434 392

Financial Intermediation Expenses (24,745) (23,208) (24,994) (32,944) (33,153) (44,582) (29,502) (62,171)

Money Market Funds (16,676) (17,856) (19,260) (21,428) (21,974) (23,557) (24,804) (28,912)

Borrowing, Assignments and Onlending (3,398) (944) (975) (6,788) (5,925) (15,076) 915 (24,339)

Allowance for Loan Losses (4,671) (4,407) (4,759) (4,728) (5,255) (5,949) (5,614) (8,919)

Gross Income from Financial Intermediation 6,595 7,904 7,681 6,583 7,333 4,853 8,392 40

Other Operating Income (Expenses) (2,659) (3,171) (2,924) (2,696) (2,877) (2,651) (3,231) (3,511)

Service Fee Income¹ 4,418 4,111 4,425 4,555 4,920 4,654 4,668 4,959

Banking Fees Income 1,663 1,552 1,616 1,718 1,751 1,655 1,791 1,948

Personnel Expenses (4,857) (4,676) (4,701) (4,949) (5,175) (5,189) (5,516) (5,987)

Other Administrative Expenses (4,559) (4,338) (4,170) (4,139) (4,549) (4,122) (4,068) (4,325)

Other Taxes Expenses (1,244) (1,009) (1,327) (1,277) (1,374) (1,846) (1,482) (1,319)

Eqty. Int. in the Res. of Subs., and Affiliates 225 (518) (188) 677 603 1,708 (228) 3,059

Inc. for Ins., Pens. Plans and Sav.Bonds Op.¹ 975 1,081 1,229 1,175 1,410 1,153 1,646 1,285

Other Operating Income 2,857 4,024 3,187 2,525 2,859 3,140 2,603 3,000

Other Operating Expenses (2,136) (3,396) (2,995) (2,982) (3,321) (3,804) (2,644) (6,131)

Operating Income 3,935 4,733 4,757 3,887 4,457 2,202 5,160 (3,471)

Non-operating Income 225 98 36 40 27 5,771 (2) 18

Income Before Taxes 4,160 4,831 4,793 3,927 4,484 7,973 5,158 (3,453)

Income and Social Contribution Taxes (294) (1,437) (1,237) (377) (639) (984) (1,245) 7,383

Statutory Profit Sharing (486) (394) (401) (392) (436) (765) (428) (419)

Minority Interest Earnings (354) (322) (326) (378) (449) (405) (478) (448)

Net Income 3,025 2,678 2,829 2,780 2,959 5,818 3,008 3,062



148

Table 185. Summary Corporate Law Income Statement – Annual Flow Series


Financial Intermediation Income 78,035 99,661 103,456 112,237 143,801 16.5

Loans 50,960 61,998 69,489 74,418 91,080 15.6

Leasing 814 616 346 175 145 (35.1)

Securities 23,238 30,849 27,982 29,970 44,010 17.3

Financial Derivatives (2,239) (1,461) (1,434) 1,156 300 -

Foreign Exchange Portfolio 1,083 (374) 147 606 634 (12.5)

Compulsory Investments 3,586 7,231 5,925 4,697 5,669 12.1

Sale or Transference of Financial Assets - - 246 537 578 -

Financ. Inc. Insur., Pension and S.Bonds Ope. 592 803 755 678 1,386 23.7

Financial Intermediation Expenses (52,473) (73,554) (73,401) (83,872) (114,300) 21.5

Money Market Funds (38,756) (54,370) (52,153) (56,626) (80,519) 20.1

Borrowing, Assignments and Onlending (3,473) (7,210) (7,376) (11,185) (14,632) 43.3

Allowance for Loan Losses (10,244) (11,975) (13,872) (16,061) (19,149) 16.9

Gross Income from Financial Intermediation 25,562 26,107 30,055 28,366 29,501 3.6

Other Operating Income (Expenses) (7,151) (7,600) (12,829) (13,746) (11,667) 13.0

Service Fee Income 10,777 12,213 14,486 16,394 18,010 13.7

Banking Fees Income 5,396 6,028 6,586 6,547 6,636 5.3

Personnel Expenses (13,020) (14,913) (16,503) (18,401) (19,500) 10.6

Other Administrative Expenses (12,453) (12,511) (15,488) (16,399) (17,195) 8.4

Other Taxes Expenses (3,750) (4,259) (4,416) (4,759) (4,987) 7.4

Eqty. Int. in the Res. of Subs., and Affiliates (46) 455 264 606 574 -

Inc. for Ins., Pens. Plans and Sav.Bonds Op. 1,888 2,265 2,349 3,590 4,895 26.9

Other Operating Income 13,788 12,978 8,346 8,163 12,594 (2.2)

Other Operating Expenses (9,731) (9,856) (8,450) (9,486) (12,695) 6.9

Operating Income 18,410 18,507 17,227 14,620 17,834 (0.8)

Non-operating Income 370 225 1,210 10,176 201 (14.2)

Income Before Taxes 18,781 18,732 18,437 24,796 18,035 (1.0)

Income and Social Contribution Taxes (5,321) (4,722) (4,241) (5,993) (3,691) (8.7)

Statutory Profit Sharing (1,756) (1,791) (1,835) (2,204) (1,623) (2.0)

Minority Interest Earnings 0 (93) (156) (840) (1,475) -

Net Income 11,703 12,126 12,205 15,758 11,246 (1.0)

1 – Series revised from 2013 to 2014.


149

11.3. Income Statement with Reallocations

Table 186. Income Statement with Reallocations – Quarterly Flow Series

Quarterly Flow - (R$ million) 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Financial Intermediation Income 31,853 30,620 32,548 40,746 41,320 52,370 37,475 67,643

Loan Operations 20,313 20,080 21,268 24,804 25,392 29,431 23,616 35,521

Sale or Transference of Financial Assets 200 173 167 127 110 109 107 123

Lease Operations 44 38 36 34 37 44 38 49

Securities¹ 8,954 8,828 9,856 12,353 13,000 16,993 12,653 20,694

Financial Derivatives 389 (93) (632) 622 403 903 (401) 1,687

Foreign Exchange Portfolio (17) 426 437 (32) (197) 424 364 2,618

Compulsory Investments 1,389 1,420 1,467 1,503 1,279 1,190 1,195 1,322

Financial Income Insurance, Pension and S.Bonds Op.² 267 286 334 316 389 469 434 392

FX Gain (Loss) on Foreign Equity 227 (480) (201) 674 599 1,822 (261) 3,246

Other Op. Inc. with Char. of Financial Int. 23 306 101 26 26 (134) 37 (480)

Tax Hedge 263 (189) (118) 447 392 1,228 (198) 2,593

Financial Intermediation Expenses (20,010) (18,738) (20,170) (28,145) (27,837) (38,549) (23,791) (53,279)

Money Market Funds (16,613) (17,711) (19,108) (21,273) (21,828) (23,385) (24,530) (28,724)

Borrowing, Assignments and Onlending (3,398) (1,027) (1,061) (6,871) (6,008) (15,164) 739 (24,554)

Net Interest Income 11,843 11,882 12,378 12,602 13,483 13,821 13,684 14,364

Allowance for Loan Losses (4,183) (4,187) (4,570) (4,571) (5,203) (5,999) (5,530) (6,407)

Net Financial Margin 7,660 7,696 7,808 8,031 8,280 7,823 8,154 7,957

Fee Income 6,081 5,662 6,041 6,273 6,671 6,309 6,459 6,907

Service Fee Income³ 4,418 4,111 4,425 4,555 4,920 4,654 4,668 4,959

Banking Fee Income 1,663 1,552 1,616 1,718 1,751 1,655 1,791 1,948

Inc. Insurance, Pension Plans and Savings Bonds Op.³ 975 1,030 1,220 1,107 1,273 1,153 1,261 1,285

Taxes on Revenues (1,177) (1,154) (1,231) (1,224) (1,278) (1,272) (1,335) (1,314)

Contribution Margin 13,538 13,234 13,838 14,187 14,946 14,014 14,539 14,835

Administrative Expenses (8,399) (7,729) (7,819) (8,048) (8,694) (8,226) (8,439) (8,551)

Personnel Expenses (4,641) (4,476) (4,465) (4,630) (4,874) (4,870) (5,131) (5,028)

Other Administrative Expenses (3,758) (3,253) (3,354) (3,417) (3,820) (3,356) (3,308) (3,523)

Other Tax Expenses (95) (94) (83) (102) (139) (122) (116) (161)

Commercial Income 5,044 5,411 5,936 6,038 6,113 5,666 5,983 6,123

Legal Risk (193) (566) (401) (529) (281) (441) (219) (726)

Legal Claims 23 (261) (216) (263) (204) (278) (46) (399)

Labor Lawsuits (216) (305) (185) (266) (77) (164) (173) (327)

Other Operating Income (782) (715) (574) (1,038) (1,011) (595) (856) (881)

Eq. Int. in Results of Subsidiaries and Affiliates (2) (38) 13 3 4 0 6 (3)

Other Operating Income / Expenses Result (780) (677) (587) (1,041) (1,015) (595) (862) (879)

Other Operating Income¹ 1,867 1,770 1,678 1,972 2,115 2,248 2,046 2,468

Previ - Plano de Benefícios 1 112 446 446 228 228 139 139 40

Previ - Atualização de Fundo Utilização 264 260 228 163 223 444 316 223

Other Operating Expenses (3,023) (3,152) (2,940) (3,403) (3,581) (3,426) (3,363) (3,610)

Operating Income 4,068 4,130 4,960 4,471 4,821 4,629 4,909 4,516

Non-Operating Income 37 98 36 40 27 (1) (2) 18

Income Before Taxes 4,105 4,228 4,996 4,511 4,849 4,628 4,907 4,534

Income and Social Contribution Taxes (889) (1,107) (1,248) (845) (987) (629) (1,026) (651)

Interest on Own Capital Tax Benefit 349 353 360 377 380 422 463 488

Statutory Profit Sharing (438) (362) (421) (403) (458) (569) (437) (553)

Minority Interest Earnings (354) (322) (326) (378) (384) (405) (403) (448)

Adjusted Net Income 2,424 2,436 3,002 2,885 3,020 3,025 3,040 2,881

One-Off Items 602 241 (173) (104) (61) 2,793 (32) 181

Economic Plans (56) (343) (328) (248) (387) (188) 33 (247)

Tax Efficiency - 260 - - - - - -

Tax Credit - - - - - 2,326 - -

Reversal of Additional Provision for Loan Losses (267) - (143) - - - - (2,370)

Extraordinary Provision for Lawsuits 401 133 163 63 46 (558) (208) (1,794)

Sale of Itapebi Shares 188 - - - - - - -

Refis (Tax Recovery Program) 587 - - - - - - -

Extraordinary Allowance for Loan Losses BV (166) - - - - - - -

Prov. Legal Lawsuits - Adj. Param. Pol. Agreements - 385 - - - - - -

BrasilPrev, Susep Circular-letter 457/12 and 462/13 - - - - 325 - 385 -

Effect BrasilPrev in Minority Shares - - - - (65) - (74) -

Cateno - Gestão de Contas de Pagamentos S.A - - - - - 11,572 - -

Position adjustment with Allocators Resources - - - - - - (127) -

Incentivated Retirement Program - - - - - - - (372)

Prov. Commitment to Buy Loyalty Program Points Partners - - - - - - - (765)

Tax Credit on CSLL - - - - - - - 3,405

Unrealized Earnings - Cateno - - - - - (5,800) - -

Tax Effect and Stat. Profit Sharing on One-Off Items (86) (193) 135 81 20 (4,558) (42) 2,325

Net Income 3,025 2,678 2,829 2,780 2,959 5,818 3,008 3,062

1 – Series revised from 1Q14 to 1Q15. 2 – Series revised from 1Q14 to 4Q14. 3 – Series revised from 1Q13 to 4Q14.


150

Table 187. Income Statement with Reallocations – Annual Flow Series


Financial Intermediation Income 80,436 102,849 104,525 113,636 145,234 15.9

Loan Operations 53,405 64,486 69,736 74,955 91,543 14.4

Sale or Transference of Financial Assets - - 246 537 578 -

Lease Operations 814 616 346 175 145 (35.1)

Securities¹ 23,238 30,849 27,982 29,970 44,038 17.3

Financial Derivatives (2,239) (1,461) (1,434) 1,156 300 -

Foreign Exchange Portfolio 1,083 (374) 147 606 634 (12.5)

Compulsory Investments 3,586 7,231 5,925 4,697 5,669 12.1

Financial Income Insurance, Pension and S.Bonds Op.¹ 592 803 755 678 1,325 22.3

FX Gain (Loss) on Foreign Equity (149) 433 357 585 592 -

Other Op. Inc. with Char. of Financial Int. 252 (75) 397 166 458 16.1

Tax Hedge (147) 341 315 648 531 -

Financial Intermediation Expenses (42,038) (62,019) (58,795) (67,584) (94,888) 22.6

Money Market Funds (38,565) (54,809) (51,660) (56,399) (79,921) 20.0

Borrowing, Assignments and Onlending (3,473) (7,210) (7,136) (11,185) (14,968) 44.1

Net Interest Income 38,398 40,830 45,730 46,052 50,346 7.0

Allowance for Loan Losses (10,675) (11,827) (14,651) (15,584) (18,531) 14.8

Net Financial Margin 27,724 29,003 31,078 30,468 31,815 3.5

Fee Income 16,173 18,242 21,071 22,941 24,647 11.1

Service Fee Income² 10,777 12,213 14,486 16,394 18,010 13.7

Banking Fee Income 5,396 6,028 6,586 6,547 6,636 5.3

Inc. Insurance, Pension Plans and Savings Bonds Op.² 1,888 2,265 2,349 3,590 4,630 25.1

Taxes on Revenues (3,627) (4,081) (4,183) (4,469) (4,887) 7.7

Contribution Margin 42,157 45,429 50,316 52,530 56,205 7.5

Administrative Expenses (22,565) (24,752) (28,194) (30,149) (32,290) 9.4

Personnel Expenses (12,244) (13,943) (15,777) (17,051) (18,445) 10.8

Other Administrative Expenses (10,322) (10,809) (12,417) (13,098) (13,845) 7.6

Other Tax Expenses (107) (216) (268) (361) (418) 40.5

Commercial Income 19,484 20,461 21,854 22,020 23,497 4.8

Legal Risk (1,076) (860) (1,539) (1,607) (1,777) 13.4

Legal Claims (427) (135) (813) (459) (944) 22.0

Labor Lawsuits (649) (724) (726) (1,148) (833) 6.4

Other Operating Income (908) (687) (2,539) (3,869) (3,337) 38.5

Eq. Int. in Results of Subsidiaries and Affiliates 102 22 (94) 21 (18) -

Other Operating Income / Expenses Result (1,010) (709) (2,446) (3,890) (3,320) 34.6

Other Operating Income¹ 4,999 5,092 4,896 5,683 7,534 10.8

Previ - Plano de Benefícios 1 4,299 2,981 1,355 598 1,348 (25.2)

Previ - Atualização de Fundo Utilização - 847 898 870 874 -

Other Operating Expenses (10,309) (9,629) (9,596) (11,041) (13,076) 6.1

Operating Income 17,500 18,914 17,776 16,544 18,383 1.2

Non-Operating Income 43 56 107 167 201 47.2

Income Before Taxes 17,543 18,970 17,883 16,712 18,583 1.5

Income and Social Contribution Taxes (5,242) (5,388) (4,455) (3,954) (4,187) (5.5)

Interest on Own Capital Tax Benefit 961 1,221 1,342 1,326 1,470 11.2

Statutory Profit Sharing (1,637) (1,737) (1,745) (1,565) (1,644) 0.1

Minority Interest Earnings 0 (93) (156) (840) (1,410) -

Adjusted Net Income 10,664 11,751 11,528 10,353 11,343 1.6

One-Off Items 1,039 375 678 5,405 (97) -

Sale of Investments 214 169 - - - -

Economic Plans (371) (103) (968) (683) (1,307) 37.0

Tax Efficiency 460 386 244 142 260 (13.3)

Contingent Liabilities – BESC 250 - - - - -

Reversal of Additional Provision for Loan Losses 332 - 699 (229) (143) -

Reversal of Labor Liabilities 568 - - - - -

Capital Gain - BB Seguros Participações 114 - - - - -

Sale of Property - - 1,103 - - -

Provision for Agreement Commitee - - - (186) - -

Lawsuits Reconciliation - - - 303 - -

Public Offer - BB Seguridade - - - 9,820 - -

Cost - Public Offer BB Seguridade - - - (172) - -

Extraordinary Provision for Lawsuits - - - (404) 404 -

Sale of Itapebi Shares - - - 188 - -

Refis (Tax Recovery Program) - - - 587 - -

Extraordinary Allowance for Loan Losses BV - - - (166) - -

Prov. Legal Lawsuits - Adj. Param. Pol. Agreements - - - - 385 -

BrasilPrev, Susep Circular-letter 457/12 and 462/13 - - - - 325 -

Effect BrasilPrev in Minority Shares - - - - (65) -

Tax Effect and Stat. Profit Sharing on One-Off Items (527) (78) (401) (3,796) 43 -

Net Income 11,703 12,126 12,205 15,758 11,246 (1.0)

1 – Series revised in 2014. 2 – Series revised from 2013 to 2014.


151

Vice Presidency of Financial Management and Investor Relations Chief Financial Officer José Maurício Pereira Coelho Head of Investor Relations Bernardo de Azevedo Silva Rothe Executive Managers Gisele Campana Rodrigues Rodrigo Felippe Afonso Divisional Managers Heverton Masaru Ono João Domingos Cicarini Júnior Joaquim Camilo de Castro Analysts Adriano Gonçalves de Souza Bruno Santos Garcia Caroline Cristina L. A. Gotti Cleber Antonio Lima Rentroia Daniela Priscila da Silva Debora Stefani Diogo Simas Machado Eva Maria Gitirana de Oliveira Fabíola Lopes Ribeiro Felipe de Mello Pimentel Fernando Mascarenhas de Oliveira Filipe Cardoso Duda Gustavo Correia de Brito Janaína Marques Storti Jefferson Guarnieri Aquino Joabel Martins de Oliveira Peterson Luiz Barbosa Regina Knysak Vilmar Francisco Thewes Viviane de Sousa

Banco do Brasil S.A. - IR

152

Banco do Brasil S.A.

Limited Assurance Report concerning the

Supplementary Financial Information

September 30, 2015

(A free translation of the original report in Portuguese on the

supplementary financial information presented in the Performance

Analysis Report)

Limited Assurance Report for Banco do Brasil S.A. concerning the supplementary

financial information

To

Board of Directors of


Brasília – DF

Introduction

We were engaged by Banco do Brasil S.A. (“Bank”) to conduct a limited assurance work

pursuant to NBC TO 3000 – Assurance Engagements Other than Audits or Reviews (ISAE

3000) on the supplementary financial information presented in the Performance Analysis Report

of Banco do Brasil S.A. for the quarter and period of nine months then ended September 30,

2015.

Responsibility of the Bank’s management

The Bank´s management is responsible for the preparation and adequate presentation of

supplementary financial information included in the Performance Analysis Report and the other

information contained in such report, as well as for the design, implementation and maintenance

of internal controls it deemed necessary to enable that such information are free from material

misstatements, regardless of whether caused by fraud or error.

Responsibility of the independent auditors

Our responsibility is to review the supplementary financial information presented in the

Performance Analysis Report prepared by the Bank and, based on that review, to issue a

conclusion in the form of limited assurance. We conducted our works in conformity with the

Brazilian Standard on Assurance Engagements NBC TO 3000 – Assurance Engagements Other

than Audits or Reviews (ISAE 3000). That standard requires compliance with ethical

requirements, including independence requirements , planning and execution of procedures to

obtain a level of limited assurance that we are not aware of any fact that would lead us to

believe that the supplementary financial information presented in the Analysis Performance

Report of the Bank are not presented, in all material respects, in accordance with the financial

information contained in the consolidated financial statements and with the criteria described in

the Performance Analysis Report in order to allow additional analysis, without, however, being

part of the consolidated financial statements.

Scope, procedures applied and limitations

A limited assurance provides a degree of assurance that is lower than an audit or a reasonable

assurance. Procedures for collecting evidence for a limited assurance work are more limited

than for a reasonable assurance work and, therefore, less assurance is obtained than in a

reasonable assurance work. Therefore, we do not express an audit opinion or a reasonable

assurance on the supplementary financial information presented in Performance Analysis Report

of the Bank. Additionally, our report does not provide limited assurance on the scope of future

information (e.g. goals, expectations and future plans) and descriptive information that are

subject to subjective evaluation.

The limited assurance procedures comprised: (a) the planning of the work, considering the

relevance of the supplementary financial information and internal control systems that formed

the basis for the preparation of the Performance Analysis Report of the Bank; (b) the

understanding of the methodology of calculations and the consolidation of the indicators by

means of interviews with the managers responsible for the preparation of the supplementary

financial information; and (c) the comparison of the financial and accounting indicators with the

respective consolidated financial statements disclosed and/or accounting records.

Criteria for preparation of supplementary financial information

The supplementary financial information presented in the Performance Analysis Report for the

quarter and period of nine months then ended September 30, 2015, were prepared by the Bank’s

management based on the financial information contained in the consolidated financial

statement and the criteria described in the Performance Analysis Report in order to allow

additional analysis, without, however, being part of the consolidated financial statement.

Conclusion

Based on the limited assurance procedures performed, as summarized above, we are not aware

of any facts that lead us to believe that the supplementary financial information presented in the

Performance Analysis Report for the quarter and period of nine months then ended September

30, 2015, are inconsistent, in all material respects, in relation to the consolidated financial

statements referred to in the paragraph regarding the criteria for preparation of the

supplementary financial information.

Brasília, November 11, 2015

KPMG Auditores Independentes

CRC SP-014428/O-6 F-DF

Original report in Portuguese signed by

Carlos Massao Takauthi

Accountant CRC 1SP206103/O 4-4

Consolidated Financial Statements

3rd

quarter 2015

0

3rd

quarter 2015

Financial Statements


3rd

quarter 2015

1

INDEX

Index ................................................................................................................................................................................................. 1

Financial Statements ....................................................................................................................................................................... 2

BALANCE SHEET ........................................................................................................................................................................ 2 STATEMENT OF INCOME ........................................................................................................................................................... 6 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY ....................................................................................................... 7 STATEMENT OF CASH FLOWS .................................................................................................................................................. 8 STATEMENT OF VALUE ADDED ................................................................................................................................................ 9

Notes to the Consolidated Financial Statements ......................................................................................................................... 10

1 - THE BANK AND ITS OPERATIONS ...................................................................................................................................... 10 2 - COMPANY RESTRUCTURING ............................................................................................................................................. 10 3 - PRESENTATION OF FINANCIAL STATEMENTS ................................................................................................................. 14 4 - DESCRIPTION OF SIGNIFICANT ACCOUNTING POLICIES ............................................................................................... 18 5 - INFORMATION BY SEGMENT .............................................................................................................................................. 25 6 - CASH AND CASH EQUIVALENTS ........................................................................................................................................ 29 7 - SHORT-TERM INTERBANK INVESTMENTS ........................................................................................................................ 30 8 - SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS ............................................................................................. 31 9 - INTERBANK ACCOUNTS ..................................................................................................................................................... 41 10 - LOAN OPERATIONS ........................................................................................................................................................... 43 11 - OTHER RECEIVABLES ....................................................................................................................................................... 50 12 - FOREIGN EXCHANGE PORTFOLIO .................................................................................................................................. 51 13 - OTHER ASSETS ................................................................................................................................................................. 52 14 - INVESTMENTS ................................................................................................................................................................... 53 15 - PROPERTY ......................................................................................................................................................................... 55 16 - INTANGIBLE ASSETS......................................................................................................................................................... 56 17 - DEPOSITS AND SECURITIES SOLD UNDER REPURCHASE AGREEMENTS ................................................................. 57 18 - BORROWINGS AND ONLENDINGS ................................................................................................................................... 61 19 - FUNDS FROM ACCEPTANCE AND ISSUANCE OF SECURITIES ..................................................................................... 63 20 - OTHER LIABILITIES ............................................................................................................................................................ 65 21 - OPERATIONS OF INSURANCE, PENSION PLAN AND CAPITALIZATION ........................................................................ 69 22 - OTHER OPERATING INCOME/EXPENSES ....................................................................................................................... 72 23 - NON-OPERATING INCOME................................................................................................................................................ 75 24 - SHAREHOLDERS' EQUITY ................................................................................................................................................ 75 25 - TAXES ................................................................................................................................................................................. 82 26 - RELATED PARTY TRANSACTIONS ................................................................................................................................... 85 27 - EMPLOYEE BENEFITS ....................................................................................................................................................... 88 28 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES, LEGAL LIABILITIES - TAXES AND SOCIAL SECURITY ......... 99 29 - RISK AND CAPITAL MANAGEMENT ................................................................................................................................ 103 30 - STATEMENT OF COMPREHENSIVE INCOME ................................................................................................................ 114 31 - OTHER INFORMATION .................................................................................................................................................... 115

Independent Auditors’ Report ..................................................................................................................................................... 119

Members of Management ............................................................................................................................................................ 122

Index


3rd

quarter 2015

In thousands of Reais, unless otherwise stated

2

BALANCE SHEET

ASSETS Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

CURRENT ASSETS 895,446,480 845,371,438 837,318,664

Cash and Cash Equivalents (Note 6) 19,772,738 13,786,585 13,961,149

Short-term Interbank Investments (Note 7.a) 347,927,192 301,620,235 315,549,244

Open market investments 295,640,358 264,237,748 281,034,019

Interbank deposits 52,286,834 37,382,487 34,515,225

Securities and Derivative Financial Instruments (Note 8) 150,095,000 134,593,926 136,831,369

Own portfolio 140,780,960 126,674,173 120,739,233

Subject to repurchase agreements 3,922,261 4,998,373 9,025,982

Deposits with Banco Central do Brasil -- -- 16

Pledged in guarantee 1,363,303 1,627,105 6,092,677

Derivative financial instruments 4,034,139 1,302,657 973,461

(Allowance for securities losses) (5,663) (8,382) --

Interbank Accounts 68,284,064 66,923,660 86,638,122

Payments and receipts pending settlement (Note 9.a) 4,211,558 10,428 4,567,821

Restricted deposits (Note 9.b) 62,910,109 65,634,181 81,097,073

Deposits with Banco Central do Brasil 60,376,188 63,251,839 78,738,806

National Treasury - rural credits resources 80,360 78,861 101,908

National Housing Finance System 2,453,561 2,303,481 2,256,359

Interbank onlendings 31,430 10,883 8,213

Correspondent banks 1,130,967 1,268,168 965,015

Interdepartmental Accounts 174,838 593,631 272,694

Internal transfers of funds 174,838 593,631 272,694

Loan Operations (Note 10) 161,960,461 199,159,425 148,998,741

Public sector 2,469,955 2,260,346 3,443,279

Private sector 170,309,728 206,057,526 154,487,687

Loan operations linked to assignment 99 469 122

(Allowance for loan losses) (10,819,321) (9,158,916) (8,932,347)

Leasing transactions (Note 10) 411,816 474,943 504,382

Private sector 460,530 507,749 539,658

(Allowance for leasing transactions losses) (48,714) (32,806) (35,276)

Other Receivables 143,743,263 125,529,228 131,440,054

Receivables from guarantees honored 400,645 539,570 459,958

Foreign exchange portfolio (Note 12.a) 23,941,589 18,362,653 16,366,034

Accrued income 3,030,191 3,800,572 2,652,736

Securities trading 832,308 861,083 401,529

Insurance, pension plans and capitalization (Note 21.a) 4,801,753 4,104,489 4,008,030

Sundry (Note 11.b) 112,493,630 99,851,614 109,390,750

(Allowance for other losses) (1,756,853) (1,990,753) (1,838,983)

Other Assets (Note 13) 3,077,108 2,689,805 3,122,909

Assets not for own use and materials in stock 698,388 618,273 685,908

(Allowance for impairment) (142,275) (147,365) (146,086)

Prepaid expenses 2,520,995 2,218,897 2,583,087

See the accompanying notes to the financial statements.



3rd

quarter 2015


3


NON-CURRENT ASSETS 679,514,386 592,114,074 594,310,441

LONG-TERM RECEIVABLES 658,500,652 569,846,879 573,075,474


Open market investments 229,192 251,925 196,788



Own portfolio 67,223,399 58,910,715 68,150,570


Pledged in guarantee 6,405,855 12,857,630 804,852

Derivative financial instruments 2,454,296 898,809 749,121

(Allowance for securities losses) (51,263) (31,933) (37,324)

Interbank Accounts 331,821 325,356 286,498

Restricted deposits (Note 9.b) 2,335 50,649 29,425




Public sector 75,265,565 58,015,534 54,213,156

Private sector 432,175,071 377,949,159 410,216,206

Loan operations linked to assignment 344,104 320,782 335,521


Leasing transactions (Note 10.i) 678,641 549,153 513,016

Private sector 693,888 563,081 526,706

(Allowance for leasing transactions losses) (15,247) (13,928) (13,690)


Foreign exchange portfolio (Note 12.a) 1,170,822 5,246 5,495

Accrued income 38,570 64,515 36,398

Securities trading 1,491,447 431,573 1,450,277

Specific credits (Note 11.a) 1,685,630 1,550,087 1,509,364

Insurance, pension plans and capitalization (Note 21.a) 1,009,980 905,696 704,584

Sundry (Note 11.b) 63,629,037 54,933,964 42,630,853

(Allowance for other losses) (781,674) (312,957) (288,422)

Other Assets (Note 13) 1,421,792 1,388,610 1,328,607

Prepaid expenses 1,421,792 1,388,610 1,328,607

PERMANENT ASSETS 21,013,734 22,267,195 21,234,967

Investments 3,540,515 3,419,631 3,397,717

Investments in subsidiaries and associates (Note 14.a) 1,697,143 1,767,548 1,811,443

Domestic 1,039,184 1,181,056 1,246,507

Abroad 657,959 586,492 564,936

Other investments (Note 14.b) 1,930,843 1,745,575 1,676,873

(Accumulated impairment) (87,471) (93,492) (90,599)

Property and Equipment (Note 15) 7,536,969 7,556,737 7,098,301

Land and buildings 6,724,833 6,370,075 6,109,272

Other property and equipment 10,192,428 9,864,596 9,434,145

(Accumulated depreciation) (9,380,292) (8,677,934) (8,445,116)

Intangible (Note 16) 9,905,994 11,249,232 10,694,383

Intangible assets 18,155,055 18,432,244 17,666,863

(Accumulated amortization) (8,249,061) (7,183,012) (6,972,480)

Deferred 30,256 41,595 44,566

Organization and expansion costs 1,614,507 1,673,307 1,674,563


TOTAL ASSETS 1,574,960,866 1,437,485,512 1,431,629,105



3rd

quarter 2015


4

LIABILITIES/SHAREHOLDERS’ EQUITY Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

CURRENT LIABILITIES 946,837,657 931,769,187 914,893,427

Deposits (Note 17.a) 409,079,766 401,177,785 386,232,793

Demand deposits 66,026,209 74,210,189 69,521,036

Savings deposits 149,763,605 148,698,890 148,995,605


Time deposits 158,546,913 153,114,309 143,927,455

Securities Sold Under Repurchase Agreements (Note 17.c) 279,316,983 292,361,623 305,689,952

Own portfolio 28,732,220 61,110,895 53,214,739

Third-party portfolio 250,026,189 231,250,728 252,470,934

Free movement portfolio 558,574 -- 4,279

Funds from Acceptance and Issuance of Securities (Note 19) 45,740,978 51,246,818 44,919,788

Bonds backed by real estate, mortgage and other credits 18,665,762 38,260,204 30,688,159

Debentures 270 -- --

Foreign securities 27,068,083 12,968,090 14,213,679

Certificates of structured operations 6,863 18,524 17,950

Interbank Accounts 3,329,328 31,463 3,237,638

Receipts and payments pending settlement (Note 9.a) 3,307,429 16 3,220,470

Correspondent banks 21,899 31,447 17,168

Interdepartmental Accounts 3,610,738 5,290,841 2,339,818

Third-party funds in transit 3,608,855 5,288,673 2,334,712


Borrowings (Note 18.a) 25,575,652 17,398,060 15,910,005

Domestic loans - other institutions 990 1,909 345,480

Foreign borrowing 25,574,662 17,396,151 15,564,525

Domestic Onlending - Official Institutions (Note 18.b) 38,873,471 34,415,072 31,759,953

National Treasury 27,994 50,670 60,849

BNDES 12,308,764 15,065,291 14,588,586

Caixa Econômica Federal 18,219,733 12,359,686 9,991,504

Finame 6,094,763 6,075,536 5,876,312

Other institutions 2,222,217 863,889 1,242,702

Foreign Onlending (Note 18.b) 8,983 95 95

Derivative Financial Instruments (Note 8.d) 4,181,698 2,420,029 2,212,444

Other Liabilities 137,120,060 127,427,401 122,590,941

Billing and collection of taxes and contributions 4,493,746 437,888 5,384,634


Shareholders and statutory distributions 2,348,202 2,356,593 1,407,000

Taxes and social security (Note 20.a) 23,638,060 20,370,981 20,156,033

Securities trading 1,258,861 756,060 645,977

Technical provisions for insurance, pension plans and capitalization (Note 21.b) 29,192,900 24,494,597 23,005,544

Financial and development funds (Note 20.b) 9,674,726 6,629,365 5,889,793

Subordinated debts (Note 20.c) 3,728,268 4,110,613 3,033,813

Equity and debt hybrid securities (Note 20.d) 368,326 368,814 735,939

Other liabilities (Note 20.e) 51,687,719 49,910,566 45,405,193



3rd

quarter 2015


5


NON-CURRENT LIABILITIES 544,308,761 425,103,131 435,489,619

LONG-TERM LIABILITIES 543,849,641 424,663,164 435,063,036

Deposits (Note 17.a) 54,758,212 67,183,984 82,592,209


Time deposits 47,097,159 61,369,635 77,849,915


Own portfolio 41,482,936 3,254,679 2,755,203


Free movement portfolio 67 5,532 9,175



Debentures 524,324 59 784,417


Certificates of structured operations 11,019 -- --


Domestic loans - other institutions 1,105,455 1,751,978 945




BNDES 27,431,326 29,216,507 29,592,148

Finame 25,787,345 27,129,214 26,188,483

Foreign Onlending (Note 18.b) 382 382 382

Derivative Financial Instruments (Note 8.d) 2,446,970 1,023,130 705,743


Foreign exchange portfolio (Note 12.a) 291,210 3,715,002 3,172,665


Securities trading 207,615 74,383 1,328,190

Technical provisions for insurance, pension plans and capitalization (Note 21.b) 94,065,914 77,725,415 71,760,075


Special operations 2,176 2,153 2,146


Equity and debt hybrid securities (Note 20.d) 7,482,721 4,496,926 4,070,675

Debt instruments eligible as capital (Notes 20.c and

20.d) 30,250,041 21,467,670 19,889,693


DEFERRED INCOME 459,120 439,967 426,583

SHAREHOLDERS' EQUITY (Note 24) 83,814,448 80,613,194 81,246,059

Capital 60,000,000 54,000,000 54,000,000

Local residents 47,025,374 42,957,421 42,998,147

Domiciled abroad 12,974,626 11,042,579 11,001,853

Instruments Qualifying to Common Equity Tier 1 Capital (Note 24.c) 8,100,000 8,100,000 8,100,000

Capital Reserves 14,326 10,773 10,768

Revaluation Reserves 2,747 2,805 2,832

Profit Reserves 25,809,320 26,625,511 23,141,903

Accumulated Other Comprehensive Income (13,829,926) (9,597,840) (6,944,165)

Retained earnings/accumulated losses 1,798,079 -- 1,784,100

(Treasury Shares) (1,697,380) (1,621,507) (1,604,406)

Noncontrolling Interests 3,617,282 3,093,452 2,755,027

TOTAL LIABILITIES 1,574,960,866 1,437,485,512 1,431,629,105



3rd

quarter 2015


6

STATEMENT OF INCOME

3rd quarter/2015 3rd quarter/2014 Jan 1 to Sep 30,

2015 Jan 1 to Sep 30,

2014

INCOME FROM FINANCIAL INTERMEDIATION 63,009,045 40,405,255 152,326,242 105,941,467

Loan operations (Note 10.b) 35,374,782 24,676,516 88,205,527 65,798,792

Leasing transactions (Note 10.i) 177,573 363,808 607,271 1,043,501

Securities (Note 8.b) 20,645,731 12,349,366 50,267,389 31,015,063

Derivative financial instruments (Note 8.e) 1,686,787 621,516 2,189,619 (103,289)

Foreign exchange results (Note 12.b) 2,618,415 -- 3,406,118 830,320

Compulsory investments (Note 9.c) 1,321,704 1,503,061 3,707,110 4,390,072

Operations of sale and transfer of financial assets 134,698 133,714 381,058 479,635

Financial income from insurance, pension plans and capitalization

(Note 21.e) 1,049,355 757,274 3,562,150 2,487,373

EXPENSES FROM FINANCIAL INTERMEDIATION (62,968,610) (33,822,100) (139,041,300) (83,773,153)

Deposits and securities sold under repurchase agreements (Note 17.d) (28,912,109) (21,428,476) (77,272,379) (58,544,985)

Borrowings and onlendings (Note 18.c) (24,339,318) (6,787,583) (38,500,254) (8,706,702)

Leasing transactions (Note 10.i) (128,183) (329,511) (476,337) (935,552)

Foreign exchange results (Note 12.b) -- (32,315) -- --

Operations of sale and transfer of financial assets (12,188) (6,291) (42,560) (12,258)

Financial expenses from technical provisions of insurance, pension plans and capitalization

(Note 21.e) (657,621) (509,676) (2,267,962) (1,678,767)

Allowance for loan losses (Notes 10.f and

10.g) (8,919,191) (4,728,248) (20,481,808) (13,894,889)

INCOME FROM FINANCIAL INTERMEDIATION 40,435 6,583,155 13,284,942 22,168,314

OTHER OPERATING INCOME/EXPENSES (3,511,316) (2,696,033) (9,393,230) (8,790,903)

Service fee income (Note 22.a) 4,958,797 4,554,565 14,280,988 13,090,193

Bank fee income (Note 22.b) 1,948,032 1,718,232 5,394,064 4,885,737

Personnel expenses (Note 22.c) (5,986,938) (4,948,573) (16,692,759) (14,325,119)

Other administrative expenses (Note 22.d) (4,324,891) (4,138,982) (12,514,917) (12,646,467)

Tax expenses (Note 25.c) (1,318,946) (1,277,085) (4,646,934) (3,613,022)

Equity in associates and subsidiaries (Note 14) 3,059,005 677,373 4,538,507 (28,868)

Insurance, pension plans and capitalization results (Note 21.e) 1,284,911 1,175,175 4,084,646 3,484,732

Other operating income (Note 22.e) 3,000,182 2,524,801 8,743,220 9,735,325

Other operating expenses (Note 22.f) (6,131,468) (2,981,539) (12,580,045) (9,373,414)

OPERATING INCOME (3,470,881) 3,887,122 3,891,712 13,377,411

NON-OPERATING INCOME (Note 23) 17,854 39,650 5,786,472 173,394

Incomes 63,278 75,824 5,949,032 276,958

Expenses (45,424) (36,174) (162,560) (103,564)

PROFIT BEFORE TAXATION AND PROFIT SHARING (3,453,027) 3,926,772 9,678,184 13,550,805

INCOME TAX AND SOCIAL CONTRIBUTION (Note 25.a) 7,382,714 (376,876) 5,153,640 (3,051,350)

EMPLOYEE AND DIRECTORS PROFIT SHARING (419,460) (391,659) (1,612,957) (1,187,098)

NON-CONTROLLING INTERESTS (448,086) (377,841) (1,330,818) (1,025,787)

NET INCOME 3,062,141 2,780,396 11,888,049 8,286,570

EARNINGS PER SHARE (Note 24.f)

Weighted average number of shares - basic and diluted 2,794,596,340 2,797,457,565 2,795,613,950 2,801,441,756

Basic and diluted earnings per share (R$) 1.08 0.97 4.16 2.96



3rd

quarter 2015


7

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

E V E N T S Capital Instruments eligible to

common equity

Capital Reserves

Revaluation reserves

Profit reserves Accumulated other comprehensive

income Treasury shares

Retained earnings

(losses) in

Noncontrolling interest

Total

Legal reserve Statutory reserves

Banco do Brasil Associate and

subsidiary companies

Balances at 12.31.2013

54,000,000 -- 6,023 4,564 4,902,575 15,069,591 (2,965,189) (166,860) (1,324,407) -- 2,698,498 72,224,795

Instruments eligible to common equity (Note 24.c) -- 8,100,000 -- -- -- -- -- -- -- -- -- 8,100,000

Accumulated other comprehensive income of securities and derivative financial instruments, net of taxes

-- -- -- -- -- -- (306,219) 63,939 -- -- -- (242,280)

Accumulated other comprehensive income - benefit plans, net of taxes

-- -- -- -- -- -- (3,569,836) -- -- -- -- (3,569,836)

Share-based payment transactions -- -- 4,745 -- -- -- -- -- 3,035 -- -- 7,780

Repurchase of shares program -- -- -- -- -- -- -- -- (283,034) -- -- (283,034)

Expired dividends/interest on own capital -- -- -- -- -- -- -- -- -- 10,076 -- 10,076

Realization of revaluation reserve in subsidiary/associated companies (Note 24.d) -- -- -- (1,732) -- -- -- -- -- 1,064 -- (668)

Change in noncontrolling interest -- -- -- -- -- -- -- -- -- -- 56,529 56,529

Net income for the period -- -- -- -- -- -- -- -- -- 8,286,570 -- 8,286,570

Interest on instruments eligible to common equity

-- -- -- -- -- -- -- -- -- (20,671) -- (20,671)

Unrealized results (Note 24.h) -- -- -- -- -- (21,437) -- -- -- 21,437 -- --

Allocation - Reserves --

-- -- 278,259 3,296,342 -- -- -- (3,574,601) -- --

- Dividends (Note 24.g) -- -- -- -- -- (383,427) -- -- -- (216,417) -- (599,844)

- Interest on own capital (Note 24.g) -- -- -- -- -- -- -- -- -- (2,723,358) -- (2,723,358)

Balances at 09.30.2014 54,000,000 8,100,000 10,768 2,832 5,180,834 17,961,069 (6,841,244) (102,921) (1,604,406) 1,784,100 2,755,027 81,246,059

Changes in the period -- 8,100,000 4,745 (1,732) 278,259 2,891,478 (3,876,055) 63,939 (279,999) 1,784,100 56,529 9,021,264

Balances at 06.30.2015 60,000,000 8,100,000 14,326 2,764 5,898,540 19,869,019 (12,422,540) (144,492) (1,629,478) -- 2,954,548 82,642,687


-- -- -- -- -- -- (1,119,176) (143,718) -- -- -- (1,262,894)

Repurchase of shares program

-- -- -- -- -- -- -- -- (67,902) -- -- (67,902)


Realization of revaluation reserve in subsidiary/associated companies (Note 24.d) -- -- -- (17) -- -- -- -- -- 17 -- --


Net income for the period

-- -- -- -- -- -- -- -- -- 3,062,141 -- 3,062,141

Interest on instruments eligible to common equity

-- -- -- -- -- -- -- -- -- (35,291) -- (35,291)

Unrealized results (Note 24.h) -- -- -- -- -- 41,761 -- -- -- (12,096) -- 29,665

Allocation: - Interest on own capital (Note 24.g) -- -- -- -- -- -- -- -- -- (1,220,018) -- (1,220,018)

Balances at 09.30.2015 60,000,000 8,100,000 14,326 2,747 5,898,540 19,910,780 (13,541,716) (288,210) (1,697,380) 1,798,079 3,617,282 83,814,448

Changes in the period -- -- -- (17) -- 41,761 (1,119,176) (143,718) (67,902) 1,798,079 662,734 1,171,761

Balances at 12.31.2014 54,000,000 8,100,000 10,773 2,805 5,468,217 21,157,294 (9,437,805) (160,035) (1,621,507) -- 3,093,452 80,613,194

Capital increase – capitalization of reserves (Note 24.b) 6,000,000 -- -- -- -- (6,000,000) -- -- -- -- -- --


-- -- -- -- -- -- (1,639,171) (128,175) -- -- -- (1,767,346)

Accumulated other comprehensive income - benefit plans, net of taxes -- -- -- -- -- -- (2,464,740) -- -- -- -- (2,464,740)

Share-based payment transactions -- -- 7,968 -- -- -- -- -- 4,741 -- -- 12,709

Repurchase of shares program -- -- (4,415) -- -- -- -- -- (80,614) -- -- (85,029)


Realization of revaluation reserve in subsidiary/associated companies (Note 24.d) -- -- -- (58) -- -- -- -- -- 58 -- --


Net income for the period -- -- -- -- -- -- -- -- -- 11,888,049 -- 11,888,049

Interest on instruments eligible to common equity -- -- -- -- -- -- -- -- -- (210,273) -- (210,273)

Unrealized results (Note 24.h) -- -- -- -- -- 86,226 -- -- -- (56,561) -- 29,665

Allocation: - Reserves -- -- -- -- 430,323 5,928,721 -- -- -- (6,359,044) -- --

- Dividends (Note 24.g) -- -- -- -- -- (1,261,461) -- -- -- (39,046) -- (1,300,507)

- Interest on own capital (Note 24.g) -- -- -- -- -- -- -- -- -- (3,432,088) -- (3,432,088)

Balances at 09.30.2015 60,000,000 8,100,000 14,326 2,747 5,898,540 19,910,780 (13,541,716) (288,210) (1,697,380) 1,798,079 3,617,282 83,814,448

Changes in the period 6,000,000 -- 3,553 (58) 430,323 (1,246,514) (4,103,911) (128,175) (75,873) 1,798,079 523,830 3,201,254



3rd

quarter 2015


8

STATEMENT OF CASH FLOWS


2015 Jan 1 to Sep 30,

2014

Cash flows from operating activities

Income before taxation and profit sharing (3,453,027) 3,926,772 9,678,184 13,550,805

Adjustments to income before taxation and profit sharing 7,293,899 11,972,672 26,427,459 39,718,275

Provision for credits, leasing and other credits (Note 10.f and

10.g) 8,919,191 4,728,248 20,481,808 13,894,889

Depreciation and amortization (Note 22.d) 1,108,758 1,000,726 3,207,177 3,398,827

Expenses from impairment (Note 15 and 16) 4,528 5,199 5,481 2,379

Equity in subsidiaries and associates (Note 14.a) (3,059,006) (677,373) (4,538,509) 28,868

Gain on the disposal of assets (Note 23) (1,947) (9,153) (7,325) (27,513)

Gain on the disposal of investments (Note 23) -- (1,236) (2,545) (3,350)

Capital (gain) loss (Note 23) 1,525 5,422 (5,733,316) 10,820

Foreign currency exchange results (Note 14.a) 3,040,852 668,432 4,502,956 (9,836)

Reversal for devaluation of other assets (Note 23) (6,984) (3,636) (8,505) (7,285)

Amortization of goodwill (Note 14.c and

22.d) 71,278 59,484 207,816 175,118

Expenses with civil, labor and tax provisions (Note 28.a) 2,391,323 436,147 4,154,246 1,548,331

Technical provisions for insurance, pension plans and capitalization (Note 21.e) 7,382,048 6,722,317 24,974,806 20,813,478

Adjustment of actuarial assets/liabilities and surplus allocation funds (Note 27) (200,208) (308,522) (1,098,476) (1,462,170)

Effect of changes in foreign exchange rates in cash and cash equivalents

(11,912,776) (255,120) (18,222,194) 2,400,355

Non-controlling interests (448,086) (377,841) (1,330,818) (1,025,787)

Other adjustments 3,403 (20,422) (165,143) (18,849)

Income adjusted before taxation and profit sharing 3,840,872 15,899,444 36,105,643 53,269,080

Equity variations 2,589,243 (39,424,042) (20,810,439) (72,512,414)

(Increase) Decrease in short-term interbank investments 30,814,475 (40,840,643) (10,576,088) (103,370,820)

Increase in trading securities and derivative financial instruments (6,849,087) (6,320,756) (17,301,600) (10,275,476)

(Increase) Decrease in interbank and interdepartmental accounts 514,407 (1,217,471) (2,205,965) (3,666,807)

(Increase) Decrease in compulsory deposits with Banco Central do Brasil

(3,186,433) 7,860,076 2,875,651 12,007,290

Increase in loan operations (25,757,778) (16,726,603) (49,366,487) (51,285,081)

(Increase) Decrease in leasing transactions (60,279) 45,913 (100,744) 239,131

(Increase) Decrease in other receivables net of deferred taxes (6,489,286) (2,902,697) (14,404,770) 2,404,315

Increase in other assets (371,686) (486,948) (404,655) (567,434)

Income tax and social contribution paid (5,946,285) (993,590) (11,165,479) (3,780,500)

(Decrease) Increase in deposits 18,207,396 (11,057,801) (4,523,791) (22,188,006)

(Decrease) Increase in securities sold under repurchase agreements (21,507,848) 30,623,562 25,318,899 80,258,390

Increase in funds from acceptance and issuance of securities 9,427,635 5,379,390 51,106,940 32,018,119

(Decrease) Increase in borrowings and onlendings 9,751,833 (2,967,725) 13,118,779 4,253,552

(Decrease) Increase in other liabilities 4,011,535 170,820 (3,200,283) (8,551,215)

(Decrease) Increase in deferred income 30,644 10,431 19,154 (7,872)

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 6,430,115 (23,524,598) 15,295,204 (19,243,334)

Cash flows from investing activities

(Increase) Decrease in securities available for sale (2,667,445) 2,414,878 (6,266,728) 516,534

Decrease in securities held to maturity 93,038 604,896 363,795 246,159

(Acquisition) Disposal of property, plant and equipment in use (331,804) 297,070 (859,350) (625,897)

Acquisition of investments (218,528) (124,954) (345,083) (63,149)

Acquisition of intangible assets/ deferred assets (439,404) (368,548) (978,963) (1,189,685)

Funds from partnership in the card segment -- -- 2,314,674 --

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (3,564,143) 2,823,342 (5,771,655) (1,116,038)

Cash flows from financing activities

Change in non-controlling interests 662,734 14,374 523,829 56,529

Increase in subordinated debts 3,679,477 952,986 5,698,627 5,042,121

Increase in equity and debt hybrid securities 7,478,615 2,192,668 10,983,652 6,918,470

Acquisition of treasury shares (67,902) (46,134) (75,874) (279,999)

Dividends paid (39,046) (216,417) (1,551,766) (809,210)

Interest on own capital paid (1,090,380) (941,310) (2,955,107) (2,723,358)

CASH PROVIDED BY FINANCING ACTIVITIES 10,623,498 1,956,167 12,623,361 8,204,553

Net variation of cash and cash equivalents 13,489,470 (18,745,089) 22,146,910 (12,154,819)

At the beginning of the period 80,295,430 75,732,281 65,328,572 71,797,486

Effect of changes in foreign exchange rates in cash and cash equivalents

11,912,776 255,120 18,222,194 (2,400,355)

At the end of the period 105,697,676 57,242,312 105,697,676 57,242,312

Increase (Decrease) in cash and cash equivalents 13,489,470 (18,745,089) 22,146,910 (12,154,819)



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STATEMENT OF VALUE ADDED

Jan 1 to Sep 30, 2015 Jan 1 to Sep 30, 2014

Income 156,974,072 113,459,788

Income from financial intermediation 152,326,242 105,941,467

Income from service and bank fees 19,675,052 17,975,930

Allowance for loan losses (20,411,405) (13,894,889)

Capital gains (Note 23) 5,801,709 3,350

Other income/(expenses) (417,526) 3,433,930

Expenses From Financial Intermediation (118,629,895) (69,878,264)

Inputs Purchased from Third Parties (7,390,810) (7,560,442)

Materials, water, electric power and gas (Note 22.d) (496,119) (380,843)

Expenses with outsourced services (Note 22.d) (1,204,513) (1,392,304)

Communications (Note 22.d) (1,022,936) (1,159,494)

Data processing (Note 22.d) (610,588) (632,883)

Transportation (Note 22.d) (885,318) (974,082)

Security services (Note 22.d) (811,424) (698,968)

Financial system services (Note 22.d) (598,709) (582,513)

Advertising and marketing (Note 22.d) (270,075) (377,778)

Other (1,491,128) (1,361,577)

Gross Added Value 30,953,367 36,021,082

Depreciation and amortization (Note 22.d) (3,414,993) (3,573,945)

Value Added produced by Entity 27,538,374 32,447,137

Value Added received through transfer 4,538,508 (28,868)

Equity in subsidiaries and associates 4,538,508 (28,868)

Added Value to Distribute 32,076,882 100.00% 32,418,269 100.00%

Value Added Distributed 32,076,882 100.00% 32,418,269 100.00%

Personnel 16,321,283 50.88% 13,634,278 42.06%

Salaries and fees 10,741,510 9,024,697

Employee and directors profit sharing 1,612,957 1,187,098

Benefits and training programs 2,133,493 1,953,735

FGTS (Government Severance Indemnity Fund for Employees)

581,112 559,804

Other charges 1,252,211 908,944

Taxes, Rates and Contributions 1,477,726 4,61% 8,518,397 26.27%

Federal 371,141 7,624,801

State 799 700

Municipal 1,105,786 892,896

Interest on Third Parties' Capital 1,059,007 3.30% 953,237 2.94%

Rent (Note 22.d) 1,059,007 953,237

Interest on Own Capital (Note 24.g) 13,218,866 41.21% 9,312,357 28.73%

Federal Government's interest on own capital 1,984,699 1,582,655

Other shareholders’ interest on own capital 1,447,390 1,140,703

Federal Government dividends 752,961 348,733

Dividends for other shareholders' dividends 547,546 251,111

Interest on the Instrument Eligible to the Federal Government's Common Equity Tier 1 Capital

210,273 20,671

Retained earnings 6,945,179 4,942,697

Non-controlling interest in retained earnings 1,330,818 1,025,787


Notes to the Consolidated Financial Statements

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1- THE BANK AND ITS OPERATIONS

Banco do Brasil S.A. (“Banco do Brasil” or the “Bank”) is a publicly traded company established under private law,

with both public and private shareholders, and is subject to the requirements of Brazilian corporate legislation. It is

headquartered in Setor de Autarquias Norte, Quadra 5, Lote B, Torre I, Edifício Banco do Brasil, Brasília, Distrito

Federal, Brazil. Its purpose is to carry out all asset, liability and accessory banking operations, to provide banking

services, to promote financial intermediation and to originate financial transactions in various forms, including foreign

exchange transactions and supplementary activities, with an emphasis on insurance, private pension, capitalization,

securities brokerage, administration of consortiums, credit/debit cards, investment funds and management portfolios,

and to practice any of the activities permitted for institutions that are part of the National Financial System. It is also

the main financial agent of the Brazilian Federal Government and is therefore required to carry out the functions

attributed to it by law, specifically those of article 19 of Law 4,595/1964.

2- COMPANY RESTRUCTURING

a) Corporate reorganization in the area of insurance, private pension plans, capitalization and reinsurance

Brasildental Operadora de Planos Odontológicos S.A.

On June 11, 2013, Banco do Brasil, BB Seguros Participações S.A. (BB Seguros), BB Corretora de Seguros e

Administradora de Bens S.A. (BB Corretora), Odontoprev S.A. (Odontoprev) and Odontoprev Serviços Ltda.

(Odontoprev Serviços) signed an Association Agreement and Other Covenants aiming to develop and publicise

dental plans under the brand BB Dental through a new company named Brasildental Operadora de Planos

Odontológicos S.A. (Brasildental). Under these agreements, these plans will be distributed and sold by BB Corretora,

with exclusivity across all BB distribution channels in Brazil.

Brasildental was formed on March 12, 2014 with capital of R$ 5,000 thousand, composed of 100 thousand common

shares (ON) and 100 thousand preferred shares (PN) with the following shareholding structure:

BB Seguros holds 49.99% of common shares and 100% of preferred shares, representing 74.99% of total capital, and

Odontoprev holds 50.01% of the common shares, representing 25.01% of total capital.

The total capital was paid-in as follows: R$ 1 thousand on Brasildental’s formation date and R$ 4.999 thousand on

April 15, 2014. BB Seguros and Odontoprev were responsible for the payment of Brasildental’s capital, in proportion

to their respective holdings.

On August 02, 2013, the Conselho Administrativo de Defesa Econômica (CADE) approved the Agreement and, on

September 19, 2013, Banco Central do Brasil authorized the indirect holding of the Bank in Brasildental.

On May 12, 2014, the company was registered in the Conselho Regional de Odontologia (CRO). The Agência

Nacional de Saúde Suplementar (ANS) authorized Brasildental’s operations on July 7, 2014 and also approved, on

August 5, 2014, the products that will be offered by Brasildental in the Brazilian dental plans market.

The Agreement will remain effective for 20 years, renewable for equal periods.

Grupo Segurador Mapfre

On November 01, 2014, Vida Seguradora S.A., a company that belongs to the holding company BB Mapfre SH1

Participações S.A., was merged into Mapfre Vida S.A. On the same date, Mapfre Affinity Seguradora S.A., a

company that belongs to the holding company Mapfre BB SH2 Participações S.A., was merged into Mapfre Seguros

Gerais S.A. Both mergers were carried out in all of their assets, which were deferred by Susep, through the letters

206 and 207/2014/SUSEP-SEGER, respectively.

The merged net assets were evaluated at the book value on the date of the transaction, September 30, 2014, in the

amount of R$ 160,471 thousand for Vida Seguradora S.A. and R$ 448,618 for Mapfre Affinity Seguradora S.A.



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As a natural result, Mapfre Vida S.A. and Mapfre Seguros Gerais S.A. became the successors, by universal title, of

Vida Seguradora S.A. and Mapfre Affinity Seguradora S.A., respectively, in all its assets, rights and obligations,

assuming its net assets.

The mergers promoted better synergy and simplification of the operating model, with consequent cost and regulatory

capital optimization.

BB Capitalização S.A.

On November 28, 2014, the directors of BB Seguros Participações S.A. approved the merger of BB Capitalização

S.A. into BB Seguros pursuant to the Protocolo e Justificação de Incorporação (Merger Agreement). The net assets

of R$ 5,573 thousand were recognized at the book value at November 28, 2014, the date of the transaction.

Considering that the base date of the appraisal report and the date of the merger are the same, there were no equity

variations after the merger.

The Bank found to be unnecessary to maintain the BB Capitalização S.A. in the process of business model review in

the capitalization sector, and also there is no expectation that the company will develop operating activities.

As a result, BB Capitalização no longer exists and BB Seguros became its successor, by universal title, of its assets,

rights and obligations, and assume its net assets.

Considering that BB Seguros was the single shareholder of the merged company at the merger date, the shares of

BB Capitalização S.A. noncontrolling shareholders were not exchanged for shares of the acquiring company, so

there were no changes in BB Seguros’ capital.

Shareholders´ Restructuring - IRB-Brasil Resseguros S.A. (IRB-Brasil Re)

Considering the corporate reorganization recently planned by the IRB-Brasil Re in order to optimize the management

of its real estate assets through the creation of a holding company, IRB - Investimentos e Participações Imobiliárias

S.A. and four specific purpose entities (SPE) on June 08,2015, Banco do Brasil, as indirect shareholder of the IRB-

Brasil Re, submitted for approval by the Banco Central do Brasil the creation of such companies, however the

request remains under review by the referred institution.

The IRB-Brasil Re General Assembly approved, on August 21, 2015: (i) the transformation of the IRB-Brazil Re in

corporation publicly traded and submission of company registration request to become an open company in category

"A" before the Comissão de Valores Mobiliários, pursuant to CVM Instruction 480, of December 07, 2009, (ii) the

request of the authorization to CVM to realize public offerings of distribution of the marketable securities, pursuant to

CVM Instruction 400 of December 29, 2003, and (iii) the redesign and consolidation of the Bylaws of the IRB-Brasil

Re, to adapt it to the legal requirements of a open company and the Novo Mercado BM&FBOVESPA S.A. - Bolsa de

Valores, Mercadorias e Futuros.

b) Corporate Reorganization – branches, subsidiaries and associates abroad

BB Money Transfers

On December 08, 2014, BB Money Transfers, located in the state of New York, was dissolved. The Executive Board

decided on the company closing and repatriation of the share capital to its controlling company, based on an

economic infeasibility study of the business.

The capital of BB Money Transfers was transferred to the Bank, through BB USA Holding Company Inc. (its

controlling company, with 100% of the shares). However, part of this capital was retained in the BB USA Holding

Company, in order to pay the costs arising from operating activities for closing the subsidiary and the expenditures of

the holding company itself.

The Bank carried out the payment of that share capital in the same place of the investment, through BB Grand

Cayman, not occurring inflow of funds into Brazil.


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c) Partnership in the card segment

Livelo

The Bank and Banco Bradesco announced to the market that Companhia Brasileira de Soluções e Serviços (Alelo),

through its wholly-owned subsidiary Livelo S.A., began negotiations to explore business opportunities from allicances

in loyalty programs.

Livelo is a company whose indirect shareholders (via Alelo) are the Bank, with 49.99% of the total capital, and

Bradesco, with 50.01% of the total capital and its objective is to:

act as an independent and open alliance loyalty program with the following partners: issuers of payment instruments; retailers; and other loyalty programs, amongst others;

bring together a diverse group of relevant and strategic partners to enable the generation of loyalty points and the redemption of benefits; and

develop its own loyalty points which will be offered to partners which have businesses which generate/accumulate points and can be converted into prizes and benefits offered by the redemption partners.

The company is in structuring process to start its activities and has already obtained authorization from authorities

and regulators.

Stelo

On April 16, 2014, the Bank and Bradesco, through its subsidiary Alelo announced the launch of Stelo S.A., a

company in the electronic means of payment business to manage, operate and explore the payment facilitators

segments, focused on electronic commerce (e-commerce) and the digital wallet business.

The services provided by Stelo aim to bring convenience and security to consumers and business establishments,

primarily in the use of payments in e-commerce.

On April 15, 2014, in order to operationalise this project, Alelo signed a Memorandum of Understanding with Cielo in

relation to its future holding in the capital of Stelo.

On June 12, 2015, Aliança Pagamentos e Participações Ltda. (Aliança) acquired 30% of the capital share of Stelo

S.A. (Stelo) through a capital increase and issue of new shares by Stelo. The new structure consolidates the

provisions in the Memorandum of Understanding dated April 15, 2014 between Companhia Brasileira de Soluções e

Serviços (Alelo) and Cielo S.A., controller of Aliança, which main objective is to invest in other companies as a

partner or shareholder.

Taking into account the indirect holding of the Bank in Cielo and in Alelo, through BB Banco de Investimento S.A. and

BB Cartões Participações S.A., respectively, the indirect holding of the Bank in Stelo is 43.62%.

Stelo began its operations in 2015, with the authorization of the authorities and regulators.

BB Elo Cartões and Cielo

On November 19, 2014, the Bank announced to the market that BB Elo Cartões Participações S.A., its wholly-owned

subsidiary, and Cielo S.A. signed on this date the Association Agreement to form a new strategic partnership in the

electronic payment industry.

The equity interest of BB Elo Cartões and Cielo in the Company was authorized by Bacen on December 30, 2014.

The creation of the Company, arising from the Partnership, was regarded as permitted under the Conselho

Administrativo de Defesa Econômica (CADE), after expiry of the period laid down in article 65 of Law 12,529/2011,

went on without any appeals or avocation of the case by the Administrative Court.


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On February 27, 2015, after approval by the relevant regulators, supervisors and inspection, and subject to the

fulfillment of all contractual conditions precedent to the closing of the transaction, BB Elo Cartões and Cielo

completed the formation of the strategic partnership, forming a new company called Cateno Gestão de Contas de

Pagamento S.A. (Cateno).

Under the terms of the Agreement, the new company has the right, transferred by BB Elo Cartões, to exploit the

activities of management of post-paid accounts transactions and management of the functionality of purchasing via

debit of its payment arrangements. In addition, the new deal aims, among its objectives, to perform associations with

other partners in order to leverage opportunities related to the electronic payment niche market, seeking to obtain

synergy gains and optimizing the structuring of new businesses in the segment.

The injection of this intangible asset to Cateno’s shareholders’ equity represented R$ 11,572,000 thousand,

according to the technical report of appraisal performed by an independent company. In return, and for equalization

of the intended equity interests, Cateno gave to BB Elo Cartões R$ 4,640,951 thousand in cash, related to the

payment of taxes on the operation, and R$ 3,459,449 thousand in debentures from Cielo. The amount of 3,471,600

thousand was kept to compose the equity interest of BB Elo Cartões in Cateno.

The total capital was divided in the proportion of 30% for BB Elo Cartões and 70% for Cielo. However, taking into

account the indirect holding of the Bank in Cielo, through BB Banco de Investimento S.A., the total indirect holding of

the Bank in Cateno, on the date of acquisition, was distributed as follows:

Holding of the Bank - % Common shares (ON) Preferred shares (PN) Total

Total Capital 42.27 100.00 50.13

Due to the conclusion of the transaction, the amount of R$ 3,211,700 thousand impacted the Bank's results from

January 01, 2015 to September 30, 2015, as shown in the table below:

1) BB Elo Cartões’ capital gain 11,572,000

2) Taxes (4,640,951)

3) Effect in BB Elo Cartões’ income, net of tax effects (1+2) 6,931,049

4) Unrealized result (50.13% of item 3) (3,474,189)

5) Effect in the Consolidated income (3+4) 3,456,860

6) Profit sharing, net of tax effects (245,160)

7) Effect in the Consolidated net income (5+6) 3,211,700


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3 - PRESENTATION OF FINANCIAL STATEMENTS

The consolidated financial statements have been prepared in accordance with the accounting guidelines derived from

Brazilian corporation law, the rules and instructions issued by the Conselho Monetário Nacional (CMN), Banco

Central do Brasil (Bacen), the Conselho Nacional de Seguros Privados (CNSP), the Superintendência de Seguros

Privados (Susep), the Agência Nacional de Saúde Complementar (ANS) and the Comissão de Valores Mobiliários

(CVM), as applicable. In the consolidated financial statements, there was a reclassification of the Instrument

Qualifying as CET1 – Hybrid capital and debt instrument to Shareholder's Equity. This adjustment is also performed

in the prudential financial statements and to IFRS, aiming to improve the quality and transparency of these

consolidated financial statements.

The preparation of financial statements in accordance with accounting practices adopted in Brazil, applicable to

financial institutions, requires that Management use judgment in the determination and recording of accounting

estimates, when applicable. Significant assets and liabilities subject to these estimates and assumptions include: the

residual value of fixed assets, the allowance for loan losses, deferred tax assets, provision for labor, civil and tax

demands, valuation of financial instruments, assets and liabilities relating to post-employment benefits and other

provisions. The final amounts of transactions involving these estimates are only known upon their settlement.

The consolidated financial statements include the operations of the Bank performed by their domestic agencies and

abroad, the operations of financial and non-financial subsidiaries in the country and abroad, Jointly Controlled

entities, Special Purpose Entity - Dollar Diversified Payment Rights Finance Company and Loans Finance Company

Limited, and of the Investment Financial Funds (BVIA Fundo de Investimento em Participações and BV Financeira

Empreendimentos e Participações S.A.) which the Bank controls directly or indirectly, as well as investments in other

companies, in accordance with Bacen requirements. In accordance with article 32 of CVM Instruction 247, dated

March 27,1996, and established by the Bank, the components of assets, liabilities, income and expenses of jointly

controlled companies have been proportionately included in the consolidated financial statements.

In the preparation of these consolidated financial statements, amounts resulting from transactions between

consolidated companies, including the equity interest held by one in another, balances of balance sheet accounts,

revenues, expenses and unrealized profits, net of tax effects, were eliminated. Non-controlling interest in net equity

and in income were separately disclosed in the financial statements. The balances of balance sheet and income

accounts of ownership interest in which control is shared with other shareholders were consolidated in proportion to

the ownership held in the capital. Leasing transactions were considered based on the financial method, and the

amounts were reclassified from the leased assets line to the leasing transactions line, after deduction of residual

amounts received in advance.

The Comitê de Pronunciamentos Contábeis (CPC) is responsible for issuing accounting standards and

interpretations, based on international accounting standards, approved by the CVM. Bacen adopted the following

pronouncements of the CPC, applied by the Bank, as applicable: CPC 00 - Conceptual Framework, CPC 01 –

Decrease in Recoverable Amount of Assets, CPC 03 - Statement of Cash Flows (DFC), CPC 05 – Related Party

Disclosures, CPC 10 – Share-Based Payment, CPC 23 – Accounting Policies, Changes in Accounting Estimates and

Errors, CPC 24 – Events After the Reporting Period, CPC 25 - Provisions, Contingent Liabilities and Contingent

Assets and CPC 33 - Employee Benefits.

Additionally, the Banco Central do Brasil issued CMN Resolution 3,533/2008, which became effective in January

2012, which established procedures for classification, accounting and disclosure of sale and transfer transactions

related to financial assets. This Resolution establishes the criteria for the derecognition of financial assets as

specified in the CPC 38 – Financial Instruments: Recognition and Measurement.

The Bank has also applied the following pronouncements which do not conflict with the Bacen rules, as established

by article 22, paragraph 2 of Law 6,385/1976: CPC 09 – Value Added Statement, CPC 12 – Adjustment at Present

Value, CPC 22 – Information by Segment, and CPC 41 – Income per Share.

The application of other standards, which depend on Bacen’s regulations, results primarily in immaterial adjustments

or in changes in disclosure, except the following pronouncements, that may result in significant impacts on the

financial statements:


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CPC 04 - Intangible Assets and CPC 15 - Business Combinations - a) reclassification of intangible assets identified

in the acquisition of the equity interest in Banco Votorantim, in 2009, as well as on acquisition of controlling interest of

Banco Patagonia, in 2011, and of BB Americas, in 2012, from the investment account to the account of intangible

assets, in the group of Non-Current Assets – Permanent; b) derecognition of goodwill amortization expenses from

acquisitions; and c) recognition of amortization expenses of intangible assets with definite useful lives, identified in

the acquisitions.

CPC 18 – Investments in Associates and Joint Ventures – a) recording at fair value of the equity interests received in

the partnership of the formation of the joint ventures BB Mapfre SH1 and SH2, on June 30, 2011; b) write-off of the

book value of the assets contributed by the Bank of Brazil including any goodwill; and, c) recognition of the result of

the transaction in the new constituted companies by the proportion of the equity interest.

CPC 36 – Consolidated Financial Statements – consolidation of the interests in investments in associates and joint

ventures using the equity method, in accordance with CPC 18, resulting in decrease in the total assets and liabilities

of the Conglomerate.

CPC 38 - Financial Instruments: Recognition and Measurement - adjustment in the allowance for loan losses, due to

the adoption of the incurred loss criteria instead of the expected loss criteria.

These financial statements were approved by the Executive Board of Directors on November 10, 2015.


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Equity interest included in the consolidated financial statements, segregated by business segments:

Activity Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

% of Total Share

Banking Segment

Banco do Brasil - AG (1) Banking 100.00% 100.00% 100.00%

BB Leasing Company Ltd. (1) Leasing 100.00% 100.00% 100.00%

BB Leasing S.A. - Arrendamento Mercantil (1) Leasing 100.00% 100.00% 100.00%

BB Securities Asia Pte. Ltd. (1) Broker 100.00% 100.00% 100.00%

Banco do Brasil Securities LLC. (1) Broker 100.00% 100.00% 100.00%

BB Securities Ltd. (1) Broker 100.00% 100.00% 100.00%

BB USA Holding Company, Inc. (1) Holding 100.00% 100.00% 100.00%

Brasilian American Merchant Bank (1) Banking 100.00% 100.00% 100.00%

Banco do Brasil Americas (1) Banking 100.00% 100.00% 100.00%

Besc Distribuidora de Títulos e Valores Mobiliários S.A. (1) Asset

Management 99.62% 99.62% 99.62%

Banco Patagonia S.A. (1) Banking 58.96% 58.96% 58.96%

Banco Votorantim S.A. (2) Banking 50.00% 50.00% 50.00%

Investment Segment

BB Banco de Investimento S.A. (1) Investment Bank 100.00% 100.00% 100.00%

Kepler Weber S.A. (2) Industry 17.46% 17.46% 17.46%

Companhia Brasileira de Securitização - Cibrasec (3) (4) Credits Acquisition 12.12% 12.12% 12.12%

Neoenergia S.A. (2) Energy 11.99% 11.99% 11.99%

Segment of Fund Management

BB Gestão de Recursos-Distribuidora de Títulos e Valores Mobiliários S.A.

(1) Asset

Management 100.00% 100.00% 100.00%

Segment of Insurance, Private Pension Fund and Capitalization

BB Seguridade Participações S.A. (1) Holding 66.25% 66.25% 66.25%

BB Cor Participações S.A. (1) Holding 66.25% 66.25% 66.25%

BB Corretora de Seguros e Administradora de Bens S.A. (1) Broker 66.25% 66.25% 66.25%

BB Seguros Participações S.A. (1) Holding 66.25% 66.25% 66.25%

BB Capitalização S.A. (sucessor of Nossa Caixa Capitalização S.A.)

(5) Capitalization -- -- 66.25%

BB Mapfre SH1 Participações S.A. (2) Holding 49.68% 49.68% 49.68%

Brasildental Operadora de Planos Odontológicos S.A. (2) Service Rendering 49.68% 49.68% 49.68%

Companhia de Seguros Aliança do Brasil (2) Insurance Company

49.68% 49.68% 49.68%

Mapfre Vida S.A. (2) Insurance Company

49.68% 49.68% 49.68%

Vida Seguradora S.A. (5) Insurance Company

-- -- 49.68%

Brasilprev Seguros e Previdência S.A. (2) Pension/Insurance 49.68% 49.68% 49.68%

Brasilcap Capitalização S.A. (2) Capitalization 44.16% 44.16% 44.16%

Mapfre BB SH2 Participações S.A. (2) Holding 33.13% 33.13% 33.13%

Aliança do Brasil Seguros S.A. (2) Insurance Company

33.13% 33.13% 33.13%

Brasilveículos Companhia de Seguros (2) Insurance Company

33.13% 33.13% 33.13%

Mapfre Seguros Gerais S.A. (2) Insurance Company

33.13% 33.13% 33.13%

Mapfre Affinity Seguradora S.A. (5) Insurance Company

-- -- 33.13%

BB Mapfre Assistência S.A. (2) Service Rendering 33.13% 33.13% 33.13%

Votorantim Corretora de Seguros S.A. (2) Broker 50.00% 50.00% 50.00%

Seguradora Brasileira de Crédito à Exportação - SBCE (3) Insurance Company

12.09% 12.09% 12.09%

IRB - Brasil Resseguros S.A. (2) Reinsurer 13.53% 13.53% 13.58%


BB Administradora de Cartões de Crédito S.A. (1) Service Rendering 100.00% 100.00% 100.00%

BB Elo Cartões Participações S.A. (1) Holding 100.00% 100.00% 100.00%

Cateno Gestão de Contas de Pagamento S.A. (2) (6) Service Rendering 50.11% -- --

Elo Participações S.A. (2) Holding 49.99% 49.99% 49.99%

Companhia Brasileira de Soluções e Serviços CBSS - Alelo (2) Service Rendering 49.99% 49.99% 49.99%

Elo Serviços S.A. (2) Service Rendering 33.33% 33.33% 33.33%

Cielo S.A. (2) Service Rendering 28.72% 28.75% 28.76%

Tecnologia Bancária S.A. - Tecban (3) Service Rendering 12.52% 13.53% 13.53%

Other Segments

Ativos S.A. Securitizadora de Créditos Financeiros (1) Credits Acquisition 100.00% 100.00% 100.00%

Ativos S.A. Gestão de Cobrança e Recuperação de Crédito (1) Credits Acquisition 100.00% 100.00% 100.00%

BB Administradora de Consórcios S.A. (1) Consortium 100.00% 100.00% 100.00%

BB Tur Viagens e Turismo Ltda. (1) (4) Tourism 100.00% 100.00% 100.00%

BB Money Transfers Inc. (5) Service Rendering -- -- 100.00%

BB Tecnologia e Serviços S.A. (1) IT 99.97% 99.97% 99.97%

(1) Subsidiaries.

(2) Joint venture, proportionately included in consolidation.

(3) Associated companies proportionately included in consolidation, as Bacen’s Regulation.

(4) The financial statements refers to August/2015.

(5) Discontinued companies during 2014.

(6) Cielo is a joint venture of the Bank and also controls Cateno. The percentage that the Bank holds in Cateno takes into consideration its direct holding in BB Elo, as well as its holding in Cielo through BB Banco de Investimento, as shown in Note 2.c.


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Information for comparability purposes

For comparability purposes in order to better show the nature of operations the following reclassifications were made:

Balance Sheet

Premium paid to customers for loyalty/performance from the grouping Other assets - Prepaid expenses to Intangible -

Intangible assets - R$ 284,630 thousand.

Jun 30, 2014 Original Report Adjustments Adjusted Balances

CURRENT ASSETS 883,984,204 (284,630) 883,699,574

Other assets – Prepaid expenses 2,867,717 (284,630) 2,583,087

NON-CURRENT ASSETS 547,644,901 284,630 547,929,531

PERMANENT ASSETS 20,950,337 284,630 21,234,967

Intangible – Intangible assets 17,382,233 284,630 17,666,863

Statement of Income

Income from services rendered to related parties of the BB Seguridade of the grouping Service fee income to

Insurance, pension plans and capitalization results.

