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
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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% |
- 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% |
- 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.
-
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 - 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.
- Asset spreads (- R$0.1 billion): reduction in the spreads on credit products for individuals, especially credit cards, personal and payroll loans.
- 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% |
- 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 (%)
- 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.
- 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 |
- 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% |
- 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 |
- Includes nonperforming loans more than 1 day overdue;
- 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$121.6 bn as of December 31, 2020
+ 4.1% (vs. Sep-20) | + 34.5% (vs. Dec-19) |
In the fourth quarter of 2020, credit origination3 for very small, small and middle- market companies increased 5% year-on- year.
- Without financial guarantees provided. (2) Includes Individuals and Companies. (3) Average origination per working day in the quarter. Note: For further information on products, please see to our Institutional Presentation, available on our Investor Relations website.
Itaú Unibanco Holding S.A. | 24 |
Management Discussion & Analysis | Balance Sheet |
Funding
Highlights
- Funding from clients grew by 5.0% in the quarter and 44.8% in the last 12 months, boosted by (i) time deposits, up 6.6% in the quarter and 77.2% in the last 12 months, (ii) demand deposits, up 5.5% in the quarter and 63.8% in the last 12 months, and (iii) savings deposits, up 4.1% in the quarter and 24.2% in the last 12 months. This growth is associated with the positive flow of funds, noted from the second half of March 2020.
- The assets under management grew by 4.5% in the quarter and 14.2% in the last 12 months, represented by the increase of 14.7% in own products and 11.2% in open platform, year-on-year.
In R$ 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 | |||||
- 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 |
- 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.
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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.
- Equivalent to 41.05% of the capital of XP Inc on the base date of September 30, 2020.
- 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 |
- 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.
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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 |
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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.
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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
- Group Head of Investor Relations and Market Intelligence.
- 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
- Elected at the A/ESM of December 11, 2020, in phase of approval by Central Bank of Brazil (BACEN).
- Elected at the A/ESM of January 04, 2021, in phase of approval by Central Bank of Brazil (BACEN).
- 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 |
- Includes the share in Other Comprehensive Income of Investments in Associates and Joint Ventures related to Available for sale securities.
- 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.
Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020 | 64 |
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
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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.
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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% |
- 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.
- ITAÚ UNIBANCO HOLDING controls ITAÚ CORPBANCA due to the shareholders' agreement.
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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.
- 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.
- 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:
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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:
•
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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.
- 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.
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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
- 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.
- 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.
- 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.
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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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- 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.
- 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.
- 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.
- 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.
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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. - 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.
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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. - 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. - 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.
Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020 | 74 |
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.
-
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.
Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020 | 75 |
- 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.
- 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. - 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.
- 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. - 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.
Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020 | 76 |
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 |
- 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.
- 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).
Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020 | 77 |
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) |
- 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).
- 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).
Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020 | 78 |
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.
Itaú Unibanco Holding S.A. - Complete Financial Statements - December 31, 2020 | 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
-
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) |
- Recorded under heading Derivative financial instruments.
- Recorded under heading Other comprehensive income.
- DI Futures negotiated on B3 and interest rate swap negotiated on Chicago Mercantile Exchange.
- 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 |
- 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 |
- Recorded under heading Derivative Financial Instruments.
- 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 |
- 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) | - |
- Recorded under heading Derivative financial instruments.
- Recorded under heading Other comprehensive income.
- 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 |
- 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 |
- Includes advances on exchange contracts and Income receivable from advances granted, reclassified from Liabilities - Foreign exchange portfolio / Other receivables (Note 2a).
- Includes securities and credits receivable, debtors for purchase of assets and Endorsements and sureties honored.
- 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) |
- Operations with overdue installments for more than 14 days or under control of administrators or in companies in the process of declaring bankruptcy.
- The balance of non-accrual operations amounts to R$ 19,925 (R$ 20,818 at 12/31/2019).
- Allowance for Financial Guarantees Provided, recorded in Other liabilities - Sundry, in the Consolidated Balance Sheet.
- 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 |
- Amounts include financial guarantees provided.
- 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) |
- 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).
- The provision for loan losses regarding the lease portfolio amounts to: R$ (367) (R$ (273) at 12/31/2019).
- At 12/31/2019 comprises R$ (272) related to change in models, and the impact is offset by Additional Provision.
- 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% |
- The amounts related to renegotiated loans up to 30 days of the Lease Portfolio are: R$146 (R$ 98 at 12/31/2019).
- Delays determined upon renegotiation.
- 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.