Itaúsa S A : Earnings Document

Management Report

2022 and 4th quarter of 2022

São Paulo, March 20, 2023 - We present the Management Report of Itaúsa S.A. ("Itaúsa" or "Company") for the fourth quarter of 2022 (4Q22) and fiscal year 2022. The Financial Statements were prepared in accordance with the standards established by the Accounting Pronouncement Committee (CPC) and approved by the Brazilian Securities and Exchange Commission (CVM), as well as the International Financial Reporting Standards (IFRS).

Executive Summary

Recurring Profit

R$ 13.7 billion

• 14% vs. 2021

Net Asset Value

R$ 102 billion

• 1.8% vs.12.31.2021

Recurring ROE

20.0% p.y.

• 0.2 p.p. vs. 2021

Itaúsa's Highlights

• Recurring profit: a 14% increase in the year and the best annual profit at the historical level reflect the strength of our portfolio and the gain from asset turnover.
• Return to stockholders: earnings declared in the amount of R$ 4.0 billion net (R$ 0.04286 net per share) in 2022, up 12% from 2021, in addition to the 10% bonus shares (carried out in November 2022), resulting in a 6.9% dividend yield.
• Interest on capital declared in 2023: declaration in advance of R$ 750 million in net interest on capital (or R$ 637 million net and R$ 0.065705 net per share) with payments up to 08.31.2023.
• Purchase of CCR: purchase of 10.33% equity interest in CCR worth R$ 2.9 billion was completed in September 2022, as it was mostly financed through the 5th issuance of debentures.
• Sale of XP Inc. shares: 41 million shares in XP were sold in 2022 (7.1% of capital) for the average price of R$ 114 per share (totaling R$ 4.7 billion), which reduced equity interest in XP to 6.6%.
• Liability Management: R$ 1.8 billion worth of debt was prepaid in December 2022, improving the holding company's debt profile, increasing the average term and reducing the concentration of maturities in 2025.
• ESG Agenda: definition of our ESG strategy, announcements of the set-up of Instituto Itaúsa and of the Audit Committee.

	R$ million	4Q22	4Q21	Change	2022	2021	Change
	PROFITABILITY AND RETURN1
	Profit	3,324	4,117	-19,3%	13,674	12,200	12,1%
	Recurring Profit	3,360	4,135	-18,7%	13,722	12,070	13,7%
	Return on Equity (%)2	18.5%	25.6%	-7.1 p.p.	20.0%	20.0%	0.0 p.p.
	Recurring Return on Equity (%)2	18.7%	26.0%	-7.3 p.p.	20.0%	19.8%	0.2 p.p.
	BALANCE SHEET
	Total Assets	83,254	74,602	11.6%	83,254	74,602	11.6%
	Net Debt3	3,805	3,793	0.3%	3,805	3,793	0.3%
	Stockholders' Equity	72,797	65,886	10.5%	72,797	65,886	10.5%
	CAPITAL MARKET
	Market Value4	82,559	78,789	4.8%	82,559	78,789	4.8%
	Average Daily traded Volume (ADTV)5	262	294	-11.0%	231	333	-30.6%

1. Attributable to controlling stockholders.
2. Annualized ROE (Return on Equity).
3. On December 31, 2021, it excludes R$ 1,176 million from the cash position related to interest on capital declared in December 2021 (paid on March 11, 2022).
4. Calculated based on the closing price of preferred shares on December 31, 2021 and December 31, 2022, excluding treasury shares.
5. It includes preferred shares in Itaúsa (ITSA4) traded on B3.

Follow Itaúsa on social networks:	/itausaholding	company/itausaholding	@itausaholding	/itausaholding

Management Report

2022 and 4th quarter of 2022

Message from Management

"Itaúsa's record earnings in 2022 reflect the strength and resilience of our portfolio against the background of a challenging year for the economy in Brazil and the world"

Alfredo Setubal

Itaúsa's CEO

The year 2022 represented a period of challenges for Brazil and the world's economy, overshadowed by inflationary pressures, rising interest rates and geopolitical conflicts, which have led to prospects of economic recession in the short term. On the other hand, the easing of Covid-19 tackling policies in China, with the resulting reopening of its market, may help lessen the effects of a possible global growth slowdown in 2023. Additionally, uncertainties in Brazil about fiscal and monetary policies have been points of attention amid the expected trends in the business setting in 2023.

