Exhibit 99.1

  

Report on review of consolidated interim financial statements

To the Board of Directors and Stockholders

Itaú Unibanco Holding S.A.

Introduction

We have reviewed the accompanying consolidated interim balance sheet of Itaú Unibanco Holding S.A. and its subsidiaries (Consolidated) as at March 31, 2016, and the related consolidated statements of income, comprehensive income, changes in stockholders' equity and cash flows for the three-month period then ended, and a summary of significant accounting policies and other explanatory information.

Management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with International Accounting Standard (IAS) 34 - "Interim Financial Reporting" issued by the International Accounting Standards Board (IASB). Our responsibility is to express a conclusion on these interim financial statements based on our review.

Scope of review

We conducted our review in accordance with Brazilian and International Standards on Reviews of Interim Financial Information (NBC TR 2410 - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" and ISRE 2410 - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the consolidated interim financial statements

Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial statements do not present fairly, in all material respects, the financial position of Itaú Unibanco Holding S.A. and its subsidiaries as at March 31, 2016, and their consolidated financial performance and cash flows for the three-month period then ended, in accordance with IAS 34 - "Interim Financial Reporting", issued by the International Accounting Standards Board (IASB).

Other matters

Supplementary information - statement of value added

We also have reviewed the consolidated statement of value added for the three-month period ended March 31, 2016, which is the responsibility of the Company's management. The presentation of this statement is required by Brazilian corporate legislation for listed companies, but it is considered supplementary information for International Financial Reporting Standards (IFRS). This statement was subject to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they have not been prepared, in all material respects, in a manner consistent with the consolidated financial statements taken as a whole.

São Paulo, May 2, 2016

PricewaterhouseCoopers

Auditores Independentes

CRC 2SP000160/O-5

Washington Luiz Pereira Cavalcanti

Contador CRC 1SP172940/O-6

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 2

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Balance Sheet

(In millions of Reais)

Assets	Note	03/31/2016			12/31/2015
Cash and deposits on demand	4		18,384			18,544
Central Bank compulsory deposits	5		67,001			66,556
Interbank deposits	6		29,189			30,525
Securities purchased under agreements to resell	6		209,394			254,404
Financial assets held for trading	7a		169,905			164,311
Pledged as collateral			13,724			11,008
Other			156,181			153,303
Financial assets designated at fair value through profit or loss	7b		396			642
Derivatives	8 and 9		27,748			26,755
Available-for-sale financial assets	10		85,679			86,045
Pledged as collateral			16,667			16,706
Other			69,012			69,339
Held-to-maturity financial assets	11		41,104			42,185
Pledged as collateral			11,050			9,460
Other			30,054			32,725
Loan operations and lease operations portfolio, net	12		418,026			447,404
Loan operations and lease operations portfolio			445,927			474,248
(-) Allowance for loan and lease losses			(27,901	)		(26,844	)
Other financial assets	20a		54,035			53,506
Investments in associates and joint ventures	13		4,576			4,399
Goodwill	3a		2,669			2,057
Fixed assets, net	15		8,181			8,541
Intangible assets, net	16		6,238			6,295
Tax assets			48,588			52,149
Income tax and social contribution - current			2,556			2,088
Income tax and social contribution - deferred	27b		43,500			47,453
Other			2,532			2,608
Assets held for sale	36		519			486
Other assets	20a		11,662			11,611
Total assets			1,203,294			1,276,415

The accompanying notes are an integral part of these consolidated financial statements.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 3

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Balance Sheet

(In millions of Reais)

Liabilities and stockholders' equity	Note	03/31/2016			12/31/2015
Deposits	17		266,318			292,610
Securities sold under repurchase agreements	19a		305,940			336,643
Financial liabilities held for trading	18		395			412
Derivatives	8 and 9		28,934			31,071
Interbank market debt	19a		148,151			156,886
Institutional market debt	19b		84,041			93,918
Other financial liabilities	20b		66,828			68,715
Reserves for insurance and private pension	30c II		134,970			129,305
Liabilities for capitalization plans			3,026			3,044
Provisions	32		19,457			18,994
Tax liabilities			3,052			4,971
Income tax and social contribution - current			867			2,364
Income tax and social contribution - deferred	27b II		310			370
Other			1,875			2,237
Other liabilities	20b		27,322			25,787
Total liabilities			1,088,434			1,162,356
Capital	21a		85,148			85,148
Treasury shares	21a		(4,144	)		(4,353	)
Additional paid-in capital	21c		1,405			1,733
Appropriated reserves	21d		10,332			10,067
Unappropriated reserves	21e		22,388			20,947
Cumulative other comprehensive income			(2,042	)		(1,290	)
Total stockholders’ equity attributed to the owners of the parent company			113,087			112,252
Non-controlling interests			1,773			1,807
Total stockholders’ equity			114,860			114,059
Total liabilities and stockholders' equity			1,203,294			1,276,415

The accompanying notes are an integral part of these consolidated financial statements.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 4

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Statement of Income

Periods ended

(In millions of Reais, except for number of shares and earnings per share information)

		01/01 to			01/01 to
	Note	03/31/2016			03/31/2015
Banking product			29,808			20,078
Interest and similar income	23a		38,707			34,967
Interest and similar expense	23b		(22,686	)		(15,793	)
Dividend income			10			2
Net gain (loss) on investment securities and derivatives	23c		3,012			1,665
Foreign exchange results and exchange variations on transactions			1,509			(9,839	)
Banking service fees	24		7,440			7,110
Income related to insurance, private pension and capitalization operations before claim and selling expenses			1,564			1,626
Income related to insurance and private pension	30b III		5,446			5,343
Reinsurance Premiums	30b III		(19	)		(19	)
Change in reserves for insurance and private pension			(4,012	)		(3,833	)
Revenue from capitalization plans			149			135
Other income	25		252			340
Losses on loans and claims			(5,856	)		(5,050	)
Expenses for allowance for loan and lease losses	12b		(6,293	)		(5,746	)
Recovery of loans written-off as loss			831			1,064
Expenses for claims			(399	)		(371	)
Recovery of claims under reinsurance			5			3
Banking product net of losses on loans and claims			23,952			15,028
Other operating income (expenses)			(13,277	)		(12,155	)
General and administrative expenses	26		(11,387	)		(11,000	)
Tax expenses			(2,016	)		(1,286	)
Share of profit or (loss) in associates and joint ventures	13		126			131
Income before income tax and social contribution	27		10,675			2,873
Current income tax and social contribution			(933	)		(4,207	)
Deferred income tax and social contribution			(4,044	)		7,117
Net income			5,698			5,783
Net income attributable to owners of the parent company	28		5,711			5,673
Net income (loss) attributable to non-controlling interests			(13	)		110
Earnings per share - basic	28
Common			0.96			0.94
Preferred			0.96			0.94
Earnings per share - diluted	28
Common			0.96			0.94
Preferred			0.96			0.94
Weighted average number of shares outstanding - basic	28
Common			3,047,037,403			3,047,037,403
Preferred			2,875,882,653			2,968,529,572
Weighted average number of shares outstanding - diluted	28
Common			3,047,037,403			3,047,037,403
Preferred			2,896,900,403			3,003,529,076

The accompanying notes are an integral part of these consolidated financial statements.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 5

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Statement of Comprehensive Income

Periods ended

(In millions of Reais)

	Note	01/01 to 03/31/2016			01/01 to 03/31/2015
Net income			5,698			5,783
Available-for-sale financial assets			1,204			(258	)
Change in fair value			1,504			(953	)
Income tax effect			(634	)		314
(Gains) / losses transferred to income statement	23c		556			636
Income tax effect			(222	)		(255	)
Hedge			(610	)		(1,108	)
Cash flow hedge	9		(1,630	)		110
Change in fair value			(3,005	)		219
Income tax effect			1,375			(109	)
Hedge of net investment in foreign operation	9		1,020			(1,218	)
Change in fair value			1,784			(2,393	)
Income tax effect			(764	)		1,175
Remeasurements of liabilities for post-employment benefits (*)			(9	)		9
Remeasurements	29		(4	)		22
Income tax effect			(5	)		(13	)
Foreign exchange differences on foreign investments			(1,337	)		1,785
Total comprehensive income			4,946			6,211
Comprehensive income attributable to non-controlling interests			(13	)		110
Comprehensive income attributable to the owners of the parent company			4,959			6,101

(*) Amounts that will not be subsequently reclassified to income.

The accompanying notes are an integral part of these consolidated financial statements.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 6

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Statement of Changes in Stockholders’ Equity (Notes 21 and 22)

Periods ended March 31, 2016 and 2015

(In millions of Reais)

	Attributed to owners of the parent company																													Total
																		Other comprehensive income												stockholders’			Total
	Capital		Treasury shares			Additional paid-in capital			Appropriated reserves			Unappropriated reserves			Retained earnings			Available for sale(1)			Remeasurements of liabilities of post- employment benefits			Cumulative translation adjustments abroad			Gains and losses – hedge(2)			equity – owners of the parent company			stockholders’ equity – non- controlling interests			Total
Balance at 01/01/2015		75,000		(1,328	)		1,508			8,210			16,301			-			(600	)		(177	)		1,723			(1,377	)		99,260			1,357			100,617
Transactions with owners		-		(339	)		(96	)		-			-			(1,509	)		-			-			-			-			(1,944	)		228			(1,716	)
Treasury shares - granting of stock options		-		(339	)		37			-			-			-			-			-			-			-			(302	)		-			(302	)
Granting of stock options – exercised options		-		229			42			-			-			-			-			-			-			-			271			-			271
Acquisition of treasury shares (Note 21a)		-		(568	)		-			-			-			-			-			-			-			-			(568	)		-			(568	)
Granted options recognized		-		-			(5	)		-			-			-			-			-			-			-			(5	)		-			(5	)
Share-based payment – variable compensation		-		-			(133	)		-			-			-			-			-			-			-			(133	)		-			(133	)
(Increase) / Reduction of interest of controlling stockholders (Note 2.4a I and 3a)		-		-			-			-			-			-			-			-			-			-			-			276			276
Dividends and interest on capital - Statutory Reserve (Note 21b)		-		-			-			-			-			(1,509	)		-			-			-			-			(1,509	)		(48	)		(1,557	)
Dividends / Interest on capital paid in 2015 - Year 2014 - Special profit reserve		-		-			-			(2,940	)		-			-			-			-			-			-			(2,940	)		-			(2,940	)
Corporate reorganizations (Note 2.4 a III)		-		-			-			(160	)		-			-			-			-			-			-			(160	)		-			(160	)
Other		-		-			-			9			39			-			-			-			-			-			48			-			48
Total comprehensive income		-		-			-			-			-			5,673			(258	)		9			1,785			(1,108	)		6,101			110			6,211
Net income		-		-			-			-			-			5,673			-			-			-			-			5,673			110			5,783
Other comprehensive income for the period		-		-			-			-			-			-			(258	)		9			1,785			(1,108	)		428			-			428
Appropriations:
Legal reserve		-		-			-			278			-			(278	)		-			-			-			-			-			-			-
Statutory reserve		-		-			-			3,768			118			(3,886	)		-			-			-			-			-			-			-
Balance at 03/31/2015		75,000		(1,667	)		1,412			9,165			16,458			-			(858	)		(168	)		3,508			(2,485	)		100,365			1,695			102,060
Change in the period		-		(339	)		(96	)		955			157			-			(258	)		9			1,785			(1,108	)		1,105			338			1,443
Balance at 01/01/2016		85,148		(4,353	)		1,733			10,067			20,947			-			(2,771	)		(225	)		4,822			(3,116	)		112,252			1,807			114,059
Transactions with owners		-		209			(328	)		-			-			(1,144	)		-			-			-			-			(1,263	)		(21	)		(1,284	)
Treasury shares - granting of stock options		-		209			(112	)		-			-			-			-			-			-			-			97			-			97
Granting of stock options – exercised options		-		409			(38	)		-			-			-			-			-			-			-			371			-			371
Acquisition of treasury shares (Note 21a)		-		(200	)		-			-			-			-			-			-			-			-			(200	)		-			(200	)
Granted options recognized		-		-			(74	)		-			-			-			-			-			-			-			(74	)		-			(74	)
Share-based payment – variable compensation		-		-			(216	)		-			-			-			-			-			-			-			(216	)		-			(216	)
(Increase) / Reduction of interest of controlling stockholders (Note 2.4a I and 3c)		-		-			-			-			-			-			-			-			-			-			-			9			9
Dividends / interest on capital – Special profit reserve (Note 21b)		-		-			-			-			-			(1,144	)		-			-			-			-			(1,144	)		(30	)		(1,174	)
Dividends / Interest on capital paid in 2016 - Year 2015 - Special profit reserve		-		-			-			(2,697	)		-			-			-			-			-			-			(2,697	)		-			(2,697	)
Corporate reorganizations (Note 2.4 a III)		-		-			-			(157	)		-			-			-			-			-			-			(157	)		-			(157	)
Other		-		-			-			-			(7	)		-			-			-			-			-			(7	)		-			(7	)
Total comprehensive income		-		-			-			-			-			5,711			1,204			(9	)		(1,337	)		(610	)		4,959			(13	)		4,946
Net income		-		-			-			-			-			5,711			-			-			-			-			5,711			(13	)		5,698
Other comprehensive income for the period		-		-			-			-			-			-			1,204			(9	)		(1,337	)		(610	)		(752	)		-			(752	)
Appropriations:
Legal reserve		-		-			-			213			-			(213	)		-			-			-			-			-			-			-
Statutory reserve		-		-			-			2,906			1,448			(4,354	)		-			-			-			-			-			-			-
Balance at 03/31/2016		85,148		(4,144	)		1,405			10,332			22,388			-			(1,567	)		(234	)		3,485			(3,726	)		113,087			1,773			114,860
Change in the period		-		209			(328	)		265			1,441			-			1,204			(9	)		(1,337	)		(610	)		835			(34	)		801

(1) Includes Share of other comprehensive income in associates and joint ventures – Available-for-sale financial assets.

(2) Includes Cash flow hedge and hedge of net investment in foreign operation.

The accompanying notes are an integral part of these consolidated financial statements.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 7

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Statement of Cash Flows

(In millions of Reais)

		01/01 to			01/01 to
	Note	03/31/2016			03/31/2015
Adjusted net income			15,229			7,668
Net income			5,698			5,783
Adjustments to net income:			9,531			1,885
Granted options recognized and share-based payment – variable compensation			(290	)		(138	)
Effects of changes in exchange rates on cash and cash equivalents			(3,176	)		(4,387	)
Expenses for allowance for loan and lease losses	12b		6,293			5,746
Interest and foreign exchange expense from operations with subordinated debt			(1,184	)		4,855
Change in reserves for insurance and private pension			4,012			3,833
Revenue from capitalization plans			(149	)		(135	)
Depreciation and amortization	15 and 16		728			667
Interest expense from provision for contingent and legal liabilities			433			342
Provision for contingent and legal liabilities			832			833
Interest income related to escrow deposits			(91	)		(82	)
Deferred taxes (excluding hedge tax effects)	27b		952			(422	)
Share of profit or (loss) in associates and joint ventures			(126	)		(131	)
(Gain) loss on available-for-sale securities	23c		556			636
Interest and foreign exchange income related to available-for-sale financial assets			185			(6,630	)
Interest and foreign exchange income related to held-to-maturity financial assets			482			(2,985	)
(Gain) loss on sale of assets held for sale	25 and 26		2			15
(Gain) loss on sale of investments	25 and 26		1			4
(Gain) loss on sale of fixed assets	25 and 26		2			3
Other			70			(140	)
Change in assets and liabilities (*)			18,343			(46,020	)
(Increase) decrease in assets			80,397			(48,569	)
Interbank deposits			32			1,005
Securities purchased under agreements to resell			70,609			(34,860	)
Compulsory deposits with the Central Bank of Brazil			(1,309	)		473
Financial assets held for trading			(5,734	)		(5,041	)
Derivatives (assets / liabilities)			(3,617	)		4,062
Financial assets designated at fair value through profit or loss			189			459
Loan operations			18,067			(11,319	)
Financial assets			(1,299	)		476
Other tax assets			2,609			(5,503	)
Other assets			850			1,679
(Decrease) increase in liabilities			(62,054	)		2,549
Deposits			(23,515	)		(4,437	)
Deposits received under securities repurchase agreements			(30,678	)		5,071
Financial liabilities held for trading			36			(305	)
Funds from interbank markets			(8,433	)		7,809
Other financial liabilities			(1,004	)		(6,289	)
Technical reserve for insurance and private pension			1,653			179
Liabilities for capitalization plans			131			202
Provisions			(515	)		(360	)
Tax liabilities			1,560			1,978
Other liabilities			1,945			1,839
Payment of income tax and social contribution			(3,234	)		(3,138	)
Net cash from (used in) operating activities			33,573			(38,352	)
Interest on capital / dividends received from investments in associates and joint ventures			137			105
Cash received on sale of available-for-sale financial assets			3,447			3,243
Cash received from redemption of held-to-maturity financial assets			887			626
Cash upon sale of assets held for sale			110			28
Cash upon sale of investments in associates and joint ventures			(1	)		(4	)
Cash and cash equivalents net assets and liabilities due from Recovery acquisition	3cI		(714	)		-
Cash upon sale of fixed assets	15		8			14
Cash upon sale of intangible assets	16		3			6
Purchase of available-for-sale financial assets			(2,127	)		(2,573	)
Purchase of held-to-maturity financial assets			(288	)		(909	)
Purchase of investments in associates and joint ventures - ConectCar	13		(144	)		-
Purchase of fixed assets	15		(146	)		(339	)
Purchase of intangible assets	16		(171	)		(247	)
Net cash from (used in) investing activities			1,002			(50	)
Funding from institutional markets			-			637
Redemptions in institutional markets			(7,727	)		(945	)
(Acquisition) / Disposal of interest of non-controlling stockholders			-			276
Granting of stock options – exercised options			371			271
Purchase of treasury shares			(200	)		(568	)
Dividends and interest on capital paid to non-controlling interests			(30	)		(48	)
Dividends and interest on capital paid			(4,826	)		(4,457	)
Net cash from (used in) financing activities			(12,412	)		(4,834	)
Net increase (decrease) in cash and cash equivalents	2.4c and 4		22,162			(43,237	)
Cash and cash equivalents at the beginning of the period	4		91,649			125,318
Effects of changes in exchange rates on cash and cash equivalents			3,176			4,387
Cash and cash equivalents at the end of the period	4		116,987			86,468
Additional information on cash flow
Interest received			44,303			28,041
Interest paid			19,333			12,630
Non-cash transactions
Loans transferred to assets held for sale			-			-
Dividends and interest on capital declared and not yet paid			1,107			1,464

(*) Includes the amounts of interest received and paid as shown above.

The accompanying notes are an integral part of these consolidated financial statements.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 8

ITAÚ UNIBANCO HOLDING S.A.

Consolidated Statement of Added Value

(In millions of Reais)

	01/01 to			01/01 to
	03/31/2016			03/31/2015
Income		47,032			31,189
Interest, similar income and other		43,238			26,795
Banking services		7,440			7,110
Income related to insurance, private pension and capitalization operations before claim and selling expenses		1,564			1,626
Result of loan losses		(5,462	)		(4,682	)
Other		252			340
Expenses		(25,028	)		(18,262	)
Interest, similar income and other		(22,686	)		(15,793	)
Other		(2,342	)		(2,469	)
Inputs purchased from third parties		(3,517	)		(3,299	)
Materials, energy and others		(183	)		(180	)
Third party services		(931	)		(883	)
Other		(2,403	)		(2,236	)
Data processing and telecommunications		(933	)		(923	)
Advertising, promotions and publication		(208	)		(218	)
Installations		(247	)		(227	)
Transportation		(99	)		(101	)
Security		(177	)		(165	)
Travel expenses		(40	)		(48	)
Other		(699	)		(554	)
Gross added value		18,487			9,628
Depreciation and amortization		(670	)		(610	)
Net added value produced by the company		17,817			9,018
Added value received through transfer		126			131
Total added value to be distributed		17,943			9,149
Distribution of added value		17,943			9,149
Personnel		2,947			4,165
Compensation		1,460			3,361
Benefits		683			612
FGTS – government severance pay fund		804			192
Taxes, fees and contributions		8,957			(1,122	)
Federal		7,818			(1,381	)
State		16			11
Municipal		1,123			248
Return on third parties’ assets - Rent		341			323
Return on own assets		5,698			5,783
Dividends and interest on capital		1,174			1,557
Retained earnings (loss) for the period		4,537			4,116
Minority interest in retained earnings		(13	)		110

The accompanying notes are an integral part of these financial statements.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 9

ITAÚ UNIBANCO HOLDING S.A.

Notes to the Consolidated Financial Statements

At March 31, 2016 and December 31, 2015 for balance sheet accounts and

From January 1 to March 31, 2016, and 2015 for income statement accounts

(In millions of Reais, except information per share)

Note 1 - Overview

ITAÚ UNIBANCO HOLDING S.A. (ITAÚ UNIBANCO HOLDING) is a publicly-held company, organized and existing under the Laws of Brazil. The head office of ITAÚ UNIBANCO HOLDING is located at Praça Alfredo Egydio de Souza Aranha, n° 100, in the city of São Paulo, Brazil.

ITAÚ UNIBANCO HOLDING provides a wide range of financial products and services to individual and corporate clients in Brazil and abroad, whether these clients have Brazilian links or not through its international branches, subsidiaries and affiliates. In Brazil we serve retail clients through the branch network of Itaú Unibanco S.A. (“Itaú Unibanco”) and wholesale clients through Banco Itaú BBA S.A. (“Itaú BBA”), and overseas through branches in New York, Grand Cayman, Tokyo, and Nassau, and through subsidiaries mainly in Argentina, Chile, the US (New York and Miami), and Europe (Lisbon, London, Luxembourg and Switzerland), Cayman Islands, Paraguay, Uruguay and Colombia.

ITAÚ UNIBANCO HOLDING is a holding company controlled by Itaú Unibanco Participações S.A. (“IUPAR”), a holding company which owns 51% of our common shares, and which is jointly controlled by (i) Itaúsa Investimentos Itaú S.A., (“Itaúsa”), a holding company controlled by members of the Egydio de Souza Aranha family, and (ii) Companhia E. Johnston de Participações (“E. Johnston”), a holding company controlled by the Moreira Salles family. Itaúsa also directly holds 38.7% of ITAÚ UNIBANCO HOLDING common shares.

As described in Note 34, the operations of ITAÚ UNIBANCO HOLDING are divided into three operating and reportable segments: (1) Retail Banking, which comprises the retail and high net worth clients (Itaú Uniclass and Personnalité) and the corporate segment (very small and small companies); (2) Wholesale Banking, which covers the wholesale products and services for middle-market and large companies, as well as the investment banking, in addition to the activities of the Latin America unit and (3) Activities with the Market + Corporation, which mainly manages the financial results associated with capital surplus, subordinated debt, and net debt of tax credits and debits of ITAÚ UNIBANCO HOLDING.

These consolidated financial statements were approved by the Executive Board on May 02, 2016.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 10

Note 2 – Significant accounting policies

2.1. Basis of Preparation

These Consolidated Financial Statements of ITAÚ UNIBANCO HOLDING were prepared taking into account the requirements and guidelines set out by the National Monetary Council (CMN), which established that as from December 31, 2010 annual Consolidated Financial Statements are to be prepared in accordance with the International Financial Reporting Standards (IFRS), as approved by the International Accounting Standards Board (IASB).

These interim financial statements were prepared in accordance with IAS 34 - Interim Financial Reporting using the option to present complete consolidated financial statements instead of condensed consolidated financial statements.

In the preparation of these consolidated financial statements, ITAÚ UNIBANCO HOLDING adopted the criteria for recognition, measurement and disclosure established in the IFRS and the interpretations of the International Financial Reporting Interpretation Committee (IFRIC).

The Consolidated Statement of Cash Flows shows the changes in cash and cash equivalents during the period, arising from operating, investing, and financing activities, and include highly-liquid investments (Note 2.4c).

Cash flows from operating activities are presented under the indirect method. Consolidated net income is adjusted for non-monetary items, such as measurement gains and losses, changes in provisions and in receivables and liabilities balances. All income and expense arising from non-monetary transactions, attributable to investing and financing activities, are eliminated. Interest received or paid are classified as operating cash flows.

Management believes that the information included in these Financial Statements is relevant and a faithful representation of the information used in the management of the ITAÚ UNIBANCO HOLDING were identified.

2.2. New accounting standards and new accounting standards changes and interpretations

a) Accounting standards applicable for period ended March 31, 2016

· IASB Annual Improvement Cycle (2012-2014) – Annually IASB makes minor amendments to a series of pronouncements to clarify the standards and avoid double interpretation. In this cycle IFRS 5 – “Non-Current Assets Held for Sale and Discontinued Operations”, IFRS 7 – “Financial Instruments: Disclosures”, IAS 19 – “Employee Benefits”, and IAS 34 – “Interim Financial Reporting” were reviewed. Effective for annual periods beginning on January 1, 2016. No material impacts arising from this change on the consolidated financial statements of ITAÚ UNIBANCO HOLDING were identified.

· Amendment to IFRS 11 – “Joint Arrangement” – The change establishes criteria for recognition of acquisition of joint operations, which activity constitutes one business, according to the methodology established in IFRS 3 – Business Combinations. Effective for the years beginning on January 1, 2016 and early adoption is permitted by IASB. Impacts of this change will occur only if there is an acquisition of a joint operation that constitutes a business.

· Amendment to IAS 16 – “Property, Plant and Equipment” and IAS 38 “Intangible Assets” – The amendment clarifies the base principle for depreciation and amortization as being the expected standard of consumption of future economic benefits embodied in the asset. Effective for annual periods beginning on January 1, 2016, with early adoption permitted by IASB. No material impacts arising from this amendment were identified for the consolidated financial statements of ITAÚ UNIBANCO HOLDING.

· Amendment to IAS 1 – “Presentation of Financial Statements” – The amendments are aimed at encouraging companies to identify which information is sufficiently material to be disclosed in the financial statements. It also clarifies that materiality is applicable to the full set of financial statements, including the notes to the financial statements, and it is applicable to any and all disclosure requirements of the IFRS standards. Effective for periods beginning on January 1, 2016. Main effects identified are related to the disclosure of accounting policies and judgment of materiality in the notes to the financial statements.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 11

· Amendments to IAS 28, IFRS 10 and IFRS 12: “Investment Entities: Applying Consolidation Exception”: This document comprises guidance for applying the Investment Entities concept. Effective for annual periods beginning on January 1, 2016. No material impacts arising from this change on the consolidated financial statements of ITAÚ UNIBANCO HOLDING were identified.

b) Accounting standards recently issued and applicable in future periods

The following pronouncements will become applicable for periods after the date of these consolidated financial statements and were not early adopted:

· IFRS 16 – “Leases” – The pronouncement replaces IAS 17 - Leases, and related interpretations (IFRIC 4, SIC 15 and SIC 27). It eliminates the accounting for operating lease agreements for the lessee, presenting only one lease model, that consists of: (a) recognizing leases which terms exceeds 12 months and with substantial amounts; (b) initially recognizing lease in assets and liabilities at present value; and (c) recognizing depreciation and interest from lease separately in the result. For the lessor, accounting will continue to be segregated between operating and financial lease. Effective for annual periods beginning on January 1, 2019. Possible impacts arising from the adoption of this standard are being assessed and will be completed by the date this standard is effective.

· Amendment to IAS 12 – “Income Taxes” – The amendment includes clarification about the recognition of deferred taxes for unrealized losses in debt instruments measured at fair value. Applicable to the years beginning on January 1, 2017. Possible impacts arising from the adoption of this change are being analyzed and will be completed until its effective date.

· IFRS 9 – “Financial instruments” – The purpose of the pronouncement is to replace IAS 39 - “Financial instruments: recognition and measurement”. IFRS 9 includes: (a) a logical classification and measurement model; (b) a single impairment model for financial instruments, which offers a response to expected losses; (c) the removal of volatility in income arising from own credit risk; and (d) a new hedge accounting approach. Effective for annual periods beginning on January 1, 2018. Any possible impacts arising from adopting these changes are being assessed and will be completed up to the date this standard is effective.

· IFRS 15 – “Revenue from Contracts with Customers” – The purpose of the pronouncement is to replace IAS 18 and IAS 11, as well as interpretations related thereto (IFRICs 13, 15 and 18). It requires that revenue is recognized in a way that shows the transfer of assets or services to the client for an amount that reflects the company’s expectation of having in consideration the rights to these assets or services. Effective for annual periods beginning on January 1, 2018. Possible impacts arising from this change are being analyzed and will be completed by the date the standard is effective.

· Amendment to IFRS 10 – “Consolidated Financial Statements” and IAS 28 – “Investments in Associates and Joint Ventures” – The amendments refer to an inconsistency between IFRS 10 and IAS 28 requirements, when addressing the sale or contribution of assets between an investor and its associate or joint venture.The effective date has not been defined by IASB yet. No material impacts arising from this change on the consolidated financial statements of ITAÚ UNIBANCO HOLDING were identified.

2.3. Critical accounting estimates and judgments

The preparation of consolidated financial statements in accordance with IFRS requires Management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenue, expenses, gains, and losses over the reporting and subsequent periods, because actual results may differ from those determined in accordance with such estimates and assumptions.

2.3.1   Critical accounting estimates

All estimates and assumptions made by Management are in accordance with IFRS and represent the current best estimates made in compliance with the applicable standards. Estimates are evaluated continuously, considering past experience and other factors.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 12

The Consolidated Financial Statements reflect a variety of estimates and assumptions. The critical accounting estimates and assumptions that have the most significant impact on the carrying amounts of assets and liabilities are described below:

a) Allowance for loan and lease losses

ITAÚ UNIBANCO HOLDING periodically reviews its portfolio of loans and receivables to evaluate the existence of impairment.

In order to determine the amount of the allowance for loan and lease losses in the Consolidated Statements of Income with respect to certain receivables or group of receivables, ITAÚ UNIBANCO HOLDING exercises its judgment to determine whether objective evidence indicates that an event of loss has occurred. This evidence may include observable data that indicates that an adverse change has occurred in the cash flows received in relation to those expected from the counterparty or the existence of a change in local or international economic conditions that correlates with impairment. The methodology and assumptions used for estimating future cash flows are regularly reviewed by Management, considering the adequacy of models and sufficiency of provision volumes in view of the experience of incurred loss.

ITAÚ UNIBANCO HOLDING uses statistical models to calculate the Allowance for Loan and Lease Losses in the homogeneous loan portfolio. ITAÚ UNIBANCO HOLDING periodically carries out procedures to improve these estimates by aligning the required provisions to the levels of losses observed by the historical behavior (as described in Note 2.4g VIII). This alignment aims at ensuring that the volume of allowances reflects the current economic conditions, the composition of the loan portfolios, the quality of guarantees obtained and the profile of our clients. In 2016 and in 2015, there were no such improvements of model assumptions.

Methodology and assumptions used by Management are detailed in Note 2.4g VIII. Allowance for loan losses is detailed in Note 12b.

b) Deferred income tax and social contribution

As explained in Note 2.4n, Deferred tax assets are recognized only in relation to temporary differences and tax assets and loss for offset to the extent it is probable that ITAÚ UNIBANCO HOLDING will generate future taxable profit for its use. The expected realization of deferred tax assets is based on the projection of future taxable profits and technical studies, as disclosed in Note 27.

c) Fair value of financial instruments, including derivatives

The fair value of financial instruments is measured recurrently, in conformity with the requirements of IAS 39 – Financial Instruments: Recognition and Measurement. The fair value of financial instruments, including derivatives that are not traded in active markets, is determined by using valuation techniques. This calculation is based on assumptions that take into consideration Management’s judgment based on market information and conditions in place at the balance sheet date.

ITAÚ UNIBANCO HOLDING ranks fair value measurements using a fair value hierarchy that reflects the significance of inputs used in the measurement process.

The fair value of financial instruments, including Derivatives, as well as the fair value hierarchy, are detailed in Note 31.

The team in charge of the pricing of assets, in accordance with the governance defined by the committee and regulatory circulars, carries out critical analyses of the information extracted from the market and from time to time reassesses the long term of indexes. At the end of the monthly closings, the areas meet for a new round of analyses for the maintenance of the classification in connection with the fair value hierarchy. ITAÚ UNIBANCO HOLDING believes that all methodologies adopted are appropriate and consistent with market participants. Regardless of this fact, the adoption of other methodologies or use of different assumptions to estimate fair values may result in different fair value estimates.

The methodologies used to estimate the fair value of certain financial instruments are described in Note 31.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 13

d) Defined benefit pension plan

The current amount of pension plan obligations is obtained from actuarial calculations that use a set of assumptions. Among the assumptions used for estimating the net cost (income) of these plans is the discount rate. Any changes in these assumptions will affect the carrying amount of pension plan assets and liabilities.

ITAÚ UNIBANCO HOLDING determines the appropriate discount rate at the end of each year, which is used for determining the present value of estimated future cash outflows necessary for settling the pension plan liabilities. In order to determine the appropriate discount rate, ITAÚ UNIBANCO HOLDING considers the interest rates of the Brazilian federal government bonds that are denominated in Brazilian Reais, the currency in which the benefits will be paid, and that have maturity terms approximating the terms of the related liabilities.

The main assumptions on Pension plan obligations are based on, in part, current market conditions. Additional information is disclosed in Note 29.

e) Provisions, contingencies and other commitments

ITAÚ UNIBANCO HOLDING periodically reviews its contingencies. These contingencies are evaluated based on Management´s best estimates, taking into account the opinion of legal counsel when there is a likelihood that financial resources will be required to settle the obligations and the amounts may be reasonably estimated.

Contingencies classified as probable losses are recognized in the Balance Sheet under Provisions.

Contingent amounts are measured using appropriate models and criteria, despite the uncertainty surrounding the ultimate timing and amounts, as detailed in Note 32.

Provisions, contingencies and other commitments are detailed in Note 32.

f) Technical provisions for insurance and pension plan

Technical provisions are liabilities arising from obligations of ITAÚ UNIBANCO HOLDING to its policyholders and participants. These obligations may be short term liabilities (property and casualty insurance) or medium and long term liabilities (life insurance and pension plans).

The determination of the actuarial liability is subject to several uncertainties inherent in the coverage of insurance and pension contracts, such as assumptions of persistence, mortality, disability, life expectancy, morbidity, expenses, frequency and severity of claims, conversion of benefits into annuities, redemptions and return on assets.

The estimates for these assumptions are based on the historical experience of ITAÚ UNIBANCO HOLDING, benchmarks and experience of the actuary, in order to comply with best market practices and the continuous review of the actuarial liability. The adjustments resulting from these continuous improvements, when necessary, are recognized in the statement of income for the corresponding period.

Additional information is described in Note 30.

2.3.2   Critical judgments in accounting policies

a) Goodwill

The impairment test for goodwill involves estimates and significant judgments, including the identification of cash generation units and the allocation of goodwill to such units based on the expectations of which ones will benefit from the acquisition. Determining the expected cash flows and a risk-adjusted interest rate for each unit requires that management exercises judgment and estimates. Annually submitted to the impairment test and, at March 31, 2016 and 2015, ITAÚ UNIBANCO HOLDING did not identify goodwill impairment losses.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 14

2.4. Summary of main accounting practices

a) Consolidation

I. Subsidiaries

Before January 1, 2013, ITAÚ UNIBANCO HOLDING consolidated its subsidiaries, in accordance with IAS 27 – “Separate Financial Statements”, and its special purpose entities, in accordance with SIC 12 – “Consolidation – Special Purpose Entities”, in its Consolidated Financial Statements. Effective January 1, 2013, ITAÚ UNIBANCO HOLDING adopted IFRS 10 – “Consolidated Financial Statements”, which replaced IAS 27 and SIC 12.

In accordance with IFRS 10, subsidiaries are all entities in which ITAÚ UNIBANCO HOLDING holds control. ITAÚ UNIBANCO HOLDING controls an entity when it is exposed to, or is entitled to, its variable returns derived from its involvement with such entity, and has the capacity to impact such returns.

Subsidiaries are fully consolidated as from the date in which ITAÚ UNIBANCO HOLDING obtains control and are no longer consolidated as from the date such control is lost.

On January 1, 2013, ITAÚ UNIBANCO HOLDING assessed its investments to determine whether the conclusions of consolidation in accordance with IFRS 10 were different from those in accordance with IAS 27 and SIC 12. The application of the standard did not have significant impacts.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 15

The following table shows the main consolidated companies, which together represent over 95% of total consolidated assets, as well as the interests of ITAÚ UNIBANCO HOLDING in their voting capital at 03/31/2016 and 12/31/2015.

			Interest in voting						Interest in total
	Incorporation		capital at						capital at
	country	Activity	03/31/2016			12/31/2015			03/31/2016			12/31/2015
Banco Itaú Argentina S.A.	Argentina	Financial institution		100.00	%		100.00	%		100.00	%		100.00	%
Banco Itaú BBA S.A.	Brazil	Financial institution		100.00	%		100.00	%		100.00	%		100.00	%
Banco Itaú Chile	Chile	Financial institution		99.99	%		99.99	%		99.99	%		99.99	%
Banco Itaú BMG Consignado S.A	Brazil	Financial institution		60.00	%		60.00	%		60.00	%		60.00	%
Banco Itaú Paraguay S.A.	Paraguay	Financial institution		100.00	%		100.00	%		100.00	%		100.00	%
Banco Itaú Suisse S.A.	Switzerland	Financial institution		100.00	%		100.00	%		100.00	%		100.00	%
Banco Itaú Uruguay S.A.	Uruguay	Financial institution		100.00	%		100.00	%		100.00	%		100.00	%
Banco Itaúcard S.A.	Brazil	Financial institution		100.00	%		100.00	%		100.00	%		100.00	%
Banco Itauleasing S.A.	Brazil	Financial institution		100.00	%		100.00	%		100.00	%		100.00	%
Cia. Itaú de Capitalização	Brazil	Capitalization		100.00	%		100.00	%		100.00	%		100.00	%
Dibens Leasing S.A. - Arrendamento Mercantil	Brazil	Leasing		100.00	%		100.00	%		100.00	%		100.00	%
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento	Brazil	Consumer finance credit		50.00	%		50.00	%		50.00	%		50.00	%
Hipercard Banco Múltiplo S.A.	Brazil	Financial institution		100.00	%		100.00	%		100.00	%		100.00	%
Itau Bank, Ltd.	Cayman Islands	Financial institution		100.00	%		100.00	%		100.00	%		100.00	%
Itau BBA Colombia S.A. Corporación Financiera	Colombia	Financial institution		100.00	%		100.00	%		100.00	%		100.00	%
Itau BBA International plc	United Kingdom	Financial institution		100.00	%		100.00	%		100.00	%		100.00	%
Itaú BBA USA Securities Inc.	United States	Broker		100.00	%		100.00	%		100.00	%		100.00	%
Itaú BMG Seguradora S.A.	Brazil	Insurance		60.00	%		60.00	%		60.00	%		60.00	%
Itaú Corretora de Valores S.A.	Brazil	Broker		100.00	%		100.00	%		100.00	%		100.00	%
Itaú Seguros S.A.	Brazil	Insurance		100.00	%		100.00	%		100.00	%		100.00	%
Itaú Unibanco Financeira S.A. - Crédito, Financiamento e Investimento	Brazil	Consumer finance credit		100.00	%		100.00	%		100.00	%		100.00	%
Itaú Unibanco S.A.	Brazil	Financial institution		100.00	%		100.00	%		100.00	%		100.00	%
Itaú Vida e Previdência S.A.	Brazil	Pension plan		50.00	%		50.00	%		50.00	%		50.00	%
Luizacred S.A. Soc. Cred. Financiamento Investimento	Brazil	Consumer finance credit		100.00	%		100.00	%		100.00	%		100.00	%
Redecard S.A. - REDE	Brazil	Acquirer		100.00	%		100.00	%		100.00	%		100.00	%

ITAÚ UNIBANCO HOLDING is committed to maintaining the minimum capital required by all these joint ventures, noteworthy is that for all FIC - Financeira Itaú CBD S.A Crédito, Financiamento e Investimento the minimum capital percentage is 25% higher than that required by the Central Bank of Brazil (Note 33).

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 16

II. Business combinations

Accounting for business combinations under IFRS 3 is only applicable when a business is acquired. Under IFRS 3, a business is defined as an integrated set of activities and assets that is conducted and managed for the purpose of providing a return to investors, or cost reduction or other economic benefits. In general, a business consists of inputs, processes applied to those inputs and outputs that are, or will be, used to generate income. If there is goodwill in a set of activities or transferred assets, this is presumed to be a business. For acquisitions that meet the definition of business, accounting under the purchase method is required.

The acquisition cost is measured at the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the exchange date, plus costs directly attributable to the acquisition. Acquired assets and assumed liabilities and contingent liabilities identifiable in a business combination are initially measured at fair value at the date of acquisition, regardless of the existence of non-controlling interests. The excess of the acquisition cost, plus non-controlling interests, if any, over the fair value of identifiable net assets acquired, is accounted for as goodwill.

The treatment of goodwill is described in Note 2.4k. If the cost of acquisition, plus non-controlling interests, if any, is lower than the fair value of identifiable net assets acquired, the difference is directly recognized in income.

For each business combination, the purchaser should measure any non-controlling interest in the acquired company at the fair value or amount proportional to its interest in net assets of the acquired company.

III. Transactions with non-controlling stockholders

IFRS 10 – “Consolidated financial statements” establishes that, changes in an ownership interest in a subsidiary, which do not result in a loss of control, are accounted for as capital transactions and any difference between the amount paid and the carrying amount of non-controlling stockholders is recognized directly in consolidated stockholders' equity.

b) Foreign currency translation

I. Functional and presentation currency

The consolidated financial statements of ITAÚ UNIBANCO HOLDING are presented in Brazilian Reais, which is its functional and presentation currency. For each subsidiary and investment in associates and joint ventures, ITAÚ UNIBANCO HOLDING defined the functional currency, as set forth in IAS 21.

The assets and liabilities of subsidiaries with a functional currency other than the Brazilian Real are translated as follows:

· assets and liabilities are translated at the closing rate at the balance sheet date.

· income and expenses are translated at monthly average exchange rates.

· exchange differences arising from currency translation are recorded in other comprehensive income.

II. Foreign currency transactions

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated statement of income as part of foreign exchange results and exchange variations on transactions.

In the case of monetary assets classified as available-for-sale, the exchange differences resulting from a change in the amortized cost of the instrument are recognized in the income statement, while those resulting from other changes in the carrying amount, except impairment losses, are recognized in other comprehensive income until derecognition or impairment.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 17

c) Cash and cash equivalents

ITAÚ UNIBANCO HOLDING defines cash and cash equivalents as cash and current accounts in banks (included in the heading cash and deposits on demand on the consolidated balance sheet), interbank deposits and securities purchased under agreements to resell that have original maturities of up to 90 days or less, as shown in Note 4.

d) Central Bank Compulsory deposits

The Central Banks of the countries in which ITAÚ UNIBANCO HOLDING operates currently impose a number of compulsory deposit requirements on financial institutions. Such requirements are applied to a wide range of banking activities and operations, such as demand, savings, and time deposits.

Compulsory deposits are initially recognized at fair value and subsequently at amortized cost, using the effective interest rate method as detailed in Note 2.4g VI.

e) Interbank deposits

ITAÚ UNIBANCO HOLDING recognizes its interbank deposits in the balance sheet initially at fair value and subsequently at the amortized cost using the effective interest method as detailed in Note 2.4g VI.

f) Securities purchased under agreements to resell and sold under repurchase agreements

ITAÚ UNIBANCO HOLDING has purchased securities with resale agreement (resale agreements), and sold securities with repurchase agreement (repurchase agreement) of financial assets. Resale and repurchase agreements are accounted for under Securities purchased under agreements to resell and Securities sold under repurchase agreements, respectively.

The amounts invested in resale agreement transactions and borrowed in repurchase agreement transactions are initially recognized in the balance sheet at the amount advanced or raised, and subsequently measured at amortized cost. The difference between the sale and repurchase prices is treated as interest and recognized over the life of the agreements using the effective interest rate method. Interest earned in resale agreement transactions and incurred in repurchase agreement transactions is recognized in Interest and similar income and Interest and similar expense, respectively.

The financial assets accepted as collateral in our resale agreements can be used by us, if provided for in the agreements, as collateral for our repurchase agreements or can be sold.

In Brazil, control over custody of financial assets is centralized and the ownership of investments under resale and repurchase agreements is temporarily transferred to the buyer. ITAÚ UNIBANCO HOLDING strictly monitors the fair value of financial assets received as collateral under our resale agreements and adjusts the collateral amount when appropriate.

Financial assets pledged as collateral to counterparties are also recognized in the consolidated financial statements. When the counterparty has the right to sell or re-pledge such instruments, they are presented in the balance sheet under the appropriate class of financial assets.

g) Financial assets and liabilities

In accordance with IAS 39, all financial assets and liabilities, including derivative financial instruments, shall be recognized in the balance sheet and measured based on the category in which the instrument is classified.

Financial assets and liabilities can be classified into the following categories:

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 18

· Financial assets and liabilities at fair value through profit or loss – held for trading

· Financial assets and liabilities at fair value through profit or loss – designated at fair value

· Available-for-sale financial assets

· Held-to-maturity financial assets

· Loans and receivables

· Financial liabilities at amortized cost

Classification of financial assets and liabilities depend on the purpose for which financial assets were acquired or financial liabilities were assumed. Management determines the classification of financial instruments at initial recognition.

ITAÚ UNIBANCO HOLDING classifies as loans and receivables the following classes of balance sheet headings: Cash and deposits on demand, Central Bank compulsory deposits (Note 2.4d), Interbank deposits (Note 2.4e), Securities purchased under agreement to resell (Note 2.4f), Loan operations (Note 2.4g VI) and Other financial assets (Note 2.4g IX).

