4Q

20

Management discussion & analysis and complete financial statements

Fourth quarter of 2020

Contents

Management discussion & analysis

Page 03

Executive Summary

03

Income Statement and Balance Sheet Analysis

11

Managerial Financial Margin

12

Cost of Credit

13

Credit Quality

15

Commissions and Fees & Result from Insurance

17

Result from Insurance, Pension Plan and Premium Bonds

19

Non-interest Expenses

20

Balance Sheet

22

Credit Portfolio

23

Funding

25

Capital, Liquidity and Market Ratios

26

Results by Business Segments

27

Results by Region - Brazil and Latin America

29

Activities Abroad

30

Additional Information

31

Itaú Unibanco Shares

32

Glossary

33

Independent Auditor's Report

35

Complete financial statements

Page 37

4Q

20

Management discussion & analysis

Fourth quarter of 2020

(This page was intentionally left blank)

Itaú Unibanco Holding S.A.

04

Management Discussion & Analysis

Executive Summary

Managerial Income Summary

We present below the financial indicators of Itaú Unibanco up to the end of each period.

In R$ millions (except where indicated), end of period

Results

Recurring Managerial Result

Operating Revenues

(1)

(2)

Managerial Financial Margin

Recurring Managerial Return on Average Equity - Annualized - Consolidated

(3)

Recurring Managerial Return on Average Equity - Annualized - Brazil

(3)

Performance

Recurring Managerial Return on Average Assets - Annualized

(4)

Nonperforming Loans Ratio (90 days overdue) - Total

Nonperforming Loans Ratio (90 days overdue) - Brazil

Nonperforming Loans Ratio (90 days overdue) - Latin America

Coverage Ratio (Total Allowance/NPL 90 days overdue)

(5)

Efficiency Ratio (IE)

(6)

Recurring Managerial Result per Share (R$)

(7)

Net Income per Share (R$)

(7)

Shares

Number of Outstanding Shares at the end of the period - in millions

Book Value per Share (R$)

(8)

Dividends and Interest on Own Capital net of Taxes

Market Capitalization

(9)

Market Capitalization

(9)

(US$ million)

Total Assets

Total Credit Portfolio, including Financial Guarantees Provided and Corporate Securities

Deposits + Debentures + Securities + Borrowings and Onlending

Sheet

(10)

Loan Portfolio/Funding

(10)

Balance

Stockholders' Equity

Solvency Ratio - Prudential Conglomerate (BIS Ratio)

Tier I Capital - BIS III

Common Equity Tier I - BIS III

Liquidity Coverage Ratio (LCR)

Net Stable Funding Ratio (NSFR)

Portfolio Managed and Investment Funds

Total Number of Employees

Other

Brazil

Abroad

Branches and CSBs - Client Service Branches

ATM - Automated Teller Machines

(11)

4Q20

3Q20

4Q19

2020

2019

5,388

5,030

7,296

18,536

28,363

29,180

28,389

31,833

114,785

119,790

17,587

16,928

19,439

70,095

74,630

16.1%

15.7%

23.7%

14.5%

23.7%

17.8%

16.8%

25.1%

15.3%

24.9%

1.0%

1.0%

1.7%

0.9%

1.7%

2.3%

2.2%

3.0%

2.3%

3.0%

2.7%

2.6%

3.4%

2.7%

3.4%

1.3%

1.2%

1.9%

1.3%

1.9%

320%

339%

229%

320%

229%

49.4%

48.0%

44.0%

47.1%

45.5%

0.55

0.52

0.75

0.78

0.46

0.77

9,762

9,762

9,746

13.99

13.37

13.54

1,814

1,095

7,729

310,641

219,948

362,147

59,777

38,993

89,847

2,112,586

2,110,120

1,738,713

869,532

846,994

722,567

1,068,926

1,038,945

760,322

66.5%

66.3%

76.7%

136,593

130,559

131,987

14.5%

13.7%

15.8%

13.2%

12.4%

14.4%

11.5%

10.7%

13.2%

194.6%

195.0%

149.1%

126.0%

123.6%

122.2%

1,423,641

1,377,413

1,387,457

96,540

96,948

94,881

83,919

84,272

81,691

12,621

12,676

13,190

4,337

4,432

4,504

45,556

45,889

46,271

Note: (1) Operating Revenues represent the sum of Managerial Financial Margin, Commissions and Fees and Revenues from Insurance, Pension Plan and Premium Bonds Operations before Retained Claims and Selling Expenses; (2) Detailed in the Managerial Financial Margin section; (3) The Annualized Recurring Managerial Return was calculated by dividing the Recurring Managerial Result by the Average Stockholders' Equity. The quotient was multiplied by the number of periods in the year to derive the annualized rate. The bases for the calculation of returns were adjusted by the amounts of dividends not yet approved at Shareholders' or Board Meetings, proposed after the balance sheet closing date; (4) The return was calculated by dividing the Recurring Managerial Result by the Average Assets; (5) Includes the balance of the allowance for financial guarantees provided; (6) For further details of the Efficiency Ratio calculation methodologies, please refer to the Glossary section; (7) Calculated based on the weighted average number of outstanding shares for the period; (8) Interest on own capital. Amounts paid/provisioned, declared and reserved in stockholders' equity; (9) Total number of outstanding shares (common and non-voting shares) multiplied by the average price per non-voting share on the last trading day in the period; (10) As detailed in the Balance Sheet section; (11) Includes ESBs (electronic service branches) and service points at third-party locations and Banco24Horas ATMs.

Itaú Unibanco Holding S.A.

05

Management Discussion & Analysis

Executive Summary

Managerial Income Statement

In this report, besides the adjustment of extraordinary items, we apply managerial criteria to present our income statement. In the accounting statements, these criteria affect the breakdown of our income statement, but not the net income. Among the managerial adjustments, we highlight the tax effects of the hedge on investments abroad, which were originally included in tax expenses (PIS and COFINS), and the income tax and social contribution on net income, which are reclassified to financial margin. The devaluation of the Brazilian Real against the currencies of the countries in which the Company has investments meant that the impact of the overhedging strategy on these investments was material in this quarter.

These reclassifications enable us to carry out business analyses from the management point of view and a reconciliation of the management and accounting figures is shown in the table below.

Accounting and Managerial Financial Statements Reconciliation | 4th quarter of 2020

Accounting

Extraordinary

Tax Effect

Managerial

Managerial

In R$ millions

Items

of Hedge

Reclassifications

Oper ating Revenues

35,321

(4,570)

(1,855)

284

29,180

Managerial Financial Margin

17,972

2

(1,855)

1,469

17,587

Financial Margin with Clients

13,987

2

-

2,031

16,020

Financial Margin with the Market

3,985

-

(1,855)

(563)

1,567

Commissions and Fees

10,470

-

-

(615)

9,855

Revenues from Insurance, Pension Plan and Premium Bonds

1,141

(18)

-

615

1,738

Operations Before Retained Claims and Selling Expenses

Other Operating Income

722

-

-

(722)

-

Equity in Earnings of Affiliates and Other Investments

448

(4)

-

(444)

-

Non-operating Income

4,569

(4,551)

-

(18)

-

Cost of Cr edit

(4,943)

689

-

(1,780)

(6,033)

Provision for Loan Losses

(5,760)

689

-

(570)

(5,641)

Impairment

-

-

-

(832)

(832)

Discounts Granted

-

-

-

(445)

(445)

Recovery of Loans Written Off as Losses

817

-

-

68

885

Retained Claims

(340)

-

-

-

(340)

Other Oper ating Expenses

(18,502)

1,393

232

1,674

(15,203)

Non-interest Expenses

(16,560)

1,495

-

1,743

(13,322)

Tax Expenses for ISS, PIS, Cofins and Other Taxes

(1,936)

(103)

232

(69)

(1,875)

Insurance Selling Expenses

(6)

-

-

-

(6)

Income befor e Tax and Pr ofit Shar ing

11,536

(2,488)

(1,623)

179

7,604

Income Tax and Social Contr ibution

(4,816)

656

1,623

(221)

(2,758)

Pr ofit Shar ing Management Member s - Statutor y

(42)

-

-

42

-

Minor ity Inter ests

914

(372)

-

-

543

Net Income

7,592

(2,204)

-

-

5,388

Extraordinary Items Net of Tax Effects

In R$ millions

4Q20

3Q20

4Q19

2020

2019

Net Income

7,592

4,492

7,482

18,909

26,583

(-) Extraordinary Items

2,204

(539)

186

373

(1,780)

Gain on the the partial sale of XP Inc. shares

3,193

-

-

3,193

-

Provision for restructuring (1)

(220)

-

-

(220)

-

Mark to market of collateralized securities

(379)

(346)

-

(1,031)

-

Goodwill amortization

(179)

(169)

(155)

(739)

(622)

Donation to 'Todos pela Saúde'

-

-

-

(834)

-

Reclassification of investment in IRB

-

-

-

379

-

Impairment of goodwill and intangible assets - Itaú Corpbanca

-

-

-

(19)

-

Voluntary severance program

-

-

-

-

(1,431)

Liability adequacy test

10

-

9

10

(59)

Gain due to the primary issuance of XP Inc. shares

-

-

1,974

-

1,974

Impairment, mainly related to technology

(92)

-

(37)

(92)

(37)

Revaluation of the tax credit balance

-

-

2,303

-

2,303

Civil, fiscal and labor contingencies

-

-

(1,307)

-

(1,307)

Constitution of provision for loan losses

-

-

(2,453)

-

(2,453)

Other

(128)

(24)

(148)

(272)

(148)

Recurring Managerial Result

5,388

5,030

7,296

18,536

28,363

(1) Mainly closing branches, returning administrative buildings, among others.

06

Itaú Unibanco Holding S.A.

Management Discussion & Analysis Executive Summary

4th quarter of 2020 Income Statement

In R$ millions

4Q20

3Q20

∍

4Q19

∍

2020

2019

∍

Operating Revenues

29,180

28,389

2.8%

31,833

-8.3%

114,785

119,790

-4 .2%

Managerial Financial Margin

17,587

16,928

3.9%

19,439

-9.5%

70,095

74,630

-6.1%

Financial Margin with Clients

16,020

15,554

3.0%

18,132

-11.6%

65,087

69,056

-5.7%

Financial Margin with the Market

1,567

1,373

14.1%

1,307

19.9%

5,008

5,573

-10.1%

Commissions and Fees

9,855

9,465

4.1%

10,356

-4.8%

37,230

37,307

-0.2%

Revenues from Insurance

1

1,738

1,996

-12.9%

2,038

-14.7%

7,460

7,853

-5.0%

Cost of Credit

(6,033)

(6,319)

-4 .5%

(5,811)

3.8%

(30,209)

(18,154)

66.4%

Provision for Loan Losses

(5,641)

(6,337)

-11.0%

(6,145)

-8.2%

(29,938)

(19,680)

52.1%

Impairment

(832)

(346)

140.4%

(230)

261.3%

(1,463)

(372)

292.8%

Discounts Granted

(445)

(617)

-27.9%

(379)

17.4%

(2,078)

(1,377)

51.0%

Recovery of Loans Written Off as Losses

885

981

-9.8%

943

-6.2%

3,270

3,275

-0.1%

Retained Claims

(340)

(363)

-6.3%

(330)

3.0%

(1,354)

(1,265)

7.0%

Other Operating Expenses

(15,203)

(14,298)

6.3%

(14,972)

1.5%

(57,004)

(57,819)

-1.4%

Non-interest Expenses

(13,322)

(12,678)

5.1%

(13,011)

2.4%

(50,164)

(50,626)

-0.9%

Tax Expenses for ISS, PIS, Cofins and Other Taxes

(1,875)

(1,615)

16.1%

(1,959)

-4.3%

(6,815)

(7,168)

-4.9%

Insurance Selling Expenses

(6)

(4)

45.2%

(2)

175.7%

(25)

(25)

-2.5%

Income before Tax and Minority Interests

7,604

7,409

2.6%

10,719

-29.1%

26,219

42,552

-38.4%

Income Tax and Social Contribution

(2,758)

(2,428)

13.6%

(3,384)

-18.5%

(8,063)

(13,496)

-40.3%

Minority Interests in Subsidiar ies

543

50

994 .2%

(39)

-1476.5%

380

(693)

-154 .8%

Recurring Managerial Result

5,388

5,030

7.1%

7,296

-26.1%

18,536

28,363

-34 .6%

  1. Revenues from Insurance includes the Revenues from Insurance, Pension Plan and Premium Bonds Operations before Retained Claims and Selling Expenses.

Credit Portfolio including Financial Guarantees Provided and Corporate Securities

In R$ billions, end of period

4Q20

3Q20

∍

4Q19

∍

In d ivid u als

255.6

237 .7

7 .5%

239.8

6.6%

Credit Card Loans

86.3

77.5

11.3%

90.9

-5.1%

Personal Loans

35.1

36.6

-4.3%

34.6

1.5%

Payroll Loans 1

55.3

50.8

8.9%

49.4

11.9%

Vehicle Loans

23.3

21.5

8.6%

19.0

23.0%

Mortgage Loans

55.7

51.3

8.6%

45.9

21.2%

V er y Small, Small and Middle Mar ket Loans 2

127 .6

122.5

4 .1%

95.3

33.9%

Individuals + V er y Small, Small and Middle Mar ket Loans

383.2

360 .2

6.4%

335.0

14 .4%

Cor por ate Loans

269.0

264 .8

1.6%

221.3

21.6%

Credit Operations

179.0

178.1

0.5%

148.4

20.6%

Corporate Securities 3

90.0

86.7

3.9%

72.8

23.6%

Total Br azil with Financial Guar antees Pr ovided and

652.2

625.0

4 .4%

556.3

17 .2%

Cor por ate Secur ities

Latin Amer ica

Argentina

Chile

Colombia

Paraguay

Panama

Uruguay

Total with Financial Guar antees Pr ovided and Cor por ate Secur ities

Total with Financial Guar antees Pr ovided and Cor por ate Secur ities (ex-for eign exchange r ate var iation) 4

217 .3

222.0

-2.1%

166.3

30 .7%

8.6

9.5

-10.0%

8.2

4.2%

150.8

154.0

-2.1%

111.8

34.9%

33.5

33.2

0.8%

27.5

21.6%

9.7

10.1

-3.7%

7.4

30.6%

1.6

2.0

-20.2%

1.3

20.3%

13.2

13.3

-0.2%

10.0

32.3%

869.5

847.0

2.7%

722.6

20 .3%

869.5

840 .9

3.4%

793.0

9.6%

  1. Includes operations originated by the institution, plus acquired operations. (2) Includes Rural Loans to Individuals. (3) Includes Debentures, Certificates of Real Estate Receivables (CRI), Commer- cial Paper, Rural Product Notes (CPR), Financial Bills, Investment Fund Quotas and Eurobonds. (4) Calculated based on the conversion of the foreign currency portfolio (U.S. Dollar and Latin American currencies). Note: The Mortgage and Rural Loan portfolios from the companies segment are allocated based on the client's size. Further details are provided on pages 23 and 24.

Itaú Unibanco Holding S.A.

07

Management Discussion & Analysis

Executive Summary

Performance analysis for the quarter and for the year 2020

Management commentary

Recurring managerial result reached R$5.4 billion in the fourth quarter of 2020, a 7.1% increase on the previous quarter. The recurring managerial return on equity was 16.1%. Our loan portfolio grew 4.4% in Brazil for all segments. Credit origination for individuals in Brazil grew 15% when compared to the previous quarter. The vehicle and mortgage loan portfolios are still highlights, and in this quarter, credit cards loan portfolio increased due to the typical seasonality effects during the period. In addition to these portfolios, the payroll loan book also presented significant growth during the quarter. We continue to support our very small and small companies clients with new financing from the Investment Guarantee Fund (FGI BNDES), a government-backedline facility. The cost of credit has decreased again and reached R$6.0 billion. Financial margin with clients grew driven by the higher average credit volume and increased margin in Latin America. These positive effects were partially offset by the ongoing change in the product mix, moving from the use of revolving credit lines due to the typical fourth quarter seasonality, and towards the higher use of installment credit instead. Margin with the market reached R$1.6 billion as a result of higher gains from balance sheet management. Commissions and fees were up due to the impact of: (i) higher levels of economic activity on revenue from cards (both issuer and acquirer), and (ii) higher revenue from performance fees on asset management activities. Non-interestexpenses increased in the quarter driven by the higher variable costs associated with higher economic activity, higher personnel expenses and the impact of foreign exchange variation on expenses in Latin America. In this quarter we closed 95 branches and client service points, which brings additional cost pressure in the period, but increases the potential for efficiency in the medium term.

In 2020, recurring managerial result reached R$18.5 billion, down 34.6% from the same period of the previous year. The recurring managerial return on equity was 14.5%. The change in the macroeconomic scenario from the second half of March 2020 led to a 66.4% increase in the cost of credit, which reached R$30.2 billion. This change, captured by our expected loss provisioning model, generated a higher provision for loan losses, both for our operations in Brazil and across the rest of Latin America. Financial margin with clients decreased by 5.7%, driven by the negative effects of regulatory changes in overdraft rates, the credit mix and a reduced interest rate on working capital, which were partially offset by an increase in credit volume. Margin with the market decreased by 10.1%, mainly driven by unexpected market volatility in the first quarter of 2020. The relative stability in fees and commissions was due to the 11.9% lower result from credit and debit cards, due to the drop-off in economic activity (mainly in the first half of the year), which was partially offset by the increase of 45.3% in revenue from advisory services and brokerage. Strategic costs management and our investments in technology led to a 0.9% reduction in non-interest expenses during 2020. In Brazil, expenses went down by 3.0%, which represents a real decrease of 7.6% (deflated by inflation). In Latin America, the growth in expenses is related to the exchange rate variation in the period. Throughout 2020, we added more than 3,700 employees to our technology team. In the same period, we closed 117 brick and mortar branches in Brazil. This reinforces our commitment to continue increasing our investment in technology and evolving in our journey of digital transformation.

main figures

recurring managerial result

R$5.4 bn

+7.1%

4Q20

4Q20 x 3Q20

credit portfolio

R$869.5 bn

+2.7%

4Q20

4Q20 x 3Q20

financial margin with clients

R$16.0 bn

+3.0%

4Q20

4Q20 x 3Q20

cost of credit

R$6.0 bn

-4.5%

4Q20

4Q20 x 3Q20

fees and insurance

R$11.2 bn

+1.4%

4Q20

4Q20 x 3Q20

non-interest expenses

R$13.3 bn

+5.1%

4Q20

4Q20 x 3Q20

15,000

30.0%

13,000

23.7%

25.0%

11,000

15.7%

16.1%

20.0%

9,000

7,296

12.8%

13.5%

7,000

5,388

15.0%

5,030

5,000

3,912

4,205

10.0%

3,000

5.0%

1,000

(1,000)

0.0%

4Q19

1Q20

2Q20

3Q20

4Q20

Recurring Managerial Result

Annualized Recurring Managerial Return on Average Equity (quarterly)

Recurring Managerial Return on Average Equity16.1%

Itaú Unibanco Holding S.A.

08

Management Discussion & Analysis

Executive Summary

Customer support during the crisis

Since the beginning of the crisis, we have sought to support our customers with complete and sustainable solutions. In the second half of March 2020, we launched the 60+ initiative, which granted, among other benefits, a 60-day grace period for repayments under credit contracts without delay. In mid-April 2020, we launched a more comprehensive support program called Travessia.

Loan portfolio reprofiling for individuals, very small and small companies

Balances at December 31, 2020

Portfolio

Portfolio

R$50.8 billion

risk profile

Non-overdueportfolio

Solutions offered to customers

86.5%

Grace periods of up to

Extended loan terms of up to

120 days for individuals and

6 years for individuals and

180 days for small and medium companies

5 years for small and medium companies

December 31st ,2020

Performing

82.6%

Within grace period

3.9%

Overdue between 15-90 days

8.3%

Overdue over 90 days

5.2%

New interest rate conditions

Itaú Unibanco Holding S.A.

9

Management Discussion & Analysis

Executive Summary

ESG highlights

In 2020, we significantly intensified our performance in sustainability, reinforcing our socio-environmental responsibility and our role in transforming Society.

As the largest private bank in Latin America, we have spared no effort in contributing to solving the complex problems in the Amazon region.

In a partnership with Bradesco and Santander, we have released an integrated plan aimed at effectively contributing to the sustainable development of the Amazon region. This plan includes ten measures designed from three actions fronts identified as priority for the region: environmental conservation and bioeconomy development; investment in sustainable infrastructure; and guarantee of basic rights for the population of the Amazon region. Among the ten measures, four were prioritized: encouraging sustainable chains, land regularization, zero illegal deforestation in the meat production chain and foster bioeconomy.

In December 2020, we held the Conference of the Amazon with the objective of raising relevant issues and debates on matters involving the region, as well as raising funds for projects in forest recovery and the generation of local income. The event was transmitted over three days and had more than twelve thousand participants. It brought together investors and managers of Brazilian and international funds, as well as clients of the bank. As a result, 380 thousand native trees will be planted with the donated resources.

todos pela saúde donation of more than R$ 1.2 billion to combat Covid-19

Todos pela Saúde

On April 13, 2020, we announced the creation of the initiative "Todos pela Saúde" (All for Health) whose purpose is to fight COVID-19 and its effects on Brazilian society. This initiative is guided by four pillars of action: inform, protect, care and return. A team of seven recognized specialists was designated to define the actions to be financed. Donations were made for the production of vaccines, test processing centers were created for the detection of the new coronavirus, individual protection equipment was distributed to hospitals throughout Brazil, among other measures.

Subsequent event: US$500 million raised in sustainable Tier 2 subordinated notes in January 2021

In January 2021, Itaú approached the international capital markets to raise funds through sustainable debt instrument. We raised U$ 500 million whose proceeds will be allocated to finance or refinance eligible green and social projects according to the criteria defined by the Framework for Sustainable Finance. The securities carry a term of 10 years and 3 months. This was the first issuance of Tier 2 capital by a financial institution to finance or refinance green and social projects in Latin America. The proceeds may be allocated to eight eligible catego- ries, namely: renewable energy and energy efficiency, sustainable transport, sustainable water and waste management, pollution prevention and control, sustainable management of natural resources and land use, green buildings, access to essential services and inclusive finance. The issuance of these debt securities is yet another step by the bank to demonstrate how sustainability has been incorporated into the business of Itaú Unibanco.

Itaú Unibanco Holding S.A.

10

Income Statement

and Balance Sheet

Analysis

Management Discussion and Analysis and Complete Financial Statements

Management Discussion & Analysis

Income Statement Analysis

Managerial Financial Margin

Highlights

  • Financial margin with clients was up 3.0% in the quarter, driven by the higher average credit volume. This positive effect was partially offset by the ongoing change in the credit product mix, with a higher share of guaranteed installment credit and the narrower spread in the quarter. During the year, the margin with clients decreased by 5.7% due to the negative effects of the regulatory change in the interest rate on overdrafts and the change in the credit product mix, partially offset by the increase in the balance of credit.
  • The 14.1% increase in financial margin with the market in the quarter was driven by higher gains from the management of assets and liabilities.

In R$ millions

4Q20

3Q20

4Q19

2020

2019

Financial Margin with Clients

16,020

15,554

3.0%

18,132

-11.6%

65,087

69,056

-5.7%

Financial Margin with the Market

1,567

1,373

14.1%

1,307

19.9%

5,008

5,573

-10.1%

Total

17,587

16,928

3.9%

19,439

-9.5%

70,095

74,630

-6.1%

Financial Margin with Clients

Breakdown of changes in the Financial Margin with Clients

R$ billions

15.6

2.0%

0.9

16.0

14.8

0.6

0.2

15.1

(0.8)

(0.4)

(0.1)

1

2

3

4

1

3Q20

(1)

Spread-Sensitive

Product Mix

Asset spreads

Average Asset

Latin America and

Spread-Sensitive

(1)

4Q20

Working Capital and

Working Capital and

other 3Q20

Operations 3Q20

Portfolio

other(2)

Operations 4Q20

other 4Q20

(1) Includes capital allocated to business areas (except treasury) and the corporation working capital. (2) Includes Latin America margin, liability financial margin and structured operations from the wholesale segment.

  1. Working capital and other (+ R$0.2 billion): the positive impact of the higher average balance as a consequence of the net income for the period.
    Product mix (- R$0.4 billion): lower use of revolving credit facilities related to typical fourth quarter seasonality and the increased use of
  2. guaranteed installment credit (payroll loans, vehicle and mortgage loans), in addition to the impact of the government-backed credit lines for very small and small companies.
  3. Asset spreads (- R$0.1 billion): reduction in the spreads on credit products for individuals, especially credit cards, personal and payroll loans.
  4. Average asset portfolio (+ R$0.6 billion): increase in loans for both individuals and companies, including the effect of the higher average balance of government-backed credit lines.

Annualized Average Rate of Financial Margin with Clients

4Q20

Average

Financial

Average Rate

In R$ millions, end of period

(1)

Margin

(p.a.)

Balance

Financial Margin with Clients

883,859

16,020

7.3%

Spread-Sensitive Operations

776,490

15,072

7.9%

Working Capital and Other

107,369

948

3.5%

Cost of Credit

(6,033)

Risk-Adjusted Financial Margin with Clients

883,859

9,986

4.5%

  1. Average daily balance.

Average

(1)

Balance

843,664

744,938

98,726

843,664

3Q20

Financial

Average Rate

Margin

(p.a.)

15,554

7.5%

14,771

8.1%

784

3.2%

(6,319)

9,235

4.4%

Consolidated

Brazil

10.0%

10.0%

10.0%

10.0%

9.2%

12.1%

12.2%

12.2%

11.9%

11.1%

8.4%

10.2%

7.5%

7.3%

9.2%

9.2%

9.0%

9.0%

8.4%

8.6%

7.6%

7.5%

7.4%

6.7%

5.2%

5.4%

6.2%

4.3%

4.4%

4.5%

4.1%

3.7%

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

4Q20

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

4Q20

Financial margin with clients

Risk-adjusted financial margin with clients

Itaú Unibanco Holding S.A.

12

Management Discussion & Analysis

Income Statement Analysis

Cost of Credit

Highlights

  • The decrease in the cost of credit in the quarter was driven by the lower provision for loan losses in Brazil. There was risk rating upgrade for Wholesale Banking segment clients, and a lower provision amount was required in the Retail Banking segment from the third quarter of 2020.
  • In 2020, the increase in the cost of credit was due to changes in the macroeconomic scenario and the financial prospects of individuals and companies from the second half of March 2020, captured by our expected loss provisioning model, impacting the provision for loan losses.

In R$ millions

4Q20

3Q20

4Q19

2020

2019

Provision for Loan Losses

(5,641)

(6,337)

-11.0%

(6,145)

-8.2%

(29,938)

(19,680)

52.1%

Recovery of Loans Written Off as Losses

885

981

-9.8%

943

-6.2%

3,270

3,275

-0.1%

Result from Loan Losses

(4,756)

(5,356)

-11.2%

(5,202)

-8.6%

(26,668)

(16,405)

62.6%

Impairment

(832)

(346)

140.4%

(230)

261.3%

(1,463)

(372)

292.8%

Discounts Granted

(445)

(617)

-27.9%

(379)

17.4%

(2,078)

(1,377)

51.0%

Cost of Credit

(6,033)

(6,319)

-4.5%

(5,811)

3.8%

(30,209)

(18,154)

66.4%

The cost of credit decreased by R$286 million from the previous quarter, driven by a lower provision for loan losses in Brazil, due to the risk rating upgrade of Wholesale Banking segment clients and to the lower provisioning requirement for expected losses in the Retail Banking segment. Additionally, discounts granted were down R$172 million, mainly in the Retail Banking segment in Brazil. Impairment charges on corporate securities increased for a single specific client in the Wholesale Banking in Brazil, for which a provision was already made, and also reversed in this quarter, with no effect on the cost of credit.

Changes in the macroeconomic scenario and the financial prospects of individuals and companies from the second half of March 2020, captured by our expected loss provisioning model, led to a R$10,258 million year-on-year increase in the provision for loan losses, mainly focused on Brazil. Impairment charges on corporate securities increased by R$1,090 million, and discounts granted increased R$702 million in the same period. These effects resulted in a R$12,055 million increase in the cost of credit for the year.

Cost of Credit

5.3%

R$ millions

3.3%

3.9%

3.0%

2.8%

10,087

266

7,770

89

6,319

5,811

750

6,033

379

196

617

445

230 '

9,732

'

346

832

5,202

6,823

5,356

4,756

4Q19

1Q20

2Q20

3Q20

4Q20

Discounts Granted

Impairment

Result from Loan Losses

Cost of Credit

Cost of Credit / Total Risk (*) - Annualized (%)

  1. The average loan portfolio balance, including financial guarantees provided and corporate securities, for the last two quarters.

Provision for Loan Losses by Segment

6.8

R$ millions

4.2

4.7

3.8

3.2

10,398

808

7,561

6,337

6,145

2,441

795

5,641

1,076

1,252

1,845

2,335

99

412

7,149

5,162

4,481

4,922

4,645

-1,339

4Q19

1Q20

2Q20

3Q20

4Q20

Latin America ex-Brazil

Wholesale Banking - Brazil

Retail Banking - Brazil

Provision for Loan Losses / Loan portfolio (*) - Annualized (%)

(*) Average loan portfolio balance, considering the last two quarters.

Note: Retail Banking includes loan loss provision expenses in the Corporation segment. In the business segment, Latin America is a part of Wholesale Banking.

The decrease in the provision for loan losses in Brazil, especially in the Wholesale Banking segment, was driven by the reversal of the provision for a specific client, which also had impairment recorded during in this quarter, without any effect on the cost of credit. Still in Wholesale Banking, there were risk rating upgrades for other clients in the segment. The provision for loan losses also decreased in the Retail Banking segment in Brazil driven by the lower provisioning requirements in the quarter. In Latin America, an increase occurred at Itaú Corpbanca, driven by uncertainty regarding the macroeconomic scenario and downgrades in the risk ratings of corporate clients.

Recovery of Loans Written off as Losses

R$ millions

943

'

738

981

885

666

4Q19

1Q20

2Q20

3Q20

4Q20

In the quarter, the balance of portfolios already written off as losses were sold for R$822 million, generating a positive impact of R$31 million in loan recoveries and of R$17 million in recurring managerial result.

Itaú Unibanco Holding S.A.

13

Management Discussion & Analysis Income Statement Analysis

Loan Portfolio by Risk Level

Allowance for Loan Losses and Financial Guarantees

Provided

Brazil¹

Consolidated

Total Allowance for Loan Losses (R$ million)

32,825

39,915

38,582

39,747

51,140

52,158

Loan Portfolio by Risk Level

43.6%

50.5%

49.4%

44.6%

48.7%

47.9%

36.1%

30.8%

32.0%

31.3%

26.8%

27.8%

5.7%

5.3%

6.1%

9.7%

10.2%

10.0%

6.2%

5.7%

5.1%

6.0%

6.2%

6.2%

8.3%

7.7%

7.4%

8.3%

8.1%

8.1%

Dec-19

Sep-20

Dec-20

Dec-19

Sep-20

Dec-20

AA

A

B

C

D-H

Compared to the end of December 2019, the allowance for loan losses and for financial guarantees provided were up 31.2%, mainly driven by the allowances for potential losses related to the macroeconomic scenario, which reflects our expectation of future losses. These changes are captured in our expected loss provisioning model. During the period, the allowances made for overdue operations were in line with the growth of the portfolio.

R$ millions

47,083

49,267

51,140

52,158

39,747

14,521

16,349

18,004

17,742

10,023

843

981

932

754

858

28,865

31,719

31,937

32,204

33,662

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Complementary Allowance

Allowance for Financial Guarantees Provided

Minimum Allowance

The total allowance allocation by type of risk is as set out below

Overdue Risk: allowances for overdue loans, as required by the Brazilian Central Bank, related to the provision required for overdue operations in accordance with CMN Resolution No. 2,682/1999. We also present the balances of loans subject to a 100% provision and loans not subject to a 100% provision.

Aggravated Risk: allowances for overdue loans with aggravated risk ratings above the minimum, and allowances for renegotiated loans. For renegotiated loans, we segregated allowances above the minimum for overdue operations and allowances for non-overdue operations.

Potential Risk: allowances for expected losses related to Retail Banking operations and allowances for potential losses related to Wholesale Banking operations, which include allowances for financial guarantees provided.

R$ millions

Allocation of the Total Allowance by Type of Risk - Consolidated

Dec-20

10,618

11,363

30,176

52,158

Sep-20

11,147

11,021

28,971

51,140

Dec-19

11,523

10,828

17,396

39,747

Overdue operations

Aggravated risk rating

Potential Loss

Provision < 100%

551

203

31%

Renegotiations

1,366

2,648

88%

5,937

28,971 30,176

8,128 10,104

17,396

2,548

Fully Provisioned

Overdue

3,999

3,859

7,042 4,745

11,523

11,147

10,618

1,419

1,509

1,591

524

721

743

9,579

8,917

8,285

Dec-19

Sep-20

Dec-20

1,039

540 69%

5,737

10,828 11,021 11,363

1,504 1,587 1,880

3,576 2,628 2,857

5,748 6,807 6,626

Dec-19Sep-20Dec-20

514

12% 689

209

13,801 15,326

9,538

Dec-19Sep-20Dec-20

Retail - Brazil ¹

Wholesale - Brazil ¹

¹ Includes units abroad ex-Latin America.² Excludes Brazil.

Itaú Unibanco Holding S.A.

Latin America ²

14

Management Discussion & Analysis

Income Statement Analysis

Credit Quality

Highlights

  • The NPL 90 days overdue ratio (NPL 90) increased from the previous quarter in both Brazil and Latin America. In Brazil, this increase is concentrated in very small, small and middle-market companies, mainly driven by the ends of the grace periods of loans reprofiled in previous periods.
  • The NPL 15 to 90 days overdue ratio (NPL 15-90) decreased in the quarter, mainly driven by the quality of loans recently granted in the individuals segment in Brazil, and the typical seasonality effects during the period. This positive impact was partially offset by the increase in the very small, small and middle market companies segment, reflecting the end of the grace period.

Nonperforming Loans

R$ billions

19.7

17.3

16.1

17.5

16.3

14.4

14.7

15.1

13.7

12.7

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Nonperforming Loans over 90 days - Total

Nonperforming Loans over 90 days - Brazil¹

  • Nonperforming loans - 90 days - Total: the 8.2% increase from the previous quarter is driven by the ends of the grace periods of loans reprofiled in previous periods to help our clients cope with the effects of the pandemic.