3rd quarter/2014 Original Report Adjustments Adjusted Balances

OTHER OPERATING INCOME/EXPENSES (2,696,033) -- (2,696,033)

Service fee income 4,645,024 (90,459) 4,554,565

Insurance, pension plans and capitalization results 1,084,716 90,459 1,175,175

Jan 01 to Sep 30, 2014 Original Report Adjustments Adjusted Balances

OTHER OPERATING INCOME/EXPENSES (8,790,903) -- (8,790,903)

Service fee income 13,386,963 (296,770) 13,090,193

Insurance, pension plans and capitalization results 3,187,962 296,770 3,484,732


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4 - DESCRIPTION OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted by Banco do Brasil are applied consistently in all periods presented in these

financial statements and applied to all the entities of the Conglomerate.

a) Statement of income

In accrual basis accounting, revenues and expenses are reported in the closing process of the period in which they

are incurred, regardless of receipt or payment. The operations with floating rates are adjusted pro rata die, based on

the variation of the indexes agreed, and operations with fixed rates are recorded at future redemption value, adjusted

for the unearned income or prepaid expenses for future periods. The operations indexed to foreign currencies are

converted at the reporting date using current rates.

b) Present value measurement

Financial assets and liabilities are presented at present value due to the application of the accrual basis in the

recognition of their interest income and expenses.

Non-contractual liabilities are primarily represented by provisions for lawsuit and legal obligations, for which the

disbursement date is uncertain and is not under the Bank's control. They are measured at present value because

they are initially recognized at estimated disbursement value on the valuation date and are updated monthly.

c) Cash and cash equivalents

Cash and cash equivalents comprise available funds in local currency, foreign currency, investments in gold,

investments in repurchase agreements – own resources, interbank deposits and investments in foreign currencies,

with high liquidity and insignificant risk of change in fair value, with maturity at time of acquisition not exceeding

90 days.

d) Short-term interbank investments

Short-term interbank investments are recorded at their investment or acquisition amount, plus income accrued up to

the balance sheet date and adjustments for allowance for losses.

e) Securities

The securities purchased for the Bank's portfolio are recorded at the actual amount paid, including brokerage charges

and fees, and are classified based on management’s intention, in one of three categories, according to Bacen

Circular 3,068/2001:

Trading Securities: these are securities purchased to be actively and frequently traded. They are adjusted monthly to

market value. The increases and decreases in value are recorded in income and expense accounts for the period;

Securities available for sale: these are securities that may be traded at any time, but are not acquired to be actively

and frequently traded. They are adjusted monthly to market value and their increases and decreases in value are

recorded, net of tax effects, in Accumulated Other Comprehensive Income in Shareholders' Equity; and

Securities held to maturity: these are securities that the Bank owns and has the financial capacity and intent to hold

to maturity. These securities are not adjusted to market value. The Bank's financial capacity to hold to maturity is

supported by a cash flow projection that does not consider the possibility of sale of these securities.

The mark-to-market methodology used for securities was established following consistent, verifiable criteria, which

consider the average price of trading on the day of calculation or, if not available, the daily adjustment of future

market transactions reported by Anbima, BM&FBovespa or the net expected realizable value obtained through

pricing models, using future interest rate curves, foreign exchange rates, and price and currency indices, all

consistent with prices adopted during the year.


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Income accrued on the securities, irrespective of the category in which they are classified, is appropriated on a pro

rata die basis on an accrual basis until the date of maturity or final sale, using the cumulative or straight-line method,

based on the contractual remuneration and purchase price, and recorded directly in the statement of income for the

period.

Impairment of securities classified as available for sale and held to maturity, if considered not to be temporary, are

recorded directly in expense for the period and a new cost basis for the asset is determined.

Upon sale, the difference between the sale amount and the cost of purchase plus accrued income is considered as a

result of the transaction and is recorded on the date of the transaction as a gain or loss on securities.

f) Derivative financial instruments

Derivative financial instruments are adjusted to market value at each monthly trial balance and balance sheet date.

Increases or decreases in value are recorded in the appropriate income or expense accounts.

The mark-to-market methodology used for derivative financial instruments was established following consistent and

verifiable criteria, which consider the average price of trading on the date of calculation or, if not available, pricing

models that estimate the expected net realizable value.

Derivative financial instruments used to offset, in whole or in part, the risks arising from exposure to variations in

financial asset or liability market values are considered hedge instruments and are classified according to their

nature:

Market Risk Hedge: increases or decreases in value of the financial instruments, as well as of the hedged item, are

recorded in income/expense accounts for the period; and

Cash Flow Hedge: the effective portion of the increases or decreases in value of the derivative financial instruments

classified in this category are recorded, net of tax effects, in Accumulated Other Comprehensive Income in

Shareholders' Equity. The effective amount is that in which the variation of the hedged item, directly related to the

corresponding risk, is offset by the variation in the financial instrument used for the hedge, considering the

accumulated effect of the transaction. Other variations in these instruments are recorded directly in the statement of

income for the period.

g) Loan and leasing operations, advances on foreign exchange contracts, other receivables with loan characteristics and allowance for loan losses

Loans, leases, advances on foreign exchange contracts and other receivables with loan characteristics are classified

according to Management's judgment with respect to the level of risk, taking into consideration market conditions,

past experience and specific risks in relation to the operation, to borrowers and guarantors, observing the parameters

established by CMN Resolution 2,682/1999, which requires periodic analyses of the portfolio and its classification into

nine levels, ranging from AA (minimum risk) to H (maximum risk), as well as the classification of operations more than

15 days overdue as non-performing. For atypical transactions with a term of more than 36 months, there is a double

counting on the days-past-due intervals defined for the nine levels of risk, as permitted by CMN Resolution

2,682/1999.

Income from loans overdue for more than 60 days, regardless of their risk level, will only be recognized as income

when effectively received.

Operations classified at level H, which remain in this classification for 180 days, are written off against the existing

allowance.

Renegotiated operations are maintained, at a minimum, at the same level at which they were rated on the date of

renegotiation. The renegotiations of loans already written off against the allowance are rated as H level and any gains

from renegotiation are recognized as income when effectively received. Reclassification to a lower risk category is

allowed when there is significant amortization of the operation or when new material facts justify a change in risk

level, according to CMN Resolution 2,682/1999.


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Allowance for loan losses, considered sufficient by management, satisfies the minimum requirement established by

the aforementioned CMN Resolution 2,682/1999 (Note 10.e).

h) Taxes

Taxes are calculated based on the rates shown in the table below:

Taxes Rate

Income Tax (15.00% + additional 10.00%) 25.00%

Social Contribution on Net Income (CSLL) (1)

20.00%

Social Integration Program/Public servant fund program (PIS/Pasep) (2)

0.65%

Contribution to Social Security Financing - (Cofins) (2)

4.00%

Tax on services of any kind - (ISSQN) Up to 5.00%

(1) Rate applied to financial companies and to non-financial companies in the areas of private insurance and capitalization, since September 01, 2015 (the rate was 15% until August 31,2015). In January 2019, the rate returns to 15%. For others non-financial companies, the CSLL rate is 9%.

(2) For non-financial firms that have opted for the non-cumulative regime of calculation, the PIS/PASEP rate is 1.65% and the Cofins rate is 7.6%.

Deferred tax assets (tax credits) and deferred tax liabilities are recorded by applying the current rates of taxes on

their respective bases. For the recording, maintaining and writing-off of deferred tax assets, the Bank follows the

established criteria by CMN Resolution 3,059 / 2002, amended by Resolutions CMN No. 3,355 / 2006, CMN 3,655 /

2008 and CMN 4,192 / 2013 and they are supported by a study of their realizability. Tax credits resulting from the

increase of the social contribution rate from 15% to 20% are being recognized in an amount sufficient for

consumption by the end of the term of the new rate (Dec 31, 2018), according to Law 13,169 / 2015.

i) Prepaid expenses

These expenses refer to the application of payments made in advance, for which the benefits or the services will

occur in subsequent periods. Prepaid expenses are recorded at cost and amortized as incurred.

j) Permanent assets

Investments: investments in subsidiaries and associates in which the Bank has significant influence or an ownership

interest of 20% or more of the voting shares, and in other companies which are part of a group or are under common

control are accounted for by the equity method based on the shareholders’ equity of the subsidiary or associates.

Goodwill, the premium paid over the book value of the investment acquired due to expectations of future profitability,

is based on a financial-economic assessment which substantiate the purchase price of the business and is amortized

based on annual income projections as per the assessment. Goodwill is tested for impairment annually.

The statements of the branches and subsidiaries abroad are adapted to the prevailing accounting criteria in Brazil

and translated into Brazilian Reais using current exchange rates, in conformity with Bacen Circulars 2,397/1993 and

2,571/1995, and their impacts are recorded in the statement of income for the period.

Other permanent investments are valued at acquisition cost, less allowance for impairment losses, as applicable.

Property and equipment: property and equipment are stated at cost less depreciation, calculated using the straight-

line method at the following annual rates: buildings and improvements - 4%; vehicles - 20%; data processing systems

- 20% and others - 10% (Note 15).

Deferred: deferred assets are recorded at cost of acquisition or formation, net of accrued amortization. They are

composed mainly of restructuring costs, and the expenditures, up to September 30, 2008, with: third party properties,

as a result of opening branches, which are amortized according to rates based on rental terms, limited to 10 years;

and with the acquisition and development of information systems, which are amortized at 10% per annum (p.a.).

Intangible: intangible assets consist of rights over intangible assets used in the running of the Bank, including

acquired goodwill.


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An asset meets the criteria for identification as an intangible asset, when it is separable, i.e, it can be separated from

the entity and sold, transferred or licensed, rented or exchanged, individually or jointly with a contract, related assets

or liabilities, regardless of the intention for use by the entity; or results from contractual rights or other legal rights,

regardless of whether these rights are transferable or separable from the entity or other rights and obligations.

Intangible assets with finite useful lives compromise: disbursements for the acquisition of rights to provide banking

services (rights to managing payrolls), amortized over the terms of contracts; goodwill paid on the acquisition of

merged company (Banco Nossa Caixa), amortized based on projections of annual results set in the economic-

financial study; software, amortized on a straight-line basis at a rate of 10% per year from the date it is available for

use. Intangible assets are adjusted by allowance for impairment losses, if applicable (Note 16). The amortization of

intangible assets is recorded in the Other Administrative Expenses account.

k) Impairment of non-financial assets

At the end of each reporting period, the Bank assesses whether there is any indication that a non-financial asset may

be impaired based on internal and external sources of information. If there is an indication that an asset may be

impaired, the Bank estimates the recoverable amount of the asset. The recoverable amount of the asset is the higher

of: i) its fair value less costs to sell it; and ii) its value in use.

The Bank tests, at least annually, the recoverable amount of intangible assets not yet available for use and goodwill

on acquisition of investments, regardless whether there is an indication of impairment or not. This test can be applied

any time during the year, provided it is performed at the same period every year.

If the recoverable amount of the asset is less than its carrying amount, the asset's carrying amount is reduced to its

recoverable amount through a provision for impairment, which is recognized in the Income Statement.

Methodologies in assessing the recoverable amount of the main non-financial assets:

Property and Equipment in Use

Land and buildings - in determining the recoverable amount of land and buildings, technical assessments are carried

out in accordance with the rules of the Brazilian Association of Technical Standards - ABNT.

Data processing systems - in determining the recoverability, the market value is considered, if it is available, or the

recoverable value for use in the operations of the Bank. Otherwise the calculation considers the projection of cash

flows arising from the use of each asset during its useful life, discounted to present value based on the rate of the

Interbank Deposit Certificate - CDI.

Other assets - although they are subject to impairment testing, other assets have little value individually and, given

the cost-effectiveness, the Bank does not assess the recoverable value of these items individually. However, the

Bank conducts inventory each year, and lost or damaged goods are properly derecognized.

Investments and Goodwill on acquisition of investments

The methodology for calculating the recoverable amount of goodwill and investments for future profitability consists of

measuring the expected result of the investment using discounted cash flow (DCF). To measure this result, the

assumptions made are based on (i) operational projections, results and investment plans, (ii) macroeconomic

scenarios developed by the Bank, and (iii) internal methodology for calculating the cost of capital based on the

Capital Asset Pricing Model - CAPM.

Intangible

Rights to Managing Payrolls - The model for assessing the recoverable amount of the rights to managing payroll

involves monitoring contracts performance, that are calculated from the contribution margins of customer relationship

related to each contract in order to check if the projections that justified the acquisition of assets match the observed

performance. For the contracts that do not achieve the expected performance levels, a provision for impairment loss

is recognized.


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Software - Software, substantially developed by the Bank in accordance with its needs, constantly receives

investments for modernization and adaptation to new technologies and business requirements. Considering that

there are no similar products on the market and considering the high cost to deploy metrics that allow calculation of

its value in use, the impairment test for software evaluates its usefulness to the company so that when software is

retired, its value is derecognized.

Goodwill on acquisition of merged company - The methodology for calculating the recoverable amount of goodwill on

the acquisition of Banco Nossa Caixa, merged into Banco do Brasil in November 2009, is to compare the value of the

goodwill paid, less the accumulated amortization, with the present value of the results of the Bank estimated for the

state of São Paulo, discounting the assets with finite useful lives. The projections are derived from the observed

results and assumptions of profitability growth for the Bank and are discounted at the rate of cost of capital calculated

using an internal methodology, based on Capital Asset Pricing Model – CAPM.

The losses recorded in the Statement of Income to adjust the recoverable value of these assets, if any, are stated in

the respective notes.

l) Employee benefits

Employee benefits related to short-term benefits for current employees are recognized on the accrual basis as the

services are provided. Post-employment benefits, comprising supplementary retirement benefits and medical

assistance for which the Bank is responsible, are assessed in accordance with criteria established by CPC 33 (R1) -

Employee benefits, approved by CVM Resolution 695/2012 (Note 27) and by the Resolution CMN 4,424/2015. The

evaluations are performed semiannually.

In defined-contribution plans, the actuarial risk and the investment risk are borne by the plan participants.

Accordingly, cost accounting is based on each period's contribution amount representing the Bank's obligation.

Consequently, no actuarial calculation is required when measuring the obligation or expense, and there are neither

actuarial gains nor losses.

In defined benefit plans, the actuarial risk and the investment risk value of plan assets fall either partially or fully on

the sponsoring entity. Accordingly, cost accounting requires the measurement of plan obligations and expenses, with

a possibility of actuarial gains and losses, leading to the register of a liability when the amount of the actuarial

obligation exceeds the value of plan assets, or an asset when the amount of assets exceeds the value of plan

obligations. In the latter instance, the asset should be recorded only when there is evidence that it can effectively

reduce the contributions from the sponsor or will be refundable in the future.

The Bank recognizes the components of defined benefit cost in the period in which the actuarial valuation was

performed, in accordance with criteria established by CPC 33 (R1) -Employee benefits, as follows:

the current service cost and the net interest on the net defined benefit liability (asset) are recognized in profit or loss; and

the remeasurements of the net defined benefit liability (asset) are recognized in other comprehensive income, in the Bank’s equity, net of tax effects.

Contributions to be paid by the Bank to medical assistance plans in some cases will continue after the employee’s

retirement. Therefore, the Banks obligations are evaluated by the present actuarial value of the contributions to be

paid over the expected period in which the plan participants and beneficiaries will be covered by the plan. Such

obligations are evaluated and recognized under the same criteria used for defined benefit plans.

The actuarial asset recognized in the balance sheet (Note 27) refers to the actuarial gains and it will be settled by the

end of the plan. Along the life of the plan there may be partial realization of the actuarial assets, if the requirements of

the Supplementary Law 109/2001 and Resolution CGPC 26/2008 are met.

m) Deposits and Securities Sold Under Repurchase Agreements

Deposits and securities sold under repurchase agreements are recorded at the amount of the liabilities and include,

when applicable, related charges up to the balance sheet date, on a daily pro rata die basis.


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n) Operations related to insurance, pension plan and capitalization activities

Statement of Income

Insurance premiums and selling expenses (direct acquisition costs deferred and amortized) are recorded upon the

issuance of policies or billings and are recognized in income/expenses, according to the elapsed coverage period.

Revenues from premiums and the corresponding selling expenses, related to present risks without the issue of

respective policies are recognized in the statement of income/expenses based on estimates.

Income from insurance premiums of unlapsed risks is deferred over the validity period of the insurance policies, by

means of the formation of a provision for unearned premiums, based on the contracted premiums.

The revenue from pension plans, life insurance plans with living benefits and capitalization plans are recognized in

the statement of income when effectively received, as a contra-entry to the recognition of technical provisions, except

the revenue to cover risks in cases of combined pension plans, which must be recognized over the duration of the

risk, regardless of its receipt. The selling costs are deferred on the issuing of the contract or policy and allocated to

income/expenses on a straight-line basis, over the average estimated period for their recovery, except the ones

related to capitalization.

Technical Provisions

Technical provisions are composed in accordance with the standards established by Conselho Nacional de Seguros

Privados (CNSP), and the values are calculated based on actuarial methods and premises.

Insurance

Provision for Unearned Premiums (PUP): formed by the insurance premium corresponding to the period of risk not

yet elapsed. The measurement is individual by policy or endorsement and performed using the pro rata die method

based on the start and end dates of the insured risk. The generating factor for this provision is the issuance of the

policy/endorsement or the beginning of the risk, whichever occurs first.

Provision for Unsettled Claims (PULC): calculated by estimate of probable payments, gross of reinsurance and net of

recovery of coinsurance, based on the notifications and notices of claims received up to the balance sheet date, and

includes provisions for claims under litigation calculated according to the criteria defined and documented in an

actuarial technical note. The accrued amounts are updated under the terms of the applicable legislation.

Provision for Claims Incurred but not Reported (IBNR): calculated in accordance with the expected amount of claims

incurred in risks assumed in the portfolio and not yet reported.

Pension plan

Mathematical Provision for Future Benefit Payments: represents the sum of the premiums and contributions

transferred by the participants, net of the loading rate, plus the financial income earned from the investments of the

resources. This provision refers to participants whose benefits have not yet started to be paid.

Mathematical Provision for benefits granted: refers to those already receiving the benefits.

Capitalization

Mathematical Reserve for Capitalization: calculated on the face value of the notes, restated according to the index

and the interest rate defined in the plan.

Provisions for Redemptions: recorded at the values of the matured notes (those with finalized and rescinded

capitalization periods), updated for the period between the date of the right to redemption and effective settlement.

Provision for prize draw: calculated on the nominal value of the notes issued, based on actuarial methods approved

by Susep. The write-off of the provision occurs as the risk lapses, i.e., the balance of the provision for prize draws

represents the values of prize draws not yet realized.


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Provision for payable prize draw: composed by prize drawn capitalization notes, inflation-adjusted for the period

between the date of the draw and the effective settlement.

o) Provisions, Contingent assets and liabilities and legal obligations

The recognition, measurement and disclosure of provisions, contingent assets and liabilities and legal obligations are

made in accordance with the criteria defined by CPC 25 – Provisions, Contingent Assets and Contingent Liabilities,

approved by CMN Resolution 3,823/2009 (Note 28).

Contingent assets are not recognized in the financial statements however when there is evidence assuring their

realization, usually represented by the final judgment of the lawsuit and by the confirmation of the capacity for its

recovery by receipt or offsetting by another receivable, are recognized as assets.

Contingent liabilities are recognized in the financial statements when, based on the opinion of legal advisor and

Management, the risk of loss of legal or administrative proceedings is considered probable, with a probable outflow of

financial resource for the settlement of the obligation and when the amounts involved are measurable with sufficient

assurance, being quantified when judicial noticed and revised monthly as follows:

Aggregated Method: cases that are similar and recurring in nature and whose values are not considered relevant.

Provisions are based on statistical data. It covers civil, tax or labor judicial proceedings (except labor claims filed by

trade unions and all proceedings classified as strategic) with probable value of award, estimated by legal advisors, up

to R$ 1 million.

Individual Method: cases considered unusual or whose value is considered relevant by our legal counsel. Provisions

are based on: the amount claimed; probability of an unfavorable decision; evidence presented; evaluation of legal

precedents; other facts raised during the process; judicial decisions made during the course of the case; and the

classification and the risk of loss of legal actions.

Contingent liabilities, individually measured, considered as possible losses are not recognized in the financial

statements, they are disclosed in notes, while those classified as remote do not require provisioning or disclosure.

Legal obligations (fiscal and social security) are derived from tax obligations provided in the legislation, regardless of

the probability of success of lawsuits in progress, and have their amounts recognized in full in the financial

statements.

p) Debt Instrument Issue Expense

Expenses related to transactions involving the issue of debt instruments are capitalized and presented as a reduction

of the corresponding liability. The expenses are recognized in the income statement over the term of the transaction.

q) Other Assets and Liabilities

Other assets are stated at their realizable amounts, including, when applicable, related income and monetary and

exchange variations on a pro rata die basis, and allowance for losses, when deemed appropriate. Other liabilities are

stated at their known and measurable amounts, plus, when applicable, related charges and monetary and exchange

variations on a pro rata die basis.

r) Earnings per share

Earnings per share is disclosed in accordance with CPC 41 – Earnings per Share, approved by Resolution

CVM 636/2010. The Bank's basic and diluted earnings per share were calculated by dividing the net profit attributable

to shareholders by the weighted average number of total common shares, excluding treasury shares (Note 24.f). The

Bank has no outstanding options, bonus of subscription nor its equivalents which provide their holders the right to

acquire shares. Thus, the basic and diluted earnings per share are equal.


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5- INFORMATION BY SEGMENT

The information by segment was compiled based on the reports used by Management in the appraisal of the

segment's performance, decision making regarding the allocation of funds for investment and other purposes, the

regulatory environment and the similarities between goods and services.

The operations of Banco do Brasil are basically divided into five segments: banking, investments, fund management,

insurance (insurance, pension and capitalization) and payment methods. In addition, the Bank participates in other

business activities, such as consortium and operational support, that were aggregated in "Other Segments".

Intersegment transactions are conducted under terms and rates consistent with those applied with third parties, when

applicable. These transactions do not involve payment risks.

a) Banking Segment

Responsible for the most significant portion of Banco do Brasil results, predominantly from operations in Brazil, this

segment involves a large diversity of products and services, such as deposits, loans and services that are made

available to customers by means of a wide variety of distribution channels, located in the country and abroad.

The operations of the banking segment include business with the retail, wholesale and government markets, carried

out through the branch network and customer service teams, and business with micro-entrepreneurs and the with the

low income population, undertaken through banking correspondents.

b) Investments Segment

Responsible for operations in the domestic capital markets, being active in the intermediation and distribution of

debts in the primary and secondary markets, as well as being responsible for equity investments and the rendering of

some financial services.

The income from financial intermediation of this segment is a result of the revenues accrued on investments in

securities less the interest expenses on funding from third parties. The principal equity investments are those in the

associates and subsidiary companies. Financial service fee income is derived from economic/financial advisory

services and the underwriting of fixed and variable income.

c) Fund Management Segment

Responsible for operations inherent to the purchase, sale and custody of securities, portfolio management, and

management of investment funds and clubs. Revenues mainly derived from commissions and management fees

charged to investors for services rendered.

d) Insurance, Pension, and Capitalization Segment

In this segment, the products and services offered are related to life, property and automobile insurance,

complementary private pension plans and capitalization plans.

Income is derived mainly from revenues from insurance premiums issued, contributions for private pension plans,

capitalization bonds and investments in securities, net of commercialization expenses, technical provisions and

expenses related to benefits and redemptions.

e) Payment Methods Segment

This segment is responsible for the funding, transmission, processing and settlement of operations via electronic

means.

Revenues are derived mainly from commissions and management fees charged to commercial and banking

establishments for the services rendered, as well as income from rent, installation and maintenance of electronic

terminals.


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f) Other segments

Other segments comprise the operational support and consortium segments, which have been aggregated as they

are not individually significant.

Their revenues are originated mainly from rendering services not covered in previous segments, such as: credit

recovery; consortium administration; development, manufacture, commercialization, rent and integration of digital

electronic systems and equipment, peripherals, programs, inputs and computing supplies; and intermediation of air

tickets, lodging and organization of events.

Breakdown by Segment

3rd quarter/2015

Banking Investments Fund

Menagement

Insurance, pension and capitalization

Payment methods

Other Segments

Intersegment transactions

Total

Income 72,268,125 244,030 427,840 2,877,810 1,661,943 584,507 (741,005) 77,323,250

Income from loans and leases 35,723,842 -- -- -- -- -- (36,789) 35,687,053

Income from operations with securities and derivative financial instruments

22,311,585 3,096 24,765 18,283 91,428 7,281 (123,920) 22,332,518

Income from exchange operations and Compulsory deposits

3,940,119 -- -- -- -- 113 (113) 3,940,119

Financial results from insurance, pension and capitalization operations

-- -- -- 1,025,911 -- -- 23,444 1,049,355

Income from service fees 2,743,275 132,077 288,243 515,919 1,284,257 360,255 (365,229) 4,958,797

Income from fees, rates and commissions 1,829,840 9,612 108,580 -- -- -- -- 1,948,032

Equity in the earnings/(loss) of subsidiaries and associates 2,981,470 (71) -- 228 76,939 439 -- 3,059,005

Results from insurance, pension plan and capitalization operations

-- -- -- 1,230,443 -- -- 54,468 1,284,911

Other Income 2,737,994 99,316 6,252 87,026 209,319 216,419 (292,866) 3,063,460

Expenses (78,457,402) (258,499) (76,391) (1,300,583) (1,026,305) (398,102) 741,005 (80,776,277)

Expenses of market funding (28,993,431) (88,592) -- -- -- (18,710) 188,624 (28,912,109)

Loans, assignments, onlending and leases (24,482,258) -- -- -- -- (2) 14,759 (24,467,501)

Allowance/Reversal for loan losses (8,916,749) (2,459) 29 -- (177) 165 -- (8,919,191)

Interest and inflation adjustment of technical reserves -- -- -- (657,621) -- -- -- (657,621)

Personnel expenses (5,658,882) (16,978) (19,886) (130,174) (79,075) (84,134) 2,191 (5,986,938)

Other administrative expenses (3,057,194) (18,205) (12,727) (182,577) (170,036) (72,878) 368,762 (3,144,855)

Depreciation (282,009) (800) -- (4,659) (7,671) (2,305) -- (297,444)

Amortization of deferred (2,486) -- -- (11,782) (1,280) (471) -- (16,019)

Amortization of Intangible (779,104) (311) -- -- (15,718) (162) -- (795,295)

Amortization of goodwill on investments (24,466) (23,464) -- (8,828) (14,520) -- -- (71,278)

Operations of sale and transfer of financial assets (12,188) -- -- -- -- -- -- (12,188)

Revenues/(Expenses) from impairment (142) -- -- -- (4,386) -- -- (4,528)

Other expenses (6,248,493) (107,690) (43,807) (304,942) (733,442) (219,605) 166,669 (7,491,310)

Profit before tax and profit sharing (6,189,277) (14,469) 351,449 1,577,227 635,638 186,405 -- (3,453,027)

Income tax and social contribution 8,294,998 (2,451) (143,011) (516,700) (186,969) (63,153) -- 7,382,714

Profit sharing (405,228) -- (461) (12,360) (888) (523) -- (419,460)

Non-controlling Interests (100,806) -- -- (347,278) -- (2) -- (448,086)

Net Income 1,599,687 (16,920) 207,977 700,889 447,781 122,727 -- 3,062,141

Balance Sheets

Assets 1,434,489,750 6,603,265 1,111,138 137,379,858 16,643,796 4,813,256 (26,080,197) 1,574,960,866

Investment in subsidiaries and associates 13,908,059 3,184,998 -- 352,684 499,916 -- (16,257,530) 1,688,127

Liabilities 1,352,778,341 3,497,353 771,519 130,334,235 10,227,568 2,796,065 (9,258,663) 1,491,146,418


3rd

quarter 2015


27

3rd quarter/2014


Menagement


Payment methods

Other Segments


Total

Income 47,058,972 315,407 412,716 2,401,467 937,296 534,738 (561,686) 51,098,910

Income from loans and leases 25,166,102 -- -- -- -- 16,440 (8,504) 25,174,038


12,982,278 54,312 16,576 2,115 -- (2,470) (81,929) 12,970,882


1,470,746 -- -- -- -- 8 (8) 1,470,746


-- -- -- 729,650 -- -- 27,624 757,274

Income from service fees 2,941,789 143,852 288,774 488,745 726,361 314,791 (259,288) 4,645,024


Equity in the earnings/(loss) of subsidiaries and associates 677,564 (191) -- -- -- -- -- 677,373


-- -- -- 1,086,242 -- -- (1,526) 1,084,716

Other Income 2,196,814 108,821 21,426 94,715 210,935 205,969 (238,055) 2,600,625

Expenses (45,500,134) (226,050) (58,768) (1,097,718) (509,278) (341,876) 561,686 (47,172,138)


Loans, assignments, onlending and leases (7,117,094) -- -- -- -- -- -- (7,117,094)

Allowance/Reversal for loan losses (4,725,407) (34,150) 1,699 -- 4 29,606 -- (4,728,248)

Interest and inflation adjustment of technical reserves -- -- -- (509,676) -- -- -- (509,676)



Depreciation (263,759) (711) -- (4,935) (5,145) (1,708) -- (276,258)

Amortization of deferred (3,437) -- -- (10,285) (1,093) (369) -- (15,184)

Amortization of Intangible (702,897) (169) -- -- (6,125) (93) -- (709,284)


Operations of sale and transfer of financial assets (22,607) -- -- -- -- -- 16,316 (6,291)

Revenues/(Expenses) from impairment (5,469) -- -- -- 270 -- -- (5,199)

Other expenses (3,438,469) (71,598) (38,419) (266,652) (347,036) (241,994) 114,569 (4,289,599)

Profit before tax and profit sharing 1,558,838 89,357 353,948 1,303,749 428,018 192,862 -- 3,926,772

Income tax and social contribution 454,886 (21,323) (139,461) (456,627) (142,165) (72,186) -- (376,876)

Profit sharing (379,214) -- (425) (9,895) (764) (1,361) -- (391,659)

Non-controlling Interests (100,961) -- -- (276,877) -- (3) -- (377,841)

Net Income 1,533,549 68,034 214,062 560,350 285,089 119,312 -- 2,780,396

Balance Sheets

Assets 1,326,048,357 5,764,787 909,470 107,566,481 6,324,097 3,676,772 (18,660,859) 1,431,629,105


Liabilities 1,246,459,406 2,656,205 565,122 101,516,414 4,491,205 1,648,449 (6,953,755) 1,350,383,046


3rd

quarter 2015


28

Jan 1 to Sep 30, 2015


Menagement


Payment methods

Other Segments


Total

Income 174,114,555 898,476 1,194,005 9,192,143 10,225,106 1,716,850 (2,024,436) 195,316,699

Income from loans and leases 89,260,792 -- -- -- -- -- (66,936) 89,193,856


52,316,203 90,027 61,003 23,792 198,596 58,033 (290,646) 52,457,008


7,113,127 -- -- -- -- 495 (394) 7,113,228


-- -- -- 3,496,222 -- -- 65,928 3,562,150

Income from service fees 8,000,175 477,451 828,741 1,511,138 3,512,536 1,044,896 (1,093,949) 14,280,988


Equity in the earnings/(loss) of subsidiaries and associates 4,448,192 (1,726) -- 979 83,526 7,536 -- 4,538,507


-- -- -- 3,886,916 -- -- 197,730 4,084,646

Other Income (1)

7,903,634 304,086 11,267 273,096 6,430,448 605,890 (836,169) 14,692,252

Expenses (178,221,730) (674,311) (213,476) (4,122,999) (3,321,417) (1,109,018) 2,024,436 (185,638,515)


Loans, assignments, onlending and leases (39,008,218) -- -- -- -- (2) 31,629 (38,976,591)

Allowance/Reversal for loan losses (20,472,801) (10,107) 5 -- (463) 1,558 -- (20,481,808)

Interest and inflation adjustment of technical reserves -- -- -- (2,267,962) -- -- -- (2,267,962)


Other administrative expenses (8,899,974) (54,141) (38,511) (548,780) (447,850) (198,492) 1,087,824 (9,099,924)

Depreciation (826,774) (2,284) -- (14,803) (21,240) (6,461) -- (871,562)

Amortization of deferred (9,004) -- -- (34,003) (3,448) (1,522) -- (47,977)

Amortization of Intangible (2,251,398) (979) -- -- (34,807) (454) -- (2,287,638)


Operations of sale and transfer of financial assets (42,560) -- -- -- -- -- -- (42,560)

(Revenues) / Expenses from impairment (2,359) -- -- -- (1,216) -- -- (3,575)

Other expenses (1)

(13,427,915) (254,423) (115,063) (839,746) (2,551,678) (616,194) 419,055 (17,385,964)

Profit before tax and profit sharing (4,107,175) 224,165 980,529 5,069,144 6,903,689 607,832 -- 9,678,184

Income tax and social contribution 9,911,175 (73,631) (393,667) (1,782,159) (2,309,431) (198,647) -- 5,153,640

Profit sharing (1,568,449) -- (1,488) (37,855) (2,523) (2,642) -- (1,612,957)

Non-controlling Interests (253,290) -- -- (1,077,519) -- (9) -- (1,330,818)

Net Income 3,982,261 150,534 585,374 2,171,611 4,591,735 406,534 -- 11,888,049

Balance Sheets

Assets 1,434,489,750 6,603,265 1,111,138 137,379,858 16,643,796 4,813,256 (26,080,197) 1,574,960,866


Liabilities 1,352,778,341 3,497,353 771,519 130,334,235 10,227,568 2,796,065 (9,258,663) 1,491,146,418

(1) Includes, in the period from Jan 01 to Set 30, 2015, the gain derived from the strategic partnership between BB Elo with Cielo in the electronic means of payment business of R$ 5,787,797 thousand (Note 2.c).


3rd

quarter 2015


29

Jan 1 to Sep 30, 2014


Menagement


Payment methods

Other Segments


Total

Income 125,757,940 807,333 1,101,348 7,203,620 2,675,887 1,407,694 (1,568,278) 137,385,544

Income from loans and leases 67,497,696 -- -- -- -- 16,440 (192,208) 67,321,928


30,919,407 95,456 40,072 2,115 64 80,755 (226,095) 30,911,774


5,221,028 -- -- -- -- (59) (577) 5,220,392


-- -- -- 2,409,865 -- -- 77,508 2,487,373

Income from service fees 8,551,729 407,182 799,251 1,392,457 2,102,903 858,720 (725,279) 13,386,963


Equity in the earnings/(loss) of subsidiaries and associates (28,380) (488) -- -- -- -- -- (28,868)


-- -- -- 3,161,195 -- -- 26,767 3,187,962

Other Income 8,961,155 280,955 35,821 237,988 572,920 451,838 (528,394) 10,012,283

Expenses (118,679,808) (591,052) (165,722) (3,439,825) (1,432,682) (1,056,459) 1,530,809 (123,834,739)


Loans, assignments, onlending and leases (9,642,254) -- -- -- -- -- -- (9,642,254)

(Allowance)/Reversal for loan losses (13,882,796) (34,117) 1,700 -- 237 20,087 -- (13,894,889)

Interest and inflation adjustment of technical reserves -- -- -- (1,678,767) -- -- -- (1,678,767)



Depreciation (750,110) (1,999) -- (14,940) (14,949) (5,152) -- (787,150)

Amortization of deferred (11,104) -- -- (28,425) (2,827) (1,077) -- (43,433)

Amortization of intangible (2,548,994) (509) -- -- (18,452) (289) -- (2,568,244)


Operations of sale and transfer of financial assets (28,574) -- -- -- -- -- 16,316 (12,258)

(Revenues) / Expenses from impairment (3,442) -- -- -- 1,063 -- -- (2,379)

Other expenses (10,577,372) (210,684) (102,905) (774,123) (989,708) (703,900) 271,071 (13,087,621)

Profit before tax and profit sharing (1)

7,078,132 216,281 935,626 3,763,795 1,243,205 351,235 (37,469) 13,550,805

Income tax and social contribution (2)

(781,447) (59,798) (368,576) (1,344,106) (414,446) (99,010) 16,033 (3,051,350)

Profit sharing (1,152,459) (6) (1,417) (27,860) (2,528) (2,828) -- (1,187,098)

Non-controlling Interests (241,811) -- -- (783,966) -- (10) -- (1,025,787)

Net Income (3)

4,902,415 156,477 565,633 1,607,863 826,231 249,387 (21,436) 8,286,570

Balance Sheets

Assets 1,326,048,357 5,764,787 909,470 107,566,481 6,324,097 3,676,772 (18,660,859) 1,431,629,105


Liabilities 1,246,459,406 2,656,205 565,122 101,516,414 4,491,205 1,648,449 (6,953,755) 1,350,383,046

(1) In intersegment transactions, the amount of R$ 37,469 thousand refers to the elimination of unrealized results arising from the assignment of credits to Ativos S.A.

(2) The amount of R$ 16,033 (highlighted in intersegment transactions) relating to the incident tax credit on the unrealized result was activated.

(3) In intersegment transactions, the amount of R$ 21,436 thousand refers to the elimination of unrealized income, net of tax effects, obtained on operations of assigned credits of Banco do Brasil to Ativos S.A.

6 - CASH AND CASH EQUIVALENTS

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Cash and Cash Equivalents 19,772,738 13,786,585 13,961,149

Local currency 9,600,858 10,144,869 11,633,682

Foreign currency 10,164,341 3,621,616 2,309,000

Investments in gold 7,539 20,100 18,467

Interbank Investments (1)

85,924,938 51,541,987 43,281,163

Open market investments - sales pending settlement - held position 35,782,687 15,534,017 10,023,543


Foreign currency 213,105 222,708 158,488

Total 105,697,676 65,328,572 57,242,312

(1) Investments whose original maturity is less than or equal to 90 days and with insignificant risk of change in fair value.


3rd

quarter 2015


30

7 - SHORT-TERM INTERBANK INVESTMENTS

a) Breakdown

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Open Market Investments 295,869,550 264,489,673 281,230,807

Reverse repos - Own Resources 36,296,397 15,538,967 9,357,563

Treasury Financial Bills 439,464 -- 180,145

National Treasury Bills 34,800,045 15,452,873 8,743,899

National Treasury Notes 595,041 698 383,694

Other securities 461,847 85,396 49,825

Reverse repos - Financed Position 258,989,877 248,941,840 271,859,655

Treasury Financial Bills 27,669,456 33,002,160 25,780,585


National Treasury Notes 103,469,419 87,520,298 153,678,911


Reverse repos - Short Position 583,276 8,866 13,589

Federal Government bonds - National Treasury 583,195 -- 12,772

Other 81 8,866 817

Interbank Deposits 53,326,093 39,746,931 36,589,634

Total 349,195,643 304,236,604 317,820,441

Current assets 347,927,192 301,620,235 315,549,244

Non-current assets 1,268,451 2,616,369 2,271,197

b) Income from Short-term Interbank Investments

3rd quarter/2015 3rd quarter/2014 Jan 1 to Sep 30, 2015 Jan 1 to Sep 30, 2014

Income from Open Market Investment 10,910,359 7,488,562 29,553,174 20,181,801

Own resources 1,092,328 593,262 2,606,198 1,791,941

Financed position 9,814,334 6,892,201 26,932,167 18,376,168

Short position 3,697 3,099 14,809 13,692

Income from Investments in Interbank Deposits 124,856 122,135 304,523 352,998

Total 11,035,215 7,610,697 29,857,697 20,534,799


3rd

quarter 2015


31

8- SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS

a) Securities

a.1) Breakdown of the consolidated portfolio by category, type of bonds and maturity

Maturity in Days

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Market Value Total Total Total

Without maturity

0 to 30 31 to 180 181 to 360 More than

360 Cost value Market value

Mark to Market

Cost value Market value Mark to Market


1 - Trading securities 3,066,727 18,749,683 11,265,482 12,595,939 72,461,289 120,242,695 118,139,120 (2,103,575) 103,037,462 101,938,979 (1,098,483) 94,679,712 93,817,459 (862,253)

Federal Government Bonds 89,271 17,676,532 7,133,632 8,383,328 63,191,688 98,251,784 96,474,451 (1,777,333) 77,261,412 76,325,816 (935,596) 72,343,023 71,626,798 (716,225)

Treasury Financial Bills -- -- -- 719,957 35,419,638 36,136,659 36,139,595 2,936 7,074,241 7,094,808 20,567 4,879,607 4,883,802 4,195

National Treasury Bills -- 4,486,357 5,401,066 5,103,399 15,156,737 31,355,753 30,147,559 (1,208,194) 55,914,411 55,128,657 (785,754) 30,663,738 30,032,869 (630,869)

National Treasury Notes -- 12,179,755 -- 1,401,714 11,486,201 26,012,988 25,067,670 (945,318) 10,709,043 10,499,113 (209,930) 33,223,953 33,075,521 (148,432)

Agricultural debt securities -- 248 1,464 912 3,705 6,329 6,329 -- 9,224 9,224 -- 110,486 110,486 --

Brazilian foreign debt securities -- -- -- -- 88,474 97,724 88,474 (9,250) 84,480 81,401 (3,079) 78,657 77,047 (1,610)

Foreign Government bonds 89,040 658,996 1,717,430 1,157,346 983,757 4,214,690 4,606,569 391,879 2,234,141 2,280,893 46,752 728,361 857,035 128,674

Other 231 351,176 13,672 -- 53,176 427,641 418,255 (9,386) 1,235,872 1,231,720 (4,152) 2,658,221 2,590,038 (68,183)

Corporate Bonds 2,977,456 1,073,151 4,131,850 4,212,611 9,269,601 21,990,911 21,664,669 (326,242) 25,776,050 25,613,163 (162,887) 22,336,689 22,190,661 (146,028)

Debentures 150 19,963 227,134 325,617 3,853,543 4,519,235 4,426,407 (92,828) 7,452,173 7,339,677 (112,496) 5,553,440 5,503,789 (49,651)

Promissory notes -- -- 161,899 -- -- 161,899 161,899 -- 160,090 160,091 1 180,853 180,853 --

Shares in investment funds 1,901,407 503,533 -- -- 86,907 2,574,713 2,491,847 (82,866) 1,642,874 1,585,514 (57,360) 2,448,260 2,325,635 (122,625)

Shares 1,023,161 -- -- -- -- 1,138,992 1,023,161 (115,831) 1,337,614 1,352,134 14,520 1,369,053 1,363,244 (5,809)

Rural Product Bills - Commodities -- -- -- -- -- -- -- -- -- -- -- 1,623 1,562 (61)

Certificate of deposit -- 16,230 134,740 106,820 15,364 272,794 273,154 360 1,287,971 1,288,454 483 1,346,953 1,376,352 29,399

Eurobonds -- -- 52,517 15,163 55,782 171,960 123,462 (48,498) 245,938 233,737 (12,201) 241,528 238,648 (2,880)

Financial bills -- 531,168 3,553,999 3,726,076 5,162,163 12,950,787 12,973,406 22,619 12,407,532 12,410,444 2,912 10,954,880 10,958,025 3,145

Other 52,738 2,257 1,561 38,935 95,842 200,531 191,333 (9,198) 1,241,858 1,243,112 1,254 240,099 242,553 2,454


3rd

quarter 2015


32

Maturity in Days

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Without maturity

0 to 30 31 to 180 181 to 360 More than


Mark to Market



2 - Available for sale securities 1,529,327 1,065,154 3,975,134 11,596,880 90,688,305 112,655,868 108,854,800 (3,801,068) 105,818,164 104,367,329 (1,450,835) 101,678,240 100,355,774 (1,322,466)

Federal Government Bonds 80,809 354,121 1,339,826 6,863,066 51,110,696 61,072,582 59,748,518 (1,324,064) 52,645,692 52,165,277 (480,415) 48,712,992 48,197,921 (515,071)

Treasury Financial Bills -- -- -- 419 34,786,886 34,787,760 34,787,305 (455) 27,609,922 27,677,606 67,684 22,210,484 22,205,002 (5,482)

National Treasury Bills -- 321,276 900,547 1,567,525 5,111,247 8,220,306 7,900,595 (319,711) 8,580,765 8,429,144 (151,621) 9,609,828 9,413,716 (196,112)

National Treasury Notes -- -- -- 1,304,268 5,316,260 7,365,426 6,620,528 (744,898) 5,508,297 5,076,564 (431,733) 5,019,457 4,616,683 (402,774)

Agricultural debt securities -- 1,906 15,927 12,968 40,912 72,235 71,713 (522) 114,606 113,822 (784) 15,776 15,546 (230)

Brazilian foreign debt securities -- -- -- -- 3,241,662 3,497,947 3,241,662 (256,285) 3,552,696 3,582,472 29,776 3,863,606 3,910,979 47,373

Foreign Government bonds -- 23,741 423,352 3,975,344 2,310,234 6,731,886 6,732,671 785 6,586,352 6,597,690 11,338 7,364,063 7,357,918 (6,145)

Other 80,809 7,198 -- 2,542 303,495 397,022 394,044 (2,978) 693,054 687,979 (5,075) 629,778 678,077 48,299

Corporate Bonds 1,448,518 711,033 2,635,308 4,733,814 39,577,609 51,583,286 49,106,282 (2,477,004) 53,172,472 52,202,052 (970,420) 52,965,248 52,157,853 (807,395)

Debentures -- 176,655 1,089,447 2,974,664 32,326,294 37,037,135 36,567,060 (470,075) 38,376,718 38,096,084 (280,634) 39,271,046 39,107,997 (163,049)

Promissory notes -- 77,248 689,939 499,796 -- 1,287,817 1,266,983 (20,834) 1,468,386 1,467,392 (994) 1,376,108 1,372,749 (3,359)

Credit Notes -- -- -- -- 48,793 51,510 48,793 (2,717) 53,169 47,558 (5,611) 53,608 48,190 (5,418)

Shares in investment funds 981,357 298,388 103,745 253,966 3,022,299 5,512,080 4,659,755 (852,325) 4,681,476 4,211,179 (470,297) 3,883,799 3,331,813 (551,986)

Shares 466,702 -- -- -- -- 458,493 466,702 8,209 606,448 560,396 (46,052) 604,960 571,978 (32,982)

Rural Product Bills - Commodities -- 143,232 547,366 374,629 52,753 1,131,654 1,117,980 (13,674) 1,564,540 1,550,675 (13,865) 1,919,464 1,907,554 (11,910)

Certificate of deposit -- -- 567 24,756 14,126 39,440 39,449 9 562,700 562,768 68 139,498 139,653 155

Eurobonds -- -- 6,929 19,851 275,234 310,572 302,014 (8,558) 264,263 240,205 (24,058) 301,628 294,539 (7,089)

Certificates of Agribusiness Credit Rights

-- -- -- -- -- -- -- -- 14,414 14,620 206 18,008 18,316 308

Financial bills -- 10,813 54,913 27,230 210,676 311,765 303,632 (8,133) 1,925,850 1,918,186 (7,664) 1,788,774 1,772,293 (16,481)

Real Estate Receivables Certificates

-- -- -- -- 490,024 497,058 490,024 (7,034) 495,439 486,491 (8,948) 591,595 583,818 (7,777)

Other 459 4,697 142,402 558,922 3,137,410 4,945,762 3,843,890 (1,101,872) 3,159,069 3,046,498 (112,571) 3,016,760 3,008,953 (7,807)


3rd

quarter 2015


33

Maturity in Days

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Without maturity

0 to 30 31 to 180 181 to 360 More than


Mark to Market



3 - Held to maturity securities 4,689 36,124 1,369,962 3,064,570 12,913,521 17,231,337 17,388,866 157,529 14,135,683 17,847,167 3,711,484 14,539,457 15,734,672 1,195,215

Federal Government Bonds -- -- 1,368,224 3,024,830 10,148,133 14,184,650 14,541,187 356,537 13,543,540 17,426,155 3,882,615 13,938,828 15,291,994 1,353,166

National Treasury Bills -- -- 1,368,224 1,951,668 293,008 3,651,499 3,612,900 (38,599) 5,533,872 5,520,252 (13,620) 4,163,773 4,158,663 (5,110)

National Treasury Notes -- -- -- 1,073,162 9,855,125 10,533,151 10,928,287 395,136 8,009,668 11,905,903 3,896,235 9,775,055 11,133,331 1,358,276

Corporate Bonds 4,689 36,124 1,738 39,740 2,765,388 3,046,687 2,847,679 (199,008) 592,143 421,012 (171,131) 600,629 442,678 (157,951)

Debentures -- -- -- 16,364 2,413,963 2,430,530 2,430,327 (203) 20,232 19,494 (738) 18,788 18,276 (512)

Shares in investment funds 4,689 -- -- -- 5,428 10,117 10,117 -- -- -- -- -- -- --

Certificate of deposit -- 36,124 307 18,866 158,381 213,678 213,678 -- 160,446 160,446 -- 250,344 250,344 --

Eurobonds -- -- -- 4,510 2,132 6,642 6,642 -- 6,603 6,603 -- 6,753 6,753 --


-- -- -- -- 141,183 339,988 141,183 (198,805) 399,167 228,774 (170,393) 317,782 160,343 (157,439)

Other -- -- 1,431 -- 44,301 45,732 45,732 -- 5,695 5,695 -- 6,962 6,962 --

Total 4,600,743 19,850,961 16,610,578 27,257,389 176,063,115 250,129,900 244,382,786 (5,747,114) 222,991,309 224,153,475 1,162,166 210,897,409 209,907,905 (989,504)

a.2) Breakdown of the consolidated portfolio by financial statement classification and maturity date

Maturity in Days

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Without maturity

0 to 30 31 to 180 181 to 360 More than

360 Cost value

Market value

Mark to Market

Cost value Market value

Mark to Market


Mark to Market

Total by portfolio 4,600,743 19,850,961 16,610,578 27,257,389 176,063,115 250,129,900 244,382,786 (5,747,114) 222,991,309 224,153,475 1,162,166 210,897,409 209,907,905 (989,504)

Own portfolio 4,600,743 19,552,989 16,074,684 24,695,505 147,021,047 216,024,400 211,944,968 (4,079,432) 188,688,724 189,288,759 600,035 190,958,930 189,998,425 (960,505)

Subject to repurchase agreements -- -- 535,894 2,266,053 23,016,697 27,357,120 25,818,644 (1,538,476) 19,787,244 20,422,487 635,243 13,018,273 13,049,448 31,175

Deposits with Banco Central do Brasil -- -- -- -- -- -- -- -- -- -- -- 29 16 (13)

Pledged in guarantee -- 297,972 -- 301,494 6,076,634 6,748,380 6,676,100 (72,280) 14,515,341 14,482,544 (32,797) 6,920,177 6,897,340 (22,837)

Allowance for securities losses -- -- -- (5,663) (51,263) -- (56,926) (56,926) -- (40,315) (40,315) -- (37,324) (37,324)


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a.3) Breakdown of the consolidated portfolio by category and maturity in years

Maturity in years

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Without maturity

Due in up to one year

Due from 1 to 5 years


Due after 10 years

Cost value Market value Cost value Market value Cost value Market value

Total by category 4,600,743 63,718,928 96,381,789 68,266,502 11,414,824 250,129,900 244,382,786 222,991,309 224,153,475 210,897,409 209,907,905

1 - Trading securities 3,066,727 42,611,104 33,273,604 37,160,459 2,027,226 120,242,695 118,139,120 103,037,462 101,938,979 94,679,712 93,817,459

2 - Available for sale securities 1,529,327 16,637,168 60,723,370 27,511,497 2,453,438 112,655,868 108,854,800 105,818,164 104,367,329 101,678,240 100,355,774

3 - Held to maturity securities 4,689 4,470,656 2,384,815 3,594,546 6,934,160 17,231,337 17,388,866 14,135,683 17,847,167 14,539,457 15,734,672

a.4) Summary of the consolidated portfolio by financial statement classification

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Book value Book value Book value

Current Non-current Total Current Non-current Total Current Non-current Total

Total by portfolio 146,060,861 98,164,396 244,225,257 133,291,269 87,150,722 220,441,991 135,857,908 72,854,782 208,712,690

Own portfolio 140,780,960 67,223,399 208,004,359 126,674,173 58,910,715 185,584,888 120,739,233 68,150,570 188,889,803

Subject to repurchase agreements 3,922,261 24,586,405 28,508,666 4,998,373 15,414,310 20,412,683 9,025,982 3,936,684 12,962,666

Deposits with Banco Central do Brasil -- -- -- -- -- -- 16 -- 16

Pledged in guarantee 1,363,303 6,405,855 7,769,158 1,627,105 12,857,630 14,484,735 6,092,677 804,852 6,897,529

Allowance for securities losses (5,663) (51,263) (56,926) (8,382) (31,933) (40,315) -- (37,324) (37,324)

a.5) Summary of the consolidated portfolio by category

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Total by category

1 - Trading securities 118,139,120 48% 101,938,979 46% 93,817,459 45%

2 - Available for sale securities 108,854,800 45% 104,367,329 47% 100,355,774 48%

3 - Held to maturity securities 17,231,337 7% 14,135,683 7% 14,539,457 7%

Portfolio Book Value 244,225,257 100% 220,441,991 100% 208,712,690 100%

Mark to market - held to maturity 157,529 -- 3,711,484 -- 1,195,215 --

Portfolio Market Value 244,382,786 -- 224,153,475 -- 209,907,905 --


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b) Income from operations with securities


Short-term Interbank Investments (Note 7.b) 11,035,215 7,610,697 29,857,697 20,534,799

Fixed-income securities 4,459,001 3,429,965 11,751,477 8,989,963

Variable-income securities 5,151,515 1,308,704 8,658,215 1,490,301

Total 20,645,731 12,349,366 50,267,389 31,015,063

c) Reclassification of securities

In the period from Jan 1, 2015 to Sep 30, 2015, IRB – Instituto de Resseguros do Brasil reclassified securities of

National Treasury Notes, with market value of R$ 68,686 thousand and Fixed income securities abroad, with market

value of R$ 313 thousand, from the category “Held to maturity securities” to the category “Trading securities”, as a

result of the review of Management’s intention on securities. The reclassification of these securities had a negative

impact of R$ 3 thousand in the income and shareholder’s equity of the company.

On December 31, 2014, Banco Votorantim reclassified securities of National Treasury Bills, with market value of

R$ 915,960 thousand from the category “Available for sale securities” to the category “Held to maturity securities”, as

a result of the review of Management’s intention on securities. The reclassification did not impact income nor

shareholder’s equity on the respective base date.

d) Derivative financial instruments

The Bank uses derivative financial instruments to manage, at the consolidated level, its positions and to meet clients'

needs, classifying its own positions as hedge (market risk and cash flow risk) and trading, both within limits approved

by committees of the Bank. The hedge strategy of the equity positions is in line with macroeconomic analyses and is

approved by the Executive Board of Directors.

In the options market, active or long positions have the Bank as holder, while passive or short positions have the

Bank as writer.

The models used to manage risks with derivatives are reviewed periodically and the decisions made follow the best

risk/return relationship, estimating possible losses based on the analysis of macroeconomic scenarios.

The Bank uses tools and systems to manage the derivatives. Trading in new derivatives, standardized or not, is

subject to a prior risk analysis.

Risk analysis of the subsidiaries is undertaken on an individual basis and its risk management is done on a

consolidated basis.

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.

Risks

The main risks inherent to derivative financial instruments, resulting from the business dealings of the bank and its

subsidiaries are credit, market, liquidity and operational risks.

Credit risk is the exposure to loss in the event of default by a counterparty to a transaction. The credit exposure in

futures contracts is minimized due to daily settlement in cash. The swap contracts, recorded in Cetip are subject to

credit risk if the counterparty is not able or willing to perform its contractual obligations, while the swap contracts

registered in the BM&FBovespa are not subject to the same risk, given that the Bank operations have the stock

exchange as guarantor.

Total credit exposure from swaps is R$ 555,439 thousand on September 30, 2015 (R$ 508,717 thousand on

December 31, 2014 and R$ 447,881 thousand on Sep 30, 2014).


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Market risk is the possibility of losses caused by changes in interest rates, exchange rates, stock prices and

commodity prices.

Market liquidity risk is the possibility of loss resulting from the inability to perform a transaction within a reasonable

time and without significant loss of value due to the size of the transaction compared to the volume usually traded.

Operational risk denotes the probability of financial losses resulting from failures or inadequacy of people, processes

and systems, or factors such as catastrophes or criminal activities.


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d.1) Breakdown of the Portfolio of Derivatives for Trading by Index

By Index

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Notional value

Cost value

Market value

Notional value

Cost value

Market value

Notional value

Cost value

Market value

Future Contracts

Purchase commitments 25,203,333 -- -- 14,885,592 -- -- 16,188,412 -- --

Interbank Deposits 7,830,755 -- -- 4,989,390 -- -- 5,271,750 -- --

Currencies 6,403,402 -- -- 3,470,456 -- -- 4,002,543 -- --

Bovespa Index 365,204 -- -- 145,461 -- -- 124,572 -- --

On-shore USD rates 10,596,824 -- -- 6,274,197 -- -- 6,788,910 -- --

Commodities 7,148 -- -- 6,088 -- -- 637 -- --

Sales commitments 39,113,445 -- -- 35,480,800 -- -- 42,438,081 -- --

Interbank Deposits 14,389,807 -- -- 22,698,805 -- -- 26,483,227 -- --

Currencies 3,172,645 -- -- 1,621,697 -- -- 1,242,427 -- --

T-Note 1,227,619 -- -- 712,179 -- -- 2,139,111 -- --

Bovespa Index 59,133 -- -- -- -- -- 102,959 -- --

On-shore USD rates 20,233,279 -- -- 10,350,422 -- -- 12,315,264 -- --

Libor -- -- -- 53,049 -- -- 98,036 -- --

Commodities 30,962 -- -- 44,648 -- -- 57,057 -- --

Forward operations

Asset position 13,119,558 2,835,771 2,892,146 10,175,507 464,014 596,864 6,415,977 211,061 304,357

Term securities 247,836 247,834 247,834 22,497 22,497 22,497 -- -- --

Term currencies 12,823,672 2,576,735 2,627,121 10,096,696 436,203 557,870 6,364,790 202,058 271,080

Term commodities 48,050 11,202 17,191 56,314 5,314 16,497 51,187 9,003 33,277

Liability position 5,454,372 (1,029,139) (910,159) 5,353,431 (260,209) (154,147) 5,931,389 (304,259) (195,783)

Term securities 247,834 (247,834) (248,089) 22,497 (22,497) (22,497) -- -- --

Term currencies 5,187,407 (774,494) (653,918) 5,312,664 (233,757) (129,528) 5,911,604 (303,869) (193,190)

Term commodities 19,131 (6,811) (8,152) 18,270 (3,955) (2,122) 19,785 (390) (2,593)

Option Market

Purchase Commitments - Long Position

4,744,749 211,233 404,775 2,308,815 88,886 116,342 4,099,723 108,843 170,446

Foreign currency 3,255,135 185,838 313,615 1,382,525 37,934 41,301 3,008,033 55,827 97,986

Flexible Currency Options 1,225,964 18,321 87,825 800,790 48,194 73,425 730,190 44,987 63,419

Shares 263,650 7,074 3,335 56,500 2,357 1,595 181,500 4,188 4,543

Other -- -- -- 69,000 401 21 180,000 3,841 4,498

Sale Commitments - Long Position

5,813,422 123,085 69,260 22,274,647 61,354 15,962 18,356,417 55,846 45,549


Interbank deposit -- -- -- 19,375,800 7,769 -- 15,693,000 6,865 2,498

Flexible Currency Options 14,400 70 -- 904,368 33,126 1,389 879,951 32,369 27,357

Shares 725,350 25,037 46,853 203,000 7,585 10,658 231,150 5,689 9,464

Other 25,000 591 2,419 11,340 163 28 43,180 1,870 1,138

Purchase Commitments - Short Position

7,742,925 (360,712) (1,143,123) 5,320,625 (195,238) (654,765) 6,038,655 (241,122) (435,547)

Foreign currency 5,668,920 (237,832) (855,330) 1,946,705 (52,862) (98,003) 2,958,804 (53,521) (109,708)

Pre-fixed 713,469 (19,098) (236,257) 1,547,218 (92) (362,772) 1,244,841 (48,311) (160,813)

Interbank deposit 31,370 (4,773) (11,114) -- -- -- -- -- --

Flexible Currency Options 837,762 (88,162) (38,164) 1,573,202 (138,540) (193,237) -- -- --

Shares 453,324 (10,480) (2,255) 253,500 (3,744) (753) -- -- --

Commodities -- -- -- -- -- -- 1,459,462 (130,794) (156,307)

Other 38,080 (367) (3) -- -- -- 244,500 (7,698) (7,678)


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38

By Index

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Notional value

Cost value

Market value

Notional value

Cost value

Market value

Notional value

Cost value

Market value

Sale Commitments - Short Position

5,130,850 (516,109) (345,649) 22,805,890 (1,524,902) (1,055,175) 19,576,062 (1,135,696) (1,050,385)


Pre-fixed 713,469 (436,405) (257,576) 1,547,218 (1,492,456) (1,042,289) 1,244,842 (1,098,115) (1,022,753)

Interbank deposit -- -- -- 19,371,250 (5,747) -- 15,691,500 (5,425) (1,703)

Flexible Currency Options 863,672 (19,423) (7,735) 390,612 (8,165) (4,843) 466,384 (7,664) (5,584)

Shares 551,448 (16,735) (38,127) 112,850 (3,314) (4,167) 470,675 (8,553) (13,083)

Commodities 20,278 (203) (18) 246,694 (4,386) (2,165) 67,683 (2,621) (1,411)

Other 67,500 (21,923) (31,975) 12,420 (366) (128) 114,720 (3,375) (2,360)

Swaps Contracts

Asset position 16,425,469 3,004,930 2,693,886 17,515,377 1,206,385 1,322,672 15,222,670 953,188 1,102,104

Interbank Deposits 6,780,091 91,480 193,535 6,812,672 26,554 111,906 3,692,716 239,684 274,419

Foreign currency 8,521,074 2,695,612 2,335,376 7,553,136 935,268 943,065 9,013,342 563,102 610,689

Pre-fixed 125,151 14,118 2,911 736,473 52,704 88,329 1,356,202 68,430 91,845

IPCA 720,698 67,287 36,435 2,072,506 112,153 89,905 830,350 16,961 36,078

IGPM 189,250 39,809 32,943 226,500 39,207 38,866 -- -- --

Libor 77,067 96,623 91,640 91,200 40,354 49,573 43,667 53 108

Commodities -- -- -- -- -- -- 548 35 45

Other 12,138 1 1,046 22,890 145 1,028 285,845 64,923 88,920

Liability position 22,526,740 (4,389,222) (4,028,307) 15,739,272 (1,140,369) (1,315,869) 18,022,678 (935,819) (1,046,240)

Interbank Deposits 1,498,389 (60,307) (130,367) 1,072,754 (13,779) (43,425) 7,167,132 (316,378) (375,173)

Foreign currency 19,999,517 (4,071,315) (3,722,686) 11,899,496 (740,518) (865,010) 9,302,427 (537,466) (565,288)

Pre-fixed 39,113 -- (110) 837,901 (90,886) (106,603) 838,370 (71,800) (77,299)

IGPM 85,000 (34,773) (33,173) 131,000 (39,953) (42,452) 7,500 (93) (14)

IPCA 794,423 (159,426) (83,401) 1,653,368 (242,787) (246,043) 704,743 (9,882) (28,440)

Libor 80,501 (63,376) (58,535) 125,702 (12,277) (11,980) -- -- --

Commodities -- -- -- 5,037 -- (98) -- -- --

Other 29,797 (25) (35) 14,014 (169) (258) 2,506 (200) (26)

Other derivatives (1)

Asset position


Liability position


(1) Related, essentially, to Non Deliverable Forwards (NDF) which are traded in the over-the-counter (OTC) market and have as their object an exchange rate of a specific currency.

d.2) Breakdown of the derivatives portfolio by maturity (notional value)

Maturity in Days 0 to 30 31 to 180 181 to 360 More than 360 Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Futures 11,143,700 24,334,355 7,439,535 21,399,188 64,316,778 50,366,392 58,626,493

Forwards 3,332,230 9,619,632 3,575,920 2,046,148 18,573,930 15,528,938 12,347,366

Options 5,534,150 14,744,788 2,545,389 607,619 23,431,946 52,709,977 48,070,857

Swaps 4,619,921 9,570,883 7,041,260 17,720,145 38,952,209 33,254,649 33,245,348

Credit derivatives 3,311 3,312 3,312 379,413 389,346 332,028 406,461

Other 3,053,221 1,690,924 392,715 381,402 5,518,262 7,637,980 5,613,517

d.3) Breakdown of the derivative portfolio by trading market and counterparty (notional value on September 30, 2015)

Futures Forwards Option market Swaps Credit

derivatives Other

BM&FBovespa 64,316,778 -- 36,371 -- -- --

Over-the-counter

Financial Institutions -- 500,660 22,526,049 26,917,482 -- 3,483,519

Client -- 18,073,270 869,526 12,034,727 -- 2,034,743


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d.4) Breakdown of the credit derivative portfolio (Credit Default Swap – CDS)

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Notional value

Cost value Market value Notional

value Cost value Market value

Notional value


Credit Default Swap - CDS

Asset Position - Received risk 3,311 -- 9 112,891 -- (2,641) 142,978 -- (3,306)

Liability Position - Transferred Risk 386,035 -- (26,692) 219,137 -- 1,992 263,483 -- 890

By Index

Asset Position - Pre-fixed 41,370 298 245 92,970 2,692 2,715 38,811 112 1,937

Liability Position - Pre-fixed 218,734 (2,169) (3,914) 239,058 (2,977) (3,364) 367,650 (2,834) (4,352)

The portfolio of credit derivatives is composed exclusively of purchases and sales carried out by Banco Votorantim.

Currently the portfolio is composed of customers whose risk is rated as investment grade and has as counterparties

the main international market leaders for this product. When protection is sold there are credit limits for both the risk

client and for the counterparty which are approved by the committees and forums of credit. The credit limit risk

allocation is made to the client by the reference value (notional) of derivatives, considering the amounts deposited as

collateral.

When protection is purchased, transactions are performed in the trading portfolio with sovereign risk client, principally

Brazil sovereign risk. In this case, the potential future exposure is considered in order to determine the credit limit for

the counterparty. The portfolio of credit derivatives did not generate impacts in the Risk Weighted Assets, relating to

the exposure credit risk (RWACPAD), for calculating the BIS Ratio as the positions held in Banco Votorantim were not

included in the calculation as deteremined by the Banco Central do Brasil (Note 29.f).

d.5) Breakdown of margin given as guarantee for transactions with derivative financial instruments

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Treasury Financial Bills 652,032 1,612,176 1,495,480

National Treasury Notes 1,000,036 314,794 458,793

National Treasury Bills 1,144,195 818,029 425,351

Other 126,571 196,550 189,739

Total 2,922,834 2,941,549 2,569,363

d.6) Portfolio of derivatives designated as hedge accounting

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Market Risk Hedge

Hedging instruments

Assets 5,166,550 4,305,233 3,892,102

Futures 4,480,136 3,812,821 3,409,185

Swaps 686,414 492,412 482,917

Liabilities 17,793,326 14,984,827 16,196,507

Borrowing - Bonds (Principal) 8,628,533 359,018 331,276

Futures 9,164,793 12,321,527 13,608,606

Swaps -- 2,304,282 2,256,625

Hedged items

Assets 13,764,352 14,649,197 15,244,030

Loan operations 8,556,435 11,901,850 11,855,497

Securities 2,988,376 2,363,815 2,972,857

Leasing transactions -- 145,220 195,778

Foreign Investments 355,964 238,312 219,898

Other assets 1,863,577 -- --

Liabilities 4,780,525 4,191,103 3,887,367

Other liabilities 4,780,525 4,191,103 3,887,367


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In order to hedge against possible fluctuations in the interest and exchange rates on its securities and foreign

investments, the Conglomerate contracted derivative operations to offset the exposure to the market value changes.

The hedges were assessed as effective, in accordance with the Circular No. 3,082/2002 from the Banco Central do

Brasil, which requires evidence of hedge effectiveness between 80% and 125%.

d.7) Income gains and losses with hedging instruments and hedged items

3rd quarter/2015 Jan 1 to Sep 30, 2015 Jan 1 to Sep 30, 2014

Hedged items losses (1,201,868) (2,476,504) (650,743)

Hedging instruments gains 1,202,989 2,485,041 637,334

Net effect 1,121 8,537 (13,409)

Hedge items gains 559,742 1,799,731 1,519,653

Hedging instruments losses (561,696) (1,799,833) (1,505,772)

Net effect (1,954) (102) 13,881

d.8) Derivative financial instruments segregated by current and non-current

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Current Non-current Current Non-current Current Non-current

Assets

Forwards 2,536,169 355,977 534,265 62,599 229,084 75,273

Options 462,122 11,913 61,495 70,809 131,466 84,529

Swaps 631,272 2,017,292 568,597 739,770 534,359 567,745

Credit derivatives 9 -- 141 2,574 51 1,886

Other derivatives 404,567 69,114 138,159 23,057 78,501 19,688

Total 4,034,139 2,454,296 1,302,657 898,809 973,461 749,121

Liabilities

Forwards (847,743) (62,416) (138,943) (15,204) (176,343) (19,440)

Options (1,467,984) (20,786) (1,552,025) (157,915) (1,337,222) (148,710)

Swaps (1,723,517) (2,304,791) (477,313) (840,429) (513,346) (532,894)

Credit derivatives (12) (26,679) (73) (3,291) (4,352) --

Other derivatives (142,442) (32,298) (251,675) (6,291) (181,181) (4,699)

Total (4,181,698) (2,446,970) (2,420,029) (1,023,130) (2,212,444) (705,743)

e) Income from derivative financial instruments


Swaps (722,610) (818,289) 62,512

Forwards 1,599,613 1,934,415 255,733

Options (297,065) (517,644) (170,774)

Futures 874,099 1,350,963 (139,534)

Credit derivatives (10,271) (9,582) (2,831)

Other derivatives 243,021 249,756 (108,395)

Total 1,686,787 2,189,619 (103,289)


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41

9 - INTERBANK ACCOUNTS

a) Payments and receipts pending settlement

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Assets

Rights against other participants of settlement systems (1)

Bank checks and other instruments 2,106,713 10,428 2,491,112

Documents sent by other participants 2,104,845 -- 2,076,709

Total 4,211,558 10,428 4,567,821

Current assets 4,211,558 10,428 4,567,821

Liabilities

Obligations to other participants of settlement systems (1)

Remitted receipts 2,244,227 -- 2,045,411

Bank checks and other instruments 1,057,854 -- 1,161,861

Other receipts 5,348 16 13,198

Total 3,307,429 16 3,220,470

Current liabilities 3,307,429 16 3,220,470

(1) There was no operation of the service of clearing checks and other securities on Dec 31, 2014.

b) Restricted deposits

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Compulsory Deposits with Banco Central do Brasil 60,376,188 63,251,839 78,738,806

Additional reserve requirements on deposits 13,952,704 22,768,271 24,327,310

Savings deposit requirements 23,663,389 20,603,108 27,230,159

Demand deposit requirements 9,593,763 14,113,482 15,401,727

Time deposit requirements 11,295,864 5,761,416 11,764,486

Resources for microfinance 222,633 1,927 2,149

Resources for rural credit (1)

1,643,753 -- --

Other 4,082 3,635 12,975

Housing Finance System 2,453,561 2,303,481 2,256,359

Compensation of wage changes fund 2,618,674 2,489,081 2,442,644

Provision for losses (172,978) (193,120) (193,411)

Other 7,865 7,520 7,126

National Treasury - Rural Credit 82,695 129,510 131,333

Rural credit - Proagro 232,744 260,361 255,811


Total 62,912,444 65,684,830 81,126,498

Current assets 62,910,109 65,634,181 81,097,073

Non-current assets 2,335 50,649 29,425

(1) Refers to funds deposited with the Banco Central do Brasil, because they were not lent on to rural credits, according to Resolution CMN No. 3,745/2009. The special supply funds were provided by Banco Central do Brasil and recorded in borrowings and onlendings (Note 18.b).


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c) Compulsory investments


2015 Jan 1 to Sep 30,

2014

Deposits linked to the Banco Central do Brasil 1,271,013 1,462,362 3,547,352 4,275,020

Additional reserve requirements on deposits 469,651 676,302 1,688,050 1,947,451

Savings deposit requirements 495,812 486,888 1,246,374 1,356,626

Time deposit requirements 305,550 289,974 612,928 931,638

Resources for rural credit -- 9,198 -- 39,305

Income Credit Linked to Real State -- 37,189 80,786 106,599

Income Credit Linked to National Treasury - Rural Credit 10,621 8,286 30,209 22,858

Losses on restricted deposits devaluation (8,469) (4,776) 224 (14,405)

Total 1,273,165 1,503,061 3,658,571 4,390,072


3rd

quarter 2015


43

10 - LOAN OPERATIONS

a) Portfolio by modality

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Loan Operations 680,564,522 644,603,816 622,695,971

Loans and discounted securities 257,745,777 245,748,854 237,970,936

Financing 198,844,301 189,218,205 184,441,809

Rural and agribusiness financing 176,040,334 170,401,721 164,837,085

Real estate financing 47,532,179 38,913,292 35,109,975

Financing of Infrastructure and development 57,728 493 523

Loan operations sold under assignment (1)

344,203 321,251 335,643

Other receivables with loan characteristics 45,140,586 42,236,643 38,908,001

Credit card operations (2)

19,327,436 20,257,650 17,698,857

Advances on exchange contracts (3)

16,255,163 12,906,242 11,893,177

Other receivables purchase under assignment (4)

8,457,262 8,212,988 8,545,904

Guarantees honored 400,645 539,570 459,958

Other 700,080 320,193 310,105

Leasing transactions 1,154,418 1,070,830 1,066,364

Total Loan Portfolio 726,859,526 687,911,289 662,670,336

(Allowance)/Reversal for Loan Losses (34,025,880) (27,311,720) (25,770,074)

(Allowance for loan losses - loan operations) (32,666,618) (26,104,655) (24,673,526)

(Allowance for other losses - other receivables) (5)

(1,295,301) (1,160,331) (1,047,582)

(Allowance for lease losses - leasing transactions) (63,961) (46,734) (48,966)

Total Loan Portfolio Net of Provisions 692,833,646 660,599,569 636,900,262

(1) Loan operations assigned with retention of the risks and benefits of the financial assets.

(2) On September 30, 2014, credit card bills to receive from clients of Banco Votorantim were reclassified from “Other receivables without

characteristics of credit”, in the amount of R$ 278,636 thousand, to harmonize the accounting practices with Banco do Brasil.

(3) Advances on exchange contracts are classified as a deduction to other liabilities.

(4) Loan operations acquired with retention of the risks and benefits by the assignor of the financial assets.

(5) Includes the amount of R$ 7,627 thousand as of September 30, 2015 (R$5,963 thousand as of December 31, 2014 and R$ 5,522 thousand as of September 30, 2014) related to Allowance for interbank onlendings losses.

b) Loan operations and leasing transactions income


2015 Jan 1 to Sep 30,

2014

Loan operations income 35,374,782 24,676,516 88,205,527 65,798,792

Loans and discounted securities 14,596,405 12,341,514 41,114,756 36,278,237

Financing 12,486,292 6,076,145 24,679,714 12,411,202

Rural and agribusiness financing 3,167,519 2,647,816 8,749,775 7,534,415

Equalization of rates - Agricultural crop- Law 8,427/1992 2,003,661 1,406,115 5,606,072 3,889,365

Real estate financing 1,186,281 784,543 3,102,344 2,019,378

Recovery of loans previously written-off as loss (1)

803,725 902,855 2,713,173 2,698,238

Income from foreign currency financing 664,918 292,370 1,253,111 563,391

Export financing 415,463 213,720 887,000 356,795

Guarantees honored 21,364 2,959 36,431 14,732

Other 29,154 8,479 63,151 33,039

Leasing Transactions Income (Note 10.i) 177,573 363,808 607,271 1,043,501

Total 35,552,355 25,040,324 88,812,798 66,842,293

(1) The amount of R$ 4,575 thousand in the 3rd

quarter/2015 (with impact on the income of R$ 2,399 thousand), R$ 51,456 thousand in the 3

rd quarter/2014 (with impact on the income of R$ 29,438 thousand), R$ 60,533 thousand in the period from Jan 01,2015 to Sep 30,2015 (with

impact on the income of R$ 32,016 thousand) and R$ 78,937 thousand in the period from Jan 01,2014 to Sep 30,2014 (with impact on the income of R$ 45,160 thousand) was received from assignments without recourse of written-off credits to entities outside the financial system, in accordance with CMN Resolution 2,836/2001. The book value of these transactions were R$ 700 thousand, R$ 134,305 thousand, R$ 85,765 thousand and R$ 148,079 thousand, respectively.


3rd

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44

c) Breakdown of the loan portfolio by sector

In these financial statements, we present the loan portfolio by sectors of economic activity in a broadly manner,

according to the main economic activity of the credit borrower, considering the adherence to the economic sector of

the controlling group, when applicable, and in compliance with the best market practices.