Regular purchases and sales of financial assets are recognized and derecognized, respectively, on the trade date.

Financial assets are derecognized when rights to receive cash flows expire or when ITAÚ UNIBANCO HOLDING transfers substantially all risks and rewards of ownership, and such transfer qualifies for write-off in accordance with IAS 39 requirements. Otherwise, control should be assessed to determine whether the continuous involvement related to any retained control does not prevent write-off. Financial liabilities are derecognized when settled or extinguished. Financial liabilities are derecognized when discharged or extinguished.

Financial assets and liabilities are offset against each other and the net amount is reported in the balance sheet solely when there is a legally enforceable right to offset the recognized amounts and there is intention to settle them on a net basis, or simultaneously realize the asset and settle the liability.

I- Financial assets and liabilities at fair value through profit or loss - held for trading

These are financial assets and liabilities acquired or incurred principally for the purpose of selling them in the short term or when they are part of a portfolio of financial instruments that are managed together and for which there is evidence of a recent history of trading transactions.

Financial assets and liabilities included in this category are initially and subsequently recognized at fair value. Transaction costs are directly recognized in the Consolidated Statement of Income. Gains and losses arising from changes in fair value are directly included in “Net gain (loss) from investments in securities and derivatives”. Interest and similar income and expense are recognized in Interest and similar income and Interest and similar expense, respectively.

II- Financial assets and liabilities at fair value through profit or loss – designated at fair value

These are assets and liabilities designated at fair value through profit or loss upon initial recognition (fair value option). In accordance with IAS 39, the fair value option can only be applied if it reduces or eliminates accounting mismatches in income or when the financial instruments are part of a portfolio for which risk is managed and reported to Management based on its fair value or when these instruments consist of debt instruments and embedded derivatives that should otherwise be separated.

Assets and liabilities of this category are granted the same accounting treatment as those recorded in Financial assets and liabilities held for trading.

III- Derivatives

Derivatives are initially recognized on the date derivative contracts are entered into, and subsequently recorded at fair value. All derivatives are recognized as assets when the fair value is positive, and as liabilities when negative.

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Certain derivatives embedded in other financial instruments are treated as separate derivatives, when their economic characteristics and risks are not closely related to those of the host contract and the host contract is not recognized at fair value through profit or loss. These embedded derivatives are accounted for separately at fair value, with changes in fair value recognized in the consolidated statement of income in Net gain (loss) on investment securities and derivatives.

Derivatives can be designated as hedging instruments under hedge accounting and in the event they qualify, depending upon the nature of the hedged item, the method for recognizing gains or losses from changes in fair value will be different. These derivatives, which are used to hedge exposures to risk or modify the characteristics of financial assets and liabilities, and that meet IAS 39 criteria, are recognized as hedge accounting.

In accordance with IAS 39, to qualify for hedge accounting, all of the following conditions are met:

· at the inception of the hedge there is formal designation and documentation of the hedging relationship and the entity’s risk management objective and strategy for undertaking the hedge.

· the hedge is expected to be highly effective in offsetting changes in fair value or cash flows attributable to the hedged risk, consistent with the originally documented risk management strategy for that particular hedging relationship.

· for a cash flow hedge, a forecast transaction that is the subject of the hedge must be highly probable and must present an exposure to variations in cash flows that could ultimately affect profit or loss.

· the effectiveness of the hedge can be reliably measured, i.e. the fair value or cash flows of the hedged item that are attributable to the hedged risk and the fair value of the hedging instrument can be reliably measured.

· the hedge is assessed on an ongoing basis and it is determined that the hedge has in fact been highly effective throughout the periods for which the hedge was designated.

IAS 39 presents three hedge accounting categories: fair value hedge, cash flow hedge, and hedge of net investments in a foreign operation.

ITAÚ UNIBANCO HOLDING uses derivatives as hedging instruments under cash flow hedge strategies, fair value hedge and hedge of net investments, as detailed in Note 9.

Fair value hedge

For derivatives that are designated and qualify as fair value hedges, the following practices are adopted:

a) The gain or loss arising from the new measurement of the hedge instrument at fair value should be recognized in income; and

b) The gain or loss arising from the hedged item, attributable to the effective portion of the hedged risk, should adjust the book value of the hedged item and also be recognized in income.

When the derivative expires or is sold or the hedge no longer meets the accounting hedge criteria or the entity revokes the designation, the entity should prospectively discontinue the accounting hedge. In addition, any adjustment in the book value of the hedged item should be amortized in income.

Cash flow hedge

For derivatives that are designated and qualify as a cash flow hedge, the effective portion of derivative gains or losses are recognized in Other comprehensive income – Cash flow hedge, and reclassified to Income in the same period or periods in which the hedged transaction affects income. The portion of gain or loss on derivatives that represents the ineffective portion or the hedge components excluded from the assessment of effectiveness is recognized immediately in income. Amounts originally recorded in Other comprehensive income and subsequently reclassified to Income are recorded in the corresponding income or expense lines in which the related hedged item is reported.

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When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting and also when ITAU UNIBANCO HOLDING redesignates a hedge, any cumulative gain or loss existing in Other comprehensive income is frozen and is recognized in income when the hedged item is ultimately recognized in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss recognized in Other Comprehensive Income is immediately transferred to the statement of income.

Hedge of net investments in foreign operations

A hedge of a net investment in a foreign operation, including hedge of a monetary item that is accounted for as part of the net investment, is accounted for in a manner similar to a cash flow hedge:

a) the portion of gain or loss on the hedge instrument determined as effective is recognized in other comprehensive income.

b) the ineffective portion is recognized in income.

Gains or losses on the hedging instrument related to the effective portion of the hedge which is recognized in comprehensive income are reclassified to the income statement upon the disposal of the investment in the foreign operation.

IV - Available-for-sale financial assets

In accordance with IAS 39, financial assets are classified as available-for-sale when in the Management’s judgment they can be sold in response to or in anticipation of changes in market conditions, and that were not classified into the categories of financial assets at fair value through profit or loss, loans and receivables or held to maturity.

Available-for-sale financial assets are initially and subsequently recognized in the consolidated balance sheet at fair value, plus transaction costs. Unrealized gains and losses (except losses for impairment, foreign exchange differences, dividends and interest income) are recognized, net of applicable taxes, in Other comprehensive income. Interest, including the amortization of premiums and discounts, is recognized in the consolidated statement of income under Interest and similar income. The average cost is used to determine the realized Gains and losses on Disposal of available-for-sale financial assets, which are recorded in the consolidated statement of income under Net gain (loss) on financial assets and liabilities – Available-for-sale financial assets. Dividends on available-for-sale assets are recognized in the consolidated statement of income as Dividend income when ITAÚ UNIBANCO HOLDING is entitled to receive such dividends and inflow of economic benefits is probable.

At the balance sheet date, ITAÚ UNIBANCO HOLDING assesses whether there is evidence that a financial asset or a group of similar financial assets is impaired and, for equity instruments, a significant or prolonged decline in the fair value of the security below its cost is evidence of an impairment, resulting in the recognition of an impairment loss. If any impairment evidence exists for available-for-sale financial assets, the cumulative loss, measured as the difference between acquisition cost and current fair value, less any impairment loss on that financial asset previously recognized in income, is recognized in the Consolidated statement of income as a reclassification adjustment from Other comprehensive income.

Both impairment of available-for-sale financial assets and reversal of this loss are recorded, when applicable, in the Consolidated statement of income.

V- Held-to-maturity financial assets

In accordance with IAS 39, the financial assets classified into the held-to-maturity category are non-derivative financial assets for which ITAÚ UNIBANCO HOLDING has the positive intention and ability to hold to maturity.

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These assets are initially recognized at fair value, plus transaction costs, and subsequently measured at amortized cost, using the effective interest rate method. Interest income, including the amortization of premiums and discounts, is recognized in the consolidated statement of income under Interest and similar income.

Both impairment of held-to-maturity financial assets and reversal of this loss are recorded, when applicable, in the Consolidated statement of income.

VI- Loan operations

Loan operations are initially recognized at fair value, plus transaction costs and are subsequently measured at amortized cost using the effective interest rate method.

When calculating the effective interest rate, ITAÚ UNIBANCO HOLDING estimates cash flows considering all contractual terms of the financial instrument, but does not consider future credit losses. The calculation includes all commissions paid or received between parties to the contract, transaction costs, and all other premiums or discounts.

ITAÚ UNIBANCO HOLDING classifies a loan operation as on non-accrual status if the payment of the principal or interest has been in default for 60 days or more. In this case, accrual of interest is no longer recognized.

When a financial asset or group of similar financial assets is impaired and its carrying amount is reduced through an allowance for loan losses, the subsequent interest income is recognized on the reduced carrying amount using the interest rate used to discount the future cash flows for purposes of measuring the allowance for loan losses.

Both the credit risk and the finance areas are responsible for defining the methodologies used to measure the allowance for loan losses and for assessing changes in the provision amounts on a recurring basis.

These areas monitor the trends observed in allowance for loan losses by segment level, in addition to establishing an initial understanding of the variables that may trigger changes in the allowance for loan losses, the probability of default or the loss given default.

Once the trends have been identified and an initial assessment of the variables has been made at the corporate level, the business areas are responsible for further analyzing these observed trends at a detailed level and for each portfolio, in order to understand the underlying reasons for the trends observed and for deciding whether changes are required in our credit policies.

VII - Lease operations (as lessor)

When assets are subject to a finance lease, the present value of lease payments is recognized as a receivable in the consolidated balance sheet under Loan operations and Lease Operations.

Initial direct costs when incurred by ITAÚ UNIBANCO HOLDING are included in the initial measurement of the lease receivable, reducing the amount of income to be recognized over the lease period. Such initial costs usually include commissions and legal fees.

The recognition of interest income reflects a constant rate of return on the net investment of ITAÚ UNIBANCO HOLDING and is recognized in the consolidated statement of income under Interest and similar income.

VIII- Allowance for loan and lease losses

General

ITAÚ UNIBANCO HOLDING periodically assesses whether there is any objective evidence that a receivable or group of receivables is impaired. A receivable or group of receivables is impaired and there is a need for recognizing an impairment loss if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event) and that loss event (or events) has an impact on the estimated future cash flows that can be reliably estimated.

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The allowance for loan and lease losses is recognized as probable losses inherent in the portfolio at the balance sheet date. The determination of the level of the allowance rests upon various judgments and assumptions, including current economic conditions, loan portfolio composition, prior loan and lease loss experience and evaluation of credit risk related to individual loans. Our process for determining the allowance for loan and lease losses includes Management's judgment and the use of estimates. The adequacy of the allowance is regularly analyzed by Management.

The criteria adopted by ITAÚ UNIBANCO HOLDING for determining whether there is objective evidence of impairment include the following:

· default in principal or interest payment.

· financial difficulties of the debtor and other objective evidence that results in the deterioration of the financial position of the debtor (for example, debt-to-equity ratio, percentage of net sales or other indicators obtained through processes adopted to monitor credit, particularly for retail portfolios).

· breach of loan clauses or terms.

· entering into bankruptcy.

· loss of competitive position of the debtor.

The estimated period between the loss event and its identification is defined by Management for each portfolio of similar receivables. Considering the representativeness of several homogeneous groups, management chose to use a twelve month period as being the most representative. For portfolios of loans that are individually evaluated for impairment this period is at most 12 months, considering the review cycle for each loan operation.

Assessment

ITAÚ UNIBANCO HOLDING first assesses whether objective evidence of impairment exists for receivables that are individually significant, and individually or collectively for receivables that are not individually significant.

To determine the amount of the allowance for individually significant receivables with objective evidence of impairment, methodologies are used that consider both the quality of the client and the nature of the transaction, including its collateral, to estimate the cash flows expected from these loans.

If no objective evidence of impairment exists for an individually assessed receivable, whether significant or not, the asset is included in a group of receivables with similar credit risk characteristics and collectively assessed for impairment. Receivables that are individually assessed for impairment and for which an impairment loss is recognized are not included in the collective assessment. The amount of loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate.

For collectively assessed loans, the calculation of the present value of the estimated future cash flows for which there is collateral reflects the historical performance of the foreclosure and recovery of fair value, considering the cash flows that may arise from foreclosure less costs for obtaining and selling that collateral.

For the purpose of a collective evaluation of impairment, receivables are grouped on the basis of similar credit risk characteristics. The characteristics are relevant to the estimation of future cash flows for such receivables by being indicative of the debtors’ ability to pay all amounts due, according to the contractual terms of the receivables being evaluated. Future cash flows in a group of receivables that are collectively evaluated for purposes of identifying the need for recognizing impairment are estimated on the basis of the contractual cash flows of the group of receivables and historical loss experience for receivables with similar credit risk characteristics. The historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently.

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For individually significant receivables with no objective evidence of impairment, ITAÚ UNIBANCO HOLDING classifies these loans into certain rating categories based on several qualitative and quantitative factors applied through internally developed models. Considering the size and the different risk characteristics of each contract, the rating category determined according to internal models can be reviewed and modified by our Corporate Credit Committee, the members of which are executives and officers in corporate credit risk. ITAÚ UNIBANCO HOLDING estimates inherent losses for each rating category considering an internally developed approach for low-default portfolios, that uses our historical experience for building internal models, that are used both to estimate the PD (probability of default) and to estimate the LGD (loss given default.)

To determine the amount of the allowance for individually insignificant items loans are segregated into classes considering the underlying risks and characteristics of each group. The allowance for loan and lease losses is determined for each of those classes through a process that considers historical delinquency and loan loss experience over the most recent years.

Measurement

The methodology used to measure the allowance for loan and lease losses was developed internally by the credit risk and finance areas at the corporate level. In those areas and considering the different characteristics of the portfolios, different areas are responsible for defining the methodology to measure the allowance for each: Corporate (including loan operations with objective evidence of impairment and individually significant loan operations but with no objective evidence of impairment), Individuals, Small and Medium Businesses, and Foreign Units Latin America. Each of the four portfolio areas responsible for defining the methodology to measure the allowance for loan and lease losses is further divided into groups, including groups that develop the methodology and groups that validate the methodology. A centralized group in the credit risk area is responsible for measuring the allowance on a recurring basis following the methodologies developed and approved for each of the four areas.

The methodology is based on two components to determine the amount of the allowance: The probability of default by the client or counterparty (PD), and the potential economic loss that may occur in the event of default, being the debt that cannot be recovered (LGD) which are applied to the outstanding balance of the loan. Measurement and assessment of these risk components is part of the process for granting credit and for managing the portfolio. The estimated amounts of PD and LGD are measured based on statistical models that consider a significant number of variables which are different for each class and include, among others, income, equity, past loan experiences, level of indebtedness, economic sectors that affect collectability and other attributes of each counterparty and of the economic environment. These models are regularly updated for changes in economic and business conditions.

A model updating process is started when the modeling area identifies that it is not capturing significant effects of the changes of economic conditions, in the performance of the portfolio or when a change is made in the methodology for calculating the allowance for loan and lease losses. When a change in the model is made, the model is validated through back-testing and statistical methods are used to measure its performance through detailed analysis of its documentation, by describing step-by-step how the process is carried out. The models are validated by an area independent from the one developing it, by issuing a technical report on the assumptions used (integrity, consistency, and replicability of the bases) and on the mathematical methodology used. The technical report is subsequently submitted to CTAM (Model assessment technical committee), which is the highest level of approval of model reviews.

Considering the different characteristics of the loans at each of the four portfolio areas (Corporate (with no objective evidence of impairment), Individuals, Small and Medium Businesses, and Foreign Units Latin America), different areas within the corporate credit risk area are responsible for developing and approving the methodologies for loans in each of those four portfolio areas. Management believes that the fact that different areas focus on each of the four portfolios results in increased knowledge, specialization and awareness of the teams as to the factors that are more relevant for each portfolio area in measuring the loan losses. Also considering such different characteristics and other factors, different inputs and information are used to estimate the PD and LGD as further detailed below:

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· Corporate (with no evidence of impairment) - factors considered and inputs used are mainly the history of the customer relationship with us, the results of analysis of the customer’s accounting statements and the information obtained through frequent contacts with its officers, aiming at understanding the strategy and the quality of its management. Additionally, industry and macroeconomic factors are also included in the analysis. All those factors (which are quantitative and qualitative) are used as inputs to the internal model developed to determine the corresponding rating category. This approach is also applied to the corporate credit portfolio outside Brazil.

· Individuals – factors considered and inputs used are mainly the history of the customer relationship with us, and information available through credit bureaus (negative information).

· Small / Medium Businesses – factors considered and inputs used include, in addition to the history of the customer relationship and credit bureau information about the customer’s revenues, industry expertise, and information about its shareholders and officers, among others.

· Foreign Units – Latin America – considering the relative smaller size of this portfolio and its more recent nature, the models are simpler and use the past due status and an internal rating of the customer as main factors.

Reversal, write-off, and renegotiation

If, in a subsequent period, the amount of the impairment loss decreases and the decrease is objectively related to an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit rating), the previously recognized impairment is reversed. The amount of reversal is recognized in the consolidated statement of Income under Expense for allowance for loan and lease losses.

When a loan is uncollectible, it is written-off in the balance sheet under allowance for loan and lease losses. Write-off as losses occur after 360 days of credits have matured or after 540 days for loans with maturities over 36 months.

In almost all cases for loan products, renegotiated loans require at least one payment to be made under the renegotiated terms in order for it to be removed from nonperforming and nonaccrual status. Renegotiated loans return to nonperforming and nonaccrual status when they reach 60 days past due under the renegotiated terms, which typically corresponds to the borrower missing two or more payments.

IX- Other financial assets

They are initially recognized at fair value and subsequently at amortized cost, using the effective interest rate method. The composition is presented in Note 20a.

Interest income is recognized in the consolidated statement of income under Interest and similar income.

X- Financial liabilities at amortized cost

They are initially recognized at fair value and subsequently at amortized cost, using the effective interest rate method. Interest expense is presented in the Consolidated Statement of Income under Interest and similar expense.

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The following financial liabilities are presented in the consolidated balance sheet and recognized at amortized cost:

· Deposits (See Note 17).

· Securities sold under repurchase agreements (Note 2.4f).

· Funds from interbank markets (Note 19a).

· Funds from institutional markets (Note 19b).

· Liabilities for capitalization plans.

· Other financial liabilities (Note 20b).

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h) Investments in associates and joint ventures

I – Associates

In conformity with IAS 28 - Investments in Associates and Joint Ventures, associates are companies in which the investor has a significant influence but does not hold control. Investments in these companies are initially recognized at cost of acquisition and subsequently accounted for using the equity method. Investments in associates and joint ventures include the goodwill identified upon acquisition, net of any cumulative impairment loss.

II – Joint arrangements

Before January 1, 2013, ITAÚ UNIBANCO HOLDING proportionally consolidated its interest held in joint ventures, as required by IAS 31 – Interests in Joint Ventures. From that date on, it adopted IFRS 11 – Joint arrangements, changing its accounting policy from interest in joint arrangements to the equity method.

ITAÚ UNIBANCO HOLDING has assessed the nature of its joint business and concluded that it has both joint operations and joint ventures. There was no change in the accounting treatment for joint operations. For joint ventures, ITAÚ UNIBANCO HOLDING adopted the new policy on interest in joint ventures, in accordance with the IFRS 11 transition provisions.

The effects arising from adopting IFRS 11, which gave rise to a change in the accounting policy, have not had significant impacts on the Consolidated financial statements of ITAÚ UNIBANCO HOLDING.

ITAU UNIBANCO HOLDING’s share in profits or losses of its associates and joint ventures after acquisition is recognized in the consolidated statement of income. Its share of the changes in the reserves of corresponding stockholders’ equity of its associates and joint ventures is recognized in its own reserves of stockholders’ equity. The cumulative changes after acquisition are adjusted against the carrying amount of the investment. When the ITAÚ UNIBANCO HOLDING share of losses of an associates and joint ventures is equal or above its interest in the associates and joint ventures, including any other receivables, ITAÚ UNIBANCO HOLDING does not recognize additional losses, unless it has incurred any obligations or made payments on behalf of the associates and joint ventures.

Unrealized profits on transactions between ITAÚ UNIBANCO HOLDING and its associates and joint ventures are eliminated to the extent of the interest of ITAÚ UNIBANCO HOLDING. Unrealized losses are also eliminated, unless the transaction provides evidence of impairment of the transferred asset. The accounting policies on associates and joint ventures are consistent with the policies adopted by ITAÚ UNIBANCO HOLDING.

If the interest in the associates and joint ventures decreases, but ITAÚ UNIBANCO HOLDING retains significant influence or joint control, only the proportional amount of the previously recognized amounts in Other comprehensive income is reclassified in Income, when appropriate.

Gains and losses from dilution arising from investments in associates and joint ventures are recognized in the consolidated statement of income.

i) Lease commitments (as lessee)

As a lessee, ITAÚ UNIBANCO HOLDING has finance and operating lease agreements.

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ITAÚ UNIBANCO HOLDING leases certain fixed assets, and those substantially holding the risks and benefits incidental to the ownership are classified as finance leases.

Each lease installment paid is allocated part to liabilities and part to financial charges, so that a constant rate is obtained for the outstanding debt balance. Corresponding obligations, net of future financial charges, are included in Other financial liabilities. Interest expenses are recognized in the Consolidated Statement of Income over the lease term, to produce a constant periodic interest rate on the remaining liabilities balance for each period.

Expenses related to operating leases are recognized in the consolidated statement of income, on a straight-line basis, over the period of lease.

When an operating lease is terminated before the end of the lease term, any payment to be made to the lessor as a penalty is recognized as an expense in the period the termination occurs.

j) Fixed assets

In accordance with IAS 16 – Property, plant and equipment, fixed assets are recognized at cost of acquisition less accumulated depreciation, which is calculated using the straight-line method and rates based on the estimated useful lives of these assets. These rates and additional details are presented in Note 15.

The residual values and useful lives of assets are reviewed and adjusted, if appropriate, at the end of each year.

ITAÚ UNIBANCO HOLDING reviews its assets in order to identify whether any indications of impairment exist. If such indications are identified, fixed assets are tested for impairment. In accordance with IAS 36 – Impairment of assets, impairment losses are recognized for the difference between the carrying and recoverable amount of an asset (or group of assets), in the consolidated statement of income. The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and its value in use. For purposes of assessing impairment, assets are grouped at the lowest level for which independent cash flows can be identified (cash-generating units). The assessment may be made at an individual asset level when the fair value less the cost to sell may be reliably determined.

Gains and losses on disposals of fixed assets are recognized in the consolidated statement of income under Other income or General and administrative expenses.

k) Goodwill

In accordance with IFRS 3 (R) – “Business combinations”, goodwill may arise on an acquisition and represents the excess of the consideration transferred plus non-controlling interest over the net fair value of the net identifiable assets and contingent liabilities of the acquiree. Goodwill is not amortized, but its recoverable amount is tested for impairment annually or when there is any indication of impairment, using an approach that involves the identification of cash-generating units and estimates of fair value less cost to sell and/or value in use.

As defined in IAS 36, a cash-generating unit is the lowest identifiable group of assets that generates cash inflows that are independent of the cash inflows from other assets or groups of assets. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units that are expected to benefit from the business combination.

IAS 36 determines that an impairment loss shall be recognized for a cash-generating unit if the recoverable amount of the cash-generating unit is less than its carrying amount. The loss shall be allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit, and then to the other assets of the unit on a pro rata basis applied to the carrying amount of each asset. The loss cannot reduce the carrying amount of an asset below the higher of its fair value less costs to sell and its value in use. The impairment loss of goodwill cannot be reversed.

Goodwill arising from the acquisition of subsidiaries is presented in the Consolidated Balance Sheet under the line Goodwill.

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Goodwill of associates and joint ventures is reported as part of investment in the consolidated balance sheet under Investments in associates and joint ventures, and the impairment test is carried out in relation to the total balance of the investments (including goodwill).

l) Intangible assets

Intangible assets are non-physical assets, including software and other assets, and are initially recognized at cost. Intangible assets are recognized when they arise from legal or contractual rights, their costs can be reliably measured, and in the case of intangible assets not arising from separate acquisitions or business combinations, it is probable that future economic benefits may arise from their use. The balance of intangible assets refers to acquired assets or those internally generated.

Intangible assets may have finite or indefinite useful lives. Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives. Intangible assets with indefinite useful lives are not amortized, but periodically tested in order to identify any impairment.

ITAÚ UNIBANCO HOLDING semi-annually assesses its intangible assets in order to identify whether any indications of impairment exist, as well as possible reversal of previous impairment losses. If such indications are found, intangible assets are tested for impairment. In accordance with IAS 36, impairment losses are recognized as the difference between the carrying and the recoverable amount of an asset (or group of assets), and recognized in the consolidated statement of income. The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and its value in use. For purposes of assessing an impairment, assets are grouped into the minimum level for which cash flows can be identified. The assessment can be made at an individual asset level when the fair value less its cost to sell can be determined reliably.

As set forth in IAS 38, ITAÚ UNIBANCO HOLDING elected the cost model to measure its intangible assets after its initial recognition.

The breakdown of intangible assets is described in Note 16.

m) Assets held for sale

Assets held for sale are recognized in the balance sheet when they are actually repossessed or there is intention to sell. These assets are initially recorded at the lower of: (i) the fair value of the asset less the estimated selling expenses, or (ii) the carrying amount of the related asset held for sale.

n) Income tax and social contribution

There are two components of the provision for income tax and social contribution: current and deferred.

Current income tax expense approximates taxes to be paid or recovered for the applicable period. Current assets and liabilities are recorded in the balance sheet under Tax assets – income tax and social contribution - current and tax liabilities – income tax and Social contribution – current, respectively.

Deferred income tax and social contribution represented by deferred tax assets and liabilities are obtained based on the differences between the tax bases of assets and liabilities and the amounts reported in the financial statements at each year end. The tax benefit of tax loss carryforwards is recognized as an asset. Deferred tax assets are only recognized when it is probable that future taxable income will be available for offsetting. Deferred tax assets and liabilities are recognized in the balance sheet under Tax assets – Income tax and social contribution – Deferred and Tax liabilities – Income tax and social contribution - Deferred, respectively.

Income tax and social contribution expense is recognized in the consolidated statement of income under Income tax and social contribution, except when it refers to items directly recognized in Other comprehensive income, such as: deferred tax on fair value measurement of available-for-sale financial assets, and tax on cash flow hedges. Deferred taxes of such items are initially recognized in Other comprehensive income and subsequently recognized in Income together with the recognition of the gain / loss originally deferred.

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Changes in tax legislation and rates are recognized in the consolidated statement of income under Income tax and social contribution in the period in which they are enacted. Interest and fines are recognized in the consolidated statement of income under General and administrative expenses. Income tax and social contribution are calculated at the rates shown below, considering the respective taxable bases, based on the current legislation related to each tax, which in the case of the operations in Brazil are for all the reporting periods as follows:

	03/31/2016
Income tax		15.00	%
Additional income tax		10.00	%
Social contribution (*)		20.00	%

(*) On October 06, 2015, Law No. 13,169, a conversion of Provisional Measure No. 675, which increased the Social Contribution tax rate from 15.00% to 20.00% until December 31, 2018, for financial institutions, insurance companies and credit card management companies, was introduced. For the other companies, the tax rate remains at 9.00%.

To determine the proper level of provisions for taxes to be maintained for uncertain tax positions, a two-phased approach was applied, according to which a tax benefit is recognized if it is more probable than not that a position can be sustained. The benefit amount is then measured to be the highest tax benefit which probability of realization is over 50%.

o) Insurance contracts and private pension

IFRS 4 – “Insurance contracts” defines insurance contracts as contracts under which the issuer accepts a significant insurance risk of the counterparty, by agreeing to compensate it if a specified uncertain future event adversely affects it.

At the time of the first-time adoption of IFRS, ITAÚ UNIBANCO HOLDING decided not to change its accounting policies for insurance contracts, which follow the accounting practices generally accepted in

Brazil (“BRGAAP”).

Although investment agreements with discretionary participation characteristics are financial instruments, they are treated as insurance contracts, as established by IFRS 4, as well as those transferring a significant financial risk.

These agreements may be reclassified as insurance contracts after their initial classification should the insurance risk become significant.

Once the contract is classified as an insurance contract, it remains as such until the end of its life, even if the insurance risk is significantly reduced during such period, unless all rights and obligations are extinguished or expired.

Note 30 presents a detailed description of all products classified as insurance contracts.

Private pension plans

In accordance with IFRS 4, an insurance contract is one that exposes its issuer to a significant insurance risk. An insurance risk is significant only if the insurance event could cause an issuer to pay significant additional benefits in any scenario, except for those that do not have commercial substance. Additional benefits refer to amounts that exceed those that would be payable if no insured event occurred.

Contracts that contemplate retirement benefits after an accumulation period (known as PGBL, VGBL and FGB) assure, at the commencement date of the contract, the basis for calculating the retirement benefit (mortality table and minimum interest). The contracts specify the annuity fees and, therefore, the contract transfers the insurance risk to the issuer at the commencement date, and they are classified as insurance contracts.

Insurance premiums

Insurance premiums are recognized by issuing an insurance policy or over the period of the contracts in proportion to the amount of the insurance coverage. Insurance premiums are recognized as income in the consolidated statement of income.

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If there is evidence of impairment losses with respect to receivables for insurance premiums, ITAÚ UNIBANCO HOLDING recognizes a provision, sufficient to cover this loss, based on the risk analysis of realization of insurance premiums receivable with installments overdue for over 60 days.

Reinsurance

Reinsurance premiums are recognized over the same period in which the related insurance premiums are recognized in the consolidated statement of income.

In the ordinary course of business, ITAÚ UNIBANCO HOLDING reinsures a portion of the risks underwritten, particularly property and casualty risks that exceed the maximum limits of responsibility that we determine to be appropriate for each segment and product (after a study which considers size, experience, specificities, and the necessary capital to support these limits). These reinsurance agreements allow the recovery of a portion of the losses from the reinsurer, although they do not release the insurer from the main obligation as direct insurer of the risks contemplated in the reinsurance.

Acquisition costs

Acquisition costs include direct and indirect costs related to the origination of insurance. These costs, except for the commissions paid to brokers and others, are expensed directly in income as incurred. Commissions, on the other hand, are deferred and expensed in proportion to the recognition of the premium revenue, i.e. over the period of the corresponding insurance contract.

Liabilities

Reserves for claims are established based on historical experience, claims in process of payment, estimated amounts of claims incurred but not yet reported, and other factors relevant to the required reserve levels. A liability for premium deficiencies is recognized if the estimated amount of premium deficiencies exceeds deferred acquisition costs. Expenses related to recognition of liabilities for insurance contracts are recognized in the consolidated statement of income under Change in reserves for insurance and private pension.

Embedded derivatives

We have not identified any embedded derivatives in our insurance contracts, which may be separated or measured at fair value in accordance with IFRS 4 requirements.

Liability adequacy test

IFRS 4 requires that the insurance companies analyze the adequacy of their insurance liabilities in each reporting period through a minimum adequacy test. The liability adequacy test for IFRS was conducted by adopting the current actuarial assumptions for future cash flows of all insurance contracts in force on the balance sheet date.

Should the analysis show insufficiency, any deficiency identified will be immediately accounted for in income for the period.

The assumptions used to conduct the liability adequacy test are detailed in Note 30.

p) Capitalization plans

For regulatory purposes in Brazil they are regulated by the insurance regulator, these plans do not meet the definition of an insurance contract under IFRS 4, and therefore they are classified as a financial liability at amortized cost under IAS 39.

Revenue from capitalization plans is recognized during the period of the contract and measured as the difference between the amount deposited by the client and the amount that ITAÚ UNIBANCO HOLDING has to reimburse.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 31

q) Post-employments benefits

ITAÚ UNIBANCO HOLDING is required to make contributions to government social security and labor indemnity plans, in Brazil and in other countries where it operates, which are expensed in the consolidated statement of income as an integral part of general and administrative expenses, when incurred.

Additionally, ITAÚ UNIBANCO HOLDING also sponsors Defined Benefit Plans and Defined Contribution Plans, accounted for in accordance with IAS 19 (R1) – “Employee benefits”.

Pension plans - Defined benefit plans

The liability (or asset, as the case may be) recognized in the Consolidated Balance Sheet with respect to the defined benefit plan corresponds to the present value of defined benefit obligations at the balance sheet date less the fair value of plan assets. The present value of defined benefit obligations is determined by discounting the estimated amount of future cash flows of benefit payments based on Brazilian government securities denominated in Reais and with maturity periods similar to the term of the pension plan liabilities. They are recognized in the Consolidated statement of income:

· current service cost – defined as the increase in the present value of obligations resulting from employee service in the current period.

· interest on the net amount of assets (liabilities) of defined benefit plans is the change, during the period, in the net amount recognized in assets and liabilities, due to the time elapsed, which comprises the interest income on plan assets, interest expense on the obligations of the defined benefit plan and interest on the asset ceiling effects.

Actuarial gains and losses arising from the non-adoption of the assumptions established in the latest evaluation, as compared to those effectively carried out or changes in such assumptions, are fully recognized in Other comprehensive income.

Pension plans - defined contribution

For defined contribution plans, contributions to plans made by ITAÚ UNIBANCO HOLDING, through pension plan funds, are recognized as an expense when due.

Other post-employment benefit obligations

Certain companies that merged into ITAÚ UNIBANCO HOLDING over the past few years were sponsors of post-employment healthcare benefit plans and ITAÚ UNIBANCO HOLDING is contractual committed to maintain such benefits over specific periods, as well as in relation to the benefits granted due to a judicial ruling.

These obligations are assessed annually by independent and qualified actuaries, and costs expected from these benefits are accumulated during the employment period and gains and losses arising from adjustments of practices and changes in actuarial assumptions are recognized in Stockholders’ equity, under Other comprehensive income, in the period they occurred.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 32

r) Share-based payment

Share-based payment is accounted for in accordance with IFRS 2 - “Share-based payment” which requires the entity to measure the value of equity instruments granted, based on their fair value at the option grant date. This cost is recognized during the vesting period of the right to exercise the instruments.

The total amount to be expensed is determined by reference to the fair value of the options granted excluding the impact of any service and non-market performance vesting conditions (notably remaining an employee of the entity over a specified time period). The fulfillment of on-market vesting conditions is included in the assumptions about the number of options that are expected to be exercised. At the end of each period, ITAÚ UNIBANCO HOLDING revises its estimates of the number of options that are expected to be exercised based on non-market vesting conditions. It recognizes the impact of the revision of the original estimates, if any, in the consolidated statement of income, with a corresponding adjustment to stockholders’ equity.

When the options are exercised, the ITAÚ UNIBANCO HOLDING treasury shares are generally delivered to the beneficiaries.

The fair value of stock options is estimated by using option pricing models that take into account the exercise price of the option, the current stock price, the risk-free interest rate, the expected volatility of the stock price and the life of the option.

All stock based compensation plans established by ITAÚ UNIBANCO HOLDING correspond to plans that can be settled exclusively through the delivery of shares.

s) Financial guarantees

ITAÚ UNIBANCO HOLDING recognizes the fair value of the guarantees issued in the consolidated balance sheet under Other liabilities. Fair value is generally represented by the fee charged to client for issuing the guarantee. This amount at the issuance date is amortized over the life of the guarantee issued and recognized in the consolidated statement of income under Banking service fees.

After issuance, if based on the best estimate ITAÚ UNIBANCO HOLDING concludes that the occurrence of a loss regarding a guarantee issued is probable, and if the loss amount is higher than the initial fair value less cumulative amortization of the guarantee, a provision is recognized for such amount.

t) Provisions, contingent assets and contingent liabilities

These are assessed, recognized and disclosed in accordance with IAS 37. Contingent assets and contingent liabilities are rights and obligations arising from past events for which materialization depends on future events.

Contingent assets are not recognized in the consolidated financial statements, except when the Management of ITAÚ UNIBANCO HOLDING understands that realization is virtually certain which, generally corresponds to lawsuits with favorable rulings, in final and unappealable judgments, withdrawal from lawsuits as a result of a payment in settlement or as a result of an agreement to offset against an existing liability.

Contingent liabilities mainly arise from administrative proceedings and lawsuits, inherent in the ordinary course of business, filed by third parties, former employees and governmental bodies, in connection with civil, labor, and tax and social security claims.

These contingencies are evaluated based on Management’s best estimates, and are classified as:

· Probable: in which liabilities are recognized in the consolidated balance sheet under Provisions.

· Possible: which are disclosed in the Consolidated Financial Statements, but no provision is recorded.

· Remote: which require neither a provision nor disclosure.

Contingent liabilities recorded under Provisions and those disclosed as possible are measured using best estimates through the use of models and criteria which allow their appropriate measurement even if there is uncertainty as to their ultimate timing and amount, and the criteria are detailed in Note 32.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 33

The amount of court escrow deposits is adjusted in accordance with current legislation.

Contingent liabilities guaranteed by indemnity clauses provided by third parties, such as in business combinations carried out before the transition date to IFRS, are recognized when a claim is asserted, and a receivable is recognized simultaneously subject to its collectability. For business combinations carried out after the transition date, indemnification assets are recognized at the same time and measured on the same basis as the indemnified item, subject to collectability or contractual limitations on the indemnified amount.

u) Capital

Common and preferred shares, which are equivalent to common shares but without voting rights are classified in Stockholders’ equity. The additional costs directly attributable to the issue of new shares are included in Stockholders’ equity as a deduction from the proceeds, net of taxes.

v) Treasury shares

Common and preferred shares repurchased are recorded in Stockholders’ equity under Treasury shares at their average purchase price.

Shares that are subsequently sold, such as those sold to grantees under our share-based payment, are recorded as a reduction in treasury shares, measured at the average price of treasury stock held at such date.

The difference between the sale price and the average price of the treasury shares is recorded as a reduction or increase in Additional paid-in capital. The cancellation of treasury shares is recorded as a reduction in Treasury shares against Appropriated reserves, at the average price of treasury shares at the cancellation date.

w) Dividends and interest on capital

Minimum dividend amounts established in the bylaws are recorded as liabilities at the end of each year. Any other amount above the mandatory minimum dividend is accounted for as a liability when approved by stockholders at a Stockholders´ Meeting.

Interest on capital is treated for accounting purposes as a dividend, and it is presented as a reduction of stockholders' equity in the consolidated financial statements. The related tax benefit is recorded in the consolidated statement of income.

Dividends have been and continue to be calculated and paid based on the financial statements prepared under Brazilian accounting standards and regulations for financial institutions and not based on these consolidated financial statements prepared under IFRS.

Dividends and interest on capital are presented in Note 21.

x) Earnings per share

Earnings per share are computed by dividing net income attributable to the owners of ITAÚ UNIBANCO HOLDING by the weighted average number of common and preferred shares outstanding for each reporting year. Weighted average shares are computed based on the periods for which the shares were outstanding.

ITAÚ UNIBANCO HOLDING grants stock-based compensation whose dilutive effect is reflected in diluted earnings per share, with the application of the “treasury stock method”. Under the treasury stock method, earnings per share are calculated as if shares under stock-based compensation plans had been issued and as if the assumed proceeds were used to purchase shares of ITAÚ UNIBANCO HOLDING.

Earnings per share are presented in Note 28.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 34

y) Revenue from services

Services related to current accounts are offered to clients either in formal packages or individually, and their income is recognized when these services are provided.

Revenue from certain services, such as fees from funds management, performance, collection for retail clients and custody, is recognized over the life of the related contracts on a straight-line basis.

The breakdown of the banking service fees is detailed in Note 24.

z) Segment information

Segment information is disclosed consistently with the internal report prepared for the Executive Committee, which makes the operational decisions of ITAÚ UNIBANCO HOLDING.

ITAÚ UNIBANCO HOLDING has three reportable segments: (i) Retail Banking (ii) Wholesale Banking and (iii) Activities with the Market + Corporation.

Segment information is presented in Note 34.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 35

Note 3 – Business development

a) Acquisitions

Credit Intelligence Bureau (“CIB”)

In January 21, 2016, the ITAÚ UNIBANCO HOLDING, through its subsidiary Itaú Unibanco S.A., sidnedd a Memorandum of Understanding with Banco Bradesco S.A. Banco do Brasil S.A., Banco Santander S.A. and Caixa Econômica Federal in order to create a credit intelligence bureau (“CIB”) which will enable greater efficiency in the management and granting of credit lines at long and medium terms.

CIB will be structured as a corporation and the Parties, each of them holding a 20% equity ownership, will share its control.

CIB’s incorporation is subject to the execution of definitive documents among the Parties, as well as the satisfaction of certain conditions precedent, including the approval by applicable regulatory authorities.

Recovery do Brasil Consultoria S.A.

At December 31, 2015, ITAÚ UNIBANCO HOLDING, through its subsidiary Itaú Unibanco S.A., entered into an agreement for purchase and sale and other covenants with Banco BTG Pactual S.A. (BTG) for acquisition of 81.94% interest in the capital of Recovery do Brasil Consultoria S.A. (Recovery), corresponding to BTG’s total interest in Recovery, for the amount of R$ 640.

In the same transaction, ITAÚ UNIBANCO HOLDING agreed on the acquisition of approximately 70% of the portfolio of R$ 38 billion in credit rights related to the recovery of portfolios held by BTG, for the amount of R$ 570.

Established in 2000 in Argentina and present in Brazil since 2006, Recovery is the market leader in the management of overdue receivables portfolio. Recovery’s activities consist in prospecting and assessing portfolios, structuring and managing operations, acting in all segments, from individual to corporate loans, with financial and non-financial institutions, and offering a competitive advantage to its clients.

After the compliance with the conditions precedent and approval by regulatory authorities, the transaction was closed on March 31, 2016.

The final allocation of the difference between the amount paid and the interest in net assets at fair value (Purchase Price Allocation - PPA) will be completed during 2016.

The transaction did not have significant accounting effects on the results of ITAÚ UNIBANCO HOLDING.

ConectCar Soluções de Mobilidade Eletrônica S.A.

On October 21, 2015, ITAÚ UNIBANCO HOLDING, through its subsidiary Redecard S.A. (Rede), entered into a share purchase and sale commitment with Odebrecht Transport S.A. for the acquisition of 50% of capital stock of ConectCar Soluções de Mobilidade Eletrônica S.A. (ConectCar) for the amount of R$ 170.

ConectCar is an institution engaged in own payment arrangements and a provider of intermediation services for automatic payment of tolls, fuels and parking lots, ranked as the second largest company in the sector, currently operating in 12 States and in the Federal District. It was organized in 2012 as the result of a partnership between Odebrecht Transport S.A. and Ipiranga Produtos de Petróleo S.A., a company controlled by Ultrapar Participações S.A., which currently holds the remaining 50% of ConectCar’s capital stock.

After compliance with the conditions precedent and approval of proper regulatory authorities, the operation was closed on January 29, 2016.

The final allocation of the difference between the amount paid and the interest in net assets at fair value (Purchase Price Allocation - PPA) will be completed during 2016.

The transaction will not have significant accounting effect on the results of ITAÚ UNIBANCO HOLDING.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 36

Itaú CorpBanca

On January 29, 2014, ITAÚ UNIBANCO HOLDING, through its subsidiary Banco Itaú Chile S.A. (BIC), entered into a Transaction Agreement with CorpBanca and its controlling stockholders (Corp Group), establishing the terms and conditions of the merger of operations of BIC and CorpBanca in Chile and in the other jurisdictions in which CorpBanca operates.

CorpBanca is a commercial bank headquartered in Chile, which also operates in Colombia and Panama. Focused on individuals and large and middle-market companies, it offers global banking products. In 2015, an accordance with the Chilean Superintendence of Banks, it was one of the largest private banks in Chile, in terms of overall size of loan portfolio, with a market share of 7.1%.

This agreement represents an important step in ITAÚ UNIBANCO HOLDING’s internationalization process and in its aim to become a leading bank in Latin America. As a result of the merger, ITAÚ UNIBANCO HOLDING rose from the seventh (7th) to the fourth (4th) place in the ranking of the largest banks in Chile.

The merger was approved by the stockholders of CorpBanca and BIC and by all proper regulatory authorities in Chile, Brazil, Colombia and Panama. As set forth in the amendment to the Transaction Agreement, entered into on June 2, 2015, the parties closed the operation on April 1, 2016, when they had full conditions for the corporate reorganization process.

The operation was consummated by means of:

i. Increase in BIC’ capital in the amount of US$ 2,309 million concluded on March 22, 2016;

ii. Merger of BIC into CorpBanca, with the cancellation of BIC’s shares and issue of new shares by CorpBanca, at the rate of 80,240 shares of CorpBanca for one share of BIC, so that interests resulting from the merger, named Itaú CorpBanca, are 33.58% for ITAÚ UNIBANCO HOLDING and 33.13% for Corp Group.

iii. The following corporate structure resulted from the transaction:

Ownership interest
ITAÚ UNIBANCO HOLDING	33.58	%
Corp Group	33.13	%
Other non-controlling stockholders	33.29	%

Itaú CorpBanca will be controlled from April 1, 2016 by ITAÚ UNIBANCO HOLDING, which entered into a Shareholders’ Agreement with Corp Group upon the closing of the operation. This Shareholders’ Agreement entitled ITAÚ UNIBANCO HOLDING to appoint members for the Board of Directors of Itaú CorpBanca.

The amounts of Itaú CorpBanca’s assets, liabilities, income and expenses were not included in the Consolidated Financial Statements of ITAÚ UNIBANCO HOLDING for the period ended March 31, 2016. The management of Itaú Unibanco Holding is assessing possible impacts in the allocation of goodwill of said operation and will disclose further details in the next financial statements. Said operation will not have significant accounting effect on the results of ITAÚ UNIBANCO HOLDING.

MasterCard Brasil Soluções de Pagamento Ltda.