NPL Ratio (%) | over 90 days

NPL Ratio (%) | 15 to 90 days

2.4

2.6

2.3

2.4

1.7

2.0

1.8

1.7

1.9

1.8

3.5

3.1

2.4

3.0

2.3

3.0

2.4

1.6

1.9

1.9

1.7

1.9

1.1

1.8

1.0

1.2

0.7

0.9

0.7

0.6

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Total

Brazil¹

Latin America²

Individuals

Very Small, Small and Middle Market Companies

Corporate

4.8

5.1

5.0

2.3

2.3

2.0

1.9

2.0

1.4

1.1

0.5

0.7

Dec-19

Mar-20

Jun-20

Total

Individuals

Very Small, Small and Middle Market Companies

4.3

4.2

1.41.7

1.2

1.3

0.5

0.4

Sep-20

Dec-20

Brazil¹

Corporate

Latin America²

Both the total NPL 15-90 days ratio and that of Brazil decreased compared to the previous quarter due to the reduction in non- performing loans to individuals in Brazil, driven by the quality of loans recently granted and the typical seasonality effects during the period. This ratio increased for very small, small and middle-market companies, reflecting the ends of the grace periods, and the impacts of the pandemic on credit quality, while in June this ratio reached its lowest level since the merger between Itaú and Unibanco, driven by the reprofiling of the loan portfolio. The ratio for the corporate segment decreased from the previous quarter due to the renegotiation with a specific client. In Latin America, the increase in the NPL 15-90 ratio was mainly driven by the corporate segment in Chile.

The total NPL 90 days ratio for both Brazil and Latin America increased compared to the previous quarter. In Brazil, this growth is concentrated in very small, small and middle-market companies, mainly driven by the end of the grace period of the loans reprofiled in previous periods. For individuals this ratio declined, driven by the increase in loans, to reach its lowest level since the merger between Itaú and Unibanco, and did not yet reflect the impacts of the crisis on credit quality. The ratio for the corporate segment decreased compared the previous quarter, mainly due to renegotiations with specific clients that were already subject to adequate provision, with no concentration in any specific sector. The increase in Latin America was mainly driven by the individuals segment in Chile and Colombia and by the companies segment in Chile and Uruguay.

¹ Includes units abroad ex-Latin America.² Excludes Brazil.

Itaú Unibanco Holding S.A.

15

Management Discussion & Analysis Income Statement Analysis

Coverage Ratio | 90 days

339%

320%

281%

229%

239%

97%

102%

100%

106%

112%

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Total

Total (Expanded)

930%

920%

1013%

952%

638%

519%

470%

341%

238%

247%

315%

282%

269%

236%

228%

238%

253%

212%

183%

193%

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Total - Brazil¹

Latin America ex-Brazil

Retail Banking - Brazil

Wholesale Banking - Brazil

The 1,900 basis point decrease in the total coverage ratio resulted from an increase in non-performing loans overdue past 90 days, driven by the ends of the grace periods of loans reprofiled in previous periods. However, the provision recognized due to the change in the macroeconomic scenario from the second half of March, which is captured by our expected loss provisioning model, maintains a high coverage ratio.

¹ Includes units abroad ex-Latin America.

Loan Portfolio Write-Off

'

'

R$ millions

4,305

4,919

5,436

5,261

4,467

0.7%

0.8%

0.8%

0.8%

0.6%

4Q19

1Q20

2Q20

3Q20

4Q20

Write-Off

Write-Off / Loan Portfolio (*)

(*) Loan portfolio average balance for the previous two quarters.

Loan portfolio write-offs decreased by 15.1% on the previous quarter in all segments, driven by the lower level of overdue loans in the portfolio, due to the loans reprofiled in previous periods. The ratio of written-off operations to the average balance of the loan portfolio also decreased compared to the last quarters, driven both by the write -off reduction and the growth of the loan portfolio.

NPL Creation over Credit Portfolio(*)

1.6%

1.7%

1.7%

1.2%

1.1%

0.9%

0.8%

0.9%

0.8%

0.5%

0.7%

0.8%

0.4%

0.3%

0.1%

0.1%

0.1%

0.0%

-0.1%

-0.3%

4Q19

1Q20

2Q20

3Q20

4Q20

Total

Retail Banking - Brazil

Wholesale Banking - Brazil

Latin America ex-Brazil

Compared to the previous quarter, the increase was mainly driven by the increase in non-performing loans overdue for longer than 90 days in the Retail Banking segment in Brazil, as a result of the end of completion of loan portfolio reprofiling. This increase raised the ratio to the level observed before the pandemic.

  1. Credit portfolio of the previous quarter without financial guarantees provided and corporate

securities

Renegotiated Loans Operations

By overdue period measured at the time of renegotiation

The decrease of 1.0% in renegotiated loan operations was mainly due

R$ billions

to individual loans which were not overdue at the time of

Brasil

renegotiation, due to typical seasonality effects during the period,

25.7

28.9

32.6

32.4

32.0

partially offset by the increase in the balance of portfolios overdue for

31.7

35.7

36.3

35.9

30 days at the time of renegotiation. Due to the reduction in the

28.1

3.2

3.9

4.0

balance of this better quality portfolio, both the coverage ratio and

2.4

2.7

1.6

1.7

1.7

the NPL 90 ratio increased in the quarter.

2.0

1.7

9.8

9.8

9.9

7.9

7.3

7.6

8.1

39.3%

37.8%

6.1

8.4

34.8%

5.5

33.7%

32.6%

1.0

1.1

1.3

1.1

1.3

12.5

11.9

11.8

10.9

9.6

15.3%

17.0%

16.2%

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

11.5%

8.9%

Non-overdue

Up to 30 days overdue

31-90 days overdue

Over 90 days overdue

Written-off as a Loss

Latin America

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Coverage Ratio (LLP/Portfolio)

Total of Renegotiated Loans Portfolio 90-day NPL ratio (%)

Itaú Unibanco Holding S.A.

16

Management Discussion & Analysis

Income Statement Analysis

Commissions and Fees and Result from Insurance Operations¹

Highlights

  • Commissions and fees increased by 4.1% in the fourth quarter, driven by the growth in revenues from cards, for both issuing and acquiring activities, and higher gains from performance fees on fund management. These increases were partially offset by lower gains from: (i) advisory services, driven by lower volumes in capital markets, and (ii) current account services due to exemptions from fees as from November 2020.
  • Compared to 2019, commissions and fees remained practically stable due to the 11.9% decrease in revenue from credit and debit cards, driven by the economic activity downturn (mainly in the first half of 2020), partially offset by the 45.3% increase in revenue from advisory services and brokerage.

In R$ millions

4Q20

3Q20

4Q19

2020

2019

Credit and Debit Cards

3,109

2,836

9.6%

3,368

-7.7%

11,480

13,034

-11.9%

Card Issuance

2,381

2,194

8.5%

2,460

-3.2%

8,844

9,125

-3.1%

Acquiring

728

642

13.4%

908

-19.8%

2,635

3,909

-32.6%

Current Account Services

1,877

1,919

-2.2%

1,979

-5.2%

7,592

7,537

0.7%

Asset Management

1,440

1,322

9.0%

1,759

-18.1%

5,555

5,471

1.5%

Fund Management Fees

1,317

1,159

13.6%

1,584

-16.8%

4,940

4,771

3.5%

Consórcio Administration Fees

123

162

-24.1%

175

-29.7%

615

700

-12.1%

Advisory Services and Brokerage

1,155

1,245

-7.3%

1,143

1.0%

4,105

2,826

45.3%

Credit Operations and Guarantees Provided

612

575

6.5%

615

-0.5%

2,312

2,481

-6.8%

Collection Services

499

480

3.9%

488

2.1%

1,869

1,943

-3.8%

Other

379

359

5.6%

269

40.9%

1,365

1,098

24.3%

Latin America (ex-Brazil)

784

730

7.5%

734

6.8%

2,952

2,917

1.2%

Commissions and Fees

9,855

9,465

4.1%

10,356

-4.8%

37,230

37,307

-0.2%

Result from Insurance Operations¹

1,392

1,629

-14.5%

1,706

-18.4%

6,081

6,563

-7.3%

Total

11,247

11,094

1.4%

12,062

-6.8%

43,312

43,870

-1.3%

¹ Revenues from Insurance, Pension Plan and Premium Bonds Operations net of retained claims and selling expenses.

Credit and Debit Cards

Revenue from credit and debit card issuing activities were up 8.5% in the quarter, driven by the higher revenue from interchange fees related to the higher transaction volume in the period. In the year, the 3.1% decrease is related to lower revenues driven by the reduced economic activity in the first half of 2020 and the lower gains from annuity fees.

Revenue from acquiring activities was up 13.4% in the quarter, driven by the higher revenue from MDR (Merchant Discount Rates) due to the increase in the transaction volume. In 2020, lower revenue from MDR and the rental of machinery led to a decrease of 32.6%.

Card Issuance Activities

R$ millions

Acquiring Activities

R$ millions

Transaction Volume

4Q20

R$155.4 billion

+ 20.0% (vs. 3Q20) + 3.2% (vs. 4Q19)

credit

+ 17.9% (vs. 3Q20) + 0.2% (vs. 4Q19)

debit

+ 25.7% (vs. 3Q20) + 12.3% (vs. 4Q19

34.5

32.5

33.3

29.5

29.7

30.0

155,364

150,490

37,740

129,502

42,384

33,706

112,751

95,796

112,980

4Q19

3Q20

4Q20

Debit Card Transactions Volume

Credit Card Transactions Volume

Credit card accounts - does not include additional cards (millions) Debit card accounts - does not include additional cards (millions)

Note: Debit cards include account holders only.

Transaction Volume

1,463

4Q20

1,349

1,330

R$154.5 billion

141,862

154,475

130,959

+ 18.0% (vs. 3Q20)

62,029

51,362

+ 8.9% (vs. 4Q19)

51,929

credit

90,499

92,447

+ 17.0% (vs. 3Q20)

79,030

+ 2.2% (vs. 4Q19)

debit

4Q19

3Q20

4Q20

+ 19.5% (vs. 3Q20)

Credit Card Transactions Volume Debit Card Transactions Volume

+ 20.8% (vs. 4Q19)

Equipment Base (thousands)

Itaú Unibanco Holding S.A.

17

Management Discussion & Analysis

Income Statement Analysis

Current Account Services

Revenue from current account services decreased by 2.2% on the previous quarter, driven by exemptions from fees as from November 2020 due to the launch of PIX (the Central Bank of Brazil's instant payment system), partially offset by the higher revenue from current account packages, after months of granting exemptions to support our clients in coping with the effects of the pandemic.

In 2020, current account services recorded a slight increase of 0.7%, evidencing recovery after months of fee exemptions as a way of helping our clients cope with the effects of the pandemic.

Loan Operations and Financial Guarantees Provided

Revenue from the loan operations and financial guarantees provided increased by 6.5% compared to the previous quarter, mainly due to the increase in the vehicle loans portfolio.

Compared to 2019, this revenue was down 6.8%, driven by a lower volume of financial guarantees provided.

Asset Management

  • Fund Management

Fund management fees were up 13.6% driven by the higher revenue from performance fees and a 3.3% increase in managed portfolios and investment funds, which offset the effects of the lower number of business days compared to the previous quarter.

Managed Portfolio and Investment Funds

R$ billions

+3.3%

+1.8%

1,363

1,276

1,343

1,387

1,299

Dec-19

Mar-19

Jun-20

Sep-20

Dec-20

Note: Does not include Latin America (ex-Brazil).

  • Consórcio Administration Fees

Consórcio administration fees were down 24.1% in the quarter, driven by changes in the provisioning model and in dealer's commission.

Collection Services

Revenue from collection services was up 3.9% on the previous quarter, as a result of the higher transaction volume arising from the higher level of economic activity in the period.

Compared to 2019, this revenue was down 3.8% driven by the lower volume, explained by the decrease in the payment of bank bills as a result of the economic activity during the period

Advisory Services and Brokerage

Revenue from advisory and brokerage services decreased by R$90 million on the previous quarter, driven by the lower volume of operations in capital markets. Despite this decrease in the quarter, this revenue grew by 1.0% compared to the same period of the previous year.

Compared to 2019, this revenue increased by R$1,279 million due to the higher levels of capital market activity.

Fixed Income: we took part in local operations with debentures, promissory notes and securitization transactions, which totaled R$6,936 million in 2020, ranked first in the ANBIMA (Brazilian Financial and Capital Markets Association) ranking.

Equities: we took part in 39 transactions in South America in 2020, which totaled US$3,060 million, ranking first in the Dealogic ranking.

Mergers and Acquisitions: in 2020, we provided financial advisory services on 47 transactions in South America, totaling US$8,139 million and remaining first ranked in the Dealogic ranking.

Itaú Unibanco Holding S.A.

18

Management Discussion and Analysis

Insurance, Pension Plan and Premium Bonds

Result from Insurance, Pension Plan and Premium Bonds

Highlights

  • The decrease in result from insurance, pension plan and premium bonds in the quarter was driven by the lower managerial financial margin and a decrease in the equity in the earnings of affiliates.
  • In 2020, the COVID-19 pandemic mainly impacted earned premiums, revenues from premium bonds and retained claims, giving rise to lower result from insurance, pension plan and premium bonds.

Result from Insurance, Pension Plan and Premium Bonds

In R$ millions

4Q20

Earned Premiums

1,123

Revenues from Pension Plan

(0)

Revenues from Premium Bonds

90

Managerial Financial Margin

(96)

Commissions and Fees

537

Earnings of Affiliates

85

Revenues from Insurance, Pension Plan and Premium Bonds

1,738

Retained Claims

(340)

Insurance Selling Expenses

(6)

Result from Insurance, Pension Plan and Premium Bonds

1,392

Recurring Managerial Result

474

The decrease in the result from insurance, pension plan and premium bonds in the quarter was driven by lower managerial financial margin, due to lower returns on assets, mainly in relation to pension plans. This effect was partially offset by the increase in earned premiums, mainly in the credit life and protected card insurance portfolios. In 2020, this result decreased, driven by the lower premiums earned, the lower revenue from premium bonds, and the increase in retained claims, mainly due to the COVID-19 pandemic, on a year-on-year basis. These effects more than offset the increase in commission from third party insurance policies in the period. Additionally, managerial financial margin decreased in the period driven by lower return on assets, and gains from the liability adequacy test carried out in pension plan were up in the second quarter of 2019.

3Q20

4Q19

2020

2019

1,095

2.6%

1,195

-6.0%

4,482

4,636

-3.3%

(8)

-95.2%

(35)

-98.9%

(30)

(13)

135.2%

92

-2.4%

104

-13.4%

350

426

-17.8%

148

-

90

-

43

141

-69.5%

536

0.2%

553

-2.9%

2,118

2,114

0.2%

133

-36.2%

132

-35.9%

496

549

-9.5%

1,996

-12.9%

2,038

-14.7%

7,460

7,853

-5.0%

(363)

-6.3%

(330)

3.0%

(1,354)

(1,265)

7.0%

(4)

45.2%

(2)

175.7%

(25)

(25)

-2.5%

1,629

-14.5%

1,706

-18.4%

6,081

6,563

-7.3%

687

-31.0%

656

-27.8%

2,425

2,624

-7.6%

Earned Premiums Breakdown

R$ millions

1,195

1,151

1,113

1,095

1,123

10.0%

7.5%

7.0%

7.1%

7.1%

8.8%

9.4%

9.8%

10.0%

10.3%

5.9%

6.0%

6.0%

6.2%

5.8%

16.3%

16.3%

15.4%

14.7%

14.0%

14.9%

15.2%

15.8%

15.6%

16.2%

44.1%

45.6%

46.0%

46.4%

46.7%

4Q19

1Q20

2Q20

3Q20

4Q20

Life and Personal Accidents

Protected Card

Credit Life

Familiar Protection

Mortgage

Other

Retained Claims Breakdown

R$ millions

27.6%

28.6%

28.8%

33.1%

30.3%

330

329

321

363

340

25.1%

17.8%

16.4%

16.0%

14.5%

4.0%

5.6%

6.2%

4.5%

6.2%

4.0%

4.2%

4.6%

6.2%

2.0%

11.2%

12.4%

11.1%

10.5%

11.3%

18.6%

14.5%

13.2%

13.2%

15.6%

51.1%

39.9%

44.4%

47.0%

48.9%

4Q19

1Q20

2Q20

3Q20

4Q20

Life and Personal Accidents

Protected Card

Credit Life

Familiar Protection

Mortgage

Other

Insurance Claims/Earned Premiums

Technical Provisions

3.8 3.5 8.4

46.7 R$223.5

161.0 billion

R$ billions

Insurance

- 4.7% (vs. 4Q19)

Premiums Bonds

+ 0.4% vs. 4Q19)

Traditional

+ 21.6% (vs. 4Q19)

PGBL

+ 4.1% (vs. 4Q19)

VGBL

+ 1.3% vs. 4Q19)

Pro Forma Income Statement of the Insurance Segment (Recurring Activities)

In R$ millions

4Q20

4Q19

The results of recurring insurance activities, which consist of

Earned Premiums

1,060

1,110

-4.5%

bancassurance products related to life, property, credit life and

Retained Claims

(297)

(287)

3.6%

third party insurance policies, decreased by 12.7% year-on-year

Selling Expenses

(5)

(4)

19.0%

basis. This reduction was driven by lower earned premiums, due to

Underwriting Margin

758

819

-7.5%

the sale of the insurance company in Chile, and by lower sales of

Managerial Financial Margin

(17)

15

-

Commissions and Fees

123

114

8.2%

credit life insurance, lower managerial financial margin, and an

Other Income and Expenses ¹

(486)

(516)

-5.7%

increase in retained claims, mainly due to the COVID-19 pandemic.

Recurring Managerial Result

377

432

-12.7%

Recurring Return on Allocated

71.5%

104.4%

-32.9 p.p.

Combined Ratio

63.9%

54.8%

9.1 p.p.

1 Includes earnings of affiliates, non-interest expenses, tax expenses for ISS, PIS and COFINS, income tax/social contribution and minority interests.

Note: As from 4Q20, the Familiar Protection products are considered as Insurance Recurring Activities. Previously this was treated as a Pension Plan product.

19

Itaú Unibanco Holding S.A.

Management Discussion & Analysis

Income Statement Analysis

Non-interest Expenses

Highlights

  • Compared to the previous quarter, non-interest expenses increased by 5.1%, driven by higher variable costs due to growth in economic activity and increased personnel expenses. Increase in expenses in Latin America were driven by foreign exchange variations.
  • Ongoing efficiency measures reduced expenses by 0.9% in 2020. In Brazil, the reduction was 3.0% in the year, which corresponds to a real reduction of 7.6% (deflated by IPCA). In Latin America, the increase in expenses is related to the exchange variations during the period.
  • Throughout 2020 we added more than 3,700 employees to our technology team. In this same period, we closed 117 brick and mortar branches in Brazil. This reinforces our commitment to continue increasing our investment in technology and to continue the evolution in our digital transformation journey.

In R$ millions

Per sonnel Expenses

Compensation, Charges and Social Benefits

(1)

Management and Employees' Profit Sharing

Employee Terminations and Labor Claims

Training

Administr ative Expenses

Third-Party Services, Security and Transportation

Data Processing and Telecommunications

Facilities and Materials

Depreciation and Amortization

Advertising, Promotions and Publications

Financial System Services

Other

Oper ating Expenses

Selling - Credit Cards

Contingencies, Claims and Other

Other Tax Expenses

( 2 )

Total - Br azil

Latin Amer ica (ex-Br azil)

( 3 )

Total

4Q20

3Q20

4Q19

2020

2019

(5,720)

(5,333)

7 .3%

(5,664)

1.0%

(21,369)

(22,144)

-3.5%

(3,727)

(3,732)

-0.1%

(3,411)

9.3%

(14,482)

(14,099)

2.7%

(1,355)

(1,015)

33.5%

(1,426)

-5.0%

(4,470)

(5,346)

-16.4%

(596)

(571)

4.5%

(777)

-23.2%

(2,325)

(2,538)

-8.4%

(41)

(15)

171.4%

(50)

-16.5%

(92)

(161)

-42.9%

(4,373)

(4,083)

7 .1%

(4,262)

2.6%

(16,499)

(16,777)

-1.7%

(1,603)

(1,418)

13.1%

(1,507)

6.4%

(5,784)

(5,580)

3.6%

(958)

(871)

10.0%

(919)

4.2%

(3,469)

(3,800)

-8.7%

(640)

(692)

-7.6%

(741)

-13.6%

(2,725)

(2,965)

-8.1%

(629)

(643)

-2.2%

(587)

7.1%

(2,534)

(2,221)

14.1%

(296)

(214)

38.4%

(222)

33.3%

(946)

(1,069)

-11.4%

(162)

(166)

-2.5%

(166)

-2.3%

(665)

(585)

13.6%

(85)

(79)

7.1%

(120)

-29.0%

(376)

(558)

-32.5%

(1,132)

(1,200)

-5.7%

(1,284)

-11.9%

(4,563)

(4,844)

-5.8%

(674)

(516)

30.6%

(759)

-11.2%

(2,445)

(2,645)

-7.6%

(458)

(684)

-33.0%

(525)

-12.8%

(2,118)

(2,199)

-3.7%

(48)

(95)

-49.5%

(98)

-51.0%

(352)

(361)

-2.6%

(11,273)

(10,711)

5.2%

(11,307)

-0 .3%

(42,783)

(44,126)

-3.0%

(2,048)

(1,967)

4 .2%

(1,704)

20 .2%

(7,381)

(6,500)

13.6%

(13,322)

(12,678)

5.1%

(13,011)

2.4%

(50,164)

(50,626)

-0 .9%

(1) Includes variable compensation and stock option plans. (2) Does not include ISS, PIS and COFINS. (3) Does not consider overhead allocation.

In Brazil, the increase in non-interest expenses in the quarter was driven by higher personnel expenses, due to increased expenses related to profit sharing, the higher number of employee terminations and investments in training in connection with corporate projects and the hiring of new employees. Additionally, the increase in administrative expenses was driven by higher levels of economic activity in the quarter, with increases in expenses for third party services, advisory and consulting services, and data processing. Advertising expenses have also increased due to marketing campaigns carried out in the period. In Latin America expenses increased driven by the foreign exchange variation during the period.

Cost efficiency measures, such as the closure of brick and mortar branches, leading to reduced fixed costs, the voluntary severance program offered in the second half of 2019, and lower employee profit sharing expenses were the main reasons for this decrease in non- interest expenses in 2020. Expenses related to data processing and telecommunication, facilities and materials, and credit card selling activities also decreased, mainly driven by lower economic activity as a result of the pandemic. Expenses increased by 13.6% in Latin America, mainly driven by foreign exchange variation in the period. The sum of these effects led to a 0.9% decrease in non-interest expenses year-on- year.

Number of Employees - in thousands

94.9

95.3

97.4

96.9

96.5

12.7

12.7

12.6

12.1

12.1

0.5

0.5

0.5

0.6

0.5

74.5

74.5

74.5

73.8

72.9

7.2

7.6

9.9

10.5

11.0

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

ZUP and IT team

Brazil (ex-Tech team)

Abroad (ex-Latin America)

Latin America

Note: Includes the employees of companies controlled by the Bank.

96.5 thousand

employees at the end of the 4Q20

- 0.4% (4Q20/3Q20) + 1.7% (4Q20/4Q19)

Committed to speeding up our digital transformation process, we have hired more personnel for the technology area and, as from the second quarter of 2020, the employees of Zup are taken into account, leading our workforce to increase by 1.7% year-on-year. In March 2020 we temporarily suspended dismissals without cause, among the various initiatives taken in the context of the COVID-19 crisis. In September 2020, all people management activities, including hiring, promotions and dismissals, were resumed.

Itaú Unibanco Holding S.A.

20

Management Discussion & Analysis Income Statement Analysis

Efficiency Ratio

Efficiency Ratio:

46.5

48.0

49.4

44.0

44.4

45.5

45.0

45.1

45.7

47.1

Non-interest expenses in Brazil

1.7%

3.1%

2.9%

-0.6%

-3.0%

-1.3%

-1.4%

4Q19

1Q20

2Q20

3Q20

4Q20

Trailing 12-month Efficiency Ratio (%)

Quarterly Efficiency Ratio (%)

12-month period: increase of 160 basis points year-on-year. These cost efficiency actions allowed a 0.9% decrease in non-interest expenses, whereas revenue decreased by 4.2%.

Digitalization

Branches Efficiency Ratio in 4Q20

Brick and Mortar Branches

Digital Branches

76.7%31.8%

-7.6%

2017

2018

2019

2020

Non-interest expenses growth year over year

Non-interest expenses growth year over year (deflated by IPCA)

Non-interest expenses in Brazil were down 3.0% year-on-year. In the same period, inflation rate was 4.5% (IPCA). The actual decrease in 2020, inflation-adjusted, was 7.6% year-on-year.

Complete digital

More speed

offering

(less Time to Market)

+81% (2020 vs. 2019)

-25% (2020 vs. 2019)

The investment in technology enabled the modernization of our platform. We delivered 81% more technology solutions to our clients in 2020, bringing new services and features to our digital platforms. In addition, this investment allowed the increase in productivity and the reduction in the technology solutions implementation time by 25% in the last 12 months.

Distribution Network

Points of Service | Brazil and Abroad

The number of available ATMs in our own network in Brazil decreased by 3.3% year-on-years, driven by the closure of brick and mortar branches.

46,271

45,701

45,809

45,889

45,556

23,780

23,268

23,386

23,676

23,798

1,107

1,091

1,085

1,066

1,071

576

576

571

572

570

20,808

20,766

20,767

20,575

20,117

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Brazil

ESB

Latin America

Banco24Horas

Note: (i) Includes Banco Itaú Argentina and banks in Chile, Colombia, Paraguay and Uruguay; (ii) Includes ESBs (Electronic Service Branches) and points of service in third-parties' establishments. (iii) Does not include points of sale.

Itaú Unibanco Holding S.A.

Branches and Client Service Branches | Brazil and Abroad

The search for efficiency and higher demand for services through digital channels led to an annual decrease of 3.7% in the number of brick and mortar branches in Brazil.

4,504

4,501

4,488

4,432

4,337

196

196

196

196

196

3,158

3,156

3,155

3,127

3,041

671

671

669

664

656

479

478

468

445

444

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Branches + CSB (Latin America ex-Brazil)

CSB - Brazil

Brick and Mortar Branches - Brazil

Digital Branches - Brazil

  1. Includes IBBA representative offices abroad. Note: Includes Banco Itaú BBA, Banco Itaú Argentina and companies in Chile, Colombia, Panama, Paraguay and Uruguay.

Geographical Distribution of Service Network(*)

Number of Branches and Client Service Branches

North

Northeast

Midwest

Southeast

South

106

298

276

2,610

590

(*) In December 2020. Does not include branches and CSBs in Latin America and Itaú BBA.

21

Management Discussion & Analysis

Balance Sheet

Balance Sheet

Highlights

  • Total assets were up 0.1% in the quarter and 21.5% in the last 12 months. Compared to the previous quarter, there was a 13.4% increase in securities and derivatives and 3.1% in loan operations.
  • Deposits grew by 5.8% in the quarter and 59.5% in the last 12 months, mainly due to the increase in time deposits (77.2% p. a.), demand deposits (63.8% p. a.) and savings deposits (24.2% p. a.).

Assets (In R$ millions, end of period)

4Q20

3Q20

∍

4Q19

∍

Current and Long-term Assets

0.1%

1,702,123

22.0%

2,076,112

2,073,487

Cash

46,224

47,069

-1.8%

30,367

52.2%

Interbank Investments

294,486

380,300

-22.6%

232,362

26.7%

Securities and Derivative Financial Instruments

712,071

628,175

13.4%

545,286

30.6%

Interbank and Interbranch Accounts

134,640

131,196

2.6%

135,499

-0.6%

Loan, Lease and Other Loan Operations

710,553

689,327

3.1%

583,017

21.9%

(Allowance for Loan Losses)

(51,404)

(50,208)

2.4%

(38,888)

32.2%

Other Assets

229,542

247,628

-7.3%

214,480

7.0%

Permanent Assets

36,474

36,633

-0.4%

36,591

-0.3%

Total Assets

2,112,586

2,110,120

0.1%

1,738,713

21.5%

Liabilities (In R$ millions, end of period)

4Q20

3Q20

∍

4Q19

∍

Current and Long-Term Liabilities

1,961,718

1,964,550

-0.1%

1,593,167

23.1%

Deposits

809,010

765,019

5.8%

507,060

59.5%

Deposits Received under Securities Repurchase Agreements

280,541

315,624

-11.1%

269,838

4.0%

Fund from Acceptances and Issue of Securities

136,638

139,783

-2.2%

143,568

-4.8%

Interbank and Interbranch Accounts

59,147

60,847

-2.8%

54,180

9.2%

Borrowings and Onlendings

83,200

91,073

-8.6%

76,393

8.9%

Technical Provisions for Insurance

79,599

78,426

1.5%

47,815

66.5%

Provisions

16,250

16,255

0.0%

16,620

-2.2%

Allowance for Financial Guarantees Provided

754

932

-19.1%

858

-12.1%

Bonds

223,469

218,584

2.2%

220,666

1.3%

Other Liabilities

273,110

278,007

-1.8%

256,169

6.6%

Deferred Income

3,163

3,203

-1.2%

2,698

17.2%

Minority Interest in Subsidiaries

11,112

11,808

-5.9%

10,861

2.3%

Stockholders' Equity

136,593

130,559

4.6%

131,987

3.5%

Total Liabilities and Equity

2,112,586

2,110,120

0.1%

1,738,713

21.5%

Assets and liabilities denominated in foreign currencies

We have a foreign exchange risk management policy associated with our asset and liability positions, primarily intended to mitigate the impacts of fluctuations in foreign exchange rates on the consolidated results.

Brazilian tax legislation provides for that gains and losses from exchange rate variations on permanent foreign investments are not to be included in the tax basis. Gains and losses on financial instruments used to hedge such asset positions are otherwise impacted by tax effects. Therefore, to prevent income being exposed to exchange rate variations, a short position must be built at a volume higher than the balance of the hedged assets.

In R$ millions, end of period

4Q20

3Q20

Investments Abroad

60,699

66,665

-8.9%

Net Foreign Exchange Position (Except Investments Abroad)

(81,912)

(122,374)

-33.1%

Total

(21,213)

(55,708)

-61.9%

Total in US$

(4,082)

(9,877)

-58.7%

The net foreign exchange position not only includes the hedge positions of our investments abroad, but also directional positions in foreign currencies.

Itaú Unibanco Holding S.A.

22

Management Discussion & Analysis

Balance Sheet

Credit Portfolio

Highlights

  • The individual loans portfolio was up 7.6% in the quarter, and the highlight was the economic recovery-driven increase in the credit card portfolio, wich is seasonally higher in the fourth quarter. Additionally, worthy of note is the increase in payroll loans, specifically in the INSS portfolio, associated with a higher payroll loan margin due to regulatory changes. The increased demand for vehicle and mortgage loans led to significant increases both in the fourth quarter and year-on-year.
  • The companies loan portfolio grew by 3.0% in the quarter, boosted by vehicles, driven by higher client demand and working capital, due to the granting of credit lines through the National Support Program for Micro and Very Small Businesses (Pronampe) and the Investment Guarantee Fund (Fundo Garantidor de Investimentos - FGI). In the 12 month period, the portfolio grew by 33.3%, with major increases in working capital, vehicles, and rural loans.

Credit Portfolio by Product

In R$ billions, end of period

4Q20

3Q20

7.6%

4Q19

6.6%

Individuals - Brazil

( 1 )

254.8

236.9

239.0

Credit Card Loans

86.3

77.5

11.3%

90.9

-5.1%

Personal Loans

34.2

35.8

-4.4%

33.7

1.5%

Payroll Loans

(2)

55.3

50.8

8.9%

49.4

11.9%

Vehicle Loans

23.3

21.5

8.6%

19.0

23.0%

Mortgage Loans

55.7

51.3

8.6%

45.9

21.2%

Rural Loans

0.0

0.0

-20.1%

0.1

-58.6%

Companies - Brazil

( 1 )

253.8

246.4

3.0%

190.4

33.3%

Working Capital

(3)

169.4

153.4

10.4%

108.2

56.6%

BNDES/Onlending

8.6

9.4

-8.4%

10.6

-18.6%

Export / Import Financing

48.4

57.5

-15.9%

48.6

-0.5%

Vehicle Loans

12.3

11.0

11.9%

9.1

35.2%

Mortgage Loans

4.5

4.7

-4.7%

4.3

4.2%

Rural Loans

10.6

10.3

2.8%

9.5

10.8%

Latin America

( 4 )

201.9

206.1

-2.0%

153.7

31.4%

Total without Financial Guarantees Provided

710.6

689.3

3.1%

583.0

21.9%

Financial Guarantees Provided

68.9

71.0

-2.9%

66.7

3.3%

Total with Financial Guarantees Provided

779.5

760.3

2.5%

649.7

20.0%

Corporate Securities

(5)

90.0

86.7

3.9%

72.8

23.6%

Total Risk

869.5

847.0

2.7%

722.6

20.3%

  1. Includes units abroad excluding Latin America. (2) Includes operations originated by the institution and acquired operations. (3) Also includes Overdraft, Receivables, Hot Money, Leasing, and other. (4) Includes Argentina, Chile, Colombia, Panama, Paraguay and Uruguay. (5) Includes Debentures, Certificates of Real Estate Receivables (CRI), Commercial Paper, Rural Product Notes (CPR), Financial Bills, Investment Fund Quotas and Eurobonds.

Credit Concentration

Companies Credit Portfolio with Financial Guarantees by Business Sectors

Largest debtors, as of December 31, 2020

In R$ billions, end of period

4Q20

3Q20

Only 14.4% of the credit risk is concentrated on the 100

-5.3%

Public Sector

5.5

5.8

largest debtors.

-0.2%

Private Sector

433.6

434.6

4.0%

Real Estate

31.6

30.4

In R$ billions

Risk*

Risk / Total credits

Risk / Total assets

2.3%

Transportation

27.4

26.8

0.7%

Food and beverages

25.0

24.9

Largest debtor

7.2

0.9%

0.3%

-3.2%

Agribusiness and fertilizers

23.3

24.1

10 Largest debtors

37.9

4.9%

1.8%

0.2%

Vehicles and auto parts

19.9

19.9

20 Largest debtors

54.8

7.0%

2.6%

6.6%

Energy and water treatment

19.5

18.3

50 Largest debtors

83.4

10.7%

3.9%

1.6%

Banks and financial institutions

17.7

17.4

100 Largest debtors

112.3

14.4%

5.3%

-0.6%

Petrochemical and chemical

15.0

15.1

(*) Including Financial Guarantees Provided.

1.4%

Infrastructure work

13.0

12.8

0.4%

Steel and metallurgy

11.1

11.0

Credit Portfolio without Financial Guarantees

1.3%

Pharmaceuticals and cosmetics

10.9

10.8

Provided by Vintage

583

689

711

-0.2%

Telecommunications

9.8

9.8

3.4%

Electronics and IT

9.7

9.4

In R$ billions

31.9%

-20.2%

Mining

9.4

11.7

32.7%

32.9%

6.0%

Entertainment and tourism

8.9

8.4

q = <-5

-4.7%

Oil and gas

7.6

8.0

q - 4

4.7%

4.5%

5.0%

-1.2%

Capital Assets

6.6

6.7

5.4%

6.7%

6.0%

-1.4%

Construction Materials

5.9

6.0

q - 3

8.8%

7.9%

11.2%

11.4%

2.3%

Health

5.5

5.4

15.1%

14.2%

-2.2%

Services - Other

53.5

54.7

q - 2

-0.8%

Commerce - Other

29.5

29.7

37.0%

q - 1

32.8%

31.7%

-12.9%

Industry - Other

11.3

13.0

Actual quarter (q)

1.7%

Other

61.5

60.5

-0.3%

Total

439.1

440.4

4Q19

3Q20

4Q20

Itaú Unibanco Holding S.A.

