1S2013 - Consolidated · 2015-10-02 · Cia. Hidromineral Piratuba Sanitation (IV) 15.56 2,356...

1st half 2013

Financial

Statements

Financial

Statements

1st half 2013

INDEX

Management Report 1

Financial Statements 17

Balance Sheet ...................................................................................................................................... 17

Statement of Income ............................................................................................................................ 21

Statement of Changes in Shareholders’ Equity................................................................................ 22

Statement of Cash Flows .................................................................................................................... 23

Statement of Value Added .................................................................................................................. 24

Notes to the Financial Statements 25

Note 1 – The Bank and its Operations ............................................................................................... 25

Note 2 – Company Restructuring ....................................................................................................... 25

Note 3 – Presentation of Financial Statements................................................................................. 28

Note 4 – Description of Significant Accounting Policies ................................................................. 31

Note 5 – Information by Segment ....................................................................................................... 42

Note 6 – Cash and Cash Equivalents ................................................................................................. 46

Note 7 – Short-term Interbank Investments ...................................................................................... 46

Note 8 – Securities and Derivative Financial Instruments ............................................................... 47

Note 9 – Interbank Accounts .............................................................................................................. 58

Note 10 – Loan Operations ................................................................................................................. 59

Note 11 – Other Receivables............................................................................................................... 65

Note 12 – Exchange Portfolio ............................................................................................................. 67

Note 13 – Other Assets ........................................................................................................................ 68

Note 14 – Investment ........................................................................................................................... 69

Note 15 – Property and Equipment .................................................................................................... 72

Note 16 – Intangible Assets ................................................................................................................ 72

Note 17 – Deposits and Securities Sold under Repurchase Agreements ..................................... 73

Note 18 – Borrowing and Onlendings ................................................................................................ 77

Note 19 – Resources from Acceptances and Securities Issues ..................................................... 79

Note 20 – Other Liabilities ................................................................................................................... 81

Note 21 – Operations of Insurance, Pension Plan and Capitalization ............................................ 85

Note 22 – Other Operating Income/Expenses ................................................................................... 88

Note 23 – Non-operating Income ........................................................................................................ 91

Note 24 – Stockholders' Equity .......................................................................................................... 91

Note 25 – Taxes .................................................................................................................................... 97

Note 26 – Related Party Transactions ............................................................................................... 99

Note 27 – Employee Benefits ............................................................................................................ 102

Note 28 – Provisions, Contingent Liabilities and Legal Liabilities–Taxes and Social Security 113

Note 29 – Risk and Capital Management ......................................................................................... 116

Note 30 – Statement of Comprehensive Income ............................................................................ 128

Note 31 – Other Information.............................................................................................................. 128

Independent Auditors’ Report

Summary of Audit Commitee Report

Members of the Management Bodies

Banco do Brasil S.A. - Management Report – 1st Half of 2013

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Dear Shareholders,

We present the Management Report of Banco do Brasil (BB) for the 1st half of 2013, in conformity with the requirements of the Brazilian Corporate Law, the National Monetary Council (CMN), the Brazilian Central Bank (Bacen), the Brazilian Securities and Exchange Commission (CVM) and BB's By-laws.

1. Macroeconomic Environment

The outlook for the recovery of the US economy as compared to the possibility of the slowdown in the Chinese economy marked the international economic environment in the first half. This context favored the appreciation of the US dollar, which produced direct adverse impacts on the currency rates and on the evaluation of risk premium associated with emerging economies.

The Brazilian economy continued to be affected by the uncertain foreign environment. Despite the strong increase in investments, which brings positive prospects for the increase in the supply capacity over the medium term and the substantial agricultural production, the Gross Domestic Product did not post high growth rates.

The cumulative inflation over the last 12 months is close to the target ceiling. Accordingly, Bacen began a new cycle of rise in interest rates.

2. Highlights of the Period

We present below a chronological list of some events that merit special emphasis:

i) Banco do Brasil issued Subordinated Financial Bills in January in Brazil totaling R$ 5.233 billion. These securities qualify for Tier II capital by Bacen;

ii) Banco do Brasil completed in January its largest funding in the foreign capital markets in the amount of US$ 2.0 billion;

iii) Banco do Brasil was selected in February to make up the new Dow Jones Sustainability Index of Emerging Markets;

iv) Banco do Brasil carried out in April the public offering of BB Seguridade, the holding that centralizes its interests in companies that operate in the insurance, pension plans and premium bonds segment. The secondary initial public offering comprised 675 million common shares, related to the base offering and the supplementary and over allotments. The shares of BB Seguridade started to be traded at the stock exchange on April 29, 2013, listed in the Novo Mercado of BM&FBOVESPA, at the fixed price of R$ 17.00 per share, generating an income from the transaction to BB of R$ 11.475 billion;

v) Banco do Brasil launched in April the new phase of BOMPRATODOS, called Cada Vez + BOMPRATODOS.

3. Strategic Planning for the Period 2013/2017

For the 2013-2017 period, Banco do Brasil gave priority to two main objectives: to increase its efficiency and productivity, and to generate sustainable results, contributing fostering sustainable development in Brazil.

In order to increase efficiency and productivity, the Bank is reviewing and streamlining its main processes. The expected results are more innovative, convenient and effective channels, products and services, which contribute to cut expenses and increase profit.

Businesses with a strong social orientation, such as the Minha Casa Minha Vida (Social Mortgage Program of Government), the MPO (Oriented Productive Microcredit), the Pronaf (National Program for Strengthening Family Agriculture) and the Fies (Student Financing Fund) are strategic for the Bank as a profitable business make compatible with the promotion of a better life for Brazilians. Are therefore fundamental parts of the business mission of BB.


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4. Economic-Financial Performance

4.1 Overview

Banco do Brasil recorded net income of R$ 10.0 billion and an annualized return on shareholders' equity of 31.9% in the 1st half of 2013. Income per share was R$ 3.52 in the period.

Assets amounted to R$ 1.2 trillion, an increase of 15.5% in twelve months, with a return on assets of 1.7%, giving the Bank the leading position in the Banking Industry (BI). Loan operations had an outstanding performance, with 20.8% of market share. Shareholders' equity reached R$ 64.7 billion, an increase of 6.4% in 12 months.

Tabela 1. Highlights

R$ million

Earnings¹ 1st Half 12 1st Half 13 on 1st Half 12

Net Income 5,510 10,029 82.0

Gross Income from Financial Intermediation 13,084 13,365 2.1

Fee Income 10,308 11,305 9.7

Income from Insurance, Pension Plans e Savings Bonds 1,124 1,527 35.8

Administrative Expenses² (14,993) (16,392) 9.3

R$ billion

Equity Jun/12 Jun/13 on Jun/12

Assets 1,052 1,215 15.5

Loan Portfolio - Broad Concept³ 508 639 25.7

Deposits and Market Funding 688 775 12.6

Total Deposits 467 478 2.4

Shareholders Equity 61 65 6.4

BIS Ratio % 14.2 15.9

Indicators 1st Half 12 1st Half 13 on 1st Half 12

Earnings per Share (R$) 1.94 3.52 81.6

Return on Assets % 1.1 1.7

Return on Equity % 19.3 31.9

thousand

Structural Information Jun/12 Jun/13 on Jun/12

Base Customers 57,466 60,187 4.7

Total Checking Account 36,690 38,512 5.0

Individuals 34,396 36,152 5.1

Companies 2,294 2,360 2.9

Branches 5,317 5,401 1.6

Asset Management (R$ billion) 448 484 8.0

R$

Market Ratios Jun/12 Jun/13 on Jun/12

BBAS3 - Book Value 21.7 22.6 3.9

BBAS3 - Closing Price 19.5 22.1 13.3 1 - Items based on Consolidated Statements; 2 - Refers to the sum of Personnel Expenses and Other Administrative Expenses; 3 - Includes private securities and guarantees offered; 4 - Time and demand deposits, Savings Deposits, Interbank Deposits, Money market borrowings, Agribusiness Letters of Credit, Mortgage Bonds and Other Bank Notes.

See further information about the economic-financial performance of BB in the Management Discussion and Analysis Report at: www.bb.com.br/ir.

4.2 Stock Performance

BB’s market value totaled R$ 63.0 billion at the end of June 2013. In the theoretical portfolio of Ibovespa in force for the next four months may to august of 2013, the Bank occupies 6th place, with a market share of 2.864%.


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BB common shares (BBAS3) were traded at Novo Mercado of BM&FBovespa, and continued to be listed in the theoretical portfolios of the main stock indexes: Ibovespa, Ibrx50, IGC, ISE and Itag. Additionally, BB makes up the international indexes MSCI LatAm Index, S&P Lac 40 and DJSI.

At the end of the period, the Level I American Depositary Receipt (ADR) Program of Banco do Brasil had 19.1 million receipts in free float at U$ 10.10 per certificate.

Banco do Brasil, aligned with its profit reinvestment and dividend distribution policy, keeps 40% of the net income distributed (payout) in the form of dividends and interest on own equity with quarterly periodicity. Thus, during the half, R$ 4.0 billion was set aside as shareholders' compensation - R$ 2,457.3 million in dividends and R$ 1,556.0 million as interest on own capital. The 60% of the remaining income were used as legal and by-laws reserves.

4.3 Information on Affiliates and Subsidiaries

Table 2. Interest in the Capital of Subsidiaries and Affiliates of the BB Banco Múltiplo

Share - % Book ValueEquity

Income

R$ thousand Activity Jun/13 Jun/12 Jun/13 1st Half 13

Consolidated Equity Interests

Banking Segment

Banco do Brasil – AG. Viena Banking (I) 100.00 233,575 288,387 8,707

BB USA Holding Company, Inc. Holding (I) 100.00 3,063 5,176 207

BB Leasing S.A. – Arrendamento Mercantil Leasing (I) 100.00 3,514,671 3,588,095 49,076

BB Leasing Company Ltd. Leasing (I) 100.00 90,546 100,544 657

BB Securities LLC. Brokerage (I) 100.00 47,148 75,468 14,839

Brasilian American Merchant Bank Banking (I) 100.00 886,275 976,874 9,752

BB Securities Asia Pte. Ltd. Brokerage (I) 100.00 9,223 10,837 862

BB Securities Ltd. Brokerage (I) 100.00 80,939 101,845 8,415

Besc DTVM S.A. Asset Management (I) 99.62 7,131 7,133 29

Banco Patagonia S.A. Multiple Bank (I) 58.96 760,994 941,592 125,789

Banco Votorantim S.A. Multiple Bank (II) 50.00 4,253,389 3,357,928 (152,939)

BB Americas Multiple Bank (I) 100.00 60,821 53,487 (8,082)

Investment Segment

BB Banco de Investimento S.A. Investment Bank (I) 100.00 2,309,446 3,102,597 675,241

Segment of Fund M anagement

BB DTVM S.A. Asset Management (I) 100.00 131,501 131,525 329,757 Segment of Insurance, Private Pension Fund, and Capitalization

BB Seguridade Participações S.A. Holding (I) 66.25 - 3,578,070 758,332

Segment of Payment M ethods

BB Adm. de Cartões de Crédito S.A. Service Rendering (I) 100.00 26,836 26,624 7,550

BB Elo Cartões Participações S.A. Holding (I) 100.00 17,069 14,822 (209)

Elo Participações S.A. Holding (II)

Elo Serviços S.A. Service Rendering (II)

Other Segments

BB Administradora de Consórcios S.A. Consortiums (I) 100.00 69,839 151,272 69,158

BB Tur Viagens e Turismo Ltda. Tourism (I) 100.00 11,675 10,170 (857)

BB Money Transfers Inc. Service Rendering (I) 100.00 3,361 5,520 621

BB Tecnologia e Serviços S.A. (old Cobra Tecnologia) IT (I) 99.97 132,462 150,912 13,680

BV Participações S.A. Holding (II) 50.00 71,998 49,460 (2,726) (I) Subsidiaries, fully consolidated; (II) Jointly-controlled subsidiaries, proportionally consolidated; (III) Affiliates, proportionally consolidated as the determination of the Bacen.


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Table 3. Unconsolidated Interest in the Capital of Subsidiaries and Affiliates

Share - % Book ValueEquity

Income

R$ mil Atividade Jun/13 Jun/12 Jun/13 1st Half 13

Equity Interest

Cadam S.A. Mining (IV) 21.64 32,433 25,720 (2,279)

Cia. Hidromineral Piratuba Sanitation (IV) 15.56 2,356 2,357 69

Itapebi Geração de Energia Energy (IV) 19.00 76,548 76,414 10,768

Estruturadora Brasileira de Projetos - EBP Service Rendering (IV) 11.11 3,851 7,412 2,755 (IV) Affiliates accounted by equity method.

5. Service Network and Channels

Banco do Brasil ended the period with 65.8 thousand points of service, comprising its own and shared network, and correspondents, covering all Brazilian states.

The Bank’s own network featured 5.4 thousand branches, 13.9 thousand points of service and 44.3 thousand automated teller machines (ATMs). BB has the largest branches chain of the Country, with a market share of 23.9%.

The correspondents’ network, identified by the MaisBB trademark, counted on 12.0 thousand points of services and establishments under agreement, plus 6.2 thousand points of the Postal Bank.

The self-service channels also delivered an outstanding performance:

i) internet: 928.4 million transactions made by individuals and 14.5 million clients registered to use the channel;

ii) cell phone: 168.0 million transactions carried out and 3.1 million users;

iii) Public Sector (internet and cell phone): 140.3 million transactions carried out by 24.7 thousand users;

iv) Call Center: 131.7 million transactions carried out and 11.9 million clients enabled;

v) Financial Manager: 992.2 million transactions, used for more than 736 thousand companies, especially small-sized companies.

Abroad, the Service Network is comprised of 49 own facilities located in 24 countries. At the end of June 2013, there were 1.1 thousand banks acting as BB's correspondent banks in 138 countries. In Argentina, the network of Banco Patagonia was increased to 196 points of service, 8.9% growth over twelve months. Banco do Brasil Americas, in the US, has a network of 3 branches on agreements, having 62.3 thousand shared ATMs available, also offering internet and mobile banking services.

6. Business

6.1 BOMPRATODOS

In the first half, more than 11 million clients have used products or services with lower prices and over 8.6 million have taken out loans with lower interest rates.

In April 2013, Banco do Brasil launched the new phase of BOMPRATODOS. The objective is to achieve excellence in relationship through service quality and satisfaction of the 60.2 million clients of Banco do Brasil. The three pillars of this stage are the following: more transparency in relationships, more banking inclusion, and more advantages in products and services.

The main highlights of the 2013 phase of BOMPRATODOS over the first half were the following:

i) running the transparency advertising campaign in the media, materialized in the launch of the new statement of services, checking account, and the new credit card bill;

ii) launching of the new standard service packages, complying with the Bacen Resolution 4,196, dated March 15, 2013 and the Circular Letter 3594, dated April 22, 2013;

iii) simplification of the service package portfolio of Banco do Brasil, reducing the quantity offered from 31 to 7, which includes the packages standardized by Bacen and the Banco Postal


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(Postal Bank) Basket, aiming at qualifying the offering and give more transparency in relation to the charging of fees;

iv) increase of 5 million, over twelve months, in new clients and/or that began a banking relationship with BB, especially through Banco Postal.

For further information, please check out the website: www.bb.com.br/bompratodos.

6.2 Loan Portfolio

The BB’s loan portfolio in a broad concept that considers guarantees provided and private securities in the portfolio, attained R$ 638.6 billion, growth of 25.7% in twelve months. BB continued to be the leader in BI credit with 20.8% of market share. The breakdown of the portfolio is presented as follows:

i) R$ 161.5 billion in individuals operations, a 15.9% increase;

ii) R$ 300.1 billion in business operations, a 28.8% increase;

iii) R$ 127.1 billion in agribusiness credit, a 32.8% increase.

Delinquencies remained under control. The indicator that measures the delay in transactions for over 90 days (ratio between loans over 90 days past due and the total loan portfolio) ended the period at 1.9%. The delinquency levels, which only considers the domestic portfolio, stood at 2.0%. The Bank also presents a better credit structure than the BI. Operations classified at risk levels AA-C closed June at 94.6% of the total portfolio, against 92.8% observed in BI.

6.2.1 Individual Customers

The main credit facilities comprising this portfolio are as follows:

Payroll Loans

The payroll loan is still the most representative category in the portfolio of loans to individuals, with 38.6% of the total, already considering the credit acquisition and interest in Banco Votorantim. With the strategy for qualifying the client base and focusing on lower risk lines, the payroll advance loan operations grew 13.3% over the last 12 months, reaffirming the Bank’s leadership in this segment, with 29.7% of market share. Loans to civil servants continued to be the most substantial of this portfolio, with 86.9% of total, being comprised by retirees and pensioners of INSS (8.5%) and private sector employees (4.5%).

Auto Loans

The balance of auto loans transactions, including credit acquisitions and ownership interest in Banco Votorantim, reached R$ 35.8 billion, an increase of 12.4% in relation to June 2012.

The growth of transactions originated in Banco do Brasil branches was noteworthy, reaching a balance of R$ 12.1 billion, a 79.9% growth over 12 months, stimulated by BOMPRATODOS. The profile of these new transactions continued to be within the criteria adopted in recent years, ensuring the quality of the portfolio within the historical performance data.

Mortgage Bonds

In June 2013, mortgage bonds to individuals recorded a balance of R$ 13.7 billion, an increase of 78.8% in 12 months. Disbursements in the year totaled R$ 4.3 billion in the half, 108.4% greater than in the same period of 2012. The offer of product portfolio with savings and FGTS (Government Severance Indemnity Fund for Employees) funding is noteworthy.

Accessibility Credit

BB Accessibility Credit is a financing line, in combination with the governmental program Viver sem Limites (Living Without Limit), a national plan for the rights of the handicapped. This product is intended to clients with monthly income of up to 10 minimum salaries for the acquisition of assistive technology products, at interest rate from 0.57% p.m. and IOF tax exemption.

Banco do Brasil operates with exclusivity in the grant of this type of credit, and in 17 months after agreement, the portfolio reached R$ 48.6 million.


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Fies

BB engaged 163.4 thousand transactions as financial agent of the Fies (Student Financing Program). The provided service enabled the portfolio originated in BB to reach the balance of R$ 14.5 billion, a 155.8% growth over 12 months, ensuring the leadership of BB in this market.

6.2.2 Companies Customers

The main amounts which comprise the balance of the corporate portfolio are presented below:

Credit for Investments

BB consolidated its position as one of the most important credit-granting agents for investments in the country. In the first half, it analyzed big projects in areas like Energy, Oil, Highway Infrastructure, and Naval Industry, where R$ 15.2 billion has already been granted or are about to be granted.

In this period, the disbursement of credit for investment amounted to R$ 28.5 billion, of which we highlight the lines of transfer of funds from the BNDES/Finame (Government Agency for Machinery and Equipment Financing), Pronaf (National Program for Strengthening Family Farming), Agricultural Investment, FCO (Constitutional Fund for the Center West) and Proger (Job and Income Generation Programs).

Mortgage Bonds

At the end of the first half, BB recorded R$ 4.1 billion of production financing. The portfolio balance reached 3.6 billion in June, a 67.6% growth over 12 months.

56 thousand housing units were sold until June, with the finance provided by the Minha Casa Minha Vida Program for all income ranges of the program.

Small and Micro Companies

BB had 2.4 million checking accounts of very small and micro companies (SME) at the end of June 2013, continuing to be the main partner of this segment and reaffirming its positioning as "the Bank of small and micro companies”.

The balance of loan operations attained R$ 94.0 billion, an increase of 24.8% in twelve months. It is worth emphasizing the allocation of R$ 61.1 billion for working capital, which represented growth of 18.7% in relation to the same period of the last year. Only the BB Giro Empresa Flex credit facility, with a balance of R$ 21.0 billion, responsible for 34.4% of the working capital portfolio.

In January 2013, Banco do Brasil started to offer a credit solution to finance the payment of taxes to SMEs which annual gross revenue up to R$ 3.6 million. This solution was provided to meet the demand from business owners who needed funds to settle the taxes that are levied in the beginning of the year. By the end of provisions on March 28, 2013, BB reached a disbursement of R$ 979.5 million, with 31.9 thousand transactions.

Another highlight is BNDES Capital de Giro Progeren, which is part of the BNDES Progeren (Program for Strengthening Employment and Income Generation Capacity). In the half, the funds released totaled R$ 2.0 billion, an increase of 105.4% in comparison with the same period of 2012.

Credit for investment financing reached R$ 30.1 billion in June, growth of 37.4% in twelve months.

BB Crédito Empresa (business credit), a line that provides financing for new vehicles, IT equipment, construction material and new domestic machinery and equipment, recorded in the end of June a 710.4% increase over 12 months, from R$ 342.3 million to R$ 2.8 billion. From the beginning of 2013, the disbursement reached R$ 2.2 billion, which represents a 992.9% increase in relation to the amount provided in the previous half. The highlight was the BB business credit – machinery and equipment.

In working capital lending to SME, Banco do Brasil made full use of the FGO (Operations Guarantee Fund). At the end of June, there were 478.2 thousand operations with FGO coverage, totaling the invested balance of R$ 16.3 billion.

BB supported in this half, 273 APL (Local Productive Arrangements), delivering services to 23.7 thousand ventures. The balance of operations with SME comprising the APL reached R$ 3.1 billion. BB’s partnership in APL aims at expanding credit granting, foster entrepreneur training, expansion and technological innovation, contributing for access to the markets.

In the Oriented Productive Microcredit (MPO), the Bank’s activities are aligned with the Crescer (Grow) Program of the Federal Government. At the end of June, it reached the balance of R$ 801.7


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million in loan operations for working capital and investments, granted to individual entrepreneurs and micro companies with annual revenue of up to R$ 120 thousand. Over 860.1 thousand clients throughout the country were benefited.

Wholesale Customers

Structuring the services into four segments, Middle, Upper Middle, Corporate e Large Corporate, provided a substantial improvement in business relationships, mainly regarding rates and terms, with more competitive conditions to clients.

In June, the loan portfolio of wholesale clients in the broad concept, which includes private securities and guarantees pledged by Banco do Brasil, recorded a balance of R$ 193.4 billion, 26.0% up on June 2012.

Banco do Brasil participates in Structured Operations, which are credit grants tailored to the specific needs of clients. The main grants over the first half totaled more than R$ 20.9 billion. Out of that total, BB's share was R$ 13.3 billion, of which R$ 3.2 billion in long-term financing operations such as with the BNDES, FCO and the FMM (Merchant Marine Fund), and R$ 10.1 billion in Issues in the Capital Markets, through Debentures, Promissory Notes, and FIDIC (Receivables Investment Fund Units).

6.2.3 Agribusiness

BB continues to act as principal partner of the Brazilian agribusiness with an interest of 66.1% of the Rural Banking Industry. The agribusiness portfolio in the broad concept ended the half with a balance of R$ 127.1 billion in agricultural loan and agroindustrial transactions. This sum represents an increase of 32.8% in relation to June 2012. It is noteworthy the balance of R$ 26.4 billion in operations with Pronaf and R$ 14.3 billion with the Pronamp (National Program for Support to Medium-Sized Rural Producers).

In the contracting of rural credit loans, special emphasis is placed on the use of risk mitigation mechanisms - bad weather and prices. In June, 51.1% of the agricultural costing operations contracted in the harvest of 2012/2013 were covered with production insurance (Agricultural insurance or Proagro), price insurance (options contracts). The delinquency of the agribusiness portfolio continues at a low threshold, with the indicator of operations delinquent for over 90 days of 0.5%.

The credit support to agribusiness sustainability is present in the following lines: Agroecology Pronaf, Eco Pronaf and ABC Program (Low-Carbon Agriculture Program) which encourages rural producers to use raising techniques that reduce the issue of greenhouse gases and deforestation. In the first half, the ABC Program accounted for over 5,307 financing, reaching R$ 1.0 billion. BB had invested R$ 2.6 billion in the ABC program in July/2012 to June/2013, of a total of R$ 1.5 billion forecast for the entire 2012/2013 crop.

The finance of crops with the adoption of the SPD (Direct Planting System), one of the technologies that are included in the spontaneous commitments made by Brazil in COP-15, is substantial and corresponds to 77.0% of the total amount in finance of agriculture cost by BB in the 2012/2013 crop.

6.3 Funding

BB’s funding totaled R$ 660.6 billion at the end of the first half, among operations in the domestic and international markets.

As to domestic funding, the following are highlighted:

i) R$ 48.2 billion in Agribusiness Letters of Credit;

ii) R$ 90.9 billion in transfer of funds and programs with growth above 26.4% in relation to the same period of 2012. Among these funds the following are highlighted: FCO, FAT (Worker Assistance Fund), FMM, Funcafé (Brazilian Coffee Fund), Finame/BNDES. They all generate funding for loan operation at BB.

iii) R$ 16.4 billion in Subordinated Letters of Credit. The balance of operations qualified as Tier II capital amounted to R$ 12.8 billion.

In January/2013, Banco do Brasil S.A. the Bank performed its highest fund raising in the external market in the form of Hybrid Capital and Debt Instrument in the amount of US$ 2.0 billion and US$ 1.950 billion was considered by Bacen eligible as Tier I and/or II capital.


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6.4 Asset Management

Banco do Brasil, through BB Gestão de Recursos (BB DTVM), is the leader in investment fund national industry since 1994. At the end of June, reached the total of R$ 483.7 billion in assets under management and a market share of 20.8%. During the period, we emphasized:

i) the volume of funds invested in Extra Market Funds, not considered in the Anbima ranking, totaled R$ 56.2 billion;

ii) during the first half, 40 funds were launched: 10 of the Brasilprev RT family;14 exclusives; 6 targeted at private clients; 1 targeted at the following segments: RPPS (Civil Servants Social Security System), EFPC (Closed Private Pension Entities) and Private. The BB Ações Seguridade fund stood out, created on May 2, 2013, with the objective of mainly investing funds in the acquisition of BB Seguridade shares.

In relation to funding transactions with a social and/or environmental focus, the Bank offers the following funds in its portfolio: BB Referenciado Social 50; BB Ações Índice de Sustentabilidade Empresarial Jovem; BB Multimercado Balanceado LP Jovem; BB Multimercado Global Acqua LP Private; BB Ações Carbono Sustentabilidade FIA and BB Ações Carbono Sustentabilidade com Opção de Venda FIA.

BB DTVM is a signatory to the United Nations Principles for Responsible Investment, governed by United Nations - UN and has improved the methodology for the integration of environmental, social and corporate governance topics with its investment decision-making.

Since 2006 BB DTVM has received the maximum rating (MQ1) in Excellence in Management Quality by the Ratings agency Moody's.

In the Private segment, Banco do Brasil recorded R$ 69.7 billion in managed assets in the first half. In the loan segment, it recorded R$ 7.7 billion in the end of June, an 49.0% increase over twelve months.

6.5 Government Customers

The loan operations with the government reached R$ 12.8 billion in the first half, a growth of more than 202.1% over 12 months, and mainly offering funds for infrastructure investments. In relation to regional development, R$ 2.8 billion were provided in FCO operations. Additionally, more than 1,060 municipalities and 20 states have already adhered to the Civil Defense Payment Card, exclusive to provide aid in disasters. In partnership with the Federal Government, the PNAIC (Permanence Scholarship and the National Pact for Literacy at the Correct Age) cards were launched to contribute to education in the country. BB also operated in the execution of the Ciências Sem Fronteira Program (Science without Borders), issuing more than 21 thousand cards to scholarship recipients.

6.6 Cards

The revenue with cards grew 20.8% in 12 months, of which we highlight the revenue with credit cards, which increased 23.5%. The heavy use as a payment means and an instrument that grants access to the traditional credit facilities has increased the revenues from cards, particularly in the corporate segments that grew 48.5% over the first half, and contributed to the grant of BB Credit, a 133.6% improvement over the same period.

During the first half, BB launched the Corporate card Elo and BNDES Elo, becoming the only financial institution to issue these cards with the three main flags. With these launches, Banco do Brasil aims at reinforcing its portfolio of cards targeted at the SME.

Reinforcing the strategy of including the card as payment means in new market segments, the increase in the use of voucher and domestic and international cards resulted in a revenue of R$ 709.0 million, a 46.5% growth over 12 months.

6.7 Insurance, Pension Plans and Premium Bonds

BB Seguridade Participações centralizes its shareholdings in insurance, open private pension companies, and premium bonds, being the leader in the markets in which it operates, according to the data provided by the Susep (Superintendency of Private Insurance).

In the insurance line, BB Seguridade has partnerships with the Spanish group Mapfre, detailed below:

i) BB Mapfre SH1 operates in the individuals segments. In the period, BB Seguridade reached 19.6% in the market share of individuals insurance and 73.7% in rural insurance;


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ii) Mapfre BB SH2 operates in the damages segments. In the period, the market share in automobile insurance was 15.4%.

BB Seguridade operates in the open private pension segment through Brasilprev, in partnership with the US group Principal Financial Group. Brasilprev offers private pension plans of the following types: PGBL (Plan Generator of Benefits) and VGBL (Redeemable Life Insurance). In the first half, it accounted for 51.5% of net collection in the market.

Brasilcap, subsidiary of BB Seguridade in the premium bonds segment, reached 30.3% of market share in volume of bonds.

Besides the insurance, pension plan and premium bond, BB Seguridade has its own brokerage company, BB Corretora, which sells the products of the other associated companies described above, exploiting the banking channel through an exclusivity agreement with Banco do Brasil.

In the first half, the BB Seguridade businesses added to BB R$ 758.3 million in share of profit of affiliates and subsidiary companies.

6.8 Social Security Management

The volume of assets managed by Banco do Brasil, through 15 investment funds exclusive targeted at RPPS, totaled R$ 26.2 billion in June 2013, which represents 35.2% of market share. The management fees of funds and pension services of actuary advisory, investments, benefits, payroll and technical support reached R$ 28.4 million in the first half.

BB Previdência is a Multisponsored Pension Fund administered by Banco do Brasil. It is a closed entity of private pension, incorporated as not-for-profit civil company. Its target audience is private companies, mixed-capital companies, government companies and institutions (unions, trade associations, and others). Ended the half with R$ 2.1 billion in equity, 41 corporate plans by 51 sponsoring companies, 2 plans created by 2 trade and professional entities, and 70.8 thousand participants.

6.9 Capital Market

Banco do Brasil, through BB - Banco de Investimento (BB-BI), operates in the domestic capital markets focused on retail and corporate investors. The share purchase and sale service by means of the network of branches, Internet (home broker) and mobile devices traded R$ 12.3 billion, of which R$ 10.9 billion were by home broker.

According to the Anbima ranking, the main achievements of the Bank over the first half were as follows:

i) coordinated 56 issues of fixed-income securities, totaling the volume of R$ 15,332 million, placing the Bank on number one position in the ranking of Consolidated Origination, with 34.9% of market share;

ii) coordinated 52 issues of debentures and promissory notes, totaling R$ 14.1 billion of originated volume;

iii) carried out CRI (Mortgage Certificate) and FIDC operations, with a volume of R$ 1.2 billion in the securitization market;

iv) coordinated 3 public offerings totaling R$ 13.3 billion in the variable income market. In terms of distribution, BB reached the 1st position in ranking, representing 22.6% of market share.

6.10 Services

Banco do Brasil makes available many banking services to its clients. Among those offered to businesses, including the government, the following stood out over the first half:

i) bank collection, tax deposit form collection and standing order services, Banco do Brasil provided services to over 591 thousand companies. The change amounted to R$ 462.9 billion and 296 million securities;

ii) payroll agreements, processing over R$ 177.8 billion, meeting 12 million public officers and employees from private enterprises;

iii) benefit payments at an amount over R$ 5.9 billion/month in the many government programs carried out by means of specific cards and credit to accounts;


10

iv) the collection of taxes amounted to R$ 311.3 billion, 13.9% up on the same period of 2012. The most outstanding product was the Federal Tax Collection, with a 13.2% growth, totaling R$ 217.9 billion;

v) the launch of the Governor’s Portal, an iPad solution that provides data about states and its municipalities to support public administration;

vi) the Licitações-e (e-bid) site, in which 20.8 thousand bidding process were undertaken in the total amount of R$ 9.96 billion.

For each checking account customer, BB offers the DDA (Authorized Direct Debit) service which had 1.2 million electronic drawees and 16.5% market share, and over 11.4 million bank payment forms were electronically processed.

To the clients that comprise the cooperative loan segment, BB started to offer the Services of Integration with Check and Other Instrument Clearance and Payment Settlement and Interbank Transfers. Until the end of the first half, the service was provided to 322 cooperative loans, involving 484.8 thousand cooperative members.

BB Administradora de Consórcios ended the half with 427 thousand active quotas, growth of 11.8% in 12 months. The automobile segment, which grew 13.4%, reaching 395 thousand quotas in June, merits special emphasis. There were 58 thousand new consortium quotas sold in the period, representing R$ 1.6 billion in letters of credit.

6.11 International Business

The Bank's strategic overseas positioning was aimed at wholesale and retail activities in favor of Brazilian immigrant communities, in funding Brazilian companies with businesses involving foreign trade and acting in the capital market.

Today BB has three brokerage companies – London, New York, and Singapore – covering the US, Europe and Asia, the main global investor markets.

In Europe, in compliance with the strategy towards improvement of the governance architecture of BB AG Viena, in March 2013, its Oversight Board approved new rules for the committees of its headquarters and branches.

Banco Patagonia, subsidiary of BB in Argentina, presented an increase of 18.8% in its result for this semester in comparison with the 1st half of 2012. Loans operations increased by 23.9% in 12 months.

6.12 Foreign Trader

BB maintained its leadership of the export and import exchange market, with volumes of US$ 35.5 billion and US$ 23.4 billion, respectively, and market shares of 27.5% and 21.9%, respectively.

In relation to its performance in the financial foreign exchange market, BB reached the milestone of US$ 17.2 billion and US$ 21.0 billion in purchase and sale transactions, respectively. The prepaid card in foreign currency known as Ourocard Visa Travel Money, reaching 57.7% of the total volume of foreign exchange sales intended for international travel (foreign currency exchange in cash), merits special emphasis.

The exports operations (Advance against Exchange and Advance against Draft Presentation) stood out with the grant of US$ 6.9 billion and 32.3% of market share. In relation to imports, the financed volume was US$ 2.1 billion. In on-lending from governmental programs, financing disbursements under the Proex (Export Financing Program) totaled US$ 246.6 million and other BNDES-Exim line reached US$ 778.8 million.

The on-line foreign exchange and foreign trade services through the Internet accounted for 67.1% of the foreign exchange contracts for exports and 48.3% for imports. BB also offers international business training services. In the first half, 4.931 people were trained all over the country, a 24.0% growth over 12 months.

To permit import, export and drawback operations in all Brazilian regions, through an operation agreement between Banco do Brasil and the MDIC (Ministry of Development, Industry and Foreign Trade), 564,320 documents were analyzed up to June 2013.


11

7. Corporate Management

7.1 Corporate Governace

Banco do Brasil's corporate governance structure is comprised by: the Board of Directors, comprised by eight members and advised by the Audit and Remuneration Committee and Internal Audit, and the Executive Board, made up of the Management Board (president and nine vice-presidents) and by 27 statutory directors. BB also has a permanent Fiscal Council comprised by five regular and alternate members.

As a good corporate governance practice, the Bank has introduced a process to evaluate the performance of the Board of Directors, Audit Committee and Executive Board. The Bylaws, the Corporate Governance and Ethics Codes also give support to the best governance practices adopted by Banco do Brasil.

In the first half of 2013, the process for electing the Employees Representative who has a seat in the Board of Directors. The process was governed by the Election Rules, as provided for in Law No 12,353/2010, Ordinance No 026/2011 of the MPOG (Ministry of Planning, Budget and Management), and the Bylaws of Banco do Brasil.

Decisions are taken collectively at all levels of the Bank with the purpose of conducting the adequate debate over strategic themes and business proposals. For such, the Management uses committees, subcommittees and commissions at a strategic level, which ensure the agility and security for the decision making.

7.2 Market Relations

Banco do Brasil releases a wide range of reports and information to the CVM, and on the Investor Relations website. Also adopts the posture of inviting the market to conferences whenever Management considers it necessary to elucidate specific topics concerning the Company. In the half, Banco do Brasil took part in 1 meeting with investors and analysts in the country, 3 roadshows abroad, 1 conference in the country, organized 4 teleconferences on net income with analysts and investors and did 262 customized services to investor and market analysts.

7.3 Corporate Controls

Risk Management

Banco do Brasil improved the risk management model for non-financial companies comprising the Conglomerate, and the process for testing the adherence of the internal market risk model; segregated a specific structure and policy on liquidity risk management, and approved the action plan aimed at cutting operating losses by manager, intensifying the risk identification process.

In June, it implemented the Internal Capital Adequacy Assessment Process (Icaap), setting the assessed items, and respective people in charge in the corporation.

Further information can be consulted in the Risk Management Report, available at the Investor Relations Website: www.bb.com.br/ir.

Internal Controls

The internal controls activities performed over the half were based on the assumption of independent determination of the compliance of process with laws and external and internal rules, the evaluation and certification of the controls defined by process managers and validation of internal risk models and Icaap. Banco do Brasil has increasingly narrowing its focus on the integrated management of control and risk areas, providing solid basis for the efficiency and effectiveness of its process.

Security Management

The Bank supports and actively contributes to the actions taken within the National System for Prevention and Fight Against Money Laundering through its participation in the meetings for the preparation and implementation of the Enncla (National Strategy for the Fight Against Corruption and Money Laundering) , and formalization of Technical Cooperation Agreements with institutions such as the Ministério da Justiça (Ministry of Justice), the Coaf (Council for Financial Activities Control), linked to the Ministério da Fazenda (Ministry of Finance), and the Ministério Público do Estado de São Paulo (São Paulo State Public Prosecution Office). Banco do Brasil also promotes a number of events which provide training for employees on PLD/FT (Prevention and Avoidance of Money Laundering and


12

Financing of Terrorism), including training courses, seminars and certifications. During the period, more than 28.5 thousand employees took part of the trainings.

The increasing investments in technology, together with the constant improvement of professionals, contribute to the protection of clients, employees and equity of the Organization.

As to the protection of financial transactions, it will continue to invest and use high technology, innovative and extremely solid security devices, aiming at combating frauds against the clients of the Bank.

BB is encouraging the increase in the use of digital certificates, ICP-Brazil standard, in the operational processes, aiming at increasing the security levels and improving the operational efficiency.

72.1 thousand foreign exchange contracts were signed with the use of digital certificates, accounting for 49.4% of the total signed in Banco do Brasil, generating savings of nearly R$ 493.6 thousand in the half.

Banco do Brasil is the ranked number 12 in terms of information demand among the entities of the Federal Government through the Citizen’s Information Service, aligned with the provisions of the Law No 12,527/11 – Access to Information Act.

7.4 Technology

The technology effort concentrated in approaches that aim at increasing the IT efficiency: cut costs by revising supplier contracts, optimize funds and consolidate the existing solutions, besides devise the technology structure to improve the productivity of the workforce. It made advances in reinforcing the business continuity and expansion with the opening of the new Capital Digital Datacenter, in Brasília, cutting operational risks, in compliance with Basel II, Sarbanes-Oxley and the Bacen provision about redundant processing and storage.

The new paths to the IT area of BB were taken around the process-oriented technology, converging in the future into technology platforms of client relationship, operational processes and management, adding solutions for the mobility of clients and technological integration.

8. People

The Bank reaffirmed its commitment to personnel by means of initiatives like the Bank of Talents and Opportunities, corporate programs such as the Professional Growth Program, which recruited the Regional Superintendents of the Wholesale pillar, and the implementation of the new site of the UniBB (Banco do Brasil Corporate University). The actions prioritize experience, performance, merit, wellbeing, education, and competence development, strengthening the succession process and employee satisfaction. Over 9,497 employees were recruited and promoted.

The programs and opportunities of the competence development offered by UniBB include all business and back office areas, and are aligned with the operational eco-efficiency strategy of the Bank. The new Unibb site, with versions in English and Spanish, has 103,792 registered employees, offered 153 courses, organized in 102 learning paths, some of which are specific to the employees abroad, and counts on 437 contents in the digital library. In total, 4.9 million hours were dedicated to online and presence-based self-learning capacity building activities, and in higher education, language and certification programs. The investment in corporate education amounted to R$ 31.3 million.

Other highlights over the period were as follows:

i) formulation of the Talent Retention Plan;

ii) implementation of the new Duties Plan, establishing new duties and responsibility levels to employees, significantly mitigating the Company’s exposure to the risk of future labor lawsuits, with the adherence of 15,350 employees;

iii) carry out of one public entrance examination, of which 2,233 were appointed thus far;

iv) improvement of the Program of Internal Certification of Knowledge;

v) increase of 50% in the number of post-graduation scholarships.


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Table 4. Profile of Staff Members

thousand

Jun/12 Jun/13 on Jun/12

Employees 113,996 113,720 (0.2)

Female 47,034 47,117 0.2

Male 66,962 66,603 (0.5)

Education's Level

High School 29,349 27,765 (5.4)

College 53,623 52,742 (1.6)

Specialization, Master's and Doctorate 30,519 32,753 7.3

Others 505 460 (8.9)

1st Half 12 1st Half 13

Turnover (%) 1.9 2.3

Compensation and benefits

The Bank approved the increase in the target audience of the PDG (Extraordinary Bonus Performance Program) - 2013, including in the list of beneficiaries the middle management of the branch network, benefitting 1,535 employees. The PDG aims at recognize the best performances, and initially included branch managers and regional superintendents of the Bank’s Business Network.

On June 10, 2013, the PDG amount for the second half of 2012 was paid to 30% of the target audience with best performance over the period. On March 8, 2013, the Bank carried out the profit sharing for the second half of 2012.

The table below shows the remuneration and the benefits granted to the employees:

Table 5. Compensation and Benefits

R$ million

1st Half 12 1st Half 13 on 1st Half 12

Payroll¹ 7,366 8,063 9.5

Supplementary Pension² 147 171 16.3

Health Care Plans² 427 428 0.2

Statutory Profit Sharing³ 850 1,340 57.7

Training 23 17 (27.3) 1 - Expenses with salaries, benefits, social charges and personnel provisions, as Note 22 (Personnel Expenses); 2 - Funding of supplementary pension and health care plans, pursuant to Note 27 (Bank's contributions table to benefit plans); 3 - Amount set aside for Profit and Gain Sharing, as Statement of Income; 4 - As Note 22 (Personnel Expenses).

9. Sustainable Development

In relation to BB’s actions in the social and environmental spheres during the half, the following stand out:

i) on January 6, 2013, it was announced that BB continue to be listed in the portfolio of Carbon Efficient Index (ICO2);

ii) since February 10, 2013 BB Consórcios offers letters of credit for acquisition of non-pollutant assets. The new type allows for the purchase of electric bikes with installments from R$ 135 and terms of up to 24 months;

iii) on February 19, 2013, the Board of Officers approved the 2013/2015 Agenda 21 of Banco do Brasil. In this new version, prepared based on the demands of the many stakeholders of BB, 92 macro-actions were devised, practically involving all areas of BB in order to constantly improve the social and environmental performance of the company;

iv) BB was selected to make up the new Dow Jones Sustainability Index Emerging Markets. The announcement was made in February 2013 by RobercoSAM Corporate Sustainability Assessment, responsible for the DJSI evaluation;

v) the Inclusion and Social Transformation Program donated 15,374 replaced computers to 140 entities for use in social purposes;


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vi) the Volunteer Program of BB had 10 thousand employees joining the activities developed in communities. In this first half, 68 projects supported by volunteer employees of BB in social entities were selected to receive R$ 4.2 million for the performance of their activities. These funds are from the Banco do Brasil Foundation and Cooperforte Institute;

vii) BB supported the Rural Women Award that produce the Sustainable Brazil. The recognition is an initiative of the SPM (Women’s Policies Secretariat) and mobilized the branch network to encourage enrollment. Aligned with the initiative, the Bank launched the Enterprising Women strategy, with campaigns targeted at the female audience, generating in the first half the opening of 12,500 accounts;

viii) BNDES has an agreement with BB for the Technical Cooperation in projects for job and income generation, with the use of the Social Fund of BNDES. The approved projects totaled R$ 3.4 million;

ix) In the context of the Água Brasil (Water Brazil) Program in June, new guidelines on sustainability of credit were published, addressing the civil construction and mining industries. In an event held in the Guariroba River Basin on June 6, BB announce that the payment for environmental services, provided for in the Programa Manancial Vivo (Live Spring Program), are going to be made by means of the BB Benefit Card;

x) the Business Strategy on Sustainable Development accounted for 4.1 thousand business plans in implementation over the first half, of which 671 internally certified plans, 1.4 thousand urban and 2.7 thousand rural ones, involving 1.5 million beneficiaries in 4.1 thousand Brazilian municipalities. The balance of engaged transactions, after the beginning of the Plans, reached 15.8 billion, of which nearly 10.4 billion (66%) refer to Pronaf. In addition, 4 projects were approved with the FBB (Banco do Brasil Foundation), and 20 projects with Besc Clube, totaling R$ 2.1 million.

For more information on BB's sustainable development actions, please visit the website: www.bb.com.br/sustentabilidade.

