Unassociated Document

Contents

Executive Summary			3

Analysis of Net Income			11

Managerial Financial Margin			12

Results from Loan and Lease Losses			13

Banking Service Fees and Banking Charge Revenues			14

Non-interest Expenses			15

Tax Expenses for ISS, PIS, Cofins and Others			17

Income Tax and Social Contribution			17

Balance Sheet			19

Balance Sheet by Currency			22

Value at Risk			23

Ownership Structure			24

Pro Forma Financial Statements by Segment			27

Commercial Bank			30

Itaú BBA			31

Consumer Credit			31

Insurance, Pension Plans and Capitalization			32

Activities Abroad			36

Report of Independent Auditors			39

Complete Financial Statements			40

It should be noted that the pro forma financial statements by segment relating to prior periods have been reclassified for comparison purposes.

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

Future expectations arising from the reading of this analysis should take into consideration the risks and uncertainties that involve any activities and that are outside the control of the companies of the conglomerate (political and economic changes, volatility in interest and foreign exchange rates, technological changes, inflation, financial disintermediation, competitive pressures on products and prices, and changes in tax legislation).

Management Discussion & Analysis

2nd Quarter, 2010

Itaú Unibanco Holding S.A.

Second Quarter of 2010

Information and financial indicators of Itaú Unibanco Holding S.A. (Itaú Unibanco) from the second quarter of 2010 are presented below.

	R$ million (except where indicated)
Highlights
Statements of Income	2nd Q/10			1st Q/10			2nd Q/09			1st H/10			1st H/09
Net Income – Parent Company		3,165			3,234			2,571			6,399			4,586
Recurring Net Income		3,298			3,168			2,429			6,466			4,990
Managerial Financial Margin (1)		10,892			10,388			10,596			21,280			21,119
Shares (R$)
Consolidated Net Income per share (2) (3)		0.70			0.71			0.57			1.41			1.02
Consolidated Recurring Net Income per share (2) (3)		0.73			0.70			0.54			1.43			1.11
Number of Outstanding Shares – in thousands (2)		4,533,922			4,531,244			4,518,347			4,533,922			4,518,347
Book Value per share		12.15			11.69			10.46			12.15			10.46
Dividends/JCP net of taxes (4) (R$ Million)		973			950			729			1,923			1,497
Dividends/JCP net of taxes (4) per share		0.21			0.21			0.16			0.42			0.34
Market Capitalization (5) (R$ Million)		149,619			176,175			128,034			149,619			128,034
Market Capitalization (5) (US$ Million)		83,053			98,919			65,604			83,053			65,604
Performance Ratios (%)
Return on Average Equity – Annualized (6)		23.4	%		25.0	%		22.3	%		24.2	%		20.2	%
Recurring Return on Average Equity – Annualized (6)		24.4	%		24.4	%		21.1	%		24.4	%		22.0	%
Return on Average Assets – Annualized (7)		2.0	%		2.1	%		1.7	%		2.0	%		1.5	%
Recurring Return on Average Assets – Annualized (7)		2.1	%		2.0	%		1.6	%		2.1	%		1.6	%
Solvency Ratio (BIS Ratio)		15.7	%		17.3	%		16.5	%		15.7	%		16.5	%
Annualized Net Interest Margin with clients (8)		10.1	%		10.3	%		10.1	%		10.1	%		10.0	%
Nonperforming Loans Index (NPL over 60 days)		5.6	%		5.9	%		6.7	%		5.6	%		6.7	%
Nonperforming Loans Index (NPL over 90 days)		4.6	%		4.9	%		5.4	%		4.6	%		5.4	%
Coverage Ratio (Provision for Loan Losses/Nonperforming Loans over 60 days)		155	%		155	%		146	%		155	%		146	%
Coverage Ratio (Provision for Loan Losses/Nonperforming Loans over 90 days)		187	%		188	%		182	%		187	%		182	%
Efficiency Ratio (ER) (9)		47.3	%		44.0	%		45.4	%		45.7	%		45.8	%
Risk Adjusted Efficiency Ratio (RAER) (10)		70.8	%		68.9	%		75.5	%		69.9	%		75.5	%
Balance Sheet	Jun 30,10			Mar 31,10			Jun 30,09
Total Assets		651,583			634,663			596,387
Total Credit Portfolio, including Sureties, Endorsements and Guarantees		296,192			284,710			265,966
Credit Operations (A)		263,498			252,117			234,490
Sureties, Endorsements and Guarantees		32,694			32,593			31,476
Deposits + Debentures + Borrowings and Onlending + Securities (B) (11)		266,558			273,224			279,423
Credit Operations/Funding (A/B)		98.9	%		92.3	%		83.9	%
Stockholders' Equity of Parent Company		55,074			52,975			47,269
Relevant Data
Assets Under Management (AUM)		344,689			348,591			304,609
Employees (Individuals)		105,847			103,835			103,790
Number of Points of Service		36,871			37,612			38,477
Branches (Units)		3,931			3,933			3,939
CSBs (Units)		938			946			978
Automated Teller Machines (Units) (12)		32,002			32,733			33,560

(1) Described on page 12.

(2) The number of shares outstanding was adjusted to reflect the 10% share bonus that occurred on August 28, 2009.

(3) Calculated based on the weighted average of the number of outstanding shares.

(4) JCP– Interest on Own Capital. Amounts paid/provisioned (Note 16 – b II to the Financial Statements).

(5) Total number of shares outstanding (common shares and non-voting shares) multiplied by the average price of non-voting share on the last trading day in the period.

(6) Annualized Return was calculated by dividing Net Income of the parent company by the Average Stockholders’ Equity of the parent company. The quotient of this division was multiplied by the number of periods of the year to derive the annualized index.

(7) Annualized Return was computed by dividing Net Income of the parent company by Average Assets. The quotient of this division was multiplied by the number of periods of the year to arrive at the annual ratio.

(8) Does not include Margin with Market.

(9) ER = Non-interest Expenses/(Managerial Financial Margin + Banking Fees and Charge Revenues + Result from Operations of Insurance, Pension Plans and Capitalization before Retained Claims + Other Operating Income – Tax Expenses for ISS/PIS/Cofins and Other).

(10) RAER = (Non-interest Expenses + Results from Loan Losses + Retained Claims)/(Managerial Financial Margin + Banking Fees and Charge Revenues + Result from Operations of Insurance, Pension Plans and Capitalization before Retained Claims + Other Operating Income – Tax Expenses for ISS/PIS/Cofins and Other) .

(11) Net of compulsory deposits as described on page 21.

(12) Includes ESBs (electronic service branches) and service points in third-party establishments.

Management Discussion & Analysis

2nd Quarter, 2010

Itaú Unibanco Holding S.A.

Second Quarter of 2010

Net Income and Recurring Net Income

Itaú Unibanco reported consolidated net income of R$ 3,165 million in the second quarter of 2010. This total includes the impact of certain non-recurring events, as presented below:

										R$ million

	2nd Q/10			1stQ/10			1st H/10			1st H/09
Recurring Net Income		3,298			3,168			6,466			4,990
Sale of investments		-			-			-			212
Program for Settlement or Installment Payment of Federal Taxes- Law No.11,941/09		-			145			145			-
Provision for contingencies – economic plans		(133	)		(79	)		(211	)		(110	)
Amortization of goodwill (*)		-			-			-			(506	)
Total non-recurring effects		(133	)		66			(66	)		(405	)
Net Income		3,165			3,234			6,399			4,586

Note:

The impacts of the non-recurring events described above are net of tax effects. (Further details are presented in Note 22-K of the Financial Statements).

(*) In the first half of 2009, refers basically to the Redecard operation.

Managerial Statement of Income

The Management Discussion and Analysis Report below is based on the Managerial Statement of Income which includes reclassifications made in the accounting statement of income. Basically, the tax effects of the hedge of our investments abroad - originally included in tax expenses (PIS and Cofins), and income tax and social contribution on net income (CSLL) - were reclassified to financial margin; in the quarter, such effects totaled R$ 18 million.

Our strategy for foreign exchange risk management of capital invested abroad is intended to avoid exchange rate variation to affect net income. In sum, the exchange risk is neutralized and the investments are compensated in reais (BRL), through the use of derivative financial instruments. Our strategy to hedge investments abroad also considers the impacts of all related tax effects. It should also be noted that, during the period, the real (BRL) depreciated by 1.2% against the U.S. dollar, while in the first quarter of 2010 the local currency appreciated by 2.3%. The real (BRL) appreciated by 8.4% and 4.0% against the euro in the second and first quarters of 2010, respectively.

Macroeconomic Indices
	Jun 30,10			Mar 31,10			Jun 30,09
EMBI Brazil Risk		248			184			282
CDI (In the Quarter)		2.2	%		2.0	%		2.4	%
Dollar Exchange Rate (Var. in the Quarter)		1.2	%		2.3	%		-15.7	%
Dollar Exchange Rate (Quotation in R$)		1.8015			1.7810			1.9516
Euro Exchange Rate (Var. in the Quarter)		-8.4	%		-4.0	%		-11.0	%
Euro Exchange Rate (Quotation in R$)		2.2043			2.4076			2.7399
IGP-M (In the Quarter)		2.8	%		2.8	%		-0.3	%
Savings Rate (In The Quarter)		1.6	%		1.6	%		1.7	%

Management Discussion & Analysis

2nd Quarter, 2010

Itaú Unibanco Holding S.A.

Second Quarter of 2010

Reconciliation between Accounting and Managerial Statement of Income

R$ million

	Itaú Unibanco
2nd Quarter/10	Accounting			Non-recurring Effects			Tax Effect of Hedge			Managerial
Managerial Financial Margin		10,874			-			18			10,892
Financial Margin with Clients		10,001			-			-			10,001
Financial Margin with Market		873			-			18			891

Result of Loan Losses		(3,053	)		-			-			(3,053	)
Expense for Allowance for Loan Losses		(4,019	)		-			-			(4,019	)
Recovery of Credits Written Off as Losses		967			-			-			967

Net Result from Financial Operations		7,822			-			18			7,839

Other Operating Income/(Expenses)		(3,325	)		201			4			(3,121	)
Banking Fees and Charge Revenues		4,300			-			-			4,300
Result from Insurance, Pension Plans and Capitalization Operations		719			-			-			719
Non-interest Expenses		(7,771	)		201			-			(7,570	)
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(974	)		-			4			(970	)
Equity in earnings of affiliates and other investments		45			-			-			45
Other Operating Income		357			-			-			357

Operating Income		4,497			201			21			4,719
Non-operating Income		(1	)		-			-			(1	)

Income before Tax and Profit Sharing		4,495			201			21			4,717
Income Tax and Social Contribution		(1,029	)		(68	)		(21	)		(1,119	)
Profit Sharing		(54	)		-			-			(54	)
Minority Interests		(247	)		-			-			(247	)

Net Income		3,165			133			-			3,298

R$ million


	Itaú Unibanco
1st Quarter/10	Accounting			Non-recurring Effects			Tax Effect of Hedge			Managerial
Managerial Financial Margin		10,105			-			284			10,388
Financial Margin with Clients		9,370			-			-			9,370
Financial Margin with Market		735			-			284			1,019

Result of Loan Losses		(3,021	)		-			-			(3,021	)
Expense for Allowance for Loan Losses		(3,866	)		-			-			(3,866	)
Recovery of Credits Written Off as Losses		846			-			-			846

Net Result from Financial Operations		7,084			-			284			7,368

Other Operating Income/(Expenses)		(2,496	)		(26	)		(24	)		(2,545	)
Banking Fees and Charge Revenues		4,120			-			-			4,120
Result from Insurance, Pension Plans and Capitalization Operations		648			-			-			648
Non-interest Expenses		(6,841	)		119			-			(6,722	)
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(842	)		-			(24	)		(865	)
Equity in earnings of affiliates and other investments		72			-			-			72
Other Operating Income		348			(145	)		-			203

Operating Income		4,588			(26	)		260			4,823
Non-operating Income		19			-			-			19

Income before Tax and Profit Sharing		4,608			(26	)		260			4,842
Income Tax and Social Contribution		(1,061	)		(40	)		(260	)		(1,362	)
Profit Sharing		(62	)		-			-			(62	)
Minority Interests		(250	)		-			-			(250	)

Net Income		3,234			(66	)		-			3,168

Management Discussion & Analysis

2nd Quarter, 2010

Managerial Financial Margin

Itaú Unibanco Holding S.A.

Second Quarter of 2010

Net Income and Annualized Return on Average Equity

In the second quarter of 2010, Itaú Unibanco’s consolidated recurring net income totaled R$ 3,298 million, representing a 4.1% increase compared to the prior quarter. At June 30, 2010, the parent company stockholders’ equity reached R$ 55,074 million. The recurring annualized return on average equity was 24.4%.

Loan Portfolio (*)

R$ million

									Variation (%)
	Jun 30,10		Mar 31,10		Dez 31,09		Jun 30,09		Jun/10 – Mar/10			Jun/10 – Dec/10			Jun/10 – Jun/09
Individuals		107,237		104,257		101,912		95,034		2.9	%		5.2	%		12.8	%
Credit Card		29,619		28,419		29,096		24,307		4.2	%		1.8	%		21.9	%
Personal Loans		22,525		21,703		20,612		21,192		3.8	%		9.3	%		6.3	%
Vehicles		55,092		54,135		52,204		49,535		1.8	%		5.5	%		11.2	%

Businesses		160,584		153,378		150,805		147,486		4.7	%		6.5	%		8.9	%
Corporate		91,982		89,057		89,813		93,174		3.3	%		2.4	%		-1.3	%
Micro, Small and Middle Market		68,602		64,321		60,992		54,312		6.7	%		12.5	%		26.3	%

Directed Loans		15,515		14,601		13,653		11,784		6.3	%		13.6	%		31.7	%
Rural Loans		5,015		5,233		5,143		4,674		-4.2	%		-2.5	%		7.3	%
Mortgage Loans		10,501		9,368		8,510		7,110		12.1	%		23.4	%		47.7	%

Argentina/Chile/Uruguay/Paraguay		12,555		12,176		11,708		11,663		3.1	%		7.2	%		7.6	%

Porto Seguro		302		299		303		-		1.0	%		-0.4	%

Total		296,192		284,710		278,382		265,966		4.0	%		6.4	%		11.4	%
Total Retail (**)		191,354		183,179		176,557		161,130		4.5	%		8.4	%		18.8	%

(*) Includes endorsements and sureties.