23

Management Discussion & Analysis Balance Sheet

Credit Portfolio¹ (individuals and companies) - Brazil

Loan Portfolio Mix - Individuals

Loan Portfolio Mix - Companies

Credit cards

Payroll loans

Mortgage

Personal

Vehicles

Corporate

Very small, small and middle market

Dec-20

33.9%

21.7%

21.9%

9.2%

52.1%

47.9%

Dec-19

38.1%

20.7%

19.2%

14.1%

7.9%

52.6%

47.4%

32.0%

21.8%

15.6%

15.1%

15.6%

68.0%

32.0%

Dec-14

Payroll loans

R$55.3 bn as of December 31, 2020

+ 8.9% (vs. Sep-20)

+ 11.9% (vs. Dec-19)

The payroll loan portfolio for INSS pensioners was up 10.6% from the end of September 2020.

Portfolio by origination (%)

4th Quarter of 2020

45% 55%

Branches

Itaú Consignado S.A.

Portfolio by sector (R$ billions)

4th Quarter of 2020

3.6

6.8

INSS

Private sector

44.9

Public sector

Credit cards

R$86.3 bn as of December 31, 2020

+ 11.3% (vs. Sep-20)- 5.1% (vs. Dec-19)

8.7%

8.9%

6.6%

6.9%

8.6%

7.9%

86.4%

82.7%

83.2%

Dec-19

Sep-20

Dec-20

  1. Includes nonperforming loans more than 1 day overdue;
  2. includes installments without interest.

Mortgage loans 2

R$60.2 bn as of December 31, 2020

+ 7.5% (vs. Sep-20)

+ 19.7% (vs. Dec-19)

92.5%

of the mortgage portfolio

is Individuals

99.8%

guaranteed by

fiduciary alienation

Originations

4th Quarter of 2020

R$9.3 bn

vs. 4Q19)

83.7%

of total credit mortgage

is done by borrowers

Loan-to-value

Ratio of the amount of the financing to the value of real estate property.

Vintage (quarterly average)

Portfolio

64.6%

35.7%

Vehicle financing

R$23.3 bn as of December 31, 2020

+ 8.6% (vs. Sep-20)

+ 23.0% (vs. Dec-19)

Originations

4th Quarter of 2020

R$4.8 bn

vs. 4Q19)

% Average

Average Term

Down Payment

Average Ticket

45 months

38%

R$39.0 thousand

Loan-to-value

Vintage (quarterly average)

Portfolio

60.4%

61.4%

Corporate loans

R$132.3 bn as of December 31, 2020

+ 2.0% (vs. Sep-20)

+ 32.2% (vs. Dec-19)

In the fourth quarter of 2020, credit origination3 was up 38% year-on-year.

Very small, small and middle market

R$121.6 bn as of December 31, 2020

+ 4.1% (vs. Sep-20)

+ 34.5% (vs. Dec-19)

In the fourth quarter of 2020, credit origination3 for very small, small and middle- market companies increased 5% year-on- year.

  1. Without financial guarantees provided. (2) Includes Individuals and Companies. (3) Average origination per working day in the quarter. Note: For further information on products, please see to our Institutional Presentation, available on our Investor Relations website.

Itaú Unibanco Holding S.A.

24

Management Discussion & Analysis

Balance Sheet

Funding

Highlights

  • Funding from clients grew by 5.0% in the quarter and 44.8% in the last 12 months, boosted by (i) time deposits, up 6.6% in the quarter and 77.2% in the last 12 months, (ii) demand deposits, up 5.5% in the quarter and 63.8% in the last 12 months, and (iii) savings deposits, up 4.1% in the quarter and 24.2% in the last 12 months. This growth is associated with the positive flow of funds, noted from the second half of March 2020.
  • The assets under management grew by 4.5% in the quarter and 14.2% in the last 12 months, represented by the increase of 14.7% in own products and 11.2% in open platform, year-on-year.

In R$ m illions , e nd of pe r iod

4Q 20

3Q20

4Q19

Funding from Clients (A)

881,561

839,765

5.0%

608,990

44.8%

Demand Deposits

134,805

127,827

5.5%

82,306

63.8%

Savings Deposits

179,470

172,391

4.1%

144,558

24.2%

Time Deposits

491,234

460,926

6.6%

277,166

77.2%

Debentures (Linked to Repurchase Agreements and Third Parties' Operations)

1,985

2,729

-27.3%

5,258

-62.2%

Funds from Bills¹ and Structured Operations Certificates

74,067

75,891

-2.4%

99,703

-25.7%

Other Funding (B)

187,366

199,180

-5.9%

151,331

23.8%

Onlending

11,456

11,464

-0.1%

11,648

-1.6%

Borrowing

71,744

79,609

-9.9%

64,745

10.8%

Securities Obligations Abroad

62,571

63,891

-2.1%

43,866

42.6%

Other²

41,594

44,215

-5.9%

31,073

33.9%

Portfolio Managed and Investment Funds (C)

1,423,641

1,377,413

3.4%

1,387,457

2.6%

Total (A) +(B) + (C)

2,492,567

2,416,358

3.2%

2,147,779

16.1%

Assets under Management

1,951,233

1,867,200

4.5%

1,709,196

14.2%

Own Products

1,646,827

1,578,374

4.3%

1,435,408

14.7%

Open Platform

304,406

288,826

5.4%

273,788

11.2%

(1) Includes funds from Real Estate, Mortgage, Financial, Credit and Similar Notes. (2) Includes installments of subordinated debt not included in the Tier II Referential Equity.

Loans and funding

The ratio of loan portfolio to funding net of compulsory deposits and cash and cash equivalents reached 76.7% in the fourth quarter of 2020.

91.9%

81.2%

75.6%

76.8%

76.7%

76.7%

71.1%

65.1%

66.3%

66.5%

In R$ Billions

1,069

1,010

1,039

927

900

897

760

788

870

657

689

711

635

583

640

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Itaú Unibanco Holding S.A.

25

Management Discussion & Analysis

Capital and Risk

Capital, Liquidity and Market ratios

Itaú Unibanco assesses the adequacy of its capital to face the risks incurred, represented by the regulatory capital for credit, market and operational risks and by the capital necessary to cover other risks, in accordance with the rules disclosed by the Central Bank of Brazil implementing the Basel III capital requirements in Brazil.

Tier I Capital Ratio

On December 31, 2020, our Tier I Capital reached 13.2%, consisting of 11.5% Common Equity Tier I and of 1.7% Additional Tier I.

12.4%

0.2%

0.3%

0.3%

13.2%

1.7%

1.7%

10.7%

11.5%

Tier I

Follow On+ Sell XP Inc.

Net Income and Dividends

Credit risk-weighted assets

Tier I

Sep-20

Dec-20

Common Equity Tier I (CET I)

Additional Tier I (AT1)

Capital Ratios

Main changes in the quarter:

Referential Equity: increase of 3.0% driven by the net income for the period and gains from the sale of XP Inc., partially offset by the payment of mandatory minimum dividends.

RWA: decrease of R$26,532 million. The reduction amount of credit risk- weighted assets (RWACPAD) was mainly driven by foreign exchange variations in the period.

BIS ratio: increase of 80 basis points, mainly driven by the net income for the period. In December 2020, our BIS ratio was 425 basis points above the minimum required with capital buffers (10.25%).

In R$ million, end of period

4Q20

3Q20

Common Equity Tier I

119,960

113,910

Tier I (Common Equity + Additional Capital)

137,157

132,272

Referential Equity (Tier I and Tier II)

151,244

146,894

Total Risk-weighted Assets (RWA)

1,042,207

1,068,739

Credit Risk-weighted Assets (RWACP A D)

921,934

948,063

Operational Risk-weighted Assets (RWAOP A D)

92,792

92,792

Market Risk-weighted Assets (RWAM I NT )

27,481

27,884

Common Equity Tier I Ratio

11.5%

10.7%

Tier I Capital Ratio

13.2%

12.4%

BIS Ratio (Referential Equity / Total Risk-

weighted Assets)

14.5%

13.7%

Liquidity Ratios

These ratios are calculated based on the methodology defined by the Brazilian Central Bank, which is in line with the Basel III international guidelines.

Liquidity Coverage Ratio (LCR)

The average LCR in the quarter was 194.6%, above the 100% limit, which means that we have sufficient stable resources available to support losses in stress scenarios.

In R$ millions

Dec-20

Sep-20

HQLA

343,174

328,202

Potential Cash Outflows

176,355

168,331

LCR (%)

194.6%

195.0%

Net Stable Funding Ratio (NSFR)

The NSFR was 126.0% at the end of the quarter, above the 100% limit, which means that we have stable resources available to support the stable resources required in the long term.

In R$ millions

Dec-20

Sep-20

Available Stable Funding

956,033

932,718

Required Stable Funding

758,907

754,386

NSFR (%)

126.0%

123.6%

For 2020, the minimum liquidity ratio indicators required by the Brazilian Central Bank is 100%.

Note: The ratios were calculated based on the Prudential information, which includes financial institutions, consórcio managers, payment institutions, companies that acquire operations or directly or indirectly assume credit risk and investment funds in which the conglomerate retains substantially all of the risks and benefits.

Value at Risk - VaR 1

This is one of the main market risk indicators and a statistical metric that quantifies the potential economic losses expected in normal market conditions.

In R$ millions, end of period

4Q20

3Q20

VaR by Risk Factor

Interest Rates

431

337

Currency

24

12

Shares on the Stock Exchange

30

11

Commodities

1

2

Diversification Effects

(263)

(177)

Total VaR

223

185

Maximum VaR in the quarter

228

250

Average VaR in the quarter

206

208

Minimum VaR in the quarter

180

171

(1) Values represented above consider a 1-day time horizon and a 99% confidence level.

Note: Further information on risk and capital management is available on the Investor Relations website at www.itau.com.br/investor-relations, in section Reports - Pillar 3 and Global Systemically Important Banks.

Itaú Unibanco Holding S.A.

26

Management Discussion and Analysis

Segment Analysis

Results by Business Segment

The Pro Forma financial statements of Retail Banking, Wholesale Banking and Activities with the Market + Corporation presented below are based on managerial information derived from internal models which more accurately reflect the activities of the business units.

Retail Banking

Retail banking products and services offered to both current account and non-current account holders include: personal loans, mortgage loans, payroll loans, credit cards, acquiring services, vehicle financing, insurance, pension plan and premium bond products, among others. Current account holders are segmented into: (i) Retail, (ii) Uniclass, (iii) Personnalité and (iv) Very small and small companies.

Highlights

  • Increase in recurring managerial result in the quarter was driven by higher commissions and fees, mainly for cards. Additionally, cost of credit was down 15.3%, driven by lower provisioning requirement in the quarter. These positive effects were partially offset by increased non-interest expenses.
  • The 54.4% reduction in recurring managerial result was due to lower revenues from financial margin and card services on a year-on-year basis.

In R$ millions Operating Revenues Managerial Financial Margin Commissions and Fees Revenues from Insurance, Pension Plans and Premium Bonds Operations before Retained Claims and Selling Expenses

4Q20

3Q20

4Q19

17,851

17,433

2.4%

20,965

-14.9%

9,822

9,761

0.6%

12,452

-21.1%

6,255

5,913

5.8%

6,667

-6.2%

1,774

1,759

0.8%

1,846

-3.9%

Cost of Credit

(4,270)

(5,040)

-15.3%

(4,230)

0.9%

Retained Claims

(339)

(360)

-6.0%

(315)

7.7%

Other Operating Expenses

(10,618)

(9,927)

7.0%

(10,698)

-0.7%

Income before Tax and Minority Interests

2,624

2,105

24.7%

5,722

-54.1%

Income Tax and Social Contribution

(890)

(660)

35.0%

(2,032)

-56.2%

Minority Interests in Subsidiaries

(74)

(20)

269.5%

(47)

56.2%

Recurring Managerial Result

1,660

1,426

16.4%

3,643

-54.4%

Recurring Return on Average Allocated Capital

14.7%

12.5%

2.2 p.p.

35.2%

-20.5 p.p.

Efficiency Ratio (ER)

57.6%

55.0%

2.6 p.p.

48.3%

9.3 p.p.

Loan Portfolio (R$ billion)

+ 8.1%

+ 11.8%

316.5

283.1

282.6

292.9

274.4

Dec-19Mar-20Jun-20Sep-20Dec-20

Digital Transformation in the Retail Banking

Use of Digital Channels 1

number of current account holders (in millions)

Share of Transactions through digital channels*

Online account opening flow

Individuals accounts (in thousands)

11.1

14.3

12.5

2020

2018

Credit

25%

19%

Investments

47%

41%

514

225268

1.1

1.2

1.2

Payments

85%

76%

4Q18

4Q19

4Q20

Dec-18

Dec-19

Dec-20

* Note: Share of digital channels in the total volume (R$) of

Individuals

Companies

transactions in the Retail Bank segment.

¹ Internet, mobile and SMS on Retail Bank.

27

Management Discussion and Analysis

Segment Analysis

Results by Business Segment

Wholesale Banking

Wholesale Banking is comprised of: i) the activities of Itaú BBA, the unit responsible for commercial operations with large companies and for investment banking services, ii) the activities of our units abroad, iii) Itaú Asset Management, a specialized asset manager, and iv) the products and services offered to high net worth clients (Private Banking), middle market companies and institutional clients.

Highlights

  • The 15.9% increase in recurring managerial result in the quarter was driven by increases in: (i) financial margin due to higher credit volume in Brazil and Latin America, and (ii) commissions and fees due to higher asset management fees. These effects were partially offset by higher cost of credit in Latin America.
  • The increase was 13.9% on a year-on-year basis and was driven by the increase in financial margin, partially offset by lower commissions and fees, and increases in cost of credit and non-interest expenses.

In R$ millions Operating Revenues Managerial Financial Margin Commissions and Fees Revenues from Insurance, Pension Plans and Premium Bonds Operations before Retained Claims and Selling Expenses

4Q20

3Q20

4Q19

8,595

8,211

4.7%

8,451

1.7%

5,306

4,966

6.8%

4,787

10.8%

3,247

3,067

5.9%

3,470

-6.4%

42

178

-76.5%

194

-78.5%

Cost of Credit

(1,764)

(1,279)

37.9%

(1,581)

11.6%

Retained Claims

(1)

(3)

-44.0%

(16)

-90.4%

Other Operating Expenses

(4,286)

(4,235)

1.2%

(4,092)

4.7%

Income before Tax and Minority Interests

2,543

2,695

-5.6%

2,762

-7.9%

Income Tax and Social Contribution

(898)

(813)

10.5%

(788)

13.9%

Minority Interests in Subsidiaries

629

80

684.7%

23

2607.4%

Recurring Managerial Result

2,274

1,962

15.9%

1,997

13.9%

Recurring Managerial Return on Average Allocated Capital

15.9%

13.1%

2.8 p.p.

17.2%

- 1.3 p.p.

Efficiency Ratio (ER)

47.2%

49.2%

-2.0 p.p.

45.8%

1.4 p.p.

Loan Portfolio (R$ billion)

- 0.6%

+ 31.4%

396.4

394.1

357.1

383.1

299.9

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Activities with the Market + Corporation

Assets under management - ANBIMA ranking (R$ billion)

+ 1.5%

- 2.3%

770.8

724.8

720.2

741.8

752.7

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Assets under management (Itaú Unibanco e Intrag)

Includes: (i) results of the capital surplus, excess subordinated debt and the net balance of tax assets and liabilities; (ii) financial margin with the market; (iii) costs of Treasury operations and (iv) the equity pickup from companies not linked to any segment.

In R$ millions

4Q20

3Q20

4Q19

Operating Revenues

2,735

2,745

-0.4%

2,417

13.2%

Managerial Financial Margin

Commissions and Fees

Revenues from Insurance, Pension Plans and Premium Bonds Operations before Retained Claims and Selling Expenses

2,459

2,201

11.7%

2,201

11.7%

353

485

-27.1%

218

62.3%

(77)

59

-231.7%

(2)

4590.7%

Cost of Credit

(0)

0

-

0

-

Other Operating Expenses

(299)

(136)

119.6%

(182)

64.3%

Income before Tax and Minority Interests

2,436

2,609

-6.6%

2,235

9.0%

Income Tax and Social Contribution

(969)

(955)

1.5%

(564)

71.9%

Minority Interests in Subsidiaries

(12)

(11)

15.8%

(15)

-20.5%

Recurring Managerial Result

1,455

1,643

-11.5%

1,656

-12.1%

Recurring Return on Average Allocated Capital

18.7%

28.5%

-9.8 p.p.

18.9%

- 0.2 p.p.

Efficiency Ratio (ER)

3.8%

3.1%

0.7 p.p.

1.4%

2.4 p.p.

Itaú Unibanco Holding S.A.

28

Management Discussion & Analysis

Activities Abroad

Results by Region (Brazil and Latin America)

We present below the income statement segregated between our operations in Brazil, which includes units abroad excluding Latin America,

and our operations in Latin America excluding Brazil. Our operations in Brazil¹ represent 99.6% of the recurring managerial result for the quarter.

Brazil¹ (In R$ millions, end of period)

Operating Revenues Managerial Financial Margin Financial margin with clients Financial margin with the Market Commissions and Fees Revenues from Insurance² Cost of Credit Provision for Loan Losses Impairment Discounts Granted Recovery of Loan Loans Written Off as Losses Retained Claims Other Operating Expenses Non-interestexpenses Tax Expenses and Other³ Income before Tax and Minority Interests Income Tax and Social Contribution Minority Interests in Subsidiaries

Recurring Managerial Result Share Return on Average Equity - Annualized

4Q20

3Q20

4Q19

2020

2019

25,890

25,427

1.8%

28,701

-9.8%

102,462

107,844

-5.0%

15,081

14,696

2.6%

17,073

-11.7%

60,725

65,727

-7.6%

13,984

13,616

2.7%

16,333

-14.4%

57,494

61,958

-7.2%

1,097

1,080

1.5%

740

48.2%

3,231

3,769

-14.3%

9,071

8,735

3.8%

9,622

-5.7%

34,278

34,390

-0.3%

1,738

1,996

-12.9%

2,006

-13.4%

7,460

7,726

-3.4%

(3,821)

(5,363)

-28.8%

(4,624)

-17.4%

(25,602)

(15,492)

65.3%

(3,307)

(5,261)

-37.1%

(4,893)

-32.4%

(24,924)

(16,734)

48.9%

(832)

(346)

140.4%

(230)

261.3%

(1,463)

(372)

292.8%

(433)

(611)

-29.2%

(344)

26.0%

(2,052)

(1,300)

57.8%

751

856

-12.3%

843

-11.0%

2,837

2,914

-2.6%

(340)

(363)

-6.3%

(316)

7.8%

(1,354)

(1,216)

11.3%

(12,947)

(12,221)

5.9%

(13,134)

-1.4%

(49,167)

(50,790)

-3.2%

(11,176)

(10,658)

4.9%

(11,208)

-0.3%

(42,513)

(43,716)

-2.8%

(1,770)

(1,564)

13.2%

(1,926)

-8.1%

(6,654)

(7,074)

-5.9%

8,782

7,480

17.4%

10,628

-17.4%

26,340

40,346

-34.7%

(3,328)

(2,605)

27.7%

(3,546)

-6.1%

(8,493)

(13,110)

-35.2%

(86)

(31)

181.1%

(63)

37.4%

(221)

(249)

-11.1%

5,368

4,844

10.8%

7,019

-23.5%

17,626

26,987

-34.7%

99.6%

96.3%

3.3 p.p

96.2%

3.4 p.p

95.1%

95.1%

0.0 p.p

17.8%

16.8%

1.0 p.p

25.1%

- 7.4 p.p

15.3%

24.9%

-9.6 p.p

Latin America (In R$ millions, end of period)

Operating Revenues Managerial Financial Margin Financial margin with clients Financial margin with the Market Commissions and Fees Revenues from Insurance² Cost of Credit Provision for Loan Losses Impairment Discounts Granted Recovery of Loan Loans Written Off as Losses Retained Claims Other Operating Expenses Non-interestexpenses Tax Expenses and Other³ Income before Tax and Minority Interests Income Tax and Social Contribution Minority Interests in Subsidiaries

Recurring Managerial Result

Share

Return on Average Equity - Annualized

4Q20

3Q20

4Q19

2020

2019

3,290

2,962

11.1%

3,132

5.1%

12,323

11,946

3.2%

2,506

2,232

12.3%

2,365

5.9%

9,371

8,902

5.3%

2,036

1,938

5.0%

1,799

13.2%

7,593

7,098

7.0%

471

293

60.3%

567

-17.0%

1,777

1,804

-1.5%

784

730

7.5%

734

6.8%

2,952

2,917

1.2%

-

-

-

32

-

-

127

-

(2,213)

(956)

131.4%

(1,187)

86.5%

(4,607)

(2,662)

73.1%

(2,335)

(1,076)

116.9%

(1,252)

86.5%

(5,014)

(2,946)

70.2%

-

-

-

-

-

-

-

-

(12)

(6)

109.4%

(35)

-65.4%

(26)

(76)

-65.8%

134

126

6.7%

100

34.0%

433

361

20.0%

-

-

-

(15)

-

-

(49)

-

(2,256)

(2,076)

8.7%

(1,838)

22.7%

(7,837)

(7,029)

11.5%

(2,145)

(2,020)

6.2%

(1,803)

19.0%

(7,652)

(6,910)

10.7%

(111)

(56)

99.2%

(36)

210.3%

(185)

(120)

54.7%

(1,179)

(71)

1557.1%

92

-1384.3%

(121)

2,206

-105.5%

570

177

221.9%

161

253.7%

429

(386)

-211.3%

629

80

683.8%

23

2607.3%

601

(444)

-235.4%

20

186

-89.0%

276

-92.6%

910

1,376

-33.9%

0.4%

3.7%

-3.3 p.p

3.8%

-3.4 p.p

4.9%

4.9%

0.0 p.p

0.6%

5.7%

-5.1 p.p

9.8%

-9.2 p.p

7.4%

12.0%

-4.6 p.p

Main foreign exchange variations compared to the Brazilian Real (BRL)

BRL vs. U.S. Dollar

Colombian Peso vs. BRL

Uruguayan Peso vs. BRL

Argentine Peso vs. BRL

Chilean Peso vs. BRL

Paraguayan Guarani vs. BRL

- 7.9% (4Q20 vs. 3Q20)

- 3.7% (4Q20 vs. 3Q20)

+ 7.7% (4Q20 vs. 3Q20)

+ 19.6% (4Q20 vs. 3Q20)

- 2.0% (4Q20 vs. 3Q20)

+ 7.1% (4Q20 vs. 3Q20)

+ 28.9%

(4Q20 vs. 4Q19)

- 19.3%

(4Q20 vs. 4Q19)

- 11.9%

(4Q20 vs. 4Q19)

+ 8.8%

(4Q20 vs. 4Q19)

- 26.7%

(4Q20 vs. 4Q19)

- 17.1%

(4Q20 vs. 4Q19)

R$ 5.641

R$ 5.197

813.67

9.21

7.53

8.11

16.16

186.43

681.66

14.85

13.50

139.41

1,598

1,325

R$ 4.031

656.60

1,237

136.57

4Q19

3Q20

4Q20

4Q19

3Q20

4Q20

4Q19

3Q20

4Q20

4Q19

3Q20

4Q20

4Q19

3Q20

4Q20

4Q19

3Q20

4Q20

  1. Includes units abroad ex-Latin America. (2) The result from Insurance includes the Revenue from Insurance, Pension Plan and Premium Bonds Operations before Retained Claims and Selling Expenses. (3) Include Tax Expenses (ISS, PIS, COFINS and other) and Insurance Selling Expenses. Note: Information for Latin America is presented in nominal currencies.

Itaú Unibanco Holding S.A.

29

Management Discussion & Analysis

Activities Abroad

Global Footprint

France1

England1 2

Germany

Our business

Spain 1

Switzerland

USA 1 2 3

Portugal 1

abroad focuses

on the following

Mexico 1

Cayman 1

2 3

activities:

Bahamas 1 3

Panama 1

4

Colombia

1

4

Brazil 1

1

Corporate &

Peru

1

2 3 4

Investment

Paraguay

2

Asset Management

1

2

3

4

Chile

Uruguay 1

3

Private Banking

1

2

3 4

4

1

3

4 Retail

Argentina 1 2 4

Countries

Uruguay ¹

Chile

Argentina

Paraguay

Colombia ²

Latin America ³

Other countries

Total

Employees

1,065

5,340

1,584

975

3,098

12,062

559

96,540

Branches & CSBs

24

185

84

40

111

444

-

4,337

ATMs

62

408

175

301

125

1,071

-

45,556

Note: The Global Footprint map does not include localities and regions in run-off or closing operations; (1) Does not include OCA's 33 Points of Service; (2) Includes employees in Panamá; (3) Latin America ex-Brazil (Argentina, Chile, Colombia, Paraguay and Uruguay).

Latin America

In R$ millions (in constant currency)

Operating Revenues Managerial Financial Margin Financial Margin with Clients Financial Margin with the Market Commissions and Fees Cost of Credit Provision for Loan Losses Recovery of Loans Written Off as Losses Other Operating Expenses Non-InterestExpenses Tax Expenses for ISS, PIS, COFINS and Other Taxes Income before Tax and Minority Interests Income Tax and Social Contribution Minority Interests in Subsidiaries ¹

Recurring Managerial Result Return on Average Equity - Annualized Efficiency Ratio

Itaú Corpbanca

Itaú Argentina

Itaú Paraguay

Itaú Uruguay

4Q20

3Q20

4Q20

3Q20

4Q20

3Q20

4Q20

3Q20

1,928

1,845

5%

456

371

23%

271

272

0%

456

463

-2%

1,540

1,496

3%

370

293

26%

192

203

-5%

247

254

-3%

1,371

1,370

0%

259

218

19%

160

143

12%

214

213

1%

168

126

33%

111

75

47%

33

60

-46%

33

41

-21%

389

349

11%

86

78

10%

79

69

14%

209

209

0%

(2,127)

(461)

362%

(36)

(454)

-92%

(2)

(11)

-82%

(25)

(17)

47%

(2,240)

(574)

290%

(37)

(454)

-92%

(6)

(16)

-62%

(28)

(20)

43%

123

117

5%

1

1

50%

4

5

-20%

5

4

17%

(1,359)

(1,357)

0%

(274)

(226)

21%

(169)

(129)

31%

(309)

(288)

7%

(1,358)

(1,357)

0%

(240)

(201)

20%

(165)

(125)

32%

(309)

(288)

7%

(1)

(1)

-1%

(35)

(25)

37%

(4)

(4)

1%

(0)

(0)

-

(1,557)

27

-5831%

146

(308)

-147%

100

131

-24%

122

158

-23%

686

89

668%

(56)

147

-138%

(27)

(53)

-48%

(47)

(62)

-25%

627

84

643%

-

-

-

-

-

-

-

-

-

(244)

201

-222%

90

(161)

-156%

72

78

-8%

75

96

-21%

-15.5%

11.9%

-27.4 p.p.

24.1%

-45.2%

69.3 p.p.

20.6%

23.3%

-2.7 p.p.

14.8%

19.5%

-4.7 p.p.

70.4%

73.6%

-3.1 p.p.

56.9%

58.0%

-1.1 p.p.

61.8%

46.8%

15.0 p.p.

67.7%

62.2%

5.6 p.p.

(1) Minority interests are calculated based on the accounting result of the transaction in BRGAAP.

Highlights of Latin America in constant currency, eliminating the effects of exchange rate variations and using the managerial concept.

Itaú Corpbanca

Itaú Argentina

Itaú Paraguay

Itaú Uruguay

• Higher margin with the market

•

Higher margin with the market

•

Operating revenue remained

• Lower margin with the mar-

due to volatility of local interest

driven by gains on derivatives.

stable from the previous quarter.

ket driven by a decrease in

and inflation rates.

•

Provision for corporate clients in

• Lower cost of credit driven by

revenue from securities.

• Higher cost of credit driven by

the third quarter of 2020 driven

upgrades and debt settlements in

• Higher cost of credit driven

additional provisions due to the

by the macroeconomic scenario.

the fourth quarter in the corpo-

by credit downgrades of

macroeconomic scenario and

•

Higher personnel expenses due to

rate and companies segments.

companies.

credit downgrades of corporate

the collective labor agreement

•

Increase in operating expenses

• Higher personnel expenses

clients.

related adjustments and higher

due to the settlement of adminis-

due to increased variable

variable compensation.

trative proceedings.

compensation.

Itaú Unibanco Holding S.A.

30

Additional

Information

Management Discussion & Analysis and Complete Financial Statements

Management Discussion & Analysis Itaú Unibanco Shares

Itaú Unibanco Shares

Our capital stock is comprised of common

Market Capitalization

shares (ITUB3) and non-voting shares

R$311 billion

US$60 billion

(ITUB4), both traded on B3 (São Paulo Stock

Exchange). Non-voting shares are also traded

The market capitalization is the total number of outstanding shares

as deposit receipts (ADRs) on the New York

(common and non-voting shares) multiplied by the average price per

Stock Exchange (NYSE).

non-voting share on the last trading day in the period.

Corporate Structure Chart and Free Float Participation

Free Float*

Egydio de Souza

Moreira Salles Family

Non Voting Shares

Aranha Family

Free Float

100.00% Total

Foreigners

Brazilian Investors

36.73% ON

63.27% ON

in B3

in NYSE

81.87% PN

18.13% PN

Cia. E. Johnston de

36%

4.8 bn

27%

66.36% Total

33.64% Total

Participações

(number of

shares)

38%

50.00% ON

Foreigners

33.47% Total

in B3

Itaúsa

50.00% ON

IUPAR

Free Float*

100.00% PN

66.53% Total

7.76% ON

39.21% ON

51.71% ON

99.62% PN

0.004% PN

26.26% Total

52.96% Total

19.91% Total

Itaú Unibanco Holding S.A.

Note: ON = Common Share; PN = Non-voting Share; (*) Excluding shares held by majority owners and treasury shares.

Market Consensus (ITUB4) -12/29/20

Sell

Buy

Buy 11

Hold 04

Sell 00

Source: Thomson Reuters .

Sell

Buy

Buy 13

Hold 04

Sell 01

Source: Bloomberg.

Strengths of our ownership

  • Family ownership and control ensuring a long-term view
  • Professional management team
  • Broad shareholder base
    (52.96% of our shares are free floating)
  • Strong corporate governance

Performance in the Capital Market

(R$)

(R$)

(US$)

Price and volume

ITUB4

ITUB3

ITUB

(Common Shares)

(Non-voting shares)

(ADR)

Closing price at 12/31/2020

31.63

27.93

6.09

Maximum Price During the Quarter

32.43

28.60

4.96

Average Price During the Quarter

27.63

25.05

4.87

Minimum Price During the Quarter

22.18

21.10

4.80

Closing Price at 09/30/2020

22.50

21.38

3.98

Closing Price at 12/31/2019

37.10

32.03

9.15

Change in 4Q20

40.6%

30.6%

53.0%

Change in the last 12 months

-14.7%

-12.8%

-33.4%

Average Daily Trading Volume in 4Q20 - million

1,047.6

19.3

189.5

Average Daily Trading Financial Volume in 12 months - million

1,028.7

23.9

172.3

Shareholder base and indicators

12/31/20

09/30/20

12/31/19

Number of Shares - million

9,804

9,804

9,804

Common Shares (ON) - million

4,958

4,958

4,958

Non-voting Shares (PN) - million

4,846

4,846

4,846

Treasury Shares - million

41.7

41.7

58.5

Number of Outstanding Shares - million

9,762

9,762

9,746

Number of Shareholders

466,560

513,451

241,166

Recurring Managerial Result per Share During the Quarter (R$)

0.55

0.52

0.75

Net Income per Share During the Quarter (R$)

0.78

0.46

0.77

Book value per Share (R$)

13.99

13.37

13.54

Price/Earnings (P/E) ¹

16.32

11.67

13.59

Price/Book value (P/B) ²

2.26

1.68

2.74

  1. Closing price of non-voting shares at end of the period/earnings per share. For calculation purposes, the retained earnings for the last 12 months were included; (2) Closing price of non-voting shares at end of the period/Book value per share at end of the period.

Itaú Unibanco Holding S.A.

32

Management Discussion & Analysis

Glossary

Glossary

Executive Summary

Operating Revenues

The sum of Managerial Financial Margin, Commissions and Fees and Result from Insurance, Pension Plan and Premium Bonds Operations before Retained Claims and Selling Expenses.

Managerial Financial Margin

The sum of the Financial Margin with Clients and the Financial Margin with the Market.

Recurring Managerial Return on Average Equity - Annualized

Obtained by dividing the Recurring Managerial Result by the Average Stockholders' Equity. The resulting amount is multiplied by the number of periods in the year to derive the annualized rate. The calculation bases of returns were adjusted by the dividends proposed after the balance sheet closing dates, which have not yet been approved at annual Stockholders' or Board meetings.

Recurring Managerial Return on Average Assets - Annualized

Obtained by dividing the Recurring Managerial Result by the Average Assets.

Coverage Ratio

Obtained by dividing the total allowance balance by the balance of operations more than 90 days overdue.

Efficiency Ratio

Obtained by dividing the Non-Interest Expenses by the sum of Managerial Financial Margin, Commissions and Fees, Result of Insurance, Pension Plan and Premium Bonds Operations and Tax Expenses (ISS, PIS, COFINS and Other Taxes).

Recurring Managerial Result per Share Calculated based on the weighted average number of outstanding shares for the period, including stock splits when they take place.

Dividends and Interest on Own

Capital Net of Taxes

Corresponds to the distribution of part of the profits to stockholders, paid or provisioned, declared and posted in Stockholders' Equity.

Market Capitalization

Obtained by multiplying the total number of outstanding shares (common and non-voting shares) by the average price per non-voting share on the last trading day of the period.

Tier I Capital Ratio

The sum of the Common Equity Tier I and the Additional Tier I Capital, divided by the Total Risk Weighted Assets.

Cost of Credit

Composed of the Result from Loan Losses, Impairment and Discounts Granted.

Managerial Financial Margin

Financial margin with clients

Consists of spread-sensitive operations, working capital and others. Spread-sensitive operations include: (i) the assets margin, which is the difference between the amount received from loan operations and corporate securities and the cost of money charged by treasury banking and (ii) the liabilities margin, which is the difference between the cost of funding and the amount received from treasury banking. The working capital margin is the interest on working capital at the SELIC interest rate.

Financial margin with the market Includes treasury banking, which manages mismatches between assets and liabilities - Asset and Liability Management (ALM), terms, the rates of interest, foreign exchange and others, and treasury trading, which manages proprietary portfolios and may assume guiding positions, in compliance with the limits established by our risk appetite.

Mix of Products

Change in the composition of credit risk assets between periods.

Average asset portfolio

Includes the portfolio of credit and private securities net of loans more than 60 days overdue, but excluding the effects of average exchange rate variations during the periods.

Asset spreads

Variation in the spreads on credit risk assets between periods.

