Itaú Unibanco

Risk Management – Pillar 3

1.2	Risk and Capital Governance

Itaú Unibanco established risk and capital management committees that report directly to the Board of Directors. Members of these committees are elected or appointed by the Board. At the executive level, risk is managed by corporate bodies composed of senior management.

A detailed description of the structure can be found in the Consolidated Annual Report in session Our Risk Management. The Consolidated Annual Report can be found in the website www.itau-unibanco.com.br/ri, section Financial Information.

Capital

2.1	Capital Management

The Board of Directors is the ultimate body in the Itaú Unibanco’s capital management and it is responsible for approving the capital management institutional policy and guidelines regarding the funding level of the conglomerate. Also in ambit of capital management, through the ICAAP report, the Board of Directors approves:

the identification of material risks, the determination of the need for additional capital for the material risks and the internal methodologies for quantifying capital;

the capital plan in both normal and stress situations;

the capital contingency plan;

the internal assessment of capital adequacy;

the independent validation of ICAAP processes and models.

Additionally, the conclusions of and points of attention raised by auditors on capital management processes are submitted to the Board of Directors.

At the executive level, committees composed of senior management are responsible for approving risk assessment and capital calculation methodologies, as well as reviewing, monitoring and recommending capital-related documents and topics to the Board of Directors. As for the committees governance, Itaú Unibanco has a dedicated structure for capital management, which consolidates information and coordinates related processes, all of which subject to verification by the independent validation, internal controls and audit areas.

The capital plan is consistent with the Itaú Unibanco’s strategic plan, and is aimed at ensuring the maintenance of an adequate and sustainable capital level, taking into account analyses of the economic, competitive and political environments, besides other external factors. The capital plan comprises the following:

Short and long-term capital goals and projections of Itaú Unibanco, under normal and stress scenarios, according to the Board of Directors’ guidelines;

Main sources of capital;

Contingency capital plan, containing actions to be taken in case of a potential capital deficiency.

During its development, at least the following is considered:

Analysis of the threats and opportunities related to the economic and business environment;

Projections about balance sheets and income;

Targets for growth and/or market share;

Segments targeted by the institution and their related products;

Profit sharing policy and its impacts on capital.

As part of the capital plan, stress tests are applied, considering severe events, aiming at finding potential capital shortages. The stress scenarios are approved by the Board of Directors and their impacts on capital are considered for devising the strategy, business positioning and capital.

Complementary to the capital assessment for Pillar 1 risks, Itaú Unibanco have been developing mechanisms for identifying and analyzing the materiality of other risks faced by the institution, besides methodologies for assessing and quantifying the need for additional capital to cover them.

Itaú Unibanco

Risk Management – Pillar 3

In order to provide the necessary information for supporting decision taking by the Executives and the Board of Directors, management reports are prepared and presented at committees, informing about Itau Unibanco’s capital adequacy, as well as about the projections of future capital levels in normal and stress situations.

2.2	Capital Requirements in Place and in Progress

Itaú Unibanco’s minimum capital requirements follow the set of resolutions2 and circulars disclosed by the Central Bank of Brazil (BACEN) that implemented, in Brazil, the global capital requirement standards known as Basel III. They are expressed as ratios of the capital available stated by the Referential Equity (PR), or Total Capital, composed of the Tier I Capital (which comprises the Common Equity and Additional Tier 1 Capital) and Tier II Capital, and the risk-weighted assets, or RWA.

From the first quarter of 2015, the Total Capital, Tier 1 Capital and Common Equity Tier 1 Capital ratios were calculated on a consolidated basis, applied to institutions included in Prudential Conglomerate3, which comprises not only financial institutions but also collective financing plans (“consórcios”), payment entities, factoring companies or companies that directly or indirectly assume credit risk, and investment funds in which the conglomerate retains substantially all risks and rewards. The information published in periods prior to the first quarter of 2015 is determined in the Financial Conglomerate.

For purposes of calculating these minimum capital requirements, the total RWA is determined as the sum of the risk-weighted asset amounts for credit risk, market risk, and operational risk. Itaú Unibanco uses the standardized approaches to calculate these risk-weighted asset amounts described in paragraph 2.4 Risk-weighted Assets.

The minimum Total Capital requirement corresponds to 11 percent from October 1, 2013 to December 31, 2015, decreasing gradually to 8 percent through January 1, 2019.

As a consideration, BACEN standards establish an Additional Tier 1 Capital, which corresponds to the combination of the conservation (fixed) and countercyclical (variable) capital buffers which, together with the requirements mentioned in the paragraph above, increase the requirements for long-term capital.

The standards also redefined new requirements to qualify instruments eligible for Tier 1 or Tier 2 Capital. Additionally, establishes a gradual reduction of the eligibility of the instrument inventory issued pursuant to CMN Resolution 3,444.

The Basel III implementation calendar was set by the BACEN as follows.

Basel III ‐ Schedule
	01/01/2014	01/01/2015	01/01/2016	01/01/2017	01/01/2018	01/01/2019
Common Equity Tier 1	4.5%	4.5%	4.5%	4.5%	4.5%	4.5%
Tier 1	5.5%	6.0%	6.0%	6.0%	6.0%	6.0%
Total Capital	11.0%	11.0%	9.875%	9.250%	8.625%	8.0%
Additional Common Equity Tier 1 - Lower Limit	-	-	0.625%	1.25%	1.875%	2.5%
Additional Common Equity Tier 1 - Upper Limit (1)	-	-	0.625%	2.5%	3.75%	5.0%
Common Equity Tier 1 +Additional Lower Limit	4.5%	4.5%	5.125%	5.75%	6.375%	7.0%
Tier 1 + Additional Lower Limit	5.5%	6.0%	6.625%	7.25%	7.875%	8.5%
Total Capital +Additional Lower Limit	11.0%	11.0%	10.5%	10.5%	10.5%	10.5%
Common Equity Tier 1 + Additional Upper Limit(1)	4.5%	4.5%	5.125%	7.0%	8.25%	9.5%
Tier 1 + Additional Lower Limit(1)	5.5%	6.0%	6.625%	8.5%	9.75%	11.0%
Total Capital + Additional Upper Limit(1)	11.0%	11.0%	10.5%	11.8%	12.375%	13.0%
Prudential adjustments deductions	20%	40%	60%	80%	100%	100%

(1)	In 2016, the Common Equity Tier 1 Upper Limit is equal to the Lower Limit, as set by the Central Bank Circular No. 3741 of 29 December 2014. In other years, it is considered the maximum.

The compliance of BACEN to the standards recommended by the Basel Committee was assessed at the end of 2014, under the Regulatory Consistency Assessment Programme (RCAP). The rules effective in Brazil were considered compliant—pursuant to the BIS, Brazil is a compliant jurisdiction3—i.e., the capital standards established in Brazil are also consistent with the internationally accepted minimum requirements. The pointed out discrepancies were considered immaterial.

The standards that implemented the Basel III rules in Brazil were disclosed on March 1, 2013 through Resolutions No. 4,192 to No. 4,195 of the National Monetary Council (CMN) (Resolution No. 4,195 was revoked by Resolution No. 4,280), together with 15 Circulars published by BACEN on March 4, 2013, as amended.

2	Further details of prudential regulation can be found in BACEN Circular No. 3,644, CMN Resolution No. 3,533 or in the link: http://www.bcb.gov.br/?BRPRUDENTIALFINREG.

3	Regulatory Consistency Assessment Programme (RCAP). Assessment os Basel III regulations in Brasil in December 2013, updated in March 2015 with no additional material points.

Itaú Unibanco

Risk Management – Pillar 3

Minimum capital requirement for Insurance

The National Private Insurance Council (CNSP) enacted on February 18, 2013 CNSP Resolutions Nos. 280 (which repeals Circular No. 411), 283, and 284, which rules address for the allocation of capital arising from the underwriting and operational risk. On September 25, 2014, the calculation requirements were changed by Resolution No. 316 of the National Council of Private Insurance (CNSP) (which revoked CNSP Resolutions No. 263, 269 and 302). These rules address the regulatory capital rules required for the authorization and operation of life insurance, pension and capitalization companies. CNSP Resolution No. 228 of December 6, 2010, which addresses the criteria to establish additional capital based on the credit risk of the supervised entities, took effect in January 2011. In addition to the underwriting, credit and operational risks, CNSP Resolution No. 317 was disclosed in December 2014, regulating the market risk capital.

2.3	Capital Composition

The PR, used to monitor compliance with the operational limits imposed by BACEN, is the sum of Tier I and Tier II, where:

Tier I: comprises the Common Equity Tier I, based on the social capital, selected reserves and retained earnings, net from deductions and prudential adjustments, as well as the Additional Tier I Capital;

Tier II: comprises as eligible instruments, primarily, subordinated debts, subject to prudential limits.

The table below presents the composition of the referential equity and its components Common Equity Tier I, Additional Tier I Capital and Tier II Capital, taking into consideration their respective deductions and prudential adjustments, as per Resolutions mentioned.

Composition of Referential Equity (PR)			R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	3/31/2014
Stockholders’ equity Itaú Unibanco Holding S.A. (Consolidated)	96,954	95,848	82,173
Minority Interest in Subsidiaries	860	2,333	1,844
Changes in ownership interest in a subsidiary in capital transactions	4,579	4,899	5,819
Unrealized Results	-	-	-
Consolidated Stockholders’ Equity (BACEN)	102,393	103,079	89,836
Preferred shares with clause of redemption excluded from Tier I	-	(1,048)	(890)
Deductions	(10,942)	(5,819)	(5,934)
Common Equity Tier I	91,451	96,212	83,013
Instruments eligible to comprise Additional Tier I	-	-	-
Additional Tier I deductions	50	20	21
Additional Tier I Capital	50	20	21
Tier I adjustments	-	-	-
Tier I (Common Equity Tier I +Additional Tier I Capital)	91,501	96,232	83,034
Instruments eligible to comprise Tier II (1)	29,354	33,547	33,547
Tier II deductions	48	12	12
Tier II adjustments	-	-
Tier II	29,402	33,559	33,559
Exclusions: Funding instruments issued by financial institutions	-	-	-
Reference Equity (Tier I + Tier II)	120,903	129,790	116,593

(1)	The Instruments eligible to comprise Tier II also includes R$ 226 million of Preferred Shares

In accordance with the schedule for the implementation of Basel III in Brazil, as from the first quarter of 2015, the information will start to be reported in the Prudential Conglomerate. From this period onwards, the prudential deductions will also be changed from 20% to 40%.

Appendix I – Referential Equity (PR) Composition and its Adequacy hereto breaks down in detail the Referential Equity as required by Circulars Nos. 3,678 and 3,716.

Itaú Unibanco

Risk Management – Pillar 3

Funds obtained through the issue of subordinated debts that compose Tier II capital, for the purpose of the ratio between capital and risk-weighted assets, are described below:

Subordinated Debt and Referential Equity Tier II									R$ million
	Maturities						3/31/2015	12/31/2014	3/31/2014
Name of instrument	<1 year	1-2 years	2-3 years	3-4 years	4-5 years	>5 years	Total	Total	Total
Bank Deposit Certificate (CDB)	5,789	1,829	‐	‐	‐	‐	7,618	7,368	12,255
Financial Bills	576	4,292	9,548	8,383	107	3,137	26,043	25,765	25,182
Euronotes	353	‐	‐	‐	‐	24,694	25,047	20,732	17,659
Subordinated Debt (Mar/15)	6,718	6,121	9,548	8,383	107	27,831	58,708	53,865	55,096
Subordinated Debt Not Elegible to Capital(1)	127	30	28	26	24	585	820	703	438
Subordinated Debt ‐ Total (Mar/15)	6,845	6,151	9,576	8,409	131	28,416	59,528	54,568	55,534
Subordinated Debt after Reducer (Mar/15)	‐	1,224	3,819	5,030	85	27,831	37,990
Subordinated Debt (Dec/12)	3,367	4,951	725	6,997	8,742	29,139	53,921
Subordinated Debt after Reducer (Dec/12)	‐	990	290	4,198	6,993	29,139	41,611
Threshold(2) Subordinated debt	‐	693	203	2,939	4,895	20,397	29,128
Subordinated Debt Elegible to Capital (Mar/15)(3)	‐	693	203	2,939	4,895	20,397	29,128

(1)	Subordinated debt that does not make up the Tier ll (PR)

(2)	Subordinated debt with application of threshold in accordance with the current rules (Resolution 4.192/13 - Art 28)

(3)	According to current legislation, the accounting balance of subordinated debt as of December 2012 was used for the calculation of referential equity as of March, 2015, considering instruments approved after closing date to compose Tier 2, totaling R$ 53,921 MM

Details concerning maturities, compensation, principal amount, accounting balance and subordinated debt balance are described next:

Subordinated Debt Elegible to Capital									R$ million
				3/11/2015	12/31/2014	3/31/2014	Mar/15-Dec/14	Mar/15-Mar14	3/31/2015
Name of instrument/Currency	Issue	Maturity	Compensation p.a.	Principal Value			Principal Variation		Accounting Balance
Subordinated CDB(1) ‐ BRL
	2007	2014	100% of CDI + 0.35% to 0.6%	‐	‐	1,865	‐	(1,865)	‐
			IGPM + 7.22%	‐	‐	33	‐	(33)	‐
	2008	2014	112% of CDI	‐	‐	1,000	‐	(1,000)	‐
	2008	2015	119.8% of CDI	400	400	400	‐	‐	842
	2010	2015	113% of CDI	50	50	50	‐	‐	87
	2006	2016	100% of CDI + 0.7%	466	466	466	‐	‐	1,116
	2010	2016	110% to 114% of CDI	2,665	2,665	2,665	‐	‐	4,622
			IPCA(2) + 7.21%	123	123	123	‐	‐	237
	2010	2017	IPCA + 7.33%	367	367	367	‐	‐	714
			Total	4,071	4,071	6,969	‐	(2,898)	7,618
Subordinated Financial Bills ‐ BRL
	2010	2016	100% of CDI + 1.35% to 1.36%	365	365	365	‐	‐	370
			112% to 112.5% of CDI	1,874	1,874	1,874	‐	‐	1,900
			IPCA + 7%	30	30	30	‐	‐	53
	2010	2017	IPCA + 6.95% to 7.2%	206	206	206	‐	‐	294
	2011	2017	108% to 112% of CDI	3,224	3,224	3,224	‐	‐	3,393
			100% of CDI + 1.29% to 1.52%	3,650	3,650	3,650	‐	‐	3,742
			IPCA + 6.15% to 7.8%	352	352	352	‐	‐	520
			IGPM + 6.55% to 7.6%	138	138	138	‐	‐	211
	2012	2017	100% of CDI + 1.12%	500	500	500	‐	‐	521
	2011	2018	IGPM + 7%	42	42	42	‐	‐	53
			IPCA + 7.53% to 7.7%	30	30	30	‐	‐	42
	2012	2018	108% a 113% of CDI	6,373	6,373	6,373	‐	‐	6,916
			IPCA + 4.4% to 6.58%	461	461	461	‐	‐	617
			100% of CDI + 1.01% to 1.32%	3,782	3,782	3,782	‐	‐	3,933
			9.95% to 11.95%	112	112	112	‐	‐	147
	2011	2019	109% to 109.7% of CDI	2	2	2	‐	‐	3
	2012	2019	110% of CDI	1	1	1	‐	‐	1
			11.96%	12	12	12	‐	‐	17
			IPCA + 4.7% to 6.3%	101	101	101	‐	‐	136
	2012	2020	111% to CDI	1	1	1	‐	‐	1
			IPCA + 6% to 6.17%	20	20	20	‐	‐	29
	2011	2021	109.25% to 110.5% of CDI	6	6	6	‐	‐	9
	2012	2022	IPCA + 5.15% to 5.83%	2,307	2,307	2,307	‐	‐	3,112
			IGPM + 4.63%	20	20	20	‐	‐	23
			Total	23,609	23,609	23,609	‐	‐	26,043
Subordinated Euronotes ‐ USD
	2010	2020	6.20%	990	990	990	‐	‐	3,259
	2010	2021	5.75%	1,000	1,000	1,000	‐	‐	3,194
	2011	2021	5.75% to 6.2%	730	730	730	‐	‐	2,459
	2012	2021	6.20%	550	550	550	‐	‐	1,764
	2012	2022	5.5% to 5.65%	2,600	2,600	2,600	‐	‐	8,315
	2012	2023	5.13%	1,851	1,851	1,851	‐	‐	6,056
			Total USD	7,721	7,721	7,721	-	-
			Total BRL						25,047

			Grand Total						58,708
	Subordinated Debt Reducer								37,990
	Subordinated Debt Delegible to Capital(2)								29,128

(1)	CDB is Bank Deposit Certificate and CDI is Interbank Deposit Certificate. The subordinated notes are redeemable from November 2011.

(2)	IPCA and IGP-M are Brazilian Inflation Indexes.

(3)	According to current legislation, the amounting balance of subordinated debt elegible to capital as of December, 12 was used for the calculation of referential equity as of March, 15.

Itaú Unibanco

Risk Management – Pillar 3

For information on each instrument that is part of the Referential Equity as required by BACEN Circulars Nos. 3,678 and 3,716, please visit the website www.itau-unibanco.com.br/ri, section Corporate Governance, Pillar 3 – Spreadsheet Support, Appendix I and II (Appendix II – Main Features of the Referential Equity Instruments).

2.4	Risk‐Weighted Asset (RWA)

According to CMN Resolutions Nos. 4,193 and 4,281, for assessing the minimum capital requirements, the RWA can be found by adding the portions, as shown below:

RWACPAD = portion relating to exposures to credit risk;

RWACAM = portion relating the exposures in gold, foreign exchange rate and assets subject to foreign exchange rate variations;

RWAJUR = portion relating to exposures subjects to variations of interest rates, interest coupons and coupon rates and classified in the Trading Portfolio;

RWACOM = portion relating to exposures subjects to variations in commodity prices;

RWAACS = portion relating to exposures subjects to variations in equities prices and classified in the Trading Portfolio;

RWAOPAD = portion relating to the calculation of operational risk capital requirements.

The table below presents the consolidated evolution of RWA composition of Itaú Unibanco. Each of the portions mentioned above will be presented in detail in the topics below.

