banco itaú holding financeira s.a. december 2004 silvio de carvalho executive director

Banco Itaú Holding Financeira S.A.

December 2004

Silvio de Carvalho

Executive Director

2

3rd Quarter 2004 Highlights

Quarterly results

Increase in equity participation: Credicard and Orbitall

Anticipating Scenarios

Sustainability

Economic, Social and Environmental Dimensions

New Initiatives

Scenarios pre-2002 and post-2003

Sensitivity analysis

Competition

3


Quarterly results



Sustainability


New Initiatives



Competition

4

•Results

2. Growth of credit portfolio in the quarter: Small and Medium Sized Companies 9.6% and Individuals 10.7%;

6. Technical Provisions of Pension Plans: R$ 7.7 billion – Growth of 307.7% in the last 24 months against 123.5% of market growth in the same period;

7. Full Amortization of Goodwill related to the association with Companhia Brasileira de Distribuição in the amount of R$ 349 million after tax effects;

3. Net interest margin maintained: small growth to 13.0% in the 3rd Quarter/04 from 12.5% in the 2nd Quarter/04;

4. Provisions maintained: Additional provision for Securities of R$ 600 million; Exceeding provision for loan losses of R$ 1,000 million;

1. Results: Net Income of R$ 920 million with a decrease of 3.1% in relation to previous quarter; ROE 30.3%; Net income per thousand shares of R$ 8.13; Recurring net income of R$1,226 million; Recurring ROE 41.7%;

5. Insolvency: Nonperforming Loans Ratio presented a positive evolution , reaching 3.2%, against 3.5% on June 30, 2004;

Highlights – 3rd Quarter of 2004Results

5

2º Tri/043º Tri/04 Jan-Set/03Var % Var %

2.673Net Interest Margin 2.457 7.503 8.1638,8% -8,1%

Highlights

Jan-Set/04

13,0%Net Interest Margin (%) 12,5% 12,2% 14,3%- -

(402)Loan Loss Expenses (383) (1.148) (1.592)5,0% -27,9%

1.508Banking Service Fees 1.454 4.366 3.7783,7% 15,6%

(1.886)Personnel+Adm Expenses (1.826) (5.481) (5.334)3,3% 2,8%

(305)Extraordinary Result - (301) (563)- -46,5%

920Net Income 949 2.745 2.298-3,0% 19,5%

1.226Recurrent Net Income 949 3.046 2.86129,2% 6,4%

8,13Net Income / 1,000 shares 8,38 24,24 20,06-3,1% 20,9%

13.471Stockholders’ Equity 12.787 13.471 11.4645,3% 17,5%

30,3%ROE (%) 33,1% 28,1% 27,6%- -

2,7%ROA (%) 3,1% 2,7% 2,6%- -

34.959Market Capitalization 30.485 34.959 25.69114,7% 36,1%

R$ Million (Except where indicated)


6

Evolution of Remunerated Assets (Risk Brazil)

15,279

31,114

9,609

21,505

4,666

51,059

9,369

11,216

20,585

71,644

Individuals

Loans to Companies

Small and Medium Sized

Corporate

Compulsory Loans (*)

Total - Loans

Public Securities

Private Securities

Total - Securities

Total

Jun 30, 04

13,789

30,855

8,768

22,088

4,068

48,713

10,738

10,745

21,484

70,197

12,777

27,768

6,787

20,982

4,036

44,581

14,784

8,564

23,348

67,929

Sep 30,04

10.7%

0.8%

9.6%

-2.6%

14.7%

4.8%

-12.8%

4.4%

-4.2%

2.1%

Var Sep04/Jun04

Dec 31, 04

R$ Million

19.6%

12.0%

41.6%

2.5%

15.6%

14.5%

-36.6%

31.0%

-11.8%

5.5%

Var Sep04/Dec03

(*) Rural Loans and Mortgage – Loans linked to the availability of Demand deposits and Savings deposits.

Obs.: If the exchange rate had remained at the level it had on June 30, 2004, the portfolio of the Corporate segment would reach R$ 22.4 billion on September 30, 2004.


7

R$ Million

Banking Service Fees

3rd Q/04

358

303

282

234

180

151

1,508

2nd Q/04

333

312

266

219

182

142

1,454

Jan-Sep/04

1,036

904

791

649

565

422

4,366

Jan-Sep/03

966

743

715

485

515

355

3,778

Var 3Q4-2Q04

7.5%

-2.9%

6.0%

6.7%

-1.1%

6.4%

3.7%

Var9 months

7.3%

21.7%

10.6%

33.8%

9.7%

18.9%

15.6%

Asset Management (*)

Current Account Services

Credit Cards

Sureties and Credits Granted

Collection Services

Other

Total

(*) Mutual Funds and Consortium.


8

Personnel Expenses

Other Administrative Expenses

Reorganization

Total

770

1,041

75

1,886

725

1,034

66

1,826

R$ Million

Administrative Expenses

Strong Cost Control

2,191

3,071

219

5,481

2,009

2,990

335

5,334

6.2%

0.7%

13.6%

3.3%

9.1%

2.7%

-34.6%

2.8%

3rd Q/04 2nd Q/04 Jan-Sep/04 Jan-Sep/03Var 3Q4-2Q04

Var9 months

Campaign “Quanto Custa”: Over 20 thousand suggestions from employees.


9

Total Unrealized

Interbank Deposits

Securities and Derivatives

Additional provision

Adjustment – Securities Held to Maturity

Credit Operations

Investment on BPI

Time and Interbank Deposits and Funds from acceptance and issuance of securities abroad

Securitization of Payment Orders Abroad

Subordinated Debt and Treasury Shares

Unrealized Income/(Loss) (1) (2) Stockholders’ Equity

09/30/04

2,366

10

782

600

182

309

691

87

133

354

06/30/04

2,265

3

663

600

63

276

672

80

129

441

R$ Million

1,486

8

594

545

49

193

414

1

56

221

09/30/03

Stockholders’ Equity

Stockholders’ Equity

Financial Instruments – Market Value

(1) Tax effects not considered.(2) Includes unrealized minority interest gains in Equity of R$ 284 million in Sep/04, R$ 276 million in Jun/04 and R$ 170 million in

Sep/03.


