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2007Strategy andBusinesses
Banco Itaú Holding Financeira S.A.Sustainability Report
Banco Itaú Holding Financeira ProfileItaú Holding
Banco Itaú
Banking Products and Services
Credit CardsAccount Holders
Fund and PortfolioManagement
Corporate Operations &Investment Banking
Taií - FIT, FIC (CBD),FAI (LASA) and Payroll Credit
Vehicles
Credit CardsNon-account Holders
Itaucred
Banco Itaú BBA
We are a financial institution that ...
has been in operations for over 60 years, is one of the largest in Brazil, has a net worth of R$29 billion and assets totaling R$295billion and achieved a market value of R$111 billion.
has a strong impact on economic, social and environmental scenarios based on the relationships we have with more than 65,000employees, 24 million customers, including account and non-account holders, 30,000 suppliers and over 60,000 shareholders.
operates nationwide, through our network of 3,528 branches and bank service posts; over 24,000 automatic teller machines andelectronic customer service stations located at places of business and the Taií network comprising 766 shops and 315 electronicservice stations.
has strengthened its international scope on a yearly basis, with units and operations in Argentina, Chile, China, England, Japan,Nassau, Portugal, the Cayman Islands, the United States and Uruguay.
is traded on the São Paulo (Brazil), Buenos Aires (Argentina) and New York (US) stock exchanges.
Our diversified operations...are primarily anchored on services based on specialized structures for the various client profiles, such as individuals, small andmedium size companies as well as micro-firms, the Government and institutional investors.
include business management services such as underwriting, custody, securities brokerage, credit cards, cooperative financingplans, insurance, premium bonds and private pension plans.
rank us as the largest wholesale bank in Brazil, through Itaú BBA, which operates in the corporate and investment sectorsproviding services to nearly 2,000 corporate groups in Brazil, many of which are among the largest in the country.
have earned us the title of leader in the Private Banking and high income (Itaú Personnalité) sector as well as the lower end of thesocial ladder, by means of Taií, which offers financing and credit cards to customers who, for the most part, do not have access tomore conventional financial services.
Our values are solid and...based on ethics, transparency, respect for human rights, compliance and diversity, wich underlie our relationships with ourstrategic publics, such as customers, government, employees, suppliers, shareholders and investors.
uphold continuous improvement in our operations assuring competitive positioning and good performance of our operations.
shared and renewed each day by our employees who embody the Modo Itaú de Fazer (The Itaú Way) and create a respectfuland motivating work environment which has resulted in our excellent products and services.
include social and environmental accountability, providing continuity to our commitment toward sustainable financial businessdevelopment.
We are acknowledged...as a sound and enduring institution, whose stock is included in the São Paulo Stock Exchange sustainability indexes, the ISE, aswell as in the New York Stock Exchange and the Dow Jones Sustainability World Index (DJSI) – we are the only Latin Americanbank to have been included in this index since its creation in 1999.
for building the most valuable Brazilian brand since 2002 according to the international consulting firm, Interbrand, attaining an estimated worth of R$8.076 billion in 2007.
for the over 50 awards received in 2007, the most important of which are listed below:
Best Latin American Bank – Euro money magazine;
Best Brazilian Bank – Euro money magazine (10th consecutive year);
Most Sustainable and Ethical Latin American Bank –Latin Finance and Consulting Management & Excellence magazine (3rd consecutive year);
Best company in the following categories:Banks (3rd consecutive year) and Social and Environmental Responsibility – Dinheiro magazine;
Sustainability reference company in Brazil – Guia Exame de Sustentabilidade 2007;
The Most Admired Companies in Brazil – 1st place in the categories:Retail Bank and Private Pension Plans – Carta Capitalmagazine and TNS InterScience.
Este relatório foi impresso em papel recicladocom tinta à base de extratos vegetais.
Praça Alfredo Egydio de Souza Aranha, 100 Torre Itaúsa – 04344 902 – São Paulo-SP – Brasil
www.itau.com.br
Strategy and BusinessesSustainability Report 2007
Insurance, Private PensionPlans and Premium Bonds
2007Strategy andBusinesses
Banco Itaú Holding Financeira S.A.Sustainability Report
Banco Itaú Holding Financeira ProfileItaú Holding
Banco Itaú
Banking Products and Services
Credit CardsAccount Holders
Fund and PortfolioManagement
Corporate Operations &Investment Banking
Taií - FIT, FIC (CBD),FAI (LASA) and Payroll Credit
Vehicles
Credit CardsNon-account Holders
Itaucred
Banco Itaú BBA
We are a financial institution that ...
has been in operations for over 60 years, is one of the largest in Brazil, has a net worth of R$29 billion and assets totaling R$295billion and achieved a market value of R$111 billion.
has a strong impact on economic, social and environmental scenarios based on the relationships we have with more than 65,000employees, 24 million customers, including account and non-account holders, 30,000 suppliers and over 60,000 shareholders.
operates nationwide, through our network of 3,528 branches and bank service posts; over 24,000 automatic teller machines andelectronic customer service stations located at places of business and the Taií network comprising 766 shops and 315 electronicservice stations.
has strengthened its international scope on a yearly basis, with units and operations in Argentina, Chile, China, England, Japan,Nassau, Portugal, the Cayman Islands, the United States and Uruguay.
is traded on the São Paulo (Brazil), Buenos Aires (Argentina) and New York (US) stock exchanges.
Our diversified operations...are primarily anchored on services based on specialized structures for the various client profiles, such as individuals, small andmedium size companies as well as micro-firms, the Government and institutional investors.
include business management services such as underwriting, custody, securities brokerage, credit cards, cooperative financingplans, insurance, premium bonds and private pension plans.
rank us as the largest wholesale bank in Brazil, through Itaú BBA, which operates in the corporate and investment sectorsproviding services to nearly 2,000 corporate groups in Brazil, many of which are among the largest in the country.
have earned us the title of leader in the Private Banking and high income (Itaú Personnalité) sector as well as the lower end of thesocial ladder, by means of Taií, which offers financing and credit cards to customers who, for the most part, do not have access tomore conventional financial services.
Our values are solid and...based on ethics, transparency, respect for human rights, compliance and diversity, which underlie our relationships with ourstrategic publics, such as customers, government, employees, suppliers, shareholders and investors.
uphold continuous improvement in our operations assuring competitive positioning and good performance of our operations.
shared and renewed each day by our employees who embody the Modo Itaú de Fazer (The Itaú Way) and create a respectfuland motivating work environment which has resulted in our excellent products and services.
include social and environmental accountability, providing continuity to our commitment toward sustainable financial businessdevelopment.
We are acknowledged...as a sound and enduring institution, whose stock is included in the São Paulo Stock Exchange sustainability indexes, the ISE, aswell as in the New York Stock Exchange and the Dow Jones Sustainability World Index (DJSI) – we are the only Latin Americanbank to have been included in this index since its creation in 1999.
for building the most valuable Brazilian brand since 2002 according to the international consulting firm, Interbrand, attaining an estimated worth of R$8.076 billion in 2007.
for the over 50 awards received in 2007, the most important of which are listed below:
Best Latin American Bank – Euro money magazine;
Best Brazilian Bank – Euro money magazine (10th consecutive year);
Most Sustainable and Ethical Latin American Bank –Latin Finance and Consulting Management & Excellence magazine (3rd consecutive year);
Best company in the following categories:Banks (3rd consecutive year) and Social and Environmental Responsibility – Dinheiro magazine;
Sustainability reference company in Brazil – Guia Exame de Sustentabilidade 2007;
The Most Admired Companies in Brazil – 1st place in the categories:Retail Bank and Private Pension Plans – Carta Capitalmagazine and TNS InterScience.
Este relatório foi impresso em papel recicladocom tinta à base de extratos vegetais.
Praça Alfredo Egydio de Souza Aranha, 100 Torre Itaúsa – 04344 902 – São Paulo-SP – Brasil
www.itau.com.br
Strategy and BusinessesSustainability Report 2007
Insurance, Private PensionPlans and Premium Bonds
Main indicators
December
A partnership between Banco Itaú andLopes Imobiliária is announced,providing Itaú exclusivity in offering realestate financing for a 20-year term andcreating a new company in which bothwill have equal interest.
The Brazilian Commodities and FuturesMarket (BM&F) realizes it Initial PublicOffering (IPO),whereby Itaú Holdingdivested 13.9 million shares that it held inthe company at a price of R$20.00 each.
January 2008
Banco Itaú enters into a partnership withDafra da Amazônia Indústria e Comérciode Motocicletas,belonging to the GrupoItavema,for exclusive financing of Daframotorcycles and working capital loans todealers.The agreement also calls for Itaúproducts and services to be offered to thecompanies' customers.Itaú will pay R$20 million for these exclusive rights fora 10-year term,which is renewable for an equal term.
Highlights2007 2006 2005 2004 2003 2002 Trend (%)
(1) (2006/2007)
Income – R$ million (2)
Gross Income from Financial Intermediation 15,476 12,530 11,157 10,200 9,224 7,250 23.5
Income from Insurance,Private Pension Plan and Capitalization 19,171 17,167 14,417 12,398 10,129 7,777 11.7
Personnel Expense, Administrative Expenses and Other Operating Expenses 14,033 15,213 10,366 9,868 9,064 8,890 (7.8)
Income From Operations 11,045 6,077 7,947 7,342 5,714 4,255 81.8
Consolidated Recurring Net Income 7,179 6,195 5,443 4,870 3,717 3,080 15.9
Consolidated Net Income 8,474 4,309 5,251 3,776 3,152 2,377 96.7
Income per Share in 2007,2006,2005 and 2004 – R$ (remaining years per 1,000 share lot)
Consolidated Recurring Net Income (3) 2.99 2.72 2.42 2.15 1.64 1.38 9.9
Consolidated Net Income (3) 3.53 1.89 2.34 1.67 1.39 1.07 86.6
Book Value 12.09 9.84 7.05 6.17 5.22 4.06 22.8
Interest on Own Capital/Dividends 1.06 0.82 0.84 0.61 0.49 0.37 29.2
Share Price PN (4) 46.26 38.54 28.05 19.93 14.42 8.57 20.0
Market Capitalization - R$ million (5) 110,888 92,270 61,935 45,153 32,850 19,074 20.2
Balance Sheet – R$ million
Total Assets 294,876 209,691 152,435 130,339 118,738 111,141 40.6
Total Loans (Including Endorsements and Sureties) 127,589 93,648 67,756 53,275 44,581 45,414 36.2
Unrestricted,Raised and Managed Own Resources 471,657 357,137 249,306 211,238 183,627 154,362 32.1
Subordinated Debts 11,375 4,566 4,584 4,765 4,814 5,707 149.1
Consolidated Shareholders' Equity 28,969 23,564 15,560 13,971 11,879 9,036 22.9
Reference Equity (6) 37,095 30,720 20,644 19,806 17,185 16,573 20.8
Financial Ratios (%)
Average Return on Equity - Recurring (7) 27.2 32.6 36.6 37.7 35.0 37.3 –
Average Return on Equity (7) 32.1 22.7 35.3 29.2 29.7 28.8 –
Return on Average Asset 3.2 2.4 3.6 3.0 2.8 2.6 –
Efficiency Ratio (8) 46.2 47.6 50.3 53.9 54.5 58.2 –
Solvency (Basel) Ratio (9) 17.9 17.2 17.0 20.6 19.8 18.4 –
Fixed Assets Ratio (9) 13.8 35.1 26.1 27.4 25.0 33.1 –
Relevant Data
Assets under Administration (R$ million) 217,377 179,808 120,287 99,753 81,102 59,167 20.9
Number of Employees 65,089 59,921 51,036 45,316 42,450 43,215 8.6
Number of Branches 2,764 2,603 2,391 2,282 2,321 2,314 6.2
Number of Itaú Service Outposts (PABs) 764 780 783 791 851 878 (2.1)
Number of Automatic Teller Machines 23,739 23,096 22,023 21,150 20,021 17,926 2.8
(1) Consolidation of Banco Itaú BBA only occurs in the Balance Sheet and does not affect results.
(2) A correct examination of the growth of income and expenses can be better viewed in the Management Discussion and Analysis Report,wherein the non-recurring items are segregated
and the exchange fluctuation of the investments abroad is distributed among the affected line items,together with the tax effect of the hedge of these investments.
(3) Calculated on the basis of the weighted average of the number of shares in circulation.
(4) Based on the average quote of the last day of the period.
(5) Calculated on the basis of the average quote of preferred shares on the last day of the period.
(6) Capital base calculated according to Brazilian Central Bank (BACEN) Resolution 2.837 issued May 30,2001 based on the consolidated financial statements.
(7) Represents the ratio of net profits for the year to average shareholders' equity [(Dec+Sept+June+March+Dec)/5].
(8) Beginning 2004,calculated according to international criteria defined in the Operations Management Analytical Report.
(9) Position on December 31.
February
Local authorities approve Itaú Holding's acquisition ofBankBoston operations in Chileand Uruguay.
May
Conclusion of acquisitions ofLatin America private bankingcustomer portfolios ofBankBoston International(BBI),of headquartered inMiami,and BankBoston TrustCompany Limited (BBT),headquartered in Nassau,byBanco Itaú Europa and itssubsidiary Banco Itaú EuropaLuxembourg.
June
Itaú Holding sells off part of itsshares (22.33% of total capital) thatit held in Serasa S.A.to ExperianGroup Limited, in a transaction thatgenerated R$490 million incompany profit in 2007 after taxes.Banco Itaú Europa concludes theacquisition of the Latin Americaninternational private banking clientassets serviced in Miami andMontevideo by ABN AMRO Bank N.V.
August
Itaú Holding divests ashareholding interest of 53.8million common shares ofRedecard S.A.,one of the leadingcompanies engaged in thepayment card industry in theBrazilian market,equal to 8.73%of its total share capital.This non operating event had a R$ 1.0 billion impact on Itaú's2007 income after taxes.
September
Itaú Holding is selected for theeighth consecutive year tocomprise the DJSI World, theNew York Stock Exchangesustainability index,whichincludes shares of 318companies which have the highest assessments in the world.
October
Itaú Holding announces the creation of Kinea,acompany specialized in alternative investmentmanagement,featuring operations involving multi-market (Hedge Funds) and Real Estate Equity funds.Kinea uses the infrastructure,know-how andtechnology of Banco Itaú and has its own premises,staff and operations.
The São Paulo Stock Exchange (Bovespa) realizes itsInitial Public Offering (IPO),at which time Itaú Holdingdivested 11.4 million shares of Bovespa at a price ofR$23.00 each.The transaction increased 2007 resultsby R$164 million (after taxes).Following thistransaction, Itaú Holding retained a 4% of interest inBovespa's share capital,which reflects a market valueof R$973 million.
November
Itaú Holding announces recordprofits of R$6.444 billion in thefirst nine months of the year andonce again outdistances theannual earnings of any otherpublicly traded Brazilian bank inthe last 20 years.
Itaú Holding is selected for thethird consecutive year to comprisethe São Paulo Stock Exchange ISEtheoretical portfolio,whichincludes shares of the 32companies that have achieved thehighest level of commitment tosustainability and socialresponsibility.
The transaction impacted 2007 results by R$150 million (after taxes) andafterward, Itaú Holding retained 2.3%of the share capital of BM&F,withmarket value equal to (on December31,2007) R$520 million.
The Itaú brand is, for the fifthconsecutive time,named the mostvaluable Brazilian brand in the country,by the international consulting firm,Interbrand,with a value of US$3.792billion (R$8.076 billion).
Main indicators
December
A partnership between Banco Itaú andLopes Imobiliária is announced,providing Itaú exclusivity in offering realestate financing for a 20-year term andcreating a new company in which bothwill have equal interest.
The Brazilian Commodities and FuturesMarket (BM&F) realizes it Initial PublicOffering (IPO),whereby Itaú Holdingdivested 13.9 million shares that it held inthe company at a price of R$20.00 each.
January 2008
Banco Itaú enters into a partnership withDafra da Amazônia Indústria e Comérciode Motocicletas,belonging to the GrupoItavema,for exclusive financing of Daframotorcycles and working capital loans todealers.The agreement also calls for Itaúproducts and services to be offered to thecompanies' customers.Itaú will pay R$20 million for these exclusive rights fora 10-year term,which is renewable for an equal term.
Highlights2007 2006 2005 2004 2003 2002 Trend (%)
(1) (2006/2007)
Income – R$ million (2)
Gross Income from Financial Intermediation 15,476 12,530 11,157 10,200 9,224 7,250 23.5
Income from Insurance,Private Pension Plan and Capitalization 19,171 17,167 14,417 12,398 10,129 7,777 11.7
Personnel Expense, Administrative Expenses and Other Operating Expenses 14,033 15,213 10,366 9,868 9,064 8,890 (7.8)
Income From Operations 11,045 6,077 7,947 7,342 5,714 4,255 81.8
Consolidated Recurring Net Income 7,179 6,195 5,443 4,870 3,717 3,080 15.9
Consolidated Net Income 8,474 4,309 5,251 3,776 3,152 2,377 96.7
Income per Share in 2007,2006,2005 and 2004 – R$ (remaining years per 1,000 share lot)
Consolidated Recurring Net Income (3) 2.99 2.72 2.42 2.15 1.64 1.38 9.9
Consolidated Net Income (3) 3.53 1.89 2.34 1.67 1.39 1.07 86.6
Book Value 12.09 9.84 7.05 6.17 5.22 4.06 22.8
Interest on Own Capital/Dividends 1.06 0.82 0.84 0.61 0.49 0.37 29.2
Share Price PN (4) 46.26 38.54 28.05 19.93 14.42 8.57 20.0
Market Capitalization - R$ million (5) 110,888 92,270 61,935 45,153 32,850 19,074 20.2
Balance Sheet – R$ million
Total Assets 294,876 209,691 152,435 130,339 118,738 111,141 40.6
Total Loans (Including Endorsements and Sureties) 127,589 93,648 67,756 53,275 44,581 45,414 36.2
Unrestricted,Raised and Managed Own Resources 471,657 357,137 249,306 211,238 183,627 154,362 32.1
Subordinated Debts 11,375 4,566 4,584 4,765 4,814 5,707 149.1
Consolidated Shareholders' Equity 28,969 23,564 15,560 13,971 11,879 9,036 22.9
Reference Equity (6) 37,095 30,720 20,644 19,806 17,185 16,573 20.8
Financial Ratios (%)
Average Return on Equity - Recurring (7) 27.2 32.6 36.6 37.7 35.0 37.3 –
Average Return on Equity (7) 32.1 22.7 35.3 29.2 29.7 28.8 –
Return on Average Asset 3.2 2.4 3.6 3.0 2.8 2.6 –
Efficiency Ratio (8) 46.2 47.6 50.3 53.9 54.5 58.2 –
Solvency (Basel) Ratio (9) 17.9 17.2 17.0 20.6 19.8 18.4 –
Fixed Assets Ratio (9) 13.8 35.1 26.1 27.4 25.0 33.1 –
Relevant Data
Assets under Administration (R$ million) 217,377 179,808 120,287 99,753 81,102 59,167 20.9
Number of Employees 65,089 59,921 51,036 45,316 42,450 43,215 8.6
Number of Branches 2,764 2,603 2,391 2,282 2,321 2,314 6.2
Number of Itaú Service Outposts (PABs) 764 780 783 791 851 878 (2.1)
Number of Automatic Teller Machines 23,739 23,096 22,023 21,150 20,021 17,926 2.8
(1) Consolidation of Banco Itaú BBA only occurs in the Balance Sheet and does not affect results.
(2) A correct examination of the growth of income and expenses can be better viewed in the Management Discussion and Analysis Report,wherein the non-recurring items are segregated
and the exchange fluctuation of the investments abroad is distributed among the affected line items,together with the tax effect of the hedge of these investments.
(3) Calculated on the basis of the weighted average of the number of shares in circulation.
(4) Based on the average quote of the last day of the period.
(5) Calculated on the basis of the average quote of preferred shares on the last day of the period.
(6) Capital base calculated according to Brazilian Central Bank (BACEN) Resolution 2.837 issued May 30,2001 based on the consolidated financial statements.
(7) Represents the ratio of net profits for the year to average shareholders' equity [(Dec+Sept+June+March+Dec)/5].
(8) Beginning 2004,calculated according to international criteria defined in the Operations Management Analytical Report.
(9) Position on December 31.
February
Local authorities approve Itaú Holding's acquisition ofBankBoston operations in Chileand Uruguay.