In line with the evolution of its portfolio management, Itaúsa carried out major transactions in terms of capital allocation in 2022. We contributed R$ 799 million in the Alpargatas share offering, which raised R$ 2.5 billion, which were allocated for the purchase of a 49.9% stake in Rothy's, a U.S. sustainable footwear brand, with great performance in digital channels. We increased our presence in the infrastructure segment through the acquisition of a 10.33% equity interest in CCR, one of the largest road, transport and airport concessionaire players in Latin America, with total investment worth R$ 2.9 billion. Last but not least, we made progress in the partial divestiture of non-strategic assets, with five sales blocks of XP shares in the total amount of R$ 4.6 billion (average price of R$ 114 per share), which boosted both our results and the implementation of our deleveraging plan.

The results posted by Itaúsa in 2022 against a challenging scenario evidence the holding company's assertiveness in its strategy of capital allocation, portfolio management and performance as an agent of change in investees over the last few years.

The largest asset in the portfolio, Itaú Unibanco posted solid results throughout the year, driven by the increased loan portfolio combined with NPL control and discipline in capital and cost management, even in the face of higher expected loan losses. Investees in the energy and infrastructure sectors, economic segments that are more resilient to turmoil, also reported rising performance curves. Meanwhile, the economic downturn, which resulted in reduced consumption in Brazilian households, has brought challenges to operations in Alpargatas and Dexco, partially offset by commercial strategies and the strength of their brands.

We made significant headway in the ESG agenda in 2022. We rethought our ESG strategy, which resulted in the definition of our ambition: "being a company that invests with responsibility, positioning itself as an agent of change to build businesses that create value and impact the sustainable development in Brazil".

Added to that, we announced the set-up of Instituto Itaúsa to support environmental and social (E&S) projects and initiatives starting in 2023. To strengthen our controls structure and governance, we also set up an Audit Committee and created the Sustainability Intelligence department, whose main purpose is to boost the ESG agenda in Itaúsa and investees.

Ultimately, we strengthened the brand's positioning with the launch of the "Todo lugar tem Itaúsa" (Everywhere you go you'll find Itaúsa) campaign, the aim of which was to translate how our investees, through strong and recognized brands, are embedded in the lives of Brazilians, meeting their needs with quality products and services, creating jobs and moving the Brazilian economy.

We are confident of our running the business on the right path by keeping a focus on capital allocation discipline, long-term vision, a culture of risk management and appreciation of human capital. We will continue to target the creation of value for our more than 900,000 stockholders, investees and society.

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Management Report

2022 and 4th quarter of 2022

1. Portfolio Management

Efficient capital allocation

Investment in Alpargatas share offering

In February 2022, Alpargatas carried out a public offering for the primary distribution of shares (follow-on offering) in the total amount of R$ 2.5 billion, the net proceeds of which were allocated to finance the purchase of equity interest in Rothy's Inc. Within the scope of this offering, Itaúsa used its own funds to purchase 30,382,808 shares issued by Alpargatas, totaling an investment worth R$ 799.1 million. Accordingly, Itaúsa now holds 199,355,304 shares issued by Alpargatas representing 29.6% of Alpargatas' total capital (excluding treasury shares).

Investment in CCR S.A. completed

In September 2022, Itaúsa completed the purchase of a 10.33% stake in the total capital of CCR S.A. for R$ 2.9 billion, which was financed by a combination of its own funds and the proceeds from the 5th issuance of debentures. With this transaction, Itaúsa is now entitled to nominate two board members and make up the investee's controlling block with equal rights to the other signatories of the Stockholders' Agreement, in addition to nominate one member for each of the following Advisory Committees: (i) Strategy, (ii) Personnel and ESG, and (iii) Audit, Compliance and Risks.