(**) Includes Credit Card, Personal Loans, Vehicles, Micro, Small and Middle Market, Rural Loans and Mortgage Loans.

Note: The acquired payroll credit portfolio started to be considered as corporate risk, and to achieve comparability, the prior quarters were adjusted

At June 30, 2010, Itaú Unibanco’s loan and financing portfolio, including sureties and endorsements, totaled R$ 296,192 million, a 4.0% increase over the first quarter of the year. When compared to the prior year, our loan portfolio balance grew by 11.4%.

A highlight of the second quarter of 2010 was the 12.1% increase in the real estate credit balance, which totaled R$ 10,501 million, as well as the increase of 6.7% in micro, small and mid-sized companies credit balance, totaling R$ 68,602 million. Considering a 12-month period, the real estate and the micro, small and mid-size company loan portfolios increased by 47.7% and 26.3%, respectively.

Retail loan grew by 4.5% in the period, reaching R$ 191,354 million as of June 30, 2010. Credit card operations increased by 4.2% in the quarter. This product is becoming one of the main financing options for low-income clients (classes C and D).

In the second quarter of 2010, the managerial financial margin totaled R$ 10,892 million, a 4.8% increase over the prior quarter. The managerial financial margin with clients increased by 6.7%, driven by loan growth. On the other hand, our managerial financial margin with market declined by 12.6% compared with the prior period, totaling R$ 891 million. The decline was essentially driven by a reduction in foreign exchange and variable income positions.

Management Discussion & Analysis

2nd Quarter, 2010

Executive Summary

Itaú Unibanco Holding S.A.

In the second quarter of 2010, expenses for loan and lease losses amounted to R$4,019 million, an increase of R$ 153 million in comparison to the first quarter of the year, lead by the increase in our credit portfolio balance.

Once again, credit risk performance ratios evolved favorably. Non-performing ratio of individual client portfolio – which considers loans that are more than 90 days overdue – was down to 6.4% in the period, from 6.8% in the previous quarter. Similarly, delinquency in the corporate portfolio dropped to 3.2% at the end of June 2010, compared to 3.3% in the prior quarter. Income from recovery of credits written off as loss added up to R$ 967 million, an increase of R$ 121 million from the first quarter of the year.

Banking service fees and banking charges added up to R$4,300 million in the second quarter of 2010, a R$ 180 million increase compared to the prior quarter. During the quarter: (i) the client base expanded, impacting current account service revenues, (ii) revenues from credit operations and guarantees increased, as a result of the higher volume of loans and financing, (iii) revenues from credit cards grew, given the higher volume of bill discount services to commercial establishments and the expansion in the client base; and (iv) investment bank activities were intensified.

In the second quarter of 2010, non-interest expenses increased by R$ 848 million, driven by higher activity level and by the following: (i) decreased number of employees on vacation, (ii) marketing and advertising expenses due to the World Soccer Cup and intensification of institutional campaigns, and (iii) increased migration of Unibanco branches to the Itaú platform. The efficiency ratio was 47.3%, in the second quarter of 2010 as a result of the above factors. Disregarding advertising expenses in connection with the World Soccer Cup and expenses associated with the branch migration, the efficiency ratio would be 45.9%. On a 12-month rolling basis, this ratio stands at 46.0% versus 47.8% in an equal period ended in June 2009.

Unrealized profit totaled R$9,225 million in the second quarter of 2010, representing a R$2,451 million reduction when compared to the first quarter of the year. Such decline is primarily due to the decline of Redecard share price in the capital market.

During the quarter the balance of additional provision for loan and lease losses remained stable at R$6,104 million. It should be noted that this allowance is not taken into account to determine the unrealized profit.

Management Discussion & Analysis

2nd Quarter, 2010

Executive Summary

Itaú Unibanco Holding S.A.

Second Quarter of 2010

R$ million

Balance Sheet
										Variation (%)
ASSETS	Jun 30,10			Mar 31,10			Jun 30,09			Jun/10 – Mar/10			Jun/10 – Jun/09

Current and Long-term Assets		641,590			624,398			586,279			2.8	%		9.4	%

Cash and Cash Equivalents		12,415			11,249			9,378			10.4	%		32.4	%
Short-term Interbank Investments		115,117			136,230			128,326			-15.5	%		-10.3	%
Securities and Derivative Financial Instruments		128,825			121,372			124,745			6.1	%		3.3	%
Interbank and Interbranch Accounts		62,204			36,550			16,542			70.2	%		276.0	%
Loans, Lease and Other Credits Operations		263,498			252,117			234,490			4.5	%		12.4	%
(Allowance for Loan Losses)		(22,900	)		(23,170	)		(22,915	)		-1.2	%		-0.1	%
Other Assets		82,430			90,051			95,713			-8.5	%		-13.9	%
Foreign Exchange Portfolio		18,238			26,821			31,313			-32.0	%		-41.8	%
Others		64,192			63,229			64,399			1.5	%		-0.3	%

Permanent Assets		9,993			10,265			10,108			-2.6	%		-1.1	%

Investments		2,132			2,279			2,153			-6.4	%		-1.0	%
Fixed and Operating Lease Assets		4,483			4,427			4,194			1.3	%		6.9	%
Intangible Assets		3,378			3,559			3,761			-5.1	%		-10.2	%

TOTAL ASSETS		651,583			634,663			596,387			2.7	%		9.3	%

R$ million

Balance Sheet
							Variation (%)
LIABILITIES AND EQUITY	Jun 30,10		Mar 31,10		Jun 30,09		Jun/10 – Mar/10			Jun/10 – Jun/09

Current and Long-term Liabilities		592,582		577,814		545,783		2.6	%		8.6	%

Deposits		189,657		183,490		190,094		3.4	%		-0.2	%
Demand Deposits		26,398		24,856		23,857		6.2	%		10.7	%
Savings Deposits		51,852		50,085		40,848		3.5	%		26.9	%
Interbank Deposits		2,307		1,747		3,147		32.1	%		-26.7	%
Time Deposits		109,099		106,802		122,243		2.2	%		-10.8	%
Deposits Received under Securities Repurchase Agreements		157,261		148,034		121,909		6.2	%		29.0	%
Funds from Acceptances and Issue of Securities		18,904		18,794		19,092		0.6	%		-1.0	%
Interbank and Interbranch Accounts		7,402		7,540		6,069		-1.8	%		22.0	%
Borrowings and Onlendings		38,071		37,228		32,537		2.3	%		17.0	%
Derivative Financial Instruments		6,849		7,443		7,507		-8.0	%		-8.8	%
Technical Provisions for Insurance, Pension Plans and Capitalization		56,001		54,274		48,044		3.2	%		16.6	%
Other Liabilities		118,437		121,011		120,530		-2.1	%		-1.7	%
Foreign Exchange Portfolio		18,793		27,283		31,768		-31.1	%		-40.8	%
Subordinated Debt		28,255		25,756		22,498		9.7	%		25.6	%
Others		71,388		67,972		66,264		5.0	%		7.7	%

Deferred Income		187		205		213		-8.9	%		-12.1	%
Minority Interest in Subsidiaries		3,740		3,669		3,122		1.9	%		19.8	%

Stockholders' Equity of Parent Company		55,074		52,975		47,269		4.0	%		16.5	%

TOTAL LIABILITIES AND EQUITY		651,583		634,663		596,387		2.7	%		9.3	%

Deposits		189,657		183,490		190,094		3.4	%		-0.2	%
Assets Under Management (AUM)		344,689		348,591		304,609		-1.1	%		13.2	%
Total Deposits + Assets Under Management (AUM)		534,346		532,081		494,703		0.4	%		8.0	%

Management Discussion & Analysis

2nd Quarter, 2010

Executive Summary

Itaú Unibanco Holding S.A.

Second Quarter of 2010

R$ million

Income Statement
													Variation
	2ndQ/10			1stQ/10			1st H/10			1st H/09			2ndQ/10 – 1stQ/10			%			1st H/10 – 1st H/09			%

Managerial Financial Margin		10,892			10,388			21,280			21,119			504			4.8	%		162			0.8	%
Financial Margin with Clients		10,001			9,370			19,371			18,442			632			6.7	%		929			5.0	%
Financial Margin with Market		891			1,019			1,909			2,677			(128	)		-12.6	%		(768	)		-28.7	%

Result of Loan Losses		(3,053	)		(3,021	)		(6,073	)		(7,215	)		(32	)		1.1	%		1,142			-15.8	%
Expenses for Allowance for Loan Losses		(4,019	)		(3,866	)		(7,886	)		(8,086	)		(153	)		4.0	%		200			-2.5	%
Income from Recovery of Credits Written Off as Loss		967			846			1,813			871			121			14.3	%		942			108.1	%

Net Result from Financial Operations		7,839			7,368			15,207			13,904			472			6.4	%		1,303			9.4	%

Other Operating Income/(Expenses)		(3,121	)		(2,545	)		(5,666	)		(6,463	)		(575	)		22.6	%		797			-12.3	%
Banking Service Fees and Income from Banking Charges		4,300			4,120			8,419			7,143			180			4.4	%		1,276			17.9	%
Result from Insurance, Pension Plans and Capitalization Operations		719			648			1,367			1,122			71			10.9	%		245			21.8	%
Non-interest Expenses		(7,570	)		(6,722	)		(14,292	)		(13,692	)		(848	)		12.6	%		(600	)		4.4	%
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(970	)		(865	)		(1,835	)		(1,591	)		(105	)		12.2	%		(244	)		15.4	%
Equity in earnings of affiliates and Other investments		45			72			116			116			(27	)		-37.3	%		0			0.2	%
Other Operating Income		357			203			560			439			154			75.7	%		121			27.5	%

Operating Income		4,719			4,823			9,541			7,440			(104	)		-2.2	%		2,101			28.2	%

Non-operating Income		(1	)		19			18			16			(21	)		-107.6	%		2			9.9	%

Income before Tax and Profit Sharing		4,717			4,842			9,559			7,457			(125	)		-2.6	%		2,103			28.2	%

Income Tax and Social Contribution		(1,119	)		(1,362	)		(2,480	)		(1,951	)		243			-17.8	%		(530	)		27.1	%
Profit Sharing		(54	)		(62	)		(116	)		(112	)		9			-13.8	%		(4	)		3.6	%
Minority Interests in Subsidiaries		(247	)		(250	)		(497	)		(403	)		3			-1.2	%		(94	)		23.3	%

Recurring Net Income		3,298			3,168			6,466			4,990			130			4.1	%		1,475			29.6	%

We present below a new perspective on the income statement, highlighting the Managerial Financial Margin plus Banking Service Fees, which is primarily derived from the sum of the main items composing revenues from the banking and insurance, pension plans and capitalization operations.

R$ million

Income Statement
													Variation
	2ndQ/10			1stQ/10			1st H/10			1st H/09			2ndQ/10 – 1stQ/10			%			1st H/10 – 1st H/09			%

Managerial Financial Margin Plus Banking Service Fees		16,959			16,159			33,117			31,479			800			4.9	%		1,638			5.2	%
Financial Margin with Clients		10,001			9,370			19,371			18,442			632			6.7	%		929			5.0	%
Financial Margin with Market		891			1,019			1,909			2,677			(128	)		-12.6	%		(768	)		-28.7	%
Banking Service Fees and Income from Banking Charges		4,300			4,120			8,419			7,143			180			4.4	%		1,276			17.9	%
Result from Insurance, Pension Plans and Capitalization Operations
Before Retained Claims		1,411			1,448			2,858			2,779			(37	)		-2.6	%		80			2.9	%
Other Operating Income		357			203			560			439			154			75.7	%		121			27.5	%

Loan Losses and Retained Claims		(3,745	)		(3,821	)		(7,565	)		(8,872	)		76			-2.0	%		1,307			-14.7	%
Expenses for Allowance for Loan Losses		(4,019	)		(3,866	)		(7,886	)		(9,400	)		(153	)		4.0	%		1,514			-16.1	%
Reversal (increase) of additional provision for loan losses		-			-			-			1,314			-			-			(1,314	)		-100.0	%
Income from Recovery of Credits Written Off as Loss		967			846			1,813			871			121			14.3	%		942			108.1	%
Retained Claims		(692	)		(800	)		(1,492	)		(1,657	)		108			-13.5	%		165			-10.0	%

Operating Margin		13,214			12,338			25,552			22,607			876			7.1	%		2,945			13.0	%

Other Operating Income/(Expenses)		(8,497	)		(7,496	)		(15,993	)		(15,150	)		(1,001	)		13.4	%		(843	)		5.6	%
Non-interest Expenses		(7,570	)		(6,722	)		(14,292	)		(13,692	)		(848	)		12.6	%		(600	)		4.4	%
Tax Expenses for ISS, PIS, Cofins and Other Taxes		(970	)		(865	)		(1,835	)		(1,591	)		(105	)		12.2	%		(244	)		15.4	%
Other Results		43			91			134			132			(48	)		-52.3	%		2			1.4	%

Income before Tax and Profit Sharing		4,717			4,842			9,559			7,457			(125	)		-2.6	%		2,103			28.2	%

Income Tax and Social Contribution		(1,119	)		(1,362	)		(2,480	)		(1,951	)		243			-17.8	%		(530	)		27.1	%
Profit Sharing		(54	)		(62	)		(116	)		(112	)		9			-13.8	%		(4	)		3.6	%
Minority Interests in Subsidiaries		(247	)		(250	)		(497	)		(403	)		3			-1.2	%		(94	)		23.3	%

Recurring Net Income		3,298			3,168			6,466			4,990			130			4.1	%		1,475			29.6	%

Note: Other Results are composed of Equity in earnings of affiliates and other investments and Non-operating Income.