May
Conclusion of acquisitions ofLatin America private bankingcustomer portfolios ofBankBoston International(BBI),of headquartered inMiami,and BankBoston TrustCompany Limited (BBT),headquartered in Nassau,byBanco Itaú Europa and itssubsidiary Banco Itaú EuropaLuxembourg.
June
Itaú Holding sells off part of itsshares (22.33% of total capital) thatit held in Serasa S.A.to ExperianGroup Limited, in a transaction thatgenerated R$490 million incompany profit in 2007 after taxes.Banco Itaú Europa concludes theacquisition of the Latin Americaninternational private banking clientassets serviced in Miami andMontevideo by ABN AMRO Bank N.V.
August
Itaú Holding divests ashareholding interest of 53.8million common shares ofRedecard S.A.,one of the leadingcompanies engaged in thepayment card industry in theBrazilian market,equal to 8.73%of its total share capital.This non operating event had a R$ 1.0 billion impact on Itaú's2007 income after taxes.
September
Itaú Holding is selected for theeighth consecutive year tocomprise the DJSI World, theNew York Stock Exchangesustainability index,whichincludes shares of 318companies which have the highest assessments in the world.
October
Itaú Holding announces the creation of Kinea,acompany specialized in alternative investmentmanagement,featuring operations involving multi-market (Hedge Funds) and Real Estate Equity funds.Kinea uses the infrastructure,know-how andtechnology of Banco Itaú and has its own premises,staff and operations.
The São Paulo Stock Exchange (Bovespa) realizes itsInitial Public Offering (IPO),at which time Itaú Holdingdivested 11.4 million shares of Bovespa at a price ofR$23.00 each.The transaction increased 2007 resultsby R$164 million (after taxes).Following thistransaction, Itaú Holding retained a 4% a of interest inBovespa's share capital,which reflects a market valueof R$973 million.
November
Itaú Holding announces recordprofits of R$6.444 billion in thefirst nine months of the year andonce again outdistances theannual earnings of any otherpublicly traded Brazilian bank inthe last 20 years.
Itaú Holding is selected for thethird consecutive year to comprisethe São Paulo Stock Exchange ISEtheoretical portfolio,whichincludes shares of the 32companies that have achieved thehighest level of commitment tosustainability and socialresponsibility.
The transaction impacted 2007 results by R$150 million (after taxes) andafterward, Itaú Holding retained 2.3%of the share capital of BM&F,withmarket value equal to (on December31,2007) R$520 million.
The Itaú brand is, for the fifthconsecutive time,named the mostvaluable Brazilian brand in the country,by the international consulting firm,Interbrand,with a value of US$3.792billion (R$8.076 billion).
RatingsBanco Itaú and Itaú BBA
Itaú Itaú BBADomestic International Domestic International
Fitch Ratings
Short-Term – Foreign Currency - F3 - F3
Short-Term – Local Currency F1+(bra) F3 F1+(bra) F3
IDR (Issuer Default Ratings) Long-Term – Foreign Currency - BBB- - BBB-
IDR (Issuer Default Ratings) Long-Term – Local Currency AAA(bra) BBB AAA(bra) BBB
Individual - B/C - B/C
Support – Legal - 3 - 3
Standard & Poor’s
Short-Term – Foreign Currency - A-3 - A-3
Short-Term – Local Currency brA-1 A-3 brA-1 A-3
Long-Term – Foreign Currency - BBB- - BBB-
Long-Term – Local Currency brAAA BBB- brAAA BBB-
Moody’s
Financial Strength (BFSR) - B- - B-
Bank Deposits – Foreign Currency (LT/ST) - Ba2/NP - Ba2/NP
Bank Deposits – Local Currency (LT/ST) - A1/P-1 - A1/P-1
Deposits – Long-Term Aaa.br - Aaa.br -
Deposits –Short-Term BR-1 - BR-1 -
Long-Term Securities – Senior Foreign Currency (2) – Baa3 – Baa3
(1) Banco Itaú Holding Financeira ratings are the same as Banco Itaú and Banco Itaú BBA.(2) At Itaú BBA, refers to Medium Term Note Program (MTN) Program Securities.
Objectives presented at meeting with members of the Capital Market Analystsand Investment Professionals Association (APIMEC) in São Paulo in December 2007:
Expand credit offer.Credit growth to Individual Entities (PF) of 30%;Credit growth to Legal Entities (PJ) of 25% (except Itaú BBA).
Consolidate Taií operations.
Increase bank’s PF/PJ customer base.
Growth of income from services of 8%.
Continue to prioritize Investment Banking.
Continue to increase payroll and real estate credit.
Continue to maintain strong growth of insurance, pension plan and capitalization operations.
Promote organic growth abroad.
Maintain 2007 levels in the following indexes:Efficiency.Default.
2008 Strategic priorities
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Introduction
Itaú has long presented public reports, and they have become an integral part of its reporting process to thecommunity. Its corporate culture promotes continuous improvement, and the Annual Report, published since1966, has undergone a number of changes in an effort to increase transparency and strive toward satisfying theaspirations of publics interested in the Bank’s operations.
The annual reports previously contained a chapter on the social and cultural efforts of the Organization but in1999, Itaú published its Social Report, which at that time was aligned to the guidelines proposed by the InstitutoEthos.Five years later in 2004, it began to incorporate the guidelines and indicators recommended by the GlobalReporting Initiative (GRI), an internationally renowned institution that proposes adopting certain reportingmethods and different measurements employed by the most sustainable organizations in the world.The mostnotable distinction this year is the inclusion of third generation GRI indicators, reformulated in the light of the newreality and prepared on the basis of public consultations conducted throughout the world.
The publication, from now on entitled the Sustainability Report, will be published in three volumes: the first one,Strategy and Businesses, outlines the panorama of Banco Itaú Holding Financeira S.A.’s operations the second,Relationships and Indicators, describes social and environmental practices and relationships with the variousstrategic publics; and the third volume includes a Management Discussion and Analysis of the Operations and theFinancial Statements for 2007.
In addition to the printed version, readers can also find more detailed information regarding policies andprograms in the Itaú Holding site.The on-line version of the Sustainability Report includes the full printed versionof the report and its attachments, as well as supplementary content.The selection of which information wasincluded in the printed version and that reserved only for the electronic version was decided on the basis of themateriality principle.The information regarded as relevant to the majority of stakeholders in the Organization wasdeemed priority and therefore published in the printed report, while the information determined to be importantto specific relationship groups or detailed content relevant to Itaú Holding strategy can only be found in the on-line publications.
The purpose of the collective printed and electronic versions of the Sustainability Report is to enable Itaú torespond fully to the readers’expectations in relation to the performance of Itaú Holding in the economic, socialand environmental areas.The information contained in both publications is related to Banco Itaú HoldingFinanceira S.A. (Itaú Holding) operations in 2007 and a description of Banco Itaú S.A. (Banco Itaú) and Banco Itaú BBA S.A. (Itaú BBA) operations in Brazil and abroad.
This report and the Quarterly Reports are available at the address:www.itauri.com.br. In the event of anyquestions, complaints, suggestions or if more copies are required, please contact the Investor Relations area by e-mail at: [email protected].
Enjoy reading!
All contents and images contained in this Annual Report are for the exclusive use of Banco Itaú Holding Financeira S.A.
3
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
2007 Strategy and BusinessesBanco Itaú Holding Financeira S.A.Sustainability Report
Banco Itaú Holding Financeira ProfileHighlights
Main indicators
2008 Priorities
Ratings
Introduction
Message from the Chairman of the Board of Directors 6
Message from the President 8
Competitive Advantages 10
Sustainable Value Bank 12
Social and environmental risk analysis 15Economic, social and environmental influence 17Vision, Principles and Values 19Global Commitments 20
Business Strategy 22
Scenario 23Challenges 242008 Priorities 25
5
Intangible Assets 26
Brand 27Share capital 28Technological capital 29
Corporate governance 30
Stock and ADR Performance 38
Management 46
Management model 47Ethics management 48Risk Management 52Cost Management 57
Businesses 58
Opening- general outlook 59Banco Itaú S.A. 62Itaucred Business 74Banco Itaú BBA 80International Presence 86
Management and Board of Directors 92
Corporate Information 94
Predicting local and international economic
scenarios in an ever-more dynamic world is a difficult
task that requires well-honed discipline, competence,
and knowledge. It is this challenge, pursued
consistently, that has been one of the pillars
sustaining Itaú Holding’s trajectory of ongoing value
generation.
The year of 2007 was marked by the return of
uncertainty related to world economic behavior as a
direct result of the crisis which began in the sub-
prime mortgages segment in the United States, with
important ramifications for the financial segment all
over the world.
Despite the uncertainty over the future effects of this
crisis, especially those related to the US economy, the
Brazilian economic scenario in 2007 was very
positive.The adjustments of its external accounts,
initiated some years ago, have shown that it is
possible to get through world financial crises without
the traumas the country suffered through in prior
crises. In other words, the Brazilian economy has
unquestionably demonstrated that it is far less
vulnerable than in the past.
In 2007,Brazil achieved historically low interest rates
which,coupled with heated domestic demand and a
visible increase in investments,enabled the country to
envisage sustained growth,with stable prices for the
coming years,higher total payrolls,more job creation
and firms migrating to the formal sector.The country
also underwent historic growth in the capitals market
and substantial growth in fixed income securities and
on the stock market, which, although somewhat
impacted by the crisis abroad, rebounded to turn in
record performance and volumes in 2007.
Rather than simply reaping the benefits of the
positive effects of this scenario from its banking
operations, Itaú Holding knew how to prepare for this
new situation. Its strategic positions in segments
such as consumer loans, via Itaucred, or the capital
market, through Itaú Corretora and Itaú BBA, were
testimony that the seeds sown in the past have
borne fine fruit, as will the investments we are
making in fields such as small and medium firms and
housing loans.
Itaú’s annual results attested to the effectiveness
of the strategy implemented. Itaú Holding net
profits for 2007 were R$8.5 billion, reflecting 32.1%
profitability on shareholders’equity and gains of
96.7% over 2006 profits.
During this period, Itaú Holding preferred shares rose
16.2%, while its common stock turned up 30.3%.
ADRs traded on the New York Stock Exchange (NYSE)
reported a 40.9% increase in price quotations.The
market value of Itaú ended 2007 with a 20.2%
increase to reach R$111 billion.
Message from the Chairman of the Board of Directors
6
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Itaú Holding believes that the means by which it has
conducted its business and achieved results for over
60 years is an expression of its long-term vision.
This stance has been perceived by the market.
Standard & Poor’s (S&P) and Fitch Ratings upgraded
their Itaú Holding, Banco Itaú and Banco Itaú BBA
ratings to investment grade.Based on the new
ratings, securities issued abroad by the banks are
more highly valued, due to the acknowledgment of
their sound position and good risk performance.
In 2007, Itaú Holding was once again selected, for the
eighth consecutive year, to be part of the select
group of 318 worldwide companies that comprise
the Dow Jones Sustainability World Index (DJSI
World), maintaining its position as only Latin
American bank in the index since it was founded. Itaú
is also included in the new Bovespa ISE stock index
which is valid from December 2007 to November
2008. It has also been awarded AAA+ Sustainability,
Ethics, Social Corporate Accountability, Corporate
Governance and Transparency ratings for Latin
American banks by the Spanish consulting firm,
Management & Excellence (M&E).
These examples of recognition translate the market’s
perception that Itaú pursues excellent financial
performance, simultaneously striving to adopt best
practices for corporate governance and furthering
initiatives related to sustainable development of
business and society.
It must be emphasized that the performance
reached reflects the commitment of more than
65,000 employees and the credibility Itaú Holding
has built with its shareholders, customers and other
stakeholders. Its current position is the result of its
constant drive to improve on all operational fronts.
Our constant and sustained effort has soundly
prepared us to meet the challenges ahead.
I would like to thank everybody who has worked
with us in this endeavor.
Sincerely,7
Olavo Egydio Setubal
Chairman of the Board of Directors
In Brazil, 2007 was an exceptional year for banking
operations.A sustainable economic growth model
was fortified and inflation stabilized, enabling the
country to reduce interest rates, expand credit access
to the population which in turn boosted
consumption.This environment also was auspicious
for increased corporate investment and continued
growth of capitals markets.
Although there is much to be done; this scenario has
enabled Itaú Holding to grow its business through all
its business units.The first important landmark of the
year was the incorporation of the merged
BankBoston operations, the largest acquisition ever
undertaken by Itaú in its history.The union of
operations and expertise with Itaú Personnalité
operations targeted toward high income customers
reached record heights.Likewise, the small and
medium size company area, after careful redesign to
merge platforms, comprises one of the areas
presenting the largest growth potential for the next
few years. It should be stressed that the integration of
BankBoston attested to Itaú’s competence to
incorporate people into its culture in a process
notable for the high talent retention level.
The Private Banking sector also recorded significant
growth based on the incorporation of a number of
hefty international portfolios such as that of ABN
AMRO in Miami.Similar growth occurred in all
business related to the capitals market and Banco
Itaú BBA and Itaú Corretora are forearmed and in a
position to seize opportunities that have firmed up
especially over the last two years. It was possible to
compete in a highly competitive environment with
the largest global investment banks and in many
instances surpass them.
In the credit area,car financing merits special attention,
which grew substantially in 2007. Banco Itaú firmed
up plans from the past few years in this area to
incorporate a number of portfolios. One example of
this is credit card operations that expanded with the
consolidation of Redecard and Orbitall operations
acquired in the past.
Despite the incorporation of BankBoston, Itaú
Holding maintained in 2007 its organic growth
strategy and expanded its customer services by
opening new branches, making it the largest branch
network in the entire Brazilian market, and by
consolidating partnership models linked to the
finance units united under the Taií brand.
Additionally, new impulse was given to expansion of
the account holder base by implementing an
initiative demonstrating the importance of
integrating social commitment and efficient business
management.Therefore, in August a brand new
attitude in the domestic finance system was
announced by Banco Itaú calling for a sweeping
reduction in fees.The objective was achieved:while
breaking with the paradigms on the one hand, there
was on the other hand an increase in new current
accounts since that time, assuring continual growth
of results.Satisfaction studies conducted among
customers also showed that this move was in the
right direction.
Message from the CEO
8
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
It is worthwhile mentioning that the actions
implemented over the last few years to expand
businesses beyond the traditional banking processes,
have enabled Itaú Holding to reach nearly 24 million
customers, account and non-account holders.These
results have increased the capacity to generate value
and the extent of Itaú Holding’s economic and social
influence.
Aware of the significance of its operations, Itaú
Holding continually strives to improve its governance
and social and environmental practices, with the
understanding that the search for excellence must
permeate all of its areas of operation and influence.
Therefore we intensified in 2007 the initiatives that
on one hand called for easier access to our services
and installations for handicapped persons and on the
other hand contributed toward educating our
customers and the public in general about the use of
financial services.
In relation to our social investment strategy, we are
proud to announce the partnership between the
Fundação Itaú Social and the Ministry of Education to
implement the Brazilian Portuguese Language
Olympics and educational methodology and
structure of our program Escrevendo o Futuro
(Writing the Future).
9
Roberto Egydio Setubal
Chief Executive Officer
What can we expect in 2008? It will be a strong year
of organic growth for Itaú.Based on the solid capital
structure and a team of competent and motivated
workers, there is space to continue to transform
planning into reality.One example of a brand new
type of financing partnership has been entered into
with the largest real estate company in Brazil, Lopes,
which was firmed up at the close of 2007.The
agreement enables us to forecast significant growth
in real estate credit transactions, which should reach
by the end of 2008, a volume of roughly R$3.5 billion
as opposed to the R$2.3 billion recorded in 2007.
Real estate credit operations establish long-term
relations with customers because they can generate
contractual links for as long as 25 years.Owed to the
multiple service businesses offered by Itaú, business
perspectives also expand to include the products
and services offered.This is a good example of how
sustainability is pursued at Itaú Holding.We endeavor
to build enduring relationships that can only be
attained on the basis of achievement of results
supported by responsible practices and subsequent
fulfillment of the needs of all those involved. This has
been the approach used by Itaú Holding in its
operations for generations.
Sincerely,
In line with the consolidation of the Country’s economic growth and the business
opportunities generated on the basis of this scenario, Itaú Holding has, over the last
few years, expanded its profits, assets, shareholders’equity and loan operations at rates
surpassing 20%, to name a few indicators.
Itaú Holding is the leader in a number of Brazilian market sectors:credit cards, home
insurance, private banking, high income, car financing, asset custodial service and
others. It has consistently been one of the most profitable groups in the domestic
financial system, especially in terms of what is referred to banking profits, which
excludes, for example, operations related to insurance and private pension funds.This
generation of results, coupled with its sound capital base, has enabled Itaú to continue
reporting marked growth, which is expected to continue and repeat over the next few
years in all areas of engagement.
Its positioning is owed to its capacity to interpret market trends and develop processes
that enable it to provide scale and profitability to those business sectors in which it
operates.The broad spectrum of products and services also contributes toward
maximizing opportunities and encouraging the loyalty of its customer base, which
totals close to 24 million account and non-account holders.
Competitive Advantages
10
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
To enable Itaú to efficiently provide services to such a large contingent of customers, it
had implemented by the close of 2007 a network of 3,528 bank branches and service
outposts, not to mention nearly 65,000 employees, an increase of over 20,000 workers
added over just the last four years.All operations and the Itaú distribution base are
equipped with an advanced technological structure, in which investments are made
periodically to improve quality and security of operations. In 2007, these investments
totaled R$2 billion.This drive has always been an essential part of Itaú Holding business
strategy and a significant advantage in relation to its competitors.
Itaú Holding’s long-term commitment to and satisfaction of all those involved or
influenced by its operations also serve to shore up its operations. Its ethical and
responsible attitude pervades the entire value chain.At the same time Itaú Holding is
willing to continually improve its practices, which are at all times focused on generating
greater value in a sustainable manner.
Strategy,scale,capillarity,processes and technologylead to sustainable generation of value.
11
Itaú has been included in the Dow Jones Sustainability Index since it wascreated
Itaú Holding once again received international recognition in 2007 for its sustainability practices
and for the eighth consecutive year has been included in the most important global indicator for
investments linked to sustainability, the DJSI World. Itaú Holding is the only financial institution in
Latin America to have been included in the index since its inception in 1999.
Inclusion in the DJSI World signifies that the company is capable of creating value for its
shareholders over the long-term as well as seizing opportunities and managing risks related to
economic, environmental and social factors.There are altogether 318 companies from 24
countries that comprise this portfolio, only seven of which are Brazilian.
On the basis of a questionnaire and public information published in annual reports and websites,
2,500 of the largest corporations were evaluated according to market value by the Dow Jones
Global Index.The polling and selection process, audited by PricewaterhouseCoopers, includes 30
items that are analyzed in relation to economic, social and environmental performance of each
company. Each year the selection criteria are reviewed and updated.
12
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Sustainable Value Bank
Society’s demand that banks serve as the conduitsfor sustainable development has encountered
synergy with the long-term thinking of Itaú.
13
“It’s not just today that Itaú has thought about
tomorrow.”
This is more than just a slogan launched in 2007, but
rather a statement that expresses the commitment
that an over 60 year old institution has made toward
stability and sustainability.Over the last decade,
companies throughout the world have started
paying attention to improving governance structures
and social and environmental practices.At Itaú
Holding, this external demand has found a fertile
field in which to grow, and it has never been driven
by immediate gain.
More recently, financial institutions have taken on a
key role in making sustainable development a reality.
After all banks are expected to steer funds toward
projects that promote management and
minimization of negative economic, social and
environmental impacts. Itaú Holding is aware that it
can positively influence people and organizations
with which it works to implement responsible
practices in their individual dealings and projects.
Ethical and transparent relations with interested
parties, preservation of environmental resources and
private social investments characterize social and
environmental accountability at Itaú Holding.This
action is guided by respect for other human beings,
compliance with the law and diversity as well as a
commitment to the quality of our products and
services.Since 2005, Itaú Holding has accelerated
development of structures capable of integrating the
concept of sustainability on all business fronts.
In 2007, this process gained sway with the creation of
three specific departments – Social and
Environmental Accountability and Social and
Environmental Risk and Micro Credit at Itaú and
Social and Environmental Risk Assessment at Itaú
BBA, which are responsible for proposing policies and
promoting synergy among the several initiatives
implemented by the Organization, focused primarily
on social and environmental issues directly related to
business.