On March 13, 2015, o ITAÚ UNIBANCO HOLDING, through its subsidiary Itaú Unibanco S.A., entered into an agreement with MasterCard Brasil Soluções de Pagamento Ltda. to create an alliance in the payment solutions market in Brazil.

The purposes of the operation are (a) to focus on the expansion of its issue and acquisition business, particularly related to the new payment solutions network, (b) to have access to new payment solutions technologies, (c) to obtain significant scale and efficiency gains, and (d) to benefit from MasterCard’s expertise in the management of payment solution brands.

The effectiveness of the alliance is subject to the satisfaction of certain conditions precedent and approval by proper regulatory authorities.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 37

MaxiPago

On September 3, 2014, ITAÚ UNIBANCO HOLDING, through its subsidiary Redecard S.A. (Rede) entered into a share purchase agreement with the controlling shareholders of MaxiPago Serviços de Internet S.A., a gateway company – network interconnection for mobile electronic payments.

On the same date, subscription and payment of 13,336 shares (33.33%) and acquisition of 24,174 shares (41.67%) were carried out, so that Rede became the holder of 43,510 common shares, representing 75% of total voting capital of MaxiPago.

After the compliance with the conditions precedent and approval by proper regulatory authorities, the operation was closed on January 8, 2015.

The difference between the amount paid and net assets at fair value resulted in the recognition of goodwill due to expected future profitability.

Purchase price	15
(-) Fair value of identified assets and liabilities	(4	)
(=) Goodwill	11

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 38

Note 4 - Cash and cash equivalents

For purposes of consolidated statements of cash flows, Cash and cash equivalents in this note comprises the following items:

	03/31/2016		12/31/2015
Cash and deposits on demand		18,384		18,544
Interbank deposits		21,921		22,022
Securities purchased under agreements to resell		76,682		51,083
Total		116,987		91,649

Amounts related to interbank deposits and securities purchased under agreements to resell not included in cash equivalents are R$ 7,268 (R$ 8,503 at 12/31/2015) and R$ 132,712 (R$ 203,321 at 12/31/2015), respectively.

Note 5 - Central Bank compulsory deposits

	03/31/2016		12/31/2015
Non-interest bearing deposits		7,154		3,790
Interest-bearing deposits		59,847		62,766
Total		67,001		66,556

Note 6 - Interbank deposits and securities purchased under agreements to resell

	03/31/2016						12/31/2015
	Current		Non- current		Total		Current		Non- current		Total
Interbank deposits		28,430		759		29,189		29,769		756		30,525
Securities purchased under agreements to resell (*)		209,130		264		209,394		254,404		-		254,404
Total		237,560		1,023		238,583		284,173		756		284,929

(*) The amounts of R$ 10,497 (R$ 9,461 at 12/31/2015) are pledged in guarantee of operations on BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros and Central Bank and the amounts of R$ 121,506 (R$ 152,551 at 12/31/2015) are pledged in guarantee of repurchase agreement transactions, in conformity with the policies described in Note 2.4f.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 39

Note 7 – Financial assets held for trading and designated at fair value through profit or loss

a) Financial assets held for trading recognized at their fair value are presented in the following table:

	03/31/2016							12/31/2015
			Accumulated gain /							Accumulated gain /
			(loss) reflected in							(loss) reflected in
	Cost		income			Fair value		Cost		income			Fair value
Investment funds		1,332		(35	)		1,297		1,110		(59	)		1,051
Brazilian government securities (1a)		122,104		231			122,335		117,848		(795	)		117,053
Brazilian external debt bonds (1b)		860		38			898		4,672		(241	)		4,431
Government securities – abroad (1c)		1,014		6			1,020		1,140		9			1,149
Argentina		582		6			588		682		14			696
Chile		237		-			237		36		-			36
Colombia		11		-			11		77		(5	)		72
United States		86		-			86		132		-			132
Mexico		-		-			-		3		-			3
Paraguay		57		-			57		68		-			68
Uruguay		41		-			41		40		-			40
Other		-		-			-		102		-			102
Corporate securities (1d)		44,225		130			44,355		40,659		(32	)		40,627
Shares		2,324		1			2,325		2,231		(70	)		2,161
Bank deposit certificates		2,433		-			2,433		2,583		-			2,583
Debentures		4,038		85			4,123		4,460		62			4,522
Eurobonds and other		4,041		44			4,085		1,015		(24	)		991
Financial credit bills		31,267		-			31,267		30,367		-			30,367
Other		122		-			122		3		-			3
Total (2)		169,535		370			169,905		165,429		(1,118	)		164,311

(1) Assets held for trading pledged as collateral of funding transactions of financial institutions and clients were: a) R$ 12,897 (R$ 7,384 at 12/31/2015), b) R$ 617 (R$ 3,541 at 12/31/2015), c) (R$ 68 at 12/31/2015) and d) R$ 210 (R$ 15 at 12/31/2015), totaling R$ 13,724 (R$ 11,008 at 12/31/2015).

(2) In the period, there was no reclassification of held for trading financial assets to other categories of financial assets.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 40

The cost and fair value of financial assets held for trading by maturity are as follows:

	03/31/2016				12/31/2015
	Cost		Fair value		Cost		Fair value
Current		41,490		41,466		36,045		35,934
Non-stated maturity		3,656		3,621		3,341		3,212
Up to one year		37,834		37,845		32,704		32,722
Non-current		128,045		128,439		129,384		128,377
From one to five years		71,810		71,937		57,923		57,700
From five to ten years		49,740		49,900		66,148		65,437
After ten years		6,495		6,602		5,313		5,240
Total		169,535		169,905		165,429		164,311

Financial assets held for trading include assets with a fair value of R$ 122,899 (R$ 117,128 at 12/31/2015) that belong to investment funds wholly owned by Itaú Vida e Previdência S.A. The return of those assets (positive or negative) is fully transferred to customers of our PGBL and VGBL private pension plans whose premiums (less fees charged by us) are used by our subsidiary to purchase quotas of those investment funds.

b) Financial assets designated at fair value through profit or loss are presented in the following table:

	03/31/2016
	Cost		Accumulated gain/(loss) reflected in income			Fair value
Brazilian external debt bonds		247		18			265
Government securities – abroad		138		(7	)		131
Total		385		11			396

	12/31/2015
	Cost		Accumulated gain/(loss) reflected in income			Fair value
Brazilian external debt bonds		493		13			506
Government securities – abroad		143		(7	)		136
Total		636		6			642

The cost and fair value by maturity of financial assets designated as fair value through profit or loss were as follows:

	03/31/2016				12/31/2015
	Cost		Fair value		Cost		Fair value
Current		205		221		-		-
Up to one year		205		221		-		-
Non-current		180		175		636		642
From one to five years		180		175		636		642

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 41

Note 8 – Derivatives

ITAÚ UNIBANCO HOLDING enters into derivative financial instruments with various counterparties to manage its overall exposures and to assist its customers in managing their own exposures.

Futures – Interest rate and foreign currency futures contracts are commitments to buy or sell a financial instrument at a future date, at a contracted price or yield and may be settled in cash or through delivery. The notional amount represents the face value of the underlying instrument. Commodity futures contracts or financial instruments are commitments to buy or sell commodities (mainly gold, coffee and orange juice), at a future date, at a contracted price, which are settled in cash. The notional amount represents the quantity of such commodities multiplied by the future price at the contract date. Daily cash settlements of price movements are made for all instruments.

Forwards – Interest forward contracts are agreements to exchange payments on a specified future date, based on a market change in interest rates from trade date to contract settlement date. Foreign exchange forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed price, at an agreed settlement date. Financial instrument forward contracts are commitments to buy or sell a financial instrument on a future date at a contracted price and are settled in cash.

Swaps – Interest rate and foreign exchange swap contracts are commitments to settle in cash at a future date or dates, based on differentials between specified financial indices (either two different interest rates in a single currency or two different rates each in a different currency), as applied to a notional principal amount. Swap contracts presented in Other in the table below correspond substantially to inflation rate swap contracts.

Options – Option contracts give the purchaser, for a fee, the right, but not the obligation, to buy or sell within a limited time a financial instrument including a flow of interest, foreign currencies, commodities, or financial instruments at a contracted price that may also be settled in cash, based on differentials between specific indices.

Credit Derivatives – Credit derivatives are financial instruments with value relating to the credit risk associated to the debt issued by a third party (the reference entity), which permits that one party (the purchaser of the hedge) transfers the risk to the counterparty (the seller of the hedge). The seller of the hedge should make payments as set forth in the contract when the reference entity undergoes a credit event, such as bankruptcy, default or debt restructuring. The seller of the hedge receives a premium for the hedge, but, on the other hand, assumes the risk that the underlying asset referenced in the contract undergoes a credit event, and the seller would have to make the payment to the purchaser of the hedge, which could be the notional amount of the credit derivative.

The total value of margins pledged in guarantee by ITAÚ UNIBANCO HOLDING was R$ 8,622 (R$ 7,757 at 12/31/2015) and was basically comprised of government securities.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 42

The following table shows the composition of derivatives by index:

	Off-balance sheet notional amount		Amortized cost			Gains / (losses)			Fair value
	03/31/2016		03/31/2016			03/31/2016			03/31/2016
Futures contracts		527,130		413			604			1,017
Purchase commitments		184,660		(628	)		634			6
Commodities		277		-			-			-
Indices		63,123		(307	)		(1	)		(308	)
Interbank market		82,915		(283	)		(1	)		(284	)
Foreign currency		27,220		(38	)		636			598
Securities		11,106		-			-			-
Other		19		-			-			-
Commitments to sell		342,470		1,041			(30	)		1,011
Commodities		289		1			-			1
Indices		77,168		292			-			292
Interbank market		150,346		499			1			500
Foreign currency		107,912		249			(31	)		218
Securities		6,737		-			-			-
Other		18		-			-			-
Swap contracts				(5,675	)		514			(5,161	)
Asset position		329,069		6,839			1,050			7,889
Commodities		5		-			-			-
Indices		131,661		886			200			1,086
Interbank market		60,535		1,715			159			1,874
Foreign currency		13,855		2,279			28			2,307
Floating rate		10,742		312			24			336
Fixed rate		112,247		1,646			639			2,285
Securities		13		-			-			-
Other		11		1			-			1
Liability position		334,744		(12,514	)		(536	)		(13,050	)
Commodities		16		-			-			-
Indices		105,580		(3,188	)		218			(2,970	)
Interbank market		39,888		(804	)		265			(539	)
Foreign currency		32,846		(3,072	)		(28	)		(3,100	)
Floating rate		10,702		(110	)		(673	)		(783	)
Fixed rate		145,567		(5,315	)		(322	)		(5,637	)
Securities		45		(25	)		4			(21	)
Other		100		-			-			-
Option contracts		417,098		(333	)		146			(187	)
Purchase commitments – long position		99,902		2,196			(792	)		1,404
Commodities		702		32			(9	)		23
Indices		28,207		163			116			279
Interbank market		369		2			(1	)		1
Foreign currency		64,106		1,864			(1,103	)		761
Fixed rate		5		1			-			1
Securities		6,423		127			195			322
Other		90		7			10			17
Commitments to sell – long position		108,224		1,654			1,892			3,546
Commodities		197		14			(3	)		11
Indices		48,210		114			(4	)		110
Interbank market		1,356		2			6			8
Foreign currency		50,508		1,235			1,336			2,571
Fixed rate		158		7			(1	)		6
Securities		7,751		282			557			839
Other		44		-			1			1
Purchase commitments – short position		82,689		(2,184	)		339			(1,845	)
Commodities		193		(6	)		(2	)		(8	)
Indices		18,983		(186	)		(139	)		(325	)
Interbank market		459		(2	)		1			(1	)
Foreign currency		57,938		(1,926	)		616			(1,310	)
Fixed rate		102		-			-			-
Securities		4,924		(57	)		(127	)		(184	)
Other		90		(7	)		(10	)		(17	)
Commitments to sell – short position		126,283		(1,999	)		(1,293	)		(3,292	)
Commodities		358		(23	)		(15	)		(38	)
Indices		67,298		(341	)		15			(326	)
Interbank market		549		(1	)		(1	)		(2	)
Foreign currency		51,244		(1,359	)		(790	)		(2,149	)
Fixed rate		20		(1	)		-			(1	)
Securities		6,770		(274	)		(501	)		(775	)
Other		44		-			(1	)		(1	)

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 43

	Off-balance sheet notional amount		Amortized cost			Gains / (losses)			Fair value
	03/31/2016		03/31/2016			03/31/2016			03/31/2016
Forward operations (onshore)		35,732		1,544			33			1,577
Purchases receivable		1,880		1,997			(5	)		1,992
Floating rate		636		639			(1	)		638
Fixed rate		1,236		1,350			(4	)		1,346
Securities		8		8			-			8
Purchases payable		-		(1,886	)		-			(1,886	)
Floating rate		-		(639	)		-			(639	)
Fixed rate		-		(1,247	)		-			(1,247	)
Sales receivable		33,852		3,334			33			3,367
Interbank market		30,488		-			28			28
Floating rate		769		786			-			786
Fixed rate		1,052		1,052			-			1,052
Securities		1,543		1,496			5			1,501
Sales deliverable		-		(1,901	)		5			(1,896	)
Floating rate		-		(772	)		2			(770	)
Fixed rate		-		(1,129	)		3			(1,126	)
Credit derivatives		11,601		43			(151	)		(108	)
Asset position		4,950		356			70			426
Foreign currency		3,670		356			33			389
Fixed rate		374		-			-			-
Securities		722		-			32			32
Other		184		-			5			5
Liability position		6,651		(313	)		(221	)		(534	)
Foreign currency		4,322		(309	)		(58	)		(367	)
Fixed rate		53		(5	)		-			(5	)
Securities		1,837		1			(143	)		(142	)
Other		439		-			(20	)		(20	)
Forwards operations (offshore)		176,076		1,228			(39	)		1,189
Asset position		92,575		4,170			(85	)		4,085
Commodities		444		43			-			43
Indices		119		10			-			10
Foreign currency		92,003		4,117			(85	)		4,032
Securities		9		-			-			-
Liability position		83,501		(2,942	)		46			(2,896	)
Commodities		40		(4	)		2			(2	)
Foreign currency		83,446		(2,938	)		44			(2,894	)
Securities		15		-			-			-
Check of swap		1,578		(314	)		92			(222	)
Asset position - Foreign currency		1,008		116			116			232
Liability position - Interbank market		570		(430	)		(24	)		(454	)
Other derivative financial instruments		10,866		128			581			709
Asset position		9,857		3,127			663			3,790
Indices		8		-			-			-
Foreign currency		5,855		3,061			441			3,502
Fixed rate		1,334		59			59			118
Securities		2,206		7			144			151
Other		454		-			19			19
Liability position		1,009		(2,999	)		(82	)		(3,081	)
Foreign currency		242		(2,998	)		(60	)		(3,058	)
Securities		598		(1	)		(18	)		(19	)
Other		169		-			(4	)		(4	)
		Asset		24,202			3,546			27,748
		Liability		(27,168	)		(1,766	)		(28,934	)
		Total		(2,966	)		1,780			(1,186	)

Derivative contracts mature as follows (in days):
Off-balance sheet – notional amount	0 - 30		31 - 180		181 - 365		Over 365		03/31/2016
Futures contracts		92,345		146,446		117,735		170,604		527,130
Swaps contracts - difference payable		11,146		45,230		44,721		221,133		322,230
Options		125,338		189,561		62,697		39,502		417,098
Forwards (onshore)		7,806		14,326		12,974		626		35,732
Credit derivatives		-		803		245		10,553		11,601
Forwards (offshore)		61,651		68,506		37,439		8,480		176,076
Check of swap		-		-		-		1,578		1,578
Other derivative financial instruments		40		1,421		2,001		7,404		10,866

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 44

The following table shows the composition of derivatives by index:

	Off-balance sheet notional amount		Amortized cost			Gains / (losses)			Fair value
	12/31/2015		12/31/2015			12/31/2015			12/31/2015
Futures contracts		589,451		(71	)		600			529
Purchase commitments		189,037		702			624			1,326
Commodities		316		-			-			-
Indices		60,485		702			(6	)		696
Interbank market		88,411		(40	)		1			(39	)
Foreign currency		34,228		40			629			669
Securities		5,508		-			-			-
Other		89		-			-			-
Commitments to sell		400,414		(773	)		(24	)		(797	)
Commodities		158		-			-			-
Indices		73,466		(754	)		8			(746	)
Interbank market		190,855		60			-			60
Foreign currency		129,357		(79	)		(32	)		(111	)
Securities		6,260		-			-			-
Other		318		-			-			-
Swap contracts				(8,848	)		1,664			(7,184	)
Asset position		327,834		4,764			4,383			9,147
Commodities		4		-			-			-
Indices		134,426		(18	)		1,050			1,032
Interbank market		60,888		426			818			1,244
Foreign currency		14,668		3,068			1,234			4,302
Floating rate		11,491		377			143			520
Fixed rate		106,316		911			1,138			2,049
Securities		25		-			-			-
Other		16		-			-			-
Liability position		336,682		(13,612	)		(2,719	)		(16,331	)
Commodities		15		-			-			-
Indices		100,826		(2,316	)		(311	)		(2,627	)
Interbank market		37,889		(233	)		(1,167	)		(1,400	)
Foreign currency		33,944		(6,084	)		(756	)		(6,840	)
Floating rate		11,195		(155	)		(560	)		(715	)
Fixed rate		152,593		(4,795	)		70			(4,725	)
Securities		64		(29	)		5			(24	)
Other		156		-			-			-
Option contracts		285,405		136			(336	)		(200	)
Purchase commitments – long position		61,880		2,288			1,661			3,949
Commodities		481		25			(11	)		14
Indices		5,505		66			(25	)		41
Interbank market		5,116		15			6			21
Foreign currency		44,802		2,073			1,474			3,547
Fixed rate		6		-			-			-
Securities		5,872		101			208			309
Other		98		8			9			17
Commitments to sell – long position		85,099		1,481			153			1,634
Commodities		159		9			12			21
Indices		27,824		133			16			149
Interbank market		12,347		16			(16	)		-
Foreign currency		36,526		1,024			(557	)		467
Fixed rate		179		8			(1	)		7
Securities		8,015		291			698			989
Other		49		-			1			1
Purchase commitments – short position		58,929		(2,020	)		(2,141	)		(4,161	)
Commodities		249		(6	)		-			(6	)
Indices		5,418		(66	)		21			(45	)
Interbank market		5,146		(21	)		(30	)		(51	)
Foreign currency		42,750		(1,864	)		(1,902	)		(3,766	)
Fixed rate		112		-			-			-
Securities		5,156		(55	)		(221	)		(276	)
Other		98		(8	)		(9	)		(17	)
Commitments to sell – short position		79,497		(1,613	)		(9	)		(1,622	)
Commodities		290		(22	)		(39	)		(61	)
Indices		30,277		(158	)		(23	)		(181	)
Interbank market		7,694		(10	)		10			-
Foreign currency		33,751		(1,147	)		740			(407	)
Fixed rate		22		(1	)		-			(1	)
Securities		7,414		(275	)		(696	)		(971	)
Other		49		-			(1	)		(1	)

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 45

	Off-balance sheet notional amount		Amortized cost			Gains / (losses)			Fair value
	12/31/2015		12/31/2015			12/31/2015			12/31/2015
Forwards operations (onshore)		40,227		2,253			80			2,333
Purchases receivable		516		636			-			636
Foreign currency		-		1			-			1
Floating rate		354		353			-			353
Fixed rate		154		273			-			273
Securities		8		9			-			9
Purchases payable		-		(508	)		-			(508	)
Floating rate		-		(353	)		-			(353	)
Fixed rate		-		(154	)		-			(154	)
Securities		-		(1	)		-			(1	)
Sales receivable		23,208		2,448			82			2,530
Interbank market		20,697		-			73			73
Floating rate		164		164			-			164
Fixed rate		153		157			-			157
Securities		2,194		2,127			9			2,136
Sales deliverable		16,503		(323	)		(2	)		(325	)
Interbank market		16,503		-			(3	)		(3	)
Foreign currency		-		(2	)		-			(2	)
Floating rate		-		(164	)		1			(163	)
Fixed rate		-		(157	)		-			(157	)
Credit derivatives		12,662		58			(319	)		(261	)
Asset position		4,605		353			261			614
Foreign currency		3,625		353			212			565
Securities		788		-			45			45
Other		192		-			4			4
Liability position		8,057		(295	)		(580	)		(875	)
Foreign currency		4,360		(290	)		(267	)		(557	)
Fixed rate		547		(6	)		(3	)		(9	)
Securities		2,763		1			(275	)		(274	)
Other		387		-			(35	)		(35	)
Forwards operations (offshore)		148,477		203			85			288
Asset position		71,227		3,285			145			3,430
Commodities		419		47			-			47
Indices		22		1			-			1
Foreign currency		70,786		3,237			145			3,382
Liability position		77,250		(3,082	)		(60	)		(3,142	)
Commodities		152		(13	)		2			(11	)
Indices		77		(3	)		-			(3	)
Foreign currency		77,020		(3,066	)		(62	)		(3,128	)
Securities		1		-			-			-
Check of swap		1,676		(330	)		140			(190	)
Asset position - Foreign currency		1,106		199			156			355
Liability position - Interbank market		570		(529	)		(16	)		(545	)
Other derivative financial instruments		16,651		117			252			369
Asset position		15,508		2,964			967			3,931
Foreign currency		10,468		2,883			588			3,471
Fixed rate		1,464		71			63			134
Securities		3,113		10			279			289
Other		463		-			37			37
Liability position		1,143		(2,847	)		(715	)		(3,562	)
Foreign currency		283		(2,847	)		(687	)		(3,534	)
Securities		743		-			(25	)		(25	)
Other		117		-			(3	)		(3	)
		Asset		18,347			8,408			26,755
		Liability		(24,829	)		(6,242	)		(31,071	)
		Total		(6,482	)		2,166			(4,316	)

Derivative contracts mature as follows (in days):
Off-balance sheet - notional amount	0 - 30		31 - 180		181 - 365		Over 365		12/31/2015
Futures contracts		152,087		138,545		74,365		224,454		589,451
Swaps contracts - difference payable		10,654		39,702		46,157		226,557		323,070
Options		93,587		123,391		40,860		27,567		285,405
Forwards (onshore)		6,591		22,349		10,118		1,169		40,227
Credit derivatives		-		1,436		428		10,798		12,662
Forwards (offshore)		43,651		70,688		23,365		10,773		148,477
		-		-		-		1,676		1,676
Other derivative financial instruments		1,550		3,254		502		11,345		16,651

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 46

Derivative financial instruments

See below the composition of the Derivative financial instruments portfolio (assets and liabilities) by type of instrument, stated fair value, and by maturity.

	03/31/2016
	Fair value		%		0-30 days		31-90 days		91-180 days			181-365 days		366-720 days		Over 720 days
Assets
Futures contracts - BM&FBOVESPA		1,017		3.7		841		10		(10	)		30		7		139
Swaps – difference receivable		7,889		28.4		111		242		479			1,806		1,415		3,836
BM&FBOVESPA		1,604		5.8		5		23		164			359		533		520
Companies		4,382		15.8		83		175		256			1,015		672		2,181
Financial institutions		1,677		6.0		22		38		25			375		151		1,066
Individuals		226		0.8		1		6		34			57		59		69
Option premiums		4,950		17.8		685		747		965			939		1,248		366
BM&FBOVESPA		1,948		7.0		298		334		445			407		456		8
Companies		901		3.2		63		67		81			121		359		210
Financial institutions		2,097		7.6		324		346		438			409		432		148
Individuals		4		0.0		-		-		1			2		1		-
Forwards (onshore)		5,359		19.3		4,011		869		461			17		1		-
BM&FBOVESPA		1,563		5.6		225		861		459			17		1		-
Companies		2,169		7.8		2,159		8		2			-		-		-
Financial institutions		1,627		5.9		1,627		-		-			-		-		-
Credit derivatives - financial Institutions		426		1.5		-		-		-			3		12		411
Forwards (offshore)		4,085		14.8		1,034		792		919			792		260		288
BM&FBOVESPA		169		0.6		76		42		33			18		-		-
Companies		1,747		6.3		340		401		345			360		140		161
Financial institutions		2,153		7.8		614		341		539			412		120		127
Individuals		16		0.1		4		8		2			2		-		-
Check of swap - Companies		232		0.8		-		-		-			-		232		-
Other		3,790		13.7		2		833		85			1,624		67		1,179
Companies		205		0.7		2		5		4			9		42		143
Financial institutions		3,585		13.0		-		828		81			1,615		25		1,036
Total (*)		27,748		100.0		6,684		3,493		2,899			5,211		3,242		6,219
% per maturity term						24.1		12.6		10.4			18.8		11.7		22.4

(*) Of the total asset portfolio of Derivative Financial Instruments, R$ 18,287 refers to current and R$ 9,461 to non-current.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 47

Derivative financial instruments

See below the composition of the Derivative Financial Instruments portfolio (assets and liabilities) by type of instrument, stated fair value and by maturity.

	12/31/2015
	Fair value		%		0-30 days		31-90 days			91-180 days			181-365 days			366-720 days		Over 720 days
Assets
Futures - BM&FBOVESPA		529		2.0		639		(155	)		(18	)		(49	)		76		36
Swaps – difference receivable		9,147		34.2		666		224			403			1,513			1,935		4,406
BM&FBOVESPA		662		2.5		17		13			25			104			126		377
Companies		5,127		19.1		627		29			46			1,037			838		2,550
Financial institutions		2,826		10.6		21		177			325			329			657		1,317
Individuals		532		2.0		1		5			7			43			314		162
Option premiums		5,583		20.8		2,413		676			609			715			692		478
BM&FBOVESPA		2,597		9.7		2,074		228			140			113			31		11
Companies		1,278		4.8		118		147			131			194			412		276
Financial institutions		1,697		6.3		221		300			337			399			249		191
Individuals		11		0.0		-		1			1			9			-		-
Forwards (onshore)		3,166		11.9		1,204		1,417			538			6			1		-
BM&FBOVESPA		2,218		8.3		368		1,313			530			6			1		-
Companies		530		2.0		418		104			8			-			-		-
Financial institutions		418		1.6		418		-			-			-			-		-
Credit derivatives - financial institutions		614		2.3		-		-			2			2			26		584
Forwards (offshore)		3,430		12.8		1,030		794			526			434			233		413
BM&FBOVESPA		47		0.2		3		19			7			18			-		-
Companies		1,453		5.4		177		327			288			294			135		232
Financial institutions		1,927		7.2		850		447			230			121			98		181
Individuals		3		0.0		-		1			1			1			-		-
Check of swap - Companies		355		1.3		-		-			-			-			355		-
Other		3,931		14.7		88		1,269			867			32			112		1,563
Companies		415		1.6		3		13			14			14			74		297
Financial institutions		3,516		13.1		85		1,256			853			18			38		1,266
Total (*)		26,755		100.0		6,040		4,225			2,927			2,653			3,430		7,480
% per maturity term						22.6		15.8			10.9			9.9			12.8		28.0

(*) Of the total asset portfolio of Derivative Financial Instruments, R$ 15.845 refers to current and R$ 10.910 to non-current.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 48

	03/31/2016
	Fair value			%		0 - 30 days			31 - 90 days			91 - 180 days			181 - 365 days			366 - 720 days			Over 720 days
Liabilities
Swaps – Difference payable		(13,050	)		45.1		(161	)		(143	)		(624	)		(978	)		(1,825	)		(9,319	)
BM&FBOVESPA		(1,515	)		5.2		(30	)		(8	)		(221	)		(281	)		(224	)		(751	)
Companies		(3,951	)		13.7		(101	)		(81	)		(254	)		(590	)		(671	)		(2,254	)
Financial institutions		(2,292	)		7.9		(29	)		(48	)		(55	)		(47	)		(441	)		(1,672	)
Individuals		(5,292	)		18.3		(1	)		(6	)		(94	)		(60	)		(489	)		(4,642	)
Option premiums		(5,137	)		17.7		(601	)		(910	)		(783	)		(1,344	)		(1,075	)		(424	)
BM&FBOVESPA		(1,826	)		6.3		(320	)		(465	)		(263	)		(601	)		(170	)		(7	)
Companies		(705	)		2.4		(16	)		(56	)		(72	)		(142	)		(221	)		(198	)
Financial institutions		(2,593	)		9.0		(265	)		(389	)		(445	)		(595	)		(682	)		(217	)
Individuals		(13	)		0.0		-			-			(3	)		(6	)		(2	)		(2	)
Forwards (onshore)		(3,782	)		13.1		(3,782	)		-			-			-			-			-
BM&FBOVESPA		(12	)		0.0		(12	)		-			-			-			-			-
Companies		(2,142	)		7.5		(2,142	)		-			-			-			-			-
Financial institutions		(1,628	)		5.6		(1,628	)		-			-			-			-			-
Credit derivatives - Financial institutions		(534	)		1.8		-			(2	)		(1	)		(2	)		(46	)		(483	)
Forwards (offshore)		(2,896	)		10.0		(1,072	)		(566	)		(482	)		(380	)		(225	)		(171	)
BM&FBOVESPA		(193	)		0.7		(79	)		(65	)		(36	)		(13	)		-			-
Companies		(896	)		3.1		(225	)		(176	)		(221	)		(143	)		(87	)		(44	)
Financial institutions		(1,805	)		6.2		(768	)		(324	)		(224	)		(224	)		(138	)		(127	)
Individuals		(2	)		0.0		-			(1	)		(1	)		-			-			-
Check of swap - Companies		(454	)		1.6		-			-			-			-			(282	)		(172	)
Other		(3,081	)		10.7		(2	)		(795	)		(82	)		(1,614	)		(6	)		(582	)
Companies		(115	)		0.4		(2	)		(1	)		(1	)		(4	)		(6	)		(101	)
Financial institutions		(2,966	)		10.3		-			(794	)		(81	)		(1,610	)		-			(481	)
Total (*)		(28,934	)		100.0		(5,618	)		(2,416	)		(1,972	)		(4,318	)		(3,459	)		(11,151	)
% per maturity term							19.4			8.4			6.8			14.9			12.0			38.5

(*) Of the total liability portfolio of Derivative Financial Instruments, R$ (14,324) refers to current and R$ (14,610) to non-current.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 49

	12/31/2015
	Fair value			%		0 - 30 days			31 - 90 days			91 - 180 days			181 - 365 days			366 - 720 days			Over 720 days
Liabilities
Swaps – difference payable		(16,331	)		52.6		(783	)		(481	)		(989	)		(1,898	)		(2,618	)		(9,562	)
BM&FBOVESPA		(1,107	)		3.6		(9	)		(10	)		(35	)		(145	)		(340	)		(568	)
Companies		(5,912	)		19.0		(703	)		(422	)		(279	)		(953	)		(1,339	)		(2,216	)
Financial institutions		(3,530	)		11.4		(60	)		(21	)		(662	)		(644	)		(284	)		(1,859	)
Individuals		(5,782	)		18.6		(11	)		(28	)		(13	)		(156	)		(655	)		(4,919	)
Option premiums		(5,783	)		18.6		(1,460	)		(1,285	)		(895	)		(845	)		(805	)		(493	)
BM&FBOVESPA		(2,365	)		7.6		(1,112	)		(565	)		(510	)		(130	)		(40	)		(8	)
Companies		(661	)		2.1		(71	)		(45	)		(63	)		(150	)		(144	)		(188	)
Financial institutions		(2,748	)		8.8		(277	)		(674	)		(321	)		(560	)		(620	)		(296	)
Individuals		(9	)		0.1		-			(1	)		(1	)		(5	)		(1	)		(1	)
Forwards (onshore)		(833	)		2.6		(828	)		(4	)		(1	)		-			-			-
BM&FBOVESPA		(5	)		0.0		-			(4	)		(1	)		-			-			-
Companies		(411	)		1.3		(411	)		-			-			-			-			-
Financial institutions		(417	)		1.3		(417	)		-			-			-			-			-
Credit derivatives - Financial institutions		(875	)		2.8		-			(9	)		(9	)		(5	)		(105	)		(747	)
Forwards (offshore)		(3,142	)		10.1		(692	)		(727	)		(785	)		(581	)		(233	)		(124	)
BM&FBOVESPA		(41	)		0.1		(8	)		(10	)		(10	)		(13	)		-			-
Companies		(1,948	)		6.3		(260	)		(478	)		(565	)		(356	)		(179	)		(110	)
Financial institutions		(1,151	)		3.7		(424	)		(238	)		(210	)		(211	)		(54	)		(14	)
Individuals		(2	)		0.0		-			(1	)		-			(1	)		-			-
Check of swap - Companies		(545	)		1.8		-			-			-			-			(335	)		(210	)
Other		(3,562	)		11.5		(87	)		(1,267	)		(857	)		(19	)		(8	)		(1,324	)
Companies		(817	)		2.6		(1	)		(3	)		(6	)		(4	)		(8	)		(795	)
Financial institutions		(2,745	)		8.9		(86	)		(1,264	)		(851	)		(15	)		-			(529	)
Total (*)		(31,071	)		100.0		(3,850	)		(3,773	)		(3,536	)		(3,348	)		(4,104	)		(12,460	)
% per maturity term							12.4			12.1			11.4			10.8			13.2			40.1

(*) Of the total liability portfolio of Derivative Financial Instruments, R$ (14,507) refers to current and R$ (16,564) to non-current.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 50

a) Information on credit derivatives

ITAÚ UNIBANCO HOLDING buys and sells credit protection mainly related to securities of Brazilian listed companies in order to meet the needs of its customers. When ITAÚ UNIBANCO HOLDING sells contracts for credit protection, the exposure for a given reference entity may be partially or totally offset by a credit protection purchase contract of another counterparty for the same reference entity or similar entity. The credit derivatives for which ITAÚ UNIBANCO HOLDING is protection seller are credit default swaps, total return swaps and credit-linked notes.

Credit Default Swaps – CDS

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

Total Return Swap – TRS

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

The table below presents the portfolio of credit derivatives in which ITAÚ UNIBANCO HOLDING sells protection to third parties, by maturity, and the maximum potential of future payments, gross of any guarantees, as well as its classification by instrument, risk and reference entity.

	03/31/2016
	Maximum potential of future payments, gross		Before 1 year		From 1 to 3 years		From 3 to 5 years		Over 5 years
By instrument
CDS		7,717		971		3,159		3,231		356
Total by instrument		7,717		971		3,159		3,231		356
By risk rating
Investment grade		7,717		971		3,159		3,231		356
Total by risk		7,717		971		3,159		3,231		356
By reference entity
Private entities		7,717		971		3,159		3,231		356
Total by entity		7,717		971		3,159		3,231		356

	12/31/2015
	Maximum potential of future payments, gross		Before 1 year		From 1 to 3 years		From 3 to 5 years		Over 5 years
By instrument
CDS		8,799		1,781		3,301		3,717		-
Total by instrument		8,799		1,781		3,301		3,717		-
By risk rating
Investment grade		8,799		1,781		3,301		3,717		-
Total by risk		8,799		1,781		3,301		3,717		-
By reference entity
Private entities		8,799		1,781		3,301		3,717		-
Total by entity		8,799		1,781		3,301		3,717		-

ITAÚ UNIBANCO HOLDING assesses the risk of a credit derivative based on the credit ratings attributed to the reference entity by independent credit rating agencies. Investment grade are those entities for which credit risk is rated as Baa3 or higher, as rated by Moody's, and BBB- or higher, according to the ratings of Standard & Poor’s and Fitch Ratings. The maximum potential loss that may be incurred with the credit derivative is based on the notional amount of the derivative. ITAÚ UNIBANCO HOLDING believes, based on its historical experience, that the amount of the maximum potential loss does not represent the actual level of loss. This is so because, should there be an event of loss, the amount of maximum potential loss should be reduced from the notional amount by the recoverable amount.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 51

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

The following table presents the notional amount of purchased credit derivatives whose underlying amounts are identical to those for which ITAÚ UNIBANCO HOLDING operates as seller of the credit protection.

	03/31/2016
	Notional amount of credit protection sold			Notional amount of credit protection purchased with identical underlying amount		Net position
CDS		(7,717	)		3,884		(3,833	)
Total		(7,717	)		3,884		(3,833	)

	12/31/2015
	Notional amount of credit protection sold			Notional amount of credit protection purchased with identical underlying amount		Net position
CDS		(8,799	)		3,863		(4,936	)
Total		(8,799	)		3,863		(4,936	)

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 52

b) Financial instruments subject to offsetting, enforceable master netting arrangements and similar agreements

The following tables set forth the financial assets and liabilities that are subject to offsetting, enforceable master netting arrangements, as well as how these financial assets UNIBANCO HOLDING's financial statements. These tables also reflect the amounts of collateral pledged or received in relation to financial assets and liabilities subject to presented on a net basis in accordance with IAS 32.

Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements:

	03/31/2016
	Gross amount of				Net amount of financial assets		Related amounts not offset in the statement of financial
	recognized financial		Gross amount offset in the		presented in the statement of		position (2)
	assets (1)		statement of financial position		financial position		Financial instruments (3)			Cash collateral received			Net amount
Securities purchased under agreements to resell		209,394		-		209,394		(455	)		-			208,939
Derivatives		27,748		-		27,748		(8,740	)		(237	)		18,771

	12/31/2015
	Gross amount of				Net amount of financial assets		Related amounts not offset in the statement of financial
	recognized financial		Gross amount offset in the		presented in the statement of		position (2)
	assets (1)		statement of financial position		financial position		Financial instruments (3)			Cash collateral received		Net amount
Securities purchased under agreements to resell		254,404		-		254,404		(2,569	)		-		251,835
Derivatives		26,755		-		26,755		(8,150	)		-		18,605

Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements:

	03/31/2016
	Gross amount of				Net amount of financial liabilities		Related amounts not offset in the statement of financial
	recognized financial		Gross amount offset in the		presented in the statement of		position (2)
	liabilities (1)		statement of financial position		financial position		Financial instruments (3)			Cash collateral pledged		Net amount
Securities sold under repurchase agreements		305,940		-		305,940		(22,913	)		-		283,027
Derivatives		28,934		-		28,934		(8,740	)		-		20,194

	12/31/2015
	Gross amount of				Net amount of financial liabilities		Related amounts not offset in the statement of financial
	recognized financial		Gross amount offset in the		presented in the statement of		position (2)
	liabilities (1)		statement of financial position		financial position		Financial instruments (3)			Cash collateral pledged			Net amount
Securities sold under repurchase agreements		336,643		-		336,643		(22,158	)		-			314,485
Derivatives		31,071		-		31,071		(8,150	)		(24	)		22,897

(1) Includes amounts of master offset agreements and other such agreements, both enforceable and unenforceable.

(2) Limited to amounts subject to enforceable master offset agreements and other such agreements.

(3) Includes amounts subject to enforceable master offset agreements and other such agreements, and guarantees in financial instruments.

Financial assets and financial liabilities are offset in the balance sheet only when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

Derivatives and repurchase agreements not set off in the balance sheet relate to transactions in which there are enforceable master netting agreements or similar agreements, but the offset criteria have not been met in accordance with paragraph 42 of IAS 32 mainly because ITAÚ UNIBANCO HOLDING has no intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 53

Note 9 – Hedge accounting

There are three types of hedge relations: Fair value hedge, Cash flow hedge, and Hedge of net investment in foreign operations.

Cash flow hedge

To hedge the variation of future cash flows of interest payment and receipts and exposure to futures interest rate, ITAÚ UNIBANCO HOLDING uses futures contracts traded at BM&FBOVESPA and Chicago Stock Exchange, related to certain fixed assets and liabilities, denominated in Brazilian Reais and US Dollars, futures Euro-Dollar and interest rate swaps, related to redeemable preferred shares, denominated in US Dollars, issued by one of our subsidiaries, DDI Futures contracts, traded on BM&FBOVESPA, related to highly probable forecast transactions denominated in US Dollars and NDF (Non Deliverable Forward) contracts traded in the over-the-counter market, related to highly probable forecast transactions not accounted for.

Under a DI Futures contract, a net payment (receipt) is made for the difference between an amount multiplied by the CDI rate and an amount computed and multiplied by a fixed rate. Under an interest rate swap and futures Euro-Dollar, a net payment (receipt) is made for the difference between an amount computed multiplied by the LIBOR rate and the an amount computed and multiplied by a fixed rate. In DDI Future contracts, NDF and Forwards, the gain (loss) on exchange variation is computed as the difference between two periods of market quotation between the US Dollar and the contracted currency.

The cash flow hedge strategies of ITAÚ UNIBANCO HOLDING consist of a hedge of exposure to variations in cash flows, payment of interest and exposure to interest rate, which are attributable to changes in interest rates related to assets and liabilities recognized and changes in interest rates of unrecognized assets and liabilities.

ITAÚ UNIBANCO HOLDING has applied cash flow hedge strategies as follows:

· Hedge of time deposits and repurchase agreements: hedge of the variability in cash flows of interest payments resulting from changes in the CDI interest rate.

· Hedge of redeemable preferred shares: hedge of the variability in cash flows of interest payments resulting from changes in the LIBOR interest rate.

· Hedge of subordinated certificates of deposit (CDB): hedge of the variability in the cash flows of interest payments resulting from changes in the CDI interest rate.

· Hedge of highly probable forecast transactions: Protecting the risk associated to variation in the amount of commitments, when measured in Brazilian Reais (parent company’s functional currency) arising from variations in foreign exchange rates.

· Hedge of Syndicated Loan: hedge the variability in cash flow of interest payments resulting from changes in the LIBOR interest rate.

· Hedge of asset transactions: to hedge the variations in cash flows of interest receipts resulting from changes in the CDI rate.

To evaluate the effectiveness and to measure the ineffectiveness of such strategies, ITAÚ UNIBANCO HOLDING uses the hypothetical derivative method. The hypothetical derivative method is based on a comparison of the change in the fair value of a hypothetical derivative with terms identical to the critical terms of the variable-rate liability, and this change in the fair value of a hypothetical derivative is considered a proxy of the present value of the cumulative change in the future cash flow expected for the hedged liability.

All hedge relationships were designated between 2008 and 2015. Periods in which expected cash flows should be paid and affect the income statement are as follows:

· Hedge of time deposits and agreements to resell: interest paid/received daily.

· Hedge of redeemable preferred shares: interest paid/received every half year.

· Hedge of highly probable forecast transactions: foreign exchange amount paid / received on future dates.

· Hedge of Syndicated Loan: interest paid/received daily.

· Hedge of asset transactions: interest paid/received monthly.

Hedge of net investment in foreign operations

ITAÚ UNIBANCO HOLDING strategies of net investments in foreign operations consist of a hedge of the exposure in foreign currency arising from the functional currency of the foreign operation, with respect to the functional currency of the head office.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 54

To hedge the changes of future cash flows of exchange variation of net investments in foreign operations, ITAÚ UNIBANCO HOLDING uses DDI Futures contracts traded at BM&FBOVESPA, Financial Assets and Forward contracts or NDF contracts entered into by our subsidiaries abroad.

In DDI Future contracts, the gain (loss) on exchange variation is computed as the difference between two periods of market quotation between the US Dollar and Brazilian Real. In the Forward or NDF contracts and Financial Assets, the gain (loss) on exchange variation is computed as the difference between two periods of market quotation between the functional currency and the US Dollar.

ITAÚ UNIBANCO HOLDING applies the hedge of net investment in foreign operations as follows:

· To hedge the risk of variation in the investment amount, when measured in Brazilian Reais (the head office’s functional currency), arising from changes in exchange rates between the functional currency of the investment abroad and the Brazilian Real.

To evaluate the effectiveness and to measure the ineffectiveness of such strategies, ITAÚ UNIBANCO HOLDING uses the Dollar Offset Method. The Dollar Offset Method is based on a comparison of the change in fair value (cash flow) of the hedge instrument, attributable to changes in exchange rate and gain (loss) arising from the variation in exchange rates, on the amount of investment abroad designated as a hedged item.

Hedge relationships were designated in 2011 and 2012 and the hedge instruments will mature on the sale of investments abroad, which will be in the period when the cash flows of exchange variation are expected to occur and affect the statement of income.

Fair value hedge

The fair value hedge strategy of ITAÚ UNIBANCO HOLDING consists in hedging the exposure to variation in fair value, in the receipt and payment of interest related to recognized assets and liabilities.

To hedge the market risk variation in the receipt and payment of interest, ITAÚ UNIBANCO HOLDING uses interest rate swap contracts related to prefixed assets and liabilities expressed in UF (Chilean Unit of Accounts - CLF), and Euros and US Dollars, issued by subsidiaries in Chile and London, respectively.

Under an interest rate swap contract, net receipt (payment) is made for the difference between the amount computed and multiplied by variable rate and an amount computed and multiplied by a fixed rate.

ITAÚ UNIBANCO HOLDING has applied fair value hedge as follows:

· To protect the risk of variation in the fair value of receipt of interest resulting from variations in the fair value of variable rates involved.

· To hedge the variations in cash flows of interest receipts resulting from changes in the CDI rate.

To evaluate the effectiveness and to measure the ineffectiveness of such strategy, ITAÚ UNIBANCO HOLDING uses the percentage approach and dollar offset method:

· The percentage approach is based on the calculation of change in the fair value of the reviewed estimate for the hedged position (hedge item) attributable to the protected risk versus the change in the fair value of the hedged derivative instrument.

· The dollar offset method is calculated based on the difference between the variation of the fair value of the hedging instrument and the variation in the fair value of the hedged item attributed to changes in the interest rate.