Sep 30, 2015 % Dec 31, 2014 % Sep 30, 2014 %

Public sector (1)

77,735,520 10.7 60,275,880 8.8 57,656,435 8.9

Public administration 39,714,480 5.5 29,203,007 4.2 26,866,511 4.1

Oil sector 25,469,510 3.5 19,480,155 2.8 19,602,159 3.0

Electricity 11,233,197 1.5 10,231,265 1.5 9,137,591 1.4

Services 359,004 0.1 416,533 0.1 343,671 0.1

Other activities 959,329 0.1 944,920 0.2 1,706,503 0.3

Private sector (2)

649,124,006 89.3 627,635,409 91.2 605,013,901 91.1

Individuals 318,498,762 43.8 303,959,602 44.2 292,187,883 44.1

Companies 330,625,244 45.5 323,675,807 47.0 312,826,018 47.0

Mining and metallurgy 38,216,923 5.3 36,853,990 5.4 36,887,133 5.6

Agribusiness of plant origin 35,319,857 4.9 34,506,174 5.0 34,504,156 5.2

Automotive sector 25,044,243 3.4 22,529,029 3.3 22,748,408 3.4

Transportation 24,851,722 3.4 20,076,409 2.9 19,291,527 2.9

Services 23,283,796 3.2 23,120,702 3.4 23,815,012 3.6

Fuel 22,062,680 3.0 19,820,970 2.9 19,666,829 3.0

Real estate agents 19,809,254 2.7 18,426,753 2.7 17,391,563 2.6

Retail commerce 18,291,641 2.5 17,115,910 2.5 16,822,170 2.5

Electricity 17,921,793 2.5 15,232,338 2.2 14,694,776 2.1

Agribusiness of animal origin 13,559,341 1.9 14,034,401 2.0 13,380,737 2.0

Specific activities of construction 12,979,322 1.8 12,693,680 1.8 12,330,161 1.9

Textile and clothing 10,647,996 1.5 11,413,662 1.7 11,292,381 1.7

Pulp and paper 9,684,995 1.3 9,568,838 1.4 9,733,155 1.5

Agricultural inputs 9,320,606 1.3 9,697,249 1.4 8,597,753 1.3

Wholesale and various industries 9,189,330 1.3 7,449,699 1.1 10,324,715 1.6

Chemical 8,749,994 1.2 7,986,785 1.2 8,337,058 1.3

Electronics 8,474,575 1.2 10,529,628 1.5 9,730,159 1.4

Heavy construction 6,395,834 0.9 5,947,526 0.8 5,666,224 0.8

Woodworking and furniture market 6,390,931 0.9 6,754,916 1.0 6,590,992 1.0

Telecommunications 4,315,729 0.6 5,574,951 0.8 5,758,816 0.8

Other activities 6,114,682 0.7 14,342,197 2.0 5,262,293 0.8

Total 726,859,526 100.0 687,911,289 100.0 662,670,336 100.0

(1) The amounts of R$ 37,073,115 thousand, presented in the financial statements of September 30, 2014, was related only to transactions with the direct public administration. The values of these financial statements are related to transactions with the direct public administration and agencies of the indirect public administration, and also with the industrial, commercial and service companies and financial institutions that belong to or that are controlled by the Government, as well as their respective associates and subsidiaries.

(2) The amounts disclosed under "Individuals" include loans to the sectors of agribusiness, housing and other sectors of economic activity carried out with individuals. To the highlighted economic sectors, operations are exclusive to companies.


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quarter 2015


45

d) Loan portfolio by risk level and maturity

AA A B C D E F G H Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Current operations

Installments falling due

01 to 30 21,226,458 11,843,733 16,106,039 2,205,686 299,762 282,766 69,464 44,481 559,418 52,637,807 48,189,949 47,059,287

31 to 60 15,966,698 5,565,934 4,998,345 1,150,017 94,320 186,060 39,108 33,678 121,769 28,155,929 30,693,165 28,954,586

61 to 90 17,267,030 5,104,872 4,944,903 1,388,870 107,195 262,233 45,427 30,911 153,701 29,305,142 25,020,397 26,669,021

91 to 180 34,633,536 11,323,839 11,022,807 3,423,284 273,400 516,417 123,405 83,375 595,225 61,995,288 67,928,134 63,129,296

181 to 360 56,298,259 18,118,135 16,580,055 3,830,728 356,157 783,082 184,903 144,169 841,872 97,137,360 104,586,058 104,826,687

More than 360 250,527,938 74,432,256 70,073,517 13,862,539 2,473,482 4,849,758 1,261,498 1,141,323 4,239,691 422,862,002 386,829,922 369,233,755

Installments overdue

Up to 14 days 298,611 506,634 343,915 136,722 33,752 68,139 35,498 19,598 50,898 1,493,767 2,513,738 913,086

Other (1)

370,110 -- -- -- -- -- -- -- -- 370,110 355,522 376,072

Subtotal 396,588,640 126,895,403 124,069,581 25,997,846 3,638,068 6,948,455 1,759,303 1,497,535 6,562,574 693,957,405 666,116,885 641,161,790

Operations past due


01 to 30 -- -- 176,903 227,480 118,820 143,674 84,136 101,718 521,666 1,374,397 1,133,519 1,184,114

31 to 60 -- -- 85,321 113,459 90,504 84,712 43,640 58,226 226,372 702,234 613,972 687,693

61 to 90 -- -- 75,738 112,226 74,730 79,442 47,078 56,228 236,548 681,990 556,232 590,435

91 to 180 -- -- 184,905 279,079 189,746 214,993 128,369 154,080 621,345 1,772,517 1,511,784 1,653,054

181 to 360 -- -- 322,964 441,141 311,181 422,718 220,451 254,436 1,109,824 3,082,715 2,526,542 2,690,866

More than 360 -- -- 883,060 1,066,414 942,668 1,581,352 1,006,675 924,306 3,982,332 10,386,807 7,188,646 6,935,702


01 to 14 -- -- 20,406 65,702 56,666 53,624 23,588 27,527 97,137 344,650 263,231 274,008

15 to 30 -- -- 311,462 218,487 96,934 119,694 65,558 50,453 263,871 1,126,459 1,049,525 812,438

31 to 60 -- -- 78,646 463,408 177,143 266,445 125,468 100,516 362,061 1,573,687 1,020,440 1,107,573

61 to 90 -- -- 7 11,055 332,479 305,108 112,727 125,344 538,946 1,425,666 917,719 975,364

91 to 180 -- -- 9 732,771 12,888 289,490 328,911 422,541 1,396,177 3,182,787 1,455,788 1,538,398

181 to 360 -- -- -- 4,300,092 1 9,674 20,013 17,850 2,578,570 6,926,200 2,179,912 1,895,204

More than 360 -- -- -- -- 2 -- -- -- 322,010 322,012 1,377,094 1,163,697

Subtotal -- -- 2,139,421 8,031,314 2,403,762 3,570,926 2,206,614 2,293,225 12,256,859 32,902,121 21,794,404 21,508,546

Total 396,588,640 126,895,403 126,209,002 34,029,160 6,041,830 10,519,381 3,965,917 3,790,760 18,819,433 726,859,526 687,911,289 662,670,336

(1) Operations with third party risk linked to government funds and programs, primarily Pronaf, Procera, FAT, BNDES and FCO. They include 31,477 thousand of overdue installments, which comply with rules defined in each program for reimbursement by the program managers and, therefore, do not represent a credit risk for the Bank.


3rd

quarter 2015


46

e) Allowance for loan losses by risk level

Level of risk

% Provision

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Value of loans

Minimum required

allowance

Additional allowance

(1)

Existent Allowance

Value of loans

Minimum required

allowance


(1)

Existent Allowance

Value of loans

Minimum required

allowance


(1)

Existent Allowance

AA 0 396,588,640 -- -- -- 395,934,651 -- -- -- 377,219,787 -- -- --

A 0.5 126,895,403 634,477 201,378 835,855 104,322,639 521,613 92,644 614,257 105,008,870 525,044 95,671 620,715

B 1 126,209,002 1,262,090 297,853 1,559,943 125,116,722 1,251,167 22,833 1,274,000 120,179,236 1,201,792 15,980 1,217,772

C 3 34,029,160 1,020,875 506,250 1,527,125 26,148,841 784,465 77,889 862,354 25,856,713 775,701 77,889 853,590

D 10 6,041,830 604,183 192,616 796,799 3,860,416 386,042 60,861 446,903 4,172,114 417,211 66,592 483,803

E 30 10,519,381 3,155,814 1,478,357 4,634,171 9,728,937 2,918,681 689,577 3,608,258 8,950,155 2,685,047 698,482 3,383,529

F 50 3,965,917 1,982,959 629,791 2,612,750 3,715,559 1,857,780 319,311 2,177,091 3,264,540 1,632,270 319,311 1,951,581

G 70 3,790,760 2,653,532 586,272 3,239,804 3,331,788 2,332,252 244,869 2,577,121 3,349,114 2,344,380 244,897 2,589,277

H 100 18,819,433 18,819,433 -- 18,819,433 15,751,736 15,751,736 -- 15,751,736 14,669,807 14,669,807 -- 14,669,807

Total 726,859,526 30,133,363 3,892,517 34,025,880 687,911,289 25,803,736 1,507,984 27,311,720 662,670,336 24,251,252 1,518,822 25,770,074

(1) Refers to the additional provision over and above the minimum required by CMN Resolution 2,682/1999. This provision is established based on the experience of Management, by making projections for the loan portfolio, based on the history of default of operations and in accordance with good banking practice.


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quarter 2015


47

f) Changes in allowance for loan losses

Includes loans, leases and other receivables with characteristics of credit.


Opening balance 29,487,457 24,796,813 27,311,720 23,661,823

Provision/(reversal) 8,777,306 4,570,763 20,306,189 13,650,820

Minimum required allowance 6,408,365 4,666,351 17,921,656 13,598,017

Additional allowance 2,368,941 (95,588) 2,384,533 52,803

Exchange fluctuation - foreign allowances 188,084 34,863 231,906 (56,700)

Write-off (4,426,967) (3,632,365) (13,823,935) (11,485,869)

Closing balance 34,025,880 25,770,074 34,025,880 25,770,074

g) Changes in allowance for other loan losses

Includes provisions for other receivables without characteristics of credit.


Opening balance 1,102,365 946,979 1,143,379 855,361

Provision/(reversal) 141,885 157,485 175,619 244,069

Exchange fluctuation - foreign allowances 7,232 1,030 9,129 (5,480)

Write-off (629) (25,671) (77,274) (14,127)

Closing balance 1,250,853 1,079,823 1,250,853 1,079,823

h) Leasing portfolio by maturity

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Up to 1 year (1)

460,530 507,749 539,658

More than 1 year and up to 5 years 691,458 559,274 524,582

Over 5 years 2,430 3,807 2,124

Total Present Value 1,154,418 1,070,830 1,066,364

(1) Includes amounts related to overdue installments.

i) Income from leasing transactions


Lease revenue 177,573 363,808 607,271 1,043,501

Leasing 177,573 363,808 607,271 1,043,501

Lease expenses (128,183) (329,511) (476,337) (935,552)

Leasing (127,976) (329,406) (475,929) (935,200)

Operating leases -- (10) -- (68)

Loss on disposal of leased assets (207) (95) (408) (284)

Total 49,390 34,297 130,934 107,949

j) Concentration of loans

Sep 30, 2015 % of credit portfolio

Dec 31, 2014 % of credit portfolio


Largest debtor 25,779,758 3.5 20,038,724 2.9 20,756,881 3.1

10 largest debtors 91,762,168 12.6 70,014,552 10.2 68,606,188 10.4

20 largest debtors 121,623,634 16.7 99,797,944 14.5 98,031,721 14.8

50 largest debtors 165,552,694 22.8 139,116,007 20.2 135,351,400 20.4

100 largest debtors 193,446,000 26.6 166,767,185 24.2 160,761,109 24.3


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quarter 2015


48

k) Renegotiated credits


2015 Jan 1 to Sep 30,

2014

Credits renegotiated during the period (1)

11,612,398 9,253,696 35,511,366 30,891,206

Renegotiated when past due (2)

3,921,380 1,080,946 9,557,949 2,972,237

Renovated (3)

7,691,018 8,172,750 25,953,417 27,918,969

Changes on credits renegotiated when past due

Opening balance 13,681,489 8,658,508 10,088,673 8,192,010

Contracts (2)

3,921,380 1,080,946 9,557,949 2,972,237

Interest (received) and appropriated (436,256) (413,629) (1,008,963) (894,522)

Write-off (572,050) (373,794) (2,043,096) (1,317,694)

Closing balance (4)

16,594,563 8,952,031 16,594,563 8,952,031

Allowance for loan losses of the portfolio renegotiated when past due 7,717,996 5,362,091

(%) Allowance for loan losses on the portfolio 46.5% 59.9%

90 days default of the portfolio renegotiated when past due 2,489,824 1,629,377

(%) Portfolio default 15.0% 18.2%

(1) Represents the balance of all installments (past due and future) of loans renegotiated during the period using the internet, automated teller machines (ATM) or branch network.

(2) Renegotiated credit under debt composition as a result of payment delay by the clients.

(3) Renegotiated current credits (i.e. not past due) in the form of the extension or renewal of the credit or the granting of new loans for partial or full settlement of previous contracts or any other type of agreement that changes the maturity or the payment terms, originally agreed.

(4) Includes the amount of R$ 126,865 thousand (R$ 171,952 thousand as of September 30, 2014) related to renegotiated rural credits. The amount of R$ 5,763,797 thousand (R$ 5,256,351 thousand as of September 30, 2014), related to deferred credits from rural portfolio governed by specific legislation, is not included.

l) Supplementary information

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Undrawn credit lines 149,350,192 147,956,001 148,885,475

Guarantees provided (1)

15,724,185 12,981,696 13,161,857

Confirmed export credit 3,579,114 2,449,198 2,381,036

Contracted credit opened for import 1,457,384 874,343 477,644

Linked resources 2,088,992 1,264,972 1,160,701

Guaranteed values for linked deposits 2,061,651 145,084 192,155

(1) For these operations, the Bank maintains an allowance recorded in Other Liabilities - Sundry, (Note 20.e) totaling R$ 524,206 thousand (R$ 193,877 thousand on December 31, 2014 and R$ 188,885 thousand on September 30,2014) calculated in accordance with Resolution CMN 2,682/1999.


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quarter 2015


49

m) Loan Operations by line of credit from Fundo de Amparo ao Trabalhador (Fund for Workers’ Assistance) - FAT

Linhas do FAT TADE(1)

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Loans and Discounted Securities 2,773,734 3,369,930 3,380,254

Proger Urbano Investimento 18/2005 2,773,705 3,369,908 3,380,231

Proger Urbano Capital de Giro 15/2005 7 9 10

Proger Urbano Empreendedor Popular 01/2006 22 13 13

Financing 573,158 690,573 705,092

Proger Exportação 27/2005 25,532 12,052 8,616

FAT Taxista 02/2009 296,014 258,634 245,368

FAT Turismo - Investimento 01/2012 146,468 163,091 144,505

FAT Turismo - Capital de Giro 02/2012 105,144 256,796 306,603

Rural and Agribusiness Financing 159,874 291,653 377,644

Proger Rural Custeio 02/2006 1,130 1,835 1,989

Proger Rural Investimento 13/2005 15,669 23,807 27,844

Pronaf Custeio 04/2005 3,149 3,626 3,888

Pronaf Investimento 05/2005 135,767 254,633 335,075

Giro Rural - Aquisição de Títulos 03/2005 4,159 7,747 8,843

Giro Rural - Fornecedores 14/2006 -- 5 5

Total 3,506,766 4,352,156 4,462,990

(1) TADE - Allocation Term of Special Deposits.


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quarter 2015


50

11 - OTHER RECEIVABLES

a) Specific credits

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Extension of rural credits - National Treasury 1,684,917 1,549,300 1,508,664

Other 713 787 700

Total 1,685,630 1,550,087 1,509,364

b) Sundry

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Deferred tax asset - tax credit (Note 25.e) 45,368,222 29,500,564 29,383,827

Sundry debtors from escrow deposits - contingencies (Note 28.c) 28,321,332 23,256,148 21,540,476

Credit card operations (Note 10.a) (1)

19,327,436 20,257,650 17,698,857

Sundry debtors from escrow deposits - lawsuit (Note 28.d) 16,138,929 15,418,982 15,204,014

Income tax and social contribution to offset 12,710,716 10,435,285 10,832,646

National Treasury - interest rate equalization - agricultural crop –

Law 8,427/1992 11,764,708 10,914,595 9,349,851

Fund of allocation of surplus - Previ (Note 27.f) 8,884,572 8,274,132 8,210,244

Credit linked to acquired operations (Note 10.a) (2)

8,457,262 8,212,988 8,545,904

Receivables - other 4,028,491 2,581,984 2,310,473

Receivables acquisition 3,745,349 3,991,029 3,805,768

Receivables - non-financial companies 3,585,187 3,940,801 3,424,635

Actuarial assets (Note 27.e) 3,321,249 6,233,307 10,173,480

Sundry debtors - domestic (1)

2,741,346 2,054,404 2,151,263

Receivables - National Treasury (3)

1,816,527 2,265,746 1,986,841

Receivables – ECT – Banco Postal (4)

1,450,101 1,985,128 1,931,492

Rights for acquisition of royalties and government credits 1,010,212 1,226,441 606,137

Premiums on credits linked to operations acquired in assignment 985,634 1,143,583 1,263,352

Advances to cards transactions processing’s companies 862,335 1,758,968 2,397,166

Sundry debtors from escrow deposits - other 342,767 178,967 173,752

Sundry debtors - foreign 301,039 245,015 240,405

Salary advances and other advances 233,086 305,609 229,419

Sundry debtors for purchasing assets 41,277 51,896 43,521

Other 684,890 552,356 518,080

Total 176,122,667 154,785,578 152,021,603

Current assets 112,493,630 99,851,614 109,390,750


(1) On September 30, 2014, credit card bills to receive from clients of Banco Votorantim were reclassified from “Sundry debtors – domestic” to “Credit card operations”, in the amount of R$ 278,636 thousand.

(2) Refers to the portfolios of payroll loans and vehicle financing granted to individuals, acquired by the Bank through assignments with full recourse

to the transferor, accounted for in accordance with CMN Resolution 3,533/2008.

(3) It refers mainly to values resulting from operations with MCR 6-2 and MCR 6-4 resources (Rural Credit Manual) and the program of recovery of the “lavoura cacaueira baiana” (CMN Resolution 2,960/2002).

(4) Receivables from the partnership between Banco do Brasil and the Empresa Brasileira de Correios e Telégrafos – ECT, for the use of the Banco Postal network.


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quarter 2015


51

12 - FOREIGN EXCHANGE PORTFOLIO

a) Breakdown

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Other Receivables

Exchange purchases pending settlement 21,909,562 16,424,851 14,539,815

Bills of exchange and time drafts in foreign currency 49,044 32,788 30,254

Receivables from sales of foreign exchange 6,450,682 15,318,188 15,118,818

(Advances received in National/foreign currency) (3,512,399) (13,568,454) (13,461,590)

Foreign currency receivables 3,295 5,655 5,271

Income receivable on advances granted and on financed imports 212,227 154,871 138,961

Total 25,112,411 18,367,899 16,371,529

Current assets 23,941,589 18,362,653 16,366,034

Non-current assets 1,170,822 5,246 5,495

Other Liabilities

Exchange sales pending settlement 9,077,783 19,294,332 17,973,243

(Financed imports) (24,177) (10,177) (10,981)

Exchange purchase liabilities 17,562,186 14,841,470 13,565,891

(Advances on exchange contracts) (15,678,475) (12,481,583) (11,486,233)

Foreign currency payables 76,887 58,891 54,621

Unearned income on advances granted 6,258 3,993 3,139

Total 11,020,462 21,706,926 20,099,680

Current liabilities 10,729,252 17,991,924 16,927,015

Non-current liabilities 291,210 3,715,002 3,172,665

Net Foreign Exchange Portfolio 14,091,949 (3,339,027) (3,728,151)

Memorandum Accounts

Credit opened for imports 1,553,851 1,162,424 659,479


b) Foreign exchange results


Exchange income 7,559,571 3,124,409 17,275,426 8,176,107

Exchange expenses (4,941,156) (3,156,724) (13,869,308) (7,345,787)

Foreign Exchange Result 2,618,415 (32,315) 3,406,118 830,320


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52

13 - OTHER ASSETS

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Assets not for own use 598,333 528,207 592,392

Real estate 204,577 194,825 227,971

Assets in special regime 169,612 152,890 157,829

Vehicles 155,763 146,687 170,629

Residential properties 12,542 7,907 5,012

Machinery and equipment 4,336 4,270 4,701

Other 51,503 21,628 26,250

Materials in stock 100,055 90,066 93,516

Subtotal 698,388 618,273 685,908

(Impairment) (1)

(142,275) (147,365) (146,086)

Prepaid Expenses 3,942,787 3,607,507 3,911,694

Insurance, reinsurance, pension and capitalization deferred expenses (2)

3,442,218 2,983,184 3,240,943

Commissions paid to car dealers - financing of vehicles 212,891 296,602 299,627

Personnel expenses - meal program 110,202 147,658 105,505

Entities abroad 90,888 52,390 52,199

Tax expenses 14,294 31 12,095

Promotion and public relations 10,955 1,598 9,319

Rent 5,833 5,901 5,924

Other 55,506 120,143 186,082

Total 4,498,900 4,078,415 4,451,516

Current assets 3,077,108 2,689,805 3,122,909


(1) The Bank recognized, in the 3rd quarter/2015, reversal of allowance for impairment losses of assets not in use in the amount of R$ 6,984 thousand (R$ 3,636 thousand in the 3rd quarter/2014).

(2) Refers mainly to commissions paid to brokers and agents for the sale of products.


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53

14- INVESTMENTS

a) Changes in Subsidiaries and Associates

Book value Changes - Jan 1 to Sep 30, 2015 Book value Equity income

Dec 31, 2014 Dividends Other Events Equity income Sep 30, 2015 Sep 30, 2014 Jan 1 to Sep

30, 2014

Domestic 1,181,056 -- (146,034) 4,162 1,039,184 1,246,507 (21,741)

Cadam S.A. 25,201 -- -- (9,340) 15,861 25,201 (728)

Cia. Hidromineral Piratuba 2,525 -- 36 154 2,715 2,514 16

Cia. Catarinense de Assessoria e Serviços - CCA (1) 228 -- -- -- 228 228 --

Estruturadora Brasileira de Projetos - EBP 8,221 -- -- (1,725) 6,496 8,181 (488)

Other investments 8,633 -- 6,089 15,073 29,795 25,514 (20,541)

Goodwill/Bargain purchase on acquisition of investments 1,136,248 -- (152,159) -- 984,089 1,184,869 --

Overseas 586,492 -- (4,462,878) 4,534,345 657,959 564,936 (7,127)

Goodwill on acquisition of investments 586,492 -- 71,467 -- 657,959 564,936 --

Profit/(loss) with foreign exchange in the branches -- -- (2,741,693) 2,741,693 -- -- 186,633

Profit/(loss) with foreign exchange in the subsidiaries and affiliates and associates

-- -- (1,761,263) 1,761,263 -- -- (196,469)

Increase/decrease in equity resulting from other changes -- -- (31,389) 31,389 -- -- 2,709

Total investments in subsidiaries and associates 1,767,548 -- (4,608,912) 4,538,507 1,697,143 1,811,443 (28,868)

Accumulated Impairment (9,018) -- -- -- (9,018) (6,998) --

(1) Company in liquidation process, not valued by the equity method.

Balances at Sep 30, 2015 Capital stock Adjusted

Shareholders’ Equity

Net income/ (loss) Jan 1 to Sep 30, 2015

Number of shares (in thousands)

Ownership interest in the total capital % Common Preferred

Domestic

Cadam S.A. 183,904 73,298 38,256 -- 4,762 21.64%

Cia. Hidromineral Piratuba 4,439 17,583 654 633 -- 14.26%

Cia. Catarinense de Assessoria e Serviços - CCA 780 474 -- 260 520 48.13%

Estruturadora Brasileira de Projetos - EBP 75,819 59,096 (1,026) 5,076 1,736 11.11%

b) Other Investments

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Tax incentive investments 104,128 94,585 95,472

Equity securities 146 146 146

Stocks and shares 87,065 76,366 73,041

Other Investments (1)

1,644,802 1,511,165 1,449,793

Other equity abroad 94,702 63,313 58,421

Total 1,930,843 1,745,575 1,676,873


(1) Includes the amount of R$ 1,181,851 thousand (R$ 1,067,909 thousand as of December 31, 2014 and R$ 1,029,294 thousand as of September 30, 2014), relating to the investments of Neonergia S.A.

c) Goodwill arising on acquisition of investments

Changes of goodwill 3rd quarter/2015 3rd quarter/2014 Jan 1 to Sep 30, 2015 Jan 1 to Sep 30, 2014

Opening balance 1,556,088 1,717,447 1,724,301 1,579,416

Additions (1)

-- 51,110 -- 410,024

Reductions (1) (2)

-- -- (99,705) (45,683)

Amortizations (3)

(71,278) (59,484) (207,816) (175,118)

Foreign exchange fluctuation (4)

158,648 42,293 226,678 (17,273)

Closing balance 1,643,458 1,751,366 1,643,458 1,751,366

(1) Adjustments arising from the alignment of the accounting practices of the investee to the practices of the investor.

(2) Transfer of the goodwill of Brasilprev Nosso Futuro Seguros e Previdência S.A. to the Intangible line (Note 16.a).

(3) Recorded in Other Administrative Expenses.

(4) Levied on the goodwill from BB Americas, Banco Patagonia and Merchant e-Solutions, Inc.


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d) Expected Goodwill Amortization

4rd quarter/2015 2016 2017 2018 2019 After 2019 Total

Banco do Brasil 26,429 108,067 107,475 47,781 48,724 45,499 383,975

Banco Votorantim 14,493 60,466 61,133 -- -- -- 136,092

Banco Patagonia 10,953 41,559 37,838 38,569 39,338 33,340 201,597

Banco do Brasil Americas 983 6,042 8,504 9,212 9,386 12,159 46,286

Tax effects (1) (11,893) (48,630) (48,364) (21,501) (21,926) (20,475) (172,789)

Net Total 14,536 59,437 59,111 26,280 26,798 25,024 211,186

BB-BI 23,464 107,670 123,517 141,696 162,550 -- 558,897

Cielo 23,464 107,670 123,517 141,696 162,550 -- 558,897

Cielo S.A. 14,482 60,660 56,500 44,525 18,126 228,969 423,262

Merchant e-Solutions, Inc. 14,198 59,279 54,900 42,927 16,428 222,345 410,077

Braspag Tecnologia em Pagamento Ltda.

167 854 1,031 984 1,042 3,734 7,812

Multidisplay Comércio e Serviços Tecnológicos S.A.

55 256 283 311 336 1,638 2,879

Companhia Brasileira de Gestão de Serviços (Orizon)

62 271 286 303 320 1,252 2,494

BB Mapfre SH1 Participações S.A. 10,068 18,781 22,254 24,050 25,314 -- 100,467

Vida Seguradora 10,068 18,781 22,254 24,050 25,314 -- 100,467

Elo Participações 4,859 22,876 23,591 24,330 -- -- 75,656

Alelo 4,859 22,876 23,591 24,330 -- -- 75,656

BB Seguros 9,143 11,225 10,743 11,040 10,028 5,256 57,435

Brasilcap 5,393 9,154 8,593 8,780 7,659 -- 39,579

IRB-Brasil Resseguros S.A. 3,750 2,071 2,150 2,260 2,369 5,256 17,856

Mapfre BB SH2 Participações S.A. 2,988 19,429 21,349 -- -- -- 43,766

Brasilveículos 2,988 19,429 21,349 -- -- -- 43,766

BB Consolidated 91,433 348,708 365,429 293,422 264,742 279,724 1,643,458

Tax effects (1) (36,575) (142,292) (149,655) (120,606) (113,253) (100,112) (662,493)

Net Total 54,858 206,416 215,774 172,816 151,489 179,612 980,965

(1) 25% of income tax and 20% of social contribution for financial companies and for non-financial companies of insurance, private pension plan and capitalization, and 25% of income tax and 9% of social contribution for other non-financial companies.

The expected amortization of goodwill arising on the acquisition of investments is based on the projections of results

made at the time of the purchase, prepared by specialized firms or technical departments within the Bank, and

considers the timing of the estimates and discount rates used in calculating the net present value of expected cash

flows.

e) Goodwill impairment test

The recoverable amount of goodwill arising on acquisition of investments is determined by the value in use, which is

the discounted value of the cash flow projections of the invested entity (cash-generating unit).

Assumptions used to project these cash flows are based on public information, budgets and / or business plans of the

purchased entities. These assumptions consider current and past performance, as well as expected market and

macroeconomic growth.

The cash flow of the entities below were actively projected for ten years and considered perpetual from the eleventh

year with fixed growth rates. For the periods that exceed the terms of the budget or business plan, the growth

estimates are in line with those adopted by the entities. The nominal discount rate is determined annually based on

the CAPM (Capital Asset Pricing Model) adapted for the Brazilian market and referenced in Reais (R$).


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55

Entity (cash-generating unit) Growth rate p.a. (1)

Discount rate p.a. (2)

Banco Votorantim 3.60% 12.22%

BB Americas 2.00% 9.44%

Vida Seguradora 3.00% 11.22%

Alelo 3.60% 12.21%

Brasilcap 3.60% 12.38%

IRB-Brasil Resseguros 3.60% 10.58%

Brasilveículos 3.00% 11.22%

(1) Nominal growth in perpetuity.

(2) Geometric average of ten years of projections, except BB Americas, that considered a geometric average of seven years of projections.

According to the sensitivity analysis performed, there is no indication that changes in the assumptions would cause

the book value of the cash-generating units to exceed the recoverable amount.

The recoverable amount of the goodwill arising on the acquisition of Cielo and Banco Patagonia are determined by

the net realizable value through sale, based on the share price of the companies on BM&FBovespa exchange and on

Merval (stock market of Buenos Aires), respectively.

Entity (cash-generating unit) Share price (1)

Banco Patagonia R$ 5.04 (2)

Cielo (CIEL3) R$ 40.00

(1) Closing price of shares at September 30, 2014. (2) Value equivalent to ARS 17.45, as ARS/BRL quoted at September 30, 2014.

From January 1, 2015 to September 30, 2015 and from January 1, 2014 to September 30, 2014, there was no

impairment loss on goodwill arising on the acquisition of investments.

15- PROPERTY

Dec 31, 2014 Jan 1 to Sep 30, 2015 Sep 30, 2015 Sep 30, 2014

Book value Changes Depreciation Provision for imparment

Cost Value Accumulated Depreciation

Accumulated Impairment

Book value Book value

Buildings 3,760,643 348,139 (260,201) -- 6,528,237 (2,670,965) (8,691) 3,848,581 3,578,891

Furniture and equipment in use

1,605,425 216,201 (209,835) (7,556) 4,015,616 (2,402,701) (8,680) 1,604,235 1,449,181

Data processing systems

1,317,072 244,650 (335,364) -- 4,290,103 (3,063,745) -- 1,226,358 1,204,853

Facilities 235,561 37,131 (29,612) -- 1,037,654 (794,574) -- 243,080 228,968

Land 200,143 5,144 -- -- 205,287 -- -- 205,287 201,441

Security systems 169,182 16,072 (20,003) -- 397,752 (232,501) -- 165,251 171,333

Constructions in progress

153,572 (27,499) -- -- 126,073 -- -- 126,073 151,923

Communication systems

100,705 15,275 (13,767) -- 289,070 (186,857) -- 102,213 97,346

Transport systems 12,663 4,257 (2,780) -- 43,089 (28,949) -- 14,140 12,589

Furniture and equipment in stock

1,771 (20) -- -- 1,751 -- -- 1,751 1,776

Total 7,556,737 859,350 (871,562) (7,556) 16,934,632 (9,380,292) (17,371) 7,536,969 7,098,301


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16 - INTANGIBLE ASSETS

a) Changes and breakdown


Book value Acquisitions Write-offs Amortization Reversion for Impairment

Cost Value

Accumulated amortization


Book value

Book value

Rights to manage payroll (1) 6,510,812 513,028 (190,192) (1,413,036) -- 9,398,626 (3,928,274) (49,740) 5,420,612 5,894,553

Goodwill on acquisition of absorbed company (2)

2,762,491 -- -- (608,788) -- 5,015,276 (2,861,573) -- 2,153,703 2,940,149

Softwares 1,710,801 540,342 (868) (167,044) 2,075 3,440,375 (1,354,766) (303) 2,085,306 1,573,219

Other intangible assets 265,128 80,933 (917) (98,771) -- 362,033 (104,448) (11,212) 246,373 286,462

Total 11,249,232 1,134,303 (191,977) (2,287,639) 2,075 18,216,310 (8,249,061) (61,255) 9,905,994 10,694,383

(1) The values of acquisitions and write-offs include contracts renegotiated in the period, in which the new contract value is recorded and the past contract value is written-off without impact on Statement of Income.

(2) Refers to the goodwill from the merger of Banco Nossa Caixa and of Brasilprev Nosso Futuro Seguros e Previdência S.A.

b) Estimate for Amortization

4th quarter/2015 2016 2017 2018 2019 After 2019 Total

Amounts to be amortized 779,457 2,988,414 2,625,248 1,413,653 791,391 1,307,831 9,905,994

c) Impairment Test

The impairment test of goodwill on the acquisition of Banco Nossa Caixa, which was merged into Banco do Brasil,

considers the value in use of Banco do Brasil´s operations in the state of São Paulo (cash-generating unit). Cash

flows are based on cash-generating unit results in 2014, the 2015 budget and internal projections of results from

2016, for five years.

The assumptions adopted for the calculation are based on Banco do Brasil's Corporate Strategy and macroeconomic

scenario. They consider the current and past performance and expected growth in the market segment.

Cash flows were discounted by the Bank’s cost of own capital. The nominal discount rate is measured annually

based on the CAPM (Capital Asset Pricing Model) adapted for the Brazilian market and referenced in Reais (R$).

The impairment test of the goodwill from the merger of Brasilprev Nosso Futuro Seguros e Previdência S.A. follows

the same methodology of the goodwill on acquisition of investments listed in 14.e.

Entity (Cash-generating unit) Growth rate p.a Discount rate p.a.

Banco do Brasil - state of São Paulo - Goodwill Banco Nossa Caixa (1)

9.5% 12.3%

Brasilprev Nosso Futuro Seguros e Previdência S.A. (1) (2)

3.0% 13.9%

(1) Geometric average of five years of projections.



the book value of the cash-generating unit to exceed its recoverable amount.


impairment loss on goodwill on merged companies.


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17 - DEPOSITS AND SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

a) Deposits

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Demand Deposits 66,026,209 74,210,189 69,521,036

Individuals 27,924,518 33,942,740 30,483,133

Companies 22,979,923 28,437,427 24,629,154

Restricted 9,955,948 5,970,418 8,781,992

Government 1,591,076 2,226,009 1,865,886

Foreign currency 1,226,183 706,951 928,661

Financial system institutions 232,422 832,896 979,967

Related companies 1,636,496 982,662 847,395

Special from Federal Treasury 325,348 403,878 542,172

Domiciled abroad 59,543 202,201 292,887

Other 94,752 505,007 169,789

Saving Deposits 149,763,605 148,698,890 148,995,605

Individuals 139,319,946 140,036,529 138,963,241

Companies 10,121,003 8,407,859 9,688,943

Related companies 306,770 240,767 330,113



Time Deposits 205,644,072 214,483,944 221,777,370

Judicial 116,107,051 115,010,129 110,095,304

National currency 54,119,211 70,136,390 85,377,147


Fundo de Amparo ao Trabalhador - FAT (Note 17.e) 3,907,659 4,478,914 4,466,951

Funproger (Note 17.f) 251,678 233,939 227,439

Other 1,089,033 887,621 834,347

Total 463,837,978 468,361,769 468,825,002


Non-current liabilities 54,758,212 67,183,984 82,592,209

b) Segregation of deposits by repayment date

Without maturity

Up to 3 months

3 to 12 months

1 to 3 years 3 to 5 years More than 5

years Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Time deposits (1)

120,948,323 28,174,790 9,423,800 19,081,034 28,009,226 6,899 205,644,072 214,483,944 221,777,370

Saving deposits 149,763,605 -- -- -- -- -- 149,763,605 148,698,890 148,995,605

Demand deposits 66,026,209 -- -- -- -- -- 66,026,209 74,210,189 69,521,036

Interbank deposits

2,939,453 11,631,781 20,171,805 6,306,218 833,347 521,488 42,404,092 30,968,746 28,530,991

Total 339,677,590 39,806,571 29,595,605 25,387,252 28,842,573 528,387 463,837,978 468,361,769 468,825,002

(1) Includes the amount R$ 53,155,538 thousand (R$ 70,102,638 thousand as of December 31, 2014 and R$ 85,587,480 thousand as of September 30, 2014), relating to time deposits with early repurchase clause (liquidity commitment), classified based on the contractual maturity dates.


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c) Securities sold under repurchase agreements

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Own Portfolio 70,215,156 64,365,574 55,969,942

Corporate bonds 51,368,607 56,847,255 48,391,182



Securities abroad 1,755,991 285,865 257,940


Other 971 37,307 12,268

Third-Party Portfolio 260,590,677 241,674,469 263,739,572




Securities abroad 118 1,149,275 1,061,648

Free movement portfolio 558,641 5,532 13,454

Total 331,364,474 306,045,575 319,722,968



d) Expenses with deposits and with securities sold under repurchase agreements


2015 Jan 1 to Sep 30,

2014

Deposits (9,044,680) (8,277,199) (24,978,882) (23,828,405)

Judicial deposits (3,193,339) (2,520,646) (8,805,323) (7,083,498)

Saving deposits (3,016,939) (2,592,193) (8,316,328) (7,356,512)

Time deposits (2,578,315) (2,985,802) (7,176,745) (8,781,945)

Interbank deposits (256,087) (178,558) (680,486) (606,450)

Securities sold under repurchase agreements (11,784,428) (8,230,127) (31,900,876) (22,253,603)

Third-party portfolio (9,640,398) (6,842,180) (26,546,227) (18,137,635)

Own portfolio (2,124,157) (1,377,320) (5,320,674) (4,081,719)

Free movement portfolio (19,873) (10,627) (33,975) (34,249)

Funds from acceptance and issuance of securities

(1)

(7,087,000) (4,129,232) (17,746,350) (10,357,645)

Agribusiness letters of credit (4,074,545) (2,486,226) (10,290,202) (6,383,437)

Securities issues abroad (1,368,793) (630,167) (2,691,723) (1,178,979)

Financial bills (1,136,676) (836,717) (3,418,617) (2,336,811)

Letters of credit – Real estate (506,986) (176,122) (1,345,808) (458,418)

Subordinated debt abroad (2)

(169,838) (118,744) (434,982) (335,066)

Equity and debt hybrid securities (3)

(639,586) (467,762) (1,638,078) (1,167,660)

Other (186,577) (205,412) (573,211) (602,606)

Total (28,912,109) (21,428,476) (77,272,379) (58,544,985)

(1) Funds from acceptance and issuance of securities are disclosed in Note 19.

(2) Subordinated debt abroad are disclosed in Note 20.c.

(3) Equity and debt hybrid securities are disclosed in Note 20.d.


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e) Fundo de Amparo ao Trabalhador (Fund for worker's assistance) – FAT

Program Resolution/

TADE (1)

Repayment of FAT Funds Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Type(2)

Initial date Final date Available

TMS(3)

Applied TJLP

(4)

Total Available

TMS(3)

Applied TJLP

(4)

Total Available

TMS(3)

Applied TJLP

(4)

Total

Proger Rural and Pronaf 56,541 144,447 200,988 120,175 289,782 409,957 113,751 388,744 502,495

Pronaf Custeio 04/2005 RA 11/2005 -- 254 1,920 2,174 481 2,362 2,843 26 2,922 2,948

Pronaf Investimento 05/2005 RA 11/2005 -- 51,502 133,066 184,568 110,778 270,733 381,511 106,419 360,878 467,297

Giro Rural - Aquisição de Títulos

03/2005 SD 01/2008 01/2015 -- -- -- 4,476 -- 4,476 1,030 4,943 5,973

Rural Custeio 02/2006 RA 11/2005 -- 314 603 917 258 1,152 1,410 324 1,334 1,658

Rural Investimento 13/2005 RA 11/2005 -- 4,471 8,858 13,329 4,182 15,535 19,717 5,952 18,667 24,619

Proger Urbano 371,895 2,614,570 2,986,465 52,129 3,190,908 3,243,037 2,033 3,168,884 3,170,917

Urbano Investimento 18/2005 RA 11/2005 -- 371,895 2,614,570 2,986,465 52,126 3,190,902 3,243,028 2,030 3,168,877 3,170,907

Urbano Capital de Giro 15/2005 RA 11/2005 -- -- -- -- 3 6 9 3 7 10

Other 156,891 563,315 720,206 142,537 683,383 825,920 94,488 699,051 793,539

Exports 27/2005 RA 11/2005 -- 15,368 24,706 40,074 408 11,947 12,355 5,357 8,389 13,746

FAT Taxista 02/2009 RA 09/2009 -- 78,823 294,539 373,362 65,397 257,715 323,112 22,536 244,547 267,083

FAT Turismo Investimento 01/2012 RA 08/2012 -- 3,646 145,384 149,030 9,228 162,119 171,347 10,697 143,930 154,627

FAT Turismo Capital de Giro 02/2012 RA 08/2012 -- 59,054 98,686 157,740 67,504 251,602 319,106 55,898 302,185 358,083

Total 585,327 3,322,332 3,907,659 314,841 4,164,073 4,478,914 210,272 4,256,679 4,466,951


(2) RA - Automatic Return (monthly, 2% of the balance) and SD - Available Balance.

(3) Funds remunerated by the Taxa Média Selic (average Selic Rate - TMS).

(4) Funds remunerated by Taxa de Juros de Longo Prazo (long-term interest rate - TJLP).


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FAT is a special accounting and financial fund, established by Law 7,998/1990, associated with the Ministério do

Trabalho e Emprego (Ministry of Labor and Employment) and managed by the Executive Council of the Fundo de

Amparo ao Trabalhador (Fund for Workers’ Assistance) - Codefat. Codefat is a collective, tripartite, equal level

organization, composed of representatives of workers, employers and government.

The main actions to promote employment using FAT funds are structured around the Programs for the Generating

Employment and Earnings (Proger), resources for which are allocated through special deposits, established by Law

8,352/1991, in official federal financial institutions. These programs include, among others, the urban Proger program

(Investment and Working Capital) and the rural Proger program and the National Program for Strengthening Family

Farming - Pronaf, in addition to the special lines such as FAT Integrar – Rural e Urbano, FAT Giro Setorial – Micro e

Pequenas Empresas (micro and small-sized companies), FAT Giro Setorial – Médias e Grandes Empresas (medium

and large-sized companies), FAT Giro Setorial Veículos – Micro e Pequenas Empresas (micro and small-sized

companies), FAT Giro Setorial Veículos – Médias e Grandes Empresas (medium and large-sized companies), FAT

Fomentar – Micro e Pequenas Empresas (micro and small-sized companies), FAT Fomentar – Médias e Grandes

Empresas (medium and large-sized companies), FAT Giro Agropecuário, FAT Inclusão Digital (digital inclusion), FAT

Taxista (taxi), FAT Turismo Investimento and FAT Turismo Capital de Giro.

The FAT special deposits allocated to Banco do Brasil incur interest on a daily pro rata die basis using the Average

Selic Rate (TMS) when not lent out. As they are disbursed as loans, the interest rate is swapped to the Long-term

Interest Rate (TJLP) until the maturity of the loans. The earnings on the Bank’s funds are paid to FAT on a monthly

basis, as established in Codefat Resolutions 439/2005 and 489/2006.

f) Guarantee Fund for Generation of Employment and Earnings (Funproger)

The Guarantee Fund for Generation of Employment and Earnings (Funproger) is a special accounting fund

established on November 23, 1999 by Law 9,872/1999, amended by Law 10,360/2001 and by Law 11,110/2005 and

regulated by Codefat Resolution 409/2004, and its amendments. It is managed by Banco do Brasil under the

supervision of Codefat/MTE and the balance at September 30, 2015 is R$ 251,678 thousand (R$ 233,939 thousand

as of December 31, 2014 and R$ 227,439 thousand as of September 30, 2014).

The objective of Funproger is to provide guarantees to entrepreneurs who would otherwise not have the necessary

guarantees to contract financing by Proger Urbano and Programa Nacional de Microcrédito Produtivo Orientado,

through the payment of a commission. The net assets of Funproger are accumulated through funds arising from the

difference between the Average Selic Rate (TMS) and the Long-Term Interest Rate (TJLP) in respect of the

remuneration of the special deposit balances available in FAT. Other sources of funds are the earnings from its

operations and the income on its excess cash resources paid by Banco do Brasil, the fund manager.


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18 - BORROWINGS AND ONLENDINGS

a) Borrowings

up to 90 days from 91 to 360 days

from 1 to 3 years

from 3 to 5 years

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Domestic 990 -- 1,105,455 -- 1,106,445 1,753,887 346,425

Borrowing from non-financial companies

-- -- 1,105,455 -- 1,105,455 1,751,978 343,481

Other borrowings 990 -- -- -- 990 1,909 2,944

Overseas 9,758,116 15,816,546 8,598,269 573,670 34,746,601 22,242,550 20,315,065

Borrowings from bankers abroad

9,636,364 15,705,629 8,537,861 572,359 34,452,213 21,799,328 19,694,701

Linked to public sector borrowings

(1)

-- -- -- -- -- 162,009 304,064

Imports 99,314 75,125 15,176 1,311 190,926 154,393 157,107

Exports 22,438 35,792 45,232 -- 103,462 126,820 159,193

Total 9,759,106 15,816,546 9,703,724 573,670 35,853,046 23,996,437 20,661,490



(1) Maturity date of April 2015 at a rate of 6.92% p.a.

b) Onlendings

Domestic - Official institutions

Programs Finance charges Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Pronaf TMS (if available)

Fixed 0.50% p.a. to 4.00% p.a. (if applicable) 90,491 158,098 363,988

Cacau (cocoa) IGP-M + 8.00% p.a.

TJLP + 0.60% p.a. or 6.35% p.a. 91,065 87,435 86,118

Recoop Fixed 5.75% p.a. to 8.25% p.a.

IGP-DI + 1.00% p.a. IGP-DI + 2.00% p.a.

25,057 37,723 39,783

Other 32,542 56,642 66,614

BNDES 39,740,090 44,281,798 44,180,734

Banco do Brasil

Fixed 0.00% p.a. to 7.30% p.a. TJLP + 0.00% p.a. to 5.40% p.a. IPCA + 7.02% p.a. to 9.41% p.a. Selic + 0.40% p.a. to 2.50% p.a.

FX Variation + 0.90% p.a. to 6.89% p.a.

38,895,277 43,250,644 43,111,334

Banco Votorantim



844,813 1,031,154 1,069,400

Caixa Econômica Federal Fixed 5.08% p.a. (average) 18,219,733 12,359,686 9,991,504

Finame 31,882,108 33,204,750 32,064,795

Banco do Brasil Fixed 0.00% p.a. to 8.50% p.a.

TJLP + 0.50% p.a. to 5.50% p.a. FX Variation + 0.90% p.a. to 3.00% p.a.

30,997,351 32,398,036 31,223,924

Banco Votorantim

Fixed 0.30% p.a. to 15.21% p.a. TJLP + 0.50% p.a. to 5.50% p.a.

Selic + 1.70% p.a. FX Variation + 1.70% p.a.

884,757 806,714 840,871

Other official institutions 2,222,217 863,889 1,242,702

Special supply - Deposits (Note 9.b) 1,643,753 -- --

Funcafé TMS (if available)

Fixed 5.50% p.a. to 7.50% p.a. (if applied) 578,436 863,861 1,242,674

Other 28 28 28

Total 92,303,303 91,050,021 88,036,238




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62

Overseas

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Funds obtained under the terms of Resolution CMN 3,844/2010 8,888 -- --

Special fund for support to small and medium manufacturing companies 477 477 477

Total 9,365 477 477

Current liabilities 8,983 95 95

Non-current liabilities 382 382 382

c) Expense on borrowings and onlendings


Borrowings expenses (9,889,201) (2,119,215) (14,856,061) (2,245,916)

Onlendings expenses (8,046,288) (2,840,988) (13,854,759) (4,596,846)

Foreign (6,568,589) (1,807,210) (9,939,874) (1,807,210)

BNDES (880,614) (704,783) (2,442,223) (2,003,628)

Finame (176,240) (158,891) (516,932) (455,527)

Caixa Econômica Federal (367,922) (113,392) (821,559) (161,959)

National Treasury (30,058) (19,941) (75,294) (59,307)

Other (22,865) (36,771) (58,877) (109,215)

Expenses for obligations with bankers abroad (4,606,164) (1,310,747) (6,949,694) (1,310,747)

Expenses for financial and development funds liabilities (1,797,665) (516,633) (2,839,740) (553,193)

Total (24,339,318) (6,787,583) (38,500,254) (8,706,702)


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19 - FUNDS FROM ACCEPTANCE AND ISSUANCE OF SECURITIES

Funding Currency Issued Value

Remuneration p.a. Issue Year

Maturity Year

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Banco do Brasil 194,572,865 146,294,452 142,533,525

Global Medium - Term Notes Program 11,345,294 11,376,533 10,690,901

R$ 350,000 9.75% 2007 2017 342,599 345,183 338,951

USD 950,000 4.50% 2010 2015 -- 2,572,930 2,347,804

USD 500,000 6.00% 2010 2020 1,999,999 1,358,763 1,235,198

EUR 750,000 4.50% 2011 2016 3,427,482 3,284,535 2,388,801

JPY 24,700,000 1.80% 2012 2015 -- 551,404 551,736

EUR 1,000,000 3.75% 2013/2014 2018 4,453,396 2,519,088 3,121,149

CHF 275,000 2.50% 2013 2019 1,121,818 744,630 707,262

"Senior Notes" 9,694,978 6,452,265 5,985,540

USD 500,000 3.88% 2011 2017 1,996,663 1,346,214 1,229,852

USD 1,925,000 3.88% 2012 2022 7,698,315 5,106,051 4,755,688

Structured Notes USD 53,534 0.64% to 3.55% 2021 214,075 143,540 153,181

Certificates of Deposits (1) 20,224,229 9,291,680 11,360,827

Short term 0.09% to 3.98% 19,643,742 8,797,314 7,867,411

Long term 1.81% to 3.25% 2020 580,487 494,366 3,493,416


Short term 6,863 2,384 2,244

Long term 2018 11,019 -- --

Letters of credit - Real estate 2017 18,473,991 14,155,946 7,771,827

Letters of credit agribusiness 134,555,176 102,325,298 104,093,828

Short term (2) 18,658,231 21,576,941 22,895,703

Long term (3) 2020 115,896,945 80,748,357 81,198,125

Financial Letters 47,240 2,546,806 2,475,177

Short term (2) 104.00% to 105.00% -- 2,506,321 --

Long term 106.50% 2017 47,240 40,485 2,475,177

Banco Patagonia (4) 459,293 395,309 434,812

Short term ARS 205,184 308,060 314,305

Long term ARS 2017 254,109 87,249 120,507

Special Purpose Entities Abroad (5) 2,273,260 968,025 318,729

Securitization of future flow of payment orders from abroad (5)

USD 150,000 5.25% 2008 2018 262,777 223,591 221,051

USD 200,000 Libor 3m+1.20% 2008 2015 -- 79,402 97,678

Structured notes (5) USD 500,000 Libor 6m+2.50% 2014/2015 2034 2,010,483 665,032 --

Banco Votorantim 12,455,775 11,456,946 11,849,972


Short term (2) 3,786,920 658,980 378,062

Long term 2020 332,106 2,631,951 2,656,683

Credit Linked Notes 25,081 16,672 15,756

Short term (2) 4,755 -- --

Long term 2020 20,326 16,672 15,756

Debentures 270 59 777,170

Floating rate R$ 100.00% DI 2011 2016 270 59 777,170

Certificates of structured operations R$ -- 16,140 15,706

Letters of credit - Real estate R$ 87.00% to 100.00% DI 2014 2019 259,298 200,433 221,681


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Funding Currency Issued Value

Remuneration p.a. Issue Year

Maturity Year

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Fixed rate R$ 11.76% p.a. to 16.31% p.a. 2014 2021 21,456 1,782 1,022

Floating rate R$ 85.00% to 98.50% DI 2007 2022 1,303,004 1,425,087 1,424,791

Floating rate R$ 4.62% p.a. to 6.66% p.a. + IPCA 2015 2018 16,289 94 94

Financial Letters 6,711,351 6,505,748 6,359,007

Fixed rate R$ 8.95% p.a. to 17.70% p.a. 2011 2024 310,214 397,352 387,174

Floating rate R$ 5.47% to 5.78% + IGPM 2013 2016 6,412 6,417 6,222

Floating rate R$ 104.50% to 112.02% DI 2011 2019 6,170,998 5,880,620 5,758,122

Floating rate R$ 3.17% to 8.07% + IPCA 2012 2021 223,727 202,004 188,706

Floating rate R$ 109.30% Selic 2012 2015 -- 19,355 18,783

Non-Financial Corporations 1,496,769 1,547 8,999

Cibrasec

Real Estate Receivables Certificates (6) R$ 9.40% p.a. 1,119 1,547 1,752

Cielo S.A.

Debentures R$ 100.00% p.a. to 111.00% p.a. 2015 2023 1,495,650 -- --

Kepler Weber S.A.

Debentures R$ TJLP + 3.80% 2007 2020 -- -- 7,247

Eliminated Amount on Consolidation (7) (1,116,485) (81,742) (74,826)

Total 210,141,477 159,034,537 155,071,211



(1) Securities issued abroad in SGD, AUD, CHF, EUR, GBP, RMB and USD.

(2) Securities issued in foreign and national currency with maturities up to 360 days.

(3) Operations with maturity between 361 and 1,983 days.

(4) Securities issued with rates from 25.50 p.a. to 28.50% p.a. and from Badlar+300 pts. to Badlar+325 pts.

(5) The Special Purpose Entities (SPE) "Dollar Diversified Payment Rights Finance Company" and "Loans Finance Company Limited" were organized under the laws of the Cayman Islands. The liabilities arising from securities issued by these entities are paid using the funds accumulated in their accounts. The SPE declare that have no relevant asset or liability other than the rights and duties originating from the contracts for issue of securities. The Bank is not a shareholder, the owner, or a beneficiary of any of the results of operations of the SPE.

The Dollar Diversified Payment Rights Finance Company was organized for the following purposes: a) fund raising by issuance of securities in the international market; (b) use of resources obtained by issuing securities to pay for the purchase, with the Bank, of the rights to payment orders issued by banking correspondents located in the U.S. and by the agency of BB New York, in U.S. dollars, for any agency in Brazil (Rights on Consignment); and (c) making payments of principal and interest on securities issued and other payments defined in the contract of issuance of these securities.

The Loans Finance Company Limited was organized for the following purposes: a) fund raising by issuance of securities in the international market; (b) closing and booking repurchase agreements with the Bank; (c) purchasing of protection against credit risk of the Bank through a credit derivative, which is actionable only in case of Bank's default in any of the obligations assumed in repurchase agreements; and (d) making payments of principal and interest on securities issued and other payments defined in the contract of issuance of these securities.

(6) Reference Rate - TR, General Market Price Index - IGP-M, IPCA and average maturity of 141 months.

(7) Refers to securities issued by BB-Consolidated, which are in possession of overseas subsidiaries.


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20 - OTHER LIABILITIES

a) Taxes and social security

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Legal liabilities (Note 28.d) 13,830,470 13,142,356 12,936,755

Provision for taxes and contributions on net income 5,258,899 1,596,292 3,005,859

Deferred tax liabilities (Note 25.d) 2,372,709 1,627,873 3,625,032

Provision for tax litigation (Note 28.a) 2,219,910 1,997,160 1,906,641

Taxes and contributions payable 1,740,244 1,836,002 1,498,862

Taxes and contributions on net income payable 1,028,267 2,261,519 976,549

Other 300,789 322,589 289,428

Total 26,751,288 22,783,791 24,239,126



b) Financial and Development Funds

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Marinha Mercante 8,714,543 5,813,891 5,054,315

Pasep (1)

2,625,924 2,259,845 2,275,104

Fundo de Desenvolvimento do Nordeste - FDNE 2,037,433 1,534,405 1,148,340

Funds from Governo do Estado de São Paulo 714,213 725,304 686,761

Fundo de Desenvolvimento do Centro Oeste - FDCO 294,861 254,640 223,603

Fundo Nacional de Aviação Civil - FNAC 71,232 51,632 55,282

Other 216,525 200,681 125,328

Total 14,674,731 10,840,398 9,568,733



(1) The Bank is administrator of the Public Servant Heritage Formation Program (Pasep), guaranteeing a minimum return equal to the Long-Term Interest Rate - TJLP.


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c) Subordinated debts

Funding Issued Value Remuneration p.a. Issue Date Maturity Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Banco do Brasil

FCO – Resources from Fundo Constitucional do Centro-Oeste

22,047,638 20,467,309 19,990,824

Funds applied (1) 21,317,515 19,898,074 18,940,470

Resources available (2) 719,717 563,304 1,039,016

Charges to capitalize 10,406 5,931 11,338

Subordinated CDB Issued in the Country

1,815,238 4,110,613 3,988,233

1,335,000 115.00% of CDI 2009 2015 -- 2,461,107 2,385,226

1,000,000 105.00% of CDI 2009 2015 1,815,238 1,649,506 1,603,007

Subordinated Debt Abroad 11,600,598 7,861,671 7,149,434

USD 660,000 5.38% 2010 2021 2,640,653 1,787,935 1,627,732

USD 1,500,000 5.88% 2011 2022 5,968,023 4,045,769 3,677,903

USD 750,000 5.88% 2012 2023 2,991,922 2,027,967 1,843,799

Subordinated Letters of Credit 24,487,730 22,101,905 21,451,690

1,000,000 108.50% of CDI 2010 2016 1,786,916 1,618,598 1,571,471

2,055,100 111.00% of CDI 2011 2017 3,265,558 2,951,225 2,863,349

4,844,900

111.50% of CDI

1.06% to 1.11% + CDI

5.24% to 5.56% + IPCA

Fixed 10.51%

2012 2018 6,916,485 6,248,995 6,075,796

215,000 112.00% of CDI 2012 2019 305,640 275,968 267,679

4,680,900 111.00% of CDI 2013 2019 6,301,092 5,694,568 5,562,800

150,500 112.50% of CDI

5.45% + IPCA 2012 2020 216,668 194,793 189,143

377,100 112.00% to 114.00% of CDI 2014 2020 436,726 393,641 381,614

163,523 112.00% to 114.00% of CDI 2014 2020 195,103 176,002 170,670

1,594,580 113.00% to 115.00% of CDI 2014 2021 1,828,488 1,646,548 1,558,010

2,273,806 113.00% to 115.00% of CDI 2014 2021 2,742,019 2,470,312 2,394,510

400,000 8.08% + IPCA 2014 2022 493,035 431,255 416,648

Total Subordinated Debt from Banco do Brasil

59,951,204 54,541,498 52,580,181

Banco Votorantim


-- -- 648,587

645,000 1.64 % to 1.67% + CDI 2009 2014 -- -- 648,587

Subordinated Notes USD 575,000 Fixed 7.38% p.a. + FX

Variation 2010 2020 1,773,443 1,690,932 1,520,311


124,950 1.28 % to 1.57% + CDI 2010 2016 130,860 125,956 129,774

70,000 7.77 % to 7.82% + IPCA 2011 2016 126,276 110,640 106,872

25,078 7.00 % to 7.20% + IPCA 2013 2016(3) -- -- 28,113

26,721 6.84 % to 7.02% + IPCA 2014 2016 30,795 27,154 --

20,000 7.76% + IPCA 2011 2017(3) -- -- 30,205

752,300

1.91% + CDI

115.00% to 119.00% of CDI

7.63% to 7.81% + IPCA

6.60% to 7.57% + IGPM

2011 2017 885,018 833,281 842,915

6,922 7.86% + IPCA 2011 2019 12,492 10,936 10,571

5,969 7.25% + IPCA 2013 2020(3) -- -- 6,689

62,446

1.72% + CDI

116.00% to 118.00% of CDI

8.01% to 8.02% + IPCA

2014 2020 77,053 39,184 1,862

38,202 117.00% of CDI

7.09% to 7.61% + IPCA 2014 2020 44,563 69,144 66,968

93,450 118.00% of CDI 2014 2021 104,932 96,611 18,927

67,150

2.16% + CDI

118.00% to 119.00% of CDI

7.98% to 8.13% + IPCA

2014 2021 81,898 73,382 70,399

17,500 Fixed 15.11% to 17.63%

9.31% + IPCA 2015 2021 18,439 -- --


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Funding Issued Value Remuneration p.a. Issue Date Maturity Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

40,380

111.00% to 118.00% of CDI

7.61% to 8.75% + IPCA

Fixed 14.52% to 15.62%

2015 2022 42,298 -- --

27,500 7.94% + IPCA 2013 2023 36,968 32,300 31,233

5,000 7.84% + IPCA 2015 2023 5,611 -- --

9,500 8.14 % to 8.63% + IPCA 2014 2024 11,737 10,250 9,897

15,000 7.79% + IPCA 2015 2030 15,942 -- --

Total Subordinated Debt from Banco Votorantim

3,398,325 3,119,770 3,523,323

Eliminated amount on consolidation (163) (10,527) (13,067)

Total Subordinated Debt Consolidated

(4)(5) 63,349,366 57,650,741 56,090,437



(1) Remunerated at the rates on the loans funded with these amounts less the del credere of the financial institution, according to article 9 of Law 7,827/1989.

(2) Remunerated based on extra-market rate announced by the Banco Central do Brasil (Bacen), according to article 9 of Law 7,827/1989.

(3) Operations paid in advance.

(4) R$ 38,674,964 thousand (37,065,165 thousand as of Dec 31, 2014 and R$ 34,936,894 thousand in September 30, 2014) of the total balance is considered tier II of the Referential Equity (RE). As determined by Bacen, subordinated debts issued by Banco Votorantim do not contribute to the Bank’s RE.

(5) Includes the amount of R$ 6,118,926 thousand, relating to subordinated debt recorded in the line Debt Instruments Eligible as Capital.

d) Equity and debt hybrid securities

Funding Issued Value Remuneration

p.a. Issue Date Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Perpetual Bonds

USD 1,500,000 8.50% 10/2009 6,168,806 4,037,923 3,803,525

USD 1,750,000 9.25% 01 and 03/2012 7,379,962 4,835,886 4,564,603

USD 2,000,000 6.25% 01/2013 8,138,335 5,355,519 5,017,529

R$ 8,100,000 5.50% 09/2012 8,310,274 8,249,587 8,189,878

USD 2,500,000 9.00% 06/2014 10,104,890 6,627,916 6,252,805

Total Banco do Brasil 40,102,267 29,106,831 27,828,340

Eliminated amount on consolidation (20,105) (8,321) (35,546)

Total reclassified to shareholders' equity (Note 24.c)

(8,100,000) (8,100,000) (8,100,000)

Total BB-Consolidated 31,982,162 20,998,510 19,692,794

Current liabilities 368,326 368,814 735,939


R$ 29,890,805 thousand of the Perpetual Bonds is included in the Referential Equity (R$ 18,502,534 thousand as of

December 31, 2014, and R$ 17,255,944 thousand as of September 30, 2014). Of this amount, R$ 24,131,115

thousand are recorded in debt instruments eligible as capital (Note 29.b).

The bonds of USD 1,500,000 thousand, issued in October 2009, have the option of redemption at the discretion of

the Bank from 2020 or on each subsequent, semi-annual interest payment date, as long as it has been previously

authorized by Banco Central do Brasil (Bacen). In case the Bank does not exercise the option to redeem on October

2020, the interest on the bonds will be adjusted on this date to 7.782% plus the traded rate on 10 year North

American Treasury bonds. Thereafter, every 10 years, the interest on the bonds will be adjusted by taking into

account the traded rate of the 10 year North American Treasury bonds.

The bonds issued in January 2012 and March 2012 (reopening), of USD 1,000,000 thousand and USD 750,000

thousand respectively, and the bonds issued in January 2013 of USD 2,000,000 thousand, had their terms and

conditions modified on September 27, 2013, in order to adjust them to the rules of Bacen through Resolution No.

4,192 of March 1, 2013, which regulates the implementation of Basel III in Brazil. The changes were effective from

October 1, 2013, when the instruments were submitted to Bacen to obtain authorization to be included in the

Supplementary Capital (Tier I) of the Bank. The authorization was granted on October 30, 2013.


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The bonds issued in June 2014 of USD 2,500,000 thousand, have the option of redemption at the discretion of the

Bank from June 18, 2024 or on each subsequent, semi-annual interest payment date, as long as it has been

previously authorized by the Central Bank of Brazil. If the Bank did not exercise the option to redeem in June 2024,

the interest on the bonds will be adjusted to 6.362% plus the traded rate on 10 year North American Treasury bonds.

If the Bank does not exercise the redemption option in April 2023 for the bonds issued in 2012, in April 2024 for the

bonds issued in 2013, and in June 2024 for the bonds issued in 2014, the rate of bond interest is adjusted on that

date and every 10 years according to the 10 year North American Treasury bondsat the time plus the initial credit

spread. The bonds have the following options of redemption, subject to prior authorization of Bacen:

(i) the Bank may, at its option, redeem the bonds in whole but not in part in April 2023 for the bonds issued in 2012, in April 2024 for the bonds issued in 2013, and in June 2024 for the bonds issued in 2014, and on each subsequent, semi-annual interest payment date, at the base redemption price;

(ii) the Bank may, at its option, redeem the bonds in whole, but not in part, after five years from the date of issue, as long as it is before April 2023, for the bonds issued in 2012, before April 2024 for the bonds issued in 2013, and before April 2024 for the bonds issued in 2014, as a result of a tax event, at the base redemption price;

(iii) the Bank may, at its option, redeem the bonds in whole but not in part, after five years from the date of issue, as long as it is before April 2023, for the bonds issued in 2012, and in April 2024 for the bonds issued in 2013, on the occurrence of a regulatory event, at the higher value between the base redemption price and the Make-whole amount.

(iv) the Bank may, at its option, redeem the bonds in whole but not in part, after five years from the date of issue as long as it is before June 2024 for the bonds issued in 2014, on the occurrence of a regulatory event at the base redemption price.

The bonds issued in October 2009 determine that the Bank suspends the semi-annual payments of interest and / or

accessories on those securities issued (which will not be due or accrued) if:

(i) the Bank does not comply or the payment of such charges does not allow the bank to comply with the levels of capital adequacy, operating limits, or its financial indicators are under the minimum level required by Brazilian regulations applicable to banks;

(ii) Bacen or the regulatory authorities determine the suspension of payment of such charges; (iii) any event of insolvency or bankruptcy occurs; (iv) a default occurs; or (v) the Bank has not distributed dividends or interest on equity to common shareholders for the period of

calculation of such interest and / or accessories.

The bonds issued in January and March 2012, in January 2013 and in June 2014 determine that the Bank suspend

the semi-annual payments of interest and/or accessories on those securities issued (which will not be due or

accrued) if:

(i) distributable income for the period are not sufficient for making the payment (discretionary condition of the Bank);

(ii) the Bank does not comply or the payment of such charges does not allow the Bank to comply with the levels of capital adequacy, operating limits, or its financial indicators are under the minimum level required by Brazilian regulations applicable to banks;

(iii) Bacen or the regulatory authorities determine the suspension of payment of such charges; (iv) any event of insolvency or bankruptcy occurs; or (v) a default occurs.

According to Basel III rules, the bonds issued in January 2012, March 2012, in January 2013 and in June 2014 have

mechanisms of loss absorption. Moreover, if the item (i) occurs, the payment of dividends by Bank to its shareholders

will be limited to the minimum required determined by applicable law until the semi-annual interest payments and / or

accessories on those titles have been resumed in full. Finally, these bonds will expire permanently and at the

minimum value corresponding to the balance recorded in the Tier I capital of the Bank if:

(i) the main capital of the Bank is less than 5.125% of the amount of risk-weighted assets (RWA); (ii) the decision to make a capital injection from the public sector or an equivalent capital contribution to the

Bank is taken, in order to maintain the bank’s viability; (iii) the Bank, on a discretionary assessment regulated by the CMN, sets out, in writing, the expiration of the

bonds to enable the continuity of the Bank.


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e) Sundry

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Credit/debit card operations 18,060,865 19,548,519 16,652,142

Provisions for pending payments 9,447,345 7,544,606 8,333,346

Actuarial liabilities (Note 27.e) 8,255,564 7,769,579 7,820,747

Sundry creditors - domestic 8,193,793 7,740,859 6,492,155

Provisions for civil claims (Note 28.a) 7,735,257 5,772,357 5,485,313

Provision for labor claims (Note 28.a) 2,778,843 2,735,089 2,940,648

Funds linked to loan operations 2,088,992 1,264,972 1,160,701

Liabilities for rendering payment services 1,947,511 1,120,747 1,405,065

Sundry creditors - abroad 1,600,125 1,092,004 960,127

Liabilities for official agreements 1,189,085 733,450 871,352

Creditors of resources to be disbursed 775,515 1,003,725 926,796

Liabilities for premiums granted under customer loyalty schemes 603,984 973,651 844,695

Provisions for guarantees provided 524,206 193,877 188,885

Liabilities for operations linked to assignments 354,522 345,409 335,758

Liabilities for assets acquisition 282,943 506,966 283,163

Provision for losses with the Fundo de Compensação de Variação Salarial - FCVS

282,840 246,586 242,374

Guarantees on credits assigment 1,068 1,107 1,180

Liabilities for shares in investment funds -- 634,174 854,292

Other 139,040 122,940 120,359

Total 64,261,498 59,350,617 55,919,098



21 - OPERATIONS OF INSURANCE, PENSION PLAN AND CAPITALIZATION

a) Operation credits

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Direct insurance premiums to receive 3,608,714 3,397,512 3,079,846

Credits from insurance transactions with reinsurers 1,746,550 1,239,800 1,229,855

Credits from insurance business with insurers 434,180 365,105 388,414

Credits from capitalization 16,804 7,692 13,729

Credits from pension plans 5,485 76 770

Total 5,811,733 5,010,185 4,712,614

Current assets 4,801,753 4,104,489 4,008,030

Non-current assets 1,009,980 905,696 704,584


3rd

quarter 2015


70

b) Technical provisions

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Insurance 11,592,771 10,442,325 9,830,781

Provision for unearned premiums 6,610,697 5,933,486 5,458,866

Provision for unsettled claims 3,641,134 3,405,527 3,279,759

Provision for claims incurred but not reported 935,187 759,609 768,126

Supplementary provision coverage 312,010 269,306 260,895

Other provisions 93,743 74,397 63,135

Pension plan 103,573,979 83,969,011 77,620,071

Mathematical provision for future benefits 101,328,533 81,648,799 74,997,089

Mathematical provision for vested benefits 1,396,204 1,207,718 1,169,577

Provision for financial surplus 474,527 453,322 456,299

Provision for claims incurred but not reported 14,162 14,350 14,501

Other provisions 360,553 644,822 982,605

Capitalization 8,092,064 7,808,676 7,314,767

Mathematical provision for capitalization 7,634,415 7,419,815 6,958,480

Provision for prize draws and redemptions 457,649 388,861 351,461

Other provisions -- -- 4,826

Total 123,258,814 102,220,012 94,765,619



c) Technical provisions by product

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Insurance 11,592,771 10,442,325 9,830,781

Life 5,501,027 5,041,816 4,069,908

Property/casualty 3,066,815 2,663,406 3,239,607

Auto 2,507,769 2,318,491 2,076,806

Dpvat 517,160 418,612 444,460

Pension plan 103,573,979 83,969,011 77,620,071

Living benefits life insurance - VGBL 78,228,118 60,362,072 54,636,775

Free benefit generating plan - PGBL 19,172,196 17,451,080 16,781,443

Traditional plans 6,173,665 6,155,859 6,201,853

Capitalization 8,092,064 7,808,676 7,314,767

Total 123,258,814 102,220,012 94,765,619


3rd

quarter 2015


71

d) Guarantee of technical provisions

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Insurance Pension plan Capitalization Total Insurance Pension plan Capitalization Total Insurance Pension plan Capitalization Total

Shares in Investment Funds (VGBL and PGBL) -- 96,763,998 -- 96,763,998 -- 77,362,267 -- 77,362,267 -- 70,788,565 -- 70,788,565

Shares in Investment Funds (except VGBL and PGBL)

4,878,863 4,959,824 4,992,680 14,831,367 4,501,338 4,831,352 4,201,507 13,534,197 4,730,146 4,860,566 3,405,212 12,995,924

Federal Government securities 3,738,518 2,787,510 1,733,912 8,259,940 2,925,739 2,586,063 2,295,753 7,807,555 2,064,432 2,391,738 2,584,354 7,040,524

Corporate bonds 1,702,608 190,090 1,625,307 3,518,005 1,406,515 200,694 1,675,544 3,282,753 1,903,516 196,773 1,571,693 3,671,982

Credit rights 2,967,698 -- -- 2,967,698 2,571,754 -- -- 2,571,754 2,089,448 -- -- 2,089,448

Real estate 25,226 -- -- 25,226 25,203 -- -- 25,203 15,814 -- -- 15,814

Deposits held at IRB and deposits in court 368 -- -- 368 327 -- -- 327 312 -- -- 312

Total 13,313,281 104,701,422 8,351,899 126,366,602 11,430,876 84,980,376 8,172,804 104,584,056 10,803,668 78,237,642 7,561,259 96,602,569

e) Financial and operational results


Insurance Pension

plan Capitalizati

on Total Insurance

Pension plan

Capitalization

Total Insurance Pension

plan Capitalizati

on Total Insurance

Pension plan

Capitalization

Total

Financial Results 264,729 562,888 221,738 1,049,355 111,061 462,626 183,587 757,274 789,058 2,089,300 683,792 3,562,150 382,220 1,575,012 530,141 2,487,373

Financial income 1,023,899 2,335,177 234,776 3,593,852 292,385 1,904,721 193,843 2,390,949 2,094,188 7,386,158 712,446 10,192,792 799,210 5,529,816 547,097 6,876,123

Financial expenses (759,170) (1,772,289) (13,038) (2,544,497) (181,324) (1,442,095) (10,256) (1,633,675) (1,305,130) (5,296,858) (28,654) (6,630,642) (416,990) (3,954,804) (16,956) (4,388,750)

Interest and inflation adjustment of technical reserves

(22,645) (478,946) (156,030) (657,621) (13,764) (379,477) (116,435) (509,676) (62,424) (1,785,564) (419,974) (2,267,962) (31,094) (1,328,138) (319,535) (1,678,767)

Operacional Results 1,093,183 76,636 115,092 1,284,911 984,594 65,669 124,912 1,175,175 3,028,276 657,312 399,058 4,084,646 2,861,549 236,686 386,497 3,484,732

Retained premiums and contributions (Note 21.f)

2,470,671 5,922,331 917,221 9,310,223 2,654,123 5,400,539 928,791 8,983,453 7,357,032 20,413,816 3,096,460 30,867,308 7,175,535 16,282,428 3,101,086 26,559,049

Change in technical provisions (159,736) (5,800,317) (764,374) (6,724,427) (133,001) (5,304,900) (774,740) (6,212,641) (430,398) (19,704,691

) (2,571,755)

(22,706,844)

(527,578) (16,006,257

) (2,600,876)

(19,134,711)

Retained claims (986,625) -- -- (986,625) (1,300,935) -- -- (1,300,935) (3,213,390) -- -- (3,213,390) (3,129,154) -- -- (3,129,154)

Selling expenses (231,127) (26,743) (8,870) (266,740) (235,593) (23,765) (4,849) (264,207) (684,968) (28,400) (21,558) (734,926) (657,254) (25,104) (11,354) (693,712)

Expenses with prize draws and redemptions of financial bonds

-- -- (28,885) (28,885) -- -- (24,290) (24,290) -- -- (104,089) (104,089) -- -- (102,359) (102,359)

Expenses with benefits and redemptions of pension plans

-- (18,635) -- (18,635) -- (6,205) -- (6,205) -- (23,413) -- (23,413) -- (14,381) -- (14,381)

Total 1,335,267 160,578 180,800 1,676,645 1,081,891 148,818 192,064 1,422,773 3,754,910 961,048 662,876 5,378,834 3,212,675 483,560 597,103 4,293,338


3rd

quarter 2015


72

f) Retained premiums of insurance, pension plan contributions and capitalization certificates


2015 Jan 1 to Sep 30,

2014

Insurance 2,470,671 2,654,123 7,357,032 7,175,535

Premiums issued 3,043,454 2,816,051 8,529,051 8,043,995

Coinsurance premiums ceded (40,963) (35,535) (124,215) (140,943)

Reimbursed premiums (7,867) (6,319) (26,532) (15,023)

Reinsurance premiums ceded, consortiums and funds (523,953) (120,074) (1,021,272) (712,494)

Pension plan 5,922,331 5,400,539 20,413,816 16,282,428

Premiums issued 5,427,457 4,912,725 18,932,894 14,854,426

Supplementary pension contributions (includes VGBL) 494,874 487,814 1,480,922 1,428,002

Capitalization 917,221 928,791 3,096,460 3,101,086

Commercialization of capitalization certificates 917,221 928,791 3,096,460 3,101,086

Total 9,310,223 8,983,453 30,867,308 26,559,049

22 - OTHER OPERATING INCOME/EXPENSES

a) Service fee income


2015 Jan 1 to Sep 30,

2014

Card income 1,361,913 1,347,211 3,978,714 3,957,567

Fund Management 1,155,879 1,038,393 3,240,747 2,819,089

Billing 435,448 375,709 1,280,523 1,089,695

Loans and guarantees provided 272,031 200,677 694,723 663,733

Collection 250,266 234,739 782,860 690,885

Insurance, pension and capitalization 231,074 242,872 758,338 720,857

Interbank 196,036 188,211 575,108 552,016

National Treasury and official funds management 130,182 95,302 332,607 260,271

Fiduciary services 113,819 106,833 323,642 294,836

Consortium management fees 108,516 96,994 313,871 242,208

Account fee 91,905 81,658 258,278 232,971

Capital market income 90,321 124,550 368,207 352,474

From non-financial associated/subsidiaries companies 71,824 54,226 194,226 171,831

Provided to related companies 29,587 18,956 72,233 52,479

Other services 419,996 348,234 1,106,911 989,281

Total 4,958,797 4,554,565 14,280,988 13,090,193

b) Bank fee income


2015 Jan 1 to Sep 30,

2014

Service packages 1,135,802 979,591 3,097,375 2,799,050

Loans and customer registration 231,105 238,989 667,385 669,700

Card income 272,845 237,580 772,540 696,720

Funds transfer 86,674 77,766 242,598 213,418

Investment funds management 98,306 77,353 265,280 203,611

Deposit account 59,261 54,050 169,882 153,132


Other 47,965 40,455 135,818 115,555

Total 1,948,032 1,718,232 5,394,064 4,885,737


3rd

quarter 2015


73

c) Personnel expenses


2015 Jan 1 to Sep 30,

2014

Salaries (2,392,951) (2,185,960) (7,450,684) (6,745,399)

Personnel administrative provisions (1,322,297) (880,487) (2,899,813) (2,184,061)

Social charges (843,684) (801,883) (2,579,054) (2,397,965)

Benefits (678,897) (615,100) (2,007,989) (1,832,159)

Labor lawsuits (586,477) (318,358) (1,290,938) (754,587)

Pension plans (115,409) (102,259) (334,662) (294,220)

Directors' and advisors' fees (25,912) (23,606) (75,530) (67,276)

Training (21,311) (20,920) (54,089) (49,452)

Total (5,986,938) (4,948,573) (16,692,759) (14,325,119)

d) Other administrative expenses


2015 Jan 1 to Sep 30,

2014

Amortization (882,592) (783,952) (2,543,430) (2,786,795)

Expenses with outsourced services (406,214) (443,703) (1,204,513) (1,392,304)

Rent (371,932) (330,363) (1,059,007) (953,237)

Communications (331,357) (390,362) (1,022,936) (1,159,494)

Depreciation (297,444) (276,258) (871,562) (787,150)

Transport (295,064) (336,042) (885,318) (974,082)

Security services (287,537) (252,150) (811,424) (698,968)

Specialized technical services (219,919) (202,355) (622,732) (555,776)

Financial system services (206,796) (196,021) (598,709) (582,513)

Data processing (205,316) (199,171) (610,588) (632,883)

Maintenance and upkeep (189,612) (186,853) (582,260) (518,539)

Water, electricity and gas (130,871) (90,354) (391,594) (276,731)

Advertising and marketing (120,601) (119,908) (270,075) (377,778)

Promotion and public relations (65,552) (58,540) (170,491) (172,339)

Domestic travel (39,975) (34,609) (115,645) (114,923)

Materials (37,954) (38,085) (104,524) (104,112)

Other (236,155) (200,256) (650,109) (558,843)

Total (4,324,891) (4,138,982) (12,514,917) (12,646,467)

e) Other operating income


2015 Jan 1 to Sep 30,

2014

Update of deposits in guarantee 745,400 495,920 1,939,548 1,429,287

Cards transactions 532,501 404,000 1,430,123 1,052,109

Recovery of charges and expenses 303,659 202,578 824,326 573,710

Surplus allocation update - Previ Plan 1 (Note 27.f) 225,973 165,222 996,655 663,061

Income on receivables 222,695 240,794 637,638 540,192

Negative foreign exchange readjustment/Reclassification of liability balances 184,672 53,630 281,213 1,794,305

From non-financial associates/subsidiaries 157,285 257,490 446,508 506,086

Reversal of provisions - guarantees not honored 98,574 -- 190,122 --

Reversal of provisions - administrative and personnel expenses 68,661 51,187 166,730 122,817

Income from specific credits ans special operations - National Treasury 63,251 53,204 174,528 153,410

Reversal of provisions - labor 49,983 52,203 306,869 591,622

Previ - Defined benefit plan income (Note 27.d) 40,070 228,331 317,929 1,119,731

Royalties and special participation 39,909 16,978 129,644 138,110

Reversal of provisions - civil and tax lawsuits 18,101 148,089 49,745 168,543

Subsidy of the National Treasury - MPO 16,016 49,938 118,723 124,439

Adjustment of tax recoverable 12,339 30,169 68,462 94,888

Other 221,093 75,068 664,457 663,015

Total 3,000,182 2,524,801 8,743,220 9,735,325


3rd

quarter 2015


74

f) Other operating expenses


2015 Jan 1 to Sep 30,

2014

Civil and tax claims (1,793,828) (429,699) (2,765,276) (1,428,963)

Credit/debit card transactions (1,697,743) (727,582) (3,515,759) (2,024,695)

Negative foreign exchange readjustment/ Reclassification of assets balances

(480,820) (28,102) (582,462) (1,362,459)

From non-financial associates/subsidiaries (297,917) (296,734) (748,128) (920,511)

Compensation for transactions of Banco Postal (297,275) (283,666) (868,461) (378,217)

Update of deposits in guarantee (1)

(253,420) (203,481) (686,469) (333,863)

Actuarial liabilities update (247,957) (236,990) (740,003) (781,423)

Discounts granted on renegotiations (220,434) (146,112) (596,048) (518,131)

Provision for rendering of guarantees (168,270) (71,197) (360,948) (129,299)

Failures/frauds and other losses (68,224) (51,877) (214,227) (157,277)

ATM Network (67,422) (57,190) (175,052) (190,479)

Business partners (2)

(62,166) (62,455) (206,848) (204,765)

Life insurance premium - consumer credit (41,868) (47,047) (133,494) (111,729)

Business relationship bonus (21,107) (47,046) (61,822) (155,440)

INSS - Social Security (18,365) (7,815) (39,283) (23,042)

Other expenses of provisions from non-financial subsidiaries/associates (9,420) (3,967) (56,032) (11,824)

Update of interest on own capital/dividends (9,085) (3,943) (13,514) (9,357)

Proagro Expenses (8,620) (6,541) (22,531) (19,090)

Fees for the use of Sisbacen - Banco Central do Brasil System (7,421) (7,536) (18,509) (20,636)

Previ - actuarial adjustment (4,928) (3,081) (10,018) (8,025)

Other (355,178) (259,478) (765,161) (584,189)

Total (6,131,468) (2,981,539) (12,580,045) (9,373,414)

(1) Refers to the adjustment of the provision for deposit in court regarding the lawsuit (Income Tax and Social Contribution Tax on Net Income) as Note 28.d.