10. Legal Information

In accordance with criteria defined by the Brazilian Statute of Small and Micro Businesses (General Law of Micro and Small Businesses), 96.1% of BB's business clients are classified as SME businesses. The volume of funds used by SMEs reached R$ 61.3 billion in July, representing an 21.2% increase in 12 months. The balance of working capital operations contracted by micro companies totaled R$ 6.8 billion, and of small companies totaled R$ 32.5 billion. Investment operations aimed at micro companies reached R$ 3.3 billion; for small companies, investments reached R$ 17.2 billion.

In the engagement of services not related to external audits, Banco do Brasil adopts procedures based on the applicable legislation and on internationally accepted principles that preserve the independence of the auditor. These principles consist of: (i) the auditor should not audit his own work and (ii) the auditor should not act managerially before his client nor promote the interests of his client.

During the period, the companies of Banco do Brasil’s Conglomerate contracted KPMG Auditores Independentes to provide other services not related to the Bank's and its subsidiaries' external audit in the amount of R$ 116.9 thousand, representing 1.6% of the fees related to the external audit service. The contracted services were:


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Table 6. Contracting of KPMG Auditores Independentes

Engaging Party Hire DateEnd Date of

Hiring Type of Service

Total Contratacted (R$)

Banco de Investimentos S.A. 05/13/2013 12/31/2013Analysis of the portfolio to be securitized

to the Compesa's FDIC 85,000

BB Securities Asia Pte Ltd. 05/22/2013 05/22/2014Development of checklist for delivering

documents required regulatory and review of regulatory capital requirements

28,606

Banco do Brasil S.A., Spain - Sucursal - Branch Office

02/04/2013 02/15/2013 Process evaluation equity adequacy 2,081

Banco do Brasil S.A., London - Branch

01/16/2013 01/16/2016Conversion of Financial Statements in

word / excel for specific system1,187

In compliance with CVM Instruction No 381, the companies of Banco do Brasil’s Conglomerate reports that KPMG Auditores Independentes has not provided any services that could affect its independence, confirmed by the Independence Letter periodically submitted to the Bank.

In Banco do Brasil, the contracting of services related to external audit should be preceded by the opinion of the Audit Committee.

According to the provisions of CVM Resolution 488/05, BB explains that:

i) in the half, fixed investments amounted to R$ 559.3 million, emphasizing the investment in new service points and in the improvement of the ambience of the bank branches (R$ 376.9 million) as well as the investment made in information technology (R$ 152.0 million);

ii) has R$ 618.3 million non-active tax credits arising from requirements defined by CMN Resolutions 3,059 of December 20, 2002 and 3,355 of March 31, 2006, and presented in a financial statement note for the 1st half of 2013;

iii) records in a memorandum account, according to rules provided for in Cosif (Financial Institutions Accounting Plan), the amount of R$ 21.6 billion deriving from Co-obligations and Risks in Guarantees Provided to clients and companies of the BB Conglomerate;

iv) in 2009 was entered Interbank Revolving Credit contract Line to release with Banco Votorantim, by the limit equivalent to the value of net assets of that institution. The operation was accounted for in memorandum accounts, according to rules provided for in Cosif and was issued in the Notes of the Related Parties of the Financial Statements related to the 1st half of 2013.

In compliance with article 8 of Bacen Circular 3,068/2001, Banco do Brasil states that it has the intention and financial capacity to hold until maturity the securities classified in the "Securities Held to Maturity" category. The financial capacity is backed by a cash flow forecast that does not take into consideration the possibility of selling these securities.

Banco do Brasil, its Shareholders, the Officers, and the members of the Audit Committee undertake to resolve all and any dispute or controversy related with the New Market Listing Regulation by means of the Arbitration Chamber of the Bovespa Market, in conformity with a commitment clause contained in the By-laws of Banco do Brasil.

11. Main Awards Received in the Period

i) in January, the BB Printing Department, located in Rio de Janeiro, obtained the FSC certification of its custody chain, which includes the inventory of paper, production and shipment of printing materials. This certification, which was conferred by the international Rainforest Alliance organization;

ii) in January, Banco do Brasil received the "Latin America Bond of the Year 2012" Award granted by the International Financing Review (IFR) for the issue of perpetual bonds of US$ 1.75 billion;

iii) also in January the ranking annually prepared by the Canadian research company Corporate Knights, "Global 100", was announced, in which Banco do Brasil was the only Brazilian bank recognized among the 100 top sustainable companies in the world;


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iv) for the sixth time, the third in a row, BB DTVM received the "Melhor Gestor Para Seu Dinheiro" (best manager for your money) award, granted by Você S.A magazine, in the January 2013 edition, with 11 funds rated with 5 stars, 6 funds with 4 stars and 8 funds with 3 stars;

v) in February, Banco do Brasil gained four positions in the world ranking "Top 500 Banking Brands 2013", holding the 22th position in the ranking prepared by The Banker/Brand Finance;

vi) in March BB DTVM obtained: 1st position in the overall "Top Asset', Award of Investidor Institucional Magazine; 1st position in Biggest Managers, in the Pension Funds, RPPS, Foreign Investors, Foreigners, Government, Retail, Exclusive Funds and Offshore Funds category; 1st position in the "Top Five ranking of Bacen" for the 8th consecutive month, relating to its short-term projection of the Selic rate; and 8th position in the overall "Top Ten ranking" of 2012, promoted by Agência Estado;

vii) in April, the Banco do Brasil brand was recognized as the “Most loved brand of Brazil" in the Banks category, in the ranking of the Consumidor Moderno magazine;

viii) also in April, Banco do Brasil was selected as the "Greenwich Associates Share Leader" in the category Brazilian Foreign Exchange Market Share and "Greenwich Associates Quality" in the category Brazilian Foreign Exchange Service Quality, acknowledgements that translate the international recognition by its clients for offering the best coverage in the industry, and the quality of its services. The recognition is given by the Greenwich Associates;

ix) in May, Banco do Brasil obtained the 1st position in the "Top of Mind Rural" survey, in the Rural Credit category, in the ranking of Rural Magazine;

x) in the same month, Banco do Brasil was recognized among the best banks in the world, according to the The World's Strongest Banks ranking of Bloomberg;

xi) in June, Banco do Brasil was the highlight in the 12th edition of the "e-Finance" Award, one of the most prestigious awards of Banking IT in the country, promoted by the Executivos Financeiros Magazine. The trophies were presented in São Paulo. In this edition, BB was awarded in 12 categories, with 23 cases recognized, keeping a record of the most awarded company;

xii) for its activities in corporate education, UniBB was recognized by the International Quality & Productivity Center Cubic Awards Brazil, as the second best corporate university in Latin America, and its education programs were considered the best in Latin America by the same entity.

Acknowledgments

We thank the dedication and diligence of our employees and collaborators, as well as the trust of shareholders, clients and company.

For more information, visit Investor Relations Website: www.bb.com.br/ir.

Banco do Brasil S.A.

Consolidated Financial Statements

In thousands of Reais

BALANCE SHEET

CURRENT ASSETS 671.895.505 638.251.446 584.868.301

Cash and Cash Equivalents (Note 6) 14.350.615 12.310.731 17.239.120

Short-term Interbank Investments (Note 7.a) 221.140.899 217.970.217 171.983.472

Open market investments 192.639.898 189.117.422 163.057.546

Interbank deposits 28.501.001 28.852.795 8.925.926

Securities and Derivative Financial Instruments (Note 8) 65.508.301 59.447.613 53.283.719

Own portfolio 40.386.623 40.160.278 42.824.841

Subject to repurchase agreements 22.268.817 17.298.906 8.658.440

Deposits with Banco Central do Brasil 17 16 17

Pledged in guarantee 1.862.927 1.437.168 494.779

Derivative financial instruments 989.917 551.245 1.316.452

(Allowance for securities losses) -- -- (10.810)

Interbank Accounts 86.164.444 83.274.821 96.771.185

Payments and receipts pending settlement (Note 9.a) 4.018.333 14.211 2.674.589

Restricted deposits (Note 9.b) 81.148.183 82.296.773 93.343.068

Banco Central do Brasil deposits 78.892.266 80.097.865 91.068.197

National Treasury - rural credits resources 149.688 156.002 290.920

National Housing Finance System 2.106.229 2.042.906 1.983.951

Interbank onlendings 48.220 49.874 88.477

Correspondent banks 949.708 913.963 665.051

Interdepartmental Accounts 139.510 467.615 140.520

Internal transfers of funds 139.510 467.615 140.520

Loan Operations (Note 10) 183.213.690 174.365.484 163.202.883

Public sector 1.480.347 1.263.598 6.595.731

Private sector 190.115.842 182.447.865 165.758.566

(Allowance for loan losses) (8.382.832) (9.346.104) (9.172.069)

Loan operations linked to assignment 333 125 20.655

Leasing transactions (Note 10) 895.532 1.129.562 1.353.404

Public sector 4.404 11.811 17.441

Private sector 958.317 1.204.836 1.437.639

(Allowance for leasing transactions losses) (67.189) (87.085) (101.676)

Other Receivables 97.746.602 86.693.097 78.232.774

Receivables from guarantees honored 133.168 107.503 90.444

Foreign exchange portfolio (Note 12.a) 16.529.777 17.275.866 20.680.014

Receivables 1.902.277 1.781.222 1.631.877

Securities trading 662.807 313.161 457.506

Insurance, pension plans and capitalization (Note 21.a) 3.055.427 2.191.786 2.283.099

Sundry (Note 11.b) 76.543.847 65.948.206 54.104.615

(Allowance for other losses) (1.080.701) (924.647) (1.014.781)

Other Assets (Note 13) 2.735.912 2.592.306 2.661.224

Assets not for own use and stock materials 553.248 557.201 521.368

(Allowance for impairment) (195.446) (195.286) (181.298)

Prepaid expenses 2.378.110 2.230.391 2.321.154

A S S E T S 06.30.2013 06.30.201212.31.2012

See the accompanying notes to the financial statements. 17




BALANCE SHEET

NON-CURRENT ASSETS 542.804.068 511.056.102 466.908.840

LONG-TERM RECEIVABLES 520.326.089 487.400.184 444.564.935

Short-term Interbank Investments (Note 7.a) 1.724.312 1.353.217 18.523.666

Short-term Interbank Investments 324.469 396.531 --

Interbank deposits 1.399.843 956.686 18.523.666

Securities and Derivative Financial Instruments (Note 8) 126.520.896 124.909.554 114.252.009

Own portfolio 99.273.761 87.403.656 82.865.654

Subject to repurchase agreements 23.635.904 32.233.089 26.691.273

Deposits with Banco Central do Brasil 15 51.443 49.689

Pledged in guarantee 2.622.730 4.359.666 4.096.544

Derivative financial instruments 990.121 863.335 548.849

(Allowance for securities losses) (1.635) (1.635) --

Interbank Accounts 124.603 125.681 81.400

Restricted deposits (Note 9.b) 4.033 23.282 1.156

National Treasury - rural credits resources 4.033 23.282 1.156

Interbank onlendings 120.570 102.399 80.244

Loan Operations (Note 10) 332.189.275 295.347.202 246.122.130

Public sector 17.687.676 11.634.221 2.196.547

Private sector 326.972.204 294.799.408 254.304.789

(Allowance for loan losses) (12.553.395) (11.175.715) (10.406.936)

Loan operations linked to assignment 82.790 89.288 27.730

Leasing transactions (Note 10) 625.568 753.191 951.120

Public sector -- 3.730 4.354

Private sector 652.187 790.290 1.008.644

(Allowance for leasing transactions losses) (26.619) (40.829) (61.878)

Other Receivables 58.171.524 63.594.405 62.699.327

Foreign exchange portfolio (Note 12.a) 263.834 266 --

Receivables 33.693 36.727 31.633


Specific credits (Note 11.a) 1.324.036 1.263.571 1.205.439

Insurance, pension plans and capitalization (Note 21.a) 2.428 2.162 1.949

Sundry (Note 11.b) 56.344.945 62.555.301 61.654.225

(Allowance for other losses) (592.547) (551.524) (590.115)

Other Assets (Note 13) 969.911 1.316.934 1.935.283

Prepaid expenses 969.911 1.316.934 1.935.283

PERMANENT ASSETS 22.477.979 23.655.918 22.343.905

Investments 7.244.777 7.639.982 7.756.459

Investments in subsidiaries and associated companies (Note 14.a) 5.726.724 6.174.615 6.597.682

Domestic 5.346.188 5.774.010 6.140.262

Abroad 380.536 400.605 457.420

Other Investments (Note 14.b) 1.632.270 1.556.260 1.242.978

(Accumulated impairment) (114.217) (90.893) (84.201)

Property, plant and equipment (Note 15) 6.769.490 6.636.978 5.703.456

Land and buildings 5.047.071 4.504.260 4.681.940

Other property, plant and equipment 9.312.573 9.663.518 8.554.067

(Accumulated depreciation) (7.590.154) (7.530.800) (7.532.551)

Intangible (Note 16) 8.411.674 9.308.569 8.790.076

Intangible assets 13.766.467 13.976.338 13.007.318

(Accumulated amortization) (5.354.793) (4.667.769) (4.217.242)

Deferred 52.038 70.389 93.914

Organization and expansion costs 1.673.236 1.686.535 2.005.247

(Accumulated amortization) (1.621.198) (1.616.146) (1.911.333)

TOTAL ASSETS 1.214.699.573 1.149.307.548 1.051.777.141

A S S E T S 06.30.2013 12.31.2012 06.30.2012





BALANCE SHEET

CURRENT LIABILITIES 770.586.340 725.824.397 644.900.440

Deposits (Note 17.a) 375.845.548 353.051.671 311.561.750

Demand deposits 72.203.518 74.759.878 60.592.352

Savings deposits 129.003.316 117.744.043 105.585.551


Time deposits 157.045.979 146.275.598 132.869.874

Securities sold under repurchase agreements (Note 17.c) 225.960.527 214.649.038 184.475.131

Own portfolio 50.891.270 56.385.430 37.142.865

Third-party portfolio 174.854.598 158.016.969 147.016.956

Free movement portfolio 214.659 246.639 315.310

Funds from Acceptance and Issuance of Securities (Note 19) 21.971.525 24.846.154 22.038.832

Funds from real state, mortgage, credit and similar bonds 11.674.905 14.581.314 11.646.485

Funds from debentures 22.691 -- 669.229

Foreign securities 10.273.929 10.264.840 9.723.118

Interbank Accounts 2.983.977 24.456 2.894.741

Receipts and payments pending settlement (Note 9.a) 2.971.092 339 2.885.502

Correspondent banks 12.885 24.117 9.239

Interdepartmental Accounts 2.561.443 5.179.603 2.370.244

Thrid-party funds in transit 2.557.912 5.177.054 2.352.531

Internal transfers of funds 3.531 2.549 17.713

Borrowings (Note 18.a) 14.131.162 12.972.062 10.553.406

Domestic loans - other institutions 416.476 404.753 98.395

Foreign borrowing 13.714.686 12.567.309 10.455.011

Domestic Onlending � Official Institutions (Note 18.b) 18.742.569 17.756.624 18.850.263

National Treasury 41.324 77.354 53.516

BNDES 11.643.268 11.952.855 11.646.021

Caixa Econômica Federal 1.910.859 895.482 508.448

Finame 4.702.972 4.177.881 4.428.090

Other institutions 444.146 653.052 2.214.188

Foreign Onlending (Note 18.b) 12.062 481 95

Foreign onlendings 12.062 481 95

Derivative Financial Instruments (Note 8.d) 2.837.947 1.325.523 2.684.652

Derivative financial instruments 2.837.947 1.325.523 2.684.652

Other Liabilities 105.539.580 96.018.785 89.471.326

Billing and collection of taxes and contributions 5.428.187 418.640 3.552.883


Stockholders and statutory distributions 3.626.131 1.817.691 2.068.592

Taxes and social security (Note 20.b) 24.748.371 24.030.336 20.739.898

Securities trading 2.269.698 625.465 854.289

Technical provisions for insurance, pension plans and capitalization (Note 21.b) 17.357.592 15.179.674 12.851.972

Financial and development funds (Note 20.a) 3.786.099 3.121.529 2.483.354

Subordinated debts (Note 20.c) -- 108.244 698.090

Equity and debt hybrid securities (Note 20.d) 368.785 242.577 322.959

Sundry (Note 20.e) 38.396.002 36.898.627 29.260.056

L I A B I L I T I E S / S T O C K H O L D E R S ' E Q U I T Y 06.30.2013 12.31.2012 06.30.2012





BALANCE SHEET

NON-CURRENT LIABILITIES 379.391.919 361.983.734 346.058.636

LONG-TERM LIABILITIES 379.003.560 361.596.443 345.732.845

Deposits (Note 17.a) 102.488.550 119.033.730 155.397.117


Time deposits 100.166.522 116.737.226 152.908.573

Securities sold under repurchase agreements (Note 17.c) 12.059.443 11.137.834 10.060.760

Own portfolio 3.720.026 3.608.690 3.054.469

Third-party portfolio 8.339.417 7.529.144 6.984.689

Free movement portfolio -- -- 21.602

Funds from Acceptance and Issuance of Securities (Note 19) 64.554.095 45.823.969 25.392.728

Funds from real state, mortgage, credit and similar bonds 45.760.466 28.546.998 13.274.698

Funds from debentures 760.569 799.306 814.822

Foreign securities 18.033.060 16.477.665 11.303.208

Borrowings (Note 18.a) 1.196.185 1.108.971 2.507.614

Domestic loans - other institutions 6.615 3.780 4.726

Foreign borrowing 1.189.570 1.105.191 2.502.888

Domestic Onlending � Official Institutions (Note 18.b) 51.249.774 45.762.002 33.545.547

National Treasury 650.154 635.925 1.669.774

BNDES 31.118.377 29.809.896 18.297.869

Finame 19.481.243 15.316.181 13.577.904

Foreign Onlending (Note 18.b) 64.456 87.009 99.936

Foreign onlendings 64.456 87.009 99.936

Derivative Financial Instruments (Note 8.d) 1.312.567 2.113.959 1.319.274

Derivative financial instruments 1.312.567 2.113.959 1.319.274

Other Liabilities 146.078.490 136.528.969 117.409.869


Taxes and social security (Note 20.b) 3.533.884 6.893.169 7.043.843


Technical provisions for insurance, pension plans and capitalization (Note 21.b) 50.617.270 45.053.852 38.946.293

Financial and development funds (Note 20.a) 2.051.664 1.967.079 2.083.209

Special operations 2.126 2.126 2.124

Subordinated debts (Note 20.c) 48.558.043 40.567.935 37.667.555

Equity and debt hybrid securities (Note 20.d) 19.885.398 14.818.494 6.531.459

Sundry (Note 20.e) 11.410.968 13.792.839 11.809.860

DEFERRED INCOME 388.359 387.291 325.791

STOCKHOLDERS' EQUITY (Note 24) 64.721.314 61.499.417 60.818.065

Capital 48.400.000 48.400.000 33.122.569

Local residents 39.033.576 39.467.977 27.327.250

Domiciled abroad 9.366.424 8.932.023 5.795.319

Capital Reserves 6.023 1 1

Revaluation Reserves 4.605 4.645 4.551

Profit Reserves 22.147.559 16.132.046 27.411.336

Accumulated Other Comprehensive Income (7.713.282) (3.150.194) (252.032)

Retained earnings/accumulated losses -- --

(Treasury Shares) (602.713) (461.248) (2)

Noncontrolling interests 2.479.122 574.167 531.642

TOTAL LIABILITIES 1.214.699.573 1.149.307.548 1.051.777.141

L I A B I L I T I E S / S T O C K H O L D E R S' E Q U I T Y 06.30.2013 12.31.2012 06.30.2012





STATEMENT OF INCOME

1st half/2013 1st half/2012

INCOME FROM FINANCIAL INTERMEDIATION 52.076.043 53.884.882

Loan Operations (Note 10.b) 33.653.343 33.709.259 Lease transactions (Note 10.i) 889.565 967.908 Securities (Note 8.b) 13.545.600 15.103.580 Derivative financial instruments (Note 8.e) 890.473 (820.410) Foreign exchange transactions (Note 12.b) 325.581 -- Compulsory investments (Note 9.c) 2.065.792 3.420.149 Sale and transfer of financial assets 249.332 69.907 Financial income from insurance, pension plans and capitalization (Note 21.e) 456.357 1.434.489

EXPENSES FROM FINANCIAL INTERMEDIATION (38.711.490) (40.801.270)

Deposits and securities sold under repurchase agreements (Note 17.d) (24.303.687) (26.947.518) Borrowings and onlendings (Note 18.c) (5.837.871) (5.030.725) Lease transactions (Note 10.i) (808.369) (697.659) Foreign exchange transactions (Note 12.b) -- (136.017) Sale and transfer of financial assets (27.190) --

Financial expenses from technical provisions of insurance, pension plans and capitalization (Note 21.e) (209.247) (1.055.142) Allowance for loan losses (Notes 10.f and 10.g) (7.525.126) (6.934.209)

INCOME FROM FINANCIAL INTERMEDIATION 13.364.553 13.083.612

OTHER OPERATING INCOME/EXPENSES (6.939.056) (4.807.544)

Service fee income (Note 22.a) 8.062.093 7.110.659 Bank fee income (Note 22.b) 3.242.648 3.196.920 Personnel expenses (Note 22.c) (8.996.303) (7.913.842) Other administrative expenses (Note 22.d) (7.395.756) (7.079.206) Tax expenses (Note 25.c) (2.307.723) (2.153.935) Equity in associated and subsidiary companies (Note 14) 328.945 347.927 Insurance, pension plans and capitalization results (Note 21.e) 1.526.673 1.124.280 Other operating income (Note 22.e) 5.116.730 5.763.554 Other operating expenses (Note 22.f) (6.516.363) (5.203.901)

OPERATING INCOME 6.425.497 8.276.068

NON-OPERATING INCOME (Note 23) 9.906.580 50.864

Incomes 10.013.719 143.974 Expenses (107.139) (93.110)

PROFIT BEFORE TAXATION AND PROFIT SHARING 16.332.077 8.326.932

INCOME TAX AND SOCIAL CONTRIBUTION (Note 25.a) (4.706.640) (1.892.658)

EMPLOYEE AND DIRECTORS PROFIT SHARING (1.339.750) (849.674)

NONCONTROLLING INTEREST (256.893) (74.484)

NET INCOME (Note 24.g) 10.028.794 5.510.116

EARNINGS PER SHARE (Note 24.e)

Weighted average number of shares - basic 2.849.386.774 2.865.410.231 Basic earnings per share (R$) 3,52 1,94 Weighted average number of shares - diluted 2.849.386.774 2.865.410.231 Diluted earnings per share (R$) 3,52 1,94


Banco do Brasil S.A.Consolidated Financial StatementsIn thousands of Reais

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

Balances disclosed at 12.31.2011 33.122.569 -- 4.730 3.496.562 20.624.740 (60.124) 783.966 (1) -- 443.928 58.416.370

Asset valuation adjustment, net of taxes - adoption of CPC 33 (R1) (Note 4.l) -- -- -- -- -- 1.135.354 -- -- -- -- 1.135.354

Adjusted balances at 12.31.2011 33.122.569 -- 4.730 3.496.562 20.624.740 1.075.230 783.966 (1) -- 443.928 59.551.724 Accumulated other comprehensive income of securities and derivative financial instruments, net of taxes -- -- -- -- -- (19.307) 533.714 -- -- -- 514.407

Accumulated other comprehensive income - benefit plans (Note 4.l) (2.625.635) (2.625.635)

Share-based payment transactions -- 1 -- -- -- -- -- (1) -- -- --

Expired dividends/interest on own capital -- -- -- -- -- -- -- -- 2.114 -- 2.114

Realization of revaluation reserve in subsidiary/associated companies (Note 24.c) -- -- (179) -- -- -- -- -- 179 -- --

Change in noncontrolling interest -- -- -- -- -- -- -- -- -- 87.714 87.714

Net income for the period -- -- -- -- -- -- -- -- 5.510.116 -- 5.510.116

Unrealized results -- -- -- -- (45.824) -- -- -- 45.824 -- --

Allocation - Reserves -- -- -- 277.797 3.239.469 -- -- -- (3.517.266) -- --

- Dividends (Note 24.f) -- -- -- -- (181.408) -- -- -- (350.274) -- (531.682)

- Interest on own capital (Note 24.f) -- -- -- -- -- -- -- -- (1.690.693) -- (1.690.693)

Balances at 06.30.2012 33.122.569 1 4.551 3.774.359 23.636.977 (1.569.712) 1.317.680 (2) -- 531.642 60.818.065

Changes in the period -- 1 (179) 277.797 3.012.237 (2.644.942) 533.714 (1) -- 87.714 1.266.341

Balances disclosed at 12.31.2012 48.400.000 1 4.645 4.112.056 12.019.990 (140.361) 1.560.715 (461.248) -- 574.167 66.069.965

Asset valuation adjustment, net of taxes - adoption of CPC 33 (R1) (Note 4.l) -- -- -- -- -- (4.570.548) -- -- -- -- (4.570.548)

Adjusted balances at 12.31.2012 48.400.000 1 4.645 4.112.056 12.019.990 (4.710.909) 1.560.715 (461.248) -- 574.167 61.499.417 Accumulated other comprehensive income of securities and derivative financial instruments, net of taxes -- -- -- -- -- (240.624) (1.352.074) -- -- -- (1.592.698)

Accumulated other comprehensive income - benefit plans (Note 4.l) (2.970.390) (2.970.390)

Share-based payment transactions -- 6.022 -- -- -- -- -- (6.022) -- -- --

Repurchase of shares program -- -- -- -- -- -- -- (135.443) -- -- (135.443)

Expired dividends/interest on own capital -- -- -- -- -- -- -- -- 7 -- 7

Realization of revaluation reserve in subsidiary/associated companies (Note 24.c) -- -- (40) -- -- -- -- -- 40 -- --

Change in noncontrolling interest -- -- -- -- -- -- -- -- -- 1.904.955 1.904.955

Net income for the period -- -- -- -- -- -- -- -- 10.028.794 -- 10.028.794

Unrealized results -- -- -- -- (4.527) -- -- -- 4.527 -- --

Allocation - Reserves -- -- -- 501.666 5.797.803 -- -- -- (6.299.469) -- --

- Dividends (Note 24.f) -- -- -- -- (279.429) -- -- -- (2.177.881) -- (2.457.310)

- Interest on own capital (Note 24.f) -- -- -- -- -- -- -- -- (1.556.018) -- (1.556.018)

Balances at 06.30.2013 48.400.000 6.023 4.605 4.613.722 17.533.837 (7.921.923) 208.641 (602.713) -- 2.479.122 64.721.314

Changes in the period -- 6.022 (40) 501.666 5.513.847 (3.211.014) (1.352.074) (141.465) -- 1.904.955 3.221.897

E V E N T S

Noncontrolling interest

TotalRealized capitalCapital

reservesRevaluation

reserves Legal reserve Statutory reserves

Profit reserves Accumulated other comprehensive inco meTreasury

shares

Retained earnings (loss) in the parent

companyBanco do Brasil

Associated and subsidiary companies





STATEMENT OF CASH FLOWS


CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax and social contribution 16.332.077 8.326.932

Adjustments to income (loss) before tax and social contribution 10.899.878 17.487.849

Provision for credits, lease and other credits (Notes 10.f and 10.g) 7.525.126 6.934.209 Depreciation and amortization (Note 22.d) 1.675.331 1.771.549 Impairment test results of assets (Notes 15 and 16) 797 4.997 Equity in subsidiaries and associated companies (Note 14.a) (328.945) (347.927) (Gain) Loss on the disposal of assets (Note 23) (40.544) 18.045 (Gain) Loss on the disposal of investments (Note 23) (9.824.793) (6.391) Capital (gain) loss (Note 23) 9.939 11.970 Foreign currency exchange results (Note 14.a) 333.884 345.399 Provision (Reversal) for impairment of other assets (Note 23) 27 (6.341) Amortization of goodwill (Note 14.c) 464.282 424.018 Expenses with civil, labor and tax provisions (Note 28.a) 2.562.291 1.634.849 Technical provisions for insurance, pension plans and capitalization (Note 21.e) 11.444.644 9.144.558 Adjustment of actuarial assets/liabilities and surplus allocation funds (Note 27) (705.250) (1.032.384) Effect of changes in foreign exchange rates in cash and cash equivalents (1.967.134) (1.334.218) Noncontrolling interests (256.893) (74.484) Other adjustments 7.116 --

Income adjusted before income tax and social contribution 27.231.955 25.814.781

Equity variations (55.676.541) (36.330.989)

(Increase) Decrease in short-term interbank investments (15.346.445) (28.789.448) (Increase) Decrease in trading securities and derivative financial instruments (4.151.223) (2.023.919) (Increase) Decrease in interbank and interdepartmental accounts (3.424.676) (1.486.392) (Increase) Decrease in compulsory deposits with Banco Central do Brasil 1.205.599 2.591.659 (Increase) Decrease in loan operations (52.983.096) (37.193.411) (Increase) Decrease in leasing transactions 327.697 494.974 (Increase) Decrease in other receivables net of deferred taxes (2.681.581) (7.743.432) (Increase) Decrease in other assets 243.934 512.015 Income tax and social contribution paid (6.440.206) (3.111.774) (Decrease) Increase in deposits 6.248.697 24.573.311 (Decrease) Increase in securities sold under repurchase agreements 12.233.098 (639.385) (Decrease) Increase in funds from acceptance and issuance of securities 15.855.496 15.108.270 (Decrease) Increase in borrowings and onlendings 7.709.059 2.206.390 (Decrease) Increase in other liabilities (14.473.962) (809.064) (Decrease) Increase in deferred income 1.068 (20.783)

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (28.444.586) (10.516.208)

CASH FLOWS FROM INVESTING ACTIVITIES

(Increase) Decrease in securities available for sale (3.479.534) 4.318.198 (Increase) Decrease in securities held to maturity (924.032) (702.456) Dividends received from associated and subsidiaries companies -- -- (Acquisition) Disposal of property, plant and equipment in use (566.432) (664.353) (Acquisition) Disposal of investments 9.740.838 (210.504) (Acquisition) Write-off of intangible assets/ deferred assets (326.962) (242.317)

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 4.443.878 2.498.568

CASH FLOWS FROM FINANCING ACTIVITIES

Change in noncontrolling interests 1.904.955 87.714 (Decrease) Increase in subordinated debts 7.881.864 7.480.962 (Decrease) Increase in equity and debt hybrid securities 5.193.113 4.008.626 (Acquisition) Disposal of treasury shares (141.465) (1) Dividends paid (1.013.659) (623.973) Interest on own capital paid (1.556.018) (1.635.272)

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 12.268.790 9.318.056

Net variation of cash and cash equivalents (11.731.918) 1.300.416

At the beginning of the period 57.805.818 43.852.139 Effect of changes in foreign exchange rates in cash and cash equivalents 1.967.134 1.334.218 At the end of the period 48.041.034 46.486.773

Increase (Decrease) in cash and cash equivalents (11.731.918) 1.300.416





STATEMENT OF VALUE ADDED

Income 65.482.133 58.616.027

Income from Financial Intermediation 52.076.043 53.884.882 Income from service and bank fees 11.304.741 10.307.579 Allowance for loan losses (7.525.126) (6.934.209) Profit on disposal of investments/equity interest (Note 23) 9.824.793 6.391 Other income/expenses (198.318) 1.351.384 Expense from Financial Intermediation (31.186.364) (33.867.061)

Inputs Purchased from Third Parties (4.758.799) (4.519.619)

Materials, electric power and other (256.692) (266.547) Expenses with outsourced services (Note 22.d) (945.643) (815.791) Communication (Note 22.d) (702.904) (692.668) Data processing (Note 22.d) (415.328) (414.172) Transportation (Note 22.d) (532.294) (587.179) Security services (Note 22.d) (389.847) (400.265) Financial system services (Note 22.d) (508.892) (338.225) Advertising and marketing (Note 22.d) (194.995) (204.645) Other (812.204) (800.127) Gross Added Value 29.536.970 20.229.347

Depreciation and amortization (Note 22.d) (1.675.331) (1.771.549) Value Added produced by the Entity 27.861.639 18.457.798

Value Added received through transfer 328.945 347.927

Equity in subsidiary and associated companies 328.945 347.927 Added Value to Distribute 28.190.584 100,00 18.805.725 100,00

Value Added distributed 28.190.584 100,00 18.805.725 100,00

Personnel 9.227.018 32,73 7.738.170 41,15

Salaries and fees 5.683.145 4.983.599 Employee and directors profit sharing 1.339.750 849.674 Benefits and training programs 1.178.632 1.096.267 FGTS (Government Severance Indemnity Fund for Employees) 351.119 321.735 Other charges 674.372 486.895 Taxes, Rates and Contributions 8.123.391 28,81 5.071.939 26,97

Federal 7.557.482 4.564.806 State 497 480 Municipal 565.412 506.653 Interest on Third Parties' Capital 554.488 1,97 411.016 2,18

Rent (Note 22.d) 554.488 411.016 Interest on Own Capital (Note 24.e) 10.285.687 36,49 5.584.600 29,70

Federal Government's interest on own capital 907.235 999.002 Interest on own capital of other stockholders 648.783 691.691 Federal Government dividends 1.432.732 314.162 Dividends from other stockholders 1.024.578 217.520 Retained earnings 6.015.466 3.287.741 Non-controlling interest in retained earnings 256.893 74.484

1st half 2013 1st half 2012 %%

See the accompanying notes to financial statements. 24

Notes to the consolidated financial statements

25

Notes to the financial statements

1 – The Bank and its Operations

Banco do Brasil S.A. (“Banco do Brasil” or the “Bank”) is a publicly traded company established under private law, with both public and private stockholders, and is subject to the requirements of Brazilian corporate legislation. It is headquartered in Setor Bancário Sul, Quadra 1, Lote 32, Bloco C, Edifício Sede III, Brasília, Distrito Federal, Brazil. Its purpose is to carry out all asset, liability and accessory banking operations, to provide banking services, to promote financial intermediation and originate financial transactions in various forms, including foreign exchange transactions and supplementary activities, with an emphasis on insurance, private pension, capitalization, securities brokerage, administration of consortiums, credit/debit cards, investment funds and management portfolios, and to practice any activities permitted for the institutions that are part of the National Finance System. It is also the main financial agent of the Brazilian Federal Government and is therefore required to carry out the functions attributed to it by law, specifically those of article 19 of Law 4,595/1964.

2 – Company Restructuring

a) Acquisitions

BB Americas (successor of EuroBank)

On 01.19.2012, the Bank concluded the acquisition, through cash payment of US$ 6 million (R$ 10.651 thousand), of the entire capital stock and voting capital of BB Americas, a North-American financial institution, corresponding to 835,855 common shares.

Investment and goodwill balances were measured based on adjusted equity of BB Americas, on December 2011, converted at the exchange rate of 01.17.2012.

R$ thousand

Amount paid 10,651

Adjusted equity value on 12.31.2011 (27,203)

Value of goodwill 37,854

Goodwill 18,058

Goodwill of assets fair value 19,796

Capital investment 90,098

BB Americas, a close corporation headquartered in the state of Florida (United States), has a network of three branches located in the cities of Miami, Pompano Beach and Boca Raton.

The BB Americas acquisition is expected to contribute to Banco do Brasil’s expansion of business in the United States, through its operations in the North-American retail market, focusing on Brazilian and Hispanic people that live in the USA.

b) Corporate reorganization in the area of insurance, private pension plans, capitalization and reinsurance

Brasildental - Signed Agreement

On 06.11.2013, Banco do Brasil, BB Seguros Participações SA (BB Seguros), BB Corretora de Seguros e Administradora de Bens S.A. (BB Corretora), Odontoprev S.A. (Odontoprev) and Odontoprev Serviços Ltda. (Odontoprev Serviços) signed an Association Agreement and Other Covenants (Association Agreement) aiming to develop and disseminate, by a new company named Brasildental Operadora de Planos Odontológicos S.A. (Brasildental), and to distribute and sell, through BB Corretora, dental plans under the brand BB Dental, with exclusivity in all BB distribution channels in the Brazilian territory.

12/08/2013 21:28


26

Brasildental will have R$ 5 million as initial paid-in capital, distributed in 100,000 common shares (ON) and 100,000 preferred shares (PN) with the following shareholding structure:

· BB Seguros will hold 49.99% of common shares and 100% of preferred shares, representing 74.99% of total capital, and

· Odontoprev will hold 50.01% of the common shares, representing 25.01% of total capital. BB Seguros and Odontoprev will be responsible for Brasildental’s startup capital constitution accordingly to their respective ownership stake.

On 08.05.2013, the Agreement was approved, without restrictions, by Superintendência Geral do Conselho Administrativo de Defesa Econômica (CADE). The transaction is still subject to the approval by the other relevant government authorities and regulatory agencies in accordance with applicable law and it will remain effective for 20 years, renewable for equal periods.

IRB - Brasil Resseguros S.A.

On 05.24.2013, BB Seguros and the Federal Government signed an Agreement for Transfer of Shares (Agreement for Transfer) aiming to transfer 212,421 common shares issued by IRB-Brasil Resseguros S.A. (IRB) held by the Federal Government to BB Seguros, representing 21.24% of IRB’s total capital, in the amount of R$ 2,577.00 per share. The amount involved in this operation was R$ 547,409 thousand.

Moreover, at that time, a Shareholders’ Agreement was signed between BB Seguros, the Federal Government, Bradesco Auto Re – Companhia de Seguros S.A., Itaú Seguros S.A., Itaú Vida e Previdência S.A. and Fundo de Investimento em Participações Caixa Barcelona in order to create an IRB’s governance control group by regulating the relationship between the partners, as well as the company’s management structure and operation. Common shares were linked to the Shareholders’ Agreement, representing 20% of the total common shares held by BB Seguros; 15% of the total common shares held by the Federal Government; 15% of the total common shares held by Itaú Seguros Group; 20% of the total common shares held by Bradesco Seguros; and 3% of the total common shares held by FIP Caixa Barcelona.

Besides the Shareholders’ Agreement celebration, the restructuring process of IRB involves the following steps:

· conversion of IRB non-voting shares into common shares (1:1); · creation of a golden share held by the Federal Government (with the veto right to certain

decisions), and; · capital increase of IRB by its current shareholders in the Extraordinary Shareholders’ Meeting

of IRB, with the issuance of new shares, and the commitment of the Federal Government not to exercise its preference rights. Upon the conclusion of the capital raise, BB Seguros stake at IRB capital is expected to be diluted to 20.42%.

The effectiveness of all actions relating to the Transaction is subject to approval by their respective regulators, supervisors and inspectors, and it is important to notice that final approvals from the Superintendência de Seguros Privados (SUSEP) and Tribunal de Contas da União (TCU) remain pending.

BB Cor Participações S.A.

On 12.27.2012, the Bank established the company BB Cor Participações S.A. (BB Cor), which now holds 100% of the equity of BB Corretora de Seguros e Administradora de Bens S.A. (BB Corretora).

The Bank´s objective is to increase the market share of BB Corretora, which will commercialize, inside and outside of the Bank’s distribution channels, third-party products in the branches where the Bank doesn’t have exclusivity agreements with partners companies.

BB Cor will also hold equity interest in other companies which operates as brokers in the sale of insurance, open pension funds, capitalization and/or health insurance and dental plans in which the Bank may participate in the future.


27

BB Seguridade Participações S.A.

On 12.27.2012, the Bank established the company BB Seguridade Participações S.A. (BB Seguridade), with the following objectives: to consolidate under a single company, all activities of the Bank in the areas of insurance, capitalization, supplementary pension plan and similar activities, including any future expansion of these activities, in Brazil or abroad, organic or not; to provide economies of scale in these operations; and to obtain reduction in the costs and espenses in the insurance segment.

The company holds the following equity interests:

a) 100% of the shares issued by BB Cor. b) 100% of the shares issued by BB Seguridade Participações S.A., which in turn holds the

following equity interests:

(i) 74.9% of the total shares (of which 49.9% are common shares) issued by BB Mapfre SH1 Participações S.A., which operates in the field of life insurance in partnership with Grupo Mapfre.

(ii) 50.0% of the total shares (of which 49.0% are common shares) issued by Mapfre BB SH2 Participações S.A., which operates in the field of property insurance also in partnership with Grupo Mapfre.

(iii) 74.9% of the total shares (of which 49.9% are common shares) issued by Brasilprev Seguros e Previdência Privada S.A., which operates in the field of open pension fund in partnership with Principal Financial Group;

(iv) 66.7% of the total shares (of which 49.9% are common shares) issued by Brasilcap Capitalização S.A.,which operates in the field of capitalization in partnership with Icatu Seguros S.A. e a Cia de Seguros Aliança da Bahia; and

(v) 100.0% of the shares issued by Nossa Caixa Capitalização S.A., which operates in the field of capitalization.

The Initial Public Offering of BB Seguridade Participações S.A.

On 02.20.2013, through a special shareholders’ meeting, the Banco do Brasil decided to do an Initial Public Offering (IPO) of BB Seguridade. The minutes of the meeting were registered in the Junta Comercial do Distrito Federal on 03.14.2013, under the number 20130248401 and published in the Diário Oficial and in the Jornal de Brasilia on 03.25.2013.

The offering, which was emitted by the BB Seguridade Participações S.A., consisted of the secondary public offering of shares, held in Brazil in the unorganized OTC market, in accordance with CVM 400/2003 Instruction.

On 04.25.2013, 500 million shares were offered, 100% Common Shares, traded on the Novo Mercado of the BM & FBOVESPA under the ticker BBSE3 with prices set at R$ 17.00. The settlement of the Offering Base (500 million shares), plus the Additional Lot (100 million shares), produced a gross gain in the income of the Banco do Brasil in the amount of R$ 8.374 billion, resulting from the disposal of 30% of the shares.

On 05.20.2013, the Public Offering of Shares was closed with the full exercise of the Green Shoe (75 million shares). Thereby, the Banco do Brasil achieved a gross gain in the operation of R$ 9.820 billion, and now holds 66.25% of the common shares of BB Security.

The funds raised were fully reverted to the Banco do Brasil, the selling shareholder. BB Seguridade received no funds from the offering.

c) Corporate Reorganization – BB USA Holding Company Inc.

On 03.05.2013, the Banco do Brasil acquired all the shares of BB USA Holding Company Inc., that previously belonged to BB AG Viena.


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The transaction was made based on the adjusted equity of the holding company BB USA Inc. 30.04.2013 by the amount of US$ 644 thousand(R$ 1,293 thousand).

BB USA Holding is a closed corporation headquartered in White Plains in New York State.

3 – Presentation of Financial Statements

The Financial Statements have been prepared in accordance with the accounting guidelines derived from Brazilian corporation law, the rules and instructions issued by the Conselho Monetário Nacional (CMN), Banco Central do Brasil (Bacen), the Conselho Nacional de Seguros Privados (CNSP), the Superintendência de Seguros Privados (Susep), and Comissão de Valores Mobiliários (CVM), as applicable.

The preparation of financial statements in accordance with accounting practices adopted in Brazil, applicable to financial institutions, requires that Management use judgment in the determination and recording of accounting estimates, when applicable. Significant assets and liabilities subject to these estimates and assumptions include: the residual value of fixed assets, the allowance for loan losses, deferred tax assets, provision for labor, civil and tax demands, appreciation of financial instruments, assets and liabilities relating to post-employment benefits and other provisions. The final amounts of transactions involving these estimates are only known upon their settlement.

The financial statements include the operations of the Bank performed by their domestic agencies and abroad (Banco do Brasil) and the consolidated financial statements also include the operations of financial and non-financial subsidiaries in the country and abroad, Jointly Controlled entities, Special Purpose Entity - Dollar Diversified Payment Rights Finance Company, and of Investment Financial Funds (BVIA Fundo de Investimento em Participações, Fundo de Investimento Nióbio I, BV Financeira FIDC I, BV Financeira FIDC II, BV Financeira FIDC III, BV Financeira FIDC IV, BV Financeira FIDC V and BV Financeira FIDC VI) which the Bank controls directly or indirectly, as well as participations in other companies, in accordance with Bacen requirements.

In the preparation of these consolidated financial statements, amounts resulting from transactions between consolidated companies, including the ownership interest held by one in another, balances of balance sheet accounts, revenues, expenses and unrealized profits, net of tax effects, were eliminated. Non-controlling interest in net equity and in income were separately disclosed in the financial statements. The balances of balance sheet and income accounts of ownership interest which control is shared with other stockholders were consolidated proportionally to the ownership held in the capital. Leasing operations were considered based on the financial method, and the amounts were reclassified from the heading of leased assets to the heading of leasing operations, after deduction of residual amounts received in advance.

The Accounting Pronouncements Committee (CPC) is responsible for issuing accounting standards and interpretations, based on international accounting standards, approved by the CVM. Bacen adopted the following pronouncements of the CPC, applied by the Bank, as applicable: CPC 00 - Conceptual Framework, CPC 01 – Decrease in Recoverable Amount of Assets, CPC 03 - Statement of Cash Flows (DFC), CPC 05 – Related Party Disclosures, CPC 10 – Share-Based Payment, CPC 23 – Accounting Policies, Changes in Accounting Estimates and Errors, CPC 24 – Events After the Reporting Period and CPC 25 - Provisions, Contingent Liabilities and Contingent Assets.