10

Banco

Itaú

814

8,182

46.2%

27,559

115,882

213

3,814

24.2%

23,500

38,464

Net income

Tier I Allocated Capital

ROE (%)

Credit Portfolio (*)

Total Assets

778

7,499

48.4%

25,116

97,866

198

3,539

24.3%

23,597

36,161

3rd Q/04 2nd Q/04

(*) Endorsements and sureties included.

R$ Million

Pro Forma

Corpo-

ration

(27)

1,749

-6.1%

-

5,690

Corpo-

ration

(107)

1,474

-25.9%

-

4,986

Note.: The Consolidated figures do not represent the sum of the parts because certain intercompany transactions were eliminated only at the Consolidated level.

Conso-

lidated

920

13,471

30.3%

51,059

138,520

Conso-

lidated

949

12,787

33.1%

48,713

122,760

Banco

Itaú BBA

Banco

Itaú

Banco

Itaú BBA


11

3rd Quarter of 2004

66%

5%

14%

15%

Banco Itaú - BankingCredit CardsInsurance, Capitalization and Pension PlansMutual Funds and Managed Portfolios

Diversification of income sourcesNot dependent only on interest rates

R$ Million

531

122

117

44

814Total

3rd Q/04Banco Itaú S.A.

Banking

Credit Cards

Ins., Pension, and Cap.

Funds and Managed Port.

Consolidated Net Income – Banco Itaú S.A.


12

R$ Milhões

Consolidated Net Income – Banco Itaú S.A.

Var %

531

122

117

44

814

471

136

131

41

778Total

12.7%

-10.3%

-10.7%

7.3%

4.6%

3º Tri/04 2º Tri/04Banco Itaú S.A. Var %Jan-

Set/04Jan-

Set/03

1,353

368

365

117

2,204

1,211

342

332

114

1,999

11.7%

7.6%

9.9%

2.6%

10.2%

Var %

Banking

Credit Cards

Ins., Pension, and Cap.

Funds and Managed Port.

Diversification of income sourcesNot dependent only on interest rates


13


Quarterly results



Sustainability


New Initiatives



Competition

14

7,9 7,8 8,411,2

14,317,2

19,322,0 23,6

28,0

35,3

41,5

47,551,1

106210

319437

517641

770

1.0281.119

1.2851.447

1.000

200152

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004(*)0

500

1.000

1.500

2.000

2.500

3.000

Number of Credit Cards (Million)

Transaction Volume (million)

Attractiveness of the businessBrazilian Credit Card Market

Source: ABECS – Brazilian Association of Credit Card and Related Service Companies

(*) As of September 2004. Transaction data on an annualized basis.

CAGR = 15.8%

CAGR = 22.3%

Highlights – 3rd Quarter of 2004Increase in Participation: Credicard and Orbitall

15

5,0%

7,5%

10,0%

12,5%

15,0%

17,5%

20,0%

jan/01

mar/01

mai/01

jul/01

set/0

1

nov/01

jan/02

mar/02

mai/02

jul/02

set/0

2

nov/02

jan/03

mar/03

mai/03

jul/03

set/0

3

nov/03

jan/04

mar/04

mai/04

jul/04

set/0

4

Credicard

OurocardItaú

Bradesco

Unibanco

17.2%

13.9%

12.7%

10.8%

7.6%

Principal Sector PlayersEvolution of Monthly Market Share by Revenue (%)


16

The Credicard Conglomerate

The Credicard Conglomerate

Credit Card issuer

Relationship with Commercial

Establishments

Transaction processor

• Largest credit card issuer in Brazil, with an 18.8% market share by transaction volume;

• Number of cards: 7.6 million in September 2004.

• Exclusive capture and transmission of the credit and debit card transactions of issuers like Mastercard, Redeshop and Diners;

• Deals directly with sales points.

• Leader in the credit card processing industry in Brazil, serving approx. 16.1 million cards;

• Diversification of its product range to include any clients accepting cards as a means of payment.


17

Credicard Banco S.A.New Shareholder Structure

Before After

Itaú

33.33%

Unibanco

33.33%

Citigroup

33.33%

Itaú

50%

Citigroup

50%


18

ITAÚ and Citigroup will enter into a new shareholders’ agreement for sharing management of Credicard Banco S.A., in such a way as to capture the synergies of the Credicard customers with the partners.

Credicard Banco S.A.Main Effects


19

Credicard Banco S.A.Evolution of Net Income (*)

214,1199,5

222,2

176,5

2001 2002 2003 2004

235.3

Net Income from Jan. to Sep.

Annualized Net Income

(*) Net Income from Credicard’s proprietary cards only.

R$ Million


20

(50%) (*)

Credicard Banco S.A.Contribution to Itaú

+As of September 30 2004

(50%) (*)

Number of Cards

Revenues(1)

Receivables

Number of Accounts

Market Share - Nr. of cards(2)

Market Share – Revenues(2)

6.6 million

R$ 8.9 billion

R$ 2.1 billion

4.3 million

12.9%

12.2%

7.6 million

R$ 13.7 billion

R$ 3.8 billion

5.2 million

14.9%

18.8%

10.3 million

R$ 15.1 billion

R$ 3.8 billion

6.9 million

20.1%

20.7%

(1) Revenues year-to-date September 2004 (2) Source: ABECS – Brazilian Association of Credit Card and Related Service Companies(*) Credicard’s proprietary cards only


21

OrbitallHighlights

Total Assets

Net Income

Number of Cards Processed

Number of Accounts Processed

Number of Credit Transactions Processed

Vouchers (*)

Numbers of Accounts Processed

Number of Transactions Processed

As of September 30 2004

R$ 419.5 million

R$ 33 million

16.1 million

12.0 million

354.3 million

2.9 million

95.4 million

Source: Orbitall

(*) Includes food, meal, fuel and pharmaceutical drug vouchers under brand names such as Ticket Alimentação, Ticket Restaurante, Ticket Car, Vale Alimentação, Vale Combustível, Sodexho Pass Alimentação and others.