Itaú decision making processes are the responsibility
of the Social and Environmental Accountability
Executive Committee, made up of directors from a
number of areas who are responsible for defining
and evaluating the social and environmental policies
of the Bank.The Social and Environmental
Accountability Commission, in turn, monitors and
evaluates the alignment of projects and suggestions
for Banco Itaú positioning in the face of the demands
made by the community as well as other activities.
In January 2008,The Executive Group approved the
creation of a Sustainability Committee comprising
Executive Group members and presided over by
Roberto Setubal.
Also at the beginning of 2008, the decision to set up
a Sustainability Monitoring Committee involving
members of Itaú Holding’s board was approved.
The entire sustainability structure in all business
areas will also renew and strengthen the
commitment that will permeate the entire group.
Itaú Holding will introduce in 2008 its Sustainability
Policy.This document will impact all other Itaú
Holding policies and will be based on a wide range
of commitments and procedures validated formally
by all areas starting with the Board of Directors. In
parallel, a Sustainability Management System will be
developed as a tool to monitor the level of progress
made in the areas in light of the practices and
commitments which have been assumed.
14
Sustainable Value Bank
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Support to expansion of micro finance
In 2007, Itaú devoted nearly R$12 million toward
Informed Productive Micro Credit.The Bank is
working toward creating the conditions necessary
to enable this initiative to gain scale and effectively
fulfill its role as an instrument of social
transformation. In this regard, Itaú believes that the
Public Interest Civil Society Organizations (OSCIPs)
are an important credit access channel for those
persons who cannot secure loans through the
formal channels and therefore represent a source
of support to enterprising initiatives from the low
income population.
Itaú held, in August 2007, the Itaú Micro Finance
Seminar, which gathered together public policy
makers, regulatory agency representatives, micro
credit operators, community members and other
Brazilian and foreign bank representatives to
encourage discussion of this topic.
Social and environmental risk analysis
At the end of 2007, Itaú Holding introduced its new
Social and Environmental Risk Policy for corporate
lending procedures.As an entirely new initiative, its
final format was reached after external consultation
with strategic publics on the lines of AA1000
(see details of the consultation in the“Dialogue and
Mobilization”chapter of the“Relationships and
Indicators”volume of this report).
In 2004, Itaú was one of the first to adopt the Equator
Principles and adhered to the revised version of the
agreement in 2006. Its new corporate policy was
developed based on its ownmethodology for
appraising social and environmental risk and
therefore represents further evolution for lending
programs.See its main objectives below:
Establish guidelines and instruments to assess the
social and environmental risks in credit analyses.
Provide support for internal sustainable
development programs and actions and
strengthen guidelines for training courses of
professionals in the commercial and corporate
customers credit areas.
Contribute toward improving social and
environmental practices of corporate customers.
15
Implementation of this methodology’s tools results in
a social and environmental customer ranking ranging
from high tomedium and low risks.The rating serves
as a guideline for the decisions regarding credit limits
of authority which is conducted in a constructive
manner and strives to encourage the customer to
improve social and environmental practices.The
analyses reports are valid for one year.
The new policy applies to all Itaú BBA customers and
Banco Itaú customers with credit involvement of
R$ 5million or more. Itaú Buen Ayre, Itaú Chile, Itaú
Uruguay,and Itaú Europa will be developing their
own processes for analysis over a two-year period in
order to reflect the specifics of each institution.The
process of incorporating the new policies will include
specific training sessions for the collaborators
involved in the branches and the administrative units.
IIn 2007, six projects related to the Equator Principles
were analyzed and approved in the ambit of Itaú
BBA; two were categorized as“A”and four as“B”, from a
volume of investment of R$4.1 billion (Itau’s share
being R$349.9 million).
16
Sustainable Value Bank
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Onlending
Automatic BNDES transactíons, in which the Bank is
engaged in onlending funds for infrastructure and
increasing production capacity, potential borrowers
of these funds must present environmental licenses
required by law to enable the transaction to be
finalized.
Compared to 2006, there was an increase of 202% in
the value of fund onlending from the BNDES, also
reflecting in an increase of 111% in the number of
projects benefiting from them.
Automatic BNDES Transactions
2005 2006 2007
Total amount financed (in millions of R$) 157 116 350
Number of financed projects 73 90 190
A social and environmental risk analysis is also
conducted in relation to loans financed from funds
raised from the Inter-American Investment
Corporation (IIC), which totaled US$150 million
between 2005 and 2006.These funds are earmarked
to finance small and medium size companies in
automatic leasing operations.
Customers extended financing are monitored to
assess their good standing every two months, by
means of applying a social and environmental risk
assessment based on the IIC requirements.A specific
social and environmental questionnaire is also
forwarded to a group of pre-selected customers
annually, which not only serves to supplement the
risk assessment, but to propagate the importance of
social and environmental accountability among the
corporate milieu as well.Previously limited to the
State of São Paulo, in 2007, the questionnaire was
used in all regions of the country, which has
enhanced propagation of responsible conduct.
Banco Itaú in 2007 raised new funds from the IIC, in
the amount of R$200 million.The funds will be used
to finance low cost housing at amounts of up to
R$100,000 per family.
Learn more:
To learn more about the social andenvironmental risk analysis and othersocial and environmental accountabilitypractices at Itaú Holding visit the sitehttp://www.itau.com.br/socioambiental/
See also:
Social and environmental accountability practices
Learn more about the major social and
environmental accountability programs in the
section Relationships and Indicators in this report.
Banco Itaú is the site for the Ecuador Principles seminar
In May 2007, Banco Itaú was the venue for the
“I Bank Seminar on Social and Environmental Risk
Analysis”, bringing together 54 participants from
13 banks in addition to four representatives from
other community sectors.
Based on the Ecuador Principles and the
International Finance Corporation. (IFC) Standards,
the purpose of the seminar was to enhance the
technical knowledge of finance and insurance
market professionals who are directly or indirectly
involved in the analysis of social and environmental
risk.Opportunities and new challenges were
discussed at the event to expand these responsible
practices.
Fifteen Banco Itaú, Banco Itaú BBA and Itaú
Seguros representatives took part in the seminar,
which was the initiative of the Sustainable Finance
Technical Chamber (CTFin) of the Brazilian
Corporate Council for Sustainable Development
(CEBDS) and sponsored by the IFC as well as the
Equator Principles forum itself.The content was
developed by the Sustainable Finance
Consultancy.
17
Economic, social and environmental influence
Itaú Holding is the second largest private enterprise
group in the country and has a network comprising
more than 4,000 points of sale and services located
throughout the country, reflecting a structure
responsible for
4.7 million interactions daily with its public through its
various business units.Currently there are over 65,000
employees and 60,000 shareholders in addition to
30,000 suppliers.These numbers help depict the
economic, social and environmental influence that its
operations have on Brazilian society.
Throughout its history, Itaú has always been dedicated
to expanding its influence to collaborate in the
development of those with whom it has worked.
Recently, based on the advancement of practices and
understanding of the scope of social and
environmental accountability, it has begun promoting a
number of actions to more efficiently use this ability to
become involved with the community. In this regard it
has extended its Micro Credit Policy, promoted various
courses, seminars and presentations related to social
and environmental accountability and efforts to
provide guidelines toward the conscientious use of
financial services, especially current accounts and
credit. In May last year, for example, it brought former
US Vice President and 2007 Nobel Peace Prize winner
Al Gore to Brazil to alert the public about the dangers
of global warming.Present at the event were
business and political leaders, including former
Brazilian President Fernando Henrique Cardoso and
the current Brazilian Vice President José Alencar, as
well as ministers, governors, mayors, banking
executives and entrepreneurs.All together the event
drew nearly 1,000 opinion makers.
Itaú Holding invested over R$180 million in programs
and initiatives associated with social and
environmental accountability.There are 25 large scale
projects that have been developed by the Fundação
Itaú Social and over 165 partnerships and forms of
support to different institutions.
133 new branches in 2007
Itaú opened more new branches in Brazil in 2007
than any other bank; 133 new branches located in
a number of locations throughout the country,
helping to strengthen the company's organic
strategic growth planning based on solid
investments toward expanding its own distribution
network.
Itaú's organic growth was due to the economy
performing well with higher total payrolls for all
sections of the population. Its commitment to
development in Brazil was seen in its practice of
investing to stimulate economic and social
development in selected regions through direct or
indirect job creation or by expanding its banking
services in these regions.
This drive is not exclusive to 2007; over the past
four years, Itaú has added a total of 500 new
branches, which attests to our confidence in the
progress of the Brazilian economy. In line with its
action plan, Itaú is now preparing in advance to
meet future demands.
18
Sustainable Value Bank
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Vision, Principles and Values
Itaú Holding operations are fully targeted toward
achieving the Itaú Vision:
“To be the industry´s best performing bank, built to
last, renowned for being sound and ethical, and
distinguished by highly motivated teams committed
to customer satisfaction, to the community and to
generating competitive advantages.”
This long-term proposal is the measure for all
strategies and actions.The Organization believes that
the sustainability of its business depends on the real
commitment on the part of its leaders and
employees toward the continuous improvement of
its operations.This can only be achieved by sharing
the principles of the code of conduct stated in our
Itaú Way (Modo Itaú de Fazer), which is a compilation
of types of employee conduct and relationships:
PerformanceWe work together to make the Bank a
performance leader.
Human Values We work to the highest standards of ethics and
social responsibility, obeying the law, and
respecting individual human rights.
FeedbackWe develop, prepare and guide our people by
providing them necessary support so they can
help us achieve better results and grow within the
Organization
MotivationWe encourage an open and motivating
environment to generate high quality decision
making by advancing the exchange of ideas and
contributions at all levels of the organization.
TeamworkWe employ a participative team structure, which
ensures quick and efficient decision making.
Continuous Improvement We always strive to improve every activity we
undertake.
Customer satisfaction We are committed to sustainable development of
our business operations, as well as the satisfaction
of our customers.
Celebration
We trust in each other, celebrating and sharing our
successful results.
19
Inspired by its Vision, Principles and Values, Itaú
Holding is aligned with global commitments shared
with those entities which best represent community
needs.The most notable are listed below:
Latin American Sustainable Finance Forum
(LASFF) – aimed at supporting sustainable finance
in the region, based on the dissemination and
systematization of knowledge acquired and
development of new technologies.
UNEP-FI – global partnership between the United
Nations Environmental Program and the finance
sector, the mission of which is to identify, promote
and implement the best financial operations
sustainability practices.As a signatory of the
UNEP-FI, Itaú Holding receives benefits such as
research, training, publications and access to a
qualified network of spokespersons.
Brazilian Global Pact Committee – Itaú Holding is
now a member of a group of Brazilian companies
designated to guide, facilitate and encourage
signatories and other interested parties to
develop programs related to the 10 basic
principles defended by the Pact in the areas of
labor relations, defense of the environment and
combating corruption.
Institute of Social and Ethical Accountability –
membership in this landmark organization
located in England enables Itaú Holding to
increase its access to available sustainable
development knowledge and assistance, as well
as inclusion in a global network of organizations
committed to this topic.
Development Objectives for the Millennium –
Itaú Holding strives to contribute toward helping
Brazil comply with the Development Objectives
for the Millennium (see box) which have been
formally established in the Millennium
Declaration, an initiative of the United Nations
(UN).The 189 signatory countries have committed
to achieving minimal conditions for sustainable
development by 2015.
Global Commitments
20
Sustainable Value Bank
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Millennium Development Objectives
Group Actions
1. Eradicate hunger and poverty Fundação Itaú Social,Banco Itaú and Banco Itaú BBA social investments,the Itaú Criança (Itaú Children) program .
2. Quality basic education for all Fundação Itaú Social,Banco Itaú and Banco Itaú BBA social investments, Itaú Children program.
3. Sexual equality and women's Personnel Management Policy,Corporate Diversity Policyrights
4. Reduce child mortality rate Itaú Children program
5. Improved Prenatal health Women's Health Program
6. Prevention of AIDS,malaria Sexually Transmitted Disease/AIDS Prevention Program,Time for Health Program and other diseases
7. Quality of life and respect for Time for Health Program,Planting Spring Campaign,campaigns for the rational use of the environment natural resources,social and environmental criteria for lending.
8. Everyone working toward Adhesion to the Equator Principles,social and environmental criteria for lending,development the Microcredit Support Program,commercialization of socially
responsible products.
21
22
BusinessStrategy
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Scenario
Itaú projects organic growth of itsbusinesses,despite possible
macroeconomic instability in 2008.
23
A strengthened economic growth scenario and price
stability open up highly positive prospects for the
banking industry in Brazil over the next few years.
Despite the external uncertainties linked to the
decided cooler US economy, which could result in
periods of greater market volatility, the Brazilian
economy should stay on the path it has forged over
the last few years including additional decreases in
basic interest rates, increased investments and
subsequent increase in economic activity levels on a
domestic scale.
This scenario should enable Itaú Holding to continue
steering its strategic planning toward growth in a
number of business areas in which it is engaged,
providing continuity to, for example, increased credit
offer to individuals and companies, an area that
requires constant improvement of the credit models
used and in the measurement and calculation
technology implemented to gauge the risks
involved.
If on the one hand this positive scenario heralds
good news for growth of Itaú Holding business it also
signals on the other hand stiffer competition from
the leading domestic financial system agents.
Formation of a new larger scale competitor in this
market, reflected by the merger of the local bank
operations of Santander and ABN AMRO, is one of the
new challenges to be faced in 2008, since the real
effects on the system will only begin to be felt in
2009.
Itaú Holding believes that it is prepared to meet the
challenges posed by this scenario.A good example
of this is the fact that results have been maintained
even in an environment of lower interest rates, which
can be explained by the remarkable growth of
business volumes and improved performance in
nearly all fronts in which we are engaged.
24
Business Strategy
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Challenges
25
In the last two years, we have concentrated a good
portion of our efforts on complex processes of
consolidation, as in the cases of BankBoston, Orbitall
and Credicard.The strategic focus of Itaú Holding in
2008 will be organic growth and expansion of all
business areas, some of which include small and
medium size businesses, real estate credit, payroll
credit, insurance and international loan operations,
especially in Chile and Uruguay.
The small and medium size corporate area is one
area in which Itaú Holding has ambitious plans for
expansion, either by increasing the scope of potential
clients resulting from the economic growth
environment or based on the expertise and
customer base that has been incorporated from the
acquisition of BankBoston, which resulted in a new
management model for this segment. Investments in
the small and medium size corporate area will
therefore be substantial over the next few years.
Itaú Holding’s strategic plans in the credit area
include increasing its share of the real estate credit
segment, which will play an important role in bank
operations over the next few years, as will payroll
credit, for which a specific department was created in
2007.Direct consumer finance operations have also
graduated from the structuring phase and, based on
increased knowledge and scale, will tend to take off
in 2008.
Expectations are also optimistic for the Treasury area,
despite the prospective global market scenario
calling for scattered instances of greater volatility
owed to the uncertainties mostly from the US
economy.The same outlook holds true for
Investment banking under Itaú BBA, which is
currently the leading domestic institution involved in
the heated dispute for operations with large scale
corporations.
2008 Priorities
26
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Intangible Assets
Brand
The value of Itaú can also be perceived in itscapacity to retain and develop knowledge based on
the strength and reputation of its brand.
27
The market value of the Itaú Holding brand has
grown at an average rate of 22.4% per year over the
last decade.This indicator is the result of the coherent
posture and good relationship Itaú has with its
several publics in addition to the solid and modern
reputation it enjoys among its customers.
In 2007, the value of the brand was estimated at
R$8.076 billion, according to an evaluation
conducted by the international consulting firm,
Interbrand, which has classified Itaú as the most
valuable brand in Brazil since 2002.The ranking takes
into account factors such as performance, market
relations and capacity to engage in highly
competitive scenarios.
Consistently increased financial results achieved have
contributed toward the good performance of the
brand, as well as the progressive consolidation of its
multiple services, its highly successful merger of
BankBoston into Personnalité, international
expansion in Argentina, Chile and Uruguay and the
engagement of Itaú in the implementation of
initiatives that prioritize sustainability.
The growing recognition and appreciation of the
brand are also enhanced by the Itaú brand
management, which includes articulation of activities
related to businesses, communications and research
of different perceptions generated by the brand in a
number of different market segments.This search for
synergy involves all Itaú areas and the purpose is to
understand the fundamental characteristics of the
Itaú brand and assure consistency in application of
the concepts related to it in the day to day
operations of the Organization.
Intellectual capital
Itaú Holding has a solid history of appreciating its
intellectual capital, encouraging the ethical and
professional education of its employees, as well as
free debate and taking advantage of the
incorporation of different cultures and levels of
expertise to aggregate value to its cultural
organization.
The process of integrating BankBoston personnel,
which took a good part of the first half of 2007, is a
good example of this capacity that Itaú has of
integrating workers of different origins and corporate
cultures.Despite the high degree of complexity
involved in the integration of the difference in
cultures between the two companies, the merger
occurred amicably and there was a good level of
Boston employee retention in the Itaú structure.
Itaú Holding believes that integration processes such
as this reflect opportunities to add expertise,
knowledge and values to the management model.
These processes also signify opportunities for people
that now are part of a united and efficient team, in
which personal merits and team work are
recognized.Today, it is not coincidental that a
significant portion of directors and managers at Itaú
Holding is made up of employees who worked at
institutions acquired by Itaú.
28
Intangible Assets
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
People management
Itaú Holding has distinctive practices in place to attract
and retain high performance professionals, details of
which can be found in the volume Relationships and
Indicators, the “Employees”chapter.
See also:
Technological capital
In addition to the entire structure and the heavy
investments in technology to increase customer
convenience, one of the reasons why the Itaú brand
is closely associated with modernity by all publics,
Itaú Holding is always developing new technological
knowledge and innovation bases to meet the needs
of its complex business structure.
Development of these technologies is one of the
pillars of success of Itaú Holding throughout all units,
enabling all expansion and organic growth planning
to be based on solid and structured bases,
simultaneously reducing inherent business risks.
In 2007, funds invested in information technology
totaled roughly R$2 billion.Customers conducted
approximately 3 billion automatic teller transactions,
which network is responsible for 40% of all
convenience transactions performed daily by the
customers themselves.Computer access, available to
5.5 million enrolled customers, reflected a total of 867
million accesses a year.Altogether, nearly 1.8 billion
transactions were performed through the customer
service centers, Internet and automatic debit and
purchase debit card systems.
Just to have an idea of this behind the scenes effort,
in 2007, 5.1 million hours (4.76 million hours utilized
in the development of systems and 342 thousand
support hours) were incurred perfecting our own
existing systems, especially in the development of
new products and services.
29
Performance Culture in the day to day routine of Modo Itaú de Fazer” (“The Itaú Way”)
The Performance Culture program seeks to assure that the principles and values of the Itaú Way are
implemented consistently and conscientiously throughout the Organization. In use since 2005, the main
objective of this system is the development of a stimulating and motivating environment that encourages
employee participation to benefit business performance.
The Performance Culture implementation process includes combined evaluation of attitudes and results,conduct
management on a day to day basis, review of all leadership competencies and continued improvement.This
concept is fundamental for better business in that it adds the value of people to the Organization's objectives to
put the capacity of each one of our employees to the best use possible, regardless of hierarchical level.
Additionally, the Performance Culture and continual improvement create an open environment in which all
suggestions as to what is in the best interests of Itaú are heard, reviewed and forwarded.The principles of
engagement and commitment are the guidelines for the performance philosophy, which not only aligns values,
but also strives to create new challenges and motivate all involved at all times.
Initially Performance Culture workshops and training courses were offered to professionals in the administrative
area, but in 2007 were expanded to the branches as well.This transformation process will still undergo a
maturation process in 2008.The goal is to reach as many branches as possible and finish the first cycle of
undertakings in all administrative areas.
30
CorporateGovernance
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Governance Structure
The Itaú Holding corporate governance structure,continually improved to follow best market practices,
supports business performance management and ethicaland sustainable generation of value.
31
Fiscal Council
Nomination andCompensation
Committee
Internal AuditCommittee
Disclousure andTrading Committee
InternationalAdvisory Council
Advisory Council
Internal AuditCorporate
External Audit Operations InternalAudits
Board of Directors
Executive Board
Senior EthicsCommission
Senior CreditCommission
Senior Financial RiskAdministration
Commission
Senior AccountingPolicies Commission
Senior TaxCommission
General Shareholders' Meeting
Senior Audit andOperations RiskManagementCommission
The involvement of the Board of Directors and its Committees, on the basis of the
administrative matrix structure of Itaú Holding, strengthens the administrative
foundations of an organization that intends to endure and remain sustainable for
the long-term and is focused strictly on business performance and creation of
value for a number of Itaú relationship publics, with ethics, transparency and the
adoption of the best corporate governance practices.