Additionally, the Banco Central do Brasil issued CMN Resolution 3,533/2008, which became effective in January, 2012, which established procedures for classification, accounting and disclosure of sale and transfer transactions related to financial assets. This Resolution establishes the criteria for the write-off of financial assets as specified in the CPC 38 – Financial Instruments: Recognition and Measurement.

The Bank has also applied the following pronouncements which do not conflict with the Bacen rules, as established by Article 22, § 2 of Law 6,385/1976: CPC 09 – Value Added Statement, CPC 12 – Adjustment at Present Value, CPC 22 – Information by segment, CPC 33 – Employee Benefits and CPC 41 – Income per share.


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Pronouncements CPC 07 - Government Grants and Assistance, CPC 17 - Construction Contracts, CPC 29 - Biological Assets and Agricultural Produce and CPC 35 - Separate Statements, which do not conflict with the Bacen rules, may be applied by the Bank as events or transactions covered by the aforementioned CPCs take place.

The application of other standards, which depend on Bacen’s regulations, results primarily in immaterial adjustments or in changes in disclosure, except the following pronouncements, that may result in significant impacts on the financial statements:

CPC 04 - Intangible Assets and CPC 15 - Business Combinations - a) reclassification of intangible assets identified on acquisitions of controlling interest of Banco Nossa Caixa and of Banco Votorantim, in 2009, as well as on acquisition of controlling interest of Banco Patagonia, in 2011, and of BB Americas, in 2012, from the investment account to the account of intangible assets, in the group of Non-Current Assets – Permanent; b) derecognition of goodwill amortization expenses from acquisitions; and c) recognition of amortization expenses of intangible assets with definite useful lives, identified in the acquisitions.

CPC 18 – Investments in Associates and Joint Ventures – a) recording at fair value of the equity interests received in the partnership of the formation of the joint ventures BB Mapfre SH1 and SH2, on 06.30.2011; b) write-off of the book value of the assets contributed by the Bank of Brazil including any goodwill; and, c) recognition of the result of the transaction in the new constituted companies by the proportion of the equity interest.

CPC 36 – Consolidated Financial Statements – consolidation of the interests in investments in associates and joint ventures using the equity method, in accordance with CPC 18, resulting in decrease in the total assets of the Conglomerate.

CPC 38 - Financial Instruments: Recognition and Measurement - adjustment in the allowance for loan losses, due to the adoption of the incurred loss criteria instead of the expected loss criteria.

These financial statements were approved by the Executive Board of Directors on 08.06.2013.


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Shareholding interest included in the consolidated financial statements, segregated by business segments

06.30.2013 12.31.2012 06.30.2012

Banking segment Activity % of Total Share

Banco do Brasil – Ag. Viena (1) (4) Banking 100% 100% 100%

BB Leasing Company Ltd. (1) (4) Leasing 100% 100% 100%

BB Leasing S.A. – Arrendamento Mercantil (1) (4) Leasing 100% 100% 100%

BB Securities Asia Pte. Ltd. (1) (4) Broker 100% 100% 100%

BB Securities LLC. (1) (4) Broker 100% 100% 100%

BB Securities Ltd. (1) (4) Broker 100% 100% 100%

BB USA Holding Company, Inc. (1) (4) Holding 100% 100% 100%

Brasilian American Merchant Bank (1) (4) Banking 100% 100% 100%

BB Americas (1) (4) Bank 100% 100% 100%

Besc Distribuidora de Títulos e Valores Mobiliários S.A. (1) (4) Asset Management 99.62% 99.62% 99.62%

Banco Patagonia S.A. (1) (4) Bank 58.96% 58.96% 58.96%

Banco Votorantim S.A. (2) (4) Bank 50% 50% 50%

Investment segment Activity % of Total Share

BB Banco de Investimento S.A. (1) (4) Investment Bank 100% 100% 100%

Kepler Weber S.A. (2) (4) Industry 17.56% 17.56% 17.56%

Companhia Brasileira de Securitização – Cibrasec (3) (5) Credits Acquisition 12.12% 12.12% 12.12%

Neoenergia S.A. (2) (4) Energy 11.99% 11.99% 11.99%

Segment of Fund Management Activity % of Total Share

BB Gestão de Recursos – Distribuidora de Títulos e Valores Mobiliários S.A. (1) (4) Asset Management 100% 100% 100%

Segment of Insurance, Private Pension Fund and Capitalization Activity % of Total Share

BB Seguridade Participações S.A. (1) (4) Holding 66.25% 100% --

BB Cor Participações S.A. (1) (4) Holding 66.25% 100% --

BB Corretora de Seguros e Administradora de Bens S.A. (1) (4) Broker 66.25% 100% 100%

BB Seguros Participações S.A. (1) (4) Holding 66.25% 100% 100%

Nossa Caixa Capitalização S.A. (1) (4) Capitalization 66.25% 100% 100%

BB Mapfre SH1 Participações S.A. (2) (4) Holding 49.68% 74.99% 74.99%

Aliança Participações S.A. (2) (6) Holding -- -- 74.99%

Mapfre Participações Ltda. (2) (6) Holding -- -- 74.99%

Companhia de Seguros Aliança do Brasil (2) (4) Insurance Company 49.68% 74.99% 74.99%

Mapfre Vida S.A. (2) (4) Company/Pension 49.68% 74.99% 74.99%

Vida Seguradora S.A. (2) (4) Insurance Company 49.68% 74.99% 74.99%

Brasilprev Seguros e Previdência S.A. (2) (4) Pension/Insurance 49.68% 74.99% 74.99%

Brasilprev Nosso Futuro Seguros e Previdência S.A. (2) (4) Pension/Insurance 49.68% 74.99% 74.99%

Brasilcap Capitalização S.A. (2) (4) Capitalization 44.16% 66.66% 66.66%

Mapfre BB SH2 Participações S.A. (2) (4) Holding 33.13% 50% 50%

Aliança Rev Participações S.A. (2) (6) Holding -- -- 50%

Aliança do Brasil Seguros S.A. (2) (4) Insurance Company 33.13% 50% 50%

Brasilveículos Companhia de Seguros (2) (4) Insurance Company 33.13% 50% 50%

Mapfre Seguros Gerais S.A. (2) (4) Insurance Company 33.13% 50% 50%

Mapfre Affinity Seguradora S.A. (2) (4) Insurance Company 33.13% 50% 50%

Mapfre Assistência S.A. (2) (4) Service Rendering 33.13% 50% 50%

Votorantim Corretora de Seguros S.A. (2) (4) Broker 50% 50% 50%

Seguradora Brasileira de Crédito à Exportação – SBCE (3) (4) Insurance Company 12.09% 12.09% 12.09%

Segment of Payment Methods Activity % of Total Share

BB Administradora de Cartões de Crédito S.A. (1) (4) Service Rendering 100% 100% 100%

BB Elo Cartões Participações S.A. (1) (4) Holding 100% 100% 100%

Elo Participações S.A. (2) (4) Holding 49.99% 49.99% 49.99%

Companhia Brasileira de Soluções e Serviços CBSS – Alelo (2) (4) Service Rendering 49.99% 49.99% 49.99%

Elo Serviços S.A. (2) (4) Service Rendering 33.33% 33.33% 33.33%

Cielo S.A. (2) (4) Service Rendering 28.71% 28.68% 28.71%

Tecnologia Bancária S.A. – Tecban (3) (4) Service Rendering 13.53% 13.53% 13.53%

Other Segments Activity % of Total Share

Ativos S.A. Securitizadora de Créditos Financeiros (1) (4) Credit Acquisition 100% 100% 100%

Ativos S.A. Gestão de Cobrança e Recuperação de Crédito (1) (4) Credit Acquisition 100% 100% 100%

BB Administradora de Consórcios S.A. (1) (4) Consortium 100% 100% 100%

BB Tur Viagens e Turismo Ltda. (1) (5) Tourism 100% 100% 100%

BB Money Transfers Inc. (1) (4) Service Rendering 100% 100% 100%

BB Tecnologia e Serviços S.A. (old Cobra Tecnologia S.A.) (1) (4) IT 99.97% 99.97% 99.97%

BV Participações S.A. (2) (4) Holding 50% 50% 50%

(1) Subsidiaries.

(2) Joint venture, proportionately included in consolidation.

(3) Associated companies, proportionately included in consolidation, as Bacen’s Regulation.

(4) Financial Statements for consolidation on June/2013.

(5) Financial Statements for consolidation on May/2013.

(6) Companies discontinued during the fiscal year 2012.


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Information for comparability purposes

The financial information is presented retrospectively according to CPC 23 – Accounting Policies, Changes in Accounting Estimates and Errors, due to changes in CPC 33 (R1), approved by CVM Resolution 695/2012, which changed the accounting of actuarial gains and losses, now recorded in the stockholder's equity, and reclassification of values Other Liabilities – Sundry to Other Liabilities - Special operations. The table below shows the re-presented balances:

Balance Sheet R$ thousand

12.31.2012 06.30.2012

Original Report

Adjustments Adjusted Balances

Original Report

Adjustments (1)

Adjusted Balances

NON-CURRENT ASSETS

Other Receivables - Sundry (2) 63,733,942 (1,178,641) 62,555,301 61,286,745 367,480 61,654,225

TOTAL ASSETS 1,150,486,189 (1,178,641) 1,149,307,548 1,051,409,661 367,480 1,051,777,141

NON-CURRENT LIABILITIES

Other Liabilities - Taxes and social security (3)

6,883,049 10,120 6,893,169 7,237,764 (193,921) 7,043,843

Other Liabilities – Special operations (4)

-- -- -- -- 2,124 2,124

Other Liabilities - Sundry (5) 10,411,052 3,381,787 13,792,839 9,760,302 2,049,558 11,809,860

STOCKHOLDERS’ EQUITY 66,069,965 (4,570,548) 61,499,417 62,308,346 (1,490,281) 60,818,065

Accumulated Other Comprehensive Income (6)

1,420,354 (4,570,548) (3,150,194) 1,238,249 (1,490,281) (252,032)

TOTAL LIABILITIES 1,150,486,189 (1,178,641) 1,149,307,548 1,051,409,661 367,480 1,051,777,141

(1) Refers to adjustments made on 12.31.2011 and on 06.30.2012, as Note 4.l - Employee benefits;

(2) Includes the actuarial asset and the deferred tax assets;

(3) Includes the deferred tax liabilities;

(4) Amount reclassified from grouping Other Liabilities – Sundry;

(5) Includes the actuarial liabilities and the reclassification, on 06.30.2012, for special operations in the amount of R$ 2,124 thousand;

(6) Includes the actuarial gains and losses, net of tax effects.

For comparability purposes, the reclassification of Lawsuit expenses from the grouping Other administrative expenses to the grouping Other operating expenses was made as follows:

Statement of Income R$ thousand

1st half/2012 Original Report Reclassification Adjusted Balances

OTHER OPERATING INCOME/EXPENSES

Other administrative expenses (7,932,604) 853,398 (7,079,206)

Other operating expenses (4,350,503) (853,398) (5,203,901)

4 – Description of Significant Accounting Policies

The accounting policies adopted by Banco do Brasil are applied consistently in all periods presented in these financial statements and applied to all the entities of the Conglomerate.

a) Statement of income

In accrual basis accounting, revenues and expenses are reported in the closing process of the period in which they are incurred, regardless of receipt or payment. The operations with floating financial charges are adjusted pro rata die, based on the variation of the indexes agreed, and operations with fixed financial charges are recorded at redemption value, adjusted for unearned income or prepaid expenses for future periods. The operations indexed to foreign currencies are adjusted up to the reporting date using current rates.


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b) Present value measurement

Financial assets and liabilities are presented at present value due to the application of the accrual basis in the recognition of their interest income and expenses.

Non-contractual liabilities are primarily represented by provisions for lawsuit and legal obligations, for which the disbursement date is uncertain and is not under the Bank control. They are measured at present value because they are initially recognized at estimated disbursement value on the valuation date and are updated monthly.

c) Cash and cash equivalents

Cash and cash equivalents comprise available funds in local currency, foreign currency, investments in gold, investments in repurchase agreements – own resources, interbank deposits and investments in foreign currencies, with high liquidity and insignificant risk of change in value, with maturity not exceeding 90 days.

d) Short-term interbank investments

Short-term interbank investments are recorded at their investment or acquisition amount, plus income accrued up to the balance sheet date and adjustment to allowance for losses.

e) Securities

The securities purchased for the Bank's portfolio are recorded at the actual amount paid, including brokerage charges and fees, and are classified based on management’s intention, in one of three categories, according to Bacen Circular 3,068/2001:

Trading Securities: these are securities purchased to be actively and frequently traded. They are adjusted monthly to market value. The increases and decreases in value are recorded in income and expense accounts for the period;

Securities available for sale: these are securities that may be traded at any time, but are not acquired to be actively and frequently traded. They are adjusted monthly to market value and their increases and decreases in value are recorded, net of tax effects, in Accumulated Other Comprehensive Income in Stockholders' Equity.

Securities held to maturity: these are securities that the Bank owns and has the financial capacity and intent to hold to maturity. These securities are not adjusted to market value. The financial capacity is supported by a cash flow projection that does not consider the possibility of sale of these securities.

The mark-to-market methodology used for securities was established following consistent, verifiable criteria, which consider the average price of trading on the day of calculation or, if not available, the daily adjustment of future market transactions reported by Anbima, BM&FBovespa or the net expected realizable value obtained through pricing models, using future interest rate curves, foreign exchange rates, and price and currency index, all consistent with prices adopted during the year.

Income accrued on the securities, irrespective of the category in which they are classified, is appropriated on a pro rata die basis on an accrual basis until the date of maturity or final sale, according to the exponential or straight-line method, based on the contractual remuneration and purchase price, and recorded directly in the statement of income for the period.

Impairment of securities classified as available for sale and held to maturity, if considered not to be temporary, are recorded directly in expense for the period and a new cost basis for the asset is determined.

Upon sale, the difference between the sale amount and the cost of purchase plus accrued income is considered as a result of the transaction and is recorded on the date of the transaction as a gain or loss on securities.


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f) Derivative financial instruments

Derivative financial instruments are adjusted to market value at each monthly trial balance and balance sheet date. Increases or decreases in value are recorded in income or expense accounts of the respective financial instruments.

The mark-to-market methodology used for derivative financial instruments was established following consistent and verifiable criteria, which consider the average price of trading on the date of calculation or, if not available, pricing models that estimate the expected net realizable value.

Derivative financial instruments used to offset, in whole or in part, the risks arising from exposure to variations in financial asset or liability market values are considered hedge instruments and are classified according to their nature:

Market Risk Hedge - increases or decreases in value of the financial instruments, as well as of the hedged item, are recorded in income/expenses accounts for the period; and

Cash Flow Hedge - the effective portion of the increases or decreases in value of the derivative financial instruments classified in this category are recorded, net of tax effects, in Accumulated Other Comprehensive Income in Stockholders' Equity. The effective amount is that in which the variation of the hedged item, directly related to the corresponding risk, is offset by the variation in the financial instrument used for the hedge, considering the accumulated effect of the transaction. Other variations in these instruments are recorded directly in the statement of income/expenses for the period.

g) Loan and lease operations, advances on foreign exchange contracts, other receivables with loan characteristics and allowance for loan losses

Loans, leases, advances on foreign exchange contracts and other receivables with loan characteristics are classified according to Management's judgment with respect to the level of risk, taking into consideration market conditions, past experience and specific risks in relation to the operation, to borrowers and guarantors, observing the parameters established by CMN Resolution 2,682/1999, which requires periodic analyses of the portfolio and its classification into nine levels, ranging from AA (minimum risk) to H (maximum risk), as well as the classification of operations more than 15 days overdue as non-performing.

Income from loans overdue for more than 60 days, regardless of their risk level, will only be recognized as income when effectively received.

Operations classified at level H, which remain in this classification for 180 days, are written off against the existing allowance.

Renegotiated operations are maintained, at a minimum, at the same level at which they were rated. The renegotiations of loans already written off against the allowance are rated as H level and any gains from renegotiation are recognized as income when effectively received.

Allowance for loan losses, considered sufficient by management, satisfies the minimum requirement established by the aforementioned CMN Resolution 2,682/1999 (Note 10.e).

h) Taxes

Taxes are calculated based on the rates shown in the table below:


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Taxes Rate

Income Tax (15% + additional 10%) 25%

Social Contribution on Net Income (CSLL) (1) 15%

Social Integration Program/Public servant fund program (PIS/Pasep) (2) 0.65%

Contribution to Social Security Financing – (Cofins) (2) 4%

Tax on services of any kind – (ISSQN) Up to 5%

(1) Rate applied to financial companies and to non-financial companies in the areas of insurance, private pension plans and capitalization. For others non-financial companies, the CSLL rate is 9%.

(2) For non-financial firms that have opted for the non-cumulative regime of calculation, the PIS/PASEP rate is 1.65% and the Cofins rate is 7.6%.

Deferred tax assets (tax credits) and deferred tax liabilities are recorded by applying the current rates of taxes on their respective bases. For recording, maintaining, and writing off tax credits the Bank follows the established criteria by CMN Resolution 3,059/2002, and amended by CMN Resolution 3,355/2006 and 3,655/2008, and they are supported by a study of their realizability.

i) Prepaid expenses

These expenses refer to the application of payments made in advance, for which the benefits or the services will occur in subsequent periods. Prepaid expenses are recorded at cost and amortized as incurred.

j) Permanent assets

Investments: investments in subsidiaries and associated companies in which the Bank has significant influence or an ownership interest of 20% or more of the voting shares, and in other companies which are part of a group or are under common control are accounted for by the equity method based on the stockholders’ equity of the subsidiary or associated company.

Goodwill, the premium paid over the book value of the investment acquired due a future profitability expectation, is based on financial economic evaluations which substantiate the purchase price of the business and is amortized based on annual income projections of those evaluations. Goodwill is tested for impairment annually.

The statements of the branches and subsidiaries abroad are adapted to the prevailing accounting criteria in Brazil and translated into Brazilian Reais using current exchange rates, in conformity with Bacen Circulars 2,397/1993 and 2,571/1995, and their impacts are recorded in the statement of income for the period.

Other permanent investments are valued at acquisition cost, less allowance for impairment losses, as applicable.

Property and equipment: property and equipment are stated at cost less depreciation, calculated using the straight-line method at the following annual rates: buildings and improvements - 4%; vehicles - 20%; data processing systems - 20% and others - 10% (Note 15).

Deferred: deferred assets are recorded at cost of acquisition or formation, net of accrued amortization. They are composed mainly of restructuring costs, and the expenditures, up to 09.30.2008, with third party properties, as a result of opening branches, which are amortized according to rates based on rental terms, as well as expenditures on the acquisition and development of information systems, which are amortized at 20% per annum (p.a.).

Intangible: intangible assets consist of rights that have as their object intangible assets intended for the maintenance of the company or that are exercised for that purpose, including acquired goodwill.

An asset meets the criteria for identification as an intangible asset, when it is separable, i.e, it can be separated from the entity and sold, transferred or licensed, rented or exchanged, individually or jointly with a contract, related assets or liabilities, regardless of the intention for use by the entity; or results


35

from contractual rights or other legal rights, regardless of whether these rights are transferable or separable from the entity or other rights and obligations.

The intangible assets have finite useful lives and compromises disbursements for the acquisition of: (i) rights to provide banking services (rights to managing payrolls), amortized over the terms of contracts; (ii) software, amortized on a straight-line basis at a rate of 20% per year from the date it is available for use; and (3) in the right to use the Banco Postal network (included in Other Intangible Assets), which is amortized according to the contractual period. Intangible assets are adjusted by allowance for impairment losses, if applicable (Note 16). The amortization of intangible assets is recorded in Other Administrative Expenses account.

k) Impairment of non-financial assets

At the end of each reporting period, the Bank assesses whether there is any indication that a non-financial asset may be impaired based on internal and external sources of information. If there is an indication that an asset may be impaired, the Bank estimates the recoverable amount of the asset. The recoverable amount of the asset is the higher of: i) its fair value less costs to sell it; and ii) its value in use.

The Bank tests, at least annually, the recoverable amount of intangible assets not yet available for use and goodwill on acquisition of investments, regardless whether there is an indication of impairment or not. This test can be applied any time during the year, provided it is performed at the same period every year.

If the recoverable amount of the asset is less than its carrying amount, the asset's carrying amount is reduced to its recoverable amount through a provision for impairment, which is recognized in the Income Statement.

Methodologies in assessing the recoverable amount of the main non-financial assets:

Property and Equipment in Use:

Land and buildings - in determining the recoverable amount of land and buildings, technical assessments are carried out in accordance with the rules of the Brazilian Association of Technical Standards - ABNT.

Data processing systems - in determining the recoverability, the market value is considered, if it is available, or the recoverable value for use in the operations of the Bank. Otherwise the calculation considers the projection of cash flows arising from the use of each asset during its useful life, discounted to present value based on the rate of the Interbank Deposit Certificate - CDI.

Other assets - although they are subject to impairment testing, other assets have little value individually and, given the cost-effectiveness, the Bank does not assess the recoverable value of these items individually. However, the Bank conducts inventory each year, and lost or damaged goods are properly derecognized.

Investments and Goodwill on acquisition of investments

The methodology for calculating the recoverable amount of goodwill and investments for future profitability consists of measuring the expected result of the investment using discounted cash flow (DCF). To measure this result, the assumptions made are based on (i) operational projections, results and investment plans, (ii) macroeconomic scenarios developed by the Bank, and (iii) internal methodology for calculating the cost of capital based on the Capital Asset Pricing Model - CAPM.

Specifically in the acquisition of Banco Nossa Caixa, which was merged into the Banco do Brasil in November 2009, the methodology is to compare the goodwill paid, less the accumulated amortization, with the present value of the results of the Bank designed for the State of São Paulo, minus assets with finite lives. The projections are based initially on results and progress based on growth assumptions of profitability for Banco do Brasil and they are discounted using the cost of capital rate, which is calculated using an internal methodology based on the Capital Asset Pricing Model – CAPM.


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Intangible

Rights to Managing Payrolls - The model for assessing the recoverable amount of the rights to managing payroll involves monitoring contracts performance, that are calculated from the contribution margins of customer relationship related to each contract in order to check if the projections that justified the acquisition of assets match the observed performance. For the contracts that do not achieve the expected performance levels, a provision for impairment loss is recognized.

Software - Software, substantially developed by the Bank in accordance with its needs constantly receive investments for modernization and adaptation to new technologies and business requirements. Considering that there are no similar products on the market and considering the high cost to deploy metrics that allow calculation of its value in use, the impairment test for software evaluates its usefulness to the company so that when software is retired, its value is derecognized.

Other Intangible Assets - Right to use the Banco Postal network - The methodology to evaluate the recoverable amount of the right to use the network of the Banco Postal involves the calculation of the present value of income flows from operations contracted through Banco Postal, that are projected based on realized values and assumptions defined in the business plan, and are discounted based on the weighted average cost of capital (WACC).

The losses recorded on the result to adjust the recoverable value of these assets, if any, are stated in the respective notes.

l) Employee benefits

Employee benefits related to short-term benefits for current employees are recognized on the accrual basis as the services are provided. Post-employment benefits, comprising supplementary retirement benefits and medical assistance for which the Bank is responsible, are assessed in accordance with criteria established by CVM Resolution 695/2012 (Note 27). As of 06.30.2010, the evaluations are performed twice a year and not per year as on 12.31.2009.

In defined-contribution plans, the actuarial risk and the investment risk are borne by the plan participants. Accordingly, cost accounting is based on each period's contribution amount representing the Bank's obligation. Consequently, no actuarial calculation is required when measuring the obligation or expense, and there are neither actuarial gains nor losses.

In defined benefit plans, the actuarial risk and the investment risk value of plan assets fall either partially or fully on the sponsoring entity. Accordingly, cost accounting requires the measurement of plan obligations and expenses, with a possibility of actuarial gains and losses, leading to record a liability when the amount of the actuarial obligation exceeds the value of plan assets, or an asset when the amount of assets exceeds the value of plan obligations. In the latter instance, the asset should be recorded only when there is evidence that it can effectively reduce the contributions from the sponsor or refundable in future.

The Bank recognizes the components of defined benefit cost in the period in which the actuarial valuation was performed, in accordance with CVM Resolution 695/2012, as follows:

a) The current service cost and the net interest on the net defined benefit liability (asset) are recognized in profit or loss; and

b) The remeasurements of the net defined benefit liability (asset) are recognized in other comprehensive income, in the Bank’s equity.

Contributions to be paid by the Bank to medical assistance plans in some cases will endure after the employee’s retirement. Therefore, the Banks obligations are evaluated by the present actuarial value of the contributions to be paid over the expected period when the plan participants and beneficiaries will be linked to the plan. Such obligations are evaluated and recognized under the same criteria used for defined benefit plans.


37

The actuarial asset recognized in the balance sheet (Note 27) refers to the actuarial gains and its implementation must occur by the end of the plan. There may be partial completion of actuarial assets, conditioned upon satisfying the requirements of the Supplementary Law 109/2001 and Resolution CGPC 26/2008.

Initial adoption of CVM Resolution 695/2012 – CPC 33 (R1)

Through Resolution 695/2012, dated 12.13.2012, the CVM adopted the CPC 33 (R1). The main changes are: i) elimination of the corridor method; ii) actuarial gains and losses are now entirely recognized as actuarial assets or liabilities, and creating a corresponding credit or debit in a stockholder's equity account, called Accumulated Other Comprehensive Income. The remeasurements of the net defined benefit liability (asset) which are recognized against other comprehensive income should not be reclassified to income statement in the following period; iii) the financial expense/income of the plan is now recognized at its net value based on the discount rate; iv) new disclosure requirements are included in the financial statements; and v) the standard must be applied retrospectively in accordance with CPC 23 - Accounting Policies, Changes in Accounting Estimates and Errors.

The adoption of this standard, applied for fiscal years beginning on or after 01.01.2013, impacted the Stockholders' Equity as follows:

R$ thousand

06.30.2013 Plano 1 - Previ Plano Informal - Previ Plano de Associados - Cassi Other Plans Total

Actuarial asset increase/(decrease)

(6,237,886) -- -- 281,150 (5,956,736)

Actuarial liability decrease -- 47,910 611,912 58,094 717,916

Effects in deferred tax assets and liabilities

2,669,191 (19,164) (244,765) (136,832) 2,268,430

Effects in Stockholders' Equity

(3,568,695) 28,746 367,147 202,412 (2,970,390)

R$ thousand


Actuarial asset decrease (4,441,209) -- -- -- (4,441,209)

Actuarial liability increase -- (109,101) (2,577,272) (695,413) (3381,786)


1,900,393 43,640 1,030,909 277,505 3,252,447


(2,540,816) (65,461) (1,546,363) (417,908) (4,570,548)

Effects are presented retrospectively according to CPC 23 – Accounting Policies, Changes in Accounting Estimates and Errors:

R$ thousand


Actuarial asset decrease (4,280,383) -- -- -- (4,280,383)

Actuarial liability increase -- (6,130) (262,146) (25,509) (293,785)


1,831,575 2,452 104,858 9,648 1,948,533


(2,448,808) (3,678) (157,288) (15,861) (2,625,635)


38

R$ thousand


Actuarial asset increase 3,742,924 -- -- -- 3,742,924

Actuarial liability increase -- (162,896) (1,240,517) (270,218) (1,673,631)


(1,601,596) 65,158 496,207 106,292 (933,939)


2,141,328 (97,738) (744,310) (163,926) 1,135,354

m) Deposits and Securities Sold Under Repurchase Agreements

Deposits and securities sold under repurchase agreements are recorded at the amount of the liabilities and include, when applicable, related charges up to the balance sheet date, on a daily pro rata die basis.

n) Operations related to insurance, pension plan and capitalization activities

Statement of Income/Expenses

Insurance premiums and selling expenses (or the cost of deferred acquisition) are recorded upon the issuance of policies or billings and are recognized in income/expenses, according to the elapsed coverage period. Revenues from premiums and the corresponding selling expenses, related to present risks without the issuing of respective policies are recognized in the statement of income/expenses based on estimates.

Income from insurance premiums of unelapsed risks is deferred for the validity period of the insurance policies, by means of the formation of provision for unearned premiums, based on the earned premiums issued.

The revenue from pension plans, life insurance plans with living benefits and capitalization plans are recognized in the statement of income when effectively received, as a contra-entry to the recognition of technical provisions, except the revenue to cover risks in cases of combined pension plans, which must be recognized by the duration of the risk, regardless of its receipt. The selling costs are deferred on the issuing of the contract or policy and allocated to income/expenses on a straight-line basis, over the average estimated period for their recovery, except the ones related to capitalization.

Technical Provisions

Technical provisions are composed in accordance with the standards established by Conselho Nacional de Seguros Privados (CNSP), and the values are calculated based on actuarial methods and premises.

Insurance

Provision for Unearned Premiums (PUP) formed by the insurance premium corresponding to the period of risk not yet elapsed. The measurement is individual by policy or endorsement of the current contracts, on the date of formation, by the pro rata method with a basis on the validity start and end dates of the insured risk. The generating factor of the formation of this provision is the issuance of the policy/endorsement or the beginning of the risk, whichever occurs first.

Provision for Premium Insufficiency (PPI) its purpose is to assess the sufficiency or insufficiency of premium reserves for coverage of future obligations related to the insurance contracts. The estimates are based on discounted cash flow of rights and future obligations of each contract, considering hypotheses and assumptions according to each type of risk.

Provision for Unsettled Claims (PULC) calculated by estimate of probable payments, gross of reinsurance and net of recovery of coinsurance, based on the notifications and notices of claims received up to the balance sheet date, and include provisions for claims under litigation calculated according to the criteria defined and documented in an actuarial technical note. The accrued amounts are restated under the terms of the applicable legislation.


39

Provision for Claims Incurred but not Reported (IBNR) calculated in accordance with the expected amount of claims incurred in risks assumed in the portfolio and not reported.

Pension plan

Mathematical Provision for Future Benefit Payments represents the sum of the premiums and contributions transferred by the participants, net of the loading rate, plus the financial income earned from the investments of the resources. This provision refers to participants whose perception of the benefits has not yet started.

Provision for benefits granted refers to those already receiving the benefits.

Provisions for a Deficiency in Contributions are formed to meet the possible adverse changes in the technical risks made in the mathematical provisions of benefits granted and to be granted, resulting from the trend for a higher survival rate of participants and related assumptions, considering all the effective plans.

The values of “other technical provisions” are composed in accordance with circular SUSEP nº 462/2013.

Capitalization

Mathematical Reserve for Redemption is calculated on the face value of the notes, restated according to the index and the interest rate defined in the plan.

Provisions for Redemption of Overdue and Prepaid Notes are recorded at the values of the notes with finalized and rescinded capitalization periods, restated in the period between the date of the right to redemption and effective settlement.

Liability adequacy test – LAT

The Bank conducts the liability adequacy test, according to Circular Susep 457/2012, for the insurance, reinsurance and pension plan operations. This test is performed semiannually to check the adequacy of provisions, and uses current estimations of contracts’ future cash flows.

The methodology takes into account the best estimation of all future cash flows, considering premises of cancellation, claim, longevity, annuitization, other expenses related to the operations, and business revenues.

Cash flows are discounted to present value, according to the Term Structure of the Interest Rates - ETTJ published by Susep, as the respective guarantees provided on the effective contracts.

The test related to the baseline date 06.30.2013 has shown no insufficiency in any of the groups of insurance, reinsurance and private pension plan contracts.

o) Provisions, Contingent assets and liabilities and legal obligations

The recognition, measurement and disclosure of provisions, contingent assets and liabilities and legal obligations are made in accordance with the criteria defined by CPC 25 – Provisions, Contingent Assets and Contingent Liabilities, approved by CMN Resolution 3,823/2009 (Note 28).

Contingent assets are only recognized in the financial statements upon the existence of evidence assuring their realization, usually represented by the final judgment of the lawsuit and by the confirmation of the capacity for its recovery by receipt or offsetting by another receivable.

Contingent liabilities are recognized in the financial statements when, based on the opinion of legal advisor and Management, the risk of loss of legal or administrative proceedings is considered probable, with a probable outflow of financial resource for the settlement of the obligation and when the amounts involved are measurable with sufficient assurance, being quantified when judicial noticed and revised monthly as follows:


40

Aggregated – cases that are similar and recurring in nature and whose values are not considered relevant. Provisions are based on statistical data for groups of cases, type of judicial body (Special Civil Court or Common Court) and plaintiff. For labor claims, provisions are based on the average payments for cases closed in the last 24 months, adjusted for the change in the National Wide Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo or IPCA). For civil claims, provisions are based on the average payments for cases closed in the last 24 months, and for those related to economic plans, provisions are based on the average payments made in the last 24 months.

Individual – cases considered unusual or whose value is considered relevant by our legal counsel. Provisions are based on: the amount claimed; probability of an unfavorable decision; evidence presented; evaluation of legal precedents; other facts raised during the process; judicial decisions made during the course of the case; and the classification and the risk of loss of legal actions.

Contingent liabilities, individually measured, considered as possible losses are not recognized in the balance sheet and only need to be disclosed in the notes to the financial statements, while those classified as remote do not require provisioning or disclosure.

Legal obligations (fiscal and social security) are derived from tax obligations provided in the legislation, regardless of the probability of success of lawsuits in progress, which have their amounts recognized in full in the financial statements.

p) Funding Expenses

Expenses related to funding transactions involving the issuance of securities are capitalized and presented as reduction of the corresponding liability. The expenses are recognized in the income statement over the term of the transaction.

q) Other Assets and Liabilities

Assets are stated at their realizable amounts, including, when applicable, related income and monetary and exchange variations on a daily pro rata die basis, and allowance for losses, when deemed appropriate. Liabilities comprise known or measurable amounts, including related charges and monetary and exchange variations on a daily pro rata die basis.

r) Earnings per share

The disclosure of earnings per share is done according to the criteria defined in Resolution CVM 636/2010. The Bank's basic earnings per share were calculated by dividing the net profit attributable to stockholders by the weighted average number of total shares, excluding treasury shares (Note 24.e).

5 – Information by Segment

The information by segment was compiled with a basis on the reports used by Management in the appraisal of the segment's performance, decision making regarding the allocation of funds for investment and other purposes, the regulatory environment and the similarities between goods and services.

The operations of Banco do Brasil are basically divided into five segments: banking, investments, fund management, insurance (insurance, pension and capitalization) and payment methods. In addition, the Bank participates in other business activities, such as consortium and operating support, that were aggregated in "Other Segments".

Intersegment transactions are conducted under terms and rates consistent with those applied with outsourced when applicable. These transactions do not involve payment risks.


41

a) Banking Segment

Responsible for the most significant portion of Banco do Brasil results, predominantly from operations in Brazil, this segment involves a large diversity of products and services, such as deposits, loans and services that are made available to customers by means of a wide variety of distribution channels, located in the country and abroad.

The operations of the banking segment include business with the retail, wholesale and government markets, carried out by network and customer service teams, and business with micro-entrepreneurs and the informal sector, performed through banking correspondents.

b) Investments Segment

In this segment, deals are performed in the domestic capital market, with activity in the intermediation and distribution of debts in the primary and secondary markets, as well as equity interest and the rendering of financial services.

The operations income of the segment is obtained by means of revenues accrued in investments in securities minus expenses with funding to third parties. The existing equity interests are concentrated at associated and subsidiary companies. Financial service fee income results from economic/financial advisory services, underwriting, fixed and variable income.

c) Segment of Fund Management

Responsible for operations inherent to the purchase, sale and custody of securities, portfolio management, institution, organization and management of investment funds and clubs. Revenues mainly derived from commissions and management fees charged to investors for services rendered.

d) Segment of Insurance, Private Pension Plan, and Capitalization

In this segment, products and services offered are related to life, property and automobile insurance, complementary private pension plans and capitalization plans.

Income is derived mainly from revenues from insurance premiums issued, contributions for private pension plans, capitalization bonds and investments in securities, net of commercialization expenses, technical provisions and expenses related to benefits and redemptions.

e) Segment of Payment Methods

Such segment is responsible for funding, transmission, processing services and financial settlement of operations in electronic means.

Revenues are derived mainly from commissions and management fees charged to commercial and banking establishments for the services rendered described in the previous paragraph, as well as income from rent, installation and maintenance of electronic terminals.

f) Other segments

Other segments comprise the operational support and consortium segments, which have not been aggregated as they are not individually significant.

Their revenues are originated mainly from rendering services not covered in previous segments, such as: credit recovery, consortium administration, development, manufacture, commercialization, rent and integration of digital electronic systems and equipment, peripherals, programs, inputs and computing supplies, intermediation of air tickets, lodging and organization of events.


42

R$ thousand

1st half/2013

Banking Investment Fund

Management Insurance

and Related Payment methods

Other Segments

Intersegment transactions

Total

Income 74,760,166 738,116 671,915 2,784,496 1,407,996 860,554 (856,392) 80,366,851

Income from loans and leases 34,857,180 -- -- -- -- -- (64,940) 34,792,240

Income from operations with securities and derivative financial instruments

14,225,241 195,279 24,027 52,799 157,234 24,547 (243,054) 14,436,073

Income from exchange operations and Compulsory

2,391,331 -- -- -- 44 9 (11) 2,391,373

Financial results from insurance operations, pension plans and capitalization

-- -- -- 434,103 -- -- 22,254 456,357

Income from service fees 5,240,827 288,698 471,360 765,790 1,211,329 502,480 (418,391) 8,062,093

Income from tariffs, rates and commissions

3,055,407 19,848 167,393 -- -- -- -- 3,242,648

Equity in the earnings/(loss) of subsidiary and associated companies

315,422 13,523 -- -- -- -- -- 328,945

Results from Insurance, Pension Plan and Capitalization Operations

-- -- -- 1,509,230 -- -- 17,443 1,526,673

Other Income(1) 14,674,758 220,768 9,135 22,574 39,389 333,518 (169,693) 15,130,449

Expenses (61,716,810) (377,680) (117,870) (1,259,338) (761,956) (649,599) 848,479 (64,034,774)

Expenses of Market funding (24,364,668) (95,009) -- -- (5,395) (17,428) 178,813 (24,303,687)

Loans, assignments, transfers and leases (6,646,207) -- -- -- -- (33) -- (6,646,240)

Allowance for loan losses (7,525,731) (34) (2) -- (226) 867 -- (7,525,126)

Interest and inflation adjustment of technical reserves

-- -- -- (209,247) -- -- -- (209,247)

Personnel Expenses (8,560,161) (23,090) (29,075) (196,898) (79,876) (110,587) 3,384 (8,996,303)

Other administrative expenses (5,616,182) (41,864) (11,383) (352,989) (94,737) (101,586) 498,315 (5,720,426)

Depreciation (412,605) (1,559) -- (9,168) (6,951) (3,458) -- (433,741)

Amortization of deferred (16,513) -- -- (14,983) (3,185) (1,100) -- (35,781)

Amortization of intangible assets (1,199,397) (4) -- -- (6,257) (150) -- (1,205,808)

Operations of Sale or Transfer of Financial Assets

(27,190) -- -- -- -- -- -- (27,190)

Revenues / (Expenses) from impairment (612) -- -- -- (185) -- -- (797)

Other expenses(2) (7,347,544) (216,120) (77,410) (476,053) (565,144) (416,124) 167,967 (8,930,428)

Profit before tax and profit sharing(3)

13,043,356 360,436 554,045 1,525,158 646,040 210,955 (7,913) 16,332,077

Income tax and social contribution(4) (3,535,575) (109,660) (223,409) (557,537) (220,165) (63,680) 3,386 (4,706,640)

Profit sharing (1,317,738) -- (884) (17,989) (948) (2,191) -- (1,339,750)

Non-controlling interest (87,545) -- -- (169,344) -- (4) -- (256,893)

Net Income(5)

8,102,498 250,776 329,752 780,288 424,927 145,080 (4,527) 10,028,794

Balance Sheets

Assets 1,137,886,567 6,377,375 1,242,526 78,284,738 4,875,814 4,955,905 (18,923,352) 1,214,699,573

Investment in subsidiaries and associate companies

11,910,084 2,662,965 75 363,018 -- -- (9,216,416) 5,719,726

Liabilities 1,074,369,172 3,112,095 781,245 72,827,874 3,813,825 2,774,475 (7,700,427) 1,149,978,259

(1) Includes the gain on disposal of shares from BB Seguridade in the amount of R$ 9,820,460 thousand.

(2) According to Banco Central do Brasil standards, since January 2011, the goodwill amortization is recognized (note 14.c). In the first half, R$ 56,431 thousand were amortized in the segments of Insurance, Pension Plans and Capitalization.

(3) In Intersegment transactions, the amount of R$ 7,913 thousand refers to the elimination of unrealized results related to Ativos S.A.

(4) The amount of R$ 3,386 thousand was activated (highlighted in transactions between segments), for the tax credit on unrealized results.

(5) In intersegment transactions, the amount of R$ 4,527 thousand, refers to the elimination of unrealized gains net of tax effects.


43

R$ thousand

1st half/2012

Banking Investment Fund

Management Insurance

and Related Payment methods

Other segments

Intersegment transactions

Total

Income 66,273,779 512,039 625,175 3,108,219 1,166,050 738,237 (987,320) 71,436,179

Income from loans and leases 34,845,270 -- -- -- -- -- (98,196) 34,747,074

Income from operations with securities and derivative financial instruments

14,210,628 79,406 26,327 31,378 139,029 12,100 (215,698) 14,283,170

Income from exchange operations and Compulsory

3,284,270 -- -- -- (106) (21) (11) 3,284,132

Financial results from insurance operations, pension plans and capitalization

-- -- -- 1,408,587 -- -- 25,902 1,434,489

Income from service fees 5,024,723 230,048 404,793 455,522 1,006,337 490,526 (501,290) 7,110,659

Income from tariffs, rates and commissions

2,994,070 16,791 186,059 -- -- -- -- 3,196,920

Equity in the earnings/(loss) of subsidiary and associated companies

325,639 21,290 -- 998 -- -- -- 347,927

Results from Insurance, Pension Plan and Capitalization Operations

-- -- -- 1,133,771 -- -- (9,491) 1,124,280

Other Income 5,589,179 164,504 7,996 77,963 20,790 235,632 (188,536) 5,907,528

Expenses (60,233,965) (347,896) (104,220) (2,136,658) (596,778) (596,951) 907,221 (63,109,247)

Expenses of Market funding (27,004,964) (148,386) -- -- -- (18,131) 223,963 (26,947,518)

Loans, assignments, transfers and leases (5,728,333) -- -- -- (16) (35) -- (5,728,384)

Allowance for loan losses (6,935,829) (11) 557 -- (77) 1,151 -- (6,934,209)

Interest and inflation adjustment of technical reserves

-- -- -- (1,055,142) -- -- -- (1,055,142)

Personnel Expenses (7,543,817) (23,677) (28,037) (169,051) (53,158) (98,859) 2,757 (7,913,842)

Other administrative expenses (6,903,842) (27,674) (11,475) (463,207) (88,912) (107,254) 2,294,708 (5,307,656)

Depreciation (527,767) (1,307) -- (7,241) (5,133) (3,447) -- (544,895)

Amortization of deferred (40,204) -- -- (9,812) (950) (2,086) -- (53,052)

Amortization of intangible assets (1,169,784) (5) -- -- (3,744) (70) -- (1,173,603)

Revenues / (Expenses) from impairment 91 -- -- -- (5,088) -- -- (4,997)

Other expenses(1) (4,379,516) (146,836) (65,265) (432,205) (439,700) (368,220) (1,614,207) (7,445,949)

Profit before tax and profit sharing(2)

6,039,814 164,143 520,955 971,561 569,272 141,286 (80,099) 8,326,932

Income tax and social contribution(3) (1,082,216) (29,811) (212,376) (365,486) (195,603) (41,441) 34,275 (1,892,658)

Profit sharing (813,573) -- (246) (20,050) (810) (14,995) -- (849,674)

Non-controlling interest (74,758) -- -- -- -- 274 -- (74,484)

Net Income(4)

4,069,267 134,332 308,333 586,025 372,859 85,124 (45,824) 5,510,116

Balance Sheets

Assets 995,716,196 6,010,040 1,130,807 59,739,127 3,130,240 4,418,378 (18,367,647) 1,051,777,141

Investment in subsidiaries and associate companies

12,636,785 2,535,912 68 398,862 -- -- (8,980,943) 6,590,684

Liabilities 934,678,113 3,698,258 999,306 55,247,804 2,233,055 1,859,882 (7,757,342) 990,959,076

(1) According to Banco Central do Brasil standards, since January 2011, the goodwill amortization is recognized (note 14.c). In the first half, R$ 95,963 thousand were amortized in the segment of Insurance, Pension Plans and Capitalization.

(2) In Intersegment transactions, the amount of R$ 80,099 thousand refers to the elimination of unrealized results related to Ativos S.A.

(3) The amount of R$ 34,275 thousand was activated (highlighted in intersegment transactions), related to the tax credit on unrealized results, was recorded as assets.

