Global Emerging Markets One- on-one Investor Forum June 2006 1 Brazilian Economy Highlights Ita Itas Positioning 1 st Quarter of 2006 Results Acquisition of BankBoston Strategy Agenda 2 Brazilian Macroeconomic Scenario Floating exchange rate and outstanding adjustment in external accounts Monetary policy: inflation expectation and growth Fiscal policy: accomplishment of fiscal targets, even without IMF surveillance Credit expansion: public sector crowding out Brazil: towards investment grade Real exchange rate Trade surplus accumulated in 12-months (US$ billion) Source: Central Bank of Brazil 5 Monetary policy and inflation Source: IBGE Headline and Core Inflation (% y-o-y) 6 Fiscal policy Source: Central Bank of Brazil Net Public Debt (% of GDP) 7 Primary surplus since 1998 Source: Central Bank of Brazil 8 Inflation expectations: 4.32% for 2006 and 4.5% for 2007 (Focus Survey on May 26, 2006) Interest rate path: compatible with limiting aggregate demand acceleration in order to bring inflation to the target Exchange rate: remains constant in real terms throughout the forecasting horizon Primary budget surplus: the target remains at 4.25% of GDP, however the effective primary surplus decreases from 4.8% of GDP in 2005 to 4.25% of GDP in 2006 and 2007 GDP linear growth trend: 3.5% in 2006 and 2007 Baseline scenario 9 Investment grade Total foreign debt/current-account receipts 10 Reserve Requirements (%) 53% 30% 23% 45% 20% Additional 8% remunerated by the Selic rate 20% remunerated by reference rate + 6% p.a. Additional 10% remunerated by Selic Remunerated by Selic rate 45% without remuneration Brazilian Banking System 11 Agenda Brazilian Economy Highlights Ita Itas Positioning 1 st Quarter of 2006 Results Acquisition of BankBoston Strategy 12 Ownership Structure - Mar/06 ESA Family: 33.72% Common Shares: 60.69% Preferred Shares: 17.24% Free Float: 66.18% Common Shares: 39.31% Preferred Shares: 82.76% Itasa Banco Ita Holding Financeira S.A. Free Float: 51.75% Common Shares: 11.16% Preferred Shares: 99.99% Total: 48.25% Commom Shares: 88.84% Preferred Shares: 0.01% 13 Highlights Assets (R$ Billion) Credit Operations (R$ Billion) Stockholders Equity (R$ Billion) Technical Provisions Insurance, Pension and Capitalization (R$ Billion) 14 Net Income (R$ Million) Non-interest Expenses (R$ Million) Banking Service Fees (R$ Million) Net Interest Margin (R$ Million) Highlights 15 Obs: Annualized quarterly indexes. Average ROE (%) Average ROA (%) BIS Ratio (%) Efficiency Ratio (%) Highlights 16 Branches+CSBs Internet Banking Clients (In million) ATMs Employees Highlights 17 CAGR (90-06) = 14.1% CAGR (90-05) = 25.2% Real Plan Mexican Crisis Asian Crisis Russian Crisis Real Devaluation Argentina Crisis Collor Plan Attack to WTC Brazilian Election Period R$ Million Evolution of Stockholders Equity and Net Income Highlights Adaptability to Different Scenarios 18 CAGR (90-06) = 14.1% CAGR (90-05) = 25.2% Real Plan Mexican Crisis Asian Crisis Russian Crisis Real Devaluation Argentina Crisis Collor Plan Attack to WTC Brazilian Election Period R$ Million Evolution of Stockholders Equity and Net Income Highlights Jan/90 to Mar/06 Dividends: R$ 9.4 Billion Increase of Capital: R$ 0.1 Billion 1 st Quarter of 2006 Net Income R$ 1,460 million 19 Agenda Brazilian Economy Highlights Ita Itas Positioning 1 st Quarter of 2006 Results Acquisition of BankBoston Strategy 20 R$ Million (*) March 16, 2006 CAGR = 28.0% Market Capitalization Leadership in Market Value 21 Presence in Brazil Mar/2006 Including: Banco Ita, Ita BBA and Tai ATMs North Region Branches+CSBs1.6% 1.5% GDP5.0% ATMs MidWest Region Branches+CSBs8.0% 