The structure of the Committees related to the Board
of Directors assures formal, specialized and
systematic treatment of matters of strategic
relevance, providing input for improvement of
management controls.The members of the Board of
Directors and other members of the Committee
structure work with the bodies associated with the
Board, striving to seek a consensus of opinion
through dialogue and a systemic vision that is
characteristic of Itaú Holding management.
The bodies associated with the Executive Board have
decision making power, thereby assuring capacity to
take decisions and encourage communications and
integration among the areas to make contributions
and offer points of view in an effort to add value to
the Organization.
See the following details regarding the duties and
composition of the main levels within the corporate
governance structure of Itaú Holding:
General Shareholders' Meeting
The highest level of the company is the General
Shareholders’Meeting which calls, general and
extraordinary meetings according to the pertinent
legal provisions.The general meetings are held in the
first four months of each year to examine and
approve the financial statements and elect the
members of the Board of Directors and the Fiscal
Council. Extraordinary meetings are held to decide
matters related to the company which are its
responsibility according to legal provisions.
Board of Directors
Itaú’s board of directors meets quarterly and now has
17 members elected by the Shareholders General
Meeting.Members must assess officers’ reports and
the conglomerate’s quarterly, half-yearly and annual
financial statements, determine the dividends to be
paid, weigh decisions and business affairs that may
have a direct effect on the company’s assets, and
discuss other subjects submitted by the president.
Since 2001, the Board of Directors has included
professionals who are independent in relation to the
controlling shareholders, thus ensuring greater
defense of minority shareholders’ interests in
decisions, and fostering discussion and exchange of
ideas.Currently, there are five independent
professionals on the Board of Directors:Pérsio Arida
(former Brazilian Central Bank president), on the
board since 2001; Roberto Teixeira da Costa (first
president of the Brazilian Securities Commission),
since 2001; Alcides Lopes Tápias (former Minister of
Development, Industry and Commerce), since 2002;
Tereza Cristina Grossi Togni (former Brazilian Central
Bank director), since 2004; and Gustavo Jorge
Laboissiere Loyola (former Brazilian Central Bank
president), since 2006.
Based on Brazilian legislation, and best practices for
corporate governance advocated by the Brazilian
Corporate Governance Institute (IBGC) and the rule-
set of the Brazilian Securities Commission (CVM), the
board of directors structured its self-evaluation
program two years ago, to be applied annually.
32
Corporate Governance
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Criteria are defined by the Nomination and
Compensation Committee and cover activities
directly related to the board, such as its level of
activity, composition, independence and relations
with external and internal auditors.
Fiscal Council
This body is elected annually by the General
Shareholders’Meeting and is responsible for
inspecting administrator acts, examining the financial
statements and issuing an opinion on the
management’s annual report. It has been in effect
since 2000 and comprises three independent
professionals from the parent company group: Iran
Siqueira Lima (former Central Bank director), Alberto
Sozin Furuguem (former Central Bank director) and
Marcos de Andrade Reis Villela (Member of the
Corporate Governance Business Counsel of the Rio
de Janeiro Commercial Association).
Advisory Councils
The Advisory Council and the International Advisory
Committee comprise Itaú directors and executives as well
as other persons of renowned competence in the
international finance and economics field.These bodies
work with the Board to assess perspectives of the Brazilian
and international economic scenario and the application
of codes and internationally accepted standards,especially
in the monetary and finance policy corporate governance,
capital market,payment systems and money laundering
prevention areas.
Nomination and CompensationCommittee
Created in 2005 and approved by the General
Shareholders’Meeting as the Compensation
Committee, this body comprises one independent
member, Roberto Teixeira da Costa. In 2006 this
committee was also assigned responsibility for
reviewing and proposing names for the Board;
recommending members to sit on the Statutory
33
Committees; providing statements regarding
situations of potential conflict of interest related to
participation of members on the Board of Directors
or on the Executive Board on statutory bodies of
other companies and proposing evaluation criteria
for the Board of Directors' activities.
This Committee also retained duties for defining
executive compensation policies, including the
following items:apportionment of overall and annual
funds established by the General Meeting;payment of
profit sharing;approval of stock options purchases;and
extension of benefits of any nature and representation
funds, taking into account the duties, seniority,
competence and professional reputation and value of
the services on the market. It is also the responsibility
of the Committee to provide input for the subsidary
company executives' compensation policy.
Audit Committee
The creation of the Itaú Holding Audit Committee
was approved at the General Shareholders’Meeting
held in April 2004.Currently its duties are in
compliance with the provisions of Resolution 3198, of
the National Monetary Counsel, Resolution 118, of
the Brazilian Private Insurance Board and the
Sarbanes Oxley Act (SOX) in the United States.Three
independent members were appointed from the
Board of Directors:Carlos da Camara Pestana,
Chairman, Alcides Lopes Tápias and Tereza Cristina
Grossi Togni, who is the financial specialist of the
Committee and is engaged full time in this position.
The Audit Committee, the only one in the Itaú
Financial Conglomerate, is one more instrument in
the defense of the minority shareholding interests.
It is the responsibility of this Committee to work
zealously to achieve and assure quality and integrity
of the financial statements, compliance with legal
and regulatory requirements and the engagement,
independence and quality of work from the
independent audit firms, definition and quality of
Internal Audit and the quality and efficiency of the
internal controls and risk management systems.
Internal Audit
Itaú Holding’s Internal Audit services work
independently to conduct methodologically
structured examinations, analyses and surveys to
evaluate the integrity, adequacy, effectiveness,
efficiency and economicity of the information
systems and processes and internal controls in our
risk management environment.
Internal Audit's activities are directly supervised by
the Audit Committee, which is part of Itaú Holding’s
board of directors, and is monitored by the Senior
Operational Risk Audit and Management
Commission. In order to perform its duties properly,
Internal Audit has access to all documents, physical
and logical records, systems, locations and people
involved with the activities under review.
34
Corporate Governance
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Disclosure and Trading Committee
The primary function of this committee is to manage
policies for disclosing material acts or facts and
trading in the company’s own stock. Its scope of
activities covers a range of internal actions designed
to improve information flows and oversee the ethical
conduct of our management and staff.
Among Brazil’s publicly listed companies, Itaú led the
way in setting up corporate governance committees.
Brazilian Securities and Exchange Commission (CVM)
Instruction 358 requires public companies to have a
Disclosure Policy and an optional Trading Policy. In
addition to having both, Itaú widened the scope of
the Instruction to set up committees, which was
not a requirement. In 2005, the Ordinary General
Shareholders Meeting made this committee
mandatory.
Internal Commissions
The Executive Board has internal commissions to
coordinate its administrative work, as follows:
Senior Itaú Holding Commission
Senior Ethics Commission
Senior Credit Commission
Senior Financial Risk Management Commission
Senior Accounting Policies Commission
Senior Taxation Commission
Senior Audit and Operational Risk Management
Commission
35
Learn more:
Announcements convening meetings, proposalsforwarded by the Board of Directors and minutesof meetings are available on the Investor Relationssite (www.itauri.com.br), section "Releases >>General Meetings".The internal regime governing the Board ofDirectors, Fiscal Council and International AdvisoryCommittee regulations, and trading and disclosurepolicy may be found on our Investor Relations site(www.itauri.com.br) in the “Corporate Governancesection >> Regulations and Policy".
History of Adopting Best Practices
36
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Four independent
members elected to the
board of directors
Admitted to Bovespa's
Corporate Governance
Level 1
Becomes part of Dow
Jones SustainabilityWorld
Index (DJSI) for 2nd
consecutive year
Holds six public meetings
with capital market
agents
Tag Along for all
shareholders
ADR Level II listing on
the NYSE
Financial Holding
Company Status
Stock Options Plan
introduced
Material Fact or Event
Disclosure Committee,
with executives and
independent board
members
Trading Committee
composed of executives
and independent board
members
Part of the DJSI for the
3rd consecutive time
11 Public Meetings held
with Capital Market
Agents
Share buyback
program for one year
Publishes“fiscal council”
regulations
Included in DJSI for 4th
consecutive year
Nine public meetings
with capital market
agents
Audit Committee
(International
Standards), three
members, two of
whom are totally
independent
New channel for
communication with
shareholders – Ações
Itaú em Foco
Adoption the Equator
Principles (August)
Treasury trading
regulations created
Dividend reinvestment
program introduced
Included in DJSI for 5th
consecutive year
Nine public meetings
with capital market
agents
2001 2002 2003 2004
Corporate Governance
37
Sets up Remuneration
Committee
Trading and Disclosure
Committees become
mandatory
New Corporate Code
of Ethics
Selected for the
Bovespa ISE
Included in DJSI for 6th
consecutive year
Thirteen public
meetings with capital
market agents
Discloses internal regulations for
the board of directors
Sets up Nomination and
Compensation Committee, and
combines Trading and Disclosure
committees
Selected for the ISE for 2nd
consecutive year
Complies with Sarbanes-Oxley
Section 404 requirements one
year in advance
Sets up Executive Committee
for Social and Environmental
Responsibility
Launches segmented version of
Investor Relations website in
Portuguese, English and Spanish
Included in DJSI for 7th
consecutive year
Fourteen public meetings with
capital market agents
2005 2006 2007
Selected for the 8th consecutive
year to be part of the DJSI, and still
the only Latin-American Bank to be
part of the index since it was
introduced in 1999
Award from Management &
Excellence/Latin Finance as Latin
America's Most Sustainable and
Best Managed Bank (for the 3rd
consecutive time)
Management & Excellence rated
Itaú Holding as AAA+ for corporate
governance
Part of Bovespa ISE for the third
consecutive year
First company to adhere to Abrasca's
Manual for Material Information
Control and Disclosure
38
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Performance of Shares and ADRs
More shareholders,more liquidity,and better valuationon the São Paulo and New York Stock Exchanges reflectthe capital market's assessment of Itaú's performance.
39
Itaú’s shares are traded on the following stock
exchanges:São Paulo (Bovespa), tickers ITAU3
(common shares) and ITAU4 (preferred shares); New
York (NYSE), ticker ITU; and Buenos Aires (BCBA), ticker
ITAU4.Certificates traded in New York and Buenos
Aires are based on preferred shares.
Market capitalization, a significant rise in share
liquidity, and launches of differentiated
products/services for the capital market, among
other initiatives, reflect our focus on a Performance
Culture of creating value for our shareholders and
sustainable profitability. In 2007, this universe grew
15.5% (from 55,327 in December 2006 to 63,901 by
end-2007).
Due to its long-term strategic vision, Itaú Holding’s
market value has increased at an average annual rate
of 31.5% over the last ten years.By the end of 2007, its
market value had risen 20.2% in relation to 2006 and
reached R$ 110.9 billion.The market value of its
preferred shares (PN) at the end of last year was
equivalent to approximately 3.7 times its net
shareholder equity.
Market Value (*) – R$ million
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
7,184 7,05618,276 19,64521,297
Itaú on the stock market – 2007
Shareholders 63,901
PN shares in circulation 1,154,316
ON shares in circulation 1,242,735
Total shares in circulation 2,397,051
PN shares in treasury 36,676
ON shares in treasury 10,266
Total shares in treasury 46,942
Total Shares 2,443,993
19,079
32,70245,195
61,935
92,270
110,888
(*) Average quotation of preferred stock on the last trading day of period.Total shares in circulation.
40
Performance of Shares and ADRs
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Performance on stock market (Bovespa) – R$
In 2007 PN stock ON stock
Year highpoint (a) 51.50 48.99
Year average 42.09 37.60
Year low point (b) 33.75 28.71
Variation % (a/b) 52.59% 70.64%
Closing Quotation (*) 45.50 43.00
(*) December 28,2007.
Average Daily Financial Volume Traded – R$ Million
BOVESPA NYSE TOTAL
2002 22 8 30
2003 23 12 35
2004 31 19 50
2005 59 42 101
2006 63 81 144
2007 103 169 272
The quotation of the preferred stock (Bovespa: ITAU4)
rose 16.2% to end 2007 at R$ 45.50 per share, and the
common stock (Bovespa: ITAU3) rose 30.3% to
R$ 43.00 per share.The ADRs (ITU) traded on the New
York Stock Exchange (NYSE) rose 40.9% to US$ 25.86
per ADR at the end of the year.
Points to highlight in 2007:
a) 108.6% rise in the average daily financial volume
traded for the ADRs;
b) 37.9% of the average daily financial volume traded
in shares on Bovespa.
By the end of 2007, the number of ADRs in circulation
increased 18.5% to reach 220.1 million. In December
2007, ADRs accounted for 19.4% of the preferred
shares in circulation and 9.0% of the total shares of
the Itaú’s capital stock.
From the initial NYSE listing on February 21, 2002, to
the end of 2007, the quantity of ADRs in circulation
rose from 3.1 to 220.1 million.A point to note is that
on February 21, 2007, Itaú Holding concluded its fifth
year of listing on the NYSE.An event
commemorating this period of five years as a listed
company was held on March 1st and attended by
around one hundred NYSE investment professionals.
This event was broadcast in full with simultaneous
translation on our “Investor Relations”site.
Included in Market Indexes
Being included in market indexes is an important
factor for publicly held companies.Many fund or
portfolio managers use these indicators as
parameters when selecting shares, or invest
exclusively in portfolios consisting of stock from a
certain index. Itaú Holding’s stock is included in
several indexes in local and international markets, e.g.:
Brazil:
São Paulo Stock Exchange Index (Ibovespa) (stocks
accounting for 80% of Bovespa’s trading volume);
IBX-100 (index of Bovespa’s 100 most actively
traded shares);
IBX-50 (index of the Bovespa’s 50 most actively
traded shares);
IGC (Bovespa’s Corporate Governance Index);
ITAG (index of Bovespa-listed companies that
offer minority shareholders tag-along rights);
ISE (Bovespa’s Corporate Sustainability Index);
International:
Dow Jones Sustainability World Index (index of
the NYSE’s most solid, ethical and sustainable
companies);
BNY Composite (Bank of New York Index of all
ADRs traded in the United States);
BNY Latin America 35 ADR (the 35 most
actively traded ADRs from Latin American-based
companies);
BNY Latin America (index of all Latin American
companies trading ADRs in the USA);
BNY Brazil (index of all Brazilian companies
trading ADRs);
BNY Emerging Markets (index of all emerging
market-based public companies trading ADRs);
BNY Emerging Markets 50 (the 50 most actively
traded emerging market-based public companies
trading ADRs);
41
BNY BRIC Select (index of the most actively traded
ADRs for companies based in Brazil, Russia, India,
and China).
BNY BRIC Select Canadian (Index of companies
that traded most ADRs based in Brazil, Russia, India
and China – aimed at Canadian customers and
monitored in accordance with the Canadian
exchange rate);
BNY International 100 (Index of the top one
hundred companies that traded ADRs);
S&P Latin America;
Global 1200 Financial Sector;
S&P ADR Index.
Dividends/JCP (Interest on Own Capital)
The policy for distribution of Dividends/JCP is to
remunerate shareholders through supplementary
monthly payments (usually twice a year).Over the
last ten years, the average net amount distributed to
shareholders was 31.4% of consolidated annual net
income and 30.0% was paid out in 2007.
Main Events in 2007
Stock Split
Itaú Holding’s shares were split to raise their liquidity
through the consequent adjustment of the
quotation in the market to a more attractive level for
trading.On October 1, one new share was distributed
for each preferred or common share on the Bovespa,
without altering each shareholder’s portion.On
October 9, one new ADR was distributed for each
ADR on the NYSE; and one new CEDEAR for each
CEDEAR on the BCBA on October 4, 2007. In order to
maintain shareholding interest unaffected and
compensate for the split, the stock quotation was
divided by two on the same dates.
42
Performance of Shares and ADRs
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Dividends/Interest on Own Capital (JCP) – Net – R$ million
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
308 291
512 534687 704
942
1,172
1,585
1,923
2,544
Share Buyback and Cancellation
Itaú Holding has had a share buyback policy for over
20 years; some 3,241,200 preferred shares and
136,100 common shares were bought back in 2007.
Under our Operational Rules for Trading Own Shares
for Treasury, our monthly disclosure to regulatory
bodies and on the Investor Relations site shows
monthly volumes traded and minimum, average, and
maximum prices for transactions in our own shares.
This policy enables Itaú to cancel some of these
shares and raise shareholders’portion of Itaú
Holding’s capital. From 1997 to 2007, some 19.9% of
total capital in circulation was bought back and
canceled. In addition to higher percentage
ownership, buyback policy raises stock liquidity and
boosts profit per share and dividends paid out to
shareholders.From 1997 to 2007, profit per share
grew at an average of 28.0% a year.
We also have previously bought back shares in
Treasury that may be used in our stock option plan,
for options not yet exercised by management.Note
15 to the Financial Statements accompanying this
Annual Report provides details of this plan,
specifically the average cost of acquiring Treasury
stock, and transactions with options.
Unrealized gains
In 2007, there were a number of partial sales of Itaú
Holding’s interests in certain companies, especially
the public offering of the shares of the São Paulo
Stock Exchange.
Those transactions made it possible to price the
companies at market value.The difference between
market value and book value for these four
companies was over R$ 6.0 billion, as shown in the
table below:
43
R$ million
Current Market value Book value Unrealized holding % (a) (b) gains (a-b)
Bovespa Holding S.A. 4.02% 973.33 58.78 914.55
BM&F S.A. 2.31% 519.85 20.77 499.08
Serasa S.A. 10.29% 369.66 99.01 270.65
Redecard S.A. 23.21% 4,498.59 172.14 4,326.45
Total – 6,361.43 350.70 6,010.73
International Financial Reporting Standards (IFRS)
At the Apimec-SP meeting held on December 5,
2007, the market was informed of the reconciliation
between BR GAAP and US GAAP accounting
standards and the International Financial Reporting
Standards (IFRS), which will be used to standardize
accounts reported by companies all over the world
and which will become obligatory in Brazil.
R$ million 12.31.2006
Net income Net shareholders equity
Under BRGAAP 4,309 23,564
Under IFRS 6,440 27,533
Under USGAAP 5,896 27,417
Details and explanations of the reconciliation
between Brazilian Accounting (BR GAAP) and IFRS,
applicable to the net shareholders equity and net
income of Banco Itaú Holding Financeira S.A., on
December 31, 2006, and their underlying
assumptions are available on our Investor Relations
site.
Investor Relations policy
Investor Relations involve the main stakeholders:
shareholders, investment professionals, media
providing specialized coverage of finance and
academics researching financial and capital markets.
The main aim of the Investor Relations unit for Banco
Itaú Holding Financeira S.A. is to add value for our
shareholders.The ongoing work of the unit includes
strategic planning, coordinated implementation,
constant servicing, assessments, and feedback.
Our Investor Relations policy is to provide data
sufficient to assist persons considering an investment
in Itaú Holding Financeira stock, through the
disclosure of information with transparency and
quality. In all cases, we respect legal and ethical
principles and seek to consolidate and maintain the
leadership and innovation of Banco Itaú Holding
Financeira S.A. in the capital market.
44
Performance of Shares and ADRs
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
See also:
Investor Relations
Read more on Itaú's relations with its investors
in the "Shareholders" chapter of Relationships
and Indicators.
Our channels for providing services for our
stakeholders includes public meetings, meetings
with groups of investors in Brazil and other countries,
our website “Contact us”button, telephone and fax, as
well as our regular channels such as the annual
report (printed and on-line versions), quarterly
earnings reports, e-mails and website presentations
of statements, press releases and material facts, the IR
website and our newsletter Ações Itaú em Foco
distributed quarterly to all our shareholders and
those registering through the IR website.
45
Accountability, transparency andaccessibility – highlights of 2007
Segmentation of the Investor Relations site in
homepages for investors and analysts, meeting
the particular needs of each group.
Launch of the "My IR" page on the Investor
Relations site (version in portuguese).
Internet chat sessions in partnership with the
National Investors Institute (Instituto Nacional
de Investidores, or INI) to discuss results and
strategies with individual shareholders.
Holding 16 meetings with market analysts and
shareholders in Brazil through the Capital
Market Analysts and Investment Professionals
Association (Associação dos Analistas e
Profissionais de Investimento do Mercado de
Capitais, or Apimec).
