investor relations | page 1
DESCRIPTION
TRANSCRIPT
Investor Relations | page 1Investor Relations 1
Institutional PresentationDecember 2006
Investor Relations
Unibanco and Unibanco Holdings, S.A.
Investor Relations | page 2Investor Relations 2
Overview of Unibanco
Investor Relations | page 3Investor Relations 3
Highlights
*In 4Q06
Controlled by the Moreira Salles group
Publicly traded at Bovespa (Brazil) and NYSE
Level I Corporate Governance on the Bovespa
Level III ADR on the NYSE and a member of IBOVESPA
Very liquid stock: R$30.4 mln / US$14.1 mln ADTV* at Bovespa R$117.1 / US$54.5 mln ADTV* at NYSE
Financial statements in US GAAP since 1997
Investor Relations | page 4Investor Relations 4
• Offers investment products via Unibanco Asset Management to individuals and institutional investors and covers high net worth individuals, in the private banking segment
• Total assets under management: R$43,7 billion
• Awarded “Top Equity Management “ by Valor Economico newspaper for the 4th consecutive year
• 2nd place in Private Banking (Anbid), with 10% market share
A Snapshot of UnibancoAs of December 2006
• Joint venture with AIG
• Individuals and corporate: life, auto, assets, disability, pension funds and annuities
• Unibanco AIG operational results: 33% of net income in 2006.
• Unibanco Insurance and Pension Plans placed 4th in the ranking of private pension plans published by Susep. The company ranked 2nd in sales of corporate pension plans• Balanced business mix
• Aggressive expansion in the retail segment
• Benchmark in consumer finance and wholesale business
• Serves individuals and SMEs with annual revenues lower than R$150 million.
• Approximately 24 million clients
• Leading Consumer Finance franchise
• Improvement of the credit card portfolio, which posted a 27% growth over the past 12 months
Retail and Consumer Credit
Wholesale
• Full coverage of more than 2,000 corporations with annual revenues greater than R$150 million, in addition to institutional investors in Brazil and internationally
• Investment Banking: M&A, Capital Markets & Project Finance
• The Wholesale loan portfolio reached R$19,421, up 14.7% over the past 12 months
Wealth Management
CROSS SELLING
Insurance & Annuity – Unibanco AIG
Investor Relations | page 5Investor Relations 5
Corporate Communication and HR
Marcos Caetano
Legal, Tax, Audit, Compliance, and Risk
Lucas Melo
Wholesale and Wealth Management
Demosthenes Madureira
Audit Committee
Gabriel Jorge FerreiraChairman
Members
Board of Directors
Pedro MalanChairman
Pedro Moreira SallesVice-Chairman
Gabriel J. Ferreira Israel Vainboim Pedro BodinBoard Members
Eduardo A. GuimarãesGuy Almeida Andrade
Armínio Fraga Joaquim F. Castro Neto João Dionisio
CEO
Pedro Moreira Salles
Retail
Márcio Schettini
Treasury
Daniel Gleizer
Planning. Control. Operations and IR
Geraldo Travaglia
Operational Efficiency
Marcos Lisboa
Insurance and Pensions
José Rudge
Organizational Structure Prominent Board Members Independent Audit Committee
Investor Relations | page 6Investor Relations 6
Over 80 years of history to become one of the leading full service banks in Brazil
Timeline
Investor Relations | page 7Investor Relations 7
Segmentation and Distribution
Client Focus Nationwide Distribution(As of December 2006)
Lower Middle Market
Investor Relations | page 8Investor Relations 8
Client Base
In Millions of Clients
4.0
4.1
6.0
Dec-03
14.1
6.4
5.0
5.0
1.8
Dec-04
18.2
Dec-05
6.8
5.3
5.3
3.0
20.4
Mar-06
7.0
5.2
5.6
3.2
21.0
Jun-06
7.2
4.5
6.7
3.8
22.2
Sep-06
4.3
6.9
4.2
22.8
7.4
Dec-06
4.3
7.1
4.7
23.8
7.7
Investor Relations | page 9Investor Relations 9
Retail Business Model
Investor Relations | page 10Investor Relations 10
Risk Management
Macroeconomic
Scenario
As anticipated by Unibanco in 2005
2,292
3,068 2,910
Dec-04 Dec-05 Dec-06
R$ MillionsLoan Portfolio
Consumer Finance Companies
R$ Millions
107154
4Q04 4Q05 4Q06
232
6.0%6.7%
7.2%
Jun-05 Dec-05 Jun-06
7.6%
Dec-06
5.9%
Feb-05
24% 26% 27%31%
2002 2003 2004 2006
33%
2006
Credit / GDP
Conservative credit approach
41%
10%
22%
Jun-05 Apr-06 4Q06