5.5% GDP7.4% ATMs South Region Branches+CSBs20.4% 14.9% GDP18.6% ATMs Southeast Region Branches+CSBs65.8% 73.2% GDP55.2% ATMs Northeast Region Branches+CSBs4.2% 4.9% GDP13.8% 22 Foreign Presence Mar/2006 Itau Bank1,603558Banco Ita Europa3, Consolidated13,7922,869 Assets Stockholders Equity Foreign Branches3,587834Banco Ita Buen Ayre58299Ita BBA and subsidiaries4, US$ Million 23 Number of Clients (Thousands) Scale of Operations Consolidated 24 In 1980 Itaus customers already obtained their balances (current and savings account) automatically by Itaufone, something unparalleled in the worlds banking system. In 1983, Ita was pioneer in Brazil in satellite transmissions and adoption of ATMs. From then on, Ita took over as the leader in Electronic Banking, and the technology with the purpose of convenience has been one of its main differentials. 5 Evolution of ATMs Technology 25 CAGR = 7.7% R$ Millions (*) Including: Electronic Banking, Computers and Telecomunications. Investments in Technology(*)... 1st Q/2006 R$ 45.5 million Total in the Period: R$ 3.0 billion 26 Jan.- Mar Transactions: 178 Million Customers: 4.4 Million Internet Banking Technology 27 Agenda Brazilian Economy Highlights Ita Itas Positioning 1 st Quarter of 2006 Results Acquisition of BankBoston Strategy 28 3. Additional provisions: R$ 130 million increase in the excess provision for loan losses in the quarter, reaching the balance of R$ 1.5 billion; R$ 90 million reversal of additional provision for securities in the quarter, remaining the balance of R$ 280 million. 1.Results: Net Income of R$ 1,460 million in the 1st Qtr/06, a 2.5% increase in comparison to the previous quarter and a 27.9% increase in comparison to the 1st Qtr/05; annualized ROE of 36.3%. Earnings per Share reached R$ 1.32 in 1st Qtr/06, growing 32.0% in comparison to 1st Qtr/ Nonperforming Loans Ratio: Nonperforming loans ratio of 4.0% % growth in the loan portfolio in the quarter: Personal Loans:11.0% in the quarter and 35.3% in the last 12 months; Vehicles:13.9% in the quarter and 71.3% in the last 12 months; 5. BIS Ratio: Maintenance of the high level of 16.9%. Highlights 1 st Quarter of 2006 Results 29 CAGR: 23.0% CAGR: 23.2% R$ Million Credit Portfolio 1 st Quarter of 2006 Results 30 Loans by Type of Customer R$ Million (*) Farming and agribusiness Credit and Mortgage Loans Linked to available funds from Demand and Savings Deposits. Mar 31, 06Dec 31, 05Mar 31, 05 Var. Mar/06 - Dec/05 Var. Mar/06 - Mar/05 Individuals 30,813 28,471 20,7708.2%48.4% Credit Cards 6,904 7,216 5, %37.2% Personal Loans 11,457 10,320 8, %35.3% Vehicles 12,451 10,936 7, %71.3% Businesses 36,703 34,744 31,9055.6%15.0% Small and Medium Sized Companies 13,741 12,784 10,4967.5%30.9% Corporate 22,962 21,960 21,4084.6%7.3% Mandatory Loans (*) 4,529 4,541 4, %4.4% Total Loans 72,046 67,756 57,0126.3%26.4% 1 st Quarter of 2006 Results 31 Composition of the Loan Portfolio 1 st Quarter of 2006 Results 32 Non-performing Loans Ratio and Coverage Ratio NPL Ratio (1) Coverage (2) (1) Loans overdue for more than 60 days (2) Balance of Provision for Loans Losses / Balance of Loans overdue for more than 60 days and that do not generate income. 1 st Quarter of 2006 Results 33 Contribution from the Change in the Mix of the Loan Portfolio R$ Million (*) Average balance of the loan portfolio, net of loans overdue for more than 60 days, which do not generate revenue. 