Itaú has acquired a 66% share of Orbitall, totaling 100% of the company's equity.


22

Orbitall will continue to be an independent card processor,

providing services to all its existing clients as well as actively

seeking new ones;

We expect to achieve operating synergies at Orbitall, resulting

in productivity and efficiency gains of about R$ 50 million p.a.,

signifying opportunities to be more price competitive.

OrbitallMain Effects


23

OrbitallEvolution of Net Income (*)

(*) Net Income on an MIS basis.

R$ Million

44,041,5

53,4

32,9

2001 2002 2003 2004

43.9

Net Income from Jan. to Sep.

Annualized Net Income

Operating Synergy

Expected: R$ 50 million p.a.


24

Credicard and OrbitallValue of the Transaction

The investment was paid for in cash.

Investment (R$ Million)

• Goodwill (R$ Million)

Internal Rate of Return (%)

768

720

19% p.a.

281

235

19% p.a.

1,049

955

Total

Itaú Holding is used to fully amortize the goodwill derived from the acquisitions in the same quarter.


25

Redecard S.A.

Itaú

31.94%

Citigroup

31.94%

Unibanco

31.94%

Mastercard

4.17%

Current structure (no change)

No change in Redecard’s current shareholder structure

Redecard will continue as an independent company, dedicated to capturing and transmitting card transactions for its existing as well as

prospective clients.


26

Additional Investment in Credicard and Acquisition of Orbitall

Reinforces Itaú’s strategy for the credit card market (expected to surpass the growth of current account customers);

Increases synergies from larger-scale card issuance and transaction processing;

Diversifies range of processing services related to the use of cards as a means of payment;

Expressive increase in market share: by number of credit cards climbed from 12.9% para 20.1% on a 51.1 million cards market.


27


Quarterly results



Sustainability


New Initiatives



Competition

28

Scen

ario

s

Consolidation

of democracy

• Low growth• Controlled Inflation• Market volatility• High interest rates• Globalization

• Foreigners / Privatization• Specialization• Growth of electronic banking

• Stiffer competition• Consolidation of the system

Period : 1995 to 2003

Polítical Economic Banking

1995 2003

Itaú´s Management

1995 – Acquisition of BFB

1997 – Acquisition of Banerj

1998 – Aquisition of Bemge

2000 – Acquisition of Banestado

2001 – Acquisition of BEG

2002 – Acquisition of BBA and FIAT


29

1990 20031994

Objective Planned Growth Shareholder Value

Operations Do it well! Do it efficiently!

Market Grow Focus

Personnel Undifferentiated Specialized

Remuneration Fixed Variable

Risk Avoid Manage

Corp.Gov. Formal Active

Business Banking Financial Services

Changes of Approach

Anticipating ScenariosBefore and after the Real Plan

Intangíbles Not managed Managed


30

44.838.723.7

14.613.5

38.415.9 17.311.58.3

29.6

dec/94 dec/95 dec/96 dec/97 dec/98 dec/99 dec/00 dec/01 dec/02 dec/03 sep/04

Asset growth trendsLoans


CAGRLoans: 18.9%R$ Billion

31

14.2 13.919.9 19.3

25.2 29.4 28.3

7.32.3 4.0


Asset Growth TrendsSecurities


CAGRSecurities: 37.2%


32

9.68.210.0

4.74.43.2

3.21.4

4.1

2.12.8


Asset Growth TrendsReserve Requirements


CAGRRes. Requirements: 13.5%



33

5.8 8.5 13.219.9 17.0 16.4

21.927.7

37.6 42.555.8


Asset Growth TrendsOther Assets


CAGROther Assets: 26.1%

CAGRRes.Requirements: 13.5%



34

6.2

5.97.0

4.73.6

2.72.92.51.81.41.0


Asset Growth TrendsGuarantees and Co-obligations


CAGRGtees & Co-oblig.: 20.6%





35

14,217,9 21,4

32,7

42,9

57,3

62,0

10,5

84,3


..

Asset Growth TrendsMutual Funds and Portfolios under Management (*)

R$ Billion


(*) Includes assets under management at Banco Itaú Europa Luxembourg.

CAGRFunds&Portfolios: 31.4%

CAGR.Gtees & Co-oblig: 20.6%




CAGRLoans: 18.9%

36

18,3 24,4 32,146,4 49,0 51,9

69,6 81,8111,1 118,7

7,911,9

16,020,4 24,3

35,4

46,5

62,0

69,0

90,2

105,1

138,5


R$ Billion

Asset Growth TrendsAssets + Off-Balance sheet

26.236.3

48.1

66.873.3

87.3

116.1

143.8

180.1

208.9

243.6


CAGROff-Balance Sheet: 30.4%

CAGRAssets: 23.1%

CAGRTotal: 25.7%

37

1.7982.145

3.465

5.121

3.778

4.366

3.699

574 856

3.159

2.202

4.466

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

dec/94 dec/95 dec/96 dec/97 dec/98 dec/99 dec/00 dec/01 dec/02 dec/03 sep/03 sep/04

R$ Million

Banking Service Fees

CAGR: 27.5%

15.6%


38

2.4102.345

3.1743.2042.750

1.186 1.0771.426 1.596 1.727

2.129 2.311


Evolution of ExpensesR$ Million

CAGRPersonnel: 11.6%


2.8%

39

3.0712.990

4.1204.040

3.679

2.8722.481

2.1431.791

1.494

1.0131.091


CAGRAdministrative: 15.9%


2.7%

R$ Million

Evolution of Expenses


40

572 199752

494647

617645

409

9431.272

907 888

dec/94 decc/95 dec/96 dec/97 dec/98 dec/99 dec/00 dec/01 dec/02 dec/03 sep/03 sep/04

CAGROperating: 9.3%



-2.1%

R$ Million

Evolution of Expenses


41

302260

356355

302

238

89

162

134


CAGRTax (97 to 03): 17.7%

CAGROperating: 9.3%



16.2%

(*) Non-interest-related Tax Expenses

R$ Million

Evolution of Expenses (*)


