1 conference call 2006 results february 14, 2007
TRANSCRIPT
![Page 1: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/1.jpg)
1
Conference Call
2006 Results
February 14, 2007
![Page 2: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/2.jpg)
2
Banco Itaú Holding Financeira S.A.
Highlights
2. Effects of BankBoston (BKB) acquisition in Brazil, Chile and Uruguay• Payment – Capital increase in Itaú (R$ 5,954 million), transferring common and preferred shares to
Bank of America (7.44% of the total capital of Itaú).• Effects of BKB acquisition amounted R$ 2,171 million, net of tax effects.
1.Results: • Q4/06: Recurring Net Income of R$ 1,628 million, 2.3% increase compared to Q3/06; annualized
ROE of 28.8%. (Full Year 2006: Net Income of R$ 6,195 million and ROE of 32.6%).• Q4/06: Net Income of R$ 1,280 million (Year 2006: Net Income of R$ 4,309)
3. 38.2% growth in credit portfolio during 2006, including BKB, and of 24.7%, not considering BKB.
• Vehicles: 64.7% in 2006 and of 14.3% in Q4/06.• Small and Medium Sized Companies: 59.9% (including BKB), 22.4% (excluding BKB) and 3.5% in
Q4/06.• 5.3% delinquency ratio as of December 31, 2006, stable Q-Q.
.
![Page 3: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/3.jpg)
3
Banco Itaú Holding Financeira S.A.
Non-recurring Effects – After Tax
R$ Million
4th Q/06 3rd Q/06 2006 2005Recurring Net Income 1,628 1,592 6,195 5,443 Non-recurring effects 1 60 286 429 (192) Result of BKB Brazil 2 - (43) (145) - Net Income without BKB Brazil acquisition effects 1,687 1,835 6,480 5,251 BKB Acquisition effects (408) (1.764) (2,171) - Net Income 1,280 71 4,309 5,251
1 For more details, see page 4 of Management Discussion and Analysis Report.
2 For more details, see Notes to Financial Statements 2a and 21i.
![Page 4: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/4.jpg)
4
Banco Itaú Holding Financeira S.A.
Highlights 4th Q/06 3rd Q/06 Variation 2006 2005 Variation
Net Income 1,280 71 1,702.1% 4,309 5,251 -17.9%
Recurring Net Income 1,628 1,592 2.3% 6,195 5,443 13.8%
Recurring Net Income per share (R$) 1.38 1.39 -1.2% 5.44 4.84 12.4%
Stockholders’ Equity 23,564 21,693 8.6% 23,564 15,560 51.4%
Recurring ROE / Average Equity annualized (%) 28.8% 32.5% -370 b.p. 32.6% 36.6% -400 b.p.
Market Capitalization 1 92,270 76,453 20.7% 92,270 61,935 49.0%
Solvency Ratio (%) 17.2% 16.8% 40 b.p. 17.2% 17.0% 30 b.p.
Efficiency Ratio 2 (%) 47.4% 49.9% -250 b.p. 47.6% 50.3% -270 b.p.
Delinquency Ratio (%) 5.3% 5.2% 0.1 p.p.
R$ Million (Except where indicated)
1 Based on the average quotation of the last trading day in the period. It includes the number of shares related to BKB Chile and Uruguay acquisition.
2
![Page 5: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/5.jpg)
5
Banco Itaú Holding Financeira S.A.
Itaú Holding Pro Forma
4th Q/06 3rd Q/06 Variation 2006 2005 Variation
Managerial Financial Margin 4,747 4,328 9.7% 16,958 13,272 27.8%
• Banking Operations 4,191 4,043 3.7% 15,354 12,016 27.8%
• Treasury 429 149 188.1% 1,056 600 76.0%
• Management of Foreign Exchange Risk from Investments Abroad 127 137 -6.9% 547 656 -16.5%
Result from Loan Losses (1,475) (1,350) 9.2% (5,302) (2,840) 86.7%
Banking Service fees 2,456 2,286 7.4% 9,097 7,738 17.6%
Non Interest Expenses (3,371) (3,246) 3.9% (12,346) (10,459) 18.0%
Recurring Net Income 1,628 1,592 2.3% 6,195 5,443 13.8%
Average Stockholders Equity 22,629 19,624 15.3% 18,998 14,883 27.6%
ROE annualized (%) 28.8% 32.5% -370 b.p. 32.6% 36.6% -400 b.p.
R$ Million (Except where indicated)
![Page 6: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/6.jpg)
6
Banco Itaú Holding Financeira S.A.