Approval rate – Fininvest Personal Loans
Financial System
Delinquency ratio
(Individuals)
Risk Management
Provisions for Loan Losses
Consumer Finance Companies Credit restriction
Investor Relations | page 11Investor Relations 11
Personal Loans – Mix of Brazilian Financial System
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-01 Apr-02 Sep-02 Feb-03 Jul-03 Dec-03 May-04 Oct-04 Mar-05 Aug-05 Jan-06 Jun-06 Dec-06
Overdraft loans
Personal Loans
Vehicles
Mortgage Loans
Durable Goods Financing - Others
Credit Cards
Others
Payroll loans 60%
40%
Investor Relations | page 12Investor Relations 12
Base 100 = 2005 Base 100 = 2005
1472006
114
120
2006
97
MarketMarket
Cars + Trucks & Buses Loans
Dec-05 Dec-06
4,029
4,833
+20.0%
Motorcycle Loans (run-off)
-51.4%
Dec-05 Dec-06
580
282
Business Repositioning
Auto Financing
Focus: New Cars (Financed Units) Focus: New Trucks & Buses (Financed Units)
R$ MillionsR$ Millions
Investor Relations | page 13Investor Relations 13
Loan Portfolio (Unicard + Hipercard)
Credit Cards
Number of cards (In millions)
+26.7%
4,001
5,070
Dec-05 Dec-06
R$ Millions
Jun-04 Dec-04 Jun-05 Dec-05 Jun-06
Total Cards
9
Credit Cards
21
30
5.0
10.0
15.0
20.0
25.0
Private Label cards
30.0
Sep-06 Dec-06
Highlights
• Acquirer, issuer and processor of credit cards• Accepted by more than 200 thousand retailers
• Issues Visa and Mastercard cards• Alliances with retailers
Investor Relations | page 14Investor Relations 14
Hipercard
+67%
122
204
Dec-05 Dec-06
Points of sale
+145%
93
228
2005 2006
2.4 2.7
4.2
6.5
Mar-04Acquisition
Dec-04 Dec-05 Dec-06
+171%
Affiliated Retailers
Number of cards (In millions)
In thousands
Investor Relations | page 15Investor Relations 15
2004: 9 Northeast capitals
Presence troughout the country
2006: 18 capitals among Northeast, South and Southeast
Credit Cards: Hipercard
Investor Relations | page 16Investor Relations 16
New Joint - Ventures
Establishment of credit, financing and investment society with the following partners:
VR Group (one of the leading benefit companies in Brazil):
- Offering of employee’s benefit products to Unibanco’s clients
- Offering of financial products, such as payroll loans, credit lines, credit card receivables accounts, among others
- VR has relationship with 20 thousand HR departments and agreements with 200 thousand retailers
BanCrBanCreded
Banco Cruzeiro do Sul (one of the leaders in payroll loans)
- Banco Cruzeiro do Sul has expertise in managing alternative distribution
channel mainly for the public sector
- Development of business in the payroll loan segment
Ipiranga Group (second largest oil company in the country):
- Offering of financial products, such as credit cards, personal credit,
consumer credit and insurance.
- 4,200 service centers and 9 million Ipiranga’s clients
Investor Relations | page 17Investor Relations 17
Financial Performance
Investor Relations | page 18Investor Relations 18
Annualized ROAE (%) Stockholders’ Equity (R$ Bln)
Performance
2005 20062004
R$ Millions
9.3
8.1
21.1%
16.8%
22.4%
Net Income(1)
Operating Income
+ 13.2%
+ 20.2%
4Q06/4Q054Q06
576
912
2006(1)
2,210
3,521
+ 20,2%
+ 20,5%
2006/2005
10.4(1)
(1) Before the extraordinary event
24.8%
10.1(1)
3Q06
24.2%
9.3
4Q054Q04
20.1%
8.1
25.8%
9.9
4Q06
Investor Relations | page 19Investor Relations 19
R$ Millions
Reduction in goodwill amortization period
During 3Q06, Unibanco reduced its goodwill amortization period from 10 to 5 years
2006 2005
1,750 1,838
Net income without goodwill amortization
Net income with goodwill amortization
Stockholders’ equity without goodwill amortization
Stockholders’ equity with goodwill amortization
ROAE without goodwill amortization (%)
ROAE with goodwill amortization (%)
2,210 1,838
9,921 9,324
10,381 9,324
18.2 21.1
22.4 21.1
Acceleration of goodwill amortization (460) -
Investor Relations | page 20Investor Relations 20
2006 Performance
ROAE (1)
ROAA (1)
Efficiency Ratio
BIS Ratio
Earnings per share (R$) (1)
(1) Before the extraordinary event of goodwill amortization
49.3% 51.5%
16.0% 15.6%
0.79 0.66
2.3% 2.1%
22.4% 21.1%
-220 b.p.