Composition of Risk‐Weighted Asset						R$ million
	Prudencial	Financial
Risk exposures	3/31/2015		12/31/2014		3/31/2014
Risk‐Weighted Assets for Credit Risk (RWACPAD)	728,559	92.4%	706,081	91.9%	686,511	92.1%
Risk‐Weighted Assets for Market Risk (RWAMPAD)	24,776	3.1%	25,176	3.3%	22,054	3.0%
Risk‐Weighted Assets for Operational Risk (RWAOPAD)	35,509	4.5%	36,817	4.8%	36,566	4.9%
Risk‐Weighted Assets (RWA)	788,844	100%	768,075	100%	745,131	100%

Risk‐Weighted Assets for Credit Risk (RWACPAD)

The table below presents the credit risk-weighted (RWACPAD) separated by weighting factor and asset type:

Composition of Risk Weighted Assets for Credit Risk (RWACPAD)			R$ million
	Prudencial	Financial
	3/31/2015	12/31/2014	3/31/2014
Risk exposures
Exposure weighted by credit risk (RWACPAD)	728,559	706,081	686,511
a) Per Weighting Factor (FPR):
FPR at 2%	136	75	53
FPR at 20%	6,291	3,249	7,298
FPR at 35%	8,579	8,139	7,033
FPR at 50%	46,681	34,486	23,615
FPR at 75%	145,250	146,705	127,690
FPR at 85%	147,950	139,730	119,733
FPR at 100%	305,875	307,259	314,160
FPR at 150%	‐	-	20,201
FPR at 250%	34,294	34,838	31,130
FPR at 300%	18,002	14,015	19,288
FPR at 1250%	1,688	4,430	6,392
Derivatives – Future potential gain and Variation of the counterparty credit quality	13,812	13,156	9,919
b) Per Type:
Securities	55,102	37,571	41,332
Loan operations ‐ Retail	119,257	121,534	104,158
Loan operations ‐ Non‐retail	232,035	226,925	230,689
Joint liabilities ‐ Retail	324	324	181
Joint liabilities ‐ Non‐retail	65,499	63,509	63,995
Loan commitments ‐ Retail	25,651	24,835	23,345
Loan commitments ‐ non‐retail	17,629	23,699	29,131
Other exposures	213,063	207,684	193,679

Itaú Unibanco

Risk Management – Pillar 3

Risk-Weighted Assets for Market Risk (RWAMPAD)

The amount of RWAMPAD is obtained by adding the terms: RWACAM, RWAJUR, RWACOM, RWAACS. The table below presents the risk weighted assets for Market Risk:

Composition of Risk‐Weighted Assets for Market Risk (RWAMPAD)			R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	3/31/2014
Risk‐Weighted Assets for Market Risk (RWAMPAD)	24,776	25,176	22,054
Trades subject to interest rate variation (RWAJUR)	12,046	10,347	14,421
Fixed income interest rate denominated in reais (RWAJUR1)	3,995	1,612	2,764
Foreign exchange linked interest rate (RWAJUR2)	4,858	4,809	7,425
Price index linked interest rate (RWAJUR3)	3,194	3,744	3,991
Interest rate linked interest rate (RWAJUR4)	‐	183	241
Operations subject to commodity price variation (RWACOM)	921	952	939
Operations subject to stock price variation (RWAACS)	610	474	1,052
Operations subject to the risk of exposures in gold, foreign currency and foreign exchange rate variations (RWACAM)	11,198	13,403	5,642

Referential equity calculated for covering the interest rate risk of trades of the banking book (RBAN)	1,216	1,846	935

3/31/2015 12/31/2014 3/31/2014

Risk-Weighted Assets for Operational Risk (RWAOPAD)

BACEN Circulars Nos. 3,640, 3,675 and 3,739 establish the criteria for determining the portion of risk-weighted assets related to the capital required for operational risk (RWAOPAD). In accordance with current regulation, the exposure of RWAOPAD is calculated on a semiannual basis, relating to June 30th and December 31st.

The RWA for operational risk is presented below:

Composition of Risk‐Weighted Assets for Market Risk (RWAOPAD)			R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	3/31/2014
Risk‐Weighted Assets for Operational Risk (RWAOPAD)	35,509	36,817	36,566
Retail	6,946	7,079	6,897
Commercial	16,653	13,429	12,502
Corporate finance	1,370	1,132	1,127
Negotiation and sales	2,581	8,256	9,430
Payments and settlements	3,070	2,856	2,785
Financial agent services	2,756	2,031	1,814
Asset management	2,132	2.030	1,993
Retail brokerage	1	4	19

Itaú Unibanco

Risk Management – Pillar 3

2.5	Capital Adequacy

Itaú Unibanco, through the ICAAP, assesses the adequacy of capital to face the incurred risks. The capital is composed by regulatory capital for credit, market and operational risks and by the necessary capital to face other risks.

In order to ensure the robustness of Itaú Unibanco and the availability of capital to support business growth, Itaú Unibanco maintains PR levels above the minimum levels, according to the Basel ratio, Common Equity Tier I, Additional Tier I Capital and Tier II.

On March 31, 2015, the PR reached R$ 120.903 million, R$ 91.501 million in Tier I and R$ 29.402 million in Tier II.

Composition of Referential Equity (PR)			R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	3/31/2014
Tier 1	91,501	96,232	83,034
Common Equity Tier I	91,451	96,212	83,013
Additional Tier I Capital	50	20	21
Tier II	29,402	33,559	33,559
Exclusions: Funding Instruments Issued by Financial Institutions	-	-¬
Referential Equity (PR)	120,903	129,790	116,593
Required Referential Equity (PRE)	86,773	84,488	81,964
Excess capital in relation to Required Referential Equity	34,130	45,302	34,629

The fixed asset ratio shows the percentage at which the PR is committed to permanent assets. Itaú Unibanco is within the maximum limit of 50% of the Adjusted PR, as established by BACEN.

On March 31, 2015, our BIS ratio reached R$15.3%, of which 11.6% equivalent to Tier I and 3.7% to Tier II. The ratio was primarily negatively impacted due to: the Basel III implementation schedule (1.0p.p.), the distribution of interest on capital declared (0,4p.p.), changes in risk‐weighted assets (0,8p.p.) and an increase in deferred tax asset balance related to income tax and social contribution loss (0,5p.p.) carryforwards as part of our mitigation strategy of exchange risk of capital invested abroad. The negative effects were offset due to the adoption of the Prudential Conglomerate and to net income.

The Basel and Fixed asset ratios are presented in the table below.

Basel and Fixed Asset Ratios			R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	3/31/2014
Basel ratio	15.3%	16.9%	15.6%
Tier I	11.6%	12.5%	11.1%
Common Equity Tier I	11.6%	12.5%	11.1%
Additional Tier I Capital	0.0%	0.0%	0.0%
Tier II	3.7%	4.4%	4.5%
Fixed assets ratio	47.5%	49.1%	49.2%
Excess Capital in Relation to Fixed Assets	3,054	1,160	926

To assess the adequacy of Itaú Unibanco’s capital, an internal capital adequacy assessment process (ICAAP) is in place.

The first stage of ICAAP consists of identifying and analyzing the materiality of the risks to which Itaú Unibanco is exposed. Itaú Unibanco’s risk identification process is as follows: (i) map any and all risks that might exist within the institution, taking into account its complexity, its business models, and its social and economic environment and analyzing the materiality, taking into account the initial mapping, of the risks identified under the structured approach and transparent assessment criteria.

Once the material risks are identified, the next stage consists of conducting an individual assessment of the need for additional capital to cover the risk. For risks that capital needs are identified, internal methodologies are developed to quantify the capital required to protect the institution from any unexpected losses that could arise if such risks materialize. As for those risks with some type of regulatory capital requirement (credit risk, trading book market risk, and operational risk), the adequacy of the required capital level to determine if the regulatory capital levels are adequate to cover all our exposures.

To ensure that the institution has an adequate, sustainable level of capitalization, in light of (i) the previously identified material risks, (ii) our business strategy, and (ii) the economic environment, it is also in place, under the ICAAP, a capital planning process. Under this process, capital projections are prepared for the conglomerate, both in common baseline and stress scenarios, aimed at providing inputs to Senior Management and the Board of Directors on capital management.

Itaú Unibanco

Risk Management – Pillar 3

Itaú Unibanco also has a capital contingency plan for cases where the sources of capital prove to be unfeasible or inadequate, or for cases where unforeseen events could affect our capital adequacy. The capital contingency plan comprises a set of actions that would allow us to increase our capitalization levels, if required.

Finally, to complete all the steps above, our capital adequacy is assessed by comparing it with the total capital required to cover all material risks, obtained using internal methodologies. This process is conducted annually and generates a report, which is submitted to the BACEN.

The output of the latest ICAAP conducted for December 2013, indicates that Itaú Unibanco not only has adequate capital to cover all material risks but also has a high capital buffer, thus ensuring the institution’s financial soundness.

Itaú Unibanco

Risk Management – Pillar 3

3	Balance Sheet

Balance Sheet

The following is a comparison between Itaú Unibanco’s Prudential Conglomerate Balance Sheet and its Consolidated Balance Sheet presented at the Financial Statements. Information presented in the Prudential Conglomerate are sufficiently detailed so that the heritage elements disclosed in Appendix I are identified in the last column of the table below.

Comparisson of balance sheets – Assets									R$ million
	Consolidated balance sheet		Diferences1			Prudential			Ref. Annex 1
Assets	3/31/2015
Current assets and Long‐term receivables		1,274,667		(131,498	)		1,143,169
Cash and cash equivalents		18,687		(180	)		18,507
Interbank investments		225,076		(4,099	)		220,977
Securities and derivative financial instruments		324,060		(117,034	)		207,026
Interbank accounts		66,855	‐				66,855
Interbranch accounts		146	‐				146
Loan, lease and other credit operations		439,751		(3,727	)		436,024
Other receivables		195,751		(5,133	)		190,618
Tax credit and Actuarial Assets		–		–			20,524
Tax credits arising from income tax losses and social contribution		–		–			10,920		(b)
Credits resulting from temporary differences		–		–			9,348		(c)
Actuarial assets related to defined benefit pension funds		–		–			256		(d)
Other		–		–			170,094
Other assets		4,341		(1,325	)		3,016
Permanent assets		19,947		40,521			60,468
Investments		3,539		34,598			38,137
Goodwill based on the expectation of future profitability		–		–			401		(e)
investments in the capital of companies that are similar to non‐consolidated financial institutions and insurance companies		–		–			9,368		(f)
investments in the capital of financial institutions		–		–			602		(a)
Other		–		–			27,766
Real estate in use		7,521		(615	)		6,906
Deferred permanent assets		–		–			41		(g)
Other		–		–			6,865
Goodwill		225		(225	)		–
Intangible assets		8,662		6,763			15,425
Acquisition of rights to credit payroll		1,051		–			1,051
Intangible assets acquired from october 1st 2013		–		–			160		(h)
Intangible assets acquired before october 1st 2013		–		–			891		(i)
Other intangible assets		10,261		10,841			21,102
Intangible assets acquired from october 1st 2013		–		–			3,621		(h)
Intangible assets acquired before october 1st 2013		–		–			3,996		(i)
Goodwill based on the expectation of future profitability		–		–			12,834		(e)
Deferred permanent assets		–		–			399		(g)
Other		–		–			252
(Accumulated amortization)		2,649		(4,079	)		(6,728	)
Intangible assets acquired from october 1st 2013		–		–			(488	)	(h)
Intangible assets acquired before october 1st 2013		–		–			(1,622	)	(i)
Goodwill based on the expectation of future profitability		–		–			(4,298	)	(e)
Deferred permanent assets		–		–			(320	)	(g)
Total assets		1,294,613		(90,976	)		1,203,637

1	Differences are mainly due to non‐consolidation of non financial companies (highlighting the following companies: Insurance, Pension Plan and Capitalização) within the Prudential Conglomerate and also by the eliminations of transactions with related parties.

Itaú Unibanco

Risk Management – Pillar 3

Comparisson of balance sheets – Liabilities										R$ million
	Consolidated Balance Sheet			Diferences1			Prudential			Ref. Annex 1
Liabilities	3/31/2015
Current and Long‐term Liabilities		1,194,447			(94,697	)		1,099,750
Deposits		298,652			5,082			303,734
Deposits received under securities repurchase agreements		330,858			2,360			333,218
Funds from acceptances and issuance of securities		50,753			9			50,762
Interbank accounts		4,220			–			4,220
Interbranch accounts		5,146			–			5,146
Borrowings and onlending		96,265			(37	)		96,228
Derivative financial instruments		30,997			45			31,042
Technical provision for insurance, pension plan and capitalization		116,737			(116,737	)		–
Other liabilities		260,819			14,581			275,400
Social and statutory		11,955			(1,639	)		10,316
Tax credits arising from income tax losses and social contribution		–			–			4,613		(b)/(c)
Provision of Actuarial assets related to defined benefit pension funds		–			–			143		(d)
Other		–			–			5,560
Other		–			–			265,084
Deferred income		1,513			(19	)		1,494
Minority interest in subsidiaries		1,700			(840	)		860
Non-controlling interest in subsidiaries that are part of the conglomerate		–			–			860		(j)
Stockholders' equity		96,954			4,579			101,533
Capital		75,000			–			75,000
Eligible instruments		–			–			75,000		(k)
Capital reserves		1,217			–			1,217
Capital reserves		–			–			1,217		(m)
Revenue reserves		22,349			4,121			26,470
Revenue reserves		–			–			26,470		(l)
Asset valuation adjustment		55			458			513
Other revenue and other reserve		–			–			513		(m)
(Treasury shares)		(1,667	)		–			(1,667	)
Shares or other instruments issued by the bank		–			–			(1,667	)	(n)
Total liabilities and stockholders' equity		1,294,613			(90,976	)		1,203,637

1	Differences are mainly due to non‐consolidation of non financial companies (highlighting the following companies: Insurance, Pension Plan and Capitalização) within the Financial Conglomerate and also by the eliminations of transactions with related parties.

Itaú Unibanco

Risk Management – Pillar 3

List of institutions that comprises the Financial Statements of Itaú Unibanco Holding

The following is a list of institutions that comprise the financial statements of Itaú Unibanco Holding Consolidated Balance Sheet presented at the Financial Statements. The institutions that, in addition to being included in the Consolidated Balance Sheet, are also included in the Prudential Conglomerate, are listed below.

List of institutions that comprise the Financial Statements of Itaú Unibanco Holding
Institutions
Aco Ltda.	Itaú Administração Previdenciária Ltda.
Afinico Américas Madeira, Sgps, Sociedade Unipessoal, Ltda.	Itaú Administradora Consórcios Ltda.(1)
Aj Titulos Públicos Fundo de Investimento Referenciado DI(1)	Itaú Asia Securities Ltd.(1)
Albarus S.A.	Itaú Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión
Banco Del Paraná S.A.	Itaú Bahamas Directors Ltd.
Banco Investcred Unibanco S.A.(1)	Itaú Bahamas Nominees Ltd.
Banco Itaú (Suisse) S.A.(1)	Itaú Bank & Trust Bahamas Ltd.(1)
Banco Itaú Argentina S.A.(1)	Itaú Bank & Trust Cayman Ltd.(1)
Banco Itaú BBA S.A.(1)	Itaú Bank, Ltd.(1)
Banco Itaú BMG Consignado S.A.(1)	Itaú BBA Colombia S.A. Corporacion Financiera(1)
Banco Itaú Chile S.A.(1)	Itaú BBA Corredor de Bolsa Ltda. (1)
Banco Itaú International(1)	Itaú BBA International (Cayman) Ltd.(1)
Banco Itaú Paraguay S.A.(1)	Itaú BBA International Plc(1)
Banco Itaú Uruguay S.A.(1)	Itaú BBA México Casa de Bolsa, S.A.(1)
Banco Itaú Veículos S.A.(1)	Itaú BBA México, S.A. de C.V.
Banco Itaubank S.A.(1)	Itaú BBA Participaçãoes S.A.
Banco Itaucard S.A.(1)	Itaú BBA Sas
Banco Itauleasing S.A.(1)	Itaú BBA Trading S.A.
BFB Rent Administração e Locação Ltda.	Itaú BBA Uk Securities Limited(1)
Bicsa Holding Ltd.	Itaú BBA Usa Securities Inc.(1)
Bie Cayman Ltd.	Itaú BMG Corretora de Seguros Ltda.
Borsen Renda Fixa Crédito Privado – Fundo de Investimento	Itaú BMG Gestão de Vendas Ltda.
Cia. Itaú de Capitalização	Itaú BMG Participação Ltda.
Credicard Promotora de Vendas Ltda.	Itaú BMG Seguradora S.A.
Ctbh Fundo de Invetimento Imobiliário-Fii(1)	Itaú Cayman Directors Ltd.
Dibens Leasing S.A. – Arrendamento Mercantil(1)	Itaú Cayman Nominees Ltd.
Estrel Serviços Administrativos S.A.	Itaú Chile Administradora General de Fondos S.A.
Facilita Promotora Ltda.	Itaú Chile Compañia De Seguors de Vida S.A.
Fic Promotora de Vendas ltda.	Itaú Chile corredora de Seguros Ltda.
Financeira Itaú CBD S.A. – Crédito, Financ. e Investimento(1)	Itaú Chile Holdings, Inc.
Fondo Mutuo Etf It Now Ipsa(1)	Itaú Chile Inversiones, Servicios y Administracion S.A.
Fundo Fortaleza Investimento Imobiliário(1)	Itaú Cia. Securitizadora de Créditos Financeiros(1)
Garnet Corporation	Itaú Corretora de Valores S.A.(1)
Hipercard Banco Múltiplo S.A.(1)	Itaú Distribuidora de Titulos e Valores Mobiliários S.A.(1)
Icarros Ltda.	Itaú EU Lux-Itaú Latin America Equity Fund(1)
Iga Participaçãoes S.A.	Itaú EU Lux-Itaú Brazil Equity Fund(1)
Intrag Distribuidora de Titulos e Valores Mobiliários Ltda.(1)	Itaú Europa Luxembourg S.A.
Intrag-Part Administração e Participaçãoes Ltda.	Itaú Global Asset Management Limited
Investcard Referenciado DI – Fundo de Investimentos Cotas FI(1)	Itaú Global Fixed Income Fund(1)
Investimentos Bemge S.A.	Itaú Institucional Curto Prazo – Fundo de Investimento
Ipi - Itaúsa Portugal Investimentos, Sgps Lda.	Itaú International Investment LLC