42

2.8492.289

3.672

6.6716.502

8.9228.542

6.701

6.066

5.316

4.679

4.015


CAGRTax (97 to 03): 17.7%

CAGROperating: 9.3%



2.6%

(*) Non-interest-related Tax Expenses

R$ Million

CAGRTotal Expenses: 13,5%

Evolution of Expenses (*)


43

Efficiency Ratio

69,5%56,7% 58,2%

64,2% 59,5% 55,0% 50,0% 46,1%53,1%

44,7%58,3% 58,0%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 9m/03 9m/04

Efficiency Ratio(Current Model) Efficiency Ratio(New Model)

(Non-interest expenses) (1)

(Net interest margin + Banking Service Fee + Partial results of Insurance, Capitalization and Pension businesses + Other operating results - PIS/COFINS taxes)

Efficiency Ratio(new model) =


(1) Personnel expenses + Other Administrative Expenses + Other Operating Expenses + Non-interest-related Tax Expenses

75.6%

58.2%

65.3%

71.6%67.1% 66.8% 65.3%

62.0% 58.6%54.9%

62.1%

55.9%

44

392 347610

939 1.1281.518

1.9182.353

3.080

3.717

2.861 3.046

-218 -248-703 -565 -563

-301-18

36

351

-77

-1.000

-500

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 9m2003 9m2004

Extraordinary Net Income

Recurrent Net Income

Evolution of Net Income R$ Million

CAGR Recurring (94 to 03) = 28,4%6.5%


CAGR Total (94 to 03) = 26,1%

19.5%

RealPlan

Mexican

Crisis

Asian Crisis

Russian Crisis

Real devaluation

Power shortage / Argentina

Elections

45

3,3 2,95,1

7,9 9,612,9

16,721,1

27,7

32,6

25,026,9

-2,1-6,3 -5,0 -4,9

-2,7-0,7

3,0

0,3

-1,8-0,2

-10

-5

0

5

10

15

20

25

30

35

40

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 9m/03 9m04

Extraordinary Net Income

Recurrent Net Income

CAGR Recurring (94 to 03) = 29.0%

Decrease Nr.Shares (%) = -6.0%

R$

7.6%


CAGR Total (94 to 03) = 26.6% 20.4%

RealPlan

Mexican Crisis

Asian Crisis

Russian Crisis

Real devaluation

Power Shortage / Argentina

Elections

Evolution of Earnings per Share

46

2,0 3,24,7

6,8 7,6

11,0

17,919,8

17,8

23,3

32,5

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004(2)

Consistently the Largest Market Cap in the Brazilian Banking Sector

R$ Billion

CAGR p.a. = 32.5%

Largest Market Cap of all Largest Market Cap of all Latin American Banks Latin American Banks

R$39 bilhões 11/12/2004R$39 bilhões 11/12/2004


(1) Average of closing prices during the year(2) From January to November 12 2004

Average Market Cap (1) per period

47


Quarterly results



Sustainability


New Initiatives



Competition

48

Total R$ 3.2 billion

• Additional Provision for Doubtful Loans R$ 1.0 billion

• Financial Instruments: Market x Recorded Value (Net of Additional Provision) R$ 1.6 billion

• SecuritiesR$ 678 millionMarket Adjustment

Additional Provision R$ 600 million

Unrealized Results September 30, 2004

Ready to GrowConservative Accounting Practices

SustainabilityEconomic Dimension

49

Ready to GrowStrong Capitalization – Basel Index (*)

14,2 14,311,6

14,0 14,0 14,4

0,22,6 6,8

5,8 5,5 5,0

dez/00 dez/01 dez/02 dez/03 jun/04 set/04

Tier I Tier II

14.4%16.9%

18.4%19.8% 19.5% 19.4%

(*) Calculated according to the Economic-Financial Consolidated.


50

The Most Valuable Brands In BrazilDinheiro Magazine – June 2004

US$ MillionUS$ MillionStudy conducted by British consulting firm Interbrand

Company

BradescoNaturaBanco do BrasilSkolPetrobrasBrahmaUnibancoAntarcticaRealEmbraerSadia

Value in 2001

697-

308---

303--

196128

Value in 2003

809-

427421286294208184133193106

Itaú 970 1,093Value in 2004

828536520512485352223192171159156

1,204


51

Corporate Governance Means Action2000 2001 2002 2003 2004

Investor Relations Website in 3 languages

Corporate Code of Ethics

Totally independent Fiscal Council

Member of the Dow Jones Sustainability World Index

Election of independent members to the Board of Directors (currently 4 independent directors)

Adheres to Bovespa’s Corporate Governance Level 1

Included in the Dow Jones Sustainability World Index for the 2nd year

Tag along rights given to ALL shareholders

Level II ADRs on NYSE

Financial Holding Company status

Disclosure Committee, with independent Board members and executives

Securities Trading Committee, with independent Board members and executives

Included in the Dow Jones Sustainability World Index for the 3rd year

Audit Committee (International Standards) with 3 members, of which 2 totally independent

New shareholder communication channel:”Ações Itaú em Foco”

Elected the most valuable Brazilian brandname by Interbrand for the 3rd year running: US$1.2 billion

Adheres to the Equator Principles (August)

Included in the Dow Jones Sustainability World Index for the 5th year running

Best Emerging Market Corporate Governance (Euromoney)

1 year Share Buy-back Program

Internal Fiscal Council regulations issued

Included in the Dow Jones Sustainability World Index for the 4th year


52

Audit Committee founded in April 2004;

CMN Resolução 3.081 and the Sarbanes-Oxley Bill;

2 independent Committee members and one external;

Independent functioning of the Board of Directors;

Independent Councilor named Committee specialist.