1st Qtr/064th Qtr/051st Qtr/05 Managerial Financial Margin Banking Operations (A) 3,628 3,351 2,607 Service Fees with Loans and Credit Cards (B) Tax Expenses for PIS and COFINS (C) (208) (197) (153) Banking Product (D = A + B + C) 4,267 4,042 3,138 Adjustment 1 Result of Loan Losses (E) (1,287) (971) (594) Adjustment 2 Excess Provision (F) Adjusted Result of Loan Losses (G = E + F) (1,157) (801) (444) Adjusted Banking Product (H = D + G) 3,111 3,240 2,694 Average Loans (*) (I) 59,942 56,124 47,754 Annualized Adjusted Banking Product / Average Loans (H/I)20.8%23.1%22.6% 1 st Quarter of 2006 Results 34 Ita Holding (pro forma) R$ Million 1st Qtr/064th Qtr/05Variation1st Qtr/05 Managerial Financial Margin 4,073 3, % 2,986 Banking Operations 3,628 3,3518.3% 2,607 Treasury % 233 Management of FX Risk from Investments Abroad % 146 Result of Loan Losses (1,287) (971)32.5% (594) Banking Service Fees 2, % 1,794 Non-Interest Expenses (2,782) (2,909)-4.4% (2,371) Net Income 1,460 1,4252.5% 1,141 Average Stockholders' Equity 16,089 15,3944.5% 14,300 Annualized ROE (%)36.3%37.0%-0.7 p.p.31.9% 1 st Quarter of 2006 Results 35 (*) (*) After adjustments for extraordinary items in the amount of R$ 612 million described in the Management Discussion and Analysis report for the 4th Qtr/04. Evolution of the Net Interest Margin (%) 1 st Quarter of 2006 Results 14.3% 15.1% Recurring Extraordinary 36 R$ Million Banking Service Fees (1) Investment Funds and Consortiums. 1st Qtr/064th Qtr/05Variation1st Qtr/05 Asset Management (1) % 398 Current Account Services % 349 Credit Cards % 437 Loans and Guarantees Issued % 271 Collection Services % 209 Other % 131 Total 2, % 1,794 1 st Quarter of 2006 Results 37 Non-Interest Expenses (1) Not including PIS, Cofins and ISS. 1st Qtr/064th Qtr/05Variation1st Qtr/05 Personnel Expenses 1,132 1,0468.2% 955 Other Administrative Expenses 1,230 1, % 1,101 Other Operating Expenses % 239 Tax Expenses (CPMF / Others) (1) % 76 Total 2,782 2, % 2,371 R$ Million 1 st Quarter of 2006 Results 38 Efficiency Ratio (*) For further details about the Managerial Financial Margin, please consult Ita Holdings Management Discussion and Analysis report. Non-Interest Expenses (Personnel Expenses + Other Administrative Expenses + Other Operating Expenses + Tax Expenses for CPMF and Other Taxes) (Managerial Financial Margin (*) + Banking Service Fees + Results from Insurance, Pension Plans and Capitalization Operations + Other Operating Income + Tax Expenses for PIS/COFINS/ISS) Efficiency Ratio 53.9% 50.3% 1 st Quarter of 2006 Results 39 (*) Values differ from the one published in note Market Value because they are net of the additional provision for securities. Conservative Accounting Practices Securities Adjust. market value Additional Provision Total Additional Provision for Loan Losses (PDD) Financial Instruments: Market vs. Recorded Value (*) R$ 496 million R$ 280 million R$ 4.5 billion 03/31/06 R$ 1.5 billion R$ 2.2 billion R$ 435 million R$ 370 million R$ 3.6 billion 12/31/05 R$ 1.37 billion R$ 1.4 billion R$ 540 million R$ 400 million R$ 3.8 billion 03/31/05 R$ 1.15 billion R$ 1.7 billion 1 st Quarter of 2006 Results 40 Agenda Brazilian Economy Highlights Ita Itas Positioning 1 st Quarter of 2006 Results Acquisition of BankBoston Strategy 41 The Acquisition Agreement Banco Ita Holding Financeira S.A. ( ITA ) and Itasa Investimentos Ita S.A. ( ITASA ) announce today that they have entered into an agreement with Bank of America Corporation ( BAC ) dated which involves : The acquisition of BankBoston ( BKB ) in Brazil by ITA pursuant to the issuance of 68,518 thousand new non-voting ITA shares, equal to an approximate 5.8% share of ITA s total capital; The exclusive right for ITA to acquire BKB s operations in Chile and Uruguay, as well as certain other financial assets owned by clients of Latin America. The largest