Hedge relationships were designated between 2012 and 2014, and maturities of related swaps will occur between 2016 and 2030. Receipts (payments) of interest flows are expected to occur on a monthly basis, and they will affect the statement of income.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 55

Following we present gains (or losses) of the effective and ineffective portions of the strategies of cash flow hedge, hedge of net investment in foreign operations and fair value hedge.

a) Cash flow hedge

	03/31/2016					12/31/2015
	Accumulated					Accumulated
Hedge instruments	effective portion			Ineffective portion		effective portion		Ineffective portion
Interest rate futures		5			16		2,947		80
NDF		(47	)		-		16		-
Total		(42	)		16		2,963		80

The effective portion is recognized in the stockholders' equity, under other comprehensive income and the ineffective portion is recognized in the statement of income under net gain (loss) on investment securities and derivatives.

To hedge future cash flows of highly probable forecast transactions, arising from futures contracts in foreign currency, against the exposure to future interest rate, ITAÚ UNIBANCO HOLDING negotiated DDI Futures contracts on BM&FBOVESPA and NDF (Non Deliverable Forward) contracts traded in the over-the-counter market. During the second quarter of 2015, part of the flow of these agreements was realized, and , accordingly, Asset Valuation Adjustment was reclassified and included in the deemed cost of assets related to Hedge of Highly Probable Forecast Transaction.

At 03/31/2016, the gain (loss) on cash flow hedge expected to be reclassified from Comprehensive Income to Income in the following 12 months is R$ 320 (R$ (211) at 03/31/2015).

b) Hedge of a net investment in foreign operations

	03/31/2016					12/31/2015
	Accumulated					Accumulated
Hedge instrument	effective portion			Ineffective portion		effective portion			Ineffective portion
DDI futures		(9,387	)		51		(11,728	)		(6	)
Forward		606			46		669			44
NDF		2,315			25		2,801			76
Financial assets		38			-		46			-
Total		(6,428	)		122		(8,212	)		114

The effective portion is recognized in the stockholders' equity, under other comprehensive income and the ineffective portion is recognized in the statement of income under net gain (loss) on investment securities and derivatives.

DDI Futures is a futures contract in which participants may trade a clean coupon for any period between the first maturity of the futures contract of foreign currency coupon (DDI) and a later maturity.

NDF (Non Deliverable Forward), or Forward Contract of Currency without Physical Delivery is a derivative traded on over-the-counter market, which has the foreign exchange rate of a given currency as its subject.

c) Fair value hedge

	03/31/2016					12/31/2015
	Accumulated					Accumulated
Hedge instrument used	effective portion			Ineffective portion		effective portion			Ineffective portion
Interest rate swap		(96	)		3		(54	)		3
Total		(96	)		3		(54	)		3

The effective and ineffective portion are recognized in the statement of income under net gain (loss) on investment securities and derivatives.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 56

The tables below present, for each strategy, the notional amount and the fair value of hedge instruments and the carrying amount of the hedged item:

	03/31/2016							12/31/2015
	Hedge instruments					Hedged item		Hedge instruments					Hedged item
	Notional							Notional
Strategies	amount		Fair value			Carrying value		amount		Fair value			Carrying value
Hedge of deposits and repurchase agreements		78,457		345			78,457		77,905		43			77,922
Hedge of syndicated loan		7,474		(107	)		7,474		8,200		(90	)		8,200
Hedge of highly probable forecast transactions		899		(47	)		899		1,125		16			1,125
Hedge of net investment in foreign operations (*)		19,533		148			11,526		21,927		(427	)		12,815
Hedge of fixed rate loan operations		4,115		100			4,115		4,346		59			4,346
Hedge of structured funding		-		-			-		781		-			781
Hedge of assets transactions		7,940		(44	)		8,660		7,405		(263	)		7,876
Total		118,418		395			111,131		121,689		(662	)		113,065

(*) Hedge instruments include the overhedge rate of 44.65% regarding taxes.

The table below shows the breakdown by maturity of the hedging strategies:

	03/31/2016
Strategies	0-1 year		1-2 years		2-3 years		3-4 years		4-5 years		5-10 years		Over 10 years		Total
Hedge of deposits and repurchase agreements		-		29,829		26,904		11,375		3,981		6,368		-		78,457
Hedge of syndicated loan		6,050		1,424		-		-		-		-		-		7,474
Hedge of highly probable forecast transactions		899		-		-		-		-		-		-		899
Hedge of assets transactions		4,628		2,778		-		-		534		-		-		7,940
Hedge of fixed rate loan operations		324		679		-		858		37		436		1,781		4,115
Hedge of net investment in foreign operations (*)		19,533		-		-		-		-		-		-		19,533
Total		31,434		34,710		26,904		12,233		4,552		6,804		1,781		118,418

(*) Classified as current, since instruments are frequently renewed.

	12/31/2015
Strategies	0-1 year		1-2 years		2-3 years		3-4 years		4-5 years		5-10 years		Over 10 years		Total
Hedge of deposits and repurchase agreements		13,324		28,185		25,779		6,460		1,402		2,755		-		77,905
Hedge of syndicated loan		-		8,200		-		-		-		-		-		8,200
Hedge of highly probable forecast transactions		1,125		-		-		-		-		-		-		1,125
Hedge of assets transactions		-		4,627		2,778		-		-		-		-		7,405
Hedge of fixed rate loan operations		339		276		474		898		88		447		1,824		4,346
Hedge of structured funding		781		-		-		-		-		-		-		781
Hedge of net investment in foreign operations (*)		21,927		-		-		-		-		-		-		21,927
Total		37,496		41,288		29,031		7,358		1,490		3,202		1,824		121,689

(*) Classified as current, since instruments are frequently renewed.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 57

Note 10 – Available-for-sale financial assets

The fair value and corresponding cost of available-for-sale financial assets are as follows:

	03/31/2016							12/31/2015
			Accumulated gain /							Accumulated gain /
			(loss) reflected in other							(loss) reflected in other
	Cost		comprehensive income			Fair value		Cost		comprehensive income			Fair value
Investment funds		495		-			495		218		-			218
Brazilian external debt bonds (1b)		14,199		(790	)		13,409		19,843		(2,531	)		17,312
Brazilian government securities (1a)		13,256		(278	)		12,978		12,702		(906	)		11,796
Government securities – abroad (1c)		9,876		(31	)		9,845		9,942		(59	)		9,883
Chile		1,528		-			1,528		1,409		(2	)		1,407
Korea		2,172		-			2,172		1,626		-			1,626
Denmark		2,548		-			2,548		2,548		-			2,548
Spain		753		-			753		1,060		-			1,060
United States		1,789		6			1,795		2,028		(6	)		2,022
Netherlands		111		-			111		122		-			122
Paraguay		756		(33	)		723		955		(43	)		912
Uruguay		210		(3	)		207		185		(7	)		178
Other		9		(1	)		8		9		(1	)		8
Corporate securities (1d)		49,914		(962	)		48,952		47,380		(544	)		46,836
Shares		951		282			1,233		706		222			928
Rural product note		1,286		(128	)		1,158		1,176		(46	)		1,130
Bank deposit certificates		771		-			771		1,576		(3	)		1,573
Securitized real estate loans		2,235		(145	)		2,090		2,244		(207	)		2,037
Debentures		23,082		(915	)		22,167		23,153		(318	)		22,835
Eurobonds and others		13,270		12			13,282		10,180		(68	)		10,112
Financial bills		7,146		(60	)		7,086		6,893		(47	)		6,846
Promissory notes		841		2			843		1,060		(69	)		991
Other		332		(10	)		322		392		(8	)		384
Total (2)		87,740		(2,061	)		85,679		90,085		(4,040	)		86,045

(1) Available-for-sale assets pledged as collateral of funding of financial institutions and Clients were: a) R$ 4,841 (R$ 1,755 at 12/31/2015), b) R$ 10,922 (R$ 14,135 at 12/31/2015), c) R$ 34 (R$ 8 at 12/31/2015) and d) R$ 870 (R$ 808 at 12/31/2015), totaling R$ 16,667 (R$ 16,706 at 12/31/2015);

(2) In the period, there was no reclassification of available-for-sale financial assets to other categories of financial assets.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 58

The cost and fair value of available-for-sale financial assets by maturity are as follows:

	03/31/2016				12/31/2015
	Cost		Fair value		Cost		Fair value
Current		27,578		27,642		22,754		22,923
Non-stated maturity		1,447		1,728		923		1,145
Up to one year		26,131		25,914		21,831		21,778
Non-current		60,162		58,037		67,331		63,122
From one to five years		32,436		31,609		35,739		35,098
From five to ten years		13,287		12,849		17,041		15,682
After ten years		14,439		13,579		14,551		12,342
Total		87,740		85,679		90,085		86,045

Note 11 - Held-to maturity financial assets

The amortized cost of held-to-maturity financial assets is as follows:

	03/31/2016		12/31/2015
	Amortized cost		Amortized cost
Corporate securities		17,423		15,661
Brazilian external debt bonds (1b)		11,647		14,788
Brazilian government securities (1a)		12,034		11,721
Government securities – abroad		-		15
Total (2)		41,104		42,185

(1) Held-to-maturity financial assets pledged as collateral of funding transactions of financial institutions and clients were a) R$ 1,707 (R$ 9,460 at 12/31/2015), b) R$ 9,343, totalizing R$ 11,050 (R$ 9,460 at 12/31/2015).

(2) In the period, there was no reclassification of held-to maturity financial assets to other categories of financial assets.

The interest income related to held-to-maturity financial assets was R$ 1,038 (R$ 828 from 01/01 to 03/31/2015).

The fair value of held-to-maturity financial assets is disclosed in Note 31.

The amortized cost of Held-to-Maturity Financial assets by maturity is as follows:

	03/31/2016		12/31/2015
	Amortized cost		Amortized cost
Current		1,646		661
Up to one year		1,646		661
Non-current		39,458		41,524
From one to five years		17,247		14,500
From five to ten years		14,125		18,870
After ten years		8,086		8,154
Total		41,104		42,185

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 59

Note 12 - Loan operations and lease operations portfolio

a) Composition of loan operations and lease operations

Below is the composition of the carrying amount of loan operations and lease operations by type, sector of debtor, maturity and concentration:

Loan operations and lease operations by type	03/31/2016			12/31/2015
Individuals		183,914			187,220
Credit card		54,867			58,542
Personal loan		28,631			28,396
Payroll loans		46,738			45,434
Vehicles		18,175			20,058
Mortgage loans		35,503			34,790
Corporate		134,494			152,527
Small and medium businesses		62,369			66,038
Foreign loans - Latin America		65,150			68,463
Total loan operations and lease operations		445,927			474,248
Allowance for loan and lease losses		(27,901	)		(26,844	)
Total loan operations and lease operations, net of allowance for loan and lease losses		418,026			447,404

By maturity	03/31/2016		12/31/2015
Overdue as from 1 day		16,325		15,596
Falling due up to 3 months		118,238		128,389
Falling due more than 3 months but less than 1 year		101,893		111,083
Falling due after 1 year		209,471		219,180
Total loan operations and lease operations		445,927		474,248

By concentration	03/31/2016		12/31/2015
Largest debtor		4,012		4,615
10 largest debtors		24,160		27,173
20 largest debtors		36,151		40,831
50 largest debtors		56,671		63,797
100 largest debtors		76,054		85,167

The breakdown of the Loan and Lease Operations Portfolio by debtor’s industry is evidenced in Note 36 item 5.1. Maximum exposure of Financial Assets segregated by business sector.

The accretion of the net present value of impaired loan operations and lease operations and the respective allowance for loan and lease losses are not presented using their gross amounts in the statement of income but on a net basis within interest and similar income. If they were presented at gross amounts, there would be an increase of R$ 799 R$ and 634 in interest and similar income as of 03/31/2016, and 03/31/2015 respectively, with the same impact on the allowance for loan and lease losses expenses.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 60

b) Allowance for loan and lease losses

The changes in the allowance for loan and lease losses are shown in the table below:

	Opening		Balance arising from the							Closing
	balance		aquisition of companies					Net increase /		balance
Composition of the carrying amount by class of assets	12/31/2015		(Note 2.4a I)		Write-offs			(Reversal)		03/31/2016
Individuals		14,717		-		(3,207	)		3,286		14,796
Credit card		4,141		-		(1,204	)		1,046		3,983
Personal loans		8,330		-		(1,520	)		1,445		8,255
Payroll loans		1,319		-		(265	)		677		1,731
Vehicles		874		-		(212	)		106		768
Mortgage loans		53		-		(6	)		12		59
Corporate		6,459		-		(863	)		1,611		7,207
Small and medium businesses		4,809		-		(1,040	)		1,293		5,062
Foreign loans - Latin America		859		-		(126	)		103		836
Total		26,844		-		(5,236	)		6,293		27,901

Composition of the carrying amount by class of assets	Opening balance 12/31/2014		Balance arising from the aquisition of companies (Note 2.4a I)		Write-offs			Net increase / (Reversal)		Closing balance 12/31/2015
Individuals		13,385		-		(11,235	)		12,567		14,717
Credit card		3,740		-		(4,055	)		4,456		4,141
Personal loans		7,024		-		(5,221	)		6,527		8,330
Payroll loans		1,107		-		(622	)		834		1,319
Vehicles		1,469		-		(1,294	)		699		874
Mortgage loans		45		-		(43	)		51		53
Corporate		3,114		-		(4,321	)		7,666		6,459
Small and medium businesses		5,158		-		(3,981	)		3,632		4,809
Foreign loans - Latin America		735		-		(528	)		652		859
Total		22,392		-		(20,065	)		24,517		26,844

The composition of the allowance for loan and lease losses by customer sector is shown in the following table:

	03/31/2016		12/31/2015
Public sector		5		2
Industry and commerce		5,157		4,314
Services		6,120		6,001
Natural resources		979		922
Other sectors		17		18
Individuals		15,623		15,587
Total		27,901		26,844

ITAÚ UNIBANCO HOLDING assesses the objective evidence of impairment for loan operations and lease operations on an individual basis for financial assets that are individually significant and, in aggregate, for financial assets that are not individually significant (Note 2.4g VIII).

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 61

The composition of the allowance for loan and lease losses by type of assessment for objective evidence of impairment is shown in the following table:

	03/31/2016												12/31/2015
	Impaired				Not impaired				Total				Impaired				Not impaired				Total
	Loan		Allowance		Loan		Allowance		Loan		Allowance		Loan		Allowance		Loan		Allowance		Loan Allowance
I – Individually
evaluated
Corporate (*)		12,679		6,409		121,815		798		134,494		7,207		11,627		5,716		140,900		743		152,527	6,459
II- Collectively
evaluated
Individuals		11,603		6,969		172,311		7,827		183,914		14,796		11,579		6,587		175,641		8,130		187,220	14,717
Credit card		3,906		2,345		50,961		1,638		54,867		3,983		4,072		2,436		54,470		1,705		58,542	4,141
Personal loans		5,141		3,516		23,490		4,739		28,631		8,255		5,049		3,442		23,347		4,888		28,396	8,330
Payroll loans		1,352		665		45,386		1,066		46,738		1,731		1,242		227		44,192		1,092		45,434	1,319
Vehicles		789		415		17,386		353		18,175		768		880		459		19,178		415		20,058	874
Mortgage loans		415		28		35,088		31		35,503		59		336		23		34,454		30		34,790	53
Small and medium businesses		3,649		2,590		58,720		2,472		62,369		5,062		3,276		2,357		62,762		2,452		66,038	4,809
Foreign loans - Latin America		679		288		64,471		548		65,150		836		675		313		67,788		546		68,463	859
Total		28,610		16,256		417,317		11,645		445,927		27,901		27,157		14,973		447,091		11,871		474,248	26,844

(*) As detailed in Note 2.4.g.VIII, corporate loans are first evaluated on an individual basis. In the event there is no objective indication of impairment, these are subsequently evaluated on an aggregate basis in accordance with the characteristics of the operation. As a result, an allowance for loan and lease losses for corporate loans is recognized, both in the individual and the aggregate evaluation.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 62

c) Present value of lease operations

Below is the analysis of the present value of minimum future payments receivable from finance leases by maturity basically composed of individual operations - vehicles:

	03/31/2016
	Minimum future		Future financial			Present
	payments		income			value
Current		2,748		(745	)		2,003
Up to 1 year		2,748		(745	)		2,003
Non-current		3,116		(979	)		2,137
From 1 to 5 years		2,897		(945	)		1,952
Over 5 years		219		(34	)		185
Total		5,864		(1,724	)		4,140

	12/31/2015
	Minimum future		Future financial			Present
	payments		income			value
Current		3,075		(794	)		2,281
Up to 1 year		3,075		(794	)		2,281
Non-current		3,402		(1,050	)		2,352
From 1 to 5 years		3,172		(1,014	)		2,158
Over 5 years		230		(36	)		194
Total		6,477		(1,844	)		4,633

The allowance for loan and lease losses related to the lease portfolio amounts to: R$ 149 (R$ 176 at 12/31/2015).

d) Sale or transfer of financial assets

ITAÚ UNIBANCO HOLDING carried out operations related to the sale or transfer of financial assets in which there was the retention of credit risks of the financial assets transferred, through joint obligation clauses. Therefore, such operations remained recorded as loan operations and represent the following amounts at March 31, 2016 and December 31, 2015:

	03/31/2016								12/31/2015
	Assets				Liabilities (*)				Assets				Liabilities (*)
	Book		Fair		Book		Fair		Book		Fair		Book		Fair
Nature of operation	value		value		value		value		value		value		value		value
Companies – working capital		2,835		2,835		2,835		2,835		2,849		2,849		2,849		2,849
Individuals – mortgage loan		2,677		2,656		2,675		2,645		2,806		2,763		2,805		2,752
Total		5,512		5,491		5,510		5,480		5,655		5,612		5,654		5,601

(*) Under Interbank Market Debt.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 63

Note 13 - Investments in associates and joint ventures

a) The following table shows the main investments of ITAÚ UNIBANCO HOLDING:

	Interest %
	at 03/31/2016				03/31/2016
	Total		Voting		Stockholders’ equity		Other Comprehensive Income			Net income		Investment		Equity in earnings			Market value (g)
Associates
Porto Seguro Itaú Unibanco Participações S.A. (a) (b)		42.93		42.93		4,090		17			142		2,529		57			2,677
BSF Holding S.A. (c)		49.00		49.00		1,528		-			94		1,331		46			-
IRB-Brasil Resseguros S.A. (a) (d)		15.01		15.01		2,875		(35	)		182		424		27			-
Other (e)		-		-		-		-			-		109		5			-
Joint Ventures - Other (f)		-		-		-		-			-		183		(9	)		-
Total		-		-		-		-			-		4,576		126			-

	Interest %
	at 12/31/2015				12/31/2015														03/31/2015
	Total		Voting		Stockholders’ equity		Other comprehensive income			Net income		Investment		Equity in earnings			Market value (g)		Equity in earnings
Associates
Porto Seguro Itaú Unibanco Participações S.A. (a) (b)		42.93		42.93		3,931		(26	)		708		2,464		289			2,830		59
BSF Holding S.A.(c)		49.00		49.00		1,561		-			447		1,348		219			-		56
IRB-Brasil Resseguros S.A.(a) (d)		15.01		15.01		3,213		12			674		475		102			-		5
Other (e)		-		-		-		-			-		106		12			-		12
Joint Ventures - Other (f)													6		(2	)				(1	)
Total		-		-		-		-			-		4,399		620			-		131

(a) For purpose of recording the participation in earnings, at 03/31/2016 the position at 02/29/2016 was used and at 12/31/2015 the position at 11/30/2015 was used, in accordance with IAS 27.

(b) For purposes of market value, the quoted share price of Porto Seguro S.A. was taken into account. The investment included the amounts of R$ 773 at 03/31/2016 and R$ 776 at 12/31/2015 that correspond to the difference between the interest in the net assets at fair value of Porto Seguro Itaú Unibanco Participações S.A. and the investment book value.

(c) In May 2012 Itaú Unibanco S.A. acquired 137,004,000 common shares of BSF Holding S.A. (parent company of Banco Carrefour) for R$ 816 which corresponds to 49% of interest in its capital. The investment amount includes R$ 583 at 03/31/2016 which correspond to goodwill.

(d) Previously accounted for as a financial instrument. As from the 4th quarter of 2013, after completing the privatization process, ITAÚ UNIBANCO HOLDING started to exercise a significant influence over IRB. Accordingly, as from this date, the investment has been accounted for under the equity method.

(e) At 03/31/2016, includes interest in total capital and voting capital of the following companies: Compañia Uruguaya de Medios de Procesamiento S.A. (38.46% total and voting capital ), Rias Redbanc S.A. (25% total and voting capital) and Tecnologia Bancária S.A. (24.91% total capital and voting capital).

(f) At 03/31/2016, includes interest in total capital and voting capital of the following companies: Olimpia Promoção e Serviços S.A. (50% total and voting capital); Conectcar Soluções de Mobilidade Eletronica S.A.(50% capital total e votante) acquired at 01/29/2016 and includes income not arising from profit subsidiaries.

(g) Disclosed only for public companies.

At 03/31/2016, ITAÚ UNIBANCO HOLDING receives / recognizes dividends and interest on capital of the unconsolidated companies being the main IRB - Brasil Resseguros S.A. in the amount of R$ 73 (R$ 73 at 12/31/2015) and BSF Holding S.A in the amount of R$ 62 (R$ 58 at 12/31/2015) and at 12/31/2015, Porto Seguro Itaú Unibanco Participações S.A. in the amount of R$ 240.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 64

b) Other information

The table below shows the summary of the aggregate financial information of the investees under the equity method of accounting.

	03/31/2016			12/31/2015			03/31/2015
Total Assets (*)		20,324			20,183			18,241
Total Liabilities (*)		11,831			11,477			10,487
Total Income (*)		4,183			22,083			3,419
Total Expenses (*)		(3,765	)		(20,255	)		(3,126	)

(*) Represented by IRB-Brasil Resseguros S.A., in the amount of R$ 14,706 (R$ 14,690 at 12/31/2015) related to assets, R$ 11,830 (R$ 11,477 at 12/31/2015) related to liabilities, R$ 3,947 (R$ 20,928 at 12/31/2015) related to income and of R$ (3,765) (R$ (20,254) at 12/31/2015) related to expenses.

The investees do not have contingent liabilities to which ITAÚ UNIBANCO HOLDING is significantly exposed.

Note 14 – Lease commitments as lessee

a) Finance lease

ITAÚ UNIBANCO HOLDING is the lessee in finance lease contracts of data processing equipment, with the option of purchase or extension, without contingent rental payments or imposed restrictions. The net carrying amount of these assets is R$ 361 (R$ 517 at 12/31/2015).

The table below shows the total future minimum payments:

	03/31/2016		12/31/2015
Current		351		491
Up to 1 year		351		491
Non-current		10		26
From 1 to 5 years		10		26
Total future minimum payments		361		517
(-) Future interest		-		-
Present value		361		517

b) Operating leases

ITAÚ UNIBANCO HOLDING leases many properties, for use in its operations, under standard real estate leases that normally can be cancelled at its option and include renewal options and escalations clauses. No lease agreement imposes any restriction on our ability to pay dividends, enter into further lease agreements or engage in debt or equity financing transactions, and there is no contingent payments related to the agreements.

The expenses related to operating lease agreements recognized under General and Administrative Expenses total R$ 293 from 01/01 to 03/31/2016 (R$ 283 from 01/01 to 12/31/2015).

ITAÚ UNIBANCO HOLDING has no relevant sublease contracts.

Minimum payments of initiated and remaining lease agreements with non-cancelable clauses are as follows:

	03/31/2016		12/31/2015
Current		1,363		1,267
Up to 1 year		1,363		1,267
Non-current		5,424		5,028
From 1 to 5 years		4,520		4,043
Over 5 years		904		985
Total future minimum payments		6,787		6,295

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 65

Note 15 - Fixed assets

				Real estate in use (2)						Other fixed assets (2) (3)
Fixed Assets (1)	Fixed assets under construction			Land			Buildings			Improvements			Installations			Furniture and equipment			EDP systems (3)			Other (communication, security and transportation)			Total
Annual depreciation rates								4%			10%			10 to 20%			10 to 20%			20 to 50%			10 to 20%
Cost
Balance at 12/31/2015		792			1,008			3,026			1,673			1,801			975			8,217			858			18,350
Acquisitions		39			-			-			2			5			8			54			38			146
Disposal		-			-			-			(16	)		-			(2	)		(70	)		(1	)		(89	)
Exchange variation		-			(1	)		(13	)		(29	)		(1	)		(28	)		(34	)		(2	)		(108	)
Transfers		(139	)		-			1			24			6			-			108			-			-
Other		4			-			-			-			3			-			(67	)		-			(60	)
Balance at 03/31/2016		696			1,007			3,014			1,654			1,814			953			8,208			893			18,239
Depreciation
Balance at 12/31/2015		-			-			(1,764	)		(930	)		(841	)		(579	)		(5,138	)		(557	)		(9,809	)
Accumulated depreciation		-			-			(19	)		(67	)		(34	)		(24	)		(261	)		(22	)		(427	)
Disposal		-			-			-			16			-			-			63			-			79
Exchange variation		-			-			4			18			2			26			20			2			72
Other		-			-			-			(1	)		(3	)		-			31			-			27
Balance at 03/31/2016		-			-			(1,779	)		(964	)		(876	)		(577	)		(5,285	)		(577	)		(10,058	)
Impairment
Balance at 12/31/2015		-			-			-			-			-			-			-			-			-
Additions/ assumptions		-			-			-			-			-			-			-			-			-
Reversals		-			-			-			-			-			-			-			-			-
Balance at 03/31/2016		-			-			-			-			-			-			-			-			-
Book value
Balance at 03/31/2016		696			1,007			1,235			690			938			376			2,923			316			8,181

(1) The contractual commitments for purchase of the fixed assets totaled R$ 59, achievable by 2016 (Note 36 - Off balance sheet).

(2) Includes the amount of R$ 4 related to attached real estate.

(3) Includes lease contracts, mainly related to data processing equipment, which are accounted for as lease operations. The asset and the liability are recognized in the Financial Statements.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 66

				Real estate in use (2)						Other fixed assets (2) (3)
Fixed assets (1)	Fixed assets under construction			Land			Buildings			Improvements			Installations			Furniture and equipment			EDP systems (3)			Other (communication, security and transportation)			Total
Annual depreciation rates								4%			10%			10 to 20%			10 to 20%			20 to 50%			10 to 20%
Cost
Balance at 12/31/2014		2,277			1,011			2,220			1,468			1,116			916			7,419			773			17,200
Acquisitions		198			-			6			139			75			141			824			83			1,466
Disposal		-			(6	)		(13	)		(112	)		182			(68	)		(533	)		(5	)		(555	)
Exchange variation		-			3			35			81			6			8			6			6			145
Transfers		(1,681	)		-			777			63			422			-			419			-			-
Other		(2	)		-			1			34			-			(22	)		82			1			94
Balance at 12/31/2015		792			1,008			3,026			1,673			1,801			975			8,217			858			18,350
Depreciation
Balance at 12/31/2014		-			-			(1,695	)		(754	)		(519	)		(504	)		(4,538	)		(479	)		(8,489	)
Accumulated depreciation		-			-			(74	)		(257	)		(129	)		(93	)		(1,057	)		(78	)		(1,688	)
Disposal		-			-			9			109			(183	)		13			489			3			440
Exchange variation		-			-			(6	)		(27	)		(2	)		1			(7	)		(3	)		(44	)
Other		-			-			2			(1	)		(8	)		4			(25	)		-			(28	)
Balance at 12/31/2015		-			-			(1,764	)		(930	)		(841	)		(579	)		(5,138	)		(557	)		(9,809	)
Impairment
Balance at 12/31/2014		-			-			-			-			-			-			-			-			-
Additions/ assumptions		-			-			-			-			-			-			-			-			-
Reversals		-			-			-			-			-			-			-			-			-
Balance at 12/31/2015		-			-			-			-			-			-			-			-			-
Book value
Balance at 12/31/2015		792			1,008			1,262			743			960			396			3,079			301			8,541

(1) The contractual commitments for purchase of the fixed assets totaled R$ 59, achievable by 2016 (Note 36 - Off balance sheet).

(2) Includes the amount of R$ 4 related to attached real estate.

(3) Includes lease contracts, mainly related to data processing equipment, which are accounted for as lease operations. The asset and the liability are recognized in the Financial Statements.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 67

Note 16 - Intangible assets

				Other intangible assets
Intangible assets (1)	Acquisition of rights to credit payroll			Association for the promotion and offer of financial products and services			Acquisition of software			Development of software			Other intangible assets			Total
Amortization rates p.a.		20%			8%			20%			20%			10 to 20%
Cost
Balance at 12/31/2015		1,005			1,409			2,362			3,311			960			9,047
Acquisitions		85			-			47			70			1			203
Terminated agreements/ write off		(46	)		(7	)		(3	)		-			-			(56	)
Exchange variation		-			(4	)		(43	)		-			(58	)		(105	)
Other		(3	)		(25	)		38			-			8			18
Balance at 03/31/2016		1,041			1,373			2,401			3,381			911			9,107
Amortization (2)
Balance at 12/31/2015		(600	)		(330	)		(1,190	)		(252	)		(342	)		(2,714	)
Amortization expense		(53	)		(30	)		(87	)		(57	)		(74	)		(301	)
Terminated agreements/ write off		46			7			-			-			-			53
Exchange variation		-			3			24			-			45			72
Other		-			-			(1	)		-			60			59
Balance at 03/31/2016		(607	)		(350	)		(1,254	)		(309	)		(311	)		(2,831	)
Impairment (3)
Balance at 12/31/2015		(18	)		(2	)		-			(18	)		-			(38	)
Additions / assumptions		-			-			-			-			-			-
Write off		-			-			-			-			-			-
Balance at 03/31/2016		(18	)		(2	)		-			(18	)		-			(38	)
Book value
Balance at 03/31/2016		416			1,021			1,147			3,054			600			6,238

(1) The contractual commitments for the purchase of new intangible assets totaled R$ 203, achievable by 2016 (Note 36 - Off balance seet).

(2) All intangible assets have a defined useful life.

(3) Note 2.4l.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 68

				Other intangible assets
Intangible assets (1)	Acquisition of rights to credit payroll			Association for the promotion and offer of financial products and services			Acquisition of software			Development of software			Other intangible assets			Total
Amortization rates p.a.		20%			8%			20%			20%			10 to 20%
Cost
Balance at 12/31/2014		1,067			1,582			1,965			2,836			791			8,241
Acquisitions		109			39			410			489			15			1,062
Terminated agreements / write off		(169	)		(195	)		(134	)		(14	)		(4	)		(516	)
Exchange variation		-			-			109			-			185			294
Other		(2	)		(17	)		12			-			(27	)		(34	)
Balance at 12/31/2015		1,005			1,409			2,362			3,311			960			9,047
Amortization (2)
Balance at 12/31/2014		(556	)		(337	)		(918	)		(113	)		(149	)		(2,073	)
Amortization expense		(213	)		(144	)		(358	)		(138	)		(287	)		(1,140	)
Terminated agreements / write off		169			144			134			-			-			447
Exchange variation		-			-			(51	)		-			(150	)		(201	)
Other		-			7			3			(1	)		244			253
Balance at 12/31/2015		(600	)		(330	)		(1,190	)		(252	)		(342	)		(2,714	)
Impairment (3)
Balance at 12/31/2014		(18	)		(2	)		-			(14	)		-			(34	)
Additions / assumptions		-			-			-			(4	)		-			(4	)
Reversals		-			-			-			-			-			-
Balance at 12/31/2015		(18	)		(2	)		-			(18	)		-			(38	)
Book value
Balance at 12/31/2015		387			1,077			1,172			3,041			618			6,295

(1) The contractual commitments for the purchase of new intangible assets totaled R$ 281, achievable by 2016 (Note 36 - Off balance seet).

(2) All intangible assets have a defined useful life.

(3) Note 2.4l.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 69

Note 17 - Deposits

The table below shows the breakdown of deposits:

	03/31/2016						12/31/2015
	Current		Non-current		Total		Current		Non-current		Total
Interest-bearing deposits		153,964		53,797		207,761		171,527		59,991		231,518
Time deposits		38,152		53,764		91,916		45,994		59,256		105,250
Interbank deposits		8,519		33		8,552		14,214		735		14,949
Savings deposits		107,293		-		107,293		111,319		-		111,319
Non-interest bearing deposits		58,557		-		58,557		61,092		-		61,092
Demand deposits		58,557		-		58,557		61,092		-		61,092
Total		212,521		53,797		266,318		232,619		59,991		292,610

Note 18 – Financial liabilities held for trading

Financial liabilities held for trading are presented in the following table:

	03/31/2016		12/31/2015
Structured notes
Shares		49		57
Debt securities		346		355
Total		395		412

The effect of the changes in credit risk of these instruments is not significant at 03/31/2016 and 12/31/2015.

For shares, in view of the characteristics of the instrument, there is no definite value to be paid at the maturity date. For debt securities, the amount to be paid at maturity comprises several exchange rates and indices, and there is no contractual amount for settlement.

The fair value of financial liabilities held for trading by maturity is as follows:

	03/31/2016		12/31/2015
	Cost / Fair value		Cost / Fair value
Current - up to one year		117		34
Non-current		278		378
From one to five years		250		364
From five to ten years		15		5
After ten years		13		9
Total		395		412

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 70

Note 19 – Securities sold under repurchase agreements and interbank and institutional market debts

a) Securities sold under repurchase agreements and interbank market debt

The table below shows the breakdown of funds:

	03/31/2016						12/31/2015
	Current		Non- current		Total		Current		Non- current		Total
Securities sold under repurchase agreements		158,870		147,070		305,940		181,198		155,445		336,643
Transactions backed by own financial assets (*)		61,698		147,070		208,768		64,955		155,445		220,400
Transactions backed by third party financial assets		97,172		-		97,172		116,243		-		116,243
Interbank market debt		69,797		78,354		148,151		80,547		76,339		156,886
Mortgage notes		33		91		124		31		108		139
Real estate credit bills		9,496		4,903		14,399		12,441		2,011		14,452
Agribusiness credit bills		6,949		7,010		13,959		6,695		7,080		13,775
Financial credit bills		3,639		15,551		19,190		3,860		14,636		18,496
Import and export financing		40,389		19,244		59,633		45,633		19,933		65,566
On-lending - domestic		9,281		26,055		35,336		11,884		26,920		38,804
Liabilities from transactions related to credit assignments (Note 12d)		10		5,500		5,510		3		5,651		5,654

(*) It includes R$ 148,139 (R$ 152,215 at 12/31/2015) related to Debentures of own issue.

Funding for import and export financing represents credit facilities available for financing of imports and exports of Brazilian companies, in general denominated in foreign currency. The interest rate for each one of the operations (p.a.) is presented in the table below:

	Brazil	Foreign
Securities sold under repurchase agreements(*)	49% of CDI to 17.36%	0.48% to 3.48%
Mortgage notes	-	3% to 7,5%
Real estate credit bills	81% to 100% of CDI	-
Financial credit bills	IGPM to 113%	-
Agribusiness credit bills	70% to 98% of CDI	-
Import and export financing	2.5% to 6.0%	0.4% to 18%
On-lending - domestic	2.5% to 14.5%	-
Liabilities from transactions related to credit assignments	6.38% to 13.17%	0.4% to 18%

(*) Note 2f presents the operations comprising Deposits received under securities repurchased agreements. Final repurchase dates are set until January 2027.

b) Institutional market debt

The table below presents the breakdown of funds obtained in Institutional markets:

	03/31/2016						12/31/2015
	Current		Non- current		Total		Current		Non- current		Total
Subordinated debt (1)		8,211		49,708		57,919		10,209		55,576		65,785
Foreign borrowing through securities		2,541		19,332		21,873		4,757		19,431		24,188
Structured Operations Certificates (2)		909		3,340		4,249		893		3,052		3,945
Total		11,661		72,380		84,041		15,859		78,059		93,918

(1) At 03/31/2016, the amount of R$ 54,136 (R$ 64,861 at 12/31/2015) is included in the Reference Equity, under the proportion defined by CMN Resolution No. 3,444, of February 28, 2007, as amended by CMN Resolution No. 3,532, of January 31, 2008.

(2) As at March 31, 2016, the market value of the funding from Structured Operations Certificates issued is R$ 4,838.

The interest rate for each one of the operations (p.a.) is presented in the table below.

	Brazil	Foreign
Subordinated debt	CDI+ 0.7% to IGPM + 7.6%	5.1% to 6.2%
Foreign borrowing through securities	0.89% to 12.73%	0.64% to 30.79%
Structured Operations Certificates	IPA + 2.72% to 16.54%	-

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 71

Note 20 - Other assets and liabilities

a) Other assets

	03/31/2016						12/31/2015
			Non-						Non-
	Current		current		Total		Current		current		Total
Financial (1)		41,710		12,325		54,035		41,546		11,960		53,506
Receivables from credit card issuers		22,498		-		22,498		25,191		-		25,191
Insurance and reinsurance operations		1,300		16		1,316		1,367		-		1,367
Deposits in guarantee for contingent liabilities (Note 32)		2,077		10,802		12,879		2,131		10,502		12,633
Deposits in guarantee for foreign borrowing program		116		-		116		409		-		409
Negotiation and intermediation of securities		11,390		-		11,390		7,725		-		7,725
Receivables from reimbursement of contingent liabilities (Note 32c)		301		805		1,106		335		758		1,093
Receivables from services provided		2,478		144		2,622		2,333		149		2,482
Amounts receivable from FCVS – Salary Variations Compensation Fund (2)		-		558		558		-		551		551
Foreign exchange portfolio		-		-		-		444		-		444
Operations without credit granting characteristics		1,550		-		1,550		1,611		-		1,611
Non-financial		7,714		3,948		11,662		7,005		4,606		11,611
Prepaid expenses		2,322		822		3,144		2,196		1,012		3,208
Retirement plan assets (Notes 29c and d)		-		2,209		2,209		-		2,183		2,183
Sundry domestic		1,273		-		1,273		602		-		602
Premiums from loan operations		806		636		1,442		814		850		1,664
Sundry foreign		1,918		272		2,190		1,542		550		2,092
Other		1,395		9		1,404		1,851		11		1,862

(1) There were no impairment losses for other financial assets in these periods.

(2) The Salary Variation Compensation Fund – FCVS was established through Resolution No. 25, of June 16, 1967, of the Board of the former BNH (National Housing Bank), and its purpose is to settle balances remaining after the end of real estate financing contracted up to March 1990, relating to agreements financed under the SFH (National Housing System), and provided that they are covered by FCVS.

b) Other liabilities

	03/31/2016						12/31/2015
			Non-						Non-
	Current		current		Total		Current		current		Total
Financial		66,673		155		66,828		68,478		237		68,715
Credit card operations		50,284		-		50,284		56,143		-		56,143
Foreign exchange portfolio		445		-		445		-		-		-
Negotiation and intermediation of securities		14,443		145		14,588		10,920		177		11,097
Finance leases (Note 14a)		351		10		361		491		26		517
Funds from consortia participants		50		-		50		45		-		45
Other		1,100		-		1,100		879		34		913
Non-financial		26,320		1,002		27,322		24,975		812		25,787
Collection and payment of taxes and contributions		4,227		-		4,227		239		-		239
Sundry creditors - domestic		1,515		97		1,612		1,681		75		1,756
Funds in transit		11,771		164		11,935		10,893		-		10,893
Provision for sundry payments		1,651		188		1,839		1,944		199		2,143
Social and statutory		1,974		15		1,989		5,110		-		5,110
Related to insurance operations		207		-		207		253		-		253
Liabilities for official agreements and rendering of payment services		812		-		812		808		-		808
Provision for retirement plan benefits (Note 29c and e)		-		496		496		-		491		491
Personnel provision		1,371		42		1,413		1,336		47		1,383
Provision for health insurance		722		-		722		716		-		716
Deferred income		1,801		-		1,801		1,909		-		1,909
Other		269		-		269		86		-		86

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 72

Note 21 – Stockholders’ equity

a) Capital

The Extraordinary Stockholders’ Meeting held on April 29, 2015 approved an increase of subscribed and paid-up capital by R$ 10,148, with the capitalization of the amounts recorded in Revenue Reserve – Statutory Reserve, with a 10% bonus share. Bonus shares started being traded on 07/17/2015 and the process was approved by the Central Bank on 06/25/2015. Accordingly, capital stock was increased by 553,083,268 shares.

Capital comprises 6,083,915,949 book-entry shares with no par value, of which 3,047,040,198 are common and 3,036,875,751 are preferred shares without voting rights; preferred shares have tag-along rights, in the event of a possible change in control, at a price equal to 80% of the amount per share paid for the controlling common shares. Capital stock amounts to R$ 85,148 (R$ 85,148 at 12/31/2015), of which R$ 57,926 (R$ 58,283 at 12/31/2015) refers to stockholders resident in Brazil and R$ 27,222 (R$ 26,864 at 12/31/2015) refers to stockholders resident abroad.

The table below shows the breakdown of and change in shares of paid-in capital and the reconciliation of balances at the beginning and end of the period:

	03/31/2016
	Number
	Common		Preferred			Total			Amount
Residents in Brazil at 12/31/2015		3,033,657,386		1,130,776,196			4,164,433,582
Residents abroad at 12/31/2015		13,382,812		1,906,099,555			1,919,482,367
Shares of capital stock at 12/31/2015		3,047,040,198		3,036,875,751			6,083,915,949
Shares of capital stock at 03/31/2016		3,047,040,198		3,036,875,751			6,083,915,949
Residents in Brazil at 03/31/2016		3,034,407,452		1,104,453,027			4,138,860,479
Residents abroad at 03/31/2016		12,632,746		1,932,422,724			1,945,055,470
Treasury shares at 12/31/2015 (1)		2,795		162,562,650			162,565,445			(4,353	)
Purchase of shares		-		7,990,000			7,990,000			(200	)
Exercised options – granting of stock options		-		(7,840,393	)		(7,840,393	)		12
Disposals – stock option plan		-		(7,483,548	)		(7,483,548	)		397
Treasury shares at 03/31/2016 (1)		2,795		155,228,709			155,231,504			(4,144	)
Outstanding shares at 03/31/2016		3,047,037,403		2,881,647,042			5,928,684,445
Outstanding shares at 12/31/2015		3,047,037,403		2,874,313,101			5,921,350,504

	12/31/2015
	Number
	Common		Preferred			Total			Amount
Residents in Brazil at 12/31/2014		2,758,685,730		1,043,799,342			3,802,485,072
Residents abroad at 12/31/2014		11,350,814		1,716,996,795			1,728,347,609
Shares of capital stock at 12/31/2014		2,770,036,544		2,760,796,137			5,530,832,681
Bonus shares - ESM of 04/29/2015 – made effective on 06/25/2015		277,003,654		276,079,614			553,083,268
Shares of capital stock at 12/31/2015		3,047,040,198		3,036,875,751			6,083,915,949
Residents in Brazil at 12/31/2015		3,033,657,386		1,130,776,196			4,164,433,582
Residents abroad at 12/31/2015		13,382,812		1,906,099,555			1,919,482,367
Treasury shares at 12/31/2014 (1)		2,541		53,828,551			53,831,092			(1,328	)
Purchase of shares		-		111,524,800			111,524,800			(3,324	)
Exercised options - granting of stock options		-		(5,873,741	)		(5,873,741	)		4
Disposals – stock option plan		-		(5,342,874	)		(5,342,874	)		295
Bonus shares - ESM of 04/29/2015		254		8,425,914			8,426,168			-
Treasury shares at 12/31/2015 (1)		2,795		162,562,650			162,565,445			(4,353	)
Outstanding shares at 12/31/2015		3,047,037,403		2,874,313,101			5,921,350,504
Outstanding shares at 12/31/2014 (2)		3,047,037,403		2,977,664,345			6,024,701,748

(1) Own shares, purchased based on authorization of the Board of Directors, to be held in Treasury for subsequent cancellation of replacement in the market.

(2) For better comparability, outstanding shares were adjusted to reflect the bonuses of 06/25/2015.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 73

We detail below of the cost of shares purchased in the period, as well the average cost of treasury shares and their market price (in Brazilian Reais per share):

	01/01 to 03/31/2016
Cost / market value	Common		Preferred
Minimum		-		23.79
Weighted average		-		25.06
Maximum		-		25.98
Treasury shares
Average cost		7.25		26.70
Market value at 03/31/2016		26.71		31.21

	01/01 to 12/31/2015
Cost / market value	Common		Preferred
Minimum		-		24.96
Weighted average		-		28.80
Maximum		-		31.86
Treasury shares
Average cost		7.25		26.78
Market value at 12/31/2015		24.58		26.33

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 74

b) Dividends

Stockholders are entitled to an annual mandatory dividend of not less than 25% of adjusted profit, pursuant to the provisions of the Brazilian Corporate Law. Both common and preferred shares participate equally, after common shares have received dividends equal to the annual minimum priority dividend of R$ 0.022 per share non-cumulative to be paid to preferred shares.

The calculation of the monthly advance of the mandatory minimum dividend is based on the share position on the last day of the prior month, with payment being made on the first business day of the subsequent month, amounting to R$ 0.015 per share.

