EX-99.1 2 ss211558_ex9901.htm ANNOUNCEMENT TO THE MARKET
 
 
 
Announcement to the Market

Disclosure of results for the first quarter of 2014, according to
International Financial Reporting Standards – IFRS


 
We present below the differences between our financial statements in BRGAAP1 and in International Financial Reporting Standards - IFRS. We emphasize that the main difference in the result and equity relates to the allowance for loan losses, which uses the concept of incurred loss in IFRS and of expected loss in BRGAAP.

The complete consolidated financial statements under IFRS for the first quarter of 2014 are available on our website: www.itau.com.br/investor-relations.
 

 
Comparison between BRGAAP1 and IFRS
R$ million
                     
Balance Sheet
   BRGAAP   Adjustments and
Reclassifications2		   IFRS     BRGAAP  
Adjustments and
Reclassifications2
  
IFRS
  
     Mar/31/2014     Dec/31/2013    
Total Assets
   1,107,376       (82,091 )      1,025,285       1,105,721       (78,424 )     1,027,297    
Cash and Cash Equivalents, Reserve Requirements, Interbank Deposits, Securities Under Repurchase Agreements, Financial Assets and Derivatives3
   552,591       (30,306 )      522,285       550,837       (25,797 )     525,040    
Loan Operations
   408,291       31      
408,322
       412,235       (533 )     411,702    
(-) Allowance for Loan Losses4
   (25,042 )      3,766       (21,276 )      (26,371 )     4,136       (22,235 )  
Other Financial Assets5
   92,033      
(42,039
 )     
49,994
       94,183       (46,591 )     47,592    
Tax Assets6
   43,005       (8,635 )      34,370       44,750       (10,008 )     34,742    
Investments in associates and jointly controlled entities, Goodwill, Fixed and Intangible Assets, Assets Held for Sale and Other Assets
   36,498      
(4,908
 )     
31,590
       30,087       369       30,456    
                                                 
Current Liabilities and Long Term Liabilities
   1,023,284       (83,486 )      939,798       1,022,794       (79,689 )     943,105    
Deposits
   278,208      
-
      
278,208
       274,383       -       274,383    
Deposits Received Under Securities Repurchase Agreements3
   288,616       (29,777 )      258,839       292,179       (25,497 )     266,682    
Financial Liabilities Held for Trading, Derivatives, Interbank and Institutional funding
   192,333       936      
193,269
       194,238       969       195,207    
Other Financial Liabilities5
   97,045       (41,504 )      55,541       107,329       (46,055 )     61,274    
Reserves for Insurance, Private Pension and Capitalization
   104,595      
-
       104,595       102,055       -       102,055    
Provisions and Other Liabilities
   52,271       (6,039 )     
46,232
       40,263       (553 )     39,710    
Tax Liabilities6
   10,216       (7,102 )      3,114       12,347       (8,553 )     3,794    
                                                 
Total Stockholders’ Equity
   84,092      
1,395
      
85,487
       82,927       1,265       84,192    
Non-controlling interests
   1,919      
(913
 )      1,006       1,903       (934 )     969    
Controlling Stockholders’ Equity7
   82,173      
2,308
       84,481       81,024       2,199       83,223    
1 BRGAAP represents the accounting practices adopted in Brazil for financial institutions, according to regulation of the Brazilian Central Bank;
2 Resulted from reclassifications between assets and liabilities and other effects from IFRS adoption;
3 Resulted from the elimination of transactions between the parent company and exclusive funds (mainly PGBL and VGBL fund quotas), which are consolidated under IFRS;
4 Implementation of the criteria for calculating the Allowance for Loan Losses as defined in IFRS;
5 Difference in accounting, mainly for Foreign Exchange Portfolio, which started to be considered as a net effect of Assets and Liabilities;
6 Difference in accounting, mainly for deferred taxes, which are now treated as a net effect of Assets and Liabilities in each of the consolidated companies.
7 Conciliation of Controlling Stockholders’ Equity is presented in the following table.
 
 
 


Itaú Unibanco Holding S.A.
 
 
 

 
Below, the conciliation of the Result and Equity, and the conceptual description of the major adjustments.
 
Conciliation
R$ million
Adjustments
  
Equity
    
Result
  
   
Mar/31/14
    
1stQ/14
    
4thQ/13
    
1stQ/13
  
BRGAAP - Values Attributable to Controlling Stockholders
     82,173       4,419       4,646       3,472  
(a) Allowance for Loan Losses
     2,988       94       456       133  
(b) Adjustment to market value of shares and quotas
     80       -       -       -  
(c) Acquisition of interest in Porto Seguro Itaú Unibanco Participações S.A.
     802       (4 )     (7 )     (6 )
(d) Conversion of subsidiaries and unconsolidated companies abroad
     -       -       (30 )     (74 )
(e) Effective interest rate
     (311 )     17       19       62  
(f) Other adjustments
     298       126       17       (16 )
Income tax and social contribution on Net Income
     (1,549 )     (101 )     (191 )     (90 )
IFRS - Values Attributable to Controlling Stockholders
     84,481       4,551       4,910       3,482  
IFRS - Values Attributable to Minority Stockholders
     1,006       50       38       8  
IFRS - Values Attributable to Controlling Stockholders and Minority Stockholders
     85,487       4,601       4,948       3,490  
               
Differences between IFRS and BRGAAP Financial Statements
(a) On IFRS (IAS 39), loan losses allowances must be made when there is objective evidence that loan operations have suffered a reduction in its value (Incurred Loss). On BRGAAP, the expected loss model is used8.
(b) On IFRS (IAS 39 and 32), stocks and quotas classified as permanents investments were measured at fair value and its gains and losses were recorded directly on Equity, with no impact on the income statement of the period.
(c) On IFRS, the effect of accounting at fair value the acquisition of the participation in Porto Seguro Itaú Unibanco Participações S.A. was recognized.
(d) On the IFRS (IAS 21), exchange rate variations of subsidiaries and nonconsolidated companies abroad, where the functional currency (defined as the currency of the primary economic environment on which each entity operates) differs from the Real, are recorded directly on Equity with no impact on the income statement of the period. On BRGAAP, until 2013 the exchange variation of investments abroad (other than the Functional Currency Dollar) exchange rate variation and hedges of such investments transiting through the income statement. From 2014 these exchange rate variations have been recorded directly in equity, thus there was no more difference in treatment between BRGAAP and IFRS.
(e) On the IFRS (IAS 39), the assets and financial liabilities measured at amortized cost are recognized according to the methodology of effective interest rate, which appropriates the revenues and costs directly attributed to the acquisition, issue or disposal for the period of operation. On BRGAAP, the recognition of expenses and revenues from fees occurs at the time of contracting these operations.
(f) Other Adjustments mainly comprise the difference in the eligibility of operations of the Cash Flow Hedge for purposes of IFRS and the reversal of the Goodwill Amortizations pursuant the BRGAAP.
8 For more details see our Complete Financial Statements for the first quarter of 2014.
 
For comparison purposes, we present on the table below the Result and the Recurring Result according to the IFRS and the BRGAAP.
 

Recurring Result
  
1stQ/14
  
4thQ/13
  
1stQ/13
   
BRGAAP
  
IFRS
  
Variation
  
BRGAAP
  
IFRS
  
Variation
  
BRGAAP
  
IFRS
  
Variation
Result - Attributable to Controlling Stockholders
     4,419       4,551       132       4,646       4,910       264       3,472       3,482       10  
Exclusion of the Non-Recurring Events
     110       110       -       34       34       -       40       40       -  
Program for the Settlement or Installment Payment of Taxes - Law No. 12,865/13
     -       -       -       (508 )     (508 )     -       -       -       -  
IRB - Change in criteria to recognize our investment in IRB Brasil Resseguros S.A. 9
     -       -       -       (131 )     (131 )     -       -       -       -  
COFINS10 / Provision for loss carryforwards - Porto Seguro
     60       60       -       (272 )     (272 )     -       -       -       -  
Realization of Assets and Impairment 11
     -       -       -       239       239       -       -       -       -  
Provision for contingencies 12
     41       41       -       648       648       -       40       40       -  
Tax and Social Security Contributions
     -       -       -       276       276       -       -       -       -  
Civil Lawsuits
     41       41       -       372       372       -       40       40       -  
Goodwill Credicard
     42       42       -       -       -       -       -       -       -  
PIS / COFINS - IRB13
     (33 )     (33 )     -       -       -       -       -       -       -  
Other
     -       -       -       58       58       -       -       -       -  
Recurring Result - Attributable to Controlling Stockholders
     4,529       4,661       132       4,680       4,944       264       3,512       3,522       10  

9 Effect of the change in criteria to recognize our investment in IRB Brasil Resseguros S.A. according to the equity method, because we reached significant degree of influence on the decisions of the legal entity.
10 Effect of the favorable decision, by the Federal Supreme Court (STF), on the legality of COFINS levy on this type of operation proportional to our interest in the company.
11 In 2013, it was composed of the impairment of assets.
12 Improvement in criteria that determine the recognition of contingencies.
13 Effect of the favorable decision on the increase of the PIS/COFINS calculation bases of IRB Brasil Resseguros S.A.

The tables in this report show the figures in millions. Variations and summations, however, are calculated in units.


São Paulo, April 29, 2014.

Alfredo Egydio Setubal
Investor Relations Officer


Itaú Unibanco Holding S.A.