(1) Institutions that also comprise the Prudential Conglomerate

Itaú Unibanco

Risk Management – Pillar 3

List of institutions that comprise the Financial Statements of Itaú Unibanco Holding
Institutions
Itaú International Securities Inc.(1)	Luizacred S.A. Soc. De Crédito, Financiamento e Investimento(1)
Itaú Japan Asset Management Limited	Marcep Corretagem de Seguros S.A.
Itaú Kinea Private Equity MM FICFI CP(1)	Maxipago Serviços de Internet S.A.
Itaú Middle East Limited	MCC Asesorías Limitada
Itaú Rent Administração e Participaçãoes Ltda.	MCC Securities Inc.(1)
Itaú Seguros S.A.	Megabônus Negócios de Varejo Ltda.
Itaú Singapore Securities Pte. Ltd.(1)	Microinvest S.A. Soc. de Crédito a Microempreendedor(1)
Itaú Uk Asset Management Limited	Mundostar S.A.
Itaú Unibanco Holding Cayman Branch(1)	Munita, Cruzat Y Claro S.A. Corredores de Bolsa(1)
Itaú Unibanco Holding S.A.(1)	Nevada Woods S.A.
Itaú Unibanco S.A. Cayman Branch(1)	Oca S.A.(1)
Itaú Unibanco S.A. New York Branch(1)	Oiti Fundo de Investimento Multimercado Crédito Privado Investimento no Exterior(1)
Itaú Unibanco S.A. Tokyo Branch(1)	Portonovo Companhia Securitizadora de Créditos Financeiros(1)
Itaú Unibanco S.A.(1)	Pró-Imóvel Promotora Ltda.
Itaú Unibanco S.A. Nassau Branch(1)	Proserv-Promociones y Servicios S.A. de Capital Variable
Itaú Unibanco Serviços e Processamento de Informações Comerciais Ltda.	Provar Negócios de Varejo Ltda.
Itaú Unibanco Veículos Administradora de Consórcios Ltda.(1)	Proyek Fip(1)
Itaú Usa Asset Management Inc.	Razac Fundo de Investimento em Participações(1)
Itaú Usa Inc.	Recuperadora de Creditos, Ltda.
Itaú Valores S.A.(1)	Redecard S.A.(1)
Itaú Vida E Previdência S.A.	Rt Alm 5 Fundo de Investimento Renda Fixa
Itauprev Retirement Renda Fixa Crédito Privado - Fundo de Investimento	Rt Alm Soberano 2 Fundo de Investimento Renda Fixa
Itaúsa Europa Investimentos, Sgps, Lda.	Rt Defiant Multimercado - Fundo de Investimento
Itaúsa Portugal - Soc. Gestora de Partic. Sociais, S.A.	Rt Endeavor Renda Fixa Crédito Privado - Fundo de Investimento
Itauseg Participaçãoes S.A.	Rt EnterprRise Curto Prazo - Fundo de Investimento(1)
Itauseg Saúde S.A.	Rt Excelsior Renda Fixa Crédito Privado - Fundo de Investimento
Itauvest Distribuidora de Titulos e Val. Mobiliários S.A.(1)	Rt Itaú Dj Titulos Públicos Fundo de Investimento Referenciado DI(1)
Itb Holding Brasil Participações Ltda.	Rt National Renda Fixa Fundo de Investimento
Itb Holding Ltd.	Rt Union Renda Fixa Fundo de Investimento
Itrust Servicios Inmobiliarios S.A.C.I.	Rt Valiant Renda Fixa - Fundo de Investimento
Iucor Corretora de Seguros Ltda.	Rt Voyager Renda Fixa Crédito Privado - Fundo de Investimento(1)
Jasper International Investment LLC	Topaz Holding Ltd.
Karen International Limited	Trishp Promoção e Serviços Ltda.
Kinea Dinâmico Master long Biased Fundo de Investimento Em Ações(1)	Tulipa S.A.
Kinea I Pipe Fundo de Investimento em Ações(1)	Ubt Finance S.A.
Kinea I Private Equity Fip(1)	Unibanco Empreendimentos Ltda.
Kinea I Total Return Equity - Fundo de Investimento Em Cotas de Fundos de Investimento Multimercado(1)	Unibanco Negócios Imobiliários Ltda.
Kinea II Macro Fundo de Investimento Multimercado(1)	Uni-Investment International Corp.(1)
Kinea Investimentos Ltda.(1)	Unión Capital Afap S.A.
LCPAR Holding Ltda.	Universo Fundo de Investimento em Participacoes(1)
Licania Fund Limited(1)

(1) Institutions that also comprise the Prudential Conglomerate

Itaú Unibanco

Risk Management – Pillar 3

List of the material entities

Total assets, shareholders’ equity, and the industries of the material entities, including those subject to the risk weight for the purpose of capital requirements are as follows:

Major Institutions					R$ million
			3/30/2014		12/31/2014
Institutions of Financial Accounting Scope of Consolidations	Country	Activity	Total Assets	Equity	Total Assets	Equity
Banco Itaú Argentina S.A.(1)	Argentina	Instituição Financeira	6,209	703	5,270	596
Banco Itaú BBA S.A.(1)	Brasil	Instituição Financeira	6,279	5,893	6,321	5,685
Banco Itaú BMG Consignado S.A.(1)	Brasil	Instituição Financeira	46,971	2,151	43,103	1,349
Banco Itaú Chile S.A.(1)	Chile	Instituição Financeira	40,478	3,771	33,905	3,134
Banco Itaú Paraguay S.A.(1)	Paraguai	Instituição Financeira	11,042	1,397	9,160	1,261
Banco Itaú Suisse S.A.(1)	Suiça	Instituição Financeira	4,840	584	3,821	458
Banco Itaú Uruguay S.A.(1)	Uruguai	Instituição Financeira	13,475	1,094	10,447	894
Banco Itaucard S.A.(1)	Brasil	Instituição Financeira	123,034	19,664	153,509	19,277
Banco Itauleasing S.A.(1)	Brasil	Instituição Financeira	10,265	9,752	41,805	40,504
Cia. Itaú de Capitalização	Brasil	Capitalização	4,169	841	4,568	933
Dibens Leasing S.A. – Arrendamento Mercantil(1)	Brasil	Arrendamento Mercantil	150,805	3,197	152,992	3,065
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento(1)	Brasil	Sociedade de Crédito	3,796	978	3,893	915
Hipercard Banco Múltiplo S.A.(1)	Brasil	Instituição Financeira	8,141	3,627	8,442	3,459
Itau Bank, Ltd.(1)	Ilhas Cayman	Instituição Financeira	28,137	2,913	33,607	2,259
Itau BBA Colombia S.A. Corporación Financiera(1)	Colómbia	Instituição Financeira	474	398	411	364
Itaú BBA International PLC(1)	Reino Unido	Instituição Financeira	22,105	3,184	16,291	2,618
Itaú BBA USA Securities Inc.(1)	Estados Unidos	Corretora de Valores	7,741	1,446	6,515	1,221
Itaú BMG Seguradora S.A.	Brasil	Seguros	207	74	199	72
Itaú Corretora de Valores S.A.(1)	Brasil	Corretora de Titulos e Valores Mobiliários	5,475	2,745	5,192	2,512
Itaú Seguros S.A.	Brasil	Seguros	12,159	5,817	14,195	6,561
Itaú Unibanco Financeira S.A. - Crédito, Financiamento e Investimento(1)(2)	Brasil	Sociedade de Crédito	–	–	4,330	3,756
Itaú Unibanco S.A.(1)	Brasil	Instituição Financeira	1,185,732	51,699	1,148,099	51,498
Itaú Vida E Previdência S.A.	Brasil	Previdência Complementar	114,424	5,202	111,445	5,608
Luizacred S.A. Soc. Cred. Financiamento Investimento(1)	Brasil	Sociedade de Crédito	4,476	561	4,611	599
Redecard S.A. – REDE(1)	Brasil	Adquirente	45,176	13,074	48,437	12,689

(1)	Prudential Conglomerate Institutions

(2)	Institution incorporated on 01/31/2015 by Itaú Unibanco S.A. and Itaú BBA Participações S.A.

Itaú Unibanco

Risk Management – Pillar 3

4	Investments in other entities

4.1	Investments in other entities not classified in the trading book

The financial statements of Itaú Unibanco and its subsidiaries have been prepared in accordance with accounting practices adopted in Brazil, as established by Brazilian Corporate Law, together with CMN, BACEN, and Brazilian Securities and Exchange Commission (CVM) regulations, in the latter case when such regulations are not inconsistent with BACEN regulations.

The permanent interests held in other entities, except those measured at book value (equity method of accounting), which we intend to hold for a long term, are classified in Permanent Assets and measured at their acquisition cost (cost method). Investments measured under the cost method are stated at their historical amount, i.e., the price the company paid to acquire them. The investor does not account for the profits or losses of an investee, except when related to the dividends based on profits obtained, when distributed.

Investments in other companies which there is no intention to hold for a long term are classified as Securities and, based on the designation defined pursuant to Management strategies, they are recognized at fair value, in other comprehensive income.

In accordance with the qualitative characteristics of useful financial information, Itaú Unibanco substantially applies its policies on a systematic basis, thus ensuring the consistency and comparability of its information, except when otherwise required by regulators, under amended regulations.

In the first quarter of 2015 there were no significant amendments to policies related to equity interests.

For further information on Itaú Unibanco’s accounting policies, please see Note 4 – Summary of Significant Accounting Policies, to the Consolidated Financial Statements, that can be found on the website www.itau‐unibanco.com.br/ri.

The following is the amount of investments not classified in the trading book and comprises the investments recognized in permanent assets, except the investments valued using the equity method, and the stock investments, classified as Securities not classified in the trading book.

Investments in other entities					R$ million
	Prudential		Financial
	3/31/2015		12/31/2014		9/30//2014
Carrying Amount	856.3		860.2		679.9
Public	103.2		105.4		76.4
Private	753.1		754.8		603.5
Fair value	966.6		969.2		810.6
Public	206.0		206.9		204.9
Private	760.6		762.2		605.6
Gain or losses arising on investments in other entities	(0.0	)	0.7		(2.4	)
Recognized and unrealized gain or losses	(249.5	)	(228.1	)	(218.9	)
Unrecognized and unrealized gain or losses	107.9		106.7		130.7

Capital required for investments in other entities not classified in the trading book according to the criteria described in the paragraph above was R$ 84 million during the first quarter of 2015.

Itaú Unibanco

Risk Management – Pillar 3

5	Credit Risk

5.1	Framework and Treatment

Credit risk is the possibility of losses associated with: failure by a borrower, issuer or counterparty to fulfill their respective financial obligations as defined in the contracts, value loss of credit agreements resulting from deterioration of the borrower’s issuer’s or counterparty’s credit rating, reduction of profits or income benefits granted upon subsequent renegotiations, or debt recovery costs.

Itaú Unibanco’s credit risk management and control structure establishes operational limits, risk mitigation mechanisms and processes, and instruments to measure, monitor and control risk that can quantify the credit risk inherent to all products, portfolio concentrations and the impacts of potential changes in the economic environment. The Bank’s portfolio, policies and strategies are continuously monitored so as to ensure compliance with the rules and laws in effect in each country.

Itaú Unibanco’s credit risk management is the primary responsibility of all Business Areas and is aimed at maintaining the quality of the credit portfolio at levels that are consistent with the institution’s risk appetite, for each market segment in which it operates. The Business Areas have to:

Follow up and closely monitor the portfolios under their responsibility;

Grant credit in accordance to the authority levels, market conditions, macroeconomic prospects, changes in markets and products and the effects of sector and geographic concentrations;

Manage credit risk adopting actions that provide sustainability to its business.

Itaú Unibanco’s credit policy is based on internal factors, such as: client rating criteria, performance and evolution of the portfolio, default levels, return rates, and the allocated economic capital, and on external factors, related to the economic environment, interest rates, market default indicators, inflation and changes in consumption.

Itaú Unibanco has a structured process to maintain a diversified portfolio, which is considered appropriate by the institution. The concentrations are monitored continuously for economic sectors, and largest debtors, allowing preventive measures to be taken to avoid the violation of the established limits.

The credit risk management governance is conducted through collegiate bodies that are subordinated to the Board of Directors or the executive structure of Itaú Unibanco, and act primarily by assessing the competitive market conditions, setting the credit limits for the institution, reviewing control practices and policies and approving the actions at the respective authority levels. The risk communication and reporting process, including disclosure of institutional policies on credit risk management, are responsibility of this structure.

The credit risk control is carried out by an independent executive area segregated from the business units, as required by the current regulation. Among others, the mains responsibilities of the credit risk control area are to:

Monitor and control the performance of the credit portfolios in view of the limits approved by senior management;

Conduct the centralized control of the credit risk segregated from the business units;

Manage the process of preparation, review and approval of institutional policies of credit risk, meeting the regulatory guidelines;

Monitor the adequacy of the level of the Referential Equity with respect to the credit risk assumed;

Assess the credit risk of the operations at the authority levels appointed by the credit commissions.

The policies and products’ evaluation process enables the Itaú Unibanco to identify potential risks in order to ensure that credit decisions make sense from an economic and risk perspective.

Itaú Unibanco’s centralized process for approving credit policies and validating models ensures the synchronization of credit actions.

The credit rating process for wholesale transactions is based on information such as the economic and financial condition of the counterparty, its cash-generating capabilities, the economic group to which it belongs, the current and prospective situation of the economic sector in which it operates. Credit proposals are analyzed on a case-by-case basis through the approval governance.

With respect to retail transactions (individuals, small and medium companies), ratings are assigned based on statistical application and behavior score models. Decisions are met based on continuously monitored scoring models. Extraordinarily, an individual analysis of specific cases may be performed, in which case credit approval follows the applicable authority levels.

Itaú Unibanco

Risk Management – Pillar 3

Additionally, the risk assessment of both the retail segments and the wholesale segment incorporate client debts both to Itaú and the market.

Itaú Unibanco rates government securities and other debt instruments according to their credit quality with the purpose of managing the exposures.

Itaú Unibanco strictly controls credit exposure to clients and counterparties, acting on occasional limit breaches. In this sense, contractual covenants may be used, such as the right to demand early payment or require of additional collateral.

Itaú Unibanco counts on a specific structure and processes aimed at ensuring that the country risk is managed and controlled, including: (i) country risk governance, (ii) country ratings, (iii) credit limits for countries, (iv) limits monitoring, and (v) actions for limit breaches.

In line with the principles of CMN Resolution 3,721, Itaú Unibanco’s credit risk management structure and institutional policy are approved by its Board of Directors, applicable to all companies and subsidiaries in Brazil and abroad.

The guidelines of the institutional credit risk management policy can be accessed at http://www.itau‐unibanco.com/ri, under Corporate Governance, Regulations and Policies, Public Access Report – Credit Risk.

Itaú Unibanco

Risk Management – Pillar 3

5.2	Credit Portfolio Analysis

Evolution of the Credit Portfolio

The information presented in the following tables allow the analysis of the credit portfolio, and its behavior, from different view stands: operations with credit granting characteristics segregated by Brazil Geographic Regions, by Countries, economic sector, by type of product and remaining maturity, concentration of the credit portfolio on largest debtors and the amount of the overdue transactions and allowance for loan losses.

Operations with Credit Granting Characteristics by Brazil Geographic Regions and by Countries

Operations with Credit(1) Granting Characteristics in Brazil: Exposure

R$ million

	Prudential						Financial
	3/31/2015						3/31/2014
	Southeast	South	North	Northeast	Midwest	Brazil	Brazil
Individuals	124,752	22,199	8,114	30,657	13,565	199,287	201,658
Rural Loans	190	29	–	1	8	228	232
Real State	25,015	1,990	293	1,294	1,371	29,963	29,256
Payroll	23,952	5,272	3,762	8,541	3,987	45,514	39,968
Vehicle and Leasing	14,327	3,928	1,148	3,003	2,531	24,937	27,841
Credit card	38,030	7,704	2,318	15,961	3,775	67,788	73,957
Endorsements and Sureties	596	38	2	13	54	703	551
Personal Loans (Other)	22,642	3,238	591	1,844	1,839	30,154	29,853
Companies	259,213	21,825	2,373	9,709	6,084	299,204	307,423
Rural Loans	4,154	3,088	14	216	411	7,883	8,033
Investments	63,264	7,783	1,132	4,394	2,586	79,159	76,638
Import and Export	24,734	1,210	185	422	226	26,777	25,357
Working Capital, Discount Bonds and Guaranteed Account	92,449	8,883	967	4,286	2,600	109,185	124,207
Endorsements and Sureties	72,640	498	31	202	117	73,488	70,389
Other	1,972	363	44	189	144	2,712	2,799
Total	383,965	44,024	10,487	40,366	19,649	498,491	509,081

(1) The amount includes endorsements, sureties and committed loans, net of allowance for loan losses.

Operations with Credit(1) Granting Characteristics by Country: Exposure

R$ million

	Prudential											Financial
	3/31/2015											3/31/2014
	Brazil	Argentina	Chile	Colombia	United States of America	Paraguay	United Kingdom	Switzer land	Uruguay	Other	Total	Total
Individuals	199,287	1,415	16,465	–	–	2,898	–	–	2,080	–	222,145	218,116
Rural Loans	228	–	–	–	–	–	–	–	–	–	228	232
Real State	29,963	2	8,612	–	–	162	–	–	207	–	38,946	36,739
Payroll	45,514	–	–	–	–	–	–	–	–	–	45,514	39,968
Vehicle and Leasing	24,937	–	–	–	–	173	–	–	–	–	25,110	27,992
Credit card	67,788	1,017	1,292	–	–	849	–	–	1,306	–	72,252	77,443
Endorsements and Sureties	703	–	83	–	–	1	–	–	9	–	796	627
Personal Loans (Other)	30,154	396	6,478	–	–	1,713	–	–	558	–	39,299	35,115
Companies	299,204	3,186	21,285	367	3,340	4,012	10,407	2,200	4,692	80	348,773	350,347
Rural Loans	7,883	–	–	–	–	–	–	–	–	–	7,883	8,033
Investments	79,159	3	2,246	–	–	11	29	–	88	–	81,536	78,702
Import and Export	26,777	244	379	–	3,100	–	2,808	2,138	–	–	35,446	32,247
Working Capital, Discount Bonds and Guaranteed Account	109,185	2,849	16,631	367	–	3,902	7,322	–	4,408	50	144,714	155,123
Endorsements and Sureties	73,488	90	2,029	–	240	98	248	62	196	30	76,481	73,442
Other	2,712	–	–	–	–	1	–	–	–	–	2,713	2,800
Total	498,491	4,601	37,750	367	3,340	6,910	10,407	2,200	6,772	80	570,918	568,463

(1) The amount includes endorsements, sureties and committed loans, net of allowance for loan losses.

Operations with Credit(1) Granting Characteristics in Brazil: Quarterly Average Exposure

R$ million

	Prudential						Financial
	3/31/2015						3/31/2014
	Southeast	South	North	Northeast	Midwest	Brazil	Brazil
Individuals	124,277	22,162	8,029	30,582	13,511	198,561	198,278
Rural Loans	192	29	–	2	8	231	219
Real State	24,420	1,946	282	1,281	1,349	29,278	28,617
Payroll	22,966	5,034	3,576	8,058	3,839	43,473	37,897
Vehicle and Leasing	14,996	4,088	1,210	3,136	2,644	26,074	28,881
Credit card	38,633	7,822	2,373	16,280	3,806	68,914	71,438
Endorsements and Sureties	637	38	3	13	57	748	545
Personal Loans (Other)	22,433	3,205	585	1,812	1,808	29,843	30,681
Companies	257,500	22,289	2,527	9,797	6,122	298,234	303,279
Rural Loans	4,229	3,220	10	210	316	7,985	7,912
Investments	63,457	7,945	1,154	4,487	2,676	79,719	75,942
Import and Export	23,645	1,162	313	420	240	25,779	24,676
Working Capital, Discount Bonds and Guaranteed Account	92,510	9,097	974	4,269	2,617	109,467	120,122
Endorsements and Sureties	71,712	484	28	214	122	72,560	71,544
Other	1,947	381	48	197	151	2,724	3,083
Total	381,777	44,451	10,556	40,379	19,633	496,795	501,557

(1) The amount includes endorsements, sureties and committed loans, net of allowance for loan losses.