stock swap ever to be completed in the Brazilian financial services industry 42 Acquired Businesses Bank of America Corporation BKB Chile BKB Brazil BKB Uruguay Corporate Middle & Small Premier Option OCA Uruguay Credit Cards Option 43 Price and Transaction Structure The acquisition of BKB Brazil will be effected in stock pursuant to the issuance of non-voting ITA shares, equal to an approximate 5.8% share of ITA s total capital (68,518 thousand new shares of ITA ). Based on the non-voting shares average price on , these newly-issued shares would be valued at R$ 4.5 billion. The same transaction structure is expected for the remaining acquisitions and the amounts involved will be generally in line with their respective asset bases vis--vis BKB Brazil. 44 Recent Acquisitions in Shares in Brazil DATEACQUIRERTARGET TOTAL AMOUNT R$ MM % PAID IN SHARES SHARES ISSUED / TOTAL CAPITAL Apr-03ABN Amro RealSudameris2, %12.9% Jan-03BradescoBBV Brasil2, %4.4% Nov-02ItaBBA-Creditanstalt3, %3.0% Jul-00UnibancoBandeirantes1, %12.3% Apr-00BradescoBoavista %6.5% Source: Merrill Lynch May-06ItaBKB Brazil4, %5.8% 45 Considerations Regarding BACs Investment in ITA BAC will appoint one member of ITAU s Board of Directors; The acquisition will involve the issuance of new non-voting ITA shares, will not give rise to preemptive subscription rights on the part of ITA s current shareholders; BAC does not have a Right of First Refusal, but will have tag along rights, in the event of a change of control at ITA ; BAC shall not increase its stake above 20% of the issued and outstanding capital of ITA in the future; Shares issued in connection with this acquisition are subject to a 3-year lock-up period and, after this period, the sale of these shares in the market is limited to 15% of the average daily volume or block trade; ITA has a Right of First Offer should BAC decide to sell its stake. 46 BKB Brazil Present in Brazil since 1947 Assets (R$ MM) 22,603 Deposits (R$ MM) 5,911 Shareholders Equity (R$ MM) 2,124 # of Employees4,800 # of Clients (thousands) 203 Assets under Management (R$ MM) 26,014 Loans (includes sureties and endorsements) (R$ MM) 11,639 Source: BKB Publication, BAC, Central Bank of Brazil and Market Share taken from ANBID Mar/05 # of Branches66 1.4% 0.6% 3.3% 1.4% Market Share Ranked 13 th by the Central Bank of Brazil 47 BKB Brazil - Segmentation Banking Revenues (BR) (*)Number of Clients (*) Banking Revenues = Financial Margins + Service Fees Position: Dec.05 Corporate 31% High Net Worth Individuals 38% Middle Market 31% SEGMENT THOUSANDS OF CLIENTS INCREASE IN BR (%) High Net Worth Individuals % Middle Market23.840% Corporate1.362% 48 Client Overlap / Opportunities SEGMENT ESTIMATED OVERLAP ESTIMATED LOSS IN BANKING REVENUES OPPORTUNITIES HIGH NET WORTH 30%5% Sale of Insurance and Private Pension Plans MIDDLE MARKET 37%11%Cash Management Services CORPORATE 12% 3% Cash Management Services Investment Banking Crossborder Transactions Clients whose limits should be reduced according to information on the largest clients 49 Relevant Aspects Will become a shareholder of ITA, thus maintaining an important presence in the region, through a significant investment in a leading bank; Will appoint one member of ITA s Board of Directors. Leadership position among private banks in assets under management, custody, high net worth individual and corporate segments; Significant economies of scale in the large corporate and middle market segments; Acquisition of a premium credit card client base; Opportunity to expand into foreign markets in which ITA does not currently have a presence. BACBAC ITA and BAC will