Roadshows outside Brazil (in 2007, we
expanded to cover the Far East and Middle East).
Holding four teleconferences in Portuguese and
four in English broadcast live on the Investor
Relations site, with 6,179 visitors listening.
46 Management
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Management model
Strict adherence to procedures and discipline in theexecution of processes ensure Itaú's efficiency in all
management initiatives involving ethics, risk or costs.
47
Since its beginnings, Itaú Holding as an organization
has built sound management procedures to support
the upscaled offer of products and services for
customers. In keeping a close watch on the main
market trends at all times, Itaú has made use of all
instruments capable of ensuring consistency, security,
and agility in business.All its procedures build
mechanisms to track how earnings evolve and
consequent returns to be expected.
Our segmentation strategy is based on knowledge
that provides efficient management of our business
units, including rapid responses to customer
demands and market trends.The Itaú Holding
management model uses interactivity across units
and constant exchange of information throughout
the Organization, which generate more powerful
synergies, faster decision making and solutions
founded on rational and structured analysis of
existing variables.
This interaction between areas enriches decision
taking with a wide range of perspectives and takes
place mainly in the several strategic committees
pervading the Organization as formal instances of
the corporate governance structured.
One of the means that ensures the dissemination
and tracking of performance standards is the Itaú
Management Action for Results Program (locally
AGIR), a management planning tool through which
the Bank ensures that employees are in tune with its
guidelines.The program sets priorities, establishes
objectives, monitors performance, remunerates
based on performance, and attributes significance
weighting to service.
Investments made to enhance management
procedures are relevant because they ensure returns
by aligning all the Organization’s objectives and
commitments.
An example of the effects of this constant effort to
enhance the operation was the participation of Itaú
Private Bank in the National Quality Award (Prêmio
Nacional da Qualidade, or PNQ). Itaú Private Bank was
a finalist among the 58 organizations competing,
which is considered a good performance, since the
bank began to adapt its management model on
PNQ lines only three years ago.Even more important
than competing for the PNQ award is confirmation that
the bank’s management system is progressing
consistently and quickly.
Ethics management
Itaú’s Corporate Ethics Code states the ethical
commitments that Itaú Holding assumes with
respect to its strategic stakeholders and society. Its
purpose is to preserve the company’s reputation,
strengthening attitudes such as fairness, cooperation,
transparency, accountability, and compliance with
Itaú Holding’s sustainability policy.
Itaú’s Ethics Code values responsibility and dialogue
with strategic stakeholders.Along with
recommendations or guidelines for conduct, it
proposes conscientious action and management of
consequences based on moral principles and values.
The Code applies to all Itaú Holding companies, so
there are versions in Portuguese, Spanish, English and
Japanese.Not only managers and collaborators, but
suppliers too are encouraged to comply. It was
introduced in 2000 and is frequently reviewed; the
most recent updating was in 2005. It is available for
consultation and download from Itaú’s website.
Key references for the Ethics Code are the United
Nations Millennium Development Goals, its Global
Pact, the Caux Round Table Business Principles, the
Dow Jones Sustainability World Indices, the Bovespa
Business Sustainability Indices, and the Ethos
Indicators.
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Management
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Stock option plan
Itaú is one of the few Brazilian companies using
stock options to remunerate executives. Since
part of the variable remuneration for senior
managers takes the form of stock options, this
produces commitment to Itaú’s future
performance and adds value for shareholders.
The objective of the plan is to make executives
part of the medium and long-term process of
developing the institution by enabling them to
participate in the value that their work and
dedication adds to Itaú’s stock.The plan
stipulates the persons eligible, conditions and
limits, details of exercise prices, vesting and
exercise of options, and other transparent
detailed rules.
The Appointments and Remuneration
Committee analyzes the board’s proposals and
periodically designates Itaú Holding directors to
whom options will be granted.
See also:
Ethics and management
Practices for disseminating the ethics culture in
Itaú Holding in the chapter "Employees" of
Relationships and Indicators.
Note that the Corporate Ethics Code is just one of a
number of instruments governing Itaú Holding’s
strategies, policy, practices and safeguards from the point
of view of business ethics (see table).
Ethics management in Itaú Holding – Instruments
Corporate values Define the main lines of the organization's culture.
Itaú Vision Sets long-term goals.
Corporate Ethics Code Guides behavior of management,collaborators and suppliers.
As part of the Performance Culture Program,the Itaú Way poses a mean of Modo Itaú de Fazer (The Itaú Way) materializing the Values,the Vision and the Ethics Code.
Corporate policy and programs • Policy for receiving and handling denunciations.
Complementing the Corporate Ethics • Policy for combating corruption and bribery.
Code.See examples (opposite). • Corporate policy for preventing and combating illicit activities.
• Corporate policy for information security and privacy.
• Policy for risk management.
• Corporate policy for crisis management.
• Negotiation policy.
• Disclosure policy.
• Legal compliance policy.
• Internal controls and implementation of Sarbanes-Oxley Act.
• Program for valuing human diversity.
• Program for conscious use of credit – employees.
49
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Corporate policy for preventing andcombating illicit acts
Itaú sees preventing and combating illicit activities as
part of its institutional responsibility to society, so it
published its corporate policy on prevention of illicit
activities in 2006, in order to formalize this
commitment, and ensure alignment with best
market practices and recommendations from
international bodies.
This policy sets Itaú’s guidelines for preventing and
combating illicit activities.The great challenge is to
identify and repress increasingly sophisticated
attempts to disguise the origin, ownership, and
movement of assets and valuables derived from
illegal activities.Financial institutions have a key role
to play in the effort to combat these operations.
Money laundering is one of the main illicit activities
to be combated and poses a major concern for both
government and society.
Money launderingand corruption prevention policy
The Organization maintains an environment of
controls to discourage illicit activities through both
preventive measures, and by encouraging
collaborators to commit to the values and principles
of the conglomerate.
Specific procedures are in place to appraise and
identify customers when starting or continuing the
business relationship.The aim is to avoid Itaú being
used to move funds originating from illicit practices.
Supplementing the process of appraising customers,
systematic monitoring is based on the perspective of
preventing money laundering and fraud.Over
530,000 current account transactions were analyzed
in 2007.
50
Management
Learn more:
More details on the Corporate Ethics Codemay be found at www.itau.com.br in thesection on "The Company"– Ethics Code.
Information security and privacy policy
Itaú Holding is committed to ensuring security for its
transactions and total privacy for its customers under
its policy for security and privacy of information and
its Information Security and Privacy Committee. In
2007, Banco Itaú made major progress in
consolidating this policy and its guidelines by
designating a department and officer entirely
focused on the subject.The recently created
Corporate Security department (DSC) comprises
sections in charge of inspection, prevention of illicit
activities, personal and property security, information
security and business continuity.
In addition to this new department, Itaú Holding
developed an extensive in-house campaign to make
its collaborators more aware of the importance of
security for the information they handle during their
routine operations.The campaign culminated with
the Information Security Week involving outside
speakers and all central office and branch network
collaborators.
In addition, the Organization is continually investing
in information security and privacy and holds the
IQnet/Good Privacy certificate awarded by Fundação
Vanzolini.
Donations to political campaigns
Itaú Holding’s support for political campaigns is
provided with total transparency and in tune with
the Organization’s principles and values.To ensure
ethical conduct in this process, a “Political
Contribution Committee”was created, composed of
bank board members and executives.
The Committee analyzes candidates’platforms and
backgrounds and, after extensive evaluation and
debate, selects those offering what it considers the
most effective proposals to reach sustainable
development and improve living conditions for
Brazilians.
All funds go to candidates – not to political parties;
they are recognized in the accounting records by
Itaú and strictly comply with the legislation
regulating donations to election campaigns.
Donations made by Itaú Holding may be seen at
www.tse.gov.br.
51
Risk management
Itaú sees risk management as an essential instrument
to optimize use of capital and select the best
business opportunities in order to obtain the best risk
return ratio for its shareholders. In advance of the
determinations of the New Basel Capital Accord, Itaú
developed a strong control environment to monitor
and mitigate risk using capital allocation models
covering all risk factors specified by the Basel
Committee.
In order to comply with Basel II, Itaú set up a specific
structure acting through committees, with the
participation of all areas involved in adapting risk
controls to the standards required under the New
Accord.
Main risk categories
Market risk
Market risk stems from the variation in the value of
assets and liabilities caused by uncertainties over
changing market prices and rates (interest rates,
stocks, foreign currency and commodity prices), as
well as correlations between these variables and their
related volatility.
The main tools and measures used by Itaú to
manage risk are Value at Risk (VaR),which provides a
statistical prediction of the maximum loss in value of
the Bank’s portfolio under normal market conditions,
based on certain time horizons and confidence
intervals;VaR Stress, which determines the effects of
extreme market conditions on portfolio value, based
52
Management
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
on optimistic and pessimistic stress scenarios as
defined by Itaú senior management; Stop Loss, which
is designed to limit real losses incurred by the trading
desks; Gaps Analysis, which is a graphical depiction,
by risk factor, of cash flow at market value as of the
due dates, and is used to assess risk exposure over a
specific period; Sensitivity Analysis (DV1), which, like
Gaps Analysis, is a measure of the sensitivity of a
particular portfolio to certain outcomes, if the interest
curve of the risk factor rates change by 1 bp; Results
Analysis, which compares results to certain
benchmarks; Allocation of Capital, which helps
measure the return on specific operations or
investments against the risk incurred, and is used to
ensure that an institution can absorb the impact of
unexpected losses and continue operating under
adverse conditions; and the Stop Loss alert, which
consists of simulating the outcome from a specific
stress scenario that may potentially involve
exceeding the Stop Loss limit.
Credit risk
Credit risk may be defined as measuring the
uncertainty of collecting an amount to be repaid,
where the transaction carries effective, contingent or
potential rights against a certain debtor. Itaú Holding
employs statistical models to determine how much
capital should be allocated to cover portfolio credit
risk, taking into account the quality and
concentration of the portfolio, as well as the credit
ratings of the clients within the portfolio.
Liquidity risk
Liquidity risk occurs when an institution’s reserves,
cash and cash equivalents are insufficient to meet
certain payment requirements, such as when a
mismatch in cash flow causes a temporary inability to
settle commitments. Itaú’s structure is designed to
monitor and analyze the Organization’s liquidity,
through statistical and financial-economic projection
modeling of the asset and liability variables that
affect our cash flow and reserve levels in local or
foreign currency, allowing us to maintain adequate
reserves and liquidity requirements in Brazil and
abroad.
53
Operational risk
Operational risk is defined as the possibility of losses
due to faults, inadequacy or failure of internal
processes, persons or systems, or due to external
events.
Increasingly sophisticated banking business
environments and evolving technology make risk
profiles of organizations more complex, clearly
pointing to a type of operational risk for which risk
management – although not requiring new
practices – now requires a specific structure other
than that traditionally used for credit or market risk.
In line with the principles in CMN Resolution No.
3.380, dated 06/29/2006, Itaú Holding defined an
operational risk management policy approved by its
Audit Committee and ratified by the Board of
Directors, which is applicable for the companies and
subsidiaries in Brazil and other countries.
This policy constitutes a set of principles, procedures,
and instruments to ensure ongoing adaptation of
management to the nature and complexity of
products, services, activities, processes, and systems.
The structure formalized in the policy stipulates
procedures for identification, evaluation, monitoring,
control, mitigation, and communications related to
operational risk, as well as the roles and
responsibilities of the bodies involved in this
structure.
In addition to this structure, Itaú Holding uses the
management model of economic valuation by line
of business, including statistical models to quantify
the operational risks incurred, which facilitates
provisioning for expected losses and allocation of
capital for unexpected losses (VaR with 99.9%
confidence interval).This proprietary mechanism
enables the bank to further refine pricing for its
products and services, and it will be submitted to the
approval of the Brazilian regulatory agency in the
Advanced Model for Operational Risk category, thus
meeting the requirements of the New Basel Capital
Accord within the periods stipulated by the regulator.
On this basis, the Organization will be enhancing its
management procedures, meeting regulatory
agency requirements and in particular maintaining
its image as a sound and trustworthy bank.
54
Management
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Underwriting risk
Underwriting risk, as defined by Brazil’s
Superintendency of Private Insurance
(Superintendência de Seguros Privados, or Susep), is
“risk originating from an adverse economic situation
that contradicts society’s expectations both at the
time of setting underwriting policy and in relation to
uncertainties existing when estimating provisions”. In
December 2006, Brazil’s insurance regulator (Susep)
followed the worldwide trend toward strengthening
the insurance market by issuing Resolutions Nos.155
-158 altering the rules for allocation of capital from
underwriting risk for different types of insurance, as
well as the regulatory agency’s performance criteria
in relation to possible insufficiency of capital affecting
insurance companies, due to come into effect as of
January 2008.
In December 2007, Susep issued Resolution No.178
and Circular No.355, modifying Resolutions Nos.155
and 158 by lengthening the period for minimum
capital adequacy from three to four years and
stipulating a more gradual process of meeting
percentages for paying in capital required for
adequacy. In addition, risk factors and underwriting
risks correlation matrices were updated, resulting in
less capital allocated in relation to the previous
parameters.
In advance of this resolution, Banco Itaú introduced
models for management of its insurance business in
2006.As from early 2007, numbers relating to the
different branches of business will be periodically
disclosed to the Organization’s executives.
55
For more details:
On risk management see our InvestorRelations site at www.itauri.com.br,Corporate Governance section >> RiskManagement in the ManagementOperations Analysis Report available in theFinancial Information section, and also the20-F Report available in the FinancialInformation section >> CVM/SEC Filings.
Market risk indicators
The following table consolidates Itaú Holding’s VaR,
including the portfolios of Itaú BBA, Banco Itaú
Europa, Banco Itaú Buen Ayre, Banco Itaú Chile and
Itaú’s structural portfolio.The Itaú and Itaú BBA
portfolios are shown jointly and broken down by risk
factor.
As of the third quarter of 2007, domestic and
international markets saw a significant increase in
volatility.The crisis involving subprime loans in the
United States peaked in August, with the highlight
on local and international interest yield curves, and
continued to affect markets until the end of the year.
In this period, Itaú Holding maintained its policy of
operating within relatively low limits.The higher
levels of risk seen in 2007 were not due to exposure
to subprime customers but to the fluctuating market
risk associated with the crisis, which is part of normal
business risk.
Note that our business units have significant risk
diversification, thus enabling the Itaú conglomerate
to keep its total exposure to market risk very low
compared to its capital.
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Management
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VaR for Banco Itaú Holding Financeira – R$ million31/Dec/07 31/Dec/06
Fixed rate 97.1 58.4Reference interest rate (TR) 7.6 3.8Inflation Indices 10.0 6.0USD coupon rate 14.3 9.5USD exchange rate (**) 6.7 7.4Private and sovereign bonds – other countries 12.1 14.0Equity 16.4 11.8International interest rate 4.1 14.4Commodities 0.4 1.1Exchange rate – Other currencies 1.0 2.1Other 0.9 0.8
Banco Itaú Europa 1.5 0.8Banco Itaú Buen Ayre 1.6 0.3Banco Itaú Chile 1.2 –Diversification Effect 56.6 (37.9)
Overall Total VaR (**) 118.2 92.5Maximum VaR 312.3 111.1Average VaR 117.3 58.4Minimum VaR 48.8 28.9(*) Does not include Own Desk Portfolio.(**) Includes the effect of fiscal adjustments.
Itaú
* +
Itaú
BBA
Efficiency Index
2001 2002 2003 2004 2005 2006 2007
62.1%58.2%
54.5% 53.9%50.3%
47.6%46.2%
Cost management
Cost management aligned with Visão Itaú (Itaú
Vision) has proved to be an important element in
attaining sustainable results. In 2007, in addition to
effects arising from salary raises for employees under
the banking industry contract, there were a number
of outstanding events that had considerable impact
on non-interest expenses; in particular there was
consolidation of the integration process for
acquisitions made in 2006, such as that of
BankBoston in Brazil; expansion in Latin America with
acquisition of the operations of BankBoston in Chile
and Uruguay; the acquisition of a private customers
portfolio outside Brazil; and sales of shareholdings,
mainly Serasa and Redecard.
The intensive dynamism of our business required
tight controls over expenses, making them more
efficient and rational.Our teams showed great
commitment and our estimates were maintained as
budgeted; this together with growing synergy
related to acquisition processes and internal
processes, due to our continuous improvement
culture, ensured productivity gains for both
management of existing products and the
development of new ones.On this basis, we see the
sustainable evolution of our efficiency index
continuing over recent years.
57
58 Businesses
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Overview
Successfully integrating BankBoston'soperations and growth in several segments of
business set the tone for 2007 in Itaú.
59
All Itaú Holding’s business units posted growth in
2007. In some cases, growth surpassed forecasts, as in
the vehicle financing and finance company segment.
Despite having to implement the process of
integrating BankBoston’s platforms and teams, which
took until mid-year, Itaú Holding continued to grow
organically and opened a substantial number of new
branches and points of service, increasing its
customer base in its several segments of business.
The following events were the main highlights for
Itaú Holding in 2007:
Institutional Investors
Large Corporations
Public Sector
Middle Market CompaniesR$ 6m < Annual Sales < R$ 150m
Investments > R$ 2 million
Income > R$ 5,000/mo
Income > R$ 3,200/moR$ 500k < Annual Sales < R$ 6mSmall Companies
BranchesManaged
Income < R$ 3.200
BranchesConsumers
Earnings
ConsumerFinance
Annual Sales < R$ 500kMicro Companies
Business segmentation – Itaú Holding
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Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Highlights in 2007
61.4% growth in automobile loans
The vehicle segment was one of the main highlights for Itaú Holding, with
substantial growth in the portfolio, which grew 61.4% against 2006 to reach a total
of R$ 29.5 billion.
Leadership in the bank card market
Banco Itaú ended 2007 with 14.8 million cards and R$ 41.4 billion total revenue.
This is a 22.6% market share and enables it to retain its leadership in Brazil.
24 million customers
Non-account holder business grew through the credit card, vehicle financing,
and consumer loan segments, which enabled Itaú Holding to reach around 24
million customers, almost half of them not current-account holders.This means that
the Bank is building relationships beyond the traditional borders of banking and
reaching a universe of customers comparable to the account-holder customer base.
61
Growth in capital market business
Banco Itaú BBA and Itaú Corretora seized opportunities offered by rapid growth in the
Brazilian capital market. Itaú Corretora won the Bovespa award for the highest number
of active customers in 2007 (Prêmio Destaque Bovespa). Itaú BBA placed R$ 18.5 billion
as IPO coordinator and distributor with another R$ 3.1 billion placed in secondary
public offerings, and was in fourth place in the ANBID ranking with an 8% market share.
Itaú partnership with Lopes Imobiliária
The partnership with Brazil’s largest real estate agency provides exclusivity for Itaú in
real estate offers for 20 years and the creation of a new company in which both
institutions will have equal participation.The expectation is that the initiative will have
a substantial impact on growth of the Bank’s real estate credit portfolio, which is likely
to end 2008 at about R$ 3.5 billion.
International expansion
The authorities in Chile and Uruguay approved acquisitions of BankBoston’s operations
there, and the full acquisition of BankBoston International with its head office in Miami,
and BankBoston Trust Company Limited, with its head office in Nassau – in the last two
cases through Banco Itaú Europa and its subsidiary Banco Itaú Europa Luxembourg.
Another highlight of the year was the purchase of the customer portfolio of the Private
Banking segment of ABN AMRO in Miami and Montevideo.
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Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Banco Itaú S.A.
Business/Banco Itaú S.A.
Segmentation ensures quality service and newproducts and services tailor-made to match the
needs of different customer profiles.
63
As part of its segmentation strategy for more than
20 years, Banco Itaú developed structures, products,
and services to meet the specific needs of customers
with different profiles and sizes.The efficiency of its
servicing structure and continuous improvement in
products and services are based on consistent
investments in technology.
This structure has a service network of 3,310
branches and points of banking services, and the Taií
chain of 766 stores and 315 electronic points of
service. In addition, there are more than 24,000
automated teller machines and electronic points of
service located in companies.
Banco Itaú has strong participation in every sector of
the Brazilian economy and acts in the financial and
capital market in Brazil and internationally. In 2007, its
net shareholders equity totaled R$ 12.8 billion, and
assets reached R$ 242.5 billion.