Management Discussion & Analysis

2nd Quarter, 2010

Analysis of the Net Income

Itaú Unibanco Holding S.A.

Managerial Financial Margin

R$ million

Managerial Financial Margin
									Variation
	2nd Q/10		1st Q/10		1st H/10		1st H/09		2nd Q/10- 1st Q/10			%			1st H/10- 1st H/09			%

Clients		10,001		9,370		19,371		18,442		632			6.7	%		929			5.0	%
Interest Rate Sensitive Margin Operations		1,241		1,092		2,332		2,297		149			13.6	%		36			1.6	%
Spread-Sensitive Margin Operations		8,761		8,278		17,038		16,145		483			5.8	%		894			5.5	%
Market		891		1,019		1,909		2,677		(128	)		-12.6	%		(768	)		-28.7	%
Treasury		891		1,019		1,909		2,677		(128	)		-12.6	%		(768	)		-28.7	%
Total		10,892		10,388		21,280		21,119		504			4.8	%		162			0.8	%

The managerial financial margin totaled R$10,892 million in the second quarter of 2010, a R$504 million increase from the first quarter of the year. The main drivers of this change are presented below.

Managerial Financial Margin with Clients

The managerial financial margin with clients comprises the use of financial products and services by our clients, including account holders and non-account holders.

In the second quarter of 2010, the margin with clients totaled R$10,001 million, increasing by R$632 million when compared to the prior period. In order to allow for a better understanding of changes in the financial margin, in this discussion the margin is divided into two different components: financial margin sensitive to interest rate changes, and financial margin sensitive to spreads.

Interest Rate Sensitive with Clients

The financial margin on interest rate-sensitive operations amounted to R$1,241 million in the quarter, a 13.6% growth from the previous quarter. The increase in the volume of operations, particularly associated with the growth in the average balance of working capital, in conjunction with the impact from the increase in the rate, were the factors behind this change.

Annualized Rate of Interest Rate Sensitive Banking Operations Performed with Clients

R$ million


							Variation
	2nd Q/10			1st Q/10			Balance		%
Average Balance		55,984			53,957			2,027		3.8	%
Financial Margin		1,241			1,092			149		13.6	%
Annualized Rate		8.9	%		8.1	%				80	b.p.

Spread-Sensitive margin with Clients

The financial margin on spread-sensitive clients operations reached R$8,761 million in the period, a R$483 million growth from the prior quarter. The increase in the average balance of credit operations was the driver of such growth, partly offset by the rise in Central Bank compulsory deposits.

Annualized Rate of Spread-Sensitive Margin with Clients

R$ million


							Variation
	2nd Q/10			1st Q/10			Balance		%
Average Balance		340,731			311,024			29,707		9.6	%
Financial Margin		8,761			8,278			483		5.8	%
Annualized Rate		10.3	%		10.6	%			-30		b.p.

Managerial Financial Margin with Market

The financial margin with market operations basically comprises treasury operations. During the quarter, the financial margin on market operations added up to R$891 million, or a 12.6% decline from the previous quarter. Such decline is attributable to the lower results of exchange rate positions and variable income positions.

Management Discussion & Analysis

2nd Quarter, 2010

Analysis of the Net Income

Itaú Unibanco Holding S.A.

As a result of the above changes, the net interest margin - NIM - (annualized rate of managerial financial margin, disregarding the financial margin on market operations) stood at 10.1% in the second quarter of 2010, compared to 10.3% in the prior period. When the expenses for loan and lease losses, net of the recovery of operations previously written off as losses, are taken into account, the adjusted NIM rate stood at 7.0% both in the current and prior quarters.

R$ million

Analysis of the Managerial Financial Margin
	Average Balance			2nd Q/10 Financial Margin		CDI (p.y.)			Average Balance			1st Q/10 Financial Margin		CDI (p.y.)			Average Balance			1st H/10 Financial Margin		CDI (p.y.)
Demand Deposits + Floatings		35,713								36,229								36,021
(-) Compulsory Deposits		(10,763	)							(10,645	)							(10,792	)
Contingent Liabilities (-) Deposits in guarantee of Contingent Liabilities		1,357								1,233								1,180

Tax and Social Security obligations (-) Deposits in guarantee		15,726								15,722								15,915

(-) Tax Credits		(27,623	)							(27,121	)							(27,388	)

Working Capital (Equity + Minority Interests - Permanent Assets - Capital Allocated to Treasury)		41,575								38,539								40,012
Interest Rate Sensitive Margin with Clients (A)		55,984			1,241		8.9	%		53,957			1,092		8.1	%		54,948			2,332		8.5	%

	Average			Financial			Spread			Average			Financial			Spread			Average			Financial			Spread
	Balance			Margin			(p.y.)			Balance			Margin			(p.y.)			Balance			Margin			(p.y.)

Cash and Cash Equivalents + Interbank Deposits + Securities (*)		67,344									70,686									69,352

Interbank and Interbranch Accounts		38,614									14,915									26,983
Loans, Leasing and Other Credits		257,808									249,034									253,855
(Allowance for Loan Losses)		(23,035	)								(23,611	)								(23,374	)

Spread-Sensitive Margin with Clients (B)		340,731			8,761			10.3	%		311,024			8,278			10.6	%		326,817			17,038			10.4	%

Net Interest Margin with Clients (C= A+B)		396,715			10,001			10.1	%		364,981			9,370			10.3	%		381,765			19,371			10.1	%

Provision for Loan and Lease Losses (D)					(4,019	)								(3,866	)								(7,886	)

Recovery of Credits Written Off as Losses (E)					967									846									1,813

Net Interest Margin after Provision for Credit Risk (F = C+D+E)		396,715			6,949			7.0	%		364,981			6,349			7.0	%		381,765			13,298			7.0	%

Treasury Financial Margin (G)					891									1,019									1,909

Net Result from Financial Operations (H= F+G)					7,839									7,368									15,207

(*) Cash and Cash Equivalents + Interbank Deposits + Securities (-) Interbank Deposits related to Repurchase Liability (-) Derivative financial instruments.

(-) Operations Sensitive to Variations in Interest Rate.

Note: spread is the annualized difference between the earnings of assets and their opportunity costs.

Management Discussion & Analysis

2nd Quarter, 2010

Analysis of the Net Income

Itaú Unibanco Holding S.A.

Results from Loan and Lease Losses

R$ million

Expenses for Provision for Loan Losses and Recovery of Credits Written off as Losses

													Variation
	2nd Q/10			1st Q/10			1st H/10			1st H/09			2nd Q/10- 1st Q/10			%			1st H/10- 1st H/09		%
Provision for Loan and Lease Losses		(4,019	)		(3,866	)		(7,886	)		(8,086	)		(153	)		4.0	%		200		-2.5	%
Income from Recovery of Credits Written Off as Losses		967			846			1,813			871			121			14.3	%		942		108.1	%
Result from Loan Losses		(3,053	)		(3,021	)		(6,073	)		(7,215	)		(32	)		1.1	%		1,142		-15.8	%

During the second quarter of 2010, Itaú Unibanco’s expense for loan and lease losses amounted to R$ 4,019 million, or a 4.0% increase compared to the prior quarter. The growth in the credit portfolio balance was the main driver of such increase.

The performance indicator improvement trend seen in our loan and financing portfolio since the third quarter of 2009 continued in the present quarter. Our non-performing loan ratio (credit operations more than 90 days overdue) reached 4.6%; this ratio for individual clients showed a positive variance of 40 basis point, while for companies the positive change was 10 basis point, always compared to the prior quarter. The reduced delinquency levels are directly associated with the current juncture of the Brazilian economic cycle, with an increase in GDP.

Revenues from the recovery of loans previously written off as losses totaled R$ 967 million, corresponding to a R$ 121 million increase from the prior period.

The balance of the additional provision for loan and lease losses remained unaltered at R$ 6,104 million.

Nonperforming Ratios							R$ million
	Jun 30, 10			Mar 31, 10			Jun 30, 09
Nonperforming Loans over 60 days (a)		14,778			14,934			15,744
Nonperforming Loans over 90 days (b)		12,224			12,345			12,604
Credit Portfolio (c)		263,498			252,117			234,490
NPL Ratio [(a)/(c)] x 100 over 60		5.6	%		5.9	%		6.7	%
NPL Ratio [(b)/(c)] x 100 over 90		4.6	%		4.9	%		5.4	%

(a) Loans overdue for more than 60 days and without generation of revenues on the accrual basis.

(b) Loans overdue for more than 90 days.

Coverage Ratio – 90 days

In the second quarter of 2010, the coverage ratio remained virtually stable when compared to the prior period.

Overdue Loans

During the quarter, this portfolio declined 1.7% from the prior quarter. Also noteworthy is the R$121 million increase in the difference between the provisions for loan and lease losses and the non-performing loan portfolio when compared to the prior quarter.

							R$ million

	Jun 30, 10			Mar 31, 10			Jun 30, 09
Overdue Loans		22,876			23,267			23,979
Balance of Provision for Loan and Lease Losses		(22,900	)		(23,170	)		(22,915	)
Difference		24			(97	)		(1,064	)

Overdue loans are credit operations having at least one installment more than 15 days overdue, irrespective of collateral provided.

Management Discussion & Analysis

2nd Quarter, 2010

Analysis of the Net Income

Itaú Unibanco Holding S.A.

Banking fee revenues and Banking charge revenues

R$ million

Banking fee revenues and Banking charge revenues
									Variation
	2nd Q/10		1st Q/10		1st H/10		1st H/09		2nd Q/10 – 1st Q/10			%			1st H/10 – 1st H/09		%

Asset Management		615		599		1,214		1,021		16			2.7	%		193		19.0	%
Current Account Services		608		579		1,188		1,005		29			5.0	%		183		18.2	%
Loan Operations and Guarantees Provided		672		657		1,330		1,129		15			2.3	%		200		17.7	%
Collection Services		317		322		640		596		(5	)		-1.5	%		44		7.4	%
Credit Cards		1,639		1,553		3,192		2,771		85			5.5	%		422		15.2	%
Other		447		408		856		621		39			9.6	%		234		37.7	%
Total		4,300		4,120		8,419		7,143		180			4.4	%		1,276		17.9	%

Banking service fees, including banking charges, grew by 4.4% compared to the prior quarter, mainly as a result of:

Asset Management

Increase in revenues from asset management, as a result of the higher number of business days in the period and cumulative CDI increase compared to the prior quarter.

Current Account Services

Change of 5.0% in the quarter, as a result of higher revenues from the fee package due to the increased client base.

Credit Operations and Guarantees Provided

Increase of 2.3% in the quarter, driven by the higher volume of credit operations, primarily in vehicle financing and leasing, credit cards, and the small and mid-sized company segment.

Credit Cards

Increase of 5.5%, quarter-on-quarter, driven by the growth in the volume of bill discount service for commercial establishments and the larger client base.

Other					R$ million

	2nd Q/10		1st Q/10		Variation
Foreign Exchange Services		19		17		2
Income from Brokerage and Securities Placement		133		133		0
Income from Custody Services and Management of Portfolio		47		44		3
Income from Economic and Financial Advisory Services		79		55		24
Other Services		170		159		11
Total		447		408		39

Growth driven by enhanced investment bank activities, giving rise to higher revenues from economic and financial advisory.

Management Discussion & Analysis

2nd Quarter, 2010

Analysis of the Net Income

Itaú Unibanco Holding S.A.

Non-interest Expenses													R$ million
Non-interest Expenses
													Variation
	2nd Q/10			1st Q/10			1st H/10			1st H/09			2nd Q/10 – 1st Q/10			%			1st H/10 – 1st H/09			%
Personnel Expenses		(3,186	)		(2,882	)		(6,068	)		(5,886	)		(304	)		10.5	%		(182	)		3.1	%
Other Administrative Expenses		(3,335	)		(2,978	)		(6,313	)		(5,656	)		(357	)		12.0	%		(656	)		11.6	%
Other Operating Expenses		(956	)		(793	)		(1,749	)		(1,996	)		(164	)		20.7	%		247			-12.4	%
Tax Expenses		(93	)		(69	)		(162	)		(154	)		(24	)		34.2	%		(8	)		5.5	%
Total		(7,570	)		(6,722	)		(14,292	)		(13,692	)		(848	)		12.6	%		(600	)		4.4	%

During the second quarter of 2010, the process performed to unify our client service network and other initiatives drove an increase of 12.6% in non-interest expenses compared to the prior quarter.

Personnel Expenses

R$ million


	2ndQ/10			1stQ/10			Variation
Compensation		(2,089	)		(1,829	)		(260	)
Charges		(506	)		(484	)		(21	)
Social Benefits		(413	)		(413	)		(0	)
Training		(53	)		(37	)		(16	)
Employee Terminations and Labor Claims		(126	)		(119	)		(6	)
Total		(3,186	)		(2,882	)		(304	)

Personnel expenses were up 10.5% from the prior quarter as a result of the increased number of employees driven by the expansion of our operations, and the lower number of employees on vacation.

Number of Employees (*)

The increased number of employees quarter-on-quarter was driven by our organic growth, in particular in the small and mid-size companies segment.