Annualized average rate of financial margin with clients

Obtained by dividing the Financial Margin with Clients by the average daily balances of spread-sensitive operations, working capital and others. The quotient of this division is divided by the number of calendar days in the quarter and annualized (rising to 360) to obtain the annual rate.

Credit Quality

NPL Ratio (over 90 days)

Calculated by dividing the balance of loans which are non-performing for longer than 90 days by the total loan portfolio. Loans more than 90 days overdue include the total balance of transactions with at least one installment more than 90 days overdue.

NPL Creation

The balance of loans that became more than 90 days overdue during the quarter.

Cost of Credit over Total Risk

Calculated by dividing the Cost of Credit by the average Loan Portfolio for the last two quarters.

Itaú Unibanco Holding S.A.

33

Management Discussion & Analysis

Glossary

Results from Insurance, Pension Plan and Premium Bonds

Underwriting Margin

The sum of earned premiums, retained claims and selling expenses.

Combined Ratio

The sum of retained claims, selling expenses, administrative expenses, other operating income and expenses, tax expenses for ISS, PIS and COFINS and other taxes divided by earned premiums.

Credit Portfolio

Loan-to-Value

Ratio of the amount of financing to the value of the underlying real estate.

Funding

Loan Portfolio over Gross Funding

Obtained by dividing Loans by Gross Funding (Funding from Clients, Funds from Acceptance and Issuance of Securities Abroad, Borrowing and Others) at the end of the period.

Common Equity Tier I

The sum of social capital, reserves and retained earnings, less deductions and prudential adjustments.

Additional Tier I Capital

Consists of instruments of aperpetual nature, which meet the eligibility requirements.

Tier I Capital

The sum of the Common Equity Tier I and the Additional Tier I Capital.

Tier II Capital

Consists of subordinated debt instruments with defined maturity dates that meet the eligibility requirements.

Total Capital

The sum of the Tier I and Tier II Capital.

Total Risk Weighted Assets

Consists of the sum of the portions related to the credit risk exposure (RWACPAD), the market risk capital requirement (RWAMINT) and the operational risk capital requirement (RWAOPAD).

Activities with the Market + Corporation The Activities with the Market + Corporation column presents the results of the capital surplus, excess subordinated debt and the net balance of tax assets and liabilities. It also includes the financial margin with the market, the costs of Treasury operations, the equity pickup from companies not linked to each segment and our interest in Porto Seguro.

Our Shares

Book Value per Share

Calculated by dividing the Stockholders' Equity on the last day of the period by the number of outstanding shares.

Currency

Includes cash, bank deposits of institutions without reserve requirements, foreign currency deposits in Brazil, foreign currency deposits abroad, and cash and cash equivalents in foreign currency.

Capital, Liquidity and

Market Indicators

Value at Risk (VaR)

A statistical metric that quantifies the potential economic loss to be expected in normal market conditions. The consolidated VaR of Itaú Unibanco is calculated based on a Historical Simulation of the bank's total exposure to market risk, at a confidence level of 99%, a historical period of four years (1000 business days) and a holding period of one day. In addition, using a conservative approach, the VaR is calculated daily, whether volatility-weighted or otherwise, and the final VaR is the most restrictive of the two methodologies.

Results by Business

Segment

Retail Banking

Consists of the offering of banking products and services to both current account and non -current account holders. Products and services offered include: personal loans, credit cards, payroll loans, vehicle financing, mortgage loans, insurance, pension plan and premium bonds products, and acquiring services, among others.

Wholesale Banking

Consists of the activities of Itaú BBA, the unit responsible for commercial operations with large companies and for investment banking services, the activities of our units abroad, and the products and services offered to high-net worth clients (Private Banking) and to middle market companies and institutional clients.

Itaú Unibanco Holding S.A.

34

Itaú Unibanco Holding S.A.

35

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Itaú Unibanco Holding S.A.

36

4Q

20

Complete financial statements

December 31, 2020

Management

Report

2020

Recurrent

Managerial

managerial income

ROE

R$ 18.5 bi

14.5%

Composition or

recurrent managerial

Non-interest expense

income per business

-0.9 %

R$ 50.2 bi

VS. 2019

Credit

3,863

Capital Surplus

Number of shareholders

18,536

436& Trading

in thousands

Total

467

14,236

Services

& Insurance

241

In millions of Reais

150

2018 2019 2020

Credit portfolio1

+20.3%

+10.4%

in billions of Reais

869.5

722.6

Individuals

654.5

255.6

239.8

211.3

Very Small, Small and

127.6

95.3

Middle Market Companies

75.5

269.0

Large Companies

221.3

204.6

Latin America

217.3

163.2

166.3

2018

2019

2020

(1) Includes financial guarantees provided and corporate securities

Dear reader,

Since March 2020, Brazil has faced an unprecedented health crisis that has affected all sectors of the economy and society.

As a Brazilian bank with the majority of our operations in this country, we have been significantly affected by the economic, political and social conditions, of Brazil. Brazil's GDP, which grew by 1.4% in 2019, is expected to decline by 4.1% at the close of 2020, affected by the coronavirus outbreak. Quarterly comparison show a decline of 1.5% and 9.6% in 1Q20 and 2Q20, respectively. In 3Q20, the fiscal response, the loosening of monetary policy and the gradual recovery of economic activity from June onward saw GDP recover by 7.7%, also in a quarterly comparison.

We are forecasting GDP growth of 4.0% for 2021, even though the reduction in emergency assistance is expected to impact consumption in the first half-year; the hope is for the recovery to gain pace once vaccination begins here. In addition, the growth in private credit in this scenario of low interest rates should contribute to the expansion of the Brazilian economy.

The SELIC rate stood at 2.0% in August 2020 and has remained at this level ever since. Bank loans in proportion to GDP grew to 53.1% in November 2020, in comparison with 46.4% for the same month of the previous year. Inflation reached 4.4% for the year ended December 31, against 4.3% for the year ended December 31, 2019.

It is important to highlight that the measures adopted to deal with the COVID-19 crisis affected the government accounts. The twelve-month deficit in the balance of the country's primary budget in 2020 was 8.9% of GDP in November, after deficits of 0.8% in 2019, 1.5% in 2018 and 1.7% in 2017. However, the ceiling on expenditures, notwithstanding the challenging scenario, should be met in the years ahead.

Keeping the customer at the center of everything we do, we were able to reinvent ourselves without forgetting about our teams, and there is no doubt that we have reached the end of the year even stronger as an organization and even more convinced of our role in society.

In 2020, we had 56,444 employees trained to work from home office, in addition to supporting our employees in the physical branches with protection and safety procedures and equipment.

As a result of this effort to provide our teams with the best possible conditions, we achieved 90 points in the E-NPS (the index that measures employee satisfaction), a record milestone, in addition to having been elected by Valor Career and UOL as the best place in people management and to work, respectively.

Having secured the best possible well-being for our teams, we were able to devote ourselves to supporting our customers during such a challenging period, with all-in, sustainable solutions. We continued to see growth in our digital channels in the fourth quarter of the year. Via the digital channel, we opened 514 thousand individual and 6.9 thousand business accounts, growth of 92% and 87% respectively over the same period of the previous year.

During the second fortnight of March 2020 we launched the 60+ program which, among other measures, provided a grace period of 60 days on payments of delinquent loan agreements. In mid-April 2020, we rolled out a wider ranging program called Travessia (Crossing). On December 31, 2020, the balance of the portfolio of personal, very small and small company loans with flexible repayment terms stood at R$ 50.8 billion.

We provided support to very small and small companies under the National Support Program for Very Small and Small Companies (Pronampe) and through the Investment Guarantee Fund (FGI BNDES), within the scope of the Emergency Program for Access to Credit intended for Very Small, Small and Middle Market Companies, self-employed truck drivers and individual entrepreneurs. Under the latter, in the fourth quarter we made available R$ 3.2 billion to over 8.6 thousand companies.

39

We are pleased to see the result of the efforts in favor of our customers, having won the Reclame Aqui Award in five categories, in addition to having reached the target we had set ourselves two years ago of increasing our NPS (the customer satisfaction index) by 10 points by 2020. In November we reached the mark of 58 points, 10 points more than in 2018, even with the challenges that we could not have foreseen.

Last, but not least, we have reached 2021 with an optimistic outlook on the future, aware of the complexities that lie ahead. Our new CEO as from February 2021, Milton Maluhy, announced in December the new members of the Executive Committee, which has been configured with the main objective of getting even closer to the business while simplifying our operations and the bank's management model, enabling greater autonomy and speed in decision making.

We are addressing the customers' demands for investment solutions against a scenario of low interest rates.

We have introduced our new Itaú Personnalité investment recommendation model which, based on 12 million monthly simulations and with around 300,000 portfolio combinations for each investor profile, allows our team of specialists to test each combination in 10,000 different scenarios until the best option for each investor profile is identified.

We also announced a new investment advisory model based on the agile work model. By opening this platform to products of other companies, we offer services supported by a system of algorithms for recommending investments in an unbiased manner. We will hire 1,700 specialists for this new structure, allocated to the 120 offices to be created nationwide.

Besides these initiatives, we will integrate our customers' experience with investments in the bank and in our brokerage firm, Itaú Corretora, using an ion application whose objective is to provide an intuitive, digital and integrated experience. The application, still exclusive to the bank's customers, offers a wide variety of products of Itaú and other asset managers in the market, with graphic analysis, comparisons, recommendations and news, providing a unique experience for each profile.

Private pension products now have the option of 100% international exposure.

We launched the Itaú International Private Pension Portfolio, the first product in this category in the Brazilian market which can have up to 100% exposure to the market international. In line with the bank's movement in working to democratizing investments in Brazil, this plan is accessible to all ranges of clients, with an initial investment of just R$ 1.00.

We have strengthened our tradition of recognizing the value of environmental, social and governance criteria with new funds.

We have Brazil's largest private asset management company, and we continue advancing in favor of ESG (Environmental, Social and Governance) criteria with three new investment funds. These are: The Itaú International ESG Portfolio, which aims for the best combination of strategies where the focus is on assets positioned in ESG criteria; the Itaú ESG H2O Ações, whose objective is to invest in the shares of 50 global companies linked in a positive way to the water business, and Itaú ESG Energia Limpa Ações whose focus is to invest in 30 'clean energy' companies involved in the biofuel, ethanol, geothermal, hydroelectric, solar and wind energy sectors.

With the aim of strengthening transaction security and accelerating the delivery of financial services, we have selected AWS as our partner in our Digital Transformation process.

We have chosen Amazon Web Services, Inc. (AWS) as our long-term, strategic cloud services provider. We will use the world's leading cloud services provider to accelerate our digital transformation and to enhance the banking experience of our clients worldwide. As part of the 10-year agreement that expands our relationship with AWS, we will migrate the largest portion of our IT Infrastructure from mainframes and our data centers to the cloud.

40

To reinforce its solutions package, iti is launching its first annual charge-free credit card.

In both the virtual and physical versions, this is the first solution of iti involving credit. To make access to credit more dramatic, the card will be automatically available in the iti portfolio and, in addition to its traditional functions, it can be used for functionalities within the app itself, such as payments using QR Code. Reflecting our concern about accessibility, the physical credit card will be identified in Braille. Moreover, the new card contains no type of written numbering: all data are accessed using the client's app, increasing security and reducing the chances of fraud.

Additionally, the singer and entrepreneur Anitta is the star in a series of videos demonstrating the various functionalities of iti, which won the award for the best digital onboarding among financial institutions in Brazil, in a study undertaken by consulting company idwall. In effect, this award means the best digital experience for opening accounts among Brazil's leading 25 digital banks and portfolios.

In a series of rollouts, Credicard is going beyond financial services focused solely on credit cards, with the aim of becoming a payment solutions business unit.

One of the hallmarks of this new phase is the rollout of a technology platform that will enable the brand to offer a more all-in payment experience, with an account already configured for free transfers via Pix and a new card, in addition to a more extensive and accessible credit access model focused on financial inclusion and guidance. Currently undergoing tests at Credicard Beta, with the client-developerco-creation model, the new system already provides for the possibility of connecting to partners using APIs and, therefore, is ready for Open Banking.

With the emphasis on creating value for our shareholders, we have taken a decision about the future of the investment in XP Inc. ("XP").

On January 31, the Extraordinary General Meeting approved the segregation of the business line of the Itaú Unibanco Conglomerate regarding its participation¹ in the capital of XP Inc. to XPart., a company to be constituted after obtaining by the controllers a favorable statement from the regulatory authority.

  • After the favorable opinion of the regulatory authority, there is a term of up to 120 days² for listing on B3 and for distribution of the new shares of XPart, with the cut-off date ("ex") and procedures to be informed in due course.
  • By the cut-off date (close to the listing date), Itaú Unibanco shares will continue to be traded with the entitlement to receive shares of XPart.
  • Once the new company is listed, the shareholders will receive an equity holding in XPart of the same quantity, type and proportion as the shares they hold in Itaú Unibanco.
  • The shareholders will continue to retain their current equity holding in Itaú Unibanco and will also become shareholders of XPart.
  • The percentage of XP's capital that will be hold by XPart represented 40.52% at 12.31.2020, due to the capitalization of XP in December.
  1. Equivalent to 41.05% of the capital of XP Inc on the base date of September 30, 2020.
  2. According to the Corporate Law.

41

As the largest private bank in Latin America, we have spared no effort in contributing to solving the complex problems in the Amazon region.

In a partnership with Bradesco and Santander, we have released an integrated plan for the purpose of making an effective contribution to the sustainable development of the Amazon. The material includes 10 measures allocated to three fronts identified as priorities for the region: environmental conservation and development of the bioeconomy; investment in sustainable infrastructure; and guarantees of the basic rights of the population of the Amazon region.

The 10 measures of the Amazon Plan are:

Zero deforestation in the beef chain

Promoting sustainable chains;

Encourage the development of sustainable

Enabling investment in basic infrastructure;

transport infrastructure;

Climate information for credit and investment

Green financial instruments;

policies;

Financial guidance and inclusion;

Land title regularization;

Social and economic development;

Driving the bioeconomy.

Among our initiatives, in December we held the Conference of the Amazon whose objective was to raise relevant issues and debates on matters involving the region, as well as raising funds for projects in forest recovery and the generation of local income. The event was transmitted over 3 days and brought together well-known investors and managers of Brazilian and international funds, as well as clients of the bank as special guests.

One year on, we are presenting the performance results of the first twelve months since the launch of our Positive Impact Commitments.

Our Positive Impact Commitments guide the decisions we take, ensuring a much view of the risks and opportunities inherent to the business. It is they that model the products and services we offer on the premise that they generate social and environmental benefits. In 2019 we introduced 8 initial commitments: Transparency in Reports and Communication, Responsible Investment, Financial Citizenship, Financing in Sectors with a Positive Impact, Inclusion and Entrepreneurship, Responsible Management, Inclusive Management and Ethics in Relations and in Business.

In 2020, we published the first report with the results of the established goals obtained so far, in addition to the inclusion of the commitment to Private Social Investment.

42

We want to foster access to and the expansion of rights, improve the quality of urban life and strengthen people's transformative power through private social investment. We are reiterating our pact with Brazilian society through our Commitment to Private Social Investment.

In the face of the covid-19 pandemic, private social investment has become even more relevant by spurring the initiatives needed to weather this difficult period. Creating the commitment to Private Social Investment means reaffirming the pact of Itaú Unibanco with Brazilian society, thereby strengthening the bonds of trust amidst uncertainty. The bank's Private Social Investment agenda, which like its other commitments is aligned with the UN Sustainable Development Objectives, is directed toward four major spheres of operation: Education, Culture, Mobility and Longevity, areas in which Itaú has an operational track record.

BRAZIL

LATAM3

Total

Amount (R$ millions)

Number of Projects

Amount (R$ millions)

Number of Projects

(R$ millions)

Sponsorship 2020

Non-incentivated1

1,880.3

1,095

33.8

98

1,914.0

Education

270.8

605

2.9

30

273.7

Sport

0.6

3

0.0

0.0

0.6

Culture

109.3

179

3.1

36

112.3

Urban Mobility

58.8

40

18.4

4

77.2

Diversity

3.7

22

0.0

0.0

3.7

Innovation and Entrepreneuship

35.8

22

0.2

6

36.0

Local Develop. and Participation

7.3

55

6.3

19

13.6

Healthcare

1,394.0

169

2.9

3

1,396.9

Incentivated2

96.5

216

0.4

2

96.9

Culture

47.6

117

0.1

1

47.7

Sport

11.3

31

0.0

0.0

11.3

Education

11.3

34

0.3

1

11.6

Healthcare

14.9

16

0.0

0.0

14.9

Senior Citizens

11.4

18

0.0

0.0

11.4

Total

1,976.8

1,311

34.2

100

2,011.0

  1. Own funds of the bank's companies and in-house budgets of the foundations and institutions. (2) Tax incentive resources under laws such as the Rouanet Law, Sports Incentive and so on. (3) Foreign currency amounts were converted to Brazilian Reais as at December 31, 2020

Recognition of the Investor Relations area in two categories at the Apimec Ibri Awards.

We were recognized in the "Large Cap Investor Relations Best Practice and Initiative" category, while Geraldo Soares as voted "Best Investor Relations Professional" at the APIMEC Awards (Association of Capital Market Investment Analysts and Professionals) and by the IBRI (the Brazilian Institute of Investor Relations).

43

Creating value is to obtain financial results that exceed the cost of capital to remunerate our shareholders and other stakeholders through ethical and responsible relations based on trust and transparency and focused on the sustainability of the business.

We present below the key indicators comprising our results:

In R$ bilions

2020

2019

Income information

Operating Revenues 1

114.8

119.8

Managerial Financial Margin

70.1

74.6

Financial Margin with Clients

65.1

69.1

Financial Margin with the Market

5.0

5.6

Commissions and Fees

37.2

37.3

Revenues from Insurance, Pension Plans and Premium

7.4

7.9

Bonds before Retained Claims and Selling Expenses

Cost of Credit

(30.2)

(18.2)

Non-interest Expenses

(50.2)

(50.6)

Recurrent managerial income

18.5

28.4

Net Income

18.9

26.6

Recurring Managerial Return on Average Equity -

14.5%

23.7%

Annualized 2

2020

2019

Balance Sheet information

Total Assets

2,113

1,739

Total Loan Portfolio 3

869.5

722.6

NPL Ratio (90 days)

2.3%

3.0%

Tier 1 Capital

13.2%

14.4%

2020

2019

Shares

Weighted Average Number of Outstanding Shares - in millions

9,760

9,740

Net Income per Share - Basic - R$

1.94

2.73

Book Value per Share - R$ (Outstanding on 12/31)

13.99

13.54

Dividends and Net Interest on Own Capital4

4.50

18.78

2020

2019

Others

Branches

4,337

4,504

Physical and Client Service Branches (CSBs)

4,141

4,308

Digital Branches

196

196

Employees (in thousands)

96.5

94.9

Brazil

83.9

81.7

Abroad

12.6

13.2

Variation

-4.2%

-6.1%

-5.7%

-10.1%

-0.2%

-5.0%

66.4%

-0.9%

-34.6%

-28.9%

-920 bps

Variation

21.5%

20.3%

-70 bps

-120 bps

Variation

0.2%

-28.9%

3.3%

-76.0%

Variation

-3.7%

-3.9%

0.0%

1.7%

2.7%

-4.3%

(1)The sum of Commissions and Fees and the Revenues from Insurance Transactions and Private Pensions before Retained Claims and Sales Expenses, net of Reinsurance.

(2)The return is calculated by dividing the recurrent Net Income by the Average Shareholders' Equity. The quotient was multiplied by the number of periods in the year to derive the annualized rate. The calculation of the returns were adjusted for the amounts of proposed dividends after the closure dates of the balance sheets not yet approved in ordinary meetings of shareholders or at meetings of the Board of Directors. (3)Total loan portfolio includes Financial Guarantees Provided and Bonds and Corporate Securities. (4) Amounts paid/provisioned, declared and highlighted in the shareholders' equity.

44

Results Analysis

The percentages of increase or decrease in this section refer to the comparison between the accumulated figures for the year 2020 in relation to the same period of 2019, unless otherwise indicated.

In 2020, our recurrent managerial income stood at R$ 18.5 billion, down by 34.6% over the same period of the previous year. The recurring Return on Shareholders' Equity was 14.5%.

The highlight was growth de 20.3% in the total credit portfolio. We give below the growth of the portfolios in the main segments:

  • 6.6% for private individuals;
  • 33.9% in very small, small and middle market companies in Brazil;
  • 21.6% in large companies in Brazil;
  • 30.7% in our Latin America operations, affected primarily by exchange rate variance; In comparison with 2019, there was growth of 31.9% in credit origination in Brazil, namely:
  • 14.1% for private individuals;
  • 24.0% for very small, small and middle market companies; and
  • 51.7% for large companies.

Portfolio growth notwithstanding, we suffered a reduction of 5.7% in the financial margin with clients on account of the lower spreads on credit products, changes in the regulations on interest rates on overdraft accounts, and the adverse impact of the reduction in the interest rate on our own working capital and liabilities margin. These negative effects were partially offset by the higher volume of credit.The high market volatility during the first quarter of 2020 led to a reduction of 10.1% in the financial margin with the market. Revenues from services and insurance fell by 1.3% during the year. This reduction was due to lower revenues from the acquiring business related to the lower billings year-on-year. It is worth pointing out that in the fourth quarter de 2020 the volume of credit and debit transactions grew by 8.9% over the fourth quarter of 2019 and by 18.0% over the third quarter of 2020. The reduction in revenue from acquiring business was partially offset by a 45.3% increase in economic and financial advisory and brokerage fees arising from a more active capital market scenario.

The cost of credit rose by 66.4% over the same period of the previous year. This can be attributed to material changes in the macroeconomic scenario as from the second week of March 2020 which, when captured by our provisioning model for expected losses, led to higher expenses with allowances for doubtful accounts.

Continuous investment in technology has enabled a cost efficiency drive such as the closure of 117 physical branches in Brazil in the last 12 months and the voluntary redundancy program to which 3,500 employees had signed up at the end of 2019, reducing expenses by during 2020.

Another highlight in 2020 was the increase in funding:

  • 77.2% in time deposits;
  • 63.8% in demand deposits; and
  • 24.2% in savings deposits.

These growth figures reflect the positive flow of resources from the second fortnight of March 2020 onward.

45

The Tier 1 Capital Ratio measures the ratio of the bank's capital to the risk level of its assets. Maintaining adequate levels aims to protect the institution in case of severe events.

By managing our capital we aim to optimize how we invest our shareholders' resources while ensuring the bank's solidness. We present below the main events that affected our ratio in the fourth quarter of 2020:

Tier I Capital Ratio

Commom Equity Tier I (CET I)

Additional Tier 1 Capital (AT1)

On December 31, 2020, our Tier 1 Capital Ratio stood at 13.2%, 495 bps above the minimum regulatory level with capital buffers (8.25%). Our Tier 1 Capital consists of 11.5% of Core Capital and 1.7% of Additional Tier 1 Capital.

The following graph shows the financial volume traded daily with our shares, which have a relevant participation in market indices in Brazil and abroad

Our shares continue to enjoy high liquidity in trading, both in Brazil and in the United States, with an increase of 53% in the average daily trading volume since 2018

Average Daily Trading Volume of the Shares of Itaú Unibanco (R$ millions)

+53%

1,912

1,388

1,253

1,053

B3 (ON+PN)

744

653

NYSE (ADR)

859

600

644

2018

2019

2020

46

Additionally, our shares end the period quoted at R$ 31.63 (ITUB4 - preferred shares) e R$ 27.93 (ITUB3 - acommon shares). We present below the evolution of R$ 100 invested on the date prior to the merger in november of 2008.

560

328

319

293

246

nov-08jun-09feb-10oct-10jun-11

feb-12oct-12jun-13feb-14oct-14nov-15jul-16

jun-17jan-18

aug-18jul-19mar-20dec-20

ITUB4 dividend-adjusted

ITUB4 without adjustment for dividends

CDI Rate

Ibovespa

US Dollar

Subsequent event

In January 2021, Itaú approached the international capital markets to raise funds through sustainable debt instrument. We raised U$ 500 million whose proceeds will be allocated to finance or refinance eligible green and social projects according to the criteria defined by the Framework for Sustainable Finance. The securities carry a term of 10 years and 3 months, remunerating investors at 3.95%. This was the first issuance of Tier 2 capital by a financial institution to finance or refinance green and social projects in Latin America. The proceeds may be allocated to eight eligible categories, namely: renewable energy and energy efficiency, sustainable transport, sustainable water and waste management, pollution prevention and control, sustainable management of natural resources and land use, green buildings, access to essential services and inclusive finance. The issuance of these debt securities is yet another step by the bank to demonstrate how sustainability has been incorporated into the business of Itaú Unibanco.

Acknowledgements

Our sincere thanks to our employees who, in the face of the current crisis, have answered the call and committed themselves to keeping our operations functioning, enabling us to continue producing solid results and our thanks to our customers and shareholders for their understanding, interest and trust, which spur us on to always do our best.

(Approved at the Meeting of the Board of Directors on February 1, 2021)

47

Independent Auditor - CVM Instruction No. 381

Procedures Adopted by the Company

Our operating policy, including subsidiaries, when contracting non-externalaudit-related services from our independent auditors, is based on applicable regulations and internationally accepted principles that protect the independence of the auditors. These principles state that: (a) the auditors must not audit their own work, (b) the auditors must not hold managerial positions at their clients, and (c) the auditors must not promote their clients' interests.

In the period from January to December 2020, we hired from the independent auditors the amount of R$ 72,156 thousand, which R$ 66,631 thousand are non-externalaudit-related services.

Bellow we list the agreements dates and the nature of the services provided, all of which did not exceed one year:

  • Audit Related Services: January 23 and 27, February 06, March 16, June 19, July 14, August 06 and 18, October 19 and 30, December 15 and 22 - Independent assurance about: subsidiary system implementation aspects; internal controls, including certain services provided to customers; sustainability report, MD&A, Integrated Report and Consolidated Annual Report; certain agreements signed with regulatory authorities and compliance with financial covenants. Appraisal reports at book value, and previously agreed procedures of acquired companies balance sheets and about profit share calculation. - R$ 4,896 thousand (7.35% of the external audit fees).
  • Tax Servicers: January 23, February 06 and 12 - review of the calculations and tax settlement and compliance with tax regulations - R$ 541 thousand (0.81% of the external audit fees).
  • Other Services: May 27 and December 21 - use of technical materials and an independent review of the financial and prudential information reporting process. - R$ 88 thousand (0.13% of the external audit fees).

Justification of the Independent Auditors - PricewaterhouseCoopers

The non-externalaudit-related services described above does not affect either the independence or the objectivity in conducting external audit examinations at Itaú Unibanco and its subsidiaries. The policy for providing Itaú Unibanco with non- external audit-related services is based on principles that protect the independent auditor's independence, all of which were observed in providing that services, including their approval by the Audit Committee.

Central Bank - Circular No. 3.068/01

We declare having the financial capacity and the intention to hold to the maturity those securities classified in the category "Held to Maturity", in the amount of R$ 48.9 billion, representing 7.2% of the total securities and derivative financial instruments in December 2020.

International Financial Reporting Standards (IFRS)

We are disclosing the full accounting statements in accordance with the international financial reporting standards (IFRS) on the same date as this publication, as per Official Circular CVM/SEP 01/13. The Management Report and the Full Accounting Statements of Itaú Unibanco Holding S.A. and those of its subsidiaries, for the period January to December 2020, abide by the rules established in Brazilian Company Law, the National Monetary Council (CMN), the Brazilian Central Bank (BACEN), the Brazilian Securities Exchange Commission (CVM), the National Council for Private Insurance (CNSP), the Superintendence for Private Isurance (SUSEP), the National Superintendence for Supplementary Pensions (PREVIC) and the recommendations of the International Accounting Standards Board (IASB). The information in both the Management Report and the Complete Financial Statements of Itaú Unibanco Holding S.A. presented in this material are available on the Itaú Unibanco Investor Relations (IR) website at: www.itau.com.br/relacoes-com-investidores > Menu > Results Center > Results.

48

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Itaú Unibanco Holding S.A.

49

ITAÚ UNIBANCO HOLDING S.A.

BOARD OF DIRECTORS

Co-Chairmen

Pedro Moreira Salles

Roberto Egydio Setubal

Vice President

Ricardo Villela Marino

Members

Alfredo Egydio Setubal

Ana Lúcia de Mattos Barretto Villela Fábio Colletti Barbosa

Frederico Trajano Inácio Rodrigues Gustavo Jorge Laboissière Loyola João Moreira Salles

José Galló

Marco Ambrogio Crespi Bonomi Pedro Luiz Bodin de Moraes

AUDIT COMMITTEE

Chairman

Gustavo Jorge Laboissière Loyola

Members

Antonio Carlos Barbosa de Oliveira Antonio Francisco de Lima Neto Diego Fresco Gutierrez

Luciana Pires Dias Otavio Yazbek

Rogério Paulo Calderón Peres

FISCAL COUNCIL

Chairman

José Caruso Cruz Henriques

Members

Alkimar Ribeiro Moura

Eduardo Azevedo do Valle

Accountant

Arnaldo Alves dos Santos

CRC 1SP210058/O-3

BOARD OF EXECUTIVE OFFICERS

Chief Executive Officer

Candido Botelho Bracher

Senior Vice Presidents ("Diretores Gerais")

Caio Ibrahim David

Márcio de Andrade Schettini (2)

Executive Vice-Presidents

André Sapoznik

Claudia Politanski (2)

Milton Maluhy Filho

Executive Officers

Alexsandro Broedel Lopes

Fernando Barçante Tostes Malta

Leila Cristiane Barboza Braga de Melo

Paulo Sergio Miron

Officers

Adriano Cabral Volpini Álvaro Felipe Rizzi Rodrigues Andre Balestrin Cestare Daniel Sposito Pastore Emerson Macedo Bortoloto Gilberto Frussa

José Virgilio Vita Neto

Renato Barbosa do Nascimento Renato da Silva Carvalho Renato Lulia Jacob (1)

Sergio Mychkis Goldstein (2) Tatiana Grecco

Teresa Cristina Athayde Marcondes Fontes

  1. Group Head of Investor Relations and Market Intelligence.
  2. Resignations recorded: (i) Officer Sergio Mychkis Goldstein, since 12/30/2020; (ii) Senior Vice President Márcio de Andrade Schettini and Vice President Claudia Politanksi, since 01/04/21.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

50

ITAÚ UNIBANCO S.A.