Credit Operation by Client Type
1 Rural and Mortgage Loans – Loans linked with the balances of Demand and Savings Deposits.
With BKB Variation
Dec 31, 06 Sep 30, 06 Dec - SepDec/06 – Dec/05
Individuals 40,487 37,571 7.8% 42.2%
• Credit Cards 9,188 7,976 15.2% 27.3%
• Personal Credit 13,284 13,829 -3.9% 28.7%
• Vehicles 18,014 15,766 14.3% 64.7%
Company Loans 47,263 46,558 1.5% 36.0%
• Small and Medium Sized 20,446 19,762 3.5% 59.9%
• Corporate 26,816 26,796 0.1% 22.1%
Mandatory Credit 1 5,898 5,740 2.8% 29.9%
Total Loans 93,648 89,869 4.2% 38.2%
R$ Million (Except where indicated)
Not considering BKB contribution, total loans reached R$ 84,497 million, an increase of 24.7% in 2006.
![Page 7: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/7.jpg)
7
Banco Itaú Holding Financeira S.A.
Credit Portfolio Break down
34.3% 36.4% 38.9% 41.5% 42.0% 42.8% 45.5% 41.8% 43.2%
18.2% 18.4% 19.0% 18.7% 18.9% 19.1% 18.8% 22.0% 21.8%8.5% 7.6% 7.2% 6.7% 6.3% 6.2% 6.4% 6.3%
39.0% 37.6% 34.8% 32.9% 32.4% 31.9% 29.6% 29.8% 28.6%
6.9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06
Individuals Small and Medium-Sized CompaniesMandatory Loans Corporate
![Page 8: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/8.jpg)
8
Banco Itaú Holding Financeira S.A.
Delinquency and Coverage Ratios
Coverage Ratio (*)
168%164%
192%203%220%
0%
50%
100%
150%
200%
250%
Dec-04 Jun-05 Dec-05 Jun-06 Dec-06
(*) Provision for loan losses / Credits overdue for more than 60 days, which are not accrued.
Delinquency Ratios
Delinquency Ratio - GlobalDelinquency Ratio - IndividualsDelinquency Ratio - Companies
1.6%2.1% 2.2%
5.1% 5.2% 5.3%
8.1% 8.3% 8.1%
Jun/06 Sep/06 Dec/06
![Page 9: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/9.jpg)
9
Banco Itaú Holding Financeira S.A.
Delinquency Ratio (NPL) by Segment
R$ Million
Dec 31, 06
Sep 30, 06
NPLCredit
Portfolio
NPL Ratio
NPL Ratio
Itaubanco 2,614
35,985 7.3% 7.5%
Branch Banking 2.355 31,031 7.6% 7.7%
Credit Cards – Account Holders 260 4,954 5.2% 5.9%
Itaú BBA 150
21,334 0.7% 0.1%
Itaucred 1,662
26,829 6.2% 6.4%
Vehicles 936 19,316 4.8% 5.0%
Credit Cards – Non Account Holders 235 4,285 5.5% 6.6%
Taií 492 3,228 15.2% 13.9%
Total 4,426
84,148 5.3% 5.2%
![Page 10: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/10.jpg)
10
Banco Itaú Holding Financeira S.A.
Funding
1 Includes Repurchase Agreement – Own Issue Securities
Dec 31,
06Sep 30,
06 Dec 31,
05
Variation (%)
Dec/06-Sep/06
Dec/06-Dec/05
Deposits 1 89,522 80,949 65,556 10.6% 36.6%
Investment Funds 167,866 166,822 112,573 0.6% 49.1%
Managed Portfolios 11,942 10,044 7,714 18.9% 54.8%
Technical Provisions regarding to Insurance, Pension Plans and Capitalization
19,036 17,534 14,640 8.6% 30.0%
Subtotal – Clients 288,367 275,348 200,482 4.7% 43.8%
Foreign Exchange Portfolio 13,124 21,941 7,828 -40.2% 67.7%
Funds from Acceptances and Securities Issued 7,541 7,568 4,961 -0.4% 52.0%
On-lendings 5,338 5,496 4,305 -2.9% 24.0%
Repurchase Agreement – Third Part Portfolio 8,353 5,477 4,520 52.5% 84.8%
Subtotal - Market 34,355 40,482 21,614 -15.1% 59.0%
Total 322,722 315,831 222,096 2.2% 45.3%
R$ Million (except where indicated)
![Page 11: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/11.jpg)
11
Banco Itaú Holding Financeira S.A.