Itaú Unibanco

Risk Management – Pillar 3

Operations with Credit(1) Granting Characteristics by Countryies: Quarterly Average Exposure												R$ million
	Prudential											Financial
						3/31/2015						12/31/2014
	Brazil	Argentina	Chile	Colombia	United States of America	Paraguay	United Kingdom	Switzer land	Uruguay	Other	Total	Total
Individuals	198,561	1,283	13,755	–	–	2,659	–	–	1,971	–	218,229	213,839
Rural Loans	231	–	–	–	–	–	–	–	–	–	231	219
Real State	29,278	2	7,892	–	–	148	–	–	191	–	37,511	35,673
Payroll	43,473	–	–	–	–	–	–	–	–	–	43,472	37,897
Vehicle and Leasing	26,074	–	–	–	–	162	–	–	–	–	26,236	29,029
Credit card	68,914	913	1,029	–	–	788	–	–	1,245	–	72,889	74,659
Endorsements and Sureties	748	–	76	–	–	–	–	–	8	–	832	618
Personal Loans (Other)	29,843	368	4,758	–	–	1,561	–	–	527	–	37,057	35,744
Companies	298,234	2,891	21,983	329	3,091	3,736	9,342	2,056	4,369	73	346,104	344,000
Rural Loans	7,985	–	–	–	–	–	–	–	–	–	7,985	7,912
Investments	79,719	3	2,093	–	–	11	28	–	86	–	81,940	77,906
Import and Export	25,779	220	189	–	2,853	–	2,517	2,000	–	–	33,558	30,922
Working Capital, Discount Bonds and Guaranteed Account	109,467	2,593	17,785	329	–	3,637	6,545	–	4,110	46	144,512	149,728
Endorsements and Sureties	72,560	75	1,916	–	238	87	252	56	173	27	75,384	74,448
Other	2,724	–	–	–	–	1	–	–	–	–	2,725	3,084
Total	496,795	4,174	37,738	329	3,091	6,395	9,342	2,056	6,340	73	564,333	557,839

(1)	The amount includes endorsements, sureties and committed loans, net of allowance for loan losses.

Operations with Credit Granting Characteristics by Economic Sector

The composition of loan portfolios by economic sector is presented below:

Operations with Credit Granting Characteristics in Brazil(1): Exposure									R$ million
	Prudential								Financial
	3/31/2015								12/31/2014
Individuals	Rural Loans	Real Estate	Payroll	Vehicle and Leasing	Credit Card	Endorsements and Sureties	Personal Loans (Other)	Total	Total
Total	228	38,946	45,514	25,110	72,252	796	39,299	222,145	218,116

(1)	The amount includes endorsements, sureties and committed loans, net of allowance for loan losses.

Operations with Credit(1) Granting Characteristics in Brazil: Exposure															R$ million
	Prudential														Financial
	3/31/2015														3/31/2014
	Rural Loans		Investments		Import and Export		Working Capital, Discount Bonds and Guaranteed Account		Endorsements and Sureties		Other		Total		Total
Companies	Total	%	Total	%	Total	%	Total	%	Total	%	Total	%	Total	%	Total	%
Public Sector	–	0.0%	1,920	0.6%	130	0.0%	3,503	1.0%	1,491	0.4%	–	0.0%	7,044	2.0%	6,402	1.8%
ENERGY	–	0.0%	14	0.0%	–	0.0%	140	0.0%	–	0.0%	–	0.0%	154	0.0%	74	0.0%
PETROCHEMICAL AND CHEMICAL	–	0.0%	1,820	0.5%	–	0.0%	3,230	0.9%	1,384	0.4%	–	0.0%	6,434	1.8%	5,855	1.7%
SUNDRY	–	0.0%	86	0.0%	130	0.0%	133	0.0%	107	0.0%	–	0.0%	456	0.1%	473	0.1%
PRIVATE SECTOR	7,883	2.3%	79,616	22.8%	35,316	10.1%	141,211	40.5%	74,991	21.5%	2,712	0.8%	341,729	98.0%	343,945	98.2%
SUGAR AND ALCOHOL	726	0.2%	6,055	1.7%	2,869	0.8%	890	0.3%	758	0.2%	114	0.0%	11,412	3.3%	11,729	3.3%
AGRIBUSINESS AND FERTILIZERS	1,799	0.5%	2,274	0.7%	4,951	1.4%	5,953	1.7%	1,885	0.5%	70	0.0%	16,932	4.9%	15,840	4.5%
FOOD AND BEVERAGE	1,123	0.3%	4,246	1.2%	1,976	0.6%	5,032	1.4%	8,168	2.3%	78	0.0%	20,623	5.9%	20,397	5.8%
BANKS AND OTHER FINANCIAL INSTITUTIONS	376	0.1%	322	0.1%	3	0.0%	6,354	1.8%	4,134	1.2%	6	0.0%	11,195	3.2%	10,853	3.1%
CAPITAL ASSETS	167	0.0%	3,580	1.0%	1,203	0.3%	3,408	1.0%	2,347	0.7%	77	0.0%	10,782	3.1%	11,476	3.3%
PULP AND PAPER	105	0.0%	886	0.3%	1,208	0.3%	768	0.2%	377	0.1%	8	0.0%	3,352	1.0%	3,113	0.9%
ELECTRONIC AND IT	1	0.0%	823	0.2%	333	0.1%	2,942	0.8%	2,638	0.8%	100	0.0%	6,837	2.0%	6,755	1.9%
PACKAGING	31	0.0%	598	0.2%	468	0.1%	1,242	0.4%	622	0.2%	95	0.0%	3,056	0.9%	3,120	0.9%
ENERGY AND SEWAGE	–	0.0%	3,651	1.0%	7	0.0%	3,399	1.0%	5,913	1.7%	2	0.0%	12,972	3.7%	15,015	4.3%
EDUCATION	8	0.0%	255	0.1%	1	0.0%	1,265	0.4%	785	0.2%	29	0.0%	2,343	0.7%	2,277	0.6%
PHARMACEUTICALS AND COSMETICS	–	0.0%	497	0.1%	422	0.1%	3,550	1.0%	2,787	0.8%	72	0.0%	7,328	2.1%	7,290	2.1%
REAL ESTATE AGENTS	12	0.0%	16,592	4.8%	19	0.0%	7,010	2.0%	1,601	0.5%	117	0.0%	25,351	7.3%	27,227	7.8%
ENTERTAINMENT AND TOURISM	2	0.0%	499	0.1%	33	0.0%	3,245	0.9%	463	0.1%	126	0.0%	4,368	1.3%	4,477	1.3%
WOOD AND FURNITURE	76	0.0%	805	0.2%	317	0.1%	1,787	0.5%	179	0.1%	53	0.0%	3,217	0.9%	3,072	0.9%
CONSTRUCTION MATERIAL	2	0.0%	1,938	0.6%	496	0.1%	3,445	1.0%	1,872	0.5%	68	0.0%	7,821	2.2%	7,649	2.2%
STEEL AND METALLURGY	40	0.0%	2,911	0.8%	2,228	0.6%	5,406	1.6%	2,394	0.7%	164	0.0%	13,143	3.8%	11,796	3.4%
MEDIA	–	0.0%	807	0.2%	96	0.0%	469	0.1%	730	0.2%	16	0.0%	2,118	0.6%	2,197	0.6%
MINING	–	0.0%	1,206	0.3%	644	0.2%	2,872	0.8%	3,664	1.1%	12	0.0%	8,398	2.4%	9,247	2.6%
INFRASTRUCTURE WORK	–	0.0%	1,409	0.4%	994	0.3%	2,272	0.7%	2,060	0.6%	81	0.0%	6,816	2.0%	6,068	1.7%
OIL AND GAS(2)	6	0.0%	677	0.2%	463	0.1%	3,554	1.0%	1,533	0.4%	39	0.0%	6,272	1.8%	5,780	1.6%
PETROCHEMICAL AND CHEMICAL	268	0.1%	1,646	0.5%	1,509	0.4%	3,895	1.1%	2,579	0.7%	172	0.0%	10,069	2.9%	9,292	2.7%
HEALTH CARE	–	0.0%	675	0.2%	52	0.0%	1,486	0.4%	524	0.2%	26	0.0%	2,763	0.8%	2,806	0.8%
INSURANCE AND REINSURANCE AND PENSION	–	0.0%	–	0.0%	–	0.0%	3	0.0%	104	0.0%	–	0.0%	107	0.0%	74	0.0%
TELECOMMUNICATIONS	–	0.0%	659	0.2%	–	0.0%	841	0.2%	9,009	2.6%	7	0.0%	10,516	3.0%	10,375	3.0%
CLOTHING AND FOOTWEAR	110	0.0%	1,105	0.3%	777	0.2%	2,948	0.8%	519	0.1%	95	0.0%	5,554	1.6%	5,445	1.6%
TRADING	28	0.0%	169	0.0%	729	0.2%	980	0.3%	337	0.1%	21	0.0%	2,264	0.6%	2,371	0.7%
TRANSPORTATION	9	0.0%	10,095	2.9%	814	0.2%	5,296	1.5%	2,172	0.6%	249	0.1%	18,635	5.3%	19,152	5.5%
DOMESTIC APPLIANCES	–	0.0%	189	0.1%	207	0.1%	1,951	0.6%	625	0.2%	25	0.0%	2,997	0.9%	3,371	1.0%
VEHICLES AND AUTOPARTS	1	0.0%	6,208	1.8%	3,990	1.1%	6,397	1.8%	6,293	1.8%	142	0.0%	23,031	6.6%	21.571	6.2%
THIRD SECTOR	–	0.0%	28	0.0%	1	0.0%	3,533	1.0%	35	0.0%	3	0.0%	3,600	1.0%	3,073	0.9%
PUBLISHING AND PRINTING	–	0.0%	174	0.0%	28	0.0%	800	0.2%	235	0.1%	54	0.0%	1,291	0.4%	1,267	0.4%
COMMERCE-SUNDRY	20	0.0%	1,442	0.4%	658	0.2%	12,577	3.6%	2,756	0.8%	297	0.1%	17,750	5.1%	17,220	4.9%
INDUSTRY-SUNDRY	14	0.0%	137	0.0%	4,965	1.4%	3,903	1.1%	225	0.1%	7	0.0%	9,251	2.7%	8,394	2.4%
SUNDRY SERVICES	68	0.0%	2,609	0.7%	2,510	0.7%	21,988	6.3%	2,331	0.7%	239	0.1%	29,745	8.5%	32,656	9.3%
SUNDRY	2,891	0.8%	4,449	1.3%	345	0.1%	9,750	2.8%	2,337	0.7%	48	0.0%	19,820	5.7%	21,500	6.1%
Total	7,883	2.3%	81,536	23.4%	35,446	10.2%	144,714	41.5%	76,482	21.9%	2,712	0.8%	348,773	100.0%	350,347	100.0%

(1)	Including sureties, endorsements and credit commitments, netted from allowance for loan losses.

(2)	Comprises trade of fuel.

Itaú Unibanco

Risk Management – Pillar 3

Remaining maturity of loan transactions

The table below presents the remaining maturity of credit risk operations detailed by type of products:

Remaining maturities of loan transactions (1)								R$ million
	Prudential				Financial
	3/31/2015				12/31/2014
	up to 6 months	6 to 12 months	1 to 5 years	above 5 years	up to 6 months	6 to 12 months	1 to 5 years	above 5 years
Individuals	60,606	5,786	64,247	58,623	67,036	5,773	67,275	49,684
Rural Loans	73	45	94	12	28	91	99	13
Real State	327	22	865	37,712	343	43	840	35,556
Payroll	254	713	25,209	19,377	210	615	26,056	13,019
Vehicle and Leasing	833	2,422	21,869	7	811	2,723	24,408	5
Credit card	51,694	-	-	-	58,414	-	-	-
Guarantees	130	158	205	305	238	139	151	99
Personal Loans (Other)	7,295	2,426	16,005	1,210	6,992	2,162	15,721	992
Companies	82,443	33,526	116,382	93,538	85,520	30,819	116,944	84,699
Rural Loans	3,776	2,213	1,433	267	3,623	2,664	1,463	270
Investments	4,251	7,256	42,992	17,994	3,751	6,289	43,698	18,502
Import and Export	13,422	5,360	13,732	2,910	12,635	3,699	13,092	2,862
Working Capital, Discount Bonds and Guaranteed Account	52,513	11,607	44,838	23,093	55,412	11,123	46,037	16,625
Endorsements and Sureties	8,325	6,949	11,348	48,895	9,819	6,888	10,450	46,285
Other	156	141	2,039	379	280	156	2,204	155
Total	143,049	39,312	180,629	152,161	152,556	36,592	184,219	134,383

(1)	Do not include loan commitments.

Credit Concentration on the Major Debtors

Concentration of Largest Clients with Credit Granting Characteristics						R$ million
	Prudential		Financial
	Exposure	% of portfolio	Exposure	% of portfolio	Exposure	% of portfolio
Loan, Lease and Other Credit Operations (1)	3/31/2015		12/31/2014		3/31/2014
Largest debtor	6 ,094	1.1%	5 ,324	1.0%	4,879	1.0%
10 largest debtors	35,185	6.5%	32,788	6.2%	30,166	6.3%
20 largest debtors	55,535	10.2%	53,209	10.1%	47,668	9.9%
50 largest debtors	90,945	16.7%	88,485	16.8%	78,944	16.4%
100 largest debtors	123,307	22.7%	118,679	22.6%	106,622	22.2%

(1)	The amounts include endorsements and sureties. Do not include loan commitments.

Concentration of Major Clients with Credit Granting Characteristics						R$ million
	Prudential		Financial
	Exposure	% of portfolio	Exposure	% of portfolio	Exposure	% of portfolio
Loan, Lease and Other Credit Operations and Securities of Companies and Financial Institutions(1)	3/31/2015		12/31/2014		3/31/2014
Largest debtor	6,244	1.0%	5 ,507	0.9%	5 ,048	0.9%
10 largest debtors	45,367	7.1%	41,262	6.8%	39,242	7.1%
20 largest debtors	75,807	11.8%	68,924	11.3%	63,694	11.6%
50 largest debtors	128,732	20.1%	119,972	19.7%	106,758	19.4%
100 largest debtors	173,826	27.1%	160,805	26.5%	142,867	26.0%

(1)	The amounts include endorsements and sureties. Do not include loan commitments.

Itaú Unibanco

Risk Management – Pillar 3

Overdue Amounts

The table below presents the balance of overdue amounts:

Overdue Amounts: by Brazil Regions and Countries									R$ million
	Prudential					Financial
	3/31/2015					12/31/2014
	15 to 60 days	61 to 90 days	91 to 180 days	181 to 360 days	Above 360 days	15 to 60 days	61 to 90 days	91 to 180 days	181 to 360 days	Above 360 days
Southeast	5,996	2,155	3,737	4,233	702	5,305	1,544	3,389	4,760	429
South	1,102	324	683	781	90	1,051	338	647	863	109
North	332	92	224	216	14	357	91	178	230	21
Northeast	930	335	703	999	53	858	293	706	1,088	75
Midwest	629	196	367	444	29	568	178	344	462	42
Brazil	8,989	3,102	5,714	6,673	888	8,139	2,444	5,264	7,403	676
Foreign	964	129	230	193	105	642	99	381	148	98
Total	9,953	3,231	5,944	6,866	993	8,781	2,543	5,645	7,551	774

Overdue Amounts: by Economic Sector									R$ million
	Prudential					Financial
	3/31/2015					12/31/2014
	15 to 60 days	61 to 90 days	91 to 180 days	181 to 360 days	Above 360 days	15 to 60 days	61 to 90 days	91 to 180 days	181 to 360 days	Above 360 days
Public Sector	-	-	-	2	-	-	-	-	1	-
Private Sector	9,950	3,231	5,944	6,864	993	8,781	2,543	5,645	7,550	774
Companies	3,359	1,286	1,979	2,037	629	2,929	681	1,693	2,259	361
Industry and Commerce	1,777	503	883	1,168	156	918	367	977	1,246	172
Services	1,344	727	948	799	386	1,712	267	659	868	103
Primary	213	53	141	63	84	289	44	52	140	84
Other	25	3	7	7	3	10	3	5	5	2
Individuals	6,591	1,945	3,965	4,827	364	5,852	1,862	3,952	5,291	413
Total	9,953	3,231	5,944	6,866	993	8,781	2,543	5,645	7,551	774

Allowance for Loan Losses

In order to be hedged against losses arising from loan operations, Itaú Unibanco takes into consideration all the aspects that determine the client’s credit risk to determine the provision level that is appropriate to the risk incurred in each operation. For each operation, the assessment and the client or economic group rating, the operation rating, and the possible existence of past due amounts are taken into account and the volume of the regulatory provision is determined.

Itaú Unibanco recognizes an allowance in addition to that minimum required by BACEN, aiming at ensuring an allowance level compatible with the expected loss, according to internal models credit risk measurement. This allowance is usually quantified in view of the past performance of loan portfolios, based on exposure, probabilities of default and expected recovery in the event of default, of transactions.

Allowance for Loan Losses – Quarterly evolution

R$ million

	Prudential				Financial
	3/31/2015				12/31/2014
	Operating Balance	Necessary accounting net provisions	Write-Off	Final Balance	Operating Balance	Necessary accounting net provisions	Write-Off	Final Balance
Public Sector	(6)	-	-	(6)	(4)	(3)	-	(7)
Private Sector	(26,465)	(5,355)	3,933	(27,887)	(25,202)	(5,734)	4.026	(26,910)
Companies	(11,451)	(2,541)	1,194	(12,798)	(9,349)	(2,946)	3,335	(8,960)
Industry and Commerce	(4,450)	(1,289)	692	(5,047)	(5,087)	28	515	(4,544)
Services	(6,471)	(817)	385	(6,903)	(3,773)	(2,958)	2,568	(4,163)
Primary	(508)	(429)	115	(822)	(436)	(47)	257	(226)
Other	(22)	(6)	2	(26)	(53)	31	(5)	(27)
Individuals	(15,014)	(2,814)	2,739	(15,089)	(15,853)	(2,788)	691	(17,950)
Total	(26,471)	(5,355)	3,933	(27,893)	(25,206)	(5,737)	4,026	(26,917)

Itaú Unibanco

Risk Management – Pillar 3

Mitigating Instruments

Itaú Unibanco uses guarantees aiming at increasing resiliencies in operations with credit risk. The using guarantees can be personal guarantees, secured guarantees, legal structures with mitigating power and netting arrangements. There are normative and institutional credit policies governing the use of collateral.

To be considered as risk reduction instrument, the guarantees need to comply with requirements and determinations of the regulations that govern the guarantees, whether internal or external and are legally valid (effective), enforceable and regularly evaluated.

The collaterals used can generate risk mitigation. The impact of asset assignment collaterals and purchased credit derivative hedges results from the collateral replacement, where a borrower’s risk parameters are replaced by the guarantor’s risk parameters. When used for managerial purposes, in the case of collateral assets and the legal structures with mitigation capabilities and offsetting agreements, risk mitigation in made based on methodologies jointly established and approved by the business units in charge of credit risk management and the centralized credit risk control department.

These methodologies take into consideration factors related to the legal enforceability of collaterals, the necessary costs of enforcing them, and the expected recoverable amount, taking into consideration market volatility and liquidity.