explore mutual cooperation opportunities to benefit their clients ITAITA 50 Important Highlights Maintenance of BKB s branches, which are highly regarded for their superior facilities, and integration with the Ita Personnalit segment (no intention to shut down branches); The ITA brand will be extended to the acquired businesses; ITA will add a set of highly qualified professionals to its current structure. ITA will continue to strengthen its tradition of providing differentiated service to its customers in the various market segments 51 BKB Chile (Exclusive Option) Assets (R$ MM) 5,330 Deposits (R$ MM) 3,490 Shareholders Equity (R$ MM) 872 BankBoston Chile Loans (R$ MM) 3,578 Source: BAC Parity CLP / US$ 1.00 e R$ / US$ 1.00 as of Investment Grade Baa1 from Moodys # of Branches 44 # of Clients (thousands) 52 BKB Uruguay (Exclusive Option) Assets (R$ MM) 1,844 Deposits (R$ MM) 1,510 Shareholders Equity (R$ MM) 125 BankBoston Uruguay Loans (R$ MM) 503 Source: BAC Parity UYU / US$ 1.00 e R$ / US$ 1.00 as of Assets (R$ MM) 239 Shareholders Equity (R$ MM) 55 Loans (R$ MM) 160 OCA Market Share 50% # of Branches ,000 clients # of Branches23 53 Pro Forma Analysis Assets Loans (*) Deposits % 23.4% 21.0% Assets Under Management % R$ BILLION (*) Includes sureties and endorsements Shareholders Equity % % BKB Brazil PRO FORMA BKB Foreign Combined ITA + BKB ITA INFORMATION AS OF 54 % Pro Forma Analysis (Continued) (*) Adjusted for BKB Brazil hedge transactions # of Employees # of Clients (thousands) # of Branches BKB Brazil PRO FORMA 51,0364,800 16, , % 3.9% 6.2% Efficiency Ratio (*) 50.3%77.3%2.4 bps Basle Ratio 17.0%14.7%-0.3 bps 2, % 15.8% 58,036 17,303 2, % 16.7% BKB Foreign Combined ITA + BKB ITAINFORMATION AS OF 55 BKB earnings requirements to avoid dilution in 2005 ITA + BKBITA Net Income (R$ MM) ROE (%p.a.) ROA (%p.a.) Efficiency Ratio 5,5765,251 BKB Brazil 325 Fiscal Year 2005 EPS (R$/share)4.74 Shares Outstanding (mm) 1,176.21, % 1.4% 77.3% 33.7% 3.5% 50.3% Required In light of its scale, ITA is in a position to make this acquisition EPS accretive in a short period of time. 56 Accounting Effects It is managements intention to effect the write-off of the goodwill amount resulting from this transaction in the fiscal year of It is estimated that ITA s net income will be reduced by R$ 2.2 billion, net of taxes, as a result of the amortization of goodwill. The amount of dividends/interest on own capital to be distributed to the pro forma ITA shareholder base for the fiscal year 2006 will not be impacted by this amortization of goodwill and should, therefore, be higher than those paid out in 2005; The transaction is expected to be EPS accretive in the second half of 2007; The Basle Ratio, pro forma for the acquisition, will equal approximately 16.7%. 57 Impact of the Transaction on Itasa Decline in stake in ITA from 48.2% to 45.4% (R$ 0.4 billion); Gain from the equity method due to capital increase at ITA (R$ 2.0 billion); Negative impact of goodwill amortization at ITA (R$ 1.0 billion); ESTIMATED POSITIVE NET EFFECT ON NET INCOME (R$ 0.6 BILLION). 58 Agenda Brazilian Economy Highlights Ita Itas Positioning 1 st Quarter of 2006 Results Acquisition of BankBoston Strategy 59 Segmentation Investment Banking 60 Ita ItaucredIta BBAItaubanco Banking Credit Cards (Current Account Holders) Insurance, Pension Plans and Capitalization Investment Funds and Managed Portfolio Corporation Corporate Operations & Investment Banking Vehicles Credit Cards (Non Current Account Holders) Tai, FIC (CBD) and FAI (LASA) Segmentation (pro forma) NB: The organization chart of the Itaucred segment basically reflects the transactions carried out in channels intended for non current account holders. 