Banking Service Fees
4th Q/06 3rd Q/06 Variation 2006 2005 Variation
Funds management 1 483 539 -10.4% 1,986 1,688 17.7%
Current account services 410 385 6.4% 1,549 1,385 11.8%
Credit Cards 577 525 9.9% 2,104 1,904 10.5%
Credit operations and guarantees provided 486 423 14.8% 1,689 1,259 34.2%
Collection services 250 219 14.4% 909 839 8.3%
Other 250 195 28.4% 859 662 29.7%
Total 2,456 2,286 7.4% 9,097 7,738 17.6%
R$ Million (Except where indicated)
1 Investment Funds and Consortium.
Not considering BKB, Banking Service Fees reached R$ 8,718 million in 2006, increase of 12.7% compared to 2005.
![Page 12: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/12.jpg)
12
Banco Itaú Holding Financeira S.A.
Non Interest Expenses
4th Q/06 3rd Q/06 Variation 2006 2005 Variation
Personnel Expenses 1,251 1,260 -0.7% 4,824 4,036 19.5%
Other Administrative Expenses 1,681 1,523 10.4% 5,835 4,946 18.0%
Other Operating Expenses 269 332 -19.1% 1,240 1,141 8.7%
Tax Expenses (CPMF and Others) 1 171 131 30.6% 447 337 32.6%
Total 3,371 3,246 3.8% 12,346 10,459 18.0%
R$ Million (Except where indicated)
1 It does not include PIS, COFINS and ISS
Not considering BKB, Non Interest Expenses reached R$ 11,470 million in 2006, increase of 9.7% compared to 2005.
![Page 13: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/13.jpg)
13
Banco Itaú Holding Financeira S.A.
50.8% 50.5% 50.1%47.2% 45.7%
49.9%47.4%
49.8%
1Q/05 2Q/05 3Q/05 4Q/05 1Q/06 2Q/06 3Q/06 4Q/06
Efficiency Ratio 1
47.6%
50.3%
1 For further details on the criteria used, see slide 4.
![Page 14: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/14.jpg)
14
Banco Itaú Holding Financeira S.A.
Segmentation (Pro forma)
Itaú
ItaucredItaú BBAItaubanco
Banking
Cards – Current Account Holders
Insurance, Pension Plans
and Capitalization
Investment Funds and
Managed Portfolio
Corporation
Corporate Operations
&
Investment Banking
Vehicles
Cards – Non Current Account
Holders
Taií, FIC (CBD) and FAI (LASA)
NB: The organization chart of Itaucred segment reflects, chiefly, the transactions carried out through channels intended for non current account holders.
![Page 15: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/15.jpg)
15
Banco Itaú Holding Financeira S.A.
Highlights of Pro Forma Segments
Itaubanco Itaú BBA Itaucred Corporation Itaú 1
4th Quarter of 2006
Recurring Net Income 1,084 297 202 45 1,628
Allocated Capital Tier I 12,244 5,754 2,780 2,787 23,564
RAROC in the Quarter (% p.y.) 36.3% 21.3% 31.7% 5.5% 28.8%
Total Assets 159,178 61,869 25,844 6,253 209,691
3rd Quarter of 2006
Recurring Net Income 793 337 185 277 1,592
Allocated Capital Tier I 11,617 5,407 2,317 2,352 21,693
RAROC in the Quarter (% p.y.) 29.1% 28.0% 33.8% 64.1% 32.5%
Total Assets 158,090 53,803 22,613 5,346 206,935
R$ Million (Except where indicated)
1 It does not represent the sum of the parts, because there are transactions between the segments eliminated in the consolidated figures only.
![Page 16: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/16.jpg)
16
Banco Itaú Holding Financeira S.A.
Highlights of Pro Forma Segments
1 It does not represent the sum of the parts, because there are transactions between the segments eliminated in the consolidated figures only.
Itaubanco Itaú BBA Itaucred Corporation Itaú 1
2006
Recurring Net Income 3,655 1,335 649 557 6,195
Allocated Capital Tier I 12,244 5,754 2,780 2,787 23,564
RAROC (% p.y.) 35.9% 27.7% 29.8% 30.8% 32.6%
Total Assets 159,178 61,869 25,844 6,253 209,691
2005
Recurring Net Income 3,179 1,242 525 497 5,443
Allocated Capital Tier I 7,603 4,328 1,688 1,941 15,560
RAROC (% p.y.) 43.1% 34.2% 39.8% 19.5% 36.6%
Total Assets 117,002 43,256 15,955 4,497 152,435
R$ Million (Except where indicated)
![Page 17: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/17.jpg)
Itaubanco
17
• Organic growth of classic business lines;• 30.6% assets growth (without BKB) and 146 new branches and 969
new ATMs, not considering the 66 branches and 104 ATMs of BKB. • Expansion of Insurance, Pension Plans and Capitalization business areas;
• Technical provisions increased 30.6%.• Efficiency ratio maintenance (at the same basis);
• Efficiency ratio of 51.2% and 54.1% in 2006 and 2005, respectively.• 25% growth on credit portfolio.