Banking
Personal
Retail
In this segment, it is important to have an extensive
servicing network and outstanding presence, since
the branch is the main form of relationship with
customers.The focus is on retail customers as
potential users of all banking products and services.
In 2007, Banco Itaú opened 133 new branches.
Following its strategy of organic growth, the
expansion of the servicing network focused on the
South and Southeast regions in particular and
tracked economic development in these markets.
This strategy ensured a growing share for Itaú in the
sector, even though competitors grew also.
Following international trends, the centralized call
center was expanded in 2007 and provided more
agility and security for Banco Itaú customers. In
addition, Banco Itaú’s Internet site was enhanced on
the basis of suggestions made by customers.
Itaú Personnalité
Itaú Personnalité was one of the first efforts by retail
banks to cater to high-income customers and offer
products and services for personal customers whose
monthly income is over R$ 5,000 or whose
investments surpass R$ 50,000.With differentiated
service, Itaú Personnalité’s portfolio includes
investment options – funds, shares and financial
products – and pension plans, as well as short,
medium and long-term credit alternatives includes
real estate, and protection for property, personal and
currency assets.
To manage its customers’ funds, Itaú Personnalité
offers financial advice through qualified relationship
managers and consulting services provided by
professionals specializing in different markets.
At the end of 2007, Itaú Personnalité was present in
36 cities and 15 states in Brazil. Its 164 exclusive
branches and 34 service offices combine with Itaú
branches and ATM network to ensure the greatest
convenience for its customers.
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Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
In the first half of the same year, the process of
integrating operations and systems due to the
acquisition of BankBoston was concluded.New
customers were then able to enjoy all the benefits
offered by Itaú Personnalité.
Personnalité launched its own quarterly magazine in
December with well-written stories and experiences
relating to interesting people.
Itaú Personnalité’s plans for 2008 include continuing the
process of expanding its branch network and its
customer base, with ongoing investments in quality
practices and processes in order to maintain high levels
of customer satisfaction in this segment.
Internet banking customers – millions
Sep/05 Dec/05 Mar/06 Jun/06 Sep/06 Dec/06 Mar/07 Jun/07 Sep/07 Dec/07
Customers who accessed in the month
Registered customers
1.8 1.9 1.9 1.9 1.9 1.9 2.0 2.1 2.1
4.1 4.2 4.4 4.5 4.6 4.8 4.9 5.2 5.3
2.2
5,9
Itaú Private Bank
Consolidating its internationalization strategy and
substantial growth in its funding in the Brazilian
market were the key achievements of 2007 for Itaú
Private Bank – which specializes in financial and asset
consulting services for high-wealth customers.Due
to its size, Brazil is still the center of the Latin-
American market in the ambit of Itaú Holding. In
2007, the Brazilian operation opened 463 new
corporate accounts and net funding was R$ 4.6
billion.This performance led to a 30.6% rise the
portfolio from R$ 23.8 billion in 2006, to R$ 31.1 billion
in 2007.Brazilian customers account for
approximately 45% of Itaú Private Bank’s base and
82% of its volume of funds.
The acquisitions of private banking operations from
BankBoston International (BBI), with its head offices in
Miami; BankBoston Trust Company Limited (BBT),
based in Nassau, and ABN AMRO Bank N.V. (Miami
and Montevideo) were important drivers for business
in Latin America, making Itaú Private Bank one of the
region’s leaders.
The BankBoston and ABN AMRO Bank portfolios
added almost R$ 10 billion in assets to the 2006 total
of R$ 7.7 billion managed by the Banco Itaú Europa
operation in Luxembourg, representing growth of
128%.
A good number of the 9,000 new customers brought
in through the acquisition of the BankBoston and
ABN AMRO operations come from other Latin-
American countries, such as Argentina, Chile,
Uruguay, and Venezuela.To meet their needs for
information and recommendations, Itaú Private Bank
set up new teams of specialists in these countries.
The local presence of these professionals is important
to track the market, provide sales teams with
information and advise customers on investments.
Another highlight in 2007 was the number of
customers of the Fundo Exclusivo (Exclusive Fund)
product – personalized for investments of over
R$ 10 million – which increased from 150 to 400.The
main reason for greater interest in this type of more
aggressive product is demand for options with
higher potential gains, since lower interest rates have
cut yields from more conservative investments.
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Business Clients
Banco Itaú maintains relationships with micro, small
and middle market companies through specialized
service structures with independent units and
infrastructure, as well as managers specially trained to
provide solutions and detailed advice on products
and services to best meet the particular business
requirements of these segments.
The process of integration with BankBoston was
concluded in 2007 and this meant substantial
growth of the customer portfolio in the small and
medium company segment, which is an important
focus of strategic performance for Itaú Holding and
its goal of reaching an increasingly substantial market
share in the business market.
Over the coming years, a good part of growth in
loans to business customers will be in the small and
medium company segment, since the large
companies are increasingly turning to the capital
market for funding and making less use of financing
obtained directly from banks.
Micro-companies
The specialized service provided to Banco Itaú’s
micro-companies comprises the states of São Paulo,
Rio de Janeiro, Minas Gerais and Paraná.Offering
areas and ambiences that are exclusive to this type of
public, the managers of these units have been
trained to offer solutions catering to the needs of
these companies and their partners, especially as
regards cash flow and credit line management.
At the end of 2007, some 700 managers were
serving over 220 thousand clients distributed among
these units.An expansion is being envisaged in 2008
for the States of Rio Grande do Sul, Bahia and Goiás,
adding up to 313 thousand clients and 945
managers. In 2007 the credit portfolio for the
segment grew 45% and in 2008 a growth of 60% is
expected.
Small and Medium Sized Companies
Clients having this profile, which, comprises
companies having yearly revenues between R$ 500
thousand and R$ 150 million, have available a series
of specific products and services, such as cash
management, investments, derivatives, insurance,
private pension plans, currency exchange and foreign
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trade services, and also financing and lending lines
according to their credit needs.These clients also
make use of Banco Itaú’s expertise to improve the
way they manage their finances.
As regards small and medium sized companies, the
year of 2007 began offering a big challenge that
needed to be faced: the integration of the operations
of Banco Itaú and of BankBoston. In a successful
process this integration was accomplished nimbly
and with quality, taking advantage of whatever
existed best in the two banks with the purpose of
focusing better on the small and medium sized
company segment.
Among the actions undertaken we should mention
the integration of teams and of systems, the
improvement of the products and services portfolio
and of the credit policy, and the migration of
BankBoston’s clients.
Besides this integration, a large restructuring
culminated at the end of 2007 with the
implementation of a new business service structure
for the small and medium sized companies.The
objective was to try to obtain a closer relationship,
which would be more adequate to the needs of each
of the different profiles of legal entities, said objective
to be achieved though the efforts of a highly trained
team, made up of specialized managers.
Banco Itaú is also committed to developing and
encouraging the use of products, services, solutions
and businesses that contemplate sustainable
development and which stimulate the best social
and environmental practices in the small and
medium sized companies.As regards this aspect, one
should mention the launching of a social-
environmental risks policy pertaining to credits
offered to legal entities.
The small and medium sized segment shall obtain a
significant movement of expansion in 2008, with
aggressive goals to increase the client base, an
increase in presence in venues where it is already
active and expanding its geographic coverage by
opening 52 new company service platforms.
Institutional Investors
Institutional Clients
The funds being managed by institutional investors
at the end of the 4th quarter in 2007 were R$ 62.7
billion, which represents a growth of 20.3% over the
end of 2006 and 3.4% over the previous quarter.
According to the December, 2007 ANBID ranking,
Banco Itaú maintained its leadership as the largest
manager of private resources belonging to Private
Complementary Social Security Entities, with a
managed volume of R$ 30.5 billion, which represents
a market share of 20.2%.
The maintenance of this position substantiates the
service segmentation strategy, making available to
clients a specialized structure constituted of high
level professionals possessing technical know-how to
cater to the specific demands of institutional clients.
Corporate
The corporate investor segment offers a range of
investment products consisting of a diversified family
of mutual and self-directed funds, with differentiated
strategies for management and capital allocation.The
flexibility of these products allows customized
solutions for our customers, and Banco Itaú ensures
specialized management and services focused on
the specific needs of each one of them.
Similarly to the Institutional Investors segment, Itaú is
also a leader in handling investment funds for clients
that are legal entities, controlling a market share of
15.5%.The results reflect the advantages brought by
segmentation, management quality and flexibility
concerning the structures of the investments.
As regards the large size companies segment,
according to the most recent ANBID ranking, Banco
Itaú reached R$ 16.3 billion in resources managed
by it.
Intrag DTVM
Intrag DTVM, which acts in the providing of fiduciary
management services, ended the 4th quarter of 2007
with a total volume of R$ 30.4 billion of funds that
were under its administration, presenting a growth of
31.1% over December 2006 and 9.2% over the
previous quarter.
This growth rate derives from the quality of
management of the fiduciary services provided,
pertaining to the maintenance and the improvement
of a structure consisting of specialized professionals
and the constant concern with the quality and risk
control of services provided.
The activity of Intrag DTVM has been divided into five
large performance segments:Pension Funds,
Corporations, Receivables Funds, Bank Treasuries and
Fund Managers. In 2007, Intrag started offering
fiduciary management services to private banks in
the market and to FIPES, which are new performance
niches offering great growth potential.
Public Sector
Banco Itaú was a pioneer among private institutions
by offering segmented service to the public sector.
It offers a wide range of products and services which
vary from payments of vendors and public servant’s
payrolls to the management of public funds, the
collection of taxes, currency exchange service and
assignments of hydric resources credit rights and
petroleum royalties.
To that effect, Itaú counts on specialized teams to
establish relations with public agencies at all levels:
federal, state and municipal, including the executive,
legislative and judiciary branches. In order to cater to
the specific needs of the public sector, the structure
of this segment operates through independent
platforms at the branch offices of Banco Itaú with a
nationwide reach.
In 2007, all sector managers went through training
with the objective of refreshing products and
services and to acquire new tools, thus allowing
differentiated services to clients.Part of the training
activities approached themes such as bids, budgets,
the Law of Fiscal Responsibility, among others.
The Public Sector segment caters to 902 agencies,
being responsible for the payroll of some 1.78 million
public servants.
Matters related to sustainability are also part of the
day to day activities of the segment.The Public Sector
segment worked jointly with the remaining areas of
Itaú, encouraging the public sector to partake of
events associated with the theme, such as “Itaú’s
Dialogues Pertaining to Sustainability”, helping to
disclose new concepts and get the Bank closer to the
communities where it operates.
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Real-Estate Lending
As planned at the end of 2006, the year was marked
by an impressive development of the real-estate
segment at Banco Itaú.The country’s economic
stability and the reinforcement of a wide
performance strategy created a favorable
environment which allowed performance records,
having R$ 2.4 billion in loans accomplished with both
individuals and legal entities.This amount represents
a growth of 164% as compared to the performance
achieved all along the previous year.
The objective during the year had been to invest in
the improvement of processes, expanding business
performance channels and expanding Itaú’s market
share (currently 16%) among private institutions.One
should also stress the raising of funds from the Inter-
American Investment Corporation (IIC) in the amount
of R$ 200 million for the granting of real-estate
financing, said funds being intended to provide
credits of up to R$ 100 thousand to individuals.
Within this context, the partnership with Lopes
should be considered.Lopes is the largest real-estate
intermediation and consulting company in Brazil.The
agreement, which is to be exclusive during 20 years,
envisaged the creation of a real-estate products sales
financing promoter, with the objective of fomenting
the growth of the secondary market and to facilitate
access to credit.
New products were launched as a contribution to
the development of the sector, bearing reduced
interest rates and financing for up to 25 years. In 2007,
Itaú became the first private bank to offer real-estate
financing using funds from The Guarantee Fund for
Time of Service (FGTS), expanding the possibilities
for the acquisition of a home in order to reduce the
housing deficit.
Furthermore, as regards the corporate segment,
after the launch of the Product “Social-Environmental
Construction”, financing fees were reduced for the
construction of undertakings encompassing
environmental preservation and social incentive
actions.
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Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Credit Cards
Itaú Cards
The integration of the teams, as well as the unification
of the portfolios and of the sales and marketing
processes, of Itaucard, Credicard Itaú and BankBoston
was concluded in 2007.When Citibank exercised its
exclusive right to use the Credicard name, as of
January, 2007 Banco Itaú started offering credit cards
bearing only Itaú names (Itaucard and Itaú
Personnalité).
The Bank ended the year with 14.8 million cards and
total billings of R$ 41.4 billion, which represents a
market share of 22.6%, and it kept its leadership
position as regards the credit card market in the
Country.
The main challenges for Banco Itaú for 2008 are to
expand its client base and to increase the profitability
of its credit card portfolio by launching new products
and benefits and by intensifying the quest for new
partnerships.
Orbitall
Orbitall kept its performance in the means of
payments market, having processed in 2007 some
21.6 million credit cards, 1.5 million benefit-allowance
electronic cards and 5.5 million private label cards, a
volume that represented an increase of 10.4% in
the total number of cards processed as compared
with 2006.
In 2007 Orbitall nicely took the position as a service
provider for third parties (banks and retail networks).
This strategy ought to bring a significant increment
in new clients in 2008 and over the coming years.
Insurance, Private Pension and Capitalization
The integration of the Insurance, Private Pension and
Capitalization operations became consolidated in
2007 through the joint administration of businesses,
which also involved important changes in risk
strategies and on a greater focus on clients needs.
Furthermore, the available sale channels of Itaú were
used to commercialize products pertaining to asset
insurance.One of the greatest objectives for the year
was the increase in the penetration of Insurance into
the checking account holders base, a challenge that
still remains current for 2008.
The year of 2007 was also marked by great
achievements.At the end of the year, Itaú Vida e
Previdência, the group’s company for life insurance
and private pension business, reached the historical
mark of R$ 20.7 billion in private pension reserves.
Itaú Seguros (responsible for insurance business) and
its subsidiaries, including Itaú Vida e Previdência,
reached in 2007 R$3.3 billion in paid premiums,
showing a growth of 8.9% as compared to 2006.The
contracting of Private Pension and VGBL products
reached the mark of R$ 5.3 billion in 2007, showing a
growth of 20.2% as compared to 2006.The
Capitalization provisions, on the other hand, added
up to R$ 1.1 billion during the period.
As regards this segment, Banco Itaú clients have
access to a line of products the financial results
whereof are passed on to basic education programs
ongoing in the country.Since 1994, the PIC Criança
and PIC Itaú-Unicef have been launched, the funds
whereof are directed to the social programs
operated by the United Nations Children's Fund
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Business/Banco Itaú S.A.
(Unicef ) – PIC Esperança and PIC Itaú Criança, the
results whereof are also destined to social programs
operated by Unicef and by Fundação Itaú Social.
Due to the excellent results obtained with the
commercialization of these capitalization plans, Itaú
made PIC Natureza available to the market, which
was launched with the support of WWF-Brasil, a non-
governmental organization in charge of managing
donations for reforestation projects in the different
regions in Brazil.
Itaú XL employs a team with more than 15 years of
experience in the market of industrial and business
lines, and after more than one year of operations and
joint venture consolidation with Itaú, this team has
been fully organized and prepared to take advantage
of the opportunities for a new scenario with the fall
of the reinsurance monopoly in Brazil.Risk
underwriting policies have been redesigned and the
services have been adapted to the new market
conditions.
The financial resources of the new company surpass
the new requirements for capital and solvency, thus
rendering viable the plans for business expansion,
taking advantage of the know-how and the
penetration of Itaú in the Brazilian market and the
expertise of XL in the underwriting of large risk
insurance in open markets.
Fund and Portfolio Management
The total of funds managed by Itaú at the end of
December reached R$ 210 billion, with a growth of
16.8% for the year.The total of investment funds
managed by the Bank reached R$ 182.5 billion,
showing a growth of 8.8%. Itaú thus consolidated its
position as the largest private administrator of third-
party funds. Itaú has maintained itself as one of the
largest fund managers in the market with a share
of 15.4%.
The differentiated performance of the investment
consultant team also contributed toward this
conquest.They are specialists in the financial market
who provide financial advisory services to help
clients to decide about their investments.
In response to the changes made to the Investment
Funds Legislation (CVM Instruction 409, introduced
by CVM Instruction 450 dated March 30, 2007) all
legal documentation having to do with investment
funds (Regulations, Prospects and Term) has been
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adapted to the new regulation.The objective of the
changes made by CVM were to expand the
possibilities of the investments made by the funds, as
well as to introduce new limits for the investment of
resources of the funds into different securities,
negotiable papers and operational modalities, taking
into account the type of financial asset and its issuer.
The highlight of the product launches for the year
was the Fundo Itaú Renda Fixa Ecomudança
(RF Ecomudança Fund) in the Retail, Personnalité and
Private segments.This fixed income fund sets aside
part of its administration fee for environmental
actions that reduce the amount of CO2 (carbon
dioxide) in the air, which is the main factor
responsible for global warming and which reinforces
Itaú’s commitment to sustainability.
This Fund joins other products in the funds segment,
which are predicated on concepts of social-
environmental responsibility, such as the Fundo Itaú
de Excelência Social (FIES).Launched in 2004, the FIES
is a fund that invests in shares of companies that are
engaged in differentiated social-environmental
management practices.This option has been
gradually gaining strengh,going from assets of
R$ 361.9 million in 2006 to R$ 538,8 million in 2007.
Itaú Corretora de Valores
(Securities Brokerage House)
The year of 2007 was especially positive to Itaú
Corretora.The company has taken a position as a Full
Brokerage House, offering services to foreign and
local institutional clients as well as to individuals,
performing Class A analyses.
In Bovespa’s ranking, Itaú Corretora intermediated a
volume of R$ 109 billion, which meant an increase of
98% as compared to the same period in the previous
year.Evincing its great penetration capacity into the
client base, Itaú Corretora received Bovespa’s
Destaque Award as result of the largest number of
active clients in 2007.At BM&F, Itaú Corretora
negotiated 14 million contracts. It ended the year in
third position, in terms of volume, operated among
the brokerage houses associated with banks.
Its participation in public share offering also
increased from 11 to 19, of which 14 were IPOs and
five were secondary offers.Always acting in
partnership with Banco Itaú BBA, it reached a total
volume of R$ 22.5 billion, which placed the institution
among the three most active institutions and as the
largest domestic group in the segment.
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Learn more:
Credit cards site: www.itaucard.com.br
Our funds site:www.itau.com.br/Investimentos/Fundos http://www.itau.com.br/socioambiental
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For the fourth consecutive year, the brokerage house
maintained its leadership in the domestic ANBID
fixed income distribution ranking.22 Fixed Income
offerings (Debentures, FIDCs, CRIs, CPRs and CDCAs)
were executed, reaching a share of 40% in the total
number of offerings executed for the year, and 27%
of the total financial value offered.As regards the
international fixed income product, Itaú Corretora
negotiated approximately US$ 9 billion throughout
2007 on behalf of its clients, split up between
sovereign debt and securities of domestic
companies and banks abroad.
Another area of significant growth was that of
Itautrade, Itaú Corretora’s home broker, where clients
may negotiate stocks through the Internet, which
ended the year in fifth place in the Homebroker
Ranking, with a negotiated volume of R$ 8.6 billion,
129% larger than in 2006.
Itaú Corretora is proceeding with the consolidation
of its strategic position as the best specialist in Brazil,
operating with highly qualified research teams and
with professionals located in New York, Lisbon, Hong
Kong and Tokyo, which has increased its distribution
potential.
Highlights for 2007
New York Event: In May the “2nd.Annual Brazil
Conference”took place in New York, promoted by Itaú
Corretora in partnership with Itaú BBA.The conference
was attended by 41 companies, 80% of them represented
by the CEOs.The total market value of the participating
companies was equivalent to 29% of the total market
value of Bovespa, and 27% of the GDP.This event already
joined the permanent agenda of the largest investors and
Brazilian companies, helping to consolidate the image of
the Top Brazilian Player in the market.
Institutional Investor:The analysis team of Itaú Corretora
obtained third place in the most highly respected research
ranking on the market,held by Institutional Investor.
Itaú Corretora received BM&F's Operational Qualification
Seals.This certification has the objective of stimulating the
improvement of the brokerage houses in order to
prepare them to compete both in the international and
the local opportunity scenarios. In order to obtain the
seal, the brokerage house must be in compliance with all
the requirements put forth by BM&F that are pertinent to
its business position. Itaú Corretora received four seals:
Agro Broker, Carrying Broker, Execution Broker and Retail
Broker.