Audit Committee


53

The Itaú Social Foundation

Net Worth: R$ 315 million

(Aug/04)

Proprietary Programs:

• Itaú-Unicef Award• Regional Training Conventions• Learning Managers

Urban Youth Program

• Direct support of the Public Schooling System• Cooperation with Non-Governmental Organizations

Focus on improving basic public education

Principal Partnerships:Canal Futura, Programa

Capacitação Solidária, Prêmio Escola Voluntária, Programa

Alfabetização Solidária, UNICEF, CENPEC, CONSED, UNDIME,

UNESCO

SustainabilitySocial Dimension

54

The Itaú Cultural Institute

2003 - 427 thousand visitors + 1,653 groups from 495 institutions totaling 30 thousand people

2003: over 220 events in Brazil and 9 outside the country:

• Theater, music and dance• Art exhibitions• Movie films and videos• Digital data base• CD and CD ROM collection• And many others

1987 – Foundation of the Itaú Cultural Institute

Popularization of access to Brazilian culture

Center for promoting, researching and divulging culture

Use of Hi Tec to reach an ever wider audience (Internet, radio and TV)

Partnerships and reciprocal arrangements with other organs/entities

Focus on representing and promoting Brazilian culture


55

The Itaú Social Excellence Mutual Fund Available for all customer categories

Portfolio chosen according to principles of corporate social responsibility Social activities Environmental protection activities Good corporate governance practice

Advisory Board composed of specialists Sign-off on what shares elegible for the Fund’s Portolio Representatives of private sector institutions

One half of the management fee reserved for projects and entities engaged in social activities


56

Responsible use of Credit

Relationship

Financial Education

Rational use Increases demand

and reduces payment delinquency

Credit product segmentation to match

individual customer profile

Credit. Use with moderation

Itaú’s responsibility for the

financial education of its

customers

Objetives:

Customers, Employees,

Companies, Government, public

schooling system attendees, the

press, the Public in general......

Target public:

Domestic market

Scope:

Premises:


57

Project financing in amounts of over US$50 million;

Commitment to Environmental Responsibility;

The principles are divided by category, according to the risks posed by each project:

Category A (high risk) Category B (medium risk) Category C (low risk)

For Categories A and B an Environmental Impact Report has to be prepared on the potential damage and the meaures to be taken when implementing the project as well as, in some cases, an Environmental Management Plan.

Drawn up in 2002 in London, with the aim of promoting the principles of social responsibility and environmental management in the execution of a wide range of industrial projects;

IFC (International Finance Corporation)

forecast

In 10 years over US$100 billion of investments

will have to conform to these rules

SustainabilityEnvironmental Dimension

58

Banco Itaú has been part of the Dow Jones Sustainability World Index (DJSI World) since 1999, together with 318 other companies. The composition of the index is reviewed annually.

Corporate Sustainability

The Ability to Create Long-term Shareholder Value

Social/Cultural/Environmental Conscience

Quality of Management

Since its launching in January 1999, the DJSI World has become an important reference for international investors and asset managers, who use its

performance as a benchmark for their investment decisions.

Itaú has been included in the index since its creation in 1999 and in 2004 was the only Latin American bank in the DJSI. In 2004, Itaúsa was chosen to be part of the index for the second year running.

The Dow Jones Sustainability World Index

Sustainability Sustainable Growth

59

• Strengthens the Image/Brand Name

• Reinforces Corporate Responsibility of Stakeholders

• Broadens the universe of potential stakeholders

• Provides a measurable view of the company’s sustainability strategy

Seal of Quality

The Dow Jones Sustainability World IndexImpact on sustainability strategy

Sustainability Sustainable Growth

60


Quarterly results



Sustainability


New Initiatives

Taií

CBD

Credicard

61Three different store models: Independent, Annex and Corner.

Taií Store

SustainabilityNew Initiatives

62

New Brand Name (Itaú-based).

Focus on lower income consumers.

Proprietary platform.

Operation launched in June/04 with 3 branches in São Paulo.

Forecast to be operating with 30 branches by end-2004.

Uses the Itaú ATM network.

Diversifies credit-related revenues.

Responsive and efficient.


63

Initial Results

Number of Customers : 13,136

0

500.000

1.000.000

1.500.000

2.000.000

2.500.000

3.000.000

3.500.000

4.000.000

4.500.000

5.000.000

8/6 30/6 30/7 31/8 30/9 4/11

R$ thousand

2.963

(*) Usage / Limits granted = 96%

Total Limits granted

Usage

3,139

2,070

1,340

386 1.9261.236

310

4.401

4,588


(*)

64


The Structure of Financeira Itaú CBD S.A.

“Financeira Itaú CBD”

A better and broader financial service and product range for CBD customers

Initial equity: R$ 150 million

50% 50%

Itaú-CBD Joint Venture

65


Growth forecasts for Financeira Itaú CBD S.A.

Consumer Credit Contracts

Private Label cards

Credit Cards3

Personal loans

580 thou

3.3 million

480 thou

-

(1) On March 31 2004.(2) Compound Average Annual Growth Rate (3) Widely accepted credit cards

Number of CAGR2

Year 10

Number of

Current1

3,519 thou

9.3 million

2,646 thou

1,600 thou

22.2%

12.2%

20.9%

Internal Rate of Return = 20%

The joint venture is expected to start contributing to Itaú’s

results after the third year


66


Operating synergy gains

A better and broader financial product and service range for CBD cutomers

Private Label Credit Cards

Other widely accepted credit cards Consumer credit Personal loans

Financial service desks to be installed at all 555 existing stores plus any subsequently opened by CBD.

Itaú-CBD Joint Venture: Characteristics

67


Strategy Greater focus on consumer credit

Long-term partnership: 20 years, extendable

Itaú responsible for operations

Exclusivity as regards financial products and services for CBD customers

Powerful partnership = Stronger commercial relations

Goodwill of R$ 380 million totally amortized in

the 3Q04 income statement


68

4,55,3 5,7

6,7 6,37,3

8,8

14,5

10,2

12,411,4

10,2

0

5

10

15

20

2000 2001 2002 2003 set/03 set/04

0

5

10

15

20

CAGR = 14.2%

CAGR = 18.1%

Credicard Banco S.A.Evolution of Volumes (*)

(*) Credicard’s proprietary cards only.