(4) In intersegment transactions, the amount of R$ 45,824 thousand, refers to the elimination of unrealized gains net of tax effects.


44

6 – Cash and Cash Equivalents

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Cash and Cash Equivalents 14,350,615 12,310,731 17,239,120

Local currency 11,506,078 8,713,507 15,379,381

Foreign currency 2,828,395 3,577,404 1,841,246

Investments in gold 16,142 19,820 18,493

Interbank Investments (1)

33,690,419 45,495,087 29,247,653

Open market investments – sales pending settlement – held position

6,043,540 20,760,206 8,740,826

Interbank deposits 27,389,496 24,517,998 18,921,444

Foreign currency 257,383 216,883 1,585,383

Total 48,041,034 57,805,818 46,486,773

(1) Investments whose maturity is less than or equal to 90 days.

7 – Short-term Interbank Investments

a) Breakdown

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Open Market Investments 192,964,367 189,513,953 163,057,546

Sales Pending Settlement – Own Resources 5,951,043 22,009,970 9,958,733

Treasury Financial Bills 59,869 3,145,040 4,579,397

National Treasury Bills 3,876,021 12,692,699 1,557,728

National Treasury Notes 1,763,931 5,727,161 3,746,685

Other Securities 251,222 445,070 74,923

Sales Pending Settlement – Financed Position 186,782,802 167,261,653 151,343,956

Treasury Financial Bills 250,051 104,449,107 93,459,993



Other Securities 324,469 368,839 21,996

Sales Pending Settlement – Short Position 230,522 242,330 254,857

Federal Government bonds – National Treasury 230,522 242,330 254,857

Sales Pending Settlement – Clearing House -- -- 1,500,000

Interbank Deposits 29,900,844 29,809,481 27,449,592

Total 222,865,211 219,323,434 190,507,138

Current assets 221,140,899 217,970,217 171,983,472

Non-current assets 1,724,312 1,353,217 18,523,666

b) Income from Short-term Interbank Investments

R$ thousand


Income from Open Market Investment 7,323,668 7,602,455

Own resources 532,604 461,554

Financed position 6,774,445 7,131,570

Short position 16,619 9,331

Income from Investiments in Interbank Deposits 207,476 278,941

Total 7,531,144 7,881,396


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8 – Securities and Derivative Financial Instruments

a) Securities

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Maturity in days

Market value Total Total Total

Without maturity

0 to 30 31 to 180 181 to 360 More

than 360

Cost

value

Market

value

Mark to market

Cost

value

Market

value

Mark to market

Cost

value

Market

value

Mark to market

1 - Trading securities 3,645,217 8,784,063 2,858,420 7,772,238 55,948,176 80,137,546 79,008,114 (1,129,432) 72,401,254 74,711,317 2,310,063 61,969,473 65,204,481 3,235,008

Federal Government Bonds 55,575 7,699,650 2,387,536 6,480,371 43,163,308 60,557,356 59,786,440 (770,916) 54,950,295 57,010,899 2,060,604 50,596,722 52,380,868 1,784,146

Treasury financial bills -- 248,284 608,437 687,872 6,660,352 8,196,987 8,204,945 7,958 10,859,168 10,857,445 (1,723) 11,353,589 11,423,446 69,857

National treasury bills -- 1,326,791 1,402,330 3,445,584 21,841,636 28,846,662 28,016,341 (830,321) 22,556,667 23,162,309 605,642 16,219,731 16,738,408 518,677

National treasury notes -- 110,757 -- 2,082,514 14,191,731 16,346,661 16,385,002 38,341 17,322,364 18,767,769 1,445,405 15,111,832 16,180,168 1,068,336

Agricultural debt securities -- 105 741 409 113,589 114,844 114,844 -- 124,457 124,456 (1) 155 156 1

Brazilian foreign debt securities -- -- 10,531 -- 49,156 62,032 59,687 (2,345) 92,731 92,265 (466) 119,508 119,279 (229)

Foreign Government bonds 53,543 279,366 67,601 247,666 185,593 787,613 833,769 46,156 557,993 604,805 46,812 417,630 537,537 119,907

Other 2,032 5,734,347 297,896 16,326 121,251 6,202,557 6,171,852 (30,705) 3,436,915 3,401,850 (35,065) 7,374,277 7,381,874 7,597

Corporate bonds 3,589,642 1,084,413 470,884 1,291,867 12,784,868 19,580,190 19,221,674 (358,516) 17,450,959 17,700,418 249,459 11,372,751 12,823,613 1,450,862

Debentures 2,258 156,943 81,187 415,504 5,147,079 5,788,343 5,802,971 14,628 5,085,316 5,193,167 107,851 4,047,173 4,112,788 65,615

Promissory notes -- -- -- 139,899 9,399 148,981 149,298 317 122,772 122,772 -- 122,942 122,943 1

Shares 1,578,208 -- -- -- -- 1,934,180 1,578,208 (355,972) 1,944,733 1,997,674 52,941 1,682,358 1,600,524 (81,834)

Shares in investment funds 1,989,380 633,164 -- 13,816 117,284 2,792,634 2,753,644 (38,990) 3,127,306 3,194,118 66,812 1,100,046 1,105,072 5,026

Rural Product Bills - Commodities -- 16,530 21,384 18,835 60,320 118,285 117,069 (1,216) 182,332 185,495 3,163 267,494 282,120 14,626

Certificate of deposit -- 259,776 220,726 378,981 672,460 1,514,508 1,531,943 17,435 2,025,777 2,032,971 7,194 3,222,072 3,228,282 6,210

Eurobonds -- 131 43,877 2,844 173,254 228,332 220,106 (8,226) 193,235 193,932 697 64,285 61,894 (2,391)

Financial bills -- -- 38,427 -- 246,877 285,047 285,304 257 216,294 216,410 116 155,985 156,067 82

Others 19,796 17,869 65,283 321,988 6,358,195 6,769,880 6,783,131 13,251 4,553,194 4,563,879 10,685 710,396 2,153,923 1,443,527


46

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Maturity in days Market value Total Total Total

Without maturity

0 to 30 31 to 180 181 to 360 More

than 360 Cost

value Market

value Mark to market

Cost value

Market value

Mark to market

Cost value

Market value

Mark to market

2 – Securities available for sale 834,834 1,510,435 7,471,124 16,446,667 70,944,100 97,841,965 97,207,160 (634,805) 93,906,515 95,321,417 1,414,902 83,148,368 84,572,751 1,424,383

Federal Government Bonds 54,646 1,276,407 5,982,088 12,632,935 30,771,011 51,018,009 50,717,087 (300,922) 54,534,638 55,915,034 1,380,396 51,099,285 52,446,812 1,347,527

Treasury financial bills -- -- 5,976,275 9,219,730 10,282,353 25,467,234 25,478,358 11,124 28,111,273 28,111,452 179 28,385,346 28,412,936 27,590

National treasury Bills -- 1,276,217 -- 2,529,675 8,331,154 12,455,602 12,137,046 (318,556) 12,525,695 12,611,058 85,363 9,780,170 9,931,597 151,427

National treasury notes -- -- -- 214,519 5,218,542 5,733,424 5,433,061 (300,363) 5,856,605 6,008,286 151,681 4,878,337 5,048,827 170,490

Agricultural debt securities -- 190 4,788 2,888 16,141 23,789 24,007 218 22,928 23,633 705 25,137 25,654 517

Brazilian foreign debt securities -- -- 1,025 -- 3,684,435 3,331,370 3,685,460 354,090 2,997,832 3,924,791 926,959 3,053,379 3,822,204 768,825

Foreign Government bonds -- -- -- 666,123 2,637,802 3,367,390 3,303,925 (63,465) 4,430,206 4,583,303 153,097 4,494,382 4,615,264 120,882

Other 54,646 -- -- -- 600,584 639,200 655,230 16,030 590,099 652,511 62,412 482,534 590,330 107,796

Corporate bonds 780,188 234,028 1,489,036 3,813,732 40,173,089 46,823,956 46,490,073 (333,883) 39,371,877 39,406,383 34,506 32,049,083 32,125,939 76,856

Debentures -- 3,477 11,401 1,736,276 32,073,101 33,686,279 33,824,255 137,976 27,072,620 27,110,736 38,116 21,062,394 21,174,156 111,762

Promissory notes -- 142,782 724,508 473,105 -- 1,350,150 1,340,395 (9,755) 1,966,340 1,964,866 (1,474) 2,968,651 2,965,573 (3,078)

Credit Notes -- -- -- -- 56,843 55,868 56,843 975 -- -- -- 15,185 14,957 (228)

Shares in investment funds 81,347 -- -- -- 2,908,341 3,241,440 2,989,688 (251,752) 2,405,101 2,436,408 31,307 2,134,772 2,219,274 84,502

Shares 697,239 -- -- -- -- 735,350 697,239 (38,111) 769,166 770,339 1,173 839,736 860,230 20,494

Rural Product Bills - Commodities -- 87,059 584,326 254,307 82,276 1,019,258 1,007,968 (11,290) 1,106,304 1,107,055 751 620,850 616,515 (4,335)

Certificate of deposit -- -- 992 -- 23,282 24,112 24,274 162 744,097 744,378 281 32,353 32,353 --

Certificates of Agribusiness Credit Rights

-- -- -- -- 36,978 35,921 36,978 1,057 43,082 43,856 774 50,327 51,440 1,113

Financial bills -- -- 60,306 1,296,702 2,000,729 3,454,489 3,357,737 (96,752) 2,218,730 2,085,117 (133,613) 1,595,395 1,464,110 (131,285)

Eurobonds -- -- 26,823 -- 338,229 383,081 365,052 (18,029) 445,278 450,593 5,315 -- -- --

Other 1,602 710 80,680 53,342 2,653,310 2,838,008 2,789,644 (48,364) 2,601,159 2,693,036 91,877 2,729,420 2,727,331 (2,089)

3 – Securities held to maturity -- 54,463 4,121,201 580,263 9,199,815 13,833,885 13,955,742 121,857 12,909,853 12,952,681 42,828 15,893,195 15,845,283 (47,912)

Federal Government Bonds -- 54,463 4,121,201 580,263 8,663,765 13,378,074 13,419,692 41,618 12,440,041 12,592,677 152,636 15,408,494 15,519,034 110,540

Treasury financial bills -- -- 4,121,194 80,193 75,191 4,276,176 4,276,578 402 4,129,837 4,128,722 (1,115) 7,820,164 7,822,598 2,434

National treasury notes -- -- -- 452,312 7,743,379 8,160,041 8,195,691 35,650 7,520,837 7,664,956 144,119 7,141,071 7,236,929 95,858

National treasury bills -- 52,729 -- 47,758 774,555 874,011 875,042 1,031 694,825 697,851 3,026 350,423 354,256 3,833

Agricultural debt securities -- -- 7 -- -- 7 7 -- 7 7 -- -- -- --

Brazilian foreign debt securities -- -- -- -- 70,640 66,105 70,640 4,535 94,535 101,141 6,606 94,190 102,605 8,415

Other -- 1,734 -- -- -- 1,734 1,734 -- -- -- -- 2,646 2,646 --

Corporate bonds -- -- -- -- 536,050 455,811 536,050 80,239 469,812 360,004 (109,808) 484,701 326,249 (158,452)

Debentures -- -- -- -- 18,163 18,301 18,163 (138) 17,282 18,690 1,408 16,609 17,161 552

Certificate of deposit -- -- -- -- 141,636 141,636 141,636 -- 163,523 163,522 (1) 157,423 157,423 --

Other -- -- -- -- 376,251 295,874 376,251 80,377 289,007 177,792 (111,215) 310,669 151,665 (159,004)

Total 4,480,051 10,348,961 14,450,745 24,799,168 136,092,091 191,813,396 190,171,016 (1,642,380) 179,217,622 182,985,415 3,767,793 161,011,036 165,622,515 4,611,479


47

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Maturity in days Market value Total Total Total

Without maturity

0 to 30 31 to 180 181 to 360 More

than 360 Cost

value Market

value Mark to market

Cost value

Market value

Mark to market

Cost value

Market value

Mark to market

Total by portfolio 4,480,051 10,348,961 14,450,745 24,799,168 136,092,091 191,813,396 190,171,016 (1,642,380) 179,217,622 182,985,415 3,767,793 161,011,036 165,622,515 4,611,479

Own portfolio 4,479,499 10,348,888 6,199,438 12,761,736 105,922,748 138,834,959 139,712,309 877,350 124,479,982 127,640,497 3,160,515 121,738,290 125,639,023 3,900,733

Subject to repurchase agreements 552 73 7,462,373 11,433,994 27,044,127 48,448,441 45,941,119 (2,507,322) 48,913,095 49,498,336 585,241 34,710,933 35,353,271 642,338

Deposits with the Brazilian Central Bank -- -- 17 -- 15 57 32 (25) 51,490 51,459 (31) 49,695 49,708 13

Pledged in guarantee -- -- 788,917 603,438 3,126,836 4,531,574 4,519,191 (12,383) 5,773,055 5,796,758 23,703 4,522,928 4,591,323 68,395

Allawance for securities losses -- -- -- -- (1,635) -- (1,635) (1,635) -- (1,635) (1,635) (10,810) (10,810) --

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Maturity in years Market value Total Total Total

Without maturity

Due in up to one year

Due from 1 to 5 years

Due from 5 to 10 years

Due after 10 years

Cost value

Market value

Cost value

Market value

Cost value

Market value

Total by category 4,480,051 49,598,874 98,111,660 24,132,323 13,848,108 191,813,396 190,171,016 179,217,622 182,985,415 161,011,036 165,622,515

1 – Trading securities 3,645,216 19,414,720 47,378,327 6,360,229 2,209,622 80,137,546 79,008,114 72,401,254 74,711,317 61,969,473 65,204,481

2 – Available for sale securities 834,835 25,428,227 47,759,255 16,935,320 6,249,523 97,841,965 97,207,160 93,906,515 95,321,417 83,148,368 84,572,751

3 – Held to maturity securities -- 4,755,927 2,974,078 836,774 5,388,963 13,833,885 13,955,742 12,909,853 12,952,681 15,893,195 15,845,283


48

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Book value Book value Book value

Current Non current Total Current Non current Total Current Non current Total

Total by portfolio 64,518,384 125,530,775 190,049,159 58,896,368 124,046,219 182,942,587 51,967,267 113,703,160 165,670,427

Own portfolio 40,386,623 99,273,761 139,660,384 40,160,278 87,403,656 127,563,934 42,824,841 82,865,654 125,690,495

Subject to repurchase agreements

22,268,817 23,635,904 45,904,721 17,298,906 32,233,089 49,531,995 8,658,440 26,691,273 35,349,713

Deposits with Brazilian Central Bank

17 15 32 16 51,443 51,459 17 49,689 49,706

Pledged in guarantee 1,862,927 2,622,730 4,485,657 1,437,168 4,359,666 5,796,834 494,779 4,096,544 4,591,323

Allawance for securities losses -- (1,635) (1,635) -- (1,635) (1,635) (10,810) -- (10,810)

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Total by category

Trading securities 79,008,114 42% 74,711,317 41% 65,204,481 39%

Available for sale securities 97,207,160 51% 95,321,417 52% 84,572,751 51%

Held to maturity securities 13,833,885 7% 12,909,853 7% 15,893,195 10%

Portfolio book value 190,049,159 100% 182,942,587 100% 165,670,427 100%

Mark to market – held to maturity 121,857 42,828 (47,912)

Portfolio market value 190,171,016 182,985,415 165,622,515

b) Income from operations with securities

R$ thousand


Short-term Interbank Investments (Note 7.b) 7,531,144 7,881,396

Fixed-income securities 4,652,259 5,669,096

Variable-income securities 1,362,197 1,553,088

Total 13,545,600 15,103,580

c) Reclassification of securities

There was no reclassification of securities in the years ended 06.30.2013, ended 06.30.2012 and the year ended 12.31.2012

d) Derivative financial instruments

The Bank uses derivative financial instruments to manage, at the consolidated level, its positions and to meet clients' needs, classifying its own positions as hedge (market risk and risk of cash flow) and trading, both with limits and approved by committees at the Bank. The hedge strategy of the equity positions is in line with macroeconomic analyses and is approved by the Executive Board of Directors.

In the options market, active or long positions have the Bank as holder, while passive or short positions have the Bank as writer.

The models used to manage risks with derivatives are reviewed periodically and the decisions made follow the best risk/return relationship, estimating possible losses based on the analysis of macroeconomic scenarios.

The Bank uses tools and systems to manage the derivatives. Trading in new derivatives, standardized or not, is subject to a prior risk analysis.

Risk analysis of the subsidiaries is undertaken on an individual basis and its risk management is done on a consolidated basis.


49

The Bank uses statistical methods and simulations to measure the risks of its positions, including derivatives, using models of values at risk sensibility and stress analysis.

Risks

The main risks inherent to derivative financial instruments, resulting from the business dealings of the bank and its subsidiaries are credit, market, liquidity and operating risks.

Credit risk is the exposure to loss in the event of default by a counterparty to a transaction. The credit exposure in futures contracts is minimized due to daily settlement in cash. The swap contracts, recorded in Cetip are subject to credit risk if the counterparty is not able or willing to perform its contractual obligations, while the swap contracts registered in the BM&FBovespa are not subject to the same risk, given that the Bank operations in Brazil have the same stock exchange as guarantor.

Total credit exposure in swaps is R$ 575,282 thousand (R$ 683,971 thousand at 12.31.2012 and R$ 654,938 thousand at 06.30.2012).

Market risk is the possibility of losses caused by changes in the behavior of interest rates and exchange rates, on stock prices and commodities.

Market liquidity risk is the possibility of loss resulting from the inability to perform a transaction within a reasonable time and without significant loss of value due to the size of the transaction in the volume usually negotiated.

Operational risk denotes the probability of financial losses resulting from failures or inadequacy of people, processes and systems, or factors such as catastrophes or criminal activities.


50

Breakdown of the Portfolio of Derivatives for Trading by Index R$ thousand

By Index 06.30.2013 12.31.2012 06.30.2012

Notional value Cost value Market value Notional value Cost value Market value Notional value Cost value Market value

Futures contracts

Purchase commitments 15,495,618 -- -- 25,829,761 -- -- 30,548,806 -- --

Interbank deposits 6,334,394 -- -- 8,235,604 -- -- 17,582,359 -- --

Currencies 3,234,307 -- -- 10,122,399 -- -- 5,971,471 -- --

T-Note -- -- -- -- -- -- -- -- --

Index 243,931 -- -- 129,028 -- -- 125,643 -- --

Foreign exchange coupon 5,574,712 -- -- 7,219,578 -- -- 6,698,680 -- --

Libor -- -- -- -- -- -- 40,404 -- --

Commodities 26,291 -- -- 21,055 -- -- 2,060 -- --

SCC (1) 81,983 -- -- 102,097 -- -- 128,189 -- --

Sales commitments 41,615,589 -- -- 46,314,994 -- -- 63,745,389 -- --

Interbank deposits 32,818,560 -- -- 35,202,008 -- -- 52,860,874 -- --

Currencies 2,148,433 -- -- 2,717,229 -- -- 701,850 -- --

T-Note -- -- -- 172,242 -- -- -- -- --

Index 12,198 -- -- 11,918 -- -- 35,602 -- --

BGI (2) 172 -- -- -- -- -- 1,951 -- --

Foreign exchange coupon 5,522,159 -- -- 7,264,532 -- -- 7,873,956 -- --

Libor 977,275 -- -- 775,919 -- -- 2,115,028 -- --

Commodities 53,707 -- -- 69,416 -- -- 32,370 -- --

SCC (1) 83,085 -- -- 101,730 -- -- 123,758 -- --

Forward operations

Asset position 7,040,186 355,823 534,951 4,976,836 147,389 165,468 8,185,836 570,552 510,262

Term securities 125,299 125,299 125,299 -- -- -- -- -- --

Term currencies 6,868,067 228,220 405,956 4,953,396 146,121 164,720 8,163,366 569,671 508,306

Term commodities 46,820 2,304 3,696 23,440 1,268 748 22,470 881 1,956

Liability position 5,318,557 (421,926) (399,240) 5,053,850 (274,598) (133,121) 3,715,327 (389,129) (302,641)

Term securities 125,299 (125,299) (125,299) -- -- -- -- -- --

Term currencies 5,185,426 (287,920) (263,385) 5,032,598 (271,912) (129,612) 3,694,264 (378,681) (294,462)

Term commodities 7,832 (8,707) (10,556) 21,252 (2,686) (3,509) 21,063 (10,448) (8,179)

(1) Foreign exchange swap with periodic adjustments.

(2) Live cattle futures contract.


51

R$ thousand

By Index 06.30.2013 12.31.2012 06.30.2012

Notional

value Cost

value Market value

Notional value

Cost value

Market value

Notional value

Cost value

Market value

Option market (1)

14,334,307 (1,987,519) (1,904,991) 28,331,053 (1,258,135) (1,345,157) 24,457,076 (1,705,733) (1,781,455)

Purchase - Purchase options 1,820,996 25,754 61,732 2,616,595 54,999 35,042 2,641,441 115,928 265,234

Foreign currency 1,236,897 16,318 42,152 2,374,145 27,799 10,576 1,824,215 89,690 235,284

Interbank Market -- -- -- -- -- -- -- -- --

Interbank deposit -- -- -- -- -- -- 263,671 811 174

Flexible Currency Options 449,704 1,730 18,917 127,284 8,918 5,066 487,338 24,961 29,675

Shares 70,495 1,673 92 83,000 2,471 2,419 55,375 318 88

Commodities -- -- -- -- -- -- 1,050 20 1

Other 63,900 6,033 571 32,166 15,811 16,981 9,792 128 12

Sold – Purchase options 2,990,161 49,375 89,361 9,308,148 18,005 25,281 7,332,234 25,700 16,648

Foreign currency 885,875 6,766 3,766 1,576,416 3,773 8,223 1,362,109 11,937 1,898


Interbank deposits 391,000 194 -- 7,300,000 5,051 7,763 5,529,548 2,153 3,055

Flexible Currency Options 307,464 11,268 9,413 96,040 2,583 3,386 216,249 8,788 8,327

Shares 1,348,850 30,203 74,764 330,249 6,570 5,890 171,700 2,073 2,002

Commodities -- -- -- 243 3 4 628 162 281

Other 56,972 944 1,418 5,200 25 15 52,000 587 1,085

Purchase – Sales options 4,942,692 (94,259) (457,534) 5,349,227 (158,713) (268,322) 4,112,451 (363,387) (666,068)

Foreign currency 1,818,003 24,288 (61,836) 3,361,794 (38,546) (17,792) 2,134,291 (105,807) (237,308)


Pre-fixed 1,952,772 (90,165) (350,725) 1,318,001 (70,214) (198,032) 1,565,059 (242,071) (422,096)

Interbank deposit -- -- -- -- -- -- 153,159 (400) (53)

Flexible Currency Options 716,817 (56,138) (31,930) 392,478 (42,450) (44,400) 154,486 (13,779) (6,283)

Shares 364,900 8,987 (219) 259,250 (6,444) (6,857) 85,800 (384) (118)

Commodities 14,950 (103) (1) 539 (78) (15) 14,080 (788) (193)

Other 75,250 18,872 (12,823) 17,165 (981) (1,226) 5,576 (158) (17)

Sold – Sales options 4,580,458 (1,968,389) (1,598,550) 11,057,083 (1,172,426) (1,137,158) 10,370,950 (1,483,974) (1,397,269)

Foreign currency 765,975 (6,371) (2,623) 1,665,321 (7,596) (12,594) 2,408,167 (22,157) (9,616)


Pre-fixed 1,952,771 (1,913,680) (1,500,119) 1,318,001 (1,138,412) (1,107,965) 1,747,055 (1,437,045) (1,368,410)

Interbank deposit 390,750 (95) -- 7,299,000 (4,674) (7,019) 5,527,798 287 (2,032)

Flexible Currency Options 236,845 6,782 (6,154) 153,404 (6,145) (1,813) 429,828 (18,765) (9,809)

Shares 1,042,310 (22,492) (48,034) 254,050 (6,664) (4,751) 144,100 (2,354) (2,064)

Commodities 71,382 (3,092) (5,106) 361,807 (8,874) (2,980) 53,758 (3,343) (4,285)

Other 120,425 (29,441) (36,514) 5,500 (61) (36) 60,244 (597) (1,053)


52

R$ thousand

By Index 06.30.2013 12.31.2012 06.30.2012

Notional

value Cost

value Market value

Notional value

Cost value

Market value

Notional value

Cost value

Market value

Swap contracts

Asset position 13,998,114 878,333 1,080,472 18,420,272 651,860 1,055,188 11,337,486 758,753 878,976

Interbank Deposit 1,896,131 51,011 71,742 4,341,764 126,744 128,608 1,405,308 82,274 93,511


Pre-fixed 1,510,769 86,486 99,458 4,740,658 90,318 196,447 2,845,185 39,518 84,019

IPCA 1,386,329 83,706 32,312 2,564,763 53,472 244,207 2,182,163 37,823 115,218

IGPM 275,682 45,217 64,783 394,552 59,514 110,472 535,429 49,504 93,901

Commodities 1,206 44 40 1,246 4 161 654 -- 154

Other 332,024 26,315 40,583 444,749 27,953 30,350 537,431 79,604 84,151

Liability position 12,751,107 (710,077) (1,016,164) 15,714,678 (601,099) (1,278,313) 15,042,129 (846,512) (1,323,098)

Interbank Deposit 1,970,318 (25,846) (45,677) 3,035,137 (65,814) (64,510) 1,649,102 (16,742) (53,684)

Foreign currency 5,050,418 (304,801) (498,300) 3,558,735 (115,185) (217,616) 4,028,265 (464,021) (458,120)

Pre-fixed 2,899,134 (158,259) (220,077) 5,446,677 (217,599) (442,458) 5,398,216 (116,500) (396,659)

TMS 530,736 4,244 (4,097) -- -- -- -- -- --

TR 3,933 (922) (1,178) 13,490 (1,297) (1,769) 13,490 (837) (1,533)

IGPM 176,000 (39,875) (56,869) 266,650 (50,081) (88,323) 306,785 (36,362) (70,814)

IPCA 1,854,794 (177,670) (168,824) 3,323,836 (150,303) (460,973) 2,796,819 (184,309) (302,534)

Libor 181,512 (5,870) (14,792) -- -- -- -- -- --

Commodities -- -- -- 369 (4) (10) 904 -- (113)

Other 84,262 (1,078) (6,350) 69,784 (816) (2,654) 848,548 (27,741) (39,641)

Other derivative financial instruments

Asset position


Liability position

Foreign currency 4,353,555 (103,962) (674,165) 4,613,640 (58,263) (618,265) 12,569,125 (268,454) (303,354)

Breakdown of the credit derivatives portfolio by maturity (notional value) R$ thousand

Maturity in days 0 to 30 31 to 180 181 to 360 More than 360 06.30.2013 12.31.2012 06.30.2012

Futures 9,083,423 11,177,514 9,630,644 27,219,626 57,111,207 72,144,755 94,294,195

Fowards 3,908,782 6,155,773 1,107,330 1,186,858 12,358,743 10,030,686 11,901,163

Option 1,757,286 7,524,091 3,833,262 1,219,668 14,334,307 28,331,053 24,457,076

Swap 591,120 4,667,508 5,282,478 16,208,115 26,749,221 34,134,950 26,379,615

Credit derivatives 753,304 -- -- -- 753,304 1,917,836 2,038,006

Other (1) 5,019,579 5,309,820 1,297,774 659,373 12,286,546 12,865,412 20,763,568

(1) Related, essentially, to Non Deliverable Forwards (NDF) which are traded in the over-the-counter (OTC) market and have as their object an exchange rate of a specific currency.

Breakdown of the credit derivative portfolio by notional value, trading market and counterpart (06.30.2013)

R$ thousand

Futures

contracts Foward

operations Option market

Swap contracts

Credit derivatives

Other

BM&FBovespa 56,133,932 -- 27,674 -- -- --

Over-the-counter

Financial Institutions 977,275 263,602 13,884,996 18,008,011 753,304 9,075,690

Client -- 12,095,141 421,637 8,741,210 -- 3,210,856


53

Breakdown of the credit derivative portfolio R$ thousand

06.30.2013 12.31.2012 06.30.2012

Notional value Market value Notional value Market value Notional value Market value

Asset position - transferred risk

Credit swaps – Derivatives with Banks 426,503 3,078 1,563,278 6,983 405,806 12,025

Liability position - received risk

Credit swaps – Derivatives with Banks 326,801 (4,861) 354,558 (4,303) 1,632,200 (11,496)

The portfolio of credit derivatives is composed exclusively of purchases and sales carried out by Banco Votorantim. Currently the portfolio is composed of customers whose risk is rated as investment grade and, as counterparty, contains the main international market leaders for this product. For the sale of protection is approved credit limit, for both the risk client and for the counterparty, according to the approval of the committees and forums of credit. The credit limit risk allocation is made to the client by the reference value (notional) of derivatives, considering the amounts deposited as collateral.

For the purpose of mitigating the risk, transactions are performed in portfolio trading with client sovereign risk, especially Brazil. In this case, we consider the potential future exposure to allocate credit limit to the counterparty. The portfolio of credit derivatives did not generate impacts in the PEPR - Portion related to the exposures weighted by risk factor for calculating the BIS Ratio, since information from Banco Votorantim were not included in the calculation, according to determination of the Brazilian Central Bank (Note 29.f).

Breakdown of margin given as guarantee for transactions with derivative financial instruments

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Treasury financial bills 1,150,529 1,682,541 1,202,325

National treasury notes 572,301 822,035 695,573

National treasury bills 735,708 904,178 587,482

Foreign government bonds -- 240,922 682,744

Eurobonds -- 56,196 3,623

Other 194,251 187,703 177,573

Total 2,652,789 3,893,575 3,349,320


54

Portfolio of derivatives designated as hedge accounting R$ thousand

06.30.2013 12.31.2012 06.30.2012

Hedge Market Risk

Hedging instruments

Assets 5,016,341 5,663,119 10,485,376

Future 4,226,089 3,811,931 9,451,958

Swap 790,252 1,851,188 374,638

Options -- -- 658,780

Liabilities 22,878,419 23,334,672 29,940,468

Future 22,878,419 21,277,102 28,887,196

Swap -- 2,057,570 --

Options -- -- 1,053,272

Hedged items

Assets 22,857,311 25,306,775 25,226,618

Loan Operations 19,560,142 22,023,528 22,603,954

Securities 2,505,239 2,173,596 215,399

Lease transactions 791,930 927,891 1,375,331

Foreign Investments -- 181,760 365,533

Other assets -- -- 666,401

Liabilities 4,638,196 5,014,884 4,288,815

Other liabilities 4,638,196 5,014,884 4,288,815

Cash Flow Hedge

Hedging instruments

Assets -- -- 441,653

Swap -- -- 441,653

Liabilities (298,970) (275,376) --

Borrowing – Bonds (Principal) (298,970) (275,376) --

Hedged items

Assets 198,453 181,760 --

Foreign Investments 198,453 181,760 --

Liabilities -- -- 441.563

Foreign Investments -- -- 441.563

The Bank, in order to hedge against possible fluctuations in interest and exchange rates of its securities, contracted derivative operations to offset the exposure to the market value changes. The hedge was assessed as effective, in accordance with the Circular n.º 3,082/2002 from Brazilian Central Bank, which require evidence of hedge effectiveness between 80% and 125%.

Income gains and losses with hedging instruments and hedged items R$ thousand


Hedged items losses (1,151,151) (733,711)

Hedging instruments gains 1,172,848 746,051

Net effect 21,697 12,340

Hedged items gains 550,593 1,311,373

Hedging instruments losses (547,582) (1,255,341)

Net effect 3,010 56,032


55

Derivative financial instruments segregated by current and non-current R$ thousand

06.30.2013 12.31.2012 06.30.2012

Current Non-current Current Non-current Current Non-current

Assets

Forward 468,245 66,706 149,879 15,589 476,256 34,006

Options 150,256 837 60,167 156 279,063 2,819

Swap 197,619 882,853 239,819 815,369 398,997 479,979

Credit derivatives 3,078 -- 6,983 -- 12,025 --

Other derivatives 170,719 39,725 94,397 32,221 150,111 32,045

Total 989,917 990,121 551,245 863,335 1,316,452 548,849

Liabilities

Forward (384,939) (14,301) (121,221) (11,900) (282,700) (19,941)

Options (1,489,255) (566,829) (259,585) (1,145,895) (1,418,802) (644,535)

Swap (293,902) (722,262) (326,893) (951,420) (677,681) (645,417)

Credit derivatives (4,861) -- (4,303) -- (11,496) --

Other derivatives (664,990) (9,175) (613,521) (4,744) (293,973) (9,381)

Total (2,837,947) (1,312,567) (1,325,523) (2,113,959) (2,684,652) (1,319,274)

e) Income from derivative financial instruments

R$ thousand


Swap 428,665 (100,270)

Forward 62,463 391,589

Options (21,915) (35,433)

Futures 485,779 (732,384)

Credit derivatives 652 11,705

Other (65,171) (355,617)

Total 890,473 (820,410)


56

9 – Interbank Accounts

a) Payments and receipts pending settlement

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Assets

Rights with participants of settlement systems(1)

Bank Checks and other instruments 2,129,911 14,211 781,926

Documents sent by other participants 1,888,422 -- 1,892,663

Total 4,018,333 14,211 2,674,589

Current assets 4,018,333 14,211 2,674,589

Liabilities

Obligations with participants of settlement systems

(1)

Remitted receipts 2,018,106 2 1,981,324

Bank Checks and other instruments 940,393 336 898,753

Other receipts 12,593 1 5,425

Total 2,971,092 339 2,885,502

Current liabilities 2,971,092 339 2,885,502

(1) There was no operation of the service of clearing checks and other securities on 12.31.2012.

b) Restricted deposits

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Compulsory Deposits at Banco Central do Brasil 78,892,266 80,097,865 91,068,197

Additional reserve requirements on deposits 27,220,541 27,618,289 37,635,172

Savings deposits 22,259,615 20,361,605 18,313,035

Time deposits 15,780,394 16,660,511 23,823,946

Demand deposits 13,441,822 15,216,673 9,225,578

Resources for microfinance 189,894 240,787 78,914

Resources for rural credit (1) -- -- 1,991,552

Housing Finance System 2,106,229 2,042,906 1,983,951

Compensation of wage changes fund 2,215,858 2,153,301 2,097,808

Provision for losses (117,391) (117,467) (117,697)

Other 7,762 7,072 3,840

National Treasury - Rural credit 153,721 179,284 292,076

Total 81,152,216 82,320,055 93,344,224

Current assets 81,148,183 82,296,773 93,343,068

Non-current assets 4,033 23,282 1,156

(1) Refers to funds deposited in the Banco Central do Brasil, because of non transfering to rural credits (Note10.a), according to Resolution CMN nº 3,745/2009. The funds were subject to special supply by the Banco Central do Brasil and maintained by the Bank, and recorded in borrowings and onlendings (Note 18.b).


57

c) Income on compulsory deposits

R$ thousand


Income Credit Linked to Banco Central do Brasil 1,997,081 3,353,729

Additional reserve requirements on deposits 934,576 1,654,158

Savings deposits 591,083 579,569

Requirements over time resources 471,422 1,120,002

Income Credit Linked to Housing Finance System

57,091 56,925

Income Credit Linked to National Treasury – Rural Credit

11,620 9,495

Total 2,065,792 3,420,149

10 – Loan Operations

a) Portfolio by modality

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Loan Operations 536,339,192 490,234,505 428,904,018

Loans and securities discounted 228,705,745 221,272,727 192,245,364

Financing 158,400,224 143,435,719 126,635,993

Rural and agribusiness financing 131,497,807 112,263,199 99,850,070

Real estate financing 17,651,621 13,157,380 10,123,413

Financing of Infrastructure and development 672 16,067 793

Loan operations linked to cessions (1) 83,123 89,413 48,385

Other receivables with loan characteristics 37,551,204 33,426,898 28,422,203

Credit card operations 16,211,680 16,084,427 13,226,170

Advances on exchange contracts (2) 12,611,290 11,351,558 12,572,564

Other Receivables linked to acquired operations(3) 8,402,886 5,673,953 2,249,085

Guarantees honored 133,168 107,503 90,444

Other 192,180 209,457 283,940

Lease transactions 1,614,908 2,010,667 2,468,078

Total Loan Portfolio 575,505,304 525,672,070 459,794,299

Allowance for loan losses (21,640,997) (21,210,060) (20,340,145)

(Allowance for loan losses) (20,936,227) (20,521,819) (19,579,005)

(Allowance for other losses) (610,962) (560,327) (597,586)

(Allowance for lease losses) (93,808) (127,914) (163,554)

Total Loan Portfolio Net of Provisions 553,864,307 504,462,010 439,454,154

(1) Loan operations assigned with retention of the risks and benefits of the financial assets involved in the transaction.

(2) Advances on exchange contracts are classified as a deduction to other liabilities.

(3) Loan operations acquired with retention of the risks and benefits by the assignor of financial assets involved in the transaction.


58

b) Loan operations income

R$ thousand


Loan operations income 33,653,343 33,709,259

Loans and securities discounted 20,608,574 20,789,534

Financing 6,343,793 6,325,749

Rural and agribusiness financing 3,390,564 3,416,216

Recovery of loans previously written-off as loss (1) 1,874,633 1,858,386

Income from foreign currency financing 447,274 477,653

Income from housing financing 590,327 388,863

Advances on exchange contracts 310,982 398,006

Guarantees honored 11,692 4,465

Other 75,504 50,387

Lease transactions income (Note 10.i) 889,565 967,908

Total 34,542,908 34,677,167

(1) The Bank made credit assignments without recourse to entities outside the financial system, in accordance with CMN Resolution 2,836/2001.The transactions were recorded in losses and were ceded by R$ 20,881 thousand (R$ 44,868 thousand in the 1st half 2012), with tax effect of R$ 8,935 thousand (R$ 17,947 thousand in the 1st half 2012) and impact on the outcome of R$ 11,946 thousand (R$ 26,921 thousand in the 1st half of 2012).

c) Breakdown of the loan portfolio by sector

R$ thousand

06.30.2013 % 12.31.2012 % 06.30.2012 %

Public sector 19,168,023 3.1 12,897,819 2.1 8,792,278 1.6

Government 8,823,687 1.4 5,525,808 0.9 3,418,346 0.6

Direct administration 8,478,570 1.4 5,162,687 0.9 3,051,619 0.6

Indirect administration 345,117 -- 363,121 -- 366,727 --

Business activities 10,344,336 1.7 7,372,011 1.2 5,373,932 1

BB Group -- -- -- -- -- --

Industry 5,490,515 0.9 3,075,975 0.5 3,476,099 0.7

Financial intermediaries 270,364 -- 201,729 -- 155,985 --

Other services 4,583,457 0.8 4,094,307 0.7 1,741,848 0.3

Private sector 556,337,281 96.9 512,774,251 97.9 451,002,021 98.4

Rural 98,920,948 17.2 86,615,273 16.5 74,949,728 16.4

Industry 170,303,985 29.6 156,878,959 29.9 137,924,580 30.1

Commerce 59,846,421 10.5 59,820,066 11.4 52,332,607 11.4

Financial intermediaries 13,219,125 2.4 7,076,867 1.4 3,563,606 0.8

Individuals 124,019,483 21.6 120,195,271 22.9 115,654,186 25.2

Housing 13,670,174 2.3 10,187,997 2.0 7,721,553 1.7

Other services 76,357,145 13.3 71,999,818 13.8 58,855,761 12.8

Total 575,505,304 100.0 525,672,070 100.0 459,794,299 100.0


59

d) Loan portfolio by risk level and maturity

R$ thousand

AA A B C D E F G H 06.30.2013 12.31.2012 06.30.2012

Normal operations

Installments falling due

01 to 30 9,895,206 11,148,909 17,701,356 2,404,540 813,490 142,626 49,783 63,436 145,922 42,365,268 42,483,168 35,812,549

31 to 60 9,324,394 7,959,671 9,518,876 1,574,073 358,405 88,170 24,379 35,922 71,011 28,954,901 27,637,892 28,647,181

61 to 90 10,305,775 7,059,292 8,551,297 1,217,473 277,152 93,705 32,953 33,334 80,467 27,651,448 22,330,994 20,890,038

91 to 180 19,346,222 15,555,204 20,477,859 3,538,659 856,404 240,617 64,946 105,244 246,491 60,431,646 56,414,257 51,669,724

181 to 360 27,061,050 21,343,864 30,393,730 5,036,516 1,214,435 333,699 100,245 158,412 490,648 86,132,599 85,133,634 72,430,296

More than 360 111,394,568 82,126,066 93,405,174 13,575,629 4,729,688 1,622,467 503,948 751,289 3,440,205 311,549,034 274,571,886 233,423,338

Installments overdue

Up to 14 days 105,135 167,838 292,030 93,363 67,414 52,855 6,415 7,370 27,653 820,073 724,644 570,065

Other (1) 698,207 -- -- -- -- -- -- -- -- 698,207 753,273 857,845

Subtotal 188,130,557 145,360,844 180,340,322 27,440,253 8,316,988 2,574,139 782,669 1,155,007 4,502,397 558,603,176 510,049,748 444,301,036

Abnormal operations

Installments falling due

01 to 30 -- -- 94,804 134,255 80,153 82,666 60,456 86,641 295,864 834,839 762,989 773,090

31 to 60 -- -- 52,757 89,109 59,616 76,781 41,520 49,200 181,611 550,594 517,449 481,987

61 to 90 -- -- 54,207 88,921 55,137 59,177 41,333 50,507 178,744 528,026 418,944 448,735

91 to 180 -- -- 145,175 239,330 142,215 165,862 115,635 129,037 447,550 1,384,804 1,216,887 1,259,283

181 to 360 -- -- 227,893 376,291 239,046 256,660 178,515 234,320 728,899 2,241,624 2,057,231 2,040,800

More than 360 -- -- 436,082 803,676 672,198 740,599 507,141 655,853 2,439,192 6,254,741 5,764,451 5,627,027

Installments overdue

01 to 14 -- -- 16,368 45,689 29,259 27,337 20,302 27,315 72,606 238,876 244,003 211,399

15 to 30 -- -- 164,930 100,501 64,418 51,294 40,116 50,080 142,360 613,699 515,309 495,873

31 to 60 -- -- 13,088 196,550 95,817 97,834 58,414 130,046 250,182 841,931 659,465 718,250

61 to 90 -- -- 1,214 9,057 114,789 89,745 63,339 108,071 242,443 628,658 523,017 555,110

91 to 180 -- -- 1,704 3,569 13,656 112,186 160,659 193,155 550,059 1,034,988 1,051,573 1,313,653

181 to 360 -- -- 2,370 679 2,772 8,937 10,929 152,499 911,911 1,090,097 1,247,626 1,015,224

More than 360 -- -- 1,805 2,708 3,078 1,586 4,517 8,440 637,117 659,251 643,378 552,832

Subtotal -- -- 1,212,397 2,090,335 1,572,154 1,770,664 1,302,876 1,875,164 7,078,538 16,902,128 15,622,322 15,493,263

Total 188,130,557 145,360,844 181,552,719 29,530,588 9,889,142 4,344,803 2,085,545 3,030,171 11,580,935 575,505,304 525,672,070 459,794,299

(1) Operations with third party risk linked to government funds and programs, primarily Pronaf, Procera, FAT, BNDES and FCO. They include the amount of overdue installments in the total amount of R$ 54,434 thousand, which comply with rules defined in each program for reimbursement with the managers and do not imply a credit risk for the Bank.


60

e) Allowance for loan losses by risk level

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Level of risk % Provision

Value of loans

Minimum required

provision

Additional allowance

(1)

Existent Allowance

Value of loans

Minimum required

provision


(1)

Existent Allowance

Value of loans

Minimum required

provision


(1)

Existent Allowance

AA 0 188,130,557 -- -- -- 168,535,041 -- -- -- 135,975,568 -- -- --

A 0.5 145,360,844 726,804 168,673 895,477 125,622,056 628,110 172,058 800,168 123,630,151 618,151 56,942 675,093

B 1 181,552,719 1,815,527 16,321 1,831,848 167,406,924 1,674,069 13 1,674,082 138,504,389 1,385,044 2,970 1,388,014

C 3 29,530,588 885,918 51,050 936,968 35,295,322 1,058,860 90,361 1,149,221 33,800,698 1,014,021 147,989 1,162,010

D 10 9,889,142 988,914 131,647 1,120,561 8,709,195 870,920 90,333 961,253 8,723,409 872,341 146,208 1,018,549

E 30 4,344,803 1,303,441 449,037 1,752,478 3,917,635 1,175,291 401,486 1,576,777 3,567,885 1,070,366 596,202 1,666,568

F 50 2,085,545 1,042,773 212,455 1,255,228 1,788,143 894,072 226,245 1,120,317 2,118,809 1,059,405 366,193 1,425,598

G 70 3,030,171 2,121,120 146,382 2,267,502 2,149,328 1,504,530 175,286 1,679,816 2,244,528 1,571,170 204,281 1,775,451

H 100 11,580,935 11,580,935 -- 11,580,935 12,248,426 12,248,426 -- 12,248,426 11,228,862 11,228,862 -- 11,228,862

Total 575,505,304 20,465,432 1,175,565 21,640,997 525,672,070 20,054,278 1,155,782 21,210,060 459,794,299 18,819,360 1,520,785 20,340,145

(1) Refers to the additional provision to the minimum required by CMN Resolution 2,682/1999. This provision is established based on the experience of Management, by simulating the loan portfolio, considering the history of default of operations and in accordance with good banking practice.