40 b.p.
19.7%
20 b.p.
130 b.p.
2006 2005
Investor Relations | page 21Investor Relations 21
Highlights
6.6% growth in the Retail portfolio in 4Q06, with Credit Cards up 17.1% and SMEs up 7.0%
Loan portfolio quality improvement: 18.8% reduction in provisions for loan losses, 4Q06 versus 4Q05 Better ratio of D-H portfolio over total loans (6.4% vis-à-vis 7.7% in December 2005) Higher E-H portfolio coverage ratio, 115%, compared to 112% in December 2005
Loan
Portfolio
Results
20.2% net income growth, 2006 versus 2005 20.5% operating income growth, 2006 versus 2005 Improvement in Efficiency Ratio: 49.3% in 2006 from 51.5% in 2005
UnitsUBBR11
Up 47% in 2006 compared to a 33% growth of Ibovespa. The greatest growth among Brazilian private-owned banks listed on Bovespa in 2006
Ibovespa weighting: 1.923%. A 95% increase since its inclusion (May 2005)
Financial
Margin
Gross Financial Margin grew to 10.2% in 2006, vis-à-vis 10.0% in 2005, despite the 475 b.p. Selic rate decline
Net Financial Margin improved to 8.0% in 4Q06, higher than the 7.5% in 4Q05
Investor Relations | page 22Investor Relations 22
Top 3 in BNDES overall ranking with 8.6% market share
30% increase in cash management revenues
Lead coordinator of Ambev´s debentures issuance, which was awarded “Local Currency Financing Deal” in 2006, by LatinFinance magazine
Investment Banking department made 31 deals, valued at approximately R$18 billion
Top 10 Research House, according to Institutional Investor magazine. 1st place in Natural Resources category, and 3rd place in Consumer Goods
Operational results: 33% of net income in 2006, vis-à-vis 9% in 2005
Leadership in commercial lines, energy, environment, D&O (Directors and Officers) and extended warranty products
Combined ratio of 94.5% in 2006, better than 98.3% in 2005
AUM reached R$44 billion
Private Bank AUM grew 25% in 2006
Awarded “Top Equity Management” by Valor Econômico newspaper, for the 4th consecutive year
17% overall client base growth, reaching 23.8 million, with a 13% increase in branch customers
New partnerships and alliances: Sonae/Wal-Mart, Ipiranga, Grupo VR (UniVR), and Banco Cruzeiro do Sul
Expansion of Hipercard to the South and Southeast, with 145% growth in total points-of-sale 26.7% credit card portfolio growth over the last 12 months Core deposits funding surpassed R$16 billion, +30% in the year
2006 Business Highlights
Wholesale
Retail
Insurance andPension Plans
WealthManagement
Investor Relations | page 23Investor Relations 23
Financial Indicators
Gross Profit from Financial Intermediation
Total Assets Loan Portfolio
Earnings per Unit (R$)
4Q05 1Q06 2Q06
91,831
93,770
98,217
Dec-05 Mar-06 Jun-06
39,875 39,684
2,481
2,257
2,357
4Q05 1Q06 2Q06
2,392
3Q06
101,999
Sep-06
41,929
3Q06
0.37 0.35
0.38
R$ Millions
Dec-05 Mar-06 Jun-06 Sep-06
43,323
0.39
Dec-06 Dec-06
45,361
2,489
4Q06 4Q06
0.42
103,777
Investor Relations | page 24Investor Relations 24
Personnel and Administrative Expenses
Fees from Services Rendered
Income Statement Summary
R$ Millions
1,6011,956
889909
(1,348)(1,527)
759912
509 576
7,297 6,343
3,582 3,270
(5,713) (5,092)
3,521 2,921
2,210 1,838
2006 2005
Gross Profit from Financial Intermediation Provisions for Loans Losses
Net Profit from Financial Intermediation
Operating Income
Net Income before the extraordinary event
4Q06 4Q05
(656)(533) (2,422) (1,904)
2,2572,489 9,719 8,247
3Q06
2,481
(579)
1,902
909
(1,458)
906
566
Investor Relations | page 25Investor Relations 25
Loan Portfolio Growth
+13.8%
Sep-06 Dec-06
+4.7%
6.6%
Dec-05
Wholesale
Retail
R$ Millions
39,875
45,361
2.3%
25,940
22,949
19,42116,926
43,323
24,338
18,985
Investor Relations | page 26Investor Relations 26
Corporate
Individuals R$ Millions
R$ Millions
Dec-05 Sep-06
+6.4%
15,614
16,383
Dec-06
17,425
+11.6%
+15.1%
24,261
+3.7%
26,940
Main Highlights
27,936
-4.5%
1.9%
17.1%
16.1%
14.7%
6.8%
Quarter
6.0%
17.6%
26.7%
7.0%
2.3%
20.0%
Year
Loan Portfolio Growth
-20.8%-51.4%
Dec-05 Sep-06 Dec-06
Branch Network
Credit Cards
Car Loans
Consumer Finance Companies
Motorcycle Financing
SMEs
Large Corporate
Investor Relations | page 27Investor Relations 27
Financial Margin
Net Financial MarginFinancial Margin
23.3%
29.1%27.2% 27.9%
Provisions for Loan Losses / Financial Margin
-770 b.p.