Itaú Unibanco also uses credit derivatives, such as single name CDS, to mitigate the credit risk of its portfolios of securities. These instruments are priced based on models that use the fair value of market inputs, such as credit spreads, recovery rates, correlations and interest rates.

The credit limits are continuously monitored and changed according to client behavior. Thus, the potential loss values represent a fraction of the amount available.

The table below presents the total amount mitigated by risk mitigating instruments, as defined in BACEN Circular No. 3,644, Art. 36, 3rd paragraph.

It is worth noting that purchase and sale commitments and residential real estate or first mortgage-backed loan operations are considered when determining risk weights assets.

Total Mitigation			R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	03/31//2013
Demand and time deposits, savings and own financial credit bills	306,757	308,239	278,344
FPR 0%	306,757	308,239	278,344
Securities	20,726	42,530	3,532
FPR 0%	20,726	42,530	3,265
FPR 20%	-	-	268
Personal Guarantee	34,257	30,774	407
FPR 0%	3,109	2,646	-
FPR 50%	31,149	28,128	407

Itaú Unibanco

Risk Management – Pillar 3

Counterparty Credit Risk

Itaú Unibanco sees the counterparty credit risk as a possibility of noncompliance, by a given counterparty, with obligations related to the settlement of transactions that involve the trading of financial assets with a bilateral risk, including those related to the settlement of derivative financial instruments. Additionally, Itaú Unibanco includes the risk of deterioration of the credit quality of the counterparty in its risk assessment.

Itaú Unibanco’s structure for managing, monitoring and controlling the counterparty credit risk arising from derivative financial instruments and other complex financial instruments, as well as from operations with variable indexes, is inserted in the credit risk management structure.

The table below presents the notional value of the contracts subject to the counterparty credit risk. According to Circular No. 3,644, for the calculation of the net global exposure to the counterparty credit risk arising from operations with derivative financial instruments, the application of the Future Potential Exposure Factor (FEPF) is considered. In the case of unsettled operations, the application of the Unsettled Operation Credit Conversion Factor (FCL) is considered. The application of these factors reduces the final exposure of the operations subject to the counterparty credit risk.

Notional Amount of Contracts Subject to the Counterparty Credit Risk			R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	9/30//2014
Notional Amount	1,818,580	1,582,323	1,612,461
Settled in Settlement Systems (Stock Exchange)(1)	477,038	359,916	434,622
Not Settled in Settlement Systems (Over-The-Counter)	1,341,541	1,222,407	1,177,838
With Guarantees	499,556	507,606	475,002
Without Guarantees	841,985	714,800	702,836

(1) amounts related to contracts settled in the settlement system of a clearing house for the financial settlement of operations in which the house operates as the central counterparty.

The tables below presents the gross positive amount and the amount of the guarantees of the contracts subject to the counterparty credit risk.

Gross Positive Amount of Contracts Subject to the Counterparty Credit Risk			R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	9/30//2014
Total Gross Positive Amount	547,330	536,891	506,662
Repurchase agreements	507,735	513,208	483,498
Others	39,595	23,683	23,165

Guarantees of Contracts Subject to the Counterparty Credit Risk			R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	9/30//2014
Gross Amount of the Guarantees	499,556	507,606	475,002

The table below presents the net global exposure to the credit risk of the counterparty, calculated in accordance with the criteria of Circular No. 3,664 and applying the Future Potential Exposure and Unsettled Operation Credit Conversion factors.

Exposure to the Counterparty Credit Risk			R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	9/30//2014
Net Global Exposure to the Counterparty Credit Risk	40,458	32,376	30,943

Itaú Unibanco

Risk Management – Pillar 3

Acquisitions, Sale or Transfer of Financial Assets

The acquisition of financial assets follows the same policies and the same credit governance established for the portfolios originated at Itaú Unibanco, where decision‐making is based on the objective assessment of the borrowers’ credit risk. Financial asset acquisitions can aim at increasing loan portfolio diversification or meeting the clients’ demands for liquidity. The purpose of the sale and transfer of financial assets is to meet investor demand for credit assets and be used as a portfolio credit risk management instrument.

Credit assignments (transfers of receivables) carried out through December 2011 were recorded in accordance with current regulation together with income recognition at the time of the assignment, regardless of the risks and benefits being retained or not.

Since beginning January 2012, as provided for by CMN Resolution No. 3,533 and supplementary regulation, accounting records take into consideration the retention or non‐retention of risks and benefits on sale or transfers of financial assets.

Sale or Transfer of Financial Assets		R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	03/31//2014
Balance of exposures assigned with significant withholding of risks and benefits	208	222	278
Balance of sale of exposure with substantial retention of risks and benefits	4,799	4,337	3,919
Credit rights Investments Fund (FIDC)	-	-	-
Securitization Companies	4,799	4,337	3,919
Financial institutions	-	-	-
Specific Purpose Company (SPE)	-	-	-
Balance of sale of exposure without substantial transfer or retention of risks and benefits	-	-	-

Sale or Transfer of Financial Assets

R$ million

	Prudential	Financial
	1st quarter of 2015	4th quarter of 2014	3rd quarter of 2014	2nd quarter 2014	1st quarter 2014
Flow of sale exposure in the quarter with substantial transfer of risks and rewards	206	1,248	770	1,517	93
Credit rights Investments Fund (FIDC)	-	25	-	68	-
Securitization Companies	173	1,174	607	1,414	93
Financial institutions	33	-	29	35	-
Specific Purpose Company (SPE)	-	-	-	-	-
Other(1)	-	49	134	-	-
Total exposures assigned honored, repurchased, or written-off	175	178	195	139	230

(1) Transfer of college credits held with the public sector

Itaú Unibanco

Risk Management – Pillar 3

Acquisition of Financial Assets		R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	3/31//2014
Acquisitions of loan portfolios WITH the retention of assignor’s risks and rewards	5,124	5,390	2,401
a) By type of exposure	4	14	246
Individuals - Payroll	3,508	3,274	2,141
Individuals - Vehicle and Leasing	1,583	2,067	14
Companies - Loans (CCB)	29	35
Companies - Other	5,124	5,390	2,401
b) By type of assignor	-	-	-
Credit rights Investments Fund (FIDC)	-	-	-
Securitization Companies	-	-	-
Financial institutions	5,124	5,390	2,401
Specific Purpose Company (SPE)	-	-	-

Acquisition of Financial Assets		R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	3/31//2014
Acquisitions of loan portfolios with NO retention of assignor’s risks and rewards
a) By type of exposure	10,530	10,669	6,528
Individuals - Payroll	10,530	10,669	6,528
b) By type of assignor	10,530	10,669	6,528
Credit rights Investments Fund (FIDC)	-	-	-
Securitization Companies	-	-	-
Financial institutions	10,530	10,669	6,528
Specific Purpose Company (SPE)	-	-	-

Operations of Securitization

Itaú Unibanco’s portfolio includes securities arising from securitization processes. The portfolio is made up of Securitized Real Estate Loans (CRI), quotas of Credit Rights Investment Funds (FIDC) and Agribusiness Receivables Certificate (CRA).

The CRIs are backed by real estate loans and predominantly are not subordinated. The quotas of FIDCs are usually senior and backed by receivables, such as trade notes, promissory notes. The CRAs are backed by receivables linked to agribusiness.

Itaú Unibanco classifies securities arising from securitization processes based on the governance of products determined, and the credit is approved at the proper authority levels. The balances of these operations are presented below.

Operations with Securities Arising from Securitization Process(1)		R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	3/31//2014
CRI	16,979	16,071	12,353
Mortgage Loans	16,979	16,071	12,353
Single-Tranche	14,561	13,548	9.393
Senior			-
Subordinated	2,418	2,523	2,960
CRA	32	53	82
Credit Related to Agribusiness	32	53	82
Single-Tranche	32	53	82
Senior	32	53	82
Subordinated		-	-
FIDC	24	47	160
Credit Rights	24	47	160
Single-Tranche	-	-	-
Senior	24	47	119
Subordinated	-	-	41
Total	17,035	16,171	12,595

(1) values of traditional securitization

Itaú Unibanco follows risk retention guidelines as defined at Resolutions 3,533 of the CMN.

Itaú Unibanco

Risk Management – Pillar 3

Then there is the summary of the securitization activity in the period:

Securitization Activities in the Period(1)		R$ million
	Prudential	Financial
	1st quarter 2015	4th quarter 2014	1st quarter 2014
CRI	829	1,380	997
Mortgage Loans	829	1,380	997
FIDC	-	-	-
Credit Rights	-	-	-
CRA	-	834
Credit Rights	-	834
Total	829	2,214	997

(1) values of traditional securitization

Itaú Unibanco

Risk Management – Pillar 3

Credit Derivatives

Itaú Unibanco buys and sells credit protection mainly related to securities of the Brazilian government and securities of Brazilian listed companies in order to meet the needs of its customers. When Itaú Unibanco sells contracts for credit protection, the exposure for a given reference entity may be partially or totally offset by a credit protection purchase contract of another counterparty for the same reference entity or similar entity. The credit derivatives for which Itaú Unibanco is protection seller are credit default swap (CDS) and total return swap (TRS).

CDS is credit derivative in which, upon a credit event related to the reference entity pursuant to the terms of the contract, the protection buyer is entitled to receive, from the protection seller, the amount equivalent to the difference between the face value of the CDS contract and the fair value of the liability on the date the contract was settled, also known as the recovered amount. The protection buyer does not need to hold the debt instrument of the reference entity for it to receive the amounts due pursuant to the CDS contract terms when a credit event occurs.

TRS is a transaction in which a party swaps the total return of a reference entity or of a basket of assets for regular cash flows, usually interest and a guarantee against capital loss. In a TRS contract, the parties do not transfer the ownership of the assets.

The maximum potential loss that may be incurred with the credit derivative is based on the notional amount of the derivative. Itaú Unibanco believes that, based on its historical experience, the maximum potential loss does not represent the actual level of loss. It happens because, when a loss event occurs, the amount of maximum potential loss should be reduced from the notional amount by the recoverable amount.

The credit derivatives sold are not covered by guarantees, and during this period, Itaú Unibanco has not incurred any loss related to credit derivative contracts.

The table below shows the nominal value of purchased credit derivatives that are identical to those that Itaú Unibanco acts as seller of protection underlying values.

Notional Amount of Credit Derivatives Held in Portfolio		R$ million
	Prudential	Financial
	3/31/2015	12/31/2014	3/31/2014
Risk Transferred	2,834	2,661	1,811
Credit Default Swap (CDS)	2,834	2,661	1,811
Total Return Swap (TRS)	-	-	-
Risk Received	(9,941)	(8,500)	(7,190)
Credit Default Swap (CDS)	(8.405)	(6,829)	(5,767)
Total Return Swap (TRS)	(1,536)	(1,671)	(1,423)
Total	(7,107)	(5,839)	(5,379)
Referential Equity (PR) of Risk Received	(428)	(360)	(248)

During the period, there was no occurrence of credit event related to those set forth in agreements.

Itaú Unibanco

Risk Management – Pillar 3

6	Market Risk

6.1	Framework and Treatment

Market risk is the possibility of losses resulting from fluctuations in the market values of positions held by a financial institution, usually the risks caused by variations in foreign exchange rates, interest rates, price indexes, equity and commodity prices, along with various indexes on these risk factors.

At Itaú Unibanco, market risk management is the process by which management monitors and controls risk of variations in the financial instruments, due to market movements, while aiming to optimize the risk-return ratio through an adequate limits structure, alerts, effective risk management models and related management tools.

Itaú Unibanco’s institutional policies and general market risk management framework are in line with the principles of CMN Resolution No. 3,464, and subsequent amendments. These principles guide the institution’s approach to market risk control and management across all business units and legal entities of Itaú Unibanco.

The document that details the market risk control institutional policy is on the Investor Relations website www.itau-unibanco.com/ri, in the route: Corporate Governance, Rules and Policies, Public Access Report - Market Risk.

Itaú Unibanco’s market risk management strategy is aimed at balancing corporate business goals, taking into account, among other things:

Political, economic and market conditions;

The market risk profile of the portfolio; and

Expertise within the group to support operations in specific markets.

Itaú Unibanco’s market risk management framework is subject to the governance and hierarchy of committees, with specific limits assigned to different levels and classes of market risk. These range covers from aggregated risk indicators at the portfolio level, to more granular limits at the individual desk level, and are aim to improve the process of risk monitoring and understanding as well as prevent risk concentration. Limits and alerts are calibrated based on projections of future balance sheets, stockholders’ equity, liquidity, complexity and market volatility and the Itaú Unibanco’s risk appetite. Limits are monitored on a daily basis, with compliance reported to and discussed at the relevant corporate bodies. In addition, the daily risk reports used by the business and control areas are distributed to the executives officers.

The structure of limits and alerts follows Board of Directors guidelines. These are approved by committees composed of senior management. The process of setting these limit levels follows the governance approved by Itaú Unibanco´s financial conglomerate internal policies. This structure of limits and alerts promotes the effectiveness and coverage of control and is reviewed at least annually.

The key principles underlying Itaú Unibanco’s market risk control structure are as follows:

Provide visibility and comfort for all senior management levels that market risks assumed must be in line with our risk-return objectives;

Provide disciplined and informed dialogue of the overall market risk profile and its evolution over time;

There must be transparency as to how the business works to optimize results;

The market risk control structure must provide early warning mechanisms to facilitate effective risk management, without obstructing the business objectives; and

Concentration of risks must be monitored and avoided.

Market risk management and control process is subject to periodic reviews, to ensure it reflects alignment with best market practices, and continuous improvement over time.

Market risk control is managed by a group that is independent from the different business units and is responsible for performing the daily activities of risk measurement, evaluation, analysis and reporting to relevant individuals and units, during normal and stress scenarios, according to established governance requirements. They also monitor actions taken to readjust positions and/or levels of risk. This area is also involved in the approval process of new financial products. In addition, there is a structured process of communication and information flow, which provides information to corporate bodies composed of senior management and ensures compliance with the requirements of Brazilian and foreign regulatory agencies.

Itaú Unibanco hedges transactions with clients and proprietary positions, including its foreign investments, in order to mitigate risk arising from fluctuations in market risk factors and maintain the positions on the breaching limits. Derivatives are commonly used for these hedging activities. When these transactions are classified as hedges for accounting purposes, specific supporting documentation is provided, including ongoing follow-up of hedge effectiveness (retrospective and prospective) and other changes in the accounting process. The accounting and managerial hedging procedures are governed by the institutional polices of Itaú Unibanco.

Itaú Unibanco

Risk Management – Pillar 3

Hedge accounting considerations are presented in detail in explanatory notes of the Financial Statements.

Market risk framework categorizes transactions as part of either the Banking Book or the Trading Book, in accordance with general criteria established by CMN Resolution No. 3,464 and BACEN Circular No. 3,354.

Trading Book is composed of all trades with financial and commodity instruments (including derivatives) undertaken with the intention of trading them.

Banking Book is predominantly characterized by portfolios originated from the banking business and operations related to the management of the institution’s balance sheet. As a general rule, this book’s portfolios are intended to be either held to maturity, or sold in the medium and in the long run.

Market risk exposures inherent in various financial instruments, including derivatives, are composed of various risk factors that refer to a market parameter whose variation impacts a position’s valuation. The main risk factors measured by Itaú Unibanco are as follow:

Interest rates: the risk of losses from transactions subject to interest rates variation;

Other foreign interest rates: the risk of losses from transactions subject to foreign interest rates variations;

FX Rates: the risk of losses from positions subject to foreign exchange rate variation (e.g., foreign currency positions);

Brazilian inflation indexes: the risk of losses from transactions subject to the variations in inflation-linked;

Equities and Commodities: the risk of losses from transactions subject to equity or commodities price variations.

The CMN has regulations establishing the segregation of market risk exposure at a minimum into the following categories: interest rates, FX rates, equities and commodities. Brazilian inflation indexes are treated as a group of risk indicators and receive the same treatment of the others risk indicators, such as interest rates and FX rates and follows the governance and risk limits framework adopted by Itaú Unibanco for market risk management.

Market risk is analyzed based on the following key metrics:

Value at Risk: a statistical metric that quantifies the maximum potential economic loss expected in normal market conditions, considering a defined holding period and confidence level;

Losses in Stress Scenarios (Stress Testing): a simulation technique to evaluate the impact, in the assets, liabilities and derivatives of the portfolio, of various risk factors in extreme market situations (based on prospective and historic scenarios);

Stop Loss: metrics that trigger a management review of positions, if the accumulated losses in a given period reach specified levels;

Concentration: cumulative exposure of certain financial instrument or risk factor calculated at market value (“MtM - Mark to Market”); and

Stressed VaR: statistical metric derived from VaR calculation, aimed at capturing the biggest risk in simulations of the current portfolio, taking into consideration the observable returns in historical scenarios of extreme volatility.

In addition to the risk metrics described above, sensitivity and loss control measures are also analyzed. They include:

Gap Analysis: accumulated exposure of the cash flows by risk factor, which are marked-to-market and positioned by settlement dates;

Sensitivity (DV01 – Delta Variation Risk): impact on the market value of cash flows when a 1 basis point change is applied to current interest rates or on the index rates;

Sensitivities to Various Risk Factors (Greeks): partial derivatives of a portfolio of options on the prices of the underlying assets, implied volatilities, interest rates and time.

Itaú Unibanco

Risk Management – Pillar 3

6.2	Portfolio Analysis

Interest rate risk in the non‐trading book

Interest rate risk corresponds to the potential loss associated with changes in market interest on index, maturity and investment and funding mismatches. The interest rate risk management process of transactions classified in the non-trading book is consistent with the corporate bodies governance and hierarchy, and the limits approved for risk market management. A mark-to-market methodology is adopted for the different products by calculating the sensitivity to the changes in interest rates, the value at risk (VaR), and stress tests are conducted to the entire book, as established in Itaú Unibanco’s institutional policies.

In treating the loan portfolios with material early settlements, the original maturities of the transactions are adjusted for the monthly revisions of their parameters, estimated from their historic bases, which accelerate the decrease of the originally contracted payment flows to better reflect the expected client behavior.

The product balances without a defined maturity, such as cash deposits and savings accounts, are separated into core and noncore portions, pursuant to statistical studies that analyze their historical and seasonal behaviors. The core portion is distributed over time, thus generating an exposure to changes in interest rates, pursuant to internally approved methodologies.

The table below shows the sensitivity of the amount of the non-trading book positions to changes in interest rate curves, using the methodology and stress scenarios adopted to manage this book’s risks at Itaú Unibanco for the fourth quarter of 2014.

Sensibiliity of Banking Position(1)				R$ million
		Prudential
Exposure		3/31/2015
Risk Factors	Risk of variation in:	Scenario I	Scenario II	Scenario III
Interest Rate	Fixed Income Interest Rates in reais	(4,643)	(1,501,639)	(2,875,175)
Foreign Exchange Linked	Foreign Exchange Linked Interest Rates	38	(38,565)	(69,906)
Price Index Linked	Interest of Inflation coupon	(2,438)	(280,084)	(482,396)
TR	TR Linked Interest Rates	578	(143,494)	(308,456)

(1) Amounts net of tax effects.