(2) Refers mainly to commission for loans originated by partners and commercial agreements with retailers.


3rd

quarter 2015


75

23 - NON-OPERATING INCOME


2015 Jan 1 to Sep 30,

2014

Non-operating Income 63,278 75,824 5,949,032 276,958

Capital gains (1)

12,468 3,026 5,801,709 13,862

Profit on disposal of assets 7,751 13,811 27,403 43,720

Rental income 4,859 10,612 15,303 23,638

Reversal of provision for devaluation of other assets 12,746 17,724 23,556 35,252

Profit on disposal of investments / equity interest -- 1,236 2,545 3,350

Interest and inflation adjustment of debtors from disposal of property 1,341 1,677 4,240 5,283

Other non-operating income 24,113 27,738 74,276 151,853

Non-operating Expenses (45,424) (36,174) (162,560) (103,564)

Devaluation of other assets (5,762) (14,088) (15,051) (27,967)

Loss on disposal of assets (5,804) (4,658) (20,078) (16,207)

Capital losses (13,993) (8,448) (68,393) (24,682)

Other non-operating expenses (19,865) (8,980) (59,038) (34,708)

Total 17,854 39,650 5,786,472 173,394

(1) Includes, in the period from Jan 1 to Set 30, 2015, the gain derived from the strategic partnership between BB Elo with Cielo in the electronic means of payment business of R$ 5,787,797 thousand (Note 2.c).

24- SHAREHOLDERS' EQUITY

a) Book value and market value per common share

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Shareholders' equity - Banco do Brasil 72,411,410 69,820,212 70,745,901

Book value per share (R$) (1)

25.93 24.97 25.29

Market value per share (R$) 15.20 23.77 25.30

Shareholders' equity - Consolidated (2)

83,814,448 80,613,194 81,246,059

(1) Calculated based on the equity of Banco do Brasil.

(2) Conciled with the equity of Banco do Brasil (Note 24.h).

b) Capital

The capital, entirely subscribed and paid-in, in the amount of R$ 60,000,000 thousand (R$ 54,000,000 thousand as

of December 31, 2014 and Sep 30, 2014) of Banco do Brasil is divided into 2,865,417,020 book-entry common

shares without par value. The Federal Government is the largest shareholder, holding control of the majority of our

voting shares.

The increase of the capital for the period as of September 30, 2014 until September 30, 2015, in the amount of

R$ 6,000,000 thousand, resulted from the use of Statutory Reserve to Operating Margin, approved by the Special

Meeting of Shareholders held on April 28, 2015, and Banco Central do Brasil authorization in July 20, 2015.

The Bank may, even without amending its by-laws, if approved by the Meeting of Shareholders, and in the conditions

established therein, increase its capital up to the limit of R$ 120,000,000 thousand by issuing common shares, for

which shareholders should be granted preference in the subscription in proportion to the number of shares held.

c) Instruments Qualifying to Common Equity Tier 1 Capital

On September 26, 2012, the Bank signed a Loan Agreement with the Federal Government, as hybrid capital and

debt instrument valued at up to R$ 8,100,000 thousand, without maturity date, with fixed remuneration, semiannual

interest payments, whose funds were allocated to finance agribusiness.

Until August 27, 2014, this instrument was authorized by Bacen to be included in the Tier I of the referential equity

(Additional Tier I Capital) and it was subject to the limitation set out in article 28 of the Resolution CMN 4,192 dated

March 1, 2013 (Note 29.b).


3rd

quarter 2015


76

On August 28, 2014, in the terms of Law 12,793, of April 2, 2013, an amendment to the contract was signed aiming

to make the instrument eligible as Common Equity Tier I Capital, in accordance with article 16 of Resolution CMN

4,192/2013.

After the amendment in the contract, remuneration became fully variable and the interest will be due on periods

matching with the fiscal year of the Bank, starting in January 1 and ending in December 31 of each year.

Remuneration for each fiscal year will be paid in a single annual installment adjusted by the Selic rate until the date of

effective payment, within 30 calendar days after making the payment of dividends for the result recorded in the fiscal

year.

The remuneration payment will be made exclusively with funds from profits and profit reserves that may be distributed

as at the year-end prior to the calculation date. Payment is ultimately at management`s discretion and there will not

be cumulative unpaid interest. If payment or dividend credit are not made (including in the form of interest on own

capital) before December 31 of the following fiscal year, the accrued amounts will no longer be due.

If the balance of retained earnings, of profit reserves, including legal reserve, and of the Bank’s capital reserve are

insufficient to absorb losses calculated in the closing balance of the fiscal year, this instrument will not be

remunerated and the Bank will use the accrued interest and the principal balance, in this order, up to the amount

necessary to offset the remaining losses, effectively constituting a pay down of the instrument.

The instrument does not have maturity date and it can be payable only in situations of the dissolution of the issuing

institution or by repurchase operations authorized by Bacen. In case of dissolution of the Bank, the payment of the

principal and the debt charges will be subordinated to the payment of other liabilities.

There will not be, under any circumstances, preferred compensation of the instrument, including relating to other

equity elements classified in the Reference Equity.

On September 22, 2014, Bacen considered the instrument as eligible to the Common Equity Tier I Capital in the form

of CMN Resolution 4,192/2013 since August 28, 2014. So the instrument mentioned was reclassified to the

Shareholders` Equity, for purposes of disclosure in the consolidated financial statements.

d) Revaluation reserves

The revaluation reserves, totaling R$ 2.747 thousand (R$ 2,805 thousand in December 31, 2014 and R$ 2,832

thousand in September 30, 2014), refer to revaluations of assets made by the associates/subsidiaries.

In the period from January 1, 2015 to Sep 30, 2015, there was a reserve realization of R$ 58 thousand (R$ 1,732

thousand in the period from January 1, 2014 to September 30, 2014), due to depreciation, transferred to Retained

Earnings (Accumulated Losses), net of taxes. In accordance with CMN Resolution 3,565/2008, the remaining amount

will be maintained until the date of its effective realization.

e) Capital and profit reserves

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Profit Reserves 25,809,320 26,625,511 23,141,903

Legal reserve 5,898,540 5,468,217 5,180,834

Statutory reserves 19,910,780 21,157,294 17,961,069

Operating margin 16,725,506 16,946,706 13,912,573

Equalization of dividends 3,185,274 4,210,588 4,048,496

The legal reserve is intended to ensure the integrity of the capital and can only be used to offset losses or increase

capital. The Legal reserve is increased by 5% of the net profit for the period, before any other allocation, as long as it

does not exceed 20% of capital.

The Statutory reserve for operating margin aims to guarantee an operating margin consistent with the development of

the Bank’s operations. It consists of up to 100% of net income, after the legal allocations, including dividends, and is

limited to 80% of the capital.


3rd

quarter 2015


77

Statutory reserve for dividend equalization provides funds for the payment of dividends, consisting of up to 50% of

the net income, after legal allocations, including dividends, limited to 20% of the capital.

f) Earnings per share


2015 Jan 1 to Sep 30,

2014

Net income attributable to shareholders (R$ thousand) 3,014,754 2,722,146 11,621,215 8,287,336

Weighted average number of shares (basic and diluted) 2,794,596,340 2,797,457,565 2,795,613,950 2,801,441,756

Earnings per share (basic and diluted) (R$) 1.08 0.97 4.16 2.96

g) Interest on own capital/Dividends and destination of the income

Introducing payment schedule of interest on own capital and dividends:

Amount Amount per share

(R$) Base date of share

position Payment date

1st quarter/2015

Interest on own capital paid (1)

1,054,134 0.377 Mar 23, 2015 Mar 31, 2015

Dividends paid 1,261,461 0.451 May 21, 2015 May 29, 2015

2nd quarter/2015


810,594 0.291 Jun 11, 2015 Jun 30, 2015

Complementary interest on own capital paid (1)

347,343 0.124 Aug 21, 2015 Sep 1, 2015

Dividends paid 39,046 0.014 Aug 21, 2015 Sep 1, 2015

3rd quarter/2015


743,037 0.266 Sep 11, 2015 Sep 30, 2015

Complementary interest on own capital payable 476,981 0.171 Nov 23, 2015 Dec 2, 2015

Total Destined to Shareholders 4,732,596 1.694

Interest on own capital (1)

3,432,089 1.229

Dividends 1,300,507 0.465

Net income for the period 11,621,215




1st quarter/2014


882,332 0.315 Mar 11, 2014 Mar 31, 2014

Dividends paid 227,611 0.081 May 19, 2014 May 30, 2014

2nd quarter/2014


899,716 0.321 11.06.2014 30.06.2014

Dividends paid 216,417 0.077 19.08.2014 29.08.2014

3rd quarter/2014


941,310 0.337 Sep 11, 2014 Sep 30, 2014

Dividends paid 155,816 0.056 Nov 14, 2014 Nov 28, 2014



2,723,358 0.973

Dividends 599,844 0.214


(1) Amounts subject to the rate of 15% Withholding Tax.

In accordance with Laws 9,249/1995 and 9,430/1996 and the Bank's Bylaws, Management decided on the payment

of Interest on own capital to its shareholders plus additional dividends, equivalent to 40% of the net income.

The interest on own capital is calculated based on adjusted net equity value and is limited on a pro rata die basis to

the variation of long-term interest rate, as long as there is profit (before the deduction of interest on own capital) or

reserves for retained earnings and profit reserves of at least twice its value.

To comply with the Income Tax legislation, the amount of interest on own capital was recorded as "Financial

expenses" and, for purposes of disclosure in these financial statements, reclassified to "Retained earnings". The total


3rd

quarter 2015


78

interest on own capital in the period from Jan 1, 2015 to Sep 30, 2015, provided an expense reduction on tax charges

totaling R$ 1,433,837 thousand (R$ 1,089,343 thousand in the period from Jan 1, 2014 to Sep 30, 2014).

h) Reconciliation of Net Income and Shareholders' Equity

Net Income Shareholders’ Equity


2015 Jan 1 to Sep 30,

2014 Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Banco do Brasil 3,014,754 2,722,146 11,621,215 8,287,336 72,411,410 69,820,212 70,745,901

Instruments eligible to common equity tier 1 capital (1)

35,291 20,671 210,273 20,671 8,100,000 8,100,000 8,100,000

3,050,045 2,742,817 11,831,488 8,308,007 80,511,410 77,920,212 78,845,901

Unrealized gains (2) 12,096 37,579 56,561 (21,437) (314,244) (400,470) (354,869)

Non-controlling Interests -- -- -- -- 3,617,282 3,093,452 2,755,027

BB-Consolidated 3,062,141 2,780,396 11,888,049 8,286,570 83,814,448 80,613,194 81,246,059

(1) The Instrument Eligible as CET1 was registered in the liabilities in the Individual Financial Statements and its interest recognized as expenses with securities sold under repurchase agreements, meanwhile, this Instrument was reclassified to Shareholder’s Equity in the consolidated financial statements, aiming to improve the quality and transparency of these consolidated financial statements (Notes 3 and 24.c).

(2) In the period from Jan 1 , 2015 to Sep 30, 2015, there was the realization of unrealized results arising from the assignment of credits from the Bank to Ativos S.A.

i) Accumulated Other Comprehensive Income


Opening balance

Net change Tax effects Closing balance Opening balance

Net change Tax effects Closing balance

Securities available for sale

Banco do Brasil (757,714) (2,100,322) 461,151 (2,396,885) (294,593) (578,486) 272,267 (600,812)

Subsidiary abroad 30,118 (27,082) (36) 3,000 24,654 1,661 1,517 27,832

Associates and subsidiaries (191,869) (213,018) 113,677 (291,210) (193,076) 101,669 (40,977) (132,384)

Cash Flow Hedge

Associates and subsidiaries 1,716 (2,600) 884 -- 1,562 115 (46) 1,631

Actuarial Gains/(Losses) on Pension Plans

(8,680,091) (3,884,108) 1,419,368 (11,144,831) (2,670,596) (6,271,308) 2,701,472 (6,240,432)

Total (9,597,840) (6,227,130) 1,995,044 (13,829,926) (3,132,049) (6,746,349) 2,934,233 (6,944,165)

j) Noncontrolling Interests

Shareholders’ Equity

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Banco Patagonia S.A. 1,270,377 855,224 743,024

Besc Distribuidora de Títulos e Valores Mobiliários S.A. 28 28 27

BB Tecnologia e Serviços S.A. 60 57 52

BB Seguridade S.A. 2,346,817 2,238,143 2,011,924

Non-controlling Interest 3,617,282 3,093,452 2,755,027


3rd

quarter 2015


79

k) Shareholdings (Number of shares)

Number of shares issued by the Bank to shareholders which, directly or indirectly, hold more than 5% of the shares:

Sharedholders Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Shares % Total Shares % Total Shares % Total

Federal Government 1,653,379,882 57.7 1,659,005,282 57.9 1,660,155,282 57.9

Ministério da Fazenda 1,453,487,115 50.7 1,453,487,115 50.7 1,453,487,115 50.7

Fundo Fiscal de Investimento e Estabilização 105,024,600 3.7 110,650,000 3.9 110,650,000 3.8

Caixa F1 Garantia Construção Naval 87,368,167 3.0 87,368,167 3.0 88,518,167 3.1

Fundo Garantidor para Investimentos 7,500,000 0.3 7,500,000 0.3 7,500,000 0.3

Caixa de Previdência dos Funcionários do Banco do Brasil - Previ

297,403,914 10.4 297,387,714 10.4 298,256,114 10.4

BNDES Participações S.A. - BNDESPar (1)

-- -- -- -- 2,187,548 0.1

Treasury shares (2)

72,864,196 2.5 68,881,576 2.4 68,241,620 2.4

Other Shareholders 841,769,028 29.4 840,142,448 29.3 836,576,456 29.2

Total 2,865,417,020 100.0 2,865,417,020 100.0 2,865,417,020 100.0

Resident Shareholders 2,245,788,437 78.4 2,279,461,556 79.6 2,281,622,618 79.6

Non Resident Shareholders 619,628,583 21.6 585,955,464 20.4 583,794,402 20.4

(1) Related to the Controller, but not part of the control block.

(2) Includes, on Sep 30, 2015, 42,709 shares of the Bank held by BB DTVM (29,138 shares in Dec 31, 2014 and Sep 30, 2014).

Number of shares issued by the Bank, held by the Board of Directors, the Executive Board and the Audit Committee:

Commom shares (ON)

(1)

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Board of Directors (except for Bank’s CEO, listed in the Bank’s Executive Committee)

1 10,007 8,007

Executive Committee 147,669 112,867 126,342

Fiscal Council 1,176 1,176 1,176

Audit Committee 10,075 75 75

(1) The shareholding interest of the Board of Directors, Executive Committee, Fiscal Council and Audit Committee represents approximately 0.006% of the Bank's capital stock.

l) Movement of shares outstanding/Free Float

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Total % Total % Total %

Free float at the starting date 840,019,565 29.3 833,621,216 29.1 833,621,216 29.1

Disposal of shares by Caixa F1 Garantia Construção Naval -- 10,777,100 9,627,100

Acquisition of shares by BNDESPar -- 5,522,648 3,335,100

Disposal of shares by FGO - Shares Investments -- 896,508 896,508

Disposal / (Acquisition) of shares by Previ (16,200) 1,404,300 535,900

Disposal of shares by FFIE - Fundo Fiscal de Investmento e Estabilização

5,625,400 -- -- -- -- --

Acquisition of shares - repurchase program (4,183,700) (12,311,300) (11,671,300)

Other Changes (1)

176,284 109,093 97,574

Free Float at the ending date (2)

841,621,349 29.4 840,019,565 29.3 836,442,098 29.2

Outstanding shares 2,865,417,020 100.0 2,865,417,020 100.0 2,865,417,020 100.0

(1) Refers mainly to changes coming from Technical and Advisory Boards.

(2) According to the Law 6,404/1976 and the regulation of BM&FBovespa's New Market. The shares held by the Board of Directors and Executive committee are not included.

m) Treasury shares

On July 13, 2012, the Board of Directors approved the repurchase program of up to 50 million shares within 180 days

from that date, with the objective of acquiring shares to be held in treasury for subsequent sale or withdrawal without

further capital reduction, aiming to generate value for shareholders. This program was in effect until January 8, 2013,

and 20,200,000 shares were acquired for an amount of R$ 461,247 thousand. Minimum, average and maximum cost

per share were R$ 18.28, R$ 22.83 e R$ 26.78 respectively.


3rd

quarter 2015


80

On June 13, 2013, the Board of Directors approved the repurchase program of up to 50 million shares, under the

same conditions as the previous program, however, valid for up to 365 days from that date. This program finished on

June 6, 2014, and 43,126,700 shares were acquired for R$ 1,014,504 thousand. The minimum, average and

maximum cost per share were R$ 18.84, R$ 23.52 and R$ 28.67 respectively. From the acquisitions relating to this

program, 353,756 shares were used for variable compensation programs.


same conditions as the previous program. This program finished on May 18, 2015, and 6,021,900 shares were

acquired for R$ 155,481 thousand. The minimum, average and maximum cost per share were R$ 22.66, R$ 25.82

and R$ 29.27 respectively. From the acquisitions relating to this program, 318,633 shares were used for variable

compensation programs.

On May 18, 2015, the Board of Directors approved the repurchase program of up to 50 million shares, under the

same conditions as the previous program. Until Sep 30, 2015, 3,623,700 shares were acquired for R$ 67,902

thousand. The minimum, average and maximum cost per share were R$ 17.90, R$ 18.74 and R$ 21.10, respectively.

None of the shares acquired in this program were used for variable compensation programs.

On Sep 30, 2015, the Bank had 72,864,196 treasury shares, amounting to R$ 1,697,380 thousand, of which

72,249,837 shares result from repurchase programs, 614,327 shares result from acquisition for share-based payment

and 32 were shares left over from mergers.

n) Share-Based Payment

2011 Program

In February 2012, 132,501 shares were purchased at an average cost per share of R$ 27.61, placed in treasury and,

thereafter, transferred to the members of the Executive Commitee and blocked for trading. The annual installments

were released for trading on March 8, 2013, March 10, 2014 and March 9, 2015.

2012 Program

The 2012 Program was developed under the CMN Resolution 3,921 of November 25, 2010, which describes the

remuneration policy for executives of financial institutions and establishes that at least 50% of variable remuneration

shall be paid in shares or share-based instruments, of which at least 40% should be deferred for future payment, over

a minimum period of three years, established according to the risks and activities overseen by the executives.

The Bank purchased 212,301 shares for payment of variable remuneration, at an average cost of R$ 26.78 per

share. Of these, 53,108 shares were transferred on March 10, 2014 and 53,063 shares on March 09, 2015, the other

shares were deferred for future transfer, if all transfer restrictions are met, as scheduled below.

Share-based Payment - Estimated schedule for transfer Number of shares Scheduled Date

Second installment 53,063 Mar 3, 2016

Third installment 53,063 Mar 3, 2017

Total 106,126

The BB DTVM purchased 19,792 shares of Banco do Brasil (BBAS3) at an average cost of R$ 26.78 per share, in

compliance with the variable remuneration policy defined for the Executive Board, of which 13,452 shares have been

transferred to the members of Executive Committee (3,170 shares in 1st quarter/2015). The other 6,340 shares are

deferred for future payment, as scheduled below, if all transfer restrictions are met.



Fourth installment 3,170 Mar 3, 2017

Total 6,340


3rd

quarter 2015


81

2013 Program

The Bank allocated 353,800 treasury shares with an average cost of R$ 20.36 per share to the variable remuneration

program, of which 70,856 shares have already been transferred on March 11, 2014 and 70,736 shares on March 2,

2015. The others installments were deferred for future transfer as appropriate considering the risks and the activities

overseen by the executives. The schedule below summarizes the future transfers to beneficiaries, if all transfer

restrictions are met.


Second installment 70,736 Mar 2, 2016


Fourth installment 70,736 Mar 2, 2018

Total 212,208

In compliance with the variable remuneration policy defined for the Executive Board of BB DTVM, 24,546 shares

were acquired by BB DTVM at an average cost of R$ 23.83. Of these, 4,918 shares were transferred on 2014 year

and the remaining shares were deferred for future transfer, in four annual installments, as scheduled below, if all

transfer restrictions are met.


Second installment 4,907 Apr 18, 2016

Third installment 4,907 Apr 17, 2017

Fourth installment 4,907 Apr 16, 2018

Total 14,721

2014 Program


program, of which 63,399 shares have already been transferred on February 27, 2015 and the others were deferred

for future transfer as appropriate considering the risks and the activities overseen by the executives. The schedule

below summarizes the future transfers to beneficiaries if all transfer restrictions are met.


First installment 63,321 Feb 27, 2016

Second installment 63,321 Feb 27, 2017

Third installment 63,321 Feb 27, 2018

Fourth installment 63,321 Feb 27, 2019

Total 253,284

The BB DTVM purchased 27,063 shares of Banco do Brasil (BBAS3) at an average cost of R$ 22.98 per share, in

compliance with the variable remuneration policy defined for the Executive Board, of which 5,415 shares have been

transferred to the members of Executive Committee in 1st half /2015. The other shares are deferred for future

payment, as scheduled below, if all transfer restrictions are met.


First installment 5,412 Apr 4, 2016

Second installment 5,412 Apr 3, 2017

Third installment 5,412 Apr 2, 2018

Fourth installment 5,412 Apr 1, 2019

Total 21,648


3rd

quarter 2015


82

25 - TAXES

a) Breakdown of income tax (IR) and social contribution expenses (CSLL)


2015 Jan 1 to Sep 30,

2014

Current values (361,656) (1,265,736) (7,290,657) (4,754,840)

Domestic income tax and social contribution (186,000) (1,149,953) (6,845,709) (4,387,258)

Foreign income tax (175,656) (115,783) (444,948) (367,582)

Deferred values 7,744,370 888,860 12,444,297 1,703,490

Deferred tax liabilities (773,161) (384,044) (1,177,476) (908,989)

Leasing transactions - portfolio adjustment and accelerated depreciation -- (39,955) 42,056 2,088

Mark to Market (MTM) (576,564) (101,717) (762,536) 68,678

Actuarial gains (15,283) (87,086) (112,658) (531,089)

Interest and inflation adjustment of fiscal judicial deposits (105,505) (81,392) (278,725) (228,078)

Foreign profits (46,202) (38,905) (85,969) (192,241)

Transactions carried out on the futures market 3,187 (20,003) 52,246 35,167

Recovered term credits (32,794) (14,986) (31,890) (63,514)

Deferred tax assets 8,517,531 1,272,904 13,621,773 2,612,479

Temporary differences (1)

7,803,938 1,180,504 12,792,163 2,592,508

Tax losses/CSLL negative bases 7,853 (48) (34,288) (728)

Mark to Market (MTM) 705,633 92,448 863,791 20,699

Transactions carried out on the futures market 107 -- 107 --

Total 7,382,714 (376,876) 5,153,640 (3,051,350)

(1) Includes, in the 3rd quarter/2015, the amount of R$ 3,404,756 thousand related to the capitalization of tax credits resulting from the increase of CSLL rate (Law 13,169/2015).

b) Reconciliation of income tax and social contribution charges


2015 Jan 1 to Sep 30,

2014

Profit before taxation and profit sharing (3,453,027) 3,926,772 9,678,184 13,550,805

Total charges of IR (25%) and CSLL (15% up to August/2015 and 20% since September/2015)

(1)

1,581,121 (1,570,709) (3,671,364) (5,420,322)

Charges upon Interest on own capital 549,008 376,524 1,433,836 1,089,343

Equity in subsidiaries and associates 1,280,376 270,949 1,872,177 (11,547)

Employee profit sharing 178,498 153,950 650,538 465,933

Other amounts (2)

3,793,711 392,410 4,868,453 825,243

Income Tax and Social Contribution 7,382,714 (376,876) 5,153,640 (3,051,350)

(1) The Provisional Measure 675 of May 21, 2015, converted into Law 13,169 of October 6, 2015, increased the rate of CSLL of financial institutions and companies in the field of private insurance and capitalization from 15% to 20%, since September 1, 2015, increasing social contribution expenses, as well as corresponding tax credits.


c) Tax expenses


Cofins (778,703) (822,292) (3,008,209) (2,328,983)

ISSQN (245,863) (214,834) (708,284) (614,579)

PIS/Pasep (133,222) (137,904) (531,185) (390,185)

Other (161,158) (102,055) (399,256) (279,275)

Total (1,318,946) (1,277,085) (4,646,934) (3,613,022)


3rd

quarter 2015


83

d) Deferred tax liabilities

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Arising from positive adjustments of benefits plans (1)

66,734 273,173 2,033,250

Arising from interest and inflation adjustment of fiscal judicial deposits 486,308 452,830 442,834

Arising from mark-to-market 1,247,255 317,567 388,425

Arising from recovered term credits 215,700 183,809 170,267

Related to foreign profit 85,968 -- 192,241

Overseas entities 97,855 80,324 75,925

Arising from leasing portfolio adjustment 92,833 141,805 185,981

Arising from futures market transactions -- 58,616 31,195

Other 80,056 119,749 104,914

Total deferred tax liabilities 2,372,709 1,627,873 3,625,032

Income tax 1,089,009 902,872 2,022,309

Social contribution 756,492 551,960 1,225,363

Cofins 453,512 148,853 324,611

PIS/Pasep 73,696 24,188 52,749

(1) The realization of deferred tax liabilities on actuarial gains is dependent on the realization of the values of actuarial asset (Note 27).

e) Deferred tax assets (Tax Credit)


Balance Constitution(1)

Write-off Balance Balance

Temporary differences 27,397,051 22,988,527 (7,052,065) 43,333,513 27,264,330

Allowance for loan losses 17,175,330 12,045,858 (5,164,623) 24,056,565 16,734,887

Provisions 7,328,158 4,330,068 (1,219,497) 10,438,729 7,698,875

Negative adjustments of benefits plans 165,954 107,607 -- 273,561 193,124

Mark to Market (MTM) 1,037,835 2,297,930 (537,601) 2,798,164 1,032,878

Other provisions (2)

1,689,774 4,207,064 (130,344) 5,766,494 1,604,566

CSLL written to 18% (MP 2,158/2001) 1,276,570 -- (20,592) 1,255,978 1,254,654

Tax losses/ negative bases 374,997 24,347 (28,343) 371,001 393,080

Excess depreciation 451,946 -- (44,216) 407,730 471,763

Total deferred tax assets 29,500,564 23,012,874 (7,145,216) 45,368,222 29,383,827

Income tax 17,851,667 11,982,208 (4,454,628) 25,379,247 17,758,842

Social contribution 11,561,312 10,860,469 (2,641,008) 19,780,773 11,530,231

Cofins 75,342 146,406 (42,649) 179,099 81,509

PIS/Pasep 12,243 23,791 (6,931) 29,103 13,245


(2) Includes , in the period from January 1 to September 30, 2015, the amount relating to the tax charges from the unrealized result derived from the strategic partnership between BB Elo and Cielo in the electronic means of payment business (Note 2.c).

f) Deferred tax assets (Tax Credit - Not Recorded)

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Overseas tax credits 1,213,015 863,209 722,539

Temporary differences -- 81,773 81,120

Total tax credits 1,213,015 944,982 803,659

Income tax 758,134 590,609 502,282

Social contribution 454,881 354,373 301,377


3rd

quarter 2015


84

Realization expectative

The expectation of realization of the deferred tax assets (tax credits) is based on a technical study, prepared in

June 30, 2015, and the present value is determined based on the average rate of funding of Banco do Brasil

Future value Present value

In 2015 5,849,838 5,068,716

In 2016 9,337,842 7,911,242

In 2017 9,320,841 7,666,374

In 2018 9,054,458 7,237,196

In 2019 2,344,168 1,817,707

In 2020 112,038 59,370

In 2021 111,506 54,595

In 2022 83,767 38,316

In 2023 99,968 42,848

In 2024 84,303 33,921

IN 2025 1,013 368

Total tax credits June 30, 2015 36,399,742 29,930,653

In the period from January 01 to September 30, 2015, it was possible to observe the realization of tax credits at

Banco do Brasil, in the amount of R$ 6,716,919 thousand corresponding to 99.57% of the projection of use for the

period of 2015 contained in the technical study prepared on December 31, 2014.

The realization of the nominal value of tax credits registered, considering the recovery of those written-off during the

lawsuits (Note 28.d), based on a technical study conducted by Banco do Brasil on June 30, 2015, is projected for 4

years in the following proportions:

Tax losses/CSLL

recoverable (1)

Diferences

intertemporary (2)

In 2015 15% 15%

In 2016 32% 25%

In 2017 30% 25%

In 2018 13% 25%

In 2019 1% 7%

From 2020 9% 3%

(1) Projected consumption linked to the capacity to generate IR and CSLL taxable amounts in subsequent periods.

(2) The consumption capacity results from the movements of provisions (expectation of reversals, write-offs and uses).


3rd

quarter 2015


85

26 - RELATED PARTY TRANSACTIONS

The costs of salaries and other benefits granted to key management personnel of the Banco do Brasil Group

(Executive Board, Audit Committee, Board of Directors and Fiscal Council):


2015 Jan 1 to Sep 30,

2014

Short-term benefits 9,592 9,247 37,833 35,274

Fees and social charges 8,639 8,438 28,792 28,597

Executive Board 7,896 7,601 26,552 26,191

Audit Committee 491 662 1,557 1,878

Board of Directors 148 85 383 270

Fiscal Council 104 90 300 258

Variable remuneration (cash) and social charges -- -- 6,669 4,883

Other 953 809 2,372 1,794

Share-based payment benefits -- -- 5,889 3,369

Total 9,592 9,247 43,722 38,643

In accordance with the Bank’s policy of variable remuneration, established in compliance with CMN Resolution

3,921/2010, the variable remuneration of Executive Directors is paid in shares (Note 24.n).

The Bank does not offer post-employment benefits to its key management personnel, except for those who are part

of the staff of the Bank.

The Bank does not grant loans to the key management personnel, pursuant to the prohibition to all financial

institutions established by Banco Central do Brasil.

The transactions between the consolidated companies are eliminated in the consolidated financial statements. In

relation to transactions with entities controlled by the Tesouro Nacional (National Treasury) by joint control or

significant influence, the Bank discloses only the most significant transactions.

The Bank disclosure the transactions with National Treasury. Among the transactions, the operations of extension of

rural credit are highlighted, which are rights with the National Treasury, derived from cession of operations of rural

credit extensioned under the Resolution CMN 2,238/1996. The amounts receivable of National Treasury regarding

the interest rates equalization of programs encouraged by the Federal Government, under the Law 8,427/1992 are

highlighted too. The equalization of rates, a type of economical subsidy, represents a differential rate between the

funding cost, plus the administrative and tax costs, and the charges for the borrower of the rural credit. The amount of

equalization is adjusted by Selic Rate since its calculation to the payment from National Treasury, that is performed

according to budget programming of that Body, as established by legislation, preserving the remuneration of the

Bank.

The Bank has banking transactions with these related parties, such as interest bearing and non-interest bearing

deposits, loans (except for key management personnel), sale and repurchase transactions and acquisition of loan

portfolios. There are also services rendered and guarantee agreed.

These transactions are conducted under terms and rates consistent with those practiced with third parties when


The resources applied in federal government securities and in funds and programs from onlendings of the Official

Institutions are listed in Notes 8 and 18, respectively.

The Bank has instituted the Fundação Banco do Brasil (FBB), which aims to promote, support, encourage and

sponsor actions in the fields of education, culture, health, social welfare, recreation and sports, science and

technology and assistance to urban-rural communities. In the period from 01.01 to 09.30.2015, the Bank made

contributions to FBB in the amount of R$ 45,668 thousand (R$ 34,647 thousand in the period from 01.01 to

09.30.2014).


3rd

quarter 2015


86

The Bank granted to BB Elo Cartões Participações S.A., its wholly owned subsidiary, irrevocably and irreversibly, and

without accounting effect, the contractual rights on the receipt of interchange fees inherent to the activities of

management of post-paid bill payment transactions and management of purchasing functionality via debit in payment

arrangements, due to the formation of strategic partnership with Cielo (Note 2.c).

The information related to Bank's contributions and other transactions with other sponsored entities are disclosed in

Note 27.

Acquisition of Portfolio of Loans Transferred by Banco Votorantim

3rd quarter/2015 3rd quarter/2014 Jan 1 to Sep

30, 2015 Jan 1 to Sep 30,

2014

Assignment with substantial retention of risks and rewards (with co-obligation) 1,536,777 4,272,188 8,168,843 8,150,021

Unrealized result, net of tax effects (balance) 14,815 65,860 14,815 65,860

Summary of related party transactions

Sep 30, 2015

Controller (1)

Subsidiaries (2)

Jointly

controlled (3)

Associates

(4)

Key Management personnel

(5)

Other related parties

(6)

Total

Assets

Interbank deposits -- 93,659,902 966,369 -- -- -- 94,626,271

Securities -- 49,636,350 22,501 -- -- -- 49,658,851

Loan operations -- 592,644 16,693,436 53,824 -- 32,142,542 49,482,446

Receivables from related companies -- 58,446 31,297 -- -- 113 89,856

Other assets (7)

15,852,991 287,356 1,599,823 -- -- 255,578 17,995,748

Liabilities

Demand deposits 331,981 71,896 223,046 257 2,020 3,210,704 3,839,904

Saving deposits -- -- -- -- 3,220 272,839 276,059

Remunerated time deposits -- 10,873,891 676,193 -- 359 16,007,396 27,557,839

Securities sold under repurchase agreements -- 7,051,789 6,821,716 -- -- 3,211,792 17,085,297

Borrowings and onlendings 2,430,597 74,647,089 -- -- -- 88,114,647 165,192,333

Other liabilities 487,054 53,240,782 254,700 15,260 -- 256,298 54,254,094

Guarantees and Other Coobligations (8)

-- 3,790,398 6,800,000 -- -- -- 10,590,398

3rd quarter/2015

Income from interest and rendering of services

2,133,445 4,340,808 1,002,157 610 -- 1,126,289 8,603,309

Expenses from raising funds (29,386) (4,455,002) (21,606) (15,048) (71) (1,641,783) (6,162,896)

Jan 1 to Sep 30, 2015


6,003,197 9,661,937 2,885,717 1,370 -- 2,727,440 21,279,661


(1) National Treasury and agencies under the direct administration of the Federal Government.

(2) Companies are listed in Note 3 identified by item (1).



(5) Board of Directors, Executive Board, Audit Committee and Fiscal Council.

(6) Includes the most significant transactions with state-owned companies and private companies controlled by the Federal Government, such as: Petrobras, CEF, BNDES, Eletrobras, Fundo de Amparo ao Trabalhador – FAT, Fundo de Aval para Geração de Emprego e Renda – Funproger. In addition, entities linked to employees and sponsored entities: Cassi, Previ and others.

(7) The transactions with the Controller refer mainly to Extension of rural credits – National Treasury transactions (Note 11.a), interest rate equalization – agricultural crop and receivables – National Treasury (Note 11.b).

(8) Includes Contract of Opening of a Revolving Interbank Credit Line with Banco Votorantim.


3rd

quarter 2015


87


Sep 30, 2014

Controller (1)

Subsidiaries (2)

Jointly

controlled (3)

Associates

(4)


(5)


(6)

Total

Assets


Securities -- 44,092,424 120,917 -- -- -- 44,213,341

Loan operations -- 86,069 15,465,837 84,606 -- 24,985,903 40,622,415

Receivables from related companies -- 43,917 7,655 -- -- -- 51,572

Other assets (7)

13,575,915 43,471 3,865,905 233 -- 88,263 17,573,787

Liabilities

Demand deposits 549,157 25,618 67,252 95 1,180 1,384,778 2,028,080

Saving deposits -- -- -- -- 1,635 297,769 299,404

Remunerated time deposits -- 4,840,694 392,908 -- 1,703 15,693,573 20,928,878

Securities sold under repurchase agreements -- 5,835,213 3,426,090 -- -- 14,390 9,275,693


Other liabilities 196,703 45,193,812 385,388 11,196 -- -- 45,787,099


-- 3,012,646 6,800,000 -- -- -- 9,812,646

3rd quarter/2014


1,478,086 2,275,307 590,480 438 -- 571,759 4,916,070


Jan 1 to Sep 30, 2014


3,976,168 5,327,491 1,771,060 1,110 -- 1,494,645 12,570,474











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27 - EMPLOYEE BENEFITS

Banco do Brasil sponsors the following private pension and complementary health plan entities that provide for

retirement and healthcare benefits for its employees:

Plans Benefits Classification

Previ - Caixa de Previdência dos Funcionários do Banco do Brasil

Previ Futuro Retirement and Pension Defined contribution

Plano de Benefícios 1 Retirement and Pension Defined benefit

Plano Informal Retirement and Pension Defined benefit

Cassi - Caixa de Assistência dos Funcionários do Banco do Brasil

Plano de Associados Health Care Defined benefit

Economus – Instituto de Seguridade Social

Prevmais Retirement and Pension Variable contribution

Regulamento Geral Retirement and Pension Defined benefit

Regulamento Complementar 1 Retirement and Pension Defined benefit

Grupo B’ Retirement and Pension Defined benefit

Plano Unificado de Saúde - PLUS Health Care Defined benefit

Plano Unificado de Saúde - PLUS II Health Care Defined benefit

Plano de Assistência Médica Complementar - PAMC

Health Care Defined benefit

Fusesc - Fundação Codesc de Seguridade Social

Multifuturo I Retirement and Pension Variable contribution

Plano de Benefícios I Retirement and Pension Defined benefit

SIM - Caixa de Assistência dos Empregados dos Sistemas Besc e Codesc, do Badesc e da Fusesc

Plano de Saúde Health Care Defined contribution

Prevbep - Caixa de Previdência Social Plano BEP Retirement and Pension Defined benefit


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Number of participants covered by benefit plans sponsored by the Bank

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Number of participants Number of participants Number of participants

Active Retired/Users Total Active Retired/Users Total Active Retired/Users Total

Retirement and Pension Plans

112,670 110,164 222,834 115,096 104,823 219,919 115,470 104,991 220,461

Plano de Benefícios 1 - Previ

18,769 92,639 111,408 23,981 88,138 112,119 24,388 87,949 112,337

Plano Previ Futuro 78,029 913 78,942 74,284 777 75,061 74,196 756 74,952

Plano Informal -- 3,593 3,593 -- 3,709 3,709 -- 3,835 3,835

Other plans 15,872 13,019 28,891 16,831 12,199 29,030 16,886 12,451 29,337

Health Care Plans 113,990 99,940 213,930 116,337 95,533 211,870 116,663 95,381 212,044

Cassi 101,538 92,658 194,196 103,269 88,134 191,403 103,524 87,958 191,482

Other plans 12,452 7,282 19,734 13,068 7,399 20,467 13,139 7,423 20,562

Bank’s contributions to benefit plans


Retirement and Pension Plans 300,642 281,701 932,351 922,754

Plano de Benefícios 1 - Previ (1)

121,532 117,452 386,216 419,095

Plano Previ Futuro 111,326 95,874 328,852 285,748

Plano Informal 38,008 38,914 124,856 128,408

Other plans 29,776 29,461 92,427 89,503

Health Care Plans 267,797 231,588 767,729 700,658

Cassi 233,480 199,525 671,702 613,549

Other plans 34,317 32,063 96,027 87,109

Total 568,439 513,289 1,700,080 1,623,412

(1) Refers to the contributions relating to participants subject to Agreement 97 and Plan 1, whereby these contributions occur by the realization of Fundo Paridade and Fundo de Utilização (Note 27.f). Agreement 97 aims to regulate the funding required to constitute a portion equivalent to 53.7% of guaranteed amount relating to the supplementary pension due to the participants who joined the Bank up to April 14, 1967 and who have retired or will retire after the aforementioned date, except for those participants who are part of the Plano Informal.

The Bank's contributions to benefit plans, during the second half/2015, are estimated in R$ 689,378 thousand.

Values recognized in income


Retirement and Pension Plans (137,396) 60,951 (228,224) 619,077

Plano de Benefícios 1 - Previ 40,070 228,331 317,929 1,119,731

Plano Previ Futuro (111,326) (95,874) (328,852) (285,748)

Plano Informal (31,836) (36,523) (102,071) (114,014)

Other plans (34,304) (34,983) (115,230) (100,892)

Health Care Plans (335,276) (314,010) (988,423) (1,029,359)

Cassi (303,306) (282,453) (895,524) (939,837)

Other plans (31,970) (31,557) (92,899) (89,522)

Total (472,672) (253,059) (1,216,647) (410,282)

a) Retirement and pension plans

Previ Futuro (Previ)

Participants in this plan are the Bank's employees hired from December 24, 1997. The active participants contribute

to Previ with an amount between 7% and 17% of their contribution salary, which varies based on the time of service

and the amount of the contribution salary. There is no contribution for retired participants. The sponsor contributes an

amount equal to the contributions of the participants, limited to 14% of the total contribution payroll of these

participants.


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Plano de Benefícios 1 (Previ)

The participants of this plan are the Bank’s employees who were enrolled up to December 23, 1997. Participants of

the Plan 1, both the actives as retirees contribute a percentage between 1.8% and 7.8% of salary or supplements.

Due to the establishment of parity between the Bank's and participants' contributions, in December 2000, the Fundo

Paridade was set up, and its resources are being used for the purpose of offsetting contributions to the plan (Note

27.f)

Plano Informal (Previ)

Banco do Brasil is exclusively and fully responsible for this plan whose contractual obligations include: (a) retirement

pensions to founder participants and pension payments to beneficiaries of participants deceased prior to April

14,1967; (b) payment of retirement supplements to the other participants employed by Banco do Brasil who retired

prior to April, 14,1967 or who, on that date, would have the right through length of service to retire and who had at

least 20 years of effective service with the Bank; and (c) increase in the amount of retirement benefits and of

pensions beyond those provided in the benefit plan of Previ, resulting from judicial decisions and from administrative

decisions due to restructuring of the career and salary plan and of incentives created by the Bank. On December 31,

2012, Banco do Brasil and Previ formalized an agreement whereby the Banco do Brasil paid, with Fundo Paridade

funds, 100% of the mathematical reserves relating to the Grupo Especial, that is Banco do Brasil’s exclusive liability,

upon which this group migrated from Plano Informal to Plano de Benefícios 1 of Previ. The Grupo Especial includes

participants from Plano de Benefícios 1 - Previ, listed in the first paragraph of the first clause of the contract of

December 24,1997, which received additional supplemental retirement arising from administrative decisions and/or

judicial decisions. (Note 27.f)

Prevmais (Economus)

The participants of this plan are the employees from Banco Nossa Caixa (merged into Banco do Brasil on November

30, 2009) enrolled after August 01, 2006, and the participants previously linked to the Regulamento Geral benefit

plan who opted for the distribution of their vested account balances. The funding for income benefits is equally

provided by employees and employer, not exceeding 8% of the participants' salary. The plan also provides risk

benefits, such as complementation of sickness aid, work - related accident, disability benefits and death pension.

Regulamento Geral (Economus)

The participants of this plan are the employees from Banco Nossa Caixa enrolled up to July 31, 2006. This plan is

closed to new members. Employees and the sponsor contribute equally, on average, with 12.11% of participation

salary.

Regulamento Complementar 1 (Economus)

The participants of this plan are the employees from Banco Nossa Caixa. This plan offers the benefits of

supplemental sickness benefit and annuity for death and disability. The cost of the plan is the responsibility of the

sponsor, participants and retirees/users.

Grupo B' (Economus)

The participants of this plan are the employees from Banco Nossa Caixa admitted between January 22,1974 and

May 13,1974 and their beneficiaries. This plan is closed to new members. The level of benefit which will be granted

when all the conditions set out in regulation are met, is known only a priori.

Multifuturo I (Fusesc)

The participants of this plan are the employees from Banco do Estado de Santa Catarina - Besc (merged into Banco

do Brasil on September 30, 2008) enrolled after January 12, 2003 and the employees previously linked to Plano de

Benefícios I (Fusesc) who opted for this plan. Employees and sponsor equally contribute from 2.33% to 7% of

participation salary to that plan, as determined by each participant.


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Plano de Benefícios I (Fusesc)

The participants of this plan are the employees from Besc enrolled until January 11, 2003. This plan is closed to new

members. Employees and the sponsor contribute equally, on average, with 9.89% of participation salary.

Plano BEP (Prevbep)

Participants of this plan are the employees from Banco do Estado do Piauí – BEP (merged in to Banco do Brasil on

November 30, 2008). Employees and the sponsor contribute equally, on average, with 3.58% of participation salary.

b) Health Care Plans

Plano de Associados (Cassi)

The Bank is the sponsor of a health plan managed by Cassi the main objective of which is to provide coverage for

expenses related to the promotion, protection, recovery and rehabilitation of a member's health and of his/her

enrolled beneficiaries. Each month, the Bank contributes with a sum equivalent to 4.5% of the total payroll or of the

total retirement or pension plan benefit. Monthly contributions from members and pension beneficiaries amount to 3%

of the payroll or the total retirement or pension plan benefits and co-participation in some hospital procedures.

Plano Unificado de Saúde - PLUS (Economus)

The participants of this plan are the employees from Banco Nossa Caixa. Participation in this plan takes place by

means of a 1.5% contribution of gross salary, without limit, covering the owner and his/her preferred dependants,

deducted from the owner's payroll and 10% as co-participation in the price of each medical visit / low-cost exam

made by the owner and his/her dependants (preferred and non-preferred).

Plano Unificado de Saúde - PLUS II (Economus)

For employees from Banco Nossa Caixa. Participation in this plan takes place by means of a 1.5% contribution of

gross salary, without limit, covering the owner and his/her preferred dependants, deducted from the owner's payroll

and 10% as co-participation in the price of each medical visit / low-cost exam made by the owner and his/her

preferred dependants and children of age. The plan does not provide for non-preferred dependents.

Plano de Assistência Médica Complementar - PAMC (Economus)

The participants of this plan are the employees from Banco Nossa Caixa stationed in the State of São Paulo. The

plan owners are those employees retired due to disability in Groups "B" and "C", and their dependents, who

participate in costs in as much as they use it, and according to the progressive salary table.

Plano de Saúde (SIM)

The participants of this plan are the employees from Besc, in addition to the employees who are linked to other

sponsors (Badesc, Codesc, Bescor, Fusesc and SIM itself). Monthly contributions from active beneficiaries amount to

3.44% of the gross remuneration, including the 13th salary, monthly contributions from inactive beneficiaries amount

to 8.86%, and those from the sponsors amount to 5.42%. The beneficiaries also contribute 0.75% per dependent.

The plan also provides for joint participation in ambulatory care procedures.

c) Risk factors

The Bank may be required to make extraordinary contributions to Previ, Economus, Fusesc and Prevbep,

which might have a negative effect on operating income.

The criteria used to determine the Bank's obligation to the set of sponsored entities and plans (Previ, Economus,

Fusesc and Prevbep) include long-term actuarial and financial estimates and assumptions, as well as the application

and interpretation of regulatory standards in effect on this date. Accordingly, inaccuracies inherent in the use of

estimates and assumptions may result in divergences between the amount recorded and the amount actually

realized, resulting in negative impacts on the result of the Bank’s operations.


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d) Actuarial valuations

The actuarial valuations are prepared every six months and the information contained in the tables below refers to

those carried out on the balance sheet dates of June 30, 2015, December 31, 2014 and June 30, 2014.


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d.1) Changes in present value of defined benefit actuarial obligations

Plano 1 - Previ Plano Informal - Previ Plano de Associados - Cassi Other plans

1st half/2015 2014 1st half/2014 1st half/2015 2014 1st half/2014 1st half/2015 2014 1st half/2014 1st half/2015 2014 1st half/2014

Opening balance (122,884,677) (113,522,849) (113,522,849) (920,380) (1,004,111) (1,004,111) (5,830,331) (6,333,578) (6,333,578) (6,428,867) (5,971,976) (5,971,976)

Interest cost (7,468,633) (14,412,148) (7,261,271) (55,620) (121,305) (62,667) (356,192) (755,247) (411,994) (391,616) (750,257) (383,901)

Current service cost (212,439) (502,741) (245,908) -- -- -- (46,337) (116,703) (69,065) (18,284) (38,970) (20,041)

Past service cost -- -- -- (14,614) (25,402) (14,824) -- -- -- -- -- --

Benefits paid net of retirees contributions 4,496,005 8,394,631 4,197,920 86,848 185,004 89,275 248,533 507,409 237,699 226,981 424,664 205,858

Remeasurements of actuarial gain/ (losses) (3,972,084) (2,841,570) (5,373,112) (58,871) 45,434 (30,558) (334,409) 867,788 786,475 270,336 (92,328) (74,060)

Closing balance (130,041,828) (122,884,677) (122,205,220) (962,637) (920,380) (1,022,885) (6,318,736) (5,830,331) (5,790,463) (6,341,450) (6,428,867) (6,244,120)

Present value of actuarial liabilities with surplus (130,041,828) (122,884,677) (122,205,220) -- -- -- -- -- -- (5,306,059) (5,115,870) (5,078,666)

Present value of actuarial liabilities without surplus -- -- -- (962,637) (920,380) (1,022,885) (6,318,736) (5,830,331) (5,790,463) (1,035,391) (1,312,997) (1,165,454)

d.2) Changes in fair value of plan assets


(1)


Opening balance 135,145,646 144,420,740 144,420,740 -- -- -- -- -- -- 5,115,870 5,033,968 5,033,968

Interest income 8,236,790 17,611,010 9,289,978 -- -- -- -- -- -- 311,455 621,916 323,813

Contributions received 264,684 581,637 301,643 86,848 185,004 89,275 248,533 507,409 237,699 69,444 151,576 71,899

Benefits paid net of retirees contributions (4,496,005) (8,394,631) (4,197,920) (86,848) (185,004) (89,275) (248,533) (507,409) (237,699) (226,981) (424,664) (205,858)

Actuarial gain / (loss) on plan assets (3,045,960) (19,073,110) (8,135,553) -- -- -- -- -- -- 36,271 (266,926) (145,156)

Closing balance 136,105,155 135,145,646 141,678,888 -- -- -- -- -- -- 5,306,059 5,115,870 5,078,666

(1) Refers to the following plans: Regulamento Geral (Economus), Prevmais (Economus), Regulamento Complementar 1 (Economus), Multifuturo 1 (Fusesc), Plano I (Fusesc) and Plano BEP (Prevbep).


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d.3) Amounts recognized in the balance sheet


Sep 30, 2015 Dec 31, 2014 Sep 30, 2014 Sep 30, 2015 Dec 31, 2014 Sep 30, 2014 Sep 30, 2015 Dec 31, 2014 Sep 30, 2014 Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

1) Fair value of the plan assets 136,105,155 135,145,646 141,678,888 -- -- -- -- -- -- 5,306,059 5,115,870 5,078,666

2) Present value of actuarial liabilities (130,041,828) (122,884,677) (122,205,220) (962,637) (920,380) (1,022,885) (6,318,736) (5,830,331) (5,790,463) (6,341,450) (6,428,867) (6,244,120)

3) Surplus/(deficit) (1+2) 6,063,327 12,260,969 19,473,668 (962,637) (920,380) (1,022,885) (6,318,736) (5,830,331) (5,790,463) (1,035,391) (1,312,997) (1,165,454)

4) Surplus/(deficit) - plot sponsor 3,031,664 6,130,485 9,736,834 (962,637) (920,380) (1,022,885) (6,318,736) (5,830,331) (5,790,463) (780,372) (916,046) (830,514)

5) Amounts recognized in profit (1)

40,070 -- 228,331 (31,836) -- (36,523) (211,953) -- (195,446) (27,147) -- (29,089)

6) Amounts received from funds (Note 27.f)

(1)

121,532 -- 117,452 -- -- -- -- -- -- -- -- --

7) Benefits paid (1)

-- -- -- 38,008 -- 38,824 142,127 -- 112,517 24,965 -- 23,695

8) Net acturial (liability)/asset (4+5+6+7)

(1)

3,193,266 6,130,485 10,082,617 (956,465) (920,380) (1,020,584) (6,388,562) (5,830,331) (5,873,392) (782,554) (916,046) (835,908)

(1) Changes occurred after the actuarial valuation from June.

(2) Refers to the portion of the surplus/(deficit) due from the sponsor. The actuarial assets recorded in Other Receivables (Note 11.b) will be realized before the end of the plan where the end of the plan is understood as the date in which the last commitment will be paid.

d.4) Maturity profile of defined benefit actuarial obligations

Duration(1)

Expected benefit payments

(2)

Up to 1 year 1 to 2 years 2 to 5 years Over 5 years Total

Plano 1 (Previ) 9.96 4,608,122 9,885,549 30,180,904 223,387,620 268,062,195

Plano Informal (Previ) 5.67 100,257 151,122 373,263 918,138 1,542,780

Plano de Associados (Cassi) 11.95 254,818 499,722 1,443,435 15,716,334 17,914,309

Regulamento Geral (Economus) 10.31 236,403 435,903 1,309,107 10,563,360 12,544,773

Regulamento Complementar 1 (Economus) 15.68 963 1,057 3,818 110,908 116,746

Plus I e II (Economus) 6.47 24,124 44,734 114,887 354,790 538,535

Grupo B' (Economus) 8.69 8,138 14,880 43,182 242,746 308,946

Prevmais (Economus) 13.67 5,712 11,004 35,479 569,873 622,068

Multifuturo I (Fusesc) 11.24 2,694 5,067 15,559 153,937 177,257

Plano I (Fusesc) 11.20 18,393 35,723 117,431 1,239,857 1,411,404

Plano BEP (Prevbep) 10.45 1,336 2,581 8,638 76,028 88,583

(1) Weighted average duration, in years, of the defined benefit actuarial obligation.

(2) Amounts considered not discounted to present value.


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d.5) Breakdown of the amounts recognized in statement of income relating to defined benefit plans


3rd quarter/2015

Jan 1 to Sep 30, 2015

Jan 1 to Sep 30, 2014

3rd quarter/2015

Jan 1 to Sep 30, 2015

Jan 1 to Sep 30, 2014

3rd quarter/2015

Jan 1 to Sep 30, 2015

Jan 1 to Sep 30, 2014

3rd quarter/2015

Jan 1 to Sep 30, 2015

Jan 1 to Sep 30, 2014


Interest cost (1,937,201) (5,671,518) (5,418,354) (28,075) (83,696) (91,986) (187,411) (543,603) (583,621) (101,967) (313,383) (168,771)

Expected yield on plan assets 2,031,342 6,149,737 6,725,247 -- -- -- -- -- -- 78,824 234,244 99,329

Unrecognized past service cost -- -- -- (3,761) (18,375) (22,028) -- -- -- -- -- --

Expense with active employees -- -- -- -- -- -- (91,353) (281,042) (263,332) (39,126) (113,802) (106,725)

Other adjustments/reversals -- -- -- -- -- -- -- -- -- -- (2,024) 534

(Expense)/income recognized in the Statement of Income

40,070 317,929 1,119,731 (31,836) (102,071) (114,014) (303,306) (895,524) (939,837) (66,274) (208,129) (190,414)

d.6) Composition of the plan assets

Plano 1 - Previ Other plans

Jun 30, 2015 Dec 31, 2014 Jun 30, 2014 Jun 30, 2015 Dec 31, 2014 Jun 30, 2014

Fixed income 48,793,698 46,440,688 45,252,237 4,707,270 4,490,711 4,432,914

Floating income (1)

73,170,131 74,607,857 82,655,463 206,671 227,912 270,185

Real estate investments 8,288,804 8,177,129 7,962,354 167,583 165,839 152,275

Loans and financing 4,899,786 4,946,825 4,887,922 107,094 104,875 103,605

Other 952,736 973,147 920,912 117,441 126,533 119,687

Total 136,105,155 135,145,646 141,678,888 5,306,059 5,115,870 5,078,666

Amounts listed in fair value of plan assets

In the Bank’s own financial instruments 10,792,928 10,940,267 11,056,439 22,825 25,537 21,486

In properties or other assets used by the Bank 153,568 163,817 161,836 7,443 7,621 8,032

(1) Includes, in Plano de Benefícios 1 from Previ, the amount of R$ 25,534,844 thousand (R$ 28,835,180 thousand as of December 31, 2014 and R$ 35,517,370 thousand as of September 30, 2014), related to the assets that are not priced in active markets.


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d.7) Main actuarial assumptions adopted in each period


Jun 30, 2015 Dec 31, 2014 Jun 30, 2014 Jun 30, 2015 Dec 31, 2014 Jun 30, 2014 Jun 30, 2015 Dec 31, 2014 Jun 30, 2014 Jun 30, 2015 Dec 31, 2014 Jun 30, 2014

Inflation rate (p.a.) 5.95% 6.07% 5.82% 5.93% 6.23% 5.82% 5.97% 6.04% 5.82% 5.96% 6.07% 5.82%

Real discount rate (p.a.) 6.18% 6.31% 6.10% 6.33% 6.19% 5.94% 6.14% 6.33% 6.14% 6.17% 6.31% 6.12%

Nominal rate of return on investments (p.a.) 12.50% 12.76% 12.28% -- -- -- -- -- -- 12.50% 12.76% 12.30%

Real rate of expected salary growth (p.a.) 1.01% 1.01% 0.25% -- -- -- -- -- -- 0.73% 0.73% 0.65%

Actuarial life table AT-2000 AT-2000 AT-2000 AT-2000

Capitalization method Projected credit unit Projected credit unit Projected credit unit Projected credit unit

In order to determine the values for the defined benefit plans, the Bank uses methods and assumptions different from those submitted by the entities sponsored.

CPC 33 (R1) prescribes the accounting, as well as the effects that occurred or that will occur in the entities that sponsor employee benefits plans. However, the sponsored entities

themselves must comply with the rules issued by the Ministério da Previdência Social, through the Conselho de Gestão da Previdência Complementar (CGPC) and the

Superintendência Nacional de Previdência Complementar (Previc). The most significant differences are in the definition of the assumptions used in Plano 1 – Previ.


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d.8) Differences in assumptions of the Plano 1 - Previ

Bank Previ

Real discount rate (p.a.) 6.18% 5.00%

Actuarial life table AT-2000 Soft AT-2000 (reduced by 10%)

Evaluation of assets - Exclusive funds Market value or discounted cash flow Discounted cash flow

Capitalization method Projected credit unit Aggregate Method

d.9) Reconciliation of amounts calculated in Plan 1 - Previ/Bank

Plan assets Actuarial liabilities Effect in surplus

Jun 30, 2015

Dec 31, 2014

Jun 30, 2014

Jun 30, 2015 Dec 31, 2014 Jun 30, 2014 Jun 30,

2015 Dec 31,

2014 Jun 30,

2014

Value determined - Previ 138,383,752 134,450,819 140,139,983 (130,269,710) (122,073,122) (118,866,137) 8,114,042 12,377,697 21,273,846

Incorporation of values from agreement 97 14,164,540 13,687,582 13,795,151 (14,164,540) (13,687,582) (13,795,151) -- -- --

Incorporation of values from Grupo Especial 1,117,743 1,071,445 1,072,293 (1,117,743) (1,071,445) (1,072,293) -- -- --

Adjustment in the value of plan assets (1) (17,560,880) (14,064,200) (13,328,539) -- -- -- (17,560,880) (14,064,200) (13,328,539)

Adjustment in the liabilities - discount rate/ capitalization method

-- -- -- 15,510,165 13,947,472 11,528,361 15,510,165 13,947,472 11,528,361

Value determined - Bank 136,105,155 135,145,646 141,678,888 (130,041,828) (122,884,677) (122,205,220) 6,063,327 12,260,969 19,473,668

(1) Refers mainly to adjustments made by the Bank in determining the fair value of the investments in Litel, Neoenergia and in securities held to maturity.

d.10) Sensitivity analysis

The sensitivity analyses are based on changes in an assumption, maintaining all the other assumptions constant. In

practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.

The methods used for the elaboration of the sensitivity analysis did not change from the previous period, and updates

in the discount rate were made.

Jun 30, 2015 Life table Salary increase Interest rate

+1 age -1 age +0.25% -0.25% +0.25% -0.25%

Plano 1 (Previ) Present value of defined benefit actuarial

obligations 130,041,828 127,821,703 132,229,747 130,269,657 129,816,055 127,584,360 132,600,784

Surplus/(deficit) in the plan 6,063,327 8,283,452 3,875,408 5,835,498 6,289,100 8,520,795 3,504,371

Plano Informal (Previ) Present value of defined benefit actuarial

obligations 962,637 926,205 999,951 -- -- 951,488 974,080

Surplus/(deficit) in the plan (962,637) (926,205) (999,951) -- -- (951,488) (974,080)

Plano de Associados (Cassi) Present value of defined benefit actuarial

obligations 6,318,736 6,175,539 6,459,834 6,320,119 6,317,388 6,184,061 6,458,919

Surplus/(deficit) in the plan (6,318,736) (6,175,539) (6,459,834) (6,320,119) (6,317,388) (6,184,061) (6,458,919)

Regulamento Geral (Economus) Present value of defined benefit actuarial

obligations 4,934,361 4,872,147 4,994,169 -- -- 4,834,410 5,052,068



Present value of defined benefit actuarial obligations

36,268 37,633 34,935 -- -- 35,115 37,477


Plus I e II (Economus) Present value of defined benefit actuarial

obligations 347,113 334,852 359,340 -- -- 341,001 353,443


Grupo B' (Economus) Present value of defined benefit actuarial

obligations 136,158 132,991 139,246 -- -- 133,585 138,822

Surplus/(deficit) in the plan (136,158) (132,991) 139,246 -- -- (133,585) 138,822

Prevmais (Economus) Present value of defined benefit actuarial

obligations 208,810 208,606 209,055 -- -- 202,783 215,163

Surplus/(deficit) in the plan 79,893 80,098 79,649 -- -- 85,921 73,541

Multifuturo I (Fusesc) Present value of defined benefit actuarial

obligations 74,196 73,256 75,105 -- -- 72,577 75,887


Plano I (Fusesc) Present value of defined benefit actuarial

obligations 557,057 556,983 557,290 557,058 557,054 551,106 563,226

Surplus/(deficit) in the plan 54,493 54,566 54,260 54,492 54,496 60,444 48,324

Plano BEP (Prevbep) Present value of defined benefit actuarial

obligations 47,487 46,767 48,186 47,668 47,310 46,502 48,515



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e) Overview of actuarial asset/(liability) recorded by the Bank

Actuarial assets Actuarial liabilities

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014 Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Plano 1 (Previ) 3,193,266 6,130,485 10,082,617 -- -- --

Plano Informal (Previ) -- -- -- (956,465) (920,380) (1,020,584)

Plano de Associados (Cassi) -- -- -- (6,388,562) (5,830,331) (5,873,392)

Regulamento Geral (Economus) -- -- -- (427,276) (532,645) (464,461)


-- -- -- (1,476) (694) (1,231)

Plus I e II (Economus) -- -- -- (344,766) (360,250) (330,148)

Grupo B' (Economus) -- -- -- (137,019) (125,279) (130,931)

Prevmais (Economus) 40,520 38,511 30,312 -- -- --

Multifuturo I (Fusesc) 37,608 28,602 18,348 -- -- --

Plano I (Fusesc) 28,067 15,006 22,596 -- -- --

Plano BEP (Prevbep) 21,788 20,703 19,607 -- -- --

Total 3,321,249 6,233,307 10,173,480 (8,255,564) (7,769,579) (7,820,747)

f) Allocations of the Surplus - Plano 1

3rd quarter/2015 3rd quarter/ Jan 1 to Sep 30,

2015 Jan 1 to Sep 30,

2014

Fundo Paridade

Opening balance 113,220 116,566 118,889 172,124

Restatement 2,932 2,366 13,695 11,912

Contributions to Plano 1 - Agreement 97 -- -- (11,829) (60,552)

Early contribution to amortize - Grupo Especial (1) (1)

-- (522) (4,603) (5,074)

Closing balance 116,152 118,410 116,152 118,410


Opening balance 8,666,911 8,045,908 8,155,243 7,794,154

Contributions to Plano 1 (121,532) (116,930) (369,784) (353,469)

Restatement 223,041 162,856 982,961 651,149

Closing balance 8,768,420 8,091,834 8,768,420 8,091,834

Total funds allocated surplus 8,884,572 8,210,244 8,884,572 8,210,244

(1) Refers to the payment of 100% of the mathematical reserves for guarantees of additional supplemental retirement for the Grupo Especial.

f.1) Fundo Paridade

The plan was funded, up to December 15, 2000, through a contribution of 2/3 (two thirds) from the Bank and another

1/3 (one third) from participants. As from December 16, 2000, in order to adjust to the requirements of Constitutional

Amendment N° 20, both the Bank and the participants started to make a contribution of 1/2 (one half), and an

agreement was signed by the parties involved and duly approved by the Supplementary Pension Plan Secretariat.

The cost for the implementation of the equal contributions was covered by using the Plan's surplus at the time. As a

result of this agreement, the Bank was also entitled to recognize the historical amount of R$ 2,227,254 thousand,

which was recorded in Fundos de Destinação Superávit - Previ. This Asset is updated on a monthly basis based on

the actuarial goal (INPC + 5% per year) and, since January 2007, has been used to offset any financial imbalance in

the ratio between the Unamortized Reserve and Advanced Amortization arising from the agreement entered into with

Previ in 1997, which granted supplementary benefits to the participants of Plano 1 who joined the Plan up to April

14,1967 and had not retired before that date.

f.2) Fundo de Utilização

The fund, composed of resources transferred from the Fundo de Destinação, can be used by the Bank for

reimbursement or as a reduction in future contributions, after fulfilling the requirements established by applicable law.

The Fundo de Utilização is updated by the actuarial goal (INPC + 5% p.a.).


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28 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES, LEGAL LIABILITIES - TAXES AND SOCIAL SECURITY

Contingent Assets

According to CPC 25 – Provisions, Contingent Liabilities and Contingent Assets, approved by CMN Resolution

3,823/09, contingent assets are not recognized in the financial statements

Labor Lawsuits

The Bank is defendant to labor lawsuits mainly filed by former employees or trade unions of the banking industry. The

allowance for probable losses represents various claims, such as: compensation, overtime, distortion of the working

day, additional function and representation amongst others.

Tax Lawsuits

The Bank, in spite of its conservative profile, is subject to tax inquiries (inspections conducted by the tax authorities),

which may eventually lead to tax assessments, such as: the composition of the calculation of the taxable profit for

income tax/social contribution (deductibility) and discussion regarding the incidence of taxes, when certain taxable

event occur. Most assessments are related to ISSQN, income tax, social contribution, PIS/COFINS, IOF and

Employer Social Security Contributions. As a guarantee for some of them, the Bank has pledged cash, bonds, real

estate or made judicial deposits when necessary, preventing the Bank to be included in restrictive registration, as well

as not to obstruct the semiannual renewal of its tax regularity certificate.

The main tax lawsuits involving the companies of Banco do Brasil, whose amounts are calculated in proportion to the

shares held by the Bank are highlighted below:

Cofins: judicial discussions of the group of security companies over the constitutionality of Law 9,718/1998, which

introduced taxation by Cofins considering all incomes (premiums, financial and other non-operating income) in this

tax calculation basis. Between May 1999 and May 2009, the companies made judicial deposits related to Cofins

maintaining a provision in the same amount, which are being adjusted according to the Selic rate. With the revogation

of the paragraph 1 of the Article 3 of Law 9,718/1998 by Law 11,941/2009, from June 2009, the companies began to

pay Cofins considering only incomes from premiums on the basis of calculation of this tax, reversing the provision of

Cofins made on financial and non-operating income. Due to the vagueness of the current case law on the

enlargement of Cofins calculation base to include the financial and non-operating income, as well as due to the

existence of Opinion PGFN/CAT 2,773/2007, companies began to classify probability of loss of merits as "possible".

The merits of the tax on income from premiums, the probability of loss is "probable" and is properly accrued, totaling

R$ 801,258 thousand. Currently the records are pending of Special and extraordinary Appeals judgment.

Cielo discusses in court the suspension of the enforceability of Cofins according to Law 10,833/2003, which

introduced the system of calculation of the non-cumulative method of the 7.6% rate, depositing the amounts

calculated monthly in court. Since then, the difference between the tax payable calculated at the rate established by

the cumulative scheme and not cumulative is accrued, totaling R$ 346,702 thousand. The judicial process is

suspended in the Federal Regional Court of the 3rd Region/SP, in order to recognize the general repercussion of the

matter by the Supreme Court in case of extraordinary appeals, pending judgment.

CSLL: Brasilprev judicially challenges the constitutionality of Law 11,727/2008 on the increase in the rate of Social

Contribution on Net Income of 9% to 15% applicable to financial institutions and similar companies starting from May

2008. Since January 2009, the company has been deposited in court the amount of the tax discussed, that is the

difference of 6% rate while maintaining equivalent provision of R$ 318,054 thousand.

Civil Lawsuits

Civil lawsuits consist mainly of: lawsuits of customers and users of our network asking for material and moral

damages indemnity related to banking products and services and Economic Plans.

The indemnities for material and moral damages are based on consumer protection laws and are generally settled in

Special Civil Courts-JEC, whose value is limited to forty times the minimum wage.


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The Bank is a defendant in proceedings seeking the payment of the difference between the actual inflation rate and

the inflation rate used for the adjustment of financial investments when economic plans were implemented in the late

1980’s and early 1990’s, known as the Bresser Plan, the Verão Plan and the Collor Plans I and II (or Economic

Plans).

Although the Bank complied with the laws and regulations in place at the time, these lawsuits have been recorded in

provisions, taking into consideration the claims where the Bank is the defendant and the outcome of loss is judged to

be probable, which is determined after the analysis of each demand, based on the current decision of the Superior

Court of Justice (STJ). Regarding disputes relating to economic plans, the Federal Supreme Court (STF) suspended

the prosecution of all cases on appeal, until the Court issues a definitive pronouncement on the right under litigation.

a) Provisions for Labor, Tax and Civil Claims

In compliance with the CMN Resolution 3,823/2009, the Bank makes allowance for labor, civil and tax lawsuits that

have risk of probable losses.

The estimates of outcome and financial effect are determined by the nature of the actions, the judgment of the

management of the entity through the opinion of legal counsel, complemented by complexity and similar transactions

expertise.

Changes in the provisions for civil, tax and labor claims classified as probable


Labor lawsuits

Opening balance 2,535,447 2,959,588 2,735,089 3,425,747

Addition 592,479 182,714 1,109,242 882,016

Reversal of the provision (109,312) (9,841) (305,822) (984,910)

Paid out (315,568) (279,896) (997,330) (656,928)

Inflation correction 75,797 88,083 237,559 274,723

Amounts merged/added -- -- 105 --

Closing balance 2,778,843 2,940,648 2,778,843 2,940,648

Tax lawsuits

Opening balance 2,150,101 2,159,844 1,997,160 2,016,385

Addition 71,788 65,329 240,142 272,391


Paid out (10,255) (12,718) (18,644) (19,074)


Closing balance 2,219,910 1,906,641 2,219,910 1,906,641

Civil lawsuits

Opening balance 6,276,045 5,377,416 5,772,357 4,811,852

Addition 2,083,839 523,736 4,537,846 2,940,874

Reversal of the provision (440,507) (76,802) (2,062,197) (1,564,334)

Paid out (293,083) (307,780) (908,973) (793,711)

Inflation correction 108,963 (31,257) 396,224 90,632

Closing balance 7,735,257 5,485,313 7,735,257 5,485,313

Total Labor, Tax and Civil 12,734,010 10,332,602 12,734,010 10,332,602


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Expected outflows of economic benefits

Labor Tax Civil

Up to 5 years 2,708,183 234,957 6,298,817

From 5 to 10 years 70,567 1,936,021 1,403,298

Over 10 years 93 48,932 33,142

Total 2,778,843 2,219,910 7,735,257

The scenario of unpredictability of the duration of proceedings, and the possibility of changes in the case law of the

courts, make values and the expected outflows of economic benefits uncertain.

b) Contingent Liabilities – Possible Loss

The lawsuits, tax and civil risks classified "possible loss" do not require provisions as per CPC 25 – Provisions,

Contingent Liabilities and Contingent Assets, approved by CMN Resolution 3,823/09. Lawsuits are labeled as

possible when the final outcome of the process is unclear but the probability of losing is judged to be less than more-

likely-than-not, but more than remote.