61 R$ Million Net Income per segment (pro forma) Net Income Breakdown in the 1 st Quarter of 2006: Segmentation (pro forma) Net Income 4 th Q/05 Variation Variation Itaubanco %3,179 3, % Ita BBA %1, % Itaucred % % Corporation %305 (555) 154.9% Consolidated1, %5,251 3, % 1 st Q/ ,460 62 RAROC* per segment (pro forma) Segmentation (pro forma) RAROC 4 th Q/05 Variation Variation Itaubanco47.2%-830 b.p.43.1%46.9% -380 b.p. Ita BBA37.0%-100 b.p.34.2%27.2%700 b.p. Itaucred22.9%510 b.p.39.8%35.2%460 b.p. Corporation12.2%2,070 b.p.12.0%-21.5%3,350 b.p. Consolidated37.0%-70 b.p.35.3% 28.7% 660 b.p. 1 st Q/ % 36.0% 28.0% 32.9% 36.3% (*) Risk-Adjusted Average Return on Allocated Capital RAROC* per segment 1 st Quarter of 2006 63 Ita CorporationItaucredIta BBAItaubanco FIC 50% CBD 50% Ita FAI 50% LASA 50% Ita Own stores 100% Ita Payroll Credit Finustria Itaucred Vehicles Banco Fiat Intercap Vehicle Credit Cards non-account holders 50% Credicard Segmentation Credit for Individuals 64 Growth of 41.8% q-o-q of Net Income pro forma of Itaucred, totaling R$ 130 million in the 1 st quarter of Credit Portfolio (R$ Million) Own Stores 5 Itaucred 65 Ita Holding ItaucredIta BBAItaubanco Organic growth of classic business lines; Expansion of Insurance, Capitalization and Pension Plan business areas; Maintenance of Efficiency Ratio; Growth of 25% in credit portfolio; Expectation of moderate growth of non-performing loans ratio. Focus on Investment Banking and banking services segments; Continuous improvement of market risk management; Growth of 5% in credit portfolio. Growth of vehicle financing; Consolidation and growth of partnerships with CBD (FIC) and Lojas Americanas (FAI); Growth of number of Tais Outlets (FIT); Growth of operations with non- account holders; Credicard / Orbitall integration on Ita with operation gains; Growth of 30% in credit operations; Expectation of moderate growth of non-performing loans ratio. Disclosure of the impacts of operational risks, in compliance with Basel II Banco Ita Holding Financeira S.A. in 2006 66 Reinforcement in Corporate Governance Expansion of the Compensation Committee through the creation of the Appointments and Compensation Committee, which will, in addition to provide guidance on the policy of compensation for the directors of the subsidiaries, analyze and propose names for appointment to the Executive Board, make known situations of potential conflict of interests and propose criteria for evaluating the activities of the Board of Directors; Election of the fifth independent member of the Board: Dr. Gustavo Loyola, former chairman of the Brazilian Central Bank; Approval of an age limit (75 years) to members of the Board; Approved the Internal Charter of the Board of Directors, which establishes rules of functioning, functions, self-evaluation and others. Creation of Shareholder Value 67 Creation of Shareholder Value R$ Net Income and Earnings per Share Earnings per Share Net Income R$ Million 27.9% NB: The earnings per share was adjusted to reflect the 900% stock split carried out in Oct/ % ,023 Ita (1) Ita (2) Ibov. 10 years 26.18%21.57% 11.41% 5 years 33.38%28.69%22.19% 12 months 66.70%61.92%61.20% Annual Average Appreciation in US$ Preferred Shares Appreciation Evolution of US$ 100 invested from May/96 to May/06 Creation of Shareholder Value Asian Crisis Russian Crisis Real Devaluation Argentine Crisis Attack to WTC Brazilian Election Period In US$ (1) With dividends reinvestment (2) Without dividends reinvestment June 2006 Global Emerging Markets One- on-one Investor Forum