In order to measure these sensitivities, the following scenarios are used:

Scenario I: Shocks of 1 base point in interest rates and associated indexes;

Scenario II: Shocks of 25 percent in interest fixed rates, currency coupon, inflation, interest rate indexes, both for growth and fall, considering the largest resulting losses per risk factor;

Scenario III: Shocks of 50 percent in interest fixed rates, currency coupon, inflation, interest rate indexes, both for growth and fall, considering the largest resulting losses per risk factor.

As required by CVM Regulatory Instruction 475, Itaú Unibanco conducts sensitivity analysis against exceptional scenarios for market risk factors considered relevant. The results can be found at Note No. 7j of the Financial Statements – BRGAAP, on the website www.itau-unibanco.com.br/ri.

Itaú Unibanco

Risk Management – Pillar 3

Evolution of the Trading Portfolio

The evolution of the Trading Portfolio, broken down by major risk factors, is tabulated below:

Total Value of Trading Position

R$ million

	Prudential		Financial
3/31/2015	3/31/2015		12/31/2014		3/31/2014
	Long	Short	Long	Short	Long	Short
Interest Rates	198,263	(169,575)	210,353	(182,630)	247,527	(250,749)
Foreign Exchange Rates	152,942	(152,447)	123,089	(120,687)	142,035	(139,651)
Equities	15,885	(15,834)	18,936	(18,947)	13,159	(13,216)
Commodities	74	(54)	23	(25)	114	(4)

Evolution of the Derivatives Portfolio

The main purpose of the derivative positions in the Banking Portfolio is to manage risks in this portfolio and in the corresponding risk factors. The evolution of Itaú Unibanco’s derivatives portfolio, broken down by group of risk factor, by the existence or absence of a central counterparty (exchange or over‐the‐counter market) and whether it is in Brazil or abroad, is presented below for both Trading and Banking Portfolios:

Derivatives: Trades in Brazil Trading + Banking With Central Counterparty					R$ million
	Prudential		Financial
3/31/2015	3/31/2015		12/31/2014		3/31/2014
	Long	Short	Long	Short	Long	Short
Interest Rates	230,981	(345,264)	288,018	(368,455)	385,097	(497,864)
Foreign Exchange Rates	132,593	(105,109)	80,818	(63,819)	69,935	(61,898)
Equities	3,891	(3,841)	4,021	(3,994)	2,111	(2,065)
Commodities	399	(188)	101	(61)	69	(74)

Derivatives: Trades in Brazil - Trading + Banking - Without Central Counterparty					R$ million
	Prudential		Financial
	3/31/2015		12/31/2014		3/31/2014
	Long	Short	Long	Short	Long	Short
Interest Rates	189,945	(189,951)	164,172	(175,393)	147,072	(158,492)
Foreign Exchange Rates	105,120	(136,506)	51,336	(72,681)	40,792	(58,142)
Equities	20,751	(20,905)	20,751	(20,959)	15,497	(15,804)
Commodities	150	(271)	167	(204)	267	(114)

Derivatives: Foreign Trades - Trading+ Banking- With Central Counterparty					R$ million
	Prudential		Financial
	3/31/2015		12/31/2014		3/31/2014
	Long	Short	Long	Short	Long	Short
Interest Rates	26	(437)	82	(3,659)	8	(273)
Foreign Exchange Rates	158,121	(157,524)	148,094	(143,097)	140,453	(138,835)
Equities	272	(305)	141	(153)	7	(40)
Commodities	64	(133)	289	(293)	358	(396)

Derivatives: Foreign Trades - Trading+ Banking - Without Central Counterparty					R$ million
	Prudential		Financial
	3/31/2015		12/31/2014		3/31/2014
	Long	Short	Long	Short	Long	Short
Interest Rates	104,344	(105,977)	91,059	(89,343)	60,425	(62,550)
Foreign Exchange Rates	424,556	(421,504)	260,641	(261,010)	169,781	(167,330)
Equities	-	(54)	267	(267)	160	(160)
Commodities	‐	‐	‐	‐	‐	‐

Itaú Unibanco

Risk Management – Pillar 3

VaR – Consolidated Itaú Unibanco

The methodology for the calculation of Itaú Unibanco’s Consolidated VaR uses, mainly, a Historical Simulation approach. This methodology carries out the full repricing of all positions, using the real historical distribution of assets.

The table below shows the Consolidated Total VaR, comprising both the Banking and Trading Book of Itaú Unibanco, and its subsidiaries abroad, showing where there are higher concentrations of market risk (subsidiaries abroad: Itaú BBA International PLC, Banco Itad Argentina S.A., Banco Itad Chile S.A., Banco Itad Uruguay S.A., Banco Itad Paraguay S.A. and Itad BBA Colombia S.A. - Corporación Financiera).

VaR ‐ Itaú Unibanco Holding(1)				R$ million
VaR per Risk Factor Group		3/31/2015	12/31/2014	9/30/2014
	Brazilian Interest rates	166.5	124.8	149.9
	Other Foreign Interest rates	89.9	83.6	84.6
Itaú Unibanco	FX rates	40.4	26.5	101.7
	Brazilian Inflation Indexes	110.0	115.7	145.2
	Equities and Commodities	19.2	22.5	26.7
	Itaú BBA International (3)	3.6	1.6	0.8
	Banco Itaú Argentina (2)	5.9	1.9	2.1
Itaú Unibanco Foreign	Banco Itaú Chile (2)	11.1	5.3	5.4
Units	Banco Itaú Uruguai (3)	1.8	2.1	1.1
	Banco Itaú Paraguai (3)	3.7	3.5	1.6
	Banco Itaú BBA Colômbia (2)	1.6	0.5	0.3
Diversification effect		(231.8)	(194.9)	(358.7)
Total VaR		221.7	193.1	160.7
Maximum Total VaR of the Quarter		236.6	227.7	199.1
Average Total VaR of the Quarter		203.7	176.0	162.6
Minimum Total VaR of the Quarter		179.1	131.1	138.7

(1) Considers one‐day holding period and 99% confidence level.

(2) VaR calculated using historical simulation as from this quarter. From January 1st to March 31, 2015, the amounts of Parametric Average Total VaR of these units were R$ 2.4 million, R$ 4.4 million and R$ 0.2 million, respectively.

(3) VaR calculated using the Parametric approach.

Itaú Unibanco maintained its conservative and diversification management style, having operated within low limits in relation to its capital through the period. The Total Average VaR for the quarter remained below 1% of Itaú Unibanco’s consolidated stockholders’ equity.

The observed increase in Total VaR, compared to the previous quarter, is due to an increase in the market volatility levels and changes of position which together resulted in a change in the diversification effect. The change in the methodology for determining the VaR from the parametric approach to the historical simulation of the external units (Banco Itad Argentina S.A., Banco Itad Chile S.A. and Banco Itad BBA Colombia S.A.- Corporación Financiera) also contributed to the increase of the amount of Total VaR this quarter.

Itaú Unibanco

Risk Management – Pillar 3

VaR - Trading Portfolio

Our Trading Portfolio VaR, based on the “historical simulation” methodology, is presented below.

VaR - Itaú Unibanco - Trading Portfolio(1)			R$ million
VaR per Risk Factor Group	3/31/2015	12/31/2014	03/31/2014
Brazilian Interest rates	36.7	16.6	24.8
Other Foreign Interest rates	11.0	3.6	13.9
FX rates	35.3	10.7	14.5
Brazilian Inflation Indexes	7.4	8.1	10.2
Equities and Commodities	5.8	4.3	2.2
Diversification effect	(69.0)	(26.4)	(37.5)
Total VaR	27.3	16.9	28.0
Maximum Total VaR of the Quarter	31.6	53.0	54.3
Average Total VaR of the Quarter	18.7	22.1	27.6
Minimum Total VaR of the Quarter	10.9	13.1	17.0

(1) VaR Historical Simulation approach. Amounts reported consider one-day holding period and 99% confidence level.

(2) External Units are not considered.

Itaú Unibanco

Risk Management – Pillar 3

VaR ‐ Foreign Units

Itaú Unibanco’s foreign units are financial institutions based in different countries that operate with local treasuries, with market risk exposures monitored by local risk control groups. These local treasury and risk control groups are subject to oversight by the equivalent structures of Itaú Unibanco at Group level. The foreign units are Itaú BBA International, Banco Itaú Argentina, Banco Itaú Chile, Banco Itaú Uruguay, Banco Itaú Paraguay and Itaú BBA Colombia S.A. Corporación Financiera.

The consolidated exposure of market risk of the foreign units in the first quarter, when compared to the previous one, reflected an increase as can be seen in the table below.

The Total consolidated VaR of all the foreign units represents less than 1% of Itaú Unibanco’s net equity.

VaR ‐ Itaú Unibanco Foreign Units(1)								R$ million
VaR per Risk Factor		3/31/2015			12/31/2014			3/31/2014
	Euribor		0.2			0.2			0.3
	Libor		0.8			0.3			0.3
Itaú BBA	FX rate		2.5			0.5			1.2
International (2)	Equities		0.0			0.0			0.0
	Others		0.7			1.0			0.2
	Diversification effect		(0.6	)		(0.4	)		(0.3	)
	Total VaR IBBA International		3.6			1.6			1.9
	Fixed income interest rate (Argentine peso)		2.6			2.0			2.9
	Inflation index linked interest rate		0.0			0.0			0.0
	Badlar		1.3			0.4			1.0
Banco Itaú Argentina (1)	FX + interest rate - Dollar		4.2			1.3			1.3
	FX + interest rate - Other currencies		0.0			-			0.0
	Diversification effect		(2.4	)		(1.8	)		(2.5	)
	Total VaR Itaú Argentina		5.9			1.9			2.8
	Fixed income interest rate (Chilean peso)		1.4			0.3			0.8
	Inflation index linked interest rate		8.5			4.4			2.6
	FX+interest rate - Dollar		3.0			1.6			0.6
Banco Itaú Chile(1)	FX rate -Other currencies		0.1			-			0.0
	Diversification effect		(1.9	)		(1.0	)		(1.0	)
	Total VaR Itaú Chile		11.1			5.3			3.0
	Fixed income interest rate (Uruguayan peso)		0.3			0.2			0.2
	Inflation index linked interest rate		1.5			1.1			0.9
	Dollar linked interest rate		1.5			2.1			1.2
Banco Itaú Uruguai(2)	FX rate		0.5			0.1			0.1
	Diversification effect		(2.0	)		(1.3	)		(0.9	)
	Total VaR Itaú Uruguai		1.8			2.1			1.5
	Fixed income interest rate (guarani)		2.9			2.6			1.9
	Dollar linked interest rate		2.7			2.8			0.5
Banco Itaú Paraguai(2)	FX rate		0.0			0.0			0.0
	Diversification effect		(1.9	)		(1.9	)		(0.5	)
	Total VaR Itaú Paraguai		3.7			3.5			1.9
Banco Itaú BBA	Fixed Income Interest Rate		1.6			0.1			0.4
Colômbia (1)	Dollar linked interest rate		0.0			-			0.0
	FX rate		-			0.5			0.1
	Diversification effect		0.0			(0.1	)		(0.1	)
	Total VaR Itaú BBA Colômbia		1.6			0.5			0.4
Total VaR			27.6			14.9			11.3

(1) VaR calculated using historical simulation as from this quarter. From January 1st to March 31, 2015, the amounts of Parametric Average Total VaR of these units were R$ 2.4 million, R$ 4.4 million and R$ 0.2 million, respectively.

(2) VaR calculated using the Parametric approach.

Itaú Unibanco

Risk Management – Pillar 3

Backtesting

The effectiveness of the VaR model is validated by the use of backtesting techniques that compare hypothetic daily results with the estimated daily VaR. The number of exceptions to the VaR pre‐established limits should be consistent, within an acceptable margin, with the hypothesis of 99% confidence intervals (i.e., there is a 1% probability that financial losses could be greater than the losses estimated by the model), considering a range of 250 business days (ending on March 31, 2015). The backtesting analysis presented below takes into consideration the ranges suggested by the Basel document “Supervisory Framework for the use of backtesting in conjunction with the internal models approach to market risk capital requirements.” The ranges are divided into:

Green (0 to 4 exceptions): corresponds to backtesting results that do not suggest any problems with the quality or accuracy of the models adopted;

Yellow (5 to 9 exceptions): refers to an intermediate range group, which indicates the need to pay attention and/or monitoring and may indicate the need of reviewing the model; and

Red (10 or more exceptions): demonstrate the need for improvement action.

The exposure graph below illustrates the reliability of risk measures generated from the models used by Itaú Unibanco in the Trading Portfolio (International Units are not included in these graph, given the immateriality of amounts involved).

The graph shows the adequacy level of the market risk models used by Itaú Unibanco, presenting the risk (absolute value) x return for the period considered.

Since the diagonal line represents the threshold where risk equals results, all the dots below this line indicate exceptions to the estimated risk.

For the exposure of the Trading Portfolio the hypothetic losses exceeded the VaR estimated by the model on 1 day in the period.

Itaú Unibanco

Risk Management – Pillar 3

7	Operational Risk

7.1	Framework and Treatment

For Itaú Unibanco the operational risk is defined as the possibility of losses arising from failure, deficiency or inadequacy of internal process, people or systems or from external events that affect the achievement of strategic, tactical or operational objectives. It includes legal risk associated with inadequacy or deficiency in contracts signed by the institution, as well as penalties due to noncompliance with laws and punitive damages to third parties arising from the activities undertaken by the Institution.

Itaú Unibanco internally classifies its risk events in:

Internal fraud;

External fraud;

Labor demands and deficient security in the workplace;

Inadequate practices related to clients, products and services;

Damages to own physical assets or assets in use by Itaú Unibanco;

Interruption of Itaú Unibanco’s activities;

Failures in information technology systems;

Failures in the performance, compliance with deadlines and management of activities at Itaú Unibanco.

In line with the principles of the CMN Resolution 3,380 and BACEN Circular 3,647, Itaú Unibanco has an operational risk management structure and institutional policy, which are annually approved by the Board of Directors and are applicable to its local and foreign companies and subsidiaries.

Operational risk management is the process composed of operational risk management and control activities, which objective is to support the institution in decision making processes, always searching for the proper identification and assessment of risks, the creation of value for stockholders and the protection of Itaú Unibanco’s assets and image.

Itaú Unibanco has a governance process that is structured through forums and corporate bodies composed of senior management, which, in turn, report to the Board of Directors, and by well-defined roles and responsibilities in order to reinforce the segregation of the business and management and control activities, ensuring independence between the areas and, consequently, well-balanced decisions with respect to risks. This is reflected in the risk management process carried out on a decentralized basis under the responsibility of the business areas and by a centralized control carried out by the internal control, compliance and operational risk department by means of methodologies, training and certification of the control environment on an independent basis and providing tools for monitoring them.

The management structure seeks to identify, prioritize, answer, monitor and report the operational risk for the purpose of ensuring the quality of the control environment in accordance with the internal guidelines and regulation in effect.

The executive areas managers use corporate methodologies that are built and made available by the internal control, compliance and operational risk department. Among the methodologies and tools used are the self-evaluation and the map of the organization’s prioritized risks, the approval of processes and products, the monitoring of key risk indicators that and the database of operational losses. Therefore, Itaú Unibanco’s operational risk framework ensures a conceptual exclusive basis for the management of processes, systems, projects and new products and services.

Within the governance of the management process, there are specific operational risk, internal control and compliance forums where the consolidated reports on risk monitoring, controls, action plans and operational losses are regularly presented to the business area executives.

It is worth noting that the dissemination of the risk and control culture to the employees by means of training is an important pillar of the operational risk agenda, aimed at providing a better understanding of the matter and playing a relevant role in its mitigation.

A summarized version of the institutional operational risk management policy can be found on the website www.itau-unibanco.com.br/ri under Corporate Governance, Regulations and Policies, Public Access Report – Operational Risk.

Itaú Unibanco

Risk Management – Pillar 3

7.2	Crisis Management and Business Continuity

The purpose of Itaú Unibanco’s Business Continuity Program is to protect its employees, ensure the continuity of the critical functions of its business lines, safeguard revenue and sustain both a stable financial market in which it operates and the trust of its clients and strategic partners in the provision of services and products.

It is composed of procedures for relocating and/ or recovering operations in response to a variety of interruption levels, and can be divided into two key elements:

Crisis Management: centralized communication and response processes to manage business interruption events and any other types of threats to the image and reputation of its identity before its employees, clients, strategic partners and regulators. The structure has a command center that constantly monitors the daily operations, as well as the media channels in which Itaú Unibanco is mentioned. The success of Crisis Management takes place through the Focal Agent Network, who are the representatives appointed by the business areas and that work in the monitoring of potential problems, resolution of crisis, resumption of business, improvement of processes and search for prevention actions;

Business Continuity Plans (PCN): document with procedures and information, developed, consolidated and maintained available for use during possible incidents, allowing the resumption of critical activities in acceptable terms and conditions. For the quick and safe resumption of the operations, Itaú Unibanco has established, in its PCN, corporate wide and customized actions for its line of business by means of:

Disaster Recovery Plan: focused on the recovery of its primary data center, ensuring the continuity of the processing of critical systems within minimum pre‐established periods;

Workplace Contingency Plan: employees responsible for carrying out critical business functions have alternative facilities to perform their activities in the event the buildings in which they usually work become unavailable. There is approximately 2,000 contingency dedicated seats that are fully equipped to meet the needs of the business areas in emergency situations.

Emergency Plan: procedures aimed at minimizing the effects of emergency situations that may impact Itaú Unibanco’s facilities, with a preemptive focus;

Processes Contingency Plan: alternatives (Plan B) to carry out the critical processes identified in the business areas.

In order to keep the continuity solutions aligned with the business requirements (processes, minimum resources, legal requirements, etc) the Program applies the following tools to understand the organization:

Business Impact Analysis (BIA): evaluates the criticality and resumption requirement of the processes that support the delivery of products and services. Through this analysis the businesses’ resumption priorities are defined.

Risk Assessment (RA): evaluates the processes and the effectiveness of the controls in place to mitigate the inherent risks of interruption as well as to implement actions to the gaps eventually identified in the business;

Threats and Vulnerabilities Analysis (AVA): identification of threats to the locations where Itaú Unibanco buildings are located. The control’s efficiency is evaluated against the potential threats in order to eventually identify vulnerabilities so that controls are adjusted or implemented to enhance the resilience level of the firm’s critical facilities.

Itaú Unibanco

Risk Management – Pillar 3

8	Liquidity Risk

8.1	Framework and Treatment

Liquidity risk is defined as the likelihood of the institution not being able to effectively honor its expected and unexpected obligations, current and future, including those from guarantees commitment, not affecting its daily operations and not incurring significant losses.

