Announcement to the Market

Disclosure of results for the second quarter and first half of 2020, according to

International Financial Reporting Standards - IFRS

We present below the differences between our financial statements in BRGAAP and in International Financial Reporting Standards - IFRS.

As from January 1st, 2018, IFRS 9 came into effect, the accounting standard that replaces IAS 39 in the treatment of Financial Instruments. The new standard is structured to encompass the pillars of classification, measurement of financial assets and impairment and was applied retrospectively by Itaú Unibanco Holding.

The complete consolidated financial statements under IFRS for the first half of 2020 are available at our website: www.itau.com.br/investor-relations.

Comparison between BRGAAP1 and IFRS

R$ million

Adjustments and

Adjustments and

Balance Sheet

BRGAAP

Reclassifications

IFRS

BRGAAP

Reclassifications

IFRS

2

2

Jun/30/2020

Dec/31/2019

Total Assets

2,075,122

(121,113)

1,954,009

1,738,713

(101,232)

1,637,481

Cash, Compulsory Deposits and Financial Assets At Amortized Cost

3 4 6

1,405,789

(29,562)

1,376,227

1,164,753

3,535

1,168,288

(-) Provision for Expected Loss at Amortized Cost

5

(48,286)

3,755

(44,531)

(38,888)

2,859

(36,029)

Financial Assets at Fair Value Through Other Comprehensive Income

4

192,368

(85,975)

106,393

166,676

(89,930)

76,746

(-) Expected Loss at Fair Value Through Other Comprehensive Income

5

(3,056)

2,942

(114)

(3,162)

3,076

(86)

Financial Assets at Fair Value Through Profit or Loss

4

400,834

(9,684)

391,150

345,677

(22,748)

322,929

Tax Assets

7

77,316

(7,063)

70,253

56,835

(7,875)

48,960

Investments in Associates and Joint Ventures, Goodwill, Fixed Assets,

50,156

4,475

54,631

46,822

9,851

56,673

Intangible Assets, Assets Held for Sale and Other Assets

Total Liabilities

1,937,304

(126,228)

1,811,076

1,595,865

(107,849)

1,488,016

Financial Assets at Amortized Cost

3 6

1,559,442

(124,021)

1,435,421

1,265,471

(105,641)

1,159,830

Financial Assets at Fair Value Through Profit or Loss

4

89,310

645

89,955

48,008

21

48,029

Provision for Expected Loss (Loan Commitments and Financial Guarantees)

5

1,080

3,890

4,970

959

3,181

4,140

Provision for Insurance and Pension Plan

214,890

1,253

216,143

217,216

1,118

218,334

Provisions

19,897

-

19,897

21,454

-

21,454

Tax Liabilities

7

9,286

(4,098)

5,188

13,870

(5,979)

7,891

Other Liabilities

43,399

(3,897)

39,502

28,887

(549)

28,338

Total Stockholders' Equity

137,818

5,115

142,933

142,848

6,617

149,465

Non-controlling Interests

11,461

(209)

11,252

10,861

1,679

12,540

Total Controlling Stockholders' Equity

8

126,357

5,324

131,681

131,987

4,938

136,925

  1. BRGAAP represents accounting practices in force in Brazil for financial institutions, according to regulation of the Central Bank of Brazil;
  2. Resulted from reclassification of assets and liabilities and other effects from the adoption of IFRS;
  3. Resulted from the elimination of transactions between parent company and exclusive funds (particularly PGBL and VGBL funds), which are consolidated under IFRS;
  4. Refer to reclassification of financial assets between measurement categories at fair value and amortized cost;
  5. Application of criterion for calculation of Expected Loss as set forth by IFRS;
  6. Difference in accounting, particularly from Foreign Exchange Portfolio, which are now be presented as net effect between Assets and Liabilities;
  7. Difference in accounting, particularly deffered taxes, which are now accounted for as net effect between Assets and Liabilities in each one of the consolidated companies;
  8. Reconciliation of Controlling Stockholders' Equity is presented in the following table.

Itaú Unibanco Holding S.A.