Number of Cards (million)

Revenues (R$ million)

Period: 2000-2003

21.6%

+15.9%

Net Income: R$ 176.5 million


69

10,012,2

13,214,6

13,4

16,1

337,2

535,8

305,0

354,3

463,5

409,0

0

5

10

15

20

25

30

35

2000 2001 2002 2003 set/03 set/04

0

100

200

300

400

500

600

OrbitallEvolution of Volume

CAGR = 13.4%

CAGR = 16.7%

Number of Cards (million)

Transaction Volume (million)

Period: 2000-2003

16.2%

+20.2%

Net Income: R$ 33 million


70


Quarterly results



Sustainability


New Initiatives



Competition

71

Brazilian Macroeconomic Scene

High volatility Lower volatility

High interest rates Declining interest rates

Brazil risk Stable risk

Low growthModerate and sustained

growth

Economic Instability Political Stability

A Change of Perspective

Pre- 2002 Post- 2003

Scenario pre-2002 and post-2003

72

Implications for the Banking Industry

Negative Implications

Loss of liability-side gains

Loss of Treasury profits

Downward pressure on spreads

-


73

Implications for Itaú

Lower interest income – 3.5% decrease in the net financial margin (1);

Lower Treasury profits (1);

A 10% reduction in spreads (2) (3).

(1) Comparison between 9M03 and 9M04.(2) Comparison between 9M02 and 9M04.(3) Sample: the ten Itaú products with the highest spread.


74

Implications for Itaú

Lower interest income – 3.5% decrease in the net financial margin (1);

Lower Treasury profits (1);

A 10% reduction in spreads (2) (3).

(1) Comparison between 9M03 and 9M04.(2) Comparison between 9M02 and 9M04.(3) Sample: the ten Itaú products with the highest spread.


Approximately

R$ 450 million

75

Implications for the Banking Sector

Positive Implications

Increase in financial asset volume

Opportunity for growth of loan portfolio

Decrease in payment delinquency

Need for greater efficiency

+


76

Individuals

2002 2004

Loan and Security Portfolio by Segment


R$ Million

59.0%

11.384

September 30

9,608 15,279

9.609

9.369

September 30

3,417

9,609181.2%

Micro, Small and Medium Cos.

22,565

21,505-4.7%

Large corporates

Public sector securities

13.9%

Govt.mandated/ funded credit

21.1%

9,259

11,216

4,097

4,666

Private sector securities

-17.7%

11,384

9,369

18.8%

60,330

71,644

77

Delinquency rate (*)

11,62%

12,67% 12,90%

1,55% 1,73% 1,66%

5,66% 5,90% 5,60%

1º Trim 02 2º Trim 02 3º Trim 02

Corporate customers Global Individuals

7,30%6,50%

6,00%

1,90% 1,80% 1,50%

4,00%3,50% 3,20%

1º Trim 04 2º Trim 04 3º Trim 04

(*) – Delinquency rate = Credits over 60 days past due / Total Credit Portfolio.

2002 2004

Scenario pre-2002 and post 2003

78

Service Fee Revenue

Asset Management Checking Account Services Credit-related

Collections Credit Cards Others

Scenario pre-2002 and post 2003

R$ Million2002 2004

11.1%

63.4%

18.7%

99.7%

44.2%

36.7%

4,367

3,050

43.2%

January to September

758 1,036

627904325

649476

565484

791

380

422


79

Other Sources of RevenueInsurance, Pensions and Capitalization – Net Income(*)


Insurance Life Insurance and Pensions Capitalization

Credit Cards (*) – Pro Forma.

R$ Million2002 2004

119.0%

84.4%

1,421.4%

-26.5%

124.6%739

329


102 75

14

21345

83

168

368


80

Non-interest expenses

Personnel expenses

Other Operating Expenses Non-interest-related Tax Expenses


R$ Million2002 2004

36.0%

9.9%

8.1%

0.2%

6,6716,276

6.3%

Other Administrative Expenses


2,404 2,410

2,842 3,071

808888

222302


81

Positive Aspects

Increase in financial assets

Opportunity for loan growth

Decline in payment delinquency


+


Negative Aspects




-

Impact on the Banking Sector

82

Impact on the Banking Sector

Positive Aspects

Increase in financial assets

Opportunity for loan growth

Decline in payment delinquency


+ Negative Aspects




-


Increase in Itaú Holding Net Income: R$ 1,067

million (Jan. to Sep. 2002 vs. 2004)

83


Quarterly results



Sustainability


New Initiatives



Competition

84

Sensitivity Analysis – Retail (*)

Assumptions

Inflation

Interest rates (Selic)

Res. requirements - demand deposits

Res. requirements – savings (TR+ 6%

p.a.)

Reduction in Spreads

Increase in Volume

Costs under Control

Scenario post-2005(APIMEC 2003)

9.2% p.a.

26.2% p.a.

45.0%

20.0%

Actual 2003

5.0% p.a.

12.0% p.a.

25.0%

20.0%

(*) Expectations from reading this sensitivity analysis should take into account the risks and uncertainties inherent in any form of economic activity and which are beyond the Itaú Conglomerate’s control (political and economic changes, interest and exchange rate volatility, technological change, inflation, financial disintermediation, competitive pressures on products and pricing and changes in the tax regime).

Sustainability

Actual Sep/04

7.1% p.a.

16.0% p.a.

45,0%

20,0%

85

(*) Expectations from reading this sensitivity analysis should take into account the risks and uncertainties inherent in any form of economic activity and which are beyond the Itaú Conglomerate’s control (political and economic changes, interest and exchange rate volatility, technological change, inflation, financial disintermediation, competitive pressures on products and pricing and changes in the tax regime)

Financial Resources

Retail loans

Corporate loans

Real Estate Finance

Service Fee Revenue

Banking Revenues

Securities-related

Loan Loss Allowance

Costs

Pre-tax net income

Actual 2003

100

Av. balance

100

100

100

100

Fin. Margin

100

100

100

100

100

100

100

100

100

100

Spread

100

100

100

Scenario post-2005 (APIMEC 2003)

130

Av. balance

154

149

152

91

Fin. Margin.

96

98

130

123

101

166

94

120

87

70

Spread

58

62

85

Actual Sep/04

121

Av. balance

122

177

87

74

Fin. Margin.