								R$ million

		2ndQ/10			1stQ/10			Variation
Data Processing and Telecommunications	A		(762	)		(739	)		(23	)
Depreciation and Amortization	B		(361	)		(300	)		(61	)
Facilities	C		(588	)		(498	)		(90	)
Third-Party Services	A		(695	)		(664	)		(31	)
Financial System Services	A		(104	)		(82	)		(22	)
Advertising, Promotions and Publications	D		(308	)		(225	)		(84	)
Transportation			(147	)		(142	)		(5	)
Materials			(109	)		(86	)		(23	)
Security			(110	)		(102	)		(8	)
Travel			(41	)		(29	)		(12	)
Others			(109	)		(112	)		2
Total			(3,335	)		(2,978	)		(357	)

Other Administrative Expenses

Other administrative expenses increased by 12.0% quarter-on-quarter. The main drivers were:

A)	higher operating activity levels;

B)	write-off of leasehold improvements arising from the branch layout remodeling;

C)	intensification of the branch migration process; and

D)	media advertising related to the World Soccer Cup and new institutional campaigns.

Other Operating Expenses

R$ million


	2ndQ/10			1stQ/10			Variation
Provision for contingencies		(237	)		(164	)		(74	)
Selling – Credit Cards		(377	)		(331	)		(47	)
Claims		(153	)		(123	)		(30	)
Others		(189	)		(176	)		(14	)
Total		(956	)		(793	)		(164	)

Other operating expenses increased by 20.7% from the prior period. The most significant drivers were the increased client base and the replacement of cards as part of the migration of the client base from Unibanco to Itaú.

Management Discussion & Analysis

2nd Quarter, 2010

Analysis of the Net Income	Itaú Unibanco Holding S.A.

Efficiency Ratio and Risk-Adjusted Efficiency Ratio

The efficiency ratio and the risk-adjusted efficiency ratio, which includes the impacts of the risk portions associated with banking operations (results from the provisions for loan and lease losses) and insurance and private pension (claims) operations are presented below.

Efficiency Ratio

The efficiency ratio for the second quarter rose to 47.3%, or a 330 basis point increase compared to the prior quarter, mostly due to the growth in personnel expenses – including the seasonal effect that benefits the first quarter of the year – and intensification of branch migration.

The efficiency ratio for the past 12 months, compared to the same period of the previous year, reached 46.0%, declining by 180 basis point, driven by synergy gains obtained during the association process.

Risk-Adjusted Efficiency Ratio

The risk-adjusted efficiency ratio rose to 70.8% in the second quarter, corresponding to a 190 basis point increase compared to the prior quarter, chiefly due to the higher non-interest expenses described above, and the increase in the provisions for loan and lease losses, given the growth in the loan portfolio balance.

The risk-adjusted efficiency ratio for the past 12 months, compared to the equal period in the prior year, reached 71.9%, or a 290 basis point reduction, reflecting gains obtained during the association process and as a result of the improved quality of our loan portfolio.

Risk Adjusted	=	Non-Interest Expenses (Personnel Expenses + Other Administrative Expenses + Other Operating Expenses + Tax Expenses with Other Taxes) + Result from Loan Losses + Retained Claims
Efficiency Ratio	=	(Managerial Financial Margin + Banking Service Fees and Charge Revenues + Operating Result of Insurance, Capitalization and Pension Plans before Retained Claims + Other Operating Income - Tax Expenses for ISS, PIS, Cofins and Other Taxes)

The chart below shows the portions of the Managerial Financial Margin Plus Banking Service Fees that are utilized to cover Non-interest Expenses, Result from Loan Losses and Retained Claims.

(*) Net of Tax Expenses for ISS, PIS and Cofins and others

(**) Does not include Equity in earnings of affiliates and other investments and Non-operating Income

Management Discussion & Analysis

2nd Quarter, 2010

Analysis of the Net Income

Itaú Unibanco Holding S.A.

Performance of Non-Interest Expenses and Ratio of Non-Interest Expenses to Assets (*)

(*) Division of Non-Interest Expenses by the arithmetic average of total assets for the two previous quarters (annualized).

History of Numbers of Points of Service (**)

(**) Includes Banco Itaú Argentina, Banco Itaú BBA and Chile, Uruguay and Paraguay companies’ information. Does not include points of sale and ATMs of TecBan – Banco 24h.

(***) Includes ESBs (electronic service branches) and service points in third-party establishments.

Non-interest Expenses without Redecard, Porto Seguro, New Points of Sale Openings and Branches’ Migration effects.

Excluding the effect of expenses incurred with the migration of Unibanco branches to the Itaú platform, those associated with the opening of new points of sale, and expenses for Redecard and Porto Seguro – consolidated companies whose cost management is not under our direct responsibility – the variation of non-interest expenses would total R$ 84 million in the first half of 2010, which is equal to a 0.6% reduction compared to the same period of 2009. This change outperformed our expectations as of the beginning of the year, since when disclosing the results for the fourth quarter of 2009, we announced a 0%-3% range for the expected growth in costs, disregarding the expansion in points of sale, Redecard and Porto Seguro.

Non-interest Expenses without Redecard, Porto Seguro, New Points of Sale Openings and Branches’ Migration effects.

													Variation
	2ndQ/10			1stQ/10			1st H/10			1st H/09			2ndQ/10 – 1stQ/10			%			1st H/10 – 1st H/09			%
Non-interest Expenses		(7,570	)		(6,722	)		(6,832	)		(14,292	)		(848	)		12.6	%		(600	)		4.4	%
(+) Redecard Expenses		263			233			496			451			31			13.1	%		45			10.0	%
(+) Porto Seguro Expenses		117			107			224			-			10			9.3	%		224			-
(+) New Points of Sale Expenses		68			54			122			-			14			25.9	%		122			-
(+) Branches' Migration Expenses		235			59			294			-			176			298.3	%		294			-
Non-interest Expenses without Redecard, Porto Seguro, New Points of Sale Openings and Branches’ Migration effects.		(6,887	)		(6,270	)		(13,157	)		(13,241	)		(617	)		9.8	%		84			-0.6	%

Tax Expenses for ISS, PIS, Cofins and Others

Tax expenses totaled R$ 970 million in the second quarter of 2010, corresponding to a 12.2% increase from the first quarter of the year, mainly because of the increase in operations.

Income Tax and Social Contribution on Net Income

Income Tax and Social Contribution on Net Income expenses added up to R$ 1,119 million in the second quarter of 2010, equal to a 17.8% decline compared to the prior quarter.

Social Contribution on Net Income expense payable in the short term continues not to include the effect of the rate increase to 15% from 9%, as the tax credits recorded are sufficient to counter this effect, considering that management believes that the National Federation of the Financial System (CONSIF) will prevail in its direct unconstitutionality lawsuit in this regard.

Management Discussion & Analysis

2nd Quarter, 2010

Balance Sheet	Itaú Unibanco Holding S.A.


Securities Portfolio	R$ million

Securities Portfolio History
																Variation (%)
	Jun 30,10		%			Mar 31,10		%			Jun 30,09		%			Jun/10 – Mar/10			Jun/10 – Jun/09
Total Public Securities		52,055		40.4	%		49,090		40.4	%		58,104		46.6	%		6.0	%		-10.4	%
Public Securities – Domestic		45,791		35.5	%		41,097		33.9	%		48,664		39.0	%		11.4	%		-5.9	%
Public Securities – Foreign		6,264		4.9	%		7,993		6.6	%		9,440		7.6	%		-21.6	%		-33.6	%
Portugal		0		0.0	%		25		0.0	%		256		0.2	%		-100.0	%		-100.0	%
Austria		0		0.0	%		0		0.0	%		573		0.5	%		0.0	%		-100.0	%
Argentina		224		0.2	%		236		0.2	%		302		0.2	%		-5.0	%		-25.9	%
Denmark		788		0.6	%		1,466		1.2	%		1,808		1.4	%		-46.2	%		-56.4	%
Spain		441		0.3	%		1,468		1.2	%		1,841		1.5	%		-70.0	%		-76.1	%
Korea		2,090		1.6	%		2,050		1.7	%		1,730		1.4	%		2.0	%		20.8	%
Chile		1,182		0.9	%		1,201		1.0	%		665		0.5	%		-1.6	%		77.8	%
Paraguay		368		0.3	%		444		0.4	%		295		0.2	%		-17.0	%		24.7	%
Uruguay		774		0.6	%		707		0.6	%		97		0.1	%		9.5	%		694.5	%
United States		391		0.3	%		366		0.3	%		1,855		1.5	%		6.6	%		-78.9	%
Others		6		0.0	%		30		0.0	%		18		0.0	%		-79.8	%		-66.7	%
Private Securities		27,432		21.3	%		23,968		19.7	%		24,117		19.3	%		14.5	%		13.7	%
PGBL/VGBL Fund Quotas		41,436		32.2	%		40,153		33.1	%		34,476		27.6	%		3.2	%		20.2	%
Derivative Financial Instruments		7,901		6.1	%		8,162		6.7	%		8,048		6.5	%		-3.2	%		-1.8	%
Total Securities		128,825		100.0	%		121,372		100.0	%		124,745		100.0	%		6.1	%		3.3	%

At June 30, 2010, the securities portfolio totaled R$ 128,825 million, representing a 6.1% increase from the prior quarter. The securities portfolio mix changed during the period, as the exposure to other country securities was reduced, while the exposure to Brazilian public and private securities was increased.

Credit Portfolio

In the second quarter of 2010, the share of credits rated "AA" to "C" grew by 30 basis point, to account for 90.1% of the portfolio.

The most significant increases in the portfolio during the quarter were seen in the following industries: Light and Heavy Vehicles (R$951 million increase, or 11.9%), Transportation (up R$767 million, or 6.7%), Finance (growth of R$766 million, or 10.0%), Real Estate (up R$690 million, or 8.3%), Other Commerce (up R$603 million, or 13.2%), Apparel (R$556 million increase, or 9.4%), Electro-electronics (growth of R$375 million, or 5.1%), as well as other less significant changes. The main declines in the quarter were seen in the following portfolios: Metals and Steel (down R$407 million, or 5.1%), Electrical Energy Generation, Transportation and Distribution (decrease of R$283 million, or 3.3%), Chemicals and Petrochemicals (down R$211 million, or 2.9%), and Fertilizers, Manure, Insecticides and Agricultural Chemical (down R$123 million, or 8.2%).

During the second quarter of 2010, the share of the 100 top debtors in the portfolio stood at 19.4%, compared to 19.1% in the prior quarter.

R$ million

Credit Portfolio (*)
Risk Level		AA			A		B		C		D - H		Total
Jun 30, 10	Credit Operations		64,957		132,256		53,856		15,771		29,352			296,192
	% of Total		21.9	%	44.7	%	18.2	%	5.3	%	9.9	%		100.0	%

Mar 31, 10	Credit Operations		60,850		126,221		52,371		16,291		28,977			284,710
	% of Total		21.4	%	44.3	%	18.4	%	5.7	%	10.2	%		100.0	%

(*) The credit balance includes sureties and endorsements.

Management Discussion & Analysis

2nd Quarter, 2010

Balance Sheet	Itaú Unibanco Holding S.A.

Funding

At June 30, 2010, funds obtained totaled R$ 716,620 million, an increase of 2.1% from the prior period.

During the quarter, the funding mix changed, with increased funding obtained through time deposits and repurchase agreements.

										R$ million
Funding from Clients
	Jun 30, 10		Mar 31, 10		Jun 30, 09		Jun/10 – Mar/10			Jun/10 – Jun/09
Demand deposits		25,838		24,316		23,499		6.3	%		10.0	%
Savings deposits		51,836		50,069		40,835		3.5	%		26.9	%
Time deposits		104,750		95,446		108,228		9.7	%		-3.2	%
Debentures (Repurchase Agreements) and Mortgage – Backed Notes		86,566		78,266		64,317		10.6	%		34.6	%
(1) Funding from Account Holders		268,990		248,096		236,879		8.4	%		13.6	%
Institutional clients		13,583		19,338		21,865		-29.8	%		-37.9	%
Onlending		24,749		23,247		18,400		6.5	%		34.5	%
(2) Total – Funding from Institutional & Account Holders		307,322		290,681		277,144		5.7	%		10.9	%
Assets under management		344,689		348,591		304,609		-1.1	%		13.2	%
Technical provisions for insurance, pension plan and capitalization		56,001		54,274		48,044		3.2	%		16.6	%
(3) Total Clients		708,012		693,546		629,796		2.1	%		12.4	%
Deposits from Banks		2,307		1,747		3,147		32.1	%		-26.7	%
Funds from acceptance and issuance of securities abroad		6,301		6,408		6,778		-1.7	%		-7.0	%
(4) Total Funding		716,620		701,701		639,721		2.1	%		12.0	%

In the second quarter of 2010, loan and financing operations used almost the totality of funds obtained from clients. The higher reserve requirements contributed to increase the credit portfolio/net funds obtained from clients from 92.3% in March to 98.9% in June 2010.

													R$ million
Ratio between Loan Portfolio and Funding
										Jun/10 –			Jun/10 –
	Jun 30, 10			Mar 31, 10			Jun 30, 09			Mar/10			Jun/09
Funding from clients		307,322			290,681			277,144			5.7	%		10.9	%
(-) Compulsory deposits		(61,585	)		(37,572	)		(19,092	)		63.9	%		222.6	%
(-) Available funds		(12,415	)		(11,249	)		(9,378	)		10.4	%		32.4	%
Funds from acceptance and issuance of securities abroad		6,301			6,408			6,778			-1.7	%		-7.0	%
Borrowings		13,321			13,981			14,138			-4.7	%		-5.8	%
Other (1)		13,614			10,974			9,834			24.1	%		38.4	%
Total (A)		266,558			273,224			279,423			-2.4	%		-4.6	%
Loan Portfolio (B) (2)		263,498			252,117			234,490			4.5	%		12.4	%
B/A		98.9	%		92.3	%		83.9	%	660		b.p	1,490		b.p.