New international funds:These funds have been triggered
by the Brazilian macro-economic stability.Through the
funds that have been created by Banco Itaú, Korean and
Chilean investors may invest in Brazil directly from their
countries. In August, Banco Itaú associated itself with
Daewoo Securities and KDB Asset Management in Korea
to create Samba Brazil Fund, the portfolio of which is
made-up of stocks of Brazilian companies and fixed
income securities. At the end of 2007 the fund was
managing resources to the tune of R$ 143 million. In
October, Banco Itaú created three funds directed at
Chilean investors.The Itaú Selection Brazil Mutual Fund
and the Itaú Small Cap Brazil Mutual Fund invest in stocks
of Brazilian companies while the Itaú Mix Brazil Mutual
Fund operates a portfolio made-up of Brazilian and
Chilean fixed income assets.At the end of 2007 the three
funds created for the Chilean market managed resources
to the tune of UR$ 25 million.
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Itaucred Businesses
Businesses/Itaucred Businesses
Leadership in car financing and strongconsumer credit growth led Itaucred to reach
the mark of 7 million clients.
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The volume of loans involving non checking account holding clients,
which were serviced within Itaucred’s structure, has grown in an
exponential manner over the last few years, beginning to represent an
ever larger and more important segment in Itaú Holding’s businesses
and results. In 2007, this figure surpassed the mark of 7 million clients,
functioning as a veritable “bank within a bank”in the group’s business
structure.
Vehicles
The vehicles segment was one of the major
highlights of Itaú Holding in 2007, demonstrating
impressive growth in the portfolio and an
improvement in the analysis and approval processes
involved. In 2007 new credit granted in the vehicle
financing and leasing segment added up to R$ 23.1
billion, which represents an increase of 56% as
compared to 2006.This result surpassed the result
recorded by the market, which grew approximately
35%.The credit volume reached R$ 29.5 billion, with a
growth of 61.4% as compared to 2006.
This performance kept Banco Itaú (under the brands
Itaú and Banco Fiat) in the leadership position of the
vehicle financing market, with a share of 25.4%.
Currently, heavy vehicle financing accounts for some
6.3% of the total amount financed by Itaucred
Veículos.
Itaucred Veículos reached the mark of 2.4 million
clients who obtained financing.Of these clients, 950
thousand already had life insurance and 700
thousand have Itaucard and Fiat Itaucard credit cards.
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Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
The Bank is also offering credit to the consumers of
16 thousand dealers and distributors of passenger
vehicles, trucks, and motorcycles scattered all over the
country.100% of the proposals are currently being
taken and processed through Internet, thus assuring
greater security and agility to the credit granting
process for the dealers and clients being financed.
New Businesses
In 2007 Itaucred Veículos started an operation to
finance motorcycles. In December, this business
channel had established business platforms in
São Paulo, Campinas and Belo Horizonte.The
implementation of the operation on a nationwide
scale shall take place through 2008.
In August, 2007, Itaú acquired a classified ads website
for the purchase and the sale of vehicles called
iCarros.All through 2008, dealerships will be offered
the possibility to advertise their inventories using
this channel.
Taií
Taií, which is a consumer credit segment offered by
Banco Itaú, distinguishes itself through the offer of
personal credit, restricted use cards (private labels),
Itaucard Visa and MasterCard credit cards (co-
branded), besides other credit products intended for
consumers, throug Taií's own shops or in partnership
with large Brazilian retailers. It encompasses the
operations of Financeira Itaú (FIT), which is 100%
owned by Itaú and Financeira Itaú CBD (FIC) and
Financeira Americanas Itaú (FAI), in which Itaú owns
50% of the capital stock.
Excluding payroll credit, the Taií credit portfolio
reached the mark of R$ 1.9 billion in December, 2007,
with a meaningful growth of 56% as compared to
2006, motivated mainly by a 57.0% growth in sales.
The client base reached the level of 6.1 million, 22.7%
higher than during the same period in 2006.
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Financeira Itaú
The network of Taií owned shops closed 2007 with
258 shops in the states of São Paulo, Rio de Janeiro,
Minas Gerais, Paraná, Espírito Santo, Bahia,
Pernambuco, Goiás and Ceará.Financeira Itaú offers a
portfolio of products to its clients which includes
personal loans through credit cards, personal loans
guaranteed by checks, insurance and Itaucard VISA
and MasterCard credit cards (these cards started to
be commercialized as of September, 2007).The focus
of the year was the increase in the portfolio of
products and the activation of the client base.This
portfolio reached a volume of R$ 459 million, an
increase of 60.9% as compared to the previous year.
Financeira Itaú CBD (FIC)
FIC offers products and services to the clients of the
Pão de Açúcar, Extra, Extra-Eletro, CompreBem and
Sendas retail stores. FIC’s product portfolio includes
personal loans guaranteed by checks, loans granted
by means of credit cards, direct consumer credit
(CDC) for the purchase of home appliances,
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
insurance, private label cards and co-branded VISA
and MasterCard credit cards. As from the third
quarter of 2007, FIC changed its operations module
seeking greater efficiency, productivity and cost
reductions, changing the physical presence to
electronic in some of the shops.This type of action
will make FIC present in the 545 shops belonging to
the group.
In 2007 this group of products generated a portfolio
of R$ 1,345 million,which represents an increase of
55.1% as compared with the previous year.The last
quarter in 2007 was marked by the steep growth of
the client base that used the co-branded cards,which
started with an upgrade of part of the private label
cards, increasing significantly the volume of
transactions inside and outside the shops.The
significant improvement of results as compared to
the previous quarter also deserves to be highlighted.
FIC reached its break-even point in November,as
planned.
Financeira Americanas Itaú (FAI)
In 2007, FAI reached the level of 1 million accounts,
which was in line with its client portfolio growth
objective, as well as the expansion of its market share
by diversifying its product portfolio.The credit
portfolio reached the mark of R$ 134 million, which
corresponds to 50% of the total volume, since FAI's
operations are included in Banco Itaú's financial
records in proportion to Itaú's percentage of
ownership.
FAI makes use of the following distribution channels:
Lojas Americanas (LASA) and Americanas Express
points of sale: through its 278 shops,FAI is offering
to this group of clients a product portfolio which
includes personal loans,guaranteed by checks,
personal loans taken out via credit cards, insurance,
private label cards and co-branded cards;
Americanas.com:offers co-branded online FAI
cards which offer the option to pay purchases on
these cards, together with a differentiated awards
program.
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Businesses/Itaucred Businesses
Learn more about:
Personal credit, vehicle financing andhome financing on the sitehttp://www.itau.com.br/itaucred
Shoptime TV Channel:as of July, 2007 this
modality will benefit from the distribution of direct
consumer credit for the purchase of home
appliances and electronics, insurance, personal loans
through cards and check-guaranteed personal loans.
It is worth stressing that the figures referring to
Taií's performance in 2007 are in line with the goals
that have been established for the year:
100 new points of sale: 247 shops were opened
in 2007, 147% more than envisaged originally.
A 50% growth in the credit portfolio (not
including payroll credit): Taií’s credit portfolio
reached the level of R$ 1.9 billion in December,
2007, which represents an increase of 56.0% as
compared to December, 2006.
Improvement in the efficiency rating: the
rating presented at the end of 2007 reflects an
improvement of 20.0% when compared to the
previous fiscal year.
Improvement in the default rate: this indicator
kept stable as compared to 2006, closing the year
at 25.9%.
We expected to reach the break-even point for
the operation in the fourth quarter of 2007,
which was to be achieved together with the
three units (FIC, FAI and FIT): as mentioned
previously, during the last quarter in 2007 FIC
reached the break-even point in November.
Payroll Credit
The expansion potential and the generation of
payroll credit business led Itaú Holding to create in
2007 a specific department to manage operations
pertaining to this segment, with the objective of
increasing the priority of the product among those
offered by the group.The operation of the segment
basically consists of an agreement between Itaú and
Banco BMG to distribute the product through Itaú’s
sales channels.
In 2007 the portfolio reached the mark of
R$ 3.3 billion, which meant an increase of 45.8% as
compared to 2006.Even while concentrated on the
public sector, this area should be a highlight over the
coming years.
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Goals for 2008
A growth of 25% in the credit portfolio (payroll
credit not included).
An improvement in the Efficiency Rate.
Break-even of the FIT operation.
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Banco Itaú BBA
Businesses/Banco Itaú BBA
Market knowledge,quality of information and afull range of solutions insure Itaú BBA's excellence
in servicing large companies.
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Profile
Itaú BBA is the bank which is responsible for the
corporate and investment banking activities of Banco
Itaú Holding Financeira. It offers a complete product
and services portfolio for some 2 thousand economic
groups using a group of highly qualified
professionals to cater to the needs and the specific
requirements of its clients.
Within this context as one of the paramount
aspects of its business strategy, Itaú BBA establishes
a full integration among the activities for which it is
responsible, thus making viable a type of
performance that is directed toward the best
interest of its clients, irrespectively of the products
and services to be offered, which range from typical
operations of a commercial bank to capital market
operations and advisory services in mergers and
acquisitions.
All through 2007 a group of important actions has
significantly contributed toward the consolidation of
Itaú BBA as the main wholesale bank in the country,
such as consistent growth of investment banking
activities; sophistication and innovation in structured
and derivative instruments which have a larger
added value; international expansion with emphasis
on Itaú BBA’s participation in the structuring and
development of large company markets in Argentina
and Chile, as well as continued development of cash
management products and services.
It is worth stressing that through the periodical re-
evaluations of the profiles and potentials of corporate
clients of Itaú Holding, 910 economic groups were
transferred from Banco Itaú to Itaú BBA in
September, 2007, thus substantially expanding its
client base and consolidating a management model
intended for close relationships and an in-depth
knowledge of the companies being served.
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Investment Banking
The Bank has been showing an enhanced
participation in the capitals market, providing large
corporations with alternatives to obtain resources
through fixed and variable income instruments.
In 2007 Banco Itaú BBA participated in debenture
and promissory note transactions totaling R$18
billion, plus $1.7 billion in FIDCs (credit receivables
funds). In the Anbid (National Association of
Investment Banks) ranking, which covers transactions
up to December, Banco Itaú BBA ranked first in
origination and distribution of fixed-income and
FIDCs, with market shares of 24% and 27%
respectively.
As an IPO coordinator and distributor, Itaú BBA
reached the mark of R$ 18.5 billion, and the mark of
R$ 3.2 billion in subsequent public offers. Itaú BBA
came up third in Thomson’s ranking as regards this
market, with a market share of 10%.Acting in the
acquisitions and mergers area, the bank closed 2007
in fifth place in Thomson’s ranking, with
18 transactions which totaled R$13.3 billion.
Corporate Banking
The credit and co-obligations portfolio grew
R$ 3.8 billion, representing an increment of 15% as
compared to the previous year.This increment
includes 910 economic groups which were
transferred from Itaú to Itaú BBA’s management.
The year of 2007 was also marked by the increase in
the volume of operations involving the derivatives
market.This expansion is due to the greater
volatility of both domestic and international
markets during the year, and to the larger
penetration of derivative and more sophisticated
products in corporate clients, consolidating Itaú BBA
as one of the leaders of this market.
The raising of funds on the local market presented
impressive growth in 2007, the result of the financial
liquidity experienced by a large portion of Brazilian
companies and of Itaú BBA’s fund raising strategy,
directed toward the offering of long term
investment, alternatives for its clients.During this
period the portfolio grew 76% as compared to 2006.
83
International Area
As regards Itaú BBA’s international area, ready
currency operations should be highlighted for 2007,
with a volume in excess of US$ 45 billion, which
represents a growth of 95% as compared to the
contracted volume in 2006, as well as the structuring
of long term, bilateral and/or syndicated transactions
with other institutions. Itaú BBA continued to offer a
large number of credit lines for foreign trade, closing
2007 with lines drawn from corresponding banks of
approximate volume of
US$ 5.1 billion.
The expansion of operations in the wholesale market
in Argentina was consolidated in 2007 under the
structure of Banco Itaú Buen Ayre, as well as the
process of strengthening corporate operations in
Chile using Itaú Chile’s structure.Following this
internationalization strategy, Itaú Holding is seeking
excellence in serving the large companies that are
active in these two markets, irrespective of their
being local or Brazilian businesses.
As regards cash management services, we should
mention the offer of a complete products and
services portfolio and the disclosure of specific
solutions to clients, placing Itaú BBA in an enhanced
position in the segment. In 2007, the volume of
collections and payments grew 54% as compared to
the previous year.
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Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Finally, Banco Itaú BBA was active in BNDES
on-lending to finance large-scale projects for
strengthening domestic infrastructure and
increasing the productive capacity of various
industrial sectors.Overall, Itaú Holding disbursed
more than R$ 2.7 billion for various projects and
financing in 2007, corresponding to an evolution of
77% as compared to 2006.
The on-lending of funds for large-scale projects is
keeping with the criteria established by the Equator
Principles, a set of voluntary guidelines to help
financial institutions assess andmonitor socio-
environmental impacts of large projects, that Banco
Itaú and Banco Itaú BBA adopted in 2004,and the
Socio-Environmental Risk Policy launched at the end
of 2007, to be used in credit granting processes to
legal entities, involving R$ 5million or more.
85
Learn more:
About Banco Itaú BBA atwww.itaubba.com.br
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Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
International Presence
Businesses/International Presence
Acquisitions accelerate the growthof Itaú Holding abroad.
87
Itaú Holding sees international markets, especially
in Latin America, as being an important part of its
business strategy.Currently, it has representations
and/or operations in Argentina, the Bahamas, Chile,
China, Frankfurt, Hong Kong, Japan, Luxembourg,
Madrid, Portugal, the Cayman Islands, the United
States, the United Kingdom and Uruguay.
The acquisition of BankBoston’s operations in Chile
and Uruguay, which were approved in 2007 by the
regulatory authorities of these two countries,
increased considerably the international retail
participation of Itaú, which already counted on the
support of Banco Itaú Buen Ayre in Argentina.The
greater challenge as regards these operations is the
creation of a business platform that would allow the
interchange of businesses and models know-how
among the several units of the Bank, in order to
create the conditions to leverage and to grow in
these regional segments.
Itaú Holding also counts on a significant presence as
regards foreign trade financing, the placement of
Eurobonds and the offer of more sophisticated
financial operations (Structured Notes) abroad
through its subsidiaries located in North America,
Europe and Asia.
Banco Itaú Europe
The consolidated assets of Banco Itaú Europe
reached € 4.5 billion at the end of 2007, 38.9%
percent higher than at the end of the previous year.
This increase is due mainly to the acquisition of
private banking operations belonging to the Bank of
America and ABN AMRO.At the end of 2007, the
consolidated net profits reached € 53.1 million.
Banking products reached the sum of € 113,1 million,
35.9% higher than in 2006, reflecting the stable
contribution of the financial margin, the high
performance of the capitals markets, treasury,
international private banking areas and the equity
held in Banco BPI. In consolidated terms, the return
on equity (ROE) reached 12.3% and the efficiency
ratio reached 53.8%.
The international private banking activity had in 2007
an important boost to development with the
acquisition of new business units and client
portfolios.Besides its presence in Luxembourg, with
this expansion, Itaú Europa also became present in
both Miami and Nassau.Such expansion contributed
toward the increase in assets under its management,
which at the end of the year surpassed US$ 6.3 billion.
The investment grade status of the Bank, given by
Moody’s (Baa1) and Fitch Ratings (BBB+), has been an
important support factor toward the diversification of
the sources of the funds with the Bank maintaining
an active presence in the primary and secondary
markets throughout 2007.
Latin America
Argentina
In 2007, Banco Itaú Buen Ayre (IBA) went through a
restructuring and expansion process.Said
restructuring included the development of electronic
relationship channels (Call Centers, ATMs and Home
Banking), the implementation of predictive models
for the contracting of loans, an increase in the sales
force and specialization of commercial products and
agents.
As a result of this process, IBA recorded an important
growth in the products directed toward individuals,
especially savings accounts, personal loans and credit
cards.Furthermore, it recorded a growth of 18.5% of
the individual customer base, which surpassed the
barrier of 200 thousand clients.
For the purpose of serving the Small and Medium-
Sized Companies, a new business segment was
created in 2007 which was independent individual
segment and the network of branches.To do this, six
new business platforms were inaugurated in the
metropolitan region of Buenos Aires, together with
service points in the country’s hinterland.Focus was
placed on the financing of operating capital, foreign
trade and cash management solutions.
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Businesses/International Presence
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
At the end of 2007, IBA operated 79 branch offices,
6 platforms, 26 Bank Service Points (PABs) plus over
200 ATMs, employing 1,383 employees.Total assets
reached R$ 1.9 billion (51% more than in December,
2006).Profits reached R$ 6 million.The loan portfolio
grew 54.4% as compared with December, 2006,
reaching R$ 1.3 billion.
On December 31, 2007, Itaú Asset Management
(IAM) Argentina had over R$ 1.1 billion in assets
under its management, being ranked third in the
local asset management industry, and having a
market share of 8.7%. In 2007, three of the IAM funds
obtained the maximum “5 star”classification from
Standard and Poor´s.
(NY)
Itau Bank Ltd (Cayman)
Europa
Europa
Securities
EuropaLuxembourg
(Hong Kong)(Nassau)
(London)
(Portugal)
(NY)
(Uruguay)
(Uruguay)
(Argentina)
(Argentina)
(Brazil)
(Chile)
(Brazil)
(NY)
Securities
(Shangai)
(Tokyo)
89
Chile
In 2007,o Banco Itaú Chile (BIC) concentrated its efforts
in replacing the BankBoston brand name with the Itaú
brand name in each of the segments in which the
Bank is active.All through the year,one of the priorities
was to improve the experience of being a BIC client
through the building of competitive advantages based
on the quality of services,products and processes.
One of the competitive advantages was the launching
of three funds (Mix Brasil, Small Cap Brasil and Selección
Brasil) focused on individual clients who requested
securities issued by Brazilian and Chilean companies,
as well as sovereign debt instruments.
In addition and as part of the strategy to improve the
quality of the services,the campaign “Open Agenda”was
launched, whereby clients could schedule a meeting
with the main BIC executives, getting unique,
exclusive and personalized attention from them.
We should stress the recognition given BIC by the Diário
Financiero newspaper,which called it one of the best
multinational companies operating in Chile in 2007.
On December 31, 2007, Banco Itaú Chile had
consolidated assets of R$ 8,219 million,
1,850 employees, 60 branch offices (of which nine
had been opened in 2007) and 77,561 checking
accounts (with a client base 16.6% larger than in
December, 2006).Banco Itaú Chile ranks ninth as
regards deposits, and it has a market share of 3.0%
regarding loans.
Uruguay
With the acquisition of BankBoston’s operations in
Uruguay, Itaú started controlling the third largest
bank in that country in asset volume, together with
OCA, the leading credit card administrator, for the last
ten years, and which today has a market share of
42.8%.
During 2007, Banco Itaú Uruguay focused its efforts
on the implementation and consolidation of the Itaú
brand in the local market.
Furthermore, new products and services have been
launched, such as Multipay (Internet banking
specifically intended to cater to the needs of
corporate clients) and the Visa Lan Pass, a partnership
with LAN airlines where the amounts spent by the
clients on credit cards are turned into miles in the
LAN compensation program.
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Businesses/International Presence
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
In 2007 a new branch office was opened in the city of
Tacuarembó, and a Banking Service Station (PAB) was
opened in the Montevideo Free Trade Zone.
On December 31, 2007, consolidated assets
belonging to Itaú in Uruguay (considering both the
Bank and OCA) reached the amount of R$ 2.0 billion,
and consolidated profits for the operations reached
R$ 49 million.
On the same date, Banco Itaú Uruguay had
98,199 clients, 16 branch offices and 477 employees.
OCA had 316,999 clients, 20 branch offices and 440
employees.
91
International Presence – Operational highlights for 2007
In March, all the remittance businesses acquired
from Banespa Tokyo in Japan were transferred to
Banco Itaú’s systems and processes.Once this had
been accomplished, over 46 thousand clients
belonging to the Itaú branch office in Tokyo were
able to use a full range of the services offered by
the bank, such as Bankfone Japan, Bankline Japan,
and over 26 self-service terminals in the Japanese
Post-Office.
In September, Banco Itaú obtained a loan of
R$ 200 million from the Interamerican
Investments Corporation (IIC) of the International
Development Bank (IDB).The funds were
directed to the real-estate segment to finance
real-properties for individuals worth
some R$ 100 thousand.The loan is for five years
and was the first in local currency to be
performed by IIC.