Below is a statement from dividends and interest on equity and the calculation of the minimum mandatory dividend:

Calculation of dividends and interest on capital

	03/31/2016			03/31/2015
Statutory net income		4,263			5,555
Adjustments:
(-) Legal reserve		(213	)		(278	)
Dividend calculation basis		4,050			5,277
Mandatory dividend - 25%		1,012			1,319
Dividends and interest on capital – paid / provisioned for		1,012			1,319

Payments / provision for interest on capital and dividends

	03/31/2016
	Gross		WHT			Net
Paid / prepaid		178		-			178
Dividends - 2 monthly installments of R$ 0.015 per share paid from February to March 2016		178		-			178
Declared until 03/31/2016 (recorded in other liabilities)		966		(132	)		834
Dividends - 1 monthly installment of R$ 0.015 per share paid on 04/01/2016		89		-			89
Interest on capital - R$ 0.1480 per share		877		(132	)		745
Total from 01/01 to 03/31/2016 - R$ 0.1708 net per share		1,144		(132	)		1,012

	03/31/2015
	Gross		WHT			Net
Paid / prepaid		165		-			165
Dividends - 2 monthly installments of R$ 0.015 per share paid from February to March 2015		165		-			165
Declared until 03/31/2015 (recorded in other liabilities)		1,344		(190	)		1,154
Dividends - 1 monthly installment of R$ 0.015 per share paid on 04/01/2015		82		-			82
Interest on capital - R$ 0.2308 per share		1,262		(190	)		1,072
Total from 01/01 to 03/31/2015 - R$ 0,2412 net per share		1,509		(190	)		1,319

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 75

c) Additional paid-in capital

Additional paid-in capital corresponds to: (i) the difference between the proceeds from the sale of treasury shares and the average cost of such shares, and (ii) the compensation expenses recognized in accordance with the stock option plan and variable compensation.

d) Appropriated reserves

	03/31/2016			12/31/2015
Capital reserves (1)		285			285
Premium on subscription of shares		284			284
Reserves from tax incentives, restatement of equity securities and other		1			1
Revenue reserves		10,047			9,782
Legal (2)		7,108			6,895
Statutory		12,373			9,461
Dividends equalization (3)		4,813			3,355
Working capital increase (4)		2,237			1,655
Increase in capital of investees (5)		5,323			4,451
Corporate reorganizations (Note 2.4 a III)		(9,434	)		(9,277	)
Unrealized profits (6)		-			2,703
Total reserves at parent company		10,332			10,067

(1) Refers to amounts received by Itaú Unibanco Holding that were not included in the statement of income, since they do not refer to compensation for the provision of goods or services.

(2) Legal reserve - may be used to increase capital or to absorb losses, but it cannot be distributed as dividends.

(3) Reserve for dividends equalization - its purpose is to reserve funds for the payment or advances on dividends, including interest on capital, to maintain the flow of the stockholders' compensation.

(4) Reserve for working capital - its purpose is to guarantee funds for operations.

(5) Reserve for increase in capital of investees - its purpose is to guarantee the preemptive right in the capital increases of investees.

(6) Refers to interest on capital declared after December 31 of each period.

e) Unappropriated reserves

Refers to balance of profit remaining after the distribution of dividends and appropriations to statutory reserves in the statutory accounts of ITAÚ UNIBANCO HOLDING.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 76

Note 22 – Share-based payment

ITAÚ UNIBANCO HOLDING and its subsidiaries have share-based payment programs aimed at involving its management members and employees in the medium and long term corporate development process.

These payments are only made in years where there are sufficient profits to enable the distribution of mandatory dividends, in order to limit the maximum dilutive effect to which stockholders are subject, and at a quantity that does not exceed the limit of 0.5% of the total shares held by the controlling and minority stockholders at the balance sheet date.

These programs are settled through the delivery of ITUB4 treasury shares to stockholders.

From 01/01 to 03/31/2016, the accounting effect of the share-based payment in income was R$ (163) (R$ (292) from 01/01 to 03/31/2015).

I – Stock Option Plan (Simple Options)

ITAÚ UNIBANCO HOLDING has a Stock Option Plan (“Simple Options”) aimed at involving management members and employees in the medium and long term corporate development program of ITAÚ UNIBANCO HOLDING and its subsidiaries, offering them the opportunity benefit from the appreciation that their work and dedication bring to the shares.

In addition to the grants provided under the Plan, ITAÚ UNIBANCO HOLDING also maintains control over the rights and obligations in connection with the options granted under the plans approved at the Extraordinary Stockholders’ Meetings held on April 24, 2009 and April 19, 2013 related to the Unibanco – União de Bancos Brasileiros S.A. and to Unibanco Holdings S.A., and to Redecard S.A. (“Rede”) stock option plans, respectively. Accordingly, the exchange of shares for ITUB4 did not have a relevant financial impact.

Simple options have the following characteristics:

a) Exercise price: calculated based on the average prices of shares in the three months of the year prior to the grant date. The prices determined will be restated to the last business day of the month prior to the option exercise date based on IGP-M or, in its absence, on an index to be determined internally, and should be paid within the period in force for the settlement of operations on BM&FBOVESPA.

b) Vesting period: determined upon issue, from one to seven years, counted from the grant date. The vesting period is normally determined at five years.

c) Fair value and economic assumptions for cost recognition: the fair value of Simple Options is calculated on the grant date based on the Binominal model. Economic assumptions used are as follows:

(i) Exercise price: exercise price previously agreed upon the option issue, adjusted by the IGP-M variation;

(ii) Price of the underlying asset (ITUB4 shares): closing price on BM&FBOVESPA on the calculation base date.

(iii) Expected dividends: the average annual return rate for the last three years of dividends paid plus interest on capital of the ITUB4 share;

(iv) Risk-free interest rate: IGP-M coupon rate at the expiration date of the Simple Option;

(v) Expected volatility: calculated based on the standard deviation from the history of the last 84 monthly returns of the ITUB4 share closing prices, disclosed by BM&FBOVESPA, adjusted by the IGP-M variation.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 77

Summary of changes in the plan

	Simple options
				Weighted average		Weighted average
	Quantity			exercise price		market value
Opening balance 12/31/2015		45,948,317			35.08
Options exercisable at the end of the period		32,407,235			36.74
Options outstanding but not exercisable		13,541,082			31.12
Options:
Granted		-			-
Canceled / Forfeited (*)		(31,201	)		25.67
Exercised		(458,924	)		26.25		31.88
Balance at 03/31/2016		45,458,192			36.22
Options exercisable at the end of the period		32,185,041			37.88
Options outstanding but not exercisable		13,273,151			32.18
Range of exercise prices
Granting 2009-2010					23.88 - 44.05
Granting 2011-2012					23.88 - 43.03
Weighted average of the remaining contractual life (in years)		2.37

(*) Refers to non-exercise based on the beneficiary’s decision.

	Simple options
				Weighted average		Weighted average
	Quantity			exercise price		market value
Opening balance 12/31/2014		55,162,112			32.43
Options exercisable at the end of the period		28,872,290			32.15
Options outstanding but not exercisable		26,289,822			32.73
Options:
Granted		-			-
Canceled / Forfeited (*)		(400,464	)		33.26
Exercised		(55,092	)		24.14		33.39
Opening balance 03/31/2015		54,706,556			33.04
Options exercisable at the end of the period		28,854,093			32.66
Options outstanding but not exercisable		25,852,462			33.45
Range of exercise prices
Granting 2008-2009					24.19 - 37.00
Granting 2010-2012					23.88 - 39.30
Weighted average of the remaining contractual life (in years)		2.58

(*) Refers to non-exercise based on the beneficiary’s decision.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 78

ll – Partner Plan

The employees and management members of ITAÚ UNIBANCO HOLDING and its subsidiaries may be selected to participate in the program investing a percentage of their bonus to acquire ITUB4 shares and share-based instruments. Accordingly, the ownership of these shares should be held by the beneficiaries for a period from three to five years, counted from the initial investment, and are thus subject to market price variations. After complying with the suspensive conditions set forth in the program, beneficiaries will be entitled to receive ITUB4 as consideration, in accordance with the numbers of shares provided for in the program regulations.

The acquisition prices of own shares and Share-Based Instruments are established every six months and is equivalent to the average of the ITUB4 quotation in the 30 days prior to the determination of the acquisition price.

The fair value of the ITUB4 as consideration is the market price at the grant date, less expected dividends.

The weighted average of the fair value of the ITUB4 shares as consideration was estimated at R$ 21.40 per share at 03/31/2016 (R$ 33.29 per share at 03/31/2015).

Law No. 12,973/14, which adjusted the tax legislation to the international accounting standards and terminated the Transitional Tax Regime (RTT), set up a new legal framework for payments made in shares. We made changes to the Partner Plan, and adjusted its tax effects, to conform to this new legislation.

Changes in the Partner Program

	Quantity
Balance at 12/31/2015		30,605,777
New granted		11,287,445
Cancelled		(54,360	)
Exercised		(7,381,469	)
Balance at 03/31/2016		34,457,393
Weighted average of remaining contractual life (years)		2.69

	Quantity
Balance at 12/31/2014		26,734,428
New granted		10,402,580
Cancelled		(277,096	)
Exercised		(2,251,281	)
Balance at 03/31/2015		34,608,631
Weighted average of remaining contractual life (years)		2.55

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 79

III- Variable compensation

The policy established in compliance with CMN Resolution No. 3,921/10 sets forth that fifty percent (50%) of the management’s variable compensation should be paid in cash and fifty percent (50%) should be paid in shares for a period of three years. Shares are delivered on a deferred basis, of which one-third (1/3) per year, will be contingent upon the executive’s remaining with the institution. The deferred unpaid portions may be reversed proportionally to the significant reduction of the recurring income realized or the negative income for the period.

The fair value of the ITUB4 share is the market price at its grant date.

The weighted average of the fair value of ITUB4 shares was estimated at R$ 24.16 per share at 03/31/2016 (R$ 31.24 per share at 03/31/2015).

Change in variable compensation in shares
	Quantity
Opening balance 12/31/2015		20,295,976
New		10,773,155
Delivered		(9,672,000	)
Cancelled		(85,777	)
Balance at 03/31/2016		21,311,354

Change in variable compensation in shares
	Quantity
Opening balance 12/31/2014		16,366,009
New		10,818,441
Delivered		(7,511,651	)
Cancelled		(539,061	)
Balance at 03/31/2015		19,133,738

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 80

Note 23 - Interest and similar income and expense and net gain (loss) on investment securities derivatives

a) Interest and similar income

	01/01 a		01/01 a
	31/03/2016		31/03/2015
Central Bank compulsory deposits		1,583		1,304
Interbank deposits		315		334
Securities purchased under agreements to resell		8,184		5,876
Financial assets held for trading		5,813		4,297
Available-for-sale financial assets		3,013		2,189
Held-to-maturity financial assets		1,038		828
Loan and lease operations		18,547		19,941
Other financial assets		214		198
Total		38,707		34,967

b) Interest and similar expense

	01/01 a			01/01 a
	31/03/2016			31/03/2015
Deposits		(3,705	)		(1,907	)
Securities sold under repurchase agreements		(11,901	)		(7,192	)
Interbank market debt		(563	)		(1,996	)
Institutional market debt		(1,837	)		(1,889	)
Financial expense from technical reserves for insurance and private pension		(4,653	)		(2,793	)
Other		(27	)		(16	)
Total		(22,686	)		(15,793	)

c) Net gain (loss) on investment securities and derivatives

	01/01 to			01/01 to
	03/31/2016			03/31/2015
Financial assets held for trading		2,374			(119	)
Derivatives (*)		1,244			2,367
Financial assets designated at fair value through profit or loss		41			10
Available-for-sale financial assets		(556	)		(636	)
Finacial liabilities held for trading		(91	)		43
Total		3,012			1,665

(*) Includes the ineffective derivatives portion related to hedge accounting.

During the periods ended 03/31/2016 and 03/31/2015, ITAÚ UNIBANCO HOLDING has not recognized any impairment losses on held-to-maturity financial assets.

During the period ended 03/31/2016, ITAÚ UNIBANCO HOLDING recognized impairment losses on available-for-sale financial assets in the amount of R$ 314 recorded in the statement of income in the line Net gain (loss) on investment securities and derivatives.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 81

Note 24 - Banking service fees

	01/01 to		01/01 to
	03/31/2016		03/31/2015
Current account services		2,238		2,155
Asset management fees		767		661
Collection commissions		309		297
Fees from credit card services		3,226		3,068
Fees for guarantees issued and credit lines		402		408
Brokerage commission		47		58
Other		451		463
Total		7,440		7,110

Note 25 - Other income

	01/01 to		01/01 to
	03/31/2016		03/31/2015
Gains on sale of assets held for sale, fixed assets and investments in associates and joint ventures		24		4
Recovery of expenses		64		37
Reversal of provisions		47		170
Program for Cash or Installment Payment of Federal Taxes (Note 32f)		11		98
Other		106		31
Total		252		340

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 82

Note 26 - General and administrative expenses

	01/01 a			01/01 a
	31/03/2016			31/03/2015
Personnel expenses		(4,911	)		(4,667	)
Compensation		(1,902	)		(1,952	)
Payroll taxes		(610	)		(671	)
Welfare benefits		(659	)		(591	)
Retirement plans and post-employment benefits (Note 29)		12			13
Defined benefit		(16	)		(3	)
Defined contribution		28			16
Stock option plan (Note 22d)		(107	)		(69	)
Training		(36	)		(34	)
Employee profit sharing		(811	)		(818	)
Dismissals		(99	)		(65	)
Provision for labor claims (Note 32)		(699	)		(480	)
Administrative expenses		(3,533	)		(3,417	)
Data processing and telecommunications		(933	)		(923	)
Third party services		(931	)		(883	)
Installations		(247	)		(227	)
Advertising, promotions and publications		(208	)		(218	)
Rent		(341	)		(323	)
Transportation		(99	)		(101	)
Materials		(63	)		(87	)
Financial services		(173	)		(144	)
Security		(177	)		(165	)
Utilities		(120	)		(93	)
Travel		(40	)		(48	)
Other		(201	)		(205	)
Depreciation		(427	)		(399	)
Amortization		(243	)		(211	)
Insurance acquisition expenses		(210	)		(281	)
Other expenses		(2,063	)		(2,025	)
Expenses related to credit cards		(805	)		(826	)
Losses with third party frauds		(107	)		(101	)
Loss on sale of assets held for sale, fixed assets and investments in associates and joint ventures		(29	)		(26	)
Provision for civil lawsuits (Note 32)		(345	)		(518	)
Provision for tax and social security lawsuits		(215	)		(144	)
Refund of interbank costs		(64	)		(60	)
Other		(498	)		(350	)
Total		(11,387	)		(11,000	)

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 83

Note 27 – Income tax and social contribution

ITAÚ UNIBANCO HOLDING and each of its subsidiaries file separate, for each fiscal year, corporate income tax returns and social contribution on net income.

a) Composition of income tax and social contribution expenses

I - Demonstration of Income tax and social contribution expense calculation:

	01/01 to			01/01 to
Due on operations for the period	03/31/2016			03/31/2015
Income before income tax and social contribution		10,675			2,873
Charges (income tax and social contribution) at the rates in effect (Note 2.4 n)		(4,804	)		(1,149	)
Increase / decrease in income tax and social contribution charges arising from:
Share of profit or (loss) of associates and joint ventures net		56			52
Foreign exchange variation on assets and liabilities abroad		(1,917	)		3,187
Interest on capital		891			510
Corporate reorganizations (Note 2.4 a III)		157			160
Dividends and interest on external debt bonds		61			54
Other nondeductible expenses net of non taxable income (*)		4,623			(7,021	)
Income tax and social contribution expenses		(933	)		(4,207	)
Related to temporary differences
Increase (reversal) for the period		(4,042	)		7,104
Increase (reversal) of prior periods		(2	)		13
(Expenses)/Income related to deferred taxes		(4,044	)		7,117
Total income tax and social contribution expenses		(4,977	)		2,910

(*) Includes temporary (additions) and exclusions.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 84

b) Deferred taxes

I - The deferred tax asset balance and respective changes are as follows:

			Realization /
	12/31/2015		reversal			Increase		03/31/2016
Reflected in income		48,911		(8,811	)		6,873		46,973
Allowance for loan and lease losses		25,572		(974	)		2,665		27,263
Related to income tax and social contribution tax carryforwards		6,655		(239	)		1,946		8,362
Provision for contingent liabilities		5,385		(254	)		256		5,387
Civil lawsuits		2,149		(139	)		19		2,029
Labor claims		1,812		(90	)		169		1,891
Tax and social security		1,420		(25	)		68		1,463
Other		4		-			-		4
Goodwill on purchase of investments		511		(66	)		42		487
Legal liabilities – tax and social security		508		(111	)		18		415
Adjustments of operations carried out on the futures settlement market		1,253		(722	)		30		561
Adjustment to market value of financial assets held for trading and derivatives		4,951		(4,951	)		305		305
Provision related to health insurance operations		322		(33	)		-		289
Other		3,754		(1,461	)		1,611		3,904
Reflected in stockholders’ equity		4,253		(1,128	)		-		3,125
Corporate reorganizations (Note 2.4 a III)		1,883		(157	)		-		1,726
Adjustment to market value of available-for-sale securities		1,980		(862	)		-		1,118
Cash flow hedge		137		(109	)		-		28
Other		253		-			-		253
Total (1)(2)		53,164		(9,939	)		6,873		50,098

(1) Deferred income tax and social contribution assets and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 43,500 and R$ 310.

(2) The accounting records of deferred tax assets on income tax losses and/or social contribution loss carryforwards, as well as those arising from temporary differences, are based on technical feasibility studies which consider the expected generation of future taxable income, considering the history of profitability for each subsidiary individually, and for the consolidated taken as a whole. For the subsidiaries, Itaú Unibanco S.A. and Banco Itaucard S.A., a petition has been sent to Central Bank of Brazil, in compliance with paragraph 7 of article 1 of Resolution No. 4,441/15 and pursuant to Circular 3,776/15.

			Realization /
	12/31/2014		reversal			Increase		12/31/2015
Reflected in income		32,513		(7,009	)		23,407		48,911
Allowance for loan and lease losses		18,909		(2,319	)		8,982		25,572
Related to income tax and social contribution tax carryforwards		5,430		(239	)		1,464		6,655
Provision for contingent liabilities		4,298		(1,364	)		2,451		5,385
Civil lawsuits		1,818		(624	)		955		2,149
Labor claims		1,460		(382	)		734		1,812
Tax and social security		1,009		(351	)		762		1,420
Other		11		(7	)		-		4
Goodwill on purchase of investments		721		(210	)		-		511
Legal liabilities – tax and social security		394		(698	)		812		508
Adjustments of operations carried out in futures settlement market		3		(4	)		1,254		1,253
Adjustment to market value of financial assets held for trading and derivatives		109		(109	)		4,951		4,951
Provision related to health insurance operations		274		-			48		322
Other		2,375		(2,066	)		3,445		3,754
Reflected in stockholders’ equity		4,106		(1,527	)		1,674		4,253
Corporate reorganizations (Note 2.4 a III)		2,514		(631	)		-		1,883
Adjustment to market value of available-for-sale securities		539		(142	)		1,583		1,980
Cash flow hedge		50		-			87		137
Other		1,003		(754	)		4		253
Total (*)		36,619		(8,536	)		25,081		53,164

(*) Deferred income tax and social contribution assets and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 47,453 and R$ 370.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 85

II- The provision for deferred tax liability balance and respective changes are as follows:

			Realization /
	12/31/2015		reversal			Increase		03/31/2016
Reflected in income		4,277		(403	)		2,509		6,383
Depreciation in excess – finance lease		1,487		(103	)		-		1,384
Adjustment of escrow deposits and contingent liabilities		1,130		(39	)		77		1,168
Pension plans		336		-			23		359
Adjustments of operations carried out on the futures settlement market		51		(63	)		12		-
Adjustment to market value of financial assets held for trading and derivatives		198		(198	)		2,153		2,153
Taxation of results abroad – capital gains		286		-			132		418
Other		789		-			112		901
Reflected in stockholders’ equity accounts		1,804		(1,308	)		29		525
Adjustment to market value of available-for-sale securities		53		-			24		77
Cash flow hedge		1,313		(1,308	)		-		5
Provision for pension plan benefits		424		-			5		429
Other		14		-			-		14
Total (*)		6,081		(1,711	)		2,538		6,908

(*) Deferred income tax and social contribution asset and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 43,500 and R$ 370.

			Realization /
	12/31/2014		reversal			Increase		12/31/2015
Reflected in income		4,735		(1,801	)		1,343		4,277
Depreciation in excess – finance lease		2,508		(1,021	)		-		1,487
Adjustment of escrow deposits and contingent liabilities		876		(425	)		679		1,130
Pension plans		336		(34	)		34		336
Adjustments of operations carried out on the futures settlement market		4		(12	)		59		51
Adjustment to market value of financial assets held for trading and derivatives		6		(6	)		198		198
Taxation of results abroad – capital gains		563		(277	)		-		286
Other		442		(26	)		373		789
Reflected in stockholders’ equity accounts		956		(97	)		945		1,804
Adjustment to market value of available-for-sale securities		132		(79	)		-		53
Cash flow hedge		373		-			940		1,313
Provision for pension plan benefits		442		(18	)		-		424
Other		9		-			5		14
Total (*)		5,691		(1,898	)		2,288		6,081

(*) Deferred income tax and social contribution asset and liabilities are recorded in the balance sheet offset by a taxable entity and total R$ 47,453 and R$ 370.

III -   The estimate of realization and present value of tax credits and social contribution to offset, arising from Provisional Measure 2,158-35 of 08/24/2001 and from the Provision for Deferred Income Tax and Social Contribution existing at 03/31/2016, are:

	Deferred tax assets
	Temporary differences		%			Tax loss / social contribution loss carryforwards		%			Total		%			Deferred tax liabilities			%			Net deferred taxes		%
2016		9,712		23	%		147		2	%		9,859		20	%		(1,335	)		19	%		8,524		20	%
2017		10,788		26	%		1,058		12	%		11,846		23	%		(1,364	)		20	%		10,482		25	%
2018		11,035		27	%		1,245		15	%		12,280		25	%		(1,390	)		20	%		10,890		25	%
2019		1,042		2	%		3,499		42	%		4,541		9	%		(132	)		2	%		4,409		10	%
2020		907		2	%		2,413		29	%		3,320		7	%		(560	)		8	%		2,760		6	%
After 2020		8,252		20	%		-		0	%		8,252		16	%		(2,127	)		31	%		6,125		14	%
Total		41,736		100	%		8,362		100	%		50,098		100	%		(6,908	)		100	%		43,190		100	%
Present value (*)		37,227					7,213					44,440					(5,923	)					38,517

(*) The average funding rate, net of tax effects, was used to determine the present value.

The projections of future taxable income include estimates related to macroeconomic variables, exchange rates, interest rates, volume of financial operations and services fees and others, which can vary in relation to actual data and amounts.

Net income in the financial statements is not directly related to the taxable income, due to differences between the accounting criteria and tax legislation, in addition to corporate aspects. Accordingly, it is recommended that the trends for the realization of deferred tax assets arising from temporary differences, and tax loss carry forwards should not be used as an indication of future net income.

Considering the temporary effects of Law 13,169/15, which increases the Social Contribution tax rate to 20% until December 31, 2018, tax credits were accounted for based on their expected realization. There are no unrecorded deferred tax assets at 03/31/2016 and 12/31/2015.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 86

Note 28 – Earnings per share

Basic and diluted earnings per share were computed as shown in the table below for the periods indicated. Basic earnings per share are computed by dividing the net income attributable to the stockholder of ITAÚ UNIBANCO HOLDING by the average number of shares for the period, and by excluding the number of shares purchased and held as treasury shares by the company. Diluted earnings per share are computed on a similar way, but with the adjustment made in the denominator when assuming the conversion of all shares that may be diluted.

Net income attributable to owners of the parent company – basic earnings per	01/01 to			01/01 to
share	03/31/2016			03/31/2015
Net income		5,711			5,673
Minimum non-cumulative dividend on preferred shares in accordance with our bylaws		(63	)		(65	)
Subtotal		5,648			5,608
Retained earnings to be distributed to common equity owners in an amount per share equal to the minimum dividend payable to preferred equity owners		(67	)		(67	)
Subtotal		5,581			5,541
Retained earnings to be distributed to common and preferred equity owners on a pro-rata basis
To common equity owners		2,871			2,807
To preferred equity owners		2,710			2,734
Total net income available to common equity owners		2,938			2,874
Total net income available to preferred equity owners		2,773			2,799
Weighted average number of shares outstanding (Note 21a)
Common shares		3,047,037,403			3,047,037,403
Preferred shares		2,875,882,653			2,968,529,572
Earnings per share - basic – R$
Common shares		0.96			0.94
Preferred shares		0.96			0.94

Net income attributable to owners of the parent company – diluted earnings per	01/01 to			01/01 to
share	03/31/2016			03/31/2015
Total net income available to preferred equity owners		2,773			2,799
Dividend on preferred shares after dilution effects		11			17
Net income available to preferred equity owners considering preferred shares after the dilution effect		2,784			2,816
Total net income available to ordinary equity owners		2,938			2,874
Dividend on preferred shares after dilution effects		(11	)		(17	)
Net income available to ordinary equity owners considering preferred shares after the dilution effect		2,927			2,857
Adjusted weighted average of shares (Note 21a)
Common shares		3,047,037,403			3,047,037,403
Preferred shares		2,896,900,403			3,003,529,076
Preferred shares		2,875,882,653			2,968,529,572
Incremental shares from stock options granted under our share-based payment		21,017,750			34,999,504
Earnings per share - diluted – R$
Common shares		0.96			0.94
Preferred shares		0.96			0.94

Potential anti-dilution effects of shares under our share-based payment, which were excluded from the calculation of diluted earnings per share, totaled 18,160,871 preferred shares at 03/31/2016, 4,367,158 preferred shares at 03/31/2015.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 87

Note 29 – Post-employment benefits

As prescribed in IAS 19 (R1), we present the policies of ITAÚ UNIBANCO HOLDING and its subsidiaries regarding employee benefits, as well as the accounting procedures adopted.

The total amounts recognized in Income for the Period and Stockholders’ Equity – Other comprehensive income were as follows:

Total amounts recognized in Income for the period

	Defined benefit						Defined contribution						Other benefits						Total
	01/01 to			01/01 to			01/01 to			01/01 to			01/01 to			01/01 to			01/01 to			01/01 to
	03/31/2016			03/31/2015			03/31/2016			03/31/2015			03/31/2016			03/31/2015			03/31/2016			03/31/2015
Cost of current service		(13	)		(15	)		-			-			-			-			(13	)		(15	)
Net interest		(1	)		(2	)		60			55			(5	)		(3	)		54			50
Contribution (*)		-			-			(32	)		(39	)		-			-			(32	)		(39	)
Benefits paid		-			-						-			3			2			3			2
Total Amounts Recognized		(14	)		(17	)		28			16			(2	)		(1	)		12			(2	)

In the period, contributions to the defined contributions plan, including PGBL, totaled R$ 85 (R$ 54 from 01/01 to 03/31/2015), of which R$ 32 (R$ 39 from 01/01 to 03/31/2015) arising from social security funds.

Total amounts recognized in Stockholders’ Equity – Other comprehensive income

	Defined benefit						Defined contribution						Other benefits						Total
	03/31/2016			12/31/2015			03/31/2016			12/31/2015			03/31/2016			12/31/2015			03/31/2016			12/31/2015
At the beginning of the period		(45	)		(75	)		(314	)		(221	)		(13	)		(8	)		(372	)		(304	)
Effects on asset ceiling		(14	)		(103	)		-			(38	)		-			-			(14	)		(141	)
Remeasurements		12			133			(2	)		(55	)		-			(5	)		10			73
Total Amounts Recognized		(47	)		(45	)		(316	)		(314	)		(13	)		(13	)		(376	)		(372	)

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 88

a)  Retirement plans

ITAÚ UNIBANCO HOLDING and some of its subsidiaries sponsor defined benefit plans, including variable contribution plans, whose basic purpose of which is to provide benefits that, in general, represent a life annuity benefit, and may be converted into survivorship annuities, according to the plan's regulations. They also sponsor defined contribution plans, the benefit of which is calculated based on the accumulated balance of individual accounts at the eligibility date, according to the plan’s regulations, which does not require actuarial calculation, except as described in Note 29c.

Employees hired prior to July 31, 2002, for those who came from Itaú, and prior to February 27, 2009 for those who came from Unibanco, are beneficiaries of the above-mentioned plans. As regards the new employees hired after these dates, they have the option to voluntarily participate in a variable contribution plan (PGBL), managed by Itaú Vida e Previdência S.A.

Retirement plans are managed by closed-end private pension entities (EFPC), with independent legal structures, as detailed below:

Entity	Benefit plan
Fundação Itau Unibanco - Previdência Complementar	Supplementary retirement plan – PAC (1)
	Franprev benefit plan - PBF (1)
	002 benefit plan - PB002 (1)
	Itaulam basic plan - PBI (1)
	Itaulam Supplementary Plan - PSI (2)
	Itaubanco Defined Contribution Plan (3)
	Itaubank Retirement Plan (3)
	Itaú Defined Benefit Plan (1)
	Itaú Defined Contribution Plan (2)
	Unibanco Pension Plan (3)
	Prebeg benefit plan (1)
	UBB PREV defined benefit plan (1)
	Benefit plan II (1)
	Supplementary Retirement Plan – Flexible Premium Annuity (ACMV) (1)
	REDECARD Basic Retirement Plan (1)
	REDECARD Supplementary Retirement Plan (2)
	REDECARD Pension Plan (3)
	ITAUCARD Defined Benefit Retirement Plan (1)
	ITAUCARD Supplementary Retirement Plan (2)
Funbep Fundo de Pensão Multipatrocinado	Funbep I Benefit Plan (1)
	Funbep II Benefit Plan (2)

(1) Defined benefit plan;

(2) Variable contribution plan;

(3) Defined contribution plan.

b)  Governance

The closed-end private pension entities (EFPC) and the benefit plans they manage are regulated in conformity with the related specific legislation. The EFPC are managed by the Executive Board, Advisory Council and Fiscal Council, with some members appointed by the sponsors and others appointed as representatives of active and other participants, pursuant to the respective Entity’s by laws. The main purpose of the EFPC is to pay benefits to eligible participants, pursuant to the Plan Regulations, maintaining the plans assets invested separately and independently from ITAÚ UNIBANCO HOLDING.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 89

c) Defined benefit plans

I - Main aossumptions used in actuarial valuation of retirement plans

	03/31/2016	03/31/2015
Discount rate (1)	11.28% p.a.	10.24% p.a.
Mortality table (2)	AT-2000	AT-2000
Turnover (3)	Exp.Itaú 2008/2010	Exp.Itaú 2008/2010
Future salary growth	7.12% p.a.	7.12% p.a.
Growth of the pension fund and social security benefits	4.00% p.a.	4.00% p.a.
Inflation	4.00% p.a.	4.00% p.a.
Actuarial method (4)	Projected Unit Credit	Projected Unit Credit

(1) The adoption of this assumption is based on interest rates obtained from the actual interest curve in IPCA, for medium term liabilities of retirement plans sponsored by ITAÚ UNIBANCO HOLDING. At 12/31/2015 assumptions were adopted consistently with the economic scenario at the balance sheet date rate, considering the volatility of the interest markets and the models adopted.

(2) The mortality tables adopted correspond to those disclosed by Society of Actuaries (SOA), the North-American entity which corresponds to Brazilian Institute of Actuarial Science (IBA), which reflects a 10% increase in the probabilities of survival compared to the respective basic tables. The life expectancy in years per the AT-2000 mortality table for participants aged 55 years is 27 and 31 years for men and

(3) The turnover is assumption is based on the effective experience of active participants linked to ITAÚ UNIBANCO HOLDING, resulting in the average of 2.4 % p.a. based on the 2008/2010 experience.

(4) Using the Projected Unit Credit method, the mathematical reserve is determined based on the current projected benefit amount multiplied by the ratio between the length of service at the assessment date and the length of service that will be reached at the date when the benefit is granted. The cost is determined taking into account the current projected benefit amount distributed over the years that each participant is employed.

Biometric/demographic assumptions adopted are consistent with the group of participants of each benefit plan, pursuant to the studies carried out by an independent external actuarial consulting company.

II- Risk Exposure - Through its defined benefit plans, ITAÚ UNIBANCO HOLDING is exposed to a number of risks, the most significant ones are:

- Volatility of Assets - The actuarial liability is calculated by adopting a discount rate defined on the income related to securities issued by the Brazilian treasury (government securities). If the actual income related to plan assets is lower than expected, this may give rise to a deficit. The plans have a significant percentage of fixed-income securities pegged to the plan commitments, aimed at minimizing volatility and short and medium term risk.

- Changes in Investment Income - A decrease in income related to public securities will imply a decrease in the discount rate and, therefore, will increase the plan's actuarial liability. The effect will be partially offset by the recognition of these securities at market value.

- Inflation Risk - Most of the employee benefit plans are pegged to the inflation rates, and a higher inflation will lead to higher obligations. The effect will also be partially offset because a significant portion of the plan assets is pegged to government securities restated at the inflation rate.

- Life Expectancy - Most of the plan obligations are to provide life benefits, and therefore an increase in life expectancy will result in increased plan liabilities.

III - Management of defined benefit plan assets

The general purpose of managing EFPCs funds is to search for a long term balance between assets and obligations to pay retirement benefits, by exceeding the actuarial targets (discount rate plus benefit adjustment index, established in the plan regulations).

Regarding the assets guaranteeing the actuarial liability reserves, management should ensure the payment capacity of retirement benefits in the long term by avoiding the risk of mismatching assets and liabilities in each pension plan.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 90

The allocation of plan assets and the allocation target by type of asset are as follows:

	Fair Value				% Allocation
Types	03/31/2016		12/31/2015		03/31/2016			12/31/2015			Meta 2016
Fixed income securities		12,500		12,369		90.62	%		90.73	%	53% a 100%
Variable income securities		593		537		4.30	%		3.94	%	0% a 20%
Structured investments		1		27		0.01	%		0.20	%	0% a 10%
Real estate		630		633		4.57	%		4.64	%	0% a 7%
Loans to participants		70		67		0.51	%		0.49	%	0% a 5%
Total		13,794		13,633		100.00	%		100.00	%

The defined benefit plan assets include shares of ITAÚ UNIBANCO HOLDING, its main parent company (ITAÚSA) and of subsidiaries of the latter, with a fair value of R$ 507 (R$ 452 at 12/31/2015), and real estate rented to Group companies, with a fair value of R$ 603 (R$ 606 at 12/31/2015).

Fair Value

The fair value of the plan assets is adjusted up to the Balance Sheet date, as follows:

Fixed-Income Securities and Structured Investments – accounted for at market value, considering the average trading price on the calculation date, net realizable value obtained upon the technical addition of pricing, considering, at least, the payment terms and maturity, credit risk and the indexing unit.

Variable income securities – accounted for at market value, taken to be the share average quotation at the last day of the month or at the closest date on the stock exchange on which the share has posted the highest liquidity rate.

Real Estate – stated at acquisition or construction cost, adjusted to market value based on reappraisals made in 2015, supported by technical appraisal reports. Depreciation is calculated under the straight line method, considering the useful life of the real estate.

Loans to participants – adjusted up to the report date, in compliance with the respective agreements.

Fund Allocation Target

The fund allocation target is based on Investment Policies that are currently revised and approved by the Advisory Council of each EFPC, considering a five-year period, which establishes guidelines for investing funds guaranteeing Actuarial Liability and for classifying securities.

IV- Net amount recognized in the balance sheet

Following is the calculation of the net amount recognized in the balance sheet, corresponding to the defined benefit plan:

	03/31/2016			12/31/2015
1 - Net assets of the plans		13,794			13,633
2- Actuarial liabilities		(11,677	)		(11,587	)
3- Surplus (1-2)		2,117			2,046
4- Asset ceiling (*)		(2,208	)		(2,134	)
5- Net amount recognized in the balance sheet (3-4)		(91	)		(88	)
Amount recognized in assets (Note 20a)		224			224
Amount recognized in liabilities (Note 20b)		(315	)		(312	)

(*) Corresponds to the excess of the present value of the available economic benefit, in conformity with paragraph 58 of IAS 19.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 91

V- Changes in the net amount recognized in the balance sheet:

	03/31/2016
	Plan net			Actuarial						Asset			Recognized
	assets			liabilities			Surplus			ceiling			amount
Value at the beginning of the period		13,633			(11,587	)		2,046			(2,134	)		(88	)
Cost of current service		-			(13	)		(13	)		-			(13	)
Net interest (1)		370			(311	)		59			(60	)		(1	)
Benefits paid		(223	)		223			-			-			-
Contributions of sponsors		13			-			13			-			13
Contributions of participants		3			-			3			-			3
Effects on asset ceiling		-			-			-			(14	)		(14	)
Remeasurements (2) (3)		(2	)		11			9			-			9
Value end of the period		13,794			(11,677	)		2,117			(2,208	)		(91	)

	12/31/2015
	Plan net			Actuarial						Asset			Recognized
	assets			liabilities			Surplus			ceiling			amount
Value at the beginning of the period		13,438			(11,695	)		1,743			(1,847	)		(104	)
Cost of current service		-			(68	)		(68	)		-			(68	)
Net interest (1)		1,334			(1,151	)		183			(189	)		(6	)
Benefits paid		(908	)		908			-			-			-
Contributions of sponsors		60			-			60			-			60
Contributions of participants		15			-			15			-			15
Effects on asset ceiling		-			-			-			(103	)		(103	)
Remeasurements (2) (3)		(306	)		419			113			5			118
Value end of the period		13,633			(11,587	)		2,046			(2,134	)		(88	)

(1) Corresponds to the amount calculated on 01/01/2016 based on the beginning amount (Net Assets, Actuarial Liabilities and Asset ceiling), taking into account the estimated amount of payments/ receipts of benefits/ contributions, multiplied by the discount rate of 11.28% p.a. (At 01/01/2015 used by the discount rate of 10.24% p.a.)

(2) Remeasurements recorded in net assets and asset ceiling correspond to the income earned above/below the expected return rate.

(3) The actual return on assets amounted to R$ 368 (R$ 1,028 at 12/31/2015 ).

During the period, the contributions made totaled R$ 13 (R$ 15 from 01/01 to 03/31/2015). The contribution rate increases based on the beneficiary’s salary.

In 2016, contribution to the retirement plans sponsored by ITAÚ UNIBANCO HOLDING is expected to amount to R$ 55.

The estimate for payment of benefits for the next 10 years is as follows:

	Payment
Period	estimate
2016		949
2017		977
2018		1,009
2019		1,042
2020		1,083
2021 to 2025		5,935

VI- Sensitivity of defined benefit obligation

The impact, due to the change in the assumption – discount rate by 0.5%, which would be recognized in Actuarial liabilities of the plans, as well as in Stockholders’ Equity – Other Comprehensive Income of the sponsor (before taxes) would amount to:

							Effect which would be
	Effects on actuarial						recognized in
	liabilities of the plan						Stockholders’ Equity (*)
Change in Assumption				Percentage of
				actuarial
	Value			liabilities			Value
- Decrease by 0.5%		566			4.92	%		(281	)
- Increase by 0.5%		(520	)		(4.51	)%		201

(*) Net of effects of asset ceiling

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 92

d) Defined contribution plans

The defined contribution plans have assets relating to sponsors’ contributions not yet included in the participant’s account balance due to loss of eligibility to a plan benefit, as well as resources from the migration from the defined benefit plans. The fund will be used for future contributions to the individual participants' accounts, according to the rules of the respective benefit plan regulation.

I - Change in the net amount recognized in the Balance sheet:

	03/31/2016									12/31/2015
	Pension plan						Recognized			Pension plan						Recognized
	fund			Asset ceiling			amount			fund			Asset ceiling			amount
Value beginning of the period		2,229			(270	)		1,959			2,438			(224	)		2,214
Net interest		67			(7	)		60			239			(20	)		219
Contribution (Note 29)		(32	)		-			(32	)		(381	)		-			(381	)
Effects on asset ceiling		-			-			-			-			(38	)		(38	)
Remeasurements		(2	)					(2	)		(67	)		12			(55	)
Value end of the period (Note 20a)		2,262			(277	)		1,985			2,229			(270	)		1,959

e) Other post-employment benefits

ITAÚ UNIBANCO HOLDING and its subsidiaries do not offer other post-employment benefits, except in those cases arising from obligations under acquisition agreements signed by ITAÚ UNIBANCO HOLDING, as well as in relation to the benefits granted due to a judicial sentence, in accordance with the terms and conditions established, in which health plans are totally or partially sponsored for specific groups of former workers and beneficiaries.

Based on the report prepared by an independent actuary, the changes in obligations for these other projected benefits and the amounts recognized in the balance sheet, under liabilities, of ITAÚ UNIBANCO HOLDING are as follows:

I- Change in the net amount recognized in the balance sheet:

	03/31/2016			12/31/2015
At the beginning of the period		(179	)		(170	)
Interest cost		(5	)		(17	)
Benefits paid		3			13
Remeasurements		-			(5	)
At the end of the period (Note 20b)		(181	)		(179	)

The estimate for payment of benefits for the next 10 years is as follows:

	Payment
Period	estimate
2016		12
2017		13
2018		14
2019		15
2020		15
2021 to 2025		91

II- Assumptions and sensitivity - medical care cost

For calculation of projected benefits obligations in addition to the assumptions used for the defined benefit plans (Note 29c I), an 8.16% p.a. increase in medical costs assumption is assumed.

Assumptions about medical care cost trends have a significant impact on the amounts recognized in income. A change of one percentage point in the medical care cost rates would have the following effects:

	Recognition	1% increase		1% decrease
Service cost and interest cost	Income		4		(3	)
Present value of obligation	Other comprehensive income		20		(17	)

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 93

Note 30 – Insurance contracts

a) Insurance contracts

ITAÚ UNIBANCO HOLDING, through its subsidiaries, offers to the market insurance and private pension products, with the purpose of assuming risks and restoring the economic balance of the assets of the policyholder if damaged. Products are offered through insurance brokers (third parties operating in the market and its own brokers), Itaú Unibanco branches and electronic channels, according to their characteristics and regulatory requirements.

b) Main products

I - Insurance

The contract entered into between the parties aims at guaranteeing the protection of the client's assets. Upon payment of a premium, the policyholder is protected through previously-agreed replacement or indemnification clauses for damages. ITAÚ UNIBANCO HOLDING insurance companies then recognize technical reserves administered by themselves, through specialized areas within the conglomerate, with the objective of indemnifying the policyholder's loss in the event of claims of insured risks.

The insurance risks sold by insurance companies of ITAÚ UNIBANCO HOLDING are divided into property and casualty, that covers losses, damages or liabilities for assets or persons, and life insurance, that includes coverage for death and personal accidents.

	Loss ratio				Sales ratio
	%				%
	01/01 a		01/01 a		01/01 a			01/01 a
Main insurance lines	31/03/2016		31/03/2015		31/03/2016			31/03/2015
Group accident insurance		6		3.4		42.8			41.0
Individual accident		18.5		15.9		11.9			11.3
Commercial multiple peril		46.8		55.4		20.9			21.3
Internal credit		171.2		131.3		6.9			21.1
Mandatory insurance for personal injury caused by motor vehicles
(DPVAT)		87		88.2		1.4			1.4
Serious or terminal diseases		12.4		17.8		10.7			10.7
Extended warranty - assets		19.1		18.0		64.2			64.5
Credit Life		18.3		13.0		21.2			21.5
Income from Uncertain Events		17.1		8.2		14.4			15.5
Multiple risks		8.5		4.8		61.7			61.6
Health		132.1		143.3		0.1			0.2
Education Insurance		200.9		56.6		39.0			33.1
Home Insurance in Market Policies – Other Coverage		5.5		2.4		0.1			0.1
Home insurance in market policies – Credit Life		13.8		22.3		(2.5	)		(3.2	)
Touristic		40.2		54.3		6.2			5.9
Group life		46.5		39.4		12.7			12.8
Individual life		14.8		13.5		-			-

II - Private pension

Developed as a solution to ensure the maintenance of the quality of life of participants, as a supplement to the government plans, through long term investments, private pension products are divided into three major groups:

· PGBL - Plan Generator of Benefits: The main objective of this plan is the accumulation of financial resources, but it can be purchased with additional risk coverage. Recommended for clients that file the full version of income tax return (rather than the simplified version), because they can deduct contributions paid for tax purposes up to 12% of the annual taxable gross income.

· VGBL - Redeemable Life Insurance: This is an insurance structured as a pension plan. Its taxation differs from the PGBL; in this case, the tax basis is the earned income.

· FGB - Fund Generator of Benefits: This is a pension plan with minimum income guarantee, and possibility of receiving earnings from asset performance. Once recognized the distribution of earnings at a certain percentage, as established by the FGB policy, it is not at management's discretion, but instead represents an obligation to ITAÚ UNIBANCO HOLDING. Although there are plans still in existence, they are no longer sold.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 94

III– Income related to insurance and private pension

The revenue from the main insurance and private pension products is as follows:

	Premiums and										Retained premiums and
	contributions issued				Reinsurance						contributions
	01/01 a		01/01 a		01/01 a			01/01 a			01/01 a		01/01 a
	31/03/2016		31/03/2015		31/03/2016			31/03/2015			31/03/2016		31/03/2015
Group accident insurance		197		217		(1	)		-			196		217
Individual accident		51		50		(5	)		-			46		50
Commercial multiple peril		15		13		-			-			15		13
Internal Credit		25		29		-			-			25		29
Mandatory insurance for personal injury caused by motor vehicles (DPVAT)		15		14		-			-			15		14
Serious or terminal diseases		37		40		(1	)		-			36		40
Warranty extension - assets		41		70		-			-			41		70
Disability Savings Pension		70		57		(1	)		(2	)		69		55
PGBL		385		388		-			-			385		388
Credit Life		143		206		-			(3	)		143		203
Income from Uncertain Events		32		33		-			-			32		33
Multiple risks		42		42		-			-			42		42
Health		38		35		-			-			38		35
Home Insurance in Market Policies – Other Coverage		19		15		-			-			19		15
Home Insurance in Market Policies – Credit Life		62		52		(4	)		(7	)		58		45
Traditional		28		33		-			-			28		33
Touristic		6		9		-			-			6		9
VGBL		3,888		3,641		-			-			3,888		3,641
Group life		309		368		(4	)		(5	)		305		363
Individual life		3		3		-			-			3		3
Other lines		40		28		(3	)		(2	)		37		26
Total		5,446		5,343		(19	)		(19	)		5,427		5,324

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 95

c) Technical reserves for insurance and private pension

The technical provisions of insurance and pension plan are recognized according to the technical notes approved by SUSEP and criteria established by current legislation.