(1)	These are comprised of installments of subordinated debt that is not included in Tier II Reference Equity.

(2)	The credit portfolio balance does not include sureties and endorsements.

Management Discussion & Analysis

2nd Quarter, 2010

Balance Sheet	Itaú Unibanco Holding S.A.

External Funding

The table below highlights the main issues abroad of Itaú Unibanco outstanding on June 30, 2010.

US$ millions

Main Issues in Effect (1)

Instrument

Coordinator

Balance at

Mar 31, 10

Issues

Amortization

Balance at

Jun 30, 10

Issue

Date

Maturity

Date

Coupon % p.y.

Fixed Rate Notes(2)

Merrill Lynch

321

339

8/13/2001

8/15/2011

4.250%

Fixed Rate Notes

Merrill Lynch and Itaubank

100

8/13/2001

8/15/2011

10.000%

Fixed Rate Notes

Merrill Lynch and Itaubank

11/9/2001

8/15/2011

10.000%

Fixed Rate Notes(3)

UBS/Merrill Lynch

500

7/29/2005

Perpetual

8.700%

Fixed Rate Notes(4)

Itaú Chile

7/24/2007

7/24/2017

UF(10) + 3.79%

Fixed Rate Notes(5)

Itaú Chile

10/30/2007

10/30/2017

UF(10) + 3.44%

Floating Rate Notes

Itaubank

393

12/31/2002

3/30/2015

Libor(11) + 1.25%

Fixed Rate Notes(6)

HypoVereinsbank and ING

270

(270

)

6/22/2005

6/22/2010

Euribor(12) + 0.375%

Fixed Rate Notes(7)

Itaú Europa, HypoVereinsbank and LB Baden Wuerttemberg

135

122

12/22/2005

12/22/2015

Euribor(12) + 0.55%

Fixed Rate Notes(8)

Itaú Europa, UBS Inv. Bank/US and Natexis Banques Populaires

406

367

7/27/2006

7/27/2011

Euribor(12) + 0.32%

Medium Term Notes(9)

HSBC

217

215

5/30/2007

5/30/2012

9.210%

Medium Term Notes(10)

Banco Itaú Holding Cayman

1,000

4/15/2010

4/15/2020

6.200%

Other Notes(13)

2,240

169

(165

)

2,244

Total

4,857

1,169

(435

)

5,556

(1) Balance refers to principal amounts.

(2) Amount in US$ equivalent on the dates shown to JPY 30 billion.

(3) Perpetual Bonds.

(4) and (5) Amounts in US$ equivalent on the issue dates shown to CHP 46.9 billion, and CHP 48.5 billion, respectively.

(6), (7) and (8) Amounts in US$ equivalent on the dates shown to € 200 million, € 100 million and € 300 million, respectively.

(9) Amounts in US$ equivalent on the date to R$ 387 million.

(10) Fomentation Financial Unit.

(11) 180–day Libor.

(12) 90–day Euribor.

(13) Structured Notes.

Equity

The consolidated stockholders’ equity totaled R$ 55,074 million at June 30, 2010. The BIS Ratio was at 15.7% at the end of the first half of 2010.

Tangible Capital

A breakdown of the Basel ratio is presented below in order to show the Tangible Common Equity (TCE) ratio, interna-tionally defined as Stockholders’ Equity less intangible as-sets, goodwill and redeemable preferred shares. This is a conservative performance indicator, as it shows the a-mount of hard equity of the company. In Brazil, non-voting shares basically have an equity function and, for this rea-son, have not been excluded from Tangible Equity.

				R$ million

	Jun 30, 10			Mar 31, 10
Stockholders´ Equity of Parent Company		55,074			52,975
(-) Intangible		(3,378	)		(3,559	)
(=) Tangible Equity (A)		51,696			49,416

Risk-weighted Exposure		454,925			437,407
(-) Intangible Asset not Eliminated from Weighting		(2,914	)		(3,172	)
(=) Adjusted Risk-weighted Exposure (B)		452,011			434,234

Ratios
BIS		15.7	%		17.3	%
Tier I (Core Capital)		12.3	%		13.7	%
Tangible Equity (A/B)		11.4	%		11.4	%

Management Discussion & Analysis

2nd Quarter, 2010

Balance Sheet by Currency (*)

Itaú Unibanco Holding S.A.

Itaú Unibanco adopts an exchange risk management policy for its asset and liability positions that is primarily intended to prevent impacts on consolidated net income arising from fluctuations in exchange parities.

Pursuant to the Brazilian tax legislation, exchange gains and losses on permanent investments abroad are not included in the tax base. On the other hand, gains and losses on financial instruments used to hedge the asset position are impacted by tax effects. Accordingly, to avoid the exposure of net income to exchange fluctuations, the liability position built must be higher than the related hedged asset.

The Balance Sheet per Currencies shows assets and liabilities balances denominated in local and foreign currencies. At June 30, 2010, the net exchange position, including investments abroad, was a liability of US$9,706 million.

R$ million

Balance Sheet

	Jun 30,10
				Business in Brazil Itaú Unibanco								Business
Assets	Consolidated Itaú Unibanco			Total			Local Currency			Foreign Currency		Abroad Itaú Unibanco
Cash and Cash Equivalents		12,415			6,871			5,645			1,226		5,301
Short Term Interbank Deposits		115,117			109,078			109,003			76		7,070
Securities		128,825			114,518			114,101			416		24,585
Loans		263,498			235,755			228,481			7,274		41,369
(Allowance for Loan Losses)		(22,900	)		(22,163	)		(22,163	)		0		(736	)
Other Assets		144,634			141,185			129,501			11,684		20,240
Foreign Exchange Portfolio		18,238			18,145			7,225			10,919		16,860
Other		126,397			123,041			122,276			765		3,380
Permanent Assets		9,993			30,240			8,733			21,507		1,260
TOTAL ASSETS		651,583			615,485			573,301			42,184		99,089
Derivatives – Purchased Positions											41,697
Futures											11,514
Options											9,131
Swaps											14,569
Other											6,483
TOTAL ASSETS AFTER ADJUSTMENTS (a)											83,881

	Jun 30,10
			Business in Brazil Itaú Unibanco							Business
Liabilities and Equity	Consolidated Itaú Unibanco		Total		Local Currency		Foreign Currency			Abroad Itaú Unibanco
Deposits		189,657		157,324		157,105		219			33,093
Funds Received under Securities Repurchase Agreements		157,261		152,834		152,834		0			4,427
Funds from Acceptances and Issue of Securities		18,904		22,549		12,557		9,992			5,712
Borrowings and OnLendings		38,071		43,316		25,944		17,372			9,275
Interbank and Interbranch Accounts		7,402		7,277		6,015		1,263			125
Derivative Financial Instruments		6,849		5,484		5,484		0			1,408
Other Liabilities		118,437		112,437		101,237		11,200			23,514
Foreign Exchange Portfolio		18,793		18,703		8,045		10,658			16,857
Other		99,644		93,734		93,192		542			6,658
Technical Provisions of Insurance, Pension Plans and Capitalization		56,001		55,994		55,994		0			7
Deferred Income		187		167		167		0			20
Minority Interest in Subsidiaries		3,740		3,029		3,029		0			0
Stockholders' Equity of Parent Company		55,074		55,074		55,074		0			21,507
Capital Stock		48,675		48,675		48,675		0			20,703
Net Income		6,399		6,399		6,399		0			804
TOTAL LIABILITIES AND EQUITY		651,583		615,485		575,438		40,046			99,089

Derivatives – Sold Positions								61,319
Futures								26,517
Options								11,350
Swaps								18,032
Other								5,419
TOTAL LIABILITIES AND EQUITY AFTER ADJUSTMENTS (b)								101,365
Net Foreign Exchange Position Itaú Unibanco (c = a - b)								(17,485	)
Net Foreign Exchange Position Itaú Unibanco (c) in US$								(9,706	)

(*) Does not consider eliminations of operations between local and foreign businesses.

Management Discussion & Analysis

2nd Quarter, 2010

Value at Risk (VaR)

Itaú Unibanco Holding S.A.

The table below shows the Consolidated Global VaR, comprising the portfolios of Itaú Unibanco, Itaú BBA, Itaú Europa, Itaú Argentina, Itaú Chile and Itaú Uruguay. Itaú Unibanco’s and Itaú BBA’s portfolios are analyzed together and segregated by risk factor.

On a consolidated basis, Itaú Unibanco continues to pursue its policy of operating within reduced limits against its equity. Consolidated global value at risk, despite of market uncertainties and a growth of volatility levels from diverse risk factors internal or external, slightly oscillated through the quarter. This can be noted at the average value at risk, due mainly to a conservative managerial of our portfolio. The significant risk diversification seen in the business units enables the conglomerate to maintain a reduced exposure to market risk when compared to its equity.

				R$ million
VaR – Itaú Unibanco
VaR by Risk Factor	Jun 30, 10			Mar 31, 10
Itaú Unibanco + Itaú BBA
Fixed Rate		62.6			44.8
TR		22.2			43.5
Inflation Indexes		16.4			12.4
Dollar Linked Interest Rate		15.1			5.2
Foreign Exchange Rate – US$		11.4			11.1
Foreign Sovereign and Private Securities		6.1			4.3
Equities		21.1			9.9
Foreign Interest Rate		3.6			5.9
Commodities		2.5			8.9
Other Foreign Exchange Rate		17.4			8.4
Others		3.3			4.4
Itaú Europa		0.7			0.7
Itaú Argentina		0.8			0.6
Itaú Chile		2.9			6.0
Itaú Uruguay		0.4			0.7
Diversification Effect		(100.4	)		(90.2	)
Global VaR		86.2			76.5
Maximum VaR		118.3			123.4
Average VaR		88.1			91.9
Minimum VaR		61.6			65.3
Adjusted for tax effects.
VaR refers to the maximum potential loss in one day, with a 99% confidence level.

Find out more on risk management in Note 21 to the Financial Statements or in our Investor Relations website, www.itau-unibanco.com/ir, in the Corporate Governance/Risk Management section, and also in Form 20-F, available in the Financial Information/SEC Files section.

Management Discussion & Analysis

2nd Quarter, 2010

Ownership Structure

Itaú Unibanco Holding S.A.

Management of our ownership structure is mainly intended to optimize the capital allocation to the various segments comprising the conglomerate.

The average acquisition cost of treasury shares, as well as the activity of options granted to conglomerate executives under the Option Plan, are set out in Note 16-f to the Complete Financial Statements.

The table below shows the number of shares of capital stock and treasury shares on June 30, 2010:

In thousands


ITAÚ UNIBANCO HOLDING S.A.	Common Shares			Non-voting Shares			Total
Balance of Shares		2,289,286			2,281,650			4,570,936
Treasury Shares		(2	)		(37,012	)		(37,014	)
Total Shares (-) Treasury		2,289,284			2,244,638			4,533,922

As announced in May, Bank of America Corporation (BAC) sold its shareholding in Itaú Unibanco. Preferred shares, that accounted for 8.4% of total non-voting shares and 4.2% of total capital, were offered under a secondary issue of ADS (American Depositary Share) for limited purchasers. Common shares held by BAC, equal to 2.5% of total common shares and 1.2% of total capital, were acquired by Itaúsa.

The organization chart below summarizes the current ownership structure:

Management Discussion & Analysis

2nd Quarter, 2010

Itaú Unibanco Holding S.A.

Performance in the Stock Market

2nd Q/10	Non-voting shares ITUB4 (R$)			Common shares ITUB3 (R$)			ADRs ITUB (US$)
Closing quotation at 03/31/2010		38.99			30.17			21.98
High for the quarter*		40.23			31.06			22.95
Average for the quarter		36.00			28.19			20.11
Low for the quarter**		31.00			24.64			16.32
Closing quotation at 06/30/2010		32.49			25.79			18.00
Change in 2nd Q/10		-16.7	%		-14.5	%		-18.1	%
Average daily trading financial volume (million)		200			4			298

* quotation at April 09 for non-voting and common shares, and at April 15 for ADRs.

** quotation at May 25.

Market Capitalization (*) x Bovespa Index

At June 30, 2010, Itaú Unibanco’s market capitalization was R$ 149.6 billion.

According to Bloomberg, the Bank ranked 10th in the global bank ranking at the end of June.

(*) Average price of non-voting shares on the last trading day of the period x total shares outstanding.

Periodic Information Filed with SEC and CVM

Form 20-F: as Itaú Unibanco has an ADR program on the New Stock Exchange, on May 10, 2010 it filed its Form 20-F for 2009 with the Securities and Exchange Commission (SEC). The document comprises the financial statements under US GAAP, as well as general information on the company. The Portuguese version was filed with the Brazilian Securities Commission (CVM) and the São Paulo Stock Exchange (BM&FBovespa) and can be found on our Investor Relations website.

Reference Form: The document filed with CVM and SEC, on June 30 and July 2, respectively, contains information on the bank activities, management comments, risk factors and corporate governance, including details on the institution’s policies and practices and its management. The document is available on the IR website (www.itau-unibanco.com/ir > Financial Information > CVM Instructions 480/481).

APIMEC 2010 Cycle

Under the continuing Apimec 2010 Cycle throughout Brazil, eight meetings were held in the second quarter, specifically in April, in several cities: Goiânia, Recife, Salvador, Caxias do Sul, Juiz de Fora, Uberlândia, Campinas and Florianópolis. Attendance at these meetings included approximately 880 participants.