115

150

39

106

100

118

52

110

102

60

Spread

93

82

45

Sustainability

Sensitivity Analysis - Retail (*)

86


Quarterly results



Sustainability


New Initiatives



Competition

87

134.2Retail Loans 143.3 129.,8

111.9Loans to micro/small/med co’s. 276.5 161.4

109.0Loans to large corporates 98.2 80.0

152.7Mutual Funds/Assets under mgt. 170.8 169.1

123.2Personnel and Admin. Expenses 104.5 118.3

109.5Loan Loss Provision (Assets) 92.8 75.3

152.5Service Fee Income 143.1 125.6

151.1Net Income 162.7 122.0

108.1Annualized ROE 103.7 95.1

150.0Net Income per Employee 166.7 118.5

101.7Efficiency Ratio (*) 90.0 111.0

137.9Earnings per share 159.8 120.4

128.2Total Assets 140.1 114.5

Jan 04 to Sep/04

Itaú Holding x Bradesco xUnibanco

Base date Sep/02 = 100

Jan 04 to Sep/04

Jan.04 to Sep/04

(*) According to

the new model.

Sustainability

88

On-going focus on credit for retail customers and micro/small/ medium-sized companies.

Steady growth in Earnings per Share

Sustainability

On-going improvements in efficiency.

New opportunities?

New lines of busines (CBD, Taií, Credicard and Orbitall)

89

11.879

13.471

2.229

9.0367.578

6.642

5.9074.198

3.3372.857

880

3.152

181

2.3772.389

1.841

1.869

721592

3433923820

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

10.000

11.000

12.000

13.000

14.000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04(*)

0

250

500

750

1.000

1.250

1.500

1.750

2.000

2.250

2.500

2.750

3.000

3.250

3.500

3.750

4.000

Net Worth

Net Income

R$ Million

CAGR(90-04) = 14.0%

Steady Growth in ResultsNet Worth and Net Income Trends

3Q04Net Income:

R$ 2,745 Million

(*) September 30 2004

CAGR(90-03) = 24.6%

Sustainability

90

Steady Growth in ResultsNet Worth and Net Income Trends

11.879

13.471

2.229

9.0367.578

6.642

5.9074.198

3.3372.857

880

3.152

181

2.3772.389

1.841

1.869

721592

3433923820

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

10.000

11.000

12.000

13.000

14.000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04(*)

0

250

500

750

1.000

1.250

1.500

1.750

2.000

2.250

2.500

2.750

3.000

3.250

3.500

3.750

4.000

Net Worth

Net Income

R$ Million

CAGR)(90-04) = 14.0%

CAGR(90-03) = 24.6%

Real Plan

Mexican crisis

Asian crisis

Russian Crisis

Real

DevaluationArgentine

Crisis

Collor Plan

3Q04 Net Income: R$ 2,745 Million

Jan/90 to Sep/04Dividends:

R$ 6.0 BillionIncrease i n Equity:

R$ 0,1 Bilion

Adaptability to Different

Scenarios

Sustainability

(*) September 30 2004

91

0

100

200

300

400

500

600

700

800

900

1.000

94 95 96 97 98 99 00 01 02 03 04

Itaú (1)

Itaú (2)

Bovespa

Itaú(1) Itaú(2) Ibov.

10 years 23.66% 19.24% 3.79%

5 years 19.86% 15.97% -1.14%

2004 33.12% 30.59% 15.01%

Average Annual Price Gain in Dollars

Russian Crisis

Real Devaluation

Mexican Crisis

Asian Crisis

Argentine crisis

WTC Attack

Elections

US$

581

145

836

Sustainability

(1) Dividends reinvested (2) Dividends not reinvested

Appreciation of the Preferred SharesEvolution of US$ 100 invested from 12-Nov-1994 to 12-Nov-2004

92

0

100

200

300

400

500

600

700

800

900

1.000

94 95 96 97 98 99 00 01 02 03 04

Itaú (1)

Itaú (2)

Bovespa

Itaú(1) Itaú(2) Ibov.

10 years 23.66% 19.24% 3.79%

5 years 19.86% 15.97% -1.14%

2004 33.12% 30.59% 15.01%

Average Annual Price Gain in Dollars

Russian Crisis

Real Devaluation

Mexican Crisis

Asian Crisis

Argentine crisis

WTC Attack

Elections

US$

581

145

836

Sustainability

(1) Dividends reinvested (2) Dividends not reinvested

Appreciation of the Preferred SharesEvolution of US$ 100 invested from 12-Nov-1994 to 12-Nov-2004

Itaú Holding: best Brazilian banking

sector performer and highest market

cap of all Latin American banks.

Banco Itaú Holding Financeira S.A.

December 2004

Silvio de Carvalho

Executive Director

Operating Rules for Trading Shares for Treasury

December 2004

Silvio de CarvalhoExecutive Director

95Reunião APIMEC SP 2004 | Regras Operacionais para a Tesouraria

Operating Rules for TreasuryApplicable Legislation

Brazil: • CVM Instruction 10 (1980) – acquisition of own shares for treasury

or canceling;

• CVM Instruction 268 (1997) – change from 5% to 10% in the limit of shares (over the total outstanding, per class of share) that can be kept in Treasury;

• CVM Instruction 390 (2003) – acquisition of own shares through options instruments and establishment of one-year as maximum term for buyback.

United States: SEC Rule 10b-18 (October 2003) – applicable only to north-american companies trading in US Stock Exchanges;

Other rules in Europe.


Active for over 20 years;

Acquisition of shares for treasury for:• Canceling with no capital reduction;• Reserve for stock option plan.

2003 – new share buyback period authorized by the Board of Directors: 1 year.