I - Insurance and private pension:

· Provision for unearned premiums – this provision is recognized, based on insurance premiums, for the coverage of amounts payable related to claims and expenses to be incurred, throughout their terms maturity, in connection with the risks assumed at the calculation base date. The calculation is performed on the level of policies or endorsement of agreements in force, on a pro rata-die basis. The provision includes an estimate for effective and not issued risks (PPNG-RVNE).

· Provision for unsettled claims – this provision is recognized for the coverage of amounts payable related to lump-sum payments and income overdue from claims reported up to the calculation base date, but not yet paid. The provision covers administrative and legal claims, gross of accepted coinsurance operations and reinsurance operations and net of ceded coinsurance operations. The provision should include, whenever required, IBNER (claims incurred but not sufficiently reported) for the aggregate development of claims reported but not paid, which amounts may be changed throughout the process up to final settlement.

· Provision for claims incurred and not reported - IBNR – this provision is recognized for the coverage of expected unsettled amounts related to claims incurred but not reported up to the calculation base date, gross of accepted coinsurance operations and reinsurance operations, and net of ceded coinsurance operations.

· Mathematical provisions for benefits to be granted - recognized for the coverage of commitments assumed to participants or policyholders, based on the assumptions set forth in the contract, while the event that gave rise to the benefit and/or indemnity has not occurred. The provision is calculated in accordance with the methodology approved in the actuarial technical note to the product.

· Mathematical provisions for granted benefits - recognized after the event triggering the benefit occurs, for the coverage of the commitments assumed to the participants or insured parties, based on the assumptions established in the agreement. The provision is calculated in accordance with the methodologies approved in the technical actuarial note on the product.

· Provision for financial surplus – it is recognized to ensure the amounts intended for distribution of financial surplus, if the event is stated in the agreement. Corresponds to the financial income exceeding the minimum return guaranteed in the product.

· Other technical provisions – it is recognized when insufficiency of premiums or contributions are identified related to payments of benefits and indemnities.

· Provision for redemptions and other amounts to regularize – it comprises the amounts related to redemptions to regularize, returns of premiums or funds, portability requested but, for any reason, not yet transferred to the insurance company or open private pension entity beneficiary, and premiums received but not quoted.

· Provision for related expenses - It is recognized for the coverage of expected amounts related to expenses with benefits and indemnities, due to events incurred and to be incurred.

II - Change in reserves for insurance and private pension

The details about the changes in balances of reserves for insurance and private pension operations are as follows:

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 96

II.I - Change in technical provisions

	03/31/2016												12/31/2015
	Property,												Property,
	individuals						Life with						individuals						Life with
	and life			Private			survivor						and life			Private			survivor
	insurance			pension			benefits			Total			insurance			pension			benefits			Total
Opening balance		4,755			32,688			91,862			129,305			5,872			28,228			75,678			109,778
(+) Additions arising from premiums / contribution		1,059			483			3,888			5,430			4,825			2,255			15,501			22,581
(-) Deferral of risk		(1,356	)		(70	)		-			(1,426	)		(5,780	)		(253	)		-			(6,033	)
(-) Payment of claims / benefits		(402	)		(83	)		(9	)		(494	)		(1,553	)		(337	)		(19	)		(1,909	)
(+) Reported claims		437			-			-			437			1,712			-			-			1,712
(-) Redemptions		-			(447	)		(2,500	)		(2,947	)		(2	)		(1,479	)		(8,720	)		(10,201	)
(+/-) Net portability		-			69			38			107			-			886			504			1,390
(+) Adjustment of reserves and financial surplus		3			1,212			3,371			4,586			9			3,244			9,052			12,305
(+/-) Other (recognition / reversal)		(38	)		24			(14	)		(28	)		(328	)		144			(134	)		(318	)
Reserves for insurance and private pension		4,458			33,876			96,636			134,970			4,755			32,688			91,862			129,305

II.II - Technical provisions balances

	Insurance				Private pension				Total
	03/31/2016		12/31/2015		03/31/2016		12/31/2015		03/31/2016		12/31/2015
Unearned premiums		2,726		3,027		15		15		2,741		3,042
Mathematical reserve for benefits to be granted and benefits granted		21		24		128,832		122,914		128,853		122,938
Redemptions and Other Unsettled Amounts		20		23		187		166		207		189
Financial surplus		1		1		544		547		545		548
Unsettled claims (1)		787		783		19		18		806		801
IBNR		434		424		24		24		458		448
Administrative and Related Expenses		40		42		52		50		92		92
Other		429		431		839		816		1,268		1,247
Total (2)		4,458		4,755		130,512		124,550		134,970		129,305

(1) The provision for unsettled claims is detailed in Note 30e.

(2) This table covers the amendments established by Susep Circular No. 517, de 07/30/2015, also for comparison purposes.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 97

d) Deferred selling expenses

Deferred acquisition costs of insurance are direct and indirect costs incurred to sell, underwrite and originate a new insurance contract.

Direct costs are basically commissions paid for brokerage services, agency and prospecting efforts and are deferred for amortization in proportion to the recognition of revenue from earned premiums, that is, over the coverage period, for the term of effectiveness of contracts, according to the calculation rules in force.

Balances are recorded under gross reinsurance assets and changes are shown in the table below:

Balance at 01/01/2016	901
Increase	241
Amortization	(397	)
Balance at 03/31/2016	745
Balance to be amortized in up to 12 months	543
Balance to be amortized after 12 months	202
Balance at 01/01/2015	1,647
Increase	1,133
Amortization	(1,879	)
Balance at 12/31/2015	901
Balance to be amortized in up to 12 months	644
Balance to be amortized after 12 months	257

The amounts of deferred selling expenses from reinsurance are stated in Note 30I.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 98

e) Table of loss development

Changes in the amount of obligations of the ITAÚ UNIBANCO HOLDING may occur at the end of each annual reporting period. The table below shows the development by the claims incurred method. The first part of the table shows how the final loss estimate changes through time. The second part of the table reconciles the amounts pending payment and the liability disclosed in the balance sheet.

The values shown in the tables express the position of 12/31/2015, since the actuarial calculations are made semiannually:

I – Gross of reinsurance

Reserve for unsettled claims (*)	801
(-) DPVAT operations	17
(-) IBNER (claims incurred but not sufficiently reported)	227
(-) Retrocession and other estimates	2
Liability claims presented in the development table (Ia + Ib)	555

(*) Provision for unsettled claims stated in Note 30c II.II of 12/31/2015, gross of reinsurance

Ia - Administratives claims - gross of reinsurance

Occurrence date	12/31/2011		12/31/2012		12/31/2013		12/31/2014		12/31/2015		Total
At the end of reporting period		928		1,061		1,221		1,302		855
After 1 year		933		1,054		1,221		1,318		-
After 2 years		934		1,059		1,222		-		-
After 3 years		937		1,058		-		-		-
After 4 years		935		-		-		-		-
Current estimate		935		1,058		1,222		1,318		855
Accumulated payments through base date		929		1,055		1,216		1,304		596		5,100
Liabilities recognized in the balance sheet		6		3		6		14		258		287
Liabilities in relation to prior years												13
Total administratives claims included in balance sheet												300

Ib - Judicial claims - gross of reinsurance
Occurrence date	12/31/2011		12/31/2012		12/31/2013		12/31/2014		12/31/2015		Total
At the end of reporting period		30		50		32		33		28
After 1 year		55		58		49		42		-
After 2 years		63		67		54		-		-
After 3 years		70		70		-		-		-
After 4 years		71		-		-		-		-
Current estimate		71		70		54		42		28
Accumulated payments through base date		43		50		37		27		15		172
Liabilities recognized in the balance sheet		28		20		17		15		13		93
Liabilities in relation to prior years												162
Total judicial claims included in balance sheet												255

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 99

II - Net of reinsurance

Reserve for unsettled claims (1)	801
(-) DPVAT operations	17
(-) IBNER	227
(-) Reinsurance (2)	36
(-) Retrocession and other estimates	2
Liability claims presented in the development table (IIa + IIb)	519

(1) Provision refers to provision for unsettled claims stated in Note 30c II.II of 12/31/2015.

(2) Reinsurance operations stated in Note 30l III of 12/31/2015.

IIa - Administratives claims - net of reinsurance

Occurrence date	12/31/2011		12/31/2012		12/31/2013		12/31/2014		12/31/2015		Total
At the end of reporting period		913		1,018		1,190		1,279		849
After 1 year		913		1,008		1,188		1,295		-
After 2 years		915		1,013		1,189		-		-
After 3 years		917		1,013		-		-		-
After 4 years		915		-		-		-		-
Current estimate		915		1,013		1,189		1,295		849
Accumulated payments through base date		912		1,010		1,184		1,281		612		4,999
Liabilities recognized in the balance sheet		3		3		6		14		237		263
Liabilities in relation to prior years												17
Total administratives claims included in balance sheet												280

IIb - Judicial claims - net of reinsurance

Occurrence date	12/31/2011		12/31/2012		12/31/2013		12/31/2014		12/31/2015		Total
At the end of reporting period		30		50		32		33		28
After 1 year		55		58		49		41		-
After 2 years		62		66		55		-		-
After 3 years		69		70		-		-		-
After 4 years		71		-		-		-		-
Current estimate		71		70		55		41		28
Accumulated payments through base date		43		50		38		27		15		173
Liabilities recognized in the balance sheet		27		20		17		15		13		92
Liabilities in relation to prior years												147
Total judicial claims included in balance sheet												239

In the breakdown of the table on change of claims, historic claims were excluded from major risk insurance operations, as informed in Note 3c.

The breakdown of the table development of claims between administrative and legal evidences the reallocation of claims up to a certain base date and that become legal ones afterwards, which may give the wrong impression of need for adjusting the provisions in each breakdown.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 100

f) Liability adequacy test

As established in IFRS 4 – “Insurance contracts”, an insurance company must carry out the Liability Adequacy Test, comparing the amount recognized for its technical reserves with the current estimate of cash flow of its future obligations. The estimate should consider all cash flows related to the business, which is the minimum requirement for carrying out the adequacy test.

The Liability adequacy test did not show any deficiency for periods ended 2015, 2014 and 2013.

The assumptions used in the test are periodically reviewed and are based on the best practices and the analysis of subsidiaries’ experience, therefore representing the best estimates for cash flow projections.

Methodology and Test Grouping

The methodology for testing all products is based on the projection of cash flows. Specifically for insurance products, cash flows were projected using the method known as run-off triangle of quarterly frequency. Cash flows for the deferral and the assignment phases are tested on a separate basis for social security products.

The risk grouping criterion considers groups subject to similar risks that are jointly managed as a single portfolio.

Biometric Tables

Biometric tables are instruments to measure the biometric risk represented by the probability of death, survival or disability of a participant.

For death and survival estimates biometric tables broken down by gender are used, adjusted according to life expectancy development (improvement), and the Álvaro Vindas table is adopted to estimate benefit requests for disability.

Risk-free Interest Rate

The relevant risk-free forward interest-rate structure is an indicator of the pure time value of money used to price the set of projected cash flows.

The relevant structure of risk-free interest rate was obtained from the curve of securities deemed to be credit risk free, available in the Brazilian financial market and determined pursuant to an internal policy of ITAÚ UNIBANCO HOLDING, considering the addition of spread, which took into account the impact of the market result of held-to-maturity securities of the guarantee assets portfolio.

Income conversion rate

The income conversion rate represents the expected conversion of balances accumulated by participants in retirement benefits. The decision of conversion into income by participants is influenced by behavioral, economic and tax factors.

Other Assumptions

Related expenses, cancellations and partial redemptions, future increases and contributions, among others, are assumptions that affect the estimate of projected cash flows since they represent expenses and income arising from insurance agreements assumed.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 101

g) Insurance risk – effect of changes on actuarial assumptions

Property insurance is a short-lived insurance, and the main actuarial assumptions involved in the management and pricing of the associated risks are claims frequency and severity. Volatility above the expected number of claims and/or amount of claim indemnities may result in unexpected losses.

Life insurance and pension plans are, in general, medium or long-lived products and the main risks involved in the business may be classified as biometric risk, financial risk and behavioral risk.

Biometric risk relates to: i) more than expected increase in life expectancies for products with survivorship coverage (mostly pension plans); ii) more than expected decrease in mortality rates for products with survivorship coverage (mostly life insurance).

Products offering financial guarantee predetermined under contract involve financial risk inherent in the underwriting risk, with such risk being considered insurance risk.

Behavioral risk relates to a more than expected increase in the rates of conversion into annuity income, resulting in increased payments of retirement benefits.

The estimated actuarial assumptions are based on the historical evaluation of ITAÚ UNIBANCO HOLDING, on benchmarks and the experience of the actuaries.

To measure the effects of changes in the key actuarial assumptions, sensitivity tests were conducted in the amounts of current estimates of future liability cash flows. The sensitivity analysis considers a vision of the impacts caused by changes in assumptions, which could affect the income for the period and stockholders’ equity at the balance sheet date. This type of analysis is usually conducted under the ceteris paribus condition, in which the sensitivity of a system is measured when one variable of interest is changed and all the others remain unchanged. The results obtained are shown in the table below:

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 102

The sensitivity analysis considers a vision of the impacts caused by changes in assumptions, which could affect the income for the period and stockholders’ equity at the balance sheet date. Results were as follows:

	Impact in Results and Stockholders’ Equity (1)
	03/31/2016 (2)									12/31/2015
	Supplementary			Insurance						Supplementary			Insurance
	Retirement Plans and			Gross of			Net of			Retirement Plans and			Gross of			Net of
Sensitivity analysis	Life with Living Benefits			reinsurance			reinsurance			Life with Living Benefits			reinsurance			reinsurance
5% increase in mortality rates		8			(4	)		(3	)		8			(4	)		(3	)
5% decrease in mortality rates		(8	)		3			3			(8	)		3			3
0.1% increase in risk-free interest rates		38			7			7			38			7			7
0.1% decrease in risk-free interest rates		(39	)		(7	)		(7	)		(39	)		(7	)		(7	)
5% increase in conversion in income rates		(12	)		-			-			(12	)		-			-
5% decrease in conversion in income rates		12			-			-			12			-			-
5% increase in claims		-			(62	)		(60	)		-			(62	)		(60	)
5% decrease in claims		-			63			60			-			63			60

(1) Amounts net of tax effects.

(2) The amounts shown in the table express the position at 12/31/2015, since the actuarial calculations are made semi-annually.

h) Risks of insurance and private pension

ITAÚ UNIBANCO HOLDING has specific committees to define the management of funds from the technical reserves for insurance and private pension, issue guidelines for managing these funds with the objective of achieving long term return, and define evaluation models, risk limits and strategies on allocation of funds to defined financial assets. Such committees are comprised not only of executives and those directly responsible for the business management process, but also for an equal number of professionals that head up or coordinate the commercial and financial areas.

Large risks products are distributed by brokers. In the case of the extended warranty product, this is marketed by the retail company that sells the product to consumer. The DPVAT production results from the participation that the insurance companies of ITAÚ UNIBANCO HOLDING have in the Leading Insurance Company of the DPVAT consortium.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 103

There is no product concentration in relation to insurance premiums, reducing the concentration risk of products and distribution channels.

	01/01 to 03/31/2016						01/01 to 03/31/2015
	Insurance		Retained		Retention		Insurance		Retained		Retention
	premiums		premium		(%)		premiums		premium		(%)
Property and casualty
Mandatory personal injury caused by motor vehicle (DPVAT)		15		15		100.0		14		14		100.0
Extended warranty		41		41		100.0		70		70		100.0
Credit life		143		143		100.0		206		203		99.0
Individuals
Group accident insurance		197		196		99.7		217		217		100.0
Individual accident		51		46		90.0		50		50		100.0
Group life		309		305		98.8		368		363		99.0
Individual life		3		3		100.0		3		3		100.0

i) Insurance, pension plan and capitalization management structure

The products that make up the portfolios of ITAÚ UNIBANCO HOLDING’s insurance companies are related to the life insurance and elementary, pension plan and capitalization lines. Therefore, we understand that the major risks inherent in these products are as follows:

· Subscription risk is the possibility of losses arising from operations of insurance, pension plan and capitalization that go against the organization’s expectations, directly or indirectly associated with the technical and actuarial bases adopted to calculate premiums, contributions and provisions.

· Market risk is the possibility of incurring losses due to fluctuations in the market values of assets and liabilities comprising the actuarial technical reserves.

· Credit risk is the possibility of a certain debtor failing to meet any obligations in connection with the settlement of operations involving the trade of financial assets or reinsurance.

· Operational risk is the possibility of incurring losses arising from the failure, deficiency or inadequacy or internal processes, personnel and systems, or external events impacting the achievement of strategic, tactical or operational purposes of the insurance, pension plan and capitalization operations.

· Liquidity risk in insurance operations is the possibility of the institution being unable to honor its obligations on a timely basis before policyholders and beneficiaries due to lack of liquidity of assets that make up their actuarial technical reserves.

j) Duties and responsibilities

In line with good national and international practices and to ensure that the risks arising from insurance, pension plan and capitalization products are properly identified, measured, assesses, reported and approved in proper bodies, the ITAÚ UNIBANCO HOLDING has a risk management structure which guidelines are established in an internal policy, approved by its Board of Directors, applicable to the companies and subsidiaries exposed to insurance, pension plan and capitalization risks in Brazil and abroad.

The management process of insurance, pension plan and capitalization risks is based on responsibilities established and distributed between the control and business areas, assuring independence among them and focusing on the specificities of each risk, in accordance with the guidelines established by ITAÚ UNIBANCO HOLDING.

Also, as part of the risk management process, there is a governance structure where decisions may be escalated to panels, ensuring compliance with a number of internal and regulatory requirements, as well as balanced decisions regarding risks.

The purpose of ITAÚ UNIBANCO HOLDING is to ensure that assets backing long-term products, with guaranteed minimum returns, are managed according to the characteristics of the liabilities aiming at actuarial balance and long-term solvency.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 104

Considering actuarial assumptions, a detailed mapping of the liabilities of long-term products that result in payment flows of projected future benefits is performed annually. Based on this mapping, Asset Liability Management models are used to find the best asset portfolio composition that enables the neutralize the risks entailed in this type of product, considering its long-term economic and financial feasibility. The portfolios of backing assets are periodically rebalanced based on the fluctuations in market prices of assets, the company’s liquidity needs, and changes in characteristics of liabilities.

k) Market, credit and liquidity risk

Market risk

Market risk is analyzed, in relation to insurance operations, based on the following metrics and sensitivity and loss control measures: Value at Risk (VaR), Losses in Stress Scenarios (Stress Test), Sensitivity (DV01- Delta Variation) and Concentration. For a detailed description of metrics, see Note 36 – Market risk. In the table, the sensitivity analysis (DV01 – Delta Variation) is presented in relation to insurance operations that demonstrate the impact on the cash flows market value when submitted to a 1 annual basis point increase in the current interest rates or index rate and 1 percentage point in the share price and currency.

	(R$ million)
	03/31/2016					12/31/2015
Class	Account balance		DV01			Account balance		DV01
Government securities
NTN-C		5,033		(3.24	)		4,821		(3.20	)
NTN-B		2,273		(2.38	)		2,055		(1.95	)
LTN		550		(0.00	)		-		-
DI Future		-		-			-		-
Private securities
Indexed to IPCA		352		(0.11	)		209		(0.09	)
Indexed to PRE		83		(0.00	)		77		(0.00	)
Shares		1		0.01			1		0.01
Floating assets		6,295		-			4,998		-
Under agreements to resell		4,606		-			4,977		-

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 105

Liquidity Risk

Liquidity risk is the risk that ITAÚ UNIBANCO HOLDING may have insufficient net funds available to honor its current obligations at a given moment. The liquidity risk is managed, for insurance operation, continuously based on the monitoring of payment flows related to its liabilities vis a vis the inflows generated by its operations and financial assets portfolio.

Financial assets are managed in order to optimize the risk-return ratio of investments, considering, on a careful basis, the characteristics of their liabilities. The risk integrated control considers the concentration limits by issuer and credit risk, sensitivities and market risk limits and control over asset liquidity risk. Thus, investments are concentrated in government and private securities with good credit quality in active and liquid markets, keeping a considerable amount invested in short-term assets, available on demand, to cover regular needs and any liquidity contingencies. Additionally, ITAÚ UNIBANCO HOLDING constantly monitors the solvency conditions of its insurance operations.

Liabilities	Assets	03/31/2016						12/31/2015
		Liabilities		Liabilities		Assets		Liabilities		Liabilities		Assets
		amounts (1)		DU (2)		DU (2)		amounts (1)		DU (2)		DU (2)
Insurance operations	Backing asset
Unearned premiums	LFT, repurchase agreements, NTN-B, CDB, LF and debentures		2,726		15.8		14.1		3,025		15.8		13.8
IBNR, PDR e PSL	LFT, repurchase agreements, NTN-B, CDB, LF and debentures		1,258		15.7		19.1		1,243		15.7		16.9
Other provisions	LFT, repurchase agreements, NTN-B, CDB, LF and debentures		432		104.6		30.2		434		104.6		22.7
Subtotal	Subtotal		4,416						4,702
Pension plan, VGBL and individual life operations
Related expenses	LFT, repurchase agreements, NTN-B, CDB, LF and debentures		52		102.7		86.9		50		102.7		85.7
Unearned premiums	LFT, repurchase agreements, NTN-B, CDB and debentures		16		-		14.1		17		-		12.2
Unsettled claims	LFT, repurchase agreements, NTN-B, CDB and debentures		21		-		14.0		20		-		12.3
IBNR	LFT, repurchase agreements, NTN-B, CDB and debentures		24		9.8		14.1		28		9.8		10.5
Redemptions and Other Unsettled Amounts	LFT, repurchase agreements, NTN-B, CDB and debentures		207		-		14.0		190		-		12.3
Mathematical reserve for benefits granted	LFT, repurchase agreements, LTN, NTN-B, NTN-C, NTN-F, CDB, LF and debentures		1,587		102.7		87.1		1,540		102.7		85.8
Mathematical reserve for benefits to be granted – PGBL/ VGBL	LFT, repurchase agreements, LTN, NTN-B, NTN-C, NTN-F, CDB, LF and debentures (3)		122,826		160.6		27.2		117,073		160.6		23.9
Mathematical reserve for benefits to be granted – traditional	LFT, repurchase agreements, NTN-B, NTN-C, Debentures		4,437		208.1		83.2		4,321		208.1		79.4
Other provisions	LFT, repurchase agreements, NTN-B, NTN-C, CDB, LF and debentures		839		208.1		83.2		816		208.1		79.4
Financial surplus	LFT, repurchase agreements, NTN-B, NTN-C, CDB, LF and debentures		545		207.8		83.0		548		207.8		79.2
Subtotal	Subtotal		130,554						124,603
Total technical reserves	Total backing assets		134,970						129,305

(1) Gross amounts of Credit Rights, Escrow Deposits and Reinsurance.

(2) DU = Duration in months

(3) Excluding PGBL / VGBL reserves allocated in variable income.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 106

Credit Risk

I - Reinsurers – Breakdown

The division of risks assigned to reinsurance companies and their rating according the Standard & Poor’s is presented below:

- Insurance Operations: reinsurance premiums operations are basically represented by: IRB Brasil Resseguros with 61.89% (86.70% at 12/31/2015) and Munich Re do Brasil with 38.10% (13.23% at 12/31/2015).

- Social Security Operations: social security operations related to reinsurance premiums are entirely represented by General Reinsurance AG with 50% (50% at 12/31/2015) and Munich Re do Brasil with 50% (50% at 12/31/2015). For insurance operations, transfers of reinsurance premiums are deployed between Munich Re do Brasil with 60.21% (60.26% at 12/31/2015) and IRB Brasil Resseguros with 39,79% (39.74% at 12/31/2015).

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 107

II - Risk level of financial assets

The table below shows insurance financial assets, individually evaluated, classified by rating:

	03/31/2016
Internal rating (*)	Interbank deposits and securities purchased under agreements to resell		Held-for-trading financial assets		Derivatives assets		Available-for- sale financial assets		Held-to- maturity financial assets		Total
Lower risk		5,698		113,250		103		1,194		4,009		124,254
Satisfactory		-		9		-		-		-		9
Higher Risk		-		15		-		-		-		15
Total		5,698		113,274		103		1,194		4,009		124,278
%		4.6		91.1		0.1		1.0		3.2		100.0

(*) Internal risk level ratings, with due associated probability of default, are detailed in Note 36.

	12/31/2015
Internal rating (*)	Interbank deposits and securities purchased under agreements to resell		Held-for-trading financial assets		Derivatives assets		Available-for- sale financial assets		Held-to- maturity financial assets		Total
Lower risk		5,667		94,709		126		2,732		4,320		107,554
Satisfactory		-		16		-		-		-		16
Higher Risk		-		-		-		-		-		-
Total		5,667		94,725		126		2,732		4,320		107,570
%		5.3		88.1		0.1		2.5		4.0		100.0

(*) Internal risk level ratings, with due associated probability of default, are detailed in Note 36.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 108

l) Reinsurance

Expenses and revenues from reinsurance premiums ceded are recognized in the period when they occur, according to the accrual basis, with no offset of assets and liabilities related to reinsurance except in the event there is a contractual provision for the offset of accounts between the parties. Analyses of reinsurance required are made to meet the current needs of ITAÚ UNIBANCO HOLDING, maintaining the necessary flexibility to comply with changes in management strategy in response to the various scenarios to which it may exposed.

Reinsurance assets

Reinsurance assets are valued according to consistent basis of risk assignment contracts, and in the event of losses effectively paid, as from December 2015; they are revalued after 180 days have elapsed in relation to the possibility of non-recovery. For previous periods, revaluation term is 365 days. This amendment was for compliance with the SUSEP Circular in force. In case of doubt, these assets are reduced based on the provision recognized for credit risk associated to reinsurance.

Reinsurance transferred

ITAÚ UNIBANCO HOLDING transfers, in the normal course of its businesses, reinsurance premiums to cover losses on underwriting risks to its policy holders and is in compliance with the operational limits established by the regulating authority. In addition to proportional contracts, non-proportional contracts are also entered into in order to transfer a portion of the responsibility to the reinsurance company for losses that exceed a certain level of losses in the portfolio. Non-proportional reinsurance premiums are included in Other assets - prepaid expenses and amortized to Other operating expenses over the effectiveness period of the contract on a daily accrual basis.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 109

I- Changes in balances of transactions with reinsurance companies

	Credits					Debits
	03/31/2016		12/31/2015			03/31/2016			12/31/2015
Opening balance		18		262			103			610
Issued contracts		-		-			14			75
Recoverable claims		3		-			-			-
Prepayments / payments to reinsurer		12		12			(58	)		(36	)
Other increase / reversal		-		(256	)		-			(546	)
Closing balance		33		18			59			103

II – Balances of technical reserves with reinsurance assets

	03/31/2016		12/31/2015
Reinsurance claims		56		52
Reinsurance premiums		21		24
Reinsurance commission		-		-
Closing balance		77		76

III – Changes in balances of technical reserves for reinsurance claims

	03/31/2016		12/31/2015
Opening balance		52		2,456
Reported claims		4		32
Paid claims		-		(25	)
Other increase / reversal		-		(2,412	)
Monetary adjustment and interest of claims		-		1
Closing balance (*)		56		52

(*) Includes Reserve for unsettled claims, IBNER (Reserve for claims not sufficiently warned), IBNR (Reserve for claims incurred but not reported), not covered by the table of loss development net of reinsurance Note 30 eII.

IV – Changes in balances of technical reserves for reinsurance premiums

	03/31/2016			12/31/2015
Opening balance		24			949
Receipts		16			61
Payments		(19	)		(45	)
Other increase / reversal		-			(941	)
Closing balance		21			24

V – Changes in balances of technical reserves for reinsurance commission

	03/31/2016			12/31/2015
Opening balance		-			(37	)
Receipts		1			4
Payments		(1	)		(4	)
Other increase / reversal		-			37
Closing balance		-			-

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 110

m) Regulatory authorities

Insurance and private pension operations are regulated by the National Council of Private Insurance (CNSP) and the Superintendence of Private Insurance (SUSEP). These authorities are responsible for regulating the market, and consequently for assisting in the mitigation of risks inherent in the business.

The CNSP is the regulatory authority of insurance activities in Brazil, created by Decree-Law N° 73, of November 21, 1966. The main attribution of CNSP, at the time of its creation, was to set out the guidelines and rules of government policy on private insurance segments, and with the enactment of Law N° 6,435, of July 15, 1977, its attributions included private pension of public companies.

The Superintendence of Private Insurance (SUSEP) is the authority responsible for controlling and overseeing the insurance, and reinsurance markets. An agency of the Ministry of Finance, it was created by the Decree-Law N° 73, of November 21, 1966, which also created the National System of Private Insurance, comprising the National Council of Private Insurance (CNSP), IRB Brasil Resseguros S.A. – IRB Brasil Re, the companies authorized to have plans and the open-ended private pension companies.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 111

Note 31 – Fair value of financial instruments

In cases where market prices are not available, fair values are based on estimates using discounted cash flows or other valuation techniques. These techniques are significantly affected by the assumptions adopted, including the discount rate and estimate of future cash flows. The estimated fair value achieved through these techniques cannot be substantiated by comparison with independent markets and, in many cases, it cannot be realized in the immediate settlement of the instrument.

The following table summarizes the carrying and estimated fair values for financial instruments:

	03/31/2016				12/31/2015
	Carrying value		Estimated fair value		Carrying value		Estimated fair value
Financial assets
Cash and deposits on demand and Central Bank compulsory deposits		85,385		85,385		85,100		85,100
Interbank deposits		29,189		29,193		30,525		30,525
Securities purchased under agreements to resell		209,394		209,394		254,404		254,404
Financial assets held for trading (*)		169,905		169,905		164,311		164,311
Financial assets designated at fair value through profit or loss (*)		396		396		642		642
Derivatives (*)		27,748		27,748		26,755		26,755
Available-for-sale financial assets (*)		85,679		85,679		86,045		86,045
Held-to-maturity financial assets		41,104		40,031		42,185		38,892
Loan operations and lease operations		418,026		420,661		447,404		446,787
Other financial assets		54,035		54,035		53,506		53,506
Financial liabilities
Deposits		266,318		266,374		292,610		292,775
Securities sold under repurchase agreements		305,940		305,940		336,643		336,643
Financial liabilities held for trading (*)		395		395		412		412
Derivatives (*)		28,934		28,934		31,071		31,071
Interbank market debt		148,151		147,555		156,886		156,174
Institutional market debt		84,041		83,390		93,918		95,461
Liabilities for capitalization plans		3,026		3,026		3,044		3,044
Other financial liabilities		66,828		66,828		68,715		68,715

(*) These assets and liabilities are recorded in the balance sheet at their fair value.

Financial instruments not included in the Balance Sheet (Note 36) are represented by Standby letters of credit and guarantees provided, which amount to R$ 79,519 (R$ 81,180 at 12/31/2015) with an estimated fair value of R$ 1,108 (R$ 1,143 at 12/31/2015).

The methods and assumptions adopted to estimate the fair value are defined below:

a) Cash and deposits on demand, Central Bank compulsory deposits, Securities purchased under agreements to resell, Securities sold under repurchase agreements and liabilities for capitalization plans – The carrying amounts for these instruments approximate their fair values.

b) Interbank deposits, deposits, Interbank market debt and Institutional market debt – ITAÚ UNIBANCO HOLDING estimates the fair values by discounting the estimated cash flows and adopting the market interest rates.

c) Financial assets held for trading, including Derivatives (assets and liabilities), Financial assets designated at fair value through profit or loss, Available-for-sale financial assets, Held-to-maturity financial assets and Financial liabilities held for trading – Under normal conditions, market prices are the best indicators of the fair values of financial instruments. However, not all instruments have liquidity or quoted market prices and, in such cases, the adoption of present value estimates and other pricing techniques are required. In the absence of quoted prices from National Association of Financial Market Institutions (ANBIMA), the fair values of bonds are calculated based on the interest rates provided by others on the market (brokers). The fair values of corporate debt securities are computed by adopting criteria similar to those applied to interbank deposits, as described above. The fair values of shares are computed based on their prices quoted in the market. The fair values of derivative financial instruments were determined as follows:

· Swaps: The cash flows are discounted to present value based on yield curves that reflect the appropriate risk factors. These yield curves may be drawn mainly based on the exchange price of derivatives at BM&FBOVESPA, of Brazilian government securities in the secondary market or derivatives and securities traded abroad. These yield curves may be used to obtain the fair value of currency swaps, interest rate swaps and swaps based on other risk factors (commodities, stock exchange indices, etc.).

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 112

· Futures and forwards: Quotations on exchanges or criteria identical to those applied to swaps.

· Options: The fair values are determined based on mathematical models (such as Black&Scholes) that are fed with implicit volatility data, interest rate yield curve and fair value of the underlying asset. Current market prices of options are used to compute the implicit volatilities. All these data are obtained from different sources (usually Bloomberg).

· Credit: Inversely related to the probability of default (PD) in a financial instrument subject to credit risk. The process of adjusting the market price of these spreads is based on the differences between the yield curves with no risk and the yield curves adjusted for credit risk.

d) Loan operations and lease operations – Fair value is estimated based on groups of loans with similar financial and risk characteristics, using valuation models. The fair value of fixed-rate loans was determined by discounting estimated cash flows, applying current interest rates for similar loans. For the majority of loans at floating rate, the carrying amount was considered close to their fair value. The fair value of loan and lease operations not overdue was calculated by discounting the expected payments of principal and interest through maturity, at the aforementioned rates. The fair value of overdue loan and lease transactions was based on the discount of estimated cash flows, using a rate proportional to the risk associated with the estimated cash flows, or on the underlying collateral. The assumptions related to cash flows and discount rates are determined using information available in the market and the borrower’s specific information of the debtor.

e) Deposits – The fair value of fixed-rate loans with maturity dates was determined by discounting estimated cash flows, applying current interest rates for similar funding operations. Cash deposits are not considered in the fair value estimate. The assumptions related to cash flows and discount rates are determined based on information available in the market and information specific for each operation.

f) Other financial assets / liabilities – primarily composed of receivables from credit card issuers, deposits in guarantee for contingent liabilities and trading and intermediation of securities. The carrying amounts for these assets/liabilities substantially approximate their fair values, since they principally represent amounts to be received in the short term from credit card holders and to be paid to credit card acquirers, judicially required deposits (indexed to market rates) made by ITAÚ UNIBANCO HOLDING as guarantees for lawsuits or very short-term receivables (generally with a maturity of approximately 5 (five) business days). All of these items represent assets / liabilities without significant associated market, credit and liquidity risks.

In accordance with IFRS, ITAÚ UNIBANCO HOLDING classifies fair value measurements in a fair value hierarchy that reflects the significance of inputs adopted in the measurement process.

Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. An active market is a market in which transactions for the asset or liability being measured occur often enough and with sufficient volume to provide pricing information on an ongoing basis.

Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. Level 2 generally includes: (i) quoted prices for similar assets or liabilities in active markets; (ii) quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability, the prices are not current, or quoted prices vary substantially either over time or among market makers, or in which little information is released publicly; (iii) inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, etc.); (iv) inputs that are mainly derived from or corroborated by observable market data through correlation or by other means.

Level 3: Inputs are unobservable for the asset or liability. Unobservable information shall be used to measure fair value to the extent that observable information is not available, thus allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 113

Financial assets for trading, Available for sale, and Designated at fair value through profit or loss:

Level 1: Highly-liquid securities with prices available in an active market are classified in Level 1 of the fair value hierarchy. This classification level includes most of the Brazilian Government Securities, securities of foreign governments, shares and debentures traded on stock exchanges and other securities traded in an active market.

Level 2: When the pricing information is not available for a specific security, the assessment is usually based on prices quoted in the market for similar instruments, pricing information obtained for pricing services, such as Bloomberg, Reuters and brokers (only when the prices represent actual transactions) or discounted cash flows, which use information for assets actively traded in an active market. These securities are classified into Level 2 of the fair value hierarchy and are comprised of certain Brazilian government securities, debentures, some government securities quoted in a less-liquid market in relation to those classified into Level 1, and some share prices in investment funds. ITAÚ UNIBANCO HOLDING does not hold positions in alternative investment funds or private equity funds.

Level 3: When no pricing information in an active market, ITAÚ UNIBANCO HOLDING uses internally developed models, from curves generated according to the proprietary model. The Level 3 classification includes some Brazilian government and private securities falling due after 2025 and securities that are not usually traded in an active market.

Derivatives:

Level 1: Derivatives traded on stock exchanges are classified in Level 1 of the hierarchy.

Level 2: For derivatives not traded on stock exchanges, ITAÚ UNIBANCO HOLDING estimates the fair value by adopting a variety of techniques, such as Black&Scholes, Garman & Kohlhagen, Monte Carlo or even the discounted cash flow models usually adopted in the financial market. Derivatives included in Level 2 are credit default swaps, cross currency swaps, interest rate swaps, plain vanilla options, certain forwards and generally all swaps. All models adopted by ITAÚ UNIBANCO HOLDING are widely accepted in the financial services industry and reflect all derivative contractual terms. Considering that many of these models do not require a high level of subjectivity, since the methodologies adopted in the models do not require major decisions and information for the model are readily observed in the actively quotation markets, these products were classified in Level 2 of the measurement hierarchy.

Level 3: The derivatives with fair values based on non-observable information in an active market were classified into Level 3 of the fair value hierarchy, and are comprised of non-standard options, certain swaps indexed to non-observable information, and swaps with other products, such as swap with option and USD Check, credit derivatives and futures of certain commodities. These operations have their pricing derived from a range of volatility using the basis of historical volatility.

All aforementioned valuation methodologies may result in a fair value that may not be indicative of the net realizable value or future fair values. However, ITAÚ UNIBANCO HOLDING believes that all methodologies used are appropriate and consistent with the other market participants. However, the adoption of other methodologies or assumptions different than those used to estimate fair value may result in different fair value estimates at the balance sheet date.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 114

Distribution by level

The following table presents the breakdown of risk levels at 03/31/2016 and 12/31/2015 for financial assets held for trading and available-for-sale financial assets.

	03/31/2016								12/31/2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Financial assets held for trading		124,366		45,490		49		169,905		123,948		40,303		60		164,311
Investment funds		18		1,279		-		1,297		19		1,032		-		1,051
Brazilian government securities		119,538		2,794		3		122,335		114,007		3,043		3		117,053
Brazilian external debt bonds		898		-		-		898		4,431		-		-		4,431
Government securities – other countries		674		346		-		1,020		933		216		-		1,149
Argentina		588		-		-		588		696		-		-		696
Chile		-		237		-		237		-		36		-		36
Colombia		-		11		-		11		-		72		-		72
United States		86		-		-		86		132		-		-		132
Mexico		-		-		-		-		3		-		-		3
Paraguay		-		57		-		57		-		68		-		68
Uruguay		-		41		-		41		-		40		-		40
Other		-		-		-		-		102		-		-		102
Corporate securities		3,238		41,071		46		44,355		4,558		36,012		57		40,627
Shares		2,325		-		-		2,325		2,161		-		-		2,161
Bank deposit certificates		17		2,416		-		2,433		19		2,564		-		2,583
Securitized real estate loans		-		-		-		-		-		-		-		-
Debentures		855		3,224		44		4,123		2,333		2,141		48		4,522
Eurobonds and others		41		4,043		1		4,085		45		940		6		991
Financial credit bills		-		31,267		-		31,267		-		30,367		-		30,367
Promissory notes		-		-		-		-		-		-		-		-
Other		-		121		1		122		-		-		3		3
Available-for-sale financial assets		28,930		50,021		6,728		85,679		32,439		49,347		4,259		86,045
Investment funds		5		63		427		495		6		98		114		218
Brazilian government securities		12,001		754		223		12,978		10,793		791		212		11,796
Brazilian external debt bonds		13,409		-		-		13,409		17,312		-		-		17,312
Government securities – other countries		1,914		7,879		52		9,845		2,152		7,702		29		9,883
Chile		-		1,476		52		1,528		-		1,378		29		1,407
Korea		-		2,172		-		2,172		-		1,626		-		1,626
Denmark		-		2,548		-		2,548		-		2,548		-		2,548
Spain		-		753		-		753		-		1,060		-		1,060
United States		1,795		-		-		1,795		2,022		-		-		2,022
Netherlands		111		-		-		111		122		-		-		122
Paraguay		-		723		-		723		-		912		-		912
Uruguay		-		207		-		207		-		178		-		178
Other		8		-		-		8		8		-		-		8
Corporate securities		1,601		41,325		6,026		48,952		2,176		40,756		3,904		46,836
Shares		1,004		-		229		1,233		661		-		267		928
Rural Product Note		-		804		354		1,158		-		1,078		52		1,130
Bank deposit certificates		-		648		123		771		-		1,443		130		1,573
Securitized real estate loans		-		-		2,090		2,090		-		-		2,037		2,037
Debentures		597		19,301		2,269		22,167		410		21,581		844		22,835
Eurobonds and others		-		12,733		549		13,282		1,105		8,981		26		10,112
Financial credit bills		-		6,749		337		7,086		-		6,479		367		6,846
Promissory notes		-		843		-		843		-		937		54		991
Other		-		247		75		322		-		257		127		384
Financial assets designated at fair value through profit or loss		396		-		-		396		642		-		-		642
Brazilian government securities		265		-		-		265		506		-		-		506
Government securities – other countries		131		-		-		131		136		-		-		136
Financial liabilities held for trading		-		395		-		395		-		412		-		412
Structured notes		-		395		-		395		-		412		-		412

The following table presents the breakdown of risk levels at 03/31/2016 and 12/31/2015 for our derivative assets and liabilities.

	03/31/2016											12/31/2015
	Level 1		Level 2			Level 3			Total			Level 1		Level 2			Level 3			Total
Derivatives – assets		1,017		25,734			997			27,748			529		24,975			1,251			26,755
Futures		1,017		-			-			1,017			529		-			-			529
Swap – differential receivable		-		7,025			864			7,889			-		7,958			1,189			9,147
Options		-		4,836			114			4,950			-		5,550			33			5,583
Forwards (onshore)		-		5,359			-			5,359			-		3,166			-			3,166
Credit derivatives		-		426			-			426			-		614			-			614
Forwards (offshore)		-		4,085			-			4,085			-		3,430			-			3,430
Check of swap		-		232			-			232			-		355			-			355
Other derivatives		-		3,771			19			3,790			-		3,902			29			3,931
Derivatives - liabilities		-		(28,907	)		(27	)		(28,934	)		-		(31,038	)		(33	)		(31,071	)
Swap – differential payable		-		(13,040	)		(10	)		(13,050	)		-		(16,310	)		(21	)		(16,331	)
Options		-		(5,120	)		(17	)		(5,137	)		-		(5,771	)		(12	)		(5,783	)
Forwards (onshore)		-		(3,782	)		-			(3,782	)		-		(833	)		-			(833	)
Credit derivatives		-		(534	)		-			(534	)		-		(875	)		-			(875	)
Forwards (offshore)		-		(2,896	)		-			(2,896	)		-		(3,142	)		-			(3,142	)
Check of swap		-		(454	)		-			(454	)		-		(545	)		-			(545	)
Other derivatives		-		(3,081	)		-			(3,081	)		-		(3,562	)		-			(3,562	)

There were no significant transfer between Level 1 and Level 2 during the period from March 31, 2016 and December 31, 2015. Transfers to and from Level 3 are presented in movements of Level 3.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 115

Measurement of fair value Level 2 based on pricing services and brokers

When pricing information is not available for securities classified as Level 2, pricing services, such as Bloomberg or brokers, are used to value such instruments.

In all cases, to assure that the fair value of these instruments is properly classified as Level 2, internal analysis of the information received are conducted, so as to understand the nature of the input used in the establishment of such values by the service provider.

Prices provided by pricing services that meet the following requirements are considered Level 2: input is immediately available, regularly distributed, provided by sources actively involved in significant markets and it is not proprietary.

Of the total of R$ 95,511 million in financial instruments classified as Level 2, at March 31, 2016, pricing service or brokers were used to evaluate securities at the fair value of R$ 47,526 million, substantially represented by:

· Debentures: When available, we use price information for transactions recorded in the Brazilian Debenture System (SND), an electronic platform operated by CETIP, which provides multiple services for transactions involving debentures in the secondary market. Alternatively, prices of debentures provided by ANBIMA are used. Its methodology includes obtaining, on a daily basis, illustration and non-binding prices from a group of market players deemed to be significant. Such information is subject to statistical filters established in the methodology, with the purpose of eliminating outliers.

· Global and corporate securities: The pricing process for these securities consists in capturing from 2 to 8 quotes from Bloomberg, depending on the asset. The methodology consists in comparing the highest purchase prices and the lowest sale prices of trades provided by Bloomberg for the last day of the month. Such prices are compared with information from purchase orders that the Institutional Treasury of ITAÚ UNIBANCO HOLDING provides for Bloomberg. Should the difference between them be lower than 0.5%, the average price of Bloomberg is used. Should it be higher than 0.5% or if the Institutional Treasury does not provide information on this specific security, the average price gathered directly from other banks is used. The price of the Institutional Treasury is used as a reference only and never in the computation of the final price.

Level 3 recurring fair value measurements

The departments in charge of defining and applying the pricing models are segregated from the business areas. The models are documented, submitted to validation by an independent area and approved by a specific committee. The daily process of price capture, calculation and disclosure are periodically checked according to formally defined testing and criteria and the information is stored in a single and corporate history data base.