Senior Vice President ("Diretores Gerais")

Caio Ibrahim David

Márcio de Andrade Schettini (3)

Executive Vice-Presidents

André Sapoznik

Claudia Politanski (3)

Milton Maluhy Filho

Executive Officers Alexandre Grossmann Zancani Alexsandro Broedel Lopes André Luís Teixeira Rodrigues Carlos Fernando Rossi Constantini Carlos Orestes Vanzo

Carlos Rodrigo Formigari

Christian George Egan (3) Cristiano Guimarães Duarte Fernando Barçante Tostes Malta Flávio Augusto Aguiar de Souza Leila Cristiane Barboza Braga de Melo Luís Eduardo Gross Siqueira Cunha Marcos Antônio Vaz de Magalhães Paula Magalhães Cardoso Neves Ricardo Ribeiro Mandacaru Guerra Sergio Guillinet Fajerman

Officers

Adriana Maria dos Santos Adriano Cabral Volpini Adriano Maciel Pedroti Alessandro Anastasi Alexandre Borin Ribeiro

Álvaro de Alvarenga Freire Pimentel (1) Álvaro Felipe Rizzi Rodrigues

Ana Lúcia Gomes de Sá Drumond Pardo Andre Balestrin Cestare

André Henrique Caldeira Daré Andrea Carpes Blanco

Atilio Luiz Magila Albiero Junior Badi Maani Shaikhzadeh Bruno Bianchi

Bruno Machado Ferreira Carlos Augusto Salamonde Carlos Eduardo de Almeida Mazzei Carlos Eduardo Mori Peyser Carlos Henrique Donegá Aidar Cintia Carbonieri Fleury de Camargo Claudio César Sanches

Cláudio José Coutinho Arromatte

Daniel Nascimento Goretti (1) Daniel Sposito Pastore Danilo Aleixo Caffaro Eduardo Cardoso Armonia Eduardo Corsetti

Eduardo Esteban Mato Amorin

Officers (continued) Eduardo Hiroyuki Miyaki Eduardo Queiroz Tracanella Emerson Savi Junqueira Emilio Pedro Borsari Filho Eric André Altafim Estevão Carcioffi Lazanha Fabiana Pascon Bastos Fábio Napoli

Fabíola Bianca Gonçalves Lima Marchiori Felipe de Souza Wey

Felipe Weil Wilberg Fernando Della Torre Chagas Fernando Julião de Souza Amaral Fernando Kontopp de Oliveira Flavio Ribeiro Iglesias Francisco Vieira Cordeiro Neto Gabriel Guedes Pinto Teixeira Gabriela Rodrigues Ferreira Gilberto Frussa

Guilhermo Luiz Bressane Gomes Gustavo Andres

Gustavo Trovisco Lopes

João Filipe Fernandes da Costa Araujo José de Castro Araújo Rudge Filho

José Geraldo Franco Ortiz Junior (2) José Virgilio Vita Neto

Laila Regina de Oliveira Pena de Antonio Leandro Roberto Dominiquini

Leon Gottlieb

Lineu Carlos Ferraz de Andrade Luís Fernando Staub

Luiz Felipe Monteiro Arcuri Trevisan Luiz Fernando Butori Reis Santos Luiz Severiano Ribeiro

Manoela Varanda

Márcio Luís Domingues da Silva

Marco Antonio Sudano (3)

Marcos Alexandre Pina Cavagnoli Mário Lúcio Gurgel Pires

Mario Magalhães Carvalho Mesquita Matias Granata

Milena de Castilho Lefon Martins Moisés João do Nascimento

Oderval Esteves Duarte Filho (3)

Pedro Barros Barreto Fernandes Renata Cristina de Oliveira Renato Cesar Mansur

Renato da Silva Carvalho Renato Lulia Jacob

Ricardo Nuno Delgado Gonçalves Rodnei Bernardino de Souza Rodrigo Jorge Dantas de Oliveira Rodrigo Rodrigues Baia Rogerio Vasconcelos Costa

Sergio Mychkis Goldstein (3) Tatiana Grecco

Teresa Cristina Athayde Marcondes Fontes Thales Ferreira Silva

Thiago Luiz Charnet Ellero

Valéria Aparecida Marretto Vanessa Lopes Reisner Wagner Bettini Sanches

  1. Elected at the A/ESM of December 11, 2020, in phase of approval by Central Bank of Brazil (BACEN).
  2. Elected at the A/ESM of January 04, 2021, in phase of approval by Central Bank of Brazil (BACEN).
  3. Resignations recorded: (i) Officer Sergio Mychkis Goldstein on December 30, 2020; (ii) Senior Vice President Márcio de Andrade Schettini, Executive Vice President Claudia Politanski, Executive Officer Christian George Egan and Officer Marco Antonio Sudano, on January 04, 2021; and (iii) Officer Oderval Esteves Duarte Filho on January 15, 2021.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

51

ITAÚ UNIBANCO HOLDING S.A. Consolidated Balance Sheet (Note 2a) (In millions of Reais)

Assets

Note

12/31/2020

12/31/2019

Current assets

1,435,937

1,220,457

Cash

0

46,224

30,367

Interbank investments

3b and 4

287,308

228,694

Money market

0

237,771

196,558

Money market and Interbank deposits - assets guaranteeing technical provisions

8b

1,074

1,066

Interbank deposits

0

48,463

31,070

Securities and derivative financial instruments

3c, 3d and 5

491,311

363,880

Own portfolio

0

209,058

85,505

Subject to repurchase commitments

0

11,664

35,468

Pledged in guarantee

0

11,059

7,893

Securities under resale agreements with free movement

0

5,603

3,628

Deposited with the Central Bank of Brazil

0

5,016

3,572

Derivative financial instruments

0

34,710

17,764

Assets guaranteeing technical provisions

8b

214,201

210,050

Interbank accounts

0

134,260

135,116

Pending settlement

0

44,171

43,466

Central Bank of Brazil deposits

0

90,059

91,248

National Housing System (SFH)

0

13

4

Correspondents

0

17

41

Interbank onlending

0

-

357

Interbranch accounts

0

381

373

Loan, lease and other credit operations

6

348,636

313,282

Operations with credit granting characteristics

3e

369,446

333,017

(Provision for Loan Losses)

3f

(20,810)

(19,735)

Other receivables

126,055

146,254

Current tax assets

2,881

7,082

Sundry

10a

123,174

139,172

Other assets

3g

1,762

2,491

Assets held for sale

0

870

1,220

(Valuation allowance)

0

(539)

(642)

Unearned reinsurance premiums

7

6

Prepaid expenses

10c

1,424

1,907

Long term receivables

0

640,175

481,665

Interbank investments

3b and 4

7,178

3,668

Money market

0

88

162

Interbank deposits

0

7,090

3,506

Securities and derivative financial instruments

3c, 3d and 5

220,759

181,406

Own portfolio

0

93,566

93,082

Subject to repurchase commitments

0

37,606

34,240

Pledged in guarantee

0

3,228

2,771

Securities under resale agreements with free movement

0

34,775

16,589

Deposited with the Central Bank of Brazil

1,000

591

Derivative financial instruments

0

41,414

23,912

Assets guaranteeing technical provisions

8b

9,170

10,221

Interbank accounts

0

-

9

Pending settlement

-

9

National Housing System (SFH)

-

-

Loan, lease and other credit operations

6

310,513

230,847

Operations with credit granting characteristics

3e

341,107

250,000

(Provision for Loan Losses)

3f

(30,594)

(19,153)

Other receivables

100,551

64,697

Current tax assets

7,222

3,974

Deferred tax assets

11b I

64,080

45,933

Sundry

10a

29,249

14,790

Other assets

1,174

1,038

Prepaid expenses

3g and 10c

1,174

1,038

Permanent assets

0

36,474

36,591

Investments

3h

16,202

15,853

Investments in associates and joint ventures

0

15,891

15,577

Other investments

0

520

485

(Allowance for losses)

0

(209)

(209)

Real estate

3i and 13

6,493

6,412

Fixed assets

0

4,360

4,301

Other fixed assets

0

15,323

14,153

(Accumulated depreciation)

0

(13,190)

(12,042)

Goodwill and Intangible assets

3j, 3k and 14

13,779

14,326

Goodwill

0

989

925

Intangible assets

0

29,692

25,876

(Accumulated amortization)

0

(16,902)

(12,475)

Total assets

2,112,586

1,738,713

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

52

ITAÚ UNIBANCO HOLDING S.A. Consolidated Balance Sheet (Note 2a) (In millions of Reais)

Liabilities and stockholders' equity

Note

12/31/2020

12/31/2019

Current liabilities

1,134,166

956,618

Deposits

3b and 7b

511,015

334,197

Demand deposits

-

134,805

82,306

Savings deposits

-

179,470

144,558

Interbank deposits

-

3,185

2,866

Time deposits

-

193,484

104,458

Other deposits

-

71

9

Deposits received under securities repurchase agreements

3b and 7c

232,358

237,131

Own portfolio

-

47,905

72,303

Third-party portfolio

-

156,602

148,021

Free portfolio

-

27,851

16,807

Funds from acceptances and issuance of securities

3b and 7d

42,327

51,352

Real estate, mortgage, credit and similar notes

-

35,101

41,567

Foreign loans through securities

-

6,648

9,210

Funding from structured operations certificates

578

575

Interbank accounts

-

51,202

48,771

Pending settlement

-

50,862

48,061

Correspondents

-

340

710

Interbranch accounts

-

7,945

5,408

Third-party funds in transit

-

7,896

5,294

Internal transfer of funds

-

49

114

Borrowing and onlending

3b and 7e

60,093

63,796

Borrowing

-

56,422

59,932

Onlending

-

3,671

3,864

Derivative financial instruments

3d and 5f

36,277

18,825

Technical provision for insurance, pension plan and premium bonds

3m and 8a

3,022

3,068

Allowance for financial guarantees provided

6c

484

532

Provisions

9b

5,928

7,489

Other liabilities

-

183,515

186,049

Current tax liabilities

3n, 3p and 11c

5,374

10,367

Subordinated debt

7f

12,125

4,099

Sundry

10d

166,016

171,583

Long term liabilities

-

827,551

636,549

Deposits

3b and 7b

297,995

172,863

Interbank deposits

-

245

155

Time deposits

-

297,750

172,708

Deposits received under securities repurchase agreements

3b and 7c

48,183

32,707

Own portfolio

-

565

2,696

Free portfolio

-

47,618

30,011

Funds from acceptances and issuance of securities

3b and 7d

94,311

92,217

Real estate, mortgage, credit and similar notes

-

38,007

57,026

Foreign loans through securities

-

55,923

34,656

Funding from structured operations certificates

381

535

Borrowing and onlending

3b and 7e

23,107

12,597

Borrowing

-

15,322

4,813

Onlending

-

7,785

7,784

Derivative financial instruments

3d and 5f

43,322

28,990

Technical provision for insurance, pension plan and premium bonds

3m and 8a

220,447

217,598

Allowance for financial guarantees provided

6c

270

327

Provisions

9b

10,322

9,131

Other liabilities

-

89,594

70,119

Current tax liabilities

3n, 3p and 11c

3,983

2,044

Deferred tax liabilities

11b II

3,845

6,294

Subordinated debt

7f

37,294

38,711

Debt instruments eligible as capital

7f

25,497

16,652

Sundry

10d

18,975

6,418

Deferred income

3q

3,163

2,698

Capital

-

97,148

97,148

Capital reserves

-

2,323

1,979

Revenue reserves

-

40,734

36,568

Other comprehensive income

3c and 3d

(2,705)

(2,434)

(Treasury shares)

-

(907)

(1,274)

Total stockholders' equity of controlling shareholders

15

136,593

131,987

Non-controlling interests

15e

11,113

10,861

Total stockholders' equity

147,706

142,848

Total liabilities and stockholders' equity

2,112,586

1,738,713

The accompanying notes are an integral part of these financial statements

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

53

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Statement of Income (Note 2a)

(In millions of Reais, except for number of shares and earnings per share information)

Note

2nd Half of

01/01 to

01/01 to

2020

12/31/2020

12/31/2019

Income related to financial operations

53,032

137,164

147,454

Loan, lease and other credit operations

-

36,221

79,701

81,994

Securities and derivative financial instruments

-

10,276

46,020

41,719

Financial income related to insurance, pension plan and premium bonds operations

8c

8,083

8,535

17,326

Foreign exchange operations

-

(2,390)

666

1,786

Compulsory deposits

-

842

2,242

4,629

Expenses related to financial operations

-

(21,986)

(90,010)

(80,065)

Money market

-

(15,578)

(54,882)

(53,859)

Financial expenses on technical provisions for insurance, pension plan and premium bonds

8c

(7,684)

(8,121)

(16,720)

Borrowing and onlending

1,276

(27,007)

(9,486)

Income related to financial operations before loan losses

-

31,046

47,154

67,389

Result of provision for loan losses

6

(10,392)

(26,760)

(19,826)

Expenses for provision for loan losses

-

(12,369)

(30,140)

(23,896)

Income related to recovery of credits written off as loss

-

1,977

3,380

4,070

Gross income related to financial operations

-

20,654

20,394

47,563

Other operating revenues (expenses)

-

(9,573)

(18,410)

(18,192)

Commissions and banking fees

10e

20,376

39,574

40,568

Result from insurance, pension plan and premium bonds operations

8c

1,601

3,334

3,579

Personnel expenses

10f

(11,794)

(22,415)

(23,799)

Other administrative expenses

10g

(11,114)

(22,162)

(20,580)

Provision expenses

9b

(2,095)

(3,575)

(5,119)

Provision for lawsuits civil

(504)

(889)

(727)

Provison for labor claims

(1,031)

(2,110)

(3,160)

Provison for tax and social security obligations

(10)

(29)

(830)

Other risks

(550)

(547)

(402)

Tax expenses

3p and 11a II

(3,873)

(6,190)

(7,502)

Equity in earnings of associates, joint ventures and other investments

862

1,530

1,408

Other operating revenues

1,172

2,082

1,500

Other operating expenses

10h

(4,708)

(10,588)

(8,247)

Operating income

-

11,081

1,984

29,371

Non-operating income

2d and 22e

4,660

4,999

2,096

Income before taxes on income and profit sharing

-

15,741

6,983

31,467

Income tax and social contribution

3p and 11a I

(4,648)

9,798

(4,257)

Due on operations for the period

-

(2,474)

(9,670)

(10,125)

Related to temporary differences

-

(2,174)

19,468

5,868

Profit sharing - Management Members - Statutory

16b

(64)

(112)

(363)

Non-controlling interests

15e

1,055

2,240

(264)

Net income

12,084

18,909

26,583

Earnings per share - Basic

18

Common

1.24

1.94

2.73

Preferred

1.24

1.94

2.73

Earnings per share - Diluted

18

Common

1.23

1.93

2.72

Preferred

1.23

1.93

2.72

Weighted average number of outstanding shares - Basic

18

Common

4,958,290,359

4,958,290,359

4,958,290,359

Preferred

4,804,166,394

4,801,324,161

4,781,855,588

Weighted average number of outstanding shares - Diluted

18

Common

4,958,290,359

4,958,290,359

4,958,290,359

Preferred

4,859,066,982

4,843,233,835

4,826,925,107

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

54

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Statement of Comprehensive Income (In millions of Reais)

Note

2nd Half of

01/01 to

01/01 to

2020

12/31/2020

12/31/2019

Consolidated net income

11,029

16,669

26,847

Financial assets at available for sale

1,306

(790)

1,103

Change in fair value

2,821

(93)

2,775

Tax effect

(1,386)

(88)

(1,107)

(Gains) / losses transferred to income statement

(234)

(1,107)

(1,027)

Tax effect

105

498

462

Hedge

60

(3,587)

220

Cash flow hedge

5f V

208

503

161

Change in fair value

413

970

157

Tax effect

(205)

(467)

4

Hedge of net investment in foreign operation

5f V

(148)

(4,090)

59

Change in fair value

(292)

(7,671)

157

Tax effect

144

3,581

(98)

Remeasurements of liabilities for post-employment benefits (*)

(222)

(192)

(338)

Remeasurements

19

(401)

(349)

(629)

Tax effect

179

157

291

Foreign exchange variation in foreign investments

(162)

4,298

(541)

Total other comprehensive income

982

(271)

444

Total comprehensive income

12,011

16,398

27,291

Comprehensive income attributable to the owners of the parent company

13,066

18,638

27,027

Comprehensive income attributable to non-controlling interests

(1,055)

(2,240)

264

(*) Amounts that will not be subsequently reclassified to income.

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

55

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Statement of Changes in Stockholders' Equity (Note 15) (In millions of Reais)

Attributed to owners of the parent company

Total

Total

Other comprehensive income

stockholders'

stockholders'

Conversion

Capital

Treasury

Capital

Revenue

Available for sale

Remeasurements of

Gains and

Retained

equity - owners

equity - non-

Total

adjustments of

of the parent

controlling

shares

reserves

reserves

securities

liabilities of post-

losses -

earnings

foreign

company

interests

Adjustments (1)

employment benefits

Hedge (2)

investments

Balance at 07/01/2020

97,148

(907)

1,829

31,974

(834)

(1,308)

6,434

(7,979)

-

126,357

11,461

137,818

Transactions with owners

-

-

494

-

-

-

-

-

-

494

699

1,193

Recognition of share-based payment plans

-

-

494

-

-

-

-

-

-

494

-

494

(Increase) / Decrease to the owners of the parent company (Note 15)

-

-

-

-

-

-

-

-

-

-

699

699

Other

-

-

-

(13)

-

-

-

-

-

(13)

-

(13)

Unclaimed dividends and Interest on capital

-

-

-

-

-

-

-

-

82

82

-

82

Total comprehensive income

-

-

-

-

1,306

(222)

(162)

60

12,084

13,066

(1,055)

12,011

Consolidated net income

-

-

-

-

-

-

-

-

12,084

12,084

(1,055)

11,029

Other comprehensive income

-

-

-

-

1,306

(222)

(162)

60

-

982

-

982

Appropriations:

Legal reserve

-

-

-

612

-

-

-

-

(612)

-

-

-

Statutory reserve

-

-

-

8,161

-

-

-

-

(8,161)

-

-

-

Dividends

-

-

-

-

-

-

-

-

(161)

(161)

8

(153)

Interest on capital

-

-

-

-

-

-

-

-

(3,232)

(3,232)

-

(3,232)

Balance at 12/31/2020

97,148

(907)

2,323

40,734

472

(1,530)

6,272

(7,919)

-

136,593

11,113

147,706

Change in the period

-

-

494

8,760

1,306

(222)

(162)

60

-

10,236

(348)

9,888

Balance at 01/01/2019

97,148

(1,820)

1,923

37,384

159

(1,001)

2,516

(4,552)

-

131,757

12,367

144,124

Transactions with owners

-

546

56

-

-

-

-

-

-

602

(1,493)

(891)

Result of delivery of treasury shares

-

546

351

-

-

-

-

-

-

897

-

897

Recognition of share-based payment plans

-

-

(295)

-

-

-

-

-

-

(295)

-

(295)

(Increase) / Decrease to the owners of the parent company (Note 15)

-

-

-

-

-

-

-

-

-

-

(1,493)

(1,493)

Other

-

-

-

(154)

-

-

-

-

-

(154)

-

(154)

Dividends - declared after 2018 - R$ 1.0507 per share

-

-

-

(10,215)

-

-

-

-

-

(10,215)

-

(10,215)

Interest on capital - declared after 2018 - R$ 0.7494 per share

-

-

-

(7,285)

-

-

-

-

-

(7,285)

-

(7,285)

Unclaimed dividends and Interest on capital

-

-

-

-

-

-

-

-

41

41

-

41

Total comprehensive income

-

-

-

-

1,103

(338)

(541)

220

26,583

27,027

264

27,291

Consolidated net income

-

-

-

-

-

-

-

-

26,583

26,583

264

26,847

Other comprehensive income

-

-

-

-

1,103

(338)

(541)

220

-

444

-

444

Appropriations:

Legal reserve

-

-

-

1,335

-

-

-

-

(1,335)

-

-

-

Statutory reserves

-

-

-

5,692

-

-

-

-

(5,692)

-

-

-

Dividends

-

-

-

4,709

-

-

-

-

(14,129)

(9,420)

(277)

(9,697)

Interest on capital

-

-

-

5,102

-

-

-

-

(5,468)

(366)

-

(366)

Balance at 12/31/2019

97,148

(1,274)

1,979

36,568

1,262

(1,339)

1,975

(4,332)

-

131,987

10,861

142,848

Change in the period

-

546

56

(816)

1,103

(338)

(541)

220

-

230

(1,506)

(1,276)

Balance at 01/01/2020

97,148

(1,274)

1,979

36,568

1,262

(1,339)

1,975

(4,332)

-

131,987

10,861

142,848

Transactions with owners

-

367

344

-

-

-

-

-

-

711

2,998

3,709

Result of delivery of treasury shares

-

367

200

-

-

-

-

-

-

567

-

567

Recognition of share-based payment plans

-

-

144

-

-

-

-

-

-

144

-

144

(Increase) / Decrease to the owners of the parent company (Note 15)

-

-

-

-

-

-

-

-

-

-

2,998

2,998

Other

-

-

-

(62)

-

-

-

-

-

(62)

-

(62)

Dividends - declared after 2019 - R$ 0.4832 per share

-

-

-

(4,709)

-

-

-

-

-

(4,709)

-

(4,709)

Interest on capital - declared after 2019 - R$ 0.5235 per share

-

-

-

(5,102)

-

-

-

-

-

(5,102)

-

(5,102)

Unclaimed dividends and Interest on capital

-

-

-

-

-

-

-

-

118

118

-

118

Total comprehensive income

-

-

-

-

(790)

(192)

4,298

(3,587)

18,909

18,638

(2,240)

16,398

Consolidated net income

-

-

-

-

-

-

-

-

18,909

18,909

(2,240)

16,669

Other comprehensive income

-

-

-

-

(790)

(192)

4,298

(3,587)

-

(271)

-

(271)

Appropriations:

Legal reserve

-

-

-

948

-

-

-

-

(948)

-

-

-

Statutory reserves

-

-

-

13,091

-

-

-

-

(13,091)

-

-

-

Dividends

-

-

-

-

-

-

-

-

(1,756)

(1,756)

(506)

(2,262)

Interest on capital

-

-

-

-

-

-

-

-

(3,232)

(3,232)

-

(3,232)

Balance at 12/31/2020

97,148

(907)

2,323

40,734

472

(1,531)

6,273

(7,919)

-

136,593

11,113

147,706

Change in the period

-

367

344

4,166

(790)

(192)

4,298

(3,587)

-

4,606

252

4,858

  1. Includes the share in Other Comprehensive Income of Investments in Associates and Joint Ventures related to Available for sale securities.
  2. Includes Cash flow hedge and hedge of net investment in foreign operation.

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

56

ITAÚ UNIBANCO HOLDING S.A. Consolidated Statement of Cash Flows (In millions of Reais)

Note

2nd Half of

01/01 to

01/01 to

2020

12/31/2020

12/31/2019

Adjusted net income

24,423

60,100

62,196

Net income

12,084

18,909

26,583

Adjustments to net income:

12,339

41,191

35,613

Share-based payment

494

217

(140)

Adjustment to fair value of securities and derivative financial instruments (assets / liabilities)

(1)

530

972

Effects of changes in exchange rates on cash and cash equivalents

(2,026)

11,677

(54)

Provision for loan losses

6c

12,369

30,140

23,896

Interest and foreign exchange income related to operations with subordinated debt

1,223

20,774

4,433

Change in technical provisions for insurance, pension plan and premium bonds

8c

5,346

10,332

15,051

Depreciation and amortization

2,527

5,007

4,530

Expense from update / charges on the provisions for lawsuits civil, labor claims, tax and social

476

893

1,925

security lawsuits and other risks

9b

Provisions for lawsuits civil, labor claims, tax and social security lawsuits and other risks

9b

2,116

3,602

5,132

Interest income related to deposits in guarantee

9b

(154)

(344)

(519)

Deferred taxes (excluding hedge tax effects)

2,613

(1,767)

(3,368)

Equity in earnings of associates, joint ventures and other investments

(862)

(1,530)

(1,408)

Income from foreign exchange and income related to available for sale securities

(4,857)

(22,166)

(9,053)

Income from foreign exchange and income related to held to maturity securities

(604)

(8,544)

(3,365)

Income from sale of available for sale financial assets

(234)

(1,107)

(1,027)

Income from sale of investments, assets held for sale and fixed assets

(4,129)

(4,197)

9

Income from non-controlling interests

15e

(1,055)

(2,240)

264

Other

(903)

(86)

(1,665)

Change in assets and liabilities

(11,595)

22,033

(35,350)

(Increase) / decrease in assets

Interbank investments

75,045

(40,675)

40,426

Securities and derivative financial instruments (assets / liabilities)

(65,552)

(84,702)

(11,038)

Compulsory deposits with the Central Bank of Brazil

(315)

1,189

2,900

Interbank and interbranch accounts (assets / liabilities)

(35)

4,636

1,694

Loan, lease and other credit operations

(62,415)

(145,383)

(69,057)

Other receivables and other assets

5,984

(11,370)

(21,668)

(Decrease) / increase in liabilities

Deposits

81,813

301,950

43,636

Deposits received under securities repurchase agreements

(36,414)

10,703

(73,398)

Funds from acceptances and issuance of securities

(8,502)

(6,931)

32,003

Borrowing and onlending

(11,984)

6,807

8,445

Technical provision for insurance, pension plan and premium bonds

(388)

(7,505)

2,106

Provisions and Other liabilities

12,525

(1,324)

14,789

Deferred income

40

465

72

Payment of income tax and social contribution

(1,397)

(5,827)

(6,260)

Net cash provided by / (used in) operating activities

12,828

82,133

26,846

Dividends / Interest on capital received from associates and joint ventures

231

487

838

Funds received from sale of available for sale securities

22,892

31,149

10,095

Funds received from redemption of held to maturity securities

10,492

12,172

8,085

(Purchase) / Disposal of Assets held for sale

510

725

533

Disposal of Investments

4,021

4,013

89

Disposal of Fixed assets

86

331

177

Termination of Intangible asset agreements

308

309

64

(Purchase) of Available for sale securities

(31,046)

(58,745)

(59,371)

(Purchase) of Held to maturity securities

(3,773)

(4,331)

(201)

(Purchase) of Investments

(25)

(66)

(419)

(Purchase) of Fixed assets

13

(1,045)

(1,716)

(1,621)

(Purchase) of Intangible assets

14

(1,718)

(3,591)

(2,691)

Net cash provided by / (used in) investing activities

933

(19,263)

(44,422)

Subordinated debt obligations raisings

2,111

5,260

8,548

Subordinated debt obligations redemptions

(3,257)

(10,581)

(2,832)

Change in non-controlling interests

737

2,998

(1,543)

Income from delivery of treasury shares

15a

-

494

742

Dividends and interest on capital paid to non-controlling interests

(30)

(506)

(227)

Dividends and interest on capital paid

(1,318)

(11,552)

(25,915)

Net cash provided by / (used in) financing activities

(1,757)

(13,887)

(21,227)

Net increase / (decrease) in cash and cash equivalents

12,004

48,983

(38,803)

Cash and cash equivalents at the beginning of the period

85,428

62,152

100,901

Effects of changes in exchange rates on cash and cash equivalents

2,026

(11,677)

54

Cash and cash equivalents at the end of the period

3a

99,458

99,458

62,152

Cash

46,224

30,367

Interbank deposits

3,886

4,559

Securities purchased under agreements to resell - Collateral held

49,348

27,226

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

57

ITAÚ UNIBANCO HOLDING S.A. Consolidated Statement of Added Value (In millions of Reais)

Note

2nd Half of

01/01 to

01/01 to

2020

12/31/2020

12/31/2019

Income

37,592

178,094

177,871

Financial operations

20,175

154,865

149,954

Commissions and Banking Fees

10e

20,376

39,574

40,568

Result from insurance, pension plan and premium bonds operations

1,601

3,334

3,579

Result from loan losses

6

(10,392)

(26,760)

(19,826)

Other

5,832

7,081

3,596

Expenses

5,538

(102,063)

(90,271)

Financial operations

11,310

(90,010)

(80,065)

Other

(5,772)

(12,053)

(10,206)

Inputs purchased from third parties

(8,347)

(16,763)

(15,634)

Materials, energy and others

10g

(133)

(321)

(330)

Third-party services

10g

(2,869)

(5,289)

(4,705)

Other

(5,345)

(11,153)

(10,599)

Data processing and telecommunications

10g

(2,110)

(3,987)

(4,278)

Advertising, promotions and publication

10g

(607)

(1,095)

(1,179)

Installations

(967)

(1,822)

(1,873)

Transportation

10g

(165)

(347)

(364)

Security

10g

(375)

(730)

(744)

Travel expenses

10g

(19)

(84)

(240)

Other

(1,102)

(3,088)

(1,921)

Gross added value

34,783

59,268

71,966

Depreciation and amortization

10g

(2,018)

(3,960)

(3,541)

Net added value produced by the company

32,765

55,308

68,425

Added value received through transfer - Results of equity method

862

1,530

1,408

Total added value to be distributed

33,627

56,838

69,833

Distribution of added value

33,627

56,838

69,833

Personnel

11,554

22,046

24,867

Compensation

8,981

17,002

19,112

Benefits

2,142

4,232

4,527

FGTS - government severance pay fund

431

812

1,228

Taxes, fees and contributions

10,295

16,684

16,715

Federal

9,490

15,130

15,141

Municipal

805

1,554

1,574

Return on third parties' capital - Rent

749

1,439

1,405

Return on capital

11,029

16,669

26,846

Dividends and interest on capital

3,393

4,988

19,597

Retained earnings attributable to controlling shareholders

8,691

13,921

6,985

Retained earnings / (loss) attributable to non-controlling shareholders

(1,055)

(2,240)

264

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

58

ITAÚ UNIBANCO HOLDING S.A.

Balance Sheet

(In millions of Reais)

Assets

Note

12/31/2020

12/31/2019

Current assets

20,805

26,358

Cash

-

41

12

Interbank investments

3b and 4

16,585

12,194

Money market

-

2,729

6,724

Interbank deposits

-

13,856

5,470

Securities and derivative financial instruments

3c, 3d and 5

274

8,782

Own portfolio

-

201

8,782

Derivative financial instruments

-

73

-

Other receivables

-

3,864

5,347

Current tax assets

425

625

Income receivable

2,129

3,563

Sundry

1,310

1,159

Other assets

3g

41

23

Prepaid expenses

41

23

Long term receivables

-

55,052

42,217

Interbank investments

3b and 4

49,669

38,887

Interbank deposits

49,669

38,887

Securities and derivative financial instruments

3c, 3d and 5

23

6

Derivative financial instruments

-

23

6

Other receivables

5,360

3,324

Current tax assets

3,075

2,937

Deferred tax assets

11b I

2,172

304

Deposits in guarantee of contingencies, provisions and legal obligations

78

63

Sundry

35

20

Permanent assets

-

134,542

113,772

Investments

3h and 12

134,542

113,772

Investments in subsidiaries

134,542

113,772

Total assets

210,399

182,347

Liabilities and stockholders' equity

Current liabilities

15,871

5,096

Other liabilities

-

15,871

5,096

Current tax liabilities

3n, 3p and 11c

67

185

Social and statutory

3,138

803

Subordinated debt

7f

12,128

4,082

Sundry

538

26

Long term liabilities

57,829

45,007

Funds from acceptances and issuance of securities

3b and 7d

7,898

-

Foreign loans through securities

7,898

Provisions

226

256

Other liabilities

49,705

44,751

Current tax liabilities

3n, 3p and 11c

25

16

Deferred tax liabilities

11b II

249

205

Subordinated debt

7f

23,934

27,878

Debt instruments eligible as capital

7f

25,497

16,652

Stockholders' equity

15

136,699

132,244

Capital

-

97,148

97,148

Capital reserves

2,323

1,979

Revenue reserves

-

39,126

34,846

Other comprehensive income

3c and 3d

(991)

(455)

(Treasury shares)

-

(907)

(1,274)

Total liabilities and stockholders' equity

-

210,399

182,347

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

59

ITAÚ UNIBANCO HOLDING S.A.

Statement of Income

(In millions of Reais, except for number of shares and earnings per share information)

Note

2nd Half of

01/01 to

01/01 to

2020

12/31/2020

12/31/2019

Income related to financial operations

1,701

4,102

4,123

Securities and derivative financial instruments

0

1,700

4,101

4,123

Foreign exchange operations

1

1

-

Expenses related to financial operations

0

(1,742)

(3,425)

(2,334)

Money market

(1,742)

(3,425)

(2,334)

Gross income related to financial operations

(41)

677

1,789

Other operating revenues (expenses)

0

11,559

15,877

25,188

Personnel expenses

0

(91)

(152)

(136)

Other administrative expenses

0

137

(837)

(138)

Provision expenses

-

17

(31)

Provision for lawsuits civil

-

(6)

-

Provison for tax and social security obligations

-

23

(31)

Tax expenses

11a II

(26)

(163)

(336)

Equity in earnings of subsidiaries

12

11,562

17,066

25,864

Other operating revenues (expenses)

0

(23)

(54)

(35)

Operating income

0

11,518

16,554

26,977

Non-operating income

0

131

355

-

Income before taxes on income and profit sharing

0

11,649

16,909

26,977

Income tax and social contribution

3p

601

2,062

(239)

Due on operations for the period

374

211

228

Related to temporary differences

227

1,851

(467)

Profit sharing - Management Members - Statutory

(4)

(10)

(26)

Net income

12,246

18,961

26,712

Earnings per share - Basic

Common

1.25

1.94

2.74

Preferred

1.25

1.94

2.74

Earnings per share - Diluted

Common

1.24

1.93

2.73

Preferred

1.24

1.93

2.73

Weighted average number of outstanding shares - Basic

Common

4,958,290,359

4,958,290,359

4,958,290,359

Preferred

4,804,166,394

4,801,324,161

4,781,855,588

Weighted average number of outstanding shares - Diluted

Common

4,958,290,359

4,958,290,359

4,958,290,359

Preferred

4,859,066,982

4,843,233,835

4,826,925,107

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

60

ITAÚ UNIBANCO HOLDING S.A. Statement of Comprehensive Income (In millions of Reais)

2nd Half of

01/01 to

01/01 to

2020

12/31/2020

12/31/2019

Net income

12,246

18,961

26,712

Financial assets at available for sale

1,276

(820)

1,103

Associates / Subsidiaries

1,276

(820)

1,103

Hedge

(46)

(3,847)

88

Cash flow hedge

225

521

164

Associates / Subsidiaries

225

521

164

Hedge of net investment in foreign operation

(271)

(4,368)

(76)

Change in fair value

(1,120)

(5,968)

-

Tax effect

433

2,738

-

Associates / Subsidiaries

416

(1,138)

(76)

Remeasurements of liabilities for post-employment benefits (*)

(221)

(191)

(338)

Associates / Subsidiaries

(221)

(191)

(338)

Foreign exchange variation in foreign investments

(155)

4,322

(540)

Change in fair value

-

1,592

(282)

Associates / Subsidiaries

(155)

2,730

(258)

Total other comprehensive income

854

(536)

313

Total comprehensive income

13,100

18,425

27,025

(*) Amounts that will not be subsequently reclassified to income.

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

61

ITAÚ UNIBANCO HOLDING S.A.

Statement of Changes in Stockholders' Equity (Note 15) (In millions of Reais)

Capital Treasury Capital Revenue

shares reserves reserves

Other comprehensive income

Available for

Remeasurements of

Conversion

Gains and

Retained

Total

adjustments

sale securities

liabilities of post-

losses -

earnings

of foreign

Adjustments

employment benefits

Hedge (1)

investments

Balance at 07/01/2020

97,148

(907)

1,829

30,191

(834)

(1,308)

5,559

(5,262)

-

126,416

Transactions with owners

-

-

494

-

-

-

-

-

-

494

Recognition of share-based payment plans

-

-

494

-

-

-

-

-

-

494

Unclaimed dividends and Interest on capital

-

-

-

-

-

-

-

-

82

82

Total comprehensive income

-

-

-

-

1,276

(221)

(155)

(46)

12,246

13,100

Net income

-

-

-

-

-

-

-

-

12,246

12,246

Other comprehensive income

-

-

-

-

-

-

-

(687)

-

(687)

Portion of other comprehensive income from investments in associates and subsidiaries

-

-

-

-

1,276

(221)

(155)

641

-

1,541

Appropriations:

Legal reserve

-

-

-

612

-

-

-

-

(612)

-

Statutory reserve

-

-

-

8,323

-

-

-

-

(8,323)

-

Dividends

-

-

-

-

-

-

-

-

(161)

(161)

Interest on capital

-

-

-

-

-

-

-

-

(3,232)

(3,232)

Balance at 12/31/2020

97,148

(907)

2,323

39,126

442

(1,529)

5,404

(5,308)

-

136,699

Change in the period

-

-

494

8,935

1,276

(221)

(155)

(46)

-

10,283

Balance at 01/01/2019

97,148

(1,820)

1,923

35,380

159

(1,001)

1,623

(1,549)

-

131,863

Transactions with owners

-

546

56

-

-

-

-

-

-

602

Result of delivery of treasury shares

-

546

351

-

-

-

-

-

-

897

Recognition of share-based payment plans

-

-

(295)

-

-

-

-

-

-

(295)

Dividends - declared after 2018 - R$ 1.0507 per share

-

-

-

(10,215)

-

-

-

-

-

(10,215)

Interest on capital - declared after 2018 - R$ 0.7494 per share

-

-

-

(7,285)

-

-

-

-

-

(7,285)

Unclaimed dividends and Interest on capital

-

-

-

-

-

-

-

-

40

40

Total comprehensive income

-

-

-

-

1,103

(338)

(540)

88

26,712

27,025

Net income

-

-

-

-

-

-

-

-

26,712

26,712

Other comprehensive income

-

-

-

-

-

-

(282)

-

-

(282)

Portion of other comprehensive income from investments in associates and subsidiaries

-

-

-

-

1,103

(338)

(258)

88

-

595

Appropriations:

Legal reserve

-

-

-

1,336

-

-

-

-

(1,336)

-

Statutory reserves

-

-

-

5,819

-

-

-

-

(5,819)

-

Dividends

-

-

-

4,709

-

-

-

-

(14,129)

(9,420)

Interest on capital

-

-

-

5,102

-

-

-

-

(5,468)

(366)

Balance at 12/31/2019

97,148

(1,274)

1,979

34,846

1,262

(1,339)

1,083

(1,461)

-

132,244

Change in the period

-

546

56

(534)

1,103

(338)

(540)

88

-

381

Balance at 01/01/2020

97,148

(1,274)

1,979

34,846

1,262

(1,339)

1,083

(1,461)

-

132,244

Transactions with owners

-

367

344

-

-

-

-

-

-

711

Result of delivery of treasury shares

-

367

200

-

-

-

-

-

-

567

Recognition of share-based payment plans

-

-

144

-

-

-

-

-

-

144

Dividends - declared after 2019 - R$ 0.4832 per share

-

-

-

(4,709)

-

-

-

-

-

(4,709)

Interest on capital - declared after 2019 - R$ 0.5235 per share

-

-

-

(5,102)

-

-

-

-

-

(5,102)

Unclaimed dividends and Interest on capital

-

-

-

-

-

-

-

-

118

118

Total comprehensive income

-

-

-

-

(820)

(191)

4,322

(3,847)

18,961

18,425

Net income

-

-

-

-

-

-

-

-

18,961

18,961

Other comprehensive income

-

-

-

-

-

-

1,592

(3,230)

-

(1,638)

Portion of other comprehensive income from investments in associates and subsidiaries

-

-

-

-

(820)

(191)

2,730

(617)

-

1,102

Appropriations:

Legal reserve

-

-

-

948

-

-

-

-

(948)

-

Statutory reserves

-

-

-

13,143

-

-

-

-

(13,143)

-

Dividends

-

-

-

-

-

-

-

-

(1,756)

(1,756)

Interest on capital

-

-

-

-

-

-

-

-

(3,232)

(3,232)

Balance at 12/31/2020

97,148

(907)

2,323

39,126

442

(1,530)

5,405

(5,308)

-

136,699

Change in the period

-

367

344

4,280

(820)

(191)

4,322

(3,847)

-

4,455

(1) Includes Cash flow hedge and hedge of net investment in foreign operation.