• The credit portfolio grew 13.7% and 38.8%, not considering BKB and
considering it, respectively.• Moderate growth in delinquency ratio are expected as a consequence of
targeting operations with higher margins and higher risks (personal loans
and credit cards).• Delinquency ratio of 7.3% in Dec 31, 2006 and of 6.7% in June of 2006.
The 2006 Outlook of Itaubanco broadcasted in 2005 Results Conference Call.
![Page 18: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/18.jpg)
Itaú BBA
18
• Focus on Investment Banking and banking services segments;• 37.9% growth in banking service fees.
• Continuous improvement of market risk management.• 26.8% increase in Treasury Financial Margin.
The 2006 Outlook of Itaú BBA broadcasted in 2005 Results Conference Call.
![Page 19: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/19.jpg)
Itaucred
19
• Growth of vehicles financing, developing new segments and presence in regions where penetration is
reduced;•67.7% growth in the balance of vehicles financing and leasing.•12 Commercial Platforms opened and 4,569 new car dealers registered in 2006.
• Consolidation and growth of partnerships with CBD (FIC) and Lojas Americanas (FAI);•48.2% increase in credit portfolio of FIC and 164.7% of FAI.
• Growth of Taií’s outlets number (FIT);•118 new outlets, increase of 90.8% from 2005.
• New products launch through FIC, FIT and FAI;• Co-branded card, Private Label, Personal Loan - Card, Installments and Home Insurance.
• Growth of operations with non-account holders;•Itaucred income correspond to 10.5% of Itaú’s income, with approximately 2.7 million new non
account holders customers. • Growth of 30% in credit portfolio.
•59.8% growth in credit portfolio• Expectation of moderate growth of delinquency ratio as a consequence of targeting operations with
higher margins and higher risks (Taií and credit cards).• Delinquency ratio was 6.2% and 7.1% in Dec 31, 06 and Jun 30, 06, respectively.
The 2006 Outlook of Itaucred broadcasted in 2005 Results Conference Call.
![Page 20: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/20.jpg)
Itaubanco
20
2007 Outlook
• Small reduction in delinquency ratio.
• Efficiency ratio improvement.
• 20% - 25% growth in credit portfolio.
• 10% growth in Banking Service Fees (15% in Itaú Holding).
• Opening of 130 branches.
• Expansion the operations in Argentina, Chile and Uruguay.
![Page 21: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/21.jpg)
Itaú BBA
21
2007 Outlook
• Focus on Investment Banking activities.
• Continuous improvement of market risk management.
• Continuous improvement of service fees.
• Consolidation of Corporate clients portfolio in Argentina, Chile and Uruguay.
• Slight reduction in the credit portfolio.
![Page 22: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/22.jpg)
Itaucred
22
2007 OutlookTaií
• 100 new sales points.
• 50% growth in credit portfolio (not including payroll loans).
• Efficiency ratio improvement.
• Delinquency ratio improvement.
• On the 4Q/07, we wait to reach break-even of the three operation (FIC, FAI and FIT).
Vehicles
• 40% growth in vehicles financing and leasing portfolio.
• Efficiency ratio improvement.
• Maintenance of delinquency ratio.
Credit Card
• 20% growth in billing.
• Maintenance of delinquency ratio.
![Page 23: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/23.jpg)
23
Banco Itaú Holding Financeira S.A.
Net Income and Net Income per Share
Recurring Net Income per share R$Recurring Net Income
Note: The Net Income per Share was adjusted to reflect the stock split of 900% that occurred in oct/05.
1,2831,383 1,352 1,425 1,397
1,579 1,592 1,628
1,0301.19 1.21 1.29 1.32 1.39 1.381.33
1.000.91
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
4Q/04 1Q/05 2Q/05 3Q/05 4Q/05 1Q/06 2Q/06 3Q/06 4Q/06
0.0
0.5
1.0
1.5
2.0
2.5R$ million
![Page 24: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/24.jpg)
24
Banco Itaú Holding Financeira S.A.
![Page 25: 1 Conference Call 2006 Results February 14, 2007](https://reader035.vdocuments.us/reader035/viewer/2022062802/56649ea95503460f94bad4be/html5/thumbnails/25.jpg)
25February 14, 2007
Conference Call
2006 Results