The amounts disclosed in the chart below represent the best estimated value that would be disbursed in the case of

an unfavorable judgment.

The balances of contingent liabilities classified as possible loss

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Labor lawsuits 807,447 901,466 959,099

Tax lawsuits (1)

14,386,425 11,955,386 11,518,805

Civil lawsuits 3,684,651 4,056,447 4,034,833

Total 18,878,523 16,913,299 16,512,737

(1) The main contingencies originate from (i) assessment for the payment of INSS contributions on: salary bonus paid under the collective agreements in the period from 1995 to 2006, in the amount of R$ 2,698,530 thousand; public transport benefits and the use of private car by employees of Banco do Brasil, in the amount of R$ 241,612 thousand; and employee profit share payments corresponding to the period from April 2001 to October 2003, in the amount of R$ 74,121 thousand and (ii) notices of tax assessment made by the Treasuries of the Municipalities, claiming ISSQN totaling R$ 1,504,079 thousand.

c) Deposits in Guarantee

Deposits given in guarantee of contingencies

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Labor lawsuits 4,513,990 4,103,332 3,977,041

Tax lawsuits 8,858,987 8,319,104 7,925,486

Civil lawsuits 14,948,355 10,833,712 9,637,949

Total 28,321,332 23,256,148 21,540,476

d) Legal Obligations

The Bank has a record in Other Liabilities - Tax and Social Security the amount of R$ 13,827,868 thousand

(R$ 13,141,399 thousand on December 31,2014 and R$ 12,936,428 thousand on September 30, 2014) relating to

the following action:


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Judicial Proceeding: Income and Social Contribution Taxes

On January 29, 1998, the Bank filed for a writ of mandamus No. 1999.34.00.002278-3, distributed to the 16th Federal

Court of Federal District claiming full compensation of accumulated losses for income tax purposes and negative

basis for the calculation of Social Contribution on Net Income (CSLL). Since then, the Bank has been fully offsetting

the tax loss and the negative basis of social contribution against income tax and social contribution, and has made

judicial deposits for the full amount due (70% of the amount offset). These deposits prompted the 16th Vara da

Justiça Federal do Distrito Federal (Federal Court of Distrito Federal) to issue an order recognizing the suspension of

chargeability of these taxes until final judgment of the Bank's claim, based on article 151, item II, of the Código

Tributário Nacional (CTN). The case was dismissed in the first instance and an appeal brought by the Bank was

denied by the TRF of the 1st Region. The decision was challenged by extraordinary appeal filed by the Bank on

October 1, 2002. Today, the appeal is pending in the Federal Court of the 1st Region awaiting the judgment by the

Supreme Court of another Extraordinary Feature (RE No. 591,340), which was recognized by the Supreme Court as

setting a relevant judicial precedent.

The offsetting of tax loss carry forward and recoverable CSLL has resulted in the write-off of deferred tax credits,

observing the limitation of 30%.

Deferred taxes including corporate income tax (IRPJ) and social contribution on net income (CSLL) on the interest /

inflation restatements of judicial deposits are being offset with the tax credits resulting from the provision related to

that judicial deposit, in conformity with paragraph 2, item II, article 1 of CMN Resolution 3,059/2002, with no impact

on income.

Based on the hypothesis of a successful outcome to this lawsuit, as of September 2005 and January 2009, the Bank

would have consumed the entire stock of tax loss carry forward and recoverable social contribution, respectively.

Therefore, since October 2005 and February 2009, the amounts of IRPJ and CSLL, respectively, are being paid in

full. Moreover, there would be a reclassification of resources from the account used to record judicial deposits to that

of cash and cash equivalents. Tax credits for the escrow deposits (principal) would be written off against the

allowance of IRPJ and CSLL and would be reversed against income, the provision for tax risks related to the

restatement of the deposits amounts to R$ 7,256,195 thousand.

If the Bank were unsuccessful in its lawsuit (situation in which the amounts deposited judicially would be converted

into income in favor of the Fazenda Nacional (Federal Tax Authority)), the portions of IRPJ tax credits on tax losses

and CSLL to offset would be reclassified to the representative asset account "IRPJ recoverable" and "CSLL

recoverable", respectively, that could be used since the accrual period starting October 2005 and February 2009,

observing the limitation of 30%. The taxes recoverable, which would result from the adjustments to prior year

Statements of Economic-Fiscal Information of Businesses, corresponds to R$ 5,390,572 thousand as of September

30, 2015 and updating by the Selic Rate results in a further recoverable amount of R$ 1,957,192 thousand. This sum

adjusts the provision for tax risks with respect to the updating of court deposits so that it will be sufficient to fully

cancel the risk of a loss.

e) The amounts related to this matter

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Judicial Deposits 16,138,929 15,418,982 15,204,014

Amount realized (70%) 7,817,011 7,817,011 7,817,011

Inflation correction 8,321,918 7,601,971 7,387,003

Legal Obligations - provision for lawsuit 13,827,868 13,141,399 12,936,428

Tax losses of IRPJ 3,002,033 3,002,033 3,002,033

CSLL negative bases/ CSLL recoverable 3,569,640 3,569,640 3,569,640

Provision for restatement of judicial deposit 7,256,195 6,569,726 6,364,755

The Banco Votorantim has Legal Obligations related to PIS/Pasep and ISSQN of R$ 2,602 thousand on September

30, 2015 (R$ 957 thousand on December 31, 2014 and R$ 327 thousand on September 30, 2014).


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29 - RISK AND CAPITAL MANAGEMENT

a) Risk Management Process

Banco do Brasil considers risks and capital management as one of the main vectors for the decision-making process.

The Institution has a process of identification of risks that will be part of the Institution's risks inventory, performed by

analysing the business segments that are explored, direct and indirectly, considering the Entities Related to Banco do

Brasil. The risks below are part of Banco do Brasil's Financial Conglomerate Relevant Risks Corporate Range:

a) Credit Risk; b) Counterparty Credit Risk; c) Concentration Risk; d) Liquidity Risk; e) Operational Risk; f) Market Risk; g) Banking Book Interest Rate Risk; h) Strategic Risk; i) Reputational Risk; j) Environmental Risk; k) Legal Risk; l) Participations Risk; m) Complementary Pension Fund Entities and Private Health Insurance Plan Operators for Employees Risk;

and n) Model Risk.

In the Bank, the collegiate risk management is performed completely segregated from the business units. Risk

management policies are approved by the Board of Directors. The Global Risk Superior Committee (CSRG), a forum

composed of the President and Vice-Presidents, is responsible for implementation and monitoring of these policies.

The guidelines issued by the CSRG are conducted by specific executive committees (credit, market, liquidity and

operational), which are groups formed by Directors.

To learn more about the risk and capital management process in Banco do Brasil, visit the information available in the

Risk Management Report at the website bb.com.br/ri.


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Financial Instruments - Fair Value

Financial instruments recorded in balance sheet accounts, compared to fair value:

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014 Unrealized gain/loss, net of tax effects

Book value Fair value Book value Fair value Book value Fair value On income On shareholders’ equity


Assets

Short-term Interbank Investments 349,195,643 349,186,304 304,236,604 304,197,645 317,820,441 317,780,104 (9,339) (38,959) (40,337) (9,339) (38,959) (40,337)

Securities 244,225,257 244,382,786 220,441,991 224,153,475 208,712,690 209,907,905 (3,643,539) 2,260,649 (127,251) 157,529 3,711,484 1,195,215

Adjustment of securities available for sale (Note 8.a) -- -- -- -- -- -- (3,801,068) (1,450,835) (1,322,466) -- -- --

Adjustment of securities held to maturity (Note 8.a) -- -- -- -- -- -- 157,529 3,711,484 1,195,215 157,529 3,711,484 1,195,215

Derivative financial instruments 6,488,435 6,488,435 2,201,466 2,201,466 1,722,582 1,722,582 -- -- -- -- -- --

Loan operations 647,897,904 646,561,262 618,499,161 612,894,768 598,022,445 594,866,578 (1,336,642) (5,604,393) (3,155,867) (1,336,642) (5,604,393) (3,155,867)

Liabilities

Interbank deposits 42,404,092 43,885,563 30,968,746 30,908,215 28,530,991 28,978,962 (1,481,471) 60,531 (447,971) (1,481,471) 60,531 (447,971)

Time deposits 205,644,072 206,238,092 214,483,944 214,533,535 221,777,370 222,020,460 (594,020) (49,591) (243,090) (594,020) (49,591) (243,090)

Liabilities related to repurchase agreement 331,364,474 329,392,582 306,045,575 304,818,732 319,722,968 318,732,844 1,971,892 1,226,843 990,124 1,971,892 1,226,843 990,124

Borrowings and onlendings 128,165,714 128,511,022 115,046,935 115,033,365 108,698,205 108,834,851 (345,308) 13,570 (136,646) (345,308) 13,570 (136,646)


Other Liabilities 343,608,921 343,608,921 299,178,072 297,212,179 289,143,434 287,648,911 -- 1,965,893 1,494,523 -- 1,965,893 1,494,523

Unrealized gain/(loss), net of tax effects (5,438,427) (165,457) (1,666,515) (1,637,359) 1,285,378 (344,049)

Determination of Fair Value of Financial Instruments

Short-term interbank investments: The fair value was obtained by discounting future cash flows, using interest rates traded by the market in similar operations on the balance sheet

date.

Securities: Securities are accounted for by market value, as allowed for in Bacen Circular No. 3,068/2001, except for securities held to maturity. The fair value of the securities,

including those held to maturity, is obtained from rates practised in the market.

Loan operations: The fair value of fixed rate operations has been estimated through the future cash flow discount method, considering the interest rates utilized by the Bank when

originating similar operations at the balance sheet date. For operations that are remunerated by floating rates, the fair value was equivalent to the book value itself.


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Interbank deposits: The fair value has been calculated by the discount of the future cash flows using rates currently

applicable in the market for fixed rate deposits. In case of floating operations the maturities of which are less than 30

days, the book value was deemed approximately equivalent to the fair value.

Time deposits: The same criteria adopted for interbank deposits are utilized in the determination of the fair value.

Liabilities related to repurchase agreement: For operations at fixed rates, the fair value was determined calculating

the discount of the estimated cash flows adopting a discount rate equivalent to the rates applied in contracting similar

operations on the last trading day. For floating operations, book values have been deemed approximately equivalent

to market value.

Borrowing and onlendings: Such operations are exclusive to the Bank with no similar operations in the market. Given

their specific characteristics, the exclusive rates for each fund, the inexistence of an active market or similar traded

instruments, the fair values of such operations are considered equivalent to the book value.

Other liabilities: Fair values have been determined by the discounted cash flow method, which takes into account

interest rates offered in the market for obligations with similar maturities, risks and terms.

Other financial instruments: Included or not in the balance sheet, fair value is approximately equivalent to the

corresponding book value.

Derivatives: According to Bacen Circular No. 3,082/2002, derivatives are recorded at market value. The market value

of derivatives was estimated in accordance with internal pricing models, with the use of the rates disclosed for

transactions with similar terms and indices on the last business day of the period.

Source of information regarding assets and liabilities measured at fair value in the balance sheet

According to the source of information in the measurement at fair value, the assessment techniques used by the

Bank are classified as follows:

Level 1 – Prices used are quoted in active markets for identical financial instruments. A financial instrument is

considered quoted in an active market if the quoted prices are readily and regularly available and these prices

represent real market transactions which occur regularly on an arm's length basis.

Level 2 – Other available information, excepted that from Level 1, is used, in which the prices are quoted in non-

active markets or for similar assets and liabilities, or other available information is used or that can be corroborated by

information observed in the market to support the assessment of the assets and liabilities.

Level 3 – Information that is not available in the market is used in the definition of the fair value. If the market for the

financial instrument is not active, the Bank establishes the fair value using the valuation technique which takes into

account internal data that is consistent with the economic methodologies accepted for pricing of financial instruments.

Assets and liabilities measured at fair value in the balance sheet

Balance at Sep 30,

2015 Level 1 Level 2 Level 3

Assets 233,482,355 157,680,353 75,307,885 494,118

Trading securities, measured by market value 118,139,120 96,812,669 21,326,452 --

Derivative financial instruments 6,488,435 -- 6,488,435 --

Available-for-sale securities, measured by market value 108,854,800 60,867,684 47,492,998 494,118

Liabilities 11,409,193 -- 11,409,193 --

Hedge funding 4,780,525 -- 4,780,525 --



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Balance at Dec 31,


Assets 208,507,774 129,548,096 78,430,915 528,763




Liabilities 7,634,262 -- 7,634,262 --

Hedge funding 4,191,103 -- 4,191,103 --


Balance at Sep 30,


Assets 195,895,815 119,799,551 75,550,671 545,593




Liabilities 6,805,554 -- 6,805,554 --

Hedge funding 3,887,367 -- 3,887,367 --


Changes on financial assets and liabilities measured at fair value in the balance sheet, classified as Level 3

3rd quarter/2015

Opening balance Acquisitions Disposal/ maturity

Income Closing balance

Assets

Available-for-sale securities, measured by market value 519,912 -- (38,046) 12,252 494,118

3rd quarter/2014

Opening balance Acquisitions Disposal/ maturity


Assets

Available-for-sale securities, measured by market value 550,754 545,593 (550,754) -- 545,593

Sensitivity analysis (CVM Instruction No. 475/2008)

Banco do Brasil manages its risks in a dynamic process, identifying, assessing, monitoring, and controlling market

risk exposure arising on its positions. In this context, the Bank takes into account the risk limits defined by the

Strategic Committees and possible scenarios, to act in a timely manner to reverse any adverse results.

In accordance with CMN Resolution No. 3,464/2007 and with Bacen Circular No. 3,354/2007, to manage more

efficiently its transactions exposed to market risks, Banco do Brasil separates its transactions, including derivative

financial instruments, as follows:

1) Trading Book: consisting of own positions held for trading or as a hedge for its trading portfolio, for which there is

an intention of trading prior to their contractual expiry, subject to normal market conditions and that do not have a

non-trading clause.

2) Banking Book: consisting of transactions not classified in the Trading Book whose feature is held to maturity.

The sensitivity analysis for all the operations with assets and liabilities of the Balance Sheet, in compliance with

CVM Instruction No. 475/2008 does not adequately reflect the market risk management process or the accounting

practices adopted by the Bank.

In order to determine the sensitivity of the Bank's capital to the impacts of market volatility (except Banco Votorantim

capital), simulations were performed with three likely scenarios, two of which assume adverse movements for the

Bank. The scenarios used are set out below:


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Scenario I: Likely situation, which reflects the perception of the Bank’s senior management, the scenario most likely

to occur for a 3-month horizon, considering macroeconomic factors and market information (BM&FBovespa, Anbima,

etc.). Assumptions: exchange rate real/dollar of R$ 3.95 and maintaining the Selic rate in 14.25% per annum based

on market conditions observed at September 30, 2015.

Scenario II: Possible situation. Assumptions adopted: parallel shock of 25.00% in the risk variables, based on market

conditions observed on September 30, 2015 considering the worst losses by risk factor and, therefore, ignoring the

dynamics of correlation between macroeconomic factors.

Scenario III: Possible situation. Assumptions adopted: parallel shock of 50.00% in the risk variables, based on market

conditions observed on September 30, 2015 considering the worst losses by risk factor and thus ignoring the


The tables below summarize the results for the Trading Portfolio (Trading), excluding Banco Votorantim's positions,

composed of public and private securities, derivative financial instruments and funds obtained through repurchase

agreements:

Risk Factor Concept

Scenario I

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Prefixed rate Risk of variation of prefixed

interest rates Maintenance -- Increase 4,632 Maintenance --

TMS and CDI indices Risk of variation of interest rate

indices Increase 39 Decrease 2 Decrease 3

IPCA index Risk of variation of inflation

indices Maintenance -- Increase (782) Maintenance --

Exchange rates variation

Risk of variation of foreign exchange rates

Decrease (1,907) Decrease (2,910) Decrease (6,478)

Risk Factor Concept

Scenario II

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)


interest rates Increase (1,492) Decrease (15,752) Decrease (3,664)


indices Increase (51) Increase (4) Increase (4)


indices Increase (1,209) Increase (1,141) Increase (1,036)




Risk Factor Concept

Scenario III

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)











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For transactions classified in the Banking Book, appreciations or depreciations resulting from changes in interest

rates practiced in the market do not imply in a significant financial or accounting impact on the Bank's income as a

result of the portfolio composition which is principally: loan operations (consumer credit, agribusiness, working capital,

etc.); retail funding (demand, time, and savings deposits), and securities, which are recorded in the books using the

contracted interest rates. In addition, it should be pointed out that these portfolios, except the securities available for

sale, have as their principal characteristic the intention to hold the respective operations to maturity and, hence they

are not subject to the effects of fluctuating interest rates, or the fact that such transactions are naturally related to

other instruments (natural hedge), hence minimizing the impacts of a stress scenario.

The tables below show a summary of the Trading Portfolio (Trading) and Non Trading (Banking) for the financial and

non-financial entities controlled by the bank, excluding Banco Votorantim:

Risk Factor Concept

Scenario I

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)


interest rates Maintenance -- Increase (5,007,316) Maintenance --

TR

Risk of variation of interest rate indices

Decrease (126,862) Increase 3,354,120 Decrease (286,059)

TBF Decrease (7,353) Increase 2,537 Decrease (8,252)

TJLP Decrease 853 Increase (9,270) Maintenance --

TMS and CDI Increase (44,351) Decrease (6,569) Decrease (10,019)

IGP-M

Risk of variation of inflation indices

Maintenance -- Increase (33,626) Maintenance --

IGP-DI Maintenance -- Increase (183) Maintenance --

INPC Maintenance -- Increase (107,864) Maintenance --

IPCA Maintenance -- Increase (534,840) Maintenance --

Foreign Currency rates Risk of variation of foreign

currency indices Increase 1,470,937 Increase 786,498 Increase 466,175

Exchange rate Risk of variation of foreign

exchange rates Decrease 10,307 Decrease (22,884) Decrease (47,818)

Risk Factor Concept

Scenario II

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)


interest rates Increase (13,305,147) Increase (14,071,513) Increase (13,262,585)

TR


Decrease (6,176,302) Decrease (9,794,504) Decrease (8,486,941)

TBF Decrease (3,896) Decrease (3,633) Decrease (3,666)

TJLP Increase (29,740) Increase (48,095) Increase (33,300)


IGP-M


Increase (180,618) Increase (45,740) Increase (49,017)

IGP-DI Increase (258) Increase (229) Increase (239)

INPC Increase (183,284) Increase (152,208) Increase (141,834)

IPCA index Increase (995.327) Increase (798,715) Increase (740,788)


currency indices Decrease (1,802,430) Decrease (851,179) Decrease (520,546)


exchange rates Increase (447,019) Decrease (468,260) Decrease (574,524)


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Risk Factor Concept

Scenario III

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)



TR






IGP-M





IPCA index Increase (1,864,766) Increase (1,502,484) Increase (1,393,497)


currency indices Decrease (3,760,981) Decrease (1,753,830) Decrease (1,069,328)


exchange rates Increase (894,037) Decrease (936,521) Decrease (1,149,048)

The scenarios used for preparing the framework for sensitivity analysis must use situations of deterioration of at least

25% and 50% of the variable risks, on an individuallized basis, as determined by CVM Instruction No. 475/2008.

Thus, the combined analysis of the results does not reflect real expectations, for example, simultaneous shocks of

increase in the prefixed interest rate and reduction of the TR rate are not consistent from the macroeconomic

perspective.

The derivative transactions classified in the Banking Book, do not represent a relevant market risk to Banco do Brasil,

as these positions are usually originated with the following objectives:

Swapping the index of funding and lending transactions performed to meet customer needs;

Hedging market risk, the purpose and effectiveness of which are described in Note 8.d. Also in this transaction, the interest and exchange rate variations have no effects on the Bank's income.

On September 30, 2015, the Banco do Brasil did not enter into any transaction classified as an exotic derivative, as

described in CVM Instruction No. 475/2008 - Attachment II.

Interest in Banco Votorantim

Simulations were also made with three possible scenarios, two of which assume adverse movements, as follows:

Scenario I: Likely situation, which reflects the perception of the Banco Votorantim’s senior management in the

scenario most likely to occur. Assumptions adopted: shock of 1.0% in the exchange rate real/dollar, from September

30, 2015, and parallel shock of 0.10% in the interest rate prefixed curve.

Scenario II: Assumptions adopted: parallel shock of 25% in the risk variables, based on market conditions observed

on September 30, 2015 and considering the worst losses by risk factor and, therefore, ignoring the dynamics of

correlation between macroeconomic factors.

Scenario III: Assumptions adopted: parallel shock of 50% in the risk variables, based on market conditions observed

on September 30, 2015 and considering the worst losses by risk factor and therefore ignoring the dynamics of


The tables below present the results from the exposure of the Bank, via its equity interest, to the trading portfolio of

Banco Votorantim:


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Risk Factor Concept

Scenario I

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)


interest rates Increase 33 Increase (32) Increase (419)

Foreign currency rates Risk of variation of foreign

currency rates Increase (529) Increase (816) Increase (1,013)

Foreign exchange fluctuation


Increase (4,377) Increase (586) Increase (1,947)

Price Indexes Risk of variation of inflation


Other Risk of variation of other rates Increase (28) Increase (61) Increase 3

Risk Factor Concept

Scenario II

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)


interest rates Decrease -- Increase (95) Increase (6,559)


currency rates Increase (5,151) Increase (2,604) Increase (2,770)






Other Risk of variation of other rates Decrease (3,972) Decrease (4,452) Decrease (29,161)

Risk Factor Concept

Scenario III

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)


interest rates Decrease -- Increase -- Increase (11,291)










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The tables below present the results from the exposure of the Bank, via its equity interest, to the trading and non-

trading book of Banco Votorantim:

Risk Factor Concept

Scenario I

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)


interest rates Increase (12,295) Increase (11,266) Increase (9,466)





Increase (1,441) Increase 1,172 Increase 320

TJLP Risk of variation of TJLP Increase 552 Increase 959 Increase 699

TR/TBF Risk of variation of TR/TBF Increase 14 Increase 64 Increase 80




Risk Factor Concept

Scenario II

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)







Increase (44,801) Decrease (71,897) Increase (60,443)

TJLP Risk of variation of TJLP Decrease (10,580) Decrease (15,907) Decrease (9,629)

TR/TBF Risk of variation of TR/TBF Decrease (69) Decrease (136) Decrease (186)




Risk Factor Concept

Scenario III

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)







Increase (84,786) Decrease (114,607) Increase (138,185)






b) Capital Management

On June 30, 2011, aligned with Pillar II of Basel, the Brazilian regulator, Banco Central do Brasil (Bacen), issued the

Conselho Monetário Nacional (CMN) Resolution No. 3,988, which established the requirement for financial

institutions to implement a capital management framework. Applying CMN Resolution, Banco do Brasil defined as

part of its structure Accounting, Risk Management, Controlling and Finance Units. Furthermore, in line with the CMN

Resolution, the Board of Directors appointed the Controller as responsible for Capital Management within Banco

Central do Brasil.


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Banco do Brasil has approaches that enable the identification and evaluation of significant risks incurred, including

those not covered by the Minimum Referential Equity Required (MRER) related to the Pillar I risks. Its policies and

strategies, as well as the capital plan, enable the maintenance of capital at a consistent level given the risks faced by

the institution. Stress tests are performed on a monthly basis and their impacts are assessed from a capital

perspective. Capital adequacy management reports are distributed to corporate units and to strategic committees,

which provide support to the decision making process of the Senior Management of the Bank.

The CMN Resolution No. 3,988/2011 also established the need for an Internal Capital Adequacy Assessment

Process (ICAAP), which was implemented by Banco do Brasil starting June 30, 2013. The responsibility for

coordinating ICAAP was assigned to the Bank’s Risk Management Unit. Meanwhile, the Internal Controls Unit, an

independent area segregated from the capital management structure, is responsible for the validation of ICAAP.

Finally, Internal Audit holds the institutional responsibility for annually evaluating the process of capital management.

To learn more about the capital management at Banco do Brasil, visit the website bb.com.br/ri.

Capital Adequacy Ratio

The Capital Adequacy Ratio was determined according to the criteria established by CMN Resolutions No.

4,192/2013 and No. 4,193/2013, which refer to the calculation of the Referential Equity (RE) and the Minimum

Referential Equity Required (MRER) in relation to Risk Weighted Assets (RWA), respectively, considering the

exposure to Banco Votorantim under the Equity Method (MEP) as determined by Bacen.

On October 1, 2013, Brazil adopted a set of legislation that implemented the recommendations of the Basel

Committee on Banking Supervision regarding the capital structure of financial institutions, known as Basel III. The

new rules adopted addressed the following issues:

I - new methodology for calculating regulatory capital, which continues to be divided into Tier I and II. The Tier I

consists of the Common Equity Tier I Capital – CET1 (net of Regulatory Adjustments) and Additional Tier I Capital

(AT1);

II - new methodology for calculating the capital required to be maintained, adopting minimum requirements for

Referential Equity, Tier I and Common Equity Tier I Capital (CET1), and the introduction of the Additional CET1.

From January 1, 2015, the percentage of deduction of prudential adjustments listed below increased to 40%:

goodwill;

intangible assets constituted after October 1, 2013;

actuarial assets related to defined benefit pension funds net of deferred tax liabilities;

non-controlling interests;

investments, directly or indirectly, above than 10% of the capital of unconsolidated entities similar to financial institutions, and insurance companies, reinsurance companies, capitalization companies and open pension entities (significant investments);

tax credits resulting from temporary differences that rely on the generation of future taxable profits or revenues for their realization;

tax credits resulting from tax loss of excess depreciation;

tax credits resulting from tax losses and negative base for social contribution on net income.

According to CMN Resolution No. 4,192/2013, these deductions will be gradually implemented at 20% per year, from

2014 to 2018, with the exception of deferred assets and funding instruments issued by institutions authorized to

operate by Banco Central do Brasil (Bacen) which have been fully deducted since October 2013.

On August 28, 2014, the Hybrid Instrument in the amount of R$ 8,100,000 thousand, was authorized by Banco

Central do Brasil to compose the Common Equity Tier 1 Capital of the Bank.

According to Bacen Resolution No. 4,192/2013 and No. 4,193/2013, from January 2015, the calculation of the

Regulatory Equity (RE) and the amount of Risk-Weighted Assets (RWA) should be elaborated based on Prudential

Conglomerate.


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Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Prudential Financial Financial

RE - Referential equity 136,633,692 126,588,485 123,713,046

Tier I 97,961,673 89,538,218 88,810,290

Common Equity Tier 1 Capital (CET1) 68,070,868 71,035,684 71,554,346

Shareholders' Equity 73,367,572 70,675,464 71,488,952

Instrument Qualifying as CET1 8,100,000 8,100,000 8,100,000

Regulatory adjustments (13,396,704) (7,739,780) (8,034,606)

Additional Tier 1 Capital (AT1) 29,890,805 18,502,534 17,255,944

Hybrid instruments authorized in accordance with CMN Resolution No. 4,192/2013

24,131,115 16,132,770 14,886,180

Hybrid instruments authorized in accordance with regulations preceding the CMN Resolution No. º 4,192/2013

(1)

5,759,690 2,369,764 2,369,764

Tier II 38,672,019 37,050,267 34,902,756

Subordinated Debt Qualifying as Capital 38,674,964 37,065,165 34,936,894

Subordinated Debt authorized in accordance with CMN Resolution No. 4,192/2013 - Financial Bills

5,569,004 3,959,773 2,307,987

Subordinated Debt authorized in accordance with regulations preceding the CMN Resolution No. 4,192/2013

33,105,960 33,105,392 32,628,907

Funds obtained from the FCO (2)

22,047,638 20,467,309 19,990,824

Funds raised in Financial Bills and CD (3)

11,058,322 12,638,083 12,638,083

Deduction from Tier II (2,945) (14,898) (34,138)

Funding instruments issued by financial institution (2,945) (14,898) (34,138)

Risk Weighted Assets (RWA) 843,590,334 785,973,522 771,393,820

Credit Risk (RWACPAD) 782,969,960 734,716,021 720,363,896

Market Risk (RWAMPAD) 24,231,284 11,545,497 11,317,920

Operational Risk (RWAOPAD) 36,389,090 39,712,004 39,712,004

Minimum Referential Equity Requirements (4)

92,794,937 86,457,087 84,853,320

Margin on the Minimum Referential Equity Required 43,838,755 40,131,398 38,859,726

Tier I Ratio (Tier I / RWA) 11.61% 11.39% 11.51%

Common Equity Tier 1 Capital Ratio (CET1 / RWA) 8.07% 9.04% 9.28%

Capital Adequacy Ratio (RE / RWA) 16.20% 16.11% 16.04%

(1) On 09.30.2015, based on the orientation of Bacen, it was considered the balance of the hybrid capital and debt instrument authorized by Bacen to compose the Tier 1 Capital of the Referential Equity according CMN Resolution 3,444/2007 and do not meet the relevant entry criteria, also related with the orientation established on article 28, sections I to X of CMN Resolution 4,192/2013.

(2) According to CMN Resolution No. 4,192/2013, balances of the FCO are eligible to compose the RE.

(3) On september 30, 2015, it was considered the balance of subordinated debt instruments that composed the RE in December 31, 2012, applying on it the decay of 30%, as determined by CMN Resolution No. 4,192/2013.

(4) According to CMN Resolution No. 4,193/2013, corresponds to the application of the "F" factor to the amount of RWA, where "F" equals: 11%, from October 1, 2013 to December 31, 2015; 9.875% from January 1, 2016 to December 31, 2016; 9.25%, from January 1, 2017 to December 31, 2017; 8.625% from January 1, 2018 to December 31, 2018 and 8%, from January 1, 2019.


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Regulatory Adjustments deducted from CET1:

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Funding instruments issued by financial institutions (1) (2)

(3,874,027) (3,714,071) (3,775,618)

Tax credits resulting from temporary differences that rely on the generation of future taxable profits or revenues for its realization (amount above 10% threshold)

(3)

(3,187,264) -- --

Intangible assets constituted after October 2013 (3)

(2,148,484) (1,066,295) (758,059)

Actuarial assets related to defined benefit pension funds net of deferred tax liabilities (3) (4)

(1,301,806) (1,192,027) (1,628,046)

Goodwill (3) (5)

(1,154,659) (715,281) (757,830)

Significant investments and tax credits resulting from temporary differences that rely on the generation of future taxable profits or revenues for their realization (amount exceeding the 15% threshold)

(3)

(635,389) (556,174) (640,823)

Non-controlling interests (3)

(508,162) (171,050) (148,610)

Tax credits resulting from tax losses and negative base for social contribution on net income

(3)

(502,401) (255,318) (250,932)

Tax credits resulting from tax loss of excess depreciation (3)

(65,052) (37,922) (39,392)

Deferred assets (2)

(19,460) (31,642) (35,296)

Total (13,396,704) (7,739,780) (8,034,606)

(1) Refers to the investment in Banco Votorantim.

(2) Regulatory Adjustments that are being fully computed since October, 2013, in accordance with CMN Resolution No. 4,192/2013.

(3) Regulatory Adjustments subject to phase-in, according to the CMN Resolution No. 4,192/2013.

(4) See notes 27.e – Benefits for Employees and 25.d - Taxes.

(5) The base value for calculating the goodwill is composed of: R$ 777,095 thousand in the investment line and R$ 2,109,553 thousand in the intangible assets line. The value in Intangible assets refers to the goodwill paid for the acquisition of Banco Nossa Caixa, merged in November/2009.

c) Fixed asset ratio

From 2015, the Fixed Asset Ratio is required only for the Prudential Conglomerate, totaling 15.27% on September

30, 2015, and it was calculated in compliance with CMN Resolutions No. 4,192/2013 and No. 2,669/1999.

In 2014 the Fixed Asset Ratio was calculated based on the Financial Conglomerate, amounting 22.18% on

December 31, 2014 and 21.97% on September 30, 2014.

30 - STATEMENT OF COMPREHENSIVE INCOME


2015 Jan 1 to Sep 30,

2014

Net income presented in the Statement of Income 3,062,141 2,780,396 11,888,049 8,286,570

Other comprehensive income

Accumulated other comprehensive income (Note 24.i) (1,648,356) (362,342) (6,227,130) (6,746,349)

Banco do Brasil (1,417,973) (322,469) (5,984,430) (6,849,794)

Subsidiaries abroad (22,606) (3,637) (27,082) 1,661

Associates and subsidiaries (207,777) (36,236) (215,618) 101,784

Income and social contribution taxes related to unrealized (gains) / losses (Note 24.i)

385,463 85,365 1,995,044 2,934,233

Other comprehensive income, net of income and social contribution taxes

(1,262,893) (276,977) (4,232,086) (3,812,116)

Comprehensive income 1,799,248 2,503,419 7,655,963 4,474,454

Comprehensive income - Non-controlling interests 448,086 377,841 1,330,818 1,025,787


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31 - OTHER INFORMATION

a) Distribution of Dividends and Interest on Own Capital

During a meeting held on March 16, 2015, the Board of Directors approved the setting of the payout rate equivalent

to the minimum of 40% of net income, for the year 2015, fulfilling the policy for payment of dividends yield and/or

interest on own capital on a quarterly basis, pursuant to art. 45 of the Bank's By-Laws.

b) Banco Postal

Since January 01, 2012, the Bank has had access to the Correios (Brazilian Postal and Telegraph Corporation)

network, with about 6.3 thousand service points located in 95% of Brazilian municipalities. Through this investment,

the Bank realized its strategic plan of increasing its service points to attend all the Brazilian municipalities.

On November 22, 2013, the Bank signed a Memorandum of Understanding with Correios, in order to analyze the

feasibility of establishing strategic partnerships relating to the Banco Postal (Postal Bank).

On February 27, 2014, continuing this analysis of Banco Postal (Postal Bank), the Bank and Correios signed an

"Agreement of the general terms and conditions of association” (Agreement). On March 05, 2014 the agreement was

submitted to the Conselho Administrativo de Defesa Econômica (CADE).

On May 06, 2014, CADE published, in the Diário Oficial da União (Oficial Gazette), the minutes of the 42th Ordinary

Session of the Judgment, with the final decision that approved the transaction, without any restrictions.

The agreement will expand the portfolio of products and services offered by the post office network.

The studies on the perpetuation of the Partnership of Banco Postal (Postal Bank) are still in progress between

partners and, once completed, they must be submitted to the appreciation to their respective regulatory, supervisory

and regulatory agencies, under the applicable law.

c) Investiment Funds Management

Funds managed by BB Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A.:

Numbers of Funds/Portfolios (in Units) Balance


Managed funds 613 600 609 602,395,345 554,723,895 555,754,978

Investment Funds 605 592 601 589,031,239 542,399,347 543,877,326

Managed Portfolios 8 8 8 13,364,106 12,324,548 11,877,652


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d) Details in relation to overseas branches, subsidiaries and associates

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Assets

BB Group 95,147,250 58,695,680 50,072,196

Third parties 145,171,543 109,798,520 102,160,363

TOTAL ASSETS 240,318,793 168,494,200 152,232,559

Liabilities

BB Group 22,657,951 19,296,951 12,866,890

Third parties 204,258,754 139,149,520 130,107,080


Attributable to parent company 12,131,711 9,192,505 8,515,565

Non-controlling Interests 1,270,377 855,224 743,024

TOTAL LIABILITIES 240,318,793 168,494,200 152,232,559


Net Income 94,693 352,237 477,258 1,120,491

Attributable to parent company (6,113) 251,277 223,968 878,681

Non-controlling interest 100,806 100,960 253,290 241,810

e) Consortium funds

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Monthly forecast of Purchase Pool Members receivable funds 206,344 187,700 190,385

Obligations of the Groups due to contributions 8,483,345 7,974,156 8,426,500

Purchase Pool Members - assets to be delivered 7,599,042 7,184,003 7,631,739

(In Units)

Quantity of groups managed 561 551 539

Quantity of active purchase pool members 623,028 565,051 557,262

Quantity of assets deliverable to members (drawn or winning offer) 59,731 51,769 48,044


2015 Jan 1 to Sep 30,

2014

Quantity of assets (in units) delivered in the period

24,810 21,617 70,786 58,508


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f) Assignment of Employees to Outside Agencies

Federal government assignments are regulated by Law 10,470/2002 and Decree No. 4,050/2001.


Quantiy of Employees

Ceded(1)

Cost in the Period


Ceded(1)

Cost in the Period


Ceded (1)

Cost in the Period

With costs for the Bank

Labor unions 209 8,769 209 26,823 218 24,448

Other organizations/entities 2 179 2 571 2 542

Subsidiary and associated companies 2 326 2 944 2 843

Without cost to the Bank

Federal, state and municipal governments 275 -- 275 -- 295 --

External organizations (Cassi, FBB, Previ and Economus)

581 -- 581 -- 600 --

Employee entities 72 -- 72 -- 86 --

Subsidiary and associated companies 569 -- 569 -- 487 --

Total 1,710 9,274 1,710 28,338 1,690 25,833

(1) Balance on the last day of the period.

g) Remuneration of Employees and Managers

Monthly wages paid to employees and Directors of the Banco do Brasil:

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Lowest salary 2,449.98 2,227.26 2,227.26

Highest salary 40,992.27 37,265.70 37,265.70

Average salary 6,705.66 6,363.72 6,336.50

Management

President 65,196.08 62,388.59 62,388.59

Vice-President 58,355.29 55,842.38 55,842.38

Director 49,457.30 47,327.56 47,327.56

Council members

Fiscal Council 5,638.43 5,395.63 5,395.63

Board of Directors 5,638.43 5,395.63 5,395.63

Audit Committee - Member 44,511.57 42,594.80 42,594.80

h) Insurance Policy of Assets

Despite the reduced level of risk to which its assets are subject, the Bank contracts insurance cover for its assets in

amounts considered to be sufficient to cover any losses.

Insurance contracted by the Bank in force on September 30, 2015

Covered Risks Amounts Covered Value of the Premium

Property insurance for the relevant fixed assets 1,123,599 6,341

Life insurance and collective personal accident insurance for the Executive Board (1)

885 3

Total 1,124,484 6,344

(1) Refers to individual coverage for members of the Executive Board.


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i) Law 12,973 (Provisional Measure No. 627/2013 converted into law)

The provisional measure 627/2013 was converted into the Law 12,973 on May 13, 2014 and amends the federal tax

law on corporate income tax (IRPJ), social contribution on net income (CSLL), Social Integration Program/Public

Servant Fund Program (PIS/Pasep) and Contribution to Social Security Financing – (Cofins) and it aims to:

repeal the transitional tax system (RTT);

alter the rules about tax on foreign profits; and

regulate the tax aspects relating to the accounting criteria and procedures established by the laws 11,638/2007 and 11,941/2009, which aimed to align the Brazilian accounting standards with the international standards.

For a more comprehensive analysis of the impacts, the Bank will wait for the regulation of Receita Federal do Brasil,

in accordance with the Law 12,973/2014. Nevertheless, according to preliminary studies and under the current text of

the aforementioned Law and its normative instructions, significant impacts on the financial statements of the Bank are

not expected.

j) Law 13,097 (Provisional Measure No. 656/2014 converted into law)

The provisional measure 656/2014 was converted into the Law 13,097 on January 20, 2015 and changed the values

of limits for the purposes of deductibility of losses on the receipt of credit past due since October 8, 2014 (date of

publication of the Provisional Measure). For operations past due since October 7, 2014, the previous limits prevail.

k) Law 13,169 (Provisional Measure No. 675/2015 converted into law)

The provisional measure 675/2015 was converted into the Law 13,169 on October 6, 2015 and increased the rate of

the Social Contribution on Net Income (CSLL) applicable to financial institutions, legal entities of private insurance

and capitalization from 15% to 20% for the period from September 1st, 2015 to December 31, 2018. The law also

establishes the return of the social contribution rate to 15% for the periods beginning on or after January 1, 2019.

l) Provisional Measure No. 694/2015

The provisional measure 694/2015, from September 30, 2015, brings a new limit for the payment of interest on own

capital (JCP), and the value of the variation of TJLP or 5% per year, whichever is less, should be considered in the

calculation. In addition, the percentage of income tax withholding at the time of payment or credit of JCP to the

beneficiary was raised to 18%. The Provisional Measure devices that deals with this issue take effect for the periods

beginning on or after January 1, 2016.

m) Retirement Incentive Plan - PAI

In accordance with the 4th paragraph of article 157 from Law 6,404/1976, the Incentive Retirement Plan - PAI was

released in June 2015 for employees with the necessary conditions to retire by the Instituto Nacional de Seguridade

Social – INSS or apply for early retirement to the Caixa de Previdência dos Funcionários do Banco do Brasil (Previ).

The plan was closed on August 14, 2015 and it had 4,992 members, with the following impact:

expenses for incentive payments in 2015 in the amount of R$ 372.5 million.



Independent Auditors’ Report on the

Interim Financial Information

Period ended at September 30, 2015

(a free translation of the original report in Portuguese containing the

Interim Financial Statements prepared by management based on the

accounting requirements of the Chart of Accounts for Financial

Institutions and Instruction 247, dated March 27, 1996, of the Brazilian

Securities and Exchange Comission)

2


SBS - Qd. 02 - Bl. Q - Lote 03 - Salas 708 a 711

Edifício João Carlos Saad

70070-120 - Brasília, DF - Brasil

Caixa Postal 8587


Central Tel 55 (61) 2104-2400

Fax 55 (61) 2104-2406

Internet www.kpmg.com.br

KPMG Auditores Independentes, uma sociedade simples brasileira e

firma-membro da rede KPMG de firmas-membro independentes e

afiliadas à KPMG International Cooperative (“KPMG International”),

uma entidade suíça.

KPMG Auditores Independentes, a Brazilian entity and a member

firm of the KPMG network of independent member firms affiliated with

KPMG International Cooperative (“KPMG International”), a Swiss

entity.

Independent Auditors’ Report on the Interim Financial

Information

To

The Board of Directors, Shareholders and Management of


Brasília - DF

Dear Sirs:

We have reviewed the consolidated statement of financial position of Banco do Brasil S.A.

(“Banco do Brasil”), as at September 30, 2015 and the related statements of income, changes in

shareholders' equity and cash flows, for the quarter and the period of nine-month then ended, as

well as the summary of significant accounting policies and other explanatory notes.

Management is responsible for the preparation and fair presentation of this interim consolidated

financial information in accordance with the requirements for preparation and presentation of

the Chart of Accounts for Financial Institutions (Plano Contábil de Instituições Financeiras -

Cosif) and Instruction 247, dated March 27, 1996, of the Brazilian Securities and Exchange

Comission (CVM), as described in note 3 to the financial statements. Our responsibility is to

express a conclusion on this interim consolidated financial information based on our review.

Scope of review

We conducted our review in accordance with Brazilian and International Standards on Review.

A review of interim financial information consists of making inquiries, primarily of persons

responsible for financial and accounting matters, and applying analytical and other review

procedures. A review is substantially less in scope than an audit conducted in accordance with

auditing standards and consequently does not enable us to obtain assurance that we would

become aware of all significant matters that might be identified in an audit. Therefore, we do

not express an audit opinion.

Opinion

Based on our review, we are not aware of any facts that would lead us to believe that the interim

consolidated financial information mentioned above were not prepared, in all material aspects,

in accordance with the requirements for preparation and presentation of the Chart of Accounts

for Financial Institutions (Plano Contábil de Instituições Financeiras - Cosif) and Instruction

247, dated March 27, 1996, of the Brazilian Securities and Exchange Comission (CVM), as

described in explanatory note 3 to the interim consolidated financial information.

3

Emphasis

Basis of preparation of the consolidated financial statements

We draw attention to the explanatory note 3 to the interim consolidated financial information.

These interim consolidated financial information were prepared in accordance with the

requirements for preparation and presentation of the Chart of Accounts for Financial Institutions

(Plano Contábil de Instituições Financeiras - Cosif) and Instruction 247, dated March 27, 1996,

of the Brazilian Securities and Exchange Comission (CVM). Consequently, the interim

consolidated financial information may not be appropriate for other purposes. Our conclusion

does not have a qualification related to this matter.

Other matter

We also reviewed the interim statement of value added (DVA) for nine-month period ended as

at September 30, 2015, which was prepared under Banco do Brasil’s Management responsibility

and is being presented as supplementary information. This statement was subject to the same

review procedures described above and based on our review, we are not aware of any facts that

would lead us to believe it was not prepared, in all material respects, consistently with the

interim consolidated financial information.

Banco do Brasil has prepared a separate set of stand-alone financial statements for general

purposes for the quarter and the period of nine-month then ended at September 30, 2015, in

accordance with accounting practices adopted in Brazil applicable to institutions authorized to

operate by the Central Bank of Brazil, on which we issued an unqualified limited review report

at this date.






Accountant

CRC 1SP206103/O-4


3rd

quarter 2015

122

MEMBERS OF MANAGEMENT PRESIDENT Alexandre Corrêa Abreu VICE-PRESIDENTS Antonio Mauricio Maurano Antônio Valmir Campelo Bezerra César Augusto Rabello Borges Geraldo Afonso Dezena da Silva José Mauricio Pereira Coelho Osmar Fernandes Dias Paulo Roberto Lopes Ricci Raul Francisco Moreira Walter Malieni Junior DIRECTORS Adriano Meira Ricci Antonio Pedro da Silva Machado Carlos Alberto Araujo Netto Carlos Célio de Andrade Santos Carlos Roberto Cafareli Clenio Severio Teribele Edmar José Casalatina Edson Rogério da Costa Eduardo Cesar Pasa Gustavo de Faria Barros Hamilton Rodrigues da Silva Ilton Luís Schwaab Ives Cézar Fülber José Carlos Reis da Silva Leonardo Silva de Loyola Reis Luís Aniceto Silva Cavicchioli Luiz Cláudio Ligabue Luiz Henrique Guimarães de Freitas Márcio Luiz Moral Marco Antonio Ascoli Mastroeni Nilson Martiniano Moreira Rogério Magno Panca Sandro Kohler Marcondes Simão Luiz Kovalski Tarcísio Hübner Wilsa Figueiredo

BOARD OF DIRECTORS Adriana Queiroz de Carvalho Alexandre Corrêa Abreu Beny Parnes Juliana Públio Donato de Oliveira Luiz Serafim Spinola Santos Manoel Carlos de Castro Pires Tarcísio José Massote de Godoy FISCAL COUNCIL Aldo César Martins Braido Giorgio Bampi Marcos Machado Guimarães Mauricio Graccho de Severiano Cardoso Paulo José dos Reis Souza AUDIT COMMITEE Antonio Carlos Correia Egidio Otmar Ames Elvio Lima Gaspar Luiz Serafim Spinola Santos ACCOUNTING DEPT. Eduardo Cesar Pasa General Accountant Accountant CRC-DF 017601/O-5 CPF 541.035.920-87 Daniel André Stieler Accountant CRC-DF 013931/O-2 CPF 391.145.110-53

Members of Management

Financial Statements - Banco do Brasil

3rd

quarter 2015

0

3rd

quarter 2015


Banco do Brasil


3rd

quarter 2015

1

INDEX

Index .............................................................................................................................................................1

Financial Statements ...................................................................................................................................3

BALANCE SHEET.....................................................................................................................................3

STATEMENT OF INCOME .......................................................................................................................7

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY .................................................................8

STATEMENT OF CASH FLOWS ..............................................................................................................9

STATEMENT OF VALUE ADDED ......................................................................................................... 10

Notes to the Financial Statements .......................................................................................................... 11

1 - THE BANK AND ITS OPERATIONS ................................................................................................ 11

2 - COMPANY RESTRUCTURING........................................................................................................ 11

3 - PRESENTATION OF FINANCIAL STATEMENTS ........................................................................... 14

4 - DESCRIPTION OF SIGNIFICANT ACCOUNTING POLICIES ........................................................ 17

5 - CASH AND CASH EQUIVALENTS .................................................................................................. 23

6 - SHORT-TERM INTERBANK INVESTMENTS .................................................................................. 23

7 - SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS ...................................................... 24

8 - INTERBANK ACCOUNTS ................................................................................................................ 31

9 - LOAN OPERATIONS ........................................................................................................................ 32

10 - OTHER RECEIVABLES ................................................................................................................. 40

11 - FOREIGN EXCHANGE PORTFOLIO ............................................................................................ 41

12 - OTHER ASSETS ............................................................................................................................ 42

13 - INVESTMENTS............................................................................................................................... 43

14 - PROPERTY AND EQUIPMENT ..................................................................................................... 46

15 - INTANGIBLE ASSETS ................................................................................................................... 46

16 - DEPOSITS AND SECURITIES SOLD UNDER REPURCHASE AGREEMENTS ......................... 47

17 - BORROWINGS AND ONLENDINGS ............................................................................................. 51

18 - FUNDS FROM ACCEPTANCE AND ISSUANCE OF SECURITIES ............................................. 53

19 - OTHER LIABILITIES ....................................................................................................................... 54

20 - OTHER OPERATING INCOME/EXPENSES ................................................................................. 58

Index


3rd

quarter 2015

2

21 - NON-OPERATING INCOME .......................................................................................................... 61

22 - SHAREHOLDERS' EQUITY ........................................................................................................... 61

23 - TAXES ............................................................................................................................................ 66

24 - RELATED PARTY TRANSACTIONS ............................................................................................. 69

25 - EMPLOYEE BENEFITS .................................................................................................................. 73

26 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES, LEGAL LIABILITIES - TAXES AND

SOCIAL SECURITY ............................................................................................................................... 84

27 - RISK AND CAPITAL MANAGEMENT ............................................................................................ 87

28 - STATEMENT OF COMPREHENSIVE INCOME ............................................................................ 98

29 - OTHER INFORMATION ................................................................................................................. 99

Independent Auditors’ Report ............................................................................................................... 103

Members of Management ...................................................................................................................... 106


3rd

quarter 2015


3

BALANCE SHEET


CURRENT ASSETS 737,496,810 720,435,904 727,371,708

Cash and Cash Equivalents (Note 5) 17,779,756 12,200,359 12,263,677


Open market investments 291,803,317 263,004,352 278,028,573



Own portfolio 16,575,524 22,212,082 36,874,062

Subject to repurchase agreements 689,959 2,543,542 6,884,424

Deposits with Banco Central do Brasil -- -- 16

Pledged in guarantee 313,256 1,436,575 5,782,600

Derivative financial instruments 3,115,487 1,074,057 702,979

Interbank Accounts 68,239,263 66,885,998 86,605,527

Payments and receipts pending settlement (Note 8.a) 4,211,410 10,428 4,567,627

Restricted deposits (Note 8.b) 62,896,054 65,606,579 81,072,537

Deposits with Banco Central do Brasil 60,362,133 63,224,237 78,714,270


National Housing Finance System 2,453,561 2,303,481 2,256,359


Correspondent banks 1,130,564 1,267,922 964,315

Interdepartmental Accounts 174,838 592,943 272,006



Public sector 2,428,994 2,217,867 3,283,175

Private sector 144,628,696 186,104,639 135,053,550

Loan operations linked to assignment 99 469 122



Receivables from guarantees honored 279,243 235,369 159,130


Accrued income 2,000,138 4,093,920 1,683,830


Sundry (Note 10.b) 104,847,157 98,221,116 108,902,783

(Allowance for other losses) (1,462,182) (1,496,395) (1,341,074)

Other Assets (Note 12) 322,908 347,570 352,183

Assets not for own use and materials in stock 250,874 256,974 259,967

(Allowance for impairment) (117,774) (121,944) (121,757)

Prepaid expenses 189,808 212,540 213,973




3rd

quarter 2015


4


NON-CURRENT ASSETS 773,012,703 660,718,827 642,367,974

LONG-TERM RECEIVABLES 730,169,743 623,741,818 605,798,754


Open market investments 287,491 285,666 185,555



Own portfolio 63,227,821 54,413,849 51,493,597


Pledged in guarantee 5,247,561 11,672,620 4

Derivative financial instruments 1,719,473 421,918 313,538

Interbank Accounts 331,821 325,356 286,498

Restricted deposits (Note 8.b) 2,335 50,649 29,425




Public sector 74,648,510 57,562,918 53,810,692

Private sector 414,671,340 360,819,717 393,666,340

Loan operations linked to assignment 344,104 320,782 335,521



Foreign exchange portfolio (Note 11.a) 1,170,076 -- --

Accrued income 38,040 33,068 35,434


Specific credits (Note 10.a) 1,684,917 1,549,300 1,508,664

Sundry (Note 10.b) 55,362,356 48,775,452 36,562,858

(Allowance for other losses) (412,272) (223,528) (236,598)

Other Assets (Note 12) 33,359 101,692 165,832

Prepaid expenses 33,359 101,692 165,832

PERMANENT ASSETS 42,842,960 36,977,009 36,569,220

Investments 26,859,708 19,304,061 19,787,654

Investments in subsidiaries and associates (Note 13.a) 26,719,184 19,204,571 19,696,159

Domestic 21,289,236 15,437,919 16,302,320

Abroad 5,429,948 3,766,652 3,393,839

Other investments (Note 13.b) 189,270 148,203 140,202


Property and Equipment (Note 14) 6,775,007 6,934,420 6,532,088

Land and buildings 6,482,788 6,184,847 5,943,460

Other property and equipment 8,745,612 8,625,435 8,245,315

(Accumulated depreciation) (8,453,393) (7,875,862) (7,656,687)

Intangible (Note 15) 9,189,853 10,708,814 10,216,747

Intangible assets 16,903,833 17,493,664 16,814,105


Deferred 18,392 29,714 32,731

Organization and expansion costs 1,587,771 1,647,042 1,648,758


TOTAL ASSETS 1,510,509,513 1,381,154,731 1,369,739,682



3rd

quarter 2015


5


CURRENT LIABILITIES 954,118,423 931,500,709 907,583,262

Deposits (Note 16.a) 402,751,829 401,776,941 380,584,278

Demand deposits 61,752,586 71,382,508 66,912,659

Savings deposits 149,763,605 148,698,890 148,995,605


Time deposits 146,258,058 147,121,199 136,820,719


Own portfolio 20,466,569 52,906,261 45,384,726






Interbank Accounts 3,328,836 31,463 3,236,805

Receipts and payments pending settlement (Note 8.a) 3,306,937 16 3,219,637

Correspondent banks 21,899 31,447 17,168

Interdepartmental Accounts 3,500,187 5,272,762 2,327,049

Third-party funds in transit 3,498,304 5,272,699 2,323,380

Internal transfers of funds 1,883 63 3,669




National Treasury 300 -- 543

BNDES 12,057,536 14,705,219 14,226,740

Caixa Econômica Federal 18,219,733 12,359,686 9,991,504

Finame 5,889,292 5,831,396 5,620,033

Other institutions 2,222,217 863,889 1,242,702

Foreign Onlending (Note 17.b) 10,224,690 261,067 95

Derivative Financial Instruments (Note 7.d) 52,567,794 47,373,790 45,868,454


Billing and collection of taxes and contributions 4,375,778 334,885 5,281,323


Shareholders and statutory distributions 2,026,023 1,042,030 1,279,813





Equity and debt hybrid securities (Note 19.d) 387,771 368,814 735,939




3rd

quarter 2015


6


NON-CURRENT LIABILITIES 483,979,680 379,833,810 391,410,519


Deposits (Note 16.a) 52,721,958 66,540,548 81,884,051


Time deposits 46,747,805 61,064,883 77,536,270


Own portfolio 41,858,991 2,180,192 1,859,666





Certificates of structured operations 11,019 -- --





BNDES 26,837,741 28,545,425 28,884,594

Finame 25,106,980 26,565,250 25,602,375

Foreign Onlending (Note 17.b) 19,339,058 19,336,277 17,879,184

Derivative Financial Instruments (Note 7.d) 1,909,939 621,908 363,355


Foreign exchange portfolio (Note 11.a) 291,210 3,715,002 3,172,665

Taxes and social security (Note 19.a) 282,434 458,609 2,203,926



Special operations 2,176 2,153 2,146


Equity and debt hybrid securities (Note 19.d) 7,483,381 4,505,247 4,106,221

Debt instruments eligible as capital (Notes 19.c and

19.d) 37,926,484 29,350,525 27,907,632


DEFERRED INCOME 427,304 415,919 400,016

SHAREHOLDERS' EQUITY (Note 22) 72,411,410 69,820,212 70,745,901

Capital 60,000,000 54,000,000 54,000,000

Local residents 47,025,374 42,957,421 42,998,147

Domiciled abroad 12,974,626 11,042,579 11,001,853


Revaluation Reserves 2,747 2,805 2,832

Profit Reserves 26,123,564 27,025,981 23,496,772

Accumulated Other Comprehensive Income (13,829,926) (9,597,840) (6,944,165)

Retained earnings/accumulated losses 1,798,079 -- 1,784,100

(Treasury Shares) (1,696,362) (1,620,785) (1,603,684)

TOTAL LIABILITIES 1,510,509,513 1,381,154,731 1,369,739,682



3rd

quarter 2015


7

STATEMENT OF INCOME

3rd

quarter/2015 3rd

quarter/2014 Jan 1 to Sep

30, 2015 Jan 1 to Sep

30, 2014

INCOME FROM FINANCIAL INTERMEDIATION 58,727,589 37,236,325 140,864,226 95,876,332

Loan operations (Note 9.b) 32,832,564 22,586,898 81,165,806 59,006,632

Leasing transactions (Note 9.h) -- -- -- 548

Securities (Note 7.b) 22,399,163 13,498,315 54,680,899 33,342,128

Derivative financial instruments (Note 7.e) (859,312) (769,449) (3,326,540) (2,808,942)

Foreign exchange results (Note 11.b) 2,509,153 -- 3,160,648 634,923

Compulsory investments (Note 8.c) 1,321,704 1,503,061 3,707,110 4,389,933

Operations of sale and transfer of financial assets 524,317 417,500 1,476,303 1,311,110

EXPENSES FROM FINANCIAL INTERMEDIATION (60,205,188) (32,149,712) (132,499,287) (77,686,705)

Deposits and securities sold under repurchase agreements

(Note 16.d) (26,771,368) (20,318,141) (72,670,238) (55,734,660)

Borrowings and onlendings (Note 17.c) (25,259,038) (7,177,048) (40,825,778) (9,032,181)

Leasing transactions (Note 9.h) -- -- -- (534)

Foreign exchange results (Note 11.b) -- (75,505) -- --

Operations of sale and transfer of financial assets (9,074) (6,291) (24,385) (13,339)

Allowance for loan losses (Note 9.f and

9.g) (8,165,708) (4,572,727) (18,978,886) (12,905,991)

INCOME FROM FINANCIAL INTERMEDIATION (1,477,599) 5,086,613 8,364,939 18,189,627

OTHER OPERATING INCOME/EXPENSES (3,176,930) (2,659,213) (5,136,160) (8,597,862)

Service fee income (Note 20.a) 2,417,854 2,696,561 7,197,688 7,889,275

Bank fee income (Note 20.b) 1,765,693 1,552,760 4,881,737 4,430,286

Personnel expenses (Note 20.c) (5,214,751) (4,367,076) (14,566,817) (12,601,965)

Other administrative expenses (Note 20.d) (3,805,873) (3,769,112) (11,184,001) (11,588,912)

Tax expenses (Note 23.c) (769,311) (871,277) (2,582,228) (2,448,286)

Equity in associates and subsidiaries (Note 13) 4,664,780 2,191,508 13,050,182 4,148,398

Other operating income (Note 20.e) 2,230,074 1,959,226 6,956,619 8,334,681

Other operating expenses (Note 20.f) (4,465,396) (2,051,803) (8,889,340) (6,761,339)

OPERATING INCOME (4,654,529) 2,427,400 3,228,779 9,591,765

NON-OPERATING INCOME (Note 21) 9,155 37,986 (2,195) 87,470

Incomes 23,358 52,283 73,289 131,402

Expenses (14,203) (14,297) (75,484) (43,932)

PROFIT BEFORE TAXATION AND PROFIT SHARING (4,645,374) 2,465,386 3,226,584 9,679,235

INCOME TAX AND SOCIAL CONTRIBUTION (Note 23.a) 8,048,791 611,084 9,887,278 (318,672)

EMPLOYEE AND DIRECTORS PROFIT SHARING (388,663) (354,324) (1,492,647) (1,073,227)

NET INCOME 3,014,754 2,722,146 11,621,215 8,287,336

EARNINGS PER SHARE (Note 22.e)

Weighted average number of shares - basic and diluted 2,794,596,340 2,797,457,565 2,795,613,950 2,801,441,756

Basic and diluted earnings per share (R$) 1.08 0.97 4.16 2.96



3rd

quarter 2015


8

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

E V E N T S Capital Capital

Reserves Revaluation

reserves

Profit reserves Accumulated other

comprehensive income

Treasury shares

Retained earnings

(losses) in Total

Legal reserve Statutory reserves

Banco do Brasil

Associate and

subsidiary companies


54,000,000 5,684 4,564 4,902,575 15,403,023 (2,965,189) (166,860) (1,324,068) -- 69,859,729


-- -- -- -- -- (306,219) 63,939 -- -- (242,280)

Accumulated other comprehensive income - benefit plans, net of taxes

-- -- -- -- -- (3,569,836) -- -- -- (3,569,836)

Share-based payment transactions -- 4,362 -- -- -- -- -- 3,418 -- 7,780


-- -- -- -- -- -- -- (283,034) -- (283,034)

Expired dividends/interest on own capital -- -- -- -- -- -- -- -- 10,076 10,076

Realization of revaluation reserve in subsidiary/associated companies (Note 22.c) -- -- (1,732) -- -- -- -- -- 1,064 (668)

Net income for the period -- -- -- -- -- -- -- -- 8,287,336 8,287,336

Allocation - Reserves

-- -- -- 278,259 3,296,342 -- -- -- (3,574,601) --

- Dividends (Note 22.f) -- -- -- -- (383,427) -- -- -- (216,417) (599,844)

- Interest on own capital (Note 22.f) -- -- -- -- -- -- -- -- (2,723,358) (2,723,358)

Balances at 09.30.2014 54,000,000 10,046 2,832 5,180,834 18,315,938 (6,841,244) (102,921) (1,603,684) 1,784,100 70,745,901

Changes in the period -- 4,362 (1,732) 278,259 2,912,915 (3,876,055) 63,939 (279,616) 1,784,100 886,172

Balances at 06.30.2015 60,000,000 13,308 2,764 5,898,540 20,225,024 (12,422,540) (144,492) (1,628,461) -- 71,944,143


-- -- -- -- -- (1,119,176) (143,718) -- -- (1,262,894)


-- -- -- -- -- -- -- (67,901) -- (67,901)


Realization of revaluation reserve in subsidiary/associated companies

-- -- (17) -- -- -- -- -- 17 --

Unrealized results

-- -- -- -- -- -- -- -- 3,014,754 3,014,754

Allocation - Interest on own capital (Note 22.f) -- -- -- -- -- -- -- -- (1,220,018) (1,220,018)


60,000,000 13,308 2,747 5,898,540 20,225,024 (13,541,716) (288,210) (1,696,362) 1,798,079 72,411,410

Changes in the period -- -- (17) -- -- (1,119,176) (143,718) (67,901) 1,798,079 467,267

Balances at 12.31.2014 54,000,000 10,051 2,805 5,468,217 21,557,764 (9,437,805) (160,035) (1,620,785) -- 69,820,212

Capital increase – capitalization of reserves (Note 22.b) 6,000,000 -- -- -- (6,000,000) -- -- -- -- --


-- -- -- -- -- (1,639,171) (128,175) -- -- (1,767,346)

Accumulated other comprehensive income - benefit plans, net of taxes -- -- -- -- -- (2,464,740) -- -- -- (2,464,740)

Share-based payment transactions -- 7,672 -- -- -- -- -- 5,037 -- 12,709

Repurchase of shares program -- (4,415) -- -- -- -- -- (80,614) -- (85,029)


Realization of revaluation reserve in subsidiary/associated companies (Note 22.c) -- -- (58) -- -- -- -- -- 58 --

Net income for the period -- -- -- -- -- -- -- -- 11,621,215 11,621,215

Allocation - Reserves -- -- -- 430,323 5,928,721 -- -- -- (6,359,044) --

- Dividends (Note 22.f) -- -- -- -- (1,261,461) -- -- -- (39,046) (1,300,507)

- Interest on own capital (Note 22.f) -- -- -- -- -- -- -- -- (3,432,088) (3,432,088)

Balances at 09.30.2015 60,000,000 13,308 2,747 5,898,540 20,225,024 (13,541,716) (288,210) (1,696,362) 1,798,079 72,411,410

Changes in the period 6,000,000 3,257 (58) 430,323 (1,332,740) (4,103,911) (128,175) (75,577) 1,798,079 2,591,198



3rd

quarter 2015


9

STATEMENT OF CASH FLOWS


Cash flows from operating activities

Income before taxation and profit sharing (4,645,374) 2,486,057 3,226,584 9,699,906

Adjustments to income before taxation and profit sharing (2,052,738) 125,518 (1,890,298) 10,217,124

Provision for credits, leasing and other credits (Note 9.f and 9.g) 8,165,708 4,572,727 18,978,886 12,905,991

Depreciation and amortization (Note 20.d) 1,046,694 955,669 3,042,858 3,279,139

Revenues from impairment (Note 14 and 15) -- -- (2,378) (960)

Equity in subsidiaries and associates (Note 13.a) (4,664,781) (2,191,508) (13,050,182) (4,148,398)

Gain on the disposal of assets (Note 21) (816) (7,055) (7,045) (24,418)

Gain on the disposal of investments (Note 21) -- -- -- (94)

Capital (gain) loss (Note 21) (378) 3,921 39,735 11,282

Foreign currency exchange results (Note 13.a) 1,824,374 449,493 2,741,693 186,633

Reversal for devaluation of other assets (Note 21) (2,925) (12,549) (3,290) (19,430)

Amortization of goodwill (Note 13.c and 20.d) 25,648 22,743 74,161 68,571

Expenses with civil, labor and tax provisions (Note 26.a) 2,262,007 599,009 3,691,026 1,392,928

Adjustment of actuarial assets/liabilities and surplus allocation funds (Note 25) (200,208) (308,522) (1,098,476) (1,462,170)

Effect of changes in foreign exchange rates in cash and cash equivalents (10,508,061) (3,937,071) (16,300,543) (1,955,000)

Other adjustments -- (21,339) 3,257 (16,950)

Income adjusted before taxation and profit sharing (6,698,112) 2,611,575 1,336,286 19,917,030

Equity variations 15,824,574 (33,918,878) 8,657,802 (20,869,478)

(Increase) Decrease in short-term interbank investments 8,450,289 (45,238,478) (45,088,986) (112,518,283)

Decrease in trading securities and derivative financial instruments 1,909,851 872,134 9,388,785 30,272,198

(Increase) Decrease in interbank and interdepartmental accounts 455,475 (1,222,548) (2,278,931) (3,709,066)

(Increase) Decrease in compulsory deposits with Banco Central do Brasil (3,194,518) 7,852,747 2,862,104 11,967,939

Increase in loan operations (20,402,989) (15,341,613) (41,816,271) (49,637,239)

Decrease in leasing transactions -- -- -- 534

(Increase) Decrease in other receivables net of deferred taxes (2,888,085) (3,009,262) (7,776,102) 1,444,214

Decrease in other assets 32,956 53,638 103,330 500,443

Income tax and social contribution paid (432,307) (431,642) (837,304) (1,645,770)

(Decrease) Increase in deposits 19,653,016 (15,563,209) (12,843,702) (21,166,916)

(Decrease) Increase in securities sold under repurchase agreements (21,022,860) 30,793,419 25,858,428 85,230,631

Increase in funds from acceptance and issuance of securities 8,100,754 5,224,614 48,278,413 32,543,793

Increase in borrowings and onlendings 25,013,653 1,856,780 38,219,691 11,272,385

(Decrease) Increase in other liabilities 127,822 224,995 (5,423,038) (5,406,142)

(Decrease) Increase in deferred income 21,517 9,547 11,385 (18,199)

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 9,126,462 (31,307,303) 9,994,088 (952,448)

Cash flows from investing activities

(Increase) Decrease in securities available for sale 356,048 1,166,812 (3,602,166) (1,431,422)

Increase in securities held to maturity (1,652,636) (1,021,496) (4,343,032) (22,475,768)

Dividends received from associated and subsidiaries companies 1,770,300 1,787,108 4,131,270 3,849,173

Acquisition of property, plant and equipment in use (238,741) (336,458) (640,990) (991,611)

Acquisition of investments (785,236) (176,776) (1,293,510) (921,049)

Acquisition of intangible assets/ deferred assets (398,003) (309,115) (709,794) (1,284,434)

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (948,268) 1,110,075 (6,458,222) (23,255,111)

Cash flows from financing activities

Increase in subordinated debts 3,686,860 1,269,429 5,409,708 5,210,481

Increase in equity and debt hybrid securities 7,495,425 2,214,407 10,995,436 6,947,901

Acquisition of treasury shares (67,902) (46,134) (75,578) (279,616)

Dividends paid (39,046) (216,417) (1,551,766) (809,210)

Interest on own capital paid (1,090,380) (941,310) (2,955,107) (2,723,358)

CASH PROVIDED BY FINANCING ACTIVITIES 9,984,957 2,279,975 11,822,693 8,346,198

Net variation of cash and cash equivalents 18,163,151 (27,917,253) 15,358,559 (15,861,361)

At the beginning of the period 77,721,490 82,729,792 74,733,600 72,655,971

Effect of changes in foreign exchange rates in cash and cash equivalents 10,508,061 3,937,071 16,300,543 1,955,000

At the end of the period 106,392,702 58,749,610 106,392,702 58,749,610

Increase (Decrease) in cash and cash equivalents 18,163,151 (27,917,253) 15,358,559 (15,861,361)



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10

STATEMENT OF VALUE ADDED


Income 131,612,569 96,556,221

Income from financial intermediation 140,864,226 95,876,332

Income from service and bank fees 12,079,425 12,319,561

Allowance for loan losses (18,978,886) (12,905,991)

Capital gains (Note 21) 16,165 94

Other income/(expenses) (2,368,361) 1,266,225

Expenses From Financial Intermediation (113,520,401) (64,780,714)

Inputs Purchased from Third Parties (6,733,696) (7,034,632)

Materials, water, electric power and gas (Note 20.d) (458,446) (353,985)

Expenses with outsourced services (Note 20.d) (1,213,341) (1,393,680)

Communications (Note 20.d) (864,844) (1,081,745)

Data processing (Note 20.d) (1,000,864) (924,908)

Transportation (Note 20.d) (818,984) (921,909)

Security services (Note 20.d) (777,991) (680,595)

Financial system services (Note 20.d) (456,804) (457,654)

Advertising and marketing (Note 20.d) (169,030) (278,758)

Other (973,392) (941,398)

Gross Added Value 11,358,472 24,740,875

Depreciation and amortization (Note 20.d) (3,117,019) (3,347,709)

Value Added produced by Entity 8,241,453 21,393,166

Value Added received through transfer 13,050,181 4,148,398

Equity in subsidiaries and associates 13,050,181 4,148,398

Added Value to Distribute 21,291,634 100.00% 25,541,564 100.00%

Value Added Distributed 21,291,634 100.00% 25,541,564 100.00%

Personnel 14,255,606 66.95% 11,953,160 46.80%

Salaries and fees 9,221,329 7,799,934

Employee and directors profit sharing 1,492,648 1,073,227

Benefits and training programs 1,900,805 1,763,763

FGTS (Government Severance Indemnity Fund for Employees)

509,278 480,842

Other charges 1,131,546 835,394

Taxes, Rates and Contributions (5,501,193) -25.84% 4,465,073 17.48%

Federal (6,109,914) 3,922,462

State 728 640

Municipal 607,993 541,971

Interest on Third Parties' Capital 916,007 4.30% 835,995 3.27%

Rent (Note 20.d) 916,007 835,995

Interest on Own Capital (Note 22.f) 11,621,214 54.58% 8,287,336 32.45%

Federal Government's interest on own capital 1,984,699 1,582,655

Other shareholders’ interest on own capital 1,447,390 1,140,703

Federal Government dividends 752,961 348,733

Dividends for other shareholders' dividends 547,546 251,111

Retained earnings 6,888,618 4,964,134


Notes to the Financial Statements - Banco do Brasil

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quarter 2015


11

1- THE BANK AND ITS OPERATIONS

Banco do Brasil S.A. (“Banco do Brasil” or the “Bank”) is a publicly traded company established under private law,

with both public and private shareholders, and is subject to the requirements of Brazilian corporate legislation. It is

headquartered in Setor de Autarquias Norte, Quadra 5, Lote B, Torre I, Edifício Banco do Brasil, Brasília, Distrito

Federal, Brazil. Its purpose is to carry out all asset, liability and accessory banking operations, to provide banking

services, to promote financial intermediation and to originate financial transactions in various forms, including foreign

exchange transactions and supplementary activities, and to practice any of the activities permitted for institutions that

are part of the National Financial System. It is also the main financial agent of the Brazilian Federal Government and

is therefore required to carry out the functions attributed to it by law, specifically those of article 19 of Law

4,595/1964.

2- COMPANY RESTRUCTURING

a) Corporate reorganization in the area of insurance, private pension plans, capitalization and reinsurance

Brasildental Operadora de Planos Odontológicos S.A.

On June 11, 2013, Banco do Brasil, BB Seguros Participações S.A. (BB Seguros), BB Corretora de Seguros e

Administradora de Bens S.A. (BB Corretora), Odontoprev S.A. (Odontoprev) and Odontoprev Serviços Ltda.

(Odontoprev Serviços) signed an Association Agreement and Other Covenants aiming to develop and publicise

dental plans under the brand BB Dental through a new company named Brasildental Operadora de Planos

Odontológicos S.A. (Brasildental). Under these agreements, these plans will be distributed and sold by BB Corretora,

with exclusivity across all BB distribution channels in Brazil.

Brasildental was formed on March 12, 2014 with capital of R$ 5,000 thousand, composed of 100 thousand common

shares (ON) and 100 thousand preferred shares (PN) with the following shareholding structure:

BB Seguros holds 49.99% of common shares and 100% of preferred shares, representing 74.99% of total capital, and

Odontoprev holds 50.01% of the common shares, representing 25.01% of total capital.

The total capital was paid-in as follows: R$ 1 thousand on Brasildental’s formation date and R$ 4,999 thousand on

April 15, 2014. BB Seguros and Odontoprev were responsible for the payment of Brasildental’s capital, in proportion

to their respective holdings.

On August 02, 2013, the Conselho Administrativo de Defesa Econômica (CADE) approved the Agreement and, on

September 19, 2013, Banco Central do Brasil authorized the indirect holding of the Bank in Brasildental.

On May 12, 2014, the company was registered in the Conselho Regional de Odontologia (CRO). The Agência

Nacional de Saúde Suplementar (ANS) authorized Brasildental’s operations on July 7, 2014 and also approved, on

August 5, 2014, the products that will be offered by Brasildental in the Brazilian dental plans market.

The Agreement will remain effective for 20 years, renewable for equal periods.

Grupo Segurador Mapfre

On November 01, 2014, Vida Seguradora S.A., a company that belongs to the holding company BB Mapfre SH1

Participações S.A., was merged into Mapfre Vida S.A. On the same date, Mapfre Affinity Seguradora S.A., a

company that belongs to the holding company Mapfre BB SH2 Participações S.A., was merged into Mapfre Seguros

Gerais S.A. Both mergers were carried out in all of their assets, which were deferred by Susep, through the letters

206 and 207/2014/SUSEP-SEGER, respectively.

The merged net assets were evaluated at the book value on the date of the transaction, September 30, 2014, in the

amount of R$ 160,471 thousand for Vida Seguradora S.A. and R$ 448,618 thousand for Mapfre Affinity Seguradora

S.A.

Notes to the Financial Statements


3rd

quarter 2015


12

As a natural result, Mapfre Vida S.A. and Mapfre Seguros Gerais S.A. became the successors, by universal title, of

Vida Seguradora S.A. and Mapfre Affinity Seguradora S.A., respectively, in all its assets, rights and obligations,

assuming its net assets.

The mergers promoted better synergy and simplification of the operating model, with consequent cost and regulatory

capital optimization.

BB Capitalização S.A.

On November 28, 2014, the directors of BB Seguros Participações S.A. approved the merger of BB Capitalização

S.A. into BB Seguros pursuant to the Protocolo e Justificação de Incorporação (Merger Agreement). The net assets

of R$ 5,573 thousand were recognized at the book value at November 28, 2014, the date of the transaction.

Considering that the base date of the appraisal report and the date of the merger are the same, there were no equity

variations after the merger.

The Bank found to be unnecessary to maintain the BB Capitalização S.A. in the process of business model review in

the capitalization sector, and also there is no expectation that the company will develop operating activities.

As a result, BB Capitalização no longer exists and BB Seguros became its successor, by universal title, of its assets,

rights and obligations, and assume its net assets.