61

f) Changes in allowance for loan losses

Includes loans, leases and other receivables with characteristics of credit.

R$ thousand


Opening balance 21,210,060 19,014,978

Provision/(reversal) 7,459,225 7,029,484

Minimum required allowance 7,439,442 7,264,636

Additional allowance 19,783 (235,152)

Exchange fluctuation – foreign allowances 3,566 17,531

Write-Off (7,031,855) (5,737,140)

Added values (1) -- 15,292

Closing balance 21,640,997 20,340,145

(1) Refers to the balance from BB Americas.

g) Changes in allowance for other loan losses

Includes provisions for other receivables without characteristics of credit.

R$ thousand


Opening balance 915,844 1,084,733

Provision/(reversal) 65,901 (95,275)

Exchange fluctuation – foreign allowances 374 780

Write-Off / Other settings 80,167 17,072

Closing balance 1,062,286 1,007,310

h) Leasing portfolio by maturity

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Up to 1 year (1) 962,721 1,216,647 1,455,080

More than 1 year and up to 5 years 633,544 788,012 1,005,412

Over 5 years 18,643 6,008 7,586

Total Present Value 1,614,908 2,010,667 2,468,078

(1) Includes amounts related to installments overdue.

i) Income from leasing transactions

R$ thousand


Lease revenue 889,565 967,908

Leasing 889,565 967,908

Lease expenses (808,369) (697,659)

Leasing (805,725) (695,705)

Operating leases (58) (58)

Loss on disposal of leased assets (2,586) (1,896)

Total 81,196 270,249


62

j) Concentration of loans

R$ thousand

06.30.2013 % of credit

portfolio 12.31.2012

% of credit portfolio

06.30.2012 % of credit

portfolio

Large debtor 11,671,820 2.2 8,518,184 1.7 8,567,425 2.0

10 largest debtors 41,649,209 7.7 34,666,327 7.1 31,172,517 7.4

20 largest debtors 57,231,560 10.6 50,114,772 10.3 43,192,773 10.2

50 largest debtors 82,305,992 15.2 73,764,234 15.1 63,738,406 15.1

100 largest debtors 104,148,490 19.2 93,464,337 19.2 81,431,355 19.3

k) Renegotiated credits

R$ thousand


Credits renegotiated during the period

(1) 18,142,129 17,799,030

Renegotiated by delay (2) 1,576,696 1,482,427

Renovated (3) 16,565,433 16,316,603

Changes on credits renegotiated by delay

Opening balance 7,265,676 6,039,018

Contracts (2) 1,576,696 1,482,427

Interest received and appropriated 160,567 (264,502)

Write-Off (776,529) (783,721)

Closing balance 8,226,410 6,473,222

06.30.2013 12.31.2012 06.30.2012

Amount of credits renegotiated by delay

(4) 8,226,410 7,265,676 6,473,222

Allowance for loan losses of the portfolio renegotiated by delay 4,899,573 4,553,265 4,226,341

(%) Allowance for loan losses on the portfolio 59.6% 62.7% 65.3%

90 days default of the portfolio renegotiated by delay 1,282,942 1,114,266 860,646

(%) Portfolio default 15.6% 15.3% 13.3%

(1) Represents the balance renegotiated, during the period of the loan operations, falling due or overdue, using internet, automated teller machines (ATM) network or branches.

(2) Renegotiated credit for composition of debts due to payment delay by clients.

(3) Renegotiated credits of non-matured operations for the extension, renewal, granting new operation for partial or full settlement of previous operation or any other type of agreement that changes the maturity or the payment terms, originally agreed.

(4) Includes the amount of R$ 157,437 thousand (R$ 24,643 thousand as of 12.31.2012 and R$ 20,551 thousand as of 06.30.2012) related to the renegotiated rural credits. The amount of R$ 5,366,943 thousand (R$ 5,250,608 thousand as of 12.31.2012 and R$ 5,264,097 thousand as of 06.30.2012), related to deferred credits from rural portfolio supported in specific legislation, is not included.

l) Supplementary information

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Releasable contracted credits 138,945,874 138,611,766 123,454,996

Guarantees provided (1) 15,430,454 15,927,569 15,835,049

Confirmed export credits 1,984,070 1,634,685 1,536,769

Contracted credit opened for import 671,367 713,220 714,792

Linked resources (2) 1,448,241 1,352,710 1,136,624

Linked credit operations (2) 1,342,271 1,219,553 1,041,271

(1) For these operations, the Bank maintains an allowance recorded in Other Liabilities - Sundry, (Note 20,e) totaling R$ 172,091 thousand (R$ 144,244 thousand, on 12.31.2012 and R$ 138,223 thousand, on 06.30.2012) calculated in accordance with Resolution CMN 2,682/1999.

(2) On 06.30.2013, there are no operations in default and no judicial questioning on active operations or linked to the funds raised to implement these operations.


63

m) Loan Operations by line of credit from Fund for Workers’ Assistance - FAT

R$ thousand

TADE (1)

06.30.2013 12.31.2012 06.30.2012

Loans and securities discounted 3,372,671 3,625,759 3,781,438

Proger Urbano Investimento 18/2005 3,372,579 3,625,278 3,779,022

Proger Urbano Capital de Giro 15/2005 68 390 1,657

Proger Urbano Empreendedor Popular 01/2006 24 91 759

Financing 597,749 410,495 194,711

Proger Exportação 27/2005 1,265 556 658

Integrar Área Urbana 25/2005 -- -- 147

FAT Giro Setorial Micro e Peq. Empresas 08/2006 2,478 9,278 26,034

FAT Giro Setorial Médias e Grandes Empresas 09/2006 -- -- --

FAT Giro Setorial Veículos MPE 08/2006 -- 10 346

FAT Giro Setorial Veículos MGE 09/2006 -- -- 6

FAT Fomentar Micro e Peq. Empresas 11/2006 2,278 4,007 5,746

FAT Fomentar Médias e Grandes Empresas 12/2006 13,321 27,271 41,077

FAT Taxista 02/2009 169,618 142,330 120,697

FAT Turismo - Investimento 01/2012 43,327 14,084 --

FAT Turismo - Capital de Giro 02/2012 365,462 212,959 --

Rural and agribusiness financing 1,242,613 1,675,141 2,215,068

Proger Rural Custeio 02/2006 3,341 4,099 4,818

Proger Rural Investimento 13/2005 66,810 87,499 118,282

Pronaf Custeio 04/2005 10,356 13,277 27,739

Pronaf Investimento 05/2005 995,667 1,320,793 1,597,288

Giro Rural - Aquisição de Títulos 03/2005 132,131 180,588 324,702

Giro Rural - Fornecedores 14/2006 34,308 68,885 142,239

Integrar Área Rural 26/2005 -- -- --

Total 5,213,033 5,711,395 6,191,217

(1) TADE – Allocation Term of Special Deposits.

11 – Other Receivables

a) Specific credits

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Extension of the rural credits – National Treasury 1,323,842 1,263,075 1,205,074

Other 194 496 365

Total 1,324,036 1,263,571 1,205,439


64

b) Sundry

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Deferred tax asset - tax credit (Note 25.e) 28,052,256 28,243,654 25,641,478

Credit card operations (Note 10.a) 16,211,680 16,084,427 13,226,170

Sundry debtors from escrow deposits - contingencies (Note 28.c)

15,732,580 13,912,147 12,670,689

Sundry debtors from escrow deposits - lawsuit (Note 28.d)

14,257,375 13,986,906 13,703,930

Income tax and social contribution to offset 12,654,891 10,650,417 8,305,034

Fund of allocation of surplus - Previ (Note 27.f) 9,232,655 9,198,717 9,890,552

Credit linked to acquired operations (1) (Note 10.a)

8,402,886 5,673,953 2,249,085

Actuarial assets (Note 27.e) 6,494,659 11,831,497 13,932,606

National Treasury - interest rate equalization – agricultural crop

4,158,015 3,203,305 1,669,782

Receivables acquisition 3,755,731 3,755,228 2,813,817

Receivables - non-financial companies 3,707,861 2,793,935 2,321,783

Premiums on credits linked to operations acquired in assignment

1,806,604 1,290,778 543,581

Notes and credits receivable - other 2,432,845 3,099,274 2,807,134

Sundry debtors - domestic 2,233,981 1,848,065 1,627,783

Advances to cards transactions processing’s companies 1,464,031 439,809 1,350,645

Receivables - National Treasury 1,043,628 1,149,609 1,080,339

Sundry debtors - foreign 294,802 148,763 571,820

Salary advances and other advances 239,227 285,213 198,422

Sundry debtors from escrow deposits - other 174,128 183,153 79,366

Advances to Credit Guarantee Fund (FGC) 101,669 223,673 345,676

Sundry debtors for purchasing assets 73,371 85,213 102,744

Rights for acquisition of royalties and government credits

16,333 31,253 46,033

Other 347,584 384,518 580,371

Total 132,888,792 128,503,507 115,758,840

Current assets 76,543,847 65,948,206 54,104,615

Non-current assets 56,344,945 62,555,301 61,654,225

(1) Refer to the payroll loans and vehicle financing portfolios granted to individuals, acquired by the Bank with assignment of the transferor, accounted for in accordance with CMN Resolution 3,533/2008.


65

12 – Exchange Portfolio

a) Breakdown

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Other Receivables

Exchange purchases pending settlement 15,959,599 14,365,123 18,144,051

Bills of exchange and time drafts in foreign currency 27,348 25,434 40,880

Receivables from sales of foreign exchange 13,649,373 20,702,935 21,758,442

(Advances received in National/foreign currency) (13,023,769) (17,997,703) (19,440,163)

Foreign currency receivables 4,602 5,903 5,334

Income receivable on advances granted and financed imports 176,458 174,440 171,470

Total 16,793,611 17,276,132 20,680,014

Current assets 16,529,777 17,275,866 20,680,014

Non-current assets 263,834 266 --

Other Liabilities

Exchange sales pending settlement 16,395,487 23,203,204 24,750,867

(Financed imports) (4,895) (20,274) (10,917)

Exchange purchase liabilities 14,807,370 14,084,421 16,867,997

(Advances on exchange contracts) (12,153,504) (10,923,409) (12,124,083)

Foreign currency payables 56,016 56,728 60,056

Unearned income on advances granted 3,306 3,124 4,264

Total 19,103,780 26,403,794 29,548,184

Current liabilities 9,558,715 13,576,002 16,639,233

Non-current liabilities 9,545,065 12,827,792 12,908,951

Net Exchange Portfolio (2,310,169) (9,127,662) (8,868,170)

Memorandum Accounts

Credit opened for imports 1,093,753 1,094,253 1,209,534

Confirmed export credit 1,984,070 1,634,685 1,536,769

b) Exchange Results

R$ thousand


Exchange income 5,523,460 7,530,198

Exchange expenses (5,197,879) (7,666,215)

Exchange result 325,581 (136,017)


66

13 – Other Assets

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Non-operating Assets 469,270 482,803 462,363

Assets in special regime 168,963 162,557 167,028

Vehicles 158,247 143,266 132,141

Property 113,501 134,554 121,894

Machinery and equipment 7,988 8,158 8,728

Housing property 7,345 23,457 19,654

Other 13,226 10,811 12,918

Materials in stock 83,978 74,398 59,005

Subtotal 553,248 557,201 521,368

(Impairment) (1) (195,446) (195,286) (181,298)

Prepaid Expenses 3,348,021 3,547,325 4,256,437

Insurance and capitalization selling expenses 1,535,510 1,305,045 991,937

Premiums for purchased credits payroll (2) 569,517 1,027,801 1,655,757

Commissions paid to tradesmen – financing of vehicles 359,983 376,266 416,468

Right on the custody of judicial deposits 330,461 446,365 516,294

Expenses from mileage program 184,064 -- --

Personnel expenses – meal program 100,209 100,500 92,356

Premium paid to costumers – partnerships retailers 53,448 56,070 59,344

Other 214,829 235,278 524,281

Total 3,705,823 3,909,240 4,596,507

Current assets 2,735,912 2,592,306 2,661,224

Non-current assets 969,911 1,316,934 1,935,283

(1) The Bank recognized, in the 1st half/2013, expenses with allowance for impairment losses of assets not in use in the amount of R$ 32 thousand (reversal in the amount of R$ 6,341 thousand in the 1st half/2012).

(2) The amounts are amortized over the maturity of the installments of loans acquired from other financial institutions.

14 – Investments

a) Changes in Subsidiaries, Associated Companies and Joint Ventures

R$ thousand

Book value Changes - 1st half/2013 Book value Equity income

12.31.2012 Dividends Other Events

Equity income

06.30.2013 06.30.2012 1st half/2012

Domestic 5,774,010 (10,096) (411,443) (6,283) 5,346,188 6,140,262 2,528

Cadam S.A. 27,999 -- -- (2,279) 25,720 32,433 10,217

Cia. Hidromineral Piratuba 2,311 (23) -- 69 2,357 2,356 51

Cia. Catarinense de Assessoria e Serviços – CCA (1)

228 -- -- -- 228 228 --

Itapebi 75,719 (10,073) -- 10,768 76,414 76,548 17,845

Mapfre Nossa Caixa Vida e Previdência S.A. -- -- -- -- -- 12,072 998

Estruturadora Brasileira de Projetos - EBP 1,827 -- 2,830 2,755 7,412 3,851 3,445

Other equity (2)

4,831 -- 26,274 (17,596) 13,509 35,911 (30,028)

Goodwill/bargain purchase on acquisition of investiments 5,661,095 -- (440,547) -- 5,220,548 5,976,863 --


67

R$ thousand

Book value Changes - 1st half/2013 Book value Equity income

12.31.2012 Dividends Other

Events Equity

income 06.30.2013 06.30.2012 1st half/2012

Abroad 400,605 -- (355,297) 335,228 380,536 457,420 345,399

Other equity abroad 47,760 -- 3,751 1,323 52,834 47,327 --

Goodwill on acquisition of investiments 352,845 -- (25,143) -- 327,702 410,093 --

Profit/(loss) with exchange in the branches -- -- (240,422) 240,422 -- -- 200,938

Profit/(loss) with exchange in the subsidiaries and associated -- -- (93,462) 93,462 -- -- 144,461

Increase/decrease in equity resulting from other changes -- -- (21) 21 -- -- --

Total Investments in Subsidiaries, Associated and Joint Ventures

6,174,615 (10,096) (766,740) 328,945 5,726,724 6,597,682 347,927

(Accumulated Impairment) (6,998) -- -- -- (6,998) (6,998) --

(1) Company in liquidation process, not valued by the equity method.

(2) Refers to investments on non-financial associated companies. R$ thousand

Realized

capital stock

Adjusted Stockholders'

Equity

Net income (loss) in 1st

half /2013

Quantity of Shares (in thousands)

Ownership interest in the

total capital %

Common Preferred

Domestic

Itapebi 105,000 402,176 56,388 19,950 -- 19

Cadam S.A. 183,904 118,831 (10,593) -- 4,762 21.64

Estruturadora Brasileira de Projetos - EBP 100,000 66,711 (3,553) 3,859 2,953 11.11

Cia. Hidromineral Piratuba 4,073 15,154 394 633 -- 15.56

Cia. Catarinense de Assessoria e Serviços - CCA 780 474 -- 260 520 48.13

b) Other Investments

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Tax incentive investments 95,835 91,121 88,806

Equity securities 146 146 146

Stocks and shares 60,872 58,261 57,272

Other investments (1) 1,475,073 1,406,414 1,096,440

Other investments abroad 344 318 314

Total 1,632,270 1,556,260 1,242,978

Accumulated Impairment (107,219) (83,895) (77,203)

(1) Includes the amount R$ 1,037,891 thousand (R$ 996,686 thousand in 12.31.2012 e R$ 939,388 thousand in 06.30.2012), relating to the investments of Neoenergia S.A. a jointly-owned subsidiary.


68

c) Goodwill on acquisition of investments

R$ thousand

Changes of Goodwill 1st half /2013 1st half /2012

Opening Balance 6,015,501 6,623,497

Acquisitions -- 145,855

Amortizations (1) (464,282) (424,018)

Exchange Variation (2) (1,408) 43,183

Closing Balance 5,549,811 6,388,517

(1) Recorded in Other Operating Expenses.

(2) Refers to the goodwill from BB Americas.

d) Expected Goodwill Amortization

R$ thousand

2nd half/

2013 2014 2015 2016 2017 2018 2019 After 2019 Total

Banco do Brasil 360,422 813,809 910,990 1,004,483 1,110,203 42,716 43,562 38,790 4,324,975

Banco Nossa Caixa 308,922 709,394 807,756 900,156 1,007,459 -- -- -- 3,733,687

Banco Votorantim 27,284 56,722 57,981 60,466 61,133 -- -- -- 263,586

Banco Patagonia 20,740 42,105 42,695 40,494 36,869 37,582 38,330 32,487 291,302

BB Americas 3,476 5,588 2,558 3,367 4,742 5,134 5,232 6,303 36,400

Tax effects (1) (144,169) (325,524) (364,395) (401,792) (444,081) (17,086) (17,425) (15,516) (1,729,988)

Net total 216,253 488,285 546,595 602,691 666,122 25,630 26,137 23,274 2,594,987

Other Equity

BB-BI 47,909 110,541 107,125 122,272 139,588 159,386 182,028 -- 868,849

Cielo 42,042 96,394 93,857 107,670 123,517 141,696 162,550 -- 767,726

Alelo 5,867 14,147 13,268 14,602 16,071 17,690 19,478 -- 101,123

BB Mapfre SH1 Participações S.A.

63,336 18,781 22,254 24,050 25,314 -- -- -- 153,735

Aliança do Brasil 53,268 -- -- -- -- -- -- -- 53,268

Vida Seguradora 10,068 18,781 22,254 24,050 25,314 -- -- -- 100,467

Mapfre BB SH2 Participações S.A.

6,641 16,482 18,297 20,134 22,124 -- -- -- 83,678

Brasilveículos 6,641 16,482 18,297 20,134 22,124 -- -- -- 83,678

BB Seguros 9,155 15,505 11,022 9,154 8,593 8,780 7,659 -- 69,868

Brasilcap 9,155 15,505 11,022 9,154 8,593 8,780 7,659 -- 69,868

Brasilprev 3,034 6,048 6,048 6,048 5,528 4,800 4,800 12,400 48,706

Brasilprev Nosso Futuro Seguros e Previdência S.A.

3,034 6,048 6,048 6,048 5,528 4,800 4,800 12,400 48,706

BB Consolidated 490,497 981,166 1,075,736 1,186,141 1,311,350 215,682 238,049 51,190 5,549,811

Tax effects (1) (191,451) (389,420) (427,199) (471,255) (521,178) (85,746) (94,760) (20,476) (2,201,485)

Net total 299,046 591,746 648,537 714,886 790,172 129,936 143,289 30,714 3,348,326

(1) 25% of income tax and 15% of social contribution for financial companies and for non-financial companies of insurance, private pension plan and capitalization, and 25% of income tax and 9% of social contribution for others non-financial companies.

The expected amortization of goodwill generated by acquisitions of equity is based on projections of results that supported the business, prepared by specialized firms or technical area of the Bank, contemplating the timing of the estimates and discount rates used in calculating the net present value of expected cash flows.


69

e) Goodwill Impairment test

Recoverable amount of goodwill on acquisition of investment is determined based on value in use, which is evaluated at discounted cash flow method, that is based on cash flow projections of the invested entity (cash-generating unit) and on measurement of the discount rate of this flow.

Assumptions adopted to measure this flow are based on public information, on budget and on business plan of evaluated entities. These assumptions consider current and past performance, as well as expected market and macroeconomic growth.

The cash flow of the entities below were designed for ten years, perpetuating from the eleventh year, with growth rate established. For the periods of excess cash flow to the terms of budget and business plan, the growth estimates are in line with those adopted by the entities. The nominal discount rate was measured, annually, based on the CAPM (Capital Asset Pricing Model) adjusted to the Brazilian market and referenced in Reais (R$), with the exception of Banco Patagonia, which model was adjusted to Argentine market and referenced in Argentine Pesos (ARS).

Entity (cash-generating unit) Growth rate (1)

Discount rate (2)

Banco Votorantim 3.60% 11.58%

Banco Patagonia 14.20% 24.52%

Alelo 3.20% 11.93%

Aliança do Brasil 0.00% 12.17%

Brasilveículos 0.00% 12.17%

Brasilcap 2.85% 9.16%

Vida Seguradora 0.00% 12.17%

(1) Nominal growth in perpetuity.

(2) Geometric mean of ten years of projection.

The impairment test of goodwill on acquisition of Banco Nossa Caixa, which was incorporated by Banco do Brasil, considers the value in use of Banco do Brasil in the state of São Paulo (cash-generating unit). Cash flows are based on cash-generating unit results in 2012, with increase of PIB (Gross Domestic Product) and IPCA (National Consumer Price Index) designed for ten years. Cash flows were discounted by the Bank’s cost of own capital.

Entity (cash-generating unit) Growth rate (1)

Discount rate (2)

Banco do Brasil – state of São Paulo – Goodwill Banco Nossa Caixa 9.22% 11.82%

(1) Geometric mean of ten years of projection.

According to the sensitivity analysis performed, there is no indication that changes in assumptions can make the book value of cash-generating units exceed the recoverable amount.

The recoverable amount of goodwill on acquisition of Cielo is determined by the net value of sale, based on the share price issued by the company on BM&FBovespa.

Entity (cash-generating unit) Share price CIEL3(1)

Cielo R$ 56.00

(1) Closing price of share on 06.28.2013.

In 1st half 2013 and 1st half 2012, there was no impairment loss on goodwill generated in the acquisition of investments.


70

15 – Property and Equipment

R$ thousand

12.31.2012 1st half 2013 06.30.2013 06.30.2012

Book

Balance Changes Depreciation

Provision for Impairment

Cost value Accumulated Depreciation

Accumulated Impairment

Book Balance

Book Balance

Buildings 2,044,069 533,888 (87,100) -- 4,498,275 (2,003,010) (4,408) 2,490,857 2,334,177

Furniture and equipment in use

1,385,438 122,386 (101,191) (185) 3,382,203 (1,974,646) (1,109) 1,406,448 787,645

Data processing systems 1,225,116 88,509 (201,468) -- 3,563,719 (2,450,602) (960) 1,112,157 1,635,389

Constructions in progress 1,013,496 (267,784) -- -- 745,712 -- -- 745,712 258,753

Land 547,552 5,652 -- -- 553,204 -- -- 553,204 238,359

Facilities 192,897 49,231 (18,849) -- 973,172 (749,893) -- 223,279 229,758

Security systems 149,521 20,821 (14,747) -- 368,372 (212,777) -- 155,595 137,967

Communication systems 65,274 11,975 (8,845) -- 241,443 (173,039) -- 68,404 67,228

Transport systems 10,595 2,165 (1,541) -- 37,406 (26,187) -- 11,219 10,476

Furniture and equipment in stock

3,020 (404) -- -- 2,616 -- -- 2,616 3,704

Total 6,636,978 566,439 (433,741) (185) 14,366,122 (7,590,154) (6,477) 6,769,491 5,703,456

16 – Intangible Assets

a) Changes and breakdown

R$ thousand

12.31.2012 1st half/2013 06.30.2013 06.30.2012

Book value Acquisitions Write-offs Amortization Provision for impairment

(1)

Cost value Accumulated amortization

Accumulated impairment

Book value Book value

Rights to manage payroll(2)

5,418,495 486,067 (283,196) (1,035,260) 48 8,858,956 (4,223,062) (49,740) 4,586,154 5,145,184

Other intangible assets (3)

2,665,725 527 -- (120,274) (660) 2,847,270 (301,292) (660) 2,545,318 2,783,934

Softwares 1,224,349 106,127 -- (50,274) -- 2,110,641 (830,439) -- 1,280,202 860,958

Total 9,308,569 592,721 (283,196) (1,205,808) (612) 13,816,867 (5,354,793) (50,400) 8,411,674 8,790,076

(1) Recorded in Other Operating Expenses.

(2) The values of acquisitions and write-offs include contracts renegotiated in the period, in which the new contract value is recorded and the past contract value is written-off without effects on Statement of Income.

(3) Refers mainly to the right to use the structure of the Postal Bank to correspondent banking services (Note 31.b).

b) Estimate for Amortization

R$ thousand

Year 2013 2014 2015 2016 2017 Total

Amounts to be amortized 1,274,652 2,282,349 2,189,346 2,175,690 489,637 8,411,674


71

17 – Deposits and Securities Sold under Repurchase Agreements

a) Deposits

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Demand Deposits 72,203,518 74,759,878 60,592,352

Individuals 31,192,721 30,651,601 25,466,058

Companies 27,710,051 28,789,127 21,359,143

Restricted 7,774,070 7,566,356 7,791,992

Government 2,553,607 3,774,800 2,796,520

Related companies 1,023,432 824,249 550,858

Special from Federal Treasury 688,267 824,699 801,125

Foreign currency 540,341 1,178,480 1,019,274

Financial system institutions 502,638 512,500 567,470

Domiciled abroad 43,869 28,361 80,232

Other 174,522 609,705 159,680

Savings Deposits 129,003,316 117,744,043 105,585,551

Individuals 119,802,314 110,270,220 98,904,970

Companies 8,917,215 7,212,425 6,408,649

Related companies 266,256 244,793 253,899

Financial system institutions 17,531 16,605 18,033

Interbank Deposits 19,914,763 16,568,656 15,002,517

Time Deposits 257,212,501 263,012,824 285,778,447

National currency 134,354,261 145,937,903 178,346,973

Judicial 94,182,794 86,346,242 85,019,136

Foreign currency 22,466,061 23,978,073 15,121,180

Workers Assistance Fund – FAT (Note 17.e) 5,359,800 5,952,981 6,479,002

Funproger (Note 17.f) 197,466 198,610 167,753

Other 652,119 599,015 644,403

Total 478,334,098 472,085,401 466,958,867



b) Segregation of deposits by deadline chargeability

R$ thousand

Without Maturity

Up to 3 Months

3 to 12 Months

1 to 3 Years

3 to 5 Years

More than 5 Years

06.30.2013 12.31.2012 06.30.2012

Time deposits(1) 103,249,701 24,811,074 28,985,204 26,589,602 73,574,814 2,106 257,212,501 263,012,824 285,778,447

Savings deposits 129,003,316 -- -- -- -- -- 129,003,316 117,744,043 105,585,551

Demand deposits 72,203,518 -- -- -- -- -- 72,203,518 74,759,878 60,592,352

Interbank deposits 1,544,000 5,938,760 10,109,975 1,564,667 348,836 408,525 19,914,763 16,568,656 15,002,517

Total 306,000,535 30,749,834 39,095,179 28,154,269 73,923,650 410,631 478,334,098 472,085,401 466,958,867

(1) Includes the amount R$ 134,856,953 thousand (R$ 143,123,684 thousand as of 12.31.2012 and R$ 175,821,068 thousand as of 06.30.2012), relating to time deposits with early repurchase clause (liquidity commitment), considering the original maturity dates.


72

c) Securities sold under repurchase agreements

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Own Portfolio 54,611,296 59,994,120 40,197,334

Treasury Financial Bills 23,326,716 30,341,365 16,681,351

Corporate bonds 23,130,685 19,642,180 17,768,347

National Treasury Bills 4,684,495 5,740,101 798,278


Securities abroad 1,179,810 1,838,920 2,571,555

Other 6,613 266,553 286,758

Third-Party Portfolio 183,194,015 165,546,113 154,001,645



Securities abroad 1,012,774 1,773,621 3,050,549

Treasury Financial Bills 26 103,044,579 93,975,095

Free movement portfolio 214,659 246,639 336,912

Total 238,019,970 225,786,872 194,535,891



d) Expenses with deposits and with securities sold under repurchase agreements

R$ thousand


Deposits (12,665,161) (15,562,555)

Time deposits (5,389,764) (8,401,196)

Judicial deposits (3,604,786) (3,403,139)

Savings deposits (3,423,702) (3,488,524)

Interbank deposits (246,909) (269,696)

Securities sold under repurchase agreements (8,260,797) (9,032,090)

Third-party portfolio (6,724,380) (7,134,074)

Own portfolio (1,535,482) (1,865,875)

Free movement portfolio (935) (32,141)

Other (3,377,729) (2,352,873)

Total (24,303,687) (26,947,518)


73

e) Workers Assistance Fund (FAT)

R$ thousand

Program Resolution

TADE (1)

Return of FAT funds 06.30.2013 12.31.2012 06.30.2012

Type(2)

Initial Date

Final Date

Available TMS

(3)

TJLP Applied

(4)

Total Available

TMS (3)

TJLP

Applied (4)

Total

Available TMS

(3)

TJLP Applied

(4)

Total

Proger Rural and Pronaf 248,746 1,169,515 1,418,261 325,502 1,536,768 1,862,270 187,804 2,148,271 2,336,075

Pronaf Custeio 04/2005 RA(**) 11/2005 --- -- 4,866 4,866 6,910 5,844 12,754 2,195 18,126 20,321

Pronaf Investimento 05/2005 RA(**) 11/2005 --- 209,625 988,303 1,197,928 277,831 1,269,113 1,546,944 143,843 1,645,820 1,789,663

Giro Rural – Aquisição de Títulos 03/2005 SD(***) 01/2008 01/2014 6,174 96,301 102,475 5,773 128,905 134,678 7,516 263,813 271,329

Giro Rural Fornecedores 14/2006 RA(**) 08/2006 --- 16,266 29,177 45,443 19,219 63,248 82,467 11,826 122,315 134,141

Rural Custeio 02/2006 RA(**) 11/2005 --- 334 2,404 2,738 324 2,956 3,280 697 3,715 4,412

Rural Investimento 13/2005 RA(**) 11/2005 --- 16,347 48,464 64,811 15,445 66,702 82,147 21,727 94,482 116,209

Proger Urbano 102,723 3,189,900 3,292,623 218,136 3,415,019 3,633,155 325,595 3,590,364 3,915,959

Urbano Investimento 18/2005 RA(**) 11/2005 --- 102,637 3,189,852 3,292,489 217,587 3,414,695 3,632,282 324,299 3,588,801 3,913,100

Urbano Capital de Giro 15/2005 RA(**) 11/2005 --- 85 48 133 545 320 865 1,219 1,551 2,770

Empreendedor Popular 01/2006 RA(**) 11/2005 --- 1 -- 1 4 4 8 77 12 89

Other 54,428 594,488 648,916 58,264 399,292 457,556 33,344 193,624 226,968

Exports 027/2005 RA(**) 11/2005 --- 482 1,252 1,734 116 -- 116 12 147 159

Integrar Área Urbana 025/2005 RA(**) 11/2005 --- -- -- -- 102 -- 102 153 102 255

FAT Giro Setorial Micro e Pequenas Empresas 08/2006 RA(**) 09/2007 --- 3,031 2,137 5,168 7,850 8,866 16,716 13,061 25,466 38,527

FAT Giro Setorial Veículos MPE 08/2006 RA(**) 02/2009 --- -- -- -- -- -- -- 223 -- 223

FAT Fomentar Micro e Pequenas Empresas 11/2006 RA(**) 08/2006 --- 1,081 2,194 3,275 1,222 3,898 5,120 1,511 5,680 7,191

FAT Fomentar Médias e Grandes Empresas 12/2006 RA(**) 07/2006 --- 7,832 12,797 20,629 9,986 24,993 34,979 9,214 39,764 48,978

FAT Taxista 02/2009 RA(**) 09/2009 --- 11,499 169,452 180,951 11,791 141,551 153,342 9,170 122,465 131,635

FAT Turismo Investimento 01/2012 RA(**) 08/2012 --- 11,954 43,264 55,218 16,124 9,069 25,193 -- -- --

FAT Turismo Capital de Giro 02/2012 RA(**) 08/2012 --- 18,549 363,392 381,941 11,073 210,915 221,988 -- -- --

Total 405,897 4,953,903 5,359,800 601,902 5,351,079 5,952,981 546,743 5,932,259 6,479,002

(1) TADE – Allocation Term of Special Deposits.

(2) RA - Automatic Return (monthly, 2% on the balance) and SD - Available Balance.

(3) Funds remunerated by the Average Selic Rate (TMS).

(4) Funds remunerated by the Long Term Interest Rate (TJLP).


74

FAT is a special accounting and financial fund, established by Law 7,998/1990, attached to the Ministry of Labor and Employment and managed by the Executive Council of the Workers Assistance Fund (Codefat). Codefat is a collective, tripartite, equal level organization, composed of representatives of workers, employers and government.

The main actions to promote employment using FAT funds are structured around the Programs for the Generating Employment and Earnings (Proger), which resources are allocated through special deposits, established by Law 8,352/1991, in official federal financial institutions, including, among others, Proger in the urban program - Investment and Working Capital - and rural program, the National Program for Strengthening Family Farming - Pronaf, in addition to the special lines such as FAT Integrar – Rural e Urbano, FAT Giro Setorial – Micro e Pequenas Empresas (micro and small-sized companies), FAT Giro Setorial – Médias e Grandes Empresas (medium and large-sized companies), FAT Giro Setorial Veículos – Micro e Pequenas Empresas (micro and small-sized companies), FAT Giro Setorial Veículos – Médias e Grandes Empresas (medium and large-sized companies), FAT Fomentar – Micro e Pequenas Empresas (micro and small-sized companies), FAT Fomentar – Médias e Grandes Empresas (medium and large-sized companies), FAT Giro Agropecuário, FAT Inclusão Digital (digital inclusion), FAT Taxista (taxi), FAT Turismo Investimento and FAT Turismo Capital de Giro.

The FAT special deposits, allocated with Banco do Brasil, while available, incur interest on a daily pro rata die basis using the Average Selic Rate (TMS). As they are applied on loans, the interest rate is changed to the Long-term Interest Rate (TJLP) during the effective period of the loans. The earnings on the Bank’s funds are paid to FAT on a monthly basis, as established in Codefat Resolutions 439/2005 and 489/2006.

f) Guarantee Fund for Generation of Employment and Earnings (Funproger)

The Guarantee Fund for Generation of Employment and Earnings (Funproger) is a special accounting fund established on November 23, 1999 by Law 9,872/1999, amended by Law 10,360/2001 and by Law 11,110/2005 and regulated by Codefat Resolution 409/2004, and its amendments. It is managed by Banco do Brasil under the supervision of Codefat/MTE and the balance for 06.30.2013 is R$ 197,466 thousand (R$ 198,610 thousand as of 12.31.2012 and R$ 167,753 thousand as of 06.30.2012).

The objective of Funproger is to provide guarantees to entrepreneurs who do not have the necessary guarantees of their own to contract financing by Proger Urbano and Programa Nacional de Microcrédito Produtivo Orientado, through the payment of a commission. The net assets of Funproger are accumulated through funds arising from the difference between the Average Selic Rate (TMS) and the Long-Term Interest Rate (TJLP) in respect of the remuneration of the special deposit balances available in FAT. Other sources of funds are the earnings from its operations and the income on its cash resources paid to Banco do Brasil, the fund manager.


75

18 – Borrowings and Onlendings

a) Borrowings

R$ thousand

Up to 90

Days From 91 to

360 Days From 1 to 3

Years Above 3

Years 06.30.2013 12.31.2012 06.30.2012

Domestic

Borrowing from non-financial companies 414,553 -- 3,780 -- 418,333 402,826 96,452

Other borrowings -- 1,923 2,835 -- 4,758 5,707 6,669

Abroad

Borrowings from bankers abroad 4,574,961 8,411,851 713,224 149,558 13,849,594 12,497,974 11,743,576

Linked to public sector borrowings (1) -- 274,096 266,320 -- 540,416 623,151 739,379

Imports 38,872 86,410 58,378 2,090 185,750 185,673 194,273

Exports 83,364 245,132 -- -- 328,496 365,702 280,671

Total 5,111,750 9,019,412 1,044,537 151,648 15,327,347 14,081,033 13,061,020



(1) Maturity date as of April 2015 at the rate of 6.92% p.a.


76

b) Onlendings

Domestic – Official institutions R$ thousand

Programs Finance charges 06.30.2013 12.31.2012 06.30.2012

National Treasury - Rural Credit 691,478 713,279 1,723,290

Pronaf TMS (if available) or

0.5% p.a. to 4% p.a. (if applied) 496,111 475,613 1,491,923

Recoop 5.75% p.a. to 8.25% p.a. or

IGP-DI + 1% p.a. or IGP-DI + 2% p.a.

62,953 69,955 83,100

Cacau IGP-M + 8% p.a. or TJLP + 0.6% p.a. or 6.35% p.a.

87,406 86,715 83,004

Other -- 45,008 80,996 65,263

BNDES 42,761,645 41,762,751 29,943,890

Banco do Brasil 0% p.a. to 11% p.a. or

TJLP/exch. var. + 0%p.a. to 6%p.a. 41,491,440 40,284,112 28,440,984

Banco Votorantim

Pre – 1.5% p.a. to 7.3% p.a./ TJLP – 0.5% p.a. to 4.5% p.a./

IPCA – 7.02% p.a. to 9.91% p.a./ exch. var. - 0,9% p.a. to 6.23% p.a.

1,270,205 1,478,639 1,502,906

Caixa Econômica Federal -- 1,910,859 895,482 508,448

Finame 24,184,215 19,494,062 18,005,994

Banco do Brasil 0% p.a. to 11% p.a. or

TJLP/exch. var. + 0.5% p.a. to 5.5% p.a.

23,203,467 18,489,696 16,760,643

Banco Votorantim Pre – 0.3% p.a. to 9.8% p.a./

TJLP – 0.5% p.a. to 5.5% p.a./ exch. var. – 0.9% p.a. to 2.3% p.a.

980,748 1,004,366 1,245,351

Other official institutions 444,146 653,052 2,214,188

Special supply - Rural savings TR -- -- 1,991,552

Funcafé TMS (if available) or

6.75% p.a. or 5.5% p.a. (if applied ) 444,118 652,912 218,482

Other -- 28 140 4,154

Total 69,992,343 63,518,626 52,395,810



Foreign R$ thousand

06.30.2013 12.31.2012 06.30.2012

Funds obtained under the terms of Resolution CMN 3,844/2010 76,041 87,013 99,554

Special fund for support to small and medium manufacturing companies 477 477 477

Total 76,518 87,490 100,031

Current liabilities 12,062 481 95

Non-current liabilities 64,456 87,009 99,936


77

c) Expense of borrowings and onlendings

R$ thousand


Borrowings expenses (2,191,640) (1,918,661)

Onlendings expenses (2,208,635) (1,560,967)

BNDES (1,285,858) (1,024,152)

Finame (340,633) (418,743)

National Treasury (33,428) (80,760)

Foreign (511,794) --

Caixa Econômica Federal (11,941) (9,366)

Other (24,981) (27,946)

Expenses for financial and development funds liabilities (370,136) (464,360)

Expenses for obligations with bankers abroad (1,067,460) (1,086,737)

Total (5,837,871) (5,030,725)


78

19 – Resources from Acceptances and Securities Issues

R$ thousand

Borrowings Issued Value

Remuneration p.a. Date of

Funding Maturity 06.30.2013 12.31.2012 06.30.2012

Banco do Brasil

Global Medium - Term Notes Program 6,605,668 6,303,172 5,516,494

R$ 350,000 9.75% 07/2007 07/2017 354,200 387,261 374,787

USD 100,000 Libor 6m+2.55% 07/2009 07/2014 224,064 206,658 204,019

USD 950,000 4.50% 01/2010 01/2015 2,145,055 1,978,662 1,956,480

USD 500,000 6.0% 01/2010 01/2020 1,132,058 1,044,118 1,032,119

EUR 750,000 4.5% 01/2011 01/2016 2,197,004 2,098,921 1,949,089

JPY 24,700,000 1.80% 09/2012 09/2015 553,287 587,552 --

Senior Notes 5,371,638 4,952,108 1,027,364

USD 500,000 3.875% 11/2011 01/2017 1,120,444 1,033,277 1,027,364

USD 1,925,000 3.875% 10/2012 10/2022 4,251,194 3,918,831 --

Structured Notes USD 213,650 0.73 a 2.15% 474,793 688,797 905,476

Certificates of Deposits 11,030,104 9,681,191 9,193,487

Short Term(1) 0.19 a 4.00% 8,163,478 7,754,338 7,180,085

Long Term(1) 1.25 a 4.55% 08/2016 2,866,626 1,926,853 2,013,402

Letters of Credit - Real Estate R$ 350,396 -- --

Resources Letters of Credit Agribusiness 47,003,307 32,898,221 15,146,424

Short Term(2) R$ 8,407,572 11,037,065 10,670,772

Long Term(3) R$ 06/2016 38,595,735 21,861,156 4,475,827

Issuance costs R$ -- -- (175)

Financial Letters 2,948,232 3,569,719 3,657,477

Short Term(2) R$ 2,913,584 3,536,300 920,000

Long Term R$ 104 to 107% DI 01/2017 34,648 33,419 2,737,477

Total Banco do Brasil 73,784,138 58,093,208 35,446,722

Banco Patagonia

Bonds G PAT Série III ARS 71,000 15.27% 08/2011 08/2012(4) -- -- 32,368

Bonds G PAT Série IV ARS 50,200 23.875% 11/2011 11/2012(4) -- -- 22,234

Bonds G PAT Série V ARS 100,000 19.3375% 01/2012 01/2013(4) -- 40,505 45,982

Bonds G PAT Série VI ARS 150,000 15.64% 03/2012 03/2013(4) -- 53,504 67,638

Bonds G PAT A Série VII ARS 50,000 14.11% 04/2012 10/2012(4) -- -- 22,568

Bonds G PAT B Série VII ARS 150,000 BADLAR+200ptos. 04/2012 04/2013(4) -- 59,714 68,744

Bonds G PAT A Série VIII ARS 33,500 16.75% 07/2012 03/2013(4) -- 15,085 --

Bonds G PAT B Série VIII ARS 58,205 BADLAR+350ptos. 07/2012 12/2013 23,957 24,215 --

Bonds G PAT A Série IX ARS 27,400 18% 08/2012 05/2013(4) -- 9,880 --

Bonds G PAT B Série IX ARS 110,100 BADLAR+399ptos. 08/2012 02/2014 48,090 44,471 --

Bonds G PAT A Série X ARS 50,000 18.9% 11/2012 08/2013 15,902 21,372 --

Bonds G PAT B Série X ARS 97,611 BADLAR+429ptos. 11/2012 05/2014 41,360 41,769 --

Bonds Banco Patagonia Clase I Serie 1 ARS 200,000 BADLAR+400PB 12/2012 06/2014 82,195 83,154 --

Bonds G PAT A Série XI ARS 23,333 19% 01/2013 10/2013 10,386 -- --

Bonds G PAT B Série XI ARS 176,666 BADLAR+435ptos. 01/2013 07/2014 75,274 -- --

Bonds G PAT A Série XII ARS 30,821 19% 03/2013 12/2013 13,331 -- --

Bonds G PAT B Série XII ARS 213,300 BADLAR+430ptos. 03/2013 09/2014 88,002 -- --

Bonds G PAT A Série XIII ARS 43,889 19% 04/2013 01/2014 15,281 -- --

Bonds G PAT B Série XIII ARS 206,111 BADLAR+297ptos. 04/2013 10/2014 83,505 -- --

Total Banco Patagonia 497,283 393,669 259,534


79

R$ thousand

Borrowings Issued Value

Remuneration p.a.

Date of Funding

Maturity 06.30.2013 12.31.2012 06.30.2012

Special Purpose Entities Abroad (5)

Securitization of future flow of payment orders from abroad

USD 250,000 6.55% 12/2003 12/2013 48,577 88,174 128,744

USD 250,000 Libor 3m+0.55% 03/2008 03/2014 166,178 255,454 353,782

USD 200,000 Libor 3m+1.2% 09/2008 09/2015 198,629 223,917 261,779

USD 150,000 5.25% 04/2008 06/2018 266,343 270,252 291,660

Total Special Purpose Entities Abroad 679,727 837,797 1,035,965

Banco Votorantim

Debentures 749,688 748,029 1,416,821

Post-fixed R$ 0.35%+DI 06/2006 07/2012(4) -- -- 669,229

Post-fixed R$ 100 to 111%DI 06/2006 07/2027 749,688 748,029 747,592

Letters of Credit - Real Estate R$ 94.00 to 97.36%DI 07/2015 97,841 66,265 44,247

Letters of Credit - Agribusiness 1,178,554 1,106,694 1,010,284

Post-fixed R$ 80.00% to 98.00%DI

03/2020 1,178,396 1,104,110 1,003,051

Pre-fixed R$ 9.22% 06/2014 158 2,584 7,233

Financial Letters 5,853,846 5,483,544 5,058,343

Pre-fixed R$ 8.27 to 13.95% 11/2022 125,090 90,269 61,154

Post-fixed R$ 100.00 to

112.02%DI 04/2019 5,449,894 5,159,520 4,804,541

Post-fixed R$ 108.3 to 109.3%Selic

04/2015 100,366 97,159 68,424


7.64%+IPCA 05/2020 176,766 135,100 122,830


5.99%+IGPM 06/2015 1,730 1,496 1,394

Global Medium - Term Notes Program 3,744,731 4,005,727 3,183,757

Short Term (2) 06/2014 1,170,401 1,497,964 218,666

Long Term (6) 12/2019 2,574,330 2,507,763 2,965,091

Total Banco Votorantim 11,624,660 11,410,259 10,713,452

Non-Financial Corporations

Cibrasec

Real Estate Receivables Certificates(7) R$ 3,195 3,869 4,408

Kepler Weber S.A.