The liquidity control risk is carried out by an independent group of the business units and is responsible for determining the composition of the reserve, proposing assumptions for the performance of cash flows in different timeframes, proposing liquidity risk limits in accordance with the group risk appetite, communicating any mismatches, considering liquidity risk on an individual basis in the countries where Itaú Unibanco operates, simulating the behavior of cash flows in stress conditions, assessing and reporting in advance the risks inherent to new products and operations and reporting on the information required by the regulatory agencies. All activities are subject to assessment by the independent validation, internal controls and audit departments.

The liquidity risk measurement has to comprise all financial trades of the companies of Itaú Unibanco, as well as possible contingent and unexpected exposures, such as those derived from settlement services, provision of sureties and guarantees, credit lines contracted and not used.

The liquidity policies of management and associated limits are established based on prospective scenarios, reviewed periodically and based on definitions from senior management.

The document that details the liquidity risk control institutional policy is on the Investor Relations website www.itau-unibanco.com/ri, in the route: Corporate Governance, Rules and Policies, Public Access Report - Liquidity Risk.

Pursuant to the requirements of CMN Resolutions No. 4,090 and BACEN Circular No. 3,393, Itaú Unibanco makes monthly delivery of its Liquidity Risk Statements (DLR) to BACEN and the following items are regularly prepared and submitted to the senior management for monitoring and decision support:

Different scenarios for liquidity projections;

Contingency plans for crisis situations;

Reports and charts to enable monitoring risk positions;

Assessment of funding costs and alternatives;

Tracking the sort of funding sources through a continuous control of funding sources considering counterparty type, maturity and other aspects.

8.2	Primary sources of funding

Itaú Unibanco has different sources of funding, with the main source arising from retail segment.

Primary sources of funding								R$ million
	Prudential			Financial
	3/31/2015			12/31/2014			3/31/2014
Funding from clients	0 to 30 days	Total	%	0 to 30 days	Total	%	0 to 30 days	Total	%
Deposits	198,220	303,735		198,856	310,831		177,956	293,130
Demand deposits	60,820	60,820	11%	64,015	64,015	11%	57,589	57,589	11%
Savings deposits	117,357	117,357	21%	118,449	118,449	21%	108,931	108,931	20%
Time deposits	10,354	97,405	18%	11,705	109,242	19%	10,049	121,117	22%
Other	9,689	28,153	5%	4,687	19,125	3%	1,387	5,493	1%
Funds from acceptances and issuance of securities(1)	2,317	50,762	9%	3,959	59,656	10%	2,370	54,847	10%
Funds from own issue(2)	2,472	138,797	25%	2,840	142,687	25%	2,977	136,289	25%
Subordinated debt	320	59,528	11%	174	55,617	10%	258	56,424	10%
Total	203,329	552,822		205,829	568,791		183,561	540,690

(1) Includes mortgage notes, real estate credit bills, agribusiness and financial credit bills recorded in interbank and institutional market debts and liabilities for issue of debentures and foreign borrowings and securities recorded in funds from institutional markets.

(2) Refer to deposits received under securities repurchase agreements with securities from own issue.

Itaú Unibanco

Risk Management – Pillar 3

9	Other Risks

Insurance Risk

Products that compose portfolios of insurance companies of Itaú Unibanco are related to life and elementary insurance, as well as pension plans and “capitalização”. Accordingly, Itaú Unibanco understands that the main risks inherent to these products are:

Underwriting Risk is the possibility of losses arising from insurance products, pension plans and capitalização that go against company’s expectations, directly or indirectly associated with technical and actuarial bases used for calculating premiums, contributions and technical provisions;

Market Risk is the possibility of losses resulting from fluctuations in market values of assets and liabilities that comprise technical actuarial reserves;

Credit Risk is the possibility of noncompliance, by a given debtor, with obligations related to the settlement of operations that involve the trading of financial assets of reinsurance;

Operational risk is the possibility of the occurrence of losses arising from the failure, deficiency or inadequacy of internal processes, people and systems, or from external events that affect the achievement of the strategic, tactical or operational objectives of the insurance, pension and capitalização operations;

Liquidity risk in insurance operations is the possibility of the institution not be able to honor timely its obligations to policyholders and beneficiaries of pension funds due to lack of liquidity of the assets comprising the actuarial technical reserves.

In line with good national and international practices and to ensure that risks arising from insurance products, pension plans and capitalização are properly identified, measured, evaluated, reported and approved in relevant forums, Itau Unibanco has a risk management framework, whose guidelines are established in institutional normative, approved by the Board, applicable to companies and subsidiaries at risk from insurance products, pension plans and capitalização, in Brazil and abroad.

Risk management process for insurance products, pension plans and capitalização is based on responsibilities defined and distributed between control and business areas, ensuring independence between them. Itaú Unibanco chose to manage the risks arising from these products on a segregated basis, in accordance with the guidelines established by the institution for each type of risk in order to focus on the specifics of each risk of the insurance, pension and capitalização.

As part of the risk management process, there is a governance structure where decisions may be taken by committees composed of senior management, thus ensuring compliance with several regulatory and internal requirements, as well as balanced decisions relative to risks.

Social and Environmental Risk

In business management, Itaú Unibanco continuously takes into consideration the potential of the risk of losses due to exposure to social and environmental events arising from the performance of its activities. These events arise from the direct operation of Itaú Unibanco which, on its own, has an impact on the environment or human health. Accordingly, the institution sees the social and environmental risk as the risk of losses arising from social and environmental losses caused by Itaú Unibanco in the development of its activities or by its actions, being its management structured by specific governance and formalized by means of policies.

In the governance of social and environmental issues, Itaú Unibanco has the Social and Environmental Risk Committee and its main responsibility is to propose institutional understandings on issues related to the exposure to the social and environmental risk of our activities and operations. Additionally, the social and environmental risk is managed by the first line of defense in its daily activities with the support of the legal department and social and environmental risk analysis units dedicated to the business. The business units also have the governance of approval of new products, which assesses the social and environmental risk, thus ensuring compliance with this requirement in all products and processes of the institution.

To this end, Itaú Unibanco has been developing many internal processes aimed at the management, control and mitigation of events that may lead to the occurrence of social and environmental risk. These include, for example, the consideration of the social and environmental in the investments, processes of credit assignment, contracting suppliers, insurance underwriting and acquisition of real estate properties for its own use. The other lines are responsible for assessing controls and the effectiveness of the risk management processes on an independent basis.

Itaú Unibanco

Risk Management – Pillar 3

Itaú Unibanco consistently seeks to evolve in the management of social and environmental risk, always paying attention to the challenges so as to monitor the changes in and demands of society. Therefore, among other actions, we have assumed and incorporated into our internal processes a number of national and international voluntary commitments and pacts aimed at integrating social, environmental and governance aspects into our business. The main ones are the Principles for Responsible Investment (PRI), the Charter for Human Rights – Ethos, the Equator Principles (EP), the Global Impact, the Carbon Disclosure Project (CDP), the Brazilian GHG Protocol Program, the Pacto Nacional para Erradicação do Trabalho Escravo (National Pact for Eradicating Slave Labor), among others. Our efforts to increase the knowledge of the assessment of the social and environmental criteria have been recognized as models in Brazil and abroad, as shown by the recurring presence of the institution in the major sustainability indexes abroad, such as the Dow Jones Sustainability Index, and in Brazil, such as the Corporate Sustainability Index, in addition to the many awards we have received.

Reputational Risk

Itaú Unibanco defines reputational risk as the risk arising from internal practices, risk events and external factors that may generate a negative perception of the institution among clients, counterparties, stockholders, investors, supervisors, commercial partners, among others, resulting in impacts on the value of the brand and financial losses, in addition to adversely affecting Itaú Unibanco’s capability to maintain existing commercial relations, start new businesses and continue to have access to financing sources.

Since the reputational risk directly or indirectly permeates all operations and processes of the institution, Itaú Unibanco’s governance is structured in a way to ensure that potential reputational risks are identified, analyzed and managed still in the initial phases of its operations and the analysis of new products.

Itaú Unibanco believes that our reputation is extremely important for us to achieve our long‐term goals and this is why we try to align our speech with ethical and transparent practice and work, which is essential to raise the confidence of our stakeholders.

For the purpose of avoiding negative impacts on the perception of Itaú Unibanco’s image by the many stakeholders, the treatment given to reputational risk is structured by means of many processes and internal initiatives, which, in turn, are supported by internal policies, and their main purpose is to provide mechanisms for the monitoring, management, control and mitigation of the main reputational risks to which the institution is, or might be, exposed. Among them are:

Process for the prevention and fight against the use of Itaú Unibanco in unlawful acts;

Crisis management process and business continuity;

Processes and guidelines of the governmental and institutional relations;

Corporate communication process;

Brand management process;

Ombudsman offices initiatives and commitment to customer satisfaction;

Ethics guidelines and prevention of corruption.

Regulatory Risk

Regulatory risk is considered at Itaú Unibanco as the risk arising from losses due to fines, sanctions and other penalties applied by regulatory agencies resulting from noncompliance with regulatory requirements. The regulatory risk is managed through a structured process aimed at identifying changes in the regulatory environment, analyzing their impacts on the departments of the institution and monitoring the implementation of actions directed at adherence to the regulatory requirements.

Itaú Unibanco has a structured and consistent flow for addressing rules, covering the stages of recognition, distribution, monitoring and compliance, and all of these processes are established in internal policies. The structure and flow for addressing the regulatory risk are composed of: (i) monitoring of legislative bills, notices and public consultation; (ii) recognition of new rules for determining action plans; (iii) relationship with regulators; (iv) monitoring of action plans and (v) prioritization of risks.

Model Risk

Itaú Unibanco’s risk management already has proprietary models for risk management that are continuously monitored, and reviewed whenever necessary, aiming at ensuring effectiveness in strategic and business decisions.

Model risk is defined as the risk that arises from the models used by Itaú Unibanco not reflecting, on a consistent basis, the relationships of variables of interest, creating results that systematically differ from those observed. This risk may materialize mainly as a result of methodological inadequacies during its development or the use in different situations from those modeled.

Itaú Unibanco

Risk Management – Pillar 3

Itaú Unibanco uses the best market practices to manage the model risk to which it is exposed during the entire lifecycle of a model and the stages of which may be classified into four main ones: development, implementation, validation and use. The best practices that mark the model risk control at the institution include: (i) certification of the quality of the database used; (ii) application of a list of essential steps to be taken during the development; (iii) conservatism in judgmental models; (iv) use of external benchmarks; (v) approval of results generated in implementation; (vi) independent technical validation; (vii) assessments of use; (viii) assessments of the impact in the use; and (ix) monitoring of performance.

Country Risk

Country risk is defined as the risk of losses arising from noncompliance with the financial obligations in the terms agreed upon by borrowers, issuers, counterparties or guarantors as a result of actions taken by the government of the country where the borrower, issuer, counterparty or guarantor is located or of political, economic and social events related to that country.

Itaú Unibanco is present in many other countries in addition to Brazil. In addition to the foreign units, we have a relationship with borrowers, issuers, counterparties and guarantors, mainly institutional, from many places in the world, regardless of whether we have a foreign unit in the place where the borrower, issuer, counterparty or guarantor is located.

In order to properly address the country risk, Itaú Unibanco has a specific and a process structure aimed at ensuring that the risk is managed and controlled. These processes include: (i) country risk governance; (ii) establishment of country ratings; (iii) determination of limits for countries; and (iv) monitoring of limits and treatment of noncompliance.

Business and Strategy Risk

Itaú Unibanco defines the business and strategy risk as the risk of a negative impact on the results or capital as a consequence of a faulty strategic planning, the making of adverse strategic decisions, the inability of Itaú Unibanco to implement the proper strategic plans and/or changes in its business environment.

Since the business and strategic risk can directly affect the creation of value and even the feasibility of the institution, Itaú Unibanco has implemented many mechanisms that ensure that both the business and the strategic decision-making processes follow proper governance standards, have the active participation of executives and the Board of Directors, are based on market, macroeconomic and risk information and are aimed at optimizing the risk-return ratio.

In order to treat risk properly, Itaú Unibanco has the governance standards and processes listed below that fully involve the senior management and the risk control and management department in business and strategic decisions so as to ensure that the risk is managed and that the decisions are sustainable. Therefore, there is:

Governance that has qualified decision-makers who, at the same time, are properly motivated;

Budgeting process with the active participation of the risk control and management department;

Process for the assessment of new products before they are sold;

Specific structure for the assessment and prospection of mergers and acquisitions.

Itaú Unibanco

Risk Management – Pillar 3

10	Enterprise Risk Management and Alignment of Incentives

In accordance with the scope and complexity of its operations, Itaú Unibanco established processes for effectively identifying, assessing, monitoring and controlling risks, besides adequately allocating the capital to segments. In addition, Itaú Unibanco established processes, which enables the Executives and Board of Directors to hold a global view about the institution´s risk exposures, as well as a prospective view about the adequacy of its capital, besides promoting the alignment of incentives. We describe some of these processes below:

Risk Appetite

Itaú Unibanco’s risk appetite is a set of guidelines and limits approved by the Board of Directors that determine the risk levels that are acceptable for Itaú Unibanco. Divided into four levels, they combine additional ways to measure risks, seeking a broad view of the exposures incurred by the institution.

The capitalization level reflects the level of protection of the bank against significant losses, defining capitalization limits that consider the current scenarios expected and the stress scenario. This level establishes the minimum capitalization guidelines of Itaú Unibanco in relation to its risks, according to which management uses the bank’s capital in accordance with acceptable leverage levels and funding costs.

The liquidity level reflects the level of protection of the bank against a long period of funding stress, which could lead to a lack of liquidity. This level establishes the guidelines regarding the minimum liquidity levels, acceptable levels of mismatch of terms and funding structure.

The business composition level, meanwhile, seeks to ensure, by means of concentration limits, proper portfolio composition, aiming at low volatility and sustainability of the business.

Last, the franchise level addresses risks that may impact the value of the brand and reputation of Itaú Unibanco with stakeholders.

The determination of acceptable risk levels includes aspects of the organization’s strategy, as well as the regulatory environment. The monitoring of the risk appetite takes into consideration the current and prospective situation. The risk appetite and its monitoring are determined at the executive levels of the Board of Directors, and they are, therefore, an important instrument for the supervision of Itaú Unibanco’s risk management.

Stress Test

The stress test performed by Itaú Unibanco is aimed at evaluating the solvency of the institution in extreme stress situations, as well as identifying areas that are more susceptible to stress impact that may undergo risk mitigation. It is based on stressed projections of macroeconomic and credit variables, with the purpose of analyzing the added effect on income, capital and liquidity of the institution, consistent with the financial industry’s standards. The test is performed on the main bank portfolios, simulating the impact on each business area through the calculation of stressed financial statements, under different scenarios approved by the Board of Directors, considering a horizon of two to three years.

The test results are reported to the top management and the Board of Directors supporting strategic decisions.

Risk‐adjusted Compensation

The Compensation guidelines of Itaú Unibanco are aimed at attracting, retaining and compensating on merit its collaborators, encouraging prudent risk exposure levels in short-, medium- and long-term strategies, in line with the interests of its shareholders and regulatory authorities and line with the organization’s culture. The governance structure of compensation and incentive to the prudent risk taking has been consolidating in line with the best international compensation and governance practices. The Compensation Committee, in accordance with the CMN Resolution No. 3,921 and reporting to the Board of Directors is responsible for setting out the guidelines on models of compensation to collaborators and the policy on compensation of management members of the Conglomerate companies.

Compensation in Itaú Unibanco takes into account the strategy of the institution, the general and specific legislation that should be adopted for each business or region of operation, and the adequate risk management over time. The variable compensation considers the current and potential risks, giving incentive to the achievement of sustainable results and discouraging decisions that involve excess risks. The calculation of the aggregate and individual amounts considers, among others, long-term sustainable financial bases, adjustments to future payments in view of assumed risks, the results of the institution and/or of the area, when applicable, and the ratio between performance and risks incurred.

Itaú Unibanco

Risk Management – Pillar 3

In accordance with the CMN Resolution No. 3,921, a portion of the variable compensation of statutory officers is paid in stocks (at least 50%) and a percentage is deferred for three years (at least 40% of variable compensation). The deferred and unpaid portions must be reversed in case the institution has an unsatisfactory performance and the business unit has a negative performance.

Reflecting its concern with sustainable performance, Itaú Unibanco implements specific variable compensation practices for collaborators which roles and responsibilities have material impact on the risk of the bank, although they are not subject to the requirements of CMN Resolution No. 3,921. For such collaborators, mechanisms are provided for making adjustments to bonus arising from compliance, risk as well as deferral events.