Considering that BB Seguros was the single shareholder of the merged company at the merger date, the shares of

BB Capitalização S.A. noncontrolling shareholders were not exchanged for shares of the acquiring company, so

there were no changes in BB Seguros’ capital.

Shareholders' Restructuring - IRB-Brasil Resseguros S.A. (IRB-Brasil Re)

Considering the corporate reorganization recently planned by the IRB-Brasil Re in order to optimize the management

of its real estate assets through the creation of a holding company, IRB - Investimentos e Participações Imobiliárias

S.A. and four specific purpose entities (SPE) on June 08, 2015, Banco do Brasil, as indirect shareholder of the IRB-

Brasil Re, submitted for approval by the Banco Central do Brasil the creation of such companies, however the

request remains under review by the referred institution.

The IRB-Brasil Re General Assembly approved, on August 21, 2015: (i) the transformation of the IRB-Brazil Re in

corporation publicly traded and submission of company registration request to become an open company in category

"A" before the Comissão de Valores Mobiliários, pursuant to CVM Instruction 480, of December 07, 2009, (ii) the

request of the authorization to CVM to realize public offerings of distribution of the marketable securities, pursuant to

CVM Instruction 400 of December 29, 2003, and (iii) the redesign and consolidation of the Bylaws of the IRB-Brasil

Re, to adapt it to the legal requirements of a open company and the Novo Mercado BM&FBOVESPA S.A. - Bolsa de

Valores, Mercadorias e Futuros.

b) Corporate Reorganization – branches, subsidiaries and associates abroad

BB Money Transfers

On December 08, 2014, BB Money Transfers, located in the state of New York, was dissolved. The Executive Board

decided on the company closing and repatriation of the share capital to its controlling company, based on an

economic infeasibility study of the business.

The capital of BB Money Transfers was transferred to the Bank, through BB USA Holding Company Inc. (its

controlling company, with 100% of the shares). However, part of this capital was retained in the BB USA Holding

Company, in order to pay the costs arising from operating activities for closing the subsidiary and the expenditures of

the holding company itself.

The Bank carried out the payment of that share capital in the same place of the investment, through BB Grand

Cayman, not occurring inflow of funds into Brazil.


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c) Partnership in the card segment

Livelo

The Bank and Banco Bradesco announced to the market that Companhia Brasileira de Soluções e Serviços (Alelo),

through its wholly-owned subsidiary Livelo S.A., began negotiations to explore business opportunities from allicances

in loyalty programs.

Livelo is a company whose indirect shareholders (via Alelo) are the Bank, with 49.99% of the total capital, and

Bradesco, with 50.01% of the total capital and its objective is to:

act as an independent and open alliance loyalty program with the following partners: issuers of payment instruments; retailers; and other loyalty programs, amongst others;

bring together a diverse group of relevant and strategic partners to enable the generation of loyalty points and the redemption of benefits; and

develop its own loyalty points which will be offered to partners which have businesses which generate/accumulate points and can be converted into prizes and benefits offered by the redemption partners.

The company is in structuring process to start its activities and has already obtained authorization from authorities

and regulators.

Stelo

On April 16, 2014, the Bank and Bradesco, through its subsidiary Alelo announced the launch of Stelo S.A., a

company in the electronic means of payment business to manage, operate and explore the payment facilitators

segments, focused on electronic commerce (e-commerce) and the digital wallet business.

The services provided by Stelo aim to bring convenience and security to consumers and business establishments,

primarily in the use of payments in e-commerce.

On April 15, 2014, in order to operationalise this project, Alelo signed a Memorandum of Understanding with Cielo in

relation to its future holding in the capital of Stelo.

On June 12, 2015, Aliança Pagamentos e Participações Ltda. (Aliança) acquired 30% of the capital share of Stelo

S.A. (Stelo) through a capital increase and issue of new shares by Stelo. The new structure consolidates the

provisions in the Memorandum of Understanding dated April 15, 2014 between Companhia Brasileira de Soluções e

Serviços (Alelo) and Cielo S.A., controller of Aliança, which main objective is to invest in other companies as a

partner or shareholder.

Taking into account the indirect holding of the Bank in Cielo and in Alelo, through BB Banco de Investimento S.A. and

BB Cartões Participações S.A., respectively, the indirect holding of the Bank in Stelo is 43.62%.

Stelo began its operations in 2015, with the authorization of the authorities and regulators.

BB Elo Cartões and Cielo

On November 19, 2014, the Bank announced to the market that BB Elo Cartões Participações S.A., its wholly-owned

subsidiary, and Cielo S.A. signed on this date the Association Agreement to form a new strategic partnership in the

electronic payment industry.

The equity interest of BB Elo Cartões and Cielo in the Company was authorized by Bacen on December 30, 2014.

The creation of the Company, arising from the Partnership, was regarded as permitted under the Conselho

Administrativo de Defesa Econômica (CADE), after expiry of the period laid down in article 65 of Law 12,529/2011,

went on without any appeals or avocation of the case by the Administrative Court.


3rd

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14

On February 27, 2015, after approval by the relevant regulators, supervisors and inspection, and subject to the

fulfillment of all contractual conditions precedent to the closing of the transaction, BB Elo Cartões and Cielo

completed the formation of the strategic partnership, forming a new company called Cateno Gestão de Contas de

Pagamento S.A. (Cateno).

Under the terms of the Agreement, the new company has the right, transferred by BB Elo Cartões, to exploit the

activities of management of post-paid accounts transactions and management of the functionality of purchasing via

debit of its payment arrangements. In addition, the new deal aims, among its objectives, to perform associations with

other partners in order to leverage opportunities related to the electronic payment niche market, seeking to obtain

synergy gains and optimizing the structuring of new businesses in the segment.

The injection of this intangible asset to Cateno’s shareholders’ equity represented R$ 11,572,000 thousand,

according to the technical report of appraisal performed by an independent company. In return, and for equalization

of the intended equity interests, Cateno gave to BB Elo Cartões R$ 4,640,951 thousand in cash, related to the

payment of taxes on the operation, and R$ 3,459,449 thousand in debentures from Cielo. The amount of 3,471,600

thousand was kept to compose the equity interest of BB Elo Cartões in Cateno.

The total capital was divided in the proportion of 30% for BB Elo Cartões and 70% for Cielo. However, taking into

account the indirect holding of the Bank in Cielo, through BB Banco de Investimento S.A., the total indirect holding of

the Bank in Cateno, on the date of acquisition, was distributed as follows:

Holding of the Bank - % Common shares (ON) Preferred shares (PN) Total

Total Capital 42.27 100.00 50.13

Due to the conclusion of the transaction, the amount of R$ 3,211,700 thousand impacted the Bank's results from

January 01 to September 30, 2015, as shown in the table below:

1) BB Elo Cartões’ capital gain 11,572,000

2) Taxes (4,640,951)

3) Effect in BB Elo Cartões’ income, net of tax effects (1+2) 6,931,049

4) Unrealized result (50.13% of item 3) (3,474,189)

5) Effect in the Consolidated income (3+4) 3,456,860

6) Profit sharing, net of tax effects (245,160)

7) Effect in the Consolidated net income (5+6) 3,211,700

3 - PRESENTATION OF FINANCIAL STATEMENTS

The financial statements of Banco do Brasil have been prepared in accordance with the accounting guidelines

derived from Brazilian corporation law, the rules and instructions issued by the Conselho Monetário Nacional (CMN),

Banco Central do Brasil (Bacen) and the Comissão de Valores Mobiliários (CVM), as applicable.

The preparation of financial statements in accordance with accounting practices adopted in Brazil, applicable to

financial institutions, requires that Management use judgment in the determination and recording of accounting

estimates, when applicable. Significant assets and liabilities subject to these estimates and assumptions include: the

residual value of fixed assets, the allowance for loan losses, deferred tax assets, provision for labor, civil and tax

demands, valuation of financial instruments, assets and liabilities relating to post-employment benefits and other

provisions. The final amounts of transactions involving these estimates are only known upon their settlement.

The consolidated financial statements include the operations of the Bank performed by their domestic agencies and

abroad, according to the Bacen Circular 2,804/1998.


3rd

quarter 2015


15

The Comitê de Pronunciamentos Contábeis (CPC) is responsible for issuing accounting standards and

interpretations, based on international accounting standards, approved by the CVM. Bacen adopted the following

pronouncements of the CPC, applied by the Bank, as applicable: CPC 00 - Conceptual Framework, CPC 01 –

Decrease in Recoverable Amount of Assets, CPC 03 - Statement of Cash Flows (DFC), CPC 05 – Related Party

Disclosures, CPC 10 – Share-Based Payment, CPC 23 – Accounting Policies, Changes in Accounting Estimates and

Errors, CPC 24 – Events After the Reporting Period, CPC 25 - Provisions, Contingent Liabilities and Contingent

Assets and CPC 33 - Employee Benefits.

Additionally, the Banco Central do Brasil issued CMN Resolution 3,533/2008, which became effective in January

2012, which established procedures for classification, accounting and disclosure of sale and transfer transactions

related to financial assets. This Resolution establishes the criteria for the derecognition of financial assets as

specified in the CPC 38 – Financial Instruments: Recognition and Measurement.

The Bank has also applied the following pronouncements which do not conflict with the Bacen rules, as established

by article 22, paragraph 2 of Law 6,385/1976: CPC 09 – Value Added Statement, CPC 12 – Adjustment at Present

Value, and CPC 41 – Income per Share.

These financial statements were approved by the Executive Board of Directors on November 10, 2015.

Information for comparability purposes

The financial information of Banco do Brasil, based on September 30, 2014, are presented retrospectively as CPC 23

– Accounting Policies, Changes in Accounting Estimates and Errors, due to the reclassification of the Instruments

Qualifying to Common Equity Tier 1 Capital in the grouping "Debt instruments eligible as capital ", and the recognition

of financial charges as "Deposits and securities sold under repurchase agreements ", according to the rules of the

Banco Central do Brasil:

Balance Sheet

Sep 30, 2014 Original Report Adjustments Adjusted Balances


Debt instruments eligible as capital 19,807,632 8,100,000 27,907,632

SHAREHOLDERS' EQUITY 78,845,901 (8,100,000) 70,745,901

Instruments Qualifying to Common Equity Tier 1 Capital 8,100,000 (8,100,000) --

Statement of Income

3rd quarter/2014 Original Report Adjustments Adjusted Balances

EXPENSES FROM FINANCIAL INTERMEDIATION (32.129.041) (20.671) (32.149.712)

Deposits and securities sold under repurchase agreements (20.297.470) (20.671) (20.318.141)

INCOME FROM FINANCIAL INTERMEDIATION 5.107.284 (20.671) 5.086.613

OPERATING INCOME 2,448,071 (20,671) 2,427,400

PROFIT BEFORE TAXATION AND PROFIT SHARING 2,486,057 (20,671) 2,465,386

NET INCOME 2,742,817 (20,671) 2,722,146

Jan 1 to Sep 30, 2014 Original Report Adjustments Adjusted Balances

EXPENSES FROM FINANCIAL INTERMEDIATION (77,666,034) (20,671) (77,686,705)

Deposits and securities sold under repurchase agreements (55,713,989) (20,671) (55,734,660)

INCOME FROM FINANCIAL INTERMEDIATION 18,210,298 (20,671) 18,189,627

OPERATING INCOME 9,612,436 (20,671) 9,591,765

PROFIT BEFORE TAXATION AND PROFIT SHARING 9,699,906 (20,671) 9,679,235

NET INCOME 8,308,007 (20,671) 8,287,336


3rd

quarter 2015


16

For comparability purposes in order to better show the nature of operations the following reclassifications were also

made:

Balance Sheet

Premium paid to customers for loyalty/performance from the grouping Other assets - Prepaid expenses to Intangible -

Intangible assets - R$ 284,630 thousand.

Sep 30, 2014 Original Report Adjustments Adjusted Balances

CURRENT ASSETS 770,692,909 (284,630) 770,408,279

Other assets – Prepaid expenses 498,603 (284,630) 213,973

NON-CURRENT ASSETS 599,046,773 284,630 599,331,403

PERMANENT ASSETS 36,284,590 284,630 36,569,220

Intangible – Intangible assets 16,529,475 284,630 16,814,105


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4 - DESCRIPTION OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted by Banco do Brasil are applied consistently in all periods presented in these

financial statements and applied to all the entities of the Conglomerate.

a) Statement of income

In accrual basis accounting, revenues and expenses are reported in the closing process of the period in which they

are incurred, regardless of receipt or payment. The operations with floating rates are adjusted pro rata die, based on

the variation of the indexes agreed, and operations with fixed rates are recorded at future redemption value, adjusted

for the unearned income or prepaid expenses for future periods. The operations indexed to foreign currencies are

converted at the reporting date using current rates.

b) Present value measurement

Financial assets and liabilities are presented at present value due to the application of the accrual basis in the

recognition of their interest income and expenses.

Non-contractual liabilities are primarily represented by provisions for lawsuit and legal obligations, for which the

disbursement date is uncertain and is not under the Bank's control. They are measured at present value because

they are initially recognized at estimated disbursement value on the valuation date and are updated monthly.

c) Cash and cash equivalents

Cash and cash equivalents comprise available funds in local currency, foreign currency, investments in gold,

investments in repurchase agreements – own resources, interbank deposits and investments in foreign currencies,

with high liquidity and insignificant risk of change in fair value, with maturity at time of acquisition not exceeding 90

days.

d) Short-term interbank investments

Short-term interbank investments are recorded at their investment or acquisition amount, plus income accrued up to

the balance sheet date and adjustments for allowance for losses.

e) Securities

The securities purchased for the Bank's portfolio are recorded at the actual amount paid, including brokerage charges

and fees, and are classified based on management’s intention, in one of three categories, according to Bacen

Circular 3,068/2001:

Trading Securities: these are securities purchased to be actively and frequently traded. They are adjusted monthly to

market value. The increases and decreases in value are recorded in income and expense accounts for the period;

Securities available for sale: these are securities that may be traded at any time, but are not acquired to be actively

and frequently traded. They are adjusted monthly to market value and their increases and decreases in value are

recorded, net of tax effects, in Accumulated Other Comprehensive Income in Shareholders' Equity; and

Securities held to maturity: these are securities that the Bank owns and has the financial capacity and intent to hold

to maturity. These securities are not adjusted to market value. The Bank's financial capacity to hold to maturity is

supported by a cash flow projection that does not consider the possibility of sale of these securities.

The mark-to-market methodology used for securities was established following consistent, verifiable criteria, which

consider the average price of trading on the day of calculation or, if not available, the daily adjustment of future

market transactions reported by Anbima, BM&FBovespa or the net expected realizable value obtained through

pricing models, using future interest rate curves, foreign exchange rates, and price and currency indices, all

consistent with prices adopted during the year.


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Income accrued on the securities, irrespective of the category in which they are classified, is appropriated on a pro

rata die basis on an accrual basis until the date of maturity or final sale, using the cumulative or straight-line method,

based on the contractual remuneration and purchase price, and recorded directly in the statement of income for the

period.

Impairment of securities classified as available for sale and held to maturity, if considered not to be temporary, are

recorded directly in expense for the period and a new cost basis for the asset is determined.

Upon sale, the difference between the sale amount and the cost of purchase plus accrued income is considered as a

result of the transaction and is recorded on the date of the transaction as a gain or loss on securities.

f) Derivative financial instruments

Derivative financial instruments are adjusted to market value at each monthly trial balance and balance sheet date.

Increases or decreases in value are recorded in the appropriate income or expense accounts.

The mark-to-market methodology used for derivative financial instruments was established following consistent and

verifiable criteria, which consider the average price of trading on the date of calculation or, if not available, pricing

models that estimate the expected net realizable value.

Derivative financial instruments used to offset, in whole or in part, the risks arising from exposure to variations in

financial asset or liability market values are considered hedge instruments and are classified according to their

nature:

Market Risk Hedge: increases or decreases in value of the financial instruments, as well as of the hedged item, are

recorded in income/expense accounts for the period; and

Cash Flow Hedge: the effective portion of the increases or decreases in value of the derivative financial instruments

classified in this category are recorded, net of tax effects, in Accumulated Other Comprehensive Income in

Shareholders' Equity. The effective amount is that in which the variation of the hedged item, directly related to the

corresponding risk, is offset by the variation in the financial instrument used for the hedge, considering the

accumulated effect of the transaction. Other variations in these instruments are recorded directly in the statement of

income for the period.

g) Loan and leasing operations, advances on foreign exchange contracts, other receivables with loan characteristics and allowance for loan losses

Loans, leases, advances on foreign exchange contracts and other receivables with loan characteristics are classified

according to Management's judgment with respect to the level of risk, taking into consideration market conditions,

past experience and specific risks in relation to the operation, to borrowers and guarantors, observing the parameters

established by CMN Resolution 2,682/1999, which requires periodic analyses of the portfolio and its classification into

nine levels, ranging from AA (minimum risk) to H (maximum risk), as well as the classification of operations more than

15 days overdue as non-performing. For atypical transactions with a term of more than 36 months, there is a double

counting on the days-past-due intervals defined for the nine levels of risk, as permitted by CMN Resolution

2,682/1999.

Income from loans overdue for more than 60 days, regardless of their risk level, will only be recognized as income

when effectively received.

Operations classified at level H, which remain in this classification for 180 days, are written off against the existing

allowance.

Renegotiated operations are maintained, at a minimum, at the same level at which they were rated on the date of

renegotiation. The renegotiations of loans already written off against the allowance are rated as H level and any gains

from renegotiation are recognized as income when effectively received. Reclassification to a lower risk category is

allowed when there is significant amortization of the operation or when new material facts justify a change in risk

level, according to CMN Resolution 2,682/1999.


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Allowance for loan losses, considered sufficient by management, satisfies the minimum requirement established by

the aforementioned CMN Resolution 2,682/1999 (Note 10.e).

h) Taxes

Taxes are calculated based on the rates shown in the table below:

Taxes Rate

Income Tax (15.00% + additional 10.00%) 25.00%

Social Contribution on Net Income (CSLL) (1)

20.00%

Social Integration Program/Public servant fund program (PIS/Pasep) (2)

0.65%

Contribution to Social Security Financing - (Cofins) (2)

4.00%

Tax on services of any kind - (ISSQN) Up to 5.00%

(1) Rate applied to financial companies and to non-financial companies in the areas of private insurance and capitalization, since September 01, 2015 (the rate was 15% until August 31,2015). In January 2019, the rate returns to 15%. For others non-financial companies, the CSLL rate is 9%.

(2) For non-financial firms that have opted for the non-cumulative regime of calculation, the PIS/PASEP rate is 1.65% and the Cofins rate is 7.6%.

Deferred tax assets (tax credits) and deferred tax liabilities are recorded by applying the current rates of taxes on

their respective bases. For the recording, maintaining and writing-off of deferred tax assets, the Bank follows the

established criteria by CMN Resolution 3,059 / 2002, amended by Resolutions CMN No. 3,355 / 2006, CMN 3,655 /

2008 and CMN 4,192 / 2013 and they are supported by a study of their realizability. Tax credits resulting from the

increase of the social contribution rate from 15% to 20% are being recognized in an amount sufficient for

consumption by the end of the term of the new rate (Dec 31, 2018), according to Law 13,169 / 2015.

i) Prepaid expenses

These expenses refer to the application of payments made in advance, for which the benefits or the services will

occur in subsequent periods. Prepaid expenses are recorded at cost and amortized as incurred.

j) Permanent assets

Investments: investments in subsidiaries and associates in which the Bank has significant influence or an ownership

interest of 20% or more of the voting shares, and in other companies which are part of a group or are under common

control are accounted for by the equity method based on the shareholders’ equity of the subsidiary or associates.

Goodwill, the premium paid over the book value of the investment acquired due to expectations of future profitability,

is based on a financial-economic assessment which substantiate the purchase price of the business and is amortized

based on annual income projections as per the assessment. Goodwill is tested for impairment annually.

The statements of the branches and subsidiaries abroad are adapted to the prevailing accounting criteria in Brazil

and translated into Brazilian Reais using current exchange rates, in conformity with Bacen Circulars 2,397/1993 and

2,571/1995, and their impacts are recorded in the statement of income for the period.

Other permanent investments are valued at acquisition cost, less allowance for impairment losses, as applicable.

Property and equipment: property and equipment are stated at cost less depreciation, calculated using the straight-

line method at the following annual rates: buildings and improvements - 4%; vehicles - 20%; data processing systems

- 20% and others - 10% (Note 14).

Deferred: deferred assets are recorded at cost of acquisition or formation, net of accrued amortization. They are

composed mainly of restructuring costs, and the expenditures, up to September 30, 2008, with: third party properties,

as a result of opening branches, which are amortized according to rates based on rental terms, limited to 10 years;

and with the acquisition and development of information systems, which are amortized at 10% per annum (p.a.).

Intangible: intangible assets consist of rights over intangible assets used in the running of the Bank, including

acquired goodwill.


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An asset meets the criteria for identification as an intangible asset, when it is separable, i.e, it can be separated from

the entity and sold, transferred or licensed, rented or exchanged, individually or jointly with a contract, related assets

or liabilities, regardless of the intention for use by the entity; or results from contractual rights or other legal rights,

regardless of whether these rights are transferable or separable from the entity or other rights and obligations.

Intangible assets with finite useful lives compromise: disbursements for the acquisition of rights to provide banking

services (rights to managing payrolls), amortized over the terms of contracts; goodwill paid on the acquisition of

merged company (Banco Nossa Caixa), amortized based on projections of annual results set in the economic-

financial study; software, amortized on a straight-line basis at a rate of 10% per year from the date it is available for

use. Intangible assets are adjusted by allowance for impairment losses, if applicable (Note 15). The amortization of

intangible assets is recorded in the Other Administrative Expenses account.

k) Impairment of non-financial assets

At the end of each reporting period, the Bank assesses whether there is any indication that a non-financial asset may

be impaired based on internal and external sources of information. If there is an indication that an asset may be

impaired, the Bank estimates the recoverable amount of the asset. The recoverable amount of the asset is the higher

of: i) its fair value less costs to sell it; and ii) its value in use.

The Bank tests, at least annually, the recoverable amount of intangible assets not yet available for use and goodwill

on acquisition of investments, regardless whether there is an indication of impairment or not. This test can be applied

any time during the year, provided it is performed at the same period every year.

If the recoverable amount of the asset is less than its carrying amount, the asset's carrying amount is reduced to its

recoverable amount through a provision for impairment, which is recognized in the Income Statement.

Methodologies in assessing the recoverable amount of the main non-financial assets:

Property and Equipment in Use

Land and buildings - in determining the recoverable amount of land and buildings, technical assessments are carried

out in accordance with the rules of the Brazilian Association of Technical Standards - ABNT.

Data processing systems - in determining the recoverability, the market value is considered, if it is available, or the

recoverable value for use in the operations of the Bank. Otherwise the calculation considers the projection of cash

flows arising from the use of each asset during its useful life, discounted to present value based on the rate of the

Interbank Deposit Certificate - CDI.

Other assets - although they are subject to impairment testing, other assets have little value individually and, given

the cost-effectiveness, the Bank does not assess the recoverable value of these items individually. However, the

Bank conducts inventory each year, and lost or damaged goods are properly derecognized.

Investments and Goodwill on acquisition of investments

The methodology for calculating the recoverable amount of goodwill and investments for future profitability consists of

measuring the expected result of the investment using discounted cash flow (DCF). To measure this result, the

assumptions made are based on (i) operational projections, results and investment plans, (ii) macroeconomic

scenarios developed by the Bank, and (iii) internal methodology for calculating the cost of capital based on the

Capital Asset Pricing Model - CAPM.

Intangible

Rights to Managing Payrolls - The model for assessing the recoverable amount of the rights to managing payroll

involves monitoring contracts performance, that are calculated from the contribution margins of customer relationship

related to each contract in order to check if the projections that justified the acquisition of assets match the observed

performance. For the contracts that do not achieve the expected performance levels, a provision for impairment loss

is recognized.


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Software - Software, substantially developed by the Bank in accordance with its needs, constantly receives

investments for modernization and adaptation to new technologies and business requirements. Considering that

there are no similar products on the market and considering the high cost to deploy metrics that allow calculation of

its value in use, the impairment test for software evaluates its usefulness to the company so that when software is

retired, its value is derecognized.

Goodwill on acquisition of merged company - The methodology for calculating the recoverable amount of goodwill on

the acquisition of Banco Nossa Caixa, merged into Banco do Brasil in November 2009, is to compare the value of the

goodwill paid, less the accumulated amortization, with the present value of the results of the Bank estimated for the

state of São Paulo, discounting the assets with finite useful lives. The projections are derived from the observed

results and assumptions of profitability growth for the Bank and are discounted at the rate of cost of capital calculated

using an internal methodology, based on Capital Asset Pricing Model – CAPM.

The losses recorded in the Statement of Income to adjust the recoverable value of these assets, if any, are stated in

the respective notes.

l) Employee benefits

Employee benefits related to short-term benefits for current employees are recognized on the accrual basis as the

services are provided. Post-employment benefits, comprising supplementary retirement benefits and medical

assistance for which the Bank is responsible, are assessed in accordance with criteria established by CPC 33 (R1) -

Employee benefits, approved by CVM Resolution 695/2012 (Note 25) and by the Resolution CMN 4,424/2015. The

evaluations are performed semiannually.

In defined-contribution plans, the actuarial risk and the investment risk are borne by the plan participants.

Accordingly, cost accounting is based on each period's contribution amount representing the Bank's obligation.

Consequently, no actuarial calculation is required when measuring the obligation or expense, and there are neither

actuarial gains nor losses.

In defined benefit plans, the actuarial risk and the investment risk value of plan assets fall either partially or fully on

the sponsoring entity. Accordingly, cost accounting requires the measurement of plan obligations and expenses, with

a possibility of actuarial gains and losses, leading to the register of a liability when the amount of the actuarial

obligation exceeds the value of plan assets, or an asset when the amount of assets exceeds the value of plan

obligations. In the latter instance, the asset should be recorded only when there is evidence that it can effectively

reduce the contributions from the sponsor or will be refundable in the future.

The Bank recognizes the components of defined benefit cost in the period in which the actuarial valuation was

performed, in accordance with criteria established by CPC 33 (R1) -Employee benefits, as follows:

the current service cost and the net interest on the net defined benefit liability (asset) are recognized in profit or loss; and

the remeasurements of the net defined benefit liability (asset) are recognized in other comprehensive income, in the Bank’s equity, net of tax effects.

Contributions to be paid by the Bank to medical assistance plans in some cases will continue after the employee’s

retirement. Therefore, the Banks obligations are evaluated by the present actuarial value of the contributions to be

paid over the expected period in which the plan participants and beneficiaries will be covered by the plan. Such

obligations are evaluated and recognized under the same criteria used for defined benefit plans.

The actuarial asset recognized in the balance sheet (Note 25) refers to the actuarial gains and it will be settled by the

end of the plan. Along the life of the plan there may be partial realization of the actuarial assets, if the requirements of

the Supplementary Law 109/2001 and Resolution CGPC 26/2008 are met.

m) Deposits and Securities Sold Under Repurchase Agreements

Deposits and securities sold under repurchase agreements are recorded at the amount of the liabilities and include,

when applicable, related charges up to the balance sheet date, on a daily pro rata die basis.


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n) Provisions, Contingent assets and liabilities and legal obligations

The recognition, measurement and disclosure of provisions, contingent assets and liabilities and legal obligations are

made in accordance with the criteria defined by CPC 25 – Provisions, Contingent Assets and Contingent Liabilities,

approved by CMN Resolution 3,823/2009 (Note 28).

Contingent assets are not recognized in the financial statements however when there is evidence assuring their

realization, usually represented by the final judgment of the lawsuit and by the confirmation of the capacity for its

recovery by receipt or offsetting by another receivable, are recognized as assets.

Contingent liabilities are recognized in the financial statements when, based on the opinion of legal advisor and

Management, the risk of loss of legal or administrative proceedings is considered probable, with a probable outflow of

financial resource for the settlement of the obligation and when the amounts involved are measurable with sufficient

assurance, being quantified when judicial noticed and revised monthly as follows:

Aggregated Method: cases that are similar and recurring in nature and whose values are not considered relevant.

Provisions are based on statistical data. It covers civil, tax or labor judicial proceedings (except labor claims filed by

trade unions and all proceedings classified as strategic) with probable value of award, estimated by legal advisors, up

to R$ 1 million.

Individual Method: cases considered unusual or whose value is considered relevant by our legal counsel. Provisions

are based on: the amount claimed; probability of an unfavorable decision; evidence presented; evaluation of legal

precedents; other facts raised during the process; judicial decisions made during the course of the case; and the

classification and the risk of loss of legal actions.

Contingent liabilities, individually measured, considered as possible losses are not recognized in the financial

statements, they are disclosed in notes, while those classified as remote do not require provisioning or disclosure.

Legal obligations (fiscal and social security) are derived from tax obligations provided in the legislation, regardless of

the probability of success of lawsuits in progress, and have their amounts recognized in full in the financial

statements.

o) Debt Instrument Issue Expense

Expenses related to transactions involving the issue of debt instruments are capitalized and presented as a reduction

of the corresponding liability. The expenses are recognized in the income statement over the term of the transaction.

p) Other Assets and Liabilities

Other assets are stated at their realizable amounts, including, when applicable, related income and monetary and

exchange variations on a pro rata die basis, and allowance for losses, when deemed appropriate. Other liabilities are

stated at their known and measurable amounts, plus, when applicable, related charges and monetary and exchange

variations on a pro rata die basis.

q) Earnings per share

Earnings per share is disclosed in accordance with CPC 41 – Earnings per Share, approved by Resolution

CVM 636/2010. The Bank's basic and diluted earnings per share were calculated by dividing the net profit attributable

to shareholders by the weighted average number of total common shares, excluding treasury shares (Note 24.f). The

Bank has no outstanding options, bonus of subscription nor its equivalents which provide their holders the right to

acquire shares. Thus, the basic and diluted earnings per share are equal.


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5 - CASH AND CASH EQUIVALENTS

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Cash and Cash Equivalents 17,779,756 12,200,359 12,263,677

Local currency 9,452,322 9,188,696 10,680,451


Interbank Investments (1)

88,612,946 62,533,241 46,485,933

Open market investments - sales pending settlement - held position 26,030,146 16,971,089 7,465,176


Total 106,392,702 74,733,600 58,749,610

(1) Investments whose original maturity is less than or equal to 90 days and with insignificant risk of change in fair value.

6 - SHORT-TERM INTERBANK INVESTMENTS

a) Breakdown

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Open Market Investments 292,090,808 263,290,018 278,214,128

Reverse repos - Own Resources 26,227,937 16,971,091 7,465,176

Treasury Financial Bills 289,463 -- 165,710


National Treasury Notes 840 699 --

Other securities 197,791 -- --

Reverse repos - Financed Position 265,862,871 246,318,927 270,748,952






Total 435,617,637 364,448,946 361,972,678

Current assets 364,594,541 313,830,594 321,665,012


b) Income from Short-term Interbank Investments


2015 Jan 1 to Sep 30,

2014

Income from Open Market Investment 10,668,914 7,434,190 28,922,128 19,933,773

Own resources 979,264 586,261 2,288,912 1,671,262

Financed position 9,689,650 6,847,929 26,633,216 18,262,511

Income from Investiments in Interbank Deposits 1,291,453 677,098 3,215,386 1,882,079

Total 11,960,367 8,111,288 32,137,514 21,815,852


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7- SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS

a) Securities

a.1) Breakdown of the portfolio by category, type of bonds and maturity

Maturity in Days

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Without maturity

0 to 30 31 to 180 181 to 360 More than


Mark to Market



1 - Trading securities -- 15,489 2,513 740,368 960,376 1,737,196 1,718,746 (18,450) 8,088,811 7,964,481 (124,330) 8,130,932 8,032,510 (98,422)

Federal Government Bonds

-- 15,489 2,513 740,368 960,376 1,737,196 1,718,746 (18,450) 8,088,811 7,964,481 (124,330) 8,121,524 8,021,678 (99,846)

Treasury Financial Bills -- -- -- 705,612 346,520 1,052,076 1,052,132 56 1,766,614 1,766,197 (417) 1,724,143 1,723,803 (340)

National Treasury Bills -- 15,489 2,513 34,756 570,482 634,726 623,240 (11,486) 6,270,594 6,149,706 (120,888) 6,347,506 6,250,415 (97,091)

National Treasury Notes -- -- -- -- 43,374 50,394 43,374 (7,020) 51,603 48,578 (3,025) 49,875 47,460 (2,415)

Corporate Bonds -- -- -- -- -- -- -- -- -- -- -- 9,408 10,832 1,424

Financial bills -- -- -- -- -- -- -- -- -- -- -- 9,408 10,832 1,424

2 - Available for sale securities

336,828 935,866 3,132,499 10,451,585 80,305,517 98,515,179 95,162,295 (3,352,884) 93,249,092 91,947,570 (1,301,522) 91,122,603 89,995,124 (1,127,479)

Federal Government Bonds

-- 323,977 1,067,709 6,238,933 44,756,105 53,392,128 52,386,724 (1,005,404) 46,265,672 45,790,603 (475,069) 43,232,506 42,833,686 (398,820)

Treasury Financial Bills -- -- -- 322 34,218,712 34,220,272 34,219,034 (1,238) 27,003,028 26,996,182 (6,846) 21,698,419 21,693,009 (5,410)

National Treasury Bills -- 299,841 643,824 1,261,981 3,086,838 5,527,846 5,292,484 (235,362) 4,995,067 4,880,612 (114,455) 6,308,336 6,198,741 (109,595)

National Treasury Notes -- -- -- 1,000,460 2,432,480 3,959,430 3,432,940 (526,490) 3,654,048 3,291,520 (362,528) 3,561,772 3,213,645 (348,127)

Agricultural debt securities

-- 395 533 826 3,513 5,693 5,267 (426) 6,314 5,999 (315) 7,337 7,012 (325)

Brazilian foreign debt securities

-- -- -- -- 2,725,427 2,936,754 2,725,427 (211,327) 3,369,300 3,397,335 28,035 3,695,607 3,744,381 48,774

Foreign Government bonds

-- 23,741 423,352 3,975,344 1,985,898 6,407,058 6,408,335 1,277 6,578,927 6,590,227 11,300 7,362,691 7,356,486 (6,205)

Other -- -- -- -- 303,237 335,075 303,237 (31,838) 658,988 628,728 (30,260) 598,344 620,412 22,068

Corporate Bonds 336,828 611,889 2,064,790 4,212,652 35,549,412 45,123,051 42,775,571 (2,347,480) 46,983,420 46,156,967 (826,453) 47,890,097 47,161,438 (728,659)

Debentures -- 152,233 1,053,898 2,906,322 30,690,517 35,216,351 34,802,970 (413,381) 36,445,901 36,227,917 (217,984) 37,600,463 37,462,200 (138,263)

Promissory notes -- 42,592 520,629 257,026 -- 817,205 820,247 3,042 1,352,518 1,351,815 (703) 1,203,814 1,200,678 (3,136)

Certificate of banking credit

-- -- -- -- 48,793 51,510 48,793 (2,717) 53,169 47,558 (5,611) 53,608 48,190 (5,418)

Shares in investment funds

336,325 297,971 -- 154,615 1,544,539 3,176,755 2,333,450 (843,305) 2,621,068 2,156,131 (464,937) 2,531,077 1,986,341 (544,736)

Shares 503 -- -- -- -- 810 503 (307) 810 854 44 810 644 (166)

Rural Product Bills - Commodities

-- 114,396 448,444 352,113 1,709 917,325 916,662 (663) 1,252,950 1,248,907 (4,043) 1,574,625 1,568,882 (5,743)

Certificate of deposit -- -- -- -- -- -- -- -- 531,243 531,219 (24) 95,644 95,707 63

Certificates of Agribusiness Credit Rights

-- -- -- -- -- -- -- -- 14,414 14,620 206 18,008 18,316 308

Financial bills -- -- -- 19,768 -- 19,750 19,768 18 1,569,689 1,562,205 (7,484) 1,544,467 1,527,650 (16,817)


-- -- -- -- 490,024 497,058 490,024 (7,034) 495,439 486,491 (8,948) 498,884 490,945 (7,939)

Other -- 4,697 41,819 522,808 2,773,830 4,426,287 3,343,154 (1,083,133) 2,646,219 2,529,250 (116,969) 2,768,697 2,761,885 (6,812)


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Maturity in Days

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Without maturity

0 to 30 31 to 180 181 to 360 More than 360 Cost value Market value Mark to Market Cost value Market value Mark to Market Cost value Market value Mark to Market

3 - Held to maturity securities

-- -- -- -- 45,493,515 49,973,375 45,493,515 (4,479,860) 45,630,343 39,811,248 (5,819,095) 44,408,424 39,482,332 (4,926,092)

Corporate Bonds -- -- -- -- 45,493,515 49,973,375 45,493,515 (4,479,860) 45,630,343 39,811,248 (5,819,095) 44,408,424 39,482,332 (4,926,092)

Debentures -- -- -- -- 45,352,332 49,633,387 45,352,332 (4,281,055) 45,307,873 39,659,172 (5,648,701) 44,090,642 39,321,989 (4,768,653)


-- -- -- -- 141,183 339,988 141,183 (198,805) 322,470 152,076 (170,394) 317,782 160,343 (157,439)

Total 336,828 951,355 3,135,012 11,191,953 126,759,408 150,225,750 142,374,556 (7,851,194) 146,968,246 139,723,299 (7,244,947) 143,661,959 137,509,966 (6,151,993)

a.2) Breakdown of the portfolio by financial statement classification and maturity date

Maturity in Days

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Without maturity

0 to 30 31 to 180 181 to 360 More than 360 Cost value Market value Mark to Market Cost value Market value Mark to Market Cost value Market value Mark to Market

Total by portfolio 336,828 951,355 3,135,012 11,191,953 126,759,408 150,225,750 142,374,556 (7,851,194) 146,968,246 139,723,299 (7,244,947) 143,661,959 137,509,966 (6,151,993)

Own portfolio 336,828 653,384 3,135,011 10,152,330 63,760,035 81,868,961 78,037,588 (3,831,373) 77,773,501 75,825,871 (1,947,630) 89,606,244 87,038,724 (2,567,520)

Subject to repurchase agreements

-- -- 1 1,024,338 57,751,812 62,795,586 58,776,151 (4,019,435) 56,080,333 50,788,233 (5,292,100) 48,270,304 44,688,622 (3,581,682)

Deposits with Banco Central do Brasil

-- -- -- -- -- -- -- -- -- -- -- 29 16 (13)

Pledged in guarantee -- 297,971 -- 15,285 5,247,561 5,561,203 5,560,817 (386) 13,114,412 13,109,195 (5,217) 5,785,382 5,782,604 (2,778)

a.3) Breakdown of the portfolio by category and maturity in years

Maturity in years

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Without maturity

Due in up to one year



Due after 10 years

Cost value Market value Cost value Market value Cost value Market value

Total by category 336,828 15,278,320 54,658,490 70,488,355 1,612,563 150,225,750 142,374,556 146,968,246 139,723,299 143,661,959 137,509,966

1 - Trading securities -- 758,370 597,253 363,123 -- 1,737,196 1,718,746 8,088,811 7,964,481 8,130,932 8,032,510

2 - Available for sale securities 336,828 14,519,950 54,061,237 24,772,509 1,471,771 98,515,179 95,162,295 93,249,092 91,947,570 91,122,603 89,995,124

3 - Held to maturity securities -- -- -- 45,352,723 140,792 49,973,375 45,493,515 45,630,343 39,811,248 44,408,424 39,482,332


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a.4) Summary of the portfolio by financial statement classification

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Book value Book value Book value

Current Non-current Total Current Non-current Total Current Non-current Total

Total by portfolio 17,578,739 129,275,677 146,854,416 26,192,199 119,350,195 145,542,394 49,541,102 92,894,956 142,436,058

Own portfolio 16,575,524 63,227,821 79,803,344 22,212,082 54,413,849 76,625,931 36,874,062 51,493,597 88,367,659

Subject to repurchase agreements 689,959 60,800,295 61,490,255 2,543,542 53,263,726 55,807,268 6,884,424 41,401,355 48,285,779

Deposits with Banco Central do Brasil -- -- -- -- -- -- 16 -- 16

Pledged in guarantee 313,256 5,247,561 5,560,817 1,436,575 11,672,620 13,109,195 5,782,600 4 5,782,604

a.5) Summary of the portfolio by category

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Total by category

1 - Trading securities 1,718,746 1% 7,964,481 6% 8,032,510 6%

2 - Available for sale securities 95,162,295 65% 91,947,570 63% 89,995,124 63%

3 - Held to maturity securities 49,973,375 34% 45,630,343 31% 44,408,424 31%

Portfolio Book Value 146,854,416 100% 145,542,394 100% 142,436,058 100%

Mark to market - held to maturity (4,479,860) -- (5,819,095) -- (4,926,092) --

Portfolio Market Value 142,374,556 -- 139,723,299 -- 137,509,966 --


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b) Income from operations with securities


Short-term Interbank Investments (Note 7.b) 11,960,367 8,111,288 32,137,514 21,815,852

Fixed-income securities 5,301,480 4,109,305 14,065,955 10,249,004

Variable-income securities 5,137,316 1,277,722 8,477,430 1,277,272

Total 22,399,163 13,498,315 54,680,899 33,342,128

c) Reclassification of securities

There was no reclassification of securities in the period from Jan 1, 2015 to Sep 30, 2015.

d) Derivative financial instruments

The Bank uses derivative financial instruments to manage, at the consolidated level, its positions and to meet clients'

needs, classifying its own positions as hedge (market risk and cash flow risk) and trading, both within limits approved

by committees of the Bank. The hedge strategy of the equity positions is in line with macroeconomic analyses and is

approved by the Executive Board of Directors.

In the options market, active or long positions have the Bank as holder, while passive or short positions have the

Bank as writer.

The models used to manage risks with derivatives are reviewed periodically and the decisions made follow the best

risk/return relationship, estimating possible losses based on the analysis of macroeconomic scenarios.

The Bank uses tools and systems to manage the derivatives. Trading in new derivatives, standardized or not, is

subject to a prior risk analysis.

Risk analysis of the subsidiaries is undertaken on an individual basis and its risk management is done on a

consolidated basis.

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.

Risks

The main risks inherent to derivative financial instruments, resulting from the business dealings of the bank and its

subsidiaries are credit, market, liquidity and operational risks.

Credit risk is the exposure to loss in the event of default by a counterparty to a transaction. The credit exposure in

futures contracts is minimized due to daily settlement in cash. The swap contracts, recorded in Cetip are subject to

credit risk if the counterparty is not able or willing to perform its contractual obligations, while the swap contracts

registered in the BM&FBovespa are not subject to the same risk, given that the Bank operations have the stock

exchange as guarantor.

Total credit exposure from swaps is R$ 555,439 thousand on Sep 30, 2015 (R$ 508,717 thousand on Dec 31, 2014

and R$ 447,881 thousand on Sep 30, 2014).

Market risk is the possibility of losses caused by changes in interest rates, exchange rates, stock prices and

commodity prices.

Market liquidity risk is the possibility of loss resulting from the inability to perform a transaction within a reasonable

time and without significant loss of value due to the size of the transaction compared to the volume usually traded.

Operational risk denotes the probability of financial losses resulting from failures or inadequacy of people, processes

and systems, or factors such as catastrophes or criminal activities.


3rd

quarter 2015


28

d.1) Breakdown of the Portfolio of Derivatives for Trading by Index

By Index

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Notional value


Notional value


Notional value


Future Contracts

Purchase commitments 3,212,354 -- -- 3,867,780 -- -- 3,186,421 -- --

Interbank Deposits 3,103,465 -- -- 1,039,869 -- -- 917,062 -- --

Currencies 101,289 -- -- 2,820,606 -- -- 2,268,140 -- --

Bovespa Index 452 -- -- 505 -- -- -- -- --

On-shore USD rates -- -- -- 1,327 -- -- 1,219 -- --

Commodities 7,148 -- -- 5,473 -- -- -- -- --

Sales commitments 4,931,334 -- -- 9,453,414 -- -- 11,690,074 -- --

Interbank Deposits 631,402 -- -- 8,240,543 -- -- 9,271,460 -- --

Currencies 3,076,854 -- -- 403,338 -- -- 185,057 -- --

T-Note 1,191,709 -- -- 712,179 -- -- 2,080,416 -- --

Bovespa Index 407 -- -- -- -- -- -- -- --

Libor -- -- -- 53,049 -- -- 98,036 -- --

Commodities 30,962 -- -- 44,305 -- -- 55,105 -- --

Forward operations

Asset position 13,097,893 2,814,105 2,870,480 10,155,637 444,144 576,994 6,399,547 194,631 287,927

Term securities 228,664 228,664 228,664 22,497 22,497 22,497 -- -- --

Term currencies 12,821,179 2,574,239 2,624,625 10,076,826 416,333 538,000 6,348,360 185,628 254,650

Term commodities 48,050 11,202 17,191 56,314 5,314 16,497 51,187 9,003 33,277

Liability position 5,432,706 (1,007,475) (888,515) 5,333,561 (240,339) (136,004) 5,914,959 (287,829) (180,549)

Term securities 228,664 (228,664) (228,664) 22,497 (22,497) (22,497) -- -- --

Term currencies 5,184,911 (772,000) (651,699) 5,292,794 (213,887) (111,385) 5,895,174 (287,439) (177,956)

Term commodities 19,131 (6,811) (8,152) 18,270 (3,955) (2,122) 19,785 (390) (2,593)

Option Market

Purchase Commitments - Long Position

8,289 59 564 36,297 426 61 116,314 1,394 26

Foreign currency 8,289 59 564 36,297 426 61 116,314 1,394 26

Sale Commitments - Long Position

-- -- -- -- -- -- 12,261 101 20

Foreign currency -- -- -- -- -- -- 12,261 101 20

Purchase Commitments - Short Position

50,441,421 (693,455) (1,840,440) 46,496,861 (685,923) (1,048,760) 45,366,080 (714,600) (1,107,622)

Foreign currency 17,095 (830) (2,720) 18,150 (491) (647) 19,955 (230) (586)

Pre-fixed 50,392,932 (687,848) (1,826,583) 46,478,711 (685,432) (1,048,113) 45,345,077 (714,325) (1,107,025)

Interbank deposit 31,370 (4,773) (11,114) -- -- -- -- -- --

Shares 24 (4) (23) -- -- -- -- -- --

Commodities -- -- -- -- -- -- 1,048 (45) (11)


3rd

quarter 2015


29

By Index

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Notional value


Notional value


Notional value


Sale Commitments - Short Position

50,422,201 (49,447,451) (48,349,931) 46,761,702 (45,974,210) (45,689,876) 45,529,075 (44,536,347) (44,180,255)

Foreign currency 8,583 (75) (2) 36,297 (420) (71) 116,314 (1,389) (374)

Pre-fixed 50,392,932 (49,447,119) (48,349,460) 46,478,711 (45,969,404) (45,687,640) 45,345,078 (44,532,337) (44,178,470)

Shares 408 (54) (451) -- -- -- -- -- --

Commodities 20,278 (203) (18) 246,694 (4,386) (2,165) 67,683 (2,621) (1,411)

Swaps Contracts

Asset position 57,282,326 2,099,613 1,842,047 52,829,606 827,168 847,795 53,660,348 659,851 694,062

Interbank Deposits 122,120 (1,511) 3,909 511,871 3,979 5,997 234,594 2,208 3,469

Foreign currency 7,408,415 2,101,343 1,837,141 6,422,397 776,846 786,765 8,695,884 608,830 635,473

Pre-fixed 49,750,424 (254) 994 45,895,338 46,343 55,033 44,729,870 48,813 55,120

IPCA 1,367 35 3 -- -- -- -- -- --

Liability position 18,055,343 (3,406,763) (3,274,827) 11,032,438 (755,604) (881,301) 9,561,114 (594,320) (629,642)

Interbank Deposits 168,570 2,424 (5,597) 136,599 659 (2,824) 33,993 774 (1,108)

Foreign currency 17,847,660 (3,409,187) (3,269,118) 10,356,380 (690,981) (814,406) 9,007,743 (532,774) (563,892)

Pre-fixed 39,113 -- (112) 539,459 (65,282) (64,071) 519,378 (62,320) (64,642)

Other derivatives (1)

Asset position


Liability position


(1) Related, essentially, to Non Deliverable Forwards (NDF) which are traded in the over-the-counter (OTC) market and have as their object an exchange rate of a specific currency.

d.2) Breakdown of the derivatives portfolio by maturity (notional value)

Maturity in Days

0 to 30 31 to 180 181 to 360 More than 360 Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Futures 601,834 5,610,323 39,683 1,891,848 8,143,688 13,321,194 14,876,495

Forwards 3,332,230 9,576,300 3,575,920 2,046,148 18,530,598 15,489,198 12,314,506

Options 99,865,764 821,621 152,316 32,210 100,871,911 93,294,860 91,023,730

Swaps 54,140,908 7,416,250 3,567,765 10,212,746 75,337,666 63,862,044 63,221,462

Other 2,797,559 695,111 91,126 240,688 3,824,484 6,449,873 3,940,492

d.3) Breakdown of the derivative portfolio by trading market and counterparty (notional value on September 30, 2015)

Futures Forwards Options Swaps Other

BM&FBovespa 8,143,688 -- 3,975,422 -- --

Over-the-counter

Financial Institutions -- 457,328 93,295,209 67,999,921 3,824,484

Client -- 18,073,270 3,601,280 7,337,745 --


3rd

quarter 2015


30

d.4) Breakdown of margin given as guarantee for transactions with derivative financial instruments

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Treasury Financial Bills 638,479 1,583,333 1,470,921

Total 638,479 1,583,333 1,470,921

d.5) Portfolio of derivatives designated as hedge accounting

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Market Risk Hedge

Hedging instruments

Assets 328,098 345,853 339,694

Swaps 328,098 345,853 339,694

Hedged items

Liabilities 328,570 345,183 338,951

Other liabilities 328,570 345,183 338,951

In order to hedge against possible fluctuations in the interest and exchange rates on its securities and foreign

investments, the Conglomerate contracted derivative operations to offset the exposure to the market value changes.

The hedges were assessed as effective, in accordance with the Circular No. 3,082/2002 from the Banco Central do

Brasil, which requires evidence of hedge effectiveness between 80% and 125%.

d.6) Income gains and losses with hedging instruments and hedged items


Hedged items losses (28,461) (87,939) (8,416)

Hedging instruments gains 28,278 87,172 6,820

Net effect (183) (767) (1,596)

Hedge items gains 51,211 51,211 --

Hedging instruments losses (51,199) (51,199) --

Net effect 12 12 --

d.7) Derivative financial instruments segregated by current and non-current

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Current Non-current Current Non-current Current Non-current

Assets

Forwards 2,514,503 355,977 514,395 62,599 212,654 75,273

Options 564 -- 61 -- 46 --

Swaps 501,665 1,340,382 494,279 353,516 459,985 234,077

Other derivatives 98,755 23,114 65,322 5,803 30,294 4,188

Total 3,115,487 1,719,473 1,074,057 421,918 702,979 313,538

Liabilities

Forwards (826,099) (62,416) (120,800) (15,204) (161,109) (19,440)

Options (50,178,909) (11,462) (46,697,392) (41,244) (45,247,616) (40,261)

Swaps (1,460,488) (1,814,339) (321,365) (559,936) (329,978) (299,664)

Other derivatives (102,298) (21,722) (234,233) (5,524) (129,751) (3,990)

Total (52,567,794) (1,909,939) (47,373,790) (621,908) (45,868,454) (363,355)


3rd

quarter 2015


31

e) Income from derivative financial instruments


Swaps (619,196) (694,237) 87,430

Forwards (2,140,863) (1,815,204) 105,396

Options (1,681,338) (4,452,172) (2,678,538)

Futures (127,544) 26,962 (298,891)

Other derivatives 3,709,629 3,608,111 (24,102)

Total (859,312) (3,326,540) (2,808,705)

8 - INTERBANK ACCOUNTS

a) Payments and receipts pending settlement

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Assets

Rights against other participants of settlement systems (1)

Bank checks and other instruments 2,106,699 10,428 2,491,009

Documents sent by other participants 2,104,711 -- 2,076,618

Total 4,211,410 10,428 4,567,627

Current assets 4,211,410 10,428 4,567,627

Liabilities

Obligations to other participants of settlement systems (1)

Remitted receipts 2,243,763 -- 2,044,578

Bank checks and other instruments 1,057,826 -- 1,161,861

Other receipts 5,348 16 13,198

Total 3,306,937 16 3,219,637

Current liabilities 3,306,937 16 3,219,637

(1) There was no operation of the service of clearing checks and other securities on Dec 31, 2014.

b) Restricted deposits

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Compulsory Deposits with Banco Central do Brasil 60,362,133 63,224,237 78,714,270

Additional reserve requirements on deposits 13,952,704 22,768,271 24,327,310

Savings deposit requirements 23,663,389 20,603,108 27,230,159

Demand deposit requirements 9,579,708 14,087,807 15,379,340

Time deposit requirements 11,295,864 5,761,416 11,764,486

Resources for microfinance 222,633 -- --

Resources for rural credit (1)

1,643,753 -- --

Other 4,082 3,635 12,975

Housing Finance System 2,453,561 2,303,481 2,256,359

Compensation of wage changes fund 2,618,674 2,489,081 2,442,644


Other 7,865 7,520 7,126


Rural credit - Proagro 232,744 260,361 255,811


Total 62,898,389 65,657,228 81,101,962

Current assets 62,896,054 65,606,579 81,072,537


(1) Refers to funds deposited with the Banco Central do Brasil, because they were not lent on to rural credits, according to Resolution CMN No. 3,745/2009. The special supply funds were provided by Banco Central do Brasil and recorded in borrowings and onlendings (Note 17.b).


3rd

quarter 2015


32

c) Compulsory investments


2015 Jan 1 to Sep 30,

2014

Deposits linked to the Banco Central do Brasil 1,271,013 1,462,362 3,547,352 4,274,881

Additional reserve requirements on deposits 469,651 676,302 1,688,050 1,947,451

Savings deposit requirements 495,812 486,888 1,246,374 1,356,626

Time deposit requirements 305,550 289,974 612,928 931,499

Resources for rural credit -- 9,198 -- 39,305

Income Credit Linked to Real State -- 37,189 80,786 106,599

Income Credit Linked to National Treasury - Rural Credit 10,621 8,286 30,209 22,858

Losses on restricted deposits devaluation (8,469) (4,776) 224 (14,405)

Total 1,273,165 1,503,061 3,658,571 4,389,933

9 - LOAN OPERATIONS

a) Portfolio by modality

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Loan Operations 636,721,743 607,026,392 586,149,400

Loans and discounted securities 235,166,295 229,003,246 221,999,488

Financing 178,770,936 169,129,871 164,554,758

Rural and agribusiness financing 175,826,411 170,127,548 164,584,090

Real estate financing 46,556,170 38,443,983 34,674,898

Financing of Infrastructure and development 57,728 493 523

Loan operations sold under assignment (1)

344,203 321,251 335,643

Other receivables with loan characteristics 51,272,581 47,711,742 44,429,531

Credit card operations 18,993,148 19,925,427 17,420,221

Advances on exchange contracts (2)

15,941,232 12,566,495 11,550,272

Other receivables purchase under assignment (3)

15,655,155 14,664,270 14,989,834

Guarantees honored 279,243 235,369 159,130

Other 403,803 320,181 310,074

Total Loan Portfolio 687,994,324 654,738,134 630,578,931

(Allowance)/Reversal for Loan Losses (31,587,162) (25,060,164) (23,558,101)

(Allowance for loan losses - loan operations) (30,776,935) (24,249,769) (22,841,688)

(Allowance for other losses - other receivables) (4)

(810,227) (810,395) (716,413)

Total Loan Portfolio Net of Provisions 656,407,162 629,677,970 607,020,830

(1) Loan operations assigned with retention of the risks and benefits of the financial assets.

(2) Advances on exchange contracts are classified as a deduction to other liabilities

(3) Loan operations acquired with retention of the risks and benefits by the assignor of the financial assets.

(4) Includes the amount of R$ 7,627 thousand as of September 30, 2015 (R$5,963 thousand as of December 31, 2014 and R$ 5,522 thousand as of September 30, 2014) related to Allowance for interbank onlendings losses.


3rd

quarter 2015


33

b) Loan operations and leasing transactions income


2015 Jan 1 to Sep 30,

2014

Loan operations income 32,832,564 22,586,898 81,165,806 59,006,632

Loans and discounted securities 13,517,991 11,600,555 38,298,257 33,163,200

Financing 11,630,351 5,118,985 21,845,493 9,443,736

Rural and agribusiness financing 3,162,390 2,643,108 8,736,568 7,521,952

Equalization of rates - Agricultural crop- Law 8,427/1992 2,003,661 1,406,115 5,606,072 3,889,365

Real estate financing 1,169,338 774,860 3,060,674 1,990,037

Recovery of loans previously written-off as loss (1)

609,690 680,191 2,115,999 2,231,131

Income from foreign currency financing 652,912 283,358 1,224,125 542,522

Export financing 55,796 71,329 210,427 192,893

Guarantees honored 19,675 2,959 34,247 12,129

Other 10,760 5,438 33,944 19,667

Leasing Transactions Income (Note 10.i) -- -- -- 548

Total 32,832,564 22,586,898 81,165,806 59,007,180

(1) The amount of R$ 4,575 thousand in the 3rd

quarter/2015 (with impact on the income of R$ 2,399 thousand), R$ 51,456 thousand in the 3rd

quarter/2014 (with impact on the income of R$ 29,438 thousand), R$ 60,533 thousand in the period from Jan 01,2015 to Sep 30,2015 (with impact on the income of R$ 32,016 thousand) and R$ 78,937 thousand in the period from Jan 01,2014 to Sep 30,2014 (with impact on the income of R$ 45,160 thousand) was received from assignments without recourse of written-off credits to entities outside the financial system, in accordance with CMN Resolution 2,836/2001. The book value of these transactions were R$ 700 thousand, R$ 134,305 thousand, R$ 85,765 thousand and R$ 148,079 thousand, respectively.


3rd

quarter 2015


34

c) Breakdown of the loan portfolio by sector

In these financial statements, we present the loan portfolio by sectors of economic activity in a broadly manner,

according to the main economic activity of the credit borrower, considering the adherence to the economic sector of

the controlling group, when applicable, and in compliance with the best market practices.

Sep 30, 2015 % Dec 31, 2014 % Sep 30, 2014 %

Public sector 77,077,504 11.2 59,780,785 9.1 57,093,867 9.1

Public administration 39,059,724 5.7 28,741,202 4.3 26,440,969 4.2

Oil sector 25,466,249 3.7 19,480,155 3.0 19,602,159 3.1

Electricity 11,233,197 1.6 10,198,015 1.6 9,107,052 1.4

Services 359,004 0.1 416,493 0.1 343,620 0.1

Other activities 959,330 0.1 944,920 0.1 1,600,067 0.3

Private sector (1)

610,916,820 88.8 594,957,349 90.9 573,485,064 90.9

Individuals 299,288,629 43.5 284,914,740 43.5 273,653,846 43.4

Companies 311,628,191 45.3 310,042,609 47.4 299,831,218 47.5

Mining and metallurgy 36,642,855 5.3 35,917,338 5.5 36,119,441 5.7

Agribusiness of plant origin 33,992,871 4.9 33,718,481 5.1 33,657,018 5.3

Automotive sector 23,308,277 3.4 21,602,573 3.3 21,791,620 3.5

Transportation 23,575,469 3.4 19,726,179 3.0 18,250,939 2.9

Services 20,860,675 3.0 22,135,085 3.4 21,487,927 3.4

Fuel 21,252,132 3.1 19,427,654 3.0 19,309,737 3.1

Real estate agents 18,394,392 2.7 18,022,956 2.8 16,771,919 2.7

Electricity 17,555,492 2.6 15,045,711 2.3 14,165,401 2.2

Retail commerce 16,898,972 2.5 16,450,483 2.5 15,792,659 2.5

Agribusiness of animal origin 12,993,027 1.9 13,769,901 2.1 13,079,858 2.1

Specific activities of construction 12,068,824 1.8 12,286,046 1.9 11,756,423 1.9

Textile and clothing 10,121,682 1.5 11,068,425 1.7 10,912,586 1.7

Pulp and paper 8,944,571 1.3 9,229,934 1.4 9,087,360 1.4

Agricultural inputs 9,208,435 1.3 9,548,536 1.5 8,435,904 1.3

Wholesale and various industries 6,297,189 0.9 7,341,571 1.1 7,084,605 1.1

Chemical 7,410,156 1.1 7,644,071 1.2 7,617,734 1.2

Electronics 8,350,344 1.2 10,416,396 1.6 9,606,458 1.5

Heavy construction 5,050,173 0.7 5,332,310 0.8 4,689,792 0.7

Woodworking and furniture market 6,310,272 0.9 6,697,376 1.0 6,497,320 1.0

Telecommunications 4,016,325 0.6 5,425,767 0.8 5,657,620 0.9

Other activities 8,376,058 1.2 9,235,816 1.4 8,058,897 1.4

Total 687,994,324 100.0 654,738,134 100.0 630,578,931 100.0

(1) The amounts disclosed under "Individuals" include loans to the sectors of agribusiness, housing and other sectors of economic activity carried out with individuals. To the highlighted economic sectors, operations are exclusive to companies.


3rd

quarter 2015


35

d) Loan portfolio by risk level and maturity

AA A B C D E F G H Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Current operations


01 to 30 20,799,039 7,374,230 15,803,634 2,005,413 236,034 277,375 66,636 42,111 533,087 47,137,559 45,825,861 43,127,218

31 to 60 15,051,648 4,412,971 4,947,236 994,749 87,597 181,852 37,158 32,027 117,601 25,862,839 29,141,870 27,450,805

61 to 90 16,331,707 4,093,812 4,774,686 1,019,496 88,478 244,026 42,951 28,213 150,012 26,773,381 23,500,409 24,961,479

91 to 180 33,514,210 8,517,814 10,781,512 2,823,316 248,599 485,968 117,443 78,314 581,673 57,148,849 63,291,007 59,473,761

181 to 360 54,979,432 14,568,323 15,556,464 3,066,370 315,486 762,459 174,241 135,918 807,244 90,365,937 99,062,496 98,562,701

More than 360 248,752,599 67,508,320 68,100,506 11,455,560 2,289,336 4,791,633 1,232,996 825,260 4,079,179 409,035,389 373,983,476 357,270,965


Up to 14 days 298,488 139,258 334,452 119,612 31,238 65,210 35,382 19,568 49,269 1,092,477 732,424 903,854

Other (1)

370,110 -- -- -- -- -- -- -- -- 370,110 355,522 376,071

Subtotal 390,097,233 106,614,728 120,298,490 21,484,516 3,296,768 6,808,523 1,706,807 1,161,411 6,318,065 657,786,541 635,893,065 612,126,854

Operations past due


01 to 30 -- -- 160,527 192,685 106,962 135,620 76,584 95,997 481,370 1,249,745 1,012,344 1,027,287

31 to 60 -- -- 69,958 91,893 81,107 77,955 39,122 52,851 205,700 618,586 519,686 572,291

61 to 90 -- -- 61,080 88,878 61,320 72,364 42,088 51,613 215,357 592,700 466,604 487,187

91 to 180 -- -- 146,281 221,062 155,309 194,544 114,396 141,839 564,800 1,538,231 1,255,266 1,370,434

181 to 360 -- -- 259,477 356,425 267,546 392,537 199,464 235,176 1,022,100 2,732,725 2,152,548 2,248,434

More than 360 -- -- 792,220 901,913 851,026 1,526,992 947,607 894,401 3,739,555 9,653,714 6,539,550 6,172,476


01 to 14 -- -- 19,486 51,368 49,829 49,193 20,283 25,300 85,108 300,567 213,759 221,644

15 to 30 -- -- 246,887 169,552 76,011 106,082 59,653 45,088 184,607 887,880 725,979 623,258

31 to 60 -- -- 77,484 409,350 160,078 256,443 117,964 94,061 330,251 1,445,631 896,350 935,788

61 to 90 -- -- 7 8,502 307,716 295,462 105,960 119,702 451,983 1,289,332 820,638 873,138

91 to 180 -- -- 9 731,772 8,680 266,753 301,877 392,255 1,232,034 2,933,380 1,283,866 1,369,222

181 to 360 -- -- -- 4,300,092 1 8,270 15,975 16,613 2,316,069 6,657,020 1,655,916 1,414,127

More than 360 -- -- -- -- 2 -- -- -- 308,270 308,272 1,302,563 1,136,791

Subtotal -- -- 1,833,416 7,523,492 2,125,587 3,382,215 2,040,973 2,164,896 11,137,204 30,207,783 18,845,069 18,452,077

Total 390,097,233 106,614,728 122,131,906 29,008,008 5,422,355 10,190,738 3,747,780 3,326,307 17,455,269 687,994,324 654,738,134 630,578,931

(1) Operations with third party risk linked to government funds and programs, primarily Pronaf, Procera, FAT, BNDES and FCO. They include 31,477 thousand of overdue installments, which comply with rules defined in each program for reimbursement by the program managers and, therefore, do not represent a credit risk for the Bank.


3rd

quarter 2015


36

e) Allowance for loan losses by risk level

Level of risk

% Provision

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Value of loans

Minimum required

allowance


(1)

Existent Allowance

Value of loans

Minimum required

allowance


(1)

Existent Allowance

Value of loans

Minimum required

allowance


(1)

Existent Allowance

AA 0 390,097,233 -- -- -- 390,137,737 -- -- -- 371,181,999 -- -- --

A 0.5 106,614,728 533,074 187,037 720,111 88,743,673 443,718 73,063 516,781 90,617,358 453,087 73,062 526,149

B 1 122,131,906 1,221,319 244,690 1,466,009 120,128,812 1,201,288 -- 1,201,288 114,758,980 1,147,590 -- 1,147,590

C 3 29,008,008 870,240 485,325 1,355,565 22,385,074 671,552 77,889 749,441 22,735,075 682,052 77,889 759,941

D 10 5,422,355 542,236 173,499 715,735 3,238,712 323,871 60,861 384,732 3,484,367 348,437 60,861 409,298

E 30 10,190,738 3,057,221 1,471,232 4,528,453 9,342,462 2,802,739 689,577 3,492,316 8,611,110 2,583,333 698,482 3,281,815

F 50 3,747,780 1,873,890 625,265 2,499,155 3,506,235 1,753,118 319,311 2,072,429 2,957,644 1,478,822 319,311 1,798,133

G 70 3,326,307 2,328,415 518,450 2,846,865 2,656,829 1,859,780 184,797 2,044,577 2,606,735 1,824,715 184,797 2,009,512

H 100 17,455,269 17,455,269 -- 17,455,269 14,598,600 14,598,600 -- 14,598,600 13,625,663 13,625,663 -- 13,625,663

Total 687,994,324 27,881,664 3,705,498 31,587,162 654,738,134 23,654,666 1,405,498 25,060,164 630,578,931 22,143,699 1,414,402 23,558,101

(1) Refers to the additional provision over and above the minimum required by CMN Resolution 2,682/1999. This provision is established based on the experience of Management, by making projections for the loan portfolio, based on the history of default of operations and in accordance with good banking practice.


3rd

quarter 2015


37

f) Changes in allowance for loan losses

Includes loans, leases and other receivables with characteristics of credit.


Opening balance 27,359,850 22,362,954 25,060,164 21,142,418

Provision/(reversal) 8,028,257 4,446,618 18,816,685 12,703,785

Minimum required allowance 5,728,257 4,402,435 16,516,685 12,516,650

Additional allowance 2,300,000 44,183 2,300,000 187,135

Exchange fluctuation - foreign allowances 144,501 15,134 168,921 8,051

Write-off (3,945,446) (3,266,605) (12,458,608) (10,296,153)

Closing balance 31,587,162 23,558,101 31,587,162 23,558,101

g) Changes in allowance for other loan losses

Includes provisions for other receivables without characteristics of credit.


Opening balance 934,306 735,850 909,528 665,952

Provision/(reversal) 137,451 126,109 162,201 202,206

Exchange fluctuation - foreign allowances 90 26 122 (140)

Write-off/ Other adjustments 7 (726) 3 (6,759)

Closing balance 1,071,854 861,259 1,071,854 861,259

h) Income from leasing transactions


Lease revenue -- -- -- 548

Leasing -- -- -- 548

Lease expenses -- -- -- (534)

Leasing -- -- -- (534)

Total -- -- -- 14

i) Concentration of loans


Dec 31, 2014 % of credit portfolio


Largest debtor 25,779,758 3.5 20,038,724 2.9 20,756,881 3.1

10 largest debtors 91,762,168 12.6 70,014,552 10.2 68,606,188 10.4

20 largest debtors 121,623,634 16.7 99,797,944 14.5 98,031,721 14.8

50 largest debtors 165,552,694 22.8 139,116,007 20.2 135,351,400 20.4

100 largest debtors 193,446,000 26.6 166,767,185 24.2 160,761,109 24.3


3rd

quarter 2015


38

j) Renegotiated credits

3rd

quarter/2015 3rd


30, 2015 Jan 1 to Sep

30, 2014

Credits renegotiated during the period (1)

11,131,435 8,691,982 33,067,839 29,343,903

Renegotiated when past due (2)

3,782,806 957,314 9,110,876 2,687,854

Renovated (3)

7,348,629 7,734,668 23,956,963 26,656,049

Changes on credits renegotiated when past due

Opening balance 12,701,343 7,564,163 9,030,112 7,093,500

Contracts (2)

3,782,806 957,315 9,110,876 2,687,855

Interest (received) and appropriated (460,952) (311,713) (957,038) (629,881)

Write-off (503,412) (334,187) (1,664,165) (1,275,896)

Closing balance (4)

15,519,785 7,875,578 15,519,785 7,875,578

Allowance for loan losses of the portfolio renegotiated when past due 7,463,541 5,162,711

(%) Allowance for loan losses on the portfolio 48.1% 65.6%

90 days default of the portfolio renegotiated when past due 2,469,413 1,613,031

(%) Portfolio default 15.9% 20.5%

(1) Represents the balance of all installments (past due and future) of loans renegotiated during the period using the internet, automated teller machines (ATM) or branch network.

(2) Renegotiated credit under debt composition as a result of payment delay by the clients.

(3) Renegotiated current credits (i.e. not past due) in the form of the extension or renewal of the credit or the granting of new loans for partial or full settlement of previous contracts or any other type of agreement that changes the maturity or the payment terms, originally agreed.

(4) Includes the amount of R$ 126,865 thousand (R$ 171,952 thousand as of September 30, 2014) related to renegotiated rural credits. The amount of R$ 5,763,797 thousand (R$ 5,256,351 thousand as of September 30, 2014), related to deferred credits from rural portfolio governed by specific legislation, is not included.

k) Supplementary information

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Undrawn credit lines 155,539,555 154,664,706 156,858,417

Guarantees provided (1)

13,981,783 11,368,409 10,296,270


Contracted credit opened for import 1,329,060 823,894 426,388

Linked resources 1,905,020 1,216,845 1,124,140

Guaranteed values for linked deposits 1,872,583 145,084 192,155

(1) For these operations, the Bank maintains an allowance recorded in Other Liabilities - Sundry, (Note 19.e) totaling R$ 522,659 thousand (R$ 182,805 thousand on December 31, 2014 and R$ 178,180 thousand on September 30,2014) calculated in accordance with Resolution CMN 2,682/1999.


3rd

quarter 2015


39

l) Loan Operations by line of credit from Fundo de Amparo ao Trabalhador (Fund for Workers’ Assistance) - FAT

Linhas do FAT TADE(1)

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Loans and Discounted Securities 2,773,734 3,369,930 3,380,254

Proger Urbano Investimento 18/2005 2,773,705 3,369,908 3,380,231

Proger Urbano Capital de Giro 15/2005 7 9 10

Proger Urbano Empreendedor Popular 01/2006 22 13 13

Financing 573,158 690,573 705,092

Proger Exportação 27/2005 25,532 12,052 8,616

FAT Taxista 02/2009 296,014 258,634 245,368

FAT Turismo - Investimento 01/2012 146,468 163,091 144,505

FAT Turismo - Capital de Giro 02/2012 105,144 256,796 306,603

Rural and Agribusiness Financing 159,874 291,653 377,644

Proger Rural Custeio 02/2006 1,130 1,835 1,989

Proger Rural Investimento 13/2005 15,669 23,807 27,844

Pronaf Custeio 04/2005 3,149 3,626 3,888

Pronaf Investimento 05/2005 135,767 254,633 335,075

Giro Rural - Aquisição de Títulos 03/2005 4,159 7,747 8,843

Giro Rural - Fornecedores 14/2006 -- 5 5

Total 3,506,766 4,352,156 4,462,990



3rd

quarter 2015


40

10 - OTHER RECEIVABLES

a) Specific credits

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Extension of rural credits - National Treasury 1,684,917 1,549,300 1,508,664

Total 1,684,917 1,549,300 1,508,664

b) Sundry

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Deferred tax asset - tax credit (Note 23.e) 36,719,119 24,193,724 24,236,179

Sundry debtors from escrow deposits - contingencies (Note 26.c) 25,452,941 20,677,150 19,062,076

Credit card operations (Note 9.a) 18,993,148 19,925,427 17,420,221

Sundry debtors from escrow deposits - lawsuit (Note 26.d) 16,138,929 15,418,982 15,204,014

Income tax and social contribution to offset 7,479,467 8,878,585 9,154,790

National Treasury - interest rate equalization - agricultural crop –

Law 8,427/1992 11,764,708 10,914,595 9,349,851

Fund of allocation of surplus - Previ (Note 25.f) 8,884,572 8,274,132 8,210,244

Credit linked to acquired operations (Note 9.a) (1)

15,655,155 14,664,270 14,989,834

Receivables - other 1,601,061 1,412,782 1,325,141

Receivables acquisition 3,745,349 3,991,029 3,805,768

Actuarial assets (Note 25.e) 3,321,249 6,233,307 10,173,480

Sundry debtors - domestic 2,112,056 1,519,239 1,614,819

Receivables - National Treasury (2)

1,816,527 2,265,746 1,986,841

Receivables – ECT – Banco Postal (3)

1,450,101 1,985,128 1,931,492

Rights for acquisition of royalties and government credits 1,010,212 1,226,441 606,137

Premiums on credits linked to operations acquired in assignment 1,858,992 2,056,693 2,245,240

Advances to cards transactions processing’s companies 1,210,866 2,405,945 3,316,901

Sundry debtors from escrow deposits - other 11,631 8,375 8,489

Sundry debtors - foreign 144,256 126,167 126,928

Salary advances and other advances 190,525 276,306 191,429

Sundry debtors for purchasing assets 41,277 51,367 43,290

Other 607,372 491,178 462,477

Total 160,209,513 146,996,568 145,465,641

Current assets 104,847,157 98,221,116 108,902,783


(1) Refers to the portfolios of payroll loans and vehicle financing granted to individuals, acquired by the Bank through assignments with full recourse to the transferor, accounted for in accordance with CMN Resolution 3,533/2008.

(2) It refers mainly to values resulting from operations with MCR 6-2 and MCR 6-4 resources (Rural Credit Manual) and the program of recovery of the “lavoura cacaueira baiana” (CMN Resolution 2,960/2002).

(3) Receivables from the partnership between Banco do Brasil and the Empresa Brasileira de Correios e Telégrafos – ECT, for the use of the Banco Postal network.


3rd

quarter 2015


41

11 - FOREIGN EXCHANGE PORTFOLIO

a) Breakdown

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Other Receivables

Exchange purchases pending settlement 20,827,850 15,745,408 14,032,850

Bills of exchange and time drafts in foreign currency 49,044 32,788 30,255

Receivables from sales of foreign exchange 6,152,596 15,007,433 15,062,079

(Advances received in National/foreign currency) (3,493,890) (13,522,786) (13,445,280)

Foreign currency receivables 3,295 5,655 5,271

Income receivable on advances granted and on financed imports 196,981 143,022 128,969

Total 23,735,876 17,411,520 15,814,144

Current assets 22,565,800 17,411,520 15,814,144

Non-current assets 1,170,076 -- --

Other Liabilities

Exchange sales pending settlement 8,776,053 18,967,647 17,916,186

(Financed imports) (24,177) (10,177) (10,981)

Exchange purchase liabilities 16,614,999 14,280,034 13,115,058

(Advances on exchange contracts) (15,395,686) (12,153,685) (11,153,566)

Foreign currency payables 4,585 6,157 5,617

Unearned income on advances granted 6,258 3,993 3,139

Total 9,982,032 21,093,969 19,875,453


Non-current liabilities 291,210 3,715,002 3,172,665

Net Foreign Exchange Portfolio 13,753,844 (3,682,449) (4,061,309)

Memorandum Accounts

Credit opened for imports 1,418,898 1,069,173 563,735


b) Foreign exchange results


Exchange income 6,595,387 2,682,304 14,986,116 6,864,039

Exchange expenses (4,086,234) (2,757,809) (11,825,468) (6,229,116)

Foreign Exchange Result 2,509,153 (75,505) 3,160,648 634,923


3rd

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42

12 - OTHER ASSETS

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Assets not for own use 222,159 229,862 230,369

Real estate 37,908 66,561 65,436

Assets in special regime 168,745 152,023 156,222

Vehicles 228 240 246

Residential properties 12,137 7,557 4,547

Machinery and equipment 3,087 3,425 3,862

Other 54 56 56

Materials in stock 28,715 27,112 29,598

Subtotal 250,874 256,974 259,967

(Impairment) (1)

(117,774) (121,944) (121,757)

Prepaid Expenses 223,167 314,232 379,805

Commissions paid to car dealers - financing of vehicles -- 57 91

Personnel expenses - meal program 110,202 147,658 105,505

Entities abroad 39,017 24,953 29,516

Tax expenses 14,294 31 12,095

Promotion and public relations 10,955 1,598 9,319

Rent 5,833 5,901 5,924

Premiums for purchased payroll credits (2)

23,736 111,923 192,865

Other 19,130 22,111 24,490

Total 356,267 449,262 518,015

Current assets 322,908 347,570 352,183


(1) The Bank recognized, in the 3rd quarter/2015, reversal of allowance for impairment losses of assets not in use in the amount of R$ 2,925 thousand (R$ 12,549 thousand in the 3rd quarter/2014).