Below is the reconciliation of Results to Stockholders' Equity, with the conceptual description of major adjustments.

R$ million

Reconciliation BRGAAP - Values Attributable to Controlling Stockholders

  1. Expected Loss - Loan and Lease Operations and Other Financial Assets
  2. Adjustment to Fair Value of Financial Assets
  3. Acquisition of Interest in Porto Seguro Itaú Unibanco Participações S.A.
  4. Criteria for Write-Off of Financial Assets
  5. Financial Lease Operations
  6. Other adjustments

IFRS - Values Attributable to Controlling Stockholders IFRS - Values Attributable to Minority Stockholders

Stockholders

Result *

Equity *

Jun/30/2020

2nd Q/20

1st Q/20

2nd Q/19

1st H/20

1st H/19

126,357

3,424

3,401

6,815

6,825

13,525

1,829

249

(136)

(77)

113

(151)

(696)

(257)

(126)

(6)

(383)

119

437

(1)

(1)

(1)

(2)

(2)

1,971

65

(21)

(24)

44

(63)

124

(32)

(37)

(45)

(69)

(81)

1,659

(1,725)

379

(135)

(1,346)

(73)

131,681

1,723

3,459

6,527

5,182

13,274

11,252

(3,626)

219

163

(3,407)

319

IFRS - Values Attributable to Controlling Stockholders and Minority Stockholders

142,933

(1,903)

3,678

6,690

1,775

13,593

* Events net of tax effects

Differences between IFRS and BRGAAP Financial Statements

  1. In the adoption of IFRS 9, there was a change in the calculation model of incurred loss (IAS 39) to expected loss, considering forward-looking information. On BRGAAP, the concept of Expected Loss is used, pursuant to BACEN Resolution No. 2,682/99. 9
  2. Under IFRS, stocks and quotas classified as permanent investments were measured at fair value and its gains and losses were recorded directly in Result. Additionally, there was a change in the model of classification and measurement of financial assets due to the new categories introduced by IFRS 9.
  3. Under IFRS, the effect of accounting at fair value of the acquisition of interest in Porto Seguro Itaú Unibanco Participações S.A. was recognized.
  4. Criterion for write-off of financial assets on IFRS considers the recovery expectative.
  5. Under IFRS (IAS 17) the financial lease operations are recorded as Fixed Assets, as a contra-entry of Other Financial Liabilities. Under BRGAAP, as from September 30 th, 2015, the consideration of these transactions are now recorded in result, in accordance with CMN Resolution No. 3,617/08.
  6. Other Adjustments is mainly due to the impairment of goodwill and intangible assets of Itaú Corpbanca and reversal of the Amortization of Goodwill under BRGAAP.

9

More details in the Complete Financial Statements for the first half of 2020.

For comparison purposes, we present on the table below the Result and Recurring Result in IFRS and BRGAAP.

R$ million

Recurring Result

2nd Q/20

2nd Q/19

BRGAAP

IFRS

Variation

BRGAAP

IFRS

Variation

Result - Attributable to Controlling Stockholders

3,424

1,723

(1,701)

6,815

6,527

(288)

Exclusion of the Non-Recurring Events

(782)

(2,085)

(1,303)

(219)

(7)

212

Donation to 'Todos pela Saúde'

(834)

(834)

-

-

-

-

Reclassification of investment in IRB

379

379

-

-

-

-

Impairment of goodwill and intangible assets - Itaú Corpbanca

(19)

(1,452)

(1,433)

-

-

-

Goodwill amortization

(206)

-

206

(151)

-

151

Liability Adequacy Test

-

(76)

(76)

(68)

(7)

61

Other

(102)

(102)

-

-

-

-

Recurring Result - Attributable to Controlling Stockholders

4,205

3,808

(398)

7,034

6,534

(500)

The tables in this report show the figures in million. Variations and summations, however, were calculated in units.

São Paulo, August 3rd, 2020.

Alexsandro Broedel

Group Executive Finance Director and Head of Investor Relations

Itaú Unibanco Holding S.A.

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Itaú Unibanco Holding SA published this content on 03 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 August 2020 22:21:13 UTC