4Q05 2Q06 3Q061Q06
21.4%
4Q06
18.00%
13.25%
Selic Interest Rate
2005 2006
10.2%
10.0%
7.7% 7.7%
Investor Relations | page 28Investor Relations 28
Asset Quality
D-H Portfolio/ Loan Portfolio
Dec-05 Sep-06 Dec-06
6.4%6.7%7.7%115%
114%
112%
Dec-05 Sep-06 Dec-06
Coverage E-H Portfolio
Coverage D-H Portfolio
92%87%
67%
Dec-05 Sep-06 Dec-06
Investor Relations | page 29Investor Relations 29
441
548
599
Dec-05 Jun-06 Dec-06
+35.8%
R$ Millions
Additional Allowance for Loan Losses
Investor Relations | page 30Investor Relations 30
Dec-06 Sep-06 Dec-05
12.4%
9.8%
9.4%
4.6%
6.6%
7.9%
3.4%
5.8%
15.3%
9.4%
9.6%
4.2%
6.6%
8.1%
3.2%
5.9%
10.1%
6.1%
9.2%
3.6%
4.7%
6.1%
3.9%
5.2%
Loan Portfolio Coverage
Consumer Finance Companies
Credit Cards
Retail Bank - Individuals
Auto Financing
SMEs
Retail
Wholesale
Unibanco Consolidated
Allowance for Loan Losses / Loan Portfolio
Investor Relations | page 31Investor Relations 31
3,963 4,469 3,778
6,757 5,558 5,629
5,452 4,648 3,044
16,172 14,675 12,451
29,631 29,130 25,946
89,583 86,280 75,793
45,803 43,805 38,397
43,780 42,475 37,396
Dec-06 Sep-06 Dec-05
40%45% 35%
Deposits and Assets under Management
Demand Deposits
Savings Deposits
Core Deposits CDs
Core Deposits
Time Deposits + Debentures
Assets Under Management (B)
Total Deposits + Debentures + AUM (A+B)
Total Deposits + Debentures (A)
Core Deposits / Total Deposits
R$ Millions
Investor Relations | page 32Investor Relations 32
Core DepositsR$ Millions
10,81112,451
Dec-04 Dec-05
16,172
Dec-06
(1) Source: Brazilian Central Bank, preliminary data.