(2) The amounts are amortized over the maturity of the installments of loans acquired from other financial institutions.


3rd

quarter 2015


43

13- INVESTMENTS

a) Changes in Subsidiaries and Associates

Book value Changes - Jan 1 to Sep 30, 2015 Book value Equity income

Dec 31, 2014 Dividends Other Events Equity income Sep 30, 2015 Sep 30, 2014 Jan 1 to Sep

30, 2014

Domestic 15,437,919 (2,344,057) (142,810) 8,338,184 21,289,236 16,302,320 3,704,558

BB Seguridade Participações S.A. (1) 3,662,042 (1,147,078) (23,381) 2,115,131 4,606,714 3,949,332 1,538,908

BB Elo Cartões Participações S.A. 586,915 -- -- 3,978,239 4,565,154 577,525 127,392

BB Leasing S.A. - Arrendamento Mercantil 3,893,195 (51,729) -- 290,430 4,131,896 3,860,509 170,258

Banco Votorantim S.A. (2) 3,714,071 -- (76,000) 235,956 3,874,027 3,775,618 284,288

BB Banco de Investimento S.A. 2,825,136 (669,806) (1,697) 949,991 3,103,624 3,106,318 831,528

BB Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A.

131,638 (377,398) 4 585,375 339,619 344,348 565,644

BB Tecnologia e Serviços S.A. (2) 207,606 -- 1,611 23,152 232,369 200,487 38,849

BB Administradora de Consórcios S.A. 164,162 (97,882) -- 153,753 220,033 209,975 132,240

BB Administradora de Cartões de Crédito S.A. 19,030 -- 19 15,139 34,188 31,729 12,706

Tecnologia Bancária S.A. - Tecban 17,172 -- -- (116) 17,056 15,317 3,308

Cadam S.A. 25,201 -- -- (9,340) 15,861 25,201 (728)

BESC Distribuidora de Títulos e Valores Mobiliários S.A. - Bescval

7,145 (164) -- 249 7,230 7,195 126

Cia. Hidromineral Piratuba 2,525 -- 36 154 2,715 2,514 16

Companhia Brasileira de Securitização - Cibrasec (3) 2,275 -- (58) 71 2,288 2,265 23

Cia. Catarinense de Assessoria e Serviços - CCA (4) 228 -- -- -- 228 228 --

BB Tur Viagens e Turismo Ltda. -- -- 142 -- 142 -- --

Goodwill/Bargain purchase on acquisition of investments 179,578 -- (43,486) -- 136,092 193,759 --

Overseas 3,766,652 (208,494) (2,840,206) 4,711,998 5,429,948 3,393,839 443,840

Banco Patagonia 1,228,999 (208,494) 441,126 363,939 1,825,570 1,067,772 347,444

Brasilian American Merchant Bank 1,221,749 -- 563,619 (28,538) 1,756,830 1,108,520 28,828

Banco do Brasil AG Viena 725,057 -- 461,084 15,437 1,201,576 685,467 28,144

BB Securities LLC 142,968 -- 71,903 4,329 219,200 126,913 31,893

Banco do Brasil Americas 119,537 -- 57,763 127 177,427 88,464 14,449

BB USA Holding Company 575 -- 286 -- 861 3,835 (379)

BB Leasing Company Ltd 121,831 -- (120,053) (1,177) 601 112,399 588

Goodwill on acquisition of investments 205,936 -- 41,947 -- 247,883 200,469 --

Profit/(loss) with foreign exchange in the branches -- -- (2,741,693) 2,741,693 -- -- 186,633

Profit/(loss) with foreign exchange in the subsidiaries and affiliates and associates

-- -- (1,584,799) 1,584,799 -- -- (196,469)

Increase/decrease in equity resulting from other changes -- -- (31,389) 31,389 -- -- 2,709

Total investments in subsidiaries and associates 19,204,571 (2,552,551) (2,983,016) 13,050,182 26,719,184 19,696,159 4,148,398

Accumulated Impairment (4,267) -- -- -- (4,267) (4,267) --

(1) On September 30, 2015, the price of BB Seguridade share was R$ 24.81.

(2) Excluded unrealized result arising from transactions with the Banco do Brasil.

(3) The information refers to the period from December/2014 to August/2015.

(4) Company in liquidation process, not valued by the equity method.


3rd

quarter 2015


44

Balances at Sep 30, 2015 Capital stock

Adjusted Shareholders’

Equity

Net income/ (loss) Jan 1 to Sep 30,

2015

Number of shares (in thousands)

Ownership interest in the total capital % Common Preferred

Domestic

BB Seguridade Participações S.A. 5,646,767 6,953,530 3,192,651 1,325,000 -- 66.25%

BB Elo Cartões Participações S.A. 406,515 5,932,905 5,345,990 10,000 -- 100.00%

BB Leasing S.A. - Arrendamento Mercantil 3,261,860 4,131,895 290,428 3,000 -- 100.00%

Banco Votorantim S.A. 7,483,754 7,777,684 404,712 43,114,693 9,581,043 50.00%

BB Banco de Investimento S.A. 1,821,082 3,103,624 949,994 949,994 2,541 100.00%

BB Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A.

109,698 339,619 585,374 100,000 -- 100.00%

BB Tecnologia e Serviços S.A. 146,391 234,777 31,079 248,458 248,586 99.97%

BB Administradora de Consórcios S.A. 98,539 220,033 153,753 398,158 -- 100.00%

BB Administradora de Cartões de Crédito S.A. 9,300 34,189 15,138 398,158 -- 100.00%

Tecnologia Bancária S.A. - Tecban (1)

374,521 378,203 4,816 470,159 -- 12.52%

Cadam S.A. 183,904 73,298 38,256 -- 4,762 21.64%

BESC Distribuidora de Títulos e Valores Mobiliários S.A. - Bescval 6,288 7,258 223 10,168,639 -- 99.62%

Cia. Hidromineral Piratuba 4,439 17,583 654 633 -- 14.26%

Companhia Brasileira de Securitização - Cibrasec (2)

68,479 75,538 2,356 8 -- 12.12%

Cia. Catarinense de Assessoria e Serviços - CCA 780 474 -- 260 520 48.13%

BB Tur Viagens e Turismo Ltda. (3)

9,633 12,872 (1,266) 96,333 -- 100.00%

Estruturadora Brasileira de Projetos - EBP 75,819 59,096 (1,026) 5,076 1,736 11.11%

Overseas

Banco Patagonia 303,314 3,095,948 371,580 245,648 424,102 58.96%

Brasilian American Merchant Bank 957,392 1,756,828 (4,938) (23,600) 241,023 --

Banco do Brasil AG Viena 414,034 1,201,577 20,761 (5,324) 338 --

BB Securities LLC 19,861 219,200 3,644 685 5,000 --

Banco do Brasil Americas 244,290 177,427 (5,035) 5,162 11,086 --

BB USA Holding Company -- 861 -- -- -- --

BB Leasing Company Ltd. -- 601 (1,193) 15 1,000 --

(1) Banco do Brasil’s direct interest is 4.51%.

(2) Banco do Brasil’s direct interest is 3.03%.

(3) Banco do Brasil's direct interest is 1.00%.

b) Other Investments

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Tax incentive investments 10,834 10,834 10,833

Equity securities 58 58 58

Stocks and shares 80,616 70,989 67,906

Other Investments 3,060 3,009 2,985

Other equity abroad 94,702 63,313 58,420

Total 189,270 148,203 140,202


c) Goodwill arising on acquisition of investments

Changes of goodwill 3rd quarter/2015 3rd quarter/2014 Jan 1 to Sep 30, 2015 Jan 1 to Sep 30, 2014

Opening balance 359,475 402,753 385,514 508,147

Amortizations (1)

(25,648) (22,743) (74,161) (68,571)

Foreign exchange fluctuation (2)

50,148 14,218 72,622 (45,348)

Closing balance 383,975 394,228 383,975 394,228

(1) Recorded in Other Administrative Expenses.

(2) Levied on the goodwill from BB Americas, Banco Patagonia and Merchant e-Solutions, Inc.


3rd

quarter 2015


45

d) Expected Goodwill Amortization


Banco do Brasil 26,429 108,067 107,475 47,781 48,724 45,499 385,975

Banco Votorantim 14,493 60,466 61,133 -- -- -- 136,092

Banco Patagonia 10,953 41,559 37,838 38,569 39,338 33,340 201,597

Banco do Brasil Americas 983 6,042 8,504 9,212 9,386 12,159 46,286

Tax effects (1)

(11,893) (48,630) (48,364) (21,501) (21,926) (20,475) (172,789)

Net Total 14,536 59,437 59,111 26,280 26,798 25,024 211,186

(1) 25% of income tax and 20% of social contribution for financial companies.

The expected amortization of goodwill arising on the acquisition of investments is based on the projections of results

made at the time of the purchase, prepared by specialized firms or technical departments within the Bank, and

considers the timing of the estimates and discount rates used in calculating the net present value of expected cash

flows.

e) Goodwill impairment test

The recoverable amount of goodwill arising on acquisition of investments is determined by the value in use, which is

the discounted value of the cash flow projections of the invested entity (cash-generating unit).

Assumptions used to project these cash flows are based on public information, budgets and / or business plans of the

purchased entities. These assumptions consider current and past performance, as well as expected market and

macroeconomic growth.

The cash flow of the entities below were actively projected for ten years and considered perpetual from the eleventh

year with fixed growth rates. For the periods that exceed the terms of the budget or business plan, the growth

estimates are in line with those adopted by the entities. The nominal discount rate is determined annually based on

the CAPM (Capital Asset Pricing Model) adapted for the Brazilian market and referenced in Reais (R$).

Entity (cash-generating unit) Growth rate p.a. (1)

Discount rate p.a. (2)

Banco Votorantim 3.60% 12.22%

BB Americas 2.00% 9.44%


(2) Geometric average of ten years of projections, except BB Americas, that considered a geometric average of seven years of projections.


the book value of the cash-generating units to exceed the recoverable amount.

The recoverable amount of the goodwill arising on the acquisition of Banco Patagonia are determined by the net

realizable value through sale, based on the share price of the companies on Merval (stock market of Buenos Aires).

Entity (cash-generating unit) Share price(1)

Banco Patagonia R$ 5.04 (2)

(1) Closing price of the shares at September 30, 2014. (2) Value equivalent to ARS 17.45, as ARS/BRL quoted at September 30, 2014.


impairment loss on goodwill arising on the acquisition of investments.


3rd

quarter 2015


46

14 - PROPERTY AND EQUIPMENT


Book value Changes Depreciation Cost Value Accumulated Depreciation


Book value Book value

Buildings 3,637,601 311,497 (256,177) 6,308,495 (2,606,883) (8,691) 3,692,921 3,474,736

Furniture and equipment in use 1,391,926 144,119 (167,442) 3,187,552 (1,818,949) -- 1,368,603 1,219,559

Data processing systems 1,135,063 185,094 (319,927) 3,878,852 (2,878,622) -- 1,000,230 1,076,786

Facilities 200,422 16,246 (25,627) 955,960 (764,919) -- 191,041 194,329

Land 183,076 (92) -- 182,984 -- -- 182,984 185,515

Security systems 164,318 13,196 (19,644) 384,686 (226,816) -- 157,870 167,384

Constructions in progress 128,664 (40,162) -- 88,502 -- -- 88,502 123,399

Communication systems 86,574 10,595 (11,066) 239,798 (153,695) -- 86,103 83,440

Transport systems 5,005 517 (520) 8,511 (3,509) -- 5,002 5,164

Furniture and equipment in stock

1,771 (20) -- 1,751 -- -- 1,751 1,776

Total 6,934,420 640,990 (800,403) 15,237,091 (8,453,393) (8,691) 6,775,007 6,532,088

15 - INTANGIBLE ASSETS

a) Changes and breakdown


Book value Acquisitions Write-offs Amortization Reversion

for Impairment

Cost Value Accumulated amortization


Book value

Book value

Rights to manage payroll (1) 6,510,812 513,028 (190,192) (1,413,036) -- 9,398,626 (3,928,274) (49,740) 5,420,612 5,894,553

Goodwill on acquisition of absorbed company (2)

2,715,371 -- -- (605,818) -- 4,961,027 (2,851,474) -- 2,109,553 2,892,719

Softwares 1,220,438 310,393 -- (117,405) 2,378 2,251,901 (836,097) -- 1,415,804 1,144,845

Other intangible assets 262,193 79,949 -- (98,258) -- 342,019 (98,135) -- 243,884 284,630

Total 10,708,814 903,370 (190,192) (2,234,517) 2,378 16,953,573 (7,713,980) (49,740) 9,189,853 10,216,747

(1) The values of acquisitions and write-offs include contracts renegotiated in the period, in which the new contract value is recorded and the past contract value is written-off without impact on Statement of Income.

(2) Refers to the goodwill from the merger of Banco Nossa Caixa.

b) Estimate for Amortization


Amounts to be amortized 761,870 2,917,271 2,554,640 1,343,793 721,531 890,748 9,189,853

c) Impairment Test

The impairment test of goodwill on the acquisition of Banco Nossa Caixa, which was merged into Banco do Brasil,

considers the value in use of Banco do Brasil´s operations in the state of São Paulo (cash-generating unit). Cash

flows are based on cash-generating unit results in 2014, the 2015 budget and internal projections of results from

2016, for five years.

The assumptions adopted for the calculation are based on Banco do Brasil's Corporate Strategy and macroeconomic

scenario. They consider the current and past performance and expected growth in the market segment.

Cash flows were discounted by the Bank’s cost of own capital. The nominal discount rate is measured annually

based on the CAPM (Capital Asset Pricing Model) adapted for the Brazilian market and referenced in Reais (R$).

Entity (Cash-generating unit) Growth rate p.a Discount rate p.a.

Banco do Brasil - state of São Paulo - Goodwill Banco Nossa Caixa (1)

9.5% 12.3%

(1) Geometric average of five years of projections.


the book value of the cash-generating unit to exceed its recoverable amount.


3rd

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47


impairment loss on goodwill on merged company.

16 - DEPOSITS AND SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

a) Deposits

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Demand Deposits 61,752,586 71,382,508 66,912,659

Individuals 27,252,943 33,550,409 30,137,679

Companies 19,379,562 25,990,910 22,397,184

Restricted 9,872,573 5,927,324 8,736,547

Government 1,591,076 2,226,009 1,865,886

Foreign currency 1,226,183 706,951 928,661


Related companies 1,714,921 1,020,371 867,784

Special from Federal Treasury 325,348 403,878 542,172

Domiciled abroad 60,629 204,987 295,115

Other 94,291 505,007 169,788

Saving Deposits 149,763,605 148,698,890 148,995,605

Individuals 139,319,946 140,036,529 138,963,241

Companies 10,121,003 8,407,859 9,688,943

Related companies 306,770 240,767 330,113



Time Deposits 193,005,863 208,186,082 214,356,989

Judicial 115,918,323 114,899,093 109,993,451

National currency 53,668,556 70,568,994 84,318,310


Fundo de Amparo ao Trabalhador - FAT (Note 16.e) 3,907,659 4,478,914 4,466,951

Funproger (Note 16.f) 251,678 233,939 227,439

Other 1,089,034 887,621 834,347

Total 455,473,787 468,317,489 462,468,329



b) Segregation of deposits by repayment date

Without maturity

Up to 3 months

3 to 12 months

1 to 3 years 3 to 5 years More than 5

years Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Time deposits (1)

120,656,048 17,035,450 8,566,560 18,840,117 27,907,688 -- 193,005,863 208,186,082 214,356,989

Saving deposits 149,763,605 -- -- -- -- -- 149,763,605 148,698,890 148,995,605

Demand deposit 61,752,586 -- -- -- -- -- 61,752,586 71,382,508 66,912,659

Interbank deposits

3,128,762 19,769,141 22,079,677 5,077,681 875,267 21,205 50,951,733 40,050,009 32,203,076

Total 335,301,001 36,804,591 30,646,237 23,917,798 28,782,955 21,205 455,473,787 468,317,489 462,468,329

(1) Includes the amount R$ 52,461,417 thousand (R$ 69,447,868 thousand as of Dec 31, 2014 and R$ 83,124,199 thousand as of Sep 30, 2014), relating to time deposits with early repurchase clause (liquidity commitment), classified based on the contractual maturity dates.


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c) Securities sold under repurchase agreements

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Own Portfolio 62,325,560 55,086,453 47,244,392

Corporate bonds 44,890,935 48,323,785 41,250,730


Securities abroad 2,259,930 231,185 144,762

National Treasury Bills -- 20,199 --

Third-Party Portfolio 264,201,186 245,581,865 267,766,515




Securities abroad 88,980 1,195,634 1,125,554

Total 326,526,746 300,668,318 315,010,907



d) Expenses with deposits and with securities sold under repurchase agreements


2015 Jan 1 to Sep 30,

2014

Deposits (8,581,516) (7,991,687) (23,866,694) (22,914,895)

Judicial deposits (3,193,466) (2,520,687) (8,805,927) (7,083,581)

Saving deposits (3,016,939) (2,592,193) (8,316,328) (7,356,512)

Time deposits (2,142,940) (2,722,886) (6,123,728) (7,946,679)

Interbank deposits (228,171) (155,921) (620,711) (528,123)

Securities sold under repurchase agreements (11,522,532) (8,067,787) (31,161,221) (21,681,204)

Third-party portfolio (9,696,376) (6,878,288) (26,543,888) (18,243,536)

Own portfolio (1,826,156) (1,189,499) (4,617,333) (3,437,668)

Funds from acceptance and issuance of securities

(1)

(5,637,555) (3,471,163) (14,810,694) (9,080,485)

Agribusiness letters of credit (4,027,526) (2,452,667) (10,165,044) (6,290,975)

Securities issues abroad (275,384) (226,502) (728,210) (643,888)

Financial bills (835,154) (621,472) (2,590,471) (1,699,643)

Letters of credit – Real estate (499,491) (170,522) (1,326,969) (445,979)

Subordinated debt abroad (2)

(169,838) (118,744) (434,982) (335,066)

Equity and debt hybrid securities (3)

(674,878) (488,432) (1,848,352) (1,191,038)

Other (185,049) (180,328) (548,295) (531,972)

Total (26,771,368) (20,318,141) (72,670,238) (55,734,660)

(1) Funds from acceptance and issuance of securities are disclosed in Note 18.

(2) Subordinated debt abroad are disclosed in Note 19.c.

(3) Equity and debt hybrid securities are disclosed in Note 19.d.


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e) Fundo de Amparo ao Trabalhador (Fund for worker's assistance) – FAT

Program Resolution/

TADE (1)

Repayment of FAT Funds Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Type(2)

Initial date Final date Available

TMS(3)

Applied TJLP

(4)

Total Available

TMS(3)

Applied TJLP

(4)

Total Available

TMS(3)

Applied TJLP

(4)

Total

Proger Rural and Pronaf 56,541 144,447 200,988 120,175 289,782 409,957 113,751 388,744 502,495

Pronaf Custeio 04/2005 RA 11/2005 -- 254 1,920 2,174 481 2,362 2,843 26 2,922 2,948

Pronaf Investimento 05/2005 RA 11/2005 -- 51,502 133,066 184,568 110,778 270,733 381,511 106,419 360,878 467,297

Giro Rural - Aquisição de Títulos

03/2005 SD 01/2008 01/2015 -- -- -- 4,476 -- 4,476 1,030 4,943 5,973

Rural Custeio 02/2006 RA 11/2005 -- 314 603 917 258 1,152 1,410 324 1,334 1,658

Rural Investimento 13/2005 RA 11/2005 -- 4,471 8,858 13,329 4,182 15,535 19,717 5,952 18,667 24,619

Proger Urbano 371,895 2,614,570 2,986,465 52,129 3,190,908 3,243,037 2,033 3,168,884 3,170,917

Urbano Investimento 18/2005 RA 11/2005 -- 371,895 2,614,570 2,986,465 52,126 3,190,902 3,243,028 2,030 3,168,877 3,170,907

Urbano Capital de Giro 15/2005 RA 11/2005 -- -- -- -- 3 6 9 3 7 10

Other 156,891 563,315 720,206 142,537 683,383 825,920 94,488 699,051 793,539

Exports 27/2005 RA 11/2005 -- 15,368 24,706 40,074 408 11,947 12,355 5,357 8,389 13,746

FAT Taxista 02/2009 RA 09/2009 -- 78,823 294,539 373,362 65,397 257,715 323,112 22,536 244,547 267,083

FAT Turismo Investimento 01/2012 RA 08/2012 -- 3,646 145,384 149,030 9,228 162,119 171,347 10,697 143,930 154,627

FAT Turismo Capital de Giro 02/2012 RA 08/2012 -- 59,054 98,686 157,740 67,504 251,602 319,106 55,898 302,185 358,083

Total 585,327 3,322,332 3,907,659 314,841 4,164,073 4,478,914 210,272 4,256,679 4,466,951


(2) RA - Automatic Return (monthly, 2% of the balance) and SD - Available Balance.

(3) Funds remunerated by the Taxa Média Selic (average Selic Rate - TMS).

(4) Funds remunerated by Taxa de Juros de Longo Prazo (long-term interest rate - TJLP).


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FAT is a special accounting and financial fund, established by Law 7,998/1990, associated with the Ministério do

Trabalho e Emprego (Ministry of Labor and Employment) and managed by the Executive Council of the Fundo de

Amparo ao Trabalhador (Fund for Workers’ Assistance) - Codefat. Codefat is a collective, tripartite, equal level

organization, composed of representatives of workers, employers and government.

The main actions to promote employment using FAT funds are structured around the Programs for the Generating

Employment and Earnings (Proger), resources for which are allocated through special deposits, established by Law

8,352/1991, in official federal financial institutions. These programs include, among others, the urban Proger program

(Investment and Working Capital) and the rural Proger program and the National Program for Strengthening Family

Farming - Pronaf, in addition to the special lines such as FAT Integrar – Rural e Urbano, FAT Giro Setorial – Micro e

Pequenas Empresas (micro and small-sized companies), FAT Giro Setorial – Médias e Grandes Empresas (medium

and large-sized companies), FAT Giro Setorial Veículos – Micro e Pequenas Empresas (micro and small-sized

companies), FAT Giro Setorial Veículos – Médias e Grandes Empresas (medium and large-sized companies), FAT

Fomentar – Micro e Pequenas Empresas (micro and small-sized companies), FAT Fomentar – Médias e Grandes

Empresas (medium and large-sized companies), FAT Giro Agropecuário, FAT Inclusão Digital (digital inclusion), FAT

Taxista (taxi), FAT Turismo Investimento and FAT Turismo Capital de Giro.

The FAT special deposits allocated to Banco do Brasil incur interest on a daily pro rata die basis using the Average

Selic Rate (TMS) when not lent out. As they are disbursed as loans, the interest rate is swapped to the Long-term

Interest Rate (TJLP) until the maturity of the loans. The earnings on the Bank’s funds are paid to FAT on a monthly

basis, as established in Codefat Resolutions 439/2005 and 489/2006.

f) Guarantee Fund for Generation of Employment and Earnings (Funproger)

The Guarantee Fund for Generation of Employment and Earnings (Funproger) is a special accounting fund

established on November 23, 1999 by Law 9,872/1999, amended by Law 10,360/2001 and by Law 11,110/2005 and

regulated by Codefat Resolution 409/2004, and its amendments. It is managed by Banco do Brasil under the

supervision of Codefat/MTE and the balance at September 30, 2015 is R$ 251,678 thousand (R$ 233,939 thousand

as of December 31, 2014 and R$ 227,439 thousand as of September 30, 2014).

The objective of Funproger is to provide guarantees to entrepreneurs who would otherwise not have the necessary

guarantees to contract financing by Proger Urbano and Programa Nacional de Microcrédito Produtivo Orientado,

through the payment of a commission. The net assets of Funproger are accumulated through funds arising from the

difference between the Average Selic Rate (TMS) and the Long-Term Interest Rate (TJLP) in respect of the

remuneration of the special deposit balances available in FAT. Other sources of funds are the earnings from its

operations and the income on its excess cash resources paid by Banco do Brasil, the fund manager.


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17 - BORROWINGS AND ONLENDINGS

a) Borrowings

up to 90

days from 91 to 360 days

from 1 to 3 years

from 3 to 5 years

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Overseas 9,063,883 29,660,234 36,753,658 467,491 75,945,266 49,078,381 39,586,687

Borrowings from BB Group companies abroad

-- 15,870,132 29,128,052 -- 44,998,184 27,979,722 20,871,688

Borrowings from bankers abroad 8,975,508 13,676,300 7,539,602 463,968 30,655,378 20,688,868 18,164,787

Linked to public sector borrowings

(1)

-- -- -- -- -- 162,009 304,064

Imports 88,375 113,802 40,772 3,523 246,472 241,423 230,676

Exports -- -- 45,232 -- 45,232 6,359 15,472

Total 9,063,883 29,660,234 36,753,658 467,491 75,945,266 49,078,381 39,586,687



(1) Maturity date of April 2015 at a rate of 6.92% p.a.

b) Onlendings

Domestic - Official institutions

Programs Finance charges Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Pronaf TMS (if available)

Fixed 0.50% p.a. to 4.00% p.a. (if applicable) 90,491 158,098 363,988

Cacau (cocoa) IGP-M + 8.00% p.a.

TJLP + 0.60% p.a. or 6.35% p.a. 91,065 87,435 86,118

Recoop Fixed 5.75% p.a. to 8.25% p.a.

IGP-DI + 1.00% p.a. IGP-DI + 2.00% p.a.

25,057 37,723 39,783

Other 1,767 1,356 1,356

BNDES 38,895,277 43,250,644 43,111,334

Banco do Brasil



38,895,277 43,250,644 43,111,334

Caixa Econômica Federal Fixed 5.08% p.a. (average) 18,219,733 12,359,686 9,991,504

Finame 30,996,272 32,396,646 31,222,408

Banco do Brasil Fixed 0.00% p.a. to 8.50% p.a.

TJLP + 0.50% p.a. to 5.50% p.a. FX Variation + 0.90% p.a. to 3.00% p.a.

30,996,272 32,396,646 31,222,408

Other official institutions 2,222,217 863,889 1,242,702

Special supply - Deposits (Note 9.b) 1,643,753 -- --

Funcafé TMS (if available)

Fixed 5.50% p.a. to 7.50% p.a. (if applied) 578,436 863,861 1,242,674

Other 28 28 28

Total 90,541,879 89,155,477 86,059,193




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52

Overseas

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Funds obtained under the terms of Resolution CMN 3,844/2010 29,563,271 19,596,867 17,878,802

Special fund for support to small and medium manufacturing companies 477 477 477

Total 29,563,748 19,597,344 17,879,279

Current liabilities 10,224,690 261,067 95


c) Expense on borrowings and onlendings


Borrowings expenses (10,564,564) (2,389,025) (16,556,612) (2,501,957)

Onlendings expenses (8,303,883) (2,980,018) (14,517,480) (4,685,659)

Foreign (6,862,698) (1,974,674) (10,693,134) (1,974,674)

BNDES (852,571) (684,704) (2,375,570) (1,949,663)

Finame (168,440) (152,225) (495,214) (434,291)

Caixa Econômica Federal (367,922) (113,392) (821,559) (161,959)

National Treasury (29,386) (18,251) (73,125) (56,619)

Other (22,866) (36,772) (58,878) (108,453)

Expenses for obligations with bankers abroad (4,592,926) (1,291,372) (6,911,946) (1,291,372)

Expenses for financial and development funds liabilities (1,797,665) (516,633) (2,839,740) (553,193)

Total (25,259,038) (7,177,048) (40,825,778) (9,032,181)


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18 - FUNDS FROM ACCEPTANCE AND ISSUANCE OF SECURITIES

Funding Currency Issued Value Remuneration

p.a. Issue Year Maturity Year Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Banco do Brasil


R$ 350,000 9.75% 2007 2017 342,599 345,183 338,951

USD 950,000 4.50% 2010 2015 -- 2,572,930 2,347,804

USD 500,000 6.00% 2010 2020 1,999,999 1,358,763 1,235,198

EUR 750,000 4.50% 2011 2016 3,427,482 3,284,535 2,388,801

JPY 24,700,000 1.80% 2012 2015 -- 551,404 551,736

EUR 1,000,000 3.75% 2013/2014 2018 4,453,396 2,519,088 3,121,149

CHF 275,000 2.50% 2013 2019 1,121,818 744,630 707,262

"Senior Notes" 9,694,978 6,452,265 5,985,540

USD 500,000 3.88% 2011 2017 1,996,663 1,346,214 1,229,852

USD 1,925,000 3.88% 2012 2022 7,698,315 5,106,051 4,755,688

Structured Notes USD 53,534 0.64% to 3.55% 2021 214,075 143,540 153,181

Certificates of Deposits (1) 20,224,229 9,291,680 11,360,827

Short term 0.09% to 3.98% 19,643,742 8,797,314 7,867,411

Long term 1.81% to 3.25% 2020 580,487 494,366 3,493,416


Short term 6,863 2,384 2,244

Long term 2018 11,019 -- --

Letters of credit - Real estate 2017 18,473,991 14,155,946 7,771,827


Short term (2) 18,658,231 21,576,941 22,895,703

Long term (3) 2020 115,896,945 80,748,357 81,198,125

Financial Letters 47,240 2,546,806 2,475,177

Short term (2) 104.00% to

105.00% -- 2,506,321 --

Long term 106.50% 2017 47,240 40,485 2,475,177

Total 194,572,865 146,294,452 142,533,525



(1) Securities issued abroad in SGD, AUD, CHF, EUR, GBP, RMB and USD.

(2) Securities issued in foreign and national currency with maturities up to 360 days.

(3) Operations with maturity between 361 and 1,983 days.


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19 - OTHER LIABILITIES

a) Taxes and social security

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Legal liabilities (Note 26.d) 13,827,869 13,141,399 12,936,428

Provision for taxes and contributions on net income 67,497 657,937 1,698,849

Deferred tax liabilities (Note 23.d) 1,670,309 1,224,727 3,145,808

Provision for tax litigation (Note 26.a) 168,869 174,611 177,145

Taxes and contributions payable 910,036 1,009,799 826,532

Taxes and contributions on net income payable 18,093 763,916 13,190

Other 316,398 316,826 316,807

Total 16,979,071 17,289,215 19,114,759


Non-current liabilities 282,434 458,609 2,203,926

b) Financial and Development Funds

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Marinha Mercante 8,714,543 5,813,891 5,054,315

Pasep (1)

2,625,924 2,259,845 2,275,104

Fundo de Desenvolvimento do Nordeste - FDNE 2,037,433 1,534,405 1,148,340

Funds from Governo do Estado de São Paulo 714,213 725,304 686,761

Fundo de Desenvolvimento do Centro Oeste - FDCO 294,861 254,640 223,603

Fundo Nacional de Aviação Civil - FNAC 71,232 51,632 55,282

Other 216,525 200,681 125,328

Total 14,674,731 10,840,398 9,568,733



(1) The Bank is administrator of the Public Servant Heritage Formation Program (Pasep), guaranteeing a minimum return equal to the Long-Term Interest Rate - TJLP.


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55

c) Subordinated debts

Funding Issued Value

Remuneration p.a. Issue Date Maturity Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Banco do Brasil

FCO – Resources from Fundo Constitucional do Centro-Oeste

22,047,638 20,467,309 19,990,824

Funds applied (1) 21,317,515 19,898,074 18,940,470

Resources available (2) 719,717 563,304 1,039,016

Charges to capitalize 10,406 5,931 11,338


1,815,238 4,110,613 3,988,233

1,335,000 115.00% of CDI 2009 2015 -- 2,461,107 2,385,226

1,000,000 105.00% of CDI 2009 2015 1,815,238 1,649,506 1,603,007

Subordinated Debt Abroad 11,600,598 7,861,671 7,149,434

USD 660,000 5.38% 2010 2021 2,640,653 1,787,935 1,627,732

USD 1,500,000 5.88% 2011 2022 5,968,023 4,045,769 3,677,903

USD 750,000 5.88% 2012 2023 2,991,922 2,027,967 1,843,799


1,000,000 108.50% of CDI 2010 2016 1,786,916 1,618,598 1,571,471

2,055,100 111.00% of CDI 2011 2017 3,265,558 2,951,225 2,863,349

4,844,900

111.50% of CDI

1.06% to 1.11% + CDI

5.24% to 5.56% + IPCA

Fixed 10.51%

2012 2018 6,916,485 6,248,995 6,075,796

215,000 112.00% of CDI 2012 2019 305,640 275,968 267,679

4,680,900 111.00% of CDI 2013 2019 6,301,092 5,694,568 5,562,800

150,500 112.50% of CDI

5.45% + IPCA 2012 2020 216,668 194,793 189,143

377,100 112.00% to 114.00% of CDI 2014 2020 436,726 393,641 381,614

163,523 112.00% to 114.00% of CDI 2014 2020 195,103 176,002 170,670

1,594,580 113.00% to 115.00% of CDI 2014 2021 1,828,488 1,646,548 1,558,010

2,273,806 113.00% to 115.00% of CDI 2014 2021 2,742,019 2,470,312 2,394,510

400,000 8.08% + IPCA 2014 2022 493,035 431,255 416,648

Total Subordinated Debt from Banco do Brasil(3)(4)

59,951,204 54,541,498 52,580,181

(1) Remunerated at the rates on the loans funded with these amounts less the del credere of the financial institution, according to article 9 of Law 7,827/1989.

(2) Remunerated based on extra-market rate announced by the Banco Central do Brasil (Bacen), according to article 9 of Law 7,827/1989.

(3) R$ 38,674,964 thousand (37,065,165 thousand as of Dec 31, 2014 and R$ 34,936,894 thousand in September 30, 2014) of the total balance is considered tier II of the Referential Equity (RE).

(4) Includes the amount of R$ 5,695,369 thousand, relating to subordinated debt recorded in the line Debt Instruments Eligible as Capital.

d) Equity and debt hybrid securities

Funding Issued Value Remuneration

p.a. Issue Date Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Perpetual Bonds

USD 1,500,000 8.50% 10/2009 6,168,806 4,037,923 3,803,525

USD 1,750,000 9.25% 01 and 03/2012 7,379,962 4,835,886 4,564,603

USD 2,000,000 6.25% 01/2013 8,138,335 5,355,519 5,017,529

R$ 8,100,000 5.50% 09/2012 8,310,274 8,249,587 8,189,878

USD 2,500,000 9.00% 06/2014 10,104,890 6,627,916 6,252,805

Total Banco do Brasil 40,102,267 29,106,831 27,828,340

R$ 29,890,805 thousand of the Perpetual Bonds is included in the Referential Equity (R$ 18,502,534 thousand as of

December 31, 2014, and R$ 17,255,944 thousand as of September 30, 2014). Of this amount, R$ 24,131,115

thousand are recorded in debt instruments eligible as capital (Note 27.b).

The bonds of USD 1,500,000 thousand, issued in October 2009, have the option of redemption at the discretion of

the Bank from 2020 or on each subsequent, semi-annual interest payment date, as long as it has been previously

authorized by Banco Central do Brasil (Bacen). In case the Bank does not exercise the option to redeem on October

2020, the interest on the bonds will be adjusted on this date to 7.782% plus the traded rate on 10 year North

American Treasury bonds. Thereafter, every 10 years, the interest on the bonds will be adjusted by taking into

account the traded rate of the 10 year North American Treasury bonds.


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56

The bonds issued in January 2012 and March 2012 (reopening), of USD 1,000,000 thousand and USD 750,000

thousand respectively, and the bonds issued in January 2013 of USD 2,000,000 thousand, had their terms and

conditions modified on September 27, 2013, in order to adjust them to the rules of Bacen through Resolution No.

4,192 of March 1, 2013, which regulates the implementation of Basel III in Brazil. The changes were effective from

October 1, 2013, when the instruments were submitted to Bacen to obtain authorization to be included in the

Supplementary Capital (Tier I) of the Bank. The authorization was granted on October 30, 2013.

The bonds issued in June 2014 of USD 2,500,000 thousand, have the option of redemption at the discretion of the

Bank from June 18, 2024 or on each subsequent, semi-annual interest payment date, as long as it has been

previously authorized by the Central Bank of Brazil. If the Bank did not exercise the option to redeem in June 2024,

the interest on the bonds will be adjusted to 6.362% plus the traded rate on 10 year North American Treasury bonds.

If the Bank does not exercise the redemption option in April 2023 for the bonds issued in 2012, in April 2024 for the

bonds issued in 2013, and in June 2024 for the bonds issued in 2014, the rate of bond interest is adjusted on that

date and every 10 years according to the 10 year North American Treasury bondsat the time plus the initial credit

spread. The bonds have the following options of redemption, subject to prior authorization of Bacen:

(i) the Bank may, at its option, redeem the bonds in whole but not in part in April 2023 for the bonds issued in 2012, in April 2024 for the bonds issued in 2013, and in June 2024 for the bonds issued in 2014, and on each subsequent, semi-annual interest payment date, at the base redemption price;

(ii) the Bank may, at its option, redeem the bonds in whole, but not in part, after five years from the date of issue, as long as it is before April 2023, for the bonds issued in 2012, before April 2024 for the bonds issued in 2013, and before April 2024 for the bonds issued in 2014, as a result of a tax event, at the base redemption price;

(iii) the Bank may, at its option, redeem the bonds in whole but not in part, after five years from the date of issue, as long as it is before April 2023, for the bonds issued in 2012, and in April 2024 for the bonds issued in 2013, on the occurrence of a regulatory event, at the higher value between the base redemption price and the Make-whole amount.

(iv) the Bank may, at its option, redeem the bonds in whole but not in part, after five years from the date of issue as long as it is before June 2024 for the bonds issued in 2014, on the occurrence of a regulatory event at the base redemption price.

The bonds issued in October 2009 determine that the Bank suspends the semi-annual payments of interest and / or

accessories on those securities issued (which will not be due or accrued) if:

(i) the Bank does not comply or the payment of such charges does not allow the bank to comply with the levels of capital adequacy, operating limits, or its financial indicators are under the minimum level required by Brazilian regulations applicable to banks;

(ii) Bacen or the regulatory authorities determine the suspension of payment of such charges; (iii) any event of insolvency or bankruptcy occurs; (iv) a default occurs; or (v) the Bank has not distributed dividends or interest on equity to common shareholders for the period of

calculation of such interest and / or accessories.

The bonds issued in January and March 2012, in January 2013 and in June 2014 determine that the Bank suspend

the semi-annual payments of interest and/or accessories on those securities issued (which will not be due or

accrued) if:

(i) distributable income for the period are not sufficient for making the payment (discretionary condition of the Bank);

(ii) the Bank does not comply or the payment of such charges does not allow the Bank to comply with the levels of capital adequacy, operating limits, or its financial indicators are under the minimum level required by Brazilian regulations applicable to banks;

(iii) Bacen or the regulatory authorities determine the suspension of payment of such charges; (iv) any event of insolvency or bankruptcy occurs; or (v) a default occurs.

According to Basel III rules, the bonds issued in January 2012, March 2012, in January 2013 and in June 2014 have

mechanisms of loss absorption. Moreover, if the item (i) occurs, the payment of dividends by Bank to its shareholders

will be limited to the minimum required determined by applicable law until the semi-annual interest payments and / or

accessories on those titles have been resumed in full. Finally, these bonds will expire permanently and at the

minimum value corresponding to the balance recorded in the Tier I capital of the Bank if:

(i) the main capital of the Bank is less than 5.125% of the amount of risk-weighted assets (RWA);


3rd

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57

(ii) the decision to make a capital injection from the public sector or an equivalent capital contribution to the Bank is taken, in order to maintain the bank’s viability;

(iii) the Bank, on a discretionary assessment regulated by the CMN, sets out, in writing, the expiration of the bonds to enable the continuity of the Bank.

On September 26, 2012, the Bank signed a Loan Agreement with the Federal Government, as hybrid capital and

debt instrument valued at up to R$ 8,100,000 thousand, without maturity date, with fixed remuneration, semiannual

interest payments, whose funds were allocated to finance agribusiness.

Until August 27, 2014, this instrument was authorized by Bacen to be included in the Tier I of the referential equity

(Additional Tier I Capital) and it was subject to the limitation set out in article 28 of the Resolution CMN 4,192 dated

March 1, 2013 (Note 27.b).

On August 28, 2014, in the terms of Law 12,793, dated April 2, 2013, an amendment to the contract was signed

aiming to make the instrument eligible as Common Equity Tier I Capital, in accordance with article 16 of Resolution

CMN 4,192/2013.

After the amendment in the contract, compensation became fully variable and the interest will be due on periods

matching with the fiscal year of the Bank, starting in January 1 and ending in December 31 of each year.

Remuneration for each fiscal year will be paid in a single annual installment adjusted by the Selic rate until the date of

effective payment, within 30 calendar days after making the payment of dividends for the result recorded in the fiscal

year.

The payment of compensation will be made exclusively with funds from profits and profit reserves that may be

distributed as at the year-end prior to the calculation date. Payment is ultimately at management`s discretion and

there will not be cumulative unpaid interest. If payment or dividend credit are not made (including in the form of

interest on own capital) before December 31 of the following fiscal year, the accrued amounts will no longer be due.

If the balance of retained earnings, of profit reserves, including legal reserve, and of the Bank’s capital reserve are

insufficient to absorb losses calculated in the closing balance of the fiscal year, this instrument will not be

remunerated and the Bank will use the accrued interest and the principal balance, in this order, up to the amount

necessary to offset the remaining losses, effectively constituting a pay down of the instrument.

The instrument does not have maturity date and it can be payable only in situations of the dissolution of the issuing

institution or by repurchase operations authorized by Bacen. In case of dissolution of the Bank, the payment of the

principal and the debt charges will be subordinated to the payment of other liabilities.

There will not be, under any circumstances, preferred compensation of the instrument, including relating to other

equity elements classified in the Reference Equity.

On September 22, 2014, Bacen considered the instrument qualifying to the Common Equity Tier I Capital in the form

of CMN Resolution 4,192/2013 from August 28, 2014.


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58

e) Sundry

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Credit/debit card operations 18,060,862 19,548,519 16,652,142

Provisions for pending payments 5,496,679 4,133,442 4,565,173

Actuarial liabilities (Note 25.e) 8,255,564 7,769,579 7,820,748

Sundry creditors - domestic 4,446,898 4,221,812 3,134,176

Provisions for civil claims (Note 26.a) 7,387,070 5,435,157 5,170,485

Provision for labor claims (Note 26.a) 2,170,195 2,143,463 2,366,788

Funds linked to loan operations 1,905,020 1,216,845 1,124,140

Liabilities for rendering payment services 1,947,506 1,120,746 1,405,065

Sundry creditors - abroad 145,478 61,130 135,595

Liabilities for official agreements 1,189,085 733,450 871,352

Creditors of resources to be disbursed 775,515 1,003,725 926,796

Liabilities for premiums granted under customer loyalty schemes 603,984 973,651 844,695

Provisions for guarantees provided 522,659 182,805 178,180

Liabilities for operations linked to assignments 344,210 321,366 335,758

Liabilities for assets acquisition 265,023 492,936 271,689

Provision for losses with the Fundo de Compensação de Variação Salarial - FCVS

282,840 246,586 242,374

Guarantees on credits assigment 1,068 1,107 1,180

Other 421,062 233,798 66,994

Total 54,220,718 49,840,117 46,113,330



20 - OTHER OPERATING INCOME/EXPENSES

a) Service fee income


2015 Jan 1 to Sep 30,

2014

Card income 128,245 655,978 600,973 1,962,083

Fund Management 579,932 530,828 1,633,590 1,440,602

Billing 422,705 369,259 1,249,950 1,072,592

Loans and guarantees provided 257,386 181,060 652,857 608,524

Collection 252,974 236,526 790,549 696,971

Insurance, pension and capitalization 96,723 94,521 328,471 293,255

Interbank 196,036 188,211 575,108 552,016

National Treasury and official funds management 130,182 95,302 332,607 260,271


Account fee 91,148 81,216 256,498 231,799

Capital market income 7,397 1,008 22,537 3,385

Provided to related companies 12,786 3,996 28,505 8,670

Other services 162,317 183,205 500,329 549,681

Total 2,417,854 2,696,561 7,197,688 7,889,275


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59

b) Bank fee income


2015 Jan 1 to Sep 30,

2014

Service packages 1,135,335 979,309 3,096,125 2,798,217

Card income 262,286 228,424 743,790 672,322

Loans and customer registration 178,953 178,255 508,846 493,458

Investment funds management 582 -- 1,578 --

Funds transfer 86,636 77,712 242,462 213,222

Deposit account 59,210 53,970 169,725 152,880

Fiduciary services 4 4 7,727 11

Other 42,687 35,086 111,484 100,176

Total 1,765,693 1,552,760 4,881,737 4,430,286

c) Personnel expenses


2015 Jan 1 to Sep 30,

2014

Salaries (1,910,613) (1,848,514) (6,130,104) (5,719,711)

Personnel administrative provisions (1,322,297) (880,487) (2,899,813) (2,184,061)

Social charges (726,506) (710,444) (2,226,038) (2,102,358)

Benefits (602,751) (547,575) (1,788,465) (1,654,304)

Labor lawsuits (516,932) (257,876) (1,132,869) (594,883)

Pension plans (112,763) (100,098) (326,559) (287,894)

Directors' and advisors' fees (7,621) (7,230) (22,040) (21,419)

Training (15,268) (14,852) (40,929) (37,335)

Total (5,214,751) (4,367,076) (14,566,817) (12,601,965)

d) Other administrative expenses


2015 Jan 1 to Sep 30,

2014

Amortization (800,623) (721,016) (2,316,614) (2,616,017)

Expenses with outsourced services (400,950) (446,758) (1,213,341) (1,393,680)

Rent (316,844) (291,334) (916,007) (835,995)

Communications (267,674) (363,306) (864,844) (1,081,745)

Depreciation (271,718) (257,395) (800,403) (731,692)

Transport (270,678) (316,427) (818,984) (921,909)

Security services (272,810) (245,531) (777,991) (680,595)

Specialized technical services (76,632) (81,458) (218,023) (216,542)

Financial system services (154,199) (155,005) (456,804) (457,654)

Data processing (338,889) (307,416) (1,000,864) (924,908)

Maintenance and upkeep (157,292) (165,651) (499,129) (463,175)

Water, electricity and gas (123,920) (85,608) (372,376) (263,518)

Advertising and marketing (81,369) (85,315) (169,030) (278,758)

Promotion and public relations (61,903) (56,834) (162,456) (167,056)

Domestic travel (32,496) (27,887) (93,784) (94,626)

Materials (30,265) (32,707) (86,070) (90,467)

Other (147,611) (129,464) (417,281) (370,575)

Total (3,805,873) (3,769,112) (11,184,001) (11,588,912)


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60

e) Other operating income


2015 Jan 1 to Sep 30,

2014

Update of deposits in guarantee 732,242 489,918 1,906,694 1,412,022

Cards transactions 186,434 156,173 461,378 385,558

Recovery of charges and expenses 435,871 268,231 1,201,602 799,568

Surplus allocation update - Previ Plan 1 (Note 25.f) 225,973 165,221 996,655 663,059

Income on receivables 222,695 240,794 637,638 540,192

Negative foreign exchange readjustment/Reclassification of liability balances

-- -- -- 1,700,328

Reversal of provisions - administrative and personnel expenses 64,145 51,184 159,704 110,406

Income from specific credits ans special operations - National Treasury 63,251 53,204 174,528 153,410

Reversal of provisions – labor -- 52,203 256,608 591,184

Previ - Defined benefit plan income (Note 25.d) 40,070 228,331 317,929 1,119,731

Royalties and special participation 39,909 16,978 129,643 138,110

Reversal of provisions - civil and tax lawsuits 24 52,124 11,374 72,139

Subsidy of the National Treasury - MPO 16,016 49,938 118,723 124,439

Adjustment of tax recoverable 12,339 30,169 68,462 94,888

Other 191,105 69,750 465,776 357,921

Total 2,230,074 1,959,226 6,956,619 8,334,681

f) Other operating expenses


2015 Jan 1 to Sep 30,

2014

Civil and tax claims (1,789,545) (427,934) (2,751,674) (1,375,944)

Credit/debit card transactions (1,101,724) (444,136) (1,913,482) (1,238,868)

Negative foreign exchange readjustment/ Reclassification of assets balances

-- -- -- (1,301,518)

Compensation for transactions of Banco Postal (297,275) (283,666) (868,461) (378,217)

Update of deposits in guarantee (1)

(253,420) (203,481) (686,469) (333,863)

Actuarial liabilities update (247,957) (236,990) (740,003) (781,423)

Discounts granted on renegotiations (182,845) (103,648) (455,049) (399,342)

Provision for rendering of guarantees (160,034) (39,386) (335,785) (65,613)

Failures/frauds and other losses (60,601) (40,292) (185,874) (116,300)

ATM Network (67,422) (57,190) (175,052) (190,479)

Business partners (2)

-- (613) -- (11,617)

Life insurance premium - consumer credit (41,868) (47,047) (133,494) (111,729)

Business relationship bonus (21,107) (47,046) (61,822) (155,440)

INSS - Social Security (18,365) (7,815) (39,283) (23,042)

Update of interest on own capital/dividends (9,085) (3,943) (13,514) (9,357)

Proagro Expenses (8,620) (6,541) (22,531) (19,090)

Fees for the use of Sisbacen - Banco Central do Brasil System (7,421) (7,536) (18,509) (20,636)

Previ - actuarial adjustment (4,928) (3,081) (10,018) (8,025)

Other (193,179) (91,458) (478,320) (220,836)

Total (4,465,396) (2,051,803) (8,889,340) (6,761,339)

(1) Refers to the adjustment of the provision for deposit in court regarding the lawsuit (Income Tax and Social Contribution Tax on Net Income) as Note 26.d.

(2) Refers mainly to commission for loans originated by partners and commercial agreements with retailers.


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61

21 - NON-OPERATING INCOME


2015 Jan 1 to Sep 30,

2014

Non-operating Income 23,358 52,282 73,289 131,401

Capital gains 6,898 2,982 16,165 10,805

Profit on disposal of assets 2,693 9,207 13,249 31,158

Rental income 2,395 7,091 7,680 16,086

Reversal of provision for devaluation of other assets 7,852 17,628 15,480 34,057

Profit on disposal of investments / equity interest -- -- -- 94

Interest and inflation adjustment of debtors from disposal of property 1,341 1,677 4,240 5,283

Other non-operating income 2,179 13,697 16,475 33,918

Non-operating Expenses (14,203) (14,297) (75,484) (43,932)

Devaluation of other assets (4,927) (5,079) (12,190) (14,627)

Loss on disposal of assets (1,877) (2,152) (6,204) (6,740)

Capital losses (6,520) (6,903) (55,900) (22,087)

Other non-operating expenses (879) (163) (1,190) (478)

Total 9,155 37,985 (2,195) 87,469

22 - SHAREHOLDERS' EQUITY

a) Book value and market value per common share

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Shareholders' equity - Banco do Brasil 72,411,410 69,820,212 70,745,901

Book value per share (R$) 25.93 24.97 25.29

Market value per share (R$) 15.20 23.77 25.30

b) Capital

The capital, entirely subscribed and paid-in, in the amount of R$ 60,000,000 thousand (R$ 54,000,000 thousand as

of December 31, 2014 and September 30, 2014) of Banco do Brasil is divided into 2,865,417,020 book-entry

common shares without par value. The Federal Government is the largest shareholder, holding control of the majority

of our voting shares.

The increase of the capital for the period as of September 30, 2014 until September 30, 2015, in the amount of

R$ 6,000,000 thousand, resulted from the use of Statutory Reserve to Operating Margin, approved by the Special

Meeting of Shareholders held on April 28, 2015, and Banco Central do Brasil authorization in July 20, 2015.

The Bank may, even without amending its by-laws, if approved by the Meeting of Shareholders, and in the conditions

established therein, increase its capital up to the limit of R$ 120,000,000 thousand by issuing common shares, for

which shareholders should be granted preference in the subscription in proportion to the number of shares held.

c) Revaluation reserves

The revaluation reserves, totaling R$ 2,747 thousand (R$ 2,805 thousand in December 31, 2014 and R$ 2,832

thousand in September 30, 2014), refer to revaluations of assets made by the associates/subsidiaries.

In the period from January 1, 2015 to September 30, 2015, there was a reserve realization of R$ 58 thousand

(R$ 1,732 thousand in the period from January 1, 2014 to September 30, 2014), due to depreciation, transferred to

Retained Earnings (Accumulated Losses), net of taxes. In accordance with CMN Resolution 3,565/2008, the

remaining amount will be maintained until the date of its effective realization.


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62

d) Capital and profit reserves

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Profit Reserves 26,123,564 27,025,981 23,496,772

Legal reserve 5,898,540 5,468,217 5,180,834

Statutory reserves 20,225,024 21,557,764 18,315,938

Operating margin 17,157,322 17,347,176 14,267,441

Equalization of dividends 3,067,702 4,210,588 4,048,497

The legal reserve is intended to ensure the integrity of the capital and can only be used to offset losses or increase

capital. The Legal reserve is increased by 5% of the net profit for the period, before any other allocation, as long as it

does not exceed 20% of capital.

The Statutory reserve for operating margin aims to guarantee an operating margin consistent with the development of

the Bank’s operations. It consists of up to 100% of net income, after the legal allocations, including dividends, and is

limited to 80% of the capital.

Statutory reserve for dividend equalization provides funds for the payment of dividends, consisting of up to 50% of

the net income, after legal allocations, including dividends, limited to 20% of the capital.

e) Earnings per share


2015 Jan 1 to Sep 30,

2014

Net income attributable to shareholders (R$ thousand) 3,014,754 2,722,146 11,621,215 8,287,336

Weighted average number of shares (basic and diluted) 2,794,596,340 2,797,457,565 2,795,613,950 2,801,441,756

Earnings per share (basic and diluted) (R$) 1.08 0.97 4.16 2.96

f) Interest on own capital/Dividends and destination of the income

Introducing payment schedule of interest on own capital and dividends:




1st quarter/2015


1,054,134 0.377 Mar 23, 2015 Mar 31, 2015

Dividends paid 1,261,461 0.451 May 21, 2015 May 29, 2015

2nd quarter/2015


810,594 0.291 Jun 11, 2015 Jun 30, 2015

Complementary interest on own capital paid (1)

347,343 0.124 Aug 21, 2015 Sep 1, 2015

Dividends paid 39,046 0.014 Aug 21, 2015 Sep 1, 2015

3rd quarter/2015


743,037 0.266 Sep 11, 2015 Sep 30, 2015

Complementary interest on own capital payable 476,981 0.171 Nov 23, 2015 Dec 2, 2015



3,432,089 1.229

Dividends 1,300,507 0.465



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63




1st quarter/2014


882,332 0.315 Mar 11, 2014 Mar 31, 2014

Dividends paid 227,611 0.081 May 19, 2014 May 30, 2014

2nd quarter/2014


899,716 0.321 Jun 11, 2014 Jun 30, 2014

Dividends paid 216,417 0.077 Aug 19,2014 Aug 29, 2014

3rd quarter/2014


941,310 0.337 Sep 11, 2014 Sep 30, 2014

Dividends paid 155,816 0.056 Nov 14, 2014 Nov 28, 2014



2,723,358 0.973

Dividends 599,844 0.214


(1) Amounts subject to the rate of 15% Withholding Tax.

In accordance with Laws 9,249/1995 and 9,430/1996 and the Bank's Bylaws, Management decided on the payment

of Interest on own capital to its shareholders plus additional dividends, equivalent to 40% of the net income.

The interest on own capital is calculated based on adjusted net equity value and is limited on a pro rata die basis to

the variation of long-term interest rate, as long as there is profit (before the deduction of interest on own capital) or

reserves for retained earnings and profit reserves of at least twice its value.

To comply with the Income Tax legislation, the amount of interest on own capital was recorded as "Financial

expenses" and, for purposes of disclosure in these financial statements, reclassified to "Retained earnings". The total

interest on own capital in the period from Jan 1, 2015 to Sep 30, 2015, provided an expense reduction on tax charges

of R$ 1,433,837 thousand (R$ 1,089,343 thousand in the period from January 1, 2014 to September 30, 2014).

g) Accumulated Other Comprehensive Income


Opening balance

Net change Tax effects Closing balance Opening balance

Net change Tax effects Closing balance

Securities available for sale

Banco do Brasil (757,714) (2,100,322) 461,151 (2,396,885) (294,593) (578,486) 272,267 (600,812)

Subsidiary abroad 30,118 (27,082) (36) 3,000 24,654 1,661 1,517 27,832

Associates and subsidiaries (191,869) (213,018) 113,677 (291,210) (193,076) 101,669 (40,977) (132,384)

Cash Flow Hedge

Associates and subsidiaries 1,716 (2,600) 884 -- 1,562 115 (46) 1,631

Actuarial Gains/(Losses) on Pension Plans

(8,680,091) (3,884,108) 1,419,368 (11,144,831) (2,670,596) (6,271,308) 2,701,472 (6,240,432)

Total (9,597,840) (6,227,130) 1,995,044 (13,829,926) (3,132,049) (6,746,349) 2,934,233 (6,944,165)


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64

h) Shareholdings (Number of shares)

Number of shares issued by the Bank to shareholders which, directly or indirectly, hold more than 5% of the shares:

Sharedholders Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Shares % Total Shares % Total Shares % Total

Federal Government 1,653,379,882 57.7 1,659,005,282 57.9 1,660,155,282 57.9

Ministério da Fazenda 1,453,487,115 50.7 1,453,487,115 50.7 1,453,487,115 50.7

Fundo Fiscal de Investimento e Estabilização 105,024,600 3.7 110,650,000 3.9 110,650,000 3.8

Caixa F1 Garantia Construção Naval 87,368,167 3.0 87,368,167 3.0 88,518,167 3.1

Fundo Garantidor para Investimentos 7,500,000 0.3 7,500,000 0.3 7,500,000 0.3

Caixa de Previdência dos Funcionários do Banco do Brasil - Previ

297,403,914 10.4 297,387,714 10.4 298,256,114 10.4

BNDES Participações S.A. - BNDESPar (1)

-- -- -- -- 2,187,548 0.1

Treasury shares (2)

72,864,196 2.5 68,881,576 2.4 68,241,620 2.4

Other Shareholders 841,769,028 29.4 840,142,448 29.3 836,576,456 29.2

Total 2,865,417,020 100.0 2,865,417,020 100.0 2,865,417,020 100.0

Resident Shareholders 2,245,788,437 78.4 2,279,461,556 79.6 2,281,622,618 79.6

Non Resident Shareholders 619,628,583 21.6 585,955,464 20.4 583,794,402 20.4

(1) Related to the Controller, but not part of the control block.

(2) Includes, on Sep 30, 2015, 42,709 shares of the Bank held by BB DTVM (29,138 shares in Dec 31, 2014 and Sep 30, 2014).

Number of shares issued by the Bank, held by the Board of Directors, the Executive Board and the Audit Committee:

Commom shares (ON)

(1)

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Board of Directors (except for Bank’s CEO, listed in the Bank’s Executive Committee)

1 10,007 8,007

Executive Committee 147,669 112,867 126,342

Fiscal Council 1,176 1,176 1,176

Audit Committee 10,075 75 75

(1) The shareholding interest of the Board of Directors, Executive Committee, Fiscal Council and Audit Committee represents approximately 0.006% of the Bank's capital stock.

i) Movement of shares outstanding/Free Float

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Total % Total % Total %

Free float at the starting date 840,019,565 29.3 833,621,216 29.1 833,621,216 29.1

Disposal of shares by Caixa F1 Garantia Construção Naval -- 10,777,100 9,627,100

Acquisition of shares by BNDESPar -- 5,522,648 3,335,100

Disposal of shares by FGO - Shares Investments -- 896,508 896,508

Disposal / (Acquisition) of shares by Previ (16,200) 1,404,300 535,900

Disposal of shares by FFIE - Fundo Fiscal de Investmento e Estabilização

5,625,400 -- -- -- -- --

Acquisition of shares - repurchase program (4,183,700) (12,311,300) (11,671,300)

Other Changes (1)

176,284 109,093 97,574

Free Float at the ending date (2)

841,621,349 29.4 840,019,565 29.3 836,442,098 29.2

Outstanding shares 2,865,417,020 100.0 2,865,417,020 100.0 2,865,417,020 100.0

(1) Refers mainly to changes coming from Technical and Advisory Boards.

(2) According to the Law 6,404/1976 and the regulation of BM&FBovespa's New Market. The shares held by the Board of Directors and Executive committee are not included.

j) Treasury shares

On July 13, 2012, the Board of Directors approved the repurchase program of up to 50 million shares within 180 days

from that date, with the objective of acquiring shares to be held in treasury for subsequent sale or withdrawal without

further capital reduction, aiming to generate value for shareholders. This program was in effect until January 8, 2013,

and 20,200,000 shares were acquired for an amount of R$ 461,247 thousand. Minimum, average and maximum cost

per share were R$ 18.28, R$ 22.83 e R$ 26.78 respectively.


3rd

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65


same conditions as the previous program, however, valid for up to 365 days from that date. This program finished on

June 6, 2014, and 43,126,700 shares were acquired for R$ 1,014,504 thousand. The minimum, average and

maximum cost per share were R$ 18.84, R$ 23.52 and R$ 28.67 respectively. From the acquisitions relating to this

program, 353,756 shares were used for variable compensation programs.


same conditions as the previous program. This program finished on May 18, 2015, and 6,021,900 shares were

acquired for R$ 155,481 thousand. The minimum, average and maximum cost per share were R$ 22.66, R$ 25.82

and R$ 29.27 respectively. From the acquisitions relating to this program, 318,633 shares were used for variable

compensation programs.

On May 18, 2015, the Board of Directors approved the repurchase program of up to 50 million shares, under the

same conditions as the previous program. Until Sep 30, 2015, 3,623,700 shares were acquired for R$ 67,902

thousand. The minimum, average and maximum cost per shares were R$ 17.90, R$ 18.74 and R$ 21.10,

respectively. None of the shares acquired in this program were used for variable compensation programs.

On Sep 30, 2015, the Bank had 72,821,487 treasury shares, amounting to R$ 1,696,362 thousand, of which

72,249,837 shares result from repurchase programs, 571,618 shares result from acquisition for share-based payment

and 32 were shares left over from mergers.

k) Share-Based Payment

2011 Program

In February 2012, 132,501 shares were purchased at an average cost per share of R$ 27.61, placed in treasury and,

thereafter, transferred to the members of the Executive Commitee and blocked for trading. The annual installments

were released for trading on March 08, 2013, March 10, 2014 and March 09, 2015.

2012 Program

The 2012 Program was developed under the CMN Resolution 3,921 of November 25, 2010, which describes the

remuneration policy for executives of financial institutions and establishes that at least 50% of variable remuneration

shall be paid in shares or share-based instruments, of which at least 40% should be deferred for future payment, over

a minimum period of three years, established according to the risks and activities overseen by the executives.

The Bank purchased 212,301 shares for payment of variable remuneration, at an average cost of R$ 26.78 per

share. Of these, 53,108 shares were transferred on March 10, 2014 and 53,063 shares on March 09, 2015, the other

shares were deferred for future transfer, if all transfer restrictions are met, as scheduled below.


Second installment 53,063 03.08.2016

Third installment 53,063 03.08.2017

Total 106,126

2013 Program


program, of which 70,856 shares have already been transferred on March 11, 2014 and 70,736 shares on March 2,

2015. The others installments were deferred for future transfer as appropriate considering the risks and the activities

overseen by the executives. The schedule below summarizes the future transfers to beneficiaries, if all transfer

restrictions are met.


3rd

quarter 2015


66




Fourth installment 70,736 03.02.2018

Total 212,208

2014 Program


program, of which 63,399 shares have already been transferred on February 27, 2015 and the others were deferred

for future transfer as appropriate considering the risks and the activities overseen by the executives. The schedule

below summarizes the future transfers to beneficiaries, if all transfer restrictions are met.


First installment 63,321 02.27.2016



Fourth installment 63,321 02.27.2019

Total 253,284

23 - TAXES

a) Breakdown of income tax (IR) and social contribution expenses (CSLL)

3rd

quarter/2015 3rd


30, 2015 Jan 1 to Sep

30, 2014

Current values 801,827 (291,344) (49,402) (1,795,185)

Domestic income tax and social contribution 811,418 (266,649) -- (1,720,117)

Foreign income tax (9,591) (24,695) (49,402) (75,068)

Deferred values 7,246,964 902,428 9,936,680 1,476,513

Deferred tax liabilities (565,110) (335,106) (950,469) (1,027,933)

Leasing transactions - portfolio adjustment and accelerated depreciation -- -- -- 133

Mark to Market (MTM) (368,513) (92,735) (493,473) (48,311)

Actuarial gains (15,283) (87,085) (112,658) (531,089)

Interest and inflation adjustment of fiscal judicial deposits (105,505) (81,392) (278,725) (228,078)

Foreign profits (46,202) (38,905) (85,969) (192,241)

Transactions carried out on the futures market 3,187 (20,003) 52,246 35,167

Recovered term credits (32,794) (14,986) (31,890) (63,514)

Deferred tax assets 7,812,074 1,237,534 10,887,149 2,504,446

Temporary differences (1)

7,421,223 1,200,562 10,428,260 2,548,317

Mark to Market (MTM) 390,744 36,972 458,782 (43,871)

Transactions carried out on the futures market 107 -- 107 --

Total 8,048,791 611,084 9,887,278 (318,672)

(1) Includes, in the 3rd quarter/2015, the amount of R $ 3,172,187 thousand related to the capitalization of tax credits resulting from the increase of CSLL rate (Law 13,169/2015).


3rd

quarter 2015


67

b) Reconciliation of income tax and social contribution charges

3rd

quarter/2015 3rd


30, 2015 Jan 1 to Sep

30, 2014

Profit before taxation and profit sharing (4,645,374) 2,465,386 3,226,584 9,679,235

Total charges of IR (25%) and CSLL (15% up to August/2015 and 20% since September/2015)

(1)

2,065,519 (986,154) (1,083,264) (3,871,694)

Charges upon Interest on own capital 549,008 376,524 1,433,836 1,089,343

Equity in subsidiaries and associates 1,953,459 876,603 5,307,619 1,659,359

Employee profit sharing 165,952 139,518 602,924 422,657

Other amounts (2)

3,314,853 204,593 3,626,163 381,663

Income Tax and Social Contribution 8,048,791 611,084 9,887,278 (318,672)

(1) The Provisional Measure 675 of May 21, 2015, converted into Law 13,169 of October 6, 2015, increased the rate of CSLL of financial institutions and companies in the field of private insurance and capitalization from 15% to 20%, since September 1, 2015, increasing social contribution expenses, as well as corresponding tax credits.


c) Tax expenses


Cofins (476,500) (586,913) (1,697,636) (1,639,288)

ISSQN (181,919) (159,122) (515,227) (459,256)

PIS/Pasep (77,436) (95,370) (275,871) (266,388)

Other (33,456) (29,872) (93,494) (83,354)

Total (769,311) (871,277) (2,582,228) (2,448,286)

d) Deferred tax liabilities

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Arising from positive adjustments of benefits plans (1)

66,734 273,173 2,033,250

Arising from interest and inflation adjustment of fiscal judicial deposits 486,308 452,830 442,834

Arising from mark-to-market 813,523 244,581 266,058

Arising from recovered term credits 215,700 183,809 170,267

Related to foreign profit 85,968 -- 192,241

Overseas entities 44 9,686 7,931

Arising from futures market transactions -- 58,616 31,195

Other 2,032 2,032 2,032

Total deferred tax liabilities 1,670,309 1,224,727 3,145,808

Income tax 640,876 663,022 1,713,404

Social contribution 545,184 396,595 1,068,342

Cofins 416,558 142,030 313,172

PIS/Pasep 67,691 23,080 50,890

(1) The realization of deferred tax liabilities on actuarial gains is dependent on the realization of the values of actuarial asset (Note 25).


3rd

quarter 2015


68

e) Deferred tax assets (Tax Credit)


Balance Constitution(1)

Write-off Balance Balance

Temporary differences 22,917,135 19,242,308 (6,696,327) 35,463,116 22,981,516

Allowance for loan losses 15,215,202 11,577,308 (5,101,285) 21,691,225 14,794,154

Provisions 6,499,531 4,214,893 (1,091,806) 9,622,618 6,953,578

Negative adjustments of benefits plans 165,953 107,607 -- 273,560 193,124

Mark to Market (MTM) 742,059 1,569,407 (456,230) 1,855,236 751,506

Other provisions 294,390 1,773,093 (47,006) 2,020,477 289,154

CSLL written to 18% (MP 2,158/2001) 1,276,570 -- (20,592) 1,255,978 1,254,655

Tax losses/ negative bases 19 6 -- 25 8

Total deferred tax assets 24,193,724 19,242,314 (6,716,919) 36,719,119 24,236,179

Income tax 14,300,537 9,411,414 (4,186,782) 19,525,169 14,336,835

Social contribution 9,812,665 9,696,523 (2,480,559) 17,028,629 9,817,870

Cofins 69,267 115,593 (42,648) 142,212 70,085

PIS/Pasep 11,255 18,784 (6,930) 23,109 11,389


f) Deferred tax assets (Tax Credit - Not Recorded)

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Overseas tax credits 1,213,015 863,209 722,539

Total tax credits 1,213,015 863,209 722,539

Income tax 758,134 539,506 451,587

Social contribution 454,881 323,703 270,952

Realization expectative

The expectation of realization of the deferred tax assets (tax credits) is based on a technical study, prepared in

June 30, 2015, and the present value is determined based on the average rate of funding of Banco do Brasil

Future value Present value

In 2015 4,678,257 4,528,664

In 2016 7,455,328 7,058,939

In 2017 7,428,912 6,832,548

In 2018 7,196,368 6,437,936

In 2019 1,801,365 1,577,968

Total tax credits June 30, 2015 28,560,230 26,436,055

In the period from January 01 to September 30, 2015, it was possible to observe the realization of tax credits at

Banco do Brasil, in the amount of R$ 6,716,919 thousand corresponding to 99.57% of the projection of use for the

period of 2015 contained in the technical study prepared on December 31, 2014.


3rd

quarter 2015


69

The realization of the nominal value of tax credits registered, considering the recovery of those written-off during the

lawsuits (Note 26.d), based on a technical study conducted by Banco do Brasil on June 30, 2015, is projected for 4

years in the following proportions:

Tax losses/CSLL

recoverable (1)

Diferences

intertemporary (2)

In 2015 17% 15%

In 2016 36% 26%

In 2017 34% 26%

In 2018 13% 26%

In 2019 -- 7%

(1) Projected consumption linked to the capacity to generate IR and CSLL taxable amounts in subsequent periods.

(2) The consumption capacity results from the movements of provisions (expectation of reversals, write-offs and uses).

24 - RELATED PARTY TRANSACTIONS

The costs of salaries and other benefits granted to key management personnel of the Banco do Brasil Group

(Executive Board, Audit Committee, Board of Directors and Fiscal Council):


2015 Jan 1 to Sep 30,

2014

Short-term benefits 9,592 9,247 37,833 35,274

Fees and social charges 8,639 8,438 28,792 28,597

Executive Board 7,896 7,601 26,552 26,191

Audit Committee 491 662 1,557 1,878

Board of Directors 148 85 383 270

Fiscal Council 104 90 300 258

Variable remuneration (cash) and social charges -- -- 6,669 4,883

Other 953 809 2,372 1,794

Share-based payment benefits -- -- 5,889 3,369

Total 9,592 9,247 43,722 38,643

In accordance with the Bank’s policy of variable remuneration, established in compliance with CMN Resolution

3,921/2010, the variable remuneration of Executive Directors is paid in shares (Note 22.k).

The Bank does not offer post-employment benefits to its key management personnel, except for those who are part

of the staff of the Bank.

The Bank does not grant loans to the key management personnel, pursuant to the prohibition to all financial

institutions established by Banco Central do Brasil.

The transactions between the consolidated companies are eliminated in the consolidated financial statements. In

relation to transactions with entities controlled by the Tesouro Nacional (National Treasury) by joint control or

significant influence, the Bank discloses only the most significant transactions.

The Bank disclosure the transactions with National Treasury. Among the transactions, the operations of extension of

rural credit are highlighted, which are rights with the National Treasury, derived from cession of operations of rural

credit extensioned under the Resolution CMN 2,238/1996. The amounts receivable of National Treasury regarding

the interest rates equalization of programs encouraged by the Federal Government, under the Law 8,427/1992 are

highlighted too. The equalization of rates, a type of economical subsidy, represents a differential rate between the

funding cost, plus the administrative and tax costs, and the charges for the borrower of the rural credit. The amount of

equalization is adjusted by Selic Rate since its calculation to the payment from National Treasury, that is performed

according to budget programming of that Body, as established by legislation, preserving the remuneration of the

Bank.


3rd

quarter 2015


70

The Bank has banking transactions with these related parties, such as interest bearing and non-interest bearing

deposits, loans (except for key management personnel), sale and repurchase transactions and acquisition of loan

portfolios. There are also services rendered and guarantee agreed.

These transactions are conducted under terms and rates consistent with those practiced with third parties when


The resources applied in federal government securities and in funds and programs from onlendings of the Official

Institutions are listed in Notes 7 and 17, respectively.

The Bank has instituted the Fundação Banco do Brasil (FBB), which aims to promote, support, encourage and

sponsor actions in the fields of education, culture, health, social welfare, recreation and sports, science and

technology and assistance to urban-rural communities. In the period from 01.01 to 09.30.2015, the Bank made

contributions to FBB in the amount of R$ 45,668 thousand (R$ 34,647 thousand in the period from 01.01 to

09.30.2014).

The Bank granted to BB Elo Cartões Participações S.A., its wholly owned subsidiary, irrevocably and irreversibly, and

without accounting effect, the contractual rights on the receipt of interchange fees inherent to the activities of

management of post-paid bill payment transactions and management of purchasing functionality via debit in payment

arrangements, due to the formation of strategic partnership with Cielo (Note 2.c).

The information related to Bank's contributions and other transactions with other sponsored entities are disclosed in

Note 25.

Acquisition of Portfolio of Loans Transferred by Banco Votorantim

3rd quarter/2015 3rd quarter/2014 Jan 1 to Sep

30, 2015 Jan 1 to Sep 30,

2014

Assignment with substantial retention of risks and rewards (with co-obligation) 1,536,777 4,272,188 8,168,843 8,150,021

Unrealized result, net of tax effects (balance) 14,815 65,860 14,815 65,860


3rd

quarter 2015


71


Sep 30, 2015

Controller (1)

Subsidiaries (2)

Jointly

controlled (3)

Associates

(4)


(5)


(6)

Total

Assets


Securities -- 49,636,350 22,501 -- -- -- 49,658,851

Loan operations -- 592,644 16,693,436 53,824 -- 32,142,542 49,482,446

Receivables from related companies -- 58,446 31,297 -- -- 113 89,856

Other assets (7)

15,852,991 287,356 1,599,823 -- -- 255,578 17,995,748

Liabilities

Demand deposits 331,981 71,896 223,046 257 2,020 3,210,704 3,839,904

Saving deposits -- -- -- -- 3,220 272,839 276,059

Remunerated time deposits -- 10,873,891 676,193 -- 359 16,007,396 27,557,839

Securities sold under repurchase agreements -- 7,051,789 6,821,716 -- -- 3,211,792 17,085,297


Other liabilities (8)

8,587,054 53,240,782 254,700 15,260 -- 256,298 62,354,094


-- 3,790,398 6,800,000 -- -- -- 10,590,398

3rd quarter/2015


2,133,445 4,340,808 1,002,157 610 -- 1,126,289 8,603,309


Jan 1 to Sep 30, 2015


6,003,197 9,661,937 2,885,717 1,370 -- 2,727,440 21,279,661



(2) Refer, mainly, to BB BI, BB Leasing, BB Consórcios, Ativos, BB Tur and subsidiaries abroad.

(3) Refer, mainly, to Banco Votorantim, Mapfre BB SH1, Mapfre BB SH2, Brasilprev, Brasilcap, Alelo and Cielo.

(4) Include Cibrasec and Tecban.




(8) Includes the Contract Hybrid Capital and Debt Instrument – Perpetual Bonds with the Federal Government (Note 19.d).



3rd

quarter 2015


72


Sep 30, 2014

Controller (1)

Subsidiaries (2)

Jointly

controlled (3)

Associates

(4)


(5)


(6)

Total

Assets


Securities -- 44,092,424 120,917 -- -- -- 44,213,341

Loan operations -- 86,069 15,465,837 84,606 -- 24,985,903 40,622,415

Receivables from related companies -- 43,917 7,655 -- -- -- 51,572

Other assets (7)

13,575,915 43,471 3,865,905 233 -- 88,263 17,573,787

Liabilities

Demand deposits 549,157 25,618 67,252 95 1,180 1,384,778 2,028,080

Saving deposits -- -- -- -- 1,635 297,769 299,404

Remunerated time deposits -- 4,840,694 392,908 -- 1,703 15,693,573 20,928,878

Securities sold under repurchase agreements -- 5,835,213 3,426,090 -- -- 14,390 9,275,693


Other liabilities (8)

8,296,703 45,193,812 385,388 11,196 -- -- 53,887,099


-- 3,012,646 6,800,000 -- -- -- 9,812,646

3rd quarter/2014


1,478,086 2,275,307 590,480 438 -- 571,759 4,916,070


Jan 1 to Sep 30, 2014


3,976,168 5,327,491 1,771,060 1,110 -- 1,494,645 12,570,474



(2) Refer, mainly, to BB BI, BB Leasing, BB Consórcios, Ativos, BB Tur and subsidiaries abroad.