Divestiture of XP Inc. shares

As part of its efficient capital allocation strategy, in the months of March, July, October and November 2022, Itaúsa sold 41 million Class A shares in XP Inc., corresponding to 7.41% of the company's capital for the approximate amount of R$ 4.7 billion (average sales price of R$ 114 per share). These sales gave rise to a positive impact of R$ 2.6 billion in Itaúsa's profit for the year, net of taxes. Itaúsa has thus become the direct holder of 6.55% (disregarding treasury shares) of XP's total capital and 2.30% of its voting capital. In spite of such sales, Itaúsa has kept its rights as defined in XP's Stockholders' Agreement, including the right to nominate members to XP's Board of Directors and Audit Committee.

Implementation timeline (in millions of shares)

	2021	2022
Number of transactions	1	5
Sales value (gross)	R$ 1,270 million	R$ 4,670 million
Impact on Profit or Loss	R$ 903 million	R$ 2,551 million
Average sale price	R$ 162/share	R$ 114/share

Total

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R$ 5,940 million R$ 3,454 million R$ 122/share

For further information on the aforementioned transactions, please access the Material Facts and Notices to the Market on www.itausa.com.br/material-facts-and-notices.

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Management Report

2022 and 4th quarter of 2022

2. Itaúsa's Operational and Financial Performance

2.1. Pro Forma Individual Result of Itaúsa

Itaúsa is an investment holding company with equity interests in operating companies, with its results basically derived from Equity in the Earnings of Investees, determined based on the profit of its investees, revenues from investments in financial assets and the result of possible sales of assets of its portfolio.

The equity in the earnings of investees and the individual result of Itaúsa are presented in the pro-forma table below, including recurring events (non-recurring events are presented in detail in table Reconciliation of Recurring Profit).

Managerial Individual Result of Itaúsa¹
R$ million	4Q22	4Q21		∆%			2022	2021		∆%
Investees' Recurring Profit	2,974	3,550		-16%		12,714	11,818		8%
Financial Sector	2,841	2,725		4%			11,493	10,513		9%
Itaú Unibanco	2,784	2,581		8%		11,119	10,228		9%
XP Inc.	57	143		-60%			375	285		31%
Non-Financial Sector	156	848		-82%			1,337	1,346		-1%
Alpargatas	19	42		-55%		75	166		-55%
Dexco	91	161		-43%			303	434		-30%
CCR	(22)	n.a.		n.a.		(23)	n.a.		n.a.
Aegea Saneamento	10	26		-61%			36	37		-2%
Copa Energia	78	14		461%			154	26		485%
NTS2	(13)	608		-102%		802	692		16%
Other Companies	(6)	(2)		151%			(9)	(9)		-3%
Other results3	(24)	(23)		1%		(117)	(42)		177%
Itaúsa's Own Results	810	720		13%			1,876	474		295%
Administrative Expenses	(46)	(39)		19%		(167)	(142)		18%
Tax Expenses	(192)	(145)		32%		(501)	(287)		74%
Other Operating Revenues/Expenses	1,049	904		16%			2,544	903		182%
Finance Results	(202)	(101)		101%		(618)	(209)		195%
Profit before income tax and social contribution	3,582	4,169		-14%		13,972	12,082		16%
Income Tax/Social Contribution	(221)	(34)		548%		(250)	(12)		1,984%
Recurring Profit	3,360	4,135		-19%		13,722	12,070		14%
Non-recurring Result	(36)	(17)		106%		(48)	130		n.a.
Itaúsa's results	47	83		-44%		164	98		67%
Financial Sector	(44)	(152)		-71%		(139)	(222)		-37%
Non-Financial Sector	(38)	51		n.a.		(72)	254		n.a.
Profit	3,324	4,117		-19%		13,674	12,200		12%
Return on Equity (%)	18.5%	25.6%		-7.1 p.p.		20.0%	20.0%		0.0 p.p.
Recurring Return on Equity (%)	18.7%	26.0%		-7.3 p.p.		20.0%	19.8%		0.2 p.p.