The 15th consecutive meeting in the city of São Paulo is scheduled for August 17. Please see the table below for the second half agenda or visit our IR website (www.itau-unibanco.com/ir > Agenda).

APIMEC Meetings

São Paulo	Fortaleza	Belém	Manaus	Curitiba	Ribeirão Preto
August 17	August 19	August 23	August 24	August 31	September 1st

Vitória	Campo Grande	Cuiabá	Santos	Porto Alegre	Belo Horizonte
September 2	September 8	September 9	September 13	September 29	September 30

Expo Money

During the second quarter of 2010, Itaú Unibanco was present at the four editions of Expo Money, held in the cities of Fortaleza, Salvador, Recife and Florianópolis. This event, which is intended to educate and train investors, attracts thousands of interested individuals in the event cycles focused on financial education and personal investments, with the presentation of a number of lectures and exhibitions by financial and industrial companies. The next editions will take place in Brasília (August 11 and 12) and São Paulo (September 23 to 25).

Recognitions

APIMEC Award: in order to highlight those professionals and companies who made a significant contribution to the technical improvement and development of capital markets in 2009, the APIMEC members elected Itaú Unibanco as the Best Brazilian Public Company, for the 5th time over the past 12 years.

IR Magazine: IR Magazine awards are attributed based on research conducted in partnership with the Getúlio Vargas Foundation, in order to identify the best company IR programs and teams. At IR Magazine Brazil Awards 2010, Itaú Unibanco received the Gran Prix for Best Investor Relations Program (above R$2 billion), and Roberto Setubal was considered the Best Performing CEO or CFO in Investor Relations. This is the second time, out of six award editions, that both the Bank and Mr. Setubal received the top award.

Hipercard and Redecard Partnership

As publicized on May 12, 2010, Redecard formed a partnership with Hipercard Banco Múltiplo, an Itaú Unibanco Group company, to start capturing operations under the Hipercard brand.

Hipercard is the leading Brazilian brand, with a countrywide footprint and a market share of approximately 8%.

Management Discussion & Analysis

2nd Quarter, 2010

Pro Forma Financial Statements by Segment

The pro forma financial information takes into account the impacts associated with the allocation of capital. To this end, adjustments were made to the financial statements, based on a proprietary model that considers the credit, market and operating risks, as well as the regulatory framework and the level of fixed asset formation.

Allocated Capital

We determine the Risk Adjusted Return on Capital (Raroc), an operating performance indicator consistently adjusted to the capital required to support the risk of asset and liability positions taken.

Adjustments made to the balance sheet and statement of income for the period are based on the business units’ managerial information.

The Corporate+Treasury column shows the results associated with excess capital, excess subordinated debt and the carrying cost of the net balance of deferred taxes. It also shows the cost of the treasury operation, equity in the earnings of companies not yet linked to the different segments, as well as the adjustments for minority interests in subsidiaries and the market financial margin.

Since the 4th quarter of 2009, the Corporate+Treasury column also comprises the consolidation of 30% of Porto Seguro.

Income Tax and Social Contribution on Net Income effects on the payment of Interest on Own Capital for each segment were reversed and subsequently reallocated to the individual segments in proportion to the amount of Tier I capital, while the financial statements were adjusted in order to replace net book value with market level funding. The financial statements were then adjusted to include revenues associated with the allocated capital. The cost of subordinated debt and the related remuneration at market prices were allocated to the segments on a pro rata basis, in accordance with the Tier I allocated capital.

The diagram below shows the changes introduced in the financial statements to reflect the impacts of capital allocation.

Pro Forma Financial Statements by Segment

The pro forma financial statements of the Commercial Bank, Itaú BBA, Consumer Credit and Corporation + Treasury segments presented below are based on managerial models, to reflect better the performance of the business units.

On June 30, 2010	R$ million
Pro Forma Balance Sheet by Segment

										Corporation +
ASSETS	Commercial Bank			Itaú BBA			Consumer Credit			Treasury			Itaú Unibanco

Current and Long-Term Assets		462,722			180,422			79,324			54,838			641,590
Cash and Cash Equivalents		11,042			1,089			-			9			12,415
Short-term Interbank Investments		173,320			46,592			-			3,169			115,117
Short-term Interbank Deposits in the Market		125,498			32			-			3,169			115,117
Short-term Interbank Deposits in Intercompany*		47,821			46,560			-			-			-
Securities and Derivative Financial Instruments		79,066			54,174			0			20,410			128,825
Interbank and Interbranch Accounts		61,158			1,113			77			-			62,204
Loans, Lease and Other Credits Operations		109,122			69,064			80,978			4,336			263,498
(Allowance for Loan Losses)		(11,254	)		(2,142	)		(7,046	)		(2,458	)		(22,900	)
Other Assets		40,269			10,532			5,315			29,372			82,430
Foreign Exchange Portfolio		11,343			9,783			-			-			18,238
Others		28,926			749			5,315			29,372			64,192
Permanent Assets		6,906			525			1,380			1,182			9,993
TOTAL ASSETS		469,628			180,947			80,704			56,020			651,583

										Corporation +
LIABILITIES AND EQUITY	Commercial Bank			Itaú BBA			Consumer Credit			Treasury			Itaú Unibanco
Current and Long-Term Liabilities		452,199			169,009			73,055			34,034			592,582
Deposits		193,771			72,231			11			1,353			189,657
Deposits from Clients		168,985			24,410			11			1,353			189,657
Deposits with Intercompany*		24,785			47,821			-			-			-
Deposits Received under Securities Repurchase Agreements		76,160			47,327			58,078			6,443			157,261
Securities Repurchase Agreements in the Market		54,386			38,184			58,078			6,443			157,261
Securities Repurchase Agreements with Intercompany*		21,774			9,144			-			-			-
Funds from Acceptances and Issue of Securities		36,546			3,648			-			18			18,904
Interbank and Interbranch Accounts		5,491			2,047			9			-			7,402
Borrowings and Onlendings		14,215			23,268			575			13			38,071
Derivative Financial Instruments		4,948			4,553			-			-			6,849
Other Liabilities		66,814			15,934			14,383			24,460			118,437
Foreign Exchange Portfolio		11,611			10,071			-			-			18,793
Others		55,204			5,864			14,383			24,460			99,644
Technical Provisions for Insurance, Pension Plans and Capitalization		54,253			-			-			1,748			56,001
Deferred Income		128			51			-			7			187
Minority Interest in Subsidiaries		(0	)		-			-			3,741			3,740
Allocated Tier I Capital		17,301			11,887			7,649			18,238			55,074
TOTAL LIABILITIES AND EQUITY		469,628			180,947			80,704			56,020			651,583
*The Intercompany were eliminated in the Consolidated.
													R$ million
Pro Forma Income Statement by Segment
2nd Quarter/10	Commercial Bank			Itaú BBA			Consumer Credit			Corporation + Treasury			Itaú Unibanco

Managerial Financial Margin		6,441			1,108			2,442			899			10,892
Financial Margin with Clients		6,450			1,108			2,442			-			10,001
Financial Margin with the Market		-			-			-			891			891
Financial Margin with the Corporation		(8	)		-			-			8			-

Result of Loan Losses		(1,822	)		(156	)		(1,066	)		(8	)		(3,053	)
Expenses for Allowance for Loan Losses		(2,482	)		(278	)		(1,251	)		(8	)		(4,019	)
Income from Recovery of Credits Written Off as Loss		660			122			185			-			967

Net Result from Financial Operations		4,619			952			1,376			891			7,839

Other Operating Income/(Expenses)		(2,460	)		(180	)		(408	)		(61	)		(3,121	)
Banking Service Fees and Income from Banking Charges		2,264			487			1,480			82			4,300
Result from Insurance, Pension Plans and Capitalization Operations		534			(0	)		59			126			719
Non-interest Expenses		(4,932	)		(542	)		(1,720	)		(377	)		(7,570	)
Tax Expenses for ISS, PIS and Cofins and Others Taxes		(572	)		(90	)		(238	)		(71	)		(970	)
Equity in Earnings of Affiliates and Other Investments		(0	)		1			-			44			45
Other Operating Income		246			(36	)		11			135			357

Operating Income		2,159			772			968			830			4,719

Non-operating Income		(12	)		11			0			(0	)		(1	)

Income Before Tax and Profit Sharing		2,147			783			968			830			4,717
Income Tax and Social Contribution		(633	)		(168	)		(284	)		(34	)		(1,119	)
Profit Sharing		(20	)		(23	)		(4	)		(7	)		(54	)
Minority Interests in Subsidiaries		-			-			-			(257	)		(247	)

Recurring Net Income		1,494			592			679			532			3,298
(RAROC) – Return on Average Tier I Allocated Capital		36.5	%		19.9	%		35.3	%		11.8	%		24.4	%
Efficiency Ratio		53.0	%		36.9	%		45.8	%		25.6	%		47.3	%

Note: Non-interest Expenses item is made up of Personnel Expenses, Other Administrative Expenses, Tax Expenses and Other Operating Expenses.

The Consolidated figures do not represent the sum of the parts, because there are operations between the companies that were eliminated only in the Consolidated figures.

Pro Forma Financial Statements by Segment

Note: Non-interest Expenses item is made up of Personnel Expenses, Other Administrative Expenses, Tax Expenses and Other Operating Expenses.

On March 31, 2010	R$ million
Pro Forma Balance Sheet by Segment

ASSETS	Commercial Bank			Itaú BBA			Consumer Credit			Corporation + Treasury			Itaú Unibanco
Current and Long-Term Assets		439,011			173,021			77,426			57,749			624,398
Cash and Cash Equivalents		9,886			1,060			-			13			11,249
Short-term Interbank Investments		182,432			43,008			-			8,382			136,230
Short-term Interbank Deposits in the Market		134,520			6,720			-			8,382			136,230
Short-term Interbank Deposits in Intercompany*		47,912			36,288			-			-			-
Securities and Derivative Financial Instruments		77,216			47,863			12			19,303			121,372
Interbank and Interbranch Accounts		35,539			1,082			86			5			36,550
Loans, Lease and Other Credits Operations		102,886			67,396			78,444			3,394			252,117
(Allowance for Loan Losses)		(11,486	)		(2,042	)		(7,185	)		(2,457	)		(23,170	)
Other Assets		42,538			14,655			6,068			29,108			90,051
Foreign Exchange Portfolio		15,766			13,209			-			-			26,821
Others		26,771			1,446			6,068			29,108			63,229
Permanent Assets		6,514			1,077			1,355			1,319			10,265
TOTAL ASSETS		445,525			174,098			78,781			59,068			634,663

LIABILITIES AND EQUITY	Commercial Bank			Itaú BBA			Consumer Credit			Corporation + Treasury			Itaú Unibanco
Current and Long-Term Liabilities		429,914			162,104			71,048			37,555			577,814
Deposits		193,783			63,520			11			2,767			183,490
Deposits from Clients		173,147			15,608			11			2,767			183,490
Deposits with Intercompany*		20,636			47,912			-			-			-
Deposits Received under Securities Repurchase Agreements		52,232			49,415			57,141			10,771			148,034
Securities Repurchase Agreements in the Market		36,579			46,914			57,141			10,771			148,034
Securities Repurchase Agreements with Intercompany*		15,653			2,501			-			-			-
Funds from Acceptances and Issue of Securities		34,511			3,908			-			17			18,794
Interbank and Interbranch Accounts		5,534			2,164			4			-			7,540
Borrowings and Onlendings		16,683			19,900			632			13			37,228
Derivative Financial Instruments		5,436			4,574			-			-			7,443
Other Liabilities		69,186			18,624			13,259			22,262			121,011
Foreign Exchange Portfolio		16,040			13,397			-			-			27,283
Others		53,146			5,227			13,259			22,262			93,728
Technical Provisions for Insurance, Pension Plans and Capitalization		52,549			-			-			1,725			54,274
Deferred Income		139			59			-			7			205
Minority Interest in Subsidiaries		(0	)		-			-			3,670			3,669
Allocated Tier I Capital		15,472			11,935			7,733			17,836			52,975
TOTAL LIABILITIES AND EQUITY		445,525			174,098			78,781			59,068			634,663
*The Intercompany were eliminated in the Consolidated.
											R$ million
Pro Forma Income Statement by Segment
1st Quarter/10	Commercial Bank			Itaú BBA			Consumer Credit			Corporation + Treasury			Itaú Unibanco

Managerial Financial Margin		6,069			991			2,429			903			10,388
Financial Margin with Clients		5,953			991			2,429			-			9,370
Financial Margin with the Market		-			-			-			1,019			1,019
Financial Margin with the Corporation		116			-			-			(116	)		-

Result of Loan Losses		(1,892	)		(4	)		(1,120	)		(5	)		(3,021	)
Expenses for Allowance for Loan Losses		(2,527	)		(102	)		(1,232	)		(5	)		(3,866	)
Income from Recovery of Credits Written Off as Loss		635			98			112			-			846

Net Result from Financial Operations		4,177			987			1,309			898			7,368

Other Operating Income/(Expenses)		(2,045	)		(141	)		(305	)		(53	)		(2,545	)
Banking Service Fees and Income from Banking Charges		2,188			437			1,422			77			4,120
Result from Insurance, Pension Plans and Capitalization Operations		468			1			81			98			648
Non-interest Expenses		(4,416	)		(458	)		(1,597	)		(254	)		(6,722	)
Tax Expenses for ISS, PIS and Cofins and Others Taxes		(504	)		(91	)		(242	)		(29	)		(865	)
Equity in Earnings of Affiliates and Other Investments		19			(0	)		-			53			72
Other Operating Income		199			(29	)		31			2			203

Operating Income		2,132			845			1,005			845			4,823

Non-operating Income		19			(7	)		1			7			19

Income Before Tax and Profit Sharing		2,151			838			1,005			852			4,842
Income Tax and Social Contribution		(616	)		(226	)		(298	)		(222	)		(1,362	)
Profit Sharing		(24	)		(44	)		(4	)		8			(62	)
Minority Interests in Subsidiaries		-			-			-			(255	)		(250	)

Recurring Net Income		1,512			569			703			384			3,168
(RAROC) – Return on Average Tier I Allocated Capital		42.1	%		18.6	%		37.9	%		8.6	%		24.4	%
Efficiency Ratio		49.6	%		35.1	%		42.9	%		18.5	%		44.0	%

The Consolidated figures do not represent the sum of the parts, because there are operations between the companies that were eliminated only in the Consolidated figures.