Share Buyback Program - Itaú Holding


YearCanceling of the treasury shares

Common (*) TotalPreferred (*)1987 77,426 6,196,7906,119,3641988 155,333 3,142,2022,986,8691989 - --1990 37,732 1,701,6061,663,8741991 499,996 5,347,0924,847,1261992 686,698 1,169,008482,3101993 175,024 1,199,9001,024,8761994 - --1995 292,441 870,602578,1611996 - --1997 27,939 454,209426,2701998 - - -1999 - - -2000 1,784,963 - 1,784,9632001 3,936,315 - 3,936,3152002 885,000 - 885,0002003 646,481 - 646,4812004(**) 664,281 - 664,281

(*) Quantities of shares adjusted by splits.(**) Until 10.31.2004.Total 9,869,599 18,128,850 27,998,449

From 1987 to 2004, 25% of

the total outstanding shares were bought back

and cancelled

Share Buyback Program - Itaú Holding


Operating Rules for TreasuryHighlights

Informal Operating Rules;

Synchronized with our Trading Policy, released on July 31, 2002;

Voluntary adoption of the Operating Rules for Treasury;

Itaú Holding: 1st company in Brazil to adopt a buyback policy;

Result of a broad research, both national and international, covering the best practices in the market.


Comparison – Buyback Legislations

United States Board None None None None None SEC

Countries Approval Time /

ScheduleRestrictions

Price Restrictions

Share Volume Restriction

Special Reporting

Insider Restric.

GoverningAuthority

Japan BoardLast 30 minutes

Closing price

25% o/ daily vol. Daily YesTokio

Exchange

United KingdomShareholder

MeetingValidity: 18

months5% of 5-day

closing15% o/ total Daily Yes FSA

FranceShareholder

MeetingValidity: 18

monthsMaximum

10% o/ total; 25% o/ daily vol.

Monthly Yes COB

GermanyShareholder

MeetingValidity: 18

monthsGeneral Meeting

10% o/ total Conditional None BaFin

Canada BoardValidity: 18

monthsLast quote

5% o/ total, 10% o/ free float

Monthly YesToronto

Exchange

ItalyShareholder

MeetingValidity: 18

monthsLast Quote

10% o/ total, 25% o/ monthly vol.

Yes (Public Offer)

n.d. CONSOB

NetherlandsShareholder

MeetingValidity: 18

monthsGeneral Meeting

10% o/ total Daily Yes Aut. FM

Switzerland Board None None 10% o/ total Conditional NoneCentral Bank

Hong KongShareholder

MeetingValidity: 12

monthsNone

10% o/ total, 25% o/ monthly vol.

Daily YesHK

Exchange


The daily volume of shares negotiated by Itaú Holding is not to exceed 25% (twenty five per cent) of the average daily trading volume of the shares on stock exchanges for the 20 (twenty) trading sessions preceding the date of the respective purchase/sell offer of shares or execution of the purchase/sell offer of shares by Itaú Holding.

The 25% limit maintains flexibility for buyback strategy and reduces possibility of trading

concentration.

Operating Rules for TreasuryMain Obligations


The Rules do not apply to the trading of shares in BOVESPA – The São Paulo Stock Exchange in any high volume auction (as provided for by specific CVM rulings and in the "The São Paulo Stock Exchange Operating Procedures Manual", Chapter IV).

In the event that the broker agent hired is Itaú Corretora and Itaú Holding is the counterparty, the relevant notice of auction must have been divulged to the stock exchanges no longer than 24 (twenty four) or 48 (forty eight) hours (according to the volume of shares being offered) prior to the relevant trade execution.

High volume lots = Auctions according to Bovespa and CVM´s rules.



Itaú Holding shall trade the shares by means of Itaú Corretora de Valores S.A.

• In case it is necessary, Itaú Corretora de Valores S.A. shall hire services of broker agents in foreign countries in order to execute trading orders for settlement in overseas stock exchanges.

Transparency and Control



Itaú Holding shall not trade the shares (i) neither during the first 30 (thirty) minutes (ii) nor during the final 10 (ten) minutes of any trading session of BOVESPA – The São Paulo Stock Exchange, the market on which the shares are most heavily traded.

Avoid directioning and formation of prices

The price at which Itaú Holding negotiates the shares shall not exceed the highest price effectively paid by the market on the day Itaú Holding trades the shares.



Simultaneous execution of opposite buy and/or sell orders received from any Itaú Holding´s administrator (or any of the administrators of any affiliated, controlled or controlling companies) and Itaú Holding itself shall not be permitted, and priority shall be given to trading orders from the above-mentioned administrators until such time as they are effectively executed.

Compliance to CVM Instruction 358; Itaú Holding will not act as counterpart to the adherents to

the Trading Policy; Priority of trading is given to the adherents to the Policy; Stock Option Plan.

The prohibitions established in these Rules do not apply to the acquisition of shares being held as treasury stock that have been privately acquired through the exercise of call options in the context of Itaú Holding's Stock Option Plan.



Itaú Holding shall monthly deliver to the CVM - Comissão de Valores Mobiliários, to the SEC – U.S. Securities and Exchange Commission, to BOVESPA – The São Paulo Stock Exchange, to the NYSE – The New York Stock Exchange, to the Buenos Aires Stock Exchange and to the entities of the over-the-counter market on which the shares may be traded a report giving the volumes traded and the minimum, average and maximum prices paid by Itaú Holding when trading its shares in the stock exchanges.

Transparency and Accountability



In the event of any crisis or economic conditions causing high volatility of share prices and/or lack of market liquidity, the daily trading volume may be as high as 100% (one hundred per cent) of the average daily trading volumes, provided that Itaú Holding complies with the limit of maintaining no more than 10% (ten per cent) of each class of the shares as Treasury stock.

Operating Rules vs. Strategy

The Rules are not limiting of Itaú Holding´s buyback strategy.


Reduction of operational, financial and strategic risk;

Creation of an internal culture of operations;

Reduction of the possibility of occurrence of market concentration and/or formation of prices;

Reinforces buyback strategy, focused in preserving value to the shareholders and liquidity;

Best practices guaranteeing greater transparency.

Operating Rules for TreasuryBenefits

Operating Rules for Trading Shares for Treasury

December 2004

Silvio de CarvalhoExecutive Director

banco itaú holding financeira s.a. december 2004 silvio de carvalho executive director

Documents

securities of r

recurring net income

shares of r

net income9492

highlights quarterly

individuals loans

loan losses of r

recurrent net income9493