1. Attributable to controlling stockholders.
2. It includes dividends/interest on capital received, adjustment to fair value of shares, and expenses on time installment of the US dollar-denominated invested amount and corresponding foreign exchange variation.
3. It refers mainly to PPAs (purchase price allocations) of the goodwill from investments in Alpargatas, Copa Energia and Aegea Saneamento.

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Management Report

2022 and 4th quarter of 2022

2.2. Recurring Profit of Investees, as recorded by Itaúsa (2022 vs. 2021)

Recurring profit of investees, recorded in Itaúsa in 2022, totaled R$ 12,714 million, up 8% on a year-on-year basis, mainly as a result of the solid results of its investment portfolio.

Itaú Unibanco reported a surge in the loan portfolio, which resulted in improved margin with clients in addition to higher spreads and better mix of revenue, partially offset by a lower margin with the market, rise in NPL rates and higher expected loan losses.

Alpargatas, faced with a scenario of inflationary pressure, high interest rates and reduced purchasing power, had its results impacted by the drop in demand in Brazil and higher commercial and marketing expenses, which were partially offset by the growth in net revenue, mainly driven by a higher revenue per pair of Havaianas sandals in Brazil, in addition to the growth in sales volume in international markets.

Dexco also recorded increase in net revenue, driven by the sales policy adopted and the improvement in the Wood Division's mix of products, which partially mitigated the fall in demand and in the sales volume of all segments, the rising costs of some inputs and financial expenses, as a result of inflationary pressure and slowdown in the civil construction sector as interest rates rose.

CCR's results started to be recognized by Itaúsa as of September 2022 under the equity method. In the last months of the year its profit was impacted by the partial impairment of the asset related to the ViaOeste concession. In 2022, CCR posted higher net revenue, EBITDA and profit, mainly driven by a better operating performance in all transport modals, as a result of the increased volume of traffic of vehicles and passengers and the adoption of tariff adjustments.

Aegea reported better revenue on a year-on-year basis, mainly driven by higher revenue from consideration of concessions and the positive impact of results of SPCs Águas do Rio 1 and 4. The company recorded lower profits, due to its increased debt and financial expenses, which were impacted by the rise in basic interest rate.

The results of the investment in NTS, recorded by Itaúsa as a "financial asset", were positively impacted mainly by the higher dividend distribution on a year-on-year basis and the slight increase in the fair value of the asset, as a result of the periodic revaluation carried out in view of the revisited assumptions to better reflect the macroeconomic scenario and the projected cash flows for the business.

Copa Energia posted strong increases in EBITDA and profit, mainly driven by the implementation of its commercial strategy and cost reduction, as a result of the synergies captured from the merger of Liquigás into Copa Energia, which was partially impacted by finance costs as a result of the rise in basic interest rate.

Furthermore, the results of XP Inc., recognized by Itaúsa under the equity method since June 2021, contributed positively to Itaúsa's results on a year-on-year basis, driven by the longer period of recognition under the equity method in spite of the drop in ownership interest over the year.

Further information on the performance of each investee and Itaúsa's corresponding equity interest is available in section 8.1 ("Operational and financial performance of investees").

2.3. Itaúsa's Own Results

Administrative expenses totaled R$ 46 million and R$ 167 million in 4Q21 and FY 2022, respectively. The 18% increase on a year- on-year basis was mainly driven by higher personal expenses and the normalization of management fees as a result of the election of new independent board members, in addition to expenses on IT initiatives with a focus on information security, advisory services in new business projects and marketing campaigns.

Tax expenses totaled R$ 192 million and R$ 501 million in 4Q22 and FY 2002, up 32% and 74%, respectively. These expenses were mainly driven by PIS/COFINS taxes levied on the interest on capital declaration made by Itaú Unibanco in the period, as well as on capital gains from sale of shares in XP, in addition to higher taxes on return on cash.

Other operating income and expenses totaled R$ 1,049 million and R$ 2,544 million in 4Q22 and FY 2022, up 16% and 182%, respectively. This result was mainly driven by the gain from the sale of XP Inc. shares, which amounted to R$ 2,551 million in 2022.

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