Debentures R$ TJLP+3.8% 09/2007 09/2020 10,881 13,465 14,297

Ativos S.A. Securitizadora de Créditos Financeiros

Debentures R$ DI + 1.50% 03/2010 03/2014 22,691 37,812 52,933

Total Non-Financial Corporations 36,767 55,146 71,638

Eliminated Amount on Consolidation(8) (96,955) (119,956) (95,751)

Total 86,525,620 70,670,123 47,431,560



(1) Securities issued abroad in USD,EUR, GBP, RMB e AUD. (2) Securities issued in foreign and national currency with maturities up to 360 days. (3) Operations with maturity between 361 and 1076 days. (4) Operations settled in advance during the year 2012 and from 01.01.2012 to 06.30.2012. (5) The Special Purpose Entity (SPE) - "Dollar Diversified Payment Rights Finance Company" was organized under the laws of the Cayman Islands

for the following purposes: (a) the issuance and sale of securities in the international market; (b) use of resources obtained by issuing securities to pay for the purchase, with the BB, the rights to payment orders issued by banking correspondents located in the U.S. and by the agency of BB New York in U.S. dollars, for any agency for Brazil ("Rights on Consignment"); and (c) making payments of principal and interest on securities and other payments payable on the issuance of these securities. The SPE declares that it has no relevant asset or liability other than the rights and duties originating from the contracts for issue of securities, Bank does not hold the control, is not a shareholder, the owner, or is a beneficiary of any of the results of operations of the SPE. The liabilities arising from the issued securities are paid by the SPE using the funds accumulated in its account.

(6) Operations with maturity greater than 360 days, and the certificates issued in foreign and national currency. (7) Reference Rate - TR, General Market Price Index - IGP-M, IPCA and average maturity of 134 months. (8) Refers to securities issued by BB-Consolidated, in possession of subsidiary abroad.


80

20 – Other Liabilities

a) Financial and Development Funds

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Pasep (1) 2,040,241 1,969,767 2,052,840

Merchant Navy 2,928,581 2,250,825 1,814,919

Funds from the State Government of São Paulo 764,794 761,189 620,389

Special Lending Program for Agrarian Reform – Procera 24,151 25,007 26,815

Consolidation of Family Farming – CAF 22,329 25,840 8,032

Combating Rural Poverty – Our First Land – CPR/NPT 11,705 11,296 13

Land and Agrarian Reform – BB Banco da Terra 5,859 4,735 3,599

Other 40,103 39,949 39,956

Total 5,837,763 5,088,608 4,566,563



(1) The Bank is administrator of the Public Servant Heritage Formation Program (Pasep), guaranteeing a minimum return corresponding Long-Term Interest Rate - TJLP.

b) Taxes and Social Security

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Legal liabilities (Note 28.d) 14,028,539 13,881,845 13,718,043

Deferred tax liabilities (Note 25.d) 3,332,393 7,452,894 7,679,570

Taxes and contributions on net income payable 536,277 4,641,641 300,131

Provision for tax litigation (Note 28.a) 2,251,471 2,020,124 1,460,755

Taxes and contributions payable 1,223,382 1,453,973 1,176,419

Provision for taxes and contributions on net income 6,597,304 1,156,167 3,133,878

Other 312,889 316,861 314,945

Total 28,282,255 30,923,505 27,783,741




81

c) Subordinated Debt

R$ thousand

Funding Issued Value

Remuneration p.a. Funding Date Maturity 06.30.2013 12.31.2012 06.30.2012

Banco do Brasil

FCO – Resources from Fundo Constitucional do Centro-Oeste

17,635,766 16,602,973 15,755,787

Funds applied (1) 17,194,276 15,938,342 15,284,280

Resources available (2) 405,386 627,940 437,465

Charges to capitalize 36,104 36,691 34,042

Subordinated CDB Issued in the Country

4,893,000 4,711,053 4,526,841

900,000 113.80% from CDI 03/2009 09/2014 1,397,851 1,344,943 1,291,411

1,335,000 115.00% from CDI 03/2009 03/2015 2,080,328 2,000,773 1,920,314

1,000,000 105.00% from CDI 11/2009 11/2015 1,414,821 1,365,337 1,315,116

Subordinated Debt Abroad 7.227.942 6,673,140 6,550,145

USD thousand 300,000 8.50% 09/2004 09/2014 672.117 619,378 612,126

USD thousand 660,000 5.38% 10/2010 01/2021 1.498.351 1,382,336 1,366,716

USD thousand 1,500,000 5.88% 05/2011 01/2022 3.368.255 3,105,980 3,069,157

USD thousand 750,000 5.88% 06/2012 01/2023 1.689.219 1,565,446 1,502,146

Subordinated Letters of Credit 15,302,979 9,196,989 7,615,181

1,000,000 108.50% from CDI 03/2010 03/2016 1,381,229 1,331,338 1,280,767

1,006,500 111.00% from CDI 03/2011 03/2017 1,257,387 1,210,944 1,163,907

335,100 111.00% from CDI 04/2011 04/2017 416,606 401,218 385,633

13,500 111.00% from CDI 05/2011 05/2017 16,611 15,997 15,375

700,000 111.00% from CDI 09/2011 10/2017 818,636 788,399 757,775

512,500 111.50% from CDI 05/2012 05/2018 558,486 537,769 516,788

215,000 112.00% from CDI 05/2012 05/2019 234,297 225,565 216,726

115,000 112.50% from CDI 05/2012 06/2020 125,322 120,632 115,884

35,500 IPCA+5.45% 05/2012 06/2020 40,045 37,771 35,675

49,800 111.50% from CDI 06/2012 01/2018 53,844 51,846 49,824

690,900 CDI+1.06% 06/2012 01/2018 748,890 720,162 681,039

300 IPCA+5.32% 06/2012 01/2018 337 316 300

873,600 IPCA+5.40% 06/2012 02/2018 980,734 921,522 887,108

52,500 111.50% from CDI 06/2012 04/2018 56,972 54,852 52,712

308,400 CDI+1.10% 06/2012 04/2018 335,737 322,795 309,770

184,800 CDI+1.11% 06/2012 05/2018 201,268 193,503 185,687

12,000 111.50% from CDI 06/2012 06/2018 13,049 12,564 12,074

7,200 IPCA+5.30% 06/2012 06/2018 8,097 7,615 7,249

100,000 IPCA+5.40% 06/2012 06/2018 112,585 105,833 100,706

20,000 IPCA+5.50% 06/2012 06/2018 22,514 21,154 20,119

500,000 IPCA+5.53% 06/2012 06/2018 562,909 528,771 502,833

315,300 IPCA+5.56% 06/2012 06/2018 355,196 333,642 317,230

100,000 111.50% from CDI 07/2012 02/2018 108,005 103,998 --

10,200 111.50% from CDI 07/2012 04/2018 11,013 10,604 --

27,000 IPCA+5.24% 07/2012 04/2018 30,119 28,413 --

40,800 111.50% from CDI 07/2012 06/2018 44,081 42,446 --

17,400 IPCA+5.33% 07/2012 06/2018 19,432 18,324 --

22,200 111.50% from CDI 07/2012 07/2018 23,977 23,088 --

1,000,000 Pre 10.51% 09/2012 07/2018 1,077,702 1,025,908 --

5,233,500 111.00% from CDI 01/2013 01/2019 5,413,369 -- --

266,400 111.00% from CDI 02/2013 02/2019 274,530 -- --

Total Subordinated Debt from Banco do Brasil 45.059.687 37,184,155 34,447,954

BB Americas

Subordinated Debt Abroad USD thousand 3,000 Libor 3m+1.85% 05/2007 05/2037 -- -- 6,068

Banco Votorantim


82

R$ thousand

Funding Issued Value

Remuneration p.a. Funding Date Maturity 06.30.2013 12.31.2012 06.30.2012

Subordinated CDB Issued in the Country

1,016,535 1,081,280 1,627,798

312,500 CDI+0.49% 11/2007 11/2012 -- -- 510,657

8,500 CDI+0.49% 12/2007 12/2012 -- -- 13,866

7,929 CDI+0.54% 12/2007 12/2012 -- -- 12,964

32,500 IGPM+7.22% 12/2007 12/2012 -- -- 59,512

57,500 IPCA+7.93% 03/2008 03/2013 -- 108,244 101,091

260,000 CDI+1.67% 08/2009 08/2014 394,060 377,837 361,477

7,500 IPCA+7.86% 08/2009 08/2014 12,594 11,713 10,942

5,250 IPCA+7.92% 08/2009 08/2014 8,838 8,217 7,674

2,500 IPCA+7.95% 08/2009 08/2014 4,212 3,915 3,656

19,500 IPCA+8.00% 08/2009 08/2014 32,918 30,599 28,563

385,000 CDI+1.67% 12/2009 12/2014 563,913 540,755 517,396

Subordinated Notes USD thousand 575,000 Pre 7.38% 01/2010 01/2020 1,414,259 1,346,054 1,240,644

Subordinated Letters of Credit 1,079,113 1,068,271 1,044,567

94,950 CDI+1.30% 11/2010 11/2016 95,642 95,587 95,727

30,000 CDI+1.60% 12/2010 12/2016 30,011 30,020 30,023

324,900 CDI+1.94% 05/2011 05/2017 328,357 328,186 328,818

35,550 IGPM+7.55% 05/2011 05/2017 44,361 45,900 40,532

1,400 IPCA+7.76% 05/2011 05/2017 1,704 1,719 1,607

4,650 IPCA+7.85% 05/2011 05/2017 6,139 5,718 5,344

7,500 IPCA+7.95% 05/2011 05/2017 9,729 9,206 8,613

45,000 IPCA+7.95% 07/2011 07/2016 58,357 54,314 50,764

15,000 IGPM+7.70% 07/2011 07/2017 18,322 19,148 16,842

6,922 IPCA+8.02% 07/2011 07/2019 8,956 8,320 7,791

25,000 IPCA+7.90% 08/2011 08/2016 32,301 30,137 28,079

1,250 115.00% from CDI 08/2011 08/2017 1,503 1,446 1,387

10,050 IGPM+7.70% 08/2011 08/2017 12,551 12,861 11,312

20,000 IPCA+7.76% 08/2011 08/2017 25,652 23,902 22,350

11,000 IPCA+7.85% 08/2011 08/2017 14,108 13,196 12,319

25,000 IPCA+7.93% 08/2011 08/2017 32,245 30,053 28,035

33,000 117.00% from CDI 09/2011 09/2017 33,513 33,645 33,808

15,000 IGPM+6.74% 09/2011 09/2017 17,893 18,655 16,462

250,000 119.00% from CDI 10/2011 10/2017 254,424 254,208 255,132

18,000 IGPM+6.71% 10/2011 10/2017 21,450 22,266 19,651

16,046 IPCA+7.10% 11/2011 11/2016(3) -- -- 18,454

5,349 IPCA+7.20% 11/2011 11/2016(3) -- -- 5,755

1,128 IPCA+7.00% 11/2012 11/2016 1,228 1,148 --

16,920 IPCA+7.10% 11/2012 11/2016 18,414 17,207 --

5,640 IPCA+7.20% 11/2012 11/2016 6,123 5,710 --

5,640 IPCA+7.25% 11/2010 11/2020 6,130 5,719 5,762

Total Subordinated Debt from Banco Votorantim 3,509,907 3,495,605 3,913,009

Subordinated debt issued by the Banco do Brasil, in the possession of subsidiary abroad, eliminated in the BB-Consolidated

(11,551) (3,581) (1,386)

Total Subordinated Debt from BB-Consolidated (4)

48,558,043 40,676,179 38,365,645

(1) Contracted charges are paid by borrowers, with less the del credere of the financial institution, according to article 9 of Law nº 7,827/1989.

(2) Remunerated based on extra-rate announced by the Banco Central do Brasil (Bacen), according to article 9 of Law nº 7,827/1989.

(3) Operations paid in advance.

(4) The amount of R$ 38,193,524 thousand (R$ 32,400,578 thousand as of 12.31.2012 and R$ 28,160,414 thousand as of 06.30.2012) compose the tier II of the Referential Equity (RE), in compliance with CMN Resolution nº 3,444/2007. As determined by Bacen, subordinated debts issued by Banco Votorantim do not compose the Bank’s RE (Note 29.f).


83

d) Hybrid Capital and Debt Instruments

R$ thousand

Raising Issued Value Remuneration p.a. Raising Date 06.30.2013 12.31.2012 06.30.2012

Perpetual Bonds

USD thousand 1,500,000 8.50% 10/2009 3,364,544 3,104,493 3,069,231

USD thousand 1,750,000 9.25% 01 and

03/2012 4,051,934 3,743,315 3,785,187

USD thousand 2,000,000 6.25% 01/2013 4,520,653 -- --

R$ thousand 8,100,000 5.50% 09/2012 8,317,937 8,214,555 --

Values eliminated in the BB-Consolidated (885) (1,292) --

Total BB-Consolidated 20,254,183 15,061,071 6,854,418

Current liabilities 368,785 242,577 322,959


In the Perpetual Bonds, the amount of R$ 19,341,125 thousand compose the Referential Equity (R$ 14,484,062 thousand as of 12.31.2012 and R$ 6,314,687 thousand as of 06.30.2012), according to CMN Resolution nº 3,444/2007 (Note 29.f).

The bonds of USD 1,500,000 thousand, issued in October 2009, has the option of redemption at the initiative of the Bank from 2020 or on each semiannual payments of interest thereafter, provided by prior authorization of Banco Central do Brasil (Bacen). If the Bank does not exercise the option to redeem on October 2020, the interest on the bonds will be fixed on this date for 7.782% over the trading price of 10 years North American Treasury bonds. Thereafter, every 10 years, the interest on the bonds will be corrected by taking into account the trading price of 10 years North American Treasury bonds.

The bonds issued in January and March (reopening), 2012, in the amounts of USD 1,000,000 thousand and USD 750 thousand, respectively, and the bonds issued in January 2013, in the amount of USD 2,000,000 thousand, may have changed its terms and conditions, without the prior permission of the bondholders, in order to maintain or manage securities as tier I capital or tier II capital, due to the implementation of Basel III rules, provided that the modifications do not adversely affect the interests of the bondholders. If the Bank does not exercise the redemption option in April 2023 for the bonds issued in 2012 and in April 2024 for the bonds issued in 2013, the rate of bond interest is reset on that date and every 10 years according to the U.S. Treasury for 10 years in force at the time plus the initial credit spread. The bonds have the following options of redemption, subject to prior authorization of Bacen:

(i) the Bank may, at its option redeem the bonds in whole but not in part in April 2023 for the bonds issued in 2012 and in April 2024 for the bonds issued in 2013 and on each subsequent interest payment every six months, at the base price of redemption;

(ii) the Bank may, at its option redeem the bonds in whole but not in part, on any date prior to April 2023 for the bonds issued in 2012 and in April 2024 for the bonds issued in 2013, according to tax event, at the base price of redemption;

(iii) the Bank may, at its option redeem the bonds in whole but not in part, on any date prior to April 2023 for the bonds issued in 2012 and in April 2024 for the bonds issued in 2013, according to regulatory event, at the higher value between the base price of redemption and the Make-whole amount.

The bonds issued in October 2009, in January and March 2012, and in January 2013 determine that the Bank suspend the semiannual payments of interest and / or accessories on those securities issued (which will not be due or accrued) if:

(i) the Bank is not framed or the payment of such charges do not allow the complies with the levels of capital adequacy, operating limits, or its financial indicators are under the minimum level required by Brazilian regulations applicable to banks;

(ii) Bacen or the regulatory authorities determine the suspension of payment of such charges; (iii) any event of insolvency or bankruptcy occurs; (iv) a default occurs; or (v) the Bank has not distributed dividends or interest on equity to common stockholders for the

period of calculation of such interest and / or accessories.


84

The bonds issued in September 2012, totaling R$ 8,100,000 thousand, will have interest paid semi-annually adjusted by the Selic rate, within thirty calendar days (i) from the payment of dividends or interest on capital of the respective period, or (ii) from the capital increase provided by the shareholders profit, whichever is earlier.

There will be no payment of financial charges for a particular semester until (i) the payment or crediting of dividends (including interest on equity), or (ii) the capital increase provided by the shareholders. Unpaid financial charges do not accumulate. If the payment or crediting of dividends, or the capital increase don’t occur until June 30 or December 31 of the following fiscal year, the unpaid financial charges may cease to be required.

The payments will be postponed if the Bank is not framed in the operational limits established by regulations or if this payment do not allow the Bank complies with those limits. In such cases the payment will be pro rata updated by Selic rate.

Amortization or redemption of debt, partial or full, agreed between the parties, can occur only if the dividends were being paid duly and authorized by Bacen. The redemption of the obligation, even partial, is conditioned upon the Bank meet the requirements regarding operational limits established by regulation, and also that the redemption does not involve noncompliance situation. The amount due will be pro rata temporis updated by the agreed rate. The debt cannot be redeemed by State initiative.

In the event of dissolution or liquidation of the Bank, the payment of principal and charges debt will be subordinated to the other liabilities payment. This funding was authorized by Bacen to integrate the Tier I capital to the regulatory limit (CMN nº 3,444/2007), and the remaining to integrate Tier II capital, starting on September 2012.


85

e) Sundry

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Credit/debit card operations 14,067,348 15,054,758 11,303,867

Actuarial liabilities (Note 27.e) 9,296,948 10,119,807 9,054,141

Provisions for pending payments 5,681,784 5,353,071 4,993,909

Sundry creditors – domestic 5,057,257 4,912,992 3,792,673

Provisions for civil claims (Note 28.a) 5,518,738 4,208,172 3,987,096

Provision for labor claims (Note 28.a) 3,320,243 2,945,490 2,603,884

Funds linked to loan operations 1,448,241 1,352,710 1,136,624

Liabilities for premiums granted to customer for loyalty 385,448 800,262 982,818

Liabilities for assets acquisition 385,435 732,021 212,108

Liabilities for official agreements 922,270 1,011,941 825,064

Liabilities for rendering payment services 1,296,096 647,850 969,446

Liabilities for operations linked to assignments 151,057 1,844,135 51,592

Sundry creditors – abroad 711,503 554,799 354,776

Provision for losses with the Compensation Fund of Wages Variations – FCVS 223,475 217,028 210,710

Provisions for guarantees provided 172,091 144,244 138,223

Guarantees on credit assignments 2,712 2,610 --

Other 1,166,324 789,576 452,985

Total 49,806,970 50,691,466 41,069,916



21 – Operations of Insurance, Pension Plan and Capitalization

a) Operation credits

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Direct insurance premiums to receive 2,132,992 1,454,249 1,536,919

Credit of insurance business with insurers 169,463 80,808 43,358

Credit of insurance transactions with reinsurers 683,330 656,213 702,822

Credit of capitalization 69,768 -- --

Credit of pension plans 2,302 2,678 1,949

Total 3,057,855 2,193,948 2,285,048

Current assets 3,055,427 2,191,786 2,283,099

Non-current assets 2,428 2,162 1,949


86

b) Technical provisions

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Insurance 6,255,334 5,393,434 4,691,161

Provision for unearned premiums 3,788,903 3,159,605 2,556,359

Provision for unsettled claims 1,618,913 1,474,351 1,453,881

Provision for claims incurred but not reported 524,104 445,662 426,269

Provision for premium insufficiency 206,754 190,828 166,096

Other provisions 116,660 122,988 88,556

Pension plan 56,476,281 50,545,598 43,439,289

Mathematical provision for future benefits 54,147,596 48,334,700 41,395,757

Mathematical provision for vested benefits 928,945 870,870 790,805

Provision for financial surplus 435,189 428,331 417,552

Provision for contribution insufficiency 424,619 415,477 378,221

Provision for claims incurred but not reported 16,969 15,624 16,319


Capitalization 5,243,247 4,294,494 3,667,815

Mathematical provision for redemptions 4,988,043 4,077,525 3,486,408

Provision for prize draws and redemptions 205,732 150,443 122,661


Total 67,974,862 60,233,526 51,798,265




87

c) Technical provisions by product

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Insurance 6,255,334 5,393,434 4,691,161

Auto 1,618,228 1,571,647 1,175,104

Life 2,999,216 2,278,323 1,978,200

Property/casualty 1,306,959 1,300,378 1,267,667

Dpvat 330,931 243,086 270,190

Pension plan 56,476,281 50,545,598 43,439,289

Free benefit generating plan - PGBL 14,270,952 14,096,010 12,824,025

Living benefits life insurance - VGBL 36,403,586 30,827,149 25,306,432

Traditional plans 5,801,743 5,622,439 5,308,832

Capitalization 5,243,247 4,294,494 3,667,815

Total 67,974,862 60,233,526 51,798,265


88

d) Guarantee of technical provisions

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Insurance Pension plan Capitalization Total Insurance Pension plan Capitalization Total Insurance Pension plan Capitalization Total

Shares in Investment Funds (VGBL and PGBL)

-- 50,009,981 -- 50,009,981 -- 44,593,171 -- 44,593,171 -- 37,838,625 -- 37,838,625

Shares in Investment Funds (except VGBL and PGBL)

4,288,053 4,804,369 2,484,076 11,576,498 3,249,862 4,190,789 2,206,084 9,646,735 2,612,124 4,191,502 2,147,770 8,951,396

Federal Government securities 202,993 2,133,063 1,855,928 4,191,984 627,578 2,052,271 1,224,747 3,904,596 780,943 1,948,984 690,271 3,420,198

Corporate bonds 737,467 147,813 908,615 1,793,895 609,168 160,376 999,971 1,769,515 602,526 4,358 918,381 1,525,265

Credit rights 1,386,712 -- 65,907 1,452,619 1,116,250 -- 68,338 1,184,588 710,860 -- 87,863 798,723

Property 13,294 -- -- 13,294 10,806 -- -- 10,806 12,368 -- -- 12,368

Deposits held at IRB and deposits in court

871 -- -- 871 1,363 -- -- 1,363 540 -- -- 540

Total 6,629,390 57,095,226 5,314,526 69,039,142 5,615,027 50,996,607 4,499,140 61,110,774 4,719,361 43,983,469 3,844,285 52,547,115

e) Financial and operational results per segment

R$ thousand

1 st half/2013 1 st half/2012

Insurance Pension plan Capitalization Total Insurance Pension plan Capitalization Total

Financial results 136,065 176,097 144,195 456,357 282,913 950,391 201,185 1,434,489

Financial income 197,127 682,304 165,694 1,045,125 339,653 2,034,574 202,447 2,576,674

Financial expenses (61,062) (506,207) (21,499) (588,768) (56,740) (1,084,183) (1,262) (1,142,185)

Interest and inflation adjustment of technical reserves (15,856) (62,667) (130,724) (209,247) (88,627) (814,561) (151,954) (1,055,142)

Operating income 1,337,402 49,385 139,886 1,526,673 940,585 63,325 120,370 1,124,280

Retained premiums and contributions (Note 21.f) 3,773,702 9,018,625 2,032,552 14,824,879 2,949,801 6,860,020 1,211,281 11,021,102

Change in technical provisions (597,066) (8,927,153) (1,711,178) (11,235,397) (366,942) (6,740,259) (982,215) (8,089,416)

Retained claims (1,418,952) (1,344) -- (1,420,296) (1,242,052) -- -- (1,242,052)

Selling expenses (420,282) (24,206) (106,147) (550,635) (400,222) (38,804) (87,787) (526,813)

Expenses with prize draws and redemptions of financial bonds -- -- (75,341) (75,341) -- -- (20,909) (20,909)

Expenses with benefits and redemptions of pension plans -- (16,537) -- (16,537) -- (17,632) -- (17,632)

Total 1,457,611 162,815 153,357 1,773,783 1,134,871 199,155 169,601 1,503,627


89

f) Retained premiums of insurance, pension plan contributions and capitalization certificates

R$ thousand


Insurance 3,773,702 2,949,801

Premiums issued 4,161,302 3,206,687

Coinsurance premiums ceded (63,343) (12,016)

Reimbursed premiums (7,786) (7,538)

Reinsurance premiums ceded, consortiums and funds (316,471) (237,332)

Pension plan 9,018,625 6,860,020

Premiums issued 8,111,115 6,010,083

Supplementary pension contributions (includes VGBL) 907,510 876,667

Reimbursed premiums -- (26,730)

Capitalization 2,032,552 1,211,281

Revenues from capitalization certificates 2,032,552 1,211,281

Total 14,824,879 11,021,102

22 – Other Operating Income/Expense

a) Service fee income

R$ thousand


Card income 2,203,053 2,065,690

Fund Management 1,802,298 1,594,292

Billing 691,180 654,145

Insurance, pension and capitalization 612,887 480,244

Loans and provided guarantees 496,147 286,846

Collection 432,733 405,823

Interbank 354,100 343,730

Capital market income 311,931 234,071

Account fee 172,129 178,254

National Treasury and official funds management 134,406 114,380

Consortium management fees 129,137 128,369

By non-financial associated/subsidiaries companies 108,824 104,670

Provided to related companies 38,311 44,048

Other services 574,957 476,097

Total 8,062,093 7,110,659

b) Bank fee income

R$ thousand


Service package 1,677,869 1,797,254

Loans and customer information file 688,094 723,500

Card income 427,650 205,396

Investment funds management 167,479 186,228

Funds transfer 113,968 91,915

Deposit account 101,277 135,612

Other 66,311 57,015

Total 3,242,648 3,196,920


90

c) Personnel expenses

R$ thousand


Salaries (4,256,517) (3,892,654)

Social charges (1,473,304) (1,342,987)

Personnel administrative provisions (1,206,715) (1,088,056)

Benefits (1,126,394) (1,042,106)

Provisions for labor claims (711,165) (348,861)

Pension Plans (170,515) (146,632)

Directors’ and advisors’ fees (35,151) (29,793)

Training (16,542) (22,753)

Total (8,996,303) (7,913,842)

d) Other administrative expenses

R$ thousand


Amortization (1,241,590) (1,226,654)

Outsourcing Services (945,643) (815,791)

Communications (702,904) (692,668)

Rent (554,488) (411,016)

Transport (532,294) (587,179)

Financial system services (508,892) (338,225)

Depreciation (433,741) (544,895)

Data processing (415,328) (414,172)

Security services (389,847) (400,265)

Specialized technical services (359,339) (331,993)

Maintenance and upkeep (299,008) (281,212)

Marketing (194,995) (204,645)

Water, electricity and gas (188,111) (195,848)

Promotion (94,037) (110,584)

Materials (68,581) (70,698)

Domestic travel (59,818) (76,337)

Other (407,140) (377,024)

Total (7.395.756) (7.079.206)


91

e) Other operating income

R$ thousand


Equalization of rates – Agricultural crop 1,815,513 1,575,129

Collateral deposits update 575,414 579,662

Surplus allocation update – Plan 1 (Note 27.f) 520,112 485,096

Previ – defined benefit plan income (Note 27.d) 374,045 780,657

Recovery of charges and expenses 351,499 313,443

Receivables income 246,823 177,622

From non-financial associated/subsidiaries companies 232,220 252,529

Cards transactions 173,747 174,097

Negative exchange readjustment/ Reclassification of liabilities balances 167,047 488,272

Reversal of provisions – administrative expenses 47,614 59,269

Reversal of provisions – actuarial liabilities 11,347 104,833

Reversal of provisions - personnel expenses 10,363 4,884

Dividends received 9,596 21,183

Reversal of provisions – labor, civil and tax claims 2,931 70,601

Other 578,459 676,277

Total 5,116,730 5,763,554

f) Other operating expenses

R$ thousand


Lawsuit (1,530,503) (875,820)

From non-financial associated/subsidiaries companies (967,934) (852,411)

Cards transactions (697,026) (800,182)

Hybrid capital and debt instruments update (657,424) (264,363)

Amortization of goodwill (464,282) (424,018)

Actuarial liabilities update (448,719) (316,249)

Discounts granted on renegotiations (195,881) (147,368)

Business partners (1) (163,206) (180,048)

Failures/frauds and other losses (124,435) (108,036)

ATM Network (112,293) (109,877)

Collateral deposits update (2) (105,850) (150,490)

Negotial relationship bonus (105,736) (106,942)

Life insurance premium - consumer credit (66,465) (78,247)

Negative exchange readjustment/ Reclassification of liabilities balances (42,720) (87,142)

INSS – Social Security (13,147) (11,421)

Fees for the use of Sisbacen – Banco Central do Brasil System (11,369) (8,763)

Update of interest own capital/dividends (9,278) (15,966)

Previ – actuarial adjustment (8,935) (9,097)

Proagro Expenses (8,576) (7,346)

Other (782,584) (650,115)

Total (6,516,363) (5,203,901)

(1) Refers mainly to commission for loans originated by partners and commercial agreements with tenants.

(2) Refers to the adjustment of the provision for deposit in court regarding the lawsuit (Income Tax and Social Contribution Tax on Net Income) as Note 28.d.


92

23 – Non-operating Income

R$ thousand


Non-operating income 10,013,719 143,974

Profit on disposal of investments / equity interest (1) 9,824,793 6,391

Profit on disposal of assets 64,741 32,815

Reversal of provision for devaluation of other assets 20,176 22,977

Capital gains 8,974 10,298

Rental income 7,668 9,556

Interest and inflation adjustment of debtors for disposal of property

3,823 7,922

Other non-operating income 83,544 54,015

Non-operating expenses (107,139) (93,110)

Loss on disposal of assets (24,197) (50,860)

Other assets devaluation (20,203) (16,636)

Capital losses (18,913) (22,268)

Other non-operating expenses (43,826) (3,346)

Total 9,906,580 50,864

(1) Includes the gain from the disposal of shares of BB Seguridade S.A. in the amount of R$ 9,820,460 thousand.

24 - Stockholders' Equity

a) Book value and market value per common share

06.30.2013 12.31.2012 06.30.2012

Stockholders' equity - Banco do Brasil (R$ thousand) 62,527,717 61,206,248 63,508,495

Book value per share (R$) 22.02 21.51 21.12

Market value per common share (R$) 22.13 25.60 19.35

Stockholders' equity - Consolidated(1) (R$ thousand) 64,721,314 61,499,417 60,818,065

(1) Reconciled with the equity of Banco do Brasil (Note 24.g)

Book value per share is calculated based on the equity of Banco do Brasil.

b) Capital

The capital, entirely subscribed and paid-in, of R$ 48,400,000 thousand (R$ 48,400,000 thousand as of December 31, 2012 and R$ 33,122,569 thousand as of June 30, 2012) of Banco do Brasil is divided into 2,865,417,020 book-entry common shares without par value. The Federal Government is the largest shareholder, holding control of the majority of our voting shares.

The increase of the capital for the period as of June 30, 2012 and June 30, 2013, in the amount of R$ 15,277,431 thousand, resulted from the use of Statutory Reserve to Operating Margin, approved by the Special Meeting of Stockholders held on 12.18.2012 and by the Banco Central do Brasil on 02.14.2013.

The Bank may, even without amending its by-laws, if approved by the Meeting of Stockholders, and in the conditions established therein, increase its capital up to the limit of R$ 80,000,000 thousand, by issuing common shares, granting stockholders preference for subscribing the capital increase proportionally to the number of held shares.

c) Revaluation reserves

The revaluation reserves, totaling R$ 4,605 thousand (R$ 4,645 thousand as of December 31, 2012 and R$ 4,551 thousand as of June 30, 2012), refer to revaluations of assets made by the associated/subsidiary companies.


93

In the first half of 2013, there was a reserve realization in the amount of R$ 40 thousand (R$ 179 thousand in the first half of 2012), due to depreciation, transferred to Retained Earnings (Accumulated Losses). In accordance with CMN Resolution 3,565/2008, the remaining amount will be kept until the date of its effective realization.

d) Capital and profit reserves

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Capital reserves (1) 5,684 1 1

Profit Reserves (2) 22,433,084 16,413,044 27,633,408

Legal Reserve 4,613,722 4,112,056 3,774,359

Statutory Reserves (2) 17,819,362 12,300,988 23,859,049

Operating margin 13,533,091 8,025,178 19,681,356

Equalization of dividends 4,286,271 4,275,810 4,177,693

(1) In the Consolidated, on June 30, 2013, figures of capital reserves is R$ 6,023 thousand, due to the acquisition of shares by BB DTVM, in the amount of R$ 339 thousand, for payment of variable remuneration that company.

(2) In the Consolidated, on June 30, 2013, figures of profit reserves and statutory reserves are R$ 22,147,559 thousand and R$ 17,533,837 thousand, respectively, due to the R$ 285,525 thousand elimination of subsidiary company unrealized results.

The Statutory reserve for operating margin aims to guarantee an operating margin consistent with the development of the Bank’s operations and consists of up to 100% of net income, after the legal destinations, including dividends, limited to 80% of the capital.

Statutory reserve for dividend equalization provides funds for the payment of dividends, the portion consisting of up 50% of the net income, after legal distributions, including dividends, up to 20% of the capital.

e) Earnings per share


Net income attributable to stockholders (R$ thousand) 10,033,321 5,555,940

Weighted average number of shares

Basic 2,849,386,774 2,865,410,231

Diluted 2,849,386,774 2,865,410,231

Earnings per share

Basic earnings per share (R$) 3.52 1.94

Diluted earnings per share (R$) 3.52 1.94

f) Interest on own capital / Dividends

Amount

(R$ thousand) Amount per

share (R$) Base date of

payment Payment date

1st quarter/2013

Interest on own capital paid (1) 753,777 0.265 03.11.2013 03.28.2013

Dividends paid 279,429 0.098 05.21.2013 05.31.2013

2nd quarter/2013


Dividends payable 2,177,881 0.767 08.22.2013 08.30.2013

Total destined to shareholders in the period of 01.01 to 06.30.2013

4,013,328 1.413

Interest on own capital (1) 1,556,018 0.548

Dividends 2,457,310 0.865

Net income for the period 10,033,321


94

Amount (R$ thousand)

Amount per share (R$)

Base date of payment

Payment date

1st quarter/2012


Dividends paid 181,408 0.063 05.10.2012 05.22.2012

2nd quarter/2012


Dividends paid 350,274 0.122 08.21.2012 08.31.2012

Total destined to shareholders in the period of 01.01 to 06.30.2013

2,222,375 0.775

Interest on own capital (1) 1,690,693 0.590

Dividends 531,682 0.185

Net income for the period 5,555,940

(1) Amounts subject to the rate of 15% Income Tax Withholding.

In accordance with Laws 9,249/1995 and 9,430/1996 and the Bank's Bylaws, Management decided on the payment of Interest on own capital to its stockholders, imputed to the value of the dividends, plus additional dividends, equivalent to 40% of the net income.

The interest on own capital is calculated based on adjusted net equity accounts and is limited on a pro rata basis to the variation of long-term interest rate, as long as there is profit computed before its deduction or reserve for retained earnings and profit reserves at least twice its amount.

To comply with the Income Tax legislation, the amount of interest on own capital was recorded as corresponding entries against "Financial expenses" and, for purposes of disclosure of these financial statements, reclassified to "Retained earnings". The total interest on own capital in the first half of 2013, provided an expense reduction on tax charges totaling R$ 622,407 thousand (R$ 676,277 thousand in the first half of 2012).

g) Reconciliation of Net Income and Stockholders' Equity

R$ thousand

Net Income Stockholders' equity

1st half/2013 1st half/2012 06.30.2013 12.31.2012 06.30.2012

Banco do Brasil 10,033,321 5,555,940 62,527,717 61,206,248 60,508,495

Unrealized results(1) (4,527) (45,824) (285,525) (280,998) (222,072)

Non-controlling interests -- -- 2,479,122 574,167 531,642

BB-Consolidated 10,028,794 5,510,116 64,721,314 61,499,417 60,818,065

(1) Refers to results from credit assignment operations from Banco do Brasil to Ativos S.A.


95

h) Accumulated Other Comprehensive Income

R$ thousand


Opening balance

Net change for the

1st half Tax effect

Closing balance

Opening balance

Net change for the

1st half Tax effect

Closing balance

Securities Available For Sale

Banco do Brasil (140,361) (420,550) 179,926 (380,985)

(60,124) (35,142) 15,835 (79,431)

Branches and Subsidiary abroad

1,267,083 (954,933) (1,216) 310,934

741,662 227,116 (18) 968,760

Associated companies and Subsidiary

292,204 (666,043) 270,013 (103,826)

42,304 532,832 (216,919) 358,217

Cash Flow Hedge

Associated companies and Subsidiary

1,428 105 -- 1,533

-- (14,086) 4,789 (9,297)

Actuarial Gains/(Losses) on Pension Plans (Note 27.d)

(4,570,548) (5,238,820) 2,268,430 (7,540,938)

1,135,354 (4,743,695) 2,118,060 (1,490,281)

Total (3,150,194) (7,280,241) 2,717,153 (7,713,282)

1,859,196 (4,032,975) 1,921,747 (252,032)

i) Non-controlling Interests

R$ thousand

Stockholders' equity

06.30.2013 12.31.2012 06.30.2012

Banco Patagonia S.A. 655,157 574,103 529,560

Besc Distribuidora de Títulos e Valores Mobiliários S.A. 27 27 27

Cobra Tecnologia S.A. 39 37 34

Servrede Serviços S.A. – Controlada da Cielo S.A. 1,109 -- 2,021

BB Seguridade S.A. 1,822,790 -- --

Non-controlling Interests 2,479,122 574,167 531,642

j) Stockholdings (Number of shares)

Gradual development of shares held by the Bank's stockholders, directly or indirectly, of more than 5% and by the directors and members of the Fiscal Council and Audit Committee:

Stockholders 06.30.2013 12.31.2012 06.30.2012

Shares % Total Shares % Total Shares % Total

Federal Government 1,670,678,890 58.3 1,693,127,780 59.1 1,693,127,780 59.1

Ministério da Fazenda 1,453,487,115 50.7 1,453,487,115 50.7 1,607,300,682 56.1

Fundo Fiscal de Investimento e Estabilização 110,650,000 3.9 110,650,000 3.9 62,500,000 2.2

Caixa F1 Garantia Construção Naval 98,145,267 3.4 105,663,567 3.7 -- --

Fundo Garantidor para Investimentos 7,500,000 0.3 7,500,000 0.3 7,500,000 0.3

FGO Fundo de Investimento em Ações 896,508 -- 9,466,808 0.3 9,466,808 0.3

FGEDUC Fundo de Investimento Multimercado -- -- 6,360,290 0.2 6,360,290 0.2

Caixa de Previdência dos Funcionários do Banco do Brasil – Previ

297,509,314 10.4 297,523,314 10.4 296,850,811 10.4

BNDES Participações S.A. – BNDESPar (1) 5,522,648 0.2 5,522,648 0.2 5,522,648 0.2

Treasury Shares (2) 26,418,028 0.9 20,200,047 0.7 47 --

Other Stockholders 865,288,140 30.2 849,043,231 29.6 869,915,734 30.3

Total 2,865,417,020 100.0 2,865,417,020 100.0 2,865,417,020 100.0

Resident Stockholders 2,310,898,227 80.6 2,336,615,977 81.5 2,364,066,873 82.5

Non Resident Stockholders 554,518,793 19.4 528,801,043 18.5 501,350,147 17.5

(1) Connected to the Controller, but not part of the control block.

(2) On Jun 30, 2013, includes 12,680 shares of the Bank held in BB DTVM.


96

Common shares (ON) (1)

30.06.2013 12.31.2012 06.30.2012

Board of Directors (Except for Bank’s CEO, listed in the Bank’s Steering Committee) 8 8 11

Executive Committee 104,677 112,821 123,679

Audit Committee 75 75 277

(1) The shareholding interest of the Board of Directors, Executive Committee and Audit Committee represents approximately 0.004% of the Bank's capital stock.

k) Movement of shares outstanding/Free Float

06.30.2013 12.31.2012 06.30.2012

Amount % Amount % Amount %

Free float at the start date 848,930,393 29.6 871,791,466 30.4 871,791,466 30.4

Sale of shares by Caixa F1 Garantia Construção Naval 7,518,300 -- --

Sale of shares by FGO – Shares Investments 8,570,300 -- --

Sale of shares by FGEDUC – Investimento Multimercado 6,360,290 -- --

Sale / (Acquisition) of shares by Previ 14,000 (749,403) (76,900)

Acquisition of shares - repurchase program (Note 24.l) (5,993,000) (20,200,000) --

Acquisition of shares – payment based on shares (Note 24.m) (224,981) (130,146) (130,146)

Acquisition of shares by BNDESPar -- (1,826,300) (1,826,300)

Other Changes (1) 8,144 44,776 33,915

Free Float at the end date (2) 865,183,466 30.2 848,930,393 29.6 869,792,035 30.4

Outstanding shares 2,865,417,020 100.0 2,865,417,020 100.0 2,865,417,020 100.0

(1) Refers mainly to changes coming from Technical and Advisory Bodies.

(2) According to the Law nº 6,404/1976 and the regulation of BM&FBovespa's New Market. The shares held by the Board of Directors and Executive committee are not included.

l) Treasury shares

On July 13, 2012, the Board of Directors approved the repurchase program of up to 50 million shares within 180 days from that date, aiming at the acquisition of shares to hold in treasury for subsequent sale or withdrawal without capital reduction, aiming at generating value for stockholders. Until December 31, 2012, 20,200,000 shares were acquired, in the amount of R$ 461,246 thousand, related to the repurchase program. Minimum, average and maximum cost per stock are respectively R$ 18.28, R$ 22.83 e R$ 26.78. This program was in effect until January 8, 2013.

On June 13, 2013, the Board of Directors approved the repurchase program of up to 50 million shares, within 365 days from that date, aiming at the acquisition of shares to hold in treasury for subsequent sale or withdrawal without capital reduction, aiming at generating value for stockholders. Until June 30, 2013, 5,993,000 shares were acquired in the amount of R$ 135,443 thousand, related to the repurchase program. Minimum, average and maximum cost per stock are respectively R$ 21.23, R$ 22.60 and R$ 23.33.

On June 30, 2013, the Bank had 26,418,028 treasury shares, amounting to R$ 602,713 thousand, of which 26,193,000 shares resulting programs repurchase, 224,981 shares resulting from acquisition to share-based payment, and 47 remaining shares of mergers.

m) Share-Based Payment

As of February 2012, the Bank reacquired 130,146 shares, placed in treasury, of which 130,131 were transferred to members of the Executive Board as of March 08, 2012. The shares transferred were blocked for trading, and the release will occur in three annual installments, according to the schedule presented in the table below. The first annual installment was released on 03.08.2013.


97

Share-Based Payment - Schedule of release Number of shares Release Date

First installment 43,409 03.08.2013

Second installment 43,361 03.10.2014

Third installment 43,361 03.09.2015

Total 130,131

Minimum, average and maximum cost per stock are respectively R$ 27.38, R$ 27.61 and R$ 27.88.

The CMN Resolution 3,921 as of November 25, 2010, which deals with the remuneration policy for financial institutions executives, requires that, at least 50% of variable remuneration shall be paid in stocks or stock-based instruments, of which at least 40% should be deferred for future payment, with a minimum period of three years, set by the risks and the executive activity.

Due to the related Resolution, the Bank approved a new policy of variable remuneration for the Executive Board, valid from 2012. This policy provides for the payment of party of the variable remuneration in shares.

In the first half of 2013 the Bank acquired 212,301 shares, all placed in treasury for possible future payment.

In attendance of the remuneration policy variable defined by the Executive Board of BB DTVM, 19,792 shares were acquired, all placed in treasury, of which 7,112 shares were transferred to members of Executive Board and blocked for movement. The remaining, 12,680 shares, abode in treasury for eventual payment future.

The shares acquired by the Bank and BB DTVM for payment of variable remuneration amounted to 224,981. The cost minimum, average and maximum per share is R$ 23.30, R$ 26.38 and R$ 27.61, respectively.

25 – Taxes

a) Breakdown of income tax (IR) and social contribution expenses (CSLL)

R$ thousand


Present values (6,646,551) (3,654,849)

Domestic income tax and social contribution (6,475,476) (3,494,626)

Foreign income tax (171,075) (160,223)

Deferred values 1,939,911 1,762,191

Deferred tax liabilities (345,976) (591,348)

Leasing transactions – portfolio adjustment and accelerated depreciation

82,240 (77,492)

Mark to Market (MTM) 43,443 (7,538)

Actuarial gains (142,661) (297,743)

Interest and inflation adjustment of judicial deposits (103,157) (135,654)

Foreign profits (158,725) (33,732)

Transactions carried out on the futures market (65,631) --

Recovered credits (1) (1,485) (39,189)

Deferred tax assets 2,285,887 2,353,539

Temporary differences 2,037,651 2,328,995

Tax losses/CSLL negative bases (40,660) (46,049)

Mark to Market (MTM) 305,334 100,630

Transactions carried out on the futures market (16,438) (30,037)

Total (4,706,640) (1,892,658)

(1) According to article 12 of Law 9,430/1996.