Itaú Unibanco

Risk Management – Pillar 3

11	Appendix I

	Breakdown of the Referential Equity and Information on its adequacy		3/31/2015
		Value (R$ Thousand)	Temporary Treatment (R$ Thousand)	Balance Sheet Reference
	Core Capital: instruments and reserves
1	Instruments Eligible for the Core Capital	75,000,000	‐	(k)
2	Revenue reserves	26,470,237	‐	(l)
3	Other revenue and other reserve	1,729,635	‐	(m)
4	Instruments that are authorized to compose the Core Capital before Resolution No. 4,192 of 2013 comes into effect
5	Non‐controlling interest in subsidiaries that are part of the conglomerate, non‐deductible from the Core Capital1	750,365	164,837	(j)
6	Core Capital before prudential adjustments	103,950,236	‐
	Core Capital: prudential adjustments
7	Prudential adjustments related to the pricing of financial instruments	‐	‐
8	Goodwill paid upon the acquisition of investments based on the expectation of future profitability	3,574,484	5,361,726	(e)
9	Intangible assets	4,582,742	1,975,116	(h) / (i)
10	Tax credits arising from income tax losses and social contribution tax loss carryfowards and those originating from this contribution related to determination periods ended until December 31, 19982	4,890,977	6,000,805	(b)
11	Adjustments related to the market value of derivative financial instruments used to hedge the cash flows of protected items whose mark‐to‐market adjustments are not recorded in the books.	‐	‐
12	Downward difference between the amount recognized as a provision and the expected loss for institutions using	‐	‐
13	Gains arising from securitization operations
14	Gains or losses arising from the impact of changes on the credit risk of the institution on the fair value assessment of liability items
15	Actuarial assets related to defined benefit pension funds	45,401	68,101	(d)
16	Shares or other instruments issued by the bank authorized to compose the Core Capital, acquired directly, indirectly or synthetically	1,667,093	‐	(n)
17	Investments crossed with instruments eligible for the Core Capital
18	Added value of investments lower than 10% of the capital of companies that are similar to non‐consolidated financial institutions, insurance companies, reinsurance companies, capitalization companies and sponsored pension fund entities, that exceeds 10% of the amount of the Core Capital, disregarding specific deductions.	‐	‐
19	Investments higher than 10% of the capital of companies that are similar to non‐consolidated financial institutions, insurance companies, reinsurance companies, capitalization companies and sponsored pension fund entities	79,971	119,957	(f)
20	Mortgage servicing rights
21	Tax credits arising from temporary differences that depend on the generation of income or future taxable income for their realization, above the limit of 10% of the Core Capital, disregarding specific deductions	‐	‐
22	Amount that exceeds 15% of the Core Capital	152,173.38	380,433.44
23	of which: arising from investments in the capital of companies that are similar to non‐consolidated financial institutions, insurance companies, reinsurance companies, capitalization companies and open ended pension entities	98,961.91	148,442.87	(f)
24	of which: arising from mortgage servicing rights
25	of which: arising from tax credits resulting from temporary differences that depend on the generation of income or future taxable income for their realization2	53,211	79,817
26	National regulatory adjustments	(2,493,498)	‐
26a	Deferred permanent assets	119,797	‐	(g)
26b	Investment in dependence, financial institution abroad or non‐financial entity that is part of the conglomerate, with respect to which the Central Bank of Brazil does not have access to information, data and documents	‐	‐
26c	Funding instruments eligible for the Core Capital issued by an institution that is authorized to operate by the Central Bank of Brazil or by a financial institution abroad, and that is not part of the conglomerate	652,703	‐	(a)
26d	Increase of unauthorized capital		‐
26e	Excess of the amount adjusted of Core Capital	‐	‐
26f	Deposit to cover capital deficiency	‐	‐
26g	Amount of intangible assets established before Resolution No. 4,192 of 2013 comes into effect	3,265,998	‐	(i)
26h	Excess of resources invested on permanent assets	‐
26i	PR emphasis	‐
26j	Other residual differences concerning the Core Capital calculation methodology for regulatory purposes	‐
27	Regulatory adjustments applied to the Core Capital due to the Insufficiency of Additional Capital and Tier II Capital to cover deductions	‐	‐
28	Total regulatory deductions from the Core Capital	12,499,343
29	Core Capital	91,450,893
	1 ‐ Considers prudential adjustments corresponding to deduction of non‐controlling interest 2 ‐ Considers the deduction of deferred tax liabilities 3 ‐ Calculated according to article 9 of Bacen Resolution No. 4,192 4 ‐ Calculated according to article 29 of Resolution No. 4,192

Itaú Unibanco

Risk Management – Pillar 3

	Breakdown of the Referential Equity and Information on its adequacy		3/31/2015
		Value (R$ Thousand)	Temporary Treatment (R$ Thousand)	Balance Sheet Reference

	Additional Capital: instruments
30	Instruments eligible for the Additional Capital		‐
31	of which: classified as core capital in accordance with the accounting rules		‐
32	of which: classified as liabilities in accordance with the accounting rules		‐
33	Instruments that are authorized to compose the Additional Capital before Resolution No. 4,192 of 2013 comes into effect		‐
34	Non‐controlling interest in subsidiaries that are part of the conglomerate, non‐deductible from the Additional Capital3	50,269	75,403
35	of which: instruments issued by subsidiaries before Resolution No. 4,192 of 2013 comes into effect	‐	‐
36	Additional capital before regulatory deductions	50,269
	Additional Capital: regulatory deductions
37	Shares or other instruments issued by the bank authorized to compose the Additional Capital, acquired directly, indirectly or synthetically	‐	‐
38	Investments crossed with instruments eligible for the Additional Capital
39	Added value of investments lower than 10% of the capital of institutions authorized to operate by the Central Bank of Brazil or by a financial institution abroad that are not part of the conglomerate and that exceeds 10% of the Additional Capital	‐
40	Investments higher than 10% of the capital of institutions authorized to operate by the Central Bank of Brazil or by a financial institution abroad that are not part of the conglomerate	‐
41	National regulatory adjustments	‐	‐
41a	Funding instruments eligible for the Additional Capital issued by an institution that is authorized to operate by the Central Bank of Brazil or by a financial institution abroad, and that is not part of the conglomerate, limited to the instruments held by third parties and issued until December 31,2012	‐	‐
41b	Non‐controlling interest in Additional Capital	‐	‐
41c	Other residual differences concerning the Additional Capital calculation methodology for regulatory purposes	‐	‐
42	Regulatory adjustments applied to the Additional Capital due to the insufficiency of Tier II Capital to cover deductions	‐	‐
43	Total regulatory deductions from the Additional Capital	‐	‐
44	Additional Capital	50,269
45	Tier I	91,501,162
	Tier II: instruments
46	Instruments eligible for Tier II Capital		‐
47	Instruments that are authorized to compose Tier II Capital before Resolution No. 4,192 of 2013 comes into effect	29,353,581	12,580,106
48	Non‐controlling interest in subsidiaries that are part of the conglomerate, non‐deductible from Tier II Capital4	59,394	89,091
49	of which: instruments issued by subsidiaries before Resolution No. 4,192 of 2013 comes into effect	59,394	89,091
50	Excess of provisions with respect to the loss expected in IRB	‐	‐
51	Tier II before regulatory deductions	29,412,975
	Tier II: regulatory deductions
52	Shares or other instruments issued by the bank authorized to compose Tier II Capital, acquired directly, indirectly or synthetically	‐	‐
53	Investments crossed with instruments eligible for Tier II Capital
54	Added value of investments lower than 10% of the capital of institutions authorized to operate by the Central Bank of Brazil or by a financial institution abroad that are not part of the conglomerate and that exceeds 10% of the amount of Tier II capital	‐
55	Investments higher than 10% of the capital of institutions authorized to operate by the Central Bank of Brazil or by a financial institution abroad that are not part of the conglomerate	‐
56	National regulatory adjustments	11,290	‐
56a	Funding instruments issued by an institution that is authorized to operate by the Central Bank of Brazil or by a financial institution abroad, and that is not part of the conglomerate, limited to the instruments held by third parties and issued until December 31, 2012	11,290	‐	(a)
56b	Non‐controlling interest in Tier II	‐	‐
56c	Other residual differences concerning Tier II calculation methodology for regulatory purposes	‐	‐
57	Total regulatory deductions from Tier II Capital	11,290	‐
58	Tier II	29,401,685	‐
59	Referential Equity (Tier I + Tier II)	120,902,847	‐
60	Total risk‐weighted assets	788,843,915	‐
	1 ‐ Considers prudential adjustments corresponding to deduction of non‐controlling interest 2 ‐ Considers the deduction of deferred tax liabilities 3 ‐ Calculated according to article 9 of Bacen Resolution No. 4,192 4 ‐ Calculated according to article 29 of Resolution No. 4,192

Itaú Unibanco

Risk Management – Pillar 3

Breakdown of the Referential Equity and Information on its adequacy		3/31/2015
	Value (R$ Thousand)	Temporary Treatment (R$ Thousand)	Balance Sheet Reference
BIS Ratios and Additional Core Capital

61	Common Equity Tier 1	11.6%
62	Tier I Ratio	11.6%
63	BIS Ratio	15.3%
64	Core Capital minimum requirement, including capital additions (% of RWA)	4.5%
65	of which: additional for preserving capital	0.0%
66	of which: countercyclical additional	0.0%
67	of which: additional for institutions that are systemically important at global level (G‐SIB)
68	Core Capital available to meet the requirement for Additional Core Capital (% of RWA)	7.1%
	National Minimum
69	Core Capital Ratio, if different from that established in Basel III	5.5%
70	Tier I Ratio, if different from that established in Basel III	11%
71	BIS Ratio, if different from that established in Basel III
	Amounts below the limit for deduction (non-weighted by risk)
72	Added value of investments lower than 10% of the capital of companies that are similar to non‐consolidated financial institutions, insurance companies, reinsurance companies, capitalization companies and sponsored pension fund entities
73	Investments higher than 10% of the capital of companies that are similar to non‐consolidated financial institutions, insurance companies, reinsurance companies, capitalization companies and sponsored pension fund entities	8,920,899	(f)
74	Mortgage servicing rights
75	Tax credits arising from temporary differences, not deducted from the Core Capital	4,796,735	(c)
	Limits to the inclusion of provisions in Tier II
76	Generic provisions eligible for the inclusion in Tier II Capital related to exposures subject to the calculation of the capital requirement by means of a standardized approach
77	Limit for the inclusion of generic provisions in Tier II Capital for exposures subject to the standardized approach
78	Provisions eligible for the inclusion in Tier II Capital related to exposures subject to the calculation of the capital requirement by means of the IRB approach (before the application of the limit)	‐
79	Limit for the inclusion of provisions in Tier II Capital for exposures subject to the IRB approach	‐
Instruments authorized to compose the Referential Equity before Resolution No. 4,192 of 2013 comes into effect (applicable between October 1, 2013 and January 1, 2022)
80	Current limit for instruments that are authorized to compose the Core Capital before Resolution No. 4,192 of 2013 comes into effect
81	Amount excluded from the Core Capital due to the limit
82	Instruments that are authorized to compose the Additional Capital before Resolution No. 4,192 of 2013 comes into effect	‐
83	Amount excluded from the Additional Capital due to the limit	‐
84	Instruments that are authorized to compose Tier II Capital before Resolution No. 4,192 of 2013 comes into effect4	29,353,581
85	Amount excluded from Tier II Capital due to the limit4	12,580,106

1 ‐ Considers prudential adjustments corresponding to deduction of non‐controlling interest

2 ‐ Considers the deduction of deferred tax liabilities

3 ‐ Calculated according to article 9 of Bacen Resolution No. 4,192

4 ‐ Calculated according to article 29 of Resolution No. 4,192

Itaú Unibanco

Risk Management – Pillar 3

12	Glossaries

12.1	Glossary of Acronyms

AVA -Avaliação de Vulnerabilidades e Ameaças (Threats and Vulnerabilities Analysis)

ARS - Argentine Peso

BACEN - Banco Central do Brasil (Central Bank of Brazil)

BIA - Business Impact Analysis

BM&FBOVESPA - Bolsa de Valores, Mercadorias e Futuros de São Paulo (São Paulo Stock, Mercantile and Future Exchange)

BRL - Brazilian Real

CDB - Certificado de Depósito Bancário (Bank Deposit Certificate)

CDI - Certificado de Depósito Interfinanceiro (Interbank Deposit Certificate)

CDS - Credit Default Swap

CER - Coeficiente de Estabilización de Referencia (Argentine inflation index linked interest rate)

CLN - Credit Linked Note

CLP - Chilean Peso

CMN - Conselho Monetário Nacional (National Monetary Council)

CNSP - Conselho Nacional de Seguros Privados (National Council of Private Insurance)

COPOM - Monetary Policy Committee

CRA -Agribusiness Receivables Certificate

CRI - Certificados de Recebíveis Imobiliários (Securitized Real Estate Loans)

CVM - Securities and Exchange Commission

DRL - Demonstrativo de Risco de Liquidez (Liquidity Risk Statements)

DV01 - Delta Variation Risk

EAD - Exposure at Default

FIDC - Fundos de Investimento em Direito Creditórios (Credit Rights Investment Funds)

FPRs - Fatores de Ponderação de Riscos (weighting factor)

ICAAP - Internal capital adequacy assessment process

IGPM – Índice Geral de Preços do Mercado (Brazilian consumer index)

IPCA - Índice de Preço ao Consumidor Amplo (Brazilian consumer index)

IT - Information Technology

Itaú Unibanco

Risk Management – Pillar 3

LGD - Loss Given Default

MEP - Equity Method

MtM - Mark to Market

PCN - Planos de Continuidade de Negócios (Business Continuity Plans)

PD - Probability of default

PR ‐ Patrimônio de Referência (Referential Equity)

PYG - Paraguayan Guarani

RA - Risk Assessment

RBAN - Referential equity calculated for covering the interest rate risk of trades of the Banking Portfolio

RCAP – Regulatory Consistency Assessment Programme

RWA - Risk Weighted Asset

RWAACS – Portion relating to exposures subjects to variations in equities prices and classified in the Trading Portfolio;

RWACAM – Portion relating the exposures in gold, foreign exchange rate and assets subject to foreign exchange rate variations;

RWACOM – Portion relating to exposures subjects to variations in commodity prices

RWACPAD – Portion relating to exposures to credit risk

RWAJUR - Portion relating to exposures subjects to variations of interest rates, interest coupons and coupon rates and classified in the Trading Portfolio

RWAJUR1 – Portion relating to exposures subject to fixed income interest rate denominated in reais

RWAJUR2 - Portion relating to exposures subject to variation in the foreign exchange linked interest rate

RWAJUR3 - Portion relating to exposures subject to variation in the price index linked interest rates

RWAJUR4 - Portion relating exposures subject to variation in the interest rate index linked interest rate

RWAMPAD - Sum of the terms: RWACAM, RWAJUR, RWACOM, RWAACS

RWAOPAD - Portion relating to the calculation of operational risk capital requirements

SUSEP - Superintendência de Seguros Privados (Superintendence of Private Insurance)

TRS - Total Return Swap

TR - Taxa Referencial (Referential Rate)

TVM - Títulos de valores mobiliários (Securities)

UF - Chilean consumer index

UI - Uruguayan consumer index

U.S. - United States of America

UYU - Uruguayan Peso

Itaú Unibanco

Risk Management – Pillar 3

VaR – Value at Risk

12.2	Glossary of Norms

BACEN Circular No. 3,354 of June 27th, 2007

BACEN Circular No. 3,393 of June 3rd, 2008

BACEN Circular No. 3,547, of July 07th, 2011

BACEN Circular No. 3,635, of March 04th, 2013

BACEN Circular No. 3,636, of March 04th, 2013

BACEN Circular No. 3,637, of March 04th, 2013

BACEN Circular No. 3,638, of March 04th, 2013

BACEN Circular No. 3,639, of March 04th, 2013

BACEN Circular No. 3,640, of March 04th, 2013

BACEN Circular No. 3,641, of March 04th, 2013

BACEN Circular No. 3,643, of March 04th, 2013

BACEN Circular No. 3,644, of March 04th, 2013

BACEN Circular No. 3,645, of March 04th, 2013

BACEN Circular No. 3,647, of March 04th, 2013

BACEN Circular No. 3,652, of March 26th, 2013

BACEN Circular No. 3,675, of October 31st, 2013

BACEN Circular No. 3,678, of October 31st, 2013

BACEN Circular No. 3,679, of October 31st, 2013

BACEN Circular No. 3,696, of January 03rd, 2014

BACEN Circular No. 3,714, of August 20th, 2014

BACEN Circular No. 3,716, of August 21st, 2014

BACEN Circular No. 3,739, of December 17th, 2014

BACEN Circular No. 3,741, of December 29th, 2014

BACEN Circular Letter No. 3,565 of September 06th, 2012

CNSP Circular No. 411 of December 22nd, 2010

CNSP Resolution No. 228 of December 06th, 2010

CNSP Resolution No. 280, of January 30th, 2013

CNSP Resolution No. 282, of January 30th, 2013

CNSP Resolution No. 283, of January 30th, 2013

CNSP Resolution No. 284, of January 30th, 2013

CNSP Resolution No. 302, of December 16th 2013

CMN Resolution No. 3,380 of June 29th, 2006

CMN Resolution No. 3,444 of February 28th, 2007

CMN Resolution No. 3,464 of June 26th, 2007

Itaú Unibanco

Risk Management – Pillar 3

CMN Resolution No. 3,533 of January 31st, 2008

CMN Resolution No. 3,721 of April 30th, 2009

CMN Resolution No. 3,809 of October 28th 2009

CMN Resolution No. 3,921 of November 25th, 2010

CMN Resolution No. 3,988 of June 30th, 2011

CMN Resolution No. 4,090, of May 24th, 2012

CMN Resolution No. 4,192, of March 1st, 2013

CMN Resolution No. 4,193, of March 1st, 2013

CMN Resolution No. 4,194, of March 1st, 2013

CMN Resolution No. 4,195, of March 1st, 2013

CMN Resolution No. 4,277, of October 31st, 2013

CMN Resolution No. 4,278, of October 31st, 2013

CMN Resolution No. 4,279, of October 31st, 2013

CMN Resolution No. 4,280, of October 31st, 2013

CMN Resolution No. 4,281, of October 31st, 2013

CMN Resolution No. 4,311, of February 20th, 2014

CVM Regulatory Instruction No. 475 of December 17th, 2008

Itaú Unibanco

BIS Ratio 15.3%	Common Equity Tier I Ratio 11.6%	Tier II Ratio 3.7%
4º Q. 2014: 16.9%	4º Q. 2014: 12.5%	4º Q. 2014: 4.4%

Referential Equity R$ 120,903 million	Common Equity Tier I R$ 91,451 million	Tier II R$ 29,402 million
4º Q. 2014: R$ 129,790 million	4º Q. 2014: R$ 96,212 million	4º Q. 2014: R$ 33,559 million

OBJECTIVE		4

KEY INDICATORS		4

1	RISK AND CAPITAL MANAGEMENT	5
1.1	Organizational Structure	5
1.2	Risk and Capital Governance	6


2	CAPITAL	6
2.1	Capital Management	6
2.2	Capital Requirements in Place and in Progress	7
2.3	Capital Composition	8
2.4	Risk‐Weighted Asset (RWA)	10
	Risk-Weighted Assets for Credit Risk (RWACPAD)	10
	Risk-Weighted Assets for Market Risk (RWAMPAD)	11
	Risk-Weighted Assets for Operational Risk (RWAOPAD)	11

2.5	Capital Adequacy	12

3	BALANCE SHEET	14
	Balance Sheet	14
	List of institutions that comprises the Financial Statements of Itaú Unibanco Holding	16
	List of the material entities	18

4	INVESTMENTS IN OTHER ENTITIES	19
4.1	Investments in other entities not classified in the trading book	19

5	CREDIT RISK	20
5.1	Framework and Treatment	20
5.2	Credit Portfolio Analysis	22
	Evolution of the Credit Portfolio	22
	Operations with Credit Granting Characteristics by Brazil Geographic Regions and by Countries	22
	Operations with Credit Granting Characteristics by Economic Sector	23
	Remaining maturity of loan transactions	24
	Credit Concentration on the Major Debtors	24
	Overdue Amounts	25
	Allowance for Loan Losses	25
	Mitigating Instruments	26
	Counterparty Credit Risk	27
	Acquisitions, Sale or Transfer of Financial Assets	28
	Operations of Securitization	29
	Credit Derivatives	31

6	MARKET RISK	32
6.1	Framework and Treatment	32
6.2	Portfolio Analysis	34
	Interest rate risk in the non-trading book	34
	Evolution of the Trading Portfolio	35
	Evolution of the Derivatives Portfolio	35
	VaR -Consolidated Itaú Unibanco	36
	VaR - Trading Portfolio	37
	VaR - Foreign Units	38
	Backtesting	39

7	OPERATIONAL RISK	40
7.1	Framework and Treatment	40
7.2	Crisis Management and Business Continuity	41


8	LIQUIDITY RISK	42
8.1	Framework and Treatment	42
8.2	Primary Sources od Funding	42

9	OTHER RISKS	43
	Insurance Risk	43
	Social and Environmental Risk	43
	Reputational Risk	44
	Regulatory Risk	44
	Model Risk	44
	Country Risk	45
	Business and Strategy Risk	45

10	ENTERPRISE RISK MANAGEMENT AND ALIGNEMENT OF INCENTIVES	46
	Risk Appetite	46
	Stress Test	46
	Risk‐adjusted Compensation	46

11	APPENDIX I	48

12	GLOSSARIES	51
12.1	Glossary of Acronyms	51
12.2	Glossary of Norms	54