In November, Banco Itaú closed syndicated loans
in the amount of US$ 220 million through its
Grand Cayman branch office for a
two-year term.The structure of the operation
had Calyon as its leader and bookrunner, under
the co-leadership of the Unicredit Group, Bank of
America, ING, HSBC, Standard Chartered and
Bayerische Landesbank,as well as the
participation of ABN AMRO.
In 2007, Banco Itaú Chile issued a bonus program
in Ufs (local index) divided into two tranches,
which added up to an equivalent of R$ 340
million.The term for the issues is ten years.
Learn more about:
Banco Itaú Europa on site www.itaueuropa.pt
Banco Itaú Buen Ayre on site www.itau.com.ar
Banco Itaú Chile on site www.itau.com.cl
Banco Itaú Uruguay on site www.itau.com.uy
OCA on site www.oca.com.uy
Banco Itaú HoldingFinanceira S.A.BOARD OF DIRECTORS
President Olavo Egydio Setubal
Vice-PresidentsAlfredo Egydio Arruda Villela FilhoJosé Carlos Moraes AbreuRoberto Egydio Setubal
Board MembersAlcides Lopes TápiasAlfredo Egydio SetubalCarlos da Câmara PestanaFernão Carlos Botelho BracherGeraldo José CarboneGuillermo Alejandro CortinaGustavo Jorge Laboissiere LoyolaHenri PenchasMaria de Lourdes Egydio VillelaPersio AridaRoberto Teixeira da CostaSergio Silva de FreitasTereza Cristina Grossi Togni
EXECUTIVE BOARD
Director-PresidentRoberto Egydio Setubal
Senior Vice-PresidentHenri Penchas
Executive Vice-PresidentsAlfredo Egydio SetubalCandido Botelho Bracher
Legal ConsultantLuciano da Silva Amaro
Executive Directors Rodolfo Henrique FischerSilvio Aparecido de Carvalho
Managing DirectorsJackson Ricardo GomesMarco Antonio Antunes Wagner Roberto Pugliesi
NOMIMATION AND COMPENSATION COMMITTEE
President Olavo Egydio Setubal
MembersAlfredo Egydio Arruda Villela FilhoCarlos da Câmara PestanaFernão Carlos Botelho BracherJosé Carlos Moraes AbreuRoberto Egydio SetubalRoberto Teixeira da Costa
AUDIT COMMITTEE
PresidentCarlos da Câmara Pestana
MembersAlcides Lopes TápiasGustavo Jorge Laboissiere LoyolaTereza Cristina Grossi Togni
DISCLOSURE AND TRADING COMMITTEE
Alfredo Egydio SetubalAlcides Lopes TápiasAlfredo Egydio Arruda Villela FilhoAntonio Carlos Barbosa de OliveiraAntonio Jacinto MatiasHenri PenchasMaria Elizabete Vilaça Lopes AmaroRoberto Teixeira da CostaSilvio Aparecido de CarvalhoTereza Cristina Grossi Togni
ADVISORY COUNCIL
Fernando de Almeida Nobre NetoLício Meirelles FerreiraLuiz Eduardo Campello
INTERNATIONALADVISORY COUNCIL
Roberto Egydio SetubalArtur Eduardo Brochado dos Santos SilvaCarlos da Câmara PestanaFernão Carlos Botelho BracherHenri PenchasJosé Carlos Moraes AbreuMaria de Lourdes Egydio VillelaRoberto Teixeira da CostaRubens Antonio BarbosaSergio Silva de Freitas
FISCAL COUNCIL
President Iran Siqueira Lima
MembersAlberto Sozin FuruguemMarcos de Andrade Reis Villela
Banco Itaú S.A.
BOARD OF DIRECTORS
Director-President and General DirectorRoberto Egydio Setubal
Senior Vice-PresidentsAlfredo Egydio Setubal Antonio Jacinto Matias Henri Penchas
Executive Vice-PresidentsJosé Francisco CanepaMarco Ambrogio Crespi Bonomi Rodolfo Henrique FischerRonald Anton de JonghRuy Villela Moraes Abreu
Legal ConsultantLuciano da Silva Amaro
Executive DirectorsAlexandre de BarrosCláudio Rudge OrtenbladFernando Tadeu PerezJoão Jacó HazarabedianOsvaldo do NascimentoRicardo Villela MarinoSérgio Ribeiro da Costa WerlangSílvio Aparecido de Carvalho
Senior Director-ManagersAlexandre Zákia Albert Antonio Carlos Morelli Carlos Henrique MussoliniJackson Ricardo GomesJosé Geraldo Borges FerreiraLuiz Antonio Fernandes ValenteLywal Salles FilhoMarcio Antonio Teixeira LinaresMaria Elizabete Vilaça Lopes AmaroMáximo Hernández González Natalísio de Almeida JúniorPaulo Roberto SoaresSandra Nunes da Cunha Boteguim
Board of Directors and Executive Management
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Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Director-ManagersAlmir VignotoAndré de Moura Madarás Antonio Carlos Richecki RibeiroAntonio Sivaldi Roberti FilhoArnaldo Pereira PintoAurélio José da Silva PortellaCarlos Eduardo MônicoCelson Luiz Hupfer Cesar PadovanCícero Marcus de Araújo Cristiane Magalhães TeixeiraEdelver CarnovaliEduardo Almeida PradoErivelto Calderan CorreaFábio Whitaker VidigalFernando Marsella Chacon RuizHeli de AndradeJaime Augusto ChavesJean Martin Sigrist JúniorJoão Antonio Dantas Bezerra LeiteJoão CostaJoaquim Marcondes de Andrade WestinJosé Antonio LopesJúlio Abel de Lima TabuaçoLinda AgarinakamuraLuís Antônio RodriguesLuiz Antonio Nogueira de FrançaLuiz Antonio RibeiroLuiz Eduardo ZagoLuiz Fernando de Assumpção FariaLuiz Marcelo Alves de MoraesManoel Antonio GranadoMarcelo BoockMarcelo Habice da MottaMarcelo Santos RibeiroMarco Antonio AntunesMarco Antonio SudanoMarcos Aurélio Reitano Marcos Roberto CarnielliMaria Elsa Alba Bernhoeft Miguel Burgos NetoMoacyr Roberto Farto CastanhoOlivio Mori Junior Osvaldo José Dal FabbroPaschoal Pipolo BaptistaPatrick Pierre DelfosseRenata Helena Oliveira Tubini Ricardo OrlandoRicardo OrlandoRicardo Terenzi NeuenschwanderValma Aversa Prioli
Itaú Seguros S.A.
BOARD OF DIRECTORS
Director-PresidentRoberto Egydio Setubal
Director-SuperintendentOsvaldo do Nascimento
Executive Director-Vice-President Olavo Egydio Setubal Júnior
Executive DirectorsCláudio Cesar SanchesJosé Carlos Moraes Abreu Filho
Managing Directors Astério Sampaio MirandaIdacelmo Mendes VieiraManes Erlichman NetoMarco Antonio Antunes
Banco ItaucredFinanciamentos S.A.BOARD OF DIRECTORS
Director-President
Roberto Egydio Setubal
Vice-President Directors José Francisco Canepa Marco Ambrogio Crespi Bonomi
DirectorsAdrienne Patrice Guedes Daibert Arnaldo Pereira PintoDilson Tadeu da Costa RibeiroErivelto Calderan CorrêaEvanir Coutinho Ussier (*)Fernando José Costa TelesFlávio Kitahara SousaJackson Ricardo GomesJason Peter Crauford Luís Fernando StaubLuís Otávio MatiasLuiz Henrique Didier JúniorManoel de Oliveira FrancoMarco Antonio Antunes Marcos Vanderlei Belini Ferreira Mário Mendes Amadeu Mário Werneck BrittoMauricio Ferreira Agudo RomãoRodolfo Henrique Fischer
(*) Elected at ASM of 01/02/2008 - awaiting Bacen's approval.
93
Banco Itaú BBA
BOARD OF DIRECTORS
PresidentRoberto Egydio Setubal
Vice-PresidentsFernão Carlos Botelho BracherHenri Penchas
Board MembersAlfredo Egydio SetubalAntonio Beltran MartinezAntonio Carlos Barbosa de OliveiraCandido Botelho BracherEdmar Lisboa BachaEduardo Mazzilli de VassimonJean-Marc Robert Nogueira Baptista EtlinRodolfo Henrique FischerSérgio Ribeiro da Costa Werlang
EXECUTIVE BOARD
Director-PresidentCandido Botelho Bracher
Executive Directors– Vice-PresidentsAntonio Carlos Barbosa de OliveiraEduardo Mazzilli de VassimonJean-Marc Robert Nogueira Baptista Etlin
Business Director – Vice-PresidentAlberto Fernandes
Legal Consultant Ezequiel Grin
DirectorsAlexandre Enrico Silva FigliolinoAndré Emílio Kok NetoAndré Luis Teixeira RodriguesAndré Luiz Helmeister Caio Ibrahim DavidElaine Cristina Zanatta Rodrigues VasquinhoEmerson Savi JunqueiraFábio de Souza Queiroz FerrazFernando Fontes IunesFrancisco Paulo Cote GilGilberto Frussa Gustavo Henrique Penha TavaresJoão Carlos de GênovaJosé Irineu Nunes BragaLilian Sala Pulzatto KieferLuis Alberto Pimenta GarciaMarcelo MazieroMarcelo NaigeborinMário Lúcio Gurgel PiresMário Luís BrugnettiMario Luiz AmabileMilton Maluhy FilhoOdair Dias da Silva JuniorPaolo Sergio PellegriniPaulo de Paula AbreuPaulo Romagnoli
Corporate Information
Head Office
Praça Alfredo Egydio de Souza Aranha,100
Torre Itaúsa
CEP 04344 902 – São Paulo – SP
www.itau.com.br
Investor Relations Services
Geraldo Soares
Investor Relations Superintendent
Praça Alfredo Egydio de Souza Aranha,100
Torre Conceição – 11º andar
CEP 04344 902 – São Paulo – SP
Tel.: (0xx11) 5019 1549
Fax: (0xx11) 5019 1133
e-mail: [email protected]
www.itauri.com.br
Investfone Service Centre
Shareholders Only
Tel.: (0xx11) 5029 7780
Fax: (0xx11) 3274 3120
Hours:Monday-Friday, 9:00 am - 6:00 pm
Shareholder Services
Belo Horizonte – MG
Av. João Pinheiro, 195 – Térreo
CEP 30130 180
Brasília – DF
SCS Quadra 3 – Ed.Dona Angela
Sobreloja – CEP 70300 500
Curitiba – PR
Rua João Negrão, 65 – Sobreloja
CEP 80010 200
Porto Alegre – RS
Rua Sete de Setembro, 746 – Térreo
CEP 90010 190
Rio de Janeiro – RJ
Rua Sete de Setembro, 99 – Subsolo
CEP 20050 005
Salvador – BA
Av.Estados Unidos, 50 – 2º andar
Ed.Sesquicentenário – CEP 40010 020
São Paulo – SP
Rua XV de Novembro, 318 – Térreo
CEP 01013 001
For other locations, contact anybranch of Banco Itaú S.A.
Customer Services
Itaú Bankfone
Information and banking transactions
Major metropolitan areas:
4004 4828 (*)
Other locations:0800 011 8944
(*) No need to dial the Area Code
Talk to Us – Internet Client Support Service
www.itau.com.br
Itaú Corporate Ombudsman
0800 5700011
Caixa Postal:nº 67.600 – São Paulo/SP
CEP 03162-971
(*) No need to dial the Area Code
Corporate Ombudsman – response service for entities
Praça Alfredo Egydio de Souza Aranha,100,
Torre Conceição, 6º andar.
CEP 04344-902 São Paulo/SP
0800 7214828
Central Bank of Brazil Support Services Group
Praça Alfredo Egydio de Souza Aranha,100,
Torre Conceição, 6º andar.
CEP 04344-902 São Paulo/SP
Major metropolitan areas:
4004 1244
(*) Other locations:0800 7221244
Fax:Option 2 of initial menu
Corporate Information
94
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
Bovespa Trades
Common Shares: ITAU3
Preferred Shares: ITAU4
BCBA (Argentina) Trades
Cedear Itaú Holding: ITAU4
NYSE (USA) TradesADR Itaú Holding: ITU
Depositary Bank (ADR):
The Bank of New York
101 Barclay Street – 22 West
New York, NY 10286
(212) 815 2293
(212) 571 3050
Specialist (ADR):
LaBranche & Co., Inc.
One Exchange Plaza
25th Floor New York,
New York 10006-3008
(212) 425 1144
International Offices
Banco Itaú – New York Branch
540 Madison Avenue
New York, NY 10022
Tel.: (1 212) 486 1280
Fax: (1 212) 888 9342
Banco Itaú – Tokyo Branch – Japan
1-6-1 Marunouchi, Chiyoda-ku
Tokyo 100-0005
Tel.: +81 (3) 5293 4828
Fax: +81 (3) 5293 4830
www.itau.co.jp
Banco Itaú – Grand Cayman Branch
20 Genesis Close Ansbacher House –
3rd.Floor P.O.Box 2582gt
Grand Cayman, Cayman Islands B.W.I
Tel.: (1 345) 945 1271
Fax: (1 345) 945 1275
Banco Itaú BBA
West Bay Street
Nassau, Bahamas
Banco Itaú BBA
Montevideo, Uruguay
Plaza Independencia, 831
Of.706 C.P.11.100
Tel.: 59 82 9013965
Fax:59 82 9085613
Itaú Bank, Ltd
20 Genesis Close
P.O.Box 2587gt
Ansbacher House – 3rd.Floor
Grand Cayman, Cayman Islands B.W.I
Tel.: (1 345) 945 4175
Fax: (1 345) 945 4185
Itaú Securities Inc.– New York
540 Madison Avenue – 23rd.Floor
New York, NY 10022
Tel.: 212 207 9056
Fax:212 207 9076
Banco Itaú Europa - Lisbon
Rua Tierno Galvan,Torre 3 – 11º andar
1099-048 Lisboa
Tel.: (351 21) 381 1000
Fax: (351 21) 388 7219
www.itaueuropa.pt
Banco Itaú Europa - London Branch
17, Dominion Street, 6th Floor
EC2M 2EF London – United Kingdom
Tel.: (44 207) 663 7830
Fax: (44 207) 663 7831
Banco Itaú Europa Luxembourg
Avenue de la Porte-Neuve, 29
L- 227 – Luxembourg
Tel.: (352) 22 33771
Fax: (352) 663 7831
BIE Bank & Trust Ltd.
Cardinal Avenue
Grand Cayman, Cayman Islands
P.O.Box 501
B.W.I.
Banco Itaú Buen Ayre – Head Office
Cerrito 740
C.P.C1010AAP
Buenos Aires – Argentina
Tel.: (5411) 4378 8420
www.itau.com.ar
Banco Itaú Chile
Enrique Foster Sur 20 Piso 6
Las Condes
Santiago – Chile – C.P. 755-0198
Tel.: (562) 686 0000
www.itau.com.cl
Banco Itaú Uruguay S.A.
Zabala 1463
C.P.11.000
Montevideo, Uruguay
Tel.: (5982) 916 0127
www.itau.com.uy
OCA SA
Colonia 1424,
C.P. 11200 Montevideo, Uruguay
Tel.: (5982) 901 8839
www.oca.com.uy
95
Publication and Overall Coordination: Banco Itaú Holding Financeira
Editorial Coordination: Report Comunicação
Editorial and Graphic Design: Adroitt Bernard
Translation: Global Translation.BR
Photos: João Musa; pages 24, 30, 33, 38, 43, 69, 72, 86 and 90 – Itaú archive
Printers: Stilgraf
Circulation: Portuguese – 5,000 copies.English and Spanish versions will be available on CD.
Distribution: sent to Shareholders, Investors, Employees, Clients, Suppliers, NGOs, Consumer
Defense Organizations, the Media, Government Agencies and Universities.
Banco Itaú Holding Financeira address:
Praça Alfredo Egydio de Souza Aranha, 100
Torre Itaúsa – CEP 04344-902 – São Paulo – SP
Address for electronic version: www.itauri.com.br
If you have any questions, comments or suggestions, or would like more copies of the
report, please e-mail our Investor Relations Department at [email protected].
Our special thanks to everyone who authorized the use of their image in this Report.
Credits
96
Strategy and Businesses 2007 Banco Itaú Holding Financeira S.A. Sustainability Report.
2007Strategy andBusinesses
Banco Itaú Holding Financeira S.A.Sustainability Report
Banco Itaú Holding Financeira ProfileItaú Holding
Banco Itaú
Banking Products and Services
Credit CardsAccount Holders
Fund and PortfolioManagement
Corporate Operations &Investment Banking
Taií - FIT, FIC (CBD),FAI (LASA) and
Consigned Credit
Vehicles
Credit CardsNon-account Holders
Itaucred
Banco Itaú BBA
We are a financial institution that ...
has been in operations for over 60 years, is one of the largest in Brazil and has a net worth of R$29 billion, assets totaling R$295billion and achieved a market value of R$111 billion.
has a strong impact on economic, social and environmental scenarios based on the relationships we have with more than 65,000employees, 24 million customers, including account and non-account holders, 30,000 suppliers and over 60,000 shareholders.
operates nationwide, through our 3,528 strong branch and bank service outpost network; over 24,000 automatic teller machinesand electronic customer service stations located at places of business and the Taií network comprising 766 shops and 315electronic service stations.
has strengthened its international scope on a yearly basis, with units and operations in Argentina, Chile, China, England, Japan,Nassau, Portugal, the Cayman Islands, the United States and Uruguay.
is traded on the São Paulo (Brazil), Buenos Aires (Argentina) and New York (US) stock exchanges.
Our diversified operations...are primarily anchored on services based on specialized structures for the several client profiles, persons with special physicalneeds, small and medium size companies as well as micro-firms, the Government and institutional investors.
include business management services such as underwriting, custody, securities brokerage, credit cards, cooperative financingplans, insurance, investment certificates and private pension plans.
rank us as the largest wholesale bank in Brazil, through Itaú BBA, which operates in the corporate and investment sectorsproviding services to nearly 2,000 corporate groups in Brazil, many of which are among the largest in the country.
have earned us the title of leader in Private Banking and high income (Itaú Personnalité) sector as well as the lower end of thesocial ladder, by means of Taií, which conducts financial operations involving financing and credit cards extended to customers,who for the most part, do not have access to more conventional financial services.
Our values are solid and...based on ethics and transparency, in relation to human rights, compliance and diversity that are exercised in relationships withour strategic publics such as customers, government, employees, suppliers, shareholders and investors.
uphold continual improvement in our operations assuring competitive positioning and good performance of our operations.
shared and renewed each day by our employees who embody the Modo Itaú de Fazer (The Itaú Way) and create a respectfuland motivating work environment which has resulted in our excellent products and services.
include social and environmental accountability providing continuity to our commitment toward sustainable financial businessdevelopment.
We are acknowledged...as a sound and enduring institution, whose stock is included in the São Paulo Stock Exchange sustainability indexes, the ISE, aswell as in the New York Stock Exchange and the Dow Jones Sustainability World Index (DJSI) – we are the only Latin Americanbank to have been included in this index since its creation in 1999.
for building the most valuable Brazilian brand since 2002 according to the international consulting firm, Interbrand, attaining an estimated worth of R$8.076 billion in 2007.
for the over 50 awards received in 2007, the most important of which are listed below:
Best Latin American Bank – Euro money magazine;
Best Brazilian Bank – Euro money magazine (10th consecutive year);
Most Sustainable and Ethical Latin American Bank –Latin Finance and Consulting Management & Excellence magazine (3rd consecutive year);
Best company in the following categories:Banks (3rd consecutive year) and Social and Environmental Responsibility – Dinheiro magazine;
Sustainability reference company in Brazil – Guia Exame de Sustentabilidade 2007;
The Most Admired Companies in Brazil – 1st place in the categories:Retail Bank and Private Pension Plans – Carta Capital and TNS InterScience magazines.
Este relatório foi impresso em papel recicladocom tinta à base de extratos vegetais.
Praça Alfredo Egydio de Souza Aranha, 100 Torre Itaúsa – 04344 902 – São Paulo-SP – Brasil
www.itau.com.br
Strategy and BusinessesSustainability Report 2007
Insurance, Private PensionPlans and Investment
Certificates