98

b) Reconciliation of income tax and social contribution charges

R$ thousand


Profit before tax and profit sharing 16,332,077 8,326,932

Total charges of IR (25%) and CSLL (15%) (6,532,831) (3,330,773)

Charges upon Interest on Own Capital 622,407 676,277

Equity in subsidiaries and associated companies 131,578 139,171

Employee profit sharing 533,481 336,870

Tax credits recorded – previous periods -- 52,871

Other amounts 538,725 232,926

Income Tax and Social Contribution (4,706,640) (1,892,658)

c) Tax Expenses

R$ thousand


Cofins (1,491,783) (1,410,247)

ISSQN (395,605) (372,115)

PIS/Pasep (248,998) (235,608)

Other (171,337) (135,965)

Total (2,307,723) (2,153,935)

d) Deferred tax liabilities

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Arising from positive adjustments of benefits plans (1) 1,522,968 5,915,093 5,465,191

Arising from interest and inflation adjustment of judicial deposits

398,815 386,239 373,080

Arising from mark-to-market 522,361 338,604 400,074

Arising from recovered credit(2) 215,561 214,075 191,402

Related to foreign profit 158,725 -- 33,732

Entities abroad 6,429 14,570 11,076

Arising from leasing portfolio adjustment 425,149 551,816 678,722

Arising from futures market transactions 73,651 -- 18

Other 8,734 32,497 526,275

Total deferred tax liabilities 3,332,393 7,452,894 7,679,570

Income tax 1,894,813 4,245,809 4,185,224

Social contribution 897,416 2,230,175 2,572,804

Cofins 464,657 840,352 792,724

PIS/Pasep 75,507 136,558 128,818

(1) The realization of deferred tax liabilities on actuarial gains is related to the achievement of the values of actuarial asset (Note 27).

(2) According to article 12 of Law 9,430/1996.


99

e) Deferred tax assets (Tax Credit)

Recorded R$ mil

12.31.2012 1st half/2013 06.30.2013 06.30.2012

Balance Constitution Write-off Balance Balance

Temporary differences 25,577,595 6,138,433 (5,661,608) 26,054,420 22,640,208

Allowance for loan losses 13,595,663 3,462,005 (2,506,435) 14,551,233 13,105,706

Passive reserves 7,071,939 1,717,698 (436,703) 8,352,934 6,991,343

Negative adjustments of benefits plans 3,262,568 -- (2,283,749) 978,819 820,673

Mark to market 509,001 936,247 (387,474) 1,057,774 560,471

Other provisions 1,138,424 22,483 (47,247) 1,113,660 1,162,015

CSLL written to 18% (MP 2,158/2001) 2,031,422 -- (627,189) 1,404,233 2,241,833

Tax losses/ negative bases 85,568 42,059 (11,623) 116,004 174,823

Excess depreciation 549,069 20,222 (91,692) 477,599 584,614

Total tax credits recorded 28,243,654 6,200,714 (6,392,112) 28,052,256 25,641,478

Income tax 16,476,328 3,714,619 (3,363,712) 16,827,235 14,759,601

Social contribution 11,525,705 2,212,583 (2,605,362) 11,132,926 10,843,027

Cofins 207,845 235,280 (363,905) 79,220 33,419

PIS/Pasep 33,776 38,232 (59,133) 12,875 5,431

Not Recorded R$ thousand

06.30.2013 12.31.2012 06.30.2012

Tax credit abroad 460,340 420,262 402,903

Temporary differences 116,409 125,231 87,324

Portion of Tax losses / negative bases 40,854 3,654 --

Portion of mark to market negative ajustment -- 329 743

Total tax credits not recorded 617,603 549,476 490,970

Income tax 401,332 344,771 302,689

Social contribution 216,271 204,705 188,281

Realization expectative

The expectation of realization of the deferred tax assets (tax credits) is based on technical study, prepared in 06.30.2013, and the present value is determined based on the average rate of funding of Banco do Brasil.

R$ thousand

Par value Present value

In 2013 4,267,545 3,899,519

In 2014 6,743,406 6,081,504

In 2015 5,593,300 4,869,646

In 2016 5,772,619 4,816,344

In 2017 4,752,200 3,703,906

In 2018 198,554 118,499

In 2019 478,822 250,091

In 2020 18,157 8,439

In 2021 23,384 9,416

In 2022 22,884 8,285

In 2023 181,385 61,500

Total tax credits 06.30.2013 28,052,256 23,827,149

In the first half 2013 it was possible to observe the realization of tax credits at Banco do Brasil in the amount of R$ 6,073,909 thousand, corresponding to 138,03% of the respective projection of use for the period of 2013, contained in the technical study prepared on 12.31.2012.


100

The realization of the nominal value of tax credit recorded, considering the recovery of those issued during the processing of the lawsuit (70%), based on a technical study conducted by the Banco do Brasil on 06.30.2013, is designed for 5 years in following proportions:

Tax losses/CSLL

recoverable (1)

Intertemporary

differences (2)

In 2013 26% 14%

In 2014 55% 23%

In 2015 3% 23%

In 2016 5% 23%

In 2017 4% 17%

From 2018 7% --

(1) Projected consumption linked to the capacity to generate IR and CSLL taxable amounts in subsequent periods.

(2) The consumption capacity results from the movements of provisions (expectation of reversals, write-offs and uses).

26 – Related Party Transactions

The costs of salaries and other benefits granted to key management personnel of the Banco do Brasil Group (Board of Directors, Executive Board, Audit Committee and Tax Council):

R$ thousand


Short-term benefits 24,117 20,541

Fees 11,846 10,770

Executive Board 10,643 9,532

Audit Committee 942 963

Board of Directors 114 146

Fiscal Council 147 129

Profit sharing 11,676 4,408

Other 595 5,363

Benefits for employment termination -- 1,127

Total 24,117 21,668

The Bank does not offer post-employment benefits to its key management personnel, except for those who are part of the staff of the Bank, which participate in the Pension Plan for Employees of the Banco do Brasil (Previ).

The Bank does not grant loans to key management personnel, pursuant to the prohibition to all financial institutions established by the Banco Central do Brasil.

The balances referring to transactions between the consolidated companies of the Bank are eliminated in the Consolidated Financial Statements. Regarding to majority shareholder, the transactions with National Treasury and with agencies of the direct administration of the Federal Government that maintain banking operations with the Bank are included.

The Bank has banking transactions with these related parties, such as interest bearing and non-interest bearing deposits, loans, sale and repurchases transactions, except for key management personnel, and acquisition of portfolio of loans. There are also service render and guarantee agreements.

These transactions are conducted under terms and rates consistent with those applied with outsourced when applicable. These transactions do not involve payment risks. On 09.26.2012, the Bank signed a loan agreement with the Federal Government in the amount of R$ 8,100,000 thousand whose terms and conditions are described in note 20.d.

The funds invested in government securities and in federal funds and programs from onlendings of the Official Institutions are listed as notes 8 and 18, respectively.


101

The Bank sponsors the Banco do Brasil Foundation which goals are the promotion, support, encouragement and sponsorship of actions at the educational, cultural, social, philanthropic, recreational/sports and promote scientific and technological research activities and assistance to urban or rural communities. In the 1st half 2013, the Bank made contributions to the FBB in the amount of R$ 36,888 thousand (R$ 19,145 thousand in the 1st half 2012).

The information related to onlending and other transactions with other sponsored entities are disclosed in Note 27.

Acquisition of Portfolio of Loans Transferred by Banco Votorantim R$ thousand


Assignment with substantial retention of risks and benefits (with coobligation) 7,749,191 16,570

Result unrealized net of tax effects 207,266 398,516

Summary of related party transations R$ thousand

06.30.2013

Controller (1)

Subsidiaries(2)

Jointly

controlled (3)

Associated

companies (4)

Key Management personnel

(5)

Other related

parties(6)

Total

Assets

Interbank deposits -- 41,185,155 -- -- -- -- 41,185,155

Securities -- 20,499,343 138,357 -- -- -- 20,637,700

Loan operations 565,818 23,043 -- 162 -- 3,386,120 3,975,143

Receivables from related companies

-- 48,366 18,220 -- -- -- 66,586

Other assets -- 497,391 8,939,671 795 -- -- 9,437,857

Liabilities

Demand deposits 690,823 24,129 22,404 241 1,256 1,076,767 1,815,620

Saving deposits -- -- -- -- 1,516 -- 1,516

Remunerated time deposits -- 4,989,509 587,991 1,040 2,762 5,949,863 11,531,165

Securities sold under repurchase agreements

-- 5,965,473 30,005 -- -- 6,025,527 12,021,005

Borrowings and onlendings 647,825 31,171,842 -- -- -- 66,603,336 98,423,003

Other liabilities (7) 8,317,938 21,892,923 142,298 -- -- 14,007 30,367,166

Guarantees and Other Coobligations (8)

-- 1,086,934 6,800,000 -- -- -- 7,886,934

1st half/2013

Income from interest and render of services

26,285 1,964,197 584,166 852 -- 75,985 2,651,485

Expenses from raising funds (32,065) (2,015,249) (52,861) (1,059) (165) (676,039) (2,777,438)

(1) National Treasury and agencies of the direct administration of the Federal Government.

(2) Includes related companies in Note 3 as identified in item (1).



(5) Board of Directors, Executive Board, Audit Committee and Tax Council.

(6) Includes public and party-state owned companies controlled by the Federal Government and entities linked to employees.

(7) Includes the Contract Hybrid Capital and Debt Instruments – Perpetual Bonds with the Federal Government (Note 20.d).

(8) Includes Opening Contract Interbank Revolving Credit Line to release with Banco Votorantim, equivalent to the value of equity of that institution.


102

R$ thousand

06.30.2012

Controller (1)

Subsidiaries(2)

Jointly

controlled (3)

Associated

companies (4)

Key Management personnel

(5)

Other related

parties(6)

Total

Assets

Interbank deposits -- 29,764,650 1,049,998 -- -- 21 30,814,669

Securities -- 79,413 146,710 -- -- -- 226,123

Loan operations 772,088 88,234 10,723 48 -- 1,029,448 1,900,541

Receivables from related companies

-- 65,526 -- -- -- -- 65,526

Other assets -- 340,139 3,000 242 -- -- 343,381

Liabilities

Demand deposits 809,558 19,307 20,995 6,908 787 594,576 1,452,131

Saving deposits -- -- -- -- 1,333 -- 1,333

Remunerated time deposits -- 4,869,636 971,031 5,177 3,951 6,411,309 12,261,104

Securities sold under repurchase agreements

-- 4,744,557 -- -- -- 6,138,756 10,883,313

Borrowings and onlendings 1,659,383 1,907,443 -- -- -- 45,704,096 49,270,922

Other liabilities (7) -- 1,151,707 29,515 -- -- 35,874 1,217,096

Guarantees and Other Coobligations (8)

-- 657,129 6,922,982 -- -- -- 7,580,111

1st half/2012

Income from interest and render of services

45,926 1,164,640 22,488 743 -- 158,594 1,392,391

Expenses from raising funds (79,032) (995,223) (43,741) (2,715) (288) (2,052,089) (3,173,088)

(1) National Treasury and agencies of the direct administration of the Federal Government.




(5) Board of Directors, Executive Board, Audit Committee and Tax Council.

(6) Includes public and party-state owned companies controlled by the Federal Government and entities linked to employees.

(7) Includes the Contract Hybrid Capital and Debt Instruments – Perpetual Bonds with the Federal Government (Note 20.d).

(8) Includes Opening Contract Interbank Revolving Credit Line to release with Banco Votorantim, equivalent to the value of equity of that institution.


103

27 – Employee Benefits

Banco do Brasil sponsors the following private pension and complementary health plan entities that provide for complementation of retirement and healthcare benefits for its employees:

Plans Benefits Classification

Previ - Caixa de Previdência dos Funcionários do Banco do Brasil

Previ Futuro Retirement and Pension Defined contribution

Plano de Benefícios 1 Retirement and Pension Defined benefit

Plano Informal Retirement and Pension Defined benefit

Cassi - Caixa de Assistência dos Funcionários do Banco do Brasil

Plano de Associados Health Care Defined benefit

Economus – Instituto de Seguridade Social

Prevmais Retirement and Pension Variable contribution

Regulamento Geral Retirement and Pension Defined benefit

Regulamento Complementar 1 Retirement and Pension Defined benefit

Grupo B’ Retirement and Pension Defined benefit

Plano Unificado de Saúde - PLUS Health Care Defined benefit

Plano Unificado de Saúde - PLUS II Health Care Defined benefit

Plano de Assistência Médica Complementar - PAMC

Health Care Defined benefit

Fusesc - Fundação Codesc de Seguridade Social Multifuturo I Retirement and Pension Variable contribution

Plano de Benefícios 1 Retirement and Pension Defined benefit

SIM - Caixa de Assistência dos Empregados dos Sistemas Besc e Codesc, do Badesc e da Fusesc

Plano de Saúde Health Care Defined contribution

Prevbep - Caixa de Previdência Social Plano BEP Retirement and Pension Defined benefit

Number of participants covered by benefit plans sponsored by the Bank

06.30.2013 12.31.2012 06.30.2012

Nº of participants Nº of participants Nº of participants

Actives Retired/Users Total Actives Retired/Users Total Actives Retired/Users Total

Retirement and Pension Plans

116,470 102,860 219,330 116,867 101,994 218,861 116,409 104,766 221,175

Plano de Benefícios 1 – Previ

27,450 85,938 113,388 28,826 84,964 113,790 29,721 84,409 114,130

Plano Previ Futuro 71,737 604 72,341 70,609 544 71,153 69,119 488 69,607

Plano Informal -- 4,046 4,046 -- 4,182 4,182 -- 7,526 7,526

Other plans 17,283 12,272 29,555 17,432 12,304 29,736 17,569 12,343 29,912

Health Care Plans 118,139 95,021 213,160 118,534 94,253 212,787 118,038 93,368 211,406

Cassi 104,536 85,886 190,422 104,824 84,867 189,691 104,111 84,040 188,151

Other plans 13,603 9,135 22,738 13,710 9,386 23,096 13,927 9,328 23,255


104

Bank’s contributions to benefit plans

R$ thousand

1st half /2013 1st half /2012

Retirement and Pension Plans 543,568 564,112

Plano de Benefícios 1 – Previ (1) 227,028 232,931

Plano Previ Futuro 158,913 130,778

Plano Informal 92,511 142,197

Other plans 65,116 58,206

Health Care Plans 427,539 426,626

Cassi 407,789 371,223

Other plans 19,750 55,403

Total 971,107 990,738

(1) Refers to the contributions from participants comprised by Agreement 97 and Plan 1, considering that these contributions occurred respectively by the realization of the Parity Fund (Note 27.f.1) and the Contribution Fund (Note 27.f.3). Agreement 97 aims to regulate the way funding is required to achieve a portion equivalent to 53.7% of guarantee amount concerning the payment of supplement retirement due to the participants who joined the Bank up to 04.14.1967 and who have retired or will retire after the aforementioned date, except for those participants who are part of the Plano Informal.

The Bank's contributions to benefit plans during the 2nd half/2013 are estimated in R$ 689,676 thousand.

Values recognized in income

R$ thousand


Retirement and Pension Plans 83,343 767,255

Plano de Benefícios 1 – Previ 374,045 780,657

Plano Previ Futuro (158,913) (130,778)

Plano Informal (68,416) 79,109

Other plans (63,373) 38,267

Health Care Plans (609,637) (594,809)

Cassi (556,932) (533,016)

Other plans (52,705) (61,793)

Total (526,294) 172,446

a) Retirement and pension plans

Previ Futuro (Previ)

Participants in this plan are the Bank's employees hired as from 12.24.1997. The active participants contribute to Previ an amount between 7% and 17% of their contribution salary, which varies based on time of service and the amount of the contribution salary. There is no contribution for retired participants. The sponsor contributes an amount equal to the contributions of the participants, limited to 14% of the total contribution payroll of these participants.

Plano de Benefícios 1 (Previ)

The participants of this plan are the Bank’s employees who were enrolled up to 12.23.1997. Due to the establishment of parity between the Bank's and participants' contributions, in December 2000, a parity fund was set up, and its resources are being used for the purpose of offsetting contributions to the plan. Due to the accumulated surplus, the contributions of participants, beneficiaries (retirees and pensioners) and of the sponsor (Banco do Brasil) were suspended, since January 2007. According to the Memorandum of Understanding signed between the Bank, Previ and entities representing the beneficiaries, it was proposed to amend the Rules of the Plan 1, which includes the suspension of contributions for the years 2011, 2012 and 2013, and its maintenance must be linked to the existence of the Special Reserve of the plan.


105

Plano Informal (Previ)

The responsibility of this plan is exclusive of Banco do Brasil whose contractual obligations include: (a) retirement pensions to founder participants and pension payments to beneficiaries of participants deceased up to 04.14.1967; (b) payment of retirement supplements to the other participants employed by Banco do Brasil who retired up to 04.14.1967 or who, on that date, would have the right through length of service to retire and who had at least 20 years of effective service with the Bank; and (c) increase in the amount of retirement benefits and of pensions beyond the provided in the benefit plan of Previ, resulting from judicial decisions and from administrative decisions due to restructuring of the job and salary plan and of incentives created by the Bank. On 12.31.2012, Banco do Brasil and Previ formalized an agreement whereby the Banco do Brasil paid up, with Fundo Paridade funds, 100% of the mathematical reserves relating to the Grupo Especial, that is Banco do Brasil’s exclusive liability, of which operations had migrated from Plano Informal to Plano de Benefícios 1 of Previ. The Grupo Especial includes participants from Plano de Benefícios 1 - Previ, listed in the first paragraph of the first clause of the contract of 12.24.1997, which received additional supplemental retirement arising from administrative decisions and/or judicial decisions. (Notes 27.f)

Prevmais (Economus)

The participants of this plan are the employees from Banco Nossa Caixa (merged into Banco do Brasil on 11.30.2009) enrolled after 08.01.2006, and the participants previously linked to the Regulamento Geral benefit plan who opted for the distribution of their vested account balances. The funding for income benefits is equally provided by employees and employer, not exceeding 8% of the participants' salary. The plan also provides risk benefits, such as complementation of sickness aid, work - related accident, disability benefits and death pension.

Regulamento Geral (Economus)

The participants of this plan are the employees from Banco Nossa Caixa enrolled up to 07.31.2006. This plan is closed to new members. Employees and the sponsor contribute equally, on average, with 12.11% of participation salary.

Regulamento Complementar 1 (Economus)

The participants of this plan are the employees from Banco Nossa Caixa. This plan offers the benefits of supplemental sickness benefit and annuity for death and disability. The cost of the plan is the responsibility of the sponsor, participants and retired/users.

Grupo B' (Economus)

The participants of this plan are the employees from Banco Nossa Caixa admitted between 01.22.1974 to 05.13.1974 and their beneficiaries. This plan is closed to new members. The level of benefit to be granted when the implementation of all the conditions laid down in regulation is known a priori.

Multifuturo I (Fusesc)

The participants of this plan are the employees from Banco do Estado de Santa Catarina - Besc (merged into Banco do Brasil on 09.30.2008) enrolled after 01.12.2003 and the employees previously linked to Fusesc's Benefit Plan 1 who opted for this plan. Employees and sponsor equally contribute from 2.33% to 7% of participation salary to that plan, as determined by each participant.

Plano de Benefícios 1 (Fusesc)

The participants of this plan are the employees from Besc enrolled until 01.11.2003. This plan is closed to new members. Employees and the sponsor contribute equally, on average, with 9.89% of participation salary.


106

Plano BEP (Prevbep)

Participants of this plan are the employees from Banco do Estado do Piauí – BEP (merged in to Banco do Brasil on 11.30.2008). Employees and the sponsor contribute equally, on average, with 3.58% of participation salary.

b) Health Care Plans

Plano de Associados (Cassi)

The Bank is the sponsor of a health plan managed by Cassi which the main objective is to provide coverage for expenses related to the promotion, protection, recovery and rehabilitation of a member's health and of his/her enrolled beneficiaries. Each month, the Bank contributes with a sum equivalent to 4.5% of the total payroll or of the total retirement or pension plan benefit. Monthly contributions from members and pension beneficiaries amount to 3% of the payroll or the total retirement or pension plan benefits and co-participation in some hospital procedures.

Plano Unificado de Saúde - PLUS (Economus)

The participants of this plan are the employees from Banco Nossa Caixa. Participation in this plan takes place by means of a 1.5% contribution of gross salary, without limitation, covering the owner and his/her preferred dependants, deducted from the owner's payroll and 10% as a co-participation in the price of each medical visit and low-cost exams, made by the owner and his/her dependants (preferred and non-preferred).

Plano Unificado de Saúde - PLUS II (Economus)

For employees from Banco Nossa Caixa. Participation in this plan takes place by means of a 1.5% contribution of gross salary, without limitation, covering the owner and his/her preferred dependants, deducted from the owner's payroll and 10% as a co-participation in the price of each medical visit and low-cost exams, made by the owner and his/her preferred dependants and children of age. The plan does not provide for non-preferred dependants.

Plano de Assistência Médica Complementar - PAMC (Economus)

The participants of this plan are the employees from Banco Nossa Caixa stationed in the State of São Paulo. The plan owners are those employees retired due to disability in Groups "B" and "C", and their dependants, who participate in costs in as much as they use it, and according to the salary range progressive table.

Plano de Saúde (SIM)

The participants of this plan are the employees from Besc. Monthly contributions from members amount to 3% of the total payroll.

c) Risk factors

The Bank may be requested to contribute with PREVI, which might have a negative effect on operating income.

In the next few years, Previ, for various reasons, might not be able to maintain the accumulation of surplus of Plano de Benefícios 1 and, under these conditions, the Bank will have to resume its contribution as plan sponsor, using its own resources, a fact that could give rise to adverse impacts on its financial situation and operating income.


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The Bank may be required to make extraordinary contributions to Economus, Fusesc and Prevbep, which might have a negative effect on operating income.

The criteria used on determination of the Bank's obligation with the set of sponsored entities plans (Economus, Prevbep, Fusesc) include long-term actuarial and financial estimates and assumptions, as well as the application and interpretation of regulatory standards in effect on this date. Accordingly, inaccuracies inherent in the use of estimates and assumptions may result in divergences between the amount recorded and the amount actually realized, resulting in negative impacts on the result of the Bank’s operations.


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d) Actuarial valuations

The actuarial valuations are prepared every six months and the information contained in the tables below refers to those carried out on the base dates of 06.30.2013, 12.31.2012 and 06.30.2012.

d.1) Changes in present value of defined benefit actuarial obligations

R$ thousand

Plano 1 – Previ Plano Informal – Previ Plano de Associados – Cassi Other plans

1st half/2013 2012 1st half/2012 1st half/2013 2012 1st half/2012 1st half/2013 2012 1st half/2012 1st half/2013 2012 1st half/2012

Initial Balance (128,413,440) (98,849,541) (98,849,541) (1,091,017) (1,905,371) (1,905,371) (7,717,855) (6,046,932) (6,046,932) (6,949,678) (5,622,609) (5,622,609)

Interest cost (5,422,373) (10,235,720) (5,041,268) (45,298) (177,875) (95,929) (326,220) (625,078) (307,809) (294,069) (573,868) (287,254)

Current service cost (305,978) (514,081) (251,006) -- -- -- (67,654) (95,589) (43,384) (19,312) (38,113) (19,418)

Past service cost -- -- -- (23,118) -- -- -- -- -- -- -- --

Benefits paid net of retirees contributions

4,586,357 7,502,104 3,175,629 92,410 297,318 142,134 244,732 487,418 222,363 200,669 403,496 204,550

Reductions / settlements (1) -- -- -- -- 1,217,263 218,176 -- -- -- -- 130,640 130,640

Remeasurements of actuarial gain/ (losses) (2)

7,434,213 (26,316,202) (4,805,453) 47,909 (522,352) (49,268) 611,911 (1,437,674) (295,110) 716,381 (1,249,224) (231,463)

Closing Balance (122,121,221) (128,413,440) (105,771,639) (1,019,114) (1,091,017) (1,690,258) (7,255,086) (7,717,855) (6,470,872) (6,346,009) (6,949,678) (5,825,554)

Present value of actuarial liabilities with surplus

(122,121,221) (128,413,440) (105,771,639) -- -- -- -- -- -- (4,975,192) (4,921,429) (4,702,982)

Present value of actuarial liabilities without surplus

-- -- -- (1,019,114) (1,091,017) (1,690,258) (7,255,086) (7,717,855) (6,470,872) (1,370,817) (2,028,249) (1,122,572)

(1) In Plano Informal, it refers mainly to the migration of Grupo Especial to Plano de Benefícios 1 – Previ. (Notes 27.f)

(2) The actuarial loss in 2012 is mainly due to the decrease in the discount rate, that was 10.56% p.a. on 12.31.2011 and 8.71% p.a. on 12.31.2012.


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d.2) Changes in fair value of plan assets

R$ thousand

Plano 1 – Previ Plano Informal – Previ Plano de Associados – Cassi Other Plans

(1)

1st half/2013 2012 1st half/2012 1st half/2013 2012 1st half/2012 1st half/2013 2012 1st half/2012 1st half/2013 2012 1st half/2012

Opening balance 152,029,136 133,079,396 133,079,397 -- -- -- -- -- -- 4,921,431 4,477,749 4,477,753

Interest income 6,476,441 13,460,271 6,853,589 -- -- -- -- -- -- 208,921 474,934 236,838

Contributions received 262,639 1,521,818 233,138 92,410 297,318 142,134 244,732 487,418 222,363 74,448 157,399 37,870

Benefits paid net of retirees contributions

(4,586,357) (7,502,104) (3,175,629) (92,410) (297,318) (142,134) (244,732) (487,418) (222,363) (200,669) (403,496) (168,889)

Actuarial gain / (loss) on plan assets

(19,199,972) 11,469,755 (3,522,177) -- -- -- -- -- -- (28,939) 214,843 119,410

Closing balance 134,981,887 152,029,136 133,468,318 -- -- -- -- -- -- 4,975,192 4,921,429 4,702,982

(1) Refers to the following plans: Regulamento Geral (Economus), Prevmais (Economus), Regulamento Complementar 1 (Economus), Multifuturo 1 (Fusesc), Plano 1 (Fusesc) and Plano BEP (Prevbep).

d.3) Amounts recognized in the balance sheet

R$ thousand


06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012

1) Fair value of the plan assets 134,981,887 152,029,136 133,468,318 -- -- -- -- -- -- 4,975,192 4,921,429 4,702,982

2) Present value of actuarial liabilities (122,121,221) (128,413,440) (105,771,639) (1,019,114) (1,091,017) (1,690,258) (7,255,086) (7,717,855) (6,470,872) (6,346,009) (6,949,678) (5,825,554)

3) Surplus/(deficit) (1+2) 12,860,666 23,615,696 27,696,679 (1,019,114) (1,091,017) (1,690,258) (7,255,086) (7,717,855) (6,470,872) (1,370,817) (2,028,249) (1,122,572)

4) Net actuarial (liability)/asset(1)

6,430,333 11,807,848 13,848,340 (1,019,114) (1,091,017) (1,690,258) (7,255,086) (7,717,855) (6,470,872) (958,422) (1,287,286) (808,745)

(1) Refers to the portion of the sponsor in surplus / (deficit). The actuarial assets recorded in other receivables (Note 11.b) will be realized before the end of the plan. The end of the plan is understood as the date in which the last commitment will be paid.


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d.4) Maturity profile of the obligations

Duration(1)

Up to 1 year 1 to 2 years 2 to 5 years Over 5 years Total

Plano 1 (Previ) 10.25 8,408,806 8,480,384 26,035,959 178,031,442 220,956,591

Plano Informal (Previ) 5.69 176,914 157,056 374,989 849,743 1,558,702

Plano de Associados (Cassi) 14.07 500,207 498,910 1,486,916 16,878,182 19,364,215

Regulamento Geral (Economus) 10.79 330,711 337,382 1,045,755 7,779,412 9,493,260

Regulamento Complementar 1 (Economus) 15.13 1,102 1,187 4,142 76,470 82,901

Plus I e II (Economus) 12.14 40,381 40,606 122,361 1,084,443 1,287,791

Grupo B’ (Economus) 9.57 11,734 11,695 34,604 203,549 261,582

Pré-74 (Economus) 8.62 2,664 2,661 7,854 37,760 50,939

Prevmais (Economus) 19.18 330,711 337,382 1,045,755 7,779,412 9,493,260

Multifuturo I (Fusesc) 13.37 4,443 4,508 13,899 153,856 176,706

Plano 1 (Fusesc) 11.76 25,953 26,890 87,276 825,964 966,083

Plano BEP (Prevbep) 12.17 2,056 2,192 7,113 71,005 82,366

(1) Weighted average duration of the defined benefit obligation.

d.5) Breakdown of the amounts recognized in statement of income relating to defined benefit plans

R$ thousand


1st half/2013 1st half/2012 1st half/2013 1st half/2012 1st half/2013 1st half/2012 1st half/2013 1st half/2012

Current service cost (152,989) (125,503) -- -- (67,655) (43,384) (6,467) (7,302)

Interest cost (2,711,186) (2,520,634) (45,299) (95,929) (326,220) (307,809) (55,035) (47,641)

Expected yield on plan assets 3,238,220 3,426,794 -- -- -- -- -- --

Amortization of net actuarial gains/(losses) -- -- (23,117) (20,827) -- (28,007) -- (20,618)

Unrecognized past service cost -- -- -- -- -- (4,956) -- --

Expense with active employees -- -- -- -- (163,057) (148,860) (65,923) (61,514)

Other adjustments/reversals -- -- -- 195,865 -- -- 11,347 113,549

(Expense)/income recognized in Statement of Income

374,045 780,657 (68,416) 79,109 (556,932) (533,016) (116,078) (23,526)


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d.6) Amounts recognized in the stockholders’ equity because of the adoption of CPC 33 (R1)

R$ thousand


06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012

Accumulated other comprehensive income (6,237,886) (4,441,209) (537,459) 47,910 (109,101) (169,026) 611,912 (2,577,272) (1,502,663) 339,244 (695,413) (295,727)

Tax effects 2,669,191 1,900,393 229,979 (19,164) 43,640 67,610 (244,765) 1,030,909 601,065 (136,832) 277,505 115,940

Accumulated other comprehensive income net of tax effects

(3,568,695) (2,540,816) (307,480) 28,746 (65,461) (101,416) 367,147 (1,546,363) (901,598) 202,412 (417,908) (179,787)

d.7) Composition of the plan assets, shown as a percentage of the total

Plano 1 - Previ Other plans

06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012

Fixed Revenue 31.5% 31.5% 31.3% 80.5% 88.9% 89.5%

Floating Revenue 59.0% 59.6% 60.1% 10.9% 6.4% 4.6%

Real estate investments 5.7% 5.2% 4.7% 2.4% 2.1% 1.8%

Loans and financing 3.4% 3.3% 3.4% 2.1% 2.0% 1.9%

Other 0.5% 0.4% 0.5% 4.2% 0.6% 2.2%

Amounts listed in fair value of plan assets

In the entity’s own financial instruments 7.2% 8.1% 6.2% -- -- --

In properties or other assets used by the entity 0.1% 0.1% 0.1% 0.1% -- 0.1%


112

d.8) Main actuarial assumptions adopted in each period


(1)

06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012

Inflation rate (p.a.) 5.60% 4.20% 4.20% 5.68% 4.20% 4.20% 5.52% 4.20% 4.20% 4.20% 4.20% 4.20%

Real discount rate (p.a.) 5.29% 4.33% 5.70% 5.12% 4.33% 5.70% 5.38% 4.33% 5.70% 4.33% 4.33% 5.70%

Nominal rate of return on investments (p.a.) 11.19% 8.71% 10.14% -- -- -- -- -- -- 8.71% 8.71% 10.14%

Real rate of expected salary growth (p.a.) 0.14% 0.14% -- -- -- -- -- -- -- 0.15% 0.52% 0.64%

Table actuarial survival (2) AT-83 AT-83 AT-83 AT-83

Capitalization method Projected credit unit Projected credit unit Projected credit unit Projected credit unit

(1) Grouped actuarial assumptions are expressed as weighted averages.

(2) Prevmais, Multifuturo I and Plano de Benefícios 1 (Fusesc) plans use the AT-2000.


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In order to determine the values for the defined benefit plans, the Bank uses methods and assumptions different from those submitted by entities sponsored.

The CPC 33 (R1) prescribes the accounting, as well as the effects that occurred or that will occur in the entities that sponsors employee benefits plans. However, the sponsored entities complies with the rules emanated from Ministério da Previdência Social, through the Conselho de Gestão da Previdência Complementar (CGPC) and the Superintendência Nacional de Previdência Complementar (Previc). The most significant differences are concentrated on the definition of the figures relating to Plano 1 – Previ.

d.9) Differences in assumptions of the Plano 1 - Previ

Bank Previ

Real discount rate (p.a.) 5.29% 5%

Table actuarial survival AT-83 AT-2000

Evaluation of assets – Exclusive funds Market value or discounted

cash flow Discounted cash flow

Capitalization method Projected credit unit Aggregate Method

d.10) Reconciliation of amounts calculated in Plan 1 - Previ/Bank

R$ thousand

Plan assets Actuarial liabilities Effect in surplus

06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012

Value determined - Previ

130,877,557 132,282,188 121,720,186 (105,150,551) (105,150,551) (100,695,706) 25,727,006 27,131,637 21,024,480

Incorporation of values from agreement 97

13,235,172 13,198,959 13,145,046 (13,235,172) (13,198,959) (13,145,046) -- -- --

Incorporation of values from Grupo Especial

1,021,733 1,013,754 -- -- -- -- 1,021,733 1,013,754 --

Adjustment in the value of plan assets (1)

(10,152,575) 5,534,235 (1,396,914) -- -- -- (10,152,575) 5,534,235 (1,396,914)

Adjustment in the liabilities –discount rate/ capitalization method

-- -- -- (3,735,498) (10,063,930) 8,069,113 (3,735,498) (10,063,930) 8,069,113

Value determined - Bank

134,981,887 152,029,136 133,468,318 (122,121,221) (128,413,440) (105,771,639) 12,860,666 23,615,696 27,696,679

(1) Refers mainly to adjustments made by the Bank in determining the fair value of the investments in Litel, Neoenergia and in securities held to maturity.

e) Overview of actuarial asset/(liability) recorded by the Bank

R$ thousand

Actuarial assets Actuarial liabilities

06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012

Plano 1 (Previ) 6,430,333 11,807,848 13,848,340 -- -- --

Plano Informal (Previ) -- -- -- (1,019,114) (1,091,017) (1,690,258)

Plano de Associados (Cassi) -- -- -- (7,255,086) (7,717,855) (6,470,872)

Regulamento Geral (Economus) -- -- -- (504,851) (763,359) (416,266)

Regulamento Complementar 1 (Economus) -- -- -- (2,226) (3,537) (1,602)

Plus I e II (Economus) -- -- -- (385,686) (391,916) (355,841)

Grupo B’ (Economus) -- -- -- (129,985) (134,705) (119,302)

Prevmais (Economus) 3,767 -- 12,187 -- (9,165) --

Multifuturo I (Fusesc) 22,217 4,910 10,953 -- -- --

Plano 1 (Fusesc) 18,200 -- 40,595 -- (8,253) --

Plano BEP (Prevbep) 20,142 18,739 20,531 -- -- --

Total 6,494,659 11,831,497 13,932,606 (9,296,948) (10,119,807) (9,054,141)


114

f) Allocations of the Surplus – Plano 1

R$ thousand

1st half/2013 2012 1st half/2012

Fundo Paridade

Initial Balance 740,643 1,608,379 1,608,379

Interest and inflation adjustment 42,908 183,275 81,505

Contributions to the Plano 1 – Agreement 97 (32,494) (37,257) (20,625)

Early contribution to amortize – Grupo Especial (1) (2,812) (1,013,754) --

Closing Balance 748,245 740,643 1,669,259

Fundo de Destinação

Initial Balance 2,373,525 3,684,325 3,684,325


Amounts transferred to Plano 1 (223,687) -- --

Transfers to Fundo de Utilização (878,421) (1,641,801) (662,203)

Closing Balance 1,377,855 2,373,525 3,191,666

Fundo de Contribuição

Initial Balance 726,637 1,096,433 1,096,433

Adjustment for inflation 37,118 100,619 50,779

Contributions to the Plano 1 (227,181) (470,415) (212,306)

Closing Balance 536,574 726,637 934,906

Fundo de Utilização

Initial Balance 5,357,912 3,249,250 3,249,250

Amounts transferred from Fundo de Destinação 878,421 1,641,801 662,203


Closing Balance 6,569,981 5,357,912 4,094,721

Total funds allocated surplus 9,232,655 9,198,717 9,890,552

(1) Refers to the payment of 100% of mathematical reserves guarantors of additional supplemental retirement of the Grupo Especial.

f.1) Fundo Paridade

The plan was funded, up to 12.15.2000, through a contribution of 2/3 (two thirds) from the Bank and another of 1/3 (one third) from participants. As from 12.16.2000, in order to adjust to the provisions of Constitutional Amendment N° 20, both the Bank and the participants started to make a contribution of 1/2 (one half), and an agreement was signed by the parties involved and duly approved by the Supplementary Pension Plan Secretariat.

The cost for the implementation of the equal contributions was defrayed by using the Plan's surplus at the time. As a result of this agreement, the Bank, yet, was entitled to recognize the amount of R$ 2,227,254 thousand, which was recorded in Fundos de Destinação Superávit - Previ. This Asset is monthly adjusted based on the actuarial goal (INPC + 5% per year) and, since January 2007, has been used to offset any financial imbalance in the ratio between the Unamortized Reserve and Advanced Amortization arising from the agreement entered into with Previ in 1997, which granted supplementary benefits to the participants of Plano 1 who joined the Plan up to 04.14.1967 and had not retired up to that date.

f.2) Fundo de Destinação

On 11.24.2010, Banco do Brasil signed a Memorandum of Understanding with the entities that represents current and retired employees, the aim of which was to allocate and use a share of the Plan's surplus, as determined by Supplementary Law 109/2001 and CGPC Resolution n° 26/2008.

In view of the approval of the measures provided for in the Memorandum of Understanding by Previ's Decision-Making Council, the Bank recorded, as of November 30, 2010, under "Fundos de Destinação - Previ", the amount of R$ 7,519,058 thousand against the write-off of the amount from "Other receivables - Actuarial assets", adjusted by the actuarial target (INPC + 5% p.a.).


115

f.3) Fundo de Contribuição

The fund is composed of resources transferred from the Fundo de Destinação to support the interruption of contribution payments for a period of three years, as established in the Memorandum of Understanding. The amount related to the Bank’s contributions is transferred to Previ, in a monthly basis. The Fundo de Contribuição is updated by an actuarial goal (INPC + 5% p.a.).

f.4) Fundo de Utilização

The fund is composed of resources transferred from the Fundo de Destinação and it can be used by the Bank after fulfilling the requirements established by applicable law. The Fundo de Utilização is updated by an actuarial goal (INPC + 5% p.a.).

28 – Provisions, Contingent Liabilities and Legal Liabilities - Taxes and Social Security

Labor Lawsuits

The Bank is a party to labor lawsuits mainly filed by former employees or trade unions of the banking industry. Allowance for probable losses represent various claimed requests, such as: compensation, overtime, distortion of the working day, additional function and representation, and others.

Tax Lawsuits

The Bank, in despite of its conservative profile - in inspections conducted by the tax authorities - is subject to the questions about taxes, which may eventually create to assessments, such as: composition of the calculation basis of income tax/social contribution (deductibility) and discussion regarding the incidence of taxes, when certain economic facts occur. Most actions from the assessments are about ISSQN, income tax, social contribution, PIS/COFINS, IOF and Social Security Contributions Employer. As guarantee for some of them, there are attachments in cash, bonds, real state or judicial deposits when necessary.

Civil Lawsuits

The collection of the difference between the inflation correction of financial investments and judicial deposits related to the period of economic plans (Bresser, Summer and Collor I and II Plans) is highlighted in the civil lawsuits.


116

a) Provisions for Labor, Tax and Civil Claims - Probable

In compliance with the CMN Resolution 3,823/2009, the Bank makes allowance for labor, civil and tax lawsuits that have risk of probable losses.

Changes in the provisions for civil, tax and labor claims classified as probable

R$ thousand


Labor lawsuits

Initial Balance 2,945,490 2,514,536

Addition 699,614 517,962

Reversal of the provision (93,025) (90,737)

Written off due payment (349,977) (415,823)

Price level correction 118,141 77,946


Tax lawsuits


Addition 221,061 149,830

Reversal of the provision (19,099) (114,353)



Amounts merged/added 3,290 --


Civil lawsuits


Addition 2,749,307 1,250,373

Reversal of the provision (1,214,156) (289,312)




Total Labor, Tax and Civil 11,090,452 8,051,735

b) Contingent Liabilities – Possible

The lawsuits, tax and civil risks classified "possible" are exempted from any provisions on the Resolution CMN 3,823/2009.

The balances of contingent liabilities classified as possible

06.30.2013 12.31.2012 06.30.2012

Labor claims 263,297 90,721 156,642

Tax claims (1) 7,822,611 5,032,809 4,149,751

Civil claims 4,325,953 3,434,338 5,639,885

Total 12,411,861 8,557,868 9,946,278

(1) The main contingencies originate from (i) notices of labor infraction drawn by the INSS, aiming at the payment of contributions applicable on year-end bonuses paid in the collective agreements in the period from 1995 to 2006, in the amount of R$ 2,124,896 thousand, public transport pay and use of private car by employees of Banco do Brasil, in the amount of R$ R$ 197,931 thousand and employee profit sharing corresponding to the period from April 2001 to October 2003, in the amount of R$ 53,610 thousand and (ii) notices of tax assessment drawn by the Treasuries of the Municipalities, aiming at the collection of ISSQN, which amounts R$ 535,071 thousand.


117

c) Deposits in Guarantee of Funds

Deposits in guarantee balances recorded for contingencies R$ thousand

06.30.2013 12.31.2012 06.30.2012

Labor claims 2,944,058 2,716,708 2,582,399

Tax claims 7,071,078 6,514,284 6,133,269

Civil claims 5,717,444 4,681,155 3,955,021

Total 15,732,580 13,912,147 12,670,689

d) Legal Obligations

The Bank has a record in Other Liabilities - Tax and Social Security, in the amount of R$ 14,028,539 thousand (R$ 13,881,845 thousand as of 12.31.2012 and R$ 13,718,043 thousand as of 06.30.2012), relating to the following actions:

Judicial Proceeding: Income and Social Contribution Taxes

In February 1998, the Bank applied for a writ of mandamus, in progress at the 16th Federal Court of Federal District claiming full compensation of accumulated losses of income tax and negative basis for the calculation of Social Contribution on Net Income (CSLL). Since then, the Bank has been fully offsetting tax loss and negative basis of social contribution against income tax and social contribution, and has made judicial deposits in the full amount due (70% of the amount offset). These deposits prompted the 16th Vara da Justiça Federal do Distrito Federal to issue an order recognizing the suspension of chargeability of these taxes until final judgment of the Bank's request, based on article 151, item II, of the Código Tributário Nacional (CTN). The case was dismissed in a first instance and an appeal brought by the Bank was deprived by the TRF of the 1st Region. The decision was challenged by extraordinary appeal filed by the Bank on 10.01.2002. Today, the appeal is pending in the Federal Court of the 1st Region, the judgment by the Supreme Court of another extraordinary feature (RE nº 591,340), which was recognized by the Supreme Court because the general impact.

The offsetting of tax loss carry forward and recoverable CSLL has resulted in the write-off of deferred tax credits, observing the limitation of 30%.

Deferred taxes including corporate income tax (IRPJ) and social contribution on net income (CSLL) on the restatement of judicial deposits are being offset with the tax credits resulting from the provision related to that judicial deposit, in conformity with paragraph 2, item II, article 1 of CMN Resolution 3,059/2002, with no impact on income.

Based on the hypothesis of a successful outcome to its lawsuit, observed as of September 2005 and January 2009, the Bank would have consumed the entire stock of tax loss carry forward and recoverable social contribution, respectively. Therefore, since the accrual period of October 2005 and February 2009, the amount of IRPJ and CSLL are being paid in full. Moreover, there would be a transfer of resources from the account used to record judicial deposits to that of cash and cash equivalents. Tax credits for the escrow deposits (principal) would be written off against the liabilities of IRPJ and CSLL and would be reversed against income, the provision for tax risks related to the restatement of the deposits, amounting to R$ 5,962,803 thousand.