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

62

ITAÚ UNIBANCO HOLDING S.A.

Statement of Cash Flows

(In millions of Reais)

Note

2nd Half of

01/01 to

01/01 to

2020

12/31/2020

12/31/2019

Adjusted net income

(301)

16,803

3,390

Net income

12,247

18,961

26,712

Adjustments to net income:

(12,547)

(2,158)

(23,322)

Share-based payment

494

217

(140)

Interest and foreign exchange expense related to operations with subordinated debt

(1,272)

16,494

3,893

Deferred taxes

(227)

(1,851)

467

Equity in earnings of subsidiaries

12

(11,562)

(17,066)

(25,864)

Amortization of goodwill

22

45

45

Effects of changes in exchange rates on cash and cash equivalents

(2)

3

(1,723)

Change in assets and liabilities

1,750

(3,816)

(3,840)

(Increase) / decrease in Interbank investments

3,390

(19,168)

20,625

(Increase) / decrease in Securities and derivative financial instruments

366

8,491

3,941

(Increase) / decrease in Other receivables and Other assets

(1,028)

(661)

(701)

Increase / (decrease) in Deposits

-

-

(26,997)

Increase / (decrease) in Funds from acceptances and issuance of securities

(424)

7,898

(7)

Increase / (decrease) in Provisions and Other liabilities

(555)

(366)

(688)

Payment of income tax and social contribution

1

(10)

(13)

Net cash provided by / (used in) operating activities

1,449

12,987

(450)

Dividends and interest on capital received

2,856

7,682

20,681

(Purchase) / disposal of Investments

(728)

(10,027)

-

Net cash provided by / (used in) investing activities

2,128

(2,345)

20,681

Subordinated debt obligations raisings

2,111

5,260

8,548

Subordinated debt obligations redemptions

(1,725)

(8,807)

(2,240)

Income from delivery of treasury shares

-

494

742

Dividends and interest on capital paid

(1,318)

(11,552)

(25,915)

Net cash provided by / (used in) financing activities

(932)

(14,605)

(18,865)

Net increase / (decrease) in cash and cash equivalents

2,645

(3,963)

1,366

Cash and cash equivalents at the beginning of the period

123

6,736

3,647

Effects of changes in exchange rates on cash and cash equivalents

2

(3)

1,723

Cash and cash equivalents at the end of the period

3a

2,770

2,770

6,736

Cash

41

12

2,729

6,724

Securities purchased under agreements to resell - Collateral held

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

63

ITAÚ UNIBANCO HOLDING S.A.

Statement of Added Value

(In millions of Reais)

Note

2nd Half of

01/01 to

01/01 to

2020

12/31/2020

12/31/2019

Income

2,408

6,646

3,951

Financial operations

1,700

4,101

4,123

Other

708

2,545

(172)

Expenses

(1,791)

(3,492)

(2,379)

Financial operations

(1,742)

(3,425)

(2,334)

Other

(49)

(67)

(45)

Inputs purchased from third parties

140

(831)

(137)

Third-party services

(16)

(35)

(38)

Advertising, promotions and publication

-

(7)

(30)

Expenses for financial system services

(21)

(52)

(42)

Other

177

(737)

(27)

Gross added value

757

2,323

1,435

Deprecitation and amortization

(22)

(45)

(46)

Net added value produced by the company

735

2,278

1,389

Added value received through transfer - Results of equity method

12

11,562

17,066

25,864

Total added value to be distributed

12,297

19,344

27,253

Distribution of added value

12,297

19,344

27,253

Personnel

82

130

130

Compensation

81

127

126

Benefits

1

3

3

FGTS - government severance pay fund

-

-

1

Taxes, fees and contributions

(34)

247

410

Federal

(35)

246

410

Municipal

1

1

-

Return on third parties' capital - Rent

3

6

1

Return on capital

12,246

18,961

26,712

Dividends and interest on capital

3,393

4,988

19,597

Retained earnings for the period

8,853

13,973

7,115

The accompanying notes are an integral part of these financial statements.

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ITAÚ UNIBANCO HOLDING S.A. Notes to the Financial Statements

At 12/31/2020 and 12/31/2019 for balance sheet accounts

From 01/01 to 12/31 of 2020 and 2019 for income statement accounts

(In millions of Reais, except information per share)

Note 1 - Operations

Itaú Unibanco Holding S.A. (ITAÚ UNIBANCO HOLDING) is a publicly-held company, organized and existing under the laws of Brazil. The head office is located at Praça Alfredo Egydio de Souza Aranha, n° 100, in the city of São Paulo, state of São Paulo, Brazil.

ITAÚ UNIBANCO HOLDING has a presence in 18 countries and territories and offers a wide variety of financial products and services to personal and corporate customers in Brazil and abroad, not necessarily related to Brazil, through its branches, subsidiaries and international affiliates. It offers a full range of banking services, through its different portfolios: commercial banking; investment banking; real estate lending; loans, financing and investment; leasing and foreign exchange business.

ITAÚ UNIBANCO HOLDING is a financial holding company controlled by Itaú Unibanco Participações S.A. ("IUPAR"), a holding company which owns 51.71% of our common shares, and which is jointly controlled by (i) Itaúsa S.A. ("ITAÚSA"), a holding company controlled by members of the Egydio de Souza Aranha family, and

  1. Companhia E. Johnston de Participações ("E. JOHNSTON"), a holding company controlled by the Moreira
    Salles family. Itaúsa also directly holds 39.21% of ITAÚ UNIBANCO HOLDING's common shares.

These individual and consolidated financial statements were approved by the Board of Directors on February 01, 2021.

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Note 2 - Presentation of the Consolidated Financial Statements

a) Presentation

The financial statements of ITAÚ UNIBANCO HOLDING and its subsidiaries (ITAÚ UNIBANCO HOLDING CONSOLIDATED) have been prepared in accordance with the Brazilian Corporate Law, as amended by Laws 11,638, of December 28, 2007, and 11,941, of May 27, 2009, and with instructions issued by the National Monetary Council (CMN), the Central Bank of Brazil (BACEN), the Brazilian Securities Commission (CVM), the National Council of Private Insurance (CNSP), the Superintendence of Private Insurance (SUSEP) and the National Superintendence of Supplementary Pensions (PREVIC), which include the use of accounting estimates for setting up provisions and valuing financial assets. The information contained in the financial statements and accompanying notes is consistent with the management accounts. The information in the financial statements and accompanying notes evidence all relevant information inherent in the financial statements, and only them, which are consistent with information used by management in its administration.

As required by the sole paragraph of article 7 of BACEN Circular 3,068, of November 8, 2001, securities classified as held for trading (Notes 3c and 5a) are shown in the Consolidated Balance Sheet under Current Assets, regardless of their maturity dates.

The presentation of the Statements of Value Added is required by the Brazilian corporate legislation and by the accounting practices adopted in Brazil applicable to publicly-held companies. This Statement was prepared in accordance with the criteria established by Technical Pronouncement CPC 09 - Statement of Value Added.

Leases are shown at present value in the Consolidated Balance Sheet. The related income and expenses, representing the financial results of these operations, are grouped together under Loan, Lease and Other Credit Operations in the Consolidated Statement of Income. Advances on exchange contracts have been reclassified from Other Liabilities - Foreign Exchange Portfolio to Loan Operations. Foreign exchange income consists of exchange rate differences on balance sheet accounts denominated in foreign currencies.

  1. Consolidation
    The consolidated financial statements of ITAÚ UNIBANCO HOLDING relate to transactions carried out by its branches and subsidiaries in Brazil and abroad, the operations of the companies and investment funds which it controls.
    In ITAÚ UNIBANCO HOLDING, goodwill recorded in subsidiaries is amortized on the basis of anticipated future profitability and appraisal reports, or upon realization of the investment, according to the rules and guidance of CMN and BACEN.
    The difference in Net Income and Shareholders' Equity between ITAÚ UNIBANCO HOLDING and ITAÚ
    UNIBANCO HOLDING CONSOLIDATED (Note 15d) results substantially from the adoption of different criteria for the amortization of goodwill originating from acquisitions of investments, for recognizing transactions with minority shareholders where there is no change in control (Note 3I) and for recognizing exchange differences, prior to January 1, 2017, on foreign investments and hedging these investments, which are denominated in currencies other than the functional currency of the parent company, net of the corresponding tax effects.
    The effects of foreign exchange differences on foreign investments are classified under the heading Income on Securities and Derivatives Financial Instruments in the Consolidated Statement of Income for subsidiaries with the same functional currency as the parent company, and in Other Comprehensive Income for subsidiaries with a different functional currency.

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The following table shows the main consolidated companies, which together represent over 95% of total consolidated assets, as well as the interests of ITAÚ UNIBANCO HOLDING in their voting capital:

Country of

Interest in voting

Interest in total

Functional currency (1)

Activity

capital %

capital %

Incorporation

12/31/2020

12/31/2019

12/31/2020

12/31/2019

In Brazil

Banco Itaú BBA S.A.

Real

Brazil

Financial institution

100.00%

100.00%

100.00%

100.00%

Banco Itaú Consignado S.A.

Real

Brazil

Financial institution

100.00%

100.00%

100.00%

100.00%

Banco Itaucard S.A.

Real

Brazil

Financial institution

100.00%

100.00%

100.00%

100.00%

Banco Itauleasing S.A.

Real

Brazil

Financial institution

100.00%

100.00%

100.00%

100.00%

Cia. Itaú de Capitalização

Real

Brazil

Premium Bonds

100.00%

100.00%

100.00%

100.00%

Dibens Leasing S.A. - Arrendamento Mercantil

Real

Brazil

Leasing

100.00%

100.00%

100.00%

100.00%

Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento

Real

Brazil

Consumer Finance Credit

50.00%

50.00%

50.00%

50.00%

Hipercard Banco Múltiplo S.A.

Real

Brazil

Financial institution

100.00%

100.00%

100.00%

100.00%

Itauseg Seguradora S.A.

Real

Brazil

Insurance

100.00%

100.00%

100.00%

100.00%

Itaú Corretora de Valores S.A.

Real

Brazil

Securities Broker

100.00%

100.00%

100.00%

100.00%

Itaú Seguros S.A.

Real

Brazil

Insurance

100.00%

100.00%

100.00%

100.00%

Itaú Unibanco S.A.

Real

Brazil

Financial institution

100.00%

100.00%

100.00%

100.00%

Itaú Vida e Previdência S.A.

Real

Brazil

Pension Plan

100.00%

100.00%

100.00%

100.00%

Luizacred S.A. Sociedade de Crédito, Financiamento e Investimento

Real

Brazil

Consumer Finance Credit

50.00%

50.00%

50.00%

50.00%

Redecard S.A.

Real

Brazil

Acquirer

100.00%

100.00%

100.00%

100.00%

Foreign

Itaú Corpbanca Colombia S.A.

Colombian Peso

Colombia

Financial institution

34.16%

33.22%

34.16%

33.22%

Banco Itaú (Suisse) SA

Swiss Franc

Switzerland

Financial institution

100.00%

100.00%

100.00%

100.00%

Banco Itaú Argentina S.A.

Argentine Peso

Argentina

Financial institution

100.00%

100.00%

100.00%

100.00%

Banco Itaú Paraguay S.A.

Guarani

Paraguay

Financial institution

100.00%

100.00%

100.00%

100.00%

Banco Itaú Uruguay S.A.

Uruguayan peso

Uruguay

Financial institution

100.00%

100.00%

100.00%

100.00%

Itau Bank, Ltd.

Real

Cayman Islands

Financial institution

100.00%

100.00%

100.00%

100.00%

Itau BBA International plc

US Dollar

United Kingdom

Financial institution

100.00%

100.00%

100.00%

100.00%

Itau BBA USA Securities Inc.

Real

United States

Securities Broker

100.00%

100.00%

100.00%

100.00%

Itaú CorpBanca(2)

Chilean Peso

Chile

Financial institution

39.22%

38.14%

39.22%

38.14%

  1. All overseas offices of ITAÚ UNIBANCO HOLDING CONSOLIDATED have the same functional currency as the parent company, except for CorpBanca New York Branch, which uses the US Dollar.
  2. ITAÚ UNIBANCO HOLDING controls ITAÚ CORPBANCA due to the shareholders' agreement.

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  1. Critical accounting estimates and judgments
    The preparation of Consolidated and Individual Financial Statements requires Management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and contingent assets and liabilities at the date of the Financial Statements, due to uncertainties and the high level of subjectivity involved in the recognition and measurement of certain items. Estimates and judgments considered more relevant by ITAÚ UNIBANCO HOLDING CONSOLIDATED are related to the following topics:

Topic

Notes

Consolidation

2c

(I) and 2b

Fair value of financial instruments

2c

(II) and 17

Provision for loan losses

2c

(III) and 6

Goodwill impairment

2c

(IV) and 14

Deferred income tax and social contribution

2c

(V) and 11

Defined benefit pension plans

2c

(VI) and 19

Contingent assets and liabilities, legal obligations and tax and social security obligations

2c

(VII) and 9

Technical provisions for insurance, pension plan and premium bonds

2c

(VIII) and 8

I. Consolidation - subsidiaries are all those in which ITAÚ UNIBANCO HOLDING CONSOLIDATED's involvement exposes it or entitles it to variable returns and can affect these returns through its influence on the entity. The existence of control is assessed continuously. Subsidiaries are consolidated from the date control is established to the date on which it ceases to exist.

The consolidated financial statements are prepared using consistent accounting policies. Intercompany asset and liability account balances, income accounts and transaction values have been eliminated.

  1. Fair value of financial instruments - the fair value of financial instruments, including derivatives that are not traded in active markets, is calculated by using valuation techniques based on assumptions that consider market information and conditions. The main assumptions are: historical data, information on similar transactions and pricing techniques. For more complex or illiquid instruments, significant judgment is necessary to determine the model used with the selection of specific inputs and, in certain cases, evaluation adjustments are applied to the model amount our price quoted for financial instruments that are not actively traded.

The methodologies used to estimate the fair value of certain financial instruments are described in Note 17.

  1. Provision for loan losses - The analysis of the provision for loan losses from the operations granted by ITAÚ UNIBANCO HOLDING CONSOLIDATED is conducted based on the assessment of the default classification (Ratings AA-H), on an individual or collective basis, established in CMN Resolution No. 2,682, of December 21, 1999. Management exercises its judgment in the assessment of the adequacy of the expected loss amounts resulting from models and, according to its experience, makes adjustments that may result from certain clients' credit condition or from temporary adjustments resulting from new situations or circumstances that have not yet been reflected in modeling. In addition to the default classification the following aspects are also considered:

•

•

12-month horizon, using base macroeconomic scenarios, i.e., with no weighting;

Highest risk classification according to the operation, client, default, renegotiation, among others.

The criteria for the provision for loan losses are detailed in Note 21.

IV. Goodwill impairment - The review of goodwill due to impairment reflects the Management's best estimate for future cash flows of Cash Generating Units (CGU), with the identification of the CGU and estimate of their fair value less costs to sell and/or value in use. These flows are subject to market conditions and uncertain factors, as follows:

•

•

Cash flows projected for periods of available forecasts and long-term assumptions for these flows;

Discount rates, since they generally reflect financial and economic variables, such as the risk-free interest rate and a risk premium.

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Cash-Generating Units or CGU groups are identified at the lowest level at which goodwill is monitored for internal management purposes. Goodwill is allocated to cash flow generating units for purposes of testing for impairment.

  1. Deferred income tax and social contribution - deferred tax assets are recognized only in relation to deductible temporary differences, tax losses and social contribution loss carryforwards for offset only to the extent that it is probable that ITAÚ UNIBANCO HOLDING CONSOLIDATED will generate future taxable profit for its use. The expected realization of deferred tax assets is based on the projection of future taxable profits and technical studies, as disclosed in Note 11.

VI. Defined benefit pension plans - the current amount of pension plans is obtained from actuarial calculations, which use assumptions such as discount rate, which is appropriated at the end of each year and used to determine the present value of estimated future cash outflows. To determine the appropriate discount rate, ITAÚ UNIBANCO HOLDING CONSOLIDATED considers the interest rates of National Treasury Notes that have maturity terms similar to the terms of the respective liabilities.

The main assumptions for Pension plan obligations are partly based on current market conditions.

Additional information is disclosed in Note 19.

VII. Contingent Assets and Liabilities, Legal Obligations and Tax and Social Security Obligations - ITAÚ UNIBANCO HOLDING CONSOLIDATED periodically reviews its contingencies. These contingencies are evaluated based on management´s best estimates, taking into account the opinion of legal counsel when there is a likelihood that financial resources will be required to settle the obligations and the amounts may be reasonably estimated.

Contingencies classified as probable losses are recognized in the Consolidated Balance Sheet under Provisions.

Contingent amounts are measured using appropriate models and criteria, despite the uncertainty surrounding the ultimate timing and amounts. Provisions, contingencies and other commitments are detailed in Note 9.

VIII. Technical provisions for insurance, pension plan and premium bonds - technical provisions are liabilities arising from obligations of ITAÚ UNIBANCO HOLDING CONSOLIDATED to its policyholders and participants. These obligations may be short term liabilities (property and casualty insurance) or medium and long term liabilities (life insurance and pension plans).

The determination of the actuarial liability is subject to several uncertainties inherent in the coverage of insurance and pension contracts, such as assumptions of persistence, mortality, disability, life expectancy, morbidity, expenses, frequency and severity of claims, conversion of benefits into annuities, redemptions and return on assets.

The estimates for these assumptions are based on the historical experience of ITAÚ UNIBANCO HOLDING CONSOLIDATED, benchmarks and the experience of the actuary, in order to comply with best market practices and constantly review of the actuarial liability. The adjustments resulting from these continuous improvements, when necessary, are recognized in the statement of income for the corresponding period. Additional information is described in Note 8.

  1. Business development
    Recovery do Brasil Consultoria S.A.
    On December 31, 2015, ITAÚ UNIBANCO HOLDING, through its subsidiary Itaú Unibanco S.A. (ITAÚ UNIBANCO), entered into an agreement for purchase and sale and other covenants with Banco BTG Pactual S.A. (BTG) and with Misben S.A. for acquisition of 89.08% of interest in capital of Recovery do Brasil Consultoria S.A. (RECOVERY), corresponding to total interest of RECOVERY's parties, for the amount of R$ 735. On July 7, 2016 an additional interest of 6.92% was acquired from International Finance Corporation, for the amount of R$ 59, then holding 96% of its capital.

On May 26, 2020, ITAÚ UNIBANCO HOLDING, through its subsidiary ITAÚ UNIBANCO, acquired from International Finance Corporation an additional interest of 4% for the amount of R$ 20.7, then holding 100% of capital of RECOVERY.

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The effective acquisition and financial settlement occurred on May 28, 2020.

Acquisition of Zup I.T. Serviços em Tecnologia e Inovação S.A.

On October 31, 2019, ITAÚ UNIBANCO HOLDING, through its subsidiary Redecard S.A. (REDE), entered into a purchase and sale agreement of 100% of the capital of Zup I.T. Serviços em Tecnologia e Inovação S.A. (ZUP). The purchase will be carried out in three phases over four years. In the first phase, ITAÚ UNIBANCO HOLDING acquired 52.96% of ZUP's total voting capital for approximately R$ 293, then holding the company's control. In the third year, after the operation is closed, ITAÚ UNIBANCO HOLDING will acquire an additional 19.6% interest; in the fourth year, the remaining interest, so as to achieve 100% of ZUP's capital.

Effective acquisitions and financial settlements occurred on March 31, 2020, after obtaining the regulatory authorizations required.

Acquisition of non-controlling interest in Pravaler S.A.

On December 27, 2019, ITAÚ UNIBANCO HOLDING, through its subsidiary ITAÚ UNIBANCO, increased its ownership interest in Pravaler S.A. (PRAVALER), acquiring 43.07% of total capital social (corresponding to 75.71% of preferred shares and 28.65% of common shares) for the amount of R$ 330.9. PRAVALER, with head office in São Paulo, is the manager of the largest private college loan program in Brazil, and it will continue operating independently from ITAÚ UNIBANCO HOLDING.

PRAVALER is classified as an associate measured under the equity method.

Effective acquisitions and financial settlements occurred on the same date, after obtaining the regulatory authorizations required.

Reduction of non-controlling interest in XP Inc.

On November 29, 2019, there was a corporate reorganization of XP Investimentos S.A., in which the shareholders subscribed their respective shares of the holding company XP Inc. (XP INC), keeping the percentages in total capital. After the initial public offering held on December 11, 2019 at Nasdaq in New York, the ownership interest of ITAÚ UNIBANCO HOLDING changed from 49.9% to 46.05%, giving rise to a R$ 1,991 result in the primary subscription of XP Inc.

On November 26, 2020, ITAÚ UNIBANCO HOLDING disclosed that the Board of Directors approved the partial spin-off of the investment in XP INC for a new company (XPart S.A.).

On December 2 and 17, 2020, ITAÚ UNIBANCO HOLDING sold 4.44% and 0.07%, respectively, of its investments in XP INC, through the public offering on the Nasdaq, giving rising to a result before taxes of R$ 4,001. Concurrently with the sales, XP INC a public offering (follow-on) which resulted in the dilution of the interest held by ITAÚ UNIBANCO HOLDING, which is now 41.00% of capital, giving rising to a result in XP INC primary subscription of R$ 546.

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Acquisition of non-controlling interest in Ticket Serviços S.A.

On September 4, 2018, ITAÚ UNIBANCO HOLDING, through its subsidiary ITAÚ UNIBANCO, entered into a strategic partnership with Edenred Participações S.A. (EDENRED) in the benefits market for workers covered mainly by PAT, the Workers' Meals Program. EDENRED is the parent company of Ticket Serviços S.A. (TICKET) in Brazil.

The strategic partnership enables ITAÚ UNIBANCO to add the benefits issued by TICKET to its current range of products and services for customers in the wholesale, medium, micro and small company segments.

In addition, ITAÚ UNIBANCO made a minority investment of 11% in TICKET, through a capital increase with contribution of (i) cash, equivalent to said interest in the company's equity value, and (ii) right to exclusive distribution of Ticket Restaurante, Ticket Alimentação, Ticket Cultura and Ticket Transporte products to the ITAÚ UNIBANCO legal entities base during the partnership term. TICKET will continue distributing its products through other commercial agreements and will continue under EDENRED's control and management.

Effective acquisitions and financial settlements occurred on August 30, 2019, after obtaining the regulatory authorizations required.

Itaú CorpBanca

The Itaú Corpbanca (ITAÚ CORPBANCA) is controlled as of April 1st, 2016 by ITAÚ UNIBANCO HOLDING. On the same date, ITAU UNIBANCO HOLDING entered into a shareholders' agreement with Corp Group, which sets forth, among others, the right of ITAÚ UNIBANCO HOLDING and Corp Group to appoint members for the Board of Directors of ITAÚ CORPBANCA in accordance to their interests in capital stock, and this group of shareholders have the right to appoint the majority of members of the Board of Directors of ITAÚ CORPBANCA and ITAÚ UNIBANCO HOLDING are be entitled to appoint the majority of members elected by this block.

On September 10, 2020, ITAÚ UNIBANCO HOLDING, through its subsidiary ITB Holding Brasil Participações Ltda, indirectly acquired additional ownership interest of 1.08% (5,558,780,153 shares) in the ITAÚ CORPBANCA's capital for the amount of R$ 229, and now it holds 39.22%.

The effective acquisition and financial settlement occurred on September 14, 2020, after obtaining the regulatory authorizations.

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Note 3 - Significant accounting policies

  1. Cash and cash equivalents - Defined as cash and current accounts with banks, shown in the Consolidated Balance Sheet under the heading Cash, Interbank Deposits and Money Market (Collateral Held) with original maturities not exceeding 90 days.
  2. Interbank investments, Remunerated restricted Credits held at the Central Bank of Brazil (BACEN), Remunerated deposits, deposits received under securities repurchase agreements, funds from acceptances and issuance of securities, borrowing and onlending, subordinated debt and other receivables and payables - Operations with fixed interest and charges are booked at present value. Operations with floating interest and charges are booked at the adjusted principal amount. Operations subject to foreign exchange variation are booked at the corresponding amount in local currency. Liabilities are presented net of the transaction costs incurred, if significant, calculated pro rata on a daily basis.
  3. Securities - Recorded at the cost of acquisition restated by the index and/or effective interest rate and presented in the Balance Sheet as required by BACEN Circular 3,068, of November 08, 2001. Securities are classified into the following categories:
    • Trading securities - Securities acquired to be actively and frequently traded. They are measured at fair value, with a counterparty to the results for the period;
    • Available for sale securities - Securities that can be negotiated but are not acquired for the purposes of active and frequent trading. They are measured at fair value, with a counterparty to a specific account in stockholders' equity;
    • Held to maturity securities - Securities, other than non-redeemable shares, which the bank has the financial capacity and intends, or is required, to hold in the portfolio to maturity. They are recorded at the cost of acquisition, or at fair value, whenever these are transferred from another category. Securities are adjusted up to maturity date, but are not measured at fair value.

Gains and losses on available for sale securities, when realized, are recognized on the trade date in the statement of income, with a counterparty to a specific account in stockholders' equity.

Decreases in the fair value of available for sale and held to maturity securities below to cost, resulting from causes not considered to be temporary, are recorded in the results as realized losses.

  1. Derivative financial instruments - These are classified on the date of their acquisition, according to whether or not management intends to use them for hedging, according to BACEN Circular 3,082, of January 30, 2002. Transactions involving financial instruments, carried out at a customer's request, for the bank's own account, or which do not comply with the hedging criteria (mainly derivatives used to manage overall risk exposure), are stated at fair value, including realized and unrealized gains and losses, which are recorded directly in the statement of income.
    Derivatives that are used for protection against risk exposure or to modify the characteristics of financial assets and liabilities, where changes in fair value are closely related to those of the items being protected at the beginning and throughout the duration of the contract, and which are considered to be effective in reducing the risk exposure in question, are classified as hedges of the following types:
    • Market Risk Hedge - Financial assets and liabilities, as well as their related financial instruments, are booked at fair value, plus realized and unrealized gains and losses, which are recorded directly in the statement of income;
    • Cash Flow Hedge - The effective portion of a hedge of financial assets and liabilities, and the related financial instruments, are booked at fair value plus realized and unrealized gains and losses, net of tax effects, when applicable, and recorded in a specific account in stockholders' equity. The ineffective portion is recorded directly in the statement of income;
    • Hedge of Net Investments in Foreign Operations - Accounted for similarly to a cash flow hedge, i.e. the portion of gains or losses on a hedging instrument that is determined to be an effective hedge is recognized in stockholders' equity, and reclassified to income for the period in the event of the disposal of the foreign operation. The ineffective portion is recognized in income for the period.

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  1. Loans, leases and other credit operations (operations with lending characteristics) - These transactions are recorded at present value and calculated pro rata on a daily basis in line with variations in a defined indexer and interest rate, and are adjusted up to the 60th day of arrears, according to the expectation of payment. After the 60th day, income is recognized only on actual receipt of payments. Credit card operations include receivables arising from purchases made by cardholders. Funds corresponding to these amounts to be paid to the credit card companies are shown as liabilities, under the heading Interbank Accounts - Receipts and Payments Pending Settlement.
  2. Provision for loan losses - The balance of the provision for loan losses is recorded based on a credit risk analysis, at an amount considered sufficient to cover loan losses in accordance with the rules determined by CMN Resolution Nº. 2,682 of December 21, 1999, which include the following:
    • Provisions are recorded from the date on which loans are granted, based on the customer's risk rating and on a periodic quality assessment of customers and business sectors, and not only in the event of default;
    • Exclusively in the case of default, losses are written off 360 days after the credits have matured, or after 540 days for operations with maturities longer than 36 months.
  4. Other assets - They are comprised of Assets Held for Sale, relating to real estate, vehicles and other assets available for sale (owned but deactivated, received as payment in kind or resulting from execution of guarantees). These assets are adjusted to fair value by setting up a provision in accordance with current regulations. This heading also covers Unearned Reinsurance Premiums (Note 3m) and Prepaid Expenses, corresponding to disbursements which will produce benefits in future years.
  5. Investments - Include goodwill identified in the acquisition of associates and joint ventures, net of any accumulated impairment loss. They are initially recognized at acquisition cost and are subsequently accounted for under the equity method.
    • Associates: are companies over which ITAÚ UNIBANCO HOLDING CONSOLIDATED has significant influence, but which it does not control.
    • Joint Ventures: ITAÚ UNIBANCO HOLDING CONSOLIDATED has joint venture whereby the parties that have joint control of the arrangement have rights to the net assets.
  7. Fixed assets - Are booked at their acquisition cost less accumulated depreciation and adjusted for impairment, if applicable. Depreciation is calculated on the straight-line method using rates based on the estimated useful lives of these assets. Such rates and other details are presented in Note 13.
    The residual values and useful lives of assets are reviewed and adjusted, if appropriate, at the end of each period.
    ITAÚ UNIBANCO HOLDING CONSOLIDATED reviews its assets in order to identify indications of impairment in their recoverable amounts. The recoverable amount of an asset is defined as the higher of its fair value less the cost to sell and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which independent cash flows can be identified (cash-generating units). The assessment may be made at an individual asset level when the fair value less the cost to sell can be reliably determined.
  8. Goodwill - Corresponds to the amount paid in excess in the acquisition of investments and it is amortized based on the expected future profitability or on its realization. It is semiannually submitted to the asset impairment test with the adoption of an approach that involves the identification of cash-generating units (CGU) and the estimate of its fair value less the cost to sell and/or its value in use.
    To determine this estimate, ITAÚ UNIBANCO HOLDING CONSOLIDATED adopts the discounted cash flow methodology for a period of 5 years, macroeconomic assumptions, growth rate and discount rate.

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The units or cash flow generating units are identified at the lowest level in which goodwill is monitored for internal Management purposes. Goodwill is allocated to cash flow generating units for purposes of testing the recoverable amount.

The breakdown of intangible assets is described in Note 14.

  1. Intangible assets - Composed of: (i) Goodwill paid upon acquisition of a company, transferred to intangible assets due to merger of the acquired company's equity into the acquirer company; (ii) Right-of-use, as well as rights on the acquisition of payrolls and association agreements, amortized according to agreement terms or as economic benefits flow to the company; and (iii) Software, amortized over five years, and customer portfolios, amortized within ten years.
    Intangible assets with definite useful lives are amortized using the straight-line method over their estimated useful lives and those with indefinite useful lives are tested on a semiannually basis to identify possible impairment losses.
  2. Capital Transactions with Non-Controlling Stockholders - Changes in an interest in a subsidiary not giving rise to loss of control are accounted for as capital transactions, and any difference between the amount paid and the amount corresponding to the non-controllingstockholders is directly recognized in
    Consolidated Stockholders' Equity.
  3. Insurance, pension plan and premium bonds operations - Technical provisions are liabilities arising from obligations of ITAÚ UNIBANCO HOLDING CONSOLIDATED to its policyholders and participants. These obligations may be short term liabilities (property and casualty insurance) or medium and long term liabilities (life insurance and pension plans).
    The determination of actuarial liability is subject to various uncertainties inherent in the coverage of insurance and pension contracts, such as assumptions of persistence, mortality, disability, life expectancy, morbidity, expenses, frequency and severity of claims, conversion of benefits into annuities, redemptions and return on assets.
    The estimates for these assumptions are based on past experience of ITAÚ UNIBANCO HOLDING CONSOLIDATED, benchmarks and the experience of the actuary, in order to comply with best market practices and constantly review the actuarial liability. The resulting adjustments, when necessary, are recognized in the statement of income for the corresponding period.
    Insurance contracts establish, for one of the parties, upon payment (premium) by the other party, the obligation to pay the latter a certain amount in the event of a claim. Insurance risk is defined as a future and uncertain event, of a sudden and unforeseeable nature, independent of the insured's will, which may cause economic loss when it occurs.
    Once a contract is classified as an insurance contract, it remains as such until the end of its life, even if the insurance risk is significantly reduced during the period, unless all rights and obligations are extinguished or expire.
    Insurance premiums, coinsurance accepted and selling expenses are accounted for upon issue of the insurance policy or in accordance with term of the insurance, through the establishment and reversal of a provision for unearned premiums and deferred selling expenses. Interest arising from fractioning of insurance premiums is accounted for as incurred. Revenues from pension contributions, gross revenue from premium bonds certificates and the respective technical provisions are recognized upon receipt.
    Private pension plans
    Contracts that provide for retirement benefits after an accumulation period (known as PGBL, VGBL and FGB) provide a guarantee, at the commencement date of the contract, of the basis for calculating the retirement benefit (mortality table and minimum interest rates). The contracts specify the annuity rates and, therefore, the insurance risk is transferred to the issuer from the start. These contracts are classified as insurance contracts.
    Insurance premiums
    Insurance premiums are recognized upon issue of an insurance policy or over the period of the contracts in proportion to the amount of the insurance coverage.

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If there is evidence of impairment losses with respect to receivables for insurance premiums, ITAÚ UNIBANCO HOLDING CONSOLIDATED recognizes a provision, sufficient to cover this loss, based on a risk analysis of realization of insurance premiums receivable with installments overdue for over 60 days.

Reinsurance

In the ordinary course of business, ITAÚ UNIBANCO HOLDING CONSOLIDATED reinsures a portion of the risks underwritten, particularly property and casualty risks that exceed the maximum limits of responsibility that determine to be appropriate for each segment and product (after a study which considers size, experience, special features, and the capital necessary to support these limits). These reinsurance agreements allow the recovery of a portion of losses from the reinsurer, although they do not release the insurer from the main obligation as direct insurer of the risks covered by the reinsurance.

Acquisition Costs

Acquisition costs include direct and indirect costs related to the origination of insurance. These costs are recorded directly in result as incurred, expect for deferred acquisition costs (commissions paid for brokerage services, agency and prospecting efforts), which are recorded proportionally to the recognition of premium revenues, i.e. over the term corresponding to the insurance contract.

Insurance Contract Liabilities

Reserves for claims are established based on past experience, claims in process of payment, estimated amounts of claims incurred but not yet reported, and other factors relevant to the required reserve levels. A provision for premium shortfalls is recognized if the estimated amount of shortfalls exceeds deferred acquisition costs.

Liability Adequacy Test

ITAÚ UNIBANCO HOLDING CONSOLIDATED tests liability adequacy by adopting current actuarial assumptions for future cash flows of all insurance contracts in force at the balance sheet date.

Should the analysis show insufficiency, any shortfall identified will immediately be accounted for in income for the period.

The assumptions used to conduct the liability adequacy test are detailed in Note 8.