Commercial Bank

The pro forma financial statements below were prepared based on Itaú Unibanco internal and managerial information and are intended to identify the performance of the insurance-related businesses.

Commercial Bank results comprise net income from the offer of financial products and banking services to a diversified client base, including individuals and companies. The segment includes retail clients (individuals and very small companies), high-income clients, wealthy clients (private bank) and small and mid-size companies.

In the second quarter of 2010, the recurring net income of the Commercial Bank totaled R$ 1,494 million, corresponding to a 1.2% decline from the prior quarter. Such decrease is primarily attributable to increased costs, impacted by the factors discussed elsewhere in this report (page 16). The loan portfolio added up to R$ 109,122 million, a 6.1% increase compared to the prior period. Return on capital allocated to the Commercial Bank stood at 36.5% per year, while the efficiency ratio reached 53.0% in the period.

Some highlights of the Commercial Bank:

In the second quarter of 2010, the assets under management totaled R$344,688 million, declining by 1.1% from the previous quarter, chiefly due to the strong drop in the stock exchange and redemption of fund quotas.

Real Estate Credit

Real estate credit portfolio amounted to R$10,501 million as of June 30, 2010, corresponding to a R$1,133 million increase, or 12.1%, from the first quarter of the year. The portfolio exhibited the same fast expansion pace seen in the most recent quarters.

Between April and June 2010, the volume of new real estate financing contracts to individuals and companies was R$1,022 million and R$1,776 million, respectively.

R$ million

New Contracts

					Variation
					2nd Q/10 –
	2nd Q/10		1st Q/10		1st Q/10		%
Individuals		1,022		818		205		25.0	%
Companies		1,776		744		1,033		138.9	%
New contracts		2,798		1,561		1,237		79.2	%

Credit Cards

Itaú Unibanco is a leader in the Brazilian credit card segment. Itaucard, Unicard and Hipercard offer a wide range of products to 25.1 million clients, both account holders and non-account holders. During the second quarter of 2010, the volume of operations on credit cards added up to R$24,761 million, equal to a 2.5% increase when compared to the first quarter of the year. The credit card product is increasing in importance as a tool to acquire new clients, in particular low-income individuals (classes C and D).

*Does not include additional cards.

Management Discussion & Analysis

2nd Quarter, 2010

Itaú Unibanco Holding S.A.

Itaú BBA

Itaú BBA carries out banking operations with large companies and investment banking activities.

In the second quarter of 2010, Itaú BBA’s net income added up to R$ 592 million, a 4.1% growth from the prior quarter. Return on allocated capital stood at 19.9% for the year, while the efficiency ratio reached 36.9% for the period. The financial margin on client operations totaled R$1,108 million, increasing by 11.9% compared to the previous quarter. Results from loan and lease losses were R$ 156 million expense in the quarter. Banking fees were up 11.6% from the first quarter of 2010, mostly driven by higher revenues related to investment banking activities.

Consumer Credit

Net income for the Consumer Credit segment is a function of financial products and services offered to non-account holder clients. In the second quarter of 2010, this segment posted net income of R$ 679 million, a 3.4% decline from the prior period, primarily as a result of higher costs caused by the growth of the client base and by the card substitutions as part of the migration process from Unibanco to Itaú. The return on allocated capital was 35.3% per year, while the efficiency ratio stood at 45.8% for the period. The loan portfolio totaled R$80,978 million, increasing by 3.2% compared to the prior quarter.

Vehicle Financing

In the second quarter of 2010, new vehicle financing and leasing operations added up to R$6,717 million, with a 23.0% market share. During the quarter, the recovery of credits that were previously written off as losses increased, as a result of changes made in the collection policy to reflect the current macroeconomic scenario. At the end of June 2010, 56.1% of the portfolio balance was comprised of new vehicles, compared to 57.2% in the prior quarter.

Partnerships

The Bank partnerships in the form of joint ventures and operating agreements with major retailers in the Brazilian market are responsible for the offer of consumer credit to non-account holder clients. Our client base reached 15.8 million clients at the end of the second quarter of 2010, for total revenues of R$ 5,735 million, or a 6.9% increase compared to the prior quarter figures.

Management Discussion & Analysis

2nd Quarter, 2010

Insurance, Pension Plans and Capitalization

Itaú Unibanco Holding S.A.

On June 30, 2010

R$ million

Pro Forma Insurance, Pension Plans and Capitalization Balance Sheet

				Life and
ASSETS	Insurance			Pension Plans			Capitalization			Consolidated
Current and Long-Term Assets		8,595			50,183			2,760			61,509
Cash and Cash Equivalents		124			16			7			148
Securities		2,823			49,423			2,676			54,902
Other Assets		5,648			743			76			6,460
Permanent Assets		774			108			43			917
TOTAL ASSETS		9,369			50,290			2,803			62,426

				Life and
LIABILITIES AND EQUITY	Insurance			Pension Plans			Capitalization			Consolidated
Current and Long – Term Liabilities		8,494			47,708			2,592			58,759
Technical Provisions – Insurance		4,788			867			-			5,655
Technical Provisions – Pension Plans and VGBL		538			45,652			-			46,189
Technical Provisions – Capitalization		-			-			2,420			2,402
Other Liabilities		3,168			1,190			172			4,512
Allocated Tier I Capital		875			2,582			211			3,668
TOTAL LIABILITIES AND EQUITY		9,369			50,290			2,803			62,426

Pro Forma Insurance, Pension Plans and Capitalization Income Statement
2nd Quarter/10	Insurance			Life and Pension Plans			Capitalization			Consolidated
Earned Premiums (a)		900			193			(0	)		1,089
Result of Pension Plans and Capitalization (b)		1			17			133			151
Retained Claims (c)		(331	)		(56	)		0			(387	)
Selling Expenses (d)		(308	)		(20	)		(15	)		(342	)
Other Operating Income/(Expenses) of Insurance Operations (e)		(54	)		(1	)		1			(49	)
Underwriting Margin (f=a+c+d+e)		208			116			-			324
Result from Insurance, Pension Plans and Capitalization (g=b+f)		209			133			119			461
Managerial Financial Margin		31			117			23			168
Banking fees and charge revenues		-			142			-			142
Non-interest Expenses		(123	)		(49	)		(50	)		(217	)
Tax Expenses for ISS, PIS and Cofins and others		(29	)		(13	)		(7	)		(48	)
Equity in Earnings of Affiliates and Other Investments		0			0			-			(0	)
Other Operating Income		(2	)		6			1			5
Operating Income		88			336			87			510
Non-operating Income		(6	)		(0	)		3			(3	)
Income Before Income Tax and Social Contribution		82			335			89			507
Income Tax/Social Contribution		(23	)		(100	)		(29	)		(152	)
Profit Sharing		1			-			-			1
Recurring Net Income		60			236			60			356
(RAROC) – Return on Average Tier I Allocated Capital		25.0	%		37.1	%		114.7	%		38.4	%
Efficiency Ratio		53.6	%		15.2	%		42.3	%		40.4	%

Note: The information on VGBL was classified together with the pension plan products.

Non-interest Expenses comprise Personnel Expenses, Other Administrative Expenses, Tax Expenses, and Other Operating Expenses. The Underwriting Margin refers to the insurance business. The Underwriting Margin comprises insurance operations.

The Consolidated figures do not represent the sum of the parts, because there are operations between the companies that were eliminated only in the Consolidated figures.

Management Discussion & Analysis

2nd Quarter, 2010

Insurance, Pension Plans and Capitalization

Itaú Unibanco Holding S.A.

The pro forma financial statements below were prepared based on Itaú Unibanco internal and managerial information and are intended to identify the performance of the insurance-related businesses.

On March 31, 2010							R$ million
Pro Forma Insurance, Pension Plans and Capitalization Balance Sheet
				Life and
ASSETS	Insurance			Pension Plans			Capitalization			Consolidated
Current and Long-Term Assets		8,585			48,460		2,703			59,722
Cash and Cash Equivalents		99			14			6			120
Securities		3,079			47,693			2,590			53,347
Other Assets		5,407			754			107			6,255
Permanent Assets		821			108			43			965
TOTAL ASSETS		9,407			48,568			2,746			60,687

				Life and
LIABILITIES AND EQUITY	Insurance			Pension Plans			Capitalization			Consolidated
Current and Long-Term Liabilities		8,350			46,070			2,537			56,923
Technical Provisions – Insurance		4,577			848			-			5,425
Technical Provisions – Pension Plans and VGBL		509			44,257			-			44,766
Technical Provisions – Capitalization		-			-			2,370			2,351
Other Liabilities		3,263			966			168			4,381
Allocated Tier I Capital		1,057			2,498			209			3,764
TOTAL LIABILITIES AND EQUITY		9,407			48,568			2,746			60,687

Pro Forma Insurance, Pension Plans and Capitalization Income Statement
1st Quarter/10	Insurance			Life and Pension Plans			Capitalization			Consolidated
Earned Premiums (a)		1,038			199			-			1,233
Result of Pension Plans and Capitalization (b)		1			13			103			118
Retained Claims (c)		(412	)		(67	)		(0	)		(479	)
Selling Expenses (d)		(343	)		(21	)		(14	)		(378	)
Other Operating Income/(Expenses) of Insurance Operations (e)		(61	)		(3	)		(1	)		(60	)
Underwriting Margin (f=a+c+d+e)		223			108			-			331
Result from Insurance, Pension Plans and Capitalization (g=b+f)		224			122			88			434
Managerial Financial Margin		37			110			21			176
Banking fees and charge revenues		-			132			-			131
Non-interest Expenses		(102	)		(55	)		(65	)		(227	)
Tax Expenses for ISS, PIS and Cofins and others		(76	)		(13	)		(5	)		(93	)
Equity in Earnings of Affiliates and Other Investments		19			-			-			19
Other Operating Income		11			1			1			13
Operating Income		113			297			41			454
Non-operating Income		6			0			2			9
Income Before Income Tax and Social Contribution		119			298			44			463
Income Tax/Social Contribution		(28	)		(87	)		(14	)		(129	)
Profit Sharing		(1	)		(0	)		-			(1	)
Recurring Net Income		90			211			30			333
(RAROC) – Return on Average Tier I Allocated Capital		33.8	%		34.3	%		56.0	%		35.6	%
Efficiency Ratio		50.0	%		17.8	%		65.9	%		42.1	%

Note: The information on VGBL was classified together with the pension plan products.

The Consolidated figures do not represent the sum of the parts, because there are operations between the companies that were eliminated only in the Consolidated figures.

Management Discussion & Analysis

2nd Quarter, 2010

Insurance, Pension Plans and Capitalization

Itaú Unibanco Holding S.A.

Insurance

Recurring net income of the Insurance subsegment amounted to R$60 million, a 33.0% decline from the first quarter, due to the review of items and equalization in the recognition of provisions for loan and lease losses on amounts recoverable from IRB (Brazilian Reinsurance Institute) of R$36.5 million, partly offset by the reversal of civil contingency provisions.

A further driver of this scenario was the receipt of IRB dividends in the first quarter of 2010, which did not recur in the second quarter.

During the second quarter of 2010, ANS – Agência Nacional de Saúde Suplementar (National Agency for Supplementary Health) approved the transfer of 100% of the share capital of Unibanco Saúde Seguradora S.A. to Tempo Participações S.A.

Currently under review by SUSEP (Brazilian private security regulator) is the ratification of the acquisition by Itaú Seguros of 100% of the shares of Itaú XL Corporativos S.A. held by XL Swiss Holdings Ltd.). Itaú Seguros will maintain a specific structure to service the large industrial and commercial company segment.

Note: Insurance charts do not include the Itauseg Saúde companies and include the Life line of Itaú Vida e Previdência S.A.

Among the components of Premiums Earned, Life and Personal Accidents and Extended Guarantee portfolio, in which Itaú Unibanco is the market leader, are to be highlighted.

Premiums Earned decreased by 5.9% from the prior quarter, influenced by a reduction of 5.3% in share in the DPVAT agreement, driven by the spin-off of the Auto portfolio from Itaú Seguros S.A to Itaú Seguros de Auto e Residência S.A. (ISAR), controlled by Porto Seguro S.A.

The number of policies declined by 13.3% from the prior quarter, essentially due to the Personal Accident product.

Combined Ratio

The combined ratio, which reflects the operating cost efficiency in relation to income from premiums earned, declined by 180 basis points from the prior quarter.

The claim level (retained claims/earned premiums) decreased by 510 basis points, in particular with respect to Property Risks which was the main driver of the 350 basis point increase in the underwriting margin and the combined ratio improvement.

Note: The combined ratio is the sum of the following indices: retained claims/ earned premiums, selling expenses/earned premiums and administrative expenses + other operating income and expenses/ earned premiums. The underwriting margin is the sum of: earned premiums, retained claims, selling expenses and other operating income (expenses) of insurance operations.

Note: the chart does not include the Itauseg Saúde company and includes the Life line of Itaú Vida e Previdência S.A.

Management Discussion & Analysis

2nd Quarter, 2010

Insurance, Pension Plans and Capitalization

Itaú Unibanco Holding S.A.