29.9%
14.3%Brazilian Financial System (1)
Dec 06vs
Dec 05
Dec 06vs
Dec 04
49.6%
23.9%
+49.6%
Core Deposits Growth
Core Deposits Comparison
Investor Relations | page 33Investor Relations 33
Revenues
R$ MillionsEfficiency Ratio Evolution
Efficiency Ratio Expenses
Efficiency Ratio
9,878
5,092
11,593
5,713
2005 2006
51.5%49.3%
8,310
5,058
2004
60.9%
Investor Relations | page 34Investor Relations 34
Insurance and Pension Plans
Technical ReservesR$ Millions
Premiums Earned
Pension Plans
Insurance
1,713
2,038
2005 2006
+19.0%
5,3766,345
1,470
1,9536,846
8,298+21.2%
2005 2006
Combined Ratio
98.3%
2005
94.5%
2006
Loss Ratio
48.8%
2006
53.0%
2005
Investor Relations | page 35Investor Relations 35
Shareholders’ Structure
and
Stocks
Investor Relations | page 36Investor Relations 36
Moreira Salles Group
Float Units +GDS
Others
Total
513,068
1,073,969
40,668
1,627,705
Unibanco Holdings
Float Units +GDS
Others
Total
1,627,705
1,073,969
98,515
2,800,189
18%
38%
2%
58%
58%
38%
4%
100%
PNUnibanco Holdings
PN Unibanco
+ UNITs76,7%
Shareholders’ Structure
% of Unibanco shares
% of Unibanco shares
Thousands of Shares
1 GDS=10 Units
Investor Relations | page 37Investor Relations 37
Weighting (%)Jan to Apr-07
Ibovespa 1.923
IBrX-50 3.879
IBrX-100 3.369
IGC Corporate Governance Index 3.967
ISE Sustainability Index* 5.884
Index
* Valid from December 2006 to November 2007.
Units and GDSs
Unibanco Units gained 47% in 2006
Unit continues to increase its weighting
within the Ibovespa. Since its inclusion in the
Ibovespa in May 2005, its participation
increased more than 95%
Units (UBBR11) versus Ibovespa
GDSs (UBB) versus Dow JonesUnits Weighting in Brazilian Stock Indices
Investor Relations | page 38Investor Relations 38
Annex I
Dividends
Investor Relations | page 39Investor Relations 39
143
Dividend History
35% 38% 37% 38% 35% 35% 36% 37% 35%
54 82 102 131 152 160 166204
283
8982
108133
171 180 196
244
334
1997 1998 1999 2000 2001 2002 2003 2004 2005
164210
264
323 340 362
448
617
CAGR = 20%
2006
403
757
36%
1st Half
2nd Half
R$ Millions
• Unibanco has paid semi-annual dividends for more than 3 decades• From 2005 on, Unibanco started paying quarterly dividends
Pay Out Ratio
354
Investor Relations | page 40Investor Relations 40
Annex II
Ratings
Investor Relations | page 41Investor Relations 41
Unibanco Ratings
Fitch Ratings
Unibanco
BB
Foreign Currency
Brazil
Long Term
Short Term
BB+
B
B
BB
Local Currency
Brazil
Long Term
Short Term
-
Unibanco BB+ B
Standard and Poor’s
Unibanco
BB
Foreign Currency
Brazil
Long Term
Short Term
BB
B
B
BB+
Local Currency
Brazil
Long Term
Short Term
BUnibanco BB B
Moody’s
Long TermDebt
Long Term Deposits
Short Term Deposits
Financial Strength
Unibanco Baa3(1) NP C-Ba3
Brazil Ba2 Ba3 NP -
Global Scale: Foreign Currency Global Scale: Local Currency
Long Term Deposits
Short Term Deposits
Unibanco P-1A1
Brazil A1 P-1
(1) The Baa3 rating was attributed to the MTN Programme (Medium Term Note Programme) of Unibanco and also to the notes indexed to the IGP-M (General Market Price Index) and payable in US dollars issued by Unibanco Grand Cayman Branch.
Investor Relations | page 42Investor Relations 42
Brazilian Economy
Investor Relations | page 43Investor Relations 43
Perspectives
2006 2007 (E)
Real GDP Growth (%) 2.9% 3.5%
SELIC (End of Year) 13.25% 11.50%
IPCA (Inflation) 3.1% 4.0%
Trade Balance (US$) 46.1 bi 45.5 bi
Macroeconomic Perspectives
Exchange Rate R$/US$ (Enf of Year) 2.20 2.10
Investor Relations | page 44Investor Relations 44
Investor Relationsphone: 5511-3584-1980
fax: 5511-3584-1585email: [email protected]
site: www.ir.unibanco.com
This presentation contains forward-looking statements regarding Unibanco. its subsidiaries and affiliates - anticipated synergies. growth plans. projected results and future strategies. Although these forward-looking statements reflect management’s good faith beliefs. they involve known and unknown risks and uncertainties that may cause the Company’s actual results or outcomes to be materially different from those anticipated and discussed herein. These risks and uncertainties include. but are not limited to. our ability to realize the amount of the projected synergies and the timetable projected. as well as economic. competitive. governmental and technological factors affecting Unibanco’s operations. markets. products and prices. and other factors detailed in Unibanco’s filings with the Securities and Exchange Commission which readers are urged to read carefully in assessing the forward-looking statements contained herein. Unibanco undertakes no duty to update any of the projections contained herein.