  1. Contingent Assets and Liabilities, Legal Obligations and Tax and Social Security Obligations - these are possible rights and potential obligations arising from past events for which realization depends on uncertain future events. They are measured using best estimates through the use of models and criteria which allow for adequate measurement even if there is uncertainty as to the ultimate timing and amount, and the criteria are detailed in Note 9.
    These contingencies are evaluated based on Management's best estimates, and are classified as:
    • Probable: in which liabilities are recognized in the Consolidated Balance Sheet under Provisions;
    • Possible: which are disclosed in the Consolidated Financial Statements, but no provision is recorded;
    • Remote: which require neither a provision nor disclosure.

Contingent assets are not recognized in the Consolidated Balance Sheet, except when Management of ITAÚ UNIBANCO HOLDING CONSOLIDATED considers that realization is practically certain. In general they correspond to lawsuits with favorable outcomes in final and unappealable judgments and to the withdrawal of lawsuits as a result of a settlement payment received or an agreement for set-off against an existing liability.

The amount of deposits in guarantee is adjusted in compliance with current legislation.

Contingencies guaranteed by indemnity clauses in privatization processes and others, and with liquidity are recognized upon judicial notification with simultaneous recognition of receivables, without any effect on results.

Legal Obligations and Tax and Social Security Obligations

Represented by amounts payable for tax liabilities, the legality or constitutionality of which are subject to judicial challenge, recognized for the full amount under discussion.

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  1. Allowance for Financial Guarantees Provided - Recognized based on the expected loss model, in an amount sufficient to cover any probable losses over the whole guarantee period.
  2. Income Tax and Social Contribution - There are two components of the provision for income tax and social contribution: current and deferred.
    The current component is approximately the total of taxes to be paid or recovered during the reporting period.
    Deferred income tax and social contribution, represented by deferred tax assets and liabilities, is obtained based on the differences between the tax bases of assets and liabilities and the amounts reported in the financial statements at each year end. Deferred tax assets are only recognized when it is probable that future taxable income will be available for offsetting.
    The income tax and social contribution expense is recognized in the Consolidated statement of income under Income Tax and Social Contribution, except when it refers to items directly recognized in Stockholders' Equity, such as tax on marking available for sale financial assets to fair value, post- employment benefits and tax on cash flow hedges and hedge of net investment in foreign operations. Subsequently, these items are recognized in income upon realization of the gain/loss on the instruments.
    Changes in tax legislation and rates are recognized in the Consolidated statement of income under Income tax and social contribution in the period in which they are enacted. Interest and fines are recognized in the Consolidated statement of income under Other administrative expenses.
    Tax rates, as well as their calculation bases, are detailed in Note 11.
  3. Deferred income - this refers to: (i) interest received in advance on which there is no prospect of demand for payment and which depends only on the passage of time to be appropriated to effective income, and (ii) the negative goodwill on acquisition of investments, which has not been absorbed in the consolidation process.
  4. Post-employmentsbenefits
    Pension plans - defined benefit plans
    The liability (or asset, as the case may be) is recognized in the consolidated balance sheet with respect to a defined benefit plan corresponds to the present value of the defined benefit obligations at the balance sheet date less the fair value of the plan assets. The defined benefit obligations are calculated annually using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated amount of future cash flows of benefit payments at the rate for Brazilian treasury long term securities denominated in Reais and with maturity periods similar to the term of the pension plan liabilities.
    Pension plans - defined contribution
    For defined contribution plans, contributions to plans made by ITAÚ UNIBANCO HOLDING CONSOLIDATED, through pension plan funds, are recognized as expenses, when due.
    Other post-employment benefit obligations
    Like defined benefit pension plans, these obligations are assessed annually by independent, qualified actuaries, and the costs expected from these benefits are accrued over the period of employment. Gains and losses arising from changes in practices and variations in actuarial assumptions are recognized in Stockholders' equity, in the period in which they occur.
  5. Foreign currency translation
    I - Functional and presentation currency
    The Financial Statements of ITAÚ UNIBANCO HOLDING CONSOLIDATED are presented in Brazilian Reais, its functional and presentation currency. For each subsidiary, joint venture or investment in associates, ITAÚ UNIBANCO HOLDING CONSOLIDATED defines the functional currency as the currency of the primary economic environment in which the entity operates.

II - Foreign Currency Operations

Foreign currency operations are translated into the functional currency using the exchange rates prevailing on the dates of the transactions. Foreign exchange gains and losses are recognized in the Consolidated Statement of Income, unless they are related to cash flow hedges and hedge of net investments in foreign operations, which are recognized in Stockholders' Equity.

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Note 4 - Interbank investments

12/31/2020

12/31/2019

0 - 30

31 - 180

181 - 365

Over 365 days

Total

%

Total

%

Money market

193,972

43,629

170

88

237,859

80.7

196,720

84.6

Collateral held (1)

43,530

12,245

-

88

55,863

19.0

35,341

15.2

Collateral repledge

143,443

12,212

170

-

155,825

52.8

142,134

61.1

Assets received as collateral with right to sell or repledge

12,392

11,765

-

-

24,157

8.2

6,645

2.9

Assets received as collateral without right to sell or repledge

131,051

447

170

-

131,668

44.6

135,489

58.2

Short position

6,999

19,172

-

-

26,171

8.9

19,245

8.3

Money market and Interbank deposits - Assets Guaranteeing

1,074

-

-

-

1,074

0.4

1,066

0.5

Technical Provisions - SUSEP (Note 8b)

Interbank deposits

34,871

5,409

8,183

7,090

55,553

18.9

34,576

14.9

Total (2)

229,917

49,038

8,353

7,178

294,486

100.0

232,362

100.0

% per maturity date

78.1

16.7

2.8

2.4

100.0

Total - 12/31/2019

45,312

180,093

3,289

3,668

232,362

% per maturity date

19.5

77.5

1.4

1.6

100.0

  1. Includes R$ 11,119 (R$ 8,544 at 12/31/2019) related to Money market - Securities purchased under agreements to resell with right to sell or repledge, in which securities are restricted to guarantee transactions at the B3 S.A. - Brasil, Bolsa, Balcão (B3) and Central Bank of Brazil.
  2. Includes a securities valuation allowance in the amount of R$ (6) (R$ (6) at 12/31/2019).

In ITAÚ UNIBANCO HOLDING the portfolio is composed of Money Market - Collateral held, amounting to R$ 2,729 with maturity up to 30 days (R$ 6,724 at 12/31/2019), Interbank Deposits, distributed in R$ 8,408 with maturity up to 30 days (with no amount at 12/31/2019), with no amount at the current period with maturity up from 31 to 180 days (R$ 5,470 at 12/31/2019), R$ 5,448 with maturity from 181 to 365 days (with no amount at 12/31/2019) and R$ 49,669 with maturity over 365 days (R$ 38,887 at 12/31/2019).

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Note 5 - Securities and derivative financial instruments (assets and liabilities)

See below the composition by Securities and Derivatives financial instruments type, maturity and portfolio already adjusted to their respective fair values.

a) Summary per maturity

12/31/2020

12/31/2019

Adjustment to fair value

Cost

reflected in:

Fair value

%

0 - 30

31 - 90

91 - 180

181 - 365

366 - 720

Over 720

Fair value

days

Income

Stockholders'

equity

Government securities - Brazil

264,826

1,517

3,190

269,533

37.7

12,130

8,710

48,009

33,606

44,522

122,556

172,451

Financial treasury bills

30,131

(2)

-

30,129

4.2

-

8,636

-

2,246

16,131

3,116

32,395

National treasury bills

99,243

392

373

100,008

13.9

-

-

31,739

31,184

15,170

21,915

41,715

National treasury notes

83,807

1,094

1,929

86,830

12.2

3,531

74

16,270

176

13,221

53,558

65,325

National treasury / securitization

132

-

52

184

0.0

-

-

-

-

-

184

192

Brazilian external debt bonds

51,513

33

836

52,382

7.4

8,599

-

-

-

-

43,783

32,824

Government securities - abroad

61,659

10

82

61,751

8.6

14,837

7,385

9,680

4,372

10,107

15,370

39,110

Germany

-

-

-

-

0.0

-

-

-

-

-

-

23

Argentina

1,479

18

-

1,497

0.2

1,157

59

14

20

231

16

317

Chile

23,184

1

46

23,231

3.3

8,664

282

1,100

907

152

12,126

12,320

Colombia

8,012

4

73

8,089

1.1

32

231

922

424

4,235

2,245

4,621

Korea

3,951

-

(15)

3,936

0.6

560

383

-

392

1,966

635

3,427

Spain

4,847

-

23

4,870

0.7

709

328

610

1,634

1,589

-

4,984

United States

5,847

(11)

(1)

5,835

0.8

522

1,245

1,983

208

1,877

-

2,978

Italy

133

(3)

-

130

0.0

-

130

-

-

-

-

329

Mexico

10,227

-

5

10,232

1.4

2,591

3,530

3,850

256

-

5

7,609

Paraguay

3,011

-

(61)

2,950

0.4

593

863

810

385

2

297

1,783

Peru

4

-

-

4

0.0

-

-

-

-

-

4

9

Uruguay

964

1

12

977

0.1

9

334

391

146

55

42

710

Corporate securities

99,488

(488)

(158)

98,842

14.1

13,486

3,421

4,343

4,837

10,108

62,647

87,519

Shares

8,493

(541)

(243)

7,709

1.1

7,709

-

-

-

-

-

5,975

Rural product note

5,857

-

(23)

5,834

0.8

103

241

831

671

915

3,073

5,420

Bank deposit certificates

527

-

2

529

0.1

142

67

169

117

34

-

2,880

Real estate receivables certificates

5,365

(1)

(17)

5,347

0.8

-

-

1

229

41

5,076

7,291

Fund quotas

4,965

25

-

4,990

0.8

4,990

-

-

-

-

-

4,231

Credit rights

2,524

-

-

2,524

0.4

2,524

-

-

-

-

-

2,863

Fixed income

1,846

-

-

1,846

0.3

1,846

-

-

-

-

-

1,054

Variable income

595

25

620

0.1

620

-

-

-

-

-

314

Debentures

56,893

15

-

56,908

8.0

15

2,270

476

2,007

4,254

47,886

47,316

Eurobonds and other

7,442

13

152

7,607

1.1

463

253

415

648

2,188

3,640

5,742

Financial bills

1,439

-

(1)

1,438

0.2

-

3

190

361

461

423

2,440

Promissory notes

7,238

-

(16)

7,222

1.0

11

587

2,157

791

2,132

1,544

4,994

Other

1,269

1

(12)

1,258

0.2

53

-

104

13

83

1,005

1,230

PGBL / VGBL fund quotas (1)

205,820

-

-

205,820

28.9

205,820

-

-

-

-

-

204,530

Subtotal - securities

631,793

1,039

3,114

635,946

89.3

246,273

19,516

62,032

42,815

64,737

200,573

503,610

Trading securities

380,559

1,039

-

381,598

53.6

220,174

9,455

42,843

23,161

35,432

50,533

303,994

Available for sale securities

202,377

-

3,114

205,491

28.8

19,531

10,061

16,642

19,111

29,268

110,878

163,510

Held to maturity securities (2)

48,857

-

-

48,857

6.9

6,568

-

2,547

543

37

39,162

36,106

Derivative financial instruments

43,376

32,748

-

76,124

10.7

17,307

5,504

2,828

9,071

6,475

34,939

41,676

Total securities and derivative financial instruments

(assets)

675,169

33,787

3,114

712,070

100.0

263,580

25,020

64,860

51,886

71,212

235,512

545,286

Derivative financial instruments (liabilities)

(47,485)

(32,114)

-

(79,599)

-

(16,630)

(4,267)

(2,712)

(12,668)

(6,895)

(36,427)

(47,815)

  1. The PGBL and VGBL plans securities portfolios, the ownership and embedded risks of which are the customer's responsibility, are recorded as securities - trading securities, with a counterparty to liabilities in Pension Plan Technical Provisions account (Note 8a).
  2. Unrecorded adjustment to fair value in the amount of R$ 3,604 (R$ 3,109 at 12/31/2019), according to Note 5e.

During the period, ITAÚ UNIBANCO HOLDING CONSOLIDATED recognized impairment of R$ (1,453) (R$ (575) from 01/01 to 12/31/2019) of Financial Assets Available for Sale. The income related to securities and derivative financial instruments totaled R$ (741) (R$ 513 from 01/01 to 12/31/2019).

In the period, the result of Derivative Financial Instruments as well as Adjustment to Fair Value of Securities (particularly private securities) had their amounts affected by oscillations of rates and other market variables arising from the impact of the COVID-19 pandemic on the macroeconomic scenario in the period (Note 22d).

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b) Summary by portfolio

12/31/2020

Restricted to

Derivative

Assets guaranteeing

Pledged

Own portfolio

Repurchase

Free portfolio

Central Bank

financial

technical provisions

Total

agreements

guarantees (*)

instruments

(Note 8b)

Government securities - Brazil

180,706

24,471

38,136

5,566

6,016

-

14,638

269,533

Financial treasury bills

26,064

756

-

732

1,029

-

1,548

30,129

National treasury bills

88,581

4,759

28

4,801

-

-

1,839

100,008

National treasury notes

49,569

18,956

2,034

33

4,987

-

11,251

86,830

National treasury / Securitization

184

-

-

-

-

-

-

184

Brazilian external debt bonds

16,308

-

36,074

-

-

-

-

52,382

Government securities - abroad

51,538

1,387

1,775

7,051

-

-

-

61,751

Argentina

1,288

-

-

209

-

-

-

1,497

Chile

22,780

402

-

49

-

-

-

23,231

Colombia

6,233

-

1,713

143

-

-

-

8,089

Korea

2,768

-

-

1,168

-

-

-

3,936

Spain

2,315

-

-

2,555

-

-

-

4,870

United States

5,320

-

-

515

-

-

-

5,835

Italy

130

-

-

-

-

-

-

130

Mexico

7,836

-

-

2,396

-

-

-

10,232

Paraguay

1,952

985

-

13

-

-

-

2,950

Peru

4

-

-

-

-

-

-

4

Uruguay

912

-

62

3

-

-

-

977

Corporate securities

70,380

23,412

467

1,670

-

-

2,913

98,842

Shares

7,469

-

-

14

-

-

226

7,709

Rural product note

5,834

-

-

-

-

-

-

5,834

Bank deposit certificates

356

-

-

-

-

-

173

529

Real estate receivables certificates

5,324

-

-

-

-

-

23

5,347

Fund quotas

4,647

-

-

131

-

-

212

4,990

Credit rights

2,470

-

-

-

-

-

54

2,524

Fixed income

1,557

-

-

131

-

-

158

1,846

Variable income

620

-

-

-

-

-

-

620

Debentures

30,652

23,412

-

1,495

-

-

1,349

56,908

Eurobonds and other

7,110

-

467

30

-

-

-

7,607

Financial bills

650

-

-

-

-

-

788

1,438

Promissory notes

7,222

-

-

-

-

-

-

7,222

Other

1,116

-

-

-

-

-

142

1,258

PGBL / VGBL fund quotas

-

-

-

-

-

-

205,820

205,820

Subtotal - securities

302,624

49,270

40,378

14,287

6,016

-

223,371

635,946

Trading securities

146,481

7,648

4,729

6,027

5,015

-

211,698

381,598

Available for sale securities

134,231

41,622

14,082

8,260

1,001

-

6,295

205,491

Held to maturity securities

21,912

-

21,567

-

-

-

5,378

48,857

Derivative financial instruments

-

-

-

-

-

76,124

-

76,124

Total securities and derivative financial instruments (assets)

302,624

49,270

40,378

14,287

6,016

76,124

223,371

712,070

Total securities and derivative financial instruments (assets) - 12/31/2019

178,587

69,708

20,217

10,664

4,163

41,676

220,271

545,286

(*) Represent securities deposited with Contingent Liabilities (Note 9e), Stock Exchanges and the Clearing Houses.

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79

c) Trading securities

See below the composition of the portfolio of trading securities by type, stated at cost and fair value and by maturity term.

12/31/2020

12/31/2019

Cost

Adjustment to fair

Fair value

%

0 - 30

31 - 90

91 - 180

181 - 365

366 - 720

Over 720 days

Fair value

value (in income)

Government securities - Brazil

152,129

1,517

153,646

40.3

4,676

8,709

42,017

22,370

30,006

45,868

83,372

Financial treasury bills

30,113

(2)

30,111

7.9

-

8,635

-

2,246

16,114

3,116

32,147

National treasury bills

75,056

392

75,448

19.8

-

-

29,902

19,948

8,867

16,731

18,867

National treasury notes

43,941

1,094

45,035

11.8

3,059

74

12,115

176

5,025

24,586

30,060

Brazilian external debt bonds

3,019

33

3,052

0.8

1,617

-

-

-

-

1,435

2,298

Government securities - abroad

8,222

10

8,232

2.0

1,282

501

350

263

4,088

1,748

1,575

Argentina

1,464

18

1,482

0.4

1,157

46

14

18

231

16

316

Chile

842

1

843

0.2

116

158

76

1

24

468

488

Colombia

3,599

4

3,603

0.9

-

152

252

-

1,955

1,244

409

United States

2,096

(11)

2,085

0.5

-

-

-

208

1,877

-

141

Italy

133

(3)

130

0.0

-

130

-

-

-

-

-

Mexico

5

-

5

0.0

-

-

-

-

-

5

58

Paraguay

3

-

3

0.0

-

-

-

-

-

3

2

Peru

4

-

4

0.0

-

-

-

-

-

4

9

Uruguay

76

1

77

0.0

9

15

8

36

1

8

152

Corporate securities

14,388

(488)

13,900

3.8

8,396

245

476

528

1,338

2,917

14,517

Shares

3,944

(541)

3,403

0.9

3,403

-

-

-

-

-

3,299

Bank deposit certificates

219

-

219

0.1

15

-

169

5

30

-

454

Real estate receivables certificates

69

(1)

68

0.0

-

-

1

1

3

63

396

Fund quotas

4,495

25

4,520

1.3

4,520

-

-

-

-

-

4,000

Credit rights

2,524

-

2,524

0.7

2,524

-

-

-

-

-

2,864

Fixed income

1,376

-

1,376

0.4

1,376

-

-

-

-

-

822

Variable income

595

25

620

0.2

620

-

-

-

-

-

314

Debentures

2,464

15

2,479

0.6

5

72

52

178

299

1,873

2,071

Eurobonds and other

2,189

13

2,202

0.6

453

170

1

236

698

644

2,082

Financial bills

802

-

802

0.2

-

3

149

95

261

294

2,101

Other

206

1

207

0.1

-

-

104

13

47

43

114

PGBL / VGBL fund quotas

205,820

-

205,820

53.9

205,820

-

-

-

-

-

204,530

Total

380,559

1,039

381,598

100.0

220,174

9,455

42,843

23,161

35,432

50,533

303,994

% per maturity date

57.7

2.5

11.2

6.1

9.3

13.2

Total - 12/31/2019

303,430

563

303,994

100.0

219,504

1,680

2,065

8,574

16,729

55,442

% per maturity date

72.2

0.6

0.7

2.8

5.5

18.2

At 12/31/2020, ITAÚ UNIBANCO HOLDING's portfolio comprises National Treasury Notes in the amount of R$ 201 with maturity over 365 days (R$ 8,782 at 12/31/2019).

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

80

d) Available for sale securities

See below the composition of the portfolio of available for sale securities by type, stated at cost and fair value and by maturity term.

12/31/2020

12/31/2019

Adjustments to fair

Cost

value (in

Fair value

%

0 - 30

31 - 90

91 - 180

181 - 365

366 - 720

Over 720 days

Fair value

stockholders' equity)

Government securities - Brazil

68,684

3,190

71,874

35.1

971

1

3,598

11,236

14,516

41,552

59,150

Financial treasury bills

18

-

18

0.0

-

1

-

-

17

-

249

National treasury bills

24,187

373

24,560

12.0

-

-

1,837

11,236

6,303

5,184

18,643

National treasury notes

31,643

1,929

33,572

16.4

472

-

1,761

-

8,196

23,143

28,095

National treasury / Securitization

132

52

184

0.1

-

-

-

-

-

184

192

Brazilian external debt bonds

12,704

836

13,540

6.6

499

-

-

-

-

13,041

11,971

Government securities - abroad

52,917

82

52,999

25.8

13,523

6,884

9,177

3,794

6,019

13,602

37,184

Germany

-

-

-

0.0

-

-

-

-

-

-

23

Argentina

15

-

15

0.0

-

13

-

2

-

-

-

Chile

22,342

46

22,388

10.9

8,548

124

1,024

906

128

11,658

11,832

Colombia

3,913

73

3,986

2.0

-

79

517

109

2,280

1,001

3,877

Korea

3,951

(15)

3,936

1.9

560

383

-

392

1,966

635

3,427

Spain

4,847

23

4,870

2.4

709

328

610

1,634

1,589

-

4,984

United States

3,751

(1)

3,750

1.8

522

1,245

1,983

-

-

-

2,837

Italy

-

-

-

0.0

-

-

-

-

-

-

329

Mexico

10,222

5

10,227

5.0

2,591

3,530

3,850

256

-

-

7,552

Paraguay

3,008

(61)

2,947

1.4

593

863

810

385

2

294

1,781

Uruguay

868

12

880

0.4

-

319

383

110

54

14

542

Corporate securities

80,776

(158)

80,618

39.1

5,037

3,176

3,867

4,081

8,733

55,724

67,176

Shares

4,549

(243)

4,306

2.1

4,306

-

-

-

-

-

2,676

Rural product note

5,857

(23)

5,834

2.8

103

241

831

671

915

3,073

5,420

Bank deposit certificates

308

2

310

0.2

127

67

-

112

4

-

2,426

Real estate receivables certificates

1,027

(17)

1,010

0.5

-

-

-

-

1

1,009

1,243

Fund quotas of fixed income

470

-

470

0.2

470

-

-

-

-

-

231

Debentures

54,429

-

54,429

26.4

10

2,198

424

1,829

3,955

46,013

45,239

Eurobonds and other

5,251

152

5,403

2.6

10

83

414

412

1,490

2,994

3,660

Financial bills

637

(1)

636

0.3

-

-

41

266

200

129

339

Promissory notes

7,238

(16)

7,222

3.5

11

587

2,157

791

2,132

1,544

4,994

Other

1,010

(12)

998

0.5

-

-

-

-

36

962

948

Total (*)

202,377

3,114

205,491

100.0

19,531

10,061

16,642

19,111

29,268

110,878

163,510

% per maturity date

9.5

4.9

8.1

9.3

14.2

54.0

Total - 12/31/2019

159,881

3,629

163,510

100.0

6,485

4,174

13,095

13,594

27,511

98,651

% per maturity date

4.0

2.6

8.0

8.3

16.8

60.3

(*) In order to reflect the current risk management strategy, in the period ended at 12/31/2020, ITAÚ UNIBANCO HOLDING CONSOLIDATED changed the classification of R$ 326 of Trading securities for Available for sale securities.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

81

e) Held to maturity securities

See below the composition of the portfolio of held to maturity securities by type, stated at cost and by maturity term. An added/(reduced) value of R$ 119 (R$ (229) at 12/31/2019) is included in the carrying value, not considered in results.

12/31/2020

12/31/2019

Cost

%

0 - 30

31 - 90

91 - 180

181 - 365

366 - 720

Over 720 days

Fair value

Cost

Fair value

Government securities - Brazil

44,013

90.2

6,483

-

2,394

-

-

35,136

47,712

29,929

32,937

National treasury bills

-

-

-

-

-

-

-

-

-

4,206

4,289

National treasury notes

8,223

16.8

-

-

2,394

-

-

5,829

9,664

7,170

8,854

Brazilian external debt bonds

35,790

73.4

6,483

-

-

-

-

29,307

38,048

18,553

19,794

Government securities - abroad

520

1.0

32

-

153

315

-

20

527

351

352

Colombia

500

1.0

32

-

153

315

-

-

493

335

327

Uruguay

20

-

-

-

-

-

-

20

34

16

25

Corporate securities

4,324

8.8

53

-

-

228

37

4,006

4,222

5,826

5,926

Real estate receivables certificates

4,269

8.7

-

-

-

228

37

4,004

4,167

5,652

5,752

Debentures

-

-

-

-

-

-

-

-

-

6

6

Eurobonds and other

2

-

-

-

-

-

-

2

2

-

-

Other

53

0.1

53

-

-

-

-

-

53

168

168

Total (*)

48,857

100.0

6,568

-

2,547

543

37

39,162

52,461

36,106

39,215

% per maturity date

13.4

-

5.2

1.2

0.1

80.1

Total - 12/31/2019

36,106

100.0

82

41

221

4,430

6,530

24,802

% per maturity date

0.2

0.1

0.6

12.4

18.1

68.6

(*) In order to reflect the current risk management strategy, in the period ended at 12/31/2020, ITAÚ UNIBANCO HOLDING CONSOLIDATED changed the classification of Government Securities - Brazil, being R$

2,178 fro m Trading Securities and

R$ 9,715 from Available for Sale Securities.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

82

f) Derivative financial instruments

ITAÚ UNIBANCO HOLDING CONSOLIDATED trades in derivative financial instruments with various counterparties to manage its overall exposure and to assist its customers in managing their own exposure.

Futures - Interest rate and foreign currency futures contracts are commitments to buy or sell a financial instrument at a future date, at an agreed price or yield, and may be settled in cash or through delivery. The notional amount represents the face value of the underlying instrument. Commodity futures contracts or financial instruments are commitments to buy or sell commodities (mainly gold, coffee and orange juice) at a future date, at an agreed price, which are settled in cash. The notional amount represents the quantity of such commodities multiplied by the future price on the contract date. Daily cash settlements of price movements are made for all instruments.

Forwards - Interest rate forward contracts are agreements to exchange payments on a specified future date, based on the variation in market interest rates from trade date to contract settlement date. Foreign exchange forward contracts represent agreements to exchange the currency of one country for the currency of another at an agreed price, on an agreed settlement date. Financial instrument forward contracts are commitments to buy or sell a financial instrument on a future date at an agreed price and are settled in cash.

Swaps - Interest rate and foreign exchange swap contracts are commitments to settle in cash on a future date or dates the differentials between specific financial indices (either two different interest rates in a single currency or two different rates each in a different currency), as applied to a notional principal amount. Swap contracts shown under Other in the table below correspond substantially to inflation rate swap contracts.

Options - Option contracts give the purchaser, for a fee, the right, but not the obligation, to buy or sell a financial instrument within a limited time, including a flow of interest, foreign currencies, commodities, or financial instruments at an agreed price that may also be settled in cash, based on the differential between specific indices.

Credit Derivatives - Credit derivatives are financial instruments with value deriving from the credit risk on debt issued by a third party (the reference entity), which permits one party (the buyer of the hedge) to transfer the risk to the counterparty (the seller of the hedge). The seller of the hedge must pay out as provided for in the contract if the reference entity undergoes a credit event, such as bankruptcy, default or debt restructuring. The seller of the hedge receives a premium for the hedge but, on the other hand, assumes the risk that the underlying instrument referenced in the contract undergoes a credit event, and the seller may have to make payment to the purchaser of the hedge for up to the notional amount of the credit derivative.

ITAÚ UNIBANCO HOLDING CONSOLIDATED buys and sells credit protection in order to meet the needs of its customers, management and mitigation of its portfolios' risk.

CDS (Credit Default Swap) is a credit derivative in which, upon a default related to the reference entity, the protection buyer is entitled to receive the amount equivalent to the difference between the face value of the CDS contract and the fair value of the liability on the date the contract was settled, also known as the recovered amount. The protection buyer does not need to hold the debt instrument of the reference entity for it to receive the amounts due pursuant to the CDS contract terms when a credit event occurs.

TRS (Total Return Swap) is a transaction in which a party swaps the total return of an asset or of a basket of assets for regular cash flows, usually interest and a guarantee against capital loss. In a TRS contract, the parties do not transfer the ownership of the assets.

The total value of margins pledged in guarantee by ITAÚ UNIBANCO HOLDING CONSOLIDATED was R$ 14,964 (R$ 12,315 at 12/31/2019) and was basically comprised of government securities.

Further information on internal controls and parameters used to manage risks may be found in Note 21 - Risk, Capital Management and Fixed Asset Limits.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

83

I - Derivatives Summary

See below the composition of the Derivative Financial Instruments portfolio (assets and liabilities) by type of instrument, stated at cost, fair value and maturity date.

12/31/2020

12/31/2019

Adjustments to fair

Cost

value (in income /

Fair value

%

0 - 30

31 - 90

91 - 180

181 - 365

366 - 720

Over 720 days

Fair value

stockholders' equity)

Assets

Swaps - adjustment receivable

16,840

29,179

46,019

60.4

4,064

515

629

1,808

5,117

33,886

26,458

Option agreements

17,179

2,982

20,161

26.5

9,863

2,298

514

5,908

989

589

8,418

Forwards (onshore)

1,961

(2)

1,959

2.6

1,233

345

284

92

5

-

2,012

Credit derivatives

(270)

426

156

0.2

-

-

8

7

29

112

167

NDF - Non Deliverable Forward

7,467

129

7,596

10.0

2,088

2,345

1,387

1,255

323

198

4,446

Other Derivative Financial Instruments

199

34

233

0.3

59

1

6

1

12

154

175

Total

43,376

32,748

76,124

100.0

17,307

5,504

2,828

9,071

6,475

34,939

41,676

% per maturity date

22.7

7.2

3.7

11.9

8.5

46.0

Total - 12/31/2019

19,710

21,966

41,676

100.0

6,942

5,589

2,184

3,049

5,361

18,551

% per maturity date

16.7

13.4

5.2

7.3

12.9

44.5

12/31/2020

12/31/2019

Adjustments to fair

Cost

value (in income /

Fair value

%

0 - 30

31 - 90

91 - 180

181 - 365

366 - 720

Over 720 days

Fair value

stockholders' equity)

Liabilities

Swaps - adjustment payable

(22,894)

(28,895)

(51,789)

65.0

(7,344)

(651)

(1,135)

(1,826)

(5,573)

(35,260)

(32,927)

Option agreements

(17,260)

(3,087)

(20,347)

25.6

(6,194)

(1,946)

(543)

(9,865)

(998)

(801)

(9,033)

Forwards (onshore)

(892)

(13)

(905)

1.1

(892)

-

(11)

(2)

-

-

(754)

Credit derivatives

(162)

86

(76)

0.1

-

-

-

(2)

(9)

(65)

(40)

NDF - Non Deliverable Forward

(6,253)

(173)

(6,426)

8.1

(2,200)

(1,669)

(1,013)

(972)

(301)

(271)

(4,971)

Other Derivative Financial Instruments

(24)

(32)

(56)

0.1

-

(1)

(10)

(1)

(14)

(30)

(90)

Total

(47,485)

(32,114)

(79,599)

100.0

(16,630)

(4,267)

(2,712)

(12,668)

(6,895)

(36,427)

(47,815)

% per maturity date

20.9

5.4

3.4

15.9

8.7

45.7

Total - 12/31/2019

(24,844)

(22,971)

(47,815)

100.0

(6,630)

(7,161)

(1,940)

(3,094)

(9,456)

(19,534)

% per maturity date

13.9

15.0

4.0

6.5

19.8

40.8

The result of derivative financial instruments in the period totaled R$ (8,925) (R$ (400) from 01/01 to 12/31/2019).

In ITAÚ UNIBANCO HOLDING, market values related to Swaps contract positions, involving Interest, in asset position totaled R$ 69 (with no amount at 12/31/2019) with maturity from 31 to 180 days. The market values related to the Options contract positions, involving Shares, totaled R$ 27 in asset position distributed, R$ 4 with maturitiy from 181 to 365 days (with no amount at 12/31/2019) and R$ 23 with maturitiy over 365 days (R$ 6 at 12/31/2019).

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

84

II - Derivatives by index and Risk Fator

Off-balance sheet /

Balance sheet account

Adjustment to fair value

receivable / (received)

(in income / stockholders'

Fair value

Notional amount

(payable) / paid

equity)

12/31/2020

12/31/2019

12/31/2020

12/31/2020

12/31/2020

12/31/2019

Future contracts

781,453

664,884

-

-

-

-

Purchase commitments

338,165

325,468

-

-

-

-

Shares

8,300

1,084

-

-

-

-

Commodities

1,170

76

-

-

-

-

Interest

304,454

301,898

-

-

-

-

Foreign currency

24,241

22,410

-

-

-

-

Commitments to sell

443,288

339,416

-

-

-

-

Shares

7,535

1,163

-

-

-

-

Commodities

2,201

1,049

-

-

-

-

Interest

397,157

308,824

-

-

-

-

Foreign currency

36,395

28,380

-

-

-

-

Swap contracts

(6,054)

284

(5,770)

(6,469)

Asset position

1,442,449

1,094,378

16,840

29,179

46,019

26,458

Commodities

278

574

1

-

1

9

Interest

1,423,134

1,075,534

14,030

27,953

41,983

24,409

Foreign currency

19,037

18,270

2,809

1,226

4,035

2,040

Liability position

1,442,449

1,094,378

(22,894)

(28,895)

(51,789)

(32,927)

Shares

108

49

(12)

2

(10)

(9)

Commodities

341

855

(9)

-

(9)

(12)

Interest

1,425,904

1,068,660

(19,112)

(28,584)

(47,696)

(31,238)

Foreign currency

16,096

24,814

(3,761)

(313)

(4,074)

(1,668)

Option contracts

1,743,520

1,724,465

(81)

(105)

(186)

(615)

Purchase commitments - long position

133,404

245,802

14,246

1,863

16,109

6,147

Shares

12,380

11,491

345

994

1,339

784

Commodities

356

268

14

13

27

17

Interest

53,061

188,110

322

(265)

57

83

Foreign currency

67,607

45,933

13,565

1,121

14,686

5,263

Commitments to sell - long position

743,573

626,187

2,933

1,119

4,052

2,271

Shares

14,659

12,294

728

62

790

356

Commodities

75

228

2

(1)

1

3

Interest

659,826

568,442

1,087

1,373

2,460

1,400

Foreign currency

69,013

45,223

1,116

(315)

801

512

Purchase commitments - short position

131,551

176,985

(13,745)

(2,071)

(15,816)

(6,662)

Shares

13,080

10,594

(348)

(1,119)

(1,467)

(634)

Commodities

899

235

(28)

(18)

(46)

(18)

Interest

57,770

129,647

(343)

44

(299)

(52)

Foreign currency

59,802

36,509

(13,026)

(978)

(14,004)

(5,958)

Commitments to sell - short position

734,992

675,491

(3,515)

(1,016)

(4,531)

(2,371)

Shares

13,200

11,152

(524)

(156)

(680)

(306)

Commodities

246

485

(10)

6

(4)

(11)

Interest

653,376

621,405

(978)

(1,317)

(2,295)

(1,316)

Foreign currency

68,170

42,449

(2,003)

451

(1,552)

(738)

Forward operations (onshore)

23,989

5,134

1,069

(15)

1,054

1,258

Purchases receivable

18,666

668

888

(3)

885

640

Shares

304

488

304

(3)

301

481

Interest

584

160

584

-

584

159

Foreign currency

17,778

20

-

-

-

-

Purchases payable obligations

-

660

(584)

-

(584)

(160)

Interest

-

-

(584)

-

(584)

(160)

Foreign currency

-

660

-

-

-

-

Sales receivable

1,132

1,653

1,073

1

1,074

1,372

Shares

770

786

765

1

766

779

Interest

-

-

308

-

308

593

Foreign currency

362

867

-

-

-

-

Sales deliverable obligations

4,191

2,153

(308)

(13)

(321)

(594)

Interest

308

592

(308)

-

(308)

(593)

Foreign currency

3,883

1,561

-

(13)

(13)

(1)

Credit derivatives

20,060

12,739

(432)

512

80

127

Asset position

15,877

9,878

(270)

426

156

167

Shares

2,796

2,307

(84)

172

88

134

Commodities

19

27

-

1

1

2

Interest

13,062

7,423

(186)

253

67

27

Foreign currency

-

121

-

-

-

4

Liability position

4,183

2,861

(162)

86

(76)

(40)

Shares

1,154

719

(45)

11

(34)

(20)

Commodities

3

2

-

-

-

-

Interest

3,026

2,140

(117)

75

(42)

(20)

NDF - Non Deliverable Forward

313,463

295,508

1,214

(44)

1,170

(525)

Asset position

156,542

138,772

7,467

129

7,596

4,446

Commodities

1,715

570

278

(16)

262

33

Foreign currency

154,827

138,202

7,189

145

7,334

4,413

Liability position

156,921

156,736

(6,253)

(173)

(6,426)

(4,971)

Commodities

975

316

(37)

(1)

(38)

(11)

Foreign currency

155,946

156,420

(6,216)

(172)

(6,388)

(4,960)

Other derivative financial instruments

6,585

6,783

175

2

177

85

Asset position

5,352

5,541

199

34

233

175

Shares

126

84

-

2

2

2

Interest

5,224

5,456

199

(25)

174

169

Foreign currency

2

1

-

57

57

4

Liability position

1,233

1,242

(24)

(32)

(56)

(90)

Shares

799

784

(15)

(22)

(37)

(54)

Interest

434

458

(9)

(10)

(19)

(18)

Foreign currency

-

-

-

-

-

(18)

Asset

43,376

32,748

76,124

41,676

Liability

(47,485)

(32,114)

(79,599)

(47,815)

Total

(4,109)

634

(3,475)

(6,139)

Derivatives contracts mature as follows (in days)

Off-balance sheet / notional amount

0 - 30

31 - 180

181 - 365

Over 365 days

12/31/2020

12/31/2019

Future contracts

305,076

242,842

108,338

125,197

781,453

664,884

Swap contracts

272,932

123,360

118,617

927,540

1,442,449

1,094,378

Option contracts

1,012,965

216,425

250,966

263,164

1,743,520

1,724,465

Forwards (onshore)

19,013

3,999

972

5

23,989

5,134

Credit derivatives

-

8,515

804

10,741

20,060

12,739

NDF - Non Deliverable Forward

131,205

124,470

38,006

19,782

313,463

295,508

Other derivative financial instruments

30

709

280

5,566

6,585

6,783

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

85

III - Derivatives by notional amount

See below the composition of the Derivative Financial Instruments portfolio by type of instrument, stated at their notional amounts, per trading location (organized or over-the-counter market) and counterparties.