(3) Refer, mainly, to Banco Votorantim, Mapfre BB SH1, Mapfre BB SH2, Brasilprev, Brasilcap, Alelo and Cielo.

(4) Include Cibrasec and Tecban.




(8) Includes the Contract Hybrid Capital and Debt Instrument – Perpetual Bonds with the Federal Government (Note 19.d).



3rd

quarter 2015


73

25 - EMPLOYEE BENEFITS

Banco do Brasil sponsors the following private pension and complementary health plan entities that provide for

retirement and healthcare benefits for its employees:

Plans Benefits Classification

Previ - Caixa de Previdência dos Funcionários do Banco do Brasil

Previ Futuro Retirement and Pension Defined contribution

Plano de Benefícios 1 Retirement and Pension Defined benefit

Plano Informal Retirement and Pension Defined benefit

Cassi - Caixa de Assistência dos Funcionários do Banco do Brasil

Plano de Associados Health Care Defined benefit

Economus – Instituto de Seguridade Social

Prevmais Retirement and Pension Variable contribution

Regulamento Geral Retirement and Pension Defined benefit

Regulamento Complementar 1 Retirement and Pension Defined benefit

Grupo B’ Retirement and Pension Defined benefit

Plano Unificado de Saúde - PLUS Health Care Defined benefit

Plano Unificado de Saúde - PLUS II Health Care Defined benefit

Plano de Assistência Médica Complementar - PAMC

Health Care Defined benefit

Fusesc - Fundação Codesc de Seguridade Social

Multifuturo I Retirement and Pension Variable contribution

Plano de Benefícios I Retirement and Pension Defined benefit

SIM - Caixa de Assistência dos Empregados dos Sistemas Besc e Codesc, do Badesc e da Fusesc

Plano de Saúde Health Care Defined contribution

Prevbep - Caixa de Previdência Social Plano BEP Retirement and Pension Defined benefit

Number of participants covered by benefit plans sponsored by the Bank

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Number of participants Number of participants Number of participants

Active Retired/Users Total Active Retired/Users Total Active Retired/Users Total

Retirement and Pension Plans

112,670 110,164 222,834 115,096 104,823 219,919 115,470 104,991 220,461

Plano de Benefícios 1 - Previ

18,769 92,639 111,408 23,981 88,138 112,119 24,388 87,949 112,337

Plano Previ Futuro 78,029 913 78,942 74,284 777 75,061 74,196 756 74,952

Plano Informal -- 3,593 3,593 -- 3,709 3,709 -- 3,835 3,835

Other plans 15,872 13,019 28,891 16,831 12,199 29,030 16,886 12,451 29,337

Health Care Plans 113,990 99,940 213,930 116,337 95,533 211,870 116,663 95,381 212,044

Cassi 101,538 92,658 194,196 103,269 88,134 191,403 103,524 87,958 191,482

Other plans 12,452 7,282 19,734 13,068 7,399 20,467 13,139 7,423 20,562


3rd

quarter 2015


74

Bank’s contributions to benefit plans


Retirement and Pension Plans 300,642 281,701 932,351 922,754

Plano de Benefícios 1 - Previ (1)

121,532 117,452 386,216 419,095

Plano Previ Futuro 111,326 95,874 328,852 285,748

Plano Informal 38,008 38,914 124,856 128,408

Other plans 29,776 29,461 92,427 89,503

Health Care Plans 267,797 231,588 767,729 700,658

Cassi 233,480 199,525 671,702 613,549

Other plans 34,317 32,063 96,027 87,109

Total 568,439 513,289 1,700,080 1,623,412

(1) Refers to the contributions relating to participants subject to Agreement 97 and Plan 1, whereby these contributions occur by the realization of Fundo Paridade and Fundo de Utilização (Note 25.f). Agreement 97 aims to regulate the funding required to constitute a portion equivalent to 53.7% of guaranteed amount relating to the supplementary pension due to the participants who joined the Bank up to April 14, 1967 and who have retired or will retire after the aforementioned date, except for those participants who are part of the Plano Informal.

The Bank's contributions to benefit plans, during the second half/2015, are estimated in R$ 689,378 thousand.

Values recognized in income


Retirement and Pension Plans (137,396) 60,951 (228,224) 619,077

Plano de Benefícios 1 - Previ 40,070 228,331 317,929 1,119,731

Plano Previ Futuro (111,326) (95,874) (328,852) (285,748)

Plano Informal (31,836) (36,523) (102,071) (114,014)

Other plans (34,304) (34,983) (115,230) (100,892)

Health Care Plans (335,276) (314,010) (988,423) (1,029,359)

Cassi (303,306) (282,453) (895,524) (939,837)

Other plans (31,970) (31,557) (92,899) (89,522)

Total (472,672) (253,059) (1,216,647) (410,282)

a) Retirement and pension plans

Previ Futuro (Previ)

Participants in this plan are the Bank's employees hired from December 24, 1997. The active participants contribute

to Previ with an amount between 7% and 17% of their contribution salary, which varies based on the time of service

and the amount of the contribution salary. There is no contribution for retired participants. The sponsor contributes an

amount equal to the contributions of the participants, limited to 14% of the total contribution payroll of these

participants.


3rd

quarter 2015


75

Plano de Benefícios 1 (Previ)

The participants of this plan are the Bank’s employees who were enrolled up to December 23, 1997. Participants of

the Plan 1, both the actives as retirees contribute a percentage between 1.8% and 7.8% of salary or supplements.

Due to the establishment of parity between the Bank's and participants' contributions, in December 2000, the Fundo

Paridade was set up, and its resources are being used for the purpose of offsetting contributions to the plan (Note

25.f).

Plano Informal (Previ)

Banco do Brasil is exclusively and fully responsible for this plan whose contractual obligations include: (a) retirement

pensions to founder participants and pension payments to beneficiaries of participants deceased prior to April

14,1967; (b) payment of retirement supplements to the other participants employed by Banco do Brasil who retired

prior to April, 14,1967 or who, on that date, would have the right through length of service to retire and who had at

least 20 years of effective service with the Bank; and (c) increase in the amount of retirement benefits and of

pensions beyond those provided in the benefit plan of Previ, resulting from judicial decisions and from administrative

decisions due to restructuring of the career and salary plan and of incentives created by the Bank. On December 31,

2012, Banco do Brasil and Previ formalized an agreement whereby the Banco do Brasil paid, with Fundo Paridade

funds, 100% of the mathematical reserves relating to the Grupo Especial, that is Banco do Brasil’s exclusive liability,

upon which this group migrated from Plano Informal to Plano de Benefícios 1 of Previ. The Grupo Especial includes

participants from Plano de Benefícios 1 - Previ, listed in the first paragraph of the first clause of the contract of

December 24,1997, which received additional supplemental retirement arising from administrative decisions and/or

judicial decisions. (Notes 25.f)

Prevmais (Economus)

The participants of this plan are the employees from Banco Nossa Caixa (merged into Banco do Brasil on November

30, 2009) enrolled after August 01, 2006, and the participants previously linked to the Regulamento Geral benefit

plan who opted for the distribution of their vested account balances. The funding for income benefits is equally

provided by employees and employer, not exceeding 8% of the participants' salary. The plan also provides risk

benefits, such as complementation of sickness aid, work - related accident, disability benefits and death pension.

Regulamento Geral (Economus)

The participants of this plan are the employees from Banco Nossa Caixa enrolled up to July 31, 2006. This plan is

closed to new members. Employees and the sponsor contribute equally, on average, with 12.11% of participation

salary.


The participants of this plan are the employees from Banco Nossa Caixa. This plan offers the benefits of

supplemental sickness benefit and annuity for death and disability. The cost of the plan is the responsibility of the

sponsor, participants and retirees/users.

Grupo B' (Economus)

The participants of this plan are the employees from Banco Nossa Caixa admitted between January 22, 1974 and

May 13, 1974 and their beneficiaries. This plan is closed to new members. The level of benefit which will be granted

when all the conditions set out in regulation are met, is known only a priori.

Multifuturo I (Fusesc)

The participants of this plan are the employees from Banco do Estado de Santa Catarina - Besc (merged into Banco

do Brasil on September 30, 2008) enrolled after January 12, 2003 and the employees previously linked to Plano de

Benefícios I (Fusesc) who opted for this plan. Employees and sponsor equally contribute from 2.33% to 7% of

participation salary to that plan, as determined by each participant.


3rd

quarter 2015


76

Plano de Benefícios I (Fusesc)

The participants of this plan are the employees from Besc enrolled until January 11, 2003. This plan is closed to new

members. Employees and the sponsor contribute equally, on average, with 9.89% of participation salary.

Plano BEP (Prevbep)

Participants of this plan are the employees from Banco do Estado do Piauí – BEP (merged in to Banco do Brasil on

November 30, 2008). Employees and the sponsor contribute equally, on average, with 3.58% of participation salary.

b) Health Care Plans

Plano de Associados (Cassi)

The Bank is the sponsor of a health plan managed by Cassi the main objective of which is to provide coverage for

expenses related to the promotion, protection, recovery and rehabilitation of a member's health and of his/her

enrolled beneficiaries. Each month, the Bank contributes with a sum equivalent to 4.5% of the total payroll or of the

total retirement or pension plan benefit. Monthly contributions from members and pension beneficiaries amount to 3%

of the payroll or the total retirement or pension plan benefits and co-participation in some hospital procedures.

Plano Unificado de Saúde - PLUS (Economus)

The participants of this plan are the employees from Banco Nossa Caixa. Participation in this plan takes place by

means of a 1.5% contribution of gross salary, without limit, covering the owner and his/her preferred dependants,

deducted from the owner's payroll and 10% as co-participation in the price of each medical visit / low-cost exam

made by the owner and his/her dependants (preferred and non-preferred).

Plano Unificado de Saúde - PLUS II (Economus)

For employees from Banco Nossa Caixa. Participation in this plan takes place by means of a 1.5% contribution of

gross salary, without limit, covering the owner and his/her preferred dependants, deducted from the owner's payroll

and 10% as co-participation in the price of each medical visit / low-cost exam made by the owner and his/her

preferred dependants and children of age. The plan does not provide for non-preferred dependents.

Plano de Assistência Médica Complementar - PAMC (Economus)

The participants of this plan are the employees from Banco Nossa Caixa stationed in the State of São Paulo. The

plan owners are those employees retired due to disability in Groups "B" and "C", and their dependents, who

participate in costs in as much as they use it, and according to the progressive salary table.

Plano de Saúde (SIM)

The participants of this plan are the employees from Besc, in addition to the employees who are linked to other

sponsors (Badesc, Codesc, Bescor, Fusesc and SIM itself). Monthly contributions from active beneficiaries amount to

3.44% of the gross remuneration, including the 13th salary, monthly contributions from inactive beneficiaries amount

to 8.86%, and those from the sponsors amount to 5.42%. The beneficiaries also contribute 0.75% per dependent.

The plan also provides for joint participation in ambulatory care procedures.


3rd

quarter 2015


77

c) Risk factors

The Bank may be required to make extraordinary contributions to Previ, Economus, Fusesc and Prevbep,

which might have a negative effect on operating income.

The criteria used to determine the Bank's obligation to the set of sponsored entities and plans (Previ, Economus,

Fusesc and Prevbep) include long-term actuarial and financial estimates and assumptions, as well as the application

and interpretation of regulatory standards in effect on this date. Accordingly, inaccuracies inherent in the use of

estimates and assumptions may result in divergences between the amount recorded and the amount actually

realized, resulting in negative impacts on the result of the Bank’s operations.

d) Actuarial valuations

The actuarial valuations are prepared every six months and the information contained in the tables below refers to

those carried out on the balance sheet dates of June 30, 2015, December 31, 2014 and June 30, 2014.


3rd

quarter 2015


78

d.1) Changes in present value of defined benefit actuarial obligations



Opening balance (122,884,677) (113,522,849) (113,522,849) (920,380) (1,004,111) (1,004,111) (5,830,331) (6,333,578) (6,333,578) (6,428,867) (5,971,976) (5,971,976)

Interest cost (7,468,633) (14,412,148) (7,261,271) (55,620) (121,305) (62,667) (356,192) (755,247) (411,994) (391,616) (750,257) (383,901)


Past service cost -- -- -- (14,614) (25,402) (14,824) -- -- -- -- -- --

Benefits paid net of retirees contributions 4,496,005 8,394,631 4,197,920 86,848 185,004 89,275 248,533 507,409 237,699 226,981 424,664 205,858

Remeasurements of actuarial gain/ (losses) (3,972,084) (2,841,570) (5,373,112) (58,871) 45,434 (30,558) (334,409) 867,788 786,475 270,336 (92,328) (74,060)

Closing balance (130,041,828) (122,884,677) (122,205,220) (962,637) (920,380) (1,022,885) (6,318,736) (5,830,331) (5,790,463) (6,341,450) (6,428,867) (6,244,120)

Present value of actuarial liabilities with surplus (130,041,828) (122,884,677) (122,205,220) -- -- -- -- -- -- (5,306,059) (5,115,870) (5,078,666)

Present value of actuarial liabilities without surplus -- -- -- (962,637) (920,380) (1,022,885) (6,318,736) (5,830,331) (5,790,463) (1,035,391) (1,312,997) (1,165,454)

d.2) Changes in fair value of plan assets


(1)


Opening balance 135,145,646 144,420,740 144,420,740 -- -- -- -- -- -- 5,115,870 5,033,968 5,033,968

Interest income 8,236,790 17,611,010 9,289,978 -- -- -- -- -- -- 311,455 621,916 323,813

Contributions received 264,684 581,637 301,643 86,848 185,004 89,275 248,533 507,409 237,699 69,444 151,576 71,899

Benefits paid net of retirees contributions (4,496,005) (8,394,631) (4,197,920) (86,848) (185,004) (89,275) (248,533) (507,409) (237,699) (226,981) (424,664) (205,858)

Actuarial gain / (loss) on plan assets (3,045,960) (19,073,110) (8,135,553) -- -- -- -- -- -- 36,271 (266,926) (145,156)

Closing balance 136,105,155 135,145,646 141,678,888 -- -- -- -- -- -- 5,306,059 5,115,870 5,078,666

(1) Refers to the following plans: Regulamento Geral (Economus), Prevmais (Economus), Regulamento Complementar 1 (Economus), Multifuturo 1 (Fusesc), Plano I (Fusesc) and Plano BEP (Prevbep).


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d.3) Amounts recognized in the balance sheet


Sep 30, 2015 Dec 31, 2014 Sep 30, 2014 Sep 30, 2015 Dec 31, 2014 Sep 30, 2014 Sep 30, 2015 Dec 31, 2014 Sep 30, 2014 Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

1) Fair value of the plan assets 136,105,155 135,145,646 141,678,888 -- -- -- -- -- -- 5,306,059 5,115,870 5,078,666

2) Present value of actuarial liabilities (130,041,828) (122,884,677) (122,205,220) (962,637) (920,380) (1,022,885) (6,318,736) (5,830,331) (5,790,463) (6,341,450) (6,428,867) (6,244,120)

3) Surplus/(deficit) (1+2) 6,063,327 12,260,969 19,473,668 (962,637) (920,380) (1,022,885) (6,318,736) (5,830,331) (5,790,463) (1,035,391) (1,312,997) (1,165,454)

4) Surplus/(deficit) - plot sponsor 3,031,664 6,130,485 9,736,834 (962,637) (920,380) (1,022,885) (6,318,736) (5,830,331) (5,790,463) (780,372) (916,046) (830,514)

5) Amounts recognized in profit (1)

40,070 -- 228,331 (31,836) -- (36,523) (211,953) -- (195,446) (27,147) -- (29,089)

6) Amounts received from funds (Note 27.f)

(1)

121,532 -- 117,452 -- -- -- -- -- -- -- -- --

7) Benefits paid (1)

-- -- -- 38,008 -- 38,824 142,127 -- 112,517 24,965 -- 23,695

8) Net acturial (liability)/asset (4+5+6+7)

(1)

3,193,266 6,130,485 10,082,617 (956,465) (920,380) (1,020,584) (6,388,562) (5,830,331) (5,873,392) (782,554) (916,046) (835,908)

(1) Changes occurred after the actuarial valuation from June.

(2) Refers to the portion of the surplus/(deficit) due from the sponsor. The actuarial assets recorded in Other Receivables (Note 10.b) will be realized before the end of the plan where the end of the plan is understood as the date in which the last commitment will be paid.

d.4) Maturity profile of defined benefit actuarial obligations

Duration(1)

Expected benefit payments

(2)

Up to 1 year 1 to 2 years 2 to 5 years Over 5 years Total

Plano 1 (Previ) 9.96 4,608,122 9,885,549 30,180,904 223,387,620 268,062,195

Plano Informal (Previ) 5.67 100,257 151,122 373,263 918,138 1,542,780

Plano de Associados (Cassi) 11.95 254,818 499,722 1,443,435 15,716,334 17,914,309

Regulamento Geral (Economus) 10.31 236,403 435,903 1,309,107 10,563,360 12,544,773

Regulamento Complementar 1 (Economus) 15.68 963 1,057 3,818 110,908 116,746

Plus I e II (Economus) 6.47 24,124 44,734 114,887 354,790 538,535

Grupo B' (Economus) 8.69 8,138 14,880 43,182 242,746 308,946

Prevmais (Economus) 13.67 5,712 11,004 35,479 569,873 622,068

Multifuturo I (Fusesc) 11.24 2,694 5,067 15,559 153,937 177,257

Plano I (Fusesc) 11.20 18,393 35,723 117,431 1,239,857 1,411,404

Plano BEP (Prevbep) 10.45 1,336 2,581 8,638 76,028 88,583

(1) Weighted average duration, in years, of the defined benefit actuarial obligation.

(2) Amounts considered not discounted to present value.


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d.5) Breakdown of the amounts recognized in statement of income relating to defined benefit plans


3rd quarter/2015

Jan 1 to Sep 30, 2015

Jan 1 to Sep 30, 2014

3rd quarter/2015

Jan 1 to Sep 30, 2015

Jan 1 to Sep 30, 2014

3rd quarter/2015

Jan 1 to Sep 30, 2015

Jan 1 to Sep 30, 2014

3rd quarter/2015

Jan 1 to Sep 30, 2015

Jan 1 to Sep 30, 2014


Interest cost (1,937,201) (5,671,518) (5,418,354) (28,075) (83,696) (91,986) (187,411) (543,603) (583,621) (101,967) (313,383) (168,771)

Expected yield on plan assets 2,031,342 6,149,737 6,725,247 -- -- -- -- -- -- 78,824 234,244 99,329

Unrecognized past service cost -- -- -- (3,761) (18,375) (22,028) -- -- -- -- -- --

Expense with active employees -- -- -- -- -- -- (91,353) (281,042) (263,332) (39,126) (113,802) (106,725)

Other adjustments/reversals -- -- -- -- -- -- -- -- -- -- (2,024) 534

(Expense)/income recognized in the Statement of Income

40,070 317,929 1,119,731 (31,836) (102,071) (114,014) (303,306) (895,524) (939,837) (66,274) (208,129) (190,414)

d.6) Composition of the plan assets

Plano 1 - Previ Other plans

Jun 30, 2015 Dec 31, 2014 Jun 30, 2014 Jun 30, 2015 Dec 31, 2014 Jun 30, 2014

Fixed income 48,793,698 46,440,688 45,252,237 4,707,270 4,490,711 4,432,914

Floating income (1)

73,170,131 74,607,857 82,655,463 206,671 227,912 270,185

Real estate investments 8,288,804 8,177,129 7,962,354 167,583 165,839 152,275

Loans and financing 4,899,786 4,946,825 4,887,922 107,094 104,875 103,605

Other 952,736 973,147 920,912 117,441 126,533 119,687

Total 136,105,155 135,145,646 141,678,888 5,306,059 5,115,870 5,078,666

Amounts listed in fair value of plan assets

In the Bank’s own financial instruments 10,792,928 10,940,267 11,056,439 22,825 25,537 21,486

In properties or other assets used by the Bank 153,568 163,817 161,836 7,443 7,621 8,032

(1) Includes, in Plano de Benefícios 1 from Previ, the amount of R$ 25,534,844 thousand (R$ 28,835,180 thousand as of December 31, 2014 and R$ 35,517,370 thousand as of September 30, 2014), related to the assets that are not priced in active markets.


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d.7) Main actuarial assumptions adopted in each period


Jun 30, 2015 Dec 31, 2014 Jun 30, 2014 Jun 30, 2015 Dec 31, 2014 Jun 30, 2014 Jun 30, 2015 Dec 31, 2014 Jun 30, 2014 Jun 30, 2015 Dec 31, 2014 Jun 30, 2014

Inflation rate (p.a.) 5.95% 6.07% 5.82% 5.93% 6.23% 5.82% 5.97% 6.04% 5.82% 5.96% 6.07% 5.82%

Real discount rate (p.a.) 6.18% 6.31% 6.10% 6.33% 6.19% 5.94% 6.14% 6.33% 6.14% 6.17% 6.31% 6.12%

Nominal rate of return on investments (p.a.) 12.50% 12.76% 12.28% -- -- -- -- -- -- 12.50% 12.76% 12.30%

Real rate of expected salary growth (p.a.) 1.01% 1.01% 0.25% -- -- -- -- -- -- 0.73% 0.73% 0.65%

Actuarial life table AT-2000 AT-2000 AT-2000 AT-2000

Capitalization method Projected credit unit Projected credit unit Projected credit unit Projected credit unit

In order to determine the values for the defined benefit plans, the Bank uses methods and assumptions different from those submitted by the entities sponsored.

CPC 33 (R1) prescribes the accounting, as well as the effects that occurred or that will occur in the entities that sponsor employee benefits plans. However, the sponsored entities

themselves must comply with the rules issued by the Ministério da Previdência Social, through the Conselho de Gestão da Previdência Complementar (CGPC) and the

Superintendência Nacional de Previdência Complementar (Previc). The most significant differences are in the definition of the assumptions used in Plano 1 – Previ.


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d.8) Differences in assumptions of the Plano 1 - Previ

Bank Previ

Real discount rate (p.a.) 6.18% 5.00%

Actuarial life table AT-2000 Soft AT-2000 (reduced by 10%)

Evaluation of assets - Exclusive funds Market value or discounted cash flow Discounted cash flow

Capitalization method Projected credit unit Aggregate Method

d.9) Reconciliation of amounts calculated in Plan 1 - Previ/Bank

Plan assets Actuarial liabilities Effect in surplus

Jun 30, 2015

Dec 31, 2014

Jun 30, 2014

Jun 30, 2015 Dec 31, 2014 Jun 30, 2014 Jun 30,

2015 Dec 31,

2014 Jun 30,

2014

Value determined - Previ 138,383,752 134,450,819 140,139,983 (130,269,710) (122,073,122) (118,866,137) 8,114,042 12,377,697 21,273,846

Incorporation of values from agreement 97 14,164,540 13,687,582 13,795,151 (14,164,540) (13,687,582) (13,795,151) -- -- --

Incorporation of values from Grupo Especial 1,117,743 1,071,445 1,072,293 (1,117,743) (1,071,445) (1,072,293) -- -- --

Adjustment in the value of plan assets (1) (17,560,880) (14,064,200) (13,328,539) -- -- -- (17,560,880) (14,064,200) (13,328,539)

Adjustment in the liabilities - discount rate/ capitalization method

-- -- -- 15,510,165 13,947,472 11,528,361 15,510,165 13,947,472 11,528,361

Value determined - Bank 136,105,155 135,145,646 141,678,888 (130,041,828) (122,884,677) (122,205,220) 6,063,327 12,260,969 19,473,668

(1) Refers mainly to adjustments made by the Bank in determining the fair value of the investments in Litel, Neoenergia and in securities held to maturity.

d.10) Sensitivity analysis

The sensitivity analyses are based on changes in an assumption, maintaining all the other assumptions constant. In

practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.

The methods used for the elaboration of the sensitivity analysis did not change from the previous period, and updates

in the discount rate were made.

Jun 30, 2015 Life table Salary increase Interest rate

+1 age -1 age +0.25% -0.25% +0.25% -0.25%

Plano 1 (Previ) Present value of defined benefit actuarial

obligations 130,041,828 127,821,703 132,229,747 130,269,657 129,816,055 127,584,360 132,600,784

Surplus/(deficit) in the plan 6,063,327 8,283,452 3,875,408 5,835,498 6,289,100 8,520,795 3,504,371

Plano Informal (Previ) Present value of defined benefit actuarial

obligations 962,637 926,205 999,951 -- -- 951,488 974,080


Plano de Associados (Cassi) Present value of defined benefit actuarial

obligations 6,318,736 6,175,539 6,459,834 6,320,119 6,317,388 6,184,061 6,458,919

Surplus/(deficit) in the plan (6,318,736) (6,175,539) (6,459,834) (6,320,119) (6,317,388) (6,184,061) (6,458,919)

Regulamento Geral (Economus) Present value of defined benefit actuarial

obligations 4,934,361 4,872,147 4,994,169 -- -- 4,834,410 5,052,068



Present value of defined benefit actuarial obligations

36,268 37,633 34,935 -- -- 35,115 37,477


Plus I e II (Economus) Present value of defined benefit actuarial

obligations 347,113 334,852 359,340 -- -- 341,001 353,443


Grupo B' (Economus) Present value of defined benefit actuarial

obligations 136,158 132,991 139,246 -- -- 133,585 138,822

Surplus/(deficit) in the plan (136,158) (132,991) 139,246 -- -- (133,585) 138,822

Prevmais (Economus) Present value of defined benefit actuarial

obligations 208,810 208,606 209,055 -- -- 202,783 215,163


Multifuturo I (Fusesc) Present value of defined benefit actuarial

obligations 74,196 73,256 75,105 -- -- 72,577 75,887


Plano I (Fusesc) Present value of defined benefit actuarial

obligations 557,057 556,983 557,290 557,058 557,054 551,106 563,226


Plano BEP (Prevbep) Present value of defined benefit actuarial

obligations 47,487 46,767 48,186 47,668 47,310 46,502 48,515



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e) Overview of actuarial asset/(liability) recorded by the Bank

Actuarial assets Actuarial liabilities


Plano 1 (Previ) 3,193,266 6,130,485 10,082,617 -- -- --

Plano Informal (Previ) -- -- -- (956,465) (920,380) (1,020,584)

Plano de Associados (Cassi) -- -- -- (6,388,562) (5,830,331) (5,873,392)

Regulamento Geral (Economus) -- -- -- (427,276) (532,645) (464,461)


-- -- -- (1,476) (694) (1,231)

Plus I e II (Economus) -- -- -- (344,766) (360,250) (330,148)

Grupo B' (Economus) -- -- -- (137,019) (125,279) (130,931)

Prevmais (Economus) 40,520 38,511 30,312 -- -- --

Multifuturo I (Fusesc) 37,608 28,602 18,348 -- -- --

Plano I (Fusesc) 28,067 15,006 22,596 -- -- --

Plano BEP (Prevbep) 21,788 20,703 19,607 -- -- --

Total 3,321,249 6,233,307 10,173,480 (8,255,564) (7,769,579) (7,820,747)

f) Allocations of the Surplus - Plano 1

3rd quarter/2015 3rd quarter/ Jan 1 to Sep 30,

2015 Jan 1 to Sep 30,

2014

Fundo Paridade

Opening balance 113,220 116,566 118,889 172,124

Restatement 2,932 2,366 13,695 11,912

Contributions to Plano 1 - Agreement 97 -- -- (11,829) (60,552)

Early contribution to amortize - Grupo Especial (1) (1)

-- (522) (4,603) (5,074)

Closing balance 116,152 118,410 116,152 118,410


Opening balance 8,666,911 8,045,908 8,155,243 7,794,154

Contributions to Plano 1 (121,532) (116,930) (369,784) (353,469)

Restatement 223,041 162,856 982,961 651,149

Closing balance 8,768,420 8,091,834 8,768,420 8,091,834

Total funds allocated surplus 8,884,572 8,210,244 8,884,572 8,210,244

(1) Refers to the payment of 100% of the mathematical reserves for guarantees of additional supplemental retirement for the Grupo Especial.

f.1) Fundo Paridade

The plan was funded, up to December 15, 2000, through a contribution of 2/3 (two thirds) from the Bank and another

1/3 (one third) from participants. As from December 16, 2000, in order to adjust to the requirements of Constitutional

Amendment N° 20, both the Bank and the participants started to make a contribution of 1/2 (one half), and an

agreement was signed by the parties involved and duly approved by the Supplementary Pension Plan Secretariat.

The cost for the implementation of the equal contributions was covered by using the Plan's surplus at the time. As a

result of this agreement, the Bank was also entitled to recognize the historical amount of R$ 2,227,254 thousand,

which was recorded in Fundos de Destinação Superávit - Previ. This Asset is updated on a monthly basis based on

the actuarial goal (INPC + 5% per year) and, since January 2007, has been used to offset any financial imbalance in

the ratio between the Unamortized Reserve and Advanced Amortization arising from the agreement entered into with

Previ in 1997, which granted supplementary benefits to the participants of Plano 1 who joined the Plan up to April

14,1967 and had not retired before that date.

f.2) Fundo de Utilização

The fund, composed of resources transferred from the Fundo de Destinação, can be used by the Bank for

reimbursement or as a reduction in future contributions, after fulfilling the requirements established by applicable law.

The Fundo de Utilização is updated by the actuarial goal (INPC + 5% p.a.).


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26 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES, LEGAL LIABILITIES - TAXES AND SOCIAL SECURITY

Contingent Assets

According to CPC 25 – Provisions, Contingent Liabilities and Contingent Assets, approved by CMN Resolution

3,823/09, contingent assets are not recognized in the financial statements

Labor Lawsuits

The Bank is defendant to labor lawsuits mainly filed by former employees or trade unions of the banking industry. The

allowance for probable losses represents various claims, such as: compensation, overtime, distortion of the working

day, additional function and representation amongst others.

Tax Lawsuits

The Bank, in spite of its conservative profile, is subject to tax inquiries (inspections conducted by the tax authorities),

which may eventually lead to tax assessments, such as: the composition of the calculation of the taxable profit for

income tax/social contribution (deductibility) and discussion regarding the incidence of taxes, when certain taxable

event occur. Most assessments are related to ISSQN, income tax, social contribution, PIS/COFINS, IOF and

Employer Social Security Contributions. As a guarantee for some of them, the Bank has pledged cash, bonds, real

estate or made judicial deposits when necessary, preventing the Bank to be included in restrictive registration, as well

as not to obstruct the semiannual renewal of its tax regularity certificate.

Civil Lawsuits

Civil lawsuits consist mainly of: lawsuits of customers and users of our network asking for material and moral

damages indemnity related to banking products and services and Economic Plans.

The indemnities for material and moral damages are based on consumer protection laws and are generally settled in

Special Civil Courts-JEC, whose value is limited to forty times the minimum wage.

The Bank is a defendant in proceedings seeking the payment of the difference between the actual inflation rate and

the inflation rate used for the adjustment of financial investments when economic plans were implemented in the late

1980’s and early 1990’s, known as the Bresser Plan, the Verão Plan and the Collor Plans I and II (or Economic

Plans).

Although the Bank complied with the laws and regulations in place at the time, these lawsuits have been recorded in

provisions, taking into consideration the claims where the Bank is the defendant and the outcome of loss is judged to

be probable, which is determined after the analysis of each demand, based on the current decision of the Superior

Court of Justice (STJ). Regarding disputes relating to economic plans, the Federal Supreme Court (STF) suspended

the prosecution of all cases on appeal, until the Court issues a definitive pronouncement on the right under litigation.

a) Provisions for Labor, Tax and Civil Claims

In compliance with the CMN Resolution 3,823/2009, the Bank makes allowance for labor, civil and tax lawsuits that

have risk of probable losses.

The estimates of outcome and financial effect are determined by the nature of the actions, the judgment of the

management of the entity through the opinion of legal counsel, complemented by complexity and similar transactions

expertise.


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85

Changes in the provisions for civil, tax and labor claims classified as probable


Labor lawsuits

Opening balance 1,891,793 2,419,801 2,143,463 2,959,477

Addition 464,040 128,498 836,305 710,177

Reversal of the provision -- (5,157) (131,626) (939,660)

Paid out (247,502) (250,574) (872,053) (597,064)


Closing balance 2,170,195 2,366,789 2,170,195 2,366,789

Tax lawsuits

Opening balance 168,804 169,543 174,611 184,579

Addition 12,052 17,690 49,254 92,419


Paid out (5,005) (4,550) (9,323) (8,409)


Closing balance 168,869 177,145 168,869 177,145

Civil lawsuits

Opening balance 5,923,282 5,069,886 5,435,157 4,511,015

Addition 1,999,920 485,076 4,083,002 2,827,561

Reversal of the provision (373,235) (63,035) (1,664,071) (1,513,969)

Paid out (267,245) (288,843) (836,747) (728,254)


Closing balance 7,387,070 5,170,485 7,387,070 5,170,485

Total Labor, Tax and Civil 9,726,134 7,714,419 9,726,134 7,714,419

Expected outflows of economic benefits

Labor Tax Civil

Up to 5 years 2,113,799 90,667 6,015,732

From 5 to 10 years 56,322 58,975 1,339,450

Over 10 years 74 19,227 31,888

Total 2,170,195 168,869 7,387,070

The scenario of unpredictability of the duration of proceedings, and the possibility of changes in the case law of the

courts, make values and the expected outflows of economic benefits uncertain.

b) Contingent Liabilities – Possible Loss

The lawsuits, tax and civil risks classified "possible loss" do not require provisions as per CPC 25 – Provisions,

Contingent Liabilities and Contingent Assets, approved by CMN Resolution 3,823/09. Lawsuits are labeled as

possible when the final outcome of the process is unclear but the probability of losing is judged to be less than more-

likely-than-not, but more than remote.

The amounts disclosed in the chart below represent the best estimated value that would be disbursed in the case of

an unfavorable judgment.


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The balances of contingent liabilities classified as possible loss

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Labor lawsuits 178,432 146,470 137,033

Tax lawsuits (1)

12,043,993 9,837,703 9,165,973

Civil lawsuits 2,550,190 2,781,458 2,973,176

Total 14,772,615 12,765,631 12,276,182

(1) The main contingencies originate from (i) assessment for the payment of INSS contributions on: salary bonus paid under the collective agreements in the period from 1995 to 2006, in the amount of R$ 2,698,530 thousand; public transport benefits and the use of private car by employees of Banco do Brasil, in the amount of R$ 241,612 thousand; and employee profit share payments corresponding to the period from April 2001 to October 2003, in the amount of R$ 74,121 thousand and (ii) notices of tax assessment made by the Treasuries of the Municipalities, claiming ISSQN totaling R$ 1,504,079 thousand.

c) Deposits in Guarantee

Deposits given in guarantee of contingencies

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Labor lawsuits 4,329,097 3,961,215 3,856,173

Tax lawsuits 6,345,868 6,021,356 5,704,963

Civil lawsuits 14,777,976 10,694,579 9,500,940

Total 25,452,941 20,677,150 19,062,076

d) Legal Obligations

The Bank has a record in Other Liabilities - Tax and Social Security the amount of R$ 13,827,868 thousand

(R$ 13,141,399 thousand on December 31, 2014 and R$ 12,936,428 thousand on September 30, 2014) relating to

the following action:

Judicial Proceeding: Income and Social Contribution Taxes

On January 29, 1998, the Bank filed for a writ of mandamus No. 1999.34.00.002278-3, distributed to the 16th Federal

Court of Federal District claiming full compensation of accumulated losses for income tax purposes and negative

basis for the calculation of Social Contribution on Net Income (CSLL). Since then, the Bank has been fully offsetting

the tax loss and the negative basis of social contribution against income tax and social contribution, and has made

judicial deposits for the full amount due (70% of the amount offset). These deposits prompted the 16th Vara da

Justiça Federal do Distrito Federal (Federal Court of Distrito Federal) to issue an order recognizing the suspension of

chargeability of these taxes until final judgment of the Bank's claim, based on article 151, item II, of the Código

Tributário Nacional (CTN). The case was dismissed in the first instance and an appeal brought by the Bank was

denied by the TRF of the 1st Region. The decision was challenged by extraordinary appeal filed by the Bank on

October 1, 2002. Today, the appeal is pending in the Federal Court of the 1st Region awaiting the judgment by the

Supreme Court of another Extraordinary Feature (RE No. 591,340), which was recognized by the Supreme Court as

setting a relevant judicial precedent.

The offsetting of tax loss carry forward and recoverable CSLL has resulted in the write-off of deferred tax credits,

observing the limitation of 30%.

Deferred taxes including corporate income tax (IRPJ) and social contribution on net income (CSLL) on the interest /

inflation restatements of judicial deposits are being offset with the tax credits resulting from the provision related to

that judicial deposit, in conformity with paragraph 2, item II, article 1 of CMN Resolution 3,059/2002, with no impact

on income.

Based on the hypothesis of a successful outcome to this lawsuit, as of September 2005 and January 2009, the Bank

would have consumed the entire stock of tax loss carry forward and recoverable social contribution, respectively.

Therefore, since October 2005 and February 2009, the amounts of IRPJ and CSLL, respectively, are being paid in

full. Moreover, there would be a reclassification of resources from the account used to record judicial deposits to that

of cash and cash equivalents. Tax credits for the escrow deposits (principal) would be written off against the

allowance of IRPJ and CSLL and would be reversed against income, the provision for tax risks related to the

restatement of the deposits amounts to R$ 7,256,195 thousand.


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If the Bank were unsuccessful in its lawsuit (situation in which the amounts deposited judicially would be converted

into income in favor of the Fazenda Nacional (Federal Tax Authority)), the portions of IRPJ tax credits on tax losses

and CSLL to offset would be reclassified to the representative asset account "IRPJ recoverable" and "CSLL

recoverable", respectively, that could be used since the accrual period starting October 2005 and February 2009,

observing the limitation of 30%. The taxes recoverable, which would result from the adjustments to prior year

Statements of Economic-Fiscal Information of Businesses, corresponds to R$ 5,390,572 thousand as of September

30, 2015 and updating by the Selic Rate results in a further recoverable amount of R$ 1,957,192 thousand. This sum

adjusts the provision for tax risks with respect to the updating of court deposits so that it will be sufficient to fully

cancel the risk of a loss.

e) The amounts related to this matter

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Judicial Deposits 16,138,929 15,418,982 15,204,014

Amount realized (70%) 7,817,011 7,817,011 7,817,011

Inflation correction 8,321,918 7,601,971 7,387,003

Legal Obligations - provision for lawsuit 13,827,868 13,141,399 12,936,428

Tax losses of IRPJ 3,002,033 3,002,033 3,002,033

CSLL negative bases/ CSLL recoverable 3,569,640 3,569,640 3,569,640

Provision for restatement of judicial deposit 7,256,195 6,569,726 6,364,755

27 - RISK AND CAPITAL MANAGEMENT

a) Risk Management Process

Banco do Brasil considers risks and capital management as one of the main vectors for the decision-making process.

The Institution has a process of identification of risks that will be part of the Institution's risks inventory, performed by

analysing the business segments that are explored, direct and indirectly, considering the Entities Related to Banco do

Brasil. The risks below are part of Banco do Brasil's Financial Conglomerate Relevant Risks Corporate Range:

a) Credit Risk; b) Counterparty Credit Risk; c) Concentration Risk; d) Liquidity Risk; e) Operational Risk; f) Market Risk; g) Banking Book Interest Rate Risk; h) Strategic Risk; i) Reputational Risk; j) Environmental Risk; k) Legal Risk; l) Participations Risk; m) Complementary Pension Fund Entities and Private Health Insurance Plan Operators for Employees Risk;

and n) Model Risk.

In the Bank, the collegiate risk management is performed completely segregated from the business units. Risk

management policies are approved by the Board of Directors. The Global Risk Superior Committee (CSRG), a forum

composed of the President and Vice-Presidents, is responsible for implementation and monitoring of these policies.

The guidelines issued by the CSRG are conducted by specific executive committees (credit, market, liquidity and

operational), which are groups formed by Directors.

Considering that the risk management covers all business segments operated by the Bank, the balances presented

in this note refer to the consolidated financial statements.

To learn more about the risk and capital management process in Banco do Brasil, visit the information available in the

Risk Management Report at the website bb.com.br/ri.


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Financial Instruments - Fair Value

Financial instruments recorded in balance sheet accounts, compared to fair value:

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014 Unrealized gain/loss, net of tax effects

Book value Fair value Book value Fair value Book value Fair value On income On shareholders’ equity


Assets

Short-term Interbank Investments 349,195,643 349,186,304 304,236,604 304,197,645 317,820,441 317,780,104 (9,339) (38,959) (40,337) (9,339) (38,959) (40,337)

Securities 244,225,257 244,382,786 220,441,991 224,153,475 208,712,690 209,907,905 (3,643,539) 2,260,649 (127,251) 157,529 3,711,484 1,195,215

Adjustment of securities available for sale (Note 7.a) -- -- -- -- -- -- (3,801,068) (1,450,835) (1,322,466) -- -- --

Adjustment of securities held to maturity (Note 7.a) -- -- -- -- -- -- 157,529 3,711,484 1,195,215 157,529 3,711,484 1,195,215


Loan operations 647,897,904 646,561,262 618,499,161 612,894,768 598,022,445 594,866,578 (1,336,642) (5,604,393) (3,155,867) (1,336,642) (5,604,393) (3,155,867)

Liabilities

Interbank deposits 42,404,092 43,885,563 30,968,746 30,908,215 28,530,991 28,978,962 (1,481,471) 60,531 (447,971) (1,481,471) 60,531 (447,971)

Time deposits 205,644,072 206,238,092 214,483,944 214,533,535 221,777,370 222,020,460 (594,020) (49,591) (243,090) (594,020) (49,591) (243,090)

Liabilities related to repurchase agreement 331,364,474 329,392,582 306,045,575 304,818,732 319,722,968 318,732,844 1,971,892 1,226,843 990,124 1,971,892 1,226,843 990,124

Borrowings and onlendings 128,165,714 128,511,022 115,046,935 115,033,365 108,698,205 108,834,851 (345,308) 13,570 (136,646) (345,308) 13,570 (136,646)


Other Liabilities 343,608,921 343,608,921 299,178,072 297,212,179 289,143,434 287,648,911 -- 1,965,893 1,494,523 -- 1,965,893 1,494,523

Unrealized gain/(loss), net of tax effects (5,438,427) (165,457) (1,666,515) (1,637,359) 1,285,378 (344,049)

Determination of Fair Value of Financial Instruments

Short-term interbank investments: The fair value was obtained by discounting future cash flows, using interest rates traded by the market in similar operations on the balance sheet

date.

Securities: Securities are accounted for by market value, as allowed for in Bacen Circular No. 3,068/2001, except for securities held to maturity. The fair value of the securities,

including those held to maturity, is obtained from rates practised in the market.

Loan operations: The fair value of fixed rate operations has been estimated through the future cash flow discount method, considering the interest rates utilized by the Bank when

originating similar operations at the balance sheet date. For operations that are remunerated by floating rates, the fair value was equivalent to the book value itself.


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Interbank deposits: The fair value has been calculated by the discount of the future cash flows using rates currently

applicable in the market for fixed rate deposits. In case of floating operations the maturities of which are less than 30

days, the book value was deemed approximately equivalent to the fair value.

Time deposits: The same criteria adopted for interbank deposits are utilized in the determination of the fair value.

Liabilities related to repurchase agreement: For operations at fixed rates, the fair value was determined calculating

the discount of the estimated cash flows adopting a discount rate equivalent to the rates applied in contracting similar

operations on the last trading day. For floating operations, book values have been deemed approximately equivalent

to market value.

Borrowing and onlendings: Such operations are exclusive to the Bank with no similar operations in the market. Given

their specific characteristics, the exclusive rates for each fund, the inexistence of an active market or similar traded

instruments, the fair values of such operations are considered equivalent to the book value.

Other liabilities: Fair values have been determined by the discounted cash flow method, which takes into account

interest rates offered in the market for obligations with similar maturities, risks and terms.

Other financial instruments: Included or not in the balance sheet, fair value is approximately equivalent to the

corresponding book value.

Derivatives: According to Bacen Circular No. 3,082/2002, derivatives are recorded at market value. The market value

of derivatives was estimated in accordance with internal pricing models, with the use of the rates disclosed for

transactions with similar terms and indices on the last business day of the period.

Source of information regarding assets and liabilities measured at fair value in the balance sheet

According to the source of information in the measurement at fair value, the assessment techniques used by the

Bank are classified as follows:

Level 1 – Prices used are quoted in active markets for identical financial instruments. A financial instrument is

considered quoted in an active market if the quoted prices are readily and regularly available and these prices

represent real market transactions which occur regularly on an arm's length basis.

Level 2 – Other available information, excepted that from Level 1, is used, in which the prices are quoted in non-

active markets or for similar assets and liabilities, or other available information is used or that can be corroborated by

information observed in the market to support the assessment of the assets and liabilities.

Level 3 – Information that is not available in the market is used in the definition of the fair value. If the market for the

financial instrument is not active, the Bank establishes the fair value using the valuation technique which takes into

account internal data that is consistent with the economic methodologies accepted for pricing of financial instruments.

Assets and liabilities measured at fair value in the balance sheet

Balance at Sep 30,


Assets 233,482,355 157,680,353 75,307,885 494,118




Liabilities 11,409,193 -- 11,409,193 --

Hedge funding 4,780,525 -- 4,780,525 --



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Balance at Dec 31,


Assets 208,507,774 129,548,096 78,430,915 528,763




Liabilities 7,634,262 -- 7,634,262 --

Hedge funding 4,191,103 -- 4,191,103 --


Balance at Sep 30,


Assets 195,895,815 119,799,551 75,550,671 545,593




Liabilities 6,805,554 -- 6,805,554 --

Hedge funding 3,887,367 -- 3,887,367 --


Changes on financial assets and liabilities measured at fair value in the balance sheet, classified as Level 3

3rd quarter/2015

Opening balance

Acquisitions Disposal/ maturity


Assets

Available-for-sale securities, measured by market value 519,912 -- (38,046) 12,252 494,118

3rd quarter/2014

Opening balance

Acquisitions Disposal/ maturity


Assets

Available-for-sale securities, measured by market value 550,754 545,593 (550,754) -- 545,593

Sensitivity analysis (CVM Instruction No. 475/2008)

Banco do Brasil manages its risks in a dynamic process, identifying, assessing, monitoring, and controlling market

risk exposure arising on its positions. In this context, the Bank takes into account the risk limits defined by the

Strategic Committees and possible scenarios, to act in a timely manner to reverse any adverse results.

In accordance with CMN Resolution No. 3,464/2007 and with Bacen Circular No. 3,354/2007, to manage more

efficiently its transactions exposed to market risks, Banco do Brasil separates its transactions, including derivative

financial instruments, as follows:

1) Trading Book: consisting of own positions held for trading or as a hedge for its trading portfolio, for which there is

an intention of trading prior to their contractual expiry, subject to normal market conditions and that do not have a

non-trading clause.

2) Banking Book: consisting of transactions not classified in the Trading Book whose feature is held to maturity.

The sensitivity analysis for all the operations with assets and liabilities of the Balance Sheet, in compliance with CVM

Instruction No. 475/2008 does not adequately reflect the market risk management process or the accounting

practices adopted by the Bank.

In order to determine the sensitivity of the Bank's capital to the impacts of market volatility (except Banco Votorantim

capital), simulations were performed with three likely scenarios, two of which assume adverse movements for the

Bank. The scenarios used are set out below:


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Scenario I: Likely situation, which reflects the perception of the Bank’s senior management, the scenario most likely

to occur for a 3-month horizon, considering macroeconomic factors and market information (BM&FBovespa, Anbima,

etc.). Assumptions: exchange rate real/dollar of R$ 3.95 and maintaining the Selic rate in 14.25% per annum based

on market conditions observed at September 30, 2015.

Scenario II: Possible situation. Assumptions adopted: parallel shock of 25.00% in the risk variables, based on market

conditions observed on September 30, 2015 considering the worst losses by risk factor and, therefore, ignoring the


Scenario III: Possible situation. Assumptions adopted: parallel shock of 50.00% in the risk variables, based on market

conditions observed on September 30, 2015 considering the worst losses by risk factor and thus ignoring the


The tables below summarize the results for the Trading Portfolio (Trading), excluding Banco Votorantim's positions,

composed of public and private securities, derivative financial instruments and funds obtained through repurchase

agreements:

Risk Factor Concept

Scenario I

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)


interest rates Maintenance -- Increase 4,632 Maintenance --


indices Increase 39 Decrease 2 Decrease 3


indices Maintenance -- Increase (782) Maintenance --

Exchange rates variation Risk of variation of foreign

exchange rates Decrease (1,907) Decrease (2,910) Decrease (6,478)

Risk Factor Concept

Scenario II

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)









Risk Factor Concept

Scenario III

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)










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For transactions classified in the Banking Book, appreciations or depreciations resulting from changes in interest

rates practiced in the market do not imply in a significant financial or accounting impact on the Bank's income as a

result of the portfolio composition which is principally: loan operations (consumer credit, agribusiness, working capital,

etc.); retail funding (demand, time, and savings deposits), and securities, which are recorded in the books using the

contracted interest rates. In addition, it should be pointed out that these portfolios, except the securities available for

sale, have as their principal characteristic the intention to hold the respective operations to maturity and, hence they

are not subject to the effects of fluctuating interest rates, or the fact that such transactions are naturally related to

other instruments (natural hedge), hence minimizing the impacts of a stress scenario.

The tables below show a summary of the Trading Portfolio (Trading) and Non Trading (Banking) for the financial and

non-financial entities controlled by the bank, excluding Banco Votorantim:

Risk Factor Concept

Scenario I

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)


interest rates Maintenance -- Increase (5,007,316) Maintenance --

TR


Decrease (126,862) Increase 3,354,120 Decrease (286,059)

TBF Decrease (7,353) Increase 2,537 Decrease (8,252)

TJLP Decrease 853 Increase (9,270) Maintenance --


IGP-M


Maintenance -- Increase (33,626) Maintenance --

IGP-DI Maintenance -- Increase (183) Maintenance --

INPC Maintenance -- Increase (107,864) Maintenance --

IPCA Maintenance -- Increase (534,840) Maintenance --


currency indices Increase 1,470,937 Increase 786,498 Increase 466,175


exchange rates Decrease 10,307 Decrease (22,884) Decrease (47,818)

Risk Factor Concept

Scenario II

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)



TR






IGP-M





IPCA index Increase (995.327) Increase (798,715) Increase (740,788)


currency indices Decrease (1,802,430) Decrease (851,179) Decrease (520,546)


exchange rates Increase (447,019) Decrease (468,260) Decrease (574,524)


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Risk Factor Concept

Scenario III

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)



TR






IGP-M





IPCA index Increase (1,864,766) Increase (1,502,484) Increase (1,393,497)


currency indices Decrease (3,760,981) Decrease (1,753,830) Decrease (1,069,328)


exchange rates Increase (894,037) Decrease (936,521) Decrease (1,149,048)

The scenarios used for preparing the framework for sensitivity analysis must use situations of deterioration of at least

25% and 50% of the variable risks, on an individuallized basis, as determined by CVM Instruction No. 475/2008.

Thus, the combined analysis of the results does not reflect real expectations, for example, simultaneous shocks of

increase in the prefixed interest rate and reduction of the TR rate are not consistent from the macroeconomic

perspective.

The derivative transactions classified in the Banking Book, do not represent a relevant market risk to Banco do Brasil,

as these positions are usually originated with the following objectives:

Swapping the index of funding and lending transactions performed to meet customer needs;

Hedging market risk, the purpose and effectiveness of which are described in Note 7.d. Also in this transaction, the interest and exchange rate variations have no effects on the Bank's income.

On September 30, 2015, the Banco do Brasil did not enter into any transaction classified as an exotic derivative, as

described in CVM Instruction No. 475/2008 - Attachment II.

Interest in Banco Votorantim

Simulations were also made with three possible scenarios, two of which assume adverse movements, as follows:

Scenario I: Likely situation, which reflects the perception of the Banco Votorantim’s senior management in the

scenario most likely to occur. Assumptions adopted: shock of 1.0% in the exchange rate real/dollar, from September

30, 2015, and parallel shock of 0.10% in the interest rate prefixed curve.

Scenario II: Assumptions adopted: parallel shock of 25% in the risk variables, based on market conditions observed

on September 30, 2015 and considering the worst losses by risk factor and, therefore, ignoring the dynamics of


Scenario III: Assumptions adopted: parallel shock of 50% in the risk variables, based on market conditions observed

on September 30, 2015 and considering the worst losses by risk factor and therefore ignoring the dynamics of



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The tables below present the results from the exposure of the Bank, via its equity interest, to the trading portfolio of

Banco Votorantim:

Risk Factor Concept

Scenario I

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)


interest rates Increase 33 Increase (32) Increase (419)


currency rates Increase (529) Increase (816) Increase (1,013)

Foreign exchange fluctuation Risk of variation of foreign

exchange rates Increase (4,377) Increase (586) Increase (1,947)

Price Indexes Risk of variation of

inflation indices Increase (834) Increase (742) Increase (330)


Risk Factor Concept

Scenario II

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)


interest rates Decrease -- Increase (95) Increase (6,559)




exchange rates Increase (105,372) Increase (20,368) Increase (107,159)


inflation indices Increase (13,168) Increase (8,496) Increase (3,086)


Risk Factor Concept

Scenario III

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)


interest rates Decrease -- Increase -- Increase (11,291)




exchange rates Increase (187,134) Increase (45,082) Increase (216,525)




The tables below present the results from the exposure of the Bank, via its equity interest, to the trading and non-

trading book of Banco Votorantim:

Risk Factor Concept

Scenario I

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)






exchange rates Increase (1,441) Increase 1,172 Increase 320

TJLP Risk of variation of TJLP Increase 552 Increase 959 Increase 699

TR/TBF Risk of variation of TR/TBF Increase 14 Increase 64 Increase 80


inflation indices Increase (836) Increase (580) Increase (308)



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Risk Factor Concept

Scenario II

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)






exchange rates Increase (44,801) Decrease (71,897) Increase (60,443)






Risk Factor Concept

Scenario III

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)

Variation of rates

Income/ (expense)






exchange rates Increase (84,786) Decrease (114,607) Increase (138,185)






b) Capital Management

On June 30, 2011, aligned with Pillar II of Basel, the Brazilian regulator, Banco Central do Brasil (Bacen), issued the

Conselho Monetário Nacional (CMN) Resolution No. 3,988, which established the requirement for financial

institutions to implement a capital management framework. Applying CMN Resolution, Banco do Brasil defined as

part of its structure Accounting, Risk Management, Controlling and Finance Units. Furthermore, in line with the CMN

Resolution, the Board of Directors appointed the Controller as responsible for Capital Management within Banco

Central do Brasil.

Banco do Brasil has approaches that enable the identification and evaluation of significant risks incurred, including

those not covered by the Minimum Referential Equity Required (MRER) related to the Pillar I risks. Its policies and

strategies, as well as the capital plan, enable the maintenance of capital at a consistent level given the risks faced by

the institution. Stress tests are performed on a monthly basis and their impacts are assessed from a capital

perspective. Capital adequacy management reports are distributed to corporate units and to strategic committees,

which provide support to the decision making process of the Senior Management of the Bank.

The CMN Resolution No. 3,988/2011 also established the need for an Internal Capital Adequacy Assessment

Process (ICAAP), which was implemented by Banco do Brasil starting June 30, 2013. The responsibility for

coordinating ICAAP was assigned to the Bank’s Risk Management Unit. Meanwhile, the Internal Controls Unit, an

independent area segregated from the capital management structure, is responsible for the validation of ICAAP.

Finally, Internal Audit holds the institutional responsibility for annually evaluating the process of capital management.

To learn more about the capital management at Banco do Brasil, visit the website bb.com.br/ri.


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Capital Adequacy Ratio

The Capital Adequacy Ratio was determined according to the criteria established by CMN Resolutions No.

4,192/2013 and No. 4,193/2013, which refer to the calculation of the Referential Equity (RE) and the Minimum

Referential Equity Required (MRER) in relation to Risk Weighted Assets (RWA), respectively, considering the

exposure to Banco Votorantim under the Equity Method (MEP) as determined by Bacen.

On October 1, 2013, Brazil adopted a set of legislation that implemented the recommendations of the Basel

Committee on Banking Supervision regarding the capital structure of financial institutions, known as Basel III. The

new rules adopted addressed the following issues:

I - new methodology for calculating regulatory capital, which continues to be divided into Tier I and II. The Tier I

consists of the Common Equity Tier I Capital – CET1 (net of Regulatory Adjustments) and Additional Tier I Capital

(AT1);

II - new methodology for calculating the capital required to be maintained, adopting minimum requirements for

Referential Equity, Tier I and Common Equity Tier I Capital (CET1), and the introduction of the Additional CET1.

From January 1, 2015, the percentage of deduction of prudential adjustments listed below increased to 40%:

goodwill;

intangible assets constituted after October 1, 2013;

actuarial assets related to defined benefit pension funds net of deferred tax liabilities;

non-controlling interests;

investments, directly or indirectly, above than 10% of the capital of unconsolidated entities similar to financial institutions, and insurance companies, reinsurance companies, capitalization companies and open pension entities (significant investments);

tax credits resulting from temporary differences that rely on the generation of future taxable profits or revenues for their realization;

tax credits resulting from tax loss of excess depreciation;

tax credits resulting from tax losses and negative base for social contribution on net income.

According to CMN Resolution No. 4,192/2013, these deductions will be gradually implemented at 20% per year, from

2014 to 2018, with the exception of deferred assets and funding instruments issued by institutions authorized to

operate by Banco Central do Brasil (Bacen) which have been fully deducted since October 2013.

On August 28, 2014, the Hybrid Instrument in the amount of R$ 8,100,000 thousand, was authorized by Banco

Central do Brasil to compose the Common Equity Tier 1 Capital of the Bank.

According to Bacen Resolution No. 4,192/2013 and No. 4,193/2013, from January 2015, the calculation of the

Regulatory Equity (RE) and the amount of Risk-Weighted Assets (RWA) should be elaborated based on Prudential

Conglomerate.


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Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


RE - Referential equity 136,633,692 126,588,485 123,713,046

Tier I 97,961,673 89,538,218 88,810,290

Common Equity Tier 1 Capital (CET1) 68,070,868 71,035,684 71,554,346


Instrument Qualifying as CET1 8,100,000 8,100,000 8,100,000

Regulatory adjustments (13,396,704) (7,739,780) (8,034,606)

Additional Tier 1 Capital (AT1) 29,890,805 18,502,534 17,255,944

Hybrid instruments authorized in accordance with CMN Resolution No. 4,192/2013

24,131,115 16,132,770 14,886,180

Hybrid instruments authorized in accordance with regulations preceding the CMN Resolution No. º 4,192/2013

(1)

5,759,690 2,369,764 2,369,764

Tier II 38,672,019 37,050,267 34,902,756

Subordinated Debt Qualifying as Capital 38,674,964 37,065,165 34,936,894

Subordinated Debt authorized in accordance with CMN Resolution No. 4,192/2013 - Financial Bills

5,569,004 3,959,773 2,307,987

Subordinated Debt authorized in accordance with regulations preceding the CMN Resolution No. 4,192/2013

33,105,960 33,105,392 32,628,907

Funds obtained from the FCO (2)

22,047,638 20,467,309 19,990,824

Funds raised in Financial Bills and CD (3)

11,058,322 12,638,083 12,638,083

Deduction from Tier II (2,945) (14,898) (34,138)

Funding instruments issued by financial institution (2,945) (14,898) (34,138)

Risk Weighted Assets (RWA) 843,590,334 785,973,522 771,393,820

Credit Risk (RWACPAD) 782,969,960 734,716,021 720,363,896

Market Risk (RWAMPAD) 24,231,284 11,545,497 11,317,920

Operational Risk (RWAOPAD) 36,389,090 39,712,004 39,712,004

Minimum Referential Equity Requirements (4)

92,794,937 86,457,087 84,853,320

Margin on the Minimum Referential Equity Required 43,838,755 40,131,398 38,859,726

Tier I Ratio (Tier I / RWA) 11.61% 11.39% 11.51%

Common Equity Tier 1 Capital Ratio (CET1 / RWA) 8.07% 9.04% 9.28%

Capital Adequacy Ratio (RE / RWA) 16.20% 16.11% 16.04%

(1) On 09.30.2015, based on the orientation of Bacen, it was considered the balance of the hybrid capital and debt instrument authorized by Bacen to compose the Tier 1 Capital of the Referential Equity according CMN Resolution 3,444/2007 and do not meet the relevant entry criteria, also related with the orientation established on article 28, sections I to X of CMN Resolution 4,192/2013.

(2) According to CMN Resolution No. 4,192/2013, balances of the FCO are eligible to compose the RE.

(3) On september 30, 2015, it was considered the balance of subordinated debt instruments that composed the RE in December 31, 2012, applying on it the decay of 30%, as determined by CMN Resolution No. 4,192/2013.

(4) According to CMN Resolution No. 4,193/2013, corresponds to the application of the "F" factor to the amount of RWA, where "F" equals: 11%, from October 1, 2013 to December 31, 2015; 9.875% from January 1, 2016 to December 31, 2016; 9.25%, from January 1, 2017 to December 31, 2017; 8.625% from January 1, 2018 to December 31, 2018 and 8%, from January 1, 2019.


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Regulatory Adjustments deducted from CET1:

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014


Funding instruments issued by financial institutions (1) (2)

(3,874,027) (3,714,071) (3,775,618)

Tax credits resulting from temporary differences that rely on the generation of future taxable profits or revenues for its realization (amount above 10% threshold)

(3)

(3,187,264) -- --

Intangible assets constituted after October 2013 (3)

(2,148,484) (1,066,295) (758,059)

Actuarial assets related to defined benefit pension funds net of deferred tax liabilities

(3) (4)

(1,301,806) (1,192,027) (1,628,046)

Goodwill (3) (5)

(1,154,659) (715,281) (757,830)

Significant investments and tax credits resulting from temporary differences that rely on the generation of future taxable profits or revenues for their realization (amount exceeding the 15% threshold)

(3)

(635,389) (556,174) (640,823)

Non-controlling interests (3)

(508,162) (171,050) (148,610)

Tax credits resulting from tax losses and negative base for social contribution on net income

(3)

(502,401) (255,318) (250,932)

Tax credits resulting from tax loss of excess depreciation (3)

(65,052) (37,922) (39,392)

Deferred assets (2)

(19,460) (31,642) (35,296)

Total (13,396,704) (7,739,780) (8,034,606)

(1) Refers to the investment in Banco Votorantim.

(2) Regulatory Adjustments that are being fully computed since October, 2013, in accordance with CMN Resolution No. 4,192/2013.

(3) Regulatory Adjustments subject to phase-in, according to the CMN Resolution No. 4,192/2013.

(4) See notes 25.e – Benefits for Employees and 23.d - Taxes.

(5) The base value for calculating the goodwill is composed of: R$ 777,095 thousand in the investment line and R$ 2,109,553 thousand in the intangible assets line. The value in Intangible assets refers to the goodwill paid for the acquisition of Banco Nossa Caixa, merged in November/2009.

c) Fixed asset ratio

From 2015, the Fixed Asset Ratio is required only for the Prudential Conglomerate, totaling 15.27% on september 30,

2015, and it was calculated in compliance with CMN Resolutions No. 4,192/2013 and No. 2,669/1999.

In 2014 the Fixed Asset Ratio was calculated based on the Financial Conglomerate, amounting 22.18% on

December 31, 2014 and 21.97% on september 30, 2014.

28 - STATEMENT OF COMPREHENSIVE INCOME


2015 Jan 1 to Sep 30,

2014

Net income presented in the Statement of Income 3,014,754 2,722,146 11,621,215 8,287,336

Other comprehensive income

Accumulated other comprehensive income (Note 22.g) (1,648,356) (362,342) (6,227,130) (6,746,349)

Banco do Brasil (1,417,973) (322,469) (5,984,430) (6,849,794)

Subsidiaries abroad (22,606) (3,637) (27,082) 1,661

Associates and subsidiaries (207,777) (36,236) (215,618) 101,784

Income and social contribution taxes related to unrealized (gains) / losses (Note 22.g)

385,463 85,365 1,995,044 2,934,233

Other comprehensive income, net of income and social contribution taxes

(1,262,893) (276,977) (4,232,086) (3,812,116)

Comprehensive income 1,751,861 2,445,169 7,389,129 4,475,220


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29 - OTHER INFORMATION

a) Distribution of Dividends and Interest on Own Capital

During a meeting held on March 16, 2015, the Board of Directors approved the setting of the payout rate equivalent

to the minimum of 40% of net income, for the year 2015, fulfilling the policy for payment of dividends yield and/or

interest on own capital on a quarterly basis, pursuant to art. 45 of the Bank's By-Laws.

b) Banco Postal

Since January 01, 2012, the Bank has had access to the Correios (Brazilian Postal and Telegraph Corporation)

network, with about 6.3 thousand service points located in 95% of Brazilian municipalities. Through this investment,

the Bank realized its strategic plan of increasing its service points to attend all the Brazilian municipalities.

On November 22, 2013, the Bank signed a Memorandum of Understanding with Correios, in order to analyze the

feasibility of establishing strategic partnerships relating to the Banco Postal (Postal Bank).

On February 27, 2014, continuing this analysis of Banco Postal (Postal Bank), the Bank and Correios signed an

"Agreement of the general terms and conditions of association” (Agreement). On March 05, 2014 the agreement was

submitted to the Conselho Administrativo de Defesa Econômica (CADE).

On May 06, 2014, CADE published, in the Diário Oficial da União (Oficial Gazette), the minutes of the 42th Ordinary

Session of the Judgment, with the final decision that approved the transaction, without any restrictions.

The agreement will expand the portfolio of products and services offered by the post office network.

The studies on the perpetuation of the Partnership of Banco Postal (Postal Bank) are still in progress between

partners and, once completed, they must be submitted to the appreciation to their respective regulatory, supervisory

and regulatory agencies, under the applicable law.

c) Investiment Funds Management

Funds managed by BB Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A.:

Numbers of Funds/Portfolios (in Units) Balance


Managed funds 613 600 609 602,395,345 554,723,895 555,754,978

Investment Funds 605 592 601 589,031,239 542,399,347 543,877,326

Managed Portfolios 8 8 8 13,364,106 12,324,548 11,877,652

d) Details in relation to overseas branches, subsidiaries and associates

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Assets

BB Group 110,966,077 73,366,070 58,747,995

Third parties 111,770,444 88,366,379 83,287,598

TOTAL ASSETS 222,736,521 161,732,449 142,035,593

Liabilities

BB Group 33,412,350 29,265,667 17,525,790

Third parties 182,155,325 126,692,026 119,060,696


Attributable to parent company 7,168,846 5,774,756 5,449,107

TOTAL LIABILITIES 222,736,521 161,732,449 142,035,593


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Net Income (127,207) 79,673 (125,816) 459,606

Attributable to parent company (127,207) 79,673 (125,816) 459,606

e) Consortium funds

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Monthly forecast of Purchase Pool Members receivable funds 206,344 187,700 190,385

Obligations of the Groups due to contributions 8,483,345 7,974,156 8,426,500

Purchase Pool Members - assets to be delivered 7,599,042 7,184,003 7,631,739

(In Units)

Quantity of groups managed 561 551 539

Quantity of active purchase pool members 623,028 565,051 557,262

Quantity of assets deliverable to members (drawn or winning offer) 59,731 51,769 48,044


2015 Jan 1 to Sep 30,

2014

Quantity of assets (in units) delivered in the period 24,810 21,617 70,786 58,508

f) Assignment of Employees to Outside Agencies

Federal government assignments are regulated by Law 10,470/2002 and Decree No. 4,050/2001.



Ceded(1)

Cost in the Period


Ceded(1)

Cost in the Period


Ceded (1)

Cost in the Period

With costs for the Bank

Labor unions 209 8,769 209 26,823 218 24,448

Other organizations/entities 2 179 2 571 2 542

Subsidiary and associated companies 2 326 2 944 2 843

Without cost to the Bank

Federal, state and municipal governments 275 -- 275 -- 295 --

External organizations (Cassi, FBB, Previ and Economus)

581 -- 581 -- 600 --

Employee entities 72 -- 72 -- 86 --

Subsidiary and associated companies 569 -- 569 -- 487 --

Total 1,710 9,274 1,710 28,338 1,690 25,833

(1) Balance on the last day of the period.


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g) Remuneration of Employees and Managers

Monthly wages paid to employees and Directors of the Banco do Brasil:

Sep 30, 2015 Dec 31, 2014 Sep 30, 2014

Lowest salary 2,449.98 2,227.26 2,227.26

Highest salary 40,992.27 37,265.70 37,265.70

Average salary 6,705.66 6,363.72 6,336.50

Management

President 65,196.08 62,388.59 62,388.59

Vice-President 58,355.29 55,842.38 55,842.38

Director 49,457.30 47,327.56 47,327.56

Council members

Fiscal Council 5,638.43 5,395.63 5,395.63

Board of Directors 5,638.43 5,395.63 5,395.63

Audit Committee - Member 44,511.57 42,594.80 42,594.80

h) Insurance Policy of Assets

Despite the reduced level of risk to which its assets are subject, the Bank contracts insurance cover for its assets in

amounts considered to be sufficient to cover any losses.

Insurance contracted by the Bank in force on September 30, 2015

Covered Risks Amounts Covered Value of the Premium

Property insurance for the relevant fixed assets 1,123,599 6,341

Life insurance and collective personal accident insurance for the Executive Board (1)

885 3

Total 1,124,484 6,344

(1) Refers to individual coverage for members of the Executive Board.

i) Law 12,973 (Provisional Measure No. 627/2013 converted into law)

The provisional measure 627/2013 was converted into the Law 12,973 on May 13, 2014 and amends the federal tax

law on corporate income tax (IRPJ), social contribution on net income (CSLL), Social Integration Program/Public

Servant Fund Program (PIS/Pasep) and Contribution to Social Security Financing – (Cofins) and it aims to:

repeal the transitional tax system (RTT);

alter the rules about tax on foreign profits; and

regulate the tax aspects relating to the accounting criteria and procedures established by the laws 11,638/2007 and 11,941/2009, which aimed to align the Brazilian accounting standards with the international standards.

For a more comprehensive analysis of the impacts, the Bank will wait for the regulation of Receita Federal do Brasil,

in accordance with the Law 12,973/2014. Nevertheless, according to preliminary studies and under the current text of

the aforementioned Law and its normative instructions, significant impacts on the financial statements of the Bank are

not expected.

j) Law 13,097 (Provisional Measure No. 656/2014 converted into law)

The provisional measure 656/2014 was converted into the Law 13,097 on January 20, 2015 and changed the values

of limits for the purposes of deductibility of losses on the receipt of credit past due since October 8, 2014 (date of

publication of the Provisional Measure). For operations past due since October 7, 2014, the previous limits prevail.


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102

k) Law 13,169 (Provisional Measure No. 675/2015 converted into law)

The provisional measure 675/2015 was converted into the Law 13,169 on October 6, 2015 and increased the rate of

the Social Contribution on Net Income (CSLL) applicable to financial institutions, legal entities of private insurance

and capitalization from 15% to 20% for the period from September 1st, 2015 to December 31, 2018. The law also

establishes the return of the social contribution rate to 15% for the periods beginning on or after January 1, 2019.

l) Provisional Measure No. 694/2015

The provisional measure 694/2015, from September 30, 2015, brings a new limit for the payment of interest on own

capital (JCP), and the value of the variation of TJLP or 5% per year, whichever is less, should be considered in the

calculation. In addition, the percentage of income tax withholding at the time of payment or credit of JCP to the

beneficiary was raised to 18%. The Provisional Measure devices that deals with this issue take effect for the periods

beginning on or after January 1, 2016.

m) Retirement Incentive Plan - PAI

In accordance with the 4th paragraph of article 157 from Law 6,404/1976, the Incentive Retirement Plan - PAI was

released in June 2015 for employees with the necessary conditions to retire by the Instituto Nacional de Seguridade

Social – INSS or apply for early retirement to the Caixa de Previdência dos Funcionários do Banco do Brasil (Previ).

The plan was closed on August 14, 2015 and it had 4,992 members, with the following impact:

expenses for incentive payments in 2015 in the amount of R$ 372.5 million;


Independent Auditors’ Report on the

Interim Financial Information Period ended at September 30, 2015 (a free translation of the original report in Portuguese containing

financial statements prepared in accordance with accounting

practices adopted in Brazil applicable to institutions authorized

to operate by the Brazilian Central Bank)

2


SBS - Qd. 02 - Bl. Q - Lote 03 - Salas 708 a 711

Edifício João Carlos Saad


Caixa Postal 8587


Central Tel 55 (61) 2104-2400

Fax 55 (61) 2104-2406

Internet www.kpmg.com.br

KPMG Auditores Independentes, uma sociedade simples brasileira e

firma-membro da rede KPMG de firmas-membro independentes e

afiliadas à KPMG International Cooperative (“KPMG International”),

uma entidade suíça.

KPMG Auditores Independentes, a Brazilian entity and a member

firm of the KPMG network of independent member firms affiliated with

KPMG International Cooperative (“KPMG International”), a Swiss

entity.

Report of Independent Auditors for Financial Statements

To

The Board of Directors, Shareholders and Management


Brasília - DF

Introducion

We have reviewed the statement of financial position of Banco do Brasil S.A. (“Banco do

Brasil”) as at September 30, 2015 and the related statements of income, changes in shareholders'

equity and cash flows, for the quarter and the period of nine-month then ended, as well as the

summary of significant accounting policies and other explanatory notes.

Management is responsible for the preparation and fair presentation of this interim financial

information in accordance with accounting practices adopted in Brazil, applicable to financial

institutions authorized to operate by the Central Bank of Brazil. Our responsibility is to express a

conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with Brazilian and International Standards on Review of

Interim Financial Information (NBC TR 2410 - Revisão de Informações Intermediárias

Executada pelo Auditor da Entidade and ISRE 2410 - Review of Interim Financial Information

Performed by the Independent Auditor of the Entity, respectively). A review of interim financial

information consists of making inquiries, primarily of persons responsible for financial and

accounting matters, and applying analytical and other review procedures. A review is

substantially less in scope than an audit conducted in accordance with auditing standards and

consequently does not enable us to obtain assurance that we would become aware of all

significant matters that might be identified in an audit. Therefore, we do not express an audit

opinion.

Conclusion

Based on our review, we are not aware of any facts that would lead us to believe that the interim

financial information mentioned above were not prepared, in all material aspects, in accordance

with accounting practices adopted in Brazil applicable to financial institutions authorized to

operate by the Central Bank of Brazil.

Other matters

Interim statement of value added

We also reviewed the interim statement of value added (DVA) for nine-month period ended as at

September 30, 2015, which was prepared under Banco do Brasil’s Management responsibility

and which presentation is required under the rules issued by the Securities and Exchange

Commission of Brazil (CVM). This statement was subject to the same review procedures

described above and based on our review, we are not aware of any facts that would lead us to

believe it was not prepared, in all material respects, consistently with the interim financial

information

3






Accountant CRC 1SP206103/O-4


3rd

quarter 2015

106

MEMBERS OF MANAGEMENT PRESIDENT Alexandre Corrêa Abreu VICE-PRESIDENTS Antonio Mauricio Maurano Antônio Valmir Campelo Bezerra César Augusto Rabello Borges Geraldo Afonso Dezena da Silva José Mauricio Pereira Coelho Osmar Fernandes Dias Paulo Roberto Lopes Ricci Raul Francisco Moreira Walter Malieni Junior DIRECTORS Adriano Meira Ricci Antonio Pedro da Silva Machado Carlos Alberto Araujo Netto Carlos Célio de Andrade Santos Carlos Roberto Cafareli Clenio Severio Teribele Edmar José Casalatina Edson Rogério da Costa Eduardo Cesar Pasa Gustavo de Faria Barros Hamilton Rodrigues da Silva Ilton Luís Schwaab Ives Cézar Fülber José Carlos Reis da Silva Leonardo Silva de Loyola Reis Luís Aniceto Silva Cavicchioli Luiz Cláudio Ligabue Luiz Henrique Guimarães de Freitas Márcio Luiz Moral Marco Antonio Ascoli Mastroeni Nilson Martiniano Moreira Rogério Magno Panca Sandro Kohler Marcondes Simão Luiz Kovalski Tarcísio Hübner Wilsa Figueiredo

BOARD OF DIRECTORS Adriana Queiroz de Carvalho Alexandre Corrêa Abreu Beny Parnes Juliana Públio Donato de Oliveira Luiz Serafim Spinola Santos Manoel Carlos de Castro Pires Tarcísio José Massote de Godoy FISCAL COUNCIL Aldo César Martins Braido Giorgio Bampi Marcos Machado Guimarães Mauricio Graccho de Severiano Cardoso Paulo José dos Reis Souza AUDIT COMMITEE Antonio Carlos Correia Egidio Otmar Ames Elvio Lima Gaspar Luiz Serafim Spinola Santos ACCOUNTING DEPT. Eduardo Cesar Pasa General Accountant Accountant CRC-DF 017601/O-5 CPF 541.035.920-87 Daniel André Stieler Accountant CRC-DF 013931/O-2 CPF 391.145.110-53

Members of Management