The most recurring cases of assets classified as Level 3 are justified by the discount factors used. Factors such as the fixed interest curve in Brazilian Reais and the TR coupon curve – and, as a result, its related factors – have inputs with terms shorter than the maturities of these fixed-income assets. For swaps, the analysis is carried out by index for both parties. There are some cases in which the inputs periods are shorter than the maturity of the derivative.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 116

Level 3 recurring fair value changes

The tables below show the changes in balance sheet for financial instruments classified by ITAÚ UNIBANCO HOLDING in Level 3 of the fair value hierarchy. Derivative financial instruments classified in Level 3 mainly correspond to other derivatives linked to shares.

	Fair value at 12/31/2015		Total gains or losses (realized / unrealized)			Purchases		Settlements			Transfers in and / or out of Level 3		Fair value at 03/31/2016		Total gains (losses) related to assets and liabilities still held at 03/31/2016
Financial assets held for trading		61		(3	)		187		(203	)		7		49		(4	)
Brazilian government securities		3		-			-		(3	)		3		3		-
Corporate securities		58		(3	)		187		(200	)		4		46		(4	)
Debentures		48		(3	)		175		(179	)		3		44		(2	)
Eurobonds and others		6		-			7		(13	)		1		1		(2	)
Other		4		-			5		(8	)		-		1		-
Available-for-sale financial assets		4,259		205			7,827		(7,877	)		2,314		6,728		(1,085	)
Investment funds		114		313			-		-			-		427		-
Brazilian government securities		212		11			24		(24	)		-		223		(6	)
Government securities – abroad - Chile		29		-			167		(144	)		-		52		-
Corporate securities		3,904		(119	)		7,636		(7,709	)		2,314		6,026		(1,079	)
Shares		267		(38	)		-		-			-		229		-
Rural Product Note		52		1			52		(105	)		354		354		(105	)
Bank deposit certificates		130		-			350		(357	)		-		123		-
Securitized real estate loans		2,037		(6	)		4,132		(4,073	)		-		2,090		(145	)
Debentures		844		(79	)		2,119		(2,050	)		1,435		2,269		(700	)
Eurobonds and others		26		-			28		(30	)		525		549		(124	)
Financial credit bills		367		2			708		(740	)		-		337		(5	)
Promissory notes		54		-			-		(54	)		-		-		-
Other		127		1			247		(300	)		-		75		-

	Fair value at 12/31/2015			Total gains or losses (realized / unrealized)			Purchases			Settlements			Transfers in and / or out of Level 3		Fair value at 03/31/2016			Total gains (losses) related to assets and liabilities still held at 03/31/2016
Derivatives - assets		1,251			(275	)		70			(49	)		-		997			58
Swap – differential receivable		1,189			(319	)		4			(10	)		-		864			-
Options		33			51			66			(36	)				114			47
Other derivatives		29			(7	)		-			(3	)		-		19			11
Derivatives - liabilities		(33	)		16			(14	)		4			-		(27	)		18
Swap – differential payable		(21	)		9			(2	)		4			-		(10	)		-
Options		(12	)		7			(12	)		-			-		(17	)		18

	Fair value at 12/31/2014		Total gains or losses (realized / unrealized)			Purchases		Settlements			Transfers in and / or out of Level 3		Fair value at 12/31/2015		Total gains (losses) related to assets and liabilities still held at 12/31/2015
Financial assets held for trading		790		33			102		(865	)		-		60		-
Brazilian government securities		-		4			-		(1	)		-		3		-
Corporate securities		790		29			102		(864	)		-		57		-
Securitized real estate loans		1		-			-		(1	)		-		-		-
Debêntures		210		(13	)		66		(215	)		-		48		-
Promissory notes		577		54			-		(631	)		-		-		-
Eurobonds and others		2		(6	)		27		(17	)		-		6		-
Other		-		(6	)		9		-			-		3
Available-for-sale financial assets		5,404		(1,241	)		4,453		(4,624	)		267		4,259		(451	)
Investment funds		-		(1,128	)		1,242		-			-		114		-
Brazilian government securities		249		(116	)		85		(6	)		-		212		(22	)
Government securities – abroad - Chile		13		(1	)		101		(84	)		-		29		-
Corporate securities		5,142		4			3,025		(4,534	)		267		3,904		(429	)
Shares		-		-			-		-			267		267		-
Rural Product Note		51		1			9		(9	)		-		52		-
Bank deposit certificates		58		7			201		(136	)		-		130		-
Securitized real estate loans		2,522		(142	)		68		(411	)		-		2,037		(207	)
Debêntures		706		(12	)		915		(765	)		-		844		(222	)
Eurobonds and others		53		(8	)		94		(113	)		-		26		2
Financial credit bills		270		48			49		-			-		367		(2	)
Promissory notes		1,397		72			1,574		(2,989	)		-		54		-
Other		85		38			115		(111	)		-		127		-

	Fair value at 12/31/2014			Total gains or losses (realized / unrealized)			Purchases			Settlements			Transfers in and / or out of Level 3			Fair value at 12/31/2015			Total gains (losses) related to assets and liabilities still held at 12/31/2015
Derivatives - Assets		121			369			316			(219	)		664			1,251			31
Swaps - differential receivable		33			318			192			(18	)		664			1,189			-
Options		16			(29	)		124			(78	)		-			33			(10	)
Other derivatives		72			80			-			(123	)		-			29			41
Derivatives - Liabilities		(44	)		(40	)		(95	)		148			(2	)		(33	)		-
Swaps - differential payable		(38	)		(38	)		(11	)		68			(2	)		(21	)		-
Options		(6	)		(2	)		(84	)		80			-			(12	)		-

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 117

Sensitivity analyses operations of Level 3

The fair value of financial instruments classified in Level 3 (in which prices negotiated are not easily noticeable in active markets) is measured through assessment techniques based on correlations and associated products traded in active markets, internal estimates and internal models.

Significant unverifiable inputs used for measurement of the fair value of instruments classified in Level 3 are: interest rates, underlying asset prices and volatility. Significant variations in any of these inputs separately may give rise to significant changes in the fair value.

The table below shows the sensitivity of these fair values in scenarios of changes of interest rates, asset prices, or in scenarios vary in prices with shocks and the volatility for non-linear assets:

Sensitivity – Level 3 Operations		03/31/2016
		Impact
					Stockholders'
Risk factor groups	Scenarios	Result			equity
	I		(3.4	)		(5.8	)
Interest rates	II		(85.7	)		(141.5	)
	III		(171.3	)		(275.5	)
Currency, commodities, and ratios	I		(21.4	)		-
	II		(42.7	)		-
Nonlinear	I		(19.1	)		-
	II		(32.9	)		-

The following scenarios are used to measure the sensitivity:

Interest rate

Shocks at 1, 25 and 50 basis points (scenarios I, II and III respectively) in the interest curves, both for increase and decrease, considering the largest losses resulting in each scenario.

Currencies, commodities and ratios

Shocks at 5 and 10 percentage points (scenarios I and II respectively) in prices of currencies, commodities and ratios, both for increase and decrease, considering the largest losses resulting in each scenario.

Non linear

Scenario I: Shocks at 5 percentage points in prices and 25 percentage points the level in volatility, both for increase and decrease, considering the largest losses resulting in each scenario.

Scenario II: Shocks at 10 percentage points in prices and 25 percentage points the level in volatility, both for increase and decrease, considering the largest losses resulting in each scenario.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 118

Note 32 – Provisions, contingencies and other commitments

Provision	03/31/2016		12/31/2015
Civil		5,228		5,227
Labor		6,445		6,132
Tax and social security		7,650		7,500
Other		134		135
Total		19,457		18,994
Current		3,750		3,848
Non-current		15,707		15,146

In the ordinary course of its businesses, ITAÚ UNIBANCO HOLDING is subject to contingencies that may be classified as follows:

a) Contingent assets: there are no contingent assets recorded.

b) Provisions and contingencies: the criteria to quantify contingencies are appropriate to the specific characteristics of civil, labor and tax litigation, as well as other risks.

- Civil lawsuits

Collective lawsuits (related to claims of a similar nature and with individual amounts not considered significant): contingencies are determined on a monthly basis and the expected amount of losses is accrued based on statistical models that take into account the type of lawsuit and the characteristics of the court (Small Claims Court or Regular Court). These are adjusted to reflect the amounts deposited as guarantee for their execution when realized.

Individual lawsuits (related to claims with unusual characteristics or involving significant amounts): calculation is carried out on a periodic basis, from the calculation of the claimed amount which, in turn, is estimated based on the de jure or de facto characteristics related to that lawsuit. The amounts considered as representing probable losses are recorded as provisions.

In general, contingencies arise from revisions of contracts and compensation for damages and pain and suffering. ITAÚ UNIBANCO HOLDING is also a party to specific lawsuits related to the collection of understated inflation adjustments to savings accounts resulting from economic plans.

From 1986 to 1994, the Brazilian federal government implemented several consecutive monetary stabilization plans (MSPs) to combat hyperinflation. In order to implement these plans, the Brazilian federal government enacted several laws based on its power to regulate the monetary and financial systems, as granted by the Brazilian federal constitution.

Savings account holders at the time when these MSPs were implemented challenged the constitutionality of the laws in connection with such plans, claiming, from the banks in which they held savings accounts, additional interest based on the inflation rates applied to the deposit accounts based on the MSPs.

ITAÚ UNIBANCO HOLDING is defendant in numerous standardized lawsuits filed by individuals in respect of the MSP, and records provisions for such claims upon service of a process for a claim. In addition, ITAÚ UNIBANCO HOLDING is defendant in class actions, similar to the lawsuits brought by individuals, filed by either: (i) consumer protection associations, or (ii) the Public Prosecution Office on behalf of savings account holders. Holders of savings accounts may claim any amount due based on such a decision. ITAÚ UNIBANCO HOLDING records provisions when individual plaintiffs apply to enforce such decisions, using the same criteria adopted to determine provisions for individual lawsuits.

The Federal Supreme Court (STF) has issued some decisions favorable to savings account holders, but has not issued a final ruling with respect to the constitutionality of the MSPs as applicable to savings accounts. In relation to a similar dispute with respect to the constitutionality of the MSPs as applicable to time deposits and other private agreements, the STF has determined that the bills were constitutional. As a response to this discrepancy, the National Confederation of the Financial System (CONSIF) an association of Brazilian financial institutions, filed a special proceeding with the STF (Action against the violation of a constitutional fundamental right No. 165 - “ADPF” No. 165), in which the Central Bank filed an amicus brief, arguing that savings account holders did not incur actual damages and that the MSPs as applicable to savings accounts were in accordance with the federal constitution. Accordingly, the STF suspended the rulings on all appeals involving this matter until it pronounces a final decision. However, there is no estimate when the judgment by STF will occur, since, due to the disqualification of certain ministers, there is no sufficient quorum at this time to resolve on the issue.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 119

The most important rulings will address the following issues: (i) the accrual of compensatory interest on the amount due to the plaintiff, on filings that carry no specific claim to such interest; (ii) the initial date of default interest, for class actions; and (iii) the possibility of compensating the negative difference arising in the month of the MSP implementation, between the interests actually paid on savings accounts and the inflation rate for the same period, with the positive difference arising in the months subsequent to the MSP implementation, between the interests actually paid on savings accounts and the inflation rate of the same period. In relevant sentences in 2015, the STJ decided that: (i) the inclusion of interest in the calculation of execution is not applicable if there is no express sentence for this; and (ii) there shall be no payment of interest to holders of savings accounts after the proven closing date of those accounts. The thesis that understated inflation of plans subsequent to those challenged in the lawsuit can be included as full monetary correction of the debt, even with no express claim by the holder of savings account, has been reaffirmed. Additionally, STJ reaffirmed that the term for filling collection lawsuits expired within five years counted from the implementation date of the monetary stabilization plan (MSP). Accordingly, various collective lawsuits continue being extinguished by the Judiciary Branch as a result of this decision.

No amount is recorded as a provision in relation to civil lawsuits which represent possible losses and which have a total estimated risk of R$ 2,637 (R$ 2,460 at 12/31/2015), these refer to claims for compensation or collection, the individual amounts of which are not significant and in this total there are no values resulting from interests in joint ventures.

- Labor claims

Collective lawsuits (related to claims of a similar nature and with individual amounts not considered significant): the expected loss amount is determined and accrued monthly based on the statistical share pricing model and is reassessed taking into account court rulings. These are adjusted to reflect the amounts deposited as guarantee for their execution when realized.

Individual lawsuits (related to claims with unusual characteristics or involving significant amounts): determined periodically, based on the amount claimed and the likelihood of loss, which, in turn, is estimated according to the factual and legal characteristics related to such lawsuit. The amounts considered as probable losses are recorded as provisions.

Contingencies are related to lawsuits in which alleged labor rights based on labor legislation, such as overtime, salary equalization, reinstatement, transfer allowances, pension plan supplements and other matters are claimed.

No amount is recorded as a provision for labor claims for which the likelihood of loss is considered possible, and for which the total estimated risk is R$ 717 (R$ 829 12/31/2015).

- Other risks

These are quantified and recorded as provisions mainly based on the evaluation of agribusiness credit transactions with joint obligation and FCVS (Salary Variations Compensation Fund) credits transferred to Banco Nacional.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 120

The table below shows the changes in the balances of provisions for civil, labor and other provision and the respective escrow deposit balances:

	01/01 to 03/31/2016
	Civil			Labor			Other			Total
Opening balance		5,227			6,132			135			11,494
(-) Contingencies guaranteed by indemnity clause (Note 2.4.t)		(236	)		(1,089	)		-			(1,325	)
Subtotal		4,991			5,043			135			10,169
Interest (Note 26)		95			152			-			247
Changes in the period reflected in results (Note 26)		250			547			(1	)		796
Increase (*)		388			581			(1	)		968
Reversal		(138	)		(34	)		-			(172	)
Payment		(348	)		(346	)		-			(694	)
Subtotal		4,988			5,396			134			10,518
(+) Contingencies guaranteed by indemnity clause (Note 2.4.t)		240			1,049			-			1,289
Closing balance		5,228			6,445			134			11,807
Escrow deposits at 03/31/2016 (Note 20a)		1,733			2,250			-			3,983

(*) Civil provisions include the provision for economic plans amounting to R$ 45.

	01/01 to 03/31/2015
	Civil			Labor			Other			Total
Opening balance		4,643			5,598			159			10,400
(-) Contingencies guaranteed by indemnity clause (Note 2.4.t)		(132	)		(1,029	)		-			(1,161	)
Subtotal		4,511			4,569			159			9,239
Interest (Note 26)		98			149			-			247
Changes in the period reflected in results (Note 26)		420			331			7			758
Increase (*)		532			365			7			904
Reversal		(112	)		(34	)		-			(146	)
Payment		(318	)		(317	)		(1	)		(636	)
Subtotal		4,711			4,732			165			9,608
(+) Contingencies guaranteed by indemnity clause (Note 2.4.t)		134			1,070			-			1,204
Closing balance		4,845			5,802			165			10,812
Escrow deposits at 03/31/2015 (Note 20a)		2,016			2,586			-			4,602

(*) Civil provisions include the provision for economic plans amounting to R$ 70.

- Tax and social security lawsuits

Contingencies are equivalent to the principal amount of taxes involved in administrative or judicial disputes, subject to tax assessment notices, plus interest and, when applicable, fines and charges. The amount is recorded as a provision when it involves a legal liability, regardless of the likelihood of loss, that is, a favorable outcome for the institution is dependent upon the recognition of the unconstitutionality of the applicable laws in force. In other cases, a provision is set up whenever the loss is considered probable.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 121

The table below shows the changes in the balances of provisions and respective balance of escrow deposits for tax and social security lawsuits:

	01/01 to			01/01 to
Provision	03/31/2016			03/31/2015
Opening balance		7,500			6,627
(-) Contingencies guaranteed by indemnity clause		(65	)		(61	)
Subtotal		7,435			6,566
Interest (*)		186			95
Changes in the period reflected in results		36			75
Increase (*)		92			85
Reversal (*)		(56	)		(10	)
Payment		(73	)		(86	)
Subtotal		7,584			6,650
(+) Contingencies guaranteed by indemnity clause		66			62
Closing balance		7,650			6,712

(*) The amounts are included in the headings Tax Expenses, General and Administrative Expenses and Current Income Tax and Social Contribution.

	01/01 to			01/01 to
Escrow deposits	03/31/2016			03/31/2015
Opening balance		4,339			4,736
Appropriation of interest		91			82
Changes in the period		66			58
Deposits made		113			151
Withdrawals		(22	)		(9	)
Deposits released		(25	)		(84	)
Closing balance (Note 20a)		4,496			4,876
Closing balance after reclassification		4,496			4,876

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 122

Main discussions related to the provisions recognized for Tax and Social Securities Lawsuits are described as follows:

· CSLL – Isonomy – R$ 1,121: as the law increased the CSLL rate for financial and insurance companies to 15%, we argue that there is no constitutional support for this measure and, due to the principle of isonomy, we believe we should only pay the regular rate of 9%. The corresponding escrow deposit balance totals R$ 1,109;

· INSS – Prevention Accident Factor (FAP) – R$ 931: it challenges the legality of FAP and inconsistent procedures applied by the INSS upon its calculation. The corresponding escrow deposit balance totals R$ 101;

· PIS and COFINS – Calculation basis – R$ 622: we are claiming that those contributions on revenue should be applied only to the revenue from sales of assets and services. The corresponding escrow deposit balance totals R$ 535;

· IRPJ and CSLL – Taxation of profits earned abroad – R$ 570: we are challenging the calculation basis for these taxes on profits earned abroad and argue that Regulatory Instruction SRF No. 213-02 is not applicable since it goes beyond the text of the law. The corresponding escrow deposit balance totals R$ 219.

Off-balance sheet contingencies –The estimated amounts at risk in the main tax and social security lawsuits with a likelihood of loss deemed possible, which total R$ 16,442, are described below:

· INSS – Non-compensatory amounts – R$ 4,477: we defend the non-taxation of these amounts, mainly profit sharing, stock options plan, transportation vouchers and sole bonuses;

· IRPJ and CSLL – Goodwill – Deductibility – R$ 2,931: the deductibility of goodwill on acquisition of investments with future expected profitability, and R$ 625 of this amount is guaranteed in company purchase agreements;

· IRPJ, CSLL, PIS and COFINS – Requests for offsetting dismissed - R$ 1,391: cases in which the liquidity and the ability of offset credits are discussed;

· IRPJ and CSLL - Interest on capital - R$ 1,326: the company is defending the deductibility of interest on capital declared to stockholders based on the Brazilian long term interest rate applied to stockholders’ equity for the year and prior years;

· ISS – Banking Institutions – R$ 944: these are banking operations, the revenue from which may not be interpreted as prices for services rendered, and/or which arises from activities not listed in a Supplementary Law.

c) Receivables - Reimbursement of contingencies

The Receivables balance arising from reimbursements of contingencies totals R$ 1,106 (R$ 1,093 at 12/31/2015) (Note 20a), basically represented by the guarantee received for the Banco Banerj S.A. privatization process which occurred 1997, where the State of Rio de Janeiro created a fund to guarantee civil, labor and tax contingencies.

d) Assets pledged as collateral for contingencies

Assets pledged as collateral for lawsuits involving contingent liabilities are restricted or deposited as shown below:

	03/31/2016		03/31/2015
Financial assets held for trading and Available-for-sale financial assets (basically financial treasury bills)		849		781
Escrow deposits (Note 20a)		4,400		4,299

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 123

Escrow deposits are generally required to be made with the court in connection with lawsuits in Brazil, and they are held by the respective court until a decision is made. In case of a decision against ITAÚ UNIBANCO HOLDING, the deposited amount is released from escrow and transferred to the counterparty to the lawsuit. In the case of a decision in favor of ITAÚ UNIBANCO HOLDING, the deposited amount is released at the full deposited and updated amount.

In general, provisions related to lawsuits of ITAÚ UNIBANCO HOLDING are long term, considering the time required for the termination of these lawsuits in the Brazilian judicial system, which is the reason why no estimate of the specific year in which these lawsuits will be terminated has been disclosed.

In the opinion of the legal advisors, ITAÚ UNIBANCO HOLDING and its subsidiaries are not parties to any other administrative proceedings or legal lawsuits that could significantly impact the results of their operations.

e) Programs for Cash or Installment Payment of Municipal Taxes

ITAÚ UNIBANCO HOLDING and its subsidiaries adhered to PPI – Installment Payment Incentive Programs substantially related to the local level, established by Laws: (Law No. 5.854, of April 27, 2015) Rio de Janeiro; (Law No. 8.927, o October 22, 2015 and Decree No. 26.624 of October 26, 2015) Salvador; (Law No. 18.181, of November 30, 2015 and Decree No. 29.275 of November 30, 2015) Recife; (Supplementary Law No. 95, of October 19, 2015) Curitiba. The programs promote the regularization of debts mentioned in these laws, arising from tax and non-tax credits, either recognized or not, including those that are part of the Enforceable Debt, either filed or to be filed in court.

The net effect of the programs in result was R$ 12, and it is recorded in Other Operating Income, Income Tax and Social Contribution.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 124

Note 33 – Regulatory capital

ITAÚ UNIBANCO HOLDING is subject to regulation by the Central Bank of Brazil (BACEN) which issues rules and instructions regarding currency and credit policies for financial institutions operating in Brazil. BACEN also determines minimum capital requirements, procedures for verification of information for assessment of the global systemic importance of financial institutions^(*), limits for fixed assets, limits for loans, accounting practices and requirements of compulsory deposits, requiring banks to comply with the regulation based on the Basel Accord on capital adequacy. Additionally, the National Council of Private Insurance (CNSP) and SUSEP issue regulations on capital requirement, which affect our insurance, pension plan and capitalization operations.

BACEN, in line with the Basel Accord, requires banks to present minimum capitalization rates equivalent to the ratio between Regulatory Capital (PR) and risk-weighted assets (RWA) of at least 9.875%, gradually decreasing to 8.0% on January 1, 2019. On the other hand, BACEN also requires the compliance with an Additional Principal Capital (ACP), which corresponds to the sum of ACP_Conservation, ACP_{Countercyclical} and ACP_Systemic portions, which together with the minimum capitalization rates, increased capital requirements over time. Currently, the value determined for ACP_Conservation corresponds to 0.625%, whereas the ACP_{Countercyclical} and ACP_Systemic are established at 0%.

The PR used to check the compliance with operating limits imposed by BACEN is composed of three levels, where:

· Principal Capital: sum of capital, reserves and retained earnings, less deductions and prudential adjustments.

· Supplementary Capital: composed of instruments of perpetual nature that meet eligibility requirements. Added to Principal Capital, compose Tier I.

· Tier II: composed of subordinated debt instruments with defined maturity that meet eligibility requirements. Added to Principal Capital and Supplementary Capital, compose Total Capital.

Management manages capital with the intention to meet the minimum capital by the BACEN. During the period ITAÚ UNIBANCO HOLDING complied with all externally imposed capital requirements to which we are subject.

The table below summarizes the breakdown of Regulatory Capital, Minimum Required Regulatory Capital, and Basel ratio, calculated in compliance with BACEN’s rules, based on Prudential Consolidated, which includes financial institutions, consortium administrators, payment institutions, companies that acquire operations with credit risk or assume, either directly or indirectly, credit risk, and investment funds in which ITAÚ UNIBANCO HOLDING substantially retains risks and benefits.

For further information on capital requirements, that is not part of the financial statements, please see to the company’s website www.itau.com.br/investor-relations, Corporate Governance section/ Risk and Capital Management – Pillar 3.

* For details on the indicators of the Global Systemic Importance Index, that is not part of the financial statements, see to our website www.itau.com.br/relacoes-com-investidores, at “Governança Corporativa”, “Anexo I_IAISG”.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 125

	03/31/2016
	Consolidated
	Prudential (*)
Regulatory Capital
Tier I		99,290
Common Equity Tier I		99,220
Additional Tier I Capital		70
Tier II		23,582
Total		122,872
Requirement for coverage of risk-weighted assets
Credit		637,179
Market		20,356
Operational		37,364
Risk-weighted assets		694,899
Minimum Required Regulatory Capital		68,621
Excess capital in relation to Minimum Required Regulatory Capital		54,251
Capital to risk-weighted assets ratio - %		17.7	%

(*) Consolidated financial statements including financial companies and the like: As from the base date January 2015, in accordance with Circular 4,278, this is the basis for the consolidation calculation.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 126

The funds obtained through the issuance of subordinated debt securities are considered Tier II capital for the purpose of capital to risk-weighted assets ratio, as follows. According to current legislation, the accounting balance of subordinated debt as of December 2012 was used for the calculation of reference equity as of March, 2016, considering instruments approved after the closing date to compose Tier II, totaling R$ 51,134.

Name of security / currency	Principal amount (original currency)		Issue		Maturity		Return p.a.	12/31/2016
Subordinated CDB - BRL
		466		2006		2016	100% of CDI + 0.7% (*)		1,278
		367		2010		2017	IPCA + 7.21% to 7.33%		847
		833					Total		2,125
Subordinated financial bills - BRL
		365		2010		2016	100% of CDI + 1.35% to 1.36%		371
		1,874					112% to 112.5% of CDI		1,904
		30					IPCA + 7%		62
		206		2010		2017	IPCA + 6.95% to 7.2%		327
		3,224		2011		2017	108% to 112% of CDI		3,467
		352					IPCA + 6.15% to 7.8%		600
		138					IGPM + 6.55% to 7.6%		252
		3,650					100% of CDI + 1.29% to 1.52%		3,765
		500		2012		2017	100% of CDI + 1.12%		524
		42		2011		2018	IGPM + 7%		59
		30					IPCA + 7.53% to 7.7%		47
		461		2012		2018	IPCA + 4.4% to 6.58%		700
		3,782					100% of CDI + 1.01% to 1.32%		3,963
		6,373					108% to 113% of CDI		7,155
		112					9.95% to 11.95%		162
		2		2011		2019	109% to 109.7% of CDI		3
		12		2012		2019	11.96%		19
		101					IPCA + 4.7% to 6.3%		155
		1					110% of CDI		2
		20		2012		2020	IPCA + 6% to 6.17%		34
		1					111% of CDI		2
		6		2011		2021	109.25% to 110.5% of CDI		10
		2,307		2012		2022	IPCA + 5.15% to 5.83%		3,608
		20					IGPM + 4.63%		26
		23,609					Total		27,217
Subordinated euronotes - USD
		990		2010		2020	6.20%		3,630
		1,000		2010		2021	5.75%		3,533
		730		2011		2021	5.75% to 6.20%		2,725
		550		2012		2021	6.20%		1,957
		2,600		2012		2022	5.50% to 5.65%		9,231
		1,851		2012		2023	5.13%		6,718
		7,721					Total		27,794
Total									57,136

(*) Subordinated CDBs may be redeemed from November 2011.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 127

Note 34 – Segment Information

ITAÚ UNIBANCO HOLDING is a banking institution that offers its customers a wide range of financial products and services.

As from the first quarter of 2015 and the comparison with 2014, the way of presenting the segments was changed in order to adjust it to the bank’s current organizational structure. The following segments will be reported: Retail Banking, Wholesale Banking, and Activities with the Market + Corporation. The Retail Banking now covers the former segments Commercial Banking, – Retail and Consumer Credit – Retail, with the transfer of operations from Private Banking and Latam to the Wholesale Banking and these are the main changes of this presentation.

The current operational and reporting segments of ITAÚ UNIBANCO HOLDING are described below:

· Retail Banking

The result of the Retail Banking segment arises from the offer of banking products and services to a diversified client base of account holders and non-account holders, individuals and companies. The segment includes retail clients, high net worth clients (Itaú Uniclass and Personnalité), and the corporate segment (very small and small companies). This segment comprises financing and lending activities carried out in units other than the branch network, and offering of credit cards, in addition to operations with Itaú BMG Consignado.

· Wholesale Banking

The result of the Wholesale Banking segment arises from the products and services offered to middle-market companies, private banking clients, from the activities of Latin America units, and the activities of Itaú BBA, the unit in charge of commercial operations with large companies and performing as an investment banking unit.

· Activities with the Market + Corporation

This segment records the result arising from capital surplus, subordinated debt surplus and the net balance of tax credits and debits. It also shows the financial margin with the market, the Treasury operating cost, the equity in earnings of companies not associated to each segment and the interest in Porto Seguro.

Basis of presentation of segment information

Segment information is prepared based on the reports used by top management (Executive Committee) to assess the performance and to make decisions regarding the allocation of funds for investment and other purposes.

The top management (Executive Committee) of ITAÚ UNIBANCO HOLDING uses a variety of information for such purposes including financial and non-financial information that is measured on different bases as well as information prepared based on accounting practices adopted in Brazil. The main index used to monitor the business performance is the Recurring Net Income and the Economic Capital allocated to each segment.

The segment information has been prepared following accounting practices adopted in Brazil modified for the adjustments described below:

· Allocated capital and income tax rate

Based on the managerial income statement, the segment information considers the application of the following criteria:

Allocated capital: The impacts associated to capital allocation are included in the financial information. Accordingly, adjustments were made to the financial statements, based on a proprietary model. The Allocated Economic Capital (AEC) model was adopted for the financial statements by segments, and as from 2015, we changed the calculation methodology. The AEC considers, in addition to Tier l allocated capital, the effects of the calculation of expected loan losses, supplementary to the requirements of the Central Bank of Brazil, pursuant to CMN Circular No. 2.682/99. Accordingly, the Allocated Capital comprises the following components: Credit risk (including expected loss), operational risk, market risk and insurance underwriting risk. Based on the portion of allocated capital tier I, we calculated the Return on Economic Allocated Capital, which corresponds to an operational performance indicator consistently adjusted to the capital required to support the risk associated to asset and liability positions assumed, in conformity with our risk appetite.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 128

Income tax rate: We consider the total income tax rate, net of the tax effect from the payment of interest on capital, for the Retail Banking, Wholesale Bank and Activities with the Market segments. The difference between the income tax amount calculated by segment and the effective income tax amount, as stated in the consolidated financial statements, is allocated to the Activities with the Market + Corporation column.

· Reclassification and application of managerial criteria

The managerial statement of income was used to prepare information per segment. These statements were obtained based on the statement of income adjusted by the impact of non-recurring events and the managerial reclassifications in income.

From the first quarter of 2013 on, some changes were made in the consolidation criteria for managerial results presented in order to better reflect the way Management monitors the bank’s figures. These adjustments change the order of presentation of the lines only and, therefore, do not affect the net income disclosed. Through these reclassifications, ITAÚ UNIBANCO HOLDING seeks to align the way it presents its results and enables a better comparison and understanding of the bank’s performance assessment.

We describe below the main reclassifications between the accounting and managerial results:

Banking product: The banking product considers the opportunity cost for each operation. The financial statements were adjusted so that the stockholders' equity was replaced by funding at market price. Subsequently, the financial statements were adjusted to include revenues related to capital allocated to each segment. The cost of subordinated debt and the respective remuneration at market price were proportionally allocated to the segments, based on the economic allocated capital.

Hedge tax effects: The tax effects of the hedge of investments abroad were adjusted – these were originally recorded in the tax expenses (PIS and COFINS) and Income Tax and Social Contribution on net income lines – and are now reclassified to the margin. The strategy to manage the foreign exchange risk associated to the capital invested abroad aims at preventing the effects of the exchange rates variation on income. In order to achieve this objective, we used derivative instruments to hedge against such foreign currency risk, with investments remunerated in Brazilian Reais. The hedge strategy for foreign investments also considers the impact of all tax effects levied.

Insurance: Insurance business revenues and expenses were concentrated in Income related to Insurance, pension plan and capitalization operations. The main reclassifications of revenues refer to the financial margins obtained with the technical provisions of insurance, pension plan and capitalization, in addition to revenue from management of pension plan funds.

Other reclassifications: Other Income, Share of Income of Associates, Non-Operating Income, Profit Sharing of Management Members and Expenses for Credit Card Reward Program were reclassified to those lines representing the way the institution manages its business, enabling greater understanding for performance analysis. Accordingly, equity in earnings of investment in Banco CSF S.A. (“Banco Carrefour”) was reclassified to the financial margin line. Additionally, for better comparison with the new consolidation criteria, 100% of the results from partnerships were consolidated (they were previously proportionally consolidated), and expenses for provisions associated to securities and derivatives were reclassified (from Non-interest expenses income to Expenses for allowance for loan losses).

The adjustments and reclassifications column shows the effects of the differences between the accounting principles followed for the presentation of segment information, which are substantially in line with the accounting practices adopted for financial institutions in Brazil, except as described above, and the policies used in the preparation of these consolidated financial statements according to IFRS. Main adjustments are as follows:

· Allowance for Loan Losses, which, under IFRS (IAS 39), should be recognized upon objective evidence that loan operations are impaired (incurred loss), and the Expected Loss concept is adopted according to Brazilian accounting standards;

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 129

· Shares and units classified as permanent investments were stated at fair value under IFRS (IAS 39 and 32), and their gains and losses were directly recorded to Stockholders’ Equity, not passing through income for the period;

· Effective interest rates, financial assets and liabilities stated at amortized cost, are recognized by the effective interest rate method, allocating revenues and costs directly attributable to acquisition, issue or disposal for the transaction period of the operation; according to Brazilian standards, fee expenses and income are recognized as these transactions are engaged.

· Business combinations are accounted for under the acquisition method in IFRS (IFRS 3), in which the purchase price is allocated among assets and liabilities of the acquired company, and the amount not subject to allocation, if any, is recognized as goodwill. Such amount is not amortized, but is subject to an impairment test.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 130

ITAÚ UNIBANCO HOLDING S.A.

From January 1 to March 31, 2016

(In millions of Reais, except for share information)

Consolidated Statement of Income	Retail Banking			Wholesale Banking			Activities with the Market + Corporation			ITAÚ UNIBANCO			Adjustments			IFRS consolidated
Banking product		17,074			6,822			1,971			25,867			3,941			29,808
Interest margin (1)		9,646			4,947			1,964			16,557			3,995			20,552
Banking service fees		5,422			1,745			2			7,169			271			7,440
Income related to insurance, private pension, and capitalization operations before claim and selling expenses		2,006			130			5			2,141			(577	)		1,564
Other income		-			-			-			-			252			252
Losses on loans and claims		(4,012	)		(2,874	)		90			(6,796	)		940			(5,856	)
Expenses for allowance for loan and lease losses		(4,413	)		(2,908	)		90			(7,231	)		938			(6,293	)
Recovery of loans written off as loss		780			49			-			829			2			831
Expenses for claims / recovery of claims under reinsurance		(379	)		(15	)		-			(394	)		-			(394	)
Operating margin		13,062			3,948			2,061			19,071			4,881			23,952
Other operating income (expenses)		(8,652	)		(2,763	)		(511	)		(11,926	)		(1,351	)		(13,277	)
Non-interest expenses (2)		(7,587	)		(2,460	)		(364	)		(10,411	)		(976	)		(11,387	)
Tax expenses for ISS, PIS and COFINS and Other		(1,065	)		(303	)		(147	)		(1,515	)		(501	)		(2,016	)
Share of profit or (loss) in associates and joint ventures		-			-			-			-			126			126
Net income before income tax and social contribution		4,410			1,185			1,550			7,145			3,530			10,675
Income tax and social contribution		(1,580	)		(143	)		(123	)		(1,846	)		(3,131	)		(4,977	)
Non-controlling interest in subsidiaries		(58	)		-			(6	)		(64	)		77			13
Net income		2,772			1,042			1,421			5,235			476			5,711

(1) Includes net interest and similar income and expenses of R$ 16,021 dividend income of R$ 10 net gain (loss) on investment securities and derivatives of R$ 3,012 and results from foreign exchange results and exchange variation of transactions abroad of R$ 1,509.

(2) Refers to general and administrative expenses including depreciation expenses of R$ 427, amortization expenses of R$ 243 and insurance acquisition expenses of R$ 210.

Total assets (1) - 03/31/2016	842,128	505,457	111,266	1,283,071	(79,777	)	1,203,294
Total liabilities - 03/31/2016	807,140	457,467	85,798	1,174,626	(86,192	)	1,088,434
(1) Includes:
Investments in associates and joint ventures	1,028	-	2,878	3,906	670		4,576
Goodwill	853	-	-	853	1,816		2,669
Fixed assets, net	5,527	1,229	-	6,756	1,425		8,181
Intangible assets, net	6,444	897	-	7,341	(1,103	)	6,238

The consolidated figures do not represent the sum of the segments because there are intercompany transactions that were eliminated only in the consolidated financial statements. Segments are assessed by top management, net of income and expenses between related parties.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 131

ITAÚ UNIBANCO HOLDING S.A.

From January 1 to March 31, 2015

(In millions of Reais except per share information)

Consolidated Statement of Income	Retail Banking			Wholesale Banking			Actitivities with the Market + Corporation			ITAÚ UNIBANCO			Adjustments			IFRS consolidated
Banking product		17,197			5,798			1,951			24,946			(4,868	)		20,078
Interest margin (1)		10,098			3,955			1,910			15,963			(4,961	)		11,002
Banking service fees		5,106			1,735			25			6,866			244			7,110
Income related to insurance, private pension, and capitalization operations before claim and selling expenses		1,993			108			16			2,117			(491	)		1,626
Other income		-			-			-			-			340			340
Losses on loans and claims		(2,878	)		(1,984	)		39			(4,823	)		(227	)		(5,050	)
Expenses for allowance for loan and lease losses		(3,503	)		(2,051	)		39			(5,515	)		(231	)		(5,746	)
Recovery of loans written off as loss		984			76			-			1,060			4			1,064
Expenses for claims / recovery of claims under reinsurance		(359	)		(9	)		-			(368	)		-			(368	)
Operating margin		14,319			3,814			1,990			20,123			(5,095	)		15,028
Other operating income (expenses)		(8,465	)		(2,649	)		(489	)		(11,603	)		(552	)		(12,155	)
Non-interest expenses (2)		(7,435	)		(2,376	)		(336	)		(10,147	)		(853	)		(11,000	)
Tax expenses for ISS, PIS and COFINS and Other		(1,030	)		(273	)		(153	)		(1,456	)		170			(1,286	)
Share of profit or (loss) in associates and joint ventures		-			-			-			-			131			131
Net income before income tax and social contribution		5,854			1,165			1,501			8,520			(5,647	)		2,873
Income tax and social contribution		(2,051	)		(256	)		(300	)		(2,607	)		5,517			2,910
Non-controlling interest in subsidiaries		(104	)		-			(1	)		(105	)		(5	)		(110	)
Net income		3,699			909			1,200			5,808			(135	)		5,673

(1) Includes net interest and similar income and expenses of R$ 19,174, dividend income of R$ 2, net gain (loss) on investment securities and derivatives of R$ 11,665 and foreign exchange results and exchange variation on transactions of abroad R$ (9,839).

(2) Refers to general and administrative expenses including depreciation expenses of R$ 399, amortization expenses of R$ 211, and insurance acquisition expenses of R$ 281.

Total assets (1) - 12/31/2015	873,202	547,236	127,716	1,359,172	(82,757	)	1,276,415
Total liabilities - 12/31/2015	840,033	502,887	97,017	1,250,955	(88,599	)	1,162,356
(1) Includes:
Investments in associates and joint ventures	1,064	-	2,436	3,500	899		4,399
Goodwill	232	-	-	232	1,825		2,057
Fixed assets, net	5,781	1,274	-	7,055	1,486		8,541
Intangible assets, net	6,606	857	-	7,463	(1,168	)	6,295

The Consolidated figures do not represent the sum of the segments because there are intercompany transactions that were eliminated only in the consolidated financial statements. Segments are assessed by top management, net of income and expenses between related parties.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 132

Information on the result of main services and products and noncurrent assets by geographic area are as follows:

	01/01 to 03/31/2016						01/01 to 03/31/2015
	Brazil		Abroad		Total		Brazil		Abroad		Total
Income related to financial operations (1) (2)		38,868		4,370		43,238		24,642		2,153		26,795
Income related to insurance, private pension and capitalization operations before claim and selling expenses		1,527		37		1,564		1,605		21		1,626
Banking service fees		6,891		549		7,440		6,551		559		7,110
Non-current assets (3)		13,509		910		14,419		13,841		995		14,836

(1) Includes interest and similar income, dividend income, net gain (loss) on investment securities and derivatives, foreign exchange results, and exchange variation on transactions.

(2) ITAÚ UNIBANCO HOLDING does not have clients representing 10% or higher of its revenues.

(3) The amounts for comparative purposes refer to the 12/31/2015.

Note 35 – Related parties

a) Transactions between related parties are carried out at amounts, terms and average rates in accordance with normal market practices during the period, as well as under reciprocal conditions.

Transactions between companies included in consolidation (Note 2.4a) were eliminated from the consolidated financial statements and the absence of risk is taken into consideration.

The unconsolidated related parties are as follows:

· Itaú Unibanco Participações S.A. (IUPAR), Companhia E. Johnston de Participações S.A. (shareholder of IUPAR) and ITAÚSA, direct and indirect shareholders of ITAÚ UNIBANCO HOLDING;

· The non-financial subsidiaries of ITAÚSA, especially: Itautec S.A., Duratex S.A., Elekeiroz S.A., ITH Zux Cayman Company Ltd and Itaúsa Empreendimentos S.A.;

· Fundação Itaú Unibanco - Previdência Complementar, FUNBEP – Fundo de Pensão Multipatrocinado, Fundação Bemgeprev, UBB Prev - Previdência Complementar, and Fundação Banorte Manuel Baptista da Silva de Seguridade Social, closed-end supplementary pension entities, that administer retirement plans sponsored by ITAÚ UNIBANCO HOLDING and / or its subsidiaries;

· Fundação Itaú Social, Instituto Itaú Cultural, Instituto Unibanco, Instituto Assistencial Pedro Di Perna, Instituto Unibanco de Cinema and Associação Itaú Viver Mais, entities sponsored by ITAÚ UNIBANCO HOLDING and subsidiaries to act in their respective areas of interest; and

· Investments in Porto Seguro Itaú Unibanco Participações S.A. and BSF Holding S.A.

The transactions with these related parties are mainly as follows:

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 133

	ITAÚ UNIBANCO HOLDING CONSOLIDATED
	Assets / (liabilities)						Revenue / (expenses)
	03/31/2016			12/31/2015			01/01 a 03/31/2016			01/01 a 03/31/2015
Securities sold under repurchase agreements		(352	)		(249	)		(16	)		(6	)
Duratex S.A.		(22	)		(41	)		(1	)		(3	)
Elekeiroz S.A.		(7	)		(8	)		-			-
Itautec S.A.		(41	)		(110	)		(2	)		-
Itaúsa Empreendimentos S.A.		-			(64	)		-			(3	)
Olimpia Promoção e Serviços S.A.		-			(11	)		-			-
Instituto Unibanco		(257	)		-			(11	)		-
Other		(25	)		(15	)		(2	)		-
Amounts receivable from (payable to) related companies / Banking service fees (expenses)		(120	)		(116	)		5			15
Itaú Unibanco S.A.		-			-			-			7
Itaúsa Empreendimentos S.A.		-			-			-			(2	)
Olimpia Promoção e Serviços S.A.		(2	)		(2	)		(6	)		-
Fundação Itaú Unibanco - Previdência Complementar		(118	)		(114	)		10			8
FUNBEP - Fundo de Pensão Multipatrocinado		-			-			-			1
Other		-			-			1			1
Rental revenues (expenses)		-			-			(14	)		(13	)
Fundação Itaú Unibanco - Previdência Complementar		-			-			(11	)		(10	)
FUNBEP - Fundo de Pensão Multipatrocinado		-			-			(3	)		(3	)
Donation expenses		-			-			(22	)		(27	)
Instituto Itaú Cultural		-			-			(22	)		(27	)

In addition to the aforementioned operations, ITAÚ UNIBANCO HOLDING and non-consolidated related parties, as an integral part of ITAÚ UNIBANCO HOLDING Agreement for Apportionment of Common Costs, recorded in General and Administrative Expenses - Other, the amount of R$ (1) (R$ (1) from 01/01 to 03/31/2015) due to the use of the common structure.

Pursuant to the current rules, financial institutions cannot grant loans or advances to the following:

a) any individuals or companies that control the Institution or any entity under common control with the institution, or any executive officer, director, member of the fiscal council, or the immediate family members of these individuals;

b) any entity controlled by the institution; or

c) any entity in which the bank directly or indirectly holds more than 10% of the capital stock.

Therefore, no loans or advances were granted to any subsidiary, executive officer, director or family members.

b) Compensation of the key management personnel

Compensation for the period paid to key management members of ITAÚ UNIBANCO HOLDING consisted of:

	01/01 a		01/01 a
	31/03/2016		31/03/2015
Compensation		143		155
Board of directors		11		8
Executives		132		147
Profit sharing		39		36
Board of directors		1		-
Executives		38		36
Contributions to pension plans - executives		5		4
Stock option plan – executives		96		54
Total		283		249

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 134

Note 36 – Management of financial risks

Credit risk

1. Credit risk measurement

Credit risk is the possibility of losses arising from the breach by the borrower, issuer or counterparty of the respective agreed-upon financial obligations, the devaluation of loan agreement due to downgrading of the borrower’s, the issuer’s, the counterparty’s risk rating, the reduction in gains or compensation, the advantages given upon posterior renegotiation and the recovery costs.

The credit risk management of ITAÚ UNIBANCO HOLDING’s is the primary responsibility of all business units and aims to keep the quality of loan portfolios in levels consistent with the institution’s risk appetite for each market segment in which it operates.

ITAÚ UNIBANCO HOLDING establishes its credit policies based on internal factors, such as the client rating criteria, performance of and changes in portfolio, default levels, return rates, and the allocated economic capital; and external factors, related to the economic environment, interest rates, market default indicators, inflation, changes in consumption.

ITAÚ UNIBANCO HOLDING has a structured process to keep a diversified portfolio deemed as adequate by the institution. The ongoing monitoring on the concentration level of portfolios, by assessing the economic activity sectors and major debtors, enables it to take preventive measures, to prevent that defined limits be breached.