12/31/2020

NDF - Non

Other

Future

Swap

Option

Forwards

Credit

derivative

Deliverable

contracts

contracts

contracts

(onshore)

derivatives

financial

Forward

instruments

Stock exchange

781,453

835,744

1,617,643

23,097

3,743

67,887

-

Over-the-counter market

-

606,705

125,877

892

16,317

245,576

6,585

Financial institutions

-

531,303

84,865

892

16,317

124,124

5,140

Companies

-

69,337

39,692

-

-

120,476

1,445

Individuals

-

6,065

1,320

-

-

976

-

Total

781,453

1,442,449

1,743,520

23,989

20,060

313,463

6,585

Total - 12/31/2019

664,884

1,094,378

1,724,465

5,134

12,739

295,508

6,783

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

86

IV - Credit derivatives

See below the composition of the Credit Derivatives portfolio stated at their notional amounts, and their effect on the calculation of Required Reference Equity.

12/31/2020

12/31/2019

Notional amount

Notional amount of credit

Notional amount of

Notional amount of credit

of credit

protection purchased with

Net position

credit protection

protection purchased with

Net position

protection sold

identical underlying amount

sold

identical underlying amount

CDS

(8,501)

3,705

(4,796)

(6,283)

2,295

(3,988)

TRS

(7,854)

-

(7,854)

(4,161)

-

(4,161)

Total

(16,355)

3,705

(12,650)

(10,444)

2,295

(8,149)

The effect of the risk received on the reference equity (Note 21c) was R$ 86 (R$ 57 at 12/31/2019).

During the period, there were no credit events relating to the taxable events provided for in the agreements.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

87

V - Hedge accounting

  1. Cash flow - the purpose of this hedge of ITAÚ UNIBANCO HOLDING CONSOLIDATED is to hedge cash flows of interest receipt and payment (CDB / Syndicated Loans / Assets Transactions / Funding and agreements to resell) and exposures to future exchange rate (anticipated transactions and unrecognized firm commitments) related to its variable interest rate risk (CDI / LIBOR / UF* / TPM* / Selic), and foreign exchange rate risk, making the cash flow constant (fixed rate) and regardless of the variations of DI CETIP Over, LIBOR / UF*/ TPM* / Selic and foreign exchange rate.
    *UF - (Chilean Unit of Account) / TPM (Monetary Policy Rate).

12/31/2020

Hedge Item

Hedge Instruments

Strategies

Book value

Variation in the amounts

Variation in the

Cash flow hedge

amounts used to

recognized in Stockholders'

Notional amount

reserve

calculate hedge

Equity (*)

Assets

Liabilities

ineffectiveness

Interest rate risk

Hedge of deposits and securities purchased under agreements to resell

-

101,929

(2,423)

(2,464)

103,417

(2,433)

Hedge of assets transactions

5,673

-

66

66

5,743

66

Hedge of asset-backed securities under repurchase agreements

29,533

-

697

697

31,417

699

Hedge of assets denominated in UF

16,674

-

(4)

(4)

16,677

(1)

Hedge of funding

-

2,007

(10)

(10)

1,996

(11)

Hedge of loan operations

327

12

12

316

15

Variable costs risks

Hedge of highly probable forecast transactions

31,594

-

(3)

(3)

15,803

(3)

Foreign exchange risk

Hedge of highly probable forecast transactions

1,314

-

(105)

52

1,314

(105)

Total

85,115

103,936

(1,770)

(1,654)

176,683

(1,773)

12/31/2019

Hedge Item

Hedge Instruments

Strategies

Book value

Variation in the amounts

Variation in the

Cash flow hedge

amounts used to

recognized in Stockholders'

Notional amount

reserve

calculate hedge

Equity (*)

Assets

Liabilities

ineffectiveness

Interest rate risk

Hedge of deposits and securities purchased under agreements to resell

-

24,068

(2,830)

(3,395)

25,026

(2,836)

Hedge of assets transactions

5,564

-

91

91

5,656

91

Hedge of asset-backed securities under repurchase agreements

30,896

-

520

520

32,130

523

Hedge of assets denominated in UF

12,588

-

6

6

12,582

5

Hedge of funding

-

4,617

(27)

(22)

4,590

(27)

Hedge of loan operations

269

-

12

12

257

14

Variable costs risks

Hedge of highly probable forecast transactions

32,200

-

16

16

32,009

16

Foreign exchange risk

Hedge of highly probable forecast transactions

294

-

(11)

179

294

(11)

Total

81,811

28,685

(2,223)

(2,593)

112,544

(2,225)

(*) Recorded under heading Other comprehensive income.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

88

12/31/2020

Book value (1)

Variation in the

Variation in value

Hedge

Amount reclassified

Hedge Instruments

Notional

amounts used to

recognized in

ineffectiveness

from Cash flow

amount

calculate hedge

Stockholders'

recognized in

hedge reserve into

Assets

Liabilities

ineffectiveness

Equity (2)

income

income

Interest rate risk (3)

Futures

140,577

146

-

(1,668)

(1,660)

(8)

(657)

Swap

18,989

2,007

17,006

3

(2)

5

-

Foreign exchange risk (4)

Futures

17,117

5

298

(108)

(108)

-

-

Total

176,683

2,158

17,304

(1,773)

(1,770)

(3)

(657)

12/31/2019

Book value (1)

Variation in the

Variation in value

Hedge

Amount reclassified

Hedge Instruments

Notional

amounts used to

recognized in

ineffectiveness

from Cash flow

amount

calculate hedge

Stockholders'

recognized in

hedge reserve into

Assets

Liabilities

ineffectiveness

Equity (2)

income

income

Interest rate risk (3)

Futures

62,812

-

14

(2,222)

(2,219)

(3)

(870)

Swap

17,429

4,617

12,858

(8)

(9)

1

-

Foreign exchange risk (4)

Futures

32,303

-

156

5

5

-

-

Total

112,544

4,617

13,028

(2,225)

(2,223)

(2)

(870)

  1. Recorded under heading Derivative financial instruments.
  2. Recorded under heading Other comprehensive income.
  3. DI Futures negotiated on B3 and interest rate swap negotiated on Chicago Mercantile Exchange.
  4. DDI Futures contracts and Dollar Purchase Options negotiated on B3.

The gains or losses related to the accounting hedge of cash flows that ITAÚ UNIBANCO HOLDING CONSOLIDATED expect to recognize in results in the following 12 months, totaling R$ (1,728) (R$ (1,285) at 12/31/2019).

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

89

  1. Market risk - The hedging strategies against market risk of ITAÚ UNIBANCO HOLDING CONSOLIDATED consist of hedge of exposure to variation in market risk, in interest receipts, which are attributable to changes in interest rates relating to recognized assets and liabilities.

12/31/2020

Hedge Item

Hedge Instruments

Book value

Fair value

Variation in the

Strategies

Variation in value

amounts

recognized in

Notional amount

used to calculate

Assets

Liabilities

Assets

Liabilities

income (*)

hedge

ineffectiveness

Interest rate risk

Hedge of loan operations

9,205

-

9,616

-

411

9,205

(423)

Hedge of funding

-

10,200

-

11,591

(1,391)

10,200

1,390

Hedge of available for sale securities

24,677

-

25,857

-

1,180

26,866

(1,186)

Total

33,882

10,200

35,473

11,591

200

46,271

(219)

12/31/2019

Hedge Item

Hedge Instruments

Book value

Fair value

Variation in the

Strategies

Variation in value

amounts

recognized in

Notional amount

used to calculate

Assets

Liabilities

Assets

Liabilities

income (*)

hedge

ineffectiveness

Interest rate risk

Hedge of loan operations

7,386

-

7,642

-

256

7,386

(264)

Hedge of funding

-

7,436

-

8,195

(759)

7,436

775

Hedge of available for sale securities

17,633

-

18,456

-

823

18,492

(816)

Total

25,019

7,436

26,098

8,195

320

33,314

(305)

(*) Recorded under heading Results from Securities and Derivative Financial Instruments.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

90

12/31/2020

Hedge Instruments

Book value (1)

Variation in the

Hedge

Notional amount

amounts used to

ineffectiveness

calculate hedge

recognized in

Assets

Liabilities

ineffectiveness

income

Interest rate risk

Swap

23,985

2,871

-

750

(19)

Other Derivatives

22,286

-

21,336

(969)

-

Total (2)

46,271

2,871

21,336

(219)

(19)

12/31/2019

Hedge Instruments

Book value (1)

Variation in the

Hedge

Notional amount

amounts used to

ineffectiveness

calculate hedge

recognized in

Assets

Liabilities

ineffectiveness

income

Interest rate risk

Swap

15,202

766

443

390

8

Other Derivatives

18,112

-

17,343

(695)

7

Total (2)

33,314

766

17,786

(305)

15

  1. Recorded under heading Derivative Financial Instruments.
  2. In the period, the amount of R$ 457 is no longer qualified as hedge, with effect on result of R$ (38) (R$ 900 at 12/31/2019, with effect on result of R$ (28) from 01/01 to 12/31/2019).

To protect against market risk variation upon receipt and payment of interest, ITAÚ UNIBANCO HOLDING CONSOLIDATED uses interest rate swap contracts. Hedge items refer to prefixed assets and liabilities denominated in Chilean Unit of Account - UF, fixed rate and denominated in Euros and US dollars, issued by subsidiaries in Chile, London and Colombia, respectively.

Receipts (payments) of interest flows are expected to occur and will affect the statement of income in monthly periods.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

91

  1. Hedge of net investment in foreign operations - ITAÚ UNIBANCO HOLDING CONSOLIDATED's strategies for net investments in foreign operations consist of a hedge of the exposure in foreign currency arising from the functional currency of foreign operations, compared to the functional currency of the head office.

12/31/2020

Hedge item

Hedge Instruments

Book value

Variation in value

Variation in the

Strategies

amounts

recognized in

Foreign currency

Notional amount

used to calculate

Stockholders'

convertion reserve

hedge

Assets

Liabilities

Equity (*)

ineffectiveness

Foreign exchange risk

Hedge of net investment in foreign operations

15,277

-

(12,595)

(12,595)

24,619

(12,645)

Total

15,277

-

(12,595)

(12,595)

24,619

(12,645)

12/31/2019

Hedge item

Hedge Instruments

Book value

Variation in value

Variation in the

Strategies

amounts

recognized in

Foreign currency

Notional amount

used to calculate

Stockholders'

convertion reserve

hedge

Assets

Liabilities

Equity (*)

ineffectiveness

Foreign exchange risk

Hedge of net investment in foreign operations

14,396

-

(5,032)

(5,032)

16,947

(5,082)

Total

14,396

-

(5,032)

(5,032)

16,947

(5,082)

(*) Recorded under heading Other comprehensive income.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

92

12/31/2020

Book value (1)

Variation in the

Variation in the

Hedge

Amount reclassified

amounts

amount

Hedge Instruments

ineffectiveness

from foreign

Notional amount

used to calculate

recognized in

recognized in

currency convertion

hedge

Stockholders'

Assets

Liabilities

income

reserve into income

ineffectiveness

Equity (2)

Foreign exchange risk (3)

Futures

44,186

-

150

(16,130)

(16,072)

(58)

-

Forward

(4,262)

4,474

-

558

552

6

-

NDF - Non Deliverable Forward

(15,196)

538

-

2,674

2,670

4

-

Financial Assets

(109)

109

-

253

255

(2)

-

Total

24,619

5,121

150

(12,645)

(12,595)

(50)

-

12/31/2019

Book value (1)

Variation in the

Variation in the

Hedge

Amount reclassified

amounts

amount

Hedge Instruments

ineffectiveness

from foreign

Notional amount

used to calculate

recognized in

recognized in

currency convertion

hedge

Stockholders'

Assets

Liabilities

income

reserve into income

ineffectiveness

Equity (2)

Foreign exchange risk (3)

Futures

32,966

228

-

(9,279)

(9,221)

(58)

-

Forward

(2,990)

2,977

-

367

361

6

-

NDF - Non Deliverable Forward

(11,525)

260

-

3,561

3,557

4

-

Financial Assets

(1,504)

1,523

-

269

271

(2)

-

Total

16,947

4,988

-

(5,082)

(5,032)

(50)

-

  1. Recorded under heading Derivative financial instruments.
  2. Recorded under heading Other comprehensive income.
  3. DDI Future negotiated on B3 and Financial Assets and Forward contracts or NDF contracts entered into by our subsidiaries abroad.

Receipts (payments) of interest flows are expected to occur and will affect the statement of income upon the total or partial disposal of investments.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

93

IV) We present below the maturity terms of cash flow hedge, market risk hedge strategies and Hedge of net investiment in foreign operations:

12/31/2020

0-1 year

1-2 years

2-3 years

3-4 years

4-5 years

5-10 years

Over 10 years

Total

Hedge of deposits and securities purchased under agreements to resell

70,202

9,077

13,059

5,504

4,856

719

-

103,417

Hedge of highly probable forecast transactions

17,117

-

-

-

-

-

-

17,117

Hedge of assets transactions

3,604

2,139

-

-

-

-

-

5,743

Hedge of assets denominated in UF

15,400

1,277

-

-

-

-

-

16,677

Hedge of funding (Cash flow)

1,765

27

204

-

-

-

-

1,996

Hedge of loan operations (Cash flow)

212

104

-

-

-

-

-

316

Hedge of loan operations (Market risk)

2,999

1,793

1,297

447

898

1,771

-

9,205

Hedge of funding (Market risk)

213

657

549

176

581

5,448

2,576

10,200

Hedge of available for sale securities

5,897

1,668

2,589

2,318

2,105

10,931

1,358

26,866

Hedge of asset-backed securities under repurchase agreements

22,186

2,297

6,130

-

804

-

-

31,417

Hedge of net investment in foreign operations (*)

24,619

-

-

-

-

-

-

24,619

Total

164,214

19,039

23,828

8,445

9,244

18,869

3,934

247,573

12/31/2019

0-1 year

1-2 years

2-3 years

3-4 years

4-5 years

5-10 years

Over 10 years

Total

Hedge of deposits and securities purchased under agreements to resell

6,005

4,412

1,627

8,464

-

4,518

-

25,026

Hedge of highly probable forecast transactions

32,303

-

-

-

-

-

-

32,303

Hedge of assets transactions

-

3,671

1,985

-

-

-

-

5,656

Hedge of assets denominated in UF

9,628

2,954

-

-

-

-

-

12,582

Hedge of funding (Cash flow)

2,562

-

-

1,646

161

221

-

4,590

Hedge of loan operations (Cash flow)

27

156

74

-

-

-

-

257

Hedge of loan operations (Market risk)

381

2,490

1,248

993

623

1,111

540

7,386

Hedge of funding (Market risk)

299

152

375

423

129

4,220

1,838

7,436

Hedge of available for sale securities

4,723

2,362

933

1,097

2,400

3,651

3,326

18,492

Hedge of asset-backed securities under repurchase agreements

6,225

18,739

812

5,621

-

733

-

32,130

Hedge of net investment in foreign operations (*)

16,947

-

-

-

-

-

-

16,947

Total

79,100

34,936

7,054

18,244

3,313

14,454

5,704

162,805

(*) Classified as current, since instruments are frequently renewed.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

94

  1. Sensitivity analysis (trading and banking portfolios)
    ITAÚ UNIBANCO HOLDING CONSOLIDATED carried out a sensitivity analysis for each market risk factor considered significant. The biggest losses arising, by risk factor, in each scenario, were stated together with their impact on the results, net of tax effects, providing an overview of ITAÚ UNIBANCO HOLDING CONSOLIDATED's exposure under exceptional scenarios.
    The sensitivity analyses of the banking and the trading portfolio shown in this report are a static evaluation of the portfolio exposure and, therefore, do not take into account management's quick response capacity (treasury and control areas), which triggers risk mitigating measures whenever a situation of loss or high risk is identified, thus minimizing the possibility of significant losses. In addition, the study's sole purpose is to show the exposure to risk and the respective protective actions, taking into account the fair value of financial instruments, irrespective of the accounting practices adopted by ITAÚ UNIBANCO HOLDING CONSOLIDATED.

Trading portfolio

Exposures

12/31/2020 (*)

Risk factors

Risk of variations in:

Scenarios

I

II

III

Fixed Interest Rate

Fixed Interest Rates in Reais

-

(12.6)

(24.7)

Currency Coupon

Foreign Exchange Coupon Rates

0.5

0.6

4.0

Foreign Currency

Foreign Exchange Rates

(3.8)

(69.4)

112.6

Price Indices

Inflation Coupon Rates

(0.7)

(36.7)

(72.7)

TR

TR Coupon Rates

-

-

-

Equities

Prices of Equities

0.7

16.4

3.3

Other

Exposures that do not fall under the definitions above

-

(11.0)

(33.3)

Total

(3.3)

(112.7)

(10.8)

(*) Amounts net of tax effects.

Trading and Banking portfolios

Exposures

12/31/2020 (*)

Risk factors

Risk of variations in:

Scenarios

I

II

III

Fixed Interest Rate

Fixed Interest Rates in Reais

(7.4)

(731.9)

(1,435.6)

Currency Coupon

Foreign Exchange Coupon Rates

(5.4)

(224.6)

(430.0)

Foreign Currency

Foreign Exchange Rates

(0.7)

(49.3)

123.9

Price Indices

Inflation Coupon Rates

(0.9)

(215.3)

(516.2)

TR

TR Coupon Rates

1.1

(67.9)

(161.9)

Equities

Prices of Equities

9.3

(197.7)

(425.2)

Other

Exposures that do not fall under the definitions above

(0.1)

(11.3)

(34.4)

Total

(4.1)

(1,498.0)

(2,879.4)

(*) Amounts net of tax effects.

The following scenarios are used to measure these sensitivities:

  • Scenario I: Addition of 1 base point in fixed interest rates, currency coupon, inflation and interest rate index, and 1 percentage point in currency and share prices;
  • Scenario II: Shocks of 25 percent in fixed interest rates, currency coupon, inflation, interest rate indexes and currency and share prices, both up and down, taking the highest resulting losses per risk factor;
  • Scenario III: Shocks of 50 percent in fixed interest rates, currency coupon, inflation, interest rate indexes and currency and share prices, both up and down, taking the highest resulting losses per risk factor.

Derivative financial instruments contracted by ITAÚ UNIBANCO HOLDING CONSOLIDATED are shown in the item Derivative financial instruments in this note.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

95

Note 6 - Loan, lease and other credit operations

a) Composition of the portfolio with credit granting characteristics

I - By type of operations and risk level

Risk levels

12/31/2020

12/31/2019

AA

A

B

C

D

E

F

G

H

Total

Total

Loan operations

332,528

111,497

65,675

40,359

12,804

7,224

11,520

7,331

9,978

598,916

470,500

Loans and discounted trade receivables

163,032

82,768

48,633

31,524

9,234

5,104

10,180

4,712

8,668

363,855

279,821

Financing

74,581

17,820

12,042

6,418

2,668

1,699

765

2,055

762

118,810

99,176

Farming financing

9,352

649

470

61

14

32

6

2

12

10,598

9,613

Real estate financing

85,563

10,260

4,530

2,356

888

389

569

562

536

105,653

81,890

Lease operations

2,837

4,223

992

672

111

78

61

178

126

9,278

7,452

Credit card operations

520

81,520

3,921

2,946

637

476

516

466

4,006

95,008

98,430

Advance on exchange contracts (1)

4,181

298

362

216

111

28

28

25

1

5,250

4,531

Other sundry receivables (2)

207

213

5

14

1

2

418

671

570

2,101

2,104

Total operations with credit granting characteristics

340,273

197,751

70,955

44,207

13,664

7,808

12,543

8,671

14,681

710,553

583,017

Financial guarantees provided (3)

68,933

66,720

Total with Financial guarantees provided

340,273

197,751

70,955

44,207

13,664

7,808

12,543

8,671

14,681

779,486

649,737

Total operations with credit granting characteristics at

12/31/2019

260,095

182,650

56,511

35,108

13,668

6,676

5,630

8,436

14,243

583,017

  1. Includes advances on exchange contracts and Income receivable from advances granted, reclassified from Liabilities - Foreign exchange portfolio / Other receivables (Note 2a).
  2. Includes securities and credits receivable, debtors for purchase of assets and Endorsements and sureties honored.
  3. Recorded in Offsetting accounts.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

96

II - By maturity and risk level

12/31/2020

12/31/2019

AA

A

B

C

D

E

F

G

H

Total

Total

Overdue Operations (1) (2)

Falling due installments

-

-

1,418

2,047

2,657

1,576

1,441

1,195

3,727

14,061

12,917

01 to 30

-

-

61

85

76

61

66

43

205

597

612

31 to 60

-

-

59

87

81

67

71

48

214

627

576

61 to 90

-

-

49

75

70

56

61

41

163

515

587

91 to 180

-

-

139

225

191

156

179

118

445

1,453

1,461

181 to 365

-

-

217

361

382

268

276

201

725

2,430

2,343

Over 365 days

-

-

893

1,214

1,857

968

788

744

1,975

8,439

7,338

Overdue installments

-

-

605

733

1,048

805

1,407

1,565

7,342

13,505

15,643

01 to 14

-

-

7

35

32

25

29

20

74

222

224

15 to 30

-

-

486

84

78

94

71

38

156

1,007

1,499

31 to 60

-

-

112

458

276

147

172

348

297

1,810

2,001

61 to 90

-

-

-

103

448

88

417

118

263

1,437

1,851

91 to 180

-

-

-

53

214

394

625

882

1,034

3,202

4,475

181 to 365

-

-

-

-

-

57

93

159

5,229

5,538

5,426

Over 365 days

-

-

-

-

-

-

-

-

289

289

167

Subtotal (a)

-

-

2,023

2,780

3,705

2,381

2,848

2,760

11,069

27,566

28,560

Subtotal 12/31/2019

-

-

2,766

2,961

2,579

2,439

3,571

3,163

11,081

28,560

Non-overdue operations

Falling due installments

339,176

196,793

68,783

41,237

9,873

5,365

9,659

5,729

3,531

680,146

551,214

01 to 30

23,576

39,771

6,954

4,566

1,598

418

261

402

507

78,053

82,347

31 to 60

24,367

19,756

4,270

2,768

503

218

147

82

240

52,351

49,820

61 to 90

20,927

12,379

3,257

2,263

385

104

315

254

190

40,074

30,944

91 to 180

38,814

26,205

7,412

4,349

901

422

4,621

652

339

83,715

69,105

181 to 365

46,702

27,282

9,860

6,172

1,362

645

371

422

469

93,285

76,336

Over 365 days

184,790

71,400

37,030

21,119

5,124

3,558

3,944

3,917

1,786

332,668

242,662

Overdue up to 14 days

1,097

958

149

190

86

62

36

182

81

2,841

3,243

Subtotal (b)

340,273

197,751

68,932

41,427

9,959

5,427

9,695

5,911

3,612

682,987

554,457

Subtotal - 12/31/2019

260,095

182,650

53,745

32,147

11,089

4,237

2,059

5,273

3,162

554,457

Total Portfolio (a + b)

340,273

197,751

70,955

44,207

13,664

7,808

12,543

8,671

14,681

710,553

583,017

Existing allowance

(2,042)

(1,867)

(1,286)

(5,282)

(6,095)

(3,299)

(8,185)

(8,667)

(14,681)

(52,158)

(39,747)

Minimum

-

(987)

(705)

(1,303)

(1,325)

(2,339)

(6,257)

(6,065)

(14,681)

(33,662)

(28,865)

Financial Guarantees Provided (3)

-

-

-

-

-

-

-

-

-

(754)

(859)

Additional (4)

(2,042)

(880)

(581)

(3,979)

(4,770)

(960)

(1,928)

(2,602)

-

(17,742)

(10,023)

Total Portfolio at 12/31/2019

260,095

182,650

56,511

35,108

13,668

6,676

5,630

8,436

14,243

583,017

Existing allowance at 12/31/2019

(165)

(994)

(1,527)

(3,504)

(3,387)

(2,994)

(3,693)

(8,381)

(14,243)

(39,747)

Minimum

-

(913)

(565)

(1,053)

(1,367)

(2,003)

(2,815)

(5,906)

(14,243)

(28,865)

Financial Guarantees Provided (3)

-

-

-

-

-

-

-

-

-

(859)

Additional (4)

(165)

(81)

(962)

(2,451)

(2,020)

(991)

(878)

(2,475)

-

(10,023)

  1. Operations with overdue installments for more than 14 days or under control of administrators or in companies in the process of declaring bankruptcy.
  2. The balance of non-accrual operations amounts to R$ 19,925 (R$ 20,818 at 12/31/2019).
  3. Allowance for Financial Guarantees Provided, recorded in Other liabilities - Sundry, in the Consolidated Balance Sheet.
  4. Related to expected and potential loss.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

97

III - By business sector

12/31/2020

%

12/31/2019

%

Public Sector

3,787

0.5%

1,190

0.2%

Petrochemical and chemical

2,360

0.3%

199

0.0%

State and local governments

1,125

0.2%

682

0.1%

Sundry

302

0.0%

309

0.1%

Private sector

706,766

99.5%

581,827

99.8%

Companies

367,233

51.7%

281,111

48.2%

Sugar and alcohol

4,569

0.6%

3,963

0.7%

Agribusiness and fertilizers

22,640

3.2%

18,067

3.1%

Food and beverage

21,043

3.0%

16,814

2.9%

Banks and other financial institutions

14,279

2.0%

10,635

1.8%

Capital assets

5,011

0.7%

5,062

0.9%

Pulp and paper

1,668

0.2%

1,693

0.3%

Publishing and printing

1,628

0.2%

1,196

0.2%

Electronic and IT

7,596

1.1%

5,311

0.9%

Packaging

3,196

0.4%

2,565

0.4%

Energy and sewage

9,007

1.3%

7,279

1.2%

Education

3,119

0.4%

2,214

0.4%

Pharmaceuticals and cosmetics

8,730

1.2%

6,319

1.1%

Real estate agents

29,457

4.1%

21,265

3.6%

Entertainment and tourism

8,409

1.2%

5,297

0.9%

Wood and furniture

4,969

0.7%

3,341

0.6%

Construction materials

4,593

0.6%

4,854

0.8%

Steel and metallurgy

10,199

1.5%

8,764

1.5%

Media

734

0.1%

717

0.1%

Mining

5,329

0.8%

4,603

0.8%

Infrastructure work

10,904

1.5%

8,468

1.4%

Oil and gas (*)

7,223

1.0%

5,990

1.0%

Petrochemical and chemical

12,764

1.8%

9,699

1.7%

Health care

5,005

0.7%

3,419

0.6%

Insurance, reinsurance and pension plans

54

0.0%

13

0.0%

Telecommucations

2,823

0.4%

2,749

0.5%

Third sector

3,656

0.5%

1,732

0.3%

Tradings

2,589

0.4%

1,842

0.3%

Transportation

25,809

3.7%

19,159

3.3%

Domestic appliances

2,894

0.4%

2,396

0.4%

Vehicles and autoparts

16,530

2.4%

12,599

2.2%

Clothing and shoes

5,277

0.7%

4,412

0.8%

Commerce - sundry

26,849

3.8%

20,373

3.5%

Industry - sundry

10,982

1.5%

9,148

1.6%

Sundry services

48,578

6.9%

38,729

6.6%

Sundry

19,120

2.7%

10,424

1.8%

Individuals

339,533

47.8%

300,716

51.6%

Credit cards

93,102

13.1%

96,663

16.6%

Mortgage loans

96,603

13.6%

73,952

12.7%

Consumer loans / checking account

126,345

17.8%

110,470

18.9%

Vehicles

23,483

3.3%

19,631

3.4%

Grand total

710,553

100.0%

583,017

100.0%

(*) Comprises trade of fuel.

IV - Financial guarantees provided by type

12/31/2020

12/31/2019

Type of guarantees

Portfolio

Provision

Portfolio

Provision

Endorsements or sureties pledged in legal and administrative tax proceedings

27,190

(188)

29,460

(236)

Sundry bank guarantees

26,448

(357)

24,275

(511)

Other financial guarantees provided

8,248

(153)

7,819

(71)

Tied to the distribution of marketable securities by Public Offering

1,445

(1)

-

-

Restricted to bids, auctions, service provision or execution of works

3,543

(27)

3,636

(26)

Restricted to international trade of goods

1,295

(26)

948

(13)

Restricted to supply of goods

764

(2)

582

(2)

Total

68,933

(754)

66,720

(859)

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

98

b) Credit concentration

12/31/2020

12/31/2019

Loan, lease and other credit operations (*)

Risk

% of

Risk

% of

total

total

Largest debtor

7,243

0.9

5,389

0.8

10 largest debtors

37,863

4.9

29,340

4.5

20 largest debtors

54,812

7.0

44,712

6.9

50 largest debtors

83,438

10.7

71,975

11.1

100 largest debtors

112,334

14.4

97,705

15.1

(*) Amounts include financial guarantees provided.

Loan, lease and other credit operations, securities and derivative

12/31/2020

12/31/2019

financial instruments of companies and financial institutions (*)

Risk

% of

Risk

% of

total

total

Largest debtor

13,145

1.4

6,509

0.8

10 largest debtors

73,609

7.8

49,106

6.3

20 largest debtors

107,100

11.3

76,529

9.9

50 largest debtors

164,323

17.3

126,915

16.4

100 largest debtors

214,907

22.6

169,379

21.9

    1. Amounts include financial guarantees provided.
  2. Changes in the provision for loan losses and Allowance for Financial Guarantees Provided

12/31/2020

12/31/2019

Opening balance - 01/01

(39,747)

(34,261)

Net increase for the period

(30,140)

(23,896)

Minimum

(22,526)

(20,252)

Financial Guarantees Provided

105

277

Additional (1)

(7,719)

(3,921)

Write-Off

20,083

18,328

Other, mainly foreign exchange

(2,354)

82

Closing balance (2)

(52,158)

(39,747)

Minimum (3)

(33,662)

(28,865)

Financial Guarantees Provided (4)

(754)

(859)

Additional

(17,742)

(10,023)

Existing provision

(52,158)

(39,747)

Provision delay

(10,618)

(11,523)

Provision aggravated

(11,364)

(10,828)

Provision potential

(30,176)

(17,396)

  1. At 12/31/2020 the increase in the Provision for Expected Loan Loss - Supplementary is related to the change in the macroeconomic scenario as from the second half of March 2020 and that impacted our provisioning model for expected loss (Note 22d).
  2. The provision for loan losses regarding the lease portfolio amounts to: R$ (367) (R$ (273) at 12/31/2019).
  3. At 12/31/2019 comprises R$ (272) related to change in models, and the impact is offset by Additional Provision.
  4. Allowance for Financial Guarantees Provided, recorded in the Consolidated Balance Sheet.

At 12/31/2020, the balance of the provision regarding the loan portfolio is equivalent to 7.3% (6.8% at 12/31/2019).

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

99

d) Renegotiation of credits

12/31/2020

12/31/2019

Portfolio (1)

Provision for

%

Portfolio (1)

Provision for

%

Loan Losses

Loan Losses

Total renegotiated loans

35,919

(12,490)

34.8%

28,051

(11,018)

39.3%

(-) Renegotiated loans overdue up to 30 days(2)

(12,684)

2,249

17.7%

(11,266)

3,053

27.1%

Renegotiated loans overdue over 30 days(2)

23,235

(10,241)

44.1%

16,785

(7,965)

47.5%

    1. The amounts related to renegotiated loans up to 30 days of the Lease Portfolio are: R$146 (R$ 98 at 12/31/2019).
    2. Delays determined upon renegotiation.
  2. Restricted operations on assets

See below the information related to the restricted operations involving assets, in accordance with CMN Resolution nº. 2,921, of January 17, 2002.

12/31/2020

12/31/2019

01/01 to

01/01 to

12/31/2020

12/31/2019

0 - 30

31 - 180

181 - 365

Over 365

Total

Total

Income

Income

days

(Expenses)

(Expenses)

Restricted operations on assets

Loan operations

-

-

-

6,784

6,784

8,734

1,965

668

Liabilities - restricted operations on assets

Foreign loans through securities

-

-

-

6,784

6,784

8,739

(1,963)

(668)

Net revenue from restricted operations

2

-

At 12/31/2020 and 12/31/2019 there were no balances in default.

Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020

100

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Itaú Unibanco Holding SA published this content on 01 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 February 2021 22:43:00 UTC.