If the Bank were unsuccessful in its lawsuit (situation in which the amounts deposited judicially would be converted into income in favor of the National Treasury), the portions of IRPJ tax credits on tax losses and CSLL to offset would be reclassified to the representative asset account "IRPJ recoverable" and "CSLL recoverable", respectively, that could be used since the accrual period of October 2005 and February 2009, observing the limitation of 30%. These taxes recoverable, which would result from the adjustments of Statements of Economic-Fiscal Information of Businesses, corresponds to R$ 5,242,316 thousand as of 06.30.2013 and its restatement by the Selic Rate corresponds to R$ 1,514,713 thousand. This sum adjusts the provision for tax risks with respect to the updating of court deposits so that it will be sufficient to fully cancel the risk of a likely loss.


118

Amounts related to this matter R$ thousand

06.30.2013 12.31.2012 06.30.2012

Judicial Deposits 14,257,375 13,986,906 13,703,930

Amount realized (70%) 7,817,011 7,817,011 7,817,011

Restatement 6,440,364 6,169,895 5,886,919

Legal Obligations - provision for lawsuit 12,534,476 12,428,627 12,304,247

Tax losses of IRPJ 3,002,033 3,002,033 3,002,033

CSLL negative bases/ CSLL recoverable 3,569,640 3,569,640 3,569,640

Provision for restatement of judicial deposit 5,962,803 5,856,954 5,732,574

Judicial Proceeding: PIS/Pasep and Cofins

Provision for lawsuit relating to the action for a writ of mandamus intended to achieve recognition of the right of Banco do Brasil, BB Corretora, Ativos S.A. and Banco Votorantim to pay PIS/Pasep and Cofins, according to the calculation bases set out in Complementary Laws 7/1970 and 70/1991. Since their preliminary injunctions were suspended on 08.12.2010, Banco do Brasil and BB Corretora returned to collect the PIS/Pasep and Cofins from the event of July 2010 as provided for in Law 9,718/1998. The legal action taken by Banco Votorantim cover only COFINS and had favorable judgments, and the adverse party had presented appeals, which currently are waiting decision of the Superior Courts, especially the Supreme Court.

Amounts related to this matter R$ thousand

06.30.2013 12.31.2012 06.30.2012

Legal Obligations – provision for lawsuit 1,494,063 1,453,218 1,413,796

29 - Risk and Capital Management

a) Risk Management Process

Banco do Brasil considers the management of risks and of capital one of the main vectors for the decision-making process.

In the Banco do Brasil, collegiate risk management is performed completely apart from the business units. Risk management policies are approved by the Bank's Board of Directors. The Global Risk Committee (CRG), which is a discussion group composed by the President and by Vice-Presidents, is responsible for implementing and monitoring of these policies. The guidelines issued by the CRG are directed at specific sub-committees (Credit, Market and Liquidity and Operational), which are groups formed by Directors.

To find out more about the risk management process at Banco do Brasil, access the website bb.com.br/ri.

b) Credit Risk

Credit Risk is associated with the possibility of loss resulting from uncertainty regarding the receipt of amounts agreed upon with borrowers, counterparts of contracts or issues of securities.

In order to comply with the best practices of credit risk management and to increase efficiency in the economic capital management, Banco do Brasil uses risk and return metrics, present throughout its loan process, as a mechanism of risk management culture at the Institution.

c) Liquidity Risk

Liquidity risk takes two forms: market liquidity risk and cash flow liquidity risk (funding). The first is the possibility of loss resulting from the incapacity to perform a transaction in a reasonable period of time


119

and without significant loss of value. The second is associated with the possibility of a shortage of funds to honor commitments assumed on account of the mismatching between assets and liabilities.

d) Operational Risk

Operational risk reflects the possibility of loss resulting from faults, deficiencies, or the inadequacy of internal processes, personnel and systems, or external events. This concept includes legal risks.

e) Market Risk

Market Risk reflects the possibility of loss that can be caused by changes in the behavior of interest and exchange rates and of prices of shares and commodities.


120

Financial Instruments – Fair Value

Financial instruments recorded in balance-sheet accounts, compared to fair value:

R$ thousand

06.30.2013 12.31.2012 06.30.2012 Unrealized gain/loss, net of tax effects

Book value Fair value Book value Fair value Book value Fair value On Income On Shareholders´ Equity

06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012

Assets

Short-term interbank investments 222,865,211 222,764,385 219,323,434 219,239,963 190,507,138 190,522,555 (100,826) (83,471) 15,417 (100,826) (83,471) 15,417

Securities 190,049,159 190,171,016 182,942,587 182,985,415 165,670,427 165,622,515 (512,948) 1,457,730 1,376,471 121,857 42,828 (47,912)

Adjustment of securities available for sale (Note 8.a)

-- -- -- -- -- -- (634,805) 1,414,902 1,424,383 -- -- --

Adjustment of securities held to maturity (Note 8.a)

-- -- -- -- -- -- 121,857 42,828 (47,912) 121,857 42,828 (47,912)

Derivative financial instruments 1,980,038 1,980,038 1,414,580 1,414,580 1,865,301 1,865,301 -- -- -- -- -- --

Loan operations 515,402,965 514,219,257 469,712,686 468,589,925 409,325,013 407,493,946 (1,183,708) (1,122,761) (1,831,067) (1,183,708) (1,122,761) (1,831,067)

Liabilities

Interbank deposits 19,914,763 19,959,178 16,568,656 16,629,535 15,002,517 14,846,560 (44,415) (60,879) 155,957 (44,415) (60,879) 155,957

Time deposits 257,212,501 257,257,164 263,012,824 262,911,255 285,778,447 285,650,498 (44,663) 101,569 127,949 (44,663) 101,569 127,949

Liabilities related to repurchase agreement 238,019,970 237,358,713 225,786,872 225,402,847 194,535,891 194,100,711 661,257 384,025 435,180 661,257 384,025 435,180

Borrowings and onlendings 85,396,208 85,434,396 77,687,149 77,729,376 65,556,861 65,591,469 (38,188) (42,227) (34,608) (38,188) (42,227) (34,608)

Derivative financial instruments 4,150,514 4,150,514 3,439,482 3,439,482 4,003,926 4,003,926 -- -- -- -- -- --

Other liabilities 251,618,070 250,252,764 232,547,754 231,669,179 206,881,195 205,130,545 1,365,306 878,575 1,750,650 1,365,306 878,575 1,750,650

Unrealized gain/(loss), net of tax effects 101,815 1,512,561 1,995,949 736,620 97,659 571,566


121

Determination of Fair Value of Financial Instruments

Short-term interbank investments: The fair value was obtained by discounted future cash flows, using interest rates exercised by the market in similar operations in the balance sheet date.

Securities: Securities are accounted for by market value, as provided for in Bacen Circular nº 3,068/2001, except for securities held to maturity. The securities fair value, including those held to maturity, were obtained according to rates collected at the market.

Loan operations: Fixed rate operations have been estimated through the future cash flow discount method, considering the interest rates utilized by the Bank for contracting of similar operations at the balance sheet date. For these operations that are remunerated by floating rates, the fair value was equivalent to the book value itself.

Interbank deposits: The fair value has been calculated through discount of the difference between future cash flows and rates currently applicable in the fixed operations market. In case of floating operations which maturities did not exceed 30 days, the book value was deemed equivalent to the fair value.

Time deposits: The same criteria adopted for interbank deposits were utilized in the determination of the fair value.

Money Market Borrowing: For operations at fixed rates, the fair value was determined calculating the discount of the estimated cash flows adopting a discount rate equivalent to the rates applicable in contracting of similar operations in the last market day. For floating operations, book values have been deemed equivalent to market value.

Borrowing and onlendings: Such operations are exclusive to the Bank, without similarity in the market. In face of their specific characteristics, exclusive rates for each fund entered, inexistence of an active market and similar instrument, the fair values of such operations were considered equivalent to the book value.

Other liabilities: Fair values have been determined by the discounted cash flow method, which takes into account interest rates offered in the market for obligations for which maturities, risks and terms are similar.

Derivatives: According to Bacen Circular nº 3,082/2002, derivatives are recorded at market value. Derivatives' market value was estimated in accordance with an internal pricing model, with the use of the rates disclosed for transactions with similar terms and indices on the fiscal years' last business day.

Other financial instruments: Included or not in the balance sheet, fair value was approximately equivalent to the correspondent book value.

Level of information regarding assets and liabilities measured at fair value in the balance sheet

According to the level of information in the measurement at fair value, the assessment techniques used by the Bank are the following:

Level 1 – Prices used are quoted in active markets for identical financial instruments. A financial instrument is considered quoted in an active market if the quoted prices are readily and regularly available and these prices represent real market transactions which occur regularly on an arm's length basis.

Level 2 – Other available information, excepted that from Level 1, is used, in which the prices are quoted in non-active markets or for similar assets and liabilities, or other available information is used or that can be corroborated by information observed in the market to support the assessment of the assets and liabilities.


122

Level 3 – Information that is not available in the market is used in the definition of the fair value. If the market for the financial instrument is not active, the Bank establishes the fair value using the valuation technique which takes into account internal data that is consistent with the economic methodologies accepted for pricing of financial instruments.

Assets and liabilities measured at fair value in the balance sheet R$ thousand

Balance at 06.30.2013

Level 1 Level 2 Level 3

Assets 178,195,312 106,624,043 70,848,811 722,458

Trading securities, measured by market value 79,008,114 54,989,921 24,018,193 --

Derivative financial instruments 1,980,038 -- 1,979,368 670

Available-for-sale securities, measured by market value 97,207,160 51,634,122 44,851,250 721,788

Liabilities 8,788,710 -- 8,788,710 --

Hedge funding 4,638,196 -- 4,638,196 --

Derivative financial instruments 4,150,514 -- 4,150,514 --

R$ thousand



Assets 171,447,314 114,356,266 56,289,673 801,375



Available-for-sale securities, measured by market value 95,321,417 58,698,803 35,822,177 800,437

Liabilities 8,454,366 -- 8,454,314 52

Hedge funding 5,014,884 -- 5,014,884 --


R$ thousand



Assets 151,642,533 99,493,497 50,846,609 1,302,427


Derivative financial instruments 1,865,301 162,501 1,700,494 2,306

Available-for-sale securities, measured by market value 84,572,751 52,697,112 30,575,518 1,300,121

Liabilities 8,292,741 448,574 7,836,234 7,933

Hedge funding 4,288,815 -- 4,288,815 --

Derivative financial instruments 4,003,926 448,574 3,547,419 7,933

Changes on financial assets and liabilities measured at fair value in the balance sheet, classified as Level 3

R$ thousand

1st half 2013

Opening

balance Acquisitions Write-offs Income

Closing balance

Assets

Trading securities, measured by market value -- -- -- -- --

Derivative financial instruments 938 244 -- (512) 670

Available-for-sale securities, measured by market value 800,437 -- (54,699) (23,950) 721,788

Liabilities

Derivative financial instruments 52 -- (6) (46) --


123

R$ thousand

1st half 2012

Opening

balance Acquisitions Write-offs Income

Closing balance

Assets

Trading securities, measured by market value -- -- -- -- --

Derivative financial instruments 821 1,485 -- -- 2,306

Available-for-sale securities, measured by market value 1,306,537 -- (6,416) -- 1,300,121

Liabilities

Derivative financial instruments 16,282 -- (8,349) -- 7,933

Sensitivity analysis (CVM Instruction nº 475/2008)

The Banco do Brasil manages its risks in a dynamic process, identifying, assessing, monitoring, and controlling market risk exposure in its own position. In this context, the Bank takes into account the risk limits defined by the Strategic Committees and possible scenarios, to act in a timely manner in reversing any occasional adverse results.

In accordance with CMN Resolution nº 3,464/2007 and with Bacen Circular nº 3,354/2007, to manage more efficiently its transactions exposed to market risks, Banco do Brasil separates its transactions, including derivative financial instruments, as follows:

1) Trading Book: consisting of own positions held for trading or as a hedge for its trading portfolio, for which there is an intention of trading prior to their contractual expiry, subject to normal market conditions and that do not have a non-trading clause.

2) Banking Book: consisting of transactions not classified in the Trading Book whose feature is held to maturity.

The sensitivity analysis for all the operations with assets and liabilities of the Balance Sheet, in compliance with CVM Instruction nº 475/2008 does not adequately reflect the market risk management process and the best practices adopted by the Institution.

In order to determine the sensitivity of the Bank's capital to the impacts of market volatility (except Banco Votorantim capital), simulations were performed with three likely scenarios, two of which with an adverse effect for the Bank. The scenarios used are listed below:

Scenario I: Likely situation, which reflects the perception of the Bank’s senior management, the scenario most likely to occur for a 3-month horizon, considering macroeconomic factors and market information (BM&FBovespa, Anbima, etc.). Assumptions: exchange rate real/dollar of R$ 2.18 and raising the Selic rate to 9.0% per annum based on market conditions observed at 06.30.2013.

Scenario II: Possible situation. Assumptions adopted: parallel shock of 25.0% in the risk variables, based on market conditions observed on 06.30.2013 considering the worst losses by risk factor and, therefore, ignoring the relation dynamics of macroeconomic factors.

Scenario III: Possible situation. Assumptions adopted: parallel shock of 50.0% in the risk variables, based on market conditions observed on 06.30.2013 considering the worst losses by risk factor and thus ignoring the relation dynamics of macroeconomic factors.

The tables below summarize the results for the Trading Portfolio (Trading), excluding Banco Votorantim's positions, composed of public and private securities, derivative financial instruments and funds obtained through commitment operations.


124

R$ thousand

Scenario I

Risk Factor Concept

06.30.2013 12.31.2012 06.30.2012

Variation of rates

Income Variation

of rates Income

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Increase 565 Maintenance -- Decrease 3,341

TMS and CDI coupons Risk of variation of interest rate coupons Decrease 48 Decrease 101 Decrease 66

IPCA coupon Risk of variation of price index coupons Increase (928) Maintenance -- Decrease 1,330

Foreign currency coupons (US Dollars)

Risk of variation of foreign currency coupons Increase -- Increase 102 Increase --

Exchange rates variation

Risk of variation of exchange rates Decrease (3,892) Decrease (1,830) Decrease 170

R$ thousand

Scenario II

Risk Factor Concept

06.30.2013 12.31.2012 06.30.2012

Variation of rates

Income Variation

of rates Income

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Decrease (1,689) Increase (25,630) Increase (11,629)

TMS and CDI coupons Risk of variation of interest rate coupons Increase (11) Increase (4) Increase (25)

IPCA coupon Risk of variation of price index coupons Increase (1,159) Increase (643) Increase (2,094)


Risk of variation of foreign currency coupons Increase -- Decrease (36) Increase --


Risk of variation of exchange rates Decrease (60,551) Decrease (46,676) Increase (1,225)

R$ thousand

Scenario III

Risk Factor Concept

06.30.2013 12.31.2012 06.30.2012

Variation of rates

Income Variation

of rates Income

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Decrease (3,579) Increase (50,692) Increase (22,058)

TMS and CDI coupons Risk of variation of interest rate coupons Increase (23) Increase (7) Increase (50)

IPCA coupon Risk of variation of price index coupons Increase (2,255) Increase (1,263) Increase (4,093)


Risk of variation of foreign currency coupons Increase -- Decrease (73) Increase --


Risk of variation of exchange rates Decrease (121,102) Decrease (93,351) Increase (2,450)

For transactions classified in the Banking Book, appreciations or depreciations resulting from changes in interest rates practiced in the market do not imply in a significant financial and accounting impact on the Bank's income. It’s a result of the portfolio quality that is composed on large scale of loan operations (consumer credit, agribusiness, working capital, etc.); retail funding (demand, time, and savings deposits), and securities, which are recorded in the books according to the agreed on rates when contracting these operations. In addition, it should be pointed out that these portfolios have as their key feature the intention of holding the respective operations to maturity, and hence they are not subject to the effects of fluctuating interest rates, or the fact that such transactions are naturally related to other instruments (natural hedge), hence minimizing the reflexes of a stress scenario.

The tables below show a summary of the Trading Portfolio (Trading) and Non Trading (Banking), except from Banco Votorantim:


125

R$ thousand

Scenario I

Risk Factor Concept

06.30.2013 12.31.2012 06.30.2012

Variation of rates

Income Variation of

rates Income

Variation of rates

Income

Prefixed rate

Risk of variation of prefixed interest rates

Increase (3,515,816) Maintenance -- Decrease 1,607,638

TR coupon

Risk of variation of interest rate coupons

Increase 3,148,930 Maintenance -- Decrease (1,515,091)

TBF coupon Increase 76 Decrease (203) Decrease (661)

TJLP coupon Increase 845,028 Increase 251,946 Decrease (25,239)

TMS and CDI coupons Decrease (34,406) Decrease (415,910) Decrease (179,024)

IGP-M coupon

Risk of variation of price index coupons

Increase (91,240) Maintenance -- Decrease 86,796

IGP-DI coupon Increase (280) Maintenance -- Decrease 145

INPC coupon Increase (117,882) Maintenance -- Decrease 81,179

IPCA coupon Increase (593,527) Maintenance -- Decrease 37,981

Foreign Currency Coupon

Risk of variation of foreign currency coupons

Increase 754,053 Increase 652,328 Increase 452,878

Exchange rate Risk of variation of exchange rates Decrease (24,107) Decrease (13,634) Decrease (26,270)

R$ thousand

Scenario II

Risk Factor Concept

06.30.2013 12.31.2012 06.30.2012

Variation of rates

Income Variation of

rates Income

Variation of rates

Income

Prefixed rate


Increase (9,234,342) Increase (6,451,975) Increase (5,500,431)

TR coupon


Decrease (8,086,863) Decrease (5,238,026) Decrease (5,091,738)

TBF coupon Decrease (86) Decrease (137) Decrease (160)

TJLP coupon Decrease (942,780) Decrease (252,037) Decrease (144,327)


IGP-M coupon


Increase (106,873) Increase (120,834) Increase (145,832)

IGP-DI coupon Increase (234) Increase (53) Increase (237)

INPC coupon Increase (134,587) Increase (89,503) Increase (133,973)

IPCA coupon Increase (771,710) Increase (17,295) Increase (61,665)



Decrease (786,375) Decrease (424,401) Decrease (509,080)


R$ thousand

Scenario III

Risk Factor Concept

06.30.2013 12.31.2012 06.30.2012

Variation of rates

Income Variation of

rates Income

Variation of rates

Income

Prefixed rate


Increase (17,521,410) Increase (12,346,186) Increase (10,479,757)

TR coupon


Decrease (16,764,427) Decrease (10,732,274) Decrease (10,452,486)

TBF coupon Decrease (173) Decrease (275) Decrease (321)

TJLP coupon Decrease (1,933,201) Decrease (509,781) Decrease (291,756)


IGP-M coupon


Increase (214,761) Increase (233,218) Increase (278,491)

IGP-DI coupon Increase (466) Increase (106) Increase (472)

INPC coupon Increase (265,111) Increase (177,352) Increase (264,095)

IPCA coupon Increase (1,393,296) Increase (25,394) Increase (118,957)



Decrease (1,599,163) Decrease (860,419) Decrease (1,037,948)


The scenarios used for preparing the framework of sensitivity analysis must use situations of deterioration of at least 25% and 50% for variable risk, in a individuallized basis, as determined by CVM Instruction nº 475/2008. Thus, the combined analysis of the results is impaired. For example,


126

simultaneous shocks of increase in the prefixed interest rate and reduction of TR Coupon are not consistent from the macroeconomic perspective.

The derivative transactions classified in the Banking Book, don’t represent a relevant market risk to Banco do Brasil, as these positions originated mainly to fulfill the following situations:

� Changing the index of funding and lending transactions performed to meet customer needs; � Market risk hedge, which purpose and effectiveness are described in Note 8.d. Also in this

transaction, the interest and exchange rate variations have no effects on the Bank's income.

On 06.30.2013, the Banco do Brasil did not enter into any transaction classified as an exotic derivative, as described in CVM Instruction nº 475/2008 - Attachment II.

Interest in Banco Votorantim

Simulations were also made with three possible scenarios, two of which with consequent adverse result, as follows:

Scenario I: Likely situation, which reflects the perception of the Banco Votorantim’ senior management in the scenario most likely to occur. Assumptions adopted: shock of 1% in the exchange rate real/dollar, from 06.30.2013, and parallel shock of 0.10% in the interest rate pre-fixed curve.

Scenario II: Assumptions adopted: parallel shock of 25% in the risk variables, based on market conditions observed on 06.30.2013 and considering the worst losses by risk factor and, therefore, ignoring the relation dynamics of macroeconomic factors.

Scenario III: Assumptions adopted: parallel shock of 50% in the risk variables, based on market conditions observed on 06.30.2013 and considering the worst losses by risk factor and therefore ignoring the relation dynamics of macroeconomic factors.

In the tables below are presented the results for the positions of the Bank for its participation in Banco Votorantim:

R$ thousand

Scenario I

Risk Factor Concept

06.30.2013 12.31.2012 06.30.2012

Variation of rates

Income Variation

of rates Income

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Increase (134) Decrease 8,508 Decrease 18,006

Foreign currency coupons

Risk of variation of foreign exchange coupon Increase (892) Maintenance -- Decrease 40

Foreign exchange fluctuation

Risk of variation of exchange rates Increase (1,971) Decrease 3,986 Decrease (22,487)

Price Indexes Risk of variation of price index coupons Increase (294) Increase 1,177 Increase (488)

Other Risk of variation of other coupons Increase (436) Maintenance -- Increase 791

R$ thousand

Scenario II

Risk Factor Concept

06.30.2013 12.31.2012 06.30.2012

Variation of rates

Income Variation

of rates Income

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Increase (3,073) Increase (13,281) Increase (17,503)


Risk of variation of foreign exchange coupon Increase (2,605) Increase (2,830) Increase (2,368)


Risk of variation of exchange rates Increase (41,058) Increase (116,098) Decrease (109,126)

Price Indexes Risk of variation of price index coupons Increase (2,686) Decrease -- Increase (654)

Other Risk of variation of other coupons Increase (3,245) Increase (12,731) Increase (200)


127

R$ thousand

Scenario III

Risk Factor Concept

06.30.2013 12.31.2012 06.30.2012

Variation of rates

Income Variation

of rates Income

Variation of rates

Income





Risk of variation of exchange rates Increase (73,224) Increase (245,147) Decrease (199,448)

Price Indexes Risk of variation of price index coupons Increase (5,326) Decrease (9) Increase (814)

Other Risk of variation of other coupons Increase (9,658) Decrease (27,622) Increase (10,700)

In the tables below are presented the results for the positions of the Bank for its participation in Banco Votorantim of the trading and non-trading book:

R$ thousand

Scenario I

Risk Factor Concept

06.30.2013 12.31.2012 06.30.2012

Variation of rates

Income Variation

of rates Income

Variation of rates

Income

Prefixed rate Risk of variation of prefixed interest rates Increase (15,433) Decrease 134,287 Decrease 233,188


Risk of variation of foreign exchange coupon Increase (1,651) Maintenance -- Decrease (234)


Risk of variation of exchange rates Increase 994 Decrease (1,702) Decrease (2,973)

TJLP Risk of variation of TJLP coupons Increase 783 Increase -- Increase 2,202

TR/TBF Risk of variation of TR/TBF coupons Increase 171 Maintenance -- Maintenance --

Price Index Risk of variation of price index coupons Increase (443) Maintenance (4,178) Increase (990)

R$ thousand

Scenario II

Risk Factor Concept

06.30.2013 12.31.2012 06.30.2012

Variation of rates

Income Variation

of rates Income

Variation of rates

Income





Risk of variation of exchange rates Decrease (1,675) Decrease (65,478) Decrease (20,711)

TJLP Risk of variation of TJLP coupons Decrease (6,012) Decrease (3,614) Decrease (553)

TR/TBF Risk of variation of TR/TBF coupons Decrease (5) Decrease (38) Decrease (28)

Price Index Risk of variation of price index coupons Increase (4,024) Increase (5,579) Increase (1,185)

R$ thousand

Scenario III

Risk Factor Concept

06.30.2013 12.31.2012 06.30.2012

Variation of rates

Income Variation

of rates Income

Variation of rates

Income





Risk of variation of exchange rates Decrease -- Decrease (133,102) Decrease (43,271)

TJLP Risk of variation of TJLP coupons Decrease (12,265) Decrease (7,316) Decrease (3,419)

TR/TBF Risk of variation of TR/TBF coupons Decrease (9) Decrease (77) Decrease (57)

Price Index Risk of variation of price index coupons Increase (7,991) Increase (6,894) Increase (1,393)


128

f) Capital Management

On June 30, 2011, aligned with Pillar II of Basel, the brazilian regulator, Banco Central do Brasil (Bacen), released the Conselho Monetário Nacional (CMN) Resolution n.º 3,988, which established the need to implement capital management structure for financial institutions. In fulfillment with the CMN Resolution, Banco do Brasil defined as part of its structure the Accounting, the Risk Management, Controlling and Finance Units. Furthermore, in line with the CMN Resolution, the Board of Directors appointed the Controller as responsible for Capital Management with the Banco Central do Brasil.

Banco do Brasil has approaches that enable the identification and evaluation of significant risks incurred, including those not covered by the Required Referential Equity (PRE). Its policies and strategies, as well as the capital plan, provide the maintenance of capital in consistent levels with the risks faced by the institution. Stress tests are performed in a monthly basis and their impacts are assessed from the capital perspective. Capital adequacy management reports are addressed to corporate units and to strategic committees, constituting support to the decision making process by the Senior Management of the Bank.

The CMN Resolution 3,988/2011 and Circular Bacen 3,547/2011 also established the need for further Internal Capital Adequacy Assessment Process (ICAAP), being the date 06/30/2013 the limit for its implementation. Among Banco do Brasil, the institutional responsibility for ICAAP was assigned to the Risk Management Unit. Meanwhile, the Internal Controls Unit, independent area and segregated from the capital management structure, is institutionally responsible for the validation of ICAAP. Finally, Internal Audit holds the institutional responsibility for annually evaluating the process of capital management.

To learn more about the capital management at Banco do Brasil, visit the website bb.com.br/ri.

The BIS Ratio was determined in accordance with the criteria established by CMN Resolutions nº 3,444/2007 and n.º 3,490/2007, which refer to the calculation of the Referential Equity (RE) and of the Required Referential Equity (RRE), respectively, without considering the information relating to Banco Votorantim as determined by Bacen.


129

R$ thousand

06.30.2013 12.31.2012 06.30.2012

Economic

and Financial Financial

Economic and Financial

Financial Economic

and Financial Financial

RE - Referential equity 117,975,571 116,351,017 107,925,146 109,285,842 91,151,695 92,602,660

Tier I 76,417,089 74,607,192 76,769,399 77,099,943 67,904,604 68,124,622

Shareholders' equity 64,721,314 63,182,901 66,069,965 66,350,927 62,308,346 62,528,364

Revaluation reserves (4,605) (4,605) (4,645) (4,644) (4,551) (4,551)

Deferred Assets (95,241) (95,241) (110,795) (110,795) (128,228) (128,228)

Mark-to-market 333,058 333,058 (700,536) (700,536) (585,555) (585,555)

Tax credits excluded from Tier I -- -- -- -- (95) (95)

Hybrid Capital and Debt Instruments (1) 11,462,563 11,191,079 11,515,410 11,564,991 6,314,687 6,314,687

Tier II 45,743,633 45,125,190 36,074,411 36,024,829 28,750,520 28,750,520

Mark-to-market (333,058) (333,058) 700,536 700,536 585,555 585,555

Hybrid Capital and Debt Instruments (1) 7,878,562 8,150,046 2,968,652 2,919,071 -- --

Revaluation reserves 4,605 4,605 4,645 4,644 4,551 4,551

Subordinated Debt Qualifying as Capital 38,193,524 38,193,524 32,400,578 32,400,578 28,160,414 28,160,414

Funds obtained from the FCO 17,635,766 17,635,766 16,602,973 16,602,973 15,755,787 15,755,787

Funds obtained abroad 6,506,572 6,506,572 6,001,028 6,001,028 6,052,014 6,052,014

Funds obtained from the CD 1,261,564 1,261,564 1,615,433 1,615,433 2,073,760 2,073,760

Funds raised in Financial Bills 12,789,622 12,789,622 8,181,144 8,181,144 4,278,853 4,278,853

Excess of Subordinated Debt Instruments (2) -- (889,927) -- -- -- --

Deduction from the RE (4,185,151) (3,381,365) (4,918,664) (3,838,930) (5,503,429) (4,272,482)

Financial instruments excluded from RE (4,185,151) (3,381,365) (4,918,664) (3,838,930) (5,503,429) (4,272,482)

RRE - Required Referential Equity 81,476,330 80,383,080 80,034,881 79,435,474 70,497,281 70,076,731

Credit Risk 77,338,612 76,498,305 76,076,547 75,730,245 66,494,392 66,327,270

Market Risk 206,790 206,790 207,377 207,377 126,675 126,675

Operational Risk 3,930,928 3,677,985 3,750,957 3,497,852 3,876,214 3,622,786

Sufficiency of RE: (RE – RRE) 36,499,241 35,967,937 27,890,265 29,850,368 20,654,414 22,525,929

BIS Ratio: (RE x 100) / (RRE / 0.11) 15.93% 15.92% 14.83% 15.13% 14.22% 14.54%

(1) According to CMN Resolution n.º 3,444/2007, Hybrid Capital and Debt Instruments authorized by Bacen to compose Tier I of the RE are limited to 15% (fifteen percent) of the total of Tier I, including the value of the Hybrid Capital and Debt Instruments itself. The values of the Hybrid Capital and Debt Instruments that may exceed that limit are added to Tier II of the RE.

(2) The Subordinated Debt Instruments allowed to compose Tier II of the RE, are limited to 50% of the total of Tier I, according to Resolution CMN. 3,444/2007. The amount that exceeds this limit should be excluded from Tier II of the RE.

g) Fixed asset ratio

The Fixed Asset Ratio is 22.79% of the Referential Equity-RE (25.85% on 12.31.2012 and 29.59% on 06.30.2012) for the Consolidated Financial Report, and 18.77% (21.64% on 12.31.2012 and 23.56% on 06.30.2012) for the Consolidated Economic and Financial Report, in compliance with CMN Resolution n.º 2,669/1999. The difference between the Fixed Assets Ratio of Consolidated Financial and Economic-Financial is the result of the inclusion of non-financial subsidiaries / affiliates that have high liquidity and low level of restraint, which consequently reduces the Fixed Assets Ratio of Consolidated Financial and Economic.


130

30 – Statement of Comprehensive Income

R$ thousand


Net income presented in the Statement of Income 10,028,794 5,510,116

Other comprehensive income / (loss)

Accumulated other comprehensive income (Note 24.h) (7,280,241) (4,032,975)

Own (5,659,370) (4,778,837)

Branches and subsidiaries abroad (954,933) 227,116

Subsidiaries and affiliates (665,938) 518,746

Income and social contribution taxes related to unrealized (gains) / losses (Note 24.h) 2,717,153 1,921,747

Other comprehensive profit / (loss), net of income and social contribution taxes (4,563,088) (2,111,228)

Comprehensive income – Banco do Brasil 5,465,706 3,398,888

Comprehensive income – Non-controlling interests 256,893 74,484

31 – Other Information

a) Distribution of Dividends and Interest on Own Capital

During a meeting held on 02.20.2013, the Board of Directors approved the setting of the payout rate equivalent to the minimum 40% of net income, for the year 2013, fulfilling the policy for payment of dividends yield and/or interest on own capital on a quarterly basis, pursuant to art. 45 of the Bank's By-Laws.

b) Banco Postal

Since 01.01.2012, the Bank has had access to Correios (Brazilian Postal and Telegraph Corporation) agencies chain, with about 6.3 thousand service points located at 95% of Brazilian municipalities. Through this investment, the Bank anticipated its strategic plan of increasing its service points to achieve all the Brazilian municipalities.

c) Investment Funds Management

Position of investment funds managed by BB Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A.

N.º of Funds/Portfolios Balance (R$ thousand)

06.30.2013 12.31.2012 06.30.2012 06.30.2013 12.31.2012 06.30.2012

Managed funds 566 548 536 483,749,970 444,022,933 447,814,843

Investment Funds 558 538 522 465,890,650 430,833,490 435,161,718

Managed Portfolios 8 10 14 17,859,320 13,189,443 12,653,125


131

d) Details of branches, subsidiaries and associated abroad R$ thousand

06.30.2013 12.31.2012 06.30.2012

Assets

BB Group 43,841,148 37,168,271 34,515,401

Third parties 89,280,916 87,178,714 71,177,429

Total assets 133,122,064 124,346,985 105,692,830

Liabilities

BB Group 20,843,326 22,991,955 20,154,202

Third parties 104,840,904 93,863,535 78,874,075

Stockholders' equity 7,437,834 7,491,495 6,664,553

Attributable to parent company 6,782,677 6,917,391 6,134,992

Non-controlling interest 655,157 574,104 529,561

Total liabilities 133,122,064 124,346,985 105,692,830

1st half/2013 2012 1st half/2012

Net income (loss) 583,644 957,731 422,680

Attributable to parent company 496,099 801,682 347,923

Non-controlling interest 87,546 156,049 74,757

e) Consortium funds R$ thousand

06.30.2013 12.31.2012 06.30.2012

Monthly forecast of Purchase Pool Members receivable funds 155,995 138,854 135,854

Obligations of the group due to contributions 7,754,099 7,454,133 7,908,789

Purchase Pool Members - assets to be contemplated 7,154,645 6,941,366 7,410,240

(In units)

Quantity of groups managed 492 465 435

Quantity of active purchase pool members 426,730 400,975 381,561

Quantity of assets deliverable to members (drawn or winning offer) 29,350 22,205 17,308

1st half/2013 2012 1st half/2012

Quantity of assets delivered in the period 33,850 70,419 35,512


132

f) Assignment of Employees to Outside Agencies

Federal government assignments are regulated by Law 10,470/2002 and Decree 4,050/2001.


Employees

Ceded (1)

Cost in the

Period (R$ thousand)

Employees

Ceded (1)

Cost in the

Period (R$ thousand)

With costs for the Bank

Federal Government -- 91 2 514

Labor unions 226 14,836 237 14,497

Other organizations/entities: 2 291 5 1,098

Subsidiary and associated companies 2 500 2 511

Without cost to the Bank

Federal, state and municipal governments 273 -- 263 --

External organizations (Cassi, FBB, Previ and Economus)

576 -- 750 --

Employee entities 84 -- 85 --

Subsidiary and associated companies 354 -- 363 --

Total 1,517 15,718 1,707 16,620

(1) Balance in the last day of the period.

g) Remuneration of Employees and Managers

Monthly wages paid to employees and Directors of the Banco do Brasil R$

06.30.2013 12.31.2012 06.30.2012

Lowest salary 1,892.00 1,892.00 1,760.00

Highest salary 31,802.11 31,802.11 29,583.36

Average salary 5,321.81 5,334.04 4,924.91

Management

President 58,773,99 55,264.68 55,264.68

Vice-President 52,607,05 49,465.96 49,465.96

Director 44,585,55 41,923.41 41,923.41

Council members

Fiscal Council 5,083,02 4,411.87 4,411.87

Board of Directors 5,083,02 4,411.87 4,411.87

Audit Committee - Member 40,127,00 37,731.07 37,731.07

h) Insurance Policy of Assets

Despite the reduced level of risk to which its assets are subject, the Bank contracts insurance cover for its assets in amounts considered sufficient to cover any losses.

Insurance contracted by the Bank in force on 06.30.2013 R$ thousand

Covered Risks Amounts Covered Value of the Premium

Property insurance for the relevant fixed assets 925,581 3,315

Life insurance and collective personal accident for the Executive Board (1) 885 121

Other 616 14

Total 927,082 3,450

(1) Refers to individual coverage for members of the Executive Board.

i) Fundo Nacional de Aviação Civil (FNAC)

Through Provisional Measure no 600, dated 12.28.2012, the federal government established that the FNAC resources for modernization, construction, expansion and renovation of public aerodromes can


133

be managed by the Bank, directly or through its subsidiaries, as it was established in the act of Civil Aviation Secretariat of the Presidency of the Republic.

The Decree 8,024 from 06.04.2013, which regulates the operation of FNAC, establishes that the resources of this Fund will be transferred to the Bank according to the programming for investments of resources approved by the Civil Aviation Secretariat of the Presidency of the Republic and to what is stated in the contract. According to the Decree, the remuneration that will be received by the Bank, from the rendering of services, will be set by a joint act of the Finance Minister and the Minister of the Civil Aviation Secretariat of the Presidency of the Republic

As a manager of the resources of FNAC, the Bank will hold a bidding process, and it can contract, on its own name or for the account of third parties, works and engineering services or any other specialized technical services.

1


Report of Independent Auditors for

Financial Statements

June 30, 2013 (a free translation of the original report in Portuguese containing

financial statements prepared in accordance with accounting

practices adopted in Brazil applicable to institutions authorized to

operate by the Brazilian Central Bank)

2

Report of Independent Auditors for Financial Statements

To

The Board of Directors, Shareholders and Management


Brasília - DF

We have audited the accompanying, individual and consolidated financial statements of Banco do

Brasil S.A. (“Bank”), which comprise the balance sheet as of June 30, 2013 and the related

statements of income, of changes in stockholders' equity and of cash flows for the semester then

ended, as well as the summary of significant accounting policies and other notes to the financial

statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these individual and

consolidated financial statements in accordance with accounting practices adopted in Brazil,

applicable to institutions authorized to operate by the Central Bank of Brazil (BACEN), and for

designing, implementing and maintaining internal control relevant to the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We

conducted our audit in accordance with Brazilian and International Auditing Standards. Those

standards require that we comply with ethical requirements and plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free from material

misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on the auditor's judgment,

including the assessment of the risks of material misstatement of the financial statements,

whether due to fraud or error. In making those risk assessments, the auditor considers internal

controls relevant to the Bank's preparation and fair presentation of the financial statements of

Bank in order to design audit procedures that are appropriate in the circumstances, but not for the

purpose of expressing an opinion on the effectiveness of the internal control of Bank. An audit

also includes evaluating the appropriateness of accounting policies used and the reasonableness

of accounting estimates made by management, as well as evaluating the overall presentation of

the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit opinion.

Opinion on the financial statements individual and consolidated

In our opinion, the individual and consolidated financial statements referred to above present

fairly, in all material respects, the financial position of Banco do Brasil S.A. at June 30, 2013, the

financial performance of its operations and its cash flows for the semester then ended, in

accordance with accounting practices adopted in Brazil applicable to institutions authorized to

operate by the Central Bank of Brazil.

3

Statement of value added

We have also audited the individual and consolidated statement of value added (DVA),

elaborated under the responsibility of the management of Bank, for the semester ended June 30,

2013, submission of which publicly-held companies are required to make according to Brazilian

corporate law. This statement was subjected to the same audit procedures described above and, in

our opinion, is presented fairly in all material respects in relation to the financial statements taken

as a whole.

Restatement of corresponding balances As mentioned on note 3 of the consolidated financial statements, due to the change in the

accounting policy in accordance with item 173 of Deliberação CVM n.º 695/2012 registered on

the 1st half of 2013, the actuarial gains/losses from employee benefit plans not recognized

according to the previously adopted accounting policy in place until December 31, 2012, were

retrospectively registered, in accordance with Deliberação CVM n.º 592/2009 (Notes 4.l and

27.d). The corresponding balances related to the balance sheet as of June 30, 2012 and December

31, 2012 and the corresponding interim accounting information related to the statements of

income, of changes in shareholders' equity, of cash flows and of the change added value

(supplemental information), for the for the six-month-period ended on June 30, 2012, presented

for comparison purposes, were adjusted, with the effects and in the accounts presented on notes

4.l and 27.d, and are being restated as determined by CPC 23 - Accounting Policies, Changes in

Accounting Estimates and Errors e CPC 26(R1) - Presentation of Financial Statements. Our

opinion does not have any modification related to this matter.

Brasília, August 12, 2013.

KPMG Auditores Independentes

CRC SP-014428/O-6 F-DF

Original report in Portuguese signed by

Giuseppe Masi

Contador CRC 1SP176273/O-7

Summary of the Audit Committee Report

Introduction

Audit Committee of Banco do Brasil, statutory advisory body of the Board of Directors, has the following main duties: to revise the set of financial statements prior to publication and to assess the effectiveness of the internal control system and of the internal audit department and independent auditors. The Audit Committee’s regulation is available at the website www.bb.com.br/ri.

Committee’s field of activity comprises the Banco do Brasil Multiple Bank and the following subsidiaries: BB DTVM Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A., BB Banco de Investimento S.A., BB Leasing S.A. – Arrendamento Mercantil; BB Administradora de Cartões de Crédito S.A., BB Administradora de Consórcios S.A. e Besc Distribuidora de Títulos e Valores Mobiliários S.A.

Administrators of Banco do Brasil and its subsidiaries are responsible for preparing and assuring the integrity of the financial statements, for managing risks, for maintaining an effective internal control system and for monitoring compliance with applicable legal and regulatory requirements.

Internal Audit is responsible for regular work, with focus on the risks to which the Conglomerate is exposed, assessing the risk management actions and the adequacy of internal controls from the verification of its quality, sufficiency, compliance and effectiveness.

KPMG Auditores Independentes is responsible for auditing the financial statements of the Multiple Bank and its subsidiaries covered by the Audit Committee. It also evaluates, in the context of the audit work on the financial statements, the quality and adequacy of the internal control system and compliance with the legal and regulatory requirements.

Activities

Over the course of the first half of 2013, Audit Committee held regular meetings, in compliance with its work plan approved by the Board of Directors, with the participation of representatives of management, the internal audit department and independent auditors, and with executives from the main areas of business, internal controls, risk management, accounting, external ombudsman, security, governance, legal, technology and treasury, besides internal work.

At these meetings, the attention was focused on subjects related to the internal control system, accounting, provisions, contingencies, risk and capital management processes, external branches, technological solutions, management of third party funds, and recommendations issued by the internal audit, independent auditors and by external inspection bodies.

Where suggestions for improvement were observed, recommendations were made.

Maintained a dialogue with the internal audit and independent audit teams, on which occasions it considered their planning, learned the results of the main work and examined their conclusions and recommendations.

The Committee revised the management reports, financial statements, notes to the financial statements and the independent auditor’s reports.

Conclusions

Based on the activities developed in the period and having the duties and limitations inherent to the scope of its activities present, the Audit Committee concluded that:

a. Internal control system is appropriate for the size and complexity of the Conglomerate’s business and is subject to permanent attention from management;

b. Internal auditor is effective and independent, as well as adequately reported to the Committee’s request;

c. Independent auditors is effective and nothing was noted that would indicate non-compliance with applicable independence rules and regulations;

d. Financial statements of the semester ended at Jun 30, 2013 were prepared in compliance with the rules of law and with accounting practices adopted in Brazil, applicable to the institutions licensed to operate by the Brazilian Central Bank, and reflect, in all material respects, the financial situation on that date.

Brasília-DF, August 12, 2013.

do Comitê de

Egidio Otmar Ames

Coordinator

Antônio Carlos Correia

Henrique Jäger

Elvio Lima Gaspar

MEMBERS OF THE MANAGEMENT BODIES PRESIDENT Aldemir Bendine VICE-PRESIDENTS Alexandre Corrêa Abreu Benito da Gama Santos Geraldo Afonso Dezena da Silva Ivan de Souza Monteiro Osmar Fernandes Dias Paulo Roberto Lopes Ricci Paulo Rogério Caffarelli Robson Rocha Walter Malieni Junior DIRECTORS Adilson do Nascimento Anisio Admilson Monteiro Garcia Adriano Meira Ricci Antonio Mauricio Maurano Antonio Pedro da Silva Machado Carlos Alberto Araujo Netto Carlos Eduardo Leal Neri Clenio Severio Teribele Edmar José Casalatina Gueitiro Matsuo Genso Hayton Jurema da Rocha Hideraldo Dwight Leitão Ives Cézar Fülber Janio Carlos Endo Macedo José Carlos Reis da Silva José Mauricio Pereira Coelho Luiz Henrique Guimarães de Freitas Marcelo Augusto Dutra Labuto Márcio Hamilton Ferreira Marco Antonio Ascoli Mastroeni Marcos Ricardo Lot Nilson Martiniano Moreira Raul Francisco Moreira Sandro José Franco Sandro Kohler Marcondes Sergio Peres ACCOUNTING DEPT. Eduardo Cesar Pasa General Accountant Accountant CRC-DF 017601/O-5 CPF 541.035.920-87 Daniel André Stieler Accountant CRC-DF 013931/O-2 CPF 391.145.110-53

BOARD OF DIRECTORS Nelson Henrique Barbosa Filho (President) Adriana Queiroz de Carvalho Aldemir Bendine Bernardo Gouthier Macedo Elvio Lima Gaspar Henrique Jäger Sérgio Eduardo Arbulu Mendonça FISCAL COUNCIL Paulo José dos Reis Souza (President) Aldo César Martins Braido Augusto Carneiro de Oliveira Filho Marcos de Andrade Reis Villela Marcos Machado Guimarães AUDIT COMMITTEE Egidio Otmar Ames Antonio Carlos Correia Elvio Lima Gaspar Henrique Jäger

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