Insurance Technical Provisions

At June 30, 2010, technical provisions amounted to R$5.7 billion, a 4.2% growth from the prior quarter.

(*) According to Circular 379/2008 of Susep, beginning in 2009 the technical provisions are shown without deducting the balance of reinsurance. We have adjusted Dec/08 for comparison purposes.

Life and Pension Plan

In the second quarter of 2010, the recurring net income of the Life and Pension Plan subsegment reached R$236 million, increasing by 11.9% compared to the prior period. Such increase, which is attributable to a 7.2% growth in the underwriting margin, was affected by a 16.3% decline in retained claims, in particular on operations under the DPVAT agreement, and partially offset by a 2.9% reduction in premiums earned.

Contributions to pension plans amounted to R$1.9 billion, in line with the previous quarter. The major components were funds obtained from the payment of company bonuses and pension plan portability.

Another driver of the improved results was the increase in revenues from administration fees of pension plans and decline of 9.9% in non-interest expenses.

Private Pension Technical Provisions

Technical provisions totaled R$ 46.2 billion as of June 30, 2010, increasing by 3.2% compared to the prior quarter.

Capitalization

The Capitalization subsegment’s recurring net income amounted to R$60 million, a 100.2% increase when compared to the prior quarter, as net revenues from capitalization bonds grew by 28.7% as a result of commercial actions carried out during the second quarter with respect to PIC da Seleção, a soccer-related theme product, and Mega Plin. A further driver of this positive change was a 23.7% decline in non-interest expenses.

During the second quarter of 2010, raffle prizes amounting to R$ 9.6 million were distributed to 436 clients.

Itaú Unibanco takes part in social/environmental and social responsibility initiatives, by passing through funds from sales of capitalization bonds.

In the second quarter of 2010, funds passed through to AACD – Associação de Assistência à Criança Deficiente (Handicapped Children Assistance Association) were in excess of R$444 thousand, or a 144% increase from the prior quarter.

Capitalization Technical Provisions

Technical provisions amounted to R$2.4 billion at June 30, 2010, equal to a 2.2% growth from the first quarter of the year.

Management Discussion & Analysis

2nd Quarter, 2010

Activities Abroad

Itaú Unibanco Holding S.A.

Below we present the financial statements of our main units abroad.

On June 30, 2010													R$ million
Balance Sheet
	Consolidated			Consolidated			Consolidated			Consolidated			Banco Itaú
ASSETS	Itaú Europa			Itaú Argentina			Itaú Chile			Itaú Uruguay			Paraguay
Current and Long-term Assets	16,668			2,273			10,754			3,464			2,171
Cash and Cash Equivalents		1,560			100			451			457			181
Short-term Interbank Deposits		2,586			172			75			604			115
Securities and Derivative Financial Instruments		1,388			201			1,569			765			369
Loans, Lease and Other Credits Operations		5,216			1,394			7,944			1,282			1,146
(Allowance for Loan Losses)		(16	)		(39	)		(206	)		(75	)		(39	)
Other Credits		5,869			131			736			102			78
Other Assets		67			315			186			330			321
Permanent Assets		571			62			185			20			17
Investments		373			2			1			0			1
Fixed and Operating Lease Assets		18			58			120			20			16
Intangible Assets		180			2			64			0			-
TOTAL ASSETS		17,239			2,335			10,939			3,484			2,188

	Consolidated			Consolidated			Consolidated			Consolidated			Banco Itaú
LIABILITIES AND EQUITY	Itaú Europa			Itaú Argentina			Itaú Chile			Itaú Uruguay			Paraguay
Current and Long-term Liabilities		15,848			2,177			9,512			3,170			1,896
Deposits		7,296			1,793			7,280			2,719			1,720
Deposits Received under Securities Repurchase Agreements		-			66			218			-			-
Funds from Acceptances and Issue of Securities		1,714			-			313			-			-
Borrowings and Onlendings		619			35			665			3			24
Derivative Financial Instruments		181			0			72			0			-
Other Liabilities		6,038			283			957			447			151
Technical Provisions for Insurance, Pension Plans and Capitalization		-			-			7			-			-
Deferred Income		12			-			0			-			0
Minority Interest in Subsidiaries		0			1			0			0			-
Stockholders' Equity		1,379			157			1,427			315			292
TOTAL LIABILITIES AND EQUITY		17,239			2,335			10,939			3,484			2,188

Income Statement
2nd Quarter/10	Consolidated Itaú Europa			Consolidated Itaú Argentina			Consolidated Itaú Chile			Consolidated Itaú Uruguay			Banco Itaú Paraguay
Financial Margin		31			44			105			52			35
Result from Loan Losses		(1	)		(5	)		(28	)		(5	)		(2	)
Expenses for Allowance for Loan Losses		(1	)		(6	)		(33	)		(6	)		(2	)
Income from Recovery of Credits Written Off as Loss		-			0			5			1			-
Net Result from Financial Operations		30			38			77			47			33
Other Operating Income/(Expenses)		9			(48	)		(35	)		(7	)		(6	)
Banking Service Fees and Income from Banking Charges		48			22			34			51			16
Result from Insurance, Pension Plans and Capitalization Operation		-			-			6			-			-
Non-interest Expenses		(58	)		(71	)		(78	)		(57	)		(23	)
Tax Expenses for ISS, PIS, Cofins and Other Taxes		-			-			-			-			-
Equity in Earnings of Affiliates and Other Investments		12			(0	)		(0	)		-			-
Other Operating Income		7			1			3			(1	)		0
Operating Income		39			(10	)		43			40			27
Non-operating Income		(0	)		1			(0	)		(0	)		1
Income before Tax and Profit Sharing		39			(9	)		43			40			28
Income Tax and Social Contribution		(18	)		1			(8	)		(6	)		(3	)
Profit Sharing		-			-			-			-			-
Minority Interests in Subsidiaries		(0	)		(0	)		(0	)		-			-
Recurring Net Income		21			(8	)		34			34			25
Return on Equity – Annualized (%p.y.)		5.8	%		-19.1	%		9.8	%		44.2	%		35.1	%
Efficiency Ratio		67.5	%		106.4	%		52.4	%		56.1	%		44.0	%
Non-interest Expenses to total Assets (%p.y.)		1.3	%		12.1	%		2.8	%		6.5	%		4.1	%

Management Discussion & Analysis

2nd Quarter, 2010

Activities Abroad

Itaú Unibanco Holding S.A.

On March 30, 2009													R$ million
Balance Sheet
	Consolidated			Consolidated			Consolidated			Consolidated			Banco Itaú
ASSETS	Itaú Europa			Itaú Argentina			Itaú Chile			Itaú Uruguay			Paraguay
Current and Long-term Assets		24,668			2,224			10,273			3,274			2,029
Cash and Cash Equivalents		1,982			103			349			525			147
Short-term Interbank Deposits		2,834			212			141			349			75
Securities and Derivative Financial Instruments		1,480			245			1,579			698			446
Loans, Lease and Other Credits Operations		5,236			1,225			7,771			1,270			1,051
(Allowance for Loan Losses)		(17	)		(37	)		(208	)		(74	)		(37	)
Other Credits		13,029			143			451			123			57
Other Assets		125			334			191			381			290
Permanent Assets		646			62			185			22			18
Investments		442			2			1			0			1
Fixed and Operating Lease Assets		19			58			121			21			17
Intangible Assets		184			2			63			0			-
TOTAL ASSETS		25,313			2,286			10,458			3,296			2,047

	Consolidated			Consolidated			Consolidated			Consolidated			Banco Itaú
LIABILITIES AND EQUITY	Itaú Europa			Itaú Argentina			Itaú Chile			Itaú Uruguay			Paraguay
Current and Long-term Liabilities		23,789			2,109			9,074			2,998			1,779
Deposits		7,696			1,661			7,150			2,607			1,608
Deposits Received under Securities Repurchase Agreements		-			147			175			-			-
Funds from Acceptances and Issue of Securities		2,196			-			340			-			-
Borrowings and Onlendings		675			23			702			3			35
Derivative Financial Instruments		118			1			89			1			-
Other Liabilities		13,103			276			611			387			135
Technical Provisions for Insurance, Pension Plans and Capitalization		-			-			7			-			-
Deferred Income		13			-			0			-			0
Minority Interest in Subsidiaries		0			1			0			0			-
Stockholders' Equity		1,511			177			1,384			297			268
TOTAL LIABILITIES AND EQUITY		25,313			2,286			10,458			3,296			2,047

Income Statement
1st Quarter/10	Consolidated Itaú Europa			Consolidated Itaú Argentina			Consolidated Itaú Chile			Consolidated Itaú Uruguay			Banco Itaú Paraguay
Financial Margin		34			45			125			36			34
Result from Loan Losses		14			(4	)		(36	)		(4	)		(2	)
Expenses for Allowance for Loan Losses		14			(4	)		(39	)		(5	)		(2	)
Income from Recovery of Credits Written Off as Loss		-			0			3			1			-
Net Result from Financial Operations		48			41			89			32			32
Other Operating Income/(Expenses)		(7	)		(42	)		(35	)		(13	)		(7	)
Banking Service Fees and Income from Banking Charges		45			21			31			47			14
Result from Insurance, Pension Plans and Capitalization Operation		-			-			5			-			-
Non-interest Expenses		(69	)		(63	)		(74	)		(62	)		(21	)
Tax Expenses for ISS, PIS, Cofins and Other Taxes		-			-			-			-			-
Equity in Earnings of Affiliates and Other Investments		7			-			0			-			-
Other Operating Income		10			0			2			2			0
Operating Income		41			(1	)		54			19			25
Non-operating Income		(0	)		6			(0	)		0			(0	)
Income before Tax and Profit Sharing		41			5			53			19			25
Income Tax and Social Contribution		(3	)		(1	)		(9	)		(10	)		(2	)
Profit Sharing		-			-			-			-			-
Minority Interests in Subsidiaries		(0	)		(0	)		(0	)		(0	)		-
Recurring Net Income		37			4			45			9			22
Return on Equity – Annualized (%p.y.)		9.8	%		9.1	%		13.3	%		13.0	%		34.7	%
Efficiency Ratio		78.3	%		95.8	%		45.3	%		72.7	%		44.0	%
Non-interest Expenses to total Assets (%p.y.)		1.1	%		11.1	%		2.8	%		7.5	%		4.1	%

Management Discussion & Analysis

2nd Quarter, 2010

Activities Abroad

Europe (Portugal, London and Luxembourg)

Our banking activities in Europe are carried out through Banco Itaú Europa S.A. in Portugal and its subsidiaries in Luxembourg, Miami, Cayman Islands and Nassau, which are primarily focused on international corporate banking, capital markets and private banking activities, as well as related treasury activities, in close cooperation with the Brazilian conglomerate institutions and areas that coordinate such activities. At June 30, 2010, total assets of our banking activities in Europe amounted to R$ 17,239 million, while net income added up to R$ 21 million in the second quarter. Operations remained stable, as did Banco Itaú Europa’s rating, in spite of the recent European crisis that adversely impacted Portugal’s rating. Such stability reflects the Bank’s good solvency and liquidity ratios.

Argentina

Banco Itaú Argentina is active in corporate (small, mid-size and large companies and multinationals) and particularly in the individual segments, with an 81-branch network. The main products offered individuals include savings deposits, personal loans and credit cards, and to corporate clients comprise financing and treasury products, including derivative and exchange instruments, and syndicated loans.

Assets totaled R$ 2,335 million as of June 30, 2010, with emphasis on growth in the loan portfolio, in particular loans to small and mid-size companies, with growth higher than the decline seen in the securities portfolio. Net income was impacted by increased non-interest expenses, driven by higher personnel, IT and marketing expenses.

Chile

Banco Itaú Chile is active in corporate (small, mid-size and large companies and multinationals) and individual segments, focusing on medium- and high-income clients, by offering a diversified range of products through its 69 branches. Major products in the region include mortgage loans, consumer credit, insurance, leasing and bill discount, trade financing and derivative instruments. At June 30, 2010, assets reached R$10,939 million, driven by the credit portfolio increase for all segments. The R$34 million net income for the period, without giving effect to the exchange variation, represents growth from the first quarter, mostly driven by lower provisions for loan and lease losses and enhanced activity in syndicated loans, partly offset by increased non-interest expenses.

Uruguay

Banco Itaú Uruguai is active in the individuals and corporate segments through 18 branches. Its main products include credit cards, cash management, trade financing, investment and pension fund services. In addition, Itaú Unibanco carries out credit card activities through the country’s largest credit card company (OCA). During the period, assets totaled R$3,484 million, driven by the growth in interbank investments, marketable securities arising from increased client deposits. Net income remained stable compared to the first quarter of 2010, when the exchange variation associated with the capital hedge structure is disregarded.

Paraguay

In Paraguay, Itaú Unibanco’s activities are carried out through Interbanco, with 19 branches, in the individual and corporate segments (small, mid-size and large companies, agribusiness and institutional clients). In the consumer segment, which represents the highest revenue source, the main product is credit cards. For the corporate segment, agribusiness exhibits the best positioning.

At June 30, 2010, assets totaled R$2,188 million, under the positive influence of the growth in the loan portfolio for the retail and large company segments. Net income of R$25 million was also positively impacted by the loan portfolio and lower borrowing costs. As from July 12, 2010, Interbanco uses the Itaú brand for its branches, under the new corporate name Banco Itaú Paraguay S.A.

Products and Services for Foreign Institutional Clients

The Itaú group offers its foreign institutional clients a comprehensive range of products and services, such as asset management, custody, alternative products, equities, fixed income, foreign exchange, sureties and treasury products. Foreign institutional clients have the assistance of both specialized teams and account managers based in foreign units located in New York, London, Hong Kong, Tokyo and Dubai.