The process for analyzing the policy and products enables ITAÚ UNIBANCO HOLDING to identify potential risks, in order make sure that credit decisions make sense from an economic and risk perspective.

The centralized process for approval of credit policies and validation of models of ITAÚ UNIBANCO HOLDING assures the synchrony of credit actions.

The table below shows the correspondence between risk levels attributed by all segments of ITAÚ UNIBANCO HOLDING internal models (lower risk, satisfactory, higher risk and impaired) and the probability of default associated with each of these levels, and the risk levels assigned by the respective market models.

		External rating
Internal rating	PD	Moody's	S&P	Fitch
Lower risk	Lower or equal than 4.44%	Aaa to B2	AAA to B	AAA to B-
Satisfactory	From 4.44% up to 25.95%	B3 to Caa3	B- to CCC-	CCC+ to CCC-
Higher risk	Higher than 25.95%	Ca1 to D	CC+ to D	CC+ to D
Impairment	Corporate operations with a PD higher than 31.84% Operations past due for over 90 days Renegotiated operations past due for over 60 days	Ca1 to D	CC+ to D	CC+ to D

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

Regarding retail (individuals, small and middle-market companies), the classification is attributed based on application statistic models (in the early phases of the relationship of ITAÚ UNIBANCO HOLDING with the client) and behavior score (used for clients with whom ITAÚ UNIBANCO HOLDING already has a relationship). Exceptionally, there may also be individualized analysis of specific cases where approval is subject to competent credit approval levels.

Government securities and other debt instruments are classified by ITAÚ UNIBANCO HOLDING according to their credit quality aiming at managing their exposures.

In line with the principles of CMN Resolution N° 3,721, of April 30, 2009, ITAÚ UNIBANCO HOLDING has structure and corporate guidelines on credit risk management, approved by its Board of Directors, applicable to companies and subsidiaries in Brazil and abroad.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 135

2. Credit risk management

The centralized control over credit risk is carried out by the independent executive area responsible for controlling risks and segregated from the business units, as required by regulation in force.

ITAÚ UNIBANCO HOLDING strictly controls the credit exposure of clients and counterparties, taking action to address situations in which the actual exposure exceeds the desired one. For that purpose, contractually provided actions can be taken, such as early payment or requirement of additional collateral.

3. Collateral and policies for mitigating credit risk

ITAÚ UNIBANCO HOLDING uses guarantees to increase its recovery capacity in transactions involving credit risk. The guarantees used may be personal guarantees, collateral, legal structures with mitigation power and offset agreements.

For collaterals to be considered instruments that mitigate credit risk, they must comply with the requirements and standards of the rules that regulate them, be them domestic or not, and they must be legally valid (effective), enforceable and assessed on a regular basis.

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

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

4. Policy on the provision

The policies on the provision adopted by ITAÚ UNIBANCO HOLDING are aligned with the guidelines of IFRS and the Basel Accord. As a result, an allowance for loan losses is recognized when there are indications of the impairment of the portfolio and takes into account a horizon of loss appropriate for each type of transaction. We consider as impaired loans overdue for more than 90 days, renegotiated loans overdue by more than 60 days and Corporate loans below a specific internal rating. Loans are written-down 360 days after such loans become past due or 540 days of being past due in the case of loans with original maturities over 36 months.

5. Credit risk exposure

	03/31/2016						12/31/2015
	Brazil		Abroad		Total		Brazil		Abroad		Total
Interbank deposits		4,260		24,929		29,189		7,502		23,023		30,525
Securities purchased under agreements to resell		208,785		609		209,394		252,295		2,109		254,404
Financial assets held for trading		162,945		6,960		169,905		157,206		7,105		164,311
Financial assets designated at fair value through profit or loss		-		396		396		-		642		642
Derivatives		16,078		11,670		27,748		15,858		10,897		26,755
Available-for-sale financial assets		53,390		32,289		85,679		52,221		33,824		86,045
Held-to-maturity financial assets		27,737		13,367		41,104		27,378		14,807		42,185
Loan operations and lease operations		307,956		110,070		418,026		326,241		121,163		447,404
Other financial assets		44,484		9,551		54,035		47,665		5,841		53,506
Off balance sheet		271,492		28,459		299,951		272,274		30,246		302,520
Endorsements and sureties		67,185		4,832		72,017		68,897		5,347		74,244
Letters of credit to be released		7,502		-		7,502		6,936		-		6,936
Commitments to be released		196,805		23,627		220,432		196,441		24,899		221,340
Mortgage loans		5,912		-		5,912		6,812		-		6,812
Overdraft accounts		80,729		-		80,729		81,151		-		81,151
Credit cards		106,157		1,025		107,182		102,721		1,211		103,932
Other pre-approved limits		4,007		22,602		26,609		5,757		23,688		29,445
Total		1,097,127		238,300		1,335,427		1,158,640		249,657		1,408,297

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 136

The table above presents the maximum exposure at March 31, 2016 and December 31, 2015, without considering any collateral received or other additional credit improvements.

For assets recognized in the balance sheet, the exposures presented are based on net carrying amounts. This analysis includes only financial assets subject to credit risk and excludes non-financial assets.

The contractual amounts of endorsements and sureties and letters of credit represent the maximum potential of credit risk in the event the counterparty does not meet the terms of the agreement. The vast majority of commitments (real estate loans, overdraft accounts and other pre-approved limits) mature without being drawn, since they are renewed monthly and we have the power to cancel them at any time. As a result, the total contractual amount does not represent our effective future exposure to credit risk or the liquidity needs arising from such commitments.

As shown in the table, the most significant exposures correspond to loan operations, financial assets held for trading, and securities purchased under agreements to resell, in addition to sureties, endorsements and other commitments.

The maximum exposure to the quality of the financial assets presented highlights that:

· 86,6% of loan operations and other financial assets exposure (Table 6.1 and 6.1.2) are categorized as low probability of default in accordance with our internal rating;

· only 4,2% of the total loans exposure (Table 6.1) is represented by overdue credits not impaired;

· 6,4% of the total loans exposure (Table 6.1) corresponds to overdue loans impaired.

5.1 Maximum exposure of financial assets segregated by business sector

a) Loan operations and lease operations portfolio

	03/31/2016		%		12/31/2015		%
Public sector		3,070		0.7		3,182		0.7
Industry and commerce		110,386		24.7		125,386		26.5
Services		97,972		22.0		104,226		22.0
Natural resources		23,084		5.2		25,306		5.3
Other sectors		2,261		0.5		2,526		0.5
Individuals		209,154		46.9		213,622		45.0
Total		445,927		100.0		474,248		100.0

b) Other financial assets ^(*)

	03/31/2016		%		12/31/2015		%
Natural resources		3,448		0.6		4,313		0.7
Public sector		203,865		36.2		197,871		32.7
Industry and commerce		11,269		2.0		11,856		2.0
Services		17,553		3.1		89,932		14.9
Other sectors		88,451		15.7		15,420		2.5
Individuals		246		0.0		546		0.1
Financial		238,583		42.3		284,929		47.1
Total		563,415		99.9		604,867		100.0

(*) Includes financial assets held for trading, derivatives, assets designated at fair value through profit or loss, available-for-sale financial assets, held-to-maturity financial assets, interbank deposits and securities purchased under agreements to resell.

c) The credit risks of off balance sheet items (endorsements and sureties, letters of credit and commitments to be released) are not categorized or managed by business sector.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 137

6. Credit quality of financial assets

6.1 The following table shows the breakdown of loans operations and lease operations portfolio considering: loans not overdue and loans overdue either impaired or not impaired:

	03/31/2016												12/31/2015
Internal rating	Loans not overdue and not impaired			Loans overdue not impaired			Loans overdue and impaired			Total loans			Loans not overdue and not impaired			Loans overdue and not impaired			Loans overdue and impaired			Total loans
Lower risk		310,335			4,275			-			314,610			340,368			3,838			-			344,206
Satisfactory		76,904			7,206			-			84,110			76,940			6,489			-			83,429
Higher risk		11,563			7,034			-			18,597			12,609			6,847			-			19,456
Impairment		-			-			28,610			28,610			-			-			27,157			27,157
Total		398,802			18,515			28,610			445,927			429,917			17,174			27,157			474,248
%		89.4	%		4.2	%		6.4	%		100.0	%		90.7	%		3.6	%		5.7	%		100.0	%

The following table shows the breakdown of loans operations and lease operations by portfolios of areas and classes, based on indicators of credit quality:

	03/31/2016															12/31/2015
	Lower risk			Satisfactory			Higher risk			Impaired			Total			Lower risk			Satisfactory			Higher risk			Impaired			Total
Individuals		101,007			58,850			12,454			11,603			183,914			102,479			60,132			13,030			11,579			187,220
Credit cards		37,561			11,143			2,257			3,906			54,867			40,297			11,887			2,286			4,072			58,542
Personal		7,107			7,560			8,823			5,141			28,631			6,234			8,014			9,099			5,049			28,396
Payroll loans		10,361			34,366			659			1,352			46,738			9,582			33,766			844			1,242			45,434
Vehicles		13,241			3,496			649			789			18,175			14,149			4,292			737			880			20,058
Mortgage loans		32,737			2,285			66			415			35,503			32,217			2,173			64			336			34,790
Corporate		111,880			9,930			5			12,679			134,494			133,779			6,915			206			11,627			152,527
Small and medium businesses		42,091			11,677			4,952			3,649			62,369			45,202			12,567			4,993			3,276			66,038
Foreign loans - Latin America		59,632			3,653			1,186			679			65,150			62,746			3,815			1,227			675			68,463
Total		314,610			84,110			18,597			28,610			445,927			344,206			83,429			19,456			27,157			474,248
%		70.5	%		18.9	%		4.2	%		6.4	%		100.0	%		72.6	%		17.6	%		4.1	%		5.7	%		100.0	%

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 138

The table below shows the breakdown of loans operations and lease operations portfolio not overdue and not impaired, by portfolio of segments and classes, based on indicators of credit quality.

	03/31/2016								12/31/2015
	Lower risk		Satisfactory		Higher risk		Total		Lower risk		Satisfactory		Higher risk		Total
I – Individually evaluated
Corporate
Large companies		111,082		9,281		-		120,363		133,251		6,721		114		140,086
II- Collectively-evaluated
Individuals		98,972		53,994		7,567		160,533		100,819		55,625		8,269		164,713
Credit card		37,107		10,140		1,348		48,595		39,945		11,086		1,492		52,523
Personal		7,016		7,005		5,645		19,666		6,166		7,527		6,030		19,723
Payroll loans		10,249		33,702		488		44,439		9,501		33,116		642		43,259
Vehicles		12,577		2,200		67		14,844		13,584		2,918		84		16,586
Mortgage loans		32,023		947		19		32,989		31,623		978		21		32,622
Small and medium businesses		41,476		10,393		3,310		55,179		44,582		11,181		3,456		59,219
Foreign loans and Latin America		58,805		3,236		686		62,727		61,716		3,413		770		65,899
Total		310,335		76,904		11,563		398,802		340,368		76,940		12,609		429,917

6.1.1 Loan operations and lease operations by portfolios of areas and classes, are classified by maturity as follows (loans overdue not impaired):

	03/31/2016								12/31/2015
	Overdue by up to 30 days		Overdue from 31 to 60 days		Overdue from 61 to 90 days		Total		Overdue by up to 30 days		Overdue from 31 to 60 days		Overdue from 61 to 90 days		Total
Individuals		6,897		3,249		1,634		11,780		6,306		2,973		1,650		10,929
Credit card		1,310		509		547		2,366		978		417		551		1,946
Personal		2,119		1,205		500		3,824		1,992		1,127		505		3,624
Payroll loans		562		224		162		948		532		248		153		933
Vehicles		1,684		622		237		2,543		1,706		642		245		2,593
Mortgage loans		1,222		689		188		2,099		1,098		539		196		1,833
Corporate		1,031		264		156		1,451		571		168		73		812
Small and medium businesses		2,028		1,028		484		3,540		2,128		987		429		3,544
Foreign loans - Latin America		1,337		262		145		1,744		1,506		274		109		1,889
Total		11,293		4,803		2,419		18,515		10,511		4,402		2,261		17,174

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 139

6.1.2 The table below shows other financial assets, individually evaluated, classified by rating:

03/31/2016
	Interbank deposits				Financial assets						Held-to-
	and securities				designated at fair				Available-for-		maturity
	purchased under		Held-for-trading		value through profit		Derivatives		sale financial		financial
Internal rating	agreements to resell		financial assets		or loss		assets		assets		assets		Total
Lower risk		238,583		169,875		396		27,527		83,064		40,495		559,940
Satisfactory		-		13		-		62		920		609		1,604
Higher risk		-		17		-		159		818		-		994
Impairment		-		-		-		-		877		-		877
Total		238,583		169,905		396		27,748		85,679		41,104		563,415
%		42.3		30.2		0.1		4.9		15.2		7.3		100.0

12/31/2015
	Interbank deposits				Financial assets						Held-to-
	and securities				designated at fair				Available-for-		maturity
	purchased under		Held-for-trading		value through profit		Derivatives		sale financial		financial
Internal rating	agreements to resell		financial assets		or loss		assets		assets		assets		Total
Lower risk		284,929		164,283		642		26,251		84,284		41,843		602,232
Satisfactory		-		26		-		130		889		342		1,387
Higher Risk		-		2		-		374		308		-		684
Impairment		-		-		-		-		564		-		564
Total		284,929		164,311		642		26,755		86,045		42,185		604,867
%		47.1		27.2		0.1		4.4		14.2		7.0		100.0

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 140

6.1.3 Collateral held for loan and lease operations portfolio

	03/31/2016								12/31/2015
	(l) Over-collateralized assets				(II) Under-collateralized assets				(l) Over-collateralized assets				(II) Under-collateralized assets
	Carrying				Carrying				Carrying				Carrying
	value of the		Fair value of		value of the		Fair value of		value of the		Fair value of		value of the		Fair value of
Financial effect of collateral	assets		collateral		assets		collateral		assets		collateral		assets		collateral
Individuals		53,513		131,890		682		615		54,640		135,202		639		572
Personal		488		1,225		461		432		495		1,204		448		419
Vehicles		17,715		45,955		219		182		19,390		50,662		189		152
Mortgage loans		35,310		84,710		2		1		34,755		83,336		2		1
Small, medium businesses and corporate		154,875		454,558		7,670		2,667		169,560		481,916		7,968		2,932
Foreign loans - Latin America		55,172		88,292		6,809		5,600		57,680		89,531		7,715		6,042
Total		263,560		674,740		15,161		8,882		281,880		706,649		16,322		9,546

The difference between the total loan portfolio and collateralized loan portfolio is generated by non-collateralized loans amounting to R$ 167.206 (R$ 176,046 at 12/31/2015).

ITAÚ UNIBANCO HOLDING uses collateral to reduce the occurrence of losses in operations with credit risk and manages and regularly reviews its collateral with the objective that collateral held is sufficient, legally exercisable (effective) and feasible. Thus, collateral is used to maximize the recoverability potential of impaired loans and not to reduce the exposure value of customers and counterparties.

Individuals

Personal – This category of credit products usually requires collateral, focusing on endorsements and sureties.

Vehicles – For this type of operation, clients' assets serve as collateral, which are also the leased assets in leasing operations.

Mortgage loans – Regards buildings themselves given in guarantee.

Small, Medium Businesses and Corporate – For these operations, any collateral can be used within the credit policy of ITAÚ UNIBANCO HOLDING (chattel mortgage, assignment trust, surety / joint debtor, Mortgage and others).

Foreign loans – Latin America – For these operations, any collateral can be used within the credit policy of ITAÚ UNIBANCO HOLDING (chattel mortgage, assignment trust, surety/joint debtor, Mortgage and others).

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 141

7. Repossessed assets

Repossessed assets are recognized as assets when possession is effectively obtained.

Assets received from the foreclosure of loans, including real estate, are initially recorded at the lower of: (i) the fair value of the asset less the estimated selling expenses, or (ii) the carrying amount of the loan.

Further impairment of assets is recorded as a provision, with a corresponding charge to income. The maintenance costs of these assets are expensed as incurred.

The policy for sales of these assets (assets not for use) includes periodic auctions that are announced in advance and considers that the assets cannot be held for more than one year as stipulated by the BACEN. This period may be extended at the discretion of BACEN.

The amounts below represent total assets repossessed in the period:

	01/01 a		01/01 a
	31/03/2016		31/03/2015
Real estate not for own use		-		97
Residential properties - mortgage loans		137		29
Vehicles - linked to loan operations		4		5
Other (Vehicles / Furniture / Equipments) - Dation		5		20
Total		146		151

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 142

Market risk

Market risk is the possibility of incurring financial losses arising from the changes in the market value of positions held by a financial institution, including the risks of transactions subject to foreign exchange variation, interest rates, share prices, price indexes and commodity prices, among other indices related to risk factors.

Market risk management is the process through which the ITAÚ UNIBANCO HOLDING monitors and controls the risks of variations in financial instruments market values due market changes, aimed at optimizing the risk-return ratio, by using an appropriate structure of limits, alerts, models and adequate management tools.

The policy of risk management the ITAÚ UNIBANCO HOLDING is in line with the principles of CMN Resolution No. 3,464 of June 26, 2007, and posterior amendments, comprising a set of principles that drive the institution’s strategy of control and management of market risks in all business units and legal entities of ITAÚ UNIBANCO HOLDING.

The document set forth by the corporate guidelines on market risk management may be viewed on the website www.itau.com.br/relacoes-com-investidores, in the section Corporate Governance / Rules and Policies / Public Access Report - Market Risk.

The risk management strategy of ITAÚ UNIBANCO HOLDING tries to achieve a balance between business objectives, considering among others:

· Political, economic and market context;

· Portfolio profile of ITAÚ UNIBANCO HOLDING;

· Capacity to operate in specific markets.

The process for managing the market risk of ITAÚ UNIBANCO HOLDING is conducted within the governance and hierarchy of committees and a framework of limits and warnings approved specifically for this purpose, covering different levels and classes of market risk (such as interest rate, and exchange variation risk, among others). This framework of limits and warnings covers from the monitoring of risk aggregate indicators (portfolio level) to granular limits (individual desk level). The framework of market risk ranges from the risk factor level, with specific limits aiming at improving the risk monitoring and understanding process, and at avoiding risk concentration. These limits are quantified by assessing the forecasted results of the balance sheet, size of stockholders’ equity, liquidity, markets complexity and volatility and the institution’s appetite for risk. Limits are monitored daily and excesses and potential violations are reported and discussed for each established limit:

· Within one business day, for management of business units in charge and executives of the risk control area and business areas; and

· Within one month, for proper committees.

Daily risk reports, used by the business and control areas, are issued to the top management. Additionally, risk control and management process is submitted to periodic reviews.

The structure of limits and alerts follows the Board of Directors' guidelines and is approved by panels. The process to definite limit levels and violation reports follow the governance to approve the internal policies of ITAÚ UNIBANCO HOLDING. The information flow established aims at disseminating information to the several levels of executives of the institution, including the members of the Executive Board, by means of the Committees in charge of risk management. This limit and warning framework increases effectiveness and the control coverage is reviewed at least on an annual basis.

The purpose of market risk of ITAÚ UNIBANCO HOLDING structure is:

· Providing visibility and assurance to all executive levels that the assumption of market risks is in line with ITAÚ UNIBANCO HOLDING and the risk-return objective;

· Promoting disciplined and educated discussion on the global risk profile and its evolution over time;

· Increasing transparency on the way the business seeks to optimize results;

· Providing early warning mechanisms in order to make the effective risk management easier, without jeopardizing the business purposes; and

· Monitoring and avoiding risk concentration.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 143

The market risk control and management process is periodically reviewed with the purpose of keeping the process aligned with best market practices and complies with continuous improvement processes at ITAÚ UNIBANCO HOLDING.

The market risk is controlled by an area independent from the business areas, which is responsible for the daily activities of: (i) risk measurement and assessment, (ii) monitoring of stress scenarios, limits and warnings, (iii) application, analysis and tests of stress scenarios, (iv) risk reporting for individuals responsible within the business areas, in compliance with governance of ITAÚ UNIBANCO HOLDING, (v) monitoring of actions required for adjustment of positions and/or risk levels to make them feasible, and (vi) support to the launch of new financial products with security. For that purpose, ITAÚ UNIBANCO HOLDING has a structured reporting and information process and an information flow that provides input for the follow-up by committees and complies with the requirements of Brazilian and foreign regulatory agencies.

ITAÚ UNIBANCO HOLDING hedges transactions with clients and proprietary positions, including foreign investments, aiming at mitigating risks arising from fluctuations in market factors and maintaining the classification the transactions into the current exposure limits. Derivatives are the most frequently used instruments for these hedges. When these transactions are designed for as hedge accounting, specific supporting documentation is prepared, including continuous review of the hedge effectiveness (retrospective and prospective) and other changes in the accounting process. Accounting and managerial hedge are governed by corporate guidelines of ITAÚ UNIBANCO HOLDING.

For a detailed vision of the accounting hedge topic, see Note 9 – Hedge accounting.

The market risk structure categorizes transactions as part of either the banking portfolio or the trading portfolio, in accordance with general criteria established by the National Monetary Council Resolution No. 3,464 and BACEN Circular No. 3,354 of July 27, 2007.

The trading portfolio consists of all transactions involving financial instruments and goods, including derivatives, which are carried out with the intention of trading.

The banking portfolio is basically characterized by transactions from the banking business and transactions related to the management of the balance sheet of the institution. It has the no-intention of resale and medium and long term time horizons as general guidelines.

Exposures to market risks inherent in the many different financial instruments, including derivatives, are broken down into a number of risk factors, primary market components for pricing. The main risk factors measured by ITAÚ UNIBANCO HOLDING are:

· Interest rates risk: risk of financial losses on operations subject to interest rates variations;

· Foreign exchange-linked: the risk of losses arising from positions in transactions which are subject to a foreign exchange-linked interest rate;

· Foreign exchange rates: risk of losses in operations subject to foreign exchange variation;

· Price index-linked: risk of financial losses on operations subject to changes in price index coupon rates;

· Variable income: risk of losses in operations subject to variation in goods prices and commodities.

The CMN has regulations that establish the segregation of exposure to market risk at least in the following categories: interest rate, exchange rate, shares and commodities. Inflation rates are addressed as a group of risk factors and received the same treatment as the other risk factors, such as interest rates, exchange rates, etc., and follow the structure of risk and limits governance adopted by ITAÚ UNIBANCO HOLDING to manage market risk.

Market risk is analyzed based on the following metrics:

· Value at risk (VaR): statistical metric that estimates the expected maximum potential economic loss under normal market conditions, taking into consideration a certain time horizon and confidence level;

· Losses in stress scenarios (Stress test): simulation technique to assess the behavior of assets, liabilities and derivatives of a portfolio when several risk factors are taken to extreme market situations (based on prospective and historical scenarios) in the portfolio;

· Stop loss: metrics which purpose is to review positions, should losses accumulated in a certain period reach a certain amount;

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 144

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

· Stressed VaR: statistical metric resulting from the VaR calculation, with the purpose of capturing the highest risk in simulations for the current portfolio, considering the returns that can be observed in historic scenarios of extreme volatility.

In addition to the risk measures, sensitivity and loss control measures are also analyzed. They comprise:

· Gap analysis: accumulated exposure, by risk factor, of cash flows expressed at market value, allocated at the maturity dates;

· Sensitivity (DV01 – Delta Variation): the impact on the cash flows market value when submitted to an one annual basis point increase in the current interest rates or index rate;

· Sensitivity to the Several Risk Factors (Greeks): partial derivatives of an options portfolio in relation to the underlying assets price, implicit volatility, interest rate and timing.

ITAÚ UNIBANCO HOLDING uses proprietary systems to measure the consolidated market risk. The processing of these systems principally takes place in São Paulo, in an access-controlled environment, being highly available, which has data safekeeping and recovery processes, and counts on such an infrastructure to ensure the continuity of business in contingency (disaster recovery) situations.

VaR - Consolidated ITAÚ UNIBANCO HOLDING

Consolidated VaR of ITAÚ UNIBANCO HOLDING is calculated through the Historical Simulation methodology, which fully reflects all its positions based on the historical series of asset prices. In the first quarter of 2016, o ITAÚ UNIBANCO HOLDING opted for including the exposures of each foreign unit in the calculation of ITAÚ UNIBANCO HOLDING’s Consolidated VaR, so as to take into account the risk factors of these units, thus improving the methodology used.

The Consolidated Total VaR table provides an analysis of the exposure to market risk of ITAÚ UNIBANCO HOLDING portfolios.

ITAÚ UNIBANCO HOLDING maintaining its conservative management and portfolio diversification, continued with its policy of operating within low limits in relation to its capital in the period. In this quarter, the Total Average VaR remained lower than 1% of ITAÚ UNIBANCO HOLDING`s stockholders` equity, in line with that recorded in the previous quarter.

From January 1st to March 31, 2016, the average total VaR in Historical Simulation was R$ 174,1 million, or 0,15% of total stockholders’ equity (throughout 2015 it was R$ 207.0 million or 0.18% of total stockholders’ equity).

	(in R$ million)
	VaR Total - Historical Simulation
	03/31/2016(1)									03/31/2016(2)									12/31/2015(2)
	Average		Minimum		Maximum		Var Total			Average		Minimum		Maximum		Var Total			Average		Minimum		Maximum		Var Total
Risk factor group
Brazilian interest rate		122.9		86.2		165.4		165.4			120.2		84.2		160.3		160.1			131.9		78.2		236.4		121.2
Other interest rate		111.2		99.9		123.5		102.0			110.5		100.0		123.2		101.7			93.6		75.1		139.2		108.6
FX rate		16.7		8.5		27.7		20.7			16.4		8.7		26.9		18.0			47.2		11.3		118.6		13.1
Brazilian inflation indexes		114.4		86.8		146.3		140.2			114.3		85.6		146.3		139.0			134.1		103.9		294.9		108.9
Equities and commodities		58.3		53.0		69.4		62.5			58.3		52.9		69.1		62.5			28.5		17.2		70.4		59.3
Effect of diversification								(315.8	)								(309.0	)								(233.3	)
Total risk		174.1		155.1		208.5		174.9			197.2		174.6		230.3		200.9			207.0		152.3		340.7		204.0

(1) VaR by Risk factor group includes information from foreign units.

(2) VaR by Risc factor group does not include information from foreign units.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 145

Interest rate

The table on the position of accounts subject to interest rate risk group them by products, book value of accounts distributed by maturity. This table is not used directly to manage interest rate risks; it is mostly used to enable the assessment of mismatching between accounts and products associated thereto and to identify possible risk concentration.

The following table sets forth our interest-earning assets and interest-bearing liabilities and therefore does not reflect interest rate gap positions that may exist as of any given date. In addition, variations in interest rate sensitivity may exist within the repricing periods presented due to differing repricing dates within the period.

Position of accounts subject to interest rate risk ⁽¹⁾

	03/31/2016																	12/31/2015
	0-30			31-180			181-365			1-5			Over 5					0-30			31-180			181-365			1-5			Over 5
	days			days			days			years			years			Total		days			days			days			years			years			Total
Interest-bearing assets		346,954			179,695			96,403			284,299			161,838			1,069,189		376,617			203,639			97,021			277,995			186,609			1,141,881
Interbank deposits		21,254			5,786			1,390			759			-			29,189		23,454			3,436			2,879			753			3			30,525
Securities purchased under agreements to resell		165,871			38,257			5,002			253			11			209,394		196,402			57,997			5			-			-			254,404
Central Bank compulsory deposits		59,847			-			-			-			-			59,847		62,766			-			-			-			-			62,766
Held-for-trading financial assets		19,023			12,239			10,204			71,937			56,502			169,905		12,872			9,413			13,649			57,700			70,677			164,311
Financial assets held for trading and designated at fair value through profit or loss		-			-			221			175			-			396		-			-			-			642			-			642
Available-for-sale financial assets		3,768			11,309			12,565			31,609			26,428			85,679		3,903			7,106			11,914			35,098			28,024			86,045
Held-to-maturity financial assets		340			285			1,021			17,247			22,211			41,104		342			-			319			14,500			27,024			42,185
Derivatives		6,684			6,392			5,211			7,128			2,333			27,748		6,040			7,152			2,653			8,116			2,794			26,755
Loan and lease operations portfolio		70,167			105,427			60,789			155,191			54,353			445,927		70,838			118,535			65,602			161,186			58,087			474,248
Interest-bearing liabilities		256,432			82,933			69,368			306,757			62,758			778,248		290,908			98,129			74,635			316,852			72,968			853,492
Savings deposits		107,293			-			-			-			-			107,293		111,319			-			-			-			-			111,319
Time deposits		9,638			18,618			9,896			47,816			5,948			91,916		13,465			19,252			13,277			57,694			1,562			105,250
Interbank deposits		3,431			4,506			582			33			-			8,552		4,475			8,727			1,012			735			-			14,949
Deposits received under repurchase agreements		120,770			13,688			24,412			134,614			12,456			305,940		144,750			15,186			21,262			134,708			20,737			336,643
Interbank market		8,909			36,991			23,897			64,455			13,899			148,151		8,056			42,525			29,966			62,654			13,685			156,886
Institutional market		773			4,720			6,168			43,961			28,419			84,041		4,988			5,123			5,748			42,938			35,121			93,918
Derivatives		5,618			4,388			4,318			12,602			2,008			28,934		3,850			7,309			3,348			14,715			1,849			31,071
Financial liabilities held for trading		-			22			95			250			28			395		5			7			22			364			14			412
Liabilities for capitalization plans		-			-			-			3,026			-			3,026		-			-			-			3,044			-			3,044
Difference asset / liability (2)		90,522			96,762			27,035			(22,458	)		99,080			290,941		85,709			105,510			22,386			(38,857	)		113,641			288,389
Cumulative difference		90,522			187,284			214,319			191,861			290,941					85,709			191,219			213,605			174,748			288,389
Ratio of cumulative difference to total interest-bearing assets		8.5	%		17.5	%		20.0	%		17.9	%		27.2	%				7.5	%		16.7	%		18.7	%		15.3	%		25.3	%

(1) Remaining contractual terms.

(2) The difference arises from the mismatch between the maturities of all remunerated assets and liabilities, at the respective period-end date, considering the contractually agreed terms.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 146

Position of accounts subject to currency risk

	03/31/2016
Assets	Dollar		Euro		Chilean Peso		Other		Total
Cash and deposits on demand		6,290		-		652		4,051		10,993
Central Bank compulsory deposits		142		-		3,338		4,468		7,948
Interbank deposits		17,980		-		863		6,086		24,929
Securities purchased under agreements to resell		407		-		-		202		609
Financial assets held for trading		6,031		-		271		658		6,960
Financial assets designated at fair value through profit or loss		396		-		-		-		396
Derivatives		10,099		-		1,480		91		11,670
Available-for-sale financial assets		28,142		-		2,346		1,801		32,289
Held-to-maturity financial assets		13,367		-		-		-		13,367
Loan operations and lease operations portfolio, net		55,719		20		35,980		18,351		110,070
Total assets		138,573		20		44,930		35,708		219,231

	03/31/2016
Liabilities	Dollar			Euro		Chilean Peso		Other		Total
Deposits		42,377			-		24,436		29,120		95,933
Securities sold under repurchase agreements		23,904			-		96		123		24,123
Financial liabilities held for trading		395			-		-		-		395
Derivatives		9,111			-		1,475		175		10,761
Interbank market debt		52,334			-		4,363		664		57,361
Institutional market debt		40,164			-		7,986		336		48,486
Total liabilities		168,285			-		38,356		30,418		237,059
Net position		(29,712	)		20		6,574		5,290		(17,828	)

The exposure to share price risk is disclosed in Note 7 related to financial assets held for trading and Note 10, related to available-for-sale financial assets.

	12/31/2015
Assets	Dollar		Chilean Peso		Other		Total
Cash and deposits on demand		6,060		779		4,611		11,450
Central Bank compulsory deposits		234		503		6,435		7,172
Interbank deposits		16,281		2,093		4,649		23,023
Securities purchased under agreements to resell		1,966		56		87		2,109
Financial assets held for trading		6,125		73		907		7,105
Financial assets designated at fair value through profit or loss		642		-		-		642
Derivatives		9,581		1,279		37		10,897
Available-for-sale financial assets		28,833		3,063		1,928		33,824
Held-to-maturity financial assets		14,807		-		-		14,807
Loan operations and lease operations portfolio, net		63,456		36,776		20,931		121,163
Total assets		147,985		44,622		39,585		232,192

	12/31/2015
Liabilities	Dollar			Chilean Peso		Other		Total
Deposits		55,539			25,811		30,657		112,007
Securities sold under securities repurchase agreements		23,405			240		142		23,787
Financial liabilities held for trading		412			-		-		412
Derivatives		9,179			1,396		429		11,004
Interbank market debt		59,203			3,796		821		63,820
Institutional market debt		44,901			8,112		334		53,347
Total liabilities		192,639			39,355		32,383		264,377
Net position		(44,654	)		5,267		7,202		(32,185	)

The exposure to share price risk is disclosed in Note 7 related to financial assets held for trading and Note 10, related to available-for-sale financial assets.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 147

Liquidity risk

Liquidity risk is defined as the existence of imbalances between marketable assets and liabilities due – mismatching between payments and receipts - which may affect payment capacity of ITAÚ UNIBANCO HOLDING, taking into consideration the different currencies and payment terms and their respective rights and obligations.

Policies and procedures

The management of liquidity risks seeks to guarantee liquidity sufficient to support possible outflows in market stress situations, as well as the compatibility between funding and the terms and liquidity of assets.

ITAÚ UNIBANCO HOLDING has a structure dedicated to improve the monitoring, control and analysis, through models of projections of the variables that affect cash flows and the level of reserves in local and foreign currencies.

The document that details the guidelines established by the internal policy on liquidity risk management, that is not part of the financial statements, may be viewed on the website www.itau.com.br/relacoes-com-investidores, in the section Corporate Governance/Rules and Policies / Public Access Report – Liquidity Risk.

The liquidity risk measurement process makes use of corporate and own in-house developed application systems. ITAÚ UNIBANCO HOLDING manages proprietary IT systems to support the liquidity risk measurement process.

Additionally, ITAÚ UNIBANCO HOLDING establishes guidelines and limits. Compliance with these guidelines and limits is periodically analyzed in technical committees, and their purpose is to provide an additional safety margin to the minimum projected needs. The liquidity management policies and the respective limits are established based on prospective scenarios periodically reviewed and on the definitions of the top management.

These scenarios may be reviewed in view of cash requirements resulting from atypical market situations or arising from strategic decisions of ITAÚ UNIBANCO HOLDING.

In compliance with the requirements of CMN Resolution No. 4,090 of May 24, 2012 and BACEN Circular N° 3,749 of March 5, 2015, the Statement of Liquidity Risk (DRL) is sent to BACEN on a monthly basis, and the following items for monitoring and supporting decisions are periodically prepared and submitted to top management:

· Different scenarios projected for changes in liquidity;

· Contingency plans for crisis situations;

· Reports and charts that describe the risk positions;

· Assessment of funding costs and alternative sources of funding;

· Monitoring of changes in funding through a constant control over sources of funding, considering the type of investor and maturities, among other factors;

Primary sources of funding

ITAÚ UNIBANCO HOLDING has different sources of funding, of which a significant portion is from the retail segment. Total funding from clients reached R$ 546.7 billion (R$ 586.2 billion at 12/31/2015), particularly funding from time deposits. A considerable portion of these funds – 34.0% of total, or R$ 185.8 billion – is available on demand to the client. However, the historical behavior of the accumulated balance of the two largest items in this group – demand and savings deposits - is relatively consistent with the balances increasing over time and inflows exceeding outflows for monthly average amounts.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 148

	03/31/2016						12/31/2015
Funding from clients	0-30 days		Total		%		0-30 days		Total		%
Deposits		178,919		266,318				190,352		292,610
Demand deposits		58,557		58,557		10.7		61,092		61,092		10.4
Savings deposits		107,293		107,293		19.6		111,319		111,319		19.0
Time deposits		9,638		91,916		16.8		13,465		105,250		18.0
Other		3,431		8,552		1.6		4,476		14,949		2.6
Funds from acceptances and issuance of securities (1)		4,114		74,352		13.6		4,128		75,590		12.9
Funds from own issue (2)		2,309		148,139		27.1		2,863		152,215		25.9
Subordinated debt		421		57,919		10.6		4,722		65,785		11.2
Total		185,763		546,728		100.0		202,065		586,200		100

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

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

Control over liquidity

ITAÚ UNIBANCO HOLDING manages its liquidity reserves based on estimates of funds that will be available for investment, considering the continuity of business in normal conditions.

During the period of 2016, ITAÚ UNIBANCO HOLDING maintained appropriate levels of liquidity in Brazil and abroad. Liquid assets (cash and deposits on demand, securities purchased under agreements to resell - funded position and government securities – available, detailed in the table Undiscounted future flows – Financial assets) totaled R$ 137.3 billion and accounted for 73.9% of the short term redeemable obligations, 25.1% of total funding, and 17.6% of total assets.

The table below shows the indicators used by ITAÚ UNIBANCO HOLDING in the management of liquidity risk:

	31/03/2016		31/12/2015
Liquidity indicators	%		%
Net assets (1) / funds within 30 days (2)		73.9		77.5
Net assets (1) / total funds (3)		25.1		26.7
Net assets (1) / total assets (4)		17.6		18.1

(1) Net assets: Cash and deposits on demand, Securities purchased under agreements to resell – Funded position and Government securities - available. Detailed in the table Undiscounted future flows – Financial assets.

(2) Table Funding from clients (Total Funding from clients 0-30 days).

(3) Table funding from clients (Total funding from clients).

(4) Detailed in the table Undiscounted future flows – Financial assets, total present value regards R$ 781,692 (R$ 863,180 at 12/31/2015).

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 149

The following table presents assets and liabilities according to their remaining contractual maturities, considering their undiscounted flows.

Undiscounted future flows except for derivatives	03/31/2016													12/31/2015
Financial assets (1)	0 - 30 days		31 - 365 days			366 - 720 days		Over 720 days			Total			0 - 30 days		31 - 365 days			366 - 720 days		Over 720 days			Total
Cash and deposits on demand		18,384		-			-		-			18,384			18,544		-			-		-			18,544
Interbank investments		181,829		43,805			656		278			226,568			229,295		40,016			696		239			270,246
Securities purchased under agreements to resell – Funded position (2)		66,244		-			-		-			66,244			72,091		-			-		-			72,091
Securities purchased under agreements to resell – Financed position		93,801		37,009			-		-			130,810			133,315		33,742			-		-			167,057
Interbank deposits		21,784		6,796			656		278			29,514			23,889		6,274			696		239			31,098
Securities		67,458		16,385			7,478		70,796			162,117			71,124		15,485			11,017		78,774			176,400
Government securities - available		52,708		-			-		-			52,708			65,965		-			-		-			65,965
Government securities – subject to repurchase commitments		8,792		1,955			1,055		4,421			16,223			68		2,675			712		6,866			10,321
Private securities - available		5,958		14,430			6,423		66,375			93,186			5,091		12,681			10,305		71,908			99,985
Private securities – subject to repurchase commitments		-		-			-		-			-			-		129			-		-			129
Derivative financial instruments		6,684		9,120			3,242		5,743			24,789			5,955		7,685			3,430		6,289			23,359
Gross position		-		36			-		473			509			-		1			-		20			21
Cross Currency Swap Deliverable - Asset position		-		2,440			-		824			3,264			-		852			-		975			1,827
Cross Currency Swap Deliverable - Liability position		-		(2,404	)		-		(351	)		(2,755	)		-		(851	)		-		(955	)		(1,806	)
Net position		6,684		9,084			3,242		5,271			24,281			5,955		7,684			3,430		6,269			23,338
Swaps		111		2,527			1,415		3,836			7,889			666		2,140			1,935		4,406			9,147
Option		685		2,651			1,248		366			4,950			2,413		2,000			692		478			5,583
Forward (onshore)		4,011		1,347			1		-			5,359			1,204		1,961			1		-			3,166
Other derivative financial instruments		1,877		2,559			578		1,069			6,083			1,672		1,583			802		1,385			5,442
Loan and lease operations portfolio (3)		56,728		157,681			80,806		173,184			468,399			63,263		171,813			86,118		187,619			508,813
Total financial assets		331,083		226,991			92,182		250,001			900,257			388,181		234,999			101,261		272,921			997,362

(1) The assets portfolio does not take into consideration the balance of compulsory deposits in Central Bank, amounting to R$ 67,001 (R$ 66,556 at 12/31/2015), which release of funds is linked to the maturity of the liability portfolios. The amounts of PGBL and VGBL are not considered in the assets portfolio because they are covered in Note 30.

(2) Net of R$ 10,947 (R$ 9,461 at 12/31/2015) which securities are restricted to guarantee transactions at BM&FBOVESPA S.A. and the Central Bank of Brazil.

(3) Net of payment to merchants of R$ 42,303 (R$ 38,978 at 12/31/2015) and the amount of liabilities from transactions related to credit assignments R$ 5,361 (R$ 5,495 at 12/31/2015) .

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 150

Undiscounted future flows except for derivatives	03/31/2016															12/31/2015
Financial liabilities	0 – 30 days			31 – 365 days			366 – 720 days			Over 720 days			Total			0 – 30 days			31 – 365 days			366 – 720 days			Over 720 days			Total
Deposits		179,276			34,960			7,304			66,510			288,050			190,890			45,133			8,331			64,843			309,197
Demand deposits		58,557			-			-			-			58,557			61,092			-			-			-			61,092
Savings deposits		107,293			-			-			-			107,293			111,319			-			-			-			111,319
Time deposit		9,862			29,849			7,287			66,488			113,486			13,873			34,660			8,326			64,819			121,678
Interbank deposits		3,565			5,111			17			22			8,715			4,606			10,473			5			24			15,108
Compulsory deposits		(39,599	)		(9,253	)		(2,149	)		(16,000	)		(67,001	)		(40,807	)		(9,021	)		(2,043	)		(14,685	)		(66,556	)
Demand deposits		(11,585	)		-			-			-			(11,585	)		(10,224	)		-			-			-			(10,224	)
Savings deposits		(24,875	)		-			-			-			(24,875	)		(26,838	)		-			-			-			(26,838	)
Time deposit		(3,139	)		(9,253	)		(2,149	)		(16,000	)		(30,541	)		(3,745	)		(9,021	)		(2,043	)		(14,685	)		(29,494	)
Securities sold under repurchase agreements (1)		150,793			38,028			53,311			106,710			348,842			167,363			39,464			63,773			111,189			381,789
Government securities		119,421			6,348			3,205			22,245			151,219			139,530			5,315			2,588			29,937			177,370
Private securities		6,312			31,678			50,106			84,465			172,561			8,043			30,146			61,185			81,252			180,626
Foreign		25,060			2			-			-			25,062			19,790			4,003			-			-			23,793
Funds from acceptances and issuance of securities (2)		4,276			21,302			19,976			42,936			88,490			4,188			24,186			19,178			40,612			88,164
Borrowing and onlending (3)		6,680			49,798			23,070			24,578			104,126			5,902			58,159			24,116			25,672			113,849
Subordinated debt (4)		403			12,190			12,923			50,970			76,486			4,775			10,115			13,764			56,006			84,660
Derivative financial instruments		5,618			6,223			3,459			10,675			25,975			3,765			8,537			4,104			11,269			27,675
Gross position		-			2			-			5			7			1			11			-			4			16
Cross Currency Swap Deliverable - Asset position		-			(79	)		-			(125	)		(204	)		(85	)		(1,269	)		-			(236	)		(1,590	)
Cross Currency Swap Deliverable - Liability position		-			81			-			130			211			86			1,280			-			240			1,606
Net position		5,618			6,221			3,459			10,670			25,968			3,764			8,526			4,104			11,265			27,659
Swaps		161			1,745			1,825			9,319			13,050			783			3,368			2,618			9,562			16,331
Option		601			3,037			1,075			424			5,137			1,460			3,025			805			493			5,783
Forward (onshore)		3,782			-			-			-			3,782			828			5			-			-			833
Other derivative financial instruments		1,074			1,439			559			927			3,999			693			2,128			681			1,210			4,712
Total financial liabilities		307,447			153,248			117,895			286,379			864,969			336,076			176,573			131,223			294,906			938,778

(1) Includes own and third parties’ portfolios.

(2) Includes mortgage notes, real estate credit bills, agribusiness, financial bills and structured operations certificates recorded in interbank market funds and liabilities for issuance of debentures and foreign securities recorded in funds from institutional markets.

(3) Recorded in funds from interbank markets.

(4) Recorded in funds from institutional markets.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 151

	03/31/2016										12/31/2015
Off balance sheet	0 – 30 days		31 – 365 days		366 – 720 days		Over 720 days		Total		0 – 30 days		31 – 365 days		366 – 720 days		Over 720 days		Total
Endorsements and sureties		1,825		12,068		6,090		52,034		72,017		2,018		13,819		5,477		52,930		74,244
Commitments to be released		82,857		28,280		29,315		79,980		220,432		84,641		28,808		28,404		79,487		221,340
Letters of credit to be released		7,502		-		-		-		7,502		6,936		-		-		-		6,936
Contractual commitments - Fixed assets and Intangible (Notes 15 and 16)		-		262		-		-		262		-		340		-		-		340
Total		92,184		40,610		35,405		132,014		300,213		93,595		42,967		33,881		132,417		302,860

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 152

Note 37 – Supplementary Information

Itaú Chile Holdings - On July 17, 2015, after approval of proper regulatory authorities, the subsidiary Itaú Chile Holdings (ICH) was dissolved. Therefore, the investments held by ICH were transferred to ITAÚ UNIBANCO HOLDING. The transaction had an accounting effect of R$ (251) million.

Itaú Unibanco Holding S.A. – Complete Financial Statements in IFRS – March 31, 2016 153