EX-99.1 2 ss403782_ex9901.htm ANNOUNCEMENT TO THE MARKET
 
 
Announcement to the Market

Disclosure of results for the second quarter and first half 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, that uses the concept of incurred loss in IFRS and of expected loss in BRGAAP.

The complete consolidated financial statements under IFRS for the first half of 2014 are available at 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
   
Jun/30/2014
     Dec/31/2013
Total Assets
   1,111,932     (72,201 )   1,039,731     1,105,721     (78,424 )   1,027,297  
Cash and Cash Equivalents, Reserve Requirements, Interbank Deposits, Securities Under Repurchase Agreements, Financial Assets and Derivatives3
   557,624     (27,425 )   530,199     550,837     (25,797 )   525,040  
Loan Operations
   414,928     339     415,267     412,235     (533 )   411,702  
(-) Allowance for Loan Losses4
   (24,547 )   3,116     (21,431 )   (26,371 )   4,136     (22,235 )
Other Financial Assets5
   84,455     (34,804 )   49,651     94,183     (46,591 )   47,592  
Tax Assets6
   42,095     (8,088 )   34,007     44,750     (10,008 )   34,742  
Investments in associates and jointly controlled entitities, Goodwill, Fixed and Intangible Assets, Assets Held for Sale and Other Assets
   37,377     (5,339 )   32,038     30,087     369     30,456  
                                     
Current Liabilities and Long Term Liabilities
   1,023,970     (73,570 )   950,400     1,022,794     (79,689 )   943,105  
Deposits
   277,347     -     277,347     274,383     -     274,383  
Deposits Received Under Securities Repurchase Agreements3
   293,342     (27,002 )   266,340     292,179     (25,497 )   266,682  
Financial Liabilities Held for Trading, Derivatives, Interbank and Institutional funding
   190,072     816     190,888     194,238     969     195,207  
Other Financial Liabilities5
   88,852     (34,222 )   54,630     107,329     (46,055 )   61,274  
Reserves for Insurance, Private Pension and Capitalization
   108,450     -     108,450     102,055     -     102,055  
Provisions and Other Liabilities
   55,593     (6,570 )   49,023     40,263     (553 )   39,710  
Tax Liabilities6
   10,314     (6,592 )   3,722     12,347     (8,553 )   3,794  
                                     
Total Stockholders’ Equity
   87,962     1,369     89,331     82,927     1,265     84,192  
Non-controlling interests
   1,975     (894 )   1,081     1,903     (934 )   969  
Controlling Stockholders’ Equity7
   85,987     2,263     88,250     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
  
   
Jun/30/14
    
2nd Q/14
    
1st Q/14
    
2nd Q/13
    
1st H/14
    
1st H/13
  
BRGAAP - Values Attributable to Controlling Stockholders
   85,987     4,899     4,419     3,583     9,318     7,055  
(a) Allowance for Loan Losses
   2,780     (208 )    94     109     (114 )   242  
(b) Adjustment to market value of shares and quotas
   124     -     -     -     -     -  
(c) Acquisition of interest in Porto Seguro Itaú Unibanco Participações S.A.
   799     (3 )   (4 )   (6 )   (7 )   (12 )
(d) Conversion of subsidiaries and unconsolidated companies abroad
   -     -     -     7     -     (67 )
(e) Effective interest rate
   (284 )   27     17     52     44     114  
(f) Other adjustments
   356     (44 )   126     86     82     70  
Income tax and social contribution on Net Income
   (1,512 )   95    
(101)
     (83 )   (6 )   (173 )
IFRS - Values Attributable to Controlling Stockholders
   88,250     4,766     4,551     3,748     9,317     7,230  
IFRS - Values Attributable to Minority Stockholders
   1,081     77     50     19     127     27  
IFRS - Values Attributable to Controlling Stockholders and Minority Stockholders
   88,331     4,843     4,601     3,767     9,444     7,257  
     
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. The result of the 2ndQ/14 was influenced by the credit card portfolio and the acquisition of payroll loans, loans that normally have different responses in relation to incurred loss and expected loss models.
(b) On IFRS(IAS39 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 (IAS21), exchange rate variations of subsidiaries and non consolidated 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 half of 2014.
 
For comparison purposes, we present on the table below the Result and the Recurring Result according to the IFRS and the BRGAAP.
 
R$ million
Recurring Result
  
2nd Q/14
     1st Q/14     1st H/14     1st H/13  
   
BRGAAP
    
IFRS
    
Variation
    
BRGAAP
    
IFRS
    
Variation
     BRGAAP    
IFRS
    
Variation
     BRGAAP     IFRS     Variation  
Result - Attributable to Controlling Stockholders
     4,899       4,766       (133 )     4,419       4,551       132       9,318       9,317       (1 )      7,055       7,230       175  
Exclusion of the Non-Recurring Events
     74       74       -       110       110       -       184       184       -       79       79       -  
COFINS9 / Provision for loss carryforwards - Porto Seguro
     -       -        -       60       60       -       60       60       -       -       -       -  
Provision for contingencies - Economic Plans10
     31       31       -       41       41       -       73       73       -       79       79       -  
Amortization of Goodwill - Credicard
     42       42       -       42       42       -       85       85       -       -       -       -  
PIS/COFINS - IRB11
     -       -       -       (33 )     (33 )     -       (33 )      (33 )     -       -       -          
Recurring Result - Attributable to Controlling Stockholders
     4,973       4,840       (133 )     4,529       4,661       132       9,502       9,501       (1 )      7,134       7,309       175  
9 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.
10 Expenses for allowance for losses arising from economnic plans that were in effect in Brazil in the 1980's.
11 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, August 5, 2014.
Alfredo Egydio